| | | | | | 39 | | | | | | 2020 Proxy Statement | (2) | The figure represents: (a) 402,563 outstanding shares owned by Mr. Joly; (b) 371,000 restricted stock units, which Mr. Joly could convert to shares within 60 days of April 13, 2016; (c) 43,554 restricted shares subject to a time-based vesting schedule, which vest within 60 days of April 13, 2016; and (d) options to purchase 714,971 shares, which Mr. Joly could exercise within 60 days of April 13, 2016. |
TABLE OF CONTENTS (3)
| The figure represents: (a) 28,660 outstanding shares owned by Mr. Joly; (b) 410,376 restricted stock units, which Mr. Joly could convert to shares within 60 days of March 30, 2020; and (c) options to purchase 443,473 shares, which Mr. Joly could exercise within 60 days of March 30, 2020. The figure does not include 83,415 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(4)
| | (3) | The figure represents: (a) 267,663 outstanding shares owned by Ms. McCollam; (b) 22,400 restricted shares subject to a time-based vesting schedule, which vest within 60 days of April 13, 2016; and (c) options to purchase 151,740 shares, which Ms. McCollam could exercise within 60 days of April 13, 2016. | The figure represents: (a) 11,065 outstanding shares owned by Mr. Bilunas; and (b) options to purchase 1,620 shares, which Mr. Bilunas could exercise within 60 days of March 30, 2020. The figure does not include 1,994 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(5)
| | (4) | The figure represents: (a) 44,013 outstanding shares owned by Ms. Ballard; (b) 6,637 restricted shares subject to a time-based vesting schedule, which vest within 60 days of April 13, 2016; and (c) options to purchase 375,080 shares, which Ms. Ballard could exercise within 60 days of April 13, 2016. | The figure represents 38,442 outstanding shares owned by Mr. Alexander. The figure does not include 3,560 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(6)
| | (5) | The figure represents: (a) 102,104 outstanding shares owned by Mr. Mohan; (b) 5,531 restricted shares subject to a time-based vesting schedule, which vest within 60 days of April 13, 2016; (c) 2,029 outstanding shares held in the name of the Trustee in connection with the Retirement Saving Plan for the benefit of Mr. Mohan; and (d) options to purchase 291,437 shares, which Mr. Mohan could exercise within 60 days of April 13, 2016. | The figure represents: (a) 73,772 outstanding shares owned by Mr. Mohan; and (b) options to purchase 12,363 shares, which Mr. Mohan could exercise within 60 days of March 30, 2020. The figure does not include 43,461 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
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| | (6) | The figure represents: (a) 27,781 outstanding shares owned by Mr. Nelsen; (b) 7,190 restricted shares subject to a time-based vesting schedule, which vest within 60 days of April 13, 2016; (c) 869 outstanding shares held in the name of the Trustee in connection with the Retirement Saving Plan for the benefit of Mr. Nelsen; and (d) options to purchase 217,631 shares, which Mr. Nelsen could exercise within 60 days of April 13, 2016. | The figure represents: (a) 23,781 outstanding shares owned by Ms. Scarlett; and (b) options to purchase 4,353 shares, which Ms. Scarlett could exercise within 60 days of March 30, 2020. The figure does not include 10,067 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(8)
| | (7) | The figure represents: (a) 125,174 outstanding shares registered in the name of Mr. Anderson's spouse and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Anderson's spouse (Mr. Anderson has disclaimed beneficial ownership of these shares); (b) 11,995 outstanding shares owned by the Anderson Family Foundation, of which Mr. Anderson is a director; and (c) 17,766 restricted stock units, which Mr. Anderson could convert to shares within 60 days of April 13, 2016.
| The figure represents: 3,000 outstanding shares owned by Mr. Nelsen. The figure does not include 20,578 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(9)
| | (8) | The figure represents: (a) 10,000 outstanding shares owned by Ms. Caputo; (b) 17,766 restricted stock units, which Ms. Caputo could convert to shares within 60 days of April 13, 2016; and (c) options to purchase 12,500 shares, which Ms. Caputo could exercise within 60 days of April 13, 2016. | The figure represents: 20,711 outstanding shares owned by Ms. Walker. The figure does not include 18,110 shares underlying performance share awards that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(10)
| | (9) | The figure represents 8,388 restricted stock units, which Mr. Doyle could convert to shares within 60 days of April 13, 2016. | The figure represents: (a) 10,000 outstanding shares owned by Ms. Caputo and (b) 33,414 restricted stock units, which Ms. Caputo could convert to shares within 60 days of March 30, 2020. |
(11)
| | (10) | The figure represents 17,766 restricted stock units, which Mr. Fradin could convert to shares within 60 days of April 13, 2016. | The figure represents restricted stock units that could be converted to shares within 60 days of March 30, 2020. |
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| | (11) | The figure represents: (a) 10,730 outstanding shares owned by Ms. Higgins Victor; (b) 17,766 restricted stock units, which Ms. Higgins Victor could convert to shares within 60 days of April 13, 2016; and (c) options to purchase 40,000 shares, which Ms. Higgins Victor could exercise within 60 days of April 13, 2016. | The figure represents: (a) 10,730 outstanding shares owned by Ms. Higgins Victor and (b) 33,414 restricted stock units, which Ms. Higgins Victor could convert to shares within 60 days of March 30, 2020. |
(13)
| | (12) | The figure represents 13,743 restricted stock units, which Mr. Kenny could convert to shares within 60 days of April 13, 2016. | The figure represents: (a) the outstanding and attainable shares, restricted stock units and options described in the preceding footnotes (2) through (7) and (10) through (12); (b) 198,776 outstanding shares owned by other executive officers; (c) 11,785 shares held by other executive officers in revocable trusts; (d) 1,240 outstanding shares held in the name of the Trustee in connection with the Retirement Savings Plan for the benefit of other executive officers; (e) 8,690 restricted shares subject to time-based vesting schedules, which are held by other executive officers and which vest within 60 days of March 30, 2020; and (f) options to purchase 79,917 shares, which the other executive officers could exercise within 60 days of March 30, 2020. The figure does not include 57,327 shares underlying performance share awards of the other executive officers that are subject to vesting and settlement within 60 days of March 30, 2020 to the extent that performance objectives are determined to be achieved. |
(14)
| | (13) | Ms. McLoughlin received a prorated equity grant of 3,606 restricted stock units on September 24, 2015, following her appointment to the Board. These units will vest one year from the grant date. If she were to leave the Board voluntarily within 60 days of April 13, 2016, she could convert to shares up to 2,598 units of her grant. |
| | (14) | The figure represents 12,230 restricted stock units, which Mr. Millner could convert to shares within 60 days of April 13, 2016. |
| | (15) | Ms. Munce received a prorated equity grant of 1,383 restricted stock units on March 14, 2016, following her appointment to the Board. These units will vest one year from the grant date. If she were to leave the Board voluntarily within 60 days of April 13, 2016, she could convert to shares up to 345 units of her grant. |
| | (16) | The figure represents: (a) 2,434 outstanding shares owned by Mr. Vittecoq; (b) 17,766 restricted stock units, which Mr. Vittecoq could convert to shares within 60 days of April 13, 2016; and (c) options to purchase 21,250 shares, which Mr. Vittecoq could exercise within 60 days of April 13, 2016. |
| | (17) | The figure represents: (a) the outstanding shares, restricted stock units and options described in the preceding footnotes (2) thru (16); (b) 28,712 outstanding shares owned by other executive officers; (c) 20,221 restricted shares subject to time-based vesting schedules, which are held by other executive officers and which vest within 60 days of April 13, 2016; and (d) options to purchase 100,434 shares, which the other executive officers could exercise within 60 days of April 13, 2016. |
| | (18) | Mr. Schulze is our Founder and Chairman Emeritus, | Mr. Schulze is our Founder and Chairman Emeritus. He is not a member of our Board and is not considered an executive officer but he is no longer a member of our Board and is not considered an executive officer. He is listed here due to his status as a beneficial owner of more than 5% of our common stock. The figure represents: (a) 1,732,500 outstanding shares owned by Mr. Schulze; (b) 24,520,994 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Schulze, of which up to $150 million in aggregate value of shares have been pledged by the trust as collateral to secure a line of credit; (c) 11,629,440 outstanding shares registered in the name of Mr. Schulze and co-trustees, and held by them as trustees of Grantor Retained Annuity Trusts for the benefit of Mr. Schulze and his family; (d) 1,143,043 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of the Sandra Schulze Grantor Retained Annuity Trust; (e) 950,169 outstanding shares held by a limited partnership of which Mr. Schulze is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of these shares except to the extent of his pecuniary interest therein); (f) 252,312 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is the sole general partner; (g) 31,672 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is the sole general partner; (h) 12,309 outstanding shares registered in the name of Mr. Schulze's spouse and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Schulze's spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (i) 183,726 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of the Sandra Schulze Revocable Trust dated June 14, 2001 (Mr. Schulze has disclaimed beneficial ownership of these shares); (j) 2,061 outstanding shares held in Mr. Schulze's individual retirement account; (k) 3,618,078 outstanding shares owned by The Richard M. Schulze Family Foundation, of which Mr. Schulze is the sole director; (l) 75,892 outstanding shares registered in the name of the Trustee in connection with the Retirement Saving Plan for the benefit of Mr. Schulze; and (m) options to purchase 7,500 shares, which he could exercise within 60 days of April 13, 2016. |
| | (19) | As reported on the owner's most recent Schedule 13G filed with the SEC on February 12, 2016 to report ownership as of December 31, 2015. FMR LLC and certain related entities have sole voting power over 3,363,312 shares and sole dispositive power over 40,526,297 shares. |
| | (20) | As reported on the owner's most recent Schedule 13G filed with the SEC on February 10, 2016 to report ownership as of December 31, 2015. The Vanguard Group has sole voting power over 548,647 shares, shared voting power over 31,600 shares, sole dispositive power over 27,940,460 shares and shared dispositive power over 592,357 shares. |
| | (21) | As reported on the owner's most recent Schedule 13G filed with the SEC on January 26, 2016 to report ownership as of December 31, 2015. JPMorgan Chase & Co. has sole voting power over 25,757,775 shares, shared voting power over 39,362 shares, sole dispositive power over 27,998,484 shares and shared dispositive power over 55,367 shares. |
| | (22) | As reported on the owner's most recent Schedule 13G filed with the SEC on January 22, 2016 to report ownership as of December 31, 2015. BlackRock, Inc. has sole voting power over 15,054,839 shares and sole dispositive power over 17,977,273 shares. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and shareholders who beneficially own more than 10% of our common stock file initial reports of ownership with the SEC. They must also file reports of changes in ownership with the SEC. In addition, they are required by SEC regulations to provide us copies of all Section 16(a) reports that they file with the SEC. Based solely on a review of such Section 16(a) reports, management and the Board believe our directors, executive officers and shareholders who beneficially own more than 10% of our common stock complied with the Section 16(a) filing requirements during the fiscal year ended January 30, 2016, except that on June 10, 2015 a Form 4 filed on behalf of Bradbury H. Anderson (as later amended on a Form 4/A filed on January 28, 2016) included bona fide gifts that occurred on June 16, 2014, July 24, 2014, November 10, 2014, December 2, 2014 and December 17, 2014.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Related Party Transactions Policy prohibits "related party transactions" unless approved by the Audit Committee and the Board. For purposes of our policy, a "related party transaction" is a transaction or series of transactions in which (a) the Company or a subsidiary is a participant, (b) the aggregate amount involved exceeds $120,000 and (c) any director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any of their respective immediate family members has a direct or indirect material interest.
A related party transaction will generally not be approved unless it provides us with a demonstrable incremental benefit and the terms are competitive with those available from unaffiliated third parties. Only Board members who do not have an intereststock. The figure represents: (a) 18,784,157 outstanding shares registered in the transaction are permittedname of Mr. Schulze and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Schulze, of which up to vote on a related party transaction. In addition, ongoing related party transactions are reviewed annually$150 million in aggregate value of shares have been pledged by the Audit Committeetrust as collateral to secure a line of credit; (b) 6,104,090 outstanding shares registered in the name of Mr. Schulze and co-trustees, and held by them as trustees of Grantor Retained Annuity Trusts for the Board to ensure that such transactions continue to providebenefit of Mr. Schulze and his family; (c) 1,143,043 outstanding shares registered in the necessary incremental benefit to usname of Mr. Schulze and have competitive terms. Eacha co-trustee, and held by them as trustees of the transactions discussed below were approved (or re-approved if ongoing)Sandra Schulze Grantor Retained Annuity Trust; (d) 950,169 outstanding shares held by the Audit Committee and the Board in March 2016, in accordance with our Related Party Transactions Policy.
We do not have any credit arrangements between our officers, directors, controlling persons and other insiders.
Richard M. Schulze
Asa limited partnership of the date of this filing,which Mr. Schulze owned approximately 13.6%is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of our common stock. On March 25, 2013, we entered into a letter agreement with Mr. Schulze pursuantthese shares except to which, among other things, Mr. Schulze was given the lifetime honorary title of "Founder and Chairman Emeritus" of the Company, although he is not an executive and is no longer a member of our Board. Under this letter agreement, we agreed to compensate Mr. Schulze with an annual base salary of $150,000 through fiscal 2018 for his services as Chairman Emeritus, and to provide lifetime medical benefits for him, his spouse and his eligible dependents in accordance with our plans, practices, programs and policies in effect generally for our executives and their dependents. We also agreed to provide office space and administrative support, and to reimburse Mr. Schulze for his costs and out-of-pocket expenses incurred in the performanceextent of his duties as Chairman Emeritus. Mr. Schulze was also entitled, during the termpecuniary interest therein); (e) 31,672 outstanding shares held by a limited partnership of the letter agreement, to nominate two directors for appointment to the Board of Directors. Messrs. Anderson and Lenzmeier were nominated and elected to the Board as part of this arrangement. The letter agreement's term expired when Mr. Schulze reached the age of 75 (which occurred in January 2016), except as specifically described above.
During fiscal 2016, we had ongoing lease obligations for one of our former U.S. Best Buy store locations leased from Mr. Schulze. We entered into the real estate lease with Mr. Schulze prior to 1990, and the Board approved the lease (with Mr. Schulze not voting). The Board relied on one or more of its members who had no financial interest in the property to review market comparisons, look into alternative rental agreements and negotiate with Mr. Schulze. At the time of entering into this lease, the Board determined that it was in our best interest and had terms that were competitive with terms available from unaffiliated third parties. We closed this store in May 2012. The store location lease included escalation clauses and, depending upon our exercise of successive renewal options, ran through 2018. We continued to pay rent for this location per the terms of the lease. During fiscal 2016, we paid aggregate rent of approximately $613,000. In April 2016, with Audit Committee and Board approval, we entered intowhich a lease termination agreement for this location in which we agreed to pay a termination fee of approximately $300,000 in exchange for a release from our future rent and other obligations under the lease (which totaled approximately $1.2 million).
We purchase certain store fixtures from Phoenix Fixtures, Inc. ("Phoenix"), alimited liability company owned by Mr. Schulze's late brother, Robert Schulze (his death occurredis the sole general partner; (f) 11,998 outstanding shares registered in June 2015). Phoenix contracts are submitted through a competitive bidding process in which Phoenix is free to participate. Payments made to Phoenix are pursuant to contracts awarded following the competitive bidding process. In lightname of Mr. Schulze's relationship with Phoenix,Schulze’s spouse and co-trustees, and held by them as trustees of trusts for the Board reviewed our transactions with Phoenix and determined thatbenefit of Mr. Schulze’s spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (g) 183,726 outstanding shares registered in the transactions were on fair terms to us and that Phoenix provides advantages with respect to service and delivery as compared with its competitors. Accordingly, the Board approved the transactions and our continued business dealings with Phoenix. The total amount paid to Phoenix during fiscal 2016 was approximately $8.3 million USD and $44,000 CAD, compared to approximately $7.5 million USD and $31,000 CAD paid in fiscal 2015. All transactions with Phoenix during fiscal 2016 were subject to the competitive bidding process discussed above to ensure fair prices and terms.
Ryan Green,name of Mr. Schulze's step-son, is employed with us as a Senior Director in our Properties department at our corporate headquarters in Richfield, Minnesota. Mr. Green's total cash compensation for fiscal 2016 was approximately $202,000. Mr. Green also received an annual long-term incentive award of 1,400 time-based restricted sharesSchulze and a mid-year long-term incentive award of 225 time-based restricted shares, which vest in one-third increments on each anniversaryco-trustee, and held by them as trustees of the grantsSandra Schulze Revocable Trust dated June 14, 2001 (Mr. Schulze has disclaimed beneficial ownership of these shares); (h) 2,568 outstanding shares registered in the name of Mr. Schulze’s sister and co-trustees, and held by them as trustees of trusts for three years,the benefit of Mr. Schulze’s sister (Mr. Schulze has disclaimed beneficial ownership of these shares); (i) 2,061 outstanding shares held in Mr. Schulze’s individual retirement account; (j) 1,023,143 outstanding shares owned by The Richard M. Schulze Family Foundation, of which Mr. Schulze is the sole director and which awards are consistent for other employees at his level. Mr. Green is eligible to receive employee benefits generally available to all employees. Mr. Green's employment with us began(k) 72,859 outstanding shares registered in August 2012. Mr. Schulze's family member is compensated at a level comparable to the compensation paid to non-family members in similar positions at Best Buy.
Fidelity
FMR LLC ("Fidelity") filed an amended Schedule 13G in February 2016, stating that it beneficially owns 11.8%name of the Company's common stock. As a result of beneficially owning more than 5% of our common stock, Fidelity is currently considered a “related party” under our Related Party Transactions Policy. Certain affiliates of Fidelity provide services to usTrustee in connection with the record keeping and administrationRetirement Saving Plan for the benefit of our stock plans (includingMr. Schulze.
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(15)
| As reported on the Employee Stock Purchase Plan and the Long-Term Incentive Plan). We paid these entities approximately $510,000 for these services for fiscal 2016. The administrative services contracts were initially entered into prior to Fidelity'sowner’s most recent Schedule 13G filing and 5% holder status. The contracts were negotiated at arm's length, and there is no indication that the Company or Fidelity received preferential treatment as a result of the relationship.
JPMorgan Chase
JPMorgan Chase & Co. ("JPMorgan")13G/A filed a Schedule 13G in January 2016, stating that it beneficially owns 8.1% of the Company's common stock. As a result of beneficially owning more than 5% of our common stock, JPMorgan is currently considered a “related party” under our Related Party Transactions Policy. JPMorgan and its affiliates provide services to us related to our revolving credit facility, share repurchase program and depository banking needs. We paid JPMorgan and its affiliates approximately $974,000 USD and $313,000 CAD for these services for fiscal 2016. The agreements related to these services were initially entered into prior to JPMorgan's Schedule 13G filing and 5% holder status. The agreements were negotiated at arm's length, and there is no indication that the Company or JPMorgan received preferential treatment as a result of the relationship.
AUDIT COMMITTEE REPORT
The information contained in this Audit Committee Report shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings with the SEC or subjecton February 12, 2020, to report ownership as of December 31, 2019. The Vanguard Group has sole voting power over 346,602 shares, shared voting power over 70,705 shares, sole dispositive power over 26,513,021 shares and shared dispositive power over 395,828 shares.
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| As reported on the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into a documentowner’s most recent Schedule 13G/A filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
In fiscal 2016, the Audit Committee included five members. The Audit Committee acts under a written charter adopted and approved by the Board. The Audit Committee's charter is posted on our website at www.investors.bestbuy.com. All members of the Audit Committee meetwith the SEC on February 7, 2020, to report ownership as of December 31, 2019. FMR LLC and NYSE definitions of independencecertain related entities have sole voting power over 2,461,372 shares and financial literacy for audit committee members. In addition, the Board has determined that all of the five members of the Audit Committee who served during fiscal 2016 are "audit committee financial experts" for purposes of SEC rules. No member of the Audit Committee servessole dispositive power over 21,594,640 shares.
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| As reported on the audit committeeowner’s most recent Schedule 13G/A filed with the SEC on February 5, 2020, to report ownership as of more than three public companies.December 31, 2019. BlackRock, Inc. has sole voting power over 14,866,400 shares and sole dispositive power over 17,817,456 shares. |
DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and shareholders who beneficially own more than 10% of our common stock file initial reports of ownership with the SEC. They must also file reports of changes in ownership with the SEC. Based solely on our review of electronic filings with the SEC of such reports, management and the Board believe our directors, and executive officers who served during any part | | | | | | | | | | | | | | | | In June 2015, Mr. Kenny was appointed to serve as Chair of the Audit Committee. In November 2015, Ms. McLoughlin was appointed to the Audit Committee. Ms. Munce was appointed to the Audit Committee in March 2016, following the conclusion of fiscal 2016.2020 Proxy Statement
| | | 40 | | | | | | |
TABLE OF CONTENTS of fiscal 2020 and shareholders who beneficially own more than 10% of our common stock complied with the Section 16(a) filing requirements during the fiscal year ended February 1, 2020, except that two stock option awards, which were granted to Hubert Joly and Kamy Scarlett on March 26, 2019, were reported on a delayed basis due to administrative error (see the Form 4 reports filed March 29, 2019, on behalf of Mr. Joly and Ms. Scarlett, respectively, for additional detail). CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Our Related Party Transactions Policy prohibits “related party transactions” unless approved by the Audit Committee and the Board. For purposes of our policy, a “related party transaction” is a transaction or series of transactions in which (a) the Company or a subsidiary is a participant, (b) the aggregate amount involved exceeds $120,000 and (c) any director, executive officer or shareholder beneficially owning more than 5 percent of our common stock, or any of their respective immediate family members has a direct or indirect material interest. A related party transaction will generally not be approved unless it provides us with a demonstrable incremental benefit and the terms are competitive with those available from unaffiliated third parties. Only Board members who do not have an interest in the transaction are permitted to vote on a related party transaction. In addition, ongoing related party transactions are reviewed by the Audit Committee and the Board to ensure that such transactions continue to provide the necessary incremental benefit to us and have competitive terms. Each of the transactions discussed below were approved (or re-approved if ongoing) by the Audit Committee and the Board in March 2020, unless otherwise noted, in accordance with our Related Party Transactions Policy. We do not have any credit arrangements between our officers, directors, controlling persons and other insiders. Richard M. Schulze As of the date of this filing, Mr. Schulze owned approximately 10.99 percent of our common stock. On March 25, 2013, we entered into a letter agreement with Mr. Schulze pursuant to which, among other things, Mr. Schulze was given the lifetime honorary title of “Founder and Chairman Emeritus” of the Company, although he is not an executive and is no longer a member of our Board. Under this letter agreement, we agreed to compensate Mr. Schulze with an annual base salary of $150,000 through fiscal 2018 for his services as Chairman Emeritus, and to provide lifetime medical benefits for him, his spouse and his eligible dependents in accordance with our plans, practices, programs and policies in effect generally for our executives and their dependents. We also agreed to provide office space and administrative support, and to reimburse Mr. Schulze for his costs and out-of-pocket expenses incurred in the performance of his duties as Chairman Emeritus. The letter agreement’s term was renewed in January 2018 through the end of fiscal 2020, and again in April 2020 for fiscal 2021, except as specifically described above in regard to certain lifetime health benefits. Ryan Green, Mr. Schulze’s step-son, is employed with us as a Senior Director in our Properties department at our corporate headquarters in Richfield, Minnesota. Mr. Green’s total cash compensation in fiscal 2020 was approximately $264,000. Mr. Green also received an annual long-term incentive award of 1,238 time-based restricted shares, which vest in one-third increments on each anniversary of the grant for three years. His award is consistent with awards for other employees at his level. Mr. Green is eligible to receive employee benefits generally available to all employees. Mr. Green’s employment with us began in August 2012. Mr. Schulze’s family member is compensated at a level comparable to the compensation paid to non-family members in similar positions at Best Buy. Fidelity FMR LLC (“Fidelity”) filed an amended Schedule 13G in February 2020, stating that it beneficially owns 8.34 percent of the Company’s common stock. As a result of beneficially owning more than 5 percent of our common stock, Fidelity is currently considered a “related party” under our Related Party Transactions Policy. Certain affiliates of Fidelity provide services to us in connection with the record keeping and administration of our stock plans (including the Employee Stock Purchase Plan and the Long-Term Incentive Plan). We paid these entities approximately $357,000 for these services for fiscal 2020. The administrative services contracts were initially entered into prior to Fidelity’s Schedule 13G filing and 5 percent holder status. The contracts were negotiated at arm’s length, and there is no indication that the Company or Fidelity received preferential treatment as a result of the relationship. | | | | | | | | | | | | | | | | | | | 41 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS The key responsibility of the Audit Committee is to assist the Board in overseeing the integrity of the Company’s financial statements and financial reporting processes. The Audit Committee’s charter, which was approved by our Board, is posted on our website at www.investors.bestbuy.com. During fiscal 2020, the Audit Committee included five members. All Audit Committee members meet the SEC and NYSE definitions of independence and financial literacy for audit committee members. The Board has determined that Ms. McLoughlin and Mr. Millner are “audit committee financial experts” for purposes of SEC rules based on their relevant experience. No member of the Audit Committee serves on the audit committee of more than three public companies. Committee Meetings
The Audit Committee met eightfourteen times during fiscal 2020, including threeten times via conference call, during fiscal 2016.call. The Audit Committee schedules its meetings to ensure it has sufficient time to devote appropriate attention to all of its tasks. The Audit Committee meetings include regular executive sessions with our independent registered public accounting firm, Deloitte & Touche LLP ("(“D&T"&T”), our internal auditors and management. The Audit Committee also discusses with our internal auditors and D&T the overall scope and plans for their respective audits.
Recommendation RegardingFiscal 2020 Audited Financial Statements
The Audit Committee, on behalf of the Board, reviewed and discussed with both management and D&T our annual audited consolidated financial statements for the fiscal year ended January 30, 2016,February 1, 2020, and our quarterly operating results for each quarter in such fiscal year, along with the related significant accounting and disclosure issues. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board Auditing Standard No. 16 "The Auditor's Communication with Audit Committees." (“PCAOB”) (U.S.) and the Commission.
The Audit Committee reviewed and discussed with D&T its independence from us and our management. As part of that review, the Audit Committee received from D&T the written disclosures and the letter required by applicable rules of the Public Company Accounting Oversight BoardPCAOB (U.S.) regarding the independent accountant'saccountant’s communications with audit committees concerning independence. In addition, the Audit Committee reviewed all services provided by and the amount of fees paid to D&T in fiscal 2016.2020. In reliance on the reviews and discussions with management and D&T, the Audit Committee believes that the services provided by D&T were compatible with, and did not impair, its independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that our annual audited consolidated financial statements be included in our Annual Report on Form 10-K for the period ended January 30, 2016, as filedFebruary 1, 2020, for filing with the SEC.
AUDIT COMMITTEE
David W. Kenny (Chair)
J. Patrick Doyle
Karen A. McLoughlin
Thomas L. Millner (Chair) Karen A. McLoughlin Claudia F. Munce Richelle P. Parham Eugene A. Woods Gérard R. Vittecoq | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 42 | | | | | | |
TABLE OF CONTENTS
ITEM OF BUSINESS NO. 2 — RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THIS SECTION SHOULD BE READ IN CONJUNCTION WITH THE " “AUDIT COMMITTEE REPORT"REPORT”
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. As part of this oversight, the Audit Committee considers the firm’s independence, qualifications, performance, and whether the independent registered public accounting firm should be rotated, as well as the impact of such a rotation. Deloitte & Touche LLP (“D&T&T”) has been retained as our independent registered public accounting firm since fiscal 2006. In compliance with Sarbanes-Oxley requirements, the Lead Audit Partner from D&T rotates off our account every five years, with oversight in selection by the Audit Committee. The last Lead Audit Partner rotation occurred in March 2016. The Audit Committee has appointed Deloitte & Touche LLP ("D&T")&T as our independent registered public accounting firm for the fiscal year ending January 30, 2016.2021. We will ask shareholders to ratify the appointment of D&T as our independent registered public accounting firm at the Meeting. Representatives of D&T are expected to be present atattend the Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Principal Accountant Services and Fees
The Audit Committee is responsible for the audit fee negotiations associated with the retention of our independent registered public accounting firm. For the fiscal years ended January 30, 2016,February 1, 2020, and January 31, 2015,February 2, 2019, D&T served as our independent registered public accounting firm. The following table presents the aggregate fees incurred for services rendered by D&T during fiscal 20162020 and fiscal 2015,2019, respectively. The fees listed below were pre-approved by our Audit Committee pursuant to the Audit Committee'sCommittee’s pre-approval policy as described below: | | | | | | | | | | Service Type | | Fiscal 2016 |
| | Fiscal 2015 |
| Audit Fees(1) | | $ | 2,740,000 |
| | $ | 3,072,000 |
| Audit-Related Fees(2) | | 400,000 |
| | 1,133,000 |
| Tax Fees(3) | | 50,000 |
| | 45,000 |
| Total Fees | | $ | 3,190,000 |
| | $ | 4,250,000 |
|
| Audit Fees(1) | | | $ 2,873,000 | | | $ 2,912,000 | | | Audit-Related Fees(2) | | | 380,000 | | | 654,000 | | | Tax Fees | | | — | | | — | | | Total Fees | | | $3,253,000 | | | $3,566,000 | |
| | (1)
| Consists of fees for professional services rendered in connection with the audits of our consolidated financial statements and the effectiveness of our internal control over financial reporting for the fiscal years ended January 30, 2016,February 1, 2020, and January 31, 2015;February 2, 2019; the reviews of the consolidated financial statements included in each of our Quarterly Reports on Form 10-Q during those fiscal years; and consultations on accounting matters. |
| | (2)
| Consists primarily of fees for statutory audit filings, as well as the audits of our retirement savings plans and foundations.foundation, as well as due diligence services related to the acquisition of GreatCall, Inc. for the fiscal year ended February 2, 2019. |
| | (3) | Consists primarily of tax compliance services based on time and materials. |
It is our policy that our independent registered public accounting firm be engaged to provide primarily audit and audit-related services. However, pursuant to the policy, in certain circumstances and using stringent standards in its evaluation, the Audit Committee may authorize our independent registered public accounting firm to provide tax services when it determines that D&T is the most efficient and effective tax service provider.
Consistent with SEC rules regarding auditor independence, the Audit Committee is responsible for appointing, setting fees for and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility and in accordance with the Securities Exchange Act of 1934, as amended, it is the policy of the Audit Committee to pre-approve all permissible services provided by our independent registered public accounting firm, except for minor audit-related engagements which in the aggregate do not exceed 5%5 percent of the fees we pay to our independent registered public accounting firm during a fiscal year.
Each year, prior to engaging our independent registered public accounting firm, management submits to the Audit Committee for approval a list of services expected to be provided during that fiscal year within each of the three categories of services described below, as well as related estimated fees, which are generally based on time and materials. | | | | | | | | | | | | | | | | | | | 43 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Audit services include audit work performed on the financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters and discussions surrounding the proper application of financial accounting and/or reporting standards.
Audit-related services include assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, statutory audits, employee benefit plan audits and special procedures required to meet certain regulatory requirements.
Tax services include compliance and other non-advisory services performed by the independent registered public accounting firm when it is most efficient and effective to use such firm as the tax service provider.
As appropriate, the Audit Committee then pre-approves the services and the related estimated fees. The Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the estimate periodically throughout the year by category of service. During the year, circumstances may arise when it becomes necessary to engage our independent registered public accounting firm for additional services not contemplated in the initial annual proposal. In those instances, the Audit Committee pre-approves the additional services and related fees before engaging our independent registered public accounting firm to provide the additional services.
Board Voting Recommendation
The members of the Audit Committee and the Board believe that the continued retention of D&T to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and our shareholders. The Board recommends that shareholders vote FOR the proposal to ratify the appointment of D&T as our independent registered public accounting firm for the fiscal year ending January 28, 2017. 30, 2021. The affirmative vote of a majority of the voting power of the shares present and entitled to vote at the Meeting is required to ratify D&T as our independent registered accounting firm. Although ratification is not required pursuant to our By-laws or otherwise, the Board is submitting the selection of D&T to our shareholders for ratification because we value our shareholders'shareholders’ views on the Company'sCompany’s independent registered public accounting firm. If the appointment of D&T were not to be ratified by the shareholders, the Audit Committee would not be required to appoint another independent registered public accounting firm, but would give consideration to an unfavorable vote. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 44 | | | | | | |
TABLE OF CONTENTS ITEM OF BUSINESS NO. 3 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION We are providing our shareholders with an opportunity to cast an advisory vote, a “Say on Pay,” regarding our fiscal 2020 named executive officer (“NEO”) compensation program, as described in the Executive and Director Compensation section of this proxy statement. Information About the Advisory Vote to Approve Named Executive Officer Compensation The Compensation Committee establishes, recommends and governs all of the compensation and benefits policies and actions for the Company’s NEOs. While the advisory vote to approve the compensation of our named executive officers is not binding, it provides useful information to our Board and Compensation Committee regarding our shareholders’ views of our executive compensation philosophy, policies and practices. The Compensation Committee values our shareholders’ opinions and will take the results of the vote into consideration when determining the future compensation arrangements for our named executive officers. At the Company’s 2019 Regular Meeting of Shareholders, our shareholders voted to hold the non-binding shareholder vote to approve the compensation of our named executive officers each year. Accordingly, the Company currently intends to hold such votes annually. The next such vote is expected to be held at the Company’s 2021 Regular Meeting of Shareholders. As detailed in the Executive and Director Compensation — Compensation Discussion and Analysis section, we believe our fiscal 2020 executive compensation program reflects market appropriate practices and balances risk and reward in relation to our overall business strategy. Our executive compensation program is focused on pay-for-performance and seeks to mitigate risks related to compensation to ensure management and shareholder interests in long-term value creation are aligned. Accordingly, we ask that our shareholders cast an advisory vote to approve the following resolution: | RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the named executive officers for the fiscal year ended February 1, 2020, as described in the Executive and Director Compensation — Compensation Discussion and Analysis section and the compensation tables and related material disclosed in the Company’s proxy statement for its 2020 Regular Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission. | |
Board Voting Recommendation Our Board recommends an advisory vote FOR approval of the fiscal 2020 compensation of our NEOs as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules. The affirmative vote of at least a majority of the voting power of the shares present, in person or by proxy, and entitled to vote is required for advisory approval of our NEO compensation. It is intended that, unless otherwise instructed, the shares represented by proxy will be voted “FOR” the advisory vote on our named executive compensation. | | | | | | | | | | | | | | | | | | | 45 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS EXECUTIVE AND DIRECTOR COMPENSATION Compensation Discussion and Analysis Introduction
The following Compensation Discussion and Analysis describes how the Compensation Committee of the Board decided to compensate our fiscal 2016 NEOs:2020 Named Executive Officers (“NEOs”): | Corie Barry | | | Chief Executive Officer | | l | Hubert Joly | | | Executive Chairman and Chief Executive Officer;Officer (Former) | | l | Sharon L. McCollam, Matt Bilunas | | | Chief AdministrativeFinancial Officer | | | Whit Alexander | | | Chief Transformation, Innovation and Membership Officer | | | Mike Mohan | | | President and Chief Financial Officer;Operating Officer | | l | Shari L. Ballard, President, U.S. Retail and Kamy Scarlett
| | | Chief Human Resources Officer;(1)Officer | | l | R. Michael Mohan, Chief Merchandising Officer; and | lKeith Nelsen | Keith J. Nelsen, | | General Counsel and Secretary.Secretary (Former) | | | Trish Walker | | | President, Services and Home Channel* | |
*
| Ms. Walker transitioned to act as a senior advisor to the CEO and executive team in February 2020. |
As discussed previously, fiscal 2020 was a year of leadership transition. This included the following changes for our named executive officers. (1) Effective March 1, 2016, Ms. Ballard took on a new role. While remainingBarry succeeded Mr. Joly as our Chief Executive Officer effective June 11, 2019 and Mr. Joly assumed the role of Executive Chairman.
Mr. Bilunas was promoted and succeeded Ms. Barry as Chief Financial Officer. Mr. Alexander was promoted to Chief Transformation, Innovation and Membership Officer. Mr. Mohan was promoted to President of U.S. Retail, she will also focus on acceleratingand Chief Operating Officer in connection with the CEO succession. Ms. Scarlett, our efforts around waste and efficiency. A new Chief Human Resources Officer, Paula Baker, was promoted internally effectivealso served as our President, U.S. Retail Stores from January 2019 through February 2020. Mr. Nelsen stepped down from his role as General Counsel and Secretary in April 2019 and assumed an advisory role through September 2019 in support of his successor. Ms. Walker’s status as an executive officer changed in March 1, 2016.2019 as a result of the leadership transitions and changes in reporting structure. The Compensation Discussion and Analysis portion of our proxy statement includes the following:
| Executive Summary | | | Highlights of our executive compensation program, including our shareholder engagement process and Committee consideration of Say on Pay votes, a summary of our fiscal 2020 executive compensation decisions, and a preview of our fiscal 2021 executive compensation | | | | | | | | | Compensation Philosophy, Objectives & Policies | | | Overview of the philosophy, objective & policies utilized by the Compensation Committee in implementing our executive compensation program | | | | | | | | | Governance | | | Summary of the key participants in our executive compensation process and the role each plays in the decision-making | | | | | | | | | Factors in Decision-Making | | | Overview of factors considered by the Compensation Committee in its decision-making process | | | | | | | | | Executive Compensation Elements | | | Description of each element of our NEO pay-mix within our executive compensation program, including specific details regarding decisions made within each element | |
Consideration of | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 46 | | | | | | |
TABLE OF CONTENTS Prior “Say on Pay” Votes
At our 20152019 Meeting, 98%95.4 percent of our shareholders voted in support of our “Say on Pay” proposal, which was on par with our results in 2014,2018 and an increase from the level of support we received in 2013.2017. We believe the high level of support we received from shareholders for the last threeseveral years wasis driven in part by our improved performance and in part by our continued commitment to align pay and performance, which we communicated to investors through shareholder outreach prior to each annual meeting. Duringperformance. In the fall of fiscal 2016,2020, following our 2019 Meeting, we reached out to all of our top twentyforty shareholders, representing approximately 70%72 percent of our outstanding shares, as well as several of our top fifty shareholders offering to discuss any questions or concerns regarding executive compensation practices and other governance issues.issues and seeking feedback on specific practices around board composition and ESG disclosure. As a result of these outreach efforts, we had in-person meetings and engaged in direct conversations with several shareholders to answer their questions, provide commentary on the compensation decisions made during the year, and receivereceived feedback to be considered when making future decisions. During these conversations, shareholders also indicated broad directional support for our compensation programs. Further, as discussed in the Corporate Governance at Best Buy — Shareholder Engagement section, we regularly engage with our shareholders throughout the year regarding their various priorities, and we welcome their feedback on our practices and policies.
Summary of Executive Compensation Practices
Pay for PerformanceFactors in Decision-Making
| | |
| | ü | We tie pay to performance by setting clear financial goals and delivering the majority of compensation opportunity through variable incentives in which payout is based on performance against predetermined goals or absolute and relative changes in our stock price over time. |
| | ü | We use multiple performance metrics that differ for long-term and short-term plans. |
| | ü | Our short term incentive plan includes a minimum performance threshold that requires a minimal level of operating income be achieved before any aspect of the bonus plan may be earned. |
ü A large portionOverview of our long-term incentive program (50% for the CEO and one-third for the other NEOs) is performance based, and long-term and short-term incentives comprise a large portion of our total compensation opportunity (90% for the CEO and 80%, on average, for the other NEOs).
Risk Mitigators
| | ü | We review peer group market data when making executive compensation decisions. |
| | ü | We have share ownership and trading guidelines for executive officers and Board members. |
| | ü | We have anti-hedging and anti-pledging policies and clawback provisions. |
| | ü | We have robust processes to identify and mitigate compensation risk. |
| | ü | Our Compensation Committee uses an outside independent compensation consulting firm that performs no other services for the Company. |
Shareholder Engagement
| | ü | We have a shareholder engagement program that covers, among other things, executive compensation issues. |
| | ü | We provide shareholder feedback to the Compensation Committee, which considers the feedback when reviewing executive compensation programs and policies. |
Key Fiscal 2016 Compensation Decisions
In fiscal 2015, two years after launching Renew Blue, we had made significant progress in addressing our two biggest challenges (declining comparable sales and declining margins):
Our Domestic comparable sales increased, and
Our Domestic non-GAAP operating income rate improved 100 basis points to 4.1%.
Accordingly, in fiscal 2016, the Compensation Committee made market-based adjustments to acknowledge and retain the critical leaders that are driving Best Buy’s transformation. These changes include base salary, short-term incentive and/or long-term incentive adjustments, depending on each position, the incumbent and market trends. A summary of these changes is included below and explained in further detail within our Compensation Discussion and Analysis:
Base Salaries: We made base salary changes for Ms. Ballard and Messrs. Mohan and Nelsen due to market comparisons and in recognition of each of their increased or continued growth in their respective roles.
Short-Term Incentives: We increased Ms. Ballard’s short-term incentive target payout percentage from 125 to 150% in recognition of her expanded role, and Mr. Mohan’s target payout percentage from 125 to 150% in acknowledgment of his continued progress in his role and to match the market.
Long-Term Incentives: Our long-term incentive program changes included increased targets for the NEOs to reflect market practice and promote retention of key leadership during this critical period of transformation, as well as a one-time award for Ms. Ballard to acknowledge comparable rates for the increased scope of her responsibilities and impact of her contributions to our Company performance. In addition, we increased the stock ownership target for our CEO from 140,000 shares to 200,000 shares to further promote alignment of officer and shareholder interests.
Other Compensation: The NEOs continue to receive the same employee benefits, perquisites and other rewards generally offered to our U.S.-based officers. We do not provide special pension benefits or other non-performance-based entitlements to the NEOs that are inconsistent with our compensation philosophy.
Preview of Key Fiscal 2017 Compensation Decisions
In fiscal 2016, we continued to make progress in our transformation journey. It marked the second year in a row that we increased our domestic revenue and expanded our operating margins. We saw a continued improvement in customer satisfaction as our Net Promoter Score (including both purchasers and non-purchasers) improved by more than 300 basis points and we grew online revenue 13% to more than $4 billion, or 11% of total domestic revenue. We also delivered $150 million against our $400 million cost reduction and gross profit optimization efforts, which was in addition to the $1 billion in costs we already removed from our business since fiscal 2013.
Our fiscal 2016 performance resulted in modest compensation changes, a summary of which is included below:
Base Salaries: We made slight increases to the base salary rates for two of the NEOs in light of the scope of their roles and responsibilities.
Short-Term Incentives: We made no changes to the short-term incentive plan target payout percentages for the NEOs.
Long-Term Incentives: Our long-term incentive program changes focused on changing the “mix” of vehicles for the NEOs, other than the CEO, to reflect the stage of growth Best Buy is in currently and to promote performance and retention of key leadership. For fiscal 2017, the mix will be 50% time-based restricted shares and 50% performance share awards. We also added a performance requirement to the time-based restricted shares granted to our top executives to further align their interests with the shareholders’ interests.
Other Compensation: No material changes were made to the employee benefits, perquisites or other rewards offered to our NEOs.
Compensation Discussion and Analysis
Compensation Philosophy, Objectives and Policies
The Company’s compensation philosophy is to align executive compensation with shareholders’ interests. To that end, the Compensation Committee works to ensure that base salaries are market competitive, and short- and long-term incentives are heavily weighted toward Company performance and are within the range of market practice.
We achieve these objectives by using programs that are designed to align employee interests with Company goals and create a common vision of success without undue risk.
We utilized the following executive compensation policies and practices during fiscal 2016:
Pay-for-performance. We tie pay to performance. The majority of executive pay is not guaranteed but instead is tied to performance metrics designed to drive shareholder value. If performance goals are not attained, no incentive compensation is paid.
Mitigate undue risk. We mitigate undue risk by, among other things, utilizing caps on incentive award payments and vesting periods on potential equity payments, clawback provisions, restrictive covenants and multiple performance metrics. The Compensation Committee annually reviews our compensation risk profile to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company.
Independent Compensation Committee and Committee Consultant. The Compensation Committee is comprised solely of independent directors. The Compensation Committee's independent compensation consultant is retained directlyfactors considered by the Compensation Committee and performs no other consulting or other services for the Company.in its decision-making process
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| | | Executive Compensation Elements | | | Shareholder engagement. We routinely engage with shareholders regardingDescription of each element of our NEO pay-mix within our executive compensation and related issues.program, including specific details regarding decisions made within each element
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| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | Re-pricing of stock options. Stock options may not, without the approval of our shareholders, be (i) amended to reduce their initial exercise price (except for adjustments in the case of a stock split or similar event); (ii) canceled and replaced by stock options having a lower exercise price; or (iii) canceled and replaced with cash or other securities.46
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Stock ownership and trading policies. We have stock ownership guidelines for all of our executive officers. As of the end of fiscal 2016, each NEO was in compliance with the guidelines. We prohibit all employees, including the NEOs and members of the Board, from hedging Company securities. Executive officers and Board members are also prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account.
NEOs' benefits. Our executive officers, including the NEOs, generally receive the same employee benefits as other officers. We do not have an executive retirement plan that provides extra benefits to the NEOs.
Governance
The following table summarizes the roles of each of the key participants in the executive compensation decision-making process for our NEOs.
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| | | | | | Key Participant | | | | | Compensation Committee | | | | | Role in Decision-Making Process | Establishes our compensation objectives. | | Determines, approves and oversees executive compensation, including the design, competitiveness and effectiveness of our compensation programs. Also oversees the development, evaluation and approval of incentive compensation, equity-based pay and other material employee benefit plans for all employees. The Compensation Committee may delegate its responsibility to oversee compensation employees other than for the NEOs or other Section 16 officers. | | The Compensation Committee's charter is available on our website at www.investors.bestbuy.com.
TABLE OF CONTENTS Prior “Say on Pay” Votes At our 2019 Meeting, 95.4 percent of our shareholders voted in support of our “Say on Pay” proposal, which was on par with our results in 2018 and 2017. We believe the high level of support we received from shareholders for the last several years is driven in part by our performance and in part by our continued commitment to align pay and performance. In the fall of fiscal 2020, following our 2019 Meeting, we reached out to all of our top forty shareholders, representing approximately 72 percent of our outstanding shares, offering to discuss any questions or concerns regarding executive compensation practices and other governance issues and seeking feedback on specific practices around board composition and ESG disclosure. As a result of these outreach efforts, we engaged in direct conversations with several shareholders to answer questions, provide commentary on the compensation decisions made during the year, and received feedback to be considered when making future decisions. During these conversations, shareholders also indicated broad directional support for our compensation programs. Further, as discussed in the Corporate Governance at Best Buy — Shareholder Engagement section, we regularly engage with our shareholders throughout the year regarding their various priorities, and we welcome their feedback on our practices and policies. Summary of Executive Compensation Practices | | Compensation Committee's Independent Compensation Consultant | Role in Decision-Making Process | Reviews the recommendations of management with the Compensation Committee to ensure that the recommendations are aligned with our objectives and are reasonable when compared to our market for executive and director talent. | | Assists the Compensation Committee in the design of the variable incentive plans, the determination of the overall compensation mix, the selection of performance metrics and the setting of the performance goals and ranges. | | Provides analysis and crafts recommendations for the Compensation Committee in the setting of CEO compensation opportunity. | | Reviews the results of the compensation risk assessment with the Compensation Committee and identifies key takeaways. | | Provides perspective on market practice and information about emerging trends. | | The Compensation Committee has sole discretion and adequate funding to engage consultants in connection with compensation-related matters. Frederic W. Cook & Co., Inc. has served as the Compensation Committee's independent compensation consultant since the fall of 2012. | | CEO | | | | | Role in Decision-Making Process | Creates and presents recommendations to the Compensation Committee for our other executive officers and provides his perspective. Does not participate in or otherwise influence recommendations regarding his own compensation. | | | | | | Human Resources ("HR") | | | | | Role in Decision-Making Process | Provides the Compensation Committee with market analytics in support of the CEO's recommendations for our executive officers, other than the CEO. Management does not make recommendations on CEO compensation. As necessary, HR engages outside consultants, including Willis Towers Watson & Co. for fiscal 2016, to assist with its analytics and recommendations. | | Finance | Role in Decision-Making Process | Provides the Compensation Committee with financial analytics in support of the short- and long-term program design and target setting. |
Compensation Consultant Independence
The Compensation Committee reviewed the independence of Frederic W. Cook & Co., Inc. under NYSE and SEC listing standards. Based on its review and information provided by Frederic W. Cook & Co., Inc. regarding the provision of its services, fees, policies and procedures, presence (if any) of any conflicts of interest, ownership of Best Buy stock, and other relevant factors, the Compensation Committee concluded that the work of Frederic W. Cook & Co., Inc. has not raised any conflicts of interest and it is deemed to be an independent advisor to the Compensation Committee.
Factors in Decision-Making | | | Overview of factors considered by the Compensation Committee in its decision-making process
| | | Market Competitive Data. For fiscal 2016,
| | | | | | Executive Compensation Elements | | | Description of each element of compensation and the level of total direct compensation for our NEOs was considered against market benchmarks and views of individual performance. Our Compensation Committee reviewed publicly available compensation data for our peer group of companies, Fortune 100 companies and general industry survey data. We used available information and monitored actions taken by our peer group to evaluate market trends and to assess the long-term incentive and overall competitiveness ofNEO pay-mix within our executive compensation levels. We did not, however, seekprogram, including specific details regarding decisions made within each element | |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 46 | | | | | | |
TABLE OF CONTENTS Prior “Say on Pay” Votes At our 2019 Meeting, 95.4 percent of our shareholders voted in support of our “Say on Pay” proposal, which was on par with our results in 2018 and 2017. We believe the high level of support we received from shareholders for the last several years is driven in part by our performance and in part by our continued commitment to align pay and performance. In the fall of fiscal 2020, following our 2019 Meeting, we reached out to all of our top forty shareholders, representing approximately 72 percent of our outstanding shares, offering to discuss any questions or concerns regarding executive compensation practices and other governance issues and seeking feedback on specific practices around board composition and ESG disclosure. As a result of these outreach efforts, we engaged in direct conversations with several shareholders to answer questions, provide commentary on the compensation decisions made during the year, and received feedback to be considered when making future decisions. During these conversations, shareholders also indicated broad directional support for our compensation programs. Further, as discussed in the Corporate Governance at Best Buy — Shareholder Engagement section, we regularly engage with our shareholders throughout the year regarding their various priorities, and we welcome their feedback on our practices and policies. Summary of Executive Compensation Practices Pay for Performance We tie pay to performance by setting clear financial goals and delivering the majority of each NEO’s compensation opportunity through variable incentives in which payout is based on performance against predetermined goals or absolute and relative changes in our stock price over time. We use multiple performance metrics that differ for long-term and short-term plans. Our short-term incentive plan includes a performance threshold that requires a minimum level of operating income be achieved before any short-term award may be earned. A significant amount of our long-term incentive program is performance-based, and long-term and short-term incentives comprise a majority of our total compensation opportunity (91 percent for the CEO and 80 percent, on average, for the other NEOs). Risk Mitigators We utilize peer group market data when making executive compensation decisions. We utilize a variety of short and long-term performance measures to mitigate the risk that our executives could be motivated to unduly pursue performance under one metric to the detriment of the Company. The amounts that can be earned on both our short and long-term awards are capped to discourage excessive risk taking. Our clawback policy provides for potential recoupment of both cash and equity executive compensation in the event of triggering events, such as violations of our Code of Business Ethics or certain financial restatements. We have stock ownership and trading guidelines for executive officers and Board members. Our executives are prohibited from hedging or pledging securities of Best Buy. | | | | | | | | | | | | | | | | | | | 47 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS We have robust processes to identify and mitigate compensation risk. Our Compensation Committee engages an outside independent compensation consulting firm that performs no other services for the Company. Shareholder Engagement We regularly solicit shareholder feedback on executive compensation and related corporate governance matters. We provide shareholder feedback to the Compensation Committee, which considers the feedback when reviewing executive compensation programs and policies. Key Compensation Actions in Support of the CEO Transition and Other Performance-Related Actions In fiscal 2020 we successfully executed a major leadership transition, including the appointment of an internally promoted new CEO, and continued to execute on our strategy. These changes reflect the Board’s ongoing succession planning process and provide the benefit of leadership continuity as the company continues to execute its strategic growth initiatives. In April 2019, the Company appointed Ms. Barry as CEO and Mr. Joly as Executive Chairman. Mr. Mohan was appointed President and Chief Operating Officer. The appointments were all effective upon conclusion of the 2019 Regular Meeting of Shareholders on June 11, 2019. In support of this succession plan, the Company entered into an employment agreement with Ms. Barry and a revised employment agreement with Mr. Joly. Additionally, the Compensation Committee adjusted NEO compensation for fiscal 2020 compensation as part of its annual planning processes and in recognition of the promotion of several officers. A summary of the changes is included below and explained in further detail within our Compensation Discussion and Analysis: Base Salaries: We increased the base salary rates for Ms. Barry, Mr. Mohan, Mr. Bilunas and Mr. Alexander in light of their promotions and the increased scope of their roles and responsibilities, and market data relevant to their new roles. We decreased the salary of Mr. Joly when he transitioned to his role as Executive Chairman of the Board. Short-Term Incentives: We made changes to the short-term incentive plan target payout percentages for Ms. Barry, Mr. Mohan, Mr. Bilunas and Mr. Alexander in light of their promotions and the increased scope of their roles and responsibilities and decreased the short-term incentive compensation of Mr. Joly in connection his transition to Executive Chairman. Long-Term Incentives: We increased the long-term incentive plan grant values for Ms. Barry, Mr. Mohan, Mr. Bilunas and Mr. Alexander in light of their promotions and provided grants to Ms. Scarlett and Ms. Walker consistent with the scope of their roles and responsibilities and market conditions. Special equity grants were also provided to Mr. Bilunas, Mr. Mohan and Mr. Alexander as they transitioned into their new roles. Other Compensation: We made no material changes to the employee benefits or perquisites offered to our NEOs other than a slight modification to the tax preparation services benefit and enhancement of the executive physical exam benefits for executive officers. At its year-end meeting, the Compensation Committee approved a cash bonus for Ms. Scarlett in recognition of the dual role she held throughout the fiscal year. In addition, Mr. Nelsen received separation benefits in accordance with the Company’s severance plan as described in more detail under Compensation of Executive Officers - Potential Payments Upon Termination or Change-of-Control below. As previously announced, Mr. Joly is stepping down as Executive Chairman at the conclusion of the Meeting. In March 2020, the Board and Mr. Joly agreed to extend, through the effective date of his departure, Mr. Joly’s revised employment agreement. Upon his departure, Mr. Joly will be eligible for the applicable rights and benefits under his revised agreement. Also in March 2020, the Board entered into an arrangement with Mr. Joly under which Mr. Joly will serve as a consultant to the Company for a one-year renewable term, effective on the date Mr. Joly steps down at the conclusion of the Meeting. Under the terms of the arrangement, Mr. Joly will provide consulting services, advice on matters related to the business activities of the Company, and support to the Company’s efforts to provide tech opportunities to disadvantaged youth. He will be paid $37,500 per quarter in exchange for these services. Mr. Joly will be considered an independent contractor and will not receive or be eligible for any employee benefits from the Company. He will receive reasonable administrative support services to facilitate his service to the Company. Additional details were disclosed in a Current Report on Form 8-K filed by the Company on March 11, 2020. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 48 | | | | | | |
TABLE OF CONTENTS Fiscal 2020 Pay and Performance Outcomes We continue to make progress on our Building the New Blue strategy and our purpose to enrich lives through technology. Our strategy is to leverage our unique combination of tech and touch to meet every day human needs and build more and deeper relationships with customers. We believe our strategy will translate to an economic model that delivers results by better serving existing customers, capturing new demand, entering new spaces and building capabilities while maintaining profitability over time. In fiscal 2020, we grew our Enterprise comparable sales by 2.1% on top of 4.8% in fiscal 2019, which represents our sixth consecutive year of positive Enterprise comparable sales. We also increased GAAP diluted EPS by 10.6% to $5.75 and increased our non-GAAP diluted EPS by 14.1% to $6.07*. In addition, we recorded annual revenue of $43.6 billion, GAAP operating income of $2.0 billion and non-GAAP operating income of $2.1 billion* in fiscal 2020. Compared to fiscal 2019, our fiscal 2020 GAAP and non-GAAP operating income as a percentage of revenue increased approximately 20 basis points and approximately 30 basis points*, respectively. From a capital allocation standpoint, we returned $1.5 billion to our shareholders through share repurchases and dividends. The strong performance in fiscal 2020 resulted in short-term incentive award payouts of 112% of target for the year. The results of the Enterprise Revenue and TSR portions of the Performance Share Awards that are earned based on a three-year performance period, including fiscal 2020, had not been approved by the Compensation Committee as of the date of this filing. The Enterprise Revenue portion of these awards is based on the compound annual growth rate of Enterprise Revenue from fiscal 2018 through fiscal 2020. The TSR portion of these awards is based on a comparison of TSR in the first quarter of fiscal 2018 with the first quarter of fiscal 2021. We anticipate the Compensation Committee will review results and make a determination on the payout of these awards following the conclusion of the first quarter of fiscal 2021. These awards and payouts are explained in further detail within the Executive Compensation Elements section of this proxy statement. *For GAAP to non-GAAP reconciliations, please refer to the schedule entitled Reconciliation of Non-GAAP Financial Measures. Fiscal 2021 COVID-19-Related Compensation Actions On April 9, 2020, in response to the COVID-19 national emergency, the Compensation Committee approved temporary base salary reductions for Ms. Barry and her direct reports, including Mr. Bilunas, Mr. Mohan, Mr. Alexander and Ms. Scarlett, for the period from April 12, 2020 through September 1, 2020. The base salary for Ms. Barry was reduced by 50% and the base salaries of the other named executive officers were reduced by 20%. In addition, the Board also accepted an offer by Mr. Joly to reduce his base salary as Executive Chairman by 50% through the duration of his term on the Board, which will conclude following the Meeting. The Board also agreed to reduce its cash retainer fees for each individual board member by 50% for the same period. Additional details were disclosed in a Current Report on Form 8-K filed by the Company on April 15, 2020. Compensation Philosophy, Objectives and Policies The Company’s compensation philosophy is performance-based and designed to ensure that executive compensation and shareholders’ interests are aligned. To that end, the Compensation Committee works to ensure that base salaries are market competitive, and short and long-term incentives are heavily weighted toward Company performance and are within the range of market practice. We achieve these objectives by using programs that are designed to align employee interests with Company goals and create a common vision of success without undue risk. We continue to utilize the following executive compensation policies and practices: Pay-for-performance. We tie pay to performance. The majority of executive pay is not guaranteed but instead tied to performance metrics designed to drive shareholder value. If performance goals are not attained, no incentive compensation is paid. Mitigate undue risk. We mitigate undue risk by, among other things, utilizing caps on incentive award payments and vesting periods on long-term incentive awards, clawback provisions, restrictive covenants and multiple performance metrics. The Compensation Committee annually reviews our compensation risk profile to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company. | | | | | | | | | | | | | | | | | | | 49 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Independent Compensation Committee and compensation consultant. The Compensation Committee is comprised solely of independent directors. The Compensation Committee’s independent compensation consultant is retained directly by the Compensation Committee and performs no other consulting or other services for the Company. Shareholder engagement. We routinely engage with shareholders regarding executive compensation and related issues. Re-pricing of stock options. Stock options may not, without the approval of our shareholders, be (i) amended to reduce their initial exercise price (except for adjustments in the case of a stock split or similar event); (ii) canceled and replaced by stock options having a lower exercise price; or (iii) canceled and replaced with cash or other securities. Stock ownership and trading policies. We have stock ownership guidelines for all of our executive officers and Board members. As of the end of fiscal 2020, each NEO and director was in compliance with the guidelines. We prohibit all employees, including our executive officers and members of the Board, from hedging Company securities. Executive officers and Board members are also prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account. Health, Retirement and other Benefits. NEOs are eligible to participate in benefit plans generally available to our employees, including health, retirement, stock purchase, severance, paid time off, life insurance and disability plans. We do not have an executive retirement plan that provides extra retirement benefits to the NEOs. NEOs are provided with annual executive physical exams, supplemental long-term disability insurance and tax planning/preparation services consistent with those provided to other executives. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 50 | | | | | | |
TABLE OF CONTENTS The following table summarizes the roles of each of the key participants in the executive compensation decision-making process for our NEOs. | Key Participant | | | Compensation Committee | | | Role in Decision-Making Process | | | • Establishes our compensation objectives. | | | | | | • Determines, approves and oversees executive compensation, including the design, competitiveness and effectiveness of our compensation programs. | | | | | | • The Compensation Committee’s charter is available on our website at www.investors.bestbuy.com. | | | | | | Compensation Committee’s Independent Compensation Consultant | | | Role in Decision-Making Process | | | • Reviews the recommendations of management with the Compensation Committee to establish any specific element of compensation or total direct compensationensure that falls within a prescribed range relativethe recommendations are aligned with our objectives and are reasonable when compared to our peer groupmarket for executive and director talent. | | | | | | • Assists the Compensation Committee in the design of companies or the Fortune 100 companies.variable incentive plans, the determination of the overall compensation mix, the selection of performance metrics and the setting of the performance goals and ranges. | | |
| | | Change• Provides analysis and crafts recommendations for the Compensation Committee in Peer Group for Fiscal 2016. We review our peer group annually.the setting of CEO compensation opportunity.
| | | | | | • Reviews the results of the compensation risk assessment with the Compensation Committee, including key observations and conclusions. | | | | | | • Provides perspective on market practice and information about emerging trends. | | | | | | • The Compensation Committee striveshas sole discretion and adequate funding to ensure thatengage consultants in connection with compensation-related matters. Frederic W. Cook & Co., Inc. has served as the Compensation Committee’s independent compensation consultant since the fall of 2012. | | | | | | CEO
| | | Role in Decision-Making Process | | | • Creates and presents recommendations to the Compensation Committee for our peer group is an accurate reflection of our business model, representsother executive officers and provides his or her own perspective. Does not participate in, or otherwise influence, recommendations regarding his or her own compensation. | | | | | | Human Resources (“HR”) and Finance | | | Role in Decision-Making Process | | | • HR provides the laborCompensation Committee with market for executive talent and includes external perspectives. For 2016, the peer group was approved after considerationanalytics in support of the following criteria:CEO’s recommendations for our executive officers. As necessary, HR engages outside consultants to assist with its analytics and recommendations. Finance provides the Compensation Committee with financial analytics in support of the short- and long-term program design, target setting and evaluation of results. | |
Compensation Consultant Independence The Compensation Committee reviewed the independence of Frederic W. Cook & Co., Inc. (“FW Cook”) under NYSE and SEC rules. Based on its review and information provided by FW Cook regarding the provision of its services, fees, policies and procedures, presence (if any) of any conflicts of interest, ownership of Best Buy stock, and other relevant factors, the Compensation Committee concluded that the work of FW Cook has not raised any conflicts of interest and deemed them to be an independent advisor to the Compensation Committee. | | | | | | | | | | | | | | | | | | | 51 | | | | | | Business model: combination of physical retailers, e-commerce retailers, digital companies, global companies and iconic brands;2020 Proxy Statement
Size: revenue similar to ours;
Current peers: preference, but not obligation, toward consistency in an effort to maintain reliability from year to year in the results of our compensation analysis; and
Labor market consideration: companies that listed us as a peer.
There were no changes to our peer group for fiscal 2016 from fiscal 2015. For fiscal 2016,
|
TABLE OF CONTENTS Factors in Decision-Making Market Competitive Data. For fiscal 2020, each element of compensation and the level of total direct compensation for our NEOs was considered against market benchmarks and views of individual performance. Our Compensation Committee reviewed publicly available compensation data and private surveys for our peer group of companies, Fortune 100 companies and general and retail industry survey data. We used available information and monitored actions taken by our peer group to evaluate market trends and to assess the long-term incentive program and overall competitiveness of our executive compensation levels. We did not, however, seek to establish any specific element of compensation or total direct compensation that falls within a prescribed range relative to our peer group of companies or the Fortune 100 companies. Change in Peer Group for Fiscal 2020. We review our peer group annually. The Compensation Committee strives to ensure that our peer group is an accurate reflection of our business model, represents the labor market for executive talent and includes external perspectives. For fiscal 2020, the peer group was approved after consideration of the following criteria: Business model: combination of physical retailers, e-commerce retailers, digital companies, global companies and iconic brands; Size: revenue similar to ours; Current peers: preference, but not obligation, toward consistency in an effort to maintain reliability from year to year in the results of our compensation analysis; and Labor market consideration: companies that listed us as a peer. The Compensation Committee considered the Company’s position relative to the peer group on the basis of earnings, revenue and market cap, and made no changes to our peer group for fiscal 2020 from fiscal 2019 other than the removal of Staples because it was acquired and is no longer a publicly traded company. For fiscal 2020, our peer group consisted of the following companies: | Alphabet, Inc. | | | Kohl’s Corporation | | | Office Depot, Inc. | | | Amazon.com, Inc. | | | Lowe’s Companies Inc. | | | Target Corporation | | | Apple Inc. | | | Macy’s, Inc. | | | Wal-Mart, Inc. | | | Costco Wholesale Corporation | | | Microsoft Corporation | | | Walgreens Boots Alliance, Inc. | | | eBay Inc. | | | Nike, Inc. | | | | | | The Home Depot, Inc. | | | Nordstrom, Inc. | | | | |
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| | | | Amazon.com, Inc. | The Home Depot, Inc. | Nordstrom, Inc. | Apple Inc. | Kohl's Corporation | Office Depot, Inc. | Costco Wholesale Corporation | Lowe's Companies Inc. | Staples, Inc. | eBay Inc. | Macy’s, Inc. | Target Corporation | Alphabet Inc. | Microsoft Corporation | Wal-Mart Stores, Inc. | (formerly known as Google Inc.) | Nike, Inc. | Walgreen Co. |
At the time of the analysis, relative to the 17 companies, the Company was competitive on revenue and earnings measures.
Executive Compensation Elements
Overview. Our NEOs' compensation in fiscal 2016
TABLE OF CONTENTS Executive Compensation Elements Overview. Our NEOs’ compensation in fiscal 2020 included the following elements (for additional details on specific awards, see the discussion below and the Compensation of Executive Officers — Summary Compensation Table section): | Base Salary | | | Cash; reviewed annually and adjusted if appropriate. | | | Provide competitive, fixed compensation to attract and retain executive talent who drive superior performance. | | | Consider individual contributions to business outcomes, scope and responsibilities, role changes and/or market data. | | | Short-Term Incentive (“STI”) | | | Cash. Variable compensation component. Performance-based award opportunity. Payable based on achievement of financial targets. | | | Incentive targets are tied to the achievement of key annual financial measures tied to our long-term strategy.
| | | Metrics are selected based on key components of the Company’s strategic plan. Fiscal 2020 metrics were: • Enterprise Operating Income – 45% • Enterprise Revenue Growth – 35%
| | | | | | | | Compensation Component | | Key Characteristics | | Purpose | | Principal Fiscal 2016 Actions | Base Salary | | Cash; reviewed annually and adjusted if appropriate. | | Provide competitive, fixed compensation to attract and retain executive talent. | | Base compensation increases for Messrs. Mohan and Nelsen and Ms. Ballard due to market factors. | Short-Term Incentive
("STI")
| | Cash. Variable compensation component. Performance-based award opportunity. Payable based on financial metrics. | | Create a strong financial incentive for achieving or exceeding Company goals. | | STI target percentage payout increases for Ms. Ballard and Mr. Mohan from 125 to 150%. Financial metrics for fiscal 2016 were enterprise comparable sales, enterprise operating income, North America “waste and efficiency,” U.S. online revenue growth and U.S. net promoter score. The NEOs received payouts equal to 162% of target. | Long-Term Incentive
("LTI")
| • Domestic Cost Reduction – 20% | | | Long-Term Incentive (“LTI”) | | | Performance share awards, stock options and restricted shares, subject to certain performance-conditions and time-based vesting requirements. | | | Create a strong financial incentive for increasing shareholder value, encourage ownership stake, and promote retention. | | | Grant award levels are based on individual contributions to business outcomes, potential future contributions, historical grant amounts, retention considerations and market data. (Actual payout based on performance over the three-year performance period.) | | | Health, Retirement and Other Benefits | | | Eligibility to participate in benefit plans generally available to our employees, including health, retirement, stock purchase, severance, paid time off, life insurance and disability plans. | | | Plans are part of our broad-based employee benefits programs designed to promote health, well-being and financial security for all employees. | | | The NEOs are eligible to participate in the same employee benefits offered to all US- based officers. | | | Executive Benefits | | | Annual executive physical exam, supplemental long-term disability insurance, and tax planning/preparation services. Limited personal use of private jet services is permitted for certain NEOs under in accordance with our private jet use policy. | | | Performance share awards, stock options and time-based restricted shares.
| | Create a strong financial incentive for increasing shareholder value, encourage ownership stake, and promote retention.
| | LTI changes included increased targets for the NEOs to reflect market practice and promote retention of key leadership, and a one-time award for Ms. Ballard to align with market rates, the increased scope of her responsibilities and impact of her contributions over the past several years. | Health, Retirement and Other Benefits | | Eligibility to participate in benefit plans generally available to our employees, including health, retirement, stock purchase, severance, paid time off, life insurance and disability plans. | | Plans are part of our broad-based employee benefits program. | | No material changes were made to the NEOs' health, retirement and other benefits in fiscal 2016. | Executive Benefits | | Annual executive physical exam, supplemental long-term disability insurance, and tax planning/preparation services. | | Provide competitive benefits to promote the health, well-being and financial security of our executive officers. | | No material changes were made to the NEOs' benefits in fiscal 2016. |
Fiscal 2016 Pay Mix. The Compensation Committee emphasizes variable performance-based pay when setting the target pay mix for our executive officers, but does not establishofficers.
| | | No material changes were made to the NEOs’ benefits in fiscal 2020 other than a set pay mix for them. The target pay mix for fiscal 2016slight modification to tax planning/preparation services, enhancement of the executive physical exam benefits and the adoption of a revised private jet use policy. All NEOs are eligible to participate in these benefits, except that use of private jet services is limited to certain NEOs in accordance with our policy. | |
| | | | | | | | | | | | | | | | | | | 53 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Fiscal 2020 Pay Mix. The Compensation Committee emphasizes variable performance-based pay when setting the target pay mix for our executive officers but does not establish a set pay mix for them. The target pay mix for fiscal 2020 for our CEO and other NEOs, on average, is shown below. Actual salary levels, STI awards (discussed in further detail in the Short-Term Incentive section) and LTI awards (discussed in further detail in the Long-Term Incentive section) vary based on the market analysis described above. Approximately 91 percent of the CEO’s target pay and, on average, approximately 80 percent of the other NEOs’ target pay is variable based on operating performance, changes in our stock price and/or total shareholder return relative to the S&P 500 companies. Each element in the pay mix is discussed below and shown in the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement. Fiscal 2020 Compensation Changes Related to CEO Succession. As part of our CEO succession plan effective at the end of the 2019 Meeting, Mr. Joly’s annual base salary decreased to $650,000, and his annual short-term incentive award target decreased to 100% of base salary for the portion of the year he held the position of Executive Chairman. He continued to participate in all benefit programs available to the Company’s senior executives. Upon her promotion to CEO, Ms. Barry’s base salary increased to $1.1 million and her annual short-term incentive award target increased to 175% of base salary for the portion of the year she held the position of CEO. Upon her promotion, Ms. Barry also received a true-up equity award with a target value of $5.475 million comprised of 50% of the value in performance shares, 20% in stock options, and 30% in restricted shares, consistent with the fiscal 2020 annual awards. Upon Mr. Mohan’s promotion to President and Chief Operating Officer, his base salary increased to $1.0 million and his short-term incentive award target increased to 160% of base salary for the portion of the year he held this role. At the time of this promotion, Mr. Mohan also received a true-up equity award with a target value of $2.475 million comprised of 50% of the value in performance shares, 20% in stock options, and 30% in restricted shares, consistent with the fiscal 2020 annual awards. Mr. Mohan also received an additional grant of restricted shares valued at $2.5 million that vest in full on the second anniversary of the grant date. Consistent with the Compensation Committee’s approach in setting annual compensation levels, in determining these compensation adjustments, the Compensation Committee considered each NEO’s prior performance, Company performance, the compensation levels paid to similarly situated executive officers at the Company, the competitive median of the market data to provide a perspective on external practices, and input from the Compensation Committee’s independent compensation consultant. Additional details regarding our CEO succession plan and related compensation were disclosed in a Current Report on Form 8-K filed by the Company on April 15, 2019, and are also described in the Compensation Discussion and Analysis section of this proxy statement. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 54 | | | | | | |
TABLE OF CONTENTS Base Salary In March 2019, the Compensation Committee reviewed the total compensation for each NEO, including their base salaries, in light of the leadership transition described above and resulting changes in reporting structure. The Compensation Committee approved base salary increases for Ms. Barry and Messrs. Mohan, Bilunas and Alexander in recognition of their promotions and increased job scope and responsibilities and based on relative market data. Mr. Joly’s salary decreased as he transitioned from his role as CEO to Executive Chairman. | Ms. Barry(1) | | | $1,100,000 | | | $850,000 | | | 29% | | | Mr. Joly(2) | | | 650,000 | | | 1,275,000 | | | -49% | | | Mr. Bilunas(3) | | | 750,000 | | | 500,000 | | | 50% | | | Mr. Alexander(4) | | | 680,000 | | | 550,000 | | | 24% | | | Mr. Mohan(5) | | | 1,000,000 | | | 900,000 | | | 11% | | | Ms. Scarlett | | | 800,000 | | | 800,000 | | | 0% | | | Mr. Nelsen | | | 750,000 | | | 750,000 | | | 0% | | | Ms. Walker | | | 750,000 | | | 750,000 | | | 0% | |
(1)
| Ms. Barry’s salary increased in connection with her promotion to CEO. |
(2)
| Mr. Joly’s salary decreased in connection with his transition to Executive Chairman. |
(3)
| Mr. Bilunas’s salary increased in connection with his promotion to CFO. |
(4)
| Mr. Alexander’s salary increased in connection with his promotion to Chief Transformation, Innovation and Membership Officer. |
(5)
| Mr. Mohan’s salary increased in connection with his promotion to President and COO. |
Short-Term Incentive Our executive compensation programs are designed to ensure that a significant percentage of total compensation is linked to Company performance. For fiscal 2020, the NEOs were eligible for performance-based, short-term incentive cash awards pursuant to our fiscal 2020 STI plan. Fiscal 2020 STI Performance Criteria. Metrics are selected based on key components of the Company’s strategic plan. The following performance metrics determined the payouts for the fiscal 2020 STI plan: | Compensable Enterprise Operating Income | | | 45% - served as the minimum threshold for STI awards (discussedto be paid | | | Enterprise non-GAAP operating income, adjusted for foreign exchange rate variances. | | | Enterprise Revenue Growth | | | 35% | | | Enterprise Revenue Growth compares all revenue streams including stores that recently opened or closed and mergers and acquisitions. | | | U.S. Cost Reduction | | | 20% | | | Annualized year-over-year cost savings (compared to fiscal 2019 expense) of cost reduction actions put into effect in further detailfiscal 2020. | |
Enterprise Revenue Growth was selected over Enterprise Comparable Sales Growth to more effectively align the STI plan with the Company’s broader focus on all available channels of addressing our customers’ technology needs. Furthermore, due to adjustments in strategic priorities, the following metrics from the fiscal 2019 plan design were not included in the fiscal 2020 plan design: U.S. Online Revenue Growth and U.S. Services POS Revenue. Although originally planned for inclusion as a fiscal 2020 performance metric, the Committee determined mid-year that U.S. Net Promoter Score should also not be included in the calculation of bonus payouts due to changes in measurement practices and reallocated its weighting to the other metrics evenly across the remaining three metrics. In March 2019, the Compensation Committee approved the performance goals for each metric. The minimum, target and maximum goals for each metric were evaluated to ensure they would incent the desired level of performance for each priority. The goals are set each year in light of anticipated year-over-year industry trends, product cycles, and other market factors. | | | | | | | | | | | | | | | | | | | 55 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS The following chart shows actual fiscal 2020 performance compared to the minimum, target and maximum goals for each metric. Minimum performance against the goal results in a no payout, Target performance results in a 1.00 payout, and Maximum performance results in a 2.00 payout. The final metric score is interpolated as an exact point somewhere between 0.00 and 2.00. The chart also includes the same information from fiscal 2019, if applicable (as presented in last year’s proxy statement) to illustrate how the goals changed and how our actual performance compared to last year. | Compensable Enterprise Operating Income (45%)(1)(2) | | | $1,926 | | | $2,016 | | | $2,196 | | | $2,125 | | | 1.60 | | | Fiscal 2019 Compensable Enterprise Operating Income(1)(3) | | | $1,802 | | | $1,892 | | | $2,072 | | | $2,003 | | | 1.61 | | | Enterprise Revenue Growth (35%)(4) | | | 1.77% | | | 2.21% | | | 3.07% | | | 1.71% | | | 0.00 | | | Fiscal 2019 Enterprise Comparable Sales Growth(5) | | | — | | | — | | | — | | | — | | | — | | | Domestic Cost Reduction (20%)(6) | | | $200 | | | $300 | | | $350 | | | $393 | | | 2.00 | | | Fiscal 2019 Domestic Cost Reduction | | | $200 | | | $250 | | | $300 | | | $265 | | | 1.30 | | | | | | | | | Fiscal 2020 Blended Score: | | | 1.120 | | | | | | | | | Fiscal 2019 Blended Score: | | | 1.663 | |
(1)
| Actual performance for this metric had to be above the minimum threshold in order for STI payments to be made. A result lower than the Short-Term Incentive section)minimum threshold would have resulted in an overall blended score of zero, and LTI awards (discussed in further detail in the Long-Term Incentive section) varyno STI payments. |
(2)
| Compensable Enterprise Operating Income was determined based on the market analysis described above. Approximately 90%non-GAAP operating income from continuing operations of $2,125 million in our Annual Report on Form 10-K for fiscal 2020, adjusted for differences from targeted foreign exchange rates. |
(3)
| Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,988 million in our Annual Report on Form 10-K for fiscal 2019, adjusted for differences from targeted foreign exchange rates. |
(4)
| Fiscal 2020 metric was changed to Enterprise Revenue Growth vs. the fiscal 2019 metric of Enterprise Compensable Sales Growth. Enterprise Revenue Growth compares all revenue streams including stores that recently opened or closed and mergers and acquisitions. Results were adjusted for differences from targeted foreign exchange rates. |
(5)
| Enterprise Comparable Sales Growth compares revenue from stores, websites and call centers operating for at least 14 full months, as well as revenue related to certain other comparable sales channels for a particular period to the corresponding period in the prior year. The difference in the definitions of Enterprise Revenue Growth and Enterprise Comparable Sales Growth makes them incomparable for purposes of the CEO’s target pay and, on average, 80% of the other NEOs’ target pay is variable based on operating performance, changes in our stock price and/or total shareholder return relative to the S&P 500 companies.
Each element in the pay mix is discussed below and shown in the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement.
table. In March 2015, the Compensation Committee reviewed the total compensation for each NEO, including their base salaries. Based on the stage of the Company's transformation and its assessment of each officer relative to market data, the Compensation Committee approved base salary increases for Ms. Ballard and Messrs. Mohan and Nelsen due to market factors and in recognition of each of their changing positions or continued growth in their respective roles.
| | | | | | | | | | | | Name | | Fiscal 2016 Annual Base Salary |
| | Fiscal 2015 Annual Base Salary |
| | Percent Change | Mr. Joly | | $ | 1,175,000 |
| | $ | 1,175,000 |
| | 0% | Ms. McCollam | | $ | 925,000 |
| | $ | 925,000 |
| | 0% | Ms. Ballard | | $ | 800,000 |
| | $ | 700,000 |
| | 14% | Mr. Mohan | | $ | 800,000 |
| | $ | 700,000 |
| | 14% | Mr. Nelsen | | $ | 650,000 |
| | $ | 550,000 |
| | 18% |
Our executive compensation programs are designed to ensure that a significant percentage of total compensation is linked to Company performance. For fiscal 2016, the NEOs were eligible for performance-based, short-term incentive cash awards pursuant to our fiscal 2016 STI.
The fiscal 2016 STI is structured as a “plan within a plan,” pursuant to the 2011 shareholder approved Executive Short-Term Incentive Plan (“Executive STI Plan”). The Executive STI Plan sets the maximum award pool for the CEO and three other NEOs (excluding the CFO) at 5% of adjusted net earnings to align compensation with shareholder interests. Individual allocations of that pool are set annually. Specific performance goals are established such that the maximum payout potential does not exceed the maximum award pool or the individual allocations.
Fiscal 2016 STI Performance Criteria. In January 2015, the Compensation Committee approved the performance criteria for the fiscal 2016 STI. For fiscal 2016, the Compensation Committee approved generally the same performance metrics as in fiscal 2015, with some refinement of the Renew Blue Priorities, as those metrics continued to support our fiscal 2016 Renew Blue priorities, specifically operating income, stabilizing comparable sales, US online revenue growth, and customer experience. The weighting of the priorities, which is also consistent with fiscal 2015, placed the greatest emphasis on profit and revenue growth while also giving significant weight to our fiscal 2016 Renew Blue strategic priorities.
The metrics and their respective weights were:
| | | | | | STI Metric | | Metric Weighting | | Definition | Compensable Enterprise Operating Income | | 50%. Served as the minimum threshold for STI awards to be paid | | Enterprise revenue less Enterprise cost of goods sold less Enterprise SG&A expenses. | Enterprise Comparable Sales | | 20% | | Domestic revenue at websites, stores, and call centers operating for at least 14 full months, compared to revenue from similar channels open at least 14 full months in the prior fiscal year. | Renew Blue Priorities: | | | | | Waste and Efficiency(1)
| | 10% | | Annualized net year-over-year cost savings (gross savings less reinvestment, compared to fiscal 2015 expense) of cost reduction actions put into effect in fiscal 2016. | U.S. Online Revenue Growth | | 10% | | Total fiscal 2016 online revenue less total fiscal 2015 online revenue divided by total fiscal 2015 online revenue. | U.S. Net Promoter Score | | 10% | | Customer experience metric in which customers (both purchasers and non-purchasers) are asked how likely they are to recommend Best Buy to a friend, colleague or family member; the percent of those likely to recommend less the percent of those unlikely to recommend is Net Promoter Score. |
(1) The Waste and Efficiency metric replaced North America Cost Take Out, which was a Renew Blue Priority and STI metric in fiscal 2015.
In March 2015, the Compensation Committee approved the performance goals for each metric. The minimum, target and maximum goals for each metric were evaluated in order to ensure they would incent the desired level of performance for each priority. For some metrics, this evaluation resulted in changes to the minimum, target, and max goals in light of anticipated year-over-year industry trends, product cycles, and other market factors. In September 2015, the Compensation Committee approved an adjustment to2019 the Enterprise Comparable Sales metricGrowth Target was 2.34% and the Actual Result was 4.79%.
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(6)
| Domestic Cost Reduction is the annualized year-over-year cost savings (compared to remove considerationfiscal 2019 expense) as a result of our International business tocost reduction actions put into effect in fiscal 2020. Cost savings must be consistent with our external reporting metrics, which were changed primarily because of the current ongoing transformation in Canada. As such, the Enterprise Comparable Sales metric includes revenue at websites, stores and call centers in the U.S. only. This adjustment led to an increase in the target level for Enterprise Comparable Sales.
The following chart shows actual fiscal 2016 performance comparedpermanent changes to the minimum, target and maximum goalsbusiness.
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Determination of Fiscal 2020 STI Target Payout. The Compensation Committee reviewed the target payout percentages for our NEOs under the fiscal 2020 STI plan as part of its review of the NEOs total fiscal 2020 target compensation. The Compensation Committee generally applies a tiered approach in determining the potential target payout ranging from 100 percent to 200 percent of annual earnings based on each NEO’s eligible base salary as of the 15th day of each fiscal month. The specific target payout percentage for each NEO is determined based on external market data (including survey and proxy data from the Fortune 100 and our peer group) for equivalent roles, with emphasis placed on job value and internal pay equity among the NEOs. The target payout percentages for each NEO either remained the same as in fiscal 2019 or increased in light of the CEO succession plan described above. For each of the metrics, the NEOs could earn zero to two times their weighted target payout percentage for that metric. The chart also includes the same information from fiscal 2015 (as presented in last year’s proxy statement) in order to illustrate how the goals changed and how our actual performance compared to last year. | | | | | | | | | | | | Metric ($ in millions) | | Minimum | | Target | | Max | | Actual Result | | Metric Score | Compensable Enterprise Operating Income (50%)(1)(2) | | $1,408 | | $1,498 | | $1,678 | | $1,610 | | 1.62 | Fiscal 2015 Compensable Enterprise Operating Income (50%)(1)(3)
| | $1,163 | | $1,353 | | $1,533 | | $1,523 | | 1.94 | Enterprise Comparable Sales (20%)(4) | | (0.06)% | | 0.4% | | 1.32% | | 0.9% | | 1.54 | Fiscal 2015 Enterprise Comparable Sales (20%)
| | (1.0)% | | 0.52% | | 1.44% | | .44% | | 0.91 | Renew Blue Priorities: | | | | | | | | | | | Waste and Efficiency (10%) | | $100 | | $120 | | $160 | | $154 | | 1.83 | Fiscal 2015 North America Cost Take Out (10%)(5)
| | $360 | | $410 | | $460 | | $438 | | 1.56 | U.S. Digital Revenue Growth (10%) | | 5.95% | | 10.95% | | 20.95% | | 13.24% | | 1.22 | Fiscal 2015 U.S. Digital Revenue Growth (10%)
| | 20% | | 30% | | 40% | | 16.5% | | — | U.S. Net Promoter Score(6) (10%) (for purchasers and non-purchasers) | | 35.4 | | 35.7 | | 36.4 | | 38.5 | | 2.00 | Fiscal 2015 U.S. Net Promoter Score (10%) (for purchasers and non-purchasers) | | 35.5 | | 36.5 | | 38.5 | | 34.8 | | — | | | | | Fiscal 2016 Blended Score: | | 1.62 | | | | | Fiscal 2015 Blended Score: | | 1.31 |
| | (1) | Actual performance for this metric had to be above the minimum threshold in order for STI payments to be made. A result lower than the minimum threshold would have resulted in an overall blended score of zero, and no STI payments. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 56 | | | | | | |
| | (2) | Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,566 million in our fiscal 2016 TABLE OF CONTENTS The following chart shows fiscal 2020 STI opportunities and payments as a dollar value and percent of annual base salary (based on their eligible base salary as of the 15th day of each fiscal month): | Ms. Barry(2) | | | $1,016,667 | | | 168% | | | $1,708,334 | | | 1.120 | | | $1,913,334 | | | 188% | | | Mr. Joly(3) | | | 858,333 | | | 149% | | | 1,283,334 | | | 1.120 | | | 1,437,334 | | | 167% | | | Mr. Bilunas(2) | | | 625,000 | | | 114% | | | 712,500 | | | 1.120 | | | 798,000 | | | 128% | | | Mr. Alexander(2) | | | 571,667 | | | 80% | | | 457,083 | | | 1.120 | | | 511,933 | | | 90% | | | Mr. Mohan(2) | | | 966,667 | | | 157% | | | 1,516,667 | | | 1,120 | | | 1,698,667 | | | 176% | | | Ms. Scarlett | | | 800,000 | | | 150% | | | 1,200,000 | | | 1.120 | | | 1,344,000 | | | 168% | | | Mr. Nelsen(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | Ms. Walker | | | 750,000 | | | 100% | | | 750,000 | | | 1.120 | | | 840,000 | | | 112% | |
(1)
| Annual Report on Form 10-K, adjusted for differences from budgeted foreign exchange rates and adjusted for the impact of the Canadian brand consolidation. |
| | (3) | Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,497 million in our fiscal 2015 Annual Report on Form 10-K, adjusted for differences from budgeted foreign exchange rates and adjusted to include the impact of Five Star (a former Chinese subsidiary) prior to December 3, 2014 (the date the Company entered into a definitive agreement to sell Five Star to a third party). |
| | (4) | The goal of keeping the target for this metric near 0.0% was to halt the historical consumer electronics industry decline over the last several years. |
| | (5) | North America Cost Takeout was a fiscal 2015 Renew Blue Priority and was defined as total cost of goods sold and selling, general and administrative expense reduction initiatives approved and executed during the year, measured as an annualized value. In fiscal 2016, the goal was replaced by Waste and Efficiency, as defined above. |
(6) U.S. Net Promoter score is a customer experience metric that measures a customer’s likelihood to recommend Best Buy and is one of many standard industry metrics for measuring customer satisfaction. Methods of measuring U.S. Net Promoter Score can differ widely among different retailers, with many retailers measuring only purchaser satisfaction; however, we measure both purchasing and non-purchasing customers across our sales channels and therefore our total score may be lower than other companies as non-purchaser results are materially lower than those of purchasers.
Determination of Fiscal 2016 STI Target Payout. The Compensation Committee reviewed the target payout percentages for our NEOs under the fiscal 2016 STI plan as part of their review of the NEOs’ total fiscal 2016 target compensation. The Compensation Committee generally applies a tiered approach in determining the potential target payout ranging from 100% to 200% of eligible base salary based on each NEO's eligible earnings as of the 15th day of each fiscal month. The specific target payout percentage for each NEO is determined based on external market data (including survey and proxy data from the Fortune 100 and our peer group) for equivalent roles, with emphasis placed on job value and internal pay equity among the NEOs.
For fiscal 2016, the tiered target opportunities were 100% to 200% of salary. The target payout percentages for each NEO remained the same as in fiscal 2015 except for Mr. Mohan, who received an increase target payout percentage from 125% in fiscal 2015 to 150% in fiscal 2016 in recognition of his continued progress in his role, and Ms. Ballard, who received an increase in target payout percentage from 125% in fiscal 2015 to 150% in fiscal 2016, in conjunction with her expanded role and increased responsibilities (for which she did not previously receive increased compensation). For each of the metrics, the NEOs could earn zero to two times their weighted target payout percentage for that metric, making the maximum fiscal 2016 STI payout equal to two times their target payout percentage.
The following chart shows fiscal 2016 STI opportunities and payments as a dollar value and percent of annual earnings (based on their salary rate):
| | | | | | | | | | | | | | | | | | | | | Name | | Fiscal 2016 Annual Earnings(1) | | Target Payout Percentage |
| | Annual Target Payout Value, based on Annual Earnings |
| | Fiscal 2016 Blended STI Score |
| | Fiscal 2016 STI Payment |
| | Fiscal 2016 STI Payment, as a Percentage of Annual Earnings |
| Mr. Joly | | $1,175,000 | | 200 | % | | $ | 2,350,000 |
| | 1.623 |
| | $ | 3,814,050 |
| | 325 | % | Ms. McCollam | | $925,000 | | 150 | % | | $ | 1,387,500 |
| | 1.623 |
| | $ | 2,251,913 |
| | 244 | % | Ms. Ballard | | $791,667 | | 150 | % | | $ | 1,187,500 |
| | 1.623 |
| | $ | 1,927,311 |
| | 244 | % | Mr. Mohan | | $791,667 | | 150 | % | | $ | 1,187,500 |
| | 1.623 |
| | $ | 1,927,311 |
| | 244 | % | Mr. Nelsen | | $633,333 | | 100 | % | | $ | 633,333 |
| | 1.623 |
| | $ | 1,027,899 |
| | 162 | % |
(1) Annual Earnings are based on the average of each NEO'sNEO’s annual base salary rate on the fifteenth15th fiscal day of each month for twelve months of the fiscal year. This number may differ slightly from Actual Earningsactual earnings listed in the Summary Compensation Table.
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(2)
Fiscal 2017
| The STI Performance Criteria. In January 2016,Targets for Ms. Barry, Mr. Bilunas, Mr. Alexander and Mr. Mohan were increased during fiscal 2020 based on changes in role and responsibilities, therefore the Compensation Committee approved the performance criteriapercentages shown in the form of metrics“Target Payout Percentage” column for these individuals reflects an approximate blended rate. |
(3)
| Mr. Joly’s Annual Base Salary and STI Target decreased during fiscal 2020 in connection with the CEO transition. The percentage shown in the “Target Payout Percentage” column for Mr. Joly reflects an approximate blended rate. |
(4)
| Mr. Nelsen was not eligible for his annual payout target because his employment ended during the fiscal 2017 STI, and in March 2016, the Compensation Committee approved the target performance levels for each metric. Similar metrics and slightly modified weightings as used in fiscal 2016 will be used in fiscal 2017, as listed below:
Enterprise Operating Income - 40%
Enterprise Comparable Sales - 30%
Renew Blue Priorities (maintaining the three fiscal 2016 priorities and adding a fourth metric based on Services revenue) - 30%
The Compensation Committee approved a shift in the weighting by 10% from Domestic Enterprise Operating Income (weighted at 50% in fiscal 2016) to Enterprise Comparable Sales (weighted at 20% in fiscal 2016) in order to place even greater emphasis on Company growth, consistent with our future priorities as discussed in greater detail within the Proxy Summary of this proxy statement.
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Long-Term Incentive
Awards of equity-based LTI compensation to our executive officers encourage a strong ownership stake in the Company and enhancesAwards of equity-based LTI compensation to our executive officers enhance the alignment of interests of our NEOs and shareholders. All LTI awards for our NEOs and directors must be approved by the Compensation Committee. In March 2019, the Compensation Committee approved LTI awards to our NEOs pursuant to our fiscal 2020 LTI program under our Amended & Restated 2014 Omnibus Incentive Plan.
The fiscal 2020 LTI program featured a mix of performance share awards, performance conditioned time-based restricted shares, and stock options. This results in a balanced portfolio of compensation rewards for the NEOs, with performance share awards based on relative total shareholder return (to reward relative performance) and enterprise revenue growth (to reward growth), time-based restricted shares (for Mr. Joly and his direct report team at the time of the annual grant, these also had a performance condition), based on adjusted net earnings (to reward earnings and promote retention), and stock options (to reward absolute share price appreciation), as shown below. | Ms. Barry | | | 20% | | | 30% | | | — | | | 50% | | | Mr. Joly | | | 20% | | | 30% | | | — | | | 50% | | | Mr. Bilunas* | | | — | | | — | | | 66.6% | | | 33.3% | | | Mr. Alexander* | | | — | | | — | | | 66.6% | | | 33.3% | | | Mr. Mohan | | | 20% | | | 30% | | | — | | | 50% | | | Ms. Scarlett | | | 20% | | | 30% | | | — | | | 50% | | | Mr. Nelsen | | | — | | | 50% | | | — | | | 50% | | | Ms. Walker | | | — | | | 50% | | | — | | | 50% | |
*
| Messrs. Bilunas and Alexander received time-based restricted shares because they were not members of Mr. Joly’s direct report team at the time of the annual grant. |
Form of Fiscal 2020 LTI Award. The NEOs receive an LTI grant once per year at a regularly scheduled Compensation Committee meeting that typically occurs in the first quarter of our fiscal year. In addition, when promoted, our NEOs receive equity awards to bring their annual compensation in line with market pay for their new roles. In fiscal 2020, the Committee also granted a series of long-term incentive awards to maintain stability of the executive team in connection with the CEO transition. In fiscal 2020, the closing price of our common stock on the grant date and an accounting valuation for each type of award was used to convert the award dollar value to a number of units. | | | | | | | | | | | | | | | | | | | 57 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS In addition, restricted stock and performance share awards include dividend equivalents, which begin to accrue for each declared dividend following the grant but are not converted into dividends until the restricted shares underlying the grants are earned, vested or payable. Determination of Fiscal 2020 LTI Target Award Values. The Compensation Committee approved the executive team’s fiscal 2020 compensation, which included increased target award values for Ms. Barry and Messrs. Bilunas, Mohan and Alexander to reflect increased responsibilities, role changes and market adjustments in light of their promotions. LTI award amounts are determined based upon analysis of external market data, with overall compensation mix and external market data for equivalent roles being key factors in the determination of the award made to each NEO. The fiscal 2020 LTI awards for each NEO are set forth below: | Ms. Barry(2) | | | 94,172 | | | 38,092 | | | — | | | 63,314 | | | $8,475,000 | | | Mr. Joly | | | 120,337 | | | 50,000 | | | — | | | 80,608 | | | $11,750,000 | | | Mr. Bilunas(3)(8) | | | 49,050 | | | 5,111 | | | 7,151 | | | 8,602 | | | $2,325,000 | | | Mr. Alexander(4)(8) | | | 49,050 | | | — | | | 8,251 | | | 3,991 | | | $1,750,000 | | | Mr. Mohan(5) | | | 65,492 | | | 26,744 | | | 38,157 | | | 43,974 | | | $8,525,000 | | | Ms. Scarlett(6) | | | 109,226 | | | 5,427 | | | — | | | 8,748 | | | $3,250,000 | | | Mr. Nelsen | | | — | | | 11,938 | | | — | | | 11,548 | | | $1,650,000 | | | Ms. Walker(7) | | | 48,083 | | | 10,491 | | | — | | | 10,149 | | | $2,450,000 | |
(1)
| The amounts reflect the target grant date dollar value approved by the Compensation Committee. During fiscal 2016, we made long-term incentive awards to our NEOs pursuant to our LTI program, which was approved byAs noted above the Compensation Committee in March 2015 under our 2014 Omnibus Incentive Plan. The fiscal 2016 LTI program featuredtable, this dollar value is converted into a mixnumber of stock options, restricted shares or performance share awards using an estimate, or approximation of the price of a share of our common stock as of the grant date (unless otherwise noted in this table), a lattice valuation model for stock options and a Monte Carlo simulation for shares under performance share award that have a market condition for vesting. These values differ from those portrayed in the Summary Compensation Table and Grants of Plan-Based Awards Table because there the grant date fair value of each award is measured in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“ASC Topic 718”), and here, the shares are based on an estimate of the grant date fair value determined under ASC Topic 718 as close to the grant date as possible.
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(2)
| Ms. Barry received an annual LTI grant in March 2019 and a promotional grant in June 2019. |
(3)
| Mr. Bilunas received an annual grant in March 2019 and a promotional grant in August 2019. In connection with the CEO transition, he also received a special stock option grant in March 2019 with four-year cliff vesting. |
(4)
| Mr. Alexander received an annual grant in March 2019. In connection with the CEO transition, he also received a special stock option grant in March 2019 with four-year cliff vesting. |
(5)
| Mr. Mohan received an annual grant in March 2019 and a promotional grant in June 2019. In connection with the CEO transition, he also received a special one-time grant in June 2019 of time-based restricted shares. This resultsshares with two-year cliff vesting. |
(6)
| Ms. Scarlett received an annual grant in March 2019. To reflect the modified scope of her role and responsibilities and market conditions, she also received a balanced portfoliostock option grant in March 2019 with four-year cliff vesting. |
(7)
| Ms. Walker received an annual grant in March 2019. To reflect the modified scope of compensation rewards consistingher role and responsibilities and market conditions, she also received a stock option grant in March 2019 with four-year cliff vesting. |
(8)
| The number of for the CEO, 50%time-based restricted shares and performance share awards (to reward relative performance), 20% stock options (to reward absolute share price appreciation)for Messrs. Bilunas and 30% time-based restricted shares (to promote retention), as shown below. The mix forAlexander’s March 2019 grants were determined using the other NEOs was one-third performance share awards, one-third stock options, and one-third time-based restricted shares, also as shown below.
Form of Fiscal 2016 LTI Award. The performance share awards are earned based on our Total Shareholder Return ("TSR") relative to the S&P 500 Index over a three-year period. TSR was selected as the metric based on its direct link to shareholder value creation. The S&P 500 was used as a proxy for overall market performance. The relative TSR performance goals were as follows:
| | | | | Relative TSR Percentile Ranking | No. of Shares Earned (as % of Target) | Less than Threshold | Less than 30th Percentile | —% | Threshold | 30th Percentile | 50% | Target | 50th Percentile | 100% | Maximum | 70th Percentile | 150% | The number of performance shares earned are interpolated on a linear basis for performance between Threshold and Target and between Target and Maximum. |
The NEOs receive an LTI grant once per year at a regularly scheduled Compensation Committee meeting that typically occurs in the first quarter of our fiscal year. In fiscal 2016, the closingaverage price of our common stock onduring the grant date was used to convertmonth of February instead of an estimate, or approximation of the award dollar value to a number of units. The nonqualified stock options have a term of ten years and become exercisable over a three-year period at the rate of one-third per year, beginning one year from the date of grant, subject to being employed on the vesting date. The exercise price for such options is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. The time-based restricted shares also vest in equal installments of one-third on the three successive anniversaries of the grant date. The final number of shares issued under performancea share awards will not be known until performance has been measured following the performance period (which goes from March 1, 2015 through February 28, 2018).
Under the terms of the 2014 Omnibus Plan, we may not grant stock options at a discount to fair market value. Unless otherwise determined by the Compensation Committee, "fair market value" as of a given date is the closing price of our common stock as quoted onof the NYSE on such date or, if the sharesgrant date. This method was applied because Messrs. Alexander and Bilunas were not traded on that date,members of Mr. Joly’s direct report team at the most recent preceding date when the shares were traded.
Determination of Fiscal 2016 LTI Target Award Values. The Compensation Committee approved the executive leadership’s fiscal 2016 compensation, which included increased target award values for the NEOs to reflect market practice and promote retention of key leadership during this critical period of transformation, and a one-time award for Ms. Ballard to acknowledge market rates for the increased scope of her responsibilities and impact of her contributions to our Company performance.
LTI award amounts are determined based upon analysis of external market data, with overall compensation mix and external market data for equivalent roles being key factors in the determinationtime of the award madeannual grant.
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Stock Options. Mr. Joly, Ms. Barry, Mr. Mohan and Ms. Scarlett received a stock option grant as part of their fiscal 2020 long-term incentive pay mix. Ms. Scarlett, Ms. Walker and Mr. Alexander received one-time stock option grants in connection with the CEO transition. The non-qualified stock options granted have a term of ten years and become exercisable over either a three-year period at the rate of one-third per year, beginning one year from the grant date or become fully vested after a four-year period, subject to being employed on the vesting date. The exercise price for such options is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. Under the terms of the Amended and Restated 2014 Omnibus Incentive Plan, we may not grant stock options with a strike price at a discount to fair market value. Unless otherwise determined by the Compensation Committee, “fair market value” as of a given date is the closing price of our common stock as quoted on the NYSE on such date or, if the shares were not traded on that date, the most recent preceding date when the shares were traded. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 58 | | | | | | |
TABLE OF CONTENTS Performance-conditioned Time-based Restricted Share Awards. The performance-conditioned time-based restricted shares also vest in equal installments of one-third on the three successive anniversaries of the grant date, provided the performance condition has been met in any fiscal year during the term of the award. The performance condition was added to the time-based restricted shares to further align compensation with shareholder interests. The vesting of these shares is conditioned upon the Company’s achievement of positive Adjusted Net Earnings. Adjusted Net Earnings means net earnings determined in accordance with GAAP, adjusted to eliminate the following: (1) the cumulative effect of changes in GAAP; (2) gains and losses from discontinued operations; (3) extraordinary gains and losses; and (4) other unusual or nonrecurring gains or losses which are separately identified and quantified, including merger-related charges. Achievement of positive Adjusted Net Earnings may occur in any fiscal year during the term of the award for the award to begin to vest. For example, if the performance condition is not achieved until year two, two-thirds of the award will vest following Compensation Committee approval of achievement of the performance condition, with the remaining one-third to vest in the third year of the award. Time-based Restricted Share Awards. The time-based restricted shares also vest in equal installments of one-third on the three successive anniversaries of the grant date, but the vesting is not dependent on achievement of a performance condition. These awards were granted to individuals (Mr. Bilunas and Mr. Alexander) who were not part of Mr. Joly’s direct report team at the time of the fiscal 2020 annual grant, and were approved by the Compensation Committee in March 2019. Performance Share Awards. The performance share awards are earned based on two metrics: half on total shareholder return (“TSR”) relative to the S&P 500 Index and the other half on enterprise revenue growth, both over a three-year period. TSR was selected as one of the metrics based on its direct link to shareholder value creation. The S&P 500 was used as a proxy for the broad variety of other investment opportunities available to investors. The relative TSR performance goals were as follows: | Less than Threshold | | | Less than 30th Percentile | | | —% | | | Threshold | | | 30th Percentile | | | 50% | | | Target | | | 50th Percentile | | | 100% | | | Maximum | | | 70th Percentile | | | 150% | |
The number of performance shares earned are interpolated on a linear basis for performance between Threshold and Target and between Target and Maximum. The other half of the performance share awards are earned based on the compound annual growth rate of enterprise revenue over the three fiscal years ending at the end of fiscal 2022. The Compensation Committee chose this metric to sharpen our focus on profitable growth and to further align our performance metrics with our growth strategy. The Committee believes this metric is an effective measurement of Company performance, particularly when combined with our TSR-based awards. Although the Committee has not specifically assessed the probability of achieving any performance metric, based on the Company’s historical results and its assessment of the Company’s strategy, it believes achieving target performance under this award is reasonably attainable while providing appropriately challenging incentives, and that achieving maximum performance would be difficult. Shares will be earned under this metric as follows: | Less than Threshold | | | —% | | | Threshold to each NEO. The fiscal 2016 LTI awards for each NEO are set forth below:Target | | | 50% to 100% | | | Target to Maximum | | | 100% to 150% | | | Above Maximum | | | 150% | |
The final number of performance shares earned are interpolated on a linear basis for performance between Threshold and Target and between Target and Maximum. Performance Share Payout. For performance share awards that were paid out in fiscal 2020, the Compensation Committee had adopted a performance share plan design, based on relative TSR versus the S&P 500 Index over the 36-month period from March 1, 2016 to February 28, 2019. The shares were eligible to vest (0 to 150%) after the | | | | | | | | | | Annual Fiscal 2016 Award Details | Name | | No. of Stock Options | | No. of Restricted Shares | | Target No. of Shares under Performance Share Award | | Target Grant Date Value | Mr. Joly | | 158,445 | | 77,142 | | 118,374 | | $10,000,000 | Ms. McCollam | | 120,154 | | 39,000 | | 35,907 | | $4,550,000 | Ms. Ballard | | 52,815 | | 17,143 | | 15,783 | | $2,000,000 | Mr. Mohan | | 52,815 | | 17,143 | | 15,783 | | $2,000,000 | Mr. Nelsen | | 43,572 | | 14,143 | | 13,021 | | $1,650,000 |
| | | | | | | | | | | | | | | | | | | 59 | | | | | | In addition, in recognition for her expanded role and responsibilities, Ms. Ballard received a one-time long-term incentive equity award in March 2015 consisting of the following:2020 Proxy Statement
| | | | | | | | | | One-Time Award Details | Name | | No. of Stock Options | | No. of Restricted Shares | | Target No. of Shares under Performance Share Award | | Target Grant Date Value | Ms. Ballard | | 52,815 | | 17,143 | | 15,783 | | $2,000,000 |
Performance Share Payout. In September 2012, the Committee adopted a new performance share unit plan design, based on relative TSR versus the S&P 500 Index over the 36-month period from October 1, 2012 to September 30, 2015. The shares would vest (0 to 150%) after the three-year period if the performance criteria was met.
Because the Company’s TSR during the performance period exceeded the 70th percentile of all companies in the S&P 500, these shares paid out at the maximum of 150% in fiscal 2016 and are reflected on the Option Exercises and Stock Vested table.
Fiscal 2017 LTI Program Design. For fiscal 2017, the mix of equity vehicles in the LTI program will consist of the following:
For the CEO, 50% performance share awards (using TSR as the performance metric), 20% stock options and 30% time-based restricted shares. This mix is consistent with the fiscal 2016 design.
For the other NEOs: 50% performance share awards (using TSR as the performance metric) and 50% time-based restricted shares. The Compensation Committee made changes to remove stock options from the mix of equity vehicles for the other NEOs in order to more closely align the performance share percentage amounts of the CEO and the other NEOs. The Compensation Committee also added a performance requirement to the time-based restricted shares granted to our top executives to better align their interests with the shareholders’ interests. The performance requirement is based on achievement of positive adjusted net earnings and acts as a minimum threshold in order for the restricted shares to vest over time.
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Benefits. Our executive officers, including our NEOs, are generally offered the same employee benefits offered to all U.S.-based officers, as summarized
TABLE OF CONTENTS three-year period if the performance criteria was met. Because the Company’s TSR during the performance period exceeded the 70th percentile of all companies in the S&P 500, these shares paid out at the maximum of 150% in fiscal 2020 and are reflected in the Compensation of Executive Officers — Option Exercises and Stock Vested section. Other Compensation Health, Retirement and other Benefits. NEOs are eligible to participate in benefit plans generally available to our employees, including health, retirement, stock purchase, severance, paid time off, life insurance and disability plans. We do not have an executive retirement plan that provides extra retirement benefits to the NEOs. NEOs are provided with annual executive physical exams, supplemental long-term disability insurance and tax planning/preparation services consistent with those provided to other executives. A summary of these benefits is provided in the following table: | Accidental Death & Dismemberment | | | • | | | • | | | Deferred Compensation Plan | | | | | | • | | | Employee Discount | | | • | | | • | | | Employee Stock Purchase Plan | | | • | | | • | | | Health Insurance | | | • | | | • | | | — Executive Physical Exam(1) | | | | | | • | | | Life Insurance | | | • | | | • | | | Long-Term Disability | | | • | | | • | | | — Executive Long-Term Disability | | | | | | • | | | Retirement Savings Plan | | | • | | | • | | | Severance Plan | | | • | | | • | | | Short-Term Disability | | | • | | | • | | | Tax Planning and Preparation | | | | | | • | |
(1)
| Enhancement to executive physical exam benefits include increased frequency to annually and expanding coverage for spouses and partners. |
We provide the executive benefits noted above to compete for executive talent and to promote the health, well-being and financial security of our NEOs. A description of executive benefits, and the costs associated with providing them for the NEOs, are reflected in the “All Other Compensation” column of the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement. | | | | | | Benefit | | All Full-TimePrivate Jet Use Policy. We lease an interest in aircraft enrolled in a fractional share program managed by a third-party provider. Use of this aircraft is governed by our Private Jet Use Policy, which was amended by the Audit Committee in June 2019. Under the policy, only the CEO and the Executive Chairman are allowed to request private jet services for business or personal travel; however, the CEO may authorize the President and COO to directly request private jet services for pre-approved uses. When the leased private jet is used for personal travel, the policy requires that all charges associated with the trip invoiced by the third-party provider must be paid by the executive.
Severance Plan. We have a severance plan that complies with the applicable provisions of the Employee Retirement Income Security Act (“ERISA”). The purpose of the severance plan is to provide financial assistance to employees while they seek other employment, in exchange for a release of any claims. Although there are differences in benefits depending on the employee’s job level, the basic elements of the plan are comparable for all eligible employees. The plan generally covers all full-time and part-time U.S. employees of Best Buy Co., Inc. and Best Buy Stores, L.P. and their respective direct and indirect U.S.-domiciled subsidiaries, including the NEOs, except for those subject to a separate severance agreement or specifically excluded. The plan covers involuntary terminations due to job elimination and discontinuation, office closing, reduction in force, business restructuring and other circumstances as we determine. Eligible terminated employees receive a severance payment based on their role and time with the Company, with basic employee benefits such as medical, dental and life insurance continued for an equivalent period. Except as modified or replaced by individual employment agreements, Mses. Scarlett and Walker and Messrs. Alexander, Bilunas, and Mohan are eligible for the U.S.-Based Employees | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 60 | | | | | | | | Executive
Officers
| Accidental Death & Dismemberment | | ● | | ● | Deferred Compensation Plan(1)
| | | | ● | Employee Discount | | ● | | ● | Employee Stock Purchase Plan | | ● | | ● | Health Insurance | | ● | | ● | — Executive Physical Exam | | | | ● | Life Insurance | | ● | | ● | Long-Term Disability | | ● | | ● | — Executive Long-Term Disability | | | | ● | Retirement Savings Plan | | ● | | ● | Severance Plan | | ● | | ● | Short-Term Disability | | ● | | ● | Tax Planning and Preparation | | | | ● |
| | (1) | TABLE OF CONTENTS following severance benefits: a lump sum payment equal to two years of salary, a payment of $25,000 in lieu of outplacement and other tax and financial planning assistance, and a payment of 150% of the cost of 24 months of basic employee benefits such as medical, dental and life insurance. See Compensation of Executive Officers - Potential Payments Upon Termination or Change-of-Control for more information regarding potential payments following an involuntary termination and for the severance provisions of Ms. Barry’s and Mr. Joly’s employment agreements, which supersede the provisions of the severance plan. A severance payment consistent with the severance plan’s allocation for their respective roles and time with the company was paid to Mr. Nelsen upon his departure in September 2019, and will be paid to Ms. Walker upon her departure in August 2020. Such payments are described in more detail below under Compensation of Executive Officers - Potential Payments Upon Termination or Change-of-Control. Executive Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines to promote the alignment of officer and shareholder interests and to encourage behaviors that have a positive influence on stock price appreciation and total shareholder return. Under the guidelines, which the Compensation Committee reviewed in fiscal 2020, we expect our NEOs to acquire ownership of a fixed number of shares, based on their positions. The stock ownership expectation generally remains effective for as long as the officer holds the position. In addition to shares personally owned by each officer, the following forms of stock ownership count toward the ownership target: Equivalent shares owned in the Best Buy Stock Fund within our Retirement Savings Plan; 100% of non-vested shares (net of taxes) subject to time-based conditions granted under our LTI program; and 50% of the intrinsic value of vested stock options (denominated as a number of shares) granted under our LTI program. We require that until the ownership target is met, NEOs will retain: (i) 50% of the net proceeds received from the exercise of a stock option in the form of Best Buy common stock; (ii) 50% of vested time-based restricted shares (net of taxes); and (iii) 50% of all performance share awards (net of taxes) issued. The ownership target does not need to be met within a certain time frame, and our NEOs are considered in compliance with the guidelines as long as progress towards the ownership target is being made consistent with the expectations noted above. In fiscal 2020, all NEOs were in compliance with the ownership guidelines. The ownership targets and ownership levels as of the end of fiscal 2020 for our continuing NEOs are shown below. | Ms. Barry | | | 200,000 | | | 156,440 | | | Mr. Bilunas | | | 55,000 | | | 19,954 | | | Mr. Alexander | | | 35,000 | | | 44,303 | | | Mr. Mohan | | | 55,000 | | | 122,639 | | | Ms. Scarlett | | | 55,000 | | | 30,270 | |
Tax Deductibility of Compensation. Until recently, Section 162(m) of the Internal Revenue Code (“Section 162(m)”) has limited the deductibility of compensation in excess of $1 million paid to the chief executive officer and each of our three most highly compensated executive officers (other than the chief financial officer), unless the compensation qualifies as “performance-based compensation.” The Tax Cuts and Jobs Act of 2017 amended Section 162(m) with respect to fiscal years beginning after December 31, 2017 to remove the performance-based compensation exception and expand the scope of Section 162(m) to apply to our chief financial officer and certain other NEOs, other than in the case of certain arrangements in place as of November 2, 2017, which qualify for transition relief. The Committee has historically attempted to structure its compensation arrangements to achieve deductibility under Section 162(m) of the Internal Revenue Code, unless the benefit of such deductibility was considered by the Committee to be outweighed by the need for flexibility or the attainment of other objectives. As was the case prior to the enactment of the Tax Cuts and Jobs Act, the Compensation Committee will continue to monitor issues concerning Only officers and directors are eligible to participate in the Deferred Compensation Plan, as described in the Compensation of Executive Officers – Nonqualified Deferred Compensation – Deferred Compensation Plan section. | | | | | | 61 | | | | | | We provide the executive benefits noted above to compete for executive talent and to promote the health, well-being and financial security of our NEOs. A description of executive benefits, and the costs associated with providing them for the NEOs, are reflected in the "All Other Compensation" column of the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement.2020 Proxy Statement
| |
TABLE OF CONTENTS the deductibility of executive compensation. We do not, however, make compensation decisions based solely on the availability of a deduction under Section 162(m). Accordingly, we expect that at least a portion of the compensation paid to our NEOs in excess of $1 million per officer will be non-deductible. Clawback and Restrictive Covenant Provisions. All STI and LTI awards granted to our NEOs are subject to our clawback policy. The triggers for potential recoupment of such awards include breach of the restrictive covenants in our long-term incentive award agreements, breach of our Code of Business Ethics, and issuance of a financial restatement as a result of fraud or misconduct. We also include confidentiality, non-compete, non-solicitation and, in select situations, non-disparagement provisions in our long-term incentive award agreements. Prohibition on Hedging and Pledging Company Securities. We prohibit all employees, including NEOs, and members of the Board from hedging Company securities, including by way of forward contracts, equity swaps, collars, exchange funds or otherwise. In addition, our executive officers and Board members are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. Compensation and Human Resources Committee Report on Executive Compensation The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended February 1, 2020, and in this proxy statement. Severance Plan. We have a severance plan that complies with the applicable provisions of the Employee Retirement Income Security Act ("ERISA"). The purpose of the severance plan is to provide financial assistance to employees while they seek other employment, in exchange for a release of any claims. Although there are differences in benefits depending on the employee's job level, the basic elements of the plan are comparable for all eligible employees. The plan generally covers all full-time and part-time U.S. employees of Best Buy Co., Inc. and Best Buy Stores, L.P. and their respective direct and indirect U.S.-domiciled subsidiaries, including the NEOs, except for those subject to a separate severance agreement or specifically excluded.
The plan covers involuntary terminations due to job elimination and discontinuation, office closing, reduction in force, business restructuring and other circumstances as we determine. Eligible terminated employees receive a severance payment based on
their role and time with the company, with basic employee benefits such as medical, dental and life insurance continued for an equivalent period. Except as modified or replaced by individual employment agreements, the NEOs (other than Mr. Joly and Ms. McCollam who have employment agreements) are eligible for the following severance benefits:
Ms. Ballard and Messrs. Mohan and Nelsen, at an enterprise executive vice president level, are eligible for two years of salary, a payment of $25,000 in lieu of outplacement and other tax and financial planning assistance, and a payment of 150% of the cost of 24 months of basic employee benefits such as medical, dental and life insurance.
See Compensation of Executive Officers — Potential Payments Upon Termination or Change-of-Control for more information regarding potential payments following an involuntary termination and for the severance provisions of Mr. Joly's and Ms. McCollam's employment agreements.
Stock Ownership, Tax and Other Policies
Executive Stock Ownership Guidelines.The Compensation Committee has established stock ownership guidelines to promote the alignment of officer and shareholder interests and to encourage behaviors that have a positive influence on stock price appreciation and total shareholder return. During its annual review in September 2015, the Compensation Committee approved changes to the guidelines to align them with market practice. Specifically, we increased the CEO’s ownership target from 140,000 shares to 200,000 shares; and we changed what shares count towards compliance. Under the guidelines, we expect our NEOs to acquire ownership of a fixed number of shares, based on their positions. The stock ownership expectation generally remains effective for as long as the officer holds the position.
In addition to shares personally owned by each officer, the following forms of stock ownership count toward the ownership target:
Equivalent shares owned in the Best Buy Stock Fund within our Retirement Savings Plan;
100% of non-vested shares subject to time-based conditions granted under our LTI program; and
50% of the intrinsic value of vested stock options (denominated as a number of shares) granted under our LTI program.
We require that until the ownership target is met, NEOs will retain: (i) 50% of the net proceeds received from the exercise of a stock option in the form of Best Buy common stock; (ii) 50% of vested time-based restricted shares (net of taxes); and (iii) 50% of all performance share awards (net of taxes) issued. The ownership target does not need to be met within a certain time frame, and our NEOs are considered in compliance with the guidelines as long as progress towards the ownership target is being made consistent with the expectations noted above.
In fiscal 2016, all NEOs were in compliance with the ownership guidelines. The ownership targets and ownership levels as of the end of fiscal 2016 for our NEOs are shown below.
| | | | | | Name | | Ownership Target (in shares) | | Ownership as of Fiscal 2016 Year-End Using Guidelines (in shares) | Mr. Joly | | 200,000 | | 792,194 | Ms. McCollam | | 55,000 | | 387,814 | Ms. Ballard | | 55,000 | | 76,353 | Mr. Mohan | | 55,000 | | 120,982 | Mr. Nelsen | | 35,000 | | 35,528 |
Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits the deductibility of compensation in excess of $1 million paid to the chief executive officer and each of our three most highly compensated executive officers (other than the chief financial officer), unless the compensation qualifies as "performance-based compensation." Among other things, in order to be deemed performance-based compensation, the compensation must be based on the achievement of pre-established, objective performance criteria and must be pursuant to a plan that has been approved by our shareholders. We believe that it is important to continue to be able to take available Company tax deductions with respect to the compensation paid to our NEOs. We do not, however, make compensation decisions based solely on the availability of a deduction under Section 162(m).
Clawback and Restrictive Covenant Provisions. Our senior management performance awards have typically included clawback provisions, particularly where it has been difficult to match the period of an employee's influence on business results. We may exercise our rights under such provisions if other strategies to mitigate unjust rewards are difficult to achieve. Such circumstances include, but are not limited to, breach of our restrictive covenants, material violations of Company policy, intentional misconduct resulting in restatements of financial statements of the Company, violations of an agreement between the individual and the Company, criminal acts, fraud and violations of securities laws. In September 2010, we adopted new guidelines with respect to clawback provisions to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act, with final clawback language to be determined after the SEC adopts related rules. The new guidelines also expanded our prior approach to cover all executive officer incentive award agreements. In addition to the clawback provisions, we include confidentiality, non-compete, non-solicitation and, in select situations, non-disparagement provisions. In March 2016, in the wake of the proposed rules on clawbacks the SEC proposed in July 2015, we approved adding a provision to our STI materials stating that any award granted is subject to any clawback policy the Company may subsequently adopt.
Prohibition on Hedging and Pledging Company Securities. We prohibit all employees, including NEOs, and members of the Board from hedging Company securities, including by way of forward contracts, equity swaps, collars, exchange funds or otherwise. In addition, our executive officers and Board members are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
Compensation and Human Resources Committee Report on Executive Compensation
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis, above, with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended January 30, 2016, and in this proxy statement.
COMPENSATION AND HUMAN RESOURCES COMMITTEE David W. Kenny (Chair)
Lisa M. Caputo Russell P. Fradin (Chair) Lisa M. Caputo
Kathy J. Higgins Victor
David W. Kenny
Cindy R. Kent
Compensation and Human Resources Committee Interlocks and Insider Participation
The Compensation Committee is comprised entirely of independent directors. At no time during fiscal 20162020 was any member of the Compensation Committee a current or former officer or employee of the Company or any of its subsidiaries. During fiscal 2016,2020, no member of the Compensation Committee had a relationship that must be described pursuant to SEC disclosure rules on related party transactions. In fiscal 2016,2020, none of our executive officers served on the board of directors or compensation committee of another company that had one or more executive officers serving on our Board or Compensation Committee. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 62 | | | | | | |
TABLE OF CONTENTS
Compensation of Executive Officers
Summary Compensation Table
The table below summarizes the total compensation earned by each of our NEOs during fiscal 20162020 and the two preceding fiscal years.years (if applicable). | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | |
Salary(1) | | Bonus | | Stock Awards(2)(3) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(4) | | All Other Compensation(5) | | Total |
| Hubert Joly Chairman and Chief Executive Officer | | 2016 | | $ | 1,175,000 |
| | $ | — |
| | $ | 8,011,688 |
| | $ | 1,842,715 |
| | $ | 3,814,050 |
| | $ | 29,028 |
| | $ | 14,872,481 |
| | 2015 | | 1,175,000 |
| | — |
| | 6,986,928 |
| | 1,654,070 |
| | 3,078,500 |
| | 42,796 |
| | 12,937,294 |
| | 2014 | | 1,175,000 |
| | — |
| | 8,167,213 |
| | 2,000,360 |
| | 2,514,500 |
| | 24,146 |
| | 13,881,219 |
| Sharon L. McCollam Chief Administrative Officer and Chief Financial Officer | | 2016 | | $ | 925,000 |
| | $ | — |
| | $ | 3,039,724 |
| | $ | 1,397,391 |
| | $ | 2,251,913 |
| | $ | 9,669 |
| | $ | 7,623,697 |
| | 2015 | | 925,000 |
| | — |
| | 2,696,985 |
| | 1,275,987 |
| | 1,817,625 |
| | 269,558 |
| | 6,985,155 |
| | 2014 | | 925,000 |
| | — |
| | 3,131,454 |
| | 1,543,133 |
| | 1,484,625 |
| | 215,221 |
| | 7,299,433 |
| Shari L. Ballard(6) President, U.S. Retail and Chief Human Resources Officer | | 2016 | | $ | 790,385 |
| | $ | — |
| | $ | 2,672,270 |
| | $ | 1,228,476 |
| | $ | 1,927,311 |
| | $ | 24,641 |
| | $ | 6,643,083 |
| | 2015 | | 700,000 |
| | — |
| | 799,099 |
| | 378,065 |
| | 1,146,250 |
| | 30,494 |
| | 3,053,908 |
| | 2014 | | 700,000 |
| | — |
| | 927,819 |
| | 457,228 |
| | 936,250 |
| | 17,131 |
| | 3,038,428 |
| R. Michael Mohan Chief Merchandising Officer
| | 2016 | | $ | 790,385 |
| | $ | — |
| | $ | 1,336,135 |
| | $ | 614,238 |
| | $ | 1,927,311 |
| | $ | 10,323 |
| | $ | 4,678,392 |
| | 2015 | | 650,000 |
| | — |
| | 1,556,015 |
| | 972,974 |
| | 1,004,333 |
| | 12,477 |
| | 4,195,799 |
| | 2014 | | 498,462 |
| | — |
| | 2,106,552 |
| | 1,047,696 |
| | 401,250 |
| | 14,581 |
| | 4,068,541 |
| Keith J. Nelsen General Counsel and Secretary
| | 2016 | | $ | 640,385 |
| | $ | — |
| | $ | 1,102,314 |
| | $ | 506,742 |
| | $ | 1,027,899 |
| | $ | 10,482 |
| | $ | 3,287,822 |
| | 2015 | | 550,000 |
| | — |
| | 865,684 |
| | 409,575 |
| | 720,500 |
| | 12,081 |
| | 2,557,840 |
| | 2014 | | 543,750 |
| | — |
| | 1,005,159 |
| | 495,324 |
| | 582,704 |
| | 41,323 |
| | 2,668,260 |
|
| Corie Barry Chief Executive Officer
| | | 2020 | | | $1,013,462 | | | $— | | | $6,780,674 | | | $1,695,326 | | | $1,913,334 | | | $37,867 | | | $11,440,663 | | | 2019 | | | 834,615 | | | — | | | 2,997,563 | | | — | | | 2,078,750 | | | 8,752 | | | 5,919,680 | | | 2018 | | | 764,423 | | | — | | | 2,008,397 | | | — | | | 2,057,625 | | | 8,203 | | | 4,838,648 | | | Hubert Joly Executive Chairman and Chief Executive Officer (Former)
| | | 2020 | | | 866,346 | | | — | | | 9,415,809 | | | 2,348,978 | | | 1,437,334 | | | 170,957 | | | 14,239,424 | | | 2019 | | | 1,275,000 | | | — | | | 9,391,513 | | | 2,267,826 | | | 4,240,650 | | | 207,497 | | | 17,382,486 | | | 2018 | | | 1,286,058 | | | — | | | 8,644,644 | | | 2,198,462 | | | 4,602,983 | | | 81,558 | | | 16,813,704 | | | Matt Bilunas Chief Financial Officer | | | 2020 | | | 629,808 | | | — | | | 1,416,581 | | | 1,000,620 | | | 798,000 | | | 35,777 | | | 3,880,786 | | | Whit Alexander Chief Transformation, Innovation and Membership Officer | | | 2020 | | | 570,000 | | | — | | | 855,588 | | | 1,000,620 | | | 511,933 | | | 16,414 | | | 2,954,555 | | | Mike Mohan President and Chief Operating Officer
| | | 2020 | | | 965,385 | | | — | | | 7,321,240 | | | 1,205,776 | | | 1,698,666 | | | 25,268 | | | 11,216,335 | | | 2019 | | | 892,308 | | | — | | | 3,547,097 | | | — | | | 2,224,262 | | | 30,098 | | | 6,693,765 | | | 2018 | | | 866,346 | | | — | | | 3,012,512 | | | — | | | 2,331,975 | | | 22,907 | | | 6,233,740 | | | Kamy Scarlett Chief Human Resources Officer
| | | 2020 | | | 800,000 | | | 500,000(6) | | | 1,000,553 | | | 2,248,690 | | | 1,344,000 | | | 123,146 | | | 6,016,389 | | | 2019 | | | 684,615 | | | — | | | 899,283 | | | 1,009,116 | | | 1,444,451 | | | 165,029 | | | 4,202,494 | | | Keith Nelsen(7) General Counsel and Secretary (Former)
| | | 2020 | | | 432,692 | | | — | | | 1,650,734 | | | — | | | — | | | 1,587,206 | | | 3,670,632 | | | 2019 | | | 740,769 | | | — | | | 1,651,340 | | | — | | | 1,230,620 | | | 34,602 | | | 3,657,331 | | | 2018 | | | 697,885 | | | — | | | 1,656,905 | | | — | | | 1,249,817 | | | 22,507 | | | 3,627,114 | | | Trish Walker(8) President, Services and Home Channel
| | | 2020 | | | 750,000 | | | — | | | 1,450,700 | | | 998,684 | | | 840,000 | | | 206,650 | | | 4,246,034 | |
| | (1)
| These amounts reflect actual earnings based on a blend of prior annual base salary rates and the go-forward base salary rates approved by the Compensation Committee during its annual review in March of each year, as well as any off-cycle increases approved by the Compensation Committee during the year. Further, these amounts are before any deferrals under the Deferred Compensation Plan. We do not provide guaranteed, above-market or preferential earnings on compensation deferred under the Deferred Compensation Plan. The investment options available for notional investment of deferred compensation are similar to those available under the Retirement Savings Plan and can be found, along with additional information about deferred amounts, in the Nonqualified Deferred Compensation section. |
| | (2)
| These amounts reflect the aggregate grant date fair value for stock-based awards granted to our NEOs for all fiscal years reflected,reflected; however, fiscal 20162020 amounts are explained in greater detail under the heading Grants of Plan-Based Awards.and in footnote 3 below. The grant date fair value reflected for any award subject to performance share awardconditions is the value at the grant date of the probable outcome of the award. The grant date fair value of an award is measured in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (" (“ASC Topic 718"718”). The amountsAs permitted by ASC Topic 718, we account for any forfeitures as they occur rather than estimating future service-based forfeitures, and, accordingly, the grant date fair values reported havedo not been adjusted to eliminate service-based forfeiture assumptions.assume any estimated forfeitures. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders'Shareholders’ Equity, of the Notes to the consolidated financial statementsConsolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2016.February 1, 2020. |
| | (3)
| The fiscal 20162020 amounts reflected in this column include the probable grant date fair value of: (a) one or more time-based restricted share awards that vest on a time-based schedule subject to achievement of positive adjusted net earnings in any fiscal year during the three-year term of the award (described in greater detail in the Grants of Plan-Based Awards section)section), and (b) one or more performance share award (valued at the probable outcome of the award as of the grant date)awards that will be earned depending on the performance of our stock's |
| | | | | | | | | | | | | | | | | | | 63 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS earned depending on the performance of our stock’s total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a three-year period or depending on the compound annual growth rate of our enterprise revenue over a three-year period (also described in greater detail in the Grants of Plan-Based Awards section). The maximum value of the performance share awards for each NEO as of the grant date, assuming the highest level of performance, is noted in the following table: | Ms. Barry | | | 63,314 | | | $4,238,134 | | | 94,971 | | | $6,357,201 | | | Mr. Joly | | | 80,608 | | | 5,890,809 | | | 120,912 | | | 8,836,213 | | | Mr. Bilunas | | | 8,602 | | | 584,845 | | | 12,903 | | | 877,268 | | | Mr. Alexander | | | 3,991 | | | 285,362 | | | 5,987 | | | 428,042 | | | Mr. Mohan | | | 43,974 | | | 3,013,601 | | | 65,961 | | | 4,520,401 | | | Ms. Scarlett | | | 8,748 | | | 625,493 | | | 13,122 | | | 938,239 | | | Mr. Nelsen | | | 11,548 | | | 825,698 | | | 17,322 | | | 1,238,548 | | | Ms. Walker | | | 10,149 | | | 725,667 | | | 15,244 | | | 1,088,501 | |
*
| Multiple performance share awards for each NEO have been aggregated in the table above. For additional detail, see the Grants of Plan-Based Awardssection). The maximum value of the performance share awards as of the grant date, assuming the highest level of performance conditions, is noted in the following table: section. |
| | | | | | | | | | | | | | | | | | | | | | | | Name | | Probable Grant Date Fair Value of Performance Share Awards (reflected in Stock Awards Column) | | Target Performance Grant in Shares | | Maximum Performance Grant in Shares | | Maximum Grant Date Fair Value of Performance Share Awards | | Grant Date Fair Value of Time-Based Awards (reflected in Stock Awards Column) | | Stock Awards Column Total | Mr. Joly | | $ | 4,997,750 |
| | 118,374 |
| | 177,561 |
| | $ | 7,496,625 |
| | $ | 3,013,938 |
| | $ | 8,011,688 |
| Ms. McCollam | | 1,515,994 |
| | 35,907 |
| | 53,861 |
| | 2,273,990 |
| | 1,523,730 |
| | 3,039,724 |
| Ms. Ballard* | | 1,332,716 |
| | 31,566 |
| | 47,350 |
| | 1,999,076 |
| | 1,339,554 |
| | 2,672,270 |
| Mr. Mohan | | 666,358 |
| | 15,783 |
| | 23,675 |
| | 999,538 |
| | 669,777 |
| | 1,336,135 |
| Mr. Nelsen | | 549,747 |
| | 13,021 |
| | 19,532 |
| | 824,620 |
| | 552,567 |
| | 1,102,314 |
|
*Ms. Ballard had two time-based awards and two performance share awards during fiscal 2016, which have been aggregated here. For additional detail, see the Grants of Plan-Based Awards section.
| | (4)
| These amounts reflect STI payments made for all fiscal years shown.shown, except for Ms. Scarlett’s fiscal 2019 amount which includes her fiscal 2019 STI payment as well as her Canadian special award payment, which was originally granted in fiscal 2016 and paid out based on Canadian performance in fiscal 2019. The fiscal 20162020 STI plan is described in the section Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive.Incentive. |
| | (5)
| The fiscal 20162020 amounts reflected in this column include All Other Compensation as described in the following table: |
| | | | | | | | | | | | | | | | | | Name | | Retirement Plan Contribution(a) |
| | Life Insurance Premiums(b) |
| | Other |
| | Total |
| Mr. Joly | | $ | 11,404 |
| | $ | 492 |
| | $ | 17,132 |
| (c) | $ | 29,028 |
| Ms. McCollam | | 9,177 |
| | 492 |
| | — |
| (d) | 9,669 |
| Ms. Ballard | | 9,990 |
| | 492 |
| | 14,159 |
| (c) | 24,641 |
| Mr. Mohan | | 9,831 |
| | 492 |
| | — |
| (d) | 10,323 |
| Mr. Nelsen | | 9,990 |
| | 492 |
| | — |
| (d) | 10,482 |
|
| Ms. Barry | | | $8,615 | | | $492 | | | $28,760(c) | | | $37,867 | | | Mr. Joly | | | 9,277 | | | 492 | | | 161,188(d) | | | 170,957 | | | Mr. Bilunas | | | 12,200 | | | 492 | | | 23,085(e) | | | 35,777 | | | Mr. Alexander | | | 11,600 | | | 492 | | | 4,322(f) | | | 16,414 | | | Mr. Mohan | | | 11,508 | | | 492 | | | 13,268(g) | | | 25,268 | | | Ms. Scarlett | | | 11,354 | | | 492 | | | 111,300(h) | | | 123,146 | | | Mr. Nelsen | | | 8,077 | | | 328 | | | 1,578,801(i) | | | 1,587,206 | | | Ms. Walker | | | 11,200 | | | 492 | | | 194,958(j) | | | 206,650 | |
| | (a)
| These amounts reflect our matching contributions to the NEOs'NEOs’ Retirement Savings Plan accounts and include true-up contributions made during fiscal 2016 to NEOs who had not previously received the prior year's maximum matching contribution.accounts. |
| | (b)
| These amounts reflect the portions of premiums paid by us for group term life insurance coverage. |
(c)
| | (c) | These amounts reflect portions ofThe amount reflects premiums paid by us for supplemental executive long-term disability insurance.insurance ($8,124), company-paid costs associated with the executive physical benefit ($10,235), company-paid tax preparation and planning services ($2,000), company-paid legal fees associated with the negotiation of Ms. Barry’s employment agreement ($1,600) and the incremental cost of Ms. Barry’s use of the Company’s leased private jet for travel to outside board meetings ($6,801). The Company considers travel to outside board meetings to be business-related as part of Ms. Barry’s professional development, as determined by our Board, and therefore, Ms. Barry is not required to reimburse the Company for those flights. Nevertheless, the Company has reported the aggregate incremental cost to the Company of those flights above, based on the actual invoiced amount from the Company’s third-party provider for the variable costs incurred on each trip, such as occupied hourly fees, as well as other direct operating costs to the Company, including fuel costs, any applicable ferry fees, crew fees and travel expenses for international flights, and passenger ground transportation handling fees. The aggregate incremental cost does not include certain fixed costs that do not change based on usage, such as monthly lease and management fees that are billed regardless of usage and the aircraft lease deposit. In addition, family members and invited guests of Ms. Barry occasionally ride along as additional passengers on business flights, and Ms. Barry reimbursed the Company for the cost of such ride-alongs at the greater of the incremental cost, if any, to accommodate the personal passengers on the flight and the imputed income amount determined using the IRS Standard Industry Fare Level (“SIFL”) rate. |
(d)
| | (d) | In accordanceThe amount reflects premiums paid by us for supplemental executive long-term disability insurance ($12,815), company-paid costs associated with the SEC’s disclosure rules, perquisitesexecutive physical benefit ($29,753), company-paid legal fees associated with the negotiation of Mr. Joly’s employment agreement ($25,000) and other personal benefits providedthe incremental cost of Mr. Joly’s use of the Company’s leased private jet for travel to outside board meetings ($93,620). The Company considers travel to outside board meetings to be business-related as part of Mr. Joly’s professional development, as determined by our Board, and therefore, Mr. Joly is not required to reimburse the named executive officers are not includedCompany for fiscal 2016 for Ms. McCollam and Messrs. Mohan and Nelsen becausethose flights. Nevertheless, the Company has reported the aggregate incremental valuecost to the Company of perquisites was less than $10,000those flights above, based on the actual invoiced amount from the Company’s third-party provider for the variable costs incurred on each trip, such as occupied hourly fees, as well as other direct operating costs to the Company, including fuel costs, any applicable ferry fees, crew fees and travel expenses for international flights, and passenger ground transportation handling fees, offset by any amounts reimbursed to Mr. Joly by the company for which he attended board meetings. The aggregate incremental cost does not include certain fixed costs that do not change based on usage, such as monthly lease and management fees that are billed regardless of these namedusage and the aircraft lease |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 64 | | | | | | |
TABLE OF CONTENTS deposit. Mr. Joly is also permitted to use the Company’s leased private jet for personal travel, and he has paid the invoiced charges for those flights. In addition, family members and invited guests of Mr. Joly occasionally ride along as additional passengers on business flights, and Mr. Joly reimbursed the Company for the cost of such ride-alongs at the greater of the incremental cost, if any, to accommodate the personal passengers on the flight and the imputed income amount determined using the IRS SIFL rate. (e)
| The amount reflects premiums paid by us for supplemental executive officers.long-term disability insurance ($6,709) and company-paid costs associated with the executive physical benefit ($16,376). |
(f)
| The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($672) and company-paid tax preparation and planning services ($3,650). |
(g)
| The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($11,288) and company-paid tax preparation and planning services ($1,980). |
(h)
| The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($14,417) and benefits provided as part of Ms. Scarlett’s relocation from Canada to the United States, including company-paid tax preparation and planning services ($25,734), tax gross-ups on the tax preparation and planning services ($22,364), tax equalization payments made on Ms. Scarlett’s behalf to cover incremental taxes ($21,981), tax gross-ups on the tax equalization payments ($21,289) and a prior-year gross-up shortfall payment related to previously grossed up tax services ($5,515). |
(i)
| The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($6,294), company-paid tax preparation and planning services ($2,000) and Mr. Nelsen’s lump sum severance payment ($1,570,507). |
(j)
| The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($13,542), company-paid costs associated with the executive physical benefit ($6,416) and a transportation stipend related to interstate commuting costs ($175,000). |
(6)
| During fiscal 2020, the Compensation Committee approved a cash bonus for Ms. Scarlett in recognition of her stewardship over the CEO transition while also maintaining the integrity and effectiveness of the senior leadership team. |
(7)
| In April 2019, Mr. Nelsen stepped down from his role as General Counsel and Secretary and assumed an advisory role in support of his successor through September 1, 2019, when his employment terminated. |
(8)
| Ms. Walker’s status as an executive officer changed in March 2019 as a result of the leadership transitions and resulting changes in reporting lines. Disclosure of Ms. Walker’s compensation is included in this section because she served as an executive officer for a portion of fiscal 2020 and would have otherwise been included in this table had she been serving as an executive officer at year-end. |
| | | | | | | | | | | | | (6) | Effective March 1, 2016, Ms. Ballard took on a new role. While remaining President of U.S. Retail, she will also focus on accelerating our efforts around waste and efficiency. A new Chief Human Resources Officer, Paula Baker, was promoted internally effective March 1, 2016. | | | | | 65 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS
Grants of Plan-Based Awards
The table below summarizes the grants made to each of our NEOs during fiscal 20162020 under the 2014 Omnibus Stock and Incentive Plan and the Short-Term Incentive Plan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($ / Sh) | | | | | | | | | | | | | | | | | | | | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under | | Estimated Future Payouts Under | | | | | | | | | Non-Equity Incentive Plan Awards(1) | | Equity Incentive Plan Awards | | | | | Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | | | Mr. Joly | | — |
| | $ | 587,500 |
| | $ | 2,350,000 |
| | $ | 4,700,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
| | | 3/12/2015 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 158,445 |
| | 40.85 | | 1,842,715 |
| | | 3/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 77,142 |
| | — |
| | — |
| | 3,013,938 |
| | | 3/12/2015 |
| (5) | — |
| | — |
| | — |
| | 59,187 |
| | 118,374 |
| | 177,561 |
| | — |
| | — |
| | — |
| | 4,997,750 |
| Ms. McCollam | | | | 346,875 |
| | 1,387,500 |
| | 2,775,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 3/12/2015 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 120,154 |
| | 40.85 | | 1,397,391 |
| | | 3/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 39,000 |
| | — |
| | — |
| | 1,523,730 |
| | | 3/12/2015 |
| (5) | — |
| | — |
| | — |
| | 17,954 |
| | 35,907 |
| | 53,861 |
| | — |
| | — |
| | — |
| | 1,515,994 |
| Ms. Ballard | | — |
| | 296,875 |
| | 1,187,499 |
| | 2,374,998 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 3/12/2015 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 52,815 |
| | 40.85 | | 614,238 |
| | | 3/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,143 |
| | — |
| | — |
| | 669,777 |
| | | 3/12/2015 |
| (5) | — |
| | — |
| | — |
| | 7,892 |
| | 15,783 |
| | 23,675 |
| | — |
| | — |
| | — |
| | 666,358 |
| | | 3/12/2015 |
| (3)(6) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 52,815 |
| | 40.85 | | 614,238 |
| | | 3/12/2015 |
| (4)(6) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,143 |
| | — |
| | — |
| | 669,777 |
| | | 3/12/2015 |
| (5)(6) | — |
| | — |
| | — |
| | 7,892 |
| | 15,783 |
| | 23,675 |
| | — |
| | — |
| | — |
| | 666,358 |
| Mr. Mohan | | — |
| | 296,875 |
| | 1,187,499 |
| | 2,374,998 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 3/12/2015 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 52,815 |
| | 40.85 | | 614,238 |
| | | 3/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,143 |
| | — |
| | — |
| | 669,777 |
| | | 3/12/2015 |
| (5) | — |
| | — |
| | — |
| | 7,892 |
| | 15,783 |
| | 23,675 |
| | — |
| | — |
| | — |
| | 666,358 |
| Mr. Nelsen | | — |
| | 158,333 |
| | 633,333 |
| | 1,266,666 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 3/12/2015 |
| (3) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 43,572 |
| | 40.85 | | 506,742 |
| | | 3/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 14,143 |
| | — |
| | — |
| | 552,567 |
| | | 3/12/2015 |
| (5) | — |
| | — |
| | — |
| | 6,511 |
| | 13,021 |
| | 19,532 |
| | — |
| | — |
| | — |
| | 549,747 |
|
| Ms. Barry | | | — | | | $384,375 | | | $1,708,334 | | | $3,416,667 | | | — | | | — | | | — | | | — | | | — | | | $— | | | $— | | | 3/20/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 31,343 | | | 69.11 | | | 600,845 | | | 3/20/2019(4) | | | — | | | — | | | — | | | — | | | 13,023 | | | 13,023 | | | — | | | — | | | — | | | 900,020 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 5,072 | | | 10,143 | | | 15,215 | | | — | | | — | | | — | | | 751,191 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 5,427 | | | 10,853 | | | 16,280 | | | — | | | — | | | — | | | 750,051 | | | 6/11/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 62,829 | | | 65.52 | | | 1,094,481 | | | 6/11/2019(4) | | | — | | | — | | | — | | | — | | | 25,069 | | | 25,069 | | | — | | | — | | | — | | | 1,642,521 | | | 6/11/2019(5) | | | — | | | — | | | — | | | 10,714 | | | 21,427 | | | 32,141 | | | — | | | — | | | — | | | 1,368,114 | | | 6/11/2019(6) | | | — | | | — | | | — | | | 10,446 | | | 20,891 | | | 31,337 | | | — | | | — | | | — | | | 1,368,778 | | | Mr. Joly(7) | | | — | | | 288,750 | | | 1,283,334 | | | 2,566,667 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/26/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 120,337 | | | 70.50 | | | 2,348,978 | | | 3/26/2019(8) | | | — | | | — | | | — | | | — | | | 50,000 | | | 50,000 | | | — | | | — | | | — | | | 3,525,000 | | | 3/26/2019(5) | | | — | | | — | | | — | | | 19,471 | | | 38,941 | | | 58,412 | | | — | | | — | | | — | | | 2,953,285 | | | 3/26/2019(6) | | | — | | | — | | | — | | | 20,834 | | | 41,667 | | | 62,501 | | | — | | | — | | | — | | | 2,937,524 | | | Mr. Bilunas | | | — | | | 160,313 | | | 712,500 | | | 1,425,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 49,050 | | | 69.11 | | | 1,000,620 | | | 3/20/2019(10) | | | — | | | — | | | — | | | — | | | — | | | — | | | 7,151 | | | — | | | — | | | 494,206 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 836 | | | 1,671 | | | 2,507 | | | — | | | — | | | — | | | 123,754 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 894 | | | 1,788 | | | 2,682 | | | — | | | — | | | — | | | 123,569 | | | 8/20/2019(4) | | | — | | | — | | | — | | | — | | | 5,111 | | | 5,111 | | | — | | | — | | | — | | | 337,530 | | | 8/20/2019(5) | | | — | | | — | | | — | | | 1,294 | | | 2,587 | | | 3,881 | | | — | | | — | | | — | | | 168,724 | | | 8/20/2019(6) | | | — | | | — | | | — | | | 1,278 | | | 2,556 | | | 3,834 | | | — | | | — | | | — | | | 168,798 | | | Mr. Alexander | | | — | | | 102,844 | | | 457,083 | | | 914,167 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 49,050 | | | 69.11 | | | 1,000,620 | | | 3/20/2019(10) | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,251 | | | — | | | — | | | 570,227 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 964 | | | 1,928 | | | 2,892 | | | — | | | — | | | — | | | 142,788 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 1,032 | | | 2,063 | | | 3,095 | | | — | | | — | | | — | | | 142,574 | | | Mr. Mohan | | | — | | | 341,250 | | | 1,516,667 | | | 3,033,334 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37,089 | | | 69.11 | | | 710,996 | | | 3/20/2019(4) | | | — | | | — | | | — | | | — | | | 15,411 | | | 15,411 | | | — | | | — | | | — | | | 1,065,054 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 6,001 | | | 12,002 | | | 18,003 | | | — | | | — | | | — | | | 888,868 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 6,421 | | | 12,842 | | | 19,263 | | | — | | | — | | | — | | | 887,511 | | | 6/11/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 28,403 | | | 65.52 | | | 494,780 | | | 6/11/2019(4) | | | — | | | — | | | — | | | — | | | 11,333 | | | 11,333 | | | — | | | — | | | — | | | 742,538 | | | 6/11/2019(5) | | | — | | | — | | | — | | | 4,843 | | | 9,686 | | | 14,529 | | | — | | | — | | | — | | | 618,451 | | | 6/11/2019(6) | | | — | | | — | | | — | | | 4,722 | | | 9,444 | | | 14,166 | | | — | | | — | | | — | | | 618,771 | | | 6/11/2019(11) | | | — | | | — | | | — | | | — | | | — | | | — | | | 38,157 | | | — | | | — | | | 2,500,047 | | | Ms. Scarlett | | | — | | | 270,000 | | | 1,200,000 | | | 2,400,001 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 13,060 | | | 69.11 | | | 250,360 | | | 3/20/2019(4) | | | — | | | — | | | — | | | — | | | 5,427 | | | 5,427 | | | — | | | — | | | — | | | 375,060 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 2,113 | | | 4,226 | | | 6,339 | | | — | | | — | | | — | | | 312,978 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 2,261 | | | 4,522 | | | 6,783 | | | — | | | — | | | — | | | 312,515 | | | 3/26/2019(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 96,166 | | | 70.50 | | | 1,998,329 | |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 66 | | | | | | |
TABLE OF CONTENTS | Mr. Nelsen(12) | | | — | | | 168,750 | | | 750,000 | | | 1,500,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(4) | | | — | | | — | | | — | | | — | | | 11,938 | | | 11,938 | | | — | | | — | | | — | | | 825,035 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 2,790 | | | 5,579 | | | 8,369 | | | — | | | — | | | — | | | 413,181 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 2,985 | | | 5,969 | | | 8,954 | | | — | | | — | | | — | | | 412,518 | | | Ms. Walker | | | — | | | 168,750 | | | 750,000 | | | 1,500,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/20/2019(4) | | | — | | | — | | | — | | | — | | | 10,491 | | | 10,491 | | | — | | | — | | | — | | | 725,033 | | | 3/20/2019(5) | | | — | | | — | | | — | | | 2,452 | | | 4,903 | | | 7,355 | | | — | | | — | | | — | | | 363,166 | | | 3/20/2019(6) | | | — | | | — | | | — | | | 2,623 | | | 5,246 | | | 7,869 | | | — | | | — | | | — | | | 362,551 | | | 3/27/2019(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 48,083 | | | 70.50 | | | 998,684 | |
(1)
| These amounts reflect the potential threshold, target and maximum payout for each NEO under our fiscal 20162020 STI, which is described in greater detail under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive. The actual payout to each NEO for fiscal 20162020 is provided in the following sections: Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive and the Summary Compensation Table. |
| | (2)
| These amounts reflect the aggregate grant date fair value, measured in accordance with ASC Topic 718. The amountsAs permitted by ASC Topic 718, we account for any forfeitures as they occur rather than estimating future service-based forfeitures, and, accordingly, the grant date fair values reported havedo not been adjusted to eliminate service-based forfeiture assumptions.assume any estimated forfeitures. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders'Shareholders’ Equity, of the Notes to the consolidated financial statementsConsolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2016.February 1, 2020. The value reflected for any performance shareperformance-conditioned award is the value at the grant date ofbased upon the probable outcome of the award – see footnote (3) to the Summary Compensation Table. |
| | (3)
| The amounts reflect nonqualified stock options, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that have a term of ten years and become exercisable in three equal installments of one-third on each of the first three anniversaries of the grant date, provided the NEO has been continually employed with us through those dates. The option exercise price is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. |
| | (4)
| The amounts reflect performance-conditioned time-based restricted shares, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, which will vest in three equal installments of one-third on each of the first three anniversaries of the grant date, provided the NEO has been continually employed with us through those dates and provided that we have achieved positive “adjusted net earnings” as of the end of any fiscal year during the three-year term of the award. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on the number of restricted shares held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the restricted shares on which such dividend equivalents were credited have become earned, vested and payable. |
(5)
| The amounts reflect performance share awards, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that, if earned, will vest at or between the threshold (50% of target) and maximum (150% of target) levels depending on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 3, 2019, and ending on January 29, 2022. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on the number of performance shares held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the performance shares on which such dividend equivalents were credited have become earned, vested and payable. |
(6)
| The amounts reflect performance share awards, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that, if earned, will vest at or between the threshold (50% of target) and maximum (150% of target) levels depending on the compound annual growth rate of our enterprise revenue, over the 36-month period commencing on February 3, 2019, and ending on January 29, 2022. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on the number of performance shares held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the performance shares on which such dividend equivalents were credited have become earned, vested and payable. |
(7)
| Mr. Joly met the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019. The effect of qualified retirement on all of our outstanding equity awards is discussed in the Potential Payments Upon Termination or Change-of-Control section. |
(8)
| The amounts reflect performance-conditioned time-based restricted stock units, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, which will vest in three equal installments of one-third on each of the first three anniversaries of the grant date, provided the NEO has been continually employed with us through those dates and provided that we have achieved positive “adjusted net earnings” as of the end of any fiscal year during the three-year term of the award. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on the number of restricted stock units held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the restricted stock units on which such dividend equivalents were credited have become earned, vested and payable. |
(9)
| The amounts reflect nonqualified stock options, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that have a term of ten years and become exercisable on the fourth anniversary of the grant date, provided the NEO has been continually employed with us through that date. The option exercise price is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. |
(10)
| The amounts reflect time-based restricted shares, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, which will vest in three equal installments of one-third on each of the first three anniversaries of the grant date, provided the NEO has been continually employed with us through those dates. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on the number of restricted shares held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the restricted shares on which such dividend equivalents were credited have become earned, vested and payable. |
| | | | | | | | | | | | | (5) | | | | | | 67 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS (11)
| The amounts reflect performance share awards,amount reflects time-based restricted shares, as discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that, if earned,which will vest at or between the threshold (50% of target) and maximum (150% of target) levels dependingin full on the performance of our stock's total shareholder return, relative to a peer group comprisedsecond anniversary of the S&P 500 Index, overgrant date, provided the 36-month period commencingNEO has been continually employed with us through that date. The NEO is also entitled to an accrual of dividend equivalents, equal to the cash amount that would have been payable on March 1, 2015the number of restricted shares held by them as of the close of business on the record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when the restricted shares on which such dividend equivalents were credited have become earned, vested and ending on February 28, 2018.payable. |
(12)
| Mr. Nelsen’s fiscal 2020 STI and performance-conditioned time-based restricted shares were forfeited upon his termination on September 1, 2019. His outstanding performance share awards are eligible for prorated payouts as detailed in the Potential Payments Upon Termination or Change-of-Control section. |
| | | | | | | | | | | | | (6) | | | As discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, in addition to her fiscal 2016 LTI award, Ms. Ballard received a one-time long-term incentive equity award having the same terms as the fiscal 2016 LTI award.2020 Proxy Statement
| | | 68 | | | | | | |
TABLE OF CONTENTS
Outstanding Equity Awards at Fiscal Year-End
The following table provides a summary of the NEOs'NEO’s equity-based awards outstanding as of the end of fiscal 2016: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | |
Grant Date(1) | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Mr. Joly | | 3/12/2015 | | | | 158,445(3) | | $ | 40.85 |
| | 3/11/2025 | | 77,142(4) | | $ | 2,154,576 |
| | 59,187(5) | | $ | 1,653,093 |
| | | 8/18/2014 | | 61,330(3) | | 122,660(3) | | 29.91 |
| | 8/17/2024 | | 61,588(4) | | 1,720,153 |
| | 149,257(6) | | 4,168,748 |
| | | 4/16/2013 | | 166,905(3) | | 83,453(3) | | 23.66 |
| | 4/15/2023 | | 43,554(4) | | 1,216,463 | | 290,376(7) | | 8,110,202 |
| | | 9/4/2012 | | 350,468(8) | | | | 18.02 |
| | 9/3/2022 | | | | | | | | | Ms. McCollam | | 3/12/2015 | | | | 120,154(3) | | 40.85 |
| | 3/11/2025 | | 39,000(4) | | 1,089,270 |
| | 17,954(5) | | 501,455 |
| | | 8/18/2014 | | 47,311(3) | | 94,623(3) | | 29.91 |
| | 8/17/2024 | | 31,674(4) | | 884,655 |
| | 46,056(6) | | 1,286,344 |
| | | 4/16/2013 | | 128,755(3) | | 64,378(3) | | 23.66 |
| | 4/15/2023 | | 22,400(4) | | 625,632 |
| | 89,603(7) | | 2,502,612 |
| | | 12/10/2012 | | 383,142(3) | | | | 12.39 |
| | 12/9/2022 | | | | | | | | | Ms. Ballard | | 3/12/2015 | | 105,630(3) | | | | 40.85 |
| | 3/11/2025 | | 34,286(4) | | 957,608 |
| | 15,783(5) | | 440,819 |
| | | 8/18/2014 | | 28,036(3) | | 14,018(3) | | 29.91 |
| | 8/17/2024 | | 9,385(4) | | 262,123 |
| | 13,646(6) | | 381,133 |
| | | 4/16/2013 | | 38,150(3) | | 19,075(3) | | 23.66 |
| | 4/15/2023 | | 6,637(4) | | 185,372 |
| | 26,549(7) | | 741,514 |
| | | 1/16/2013 | | 11,084(3) | | | | 14.67 |
| | 1/15/2023 | | | | | | | | | | | 9/19/2012 | | 11,084(3) | | | | 17.94 |
| | 9/18/2022 | | | | | | | | | | | 6/20/2012 | | 11,084(3) | | | | 20.31 |
| | 6/19/2022 | | | | | | | | | | | 4/18/2012 | | 8,334(3) | | | | 22.06 |
| | 4/17/2022 | | | | | | | | | | | 2/1/2012 | | 11,250(9) | | 3,750(9) | | 24.18 |
| | 1/31/2022 | | 417(10) | | 11,647 |
| | | | | | | 9/21/2011 | | 15,000(9) | | | | 24.12 |
| | 9/20/2021 | | | | | | | | | | | 6/20/2011 | | 15,000(9) | | | | 31.54 |
| | 6/19/2021 | | | | | | | | | | | 4/6/2011 | | 20,000(9) | | | | 29.75 |
| | 4/5/2021 | | | | | | | | | | | 1/12/2011 | | 20,000(9) | | | | 35.67 |
| | 1/11/2021 | | | | | | | | | | | 9/20/2010 | | 20,000(9) | | | | 38.32 |
| | 9/19/2020 | | | | | | | | | | | 6/23/2010 | | 16,563(9) | | | | 36.63 |
| | 6/22/2020 | | | | | | | | | | | 4/7/2010 | | 16,563(9) | | | | 44.20 |
| | 4/6/2020 | | | | | | | | | | | 1/13/2010 | | 16,563(9) | | | | 39.73 |
| | 1/12/2020 | | | | | | | | | | | 9/17/2009 | | 16,563(9) | | | | 37.59 |
| | 9/16/2019 | | | | | | | | | | | 6/23/2009 | | 33,125(9) | | | | 32.98 |
| | 6/22/2019 | | | | | | | | | | | 10/31/2008 | | 66,250(9) | | | | 26.88 |
| | 10/30/2018 | | | | | | | | | | | 10/18/2007 | | 66,200(9) | | | | 47.84 |
| | 10/17/2017 | | | | | | | | | | | 10/23/2006 | | 66,200(9) | | | | 55.46 |
| | 10/22/2016 | | | | | | | | | Mr. Mohan | | 3/12/2015 | | | | 52,815(3) | | 40.85 |
| | 3/11/2025 | | 15,783(4) | | 440,819 |
| | 7,892(5) | | 220,424 |
| | | 8/18/2014 | | 20,443(3) | | 40,886(3) | | 29.91 |
| | 8/17/2024 | | 13,686(4) | | 382,250 |
| | 19,901(6) | | 555,835 |
| | | 3/12/2014 | | 15,128(3) | | 30,257(3) | | 25.74 |
| | 3/11/2024 | | 10,527(4) | | 294,019 |
| | | | | | | 4/16/2013 | | 31,791(3) | | 15,896(3) | | 23.66 |
| | 4/15/2023 | | 5,531(4) | | 154,481 |
| | 22,124(7) | | 617,923 |
| | | 3/11/2013 | | 19,970(3) | | 35,330(3) | | 20.08 |
| | 3/10/2023 | | 11,514(4) | | 321,586 |
| | | | | | | 1/16/2013 | | 1,330(3) | | | | 14.67 |
| | 1/15/2023 | | | | | | | | | | | 9/19/2012 | | 1,330(3) | | | | 17.94 |
| | 9/18/2022 | | | | | | | | | | | 4/18/2012 | | 3,000(3) | | | | 22.06 |
| | 4/17/2022 | | | | | | | | | | | 2/1/2012 | | 3,750(9) | | 1,250(9) | | 24.18 |
| | 1/31/2022 | | | | | | | | | | | 9/21/2011 | | 5,000(9) | | | | 24.12 |
| | 9/20/2021 | | | | | | | | | | | 6/20/2011 | | 5,000(9) | | | | 31.54 |
| | 6/19/2021 | | | | | | | | | | | 4/6/2011 | | 5,000(9) | | | | 29.75 |
| | 4/5/2021 | | | | | | | | | | | 1/12/2011 | | 5,000(9) | | | | 35.67 |
| | 1/11/2021 | | | | | | | | | | | 9/20/2010 | | 5,000(9) | | | | 38.32 |
| | 9/19/2020 | | | | | | | | | | | 6/23/2010 | | 5,000(9) | | | | 36.63 |
| | 6/22/2020 | | | | | | | | | | | 4/7/2010 | | 6,250(9) | | | | 44.20 |
| | 4/6/2020 | | | | | | | | | | | 1/13/2010 | | 6,250(9) | | | | 39.73 |
| | 1/12/2020 | | | | | | | | | | | 9/17/2009 | | 6,250(9) | | | | 37.59 |
| | 9/16/2019 | | | | | | | | | | | 6/23/2009 | | 12,500(9) | | | | 32.98 |
| | 6/22/2019 | | | | | | | | | | | 10/31/2008 | | 18,333(9) | | | | 26.88 |
| | 10/30/2018 | | | | | | | | | | | 8/5/2008 | | 20,000(9) | | | | 41.19 |
| | 8/4/2018 | | | | | | | | | | | 10/18/2007 | | 4,878(9) | | | | 47.84 |
| | 10/17/2017 | | | | | | | | | | | 10/23/2006 | | 5,025(9) | | | | 55.46 |
| | 10/22/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ms. Barry | | | 6/11/2019 | | | | | | 62,829(3) | | | $65.52 | | | 6/10/2029 | | | 25,578(4) | | | $2,166,201 | | | 32,576(5) | | | $2,758,819 | | | 6/11/2019 | | | | | | | | | | | | | | | | | | | | | 31,761(6) | | | 2,689,797 | | | 3/20/2019 | | | | | | 31,343(3) | | | 69.11 | | | 3/19/2029 | | | 13,378(4) | | | 1,132,983 | | | 15,493(5) | | | 1,312,060 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 16,575(6) | | | 1,403,694 | | | 3/12/2018 | | | | | | | | | | | | | | | 14,647(4) | | | 1,132,983 | | | 15,722(7) | | | 1,331,539 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 16,194(8) | | | 1,371,470 | | | 3/13/2017 | | | | | | | | | | | | | | | 7,890(4) | | | 668,204 | | | 18,099(9) | | | 1,532,804 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 18,297(10) | | | 1,549,573 | | | 10/1/2015 | | | 33,253 | | | | | | 37.16 | | | 9/30/2025 | | | | | | | | | | | | | | | 3/12/2015 | | | 12,293 | | | | | | 40.85 | | | 3/11/2025 | | | | | | | | | | | | | | | 8/18/2014 | | | 14,730 | | | | | | 29.91 | | | 8/17/2024 | | | | | | | | | | | | | | | 6/19/2013 | | | 3,246 | | | | | | 27.66 | | | 6/18/2023 | | | | | | | | | | | | | | | 4/16/2013 | | | 3,243 | | | | | | 23.66 | | | 4/15/2023 | | | | | | | | | | | | | | | 1/12/2011 | | | 2,125 | | | | | | 35.67 | | | 1/11/2021 | | | | | | | | | | | | | | | 9/20/2010 | | | 2,125 | | | | | | 38.32 | | | 9/19/2020 | | | | | | | | | | | | | | | 6/23/2010 | | | 463 | | | | | | 36.63 | | | 6/22/2020 | | | | | | | | | | | | | | | 4/7/2010 | | | 523 | | | | | | 44.20 | | | 4/6/2020 | | | | | | | | | | | | | | | Mr. Joly(11) | | | 3/26/2019 | | | | | | 120,337(3) | | | 70.50 | | | 3/25/2029 | | | 49,815(4) | | | 4,218,832 | | | 59,201(5) | | | 5,013,690 | | | 3/26/2019 | | | | | | | | | | | | | | | | | | | | | 63,346(6) | | | 5,364,730 | | | 3/13/2018 | | | 34,660 | | | 69,321(3) | | | 71.52 | | | 3/12/2028 | | | 33,864(4) | | | 2,867,942 | | | 62,026(7) | | | 5,252,940 | | | 3/13/2018 | | | | | | | | | | | | | | | | | | | | | 63,887(8) | | | 5,410,548 | | | 3/13/2017 | | | 117,064 | | | 58,532(3) | | | 44.85 | | | 3/12/2027 | | | 24,846(4) | | | 2,104,208 | | | 97,277(9) | | | 8,238,347 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 98,342(10) | | | 8,328,542 | | | 3/12/2015 | | | 158,445 | | | | | | 40.85 | | | 3/11/2025 | | | | | | | | | | | | | | | Mr. Bilunas | | | 8/20/2019 | | | | | | | | | | | | | | | 5,180(4) | | | 438,694 | | | 3,916(5) | | | 331,604 | | | 8/20/2019 | | | | | | | | | | | | | | | | | | | | | 3,869(6) | | | 327,666 | | | 3/20/2019 | | | | | | 49,050(12) | | | 69.11 | | | 3/19/2029 | | | 7,347(13) | | | 622,217 | | | 2,554(5) | | | 216,256 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 2,733(6) | | | 231,458 | | | 3/12/2018 | | | | | | | | | | | | | | | 3,288(13) | | | 278,461 | | | 1,767(7) | | | 149,647 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 1,822(8) | | | 154,305 | | | 3/13/2017 | | | | | | | | | | | | | | | 2,674(13) | | | 226,461 | | | 3,379(9) | | | 286,210 | | | 3/12/2015 | | | 1,620 | | | | | | 40.85 | | | 3/11/2025 | | | | | | | | | | | | | | | Mr. Alexander | | | 3/20/2019 | | | | | | 49,050(12) | | | 69.11 | | | 3/19/2029 | | | 8,476(13) | | | 717,832 | | | 2,946(5) | | | 249,497 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 3,152(6) | | | 266,901 | | | 9/17/2018 | | | | | | | | | | | | | | | 337(13) | | | 28,541 | | | | | | | | | 3/12/2018 | | | | | | | | | | | | | | | 3,945(13) | | | 334,102 | | | 2,119(7) | | | 179,458 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 2,183(8) | | | 184,836 | | | 3/23/2017 | | | | | | | | | | | | | | | 5,919(13) | | | 501,280 | | | | | | | | | 3/13/2017 | | | | | | | | | | | | | | | 2,631(13) | | | 222,819 | | | 6,034(9) | | | 511,062 | | | Mr. Mohan | | | 6/11/2019 | | | | | | 28,403(3) | | | 65.52 | | | 6/10/2029 | | | 11,564(4) | | | 979,355 | | | 14,727(5) | | | 1,247,230 | | | 6/11/2019 | | | | | | | | | | | | | | | 38,930(14) | | | 3,296,982 | | | 14,359(6) | | | 1,216,064 | | | 3/20/2019 | | | | | | 37,089(3) | | | 69.11 | | | 3/19/2029 | | | 15,831(4) | | | 1,340,727 | | | 18,331(5) | | | 1,552,452 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 19,613(6) | | | 1,661,025 | | | 3/12/2018 | | | | | | | | | | | | | | | 17,336(4) | | | 1,468,186 | | | 18,607(7) | | | 1,575,827 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 19,162(8) | | | 1,622,830 | | | 3/13/2017 | | | | | | | | | | | | | | | 11,835(4) | | | 1,002,306 | | | 27,147(9) | | | 2,299,079 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 27,444(10) | | | 2,324,232 | | | Ms. Scarlett | | | 3/26/2019 | | | | | | 96,166(12) | | | 70.50 | | | 3/25/2029 | | | | | | | | | | | | | | | 3/20/2019 | | | | | | 13,060(3) | | | 69.11 | | | 3/19/2029 | | | 5,577(4) | | | 472,316 | | | 6,456(5) | | | 546,759 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 6,908(6) | | | 585,039 | | | 1/24/2019 | | | | | | 57,109(12) | | | 57.60 | | | 1/23/2029 | | | | | | | | | | | | | | | 3/12/2018 | | | | | | | | | | | | | | | 4,394(4) | | | 372,128 | | | 4,720(7) | | | 399,737 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 4,862(8) | | | 411,720 | | | 6/1/2017 | | | | | | | | | | | | | | | 2,740(4) | | | 232,051 | | | 6,288(9) | | | 532,531 | | | 6/1/2017 | | | | | | | | | | | | | | | | | | | | | 6,357(10) | | | 538,374 | | | 3/13/2017 | | | | | | | | | | | | | | | 2,273(13) | | | 192,500 | | | 5,214(9) | | | 441,574 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | |
Grant Date(1) | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Mr. Nelsen | | 3/12/2015 | | | | 43,572(3) | | 40.85 |
| | 3/11/2025 | | 14,143(4) | | $ | 395,014 |
| | 6,511(5) | | $ | 181,852 |
| | | 8/18/2014 | | 15,186(3) | | 30,373(3) | | 29.91 |
| | 8/17/2024 | | 10,167(4) | | 283,964 |
| | 14,783(6) | | 412,889 |
| | | 4/16/2013 | | 41,328(3) | | 20,665(3) | | 23.66 |
| | 4/15/2023 | | 7,190(4) | | 200,817 |
| | 28,761(7) | | 803,295 |
| | | 1/16/2013 | | 3,325(3) | | | | 14.67 |
| | 1/15/2023 | | | | | | | | | | | 9/19/2012 | | 3,325(3) | | | | 17.94 |
| | 9/18/2022 | | | | | | | | | | | 2/1/2012 | | 7,031(9) | | 2,344(9) | | 24.18 |
| | 1/31/2022 | | 261(10) | | 7,290 |
| | | | | | | 9/21/2011 | | 6,875(9) | | | | 24.12 |
| | 9/20/2021 | | | | | | | | | | | 6/20/2011 | | 9,375(9) | | | | 31.54 |
| | 6/19/2021 | | | | | | | | | | | 4/6/2011 | | 5,000(9) | | | | 29.75 |
| | 4/5/2021 | | | | | | | | | | | 1/12/2011 | | 5,000(9) | | | | 35.67 |
| | 1/11/2021 | | | | | | | | | | | 9/20/2010 | | 5,000(9) | | | | 38.32 |
| | 9/19/2020 | | | | | | | | | | | 6/23/2010 | | 5,000(9) | | | | 36.63 |
| | 6/22/2020 | | | | | | | | | | | 4/7/2010 | | 5,250(9) | | | | 44.20 |
| | 4/6/2020 | | | | | | | | | | | 1/13/2010 | | 5,250(9) | | | | 39.73 |
| | 1/12/2020 | | | | | | | | | | | 9/17/2009 | | 5,250(9) | | | | 37.59 |
| | 9/16/2019 | | | | | | | | | | | 6/23/2009 | | 10,500(9) | | | | 32.98 |
| | 6/22/2019 | | | | | | | | | | | 10/31/2008 | | 10,000(9) | | | | 26.88 |
| | 10/30/2018 | | | | | | | | | | | 8/5/2008 | | 20,000(9) | | | | 41.19 |
| | 8/4/2018 | | | | | | | | | | | 10/18/2007 | | 4,403(9) | | | | 47.84 |
| | 10/17/2017 | | | | | | | | | | | 2/21/2007 | | 13,000(9) | | | | 50.39 |
| | 2/20/2017 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 69 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS | Mr. Nelsen | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 8,463(5) | | | 716,689 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 9,053(6) | | | 766,656 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 8,616(7) | | | 729,647 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 8,873(8) | | | 751,454 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 14,931(9) | | | 1,264,506 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 15,095(10) | | | 1,278,353 | | | Ms. Walker | | | 3/27/2019 | | | | | | 48,083(12) | | | 70.50 | | | 3/26/2029 | | | | | | | | | | | | | | | 3/20/2019 | | | | | | | | | | | | | | | 10,777(4) | | | 912,704 | | | 7,490(5) | | | 634,286 | | | 3/20/2019 | | | | | | | | | | | | | | | | | | | | | 8,013(6) | | | 678,621 | | | 3/12/2018 | | | | | | | | | | | | | | | 7,081(4) | | | 599,690 | | | 7,603(7) | | | 643,856 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 7,830(8) | | | 663,123 | | | 3/13/2017 | | | | | | | | | | | | | | | 4,931(4) | | | 417,606 | | | 11,312(9) | | | 957,971 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 11,436(10) | | | 968,515 | |
(1)
| For a better understanding of the equity-based awards included in this table, we have provided the grant date of each award. |
| | (2)
| These amounts were determined based on the closing price of Best Buy common stock on the NYSE of $84.69 on January 29, 2016,31, 2020, the last trading day in fiscal 2016. The closing price quoted on the NYSE was $27.93.2020. |
| | (3)
| The amount reflects nonqualified stock options that become exercisable over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided the NEO has been continually employed with us through those dates. |
(4)
| The amount reflects performance-conditioned time-based restricted shares or stock units, including restricted shares or stock units remaining from the original grant and any restricted shares or restricted stock units accrued as dividend equivalents, if applicable (as indicated in the table below), that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided the NEO has been continually employed with us through those dates and provided that we have achieved positive “adjusted net earnings” as of the end of any fiscal year during the three-year term of the award (the “Performance Condition”). For these awards, the Performance Condition was achieved as of the end of the fiscal year noted in the table below. |
| Ms. Barry | | | 6/11/2019 | | | 2020 | | | 25,069 | | | 509 | | | 3/20/2019 | | | 2020 | | | 13,023 | | | 355 | | | 3/12/2018 | | | 2019 | | | 13,879 | | | 768 | | | 3/13/2017 | | | 2018 | | | 7,890 | | | n/a | | | Mr. Joly | | | 3/26/2019 | | | 2020 | | | 48,808* | | | 1,007 | | | 3/13/2018 | | | 2019 | | | 32,048* | | | 1,816 | | | 3/13/2017 | | | 2018 | | | 24,846* | | | n/a | | | Mr. Bilunas | | | 8/20/2019 | | | 2020 | | | 5,111 | | | 69 | | | Mr. Mohan | | | 6/11/2019 | | | 2020 | | | 11,333 | | | 231 | | | 3/20/2019 | | | 2020 | | | 15,411 | | | 420 | | | 3/12/2018 | | | 2019 | | | 16,424 | | | 912 | | | 3/13/2017 | | | 2018 | | | 11,835 | | | n/a | | | Ms. Walker | | | 3/20/2019 | | | 2020 | | | 10,491 | | | 286 | | | 3/12/2018 | | | 2019 | | | 6,708 | | | 373 | | | 3/13/2017 | | | 2018 | | | 4,931 | | | n/a | |
*
| Number of unvested units for Mr. Joly is reflective of shares decremented to cover FICA taxes in December 2019. |
| | | | | | | | | | | | | (4) | | | 2020 Proxy Statement | | | 70 | | | | | | |
TABLE OF CONTENTS (5)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant) plus accrued dividend equivalents (as indicated in the table below) as of fiscal year-end. The number of shares ultimately earned will be based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 3, 2019, and ending on January 29, 2022. As of the end of fiscal 2020, performance was at the maximum payout level for these shares. Dividend equivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actual performance. |
| Ms. Barry | | | 6/11/2019 | | | 32,141 | | | 435 | | | 3/20/2019 | | | 15,215 | | | 278 | | | Mr. Joly | | | 3/26/2019 | | | 58,412 | | | 789 | | | Mr. Bilunas | | | 8/20/2019 | | | 3,881 | | | 35 | | | 3/20/2019 | | | 2,507 | | | 47 | | | Mr. Alexander | | | 3/20/2019 | | | 2,892 | | | 54 | | | Mr. Mohan | | | 6/11/2019 | | | 14,529 | | | 198 | | | 3/20/2019 | | | 18,003 | | | 328 | | | Ms. Scarlett | | | 3/20/2019 | | | 6,339 | | | 117 | | | Mr. Nelsen | | | 3/20/2019 | | | 8,369 | | | 94 | | | Ms. Walker | | | 3/20/2019 | | | 7,355 | | | 135 | |
(6)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant) plus accrued dividend equivalents (as indicated in the table below) as of fiscal year-end. The number of shares ultimately earned will be based on the compound annual growth rate of our enterprise revenue, over the 36-month period commencing on February 3, 2019, and ending on January 29, 2022. As of the end of fiscal 2020, performance was between the target and maximum payout level for these shares. Dividend equivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actual performance. |
| Ms. Barry | | | 6/11/2019 | | | 31,761 | | | 424 | | | 3/20/2019 | | | 16,574 | | | 295 | | | Mr. Joly | | | 3/26/2019 | | | 62,501 | | | 845 | | | Mr. Bilunas | | | 8/20/2019 | | | 3,834 | | | 35 | | | 3/20/2019 | | | 2,682 | | | 51 | | | Mr. Alexander | | | 3/20/2019 | | | 3,095 | | | 57 | | | Mr. Mohan | | | 6/11/2019 | | | 14,166 | | | 193 | | | 3/20/2019 | | | 19,263 | | | 350 | | | Ms. Scarlett | | | 3/20/2019 | | | 6,783 | | | 125 | | | Mr. Nelsen | | | 3/20/2019 | | | 8,954 | | | 99 | | | Ms. Walker | | | 3/20/2019 | | | 7,869 | | | 144 | |
(7)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant) plus accrued dividend equivalents (as indicated in the table below) as of fiscal year-end. The number of shares ultimately earned will be based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 4, 2018, and ending on January 30, 2021. As of the end of fiscal 2020, performance was between the threshold and maximum payout level for these shares. Dividend equivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actual performance. |
| Ms. Barry | | | 3/12/2018 | | | 15,161 | | | 562 | | | Mr. Joly | | | 3/13/2018 | | | 59,816 | | | 2,210 | | | Mr. Bilunas | | | 3/12/2018 | | | 1,701 | | | 66 | | | Mr. Alexander | | | 3/12/2018 | | | 2,040 | | | 79 | | | Mr. Mohan | | | 3/12/2018 | | | 17,940 | | | 667 | | | Ms. Scarlett | | | 3/12/2018 | | | 4,548 | | | 172 | | | Mr. Nelsen | | | 3/12/2018 | | | 8,339 | | | 277 | | | Ms. Walker | | | 3/12/2018 | | | 7,328 | | | 275 | |
| | | | | | | | | | | | | | | | | | | 71 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS (8)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant) plus accrued dividend equivalents (as indicated in the table below) as of fiscal year-end. The number of shares ultimately earned will be based on the compound annual growth rate of our enterprise revenue, over the 36-month period commencing on February 4, 2018, and ending on January 30, 2021. As of the end of fiscal 2020, performance was at the maximum payout level for these shares. Dividend equivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actual performance. |
| Ms. Barry | | | 3/12/2018 | | | 15,615 | | | 579 | | | Mr. Joly | | | 3/13/2018 | | | 61,610 | | | 2,277 | | | Mr. Bilunas | | | 3/12/2018 | | | 1,752 | | | 70 | | | Mr. Alexander | | | 3/12/2018 | | | 2,102 | | | 81 | | | Mr. Mohan | | | 3/12/2018 | | | 18,477 | | | 685 | | | Ms. Scarlett | | | 3/12/2018 | | | 4,685 | | | 177 | | | Mr. Nelsen | | | 3/12/2018 | | | 8,589 | | | 284 | | | Ms. Walker | | | 3/12/2018 | | | 7,548 | | | 282 | |
(9)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant). The number of shares ultimately earned will be based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on January 29, 2017, and ending on February 1, 2020. As of the end of fiscal 2020, performance was at the maximum payout level for these shares. |
(10)
| The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant). The number of shares ultimately earned will be based on the compound annual growth rate of our enterprise revenue, over the 36-month period commencing on January 29, 2017, and ending on February 1, 2020. As of the end of fiscal 2020, performance was at the maximum payout level for these shares. |
(11)
| Mr. Joly met the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019. The effect of qualified retirement on all of our outstanding equity awards is discussed in the Potential Payments Upon Termination or Change-of-Control section. |
(12)
| The amount represents nonqualified stock options that will become exercisable on the fourth anniversary of the grant date, provided the NEO has been continually employed with us through that date. |
(13)
| The amount reflects time-based restricted shares, including restricted shares remaining from the original grant and any restricted shares accrued as dividend equivalents, if applicable (as indicated in the table below), that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided the NEO has been continually employed with us through those dates. |
| Mr. Bilunas | | | 3/20/2019 | | | 7,151 | | | 196 | | | 3/12/2018 | | | 3,113 | | | 175 | | | 3/13/2017 | | | 2,674 | | | n/a | | | Mr. Alexander | | | 3/20/2019 | | | 8,215 | | | 225 | | | 9/17/2018 | | | 319 | | | 18 | | | 3/12/2018 | | | 3,736 | | | 209 | | | 3/23/2017 | | | 17,756 | | | n/a | | | 3/13/2017 | | | 7,892 | | | n/a | | | Ms. Scarlett | | | 3/13/2017 | | | 2,273 | | | n/a | |
| | (5)(14)
| The amount reflects an outstanding performance share award assuming a payout at threshold (50% oftime-based restricted shares, including 38,157 restricted shares remaining from the target grant). The number oforiginal grant and 773 restricted shares ultimately earned will be based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over the 36-month period commencing on March 1, 2015 and ending on February 28, 2018. As of the end of fiscal 2016, performance was beneath the threshold payout level for these shares. |
| | (6) | The amount reflects an outstanding performance share award assuming payout at target. The number of shares ultimately earned will be based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over the 36-month period commencing on August 1, 2014 and ending on July 31, 2017. As of the end of fiscal 2016, performance was between the threshold and target payout level for these shares. |
| | (7) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant). The number of shares ultimately earned will be based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over the 36-month period commencing on April 1, 2013 and ending on March 31, 2016. As of the end of fiscal 2016, performance was between the target and maximum payout level for these shares. |
| | (8) | The amount reflects nonqualified stock optionsaccrued as dividend equivalents, that became exercisablevest in four equal installments of 25% each, with the first installment vesting on the grant date and the remaining three installments vesting on each of the next three anniversaries of the grant date. |
| | (9) | The amount reflects nonqualified stock options that become exercisable over a four-year period at the rate of 25% per year, beginning one yearfull two years from the grant date, provided the NEOMr. Mohan has been continually employed with us through those dates.that date. |
| | | | | | | | | | | | | (10) | The amount reflects time-based restricted shares which will vest in equal installments over a four-year period at the rate of 25% per year, beginning one year from the grant date, provided the NEO has been continually employed with us through those dates. | | 2020 Proxy Statement | | | 72 | | | | | | |
TABLE OF CONTENTS
Option Exercises and Stock Vested
The table below provides a summary of the value realized in connection with stock option awards exercised and stock awards vested for our NEOs during fiscal 2016.2020. | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise(1) ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting(2) ($) | Mr. Joly | | — |
| | $ | — |
| | 499,688(3) | | $ | 18,238,473 |
| Ms. McCollam | | — |
| | — |
| | 317,756(4) | | 11,460,330 |
| Ms. Ballard | | — |
| | — |
| | 60,203(5) | | 2,143,230 |
| Mr. Mohan | | 30,000(6) |
| | 557,658 |
| | 92,857(7) | | 3,455,950 |
| Mr. Nelsen | | 14,975(8) |
| | 277,491 |
| | 52,066(9) | | 1,244,973 |
|
| Ms. Barry | | | 1,046(3) | | | $43,074 | | | | | | 65,805(4) | | | $4,506,025 | | | Mr. Joly | | | 1,008,706(5) | | | 41,163,735 | | | | | | 310,424(6) | | | 21,234,037 | | | Mr. Bilunas | | | 315(7) | | | 8,754 | | | | | | 11,209(8) | | | 768,012 | | | Mr. Alexander | | | — | | | — | | | | | | 19,304(9) | | | 1,324,529 | | | Mr. Mohan | | | — | | | — | | | | | | 108,507(10) | | | 7,412,183 | | | Ms. Scarlett | | | 4,098(11) | | | 100,142 | | | | | | 17,857(12) | | | 1,209,203 | | | Mr. Nelsen | | | — | | | — | | | | | | 58,314(13) | | | 3,992,199 | | | Ms. Walker | | | — | | | — | | | | | | 43,612(14) | | | 3,011,015 | |
| | (1)
| Value based on market value of Best Buy common stock at the time of exercise, minus the exercise cost. |
| | (2)
| Value based on the closing market price of Best Buy common stock on the vesting date. |
| | (3)
| The amount represents:represents stock options that auto-exercised on their expiration date during fiscal 2020: |
(a)
| | (a) | the partial vesting of the time-based restricted shares granted under our fiscal 2015 LTI program: one-third (30,794 shares) of the August 18, 2014 grant, which vested on August 18, 2015; |
| | (b) | the partial vesting of the time-based restricted shares granted under our fiscal 2014 LTI program: one-third (43,554 shares) of the April 16, 2013 grant, which vested on April 16, 2014; |
| | (c) | the final vesting for Mr. Joly's September 4, 2012 time-based restricted stock unit award: (i) 73,992 restricted stock units, which vested in 8 equal installments of 9,249 restricted stock units on the fourth day of each month in fiscal 2016 through September 4, 2015 and (ii) 19,739 restricted stock units earned as dividend equivalents, which also vested during fiscal 2016. The vested units are payable to Mr. Joly in the form of shares of our common stock (one share per unit); however, issuance of the shares to Mr. Joly is deferred until after his separation from the Company per the terms of the award agreement; and |
| | (d) | the shares (299,859) and dividend equivalents (31,750) acquired upon the vesting and settlement of a performance share award which was granted on September 4, 2012 and was based on the performance of our stock's total shareholder return, relative to17, 2019, 523 stock options having a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015. |
| | (4) | The amount represents: |
| | (a) | the partial vesting of the time-based restricted shares granted under our fiscal 2015 LTI program: one-third (15,836) of the August 18, 2014 grant, which vested on August 18, 2015; |
| | (b) | the partial vesting of the time-based restricted shares granted under our fiscal 2014 LTI program: one-third (22,399 shares) of the April 16, 2013 grant, which vested on April 16, 2015; |
| | (c) | the final vesting for Ms. McCollam's December 10, 2012 time-based restricted share award (35,872 shares and 4,061 shares earned as dividend equivalents), which occurred on December 10, 2015; and |
| | (d) | the shares (218,819) and dividend equivalents (20,769) acquired upon the vesting and settlement of a performance share award which was granted on December 10, 2012 and was based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015. |
| | (5) | The amount represents: |
| | (a) | the partial vesting of the time-based restricted shares granted under our fiscal 2015 LTI program: one-third (4,692) of the August 18, 2014 grant, which vested on August 18, 2015; |
| | (b) | the partial vesting of the time-based restricted shares granted under our fiscal 2014 LTI program: one-third (6,637 shares) of the April 16, 2013 grant, which vested on April 16, 2015; |
| | (c) | the partial vesting of four time-based restricted share awards granted under our fiscal 2013 LTI program: (i) one-third (926 shares) of the April 18, 2012 grant, which vested on April 20, 2015, (ii) one-third (926 shares) of the June 20, 2012 grant, which vested on June 22, 2015, (iii) one-third (926 shares) of the September 19, 2012 grant, which vested on September 21, 2015 and (iv) one-third (926 shares) of the January 16, 2013 grant, which vested on January 19, 2016; |
| | (d) | the final vesting (25,668 shares) of Ms. Ballard's June 21, 2012 time-based restricted share award, which occurred on June 22, 2015; |
| | (e) | the partial vesting of three time-based restricted share awards granted under our fiscal 2012 LTI program: (i) 25% (417 shares) of the February 2, 2011 grant, which vested on February 2, 2015, (ii) 25% (417 shares) of the June 20, 2011 grant, which vested on June 22, 2015, and (iii) 25% (417 shares) of the September 21, 2011 grant, which vested on September 21, 2015; and |
| | (f) | the shares (16,668) and dividend equivalents (1,583) acquired upon the vesting and settlement of a performance share award which was granted on September 19, 2012 and was based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015. |
| | (6) | On September 16, 2015, Mr. Mohan exercised options to purchase 27,340 shares at an exercisestrike price of $20.08, 1,330 shares at an exercise price of $20.31, and 1,330 shares at an exercise price of $14.67. These options were exercised$37.59 auto-exercised when the market pricesprice of a share of Best Buy common stock were $38.43 (27,340 shares)was $68.42; and $38.50 (2,660 shares). |
(b)
| on January 13, 2020, 523 stock options having a strike price of $39.73 auto-exercised when the market price of a share of Best Buy common stock was $91.26. |
(7)(4)
| The amount represents: |
| | (a)
| the partial vesting of the time-based restricted shares granted under our fiscal 2015 LTI program: one-third (6,843) of the August 18, 2014 grant, which vested on August 18, 2015; |
| | (b) | the partial vesting (5,263 shares) of Mr. Mohan's March 12, 2014 time-based restricted share award, which occurred9,658 shares that were granted on March 12, 2015; |
| | (c) | the partial vesting of the time-based restricted shares granted under our fiscal 2014 LTI program: one-third (5,531 shares) of the April 16, 2013 grant, which vested on April 16, 2015; |
| | (d) | the partial vesting (11,514 shares) of Mr. Mohan's March 11, 2013 time-based restricted share award,15, 2016, which vested on March 11, 2015; |
| | (e) | the partial vesting of four time-based restricted share awards14, 2019; 7,890 shares that were granted under our fiscal 2013 LTI program: (i) one-third (334 shares) of the April 18, 2012 grant,on March 13, 2017, which vested on April 20, 2015, (ii) one-third (334 shares) of the June 20, 2012 grant,March 13, 2019; and 7,134 shares that were granted on March 12, 2018, which vested on June 22, 2015, (iii) one-third (334 shares) of the September 19, 2012 grant, which vested on September 21, 2015, and (iv) one-third (334 shares) of the January 16, 2013 grant, which vested on January 19, 2015; |
| | (f) | the final vesting (5,545 shares) of Mr. Mohan's June 21, 2012 time-based restricted share award, which occurred on June 22, 2015; |
| | (g) | the shares (6,000) and dividend equivalents (570) acquired upon the vesting and settlement of a performance share award which was granted on September 19, 2012 and was based on the performance of our stock's total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015;March 12, 2019; and |
| | (h)(b)
| the shares (46,557) and dividend equivalents (3,698)(41,123) acquired upon the vesting and settlement of a performance share award which was granted on March 13, 201315, 2016, and was based on the performance of our stock'sstock’s total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015.February 28, 2019. |
(5)
| The amount represents stock options exercised by Mr. Joly during fiscal 2020: |
(8)(a)
| On September 21, 2015, Mr. Nelsen exercisedon May 23, 2019, 9,240 stock options to purchase 3,325 shares at an exercisehaving a strike price of $20.31, 2,500 shares at an exercise price of $22.06, 2,500 shares at an exercise price of $24.12, 3,325 shares at an exercise price of $17.94 and 3,325 shares at an exercise price of $14.67. These options$18.02 were all exercised when the market price of a share of Best Buy common stock was $37.99.$68.83; |
(b)
| on May 24, 2019, 341,228 stock options having a strike price of $18.02 and 250,358 stock options having a strike price of $23.66 were exercised when the market price of a share of Best Buy common stock was $64.14 and $64.65, respectively; and |
(9)(c)
| on September 26, 2019, 223,890 stock options having a strike price of $31.79 and 183,990 stock options having a strike price of $29.91 were exercised when the market price of a share of Best Buy common stock was $67.00 and $66.93, respectively. |
(6)
| The amount represents: |
| | (a)
| the partial vesting of the time-based restricted shares granted under our fiscal 2015 LTI program: one-third (5,083) of the August 18, 2014 grant,33,113 shares that were granted on March 15, 2016, which vested on August 18, 2015; |
| | (b) | the partial vesting of the time-based restrictedMarch 14, 2019; 25,445 shares that were granted under our fiscal 2014 LTI program: one-third (7,190 shares) of the April 16, 2013 grant,on March 13, 2017, which vested on April 16, 2015; |
| | (c) | the partial vesting of four time-based restricted share awardsMarch 13, 2019; and 16,882 shares that were granted under our fiscal 2013 LTI program: (i) one-third (834 shares) of the April 18, 2012 grant,on March 13, 2018, which vested on April 20, 2015, (ii) one-third (834 shares) of the June 20, 2012 grant, which vested on June 22, 2015, (iii) one-third (834 shares) of the September 19, 2012 grant, which vested on September 21, 2015 and (iv) one-third (834 shares) of the January 16, 2013 grant, which vested on January 19, 2016; |
| | (d) | the final vesting (19,251 shares) of Mr. Nelsen's June 21, 2012 time-based restricted share award, which occurred on June 22, 2015; |
| | (e) | the partial vesting of three time-based restricted share awards granted under our fiscal 2012 LTI program: (i) 25% (260 shares) of the February 2, 2011 grant, which vested on February 2, 2015; (ii) 25% (261 shares) of the June 20, 2011 grant, which vested on June 22, 2015, and (iii) 25% (261 shares) of the September 21, 2011 grant, which vested on September 21, 2015;March 13, 2019; and |
| | (f)(b)
| the shares (15,000) and dividend equivalents (1,424)(234,984) acquired upon the vesting and settlement of a performance share award which was granted on September 19, 2012March 15, 2016, and was based on the performance of our stock'sstock’s total shareholder return, relative to a peer group comprised of the S&P 500 Index, over a 36-month period which ended on September 30, 2015.February 28, 2019. |
(7)
| On February 28, 2019, Mr. Bilunas exercised 315 stock options having an exercise price of $40.85 when the market price of a share of Best Buy common stock was $68.64. |
(8)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 2,217 shares that were granted on March 14, 2016, which vested on March 14, 2019; 2,673 shares that were granted on March 13, 2017, which vested on March 13, 2019; and 1,600 shares that were granted on March 12, 2018, which vested on March 12, 2019; and |
(b)
| the shares (4,719) acquired upon the vesting and settlement of a performance share award which was granted on March 14, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
| | | | | | | | | | | | | | | | | | | 73 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS (9)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 2,771 shares that were granted on March 14, 2016, which vested on March 14, 2019; 2,631 shares that were granted on March 13, 2017, which vested on March 13, 2019; 5,919 shares that were granted on March 23, 2017, which vested on February 27, 2019; 1,920 shares that were granted on March 12, 2018, which vested on March 12, 2019; and 165 shares that were granted on September 17, 2018, which vested on September 17, 2019; and |
(b)
| the shares (5,898) acquired upon the vesting and settlement of a performance share award which was granted on March 14, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
(10)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 11,038 shares that were granted on March 15, 2016, which vested on March 14, 2019; 5,743 shares that were granted on May 24, 2016, which vested on May 24, 2019; 11,835 shares that were granted on March 13, 2017, which vested on March 13, 2019; and 8,440 shares that were granted on March 12, 2018, which vested on March 12, 2019; |
(b)
| the shares (46,998) acquired upon the vesting and settlement of a performance share award which was granted on March 15, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019; and |
(c)
| the shares (24,453) acquired upon the vesting and settlement of a performance share award which was granted on May 24, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
(11)
| On May 29, 2019, Ms. Scarlett exercised 4,098 stock options having an exercise price of $40.85 when the market price of a share of Best Buy common stock was $65.29. |
(12)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 3,420 shares that were granted on March 14, 2016, which vested on March 14, 2019; 2,237 shares that were granted on March 13, 2017, which vested on March 13, 2019; 2,741 shares that were granted on June 1, 2017, which vested on June 3, 2019; and 2,143 shares that were granted on March 12, 2018, which vested on March 12, 2019; and |
(b)
| the shares (7,280) acquired upon the vesting and settlement of a performance share award which was granted on March 14, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
(13)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 9,106 shares that were granted on March 15, 2016, which vested on March 14, 2019; 6,509 shares that were granted on March 13, 2017, which vested on March 13, 2019; and 3,925 shares that were granted on March 12, 2018, which vested on March 12, 2019; and |
(b)
| the shares (38,774) acquired upon the vesting and settlement of a performance share award which was granted on March 15, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
(14)
| The amount represents: |
(a)
| the vesting of restricted shares granted under our LTI program: 6,701 shares that were granted on April 21, 2016, which vested on March 14, 2019; 4,931 shares that were granted on March 13, 2017, which vested on March 13, 2019; and 3,450 shares that were granted on March 12, 2018, which vested on March 12, 2019; and |
(b)
| the shares (28,530) acquired upon the vesting and settlement of a performance share award which was granted on April 21, 2016, and was based on the performance of our stock’s total shareholder return, relative to the S&P 500 Index, over a 36-month period which ended on February 28, 2019. |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 74 | | | | | | |
TABLE OF CONTENTS Nonqualified Deferred Compensation
The following table shows the account balances at January 30, 2016,February 1, 2020, and the contributions and earnings during fiscal 2016,2020, for participating NEOs under the Best Buy Co., Inc. Sixth Amended and Restated Deferred Compensation Plan as amended ("(“Deferred Compensation Plan"Plan”), which is described in greater detail below the table. The table also includes the value of restricted stock units granted to Mr. Joly in 2012 that have vested but, as of the end of fiscal 2016,2020, have not been issued to Mr. Joly as shares pursuant to the terms of his award agreement. | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in Last Fiscal Year |
| | Registrant Contributions in Last Fiscal Year |
| | Aggregate Earnings (Losses) in Last Fiscal Year |
| | Aggregate Withdrawals/ Distributions |
| | Aggregate Balance at Last Fiscal Year End |
| | Mr. Joly | | $ | 2,647,896 |
| (1) | $ | — |
| | $ | 649,872 |
| (2) | $ | — |
| | $ | 10,362,030 |
| (3) | Ms. McCollam | | — |
| | — |
| | — |
| | — |
| | — |
| | Ms. Ballard | | — |
| | — |
| | (88,576 | ) | | — |
| | 1,752,142 |
| (4) | Mr. Mohan | | — |
| | — |
| | (5,413 | ) | | — |
| | 121,840 |
| (5) | Mr. Nelsen | | — |
| | — |
| | — |
| | — |
| | — |
| |
employment arrangement with the Company, as disclosed on the Current Report on Form 8-K filed by the Company on August 21, 2012. Such restricted stock units were part of the equity granted to Mr. Joly to compensate him for certain forfeitures he incurred upon termination of his employment with his former employer.(1) | This amount reflects the value of the portion of Mr. Joly's September 4, 2012 restricted stock unit award (73,992 units) that vested during fiscal 2016. The 73,992 vested units are payable to Mr. Joly in the form of shares of our common stock (one share per unit). The shares were a part of the equity granted to Mr. Joly to compensate him for certain forfeitures he incurred upon termination of his employment with his former employer. The shares will be issued to Mr. Joly within six months following his separation from the Company, pursuant to his employment arrangement with the Company as disclosed on the Current Report on Form 8-K filed by the Company on August 21, 2012. |
Ms. Barry | | | $— | | | $— | | | $— | | | $— | | | $— | | | Mr. Joly | | | — | | | — | | | 826,769(1) | | | (870,445)(2) | | | 34,754,828(3) | | | Mr. Bilunas | | | — | | | — | | | — | | | — | | | — | | | Mr. Mohan | | | — | | | — | | | 28,125 | | | — | | | 206,843(4) | | | Ms. Scarlett | | | — | | | — | | | — | | | — | | | — | | | Mr. Nelsen | | | — | | | — | | | — | | | — | | | — | | | Ms. Walker | | | — | | | — | | | — | | | — | | | — | |
(1)
| This amount reflects the value of the dividend equivalents earned by Mr. Joly (11,081 dividend equivalent units) relative to his September 4, 2012, restricted stock unit award which vested during fiscal 2016 (19,739 dividend equivalent units).award. The 19,73911,081 units are payable to Mr. Joly in the form of shares of our common stock (one share per unit). The shares will be issued to Mr. Joly within six months following his separation from the Company. |
(2)
| This amount reflects the value of restricted stock units decremented from Mr. Joly’s September 4, 2012, restricted stock unit award (in total, 9,820 units) to cover payment of FICA taxes. |
(3)
| This amount reflects the end of fiscal year value of all vested restricted stock units and related dividend equivalents from Mr. Joly'sJoly’s September 4, 2012, restricted stock unit award (in total, 332,964 units and 38,03687,233 dividend equivalent units), calculated based on the closing price of our common stock ($27.93)84.69) as quoted on the NYSE on January 29, 2016,31, 2020, the last business day in fiscal 2016. The entire2020. Of this amount, $5,051,064 has been previously reported in the “Stock Awards” column of the Summary Compensation Table. |
| | (4)
| This amount includes $859,369 that has previously been reported as either "Salary" or "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table.
|
| | (5) | No portion of this amount has been previously reported in the Summary Compensation Table. |
Deferred Compensation Plan. The Company'sCompany’s Deferred Compensation Plan is unfunded and unsecured. We believe the plan provides a tax-deferred retirement savings vehicle that plays an important role in attracting and retaining executive talent. The Deferred Compensation Plan allows highly compensated employees, including the NEOs, to defer:
Up to 75% of base salary; and
Up to 100% of a cash bonus (earned and paid in the same year) and short-term incentive compensation (earned and paid in different years), as applicable. | | | | | | | | | | | | | | | | | | | 75 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Amounts deferred under and contributed to the Deferred Compensation Plan are credited or charged with the performance of investment options selected by the participants. The investment options are notional and do not represent actual investments, but rather serve as a measurement of performance. The options available under the Deferred Compensation Plan and their one-year annualized averageannual rates of return as of the end of fiscal 2016,December 31, 2019, were as follows: | | | | Investment | | Investment | | | Rate of Return(1) | | NVIT Money Market | Fidelity VIP Balanced Service | — | % | 24.30% | | | Vanguard VIF International | | | 31.22% | | | PIMCO VIT Total Return Admin | | (1.19 | )%8.35% | | | Vanguard VIF Small Company Growth | | | 28.11% | | | PIMCO VIT High-Yield BondHigh Yield Admin | | (3.22 | )%14.73% | | Fidelity VIP II Asset Manager | Vanguard VIF Equity Income | (5.24 | )% | 24.43% | | Vanguard VIF Diversified Value | | (3.11 | )% | Vanguard VIF Equity Index | | (0.76 | )%31.30% | | MFS VIT Growth Series | NVIT Government Money Market | 3.79 | % | 1.83% | | | Franklin VIPTVIP Small Cap Value Securities | | (6.49 | )%26.35% | | Wells Fargo Advantage VT Small Cap | T. Rowe Price Blue Chip Growth | | (12.81 | )% | Vanguard VIF International29.89% | | (8.72 | )% |
| | (1) | Rate of return is net of investment management fees, fund expenses or administrative charges, as applicable. |
Participants who elect to defer compensation under the Deferred Compensation Plan also select when the deferred amounts will be distributed to them. Distributions may be made in a specific year, or at a specified time that begins on or after the participant'sparticipant’s retirement. Distributions are paid in a lump sum or in quarterly installments, depending on the participant'sparticipant’s election at the time of deferral. However, if a participant'sparticipant’s employment ends prior to retirement, a distribution is made promptly in a lump sum or in quarterly installments, depending on their initial election and account balance.
We do not provide employer-matching contributions for amounts deferred under the plan. Participants are fully vested in their contributions.
Potential Payments Upon Termination or Change-of-Control Upon termination of employment or in the event the Company experiences a change-of-control, our NEOs may be eligible to receive certain payments and their outstanding equity awards may be impacted. Following is a summary of the effects of various termination and change-of-control scenarios for each form of compensation, including a quantitative disclosure of the estimated payments and realizable value for each scenario assuming an effective date of February 1, 2020, the end of fiscal 2020, for each NEO with the exception of Mr. Nelsen, whose employment with us ended in September 2019.
When Mr. Nelsen’s employment terminated on September 1, 2019, he was eligible for and received a lump sum severance payment under the Company’s severance plan, which was subject to Mr. Nelsen entering into a separation agreement containing confidentiality and non-solicitation restrictive covenants, as discussed in the Restrictive Covenants section below. The severance payment, as quantified in the Summary Compensation Table, was equal to two years of base salary; a payment equal to 150% of the cost of 24 months of the basic employee benefits (such as medical, dental and life insurance) that Mr. Nelsen was enrolled in at the time of his termination; and payment of $25,000 in lieu of providing outplacement services. None of Mr. Nelsen’s outstanding equity awards were modified upon his departure. See the Outstanding Equity Awards at Fiscal Year-End section for additional detail regarding Mr. Nelsen’s outstanding performance share awards. On February 7, 2020, we and Ms. Walker agreed that she will be stepping down on August 5, 2020. Ms. Walker will receive severance benefits in accordance with the terms of our severance plan upon her departure, and she will remain employed with us a senior advisor to the CEO and the executive team through her departure. Cash payments.compensation. Pursuant to the terms of our severance plan, upon involuntary termination dueand subject to job elimination, reduction in force, business restructuring or other circumstances as we determine atentering into a separation agreement with us, our discretion, our NEOs (other than Mr. Joly and Ms. McCollam, who have employment agreements)executive officers are generally eligible for: severance pay equal to two years of base salary; a payment equal to 150% of the cost of 24 months of basic employee benefits, such as medical, dental and life insurance; and payment of $25,000 in lieu of providing outplacement services and other tax and financial assistance.assistance upon involuntary termination due to job elimination, reduction in force, business restructuring or other circumstances as we determine at our discretion. For more detail regarding our severance plan, see the Compensation Discussion and Analysis — Executive Compensation Elements — Other Compensation — Severance Plan.section.
Mr. Joly and | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 76 | | | | | | |
TABLE OF CONTENTS Ms. McCollam'sBarry’s employment agreements entitle themagreement entitles her to participate in the Company'sCompany’s severance plan, as detailed above, but also provide enhanced benefits under certain termination scenarios. They both receive an enhancedprovides that she is eligible for the same severance offeringpay if she were to be involuntarily terminated without Cause or were to voluntarily terminate her employment for Good Reason. Additionally, upon involuntary termination without Cause or voluntary termination for Good Reason on or within 12 months following (or in anticipation of) a change-of-control, Ms. Barry is eligible for enhanced severance equal to (a) two times the sum of their base salary plus target bonus and (b) a pro-rata annual bonus payment, dependent on actual performance under the Company's STICompany’s short-term incentive plan for the fiscal year in which the termination occurs. Additionally, they are both Mr. Joly did not receive any severance in connection with his transition out of the CEO role in June 2019. Pursuant to the Executive Chairman employment agreement entered into at that time, Mr. Joly is not entitled to participate in the Company’s severance plan and is not eligible for severance payments ifbenefits under any other plan, policy or arrangement of the Company. Mr. Joly’s Executive Chairman revised employment agreement and subsequent consulting agreement are discussed in greater detail in the “Compensation Discussion and Analysis — Summary of Executive Compensation Practices — Key Compensation Actions in Support of the CEO Transition and Other Performance-Related Actions section.” The following table provides, for the specified NEOs, as of the end of fiscal 2020, the potential severance amount they are terminated involuntarily without Cause or if they terminate their employment voluntarilyeligible for Good Reason (outside of a change-of-control)under the scenarios discussed above. | Ms. Barry | | | $2,280,954 | | | $2,280,954 | | | $2,280,954 | | | $8,044,287 | | | Mr. Joly | | | — | | | — | | | — | | | — | | | Mr. Bilunas | | | — | | | — | | | 1,583,191 | | | — | | | Mr. Alexander | | | — | | | — | | | 1,440,331 | | | — | | | Mr. Mohan | | | — | | | — | | | 2,083,677 | | | — | | | Ms. Scarlett | | | — | | | — | | | 1,666,906 | | | — | | | Ms. Walker | | | — | | | — | | | 1,581,352 | | | — | |
(1)
| Pursuant to our Severance Plan, our NEOs are eligible for cash severance, as detailed above the table, if they are involuntarily terminated as a result of job elimination, reduction in force or business restructuring (or other circumstances at our discretion). |
Under our STI plan, which is discussed in more detail in the tables that follow.Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive section, our NEOs must remain employed with us through the end of the performance period in order to receive any payouts under the plan. If an NEO is terminated with Cause, they are not eligible for any STI plan payments. In fiscal 2020, all of our NEOs were employed with us through the end of fiscal 2020, which was the end of the fiscal 2020 STI plan. Each of their fiscal 2020 payments are discussed in the Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive and Summary Compensation Table sections.
Nonqualified stock options. Our award agreements dictate what happens to unvested stock options and how long vested stock options are exercisable following different types of termination events. The following chart illustrates the treatment of outstandingthese various treatments under each possible scenario for stock options granted to our NEOs under various scenarios:our long-term incentive award programs and to Mr. Joly as part of his September 4, 2012, sign-on equity award (the “Sign-On Stock Options”). | | | | | Event | | Event | | | Effect on Vested Stock Options(1) | | | Effect on Unvested Stock Options | | | Voluntary termination without Good Reason(2) | | | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Sign-on stock options granted to Mr. Joly and Ms. McCollam in fiscal 2013 (on September 4, 2012 and December 10, 2012, respectively) (the "Sign-OnJoly’s Sign-On Stock Options")Options are exercisable for a 90-day period following the termination date.
| | | All stock options are forfeited.
| | | Voluntary termination for Good Reason(2) | | | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Mr. Joly and Ms. McCollam'sJoly’s Sign-On Stock Options are exercisable for a two-year period following the termination date.
| | | All stock options are forfeited. | | | Involuntary termination for Cause | | | Not exercisable. | | | All stock options are forfeited. | |
| | | | | | | | | | | | | | | | | | | 77 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS | Involuntary termination without Cause | | | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Mr. Joly and Ms. McCollam'sJoly’s Sign-On Stock Options are exercisable for a two-year period following the termination date.
| | | All stock options are forfeited. | | | Termination(3) within 12 months of a change-of-control
| | | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Mr. Joly and Ms. McCollam'sJoly’s Sign-On Stock Options are exercisable for a two-year period following the termination date.
| | | All stock options vest 100%.
| | | Death or disability | | | Generally exercisable for a one-year period. | | | All stock options vest 100%. | | | Qualified retirement(4) | | | Generally exercisable for a one- to three-year period depending on the terms and conditions of the respective award agreement. | | | Stock options granted since fiscal 2015 continueContinue to vest according to their normal vesting terms.
Stock options granted prior to fiscal 2015 vest 100%.
| |
| | (1)
| Stock options may not be exercised after their expiration dates under any circumstance. |
(2)
| | (2) | Good Reason is usually deemed to exist if the Company makes a material adverse change to the NEO'sNEO’s title, responsibilities or salary or requires the NEO to work more than 50 miles from the corporate office location in Richfield, MN (except for temporary business-related travel). |
| | (3)
| For awards granted prior to fiscal 2015, this means involuntary termination without Cause or voluntary termination for Good Reason. For awards granted in fiscal 2015 and thereafter, this means only involuntary termination without Cause. |
| | (4)
| Qualified Retirement is defined in our employment and award agreements as: retirement by an employee, including our NEOs, on or after their 60th birthday, so long as they have been employed with the Company continuously for at least the five-year period immediately preceding their retirement date. |
Time-based restricted share awards. The following chart illustratestable below provides, for the treatmentspecified NEOs, as of the end of fiscal 2020, the value of their unvested, time-based restricted sharesin-the-money stock options (as detailed in the Outstanding Equity Awards at Fiscal Year End section), under various scenarios.the situations discussed above. All values below were calculated using the closing price of our common stock as quoted on the NYSE on January 31, 2020, the last business day in fiscal 2020. | Ms. Barry | | | $1,692,756 | | | $1,692,756 | | | Mr. Joly(2) | | | 4,952,454 | | | 4,952,454 | | | Mr. Bilunas | | | 764,199 | | | 764,199 | | | Mr. Alexander | | | 764,199 | | | 764,199 | | | Mr. Mohan | | | 1,122,332 | | | 1,122,332 | | | Ms. Scarlett | | | 3,115,153 | | | 3,115,153 | | | Ms. Walker | | | 682,298 | | | 682,298 | |
| (1)
| | | | | Outstanding Awards | | Event | | EffectSpecifically, termination on Unvested Shares | Fiscal 2016 andor within 12 months of a change-of-control. For awards granted prior to fiscal 2015, LTI program time-based restricted share awards (all NEOs) | | -Death or disability | | -Vest 100% | | -Qualified retirement | | -Continue to vest according to normal vesting terms without risk of forfeiture | Fiscal 2014 LTI program time-based restricted share awards (all NEOs) | | -Qualified retirement | | -Vest 100% | Fiscal 2012 LTI program time-based restricted share awards (Ms. Ballard and Mr. Nelsen) | | -Death or disability | | -All restrictions on the shares lapse and they become non-forfeitable and transferable | | -Qualified retirement | | | -Change-of-control(1)
| |
| | (1) | Meansthis means involuntary termination without Cause or voluntary termination for Good Reason within 12 months following a change-of-control.Reason. For awards granted in fiscal 2015 and thereafter, this means only involuntary termination without Cause. |
(2)
| Following his departure, Mr. Joly’s outstanding stock options, as reflected in the Outstanding Equity Awards at Fiscal Year End section will continue to vest according to their normal vesting schedule. |
Restricted share awards. Pursuant to our award agreements, all unvested restricted share and restricted stock unit awards (including both time-based awards and time-based awards subject to performance conditions) held by our NEOs fully vest in the event of death or termination due to disability. Additionally, upon qualified retirement any unvested restricted shares and restricted stock units would continue to vest according to their normal vesting schedule, subject to achievement of performance conditions (where applicable). Under all other termination scenarios, unvested restricted shares and restricted stock units are forfeited and there are no change-of-control provisions which impact them.
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 78 | | | | | | |
TABLE OF CONTENTS The table below provides, for the specified NEOs, as of the end of fiscal 2020, the value of their unvested restricted share and restricted stock unit awards (as detailed in the Outstanding Equity Awards at Fiscal Year End section) in the event of their death or disability. All values below were calculated using the closing price of our common stock as quoted on the NYSE on January 31, 2020, the last business day in fiscal 2020. | Ms. Barry | | | $5,207,842 | | | Mr. Joly(1) | | | 9,190,982 | | | Mr. Bilunas | | | 1,565,833 | | | Mr. Alexander | | | 1,804,575 | | | Mr. Mohan | | | 8,087,556 | | | Ms. Scarlett | | | 1,268,995 | | | Ms. Walker | | | 1,930,000 | |
(1)
| Following his departure, Mr. Joly’s outstanding restricted shares, as reflected in the Outstanding Equity Awards at Fiscal Year End section will continue to vest according to their normal vesting schedule. |
Performance share awards. The following chart illustrates the treatment of outstanding performance share awards under various scenarios.scenarios pursuant to our award agreements. | Event | | | | Outstanding Awards | | Event | | Effect on Unearned Shares | | Fiscal 2016 and fiscal 2015 LTI program performance share awards (all NEOs)
| | -Death or disability | | | -Deemed earned on a pro-rata basis (number of days employed through termination / total number of days in performance period) based on the level of performance achieved as of the termination date(as determined as of the last completed fiscal quarter or fiscal year, depending on the performance metric)
| | | -Involuntary termination without CauseCause-Qualified retirement | | | -Deemed earned on a pro-rata basis (number of days employed through termination / total number of days in performance period) based on the level of performance achieved as of the end of the performance period | | -Qualified retirement | | | -Change-of-control | | | -Deemed earned based on the level of performance achieved or at target, whichever is greater, as of the date of the change-of-control.change-of-control (as determined as of the last completed fiscal quarter or fiscal year, depending on the performance metric). Issuance of earned shares is subject to the NEO'sNEO’s continued employment through the end of the performance period
| | | -Termination following a change-of-control due to: death or disability, or involuntary termination without Cause or qualified retirement | | | -A pro-rata portion (determined by number of days employed through termination / total number of days in performance period) of those shares deemed earned as of the date of the change-of-control are issued to the NEO
| |
The table below provides, for the specified NEOs, as of the end of fiscal 2020, the value of their outstanding performance share awards (as detailed in the Outstanding Equity Awards at Fiscal Year End section), under the situations discussed above. All values below were calculated using the closing price of our common stock as quoted on the NYSE on January 31, 2020, the last business day in fiscal 2020, and assume the same vesting percentage (150%) as reflected in the Outstanding Equity Awards at Fiscal Year End section. | Ms. Barry | | | $7,571,207 | | | $7,571,207 | | | $— | | | $13,949,756 | | | Mr. Joly | | | 27,058,396 | | | 27,058,396 | | | 27,058,396 | | | 37,608,796 | | | Mr. Bilunas | | | 853,428 | | | 853,428 | | | — | | | 1,697,145 | | | Mr. Alexander | | | 922,985 | | | 922,985 | | | — | | | 1,391,753 | | | Mr. Mohan | | | 8,617,915 | | | 8,617,915 | | | — | | | 13,498,739 | | | Ms. Scarlett | | | 2,423,925 | | | 2,423,925 | | | — | | | 3,455,733 | | | Ms. Walker | | | 3,225,896 | | | 3,225,896 | | | — | | | 4,546,371 | |
Fiscal 2014 LTI program performance share awards (all NEOs)
(1)
| | -Death or disability | | -Deemed earned onReflects value realizable upon a pro-rata basis (number of days employed through termination / total number of days in performance period) based onchange-of-control event, but assumes that the level of performance achieved as ofNEO will stay with the termination date
| | -Involuntary termination without Cause | | | -Voluntary termination for Good Reason | | | -Change-of-control | | -Deemed earned based on the level of performance achieved or at target, whichever is greater, as of the date of the change-of-control. Issuance of earned shares is subject to the NEO's continued employmentCompany through the end of the performance period of each outstanding performance share award. |
| | | | | | | | | | | | | | -Termination following a change-of-control due to: death, disability, involuntary termination without Cause or voluntary termination for Good Reason | | -A pro-rata portion (determined by number of days employed through termination / total number of days in performance period) of those shares deemed earned as of the date of the change-of-control are issued to the NEO | | | 79 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Restrictive Covenants. As further described in theCompensation Discussion and Analysis – Executive Compensation Elements – Other Compensation – Clawback and Restrictive Covenant Provisions,section, our executive officer long-term incentiveseparation agreements and LTI award agreements generally include confidentiality, non-compete, non-solicitation and in select situations, non-disparagementnon-solicitation provisions as generally described below:
Confidentiality. Award recipients agree to maintain the confidentiality of Best Buy’s “confidential information” and to use such information for the exclusive benefit of Best Buy. This obligation has the appropriate application to the post-termination period.
Non-Compete. Award recipients agree not to engage in “competitive activity” for a period of one year following the earlierlater of termination of employment for any reason, or the last scheduled award vesting date.
Non-Solicitation. Award recipients agree not to solicit Company employees for employment or parties with which we do business from engaging such business for a period of one year following the earlierlater of termination of employment for any reason, or the last scheduled award vesting date. Non-Disparagement. A non-disparagement provision is includedin specific circumstances.
Upon violation of a restrictive covenant, unexercised options and unvested shares related to the respective award agreement under which they were issued aremay be canceled and forfeited, and likewise, the Company may require that the related issued shares (or their fair market value, as measured on the option exercise date or share vesting date) must be returned to the Company. Additionally, the Company may seek injunctive or other appropriate equitable relief.
Quantitative Disclosure. The tables below provide for each NEO, as of the end of fiscal 2016, the potential severance amount and the value of their unvested stock options (if in-the-money) and restricted share awards (as detailed in the Outstanding Equity Awards at Fiscal Year-End section) under the various scenarios discussed above, excluding retirement (as none of our NEOs meet the age and service requirements for qualified retirement under our agreements) and voluntary termination without Good Reason and involuntary termination for Cause (as none of our NEOs qualify for any payments under these scenarios).
Equity award values used in the following tables were calculated using the closing price of our common stock as quoted on the NYSE on January 29, 2016, the last business day in fiscal 2016.
Voluntary Termination for Good Reason | | | | | | | | | | | | | | Name | | Cash Payments | | Performance Share Awards(1) | | Total | Mr. Joly | | $ | 2,406,970 |
| (2) | $ | 7,346,959 |
| | $ | 9,753,929 |
| Ms. McCollam | | 4,625,000 |
| (3) | 2,267,081 |
| | 6,892,081 |
| Ms. Ballard | | — |
| | 671,718 |
| | 671,718 |
| Mr. Mohan | | — |
| | 559,759 |
| | 559,759 |
| Mr. Nelsen | | — |
| | 727,697 |
| | 727,697 |
|
| | (1) | Performance share awards granted in fiscal 2014 vest on a pro-rata basis to the extent that the performance goals have been attained through the termination date if the NEO terminates their employment voluntarily for Good Reason. If the Compensation Committee deems that performance goals have been achieved and has determined the number of shares earned, the actual number of shares that would vest is calculated based on the number of days the NEO was employed through termination over the total number of days in the performance period. The values in this column were calculated using an estimated vesting percentage of 144% which is based on performance trends for the fiscal 2014 performance share awards as of the end of fiscal 2016. |
| | (2) | The amount reflects a severance payment pursuant to Mr. Joly's employment agreement, equal to 24 months of base salary and 150% of the cost of 24 months of COBRA health coverage and group life insurance based on the cost of coverage in place at the time of termination. |
| | (3) | The amount reflects a severance payment pursuant to Ms. McCollam's employment agreement, equal to 24 months of base salary plus two times her target STI bonus payment (150% of base salary). |
Involuntary Termination without Cause | | | | | | | | | | | | | | Name | | Cash Payments | | Performance Share Awards(1) | | Total | Mr. Joly | | $ | 2,406,970 |
| (2) | $ | 9,167,038 |
| | $ | 11,574,008 |
| Ms. McCollam | | 4,625,000 |
| (3) | 2,828,700 |
| | 7,453,700 |
| Ms. Ballard | | — |
| (4) | 838,121 |
| | 838,121 |
| Mr. Mohan | | — |
| (4) | 802,437 |
| | 802,437 |
| Mr. Nelsen | | — |
| (4) | 907,965 |
| | 907,965 |
|
| | (1) | All outstanding performance share awards vest on a pro-rata basis to the extent that the performance goals have been attained through either the termination date or the end of the performance period (depending on the award) if the NEO is terminated involuntarily without Cause. If the Compensation Committee deems that performance goals have been achieved and has determined the number of shares earned, the actual number of shares that would vest is calculated based on the number of days the NEO was employed through termination over the total number of days in the performance period. |
The values in this column were calculated using an estimated vesting percentage based on performance trends for each outstanding performance share award as of the end of fiscal 2016, as follows: | | | | | | | Fiscal Year of
Performance Share Award
| | Performance Period | | Estimated vesting percentage
as of January 30, 2016
| Fiscal 2016 | | March 1, 2015 - February 28, 2018 | | — | % | Fiscal 2015 | | August 1, 2014 - July 31, 2017 | | 87 | % | Fiscal 2014 | | April 1, 2013 - March 31, 2016 | | 144 | % |
| | (2) | The amount reflects a severance payment pursuant to Mr. Joly's employment agreement and includes 24 months of base salary and 150% of the cost of 24 months of COBRA health coverage and group life insurance based on the cost of coverage in place at the time of termination. |
| | (3) | The amount reflects a severance payment pursuant to Ms. McCollam's employment agreement, equal to 24 months of base salary plus two times her target STI bonus payment (150% of base salary). |
| | (4) | Pursuant to our Severance Plan, these NEOs are eligible for cash severance, as detailed above under the heading Cash payments, if they are involuntarily terminated as a result of job elimination, reduction in force or business restructuring (or other circumstances at our discretion). Since the applicability of the Severance Plan is more narrow than is implied by the table name "Involuntary Termination without Cause", the severance payments the NEOs are eligible for under those limited circumstances (Ms. Ballard: $1,628,619; Mr. Mohan: $1,644,852; and Mr. Nelsen: $1,353,802) are not included in the table.
|
| | | | | | | | | | | | | | | | | | | | | | Name | | Cash Payments | | Stock Options(2) | | Time-Based Restricted Shares | | Performance-Share Awards(3) | | Total | Mr. Joly | | $ | 10,921,020 |
| (4) | $ | 356,344 |
| | $ | — |
| | $ | 15,255,321 |
| | $ | 26,532,685 |
| Ms. McCollam | | 6,911,967 |
| (4) | 274,894 |
| | — |
| | 4,690,052 |
| | 11,876,913 |
| Ms. Ballard | | — |
| | 95,513 |
| | 11,647 |
| (5) | 1,974,116 |
| | 2,081,276 |
| Mr. Mohan | | — |
|
| 416,167 |
| | — |
| | 1,589,435 |
| | 2,005,602 |
| Mr. Nelsen | | — |
|
| 97,030 |
| | 6,033 |
| (5) | 1,547,193 |
| | 1,650,256 |
|
| | (1) | This table reflects the specific instances where our employment and award agreements have provisions related to change-of-control, some of which apply upon the change-of-control itself and some of which apply upon termination following the change-of-control. As such, the totals reflected are not necessarily indicative of the actual value that each NEO would realize upon a change-of-control or upon termination following a change-of-control. Additionally, if an NEO is terminated following a change-of-control, the NEO would potentially realize additional value not reflected here depending on the nature of the termination, as detailed in the other tables within this section. |
| | (2) | All unvested stock options granted to our NEOs fully vest upon involuntary termination without Cause or voluntary termination for Good Reason within 12 months following a change-of-control. |
| | (3) | All outstanding performance share awards are deemed earned upon a change-of-control based on the level of actual performance achieved as of the date of the change-of-control or at target, whichever is greater. Issuance of the earned shares is subject to the NEO's continued employment through the end of the performance period for each award. If the NEO's employment were to be terminated following the change-of-control, but prior to the end of the performance period, a pro-rata portion of the shares deemed earned would potentially be issued to the NEO depending on the type of termination (as described earlier in this section under the heading Performance share awards).
|
The values in this column were calculated using the greater of the actual estimated vesting percentage based on performance trends for each outstanding performance share award as of the end of fiscal 2016 or target (100%), as follows:
| | | | | | Fiscal Year of
Performance Share Award
| | Performance Period | | Estimated vesting percentage
as of January 30, 2016 or
Target (100%)
| Fiscal 2016 | | March 1, 2015 - February 28, 2018 | | 100% | Fiscal 2015 | | August 1, 2014 - July 31, 2017 | | 100% | Fiscal 2014 | | April 1, 2013 - March 31, 2016 | | 144% |
| | (4) | The amounts reflect cash severance payments pursuant to Mr. Joly and Ms. McCollam's employment agreements. In the event Mr. Joly or Ms. McCollam voluntarily terminate their employment for Good Reason or are involuntarily terminated without Cause in anticipation of or within 12 months following a change-of-control, they are entitled to an enhanced severance offering of: (i) two times the sum of base salary plus target annual bonus; (ii) a pro-rata annual bonus for the fiscal year in which such termination occurs based on actual performance (for fiscal 2016 payouts, see Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive) and (iii) 150% of the cost of 24 months of COBRA health coverage and group life insurance based on the cost of coverage in place at the time of termination.
|
| | (5) | The amounts represent the unvested portions of the time-based restricted shares granted under our fiscal 2012 LTI program which become non-forfeitable upon involuntary termination without Cause or voluntary termination for Good Reason within 12 months following a change-of-control. |
Death or Disability
| | | | | | | | | | | | | | | | | | Name | | Stock Options(1) | | Time-Based Restricted Shares | | Performance Share Awards(2) | | Total | Mr. Joly | | $ | 356,344 |
| | $ | 3,874,729 |
| (3) | $ | 9,167,038 |
| | $ | 13,398,111 |
| Ms. McCollam | | 274,894 |
| | 1,973,925 |
| (3) | 2,828,700 |
| | 5,077,519 |
| Ms. Ballard | | 95,513 |
| | 1,231,378 |
| (4) | 838,121 |
| | 2,165,012 |
| Mr. Mohan | | 416,167 |
| | 1,155,073 |
| (3) | 802,437 |
| | 2,373,677 |
| Mr. Nelsen | | 97,030 |
| | 685,011 |
| (4) | 907,965 |
| | 1,690,006 |
|
| | (1) | All outstanding unvested stock options fully vest upon death or disability. |
| | (2) | All outstanding performance share awards vest on a pro-rata basis to the extent that the performance goals have been attained through the date of the NEO's death or termination due to disability. If the Compensation Committee deems that performance goals have been achieved and has determined the number of shares earned, the actual number of shares that would vest is calculated based on the number of days the NEO was employed through termination over the total number of days in the performance period. |
The values in this column were calculated using an estimated vesting percentage based on performance trends for each outstanding performance share award as of the end of fiscal 2016, as follows: | | | | | | | Fiscal Year of
Performance Share Award
| | Performance Period | | Estimated vesting percentage
as of January 30, 2016
| Fiscal 2016 | | March 1, 2015 - February 28, 2018 | | — | % | Fiscal 2015 | | August 1, 2014 - July 31, 2017 | | 87 | % | Fiscal 2014 | | April 1, 2013 - March 31, 2016 | | 144 | % |
| | (3) | The amounts represent unvested time-based restricted shares granted under our fiscal 2016 and fiscal 2015 LTI programs, which fully vest upon death or disability. |
| | (4) | The amounts represent the unvested time-based restricted shares granted under our fiscal 2016 and fiscal 2015 LTI programs, which fully vest upon death or disability and unvested time-based restricted shares granted under our fiscal 2012 LTI program, which would become non-forfeitable upon death or disability. |
Director Compensation
Overview
Each year, the Compensation Committee reviews the total compensation paid to non-management directors. The purpose of the review is to ensure that the level of compensation is appropriate to attract and retain a diverse group of directors with the breadth of experience necessary to perform the Board'sBoard’s duties, and to fairly compensate directors for their service. As part of their analysis, the Compensation Committee considers the total value of the compensation as compared with director compensation at other Fortune 100 companies and our peer group of companies, which is described in Compensation
Discussion and Analysis — Factors in Decision-Making. In March 2015,2019, the Compensation Committee and Board reviewed and approved the fiscal 20162020 compensation for non-management directors, including the value and terms of the equity compensation component, as detaileddescribed in more detail below.
Cash Compensation
The fiscal 20162020 cash compensation for our non-management directors consisted of the following annual retainers: | Annual retainer | | | $95,000(1) | | | | | | Lead independent director stipend | | | 100,000 | | | | | | Annual committee chair retainer - Audit | | | 25,000 | | | | | | Annual committee chair retainer - Compensation & Human Resources | | | 20,000 | | | | | | Annual committee chair retainer - Nominating, Corporate Governance and Public Policy | | | 20,000(2) | | | | | | Annual committee chair retainer - Finance and Investment Policy | | | 15,000(3) | | | | |
(1)
| Increased from $90,000 in fiscal 2019. |
(2)
| Increased from $15,000 in fiscal 2019. |
(3)
| Increased from $10,000 in fiscal 2019. |
All annual retainers for non-management directors who serve on the Board or as chair of a committee for only a portion of a fiscal year are prorated. All annual retainers are paid in quarterly installments. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 80 | | | | | | |
TABLE OF CONTENTS Equity Compensation
On June 8, 2015,11, 2019, the Compensation Committee approved an annual equity award with a value of $185,000 for alleach of the then-serving non-management directors in the form of restricted stock units. The awards each had a value of $195,000, which translated into 5,3982,977 restricted stock units. The restricted stock units are entitled to dividend equivalents, which are subject to the same restrictions and vesting criteria as the underlying units. All restricted stock units granted to our directors fully vest one year from the grant date of grant and must be held until the director leaves the Board. Director equity awards are prorated through a director’s termination date if a director leaves the Board before the restricted stock units have vested, unless the director is terminated for Cause, in which case all unvested restricted stock units are forfeited.
The Compensation Committee also considers prorated annual equity awards for new directors who are appointed to the Board between each annual grant in June. As such, the Compensation Committee approved prorated equity awards for new directors Karen L. McLoughlin (3,606 restricted stock units) and Claudia F. Munce (1,383 restricted stock units) in September 2015 and March 2016, respectively. Since Ms. McLoughlin was appointed to the Board during fiscal 2016, additional detail regarding her fiscal 2016 compensation can be found below in the Director Compensation Table.
Preview of Fiscal 2017 Director Compensation
On March 16, 2016, the Compensation Committee reviewed the cash and equity compensation of our non-management directors for fiscal 2017 and approved the following compensation adjustments in order to align our directors' pay with current market practice.
| | | | | | | | Fiscal 2016 Amount |
| | Change for Fiscal 2017 | Annual retainer | $ | 80,000 |
| | Increase by $5,000 | Lead independent director stipend | 25,000 |
| | No change | Annual committee chair retainer - Audit | 25,000 |
| | No change | Annual committee chair retainer - Compensation & Human Resources | 20,000 |
| | No change | Annual committee chair retainer - Nominating | 15,000 |
| | No change | Annual committee chair retainer - Finance and Investment Policy | 10,000 |
| | No change | Annual equity award | 185,000 |
| | Increase by $5,000 |
Director Compensation Table
The following table summarizes the compensation earned during fiscal 20162020 by our non-management directors: | | | | | | | | | | | | | | | | | | | | | | Name(1) | | Fees Earned or Paid In Cash |
| | Stock Awards(2) |
| | Option Awards(3) |
| | All Other Compensation(4) |
| | Total |
| Bradbury H. Anderson* | | $ | 80,000 |
| | $ | 180,293 |
| | $ | — |
| | $ | — |
| | $ | 260,293 |
| Lisa M. Caputo | | 80,000 |
| | 180,293 |
| | — |
| | — |
| | 260,293 |
| J. Patrick Doyle | | 80,000 |
| | 180,293 |
| | — |
| | — |
| | 260,293 |
| Russell P. Fradin(5) | | 116,209 |
| | 180,293 |
| | — |
| | — |
| | 296,502 |
| Kathy J. Higgins Victor(6) | | 95,000 |
| | 180,293 |
| | — |
| | — |
| | 275,293 |
| David W. Kenny(7) | | 96,209 |
| | 180,293 |
| | — |
| | — |
| | 276,502 |
| Sanjay Khosla(8) | | 28,352 |
| | — |
| | — |
| | 8,541 |
| | 36,893 |
| Allen U. Lenzmeier(9) | | 28,352 |
| | — |
| | — |
| | 8,541 |
| | 36,893 |
| Karen L. McLoughlin(10) | | 30,549 |
| | 128,770 |
| | | | | | 159,319 |
| Thomas L. Millner | | 80,000 |
| | 180,293 |
| | — |
| | — |
| | 260,293 |
| Hatim A. Tyabji(11) | | 65,563 |
| | — |
| | — |
| | 17,083 |
| | 82,646 |
| Gérard R. Vittecoq(12) | | 90,000 |
| | 180,293 |
| | — |
| | — |
| | 270,293 |
|
*Indicates a director who is not standing for re-election at the Meeting.
| Lisa M. Caputo | | | $95,000 | | | $195,053 | | | $— | | | $290,053 | | | J. Patrick Doyle(4) | | | 165,110 | | | 195,053 | | | — | | | 360,163 | | | Russell P. Fradin(5)* | | | 137,198 | | | 195,053 | | | — | | | 332,251 | | | Kathy J. Higgins Victor(6) | | | 115,000 | | | 195,053 | | | — | | | 310,053 | | | David W. Kenny(7) | | | 107,967 | | | 195,053 | | | — | | | 303,020 | | | Cindy R. Kent* | | | 95,000 | | | 195,053 | | | — | | | 290,053 | | | Karen L. McLoughlin(8) | | | 104,725 | | | 195,053 | | | — | | | 299,778 | | | Thomas L. Millner(9) | | | 120,000 | | | 195,053 | | | — | | | 315,053 | | | Claudia F. Munce | | | 95,000 | | | 195,053 | | | — | | | 290,053 | | | Richelle P. Parham | | | 95,000 | | | 195,053 | | | — | | | 290,053 | | | Eugene A. Woods | | | 95,000 | | | 195,053 | | | — | | | 290,053 | |
*
| Indicates a director who is not standing for re-election at the Meeting. |
(1)
| Ms. Barry and Mr. Joly, our only management directordirectors during fiscal 2016,2020, did not receive any compensation for his serviceserving as a director.directors. |
| | (2)
| The amounts in this column reflect the aggregate grant date fair value for restricted stock units granted to our non-management directors during fiscal 2016,2020, measured in accordance with ASC Topic 718. As of January 30, 2016,February 1, 2020, our non-management directors held outstanding stock units including both unvested restricted stock units and restricted stock units that have vested, but that are subject to a holding requirement until the director leaves the board ("(“deferred units"units”) as follows: Mr. AndersonMs. Caputo — 5,3983,039 unvested units and 12,368 deferred units; Ms. Caputo — 5,398 unvested units and 12,63830,475 deferred units; Mr. Doyle — 5,3983,039 unvested units and 2,99021,097 deferred units; Mr. Fradin — 5,3983,039 unvested units and 12,36830,475 deferred units; Ms. Higgins Victor — 5,3983,039 unvested units and 12,36830,475 deferred units; Mr. Kenny — 5,3983,039 unvested units and 8,34526,452 deferred units; Ms. Kent — 3,039 unvested units and 1,912 deferred units; Ms. McLoughlin — 3,6063,039 unvested units and 016,315 deferred units; Mr. Millner — 5,3983,039 unvested units and 6,83224,939 deferred units; Mr. VittecoqMs. Munce — 5,3983,039 unvested units and 12,36814,092 deferred units; Ms. Parham — 3,039 unvested units and 2,781 deferred units; and Mr. Woods — 3,039 unvested units and 1,811 deferred units. |
| | (3)
| We did not grant stock option awards to our non-management directors in fiscal 2016.2020. As of January 30, 2016,February 1, 2020, none of our non-management directors held outstanding stock options as follows: Mr. Anderson — 0 stock options; Ms. Caputo — 12,500 stock options; options. |
(4)
| Mr. Doyle — 0 stock options; Mr. Fradin — 0 stock options; Ms. Higgins Victor — 40,000 stock options; Mr. Kenny — 0 stock options; Ms. McLoughlin — 0 stock options; Mr. Millner — 0 stock options; Mr. Vittecoq — 21,250 stock options. |
| | (4) | Pursuant to the termswas chair of the restricted stock units granted toFinance and Investment Policy Committee through June 11, 2019, when he was named our non-management directors on June 19, 2013, directors are entitled to an accrual of dividend equivalents from the vesting date (June 19, 2014) through the date the restricted stock units are issued to the director as shares (upon departure from the Board). Dividend equivalent accruals are to be settled in cash at the time the shares are delivered to the departing director. The amounts in this column reflect the dividend equivalent payments received by directors who retired during fiscal 2016.Lead Independent Director. |
| | (5)
| Mr. Fradin becamewas our Lead Independent Director on June 9, 2015. Mr. Fradin is alsoand chair of the Compensation Committee.Committee through June 11, 2019. |
| | (6)
| Ms. Higgins Victor is chair of the Nominating Committee. |
| | (7)
| Mr. Kenny became chair of the AuditCompensation Committee on June 9, 2015.11, 2019. |
| | (8) | Mr. Khosla retired from the Board on June 9, 2015. |
| | (9) | Mr. Lenzmeier retired from the Board on June 9, 2015. |
| | (10) | Ms. McLoughlin joinedbecame chair of the BoardFinance and Investment Policy Committee on September 14, 2015.June 11, 2019. |
| | (11)(9)
| Mr. Tyabji retired from the Board on June 9, 2015. Prior to retiring, Mr. Tyabji served as Chairman of the Board andMillner is chair of the Audit Committee. |
| | (12) | Mr. Vittecoq is chair of the Finance and Investment Policy Committee. |
Director Stock Ownership Guidelines
The Compensation Committee has established stock ownership guidelines requiring our non-management directors to own, indirectly or directly, 10,000 shares. We expectHistorically, we have expected that, until the ownership target is met, directors will retain: (i) 50%would retain 50 percent of the net proceeds received from the exercise of a stock option in the form of Best Buy common stock; and (ii) 50% of sharestheir granted equity (net of taxes) issued in connection with the lapse of restrictions on restricted share awards. The ownership target does not need to be met within a certain timeframe and our directors are considered in compliance with the guidelines as long as progress towards the ownership target is being made, consistent with the expectations noted above.. In further support of director stock
ownership, equity grants awarded to directors sincewe began in fiscal 2014 havegranting director equity subject to a holding requirement throughfor the conclusionduration of each director'sa director’s service on ourthe Board. In fiscal 2016,2020, all of our non-management directors were in compliance with the ownership guidelines, either by meeting the ownership target or by making progress towards the ownership target.
Our stock ownership guidelines for executive officers are discussed in the Compensation Discussion and Analysis — Executive Compensation Elements — Other Compensation section. | | | | | | | | | | | | | | | | | | | 81 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Deferred Compensation Plan
Each calendar year, we offer our directors the opportunity to defer up to 100%100 percent of their annual and committee chair retainers under the Deferred Compensation Plan which is described in the section Compensation of Executive Officers — Nonqualified Deferred Compensation. No Company contributions or matching contributions are made for the benefit of directors under the Deferred Compensation Plan.
Other Benefits
We reimburse all directors for travel and other necessary business expenses incurred in performance of their services for us. In addition, all directors are covered under a directors'directors’ and officers'officers’ indemnity insurance policy. Pursuant to SEC rules, we are providing the following information about the ratio of the annual total compensation of our median employee to the annual total compensation of Ms. Barry, our CEO. Given the CEO transition which occurred in fiscal 2020, for purposes of the pay ratio calculation we annualized Ms. Barry’s compensation as if she had served as CEO for the entire year. Ms. Barry’s annualized fiscal 2020 compensation is based on the following: Salary: her CEO-level salary rate of $1,100,000 as if such rate had been in effect throughout the entire fiscal year (which, based on payroll dates would have been $1,119,049);
69Short-term Incentive: an annual award of $2,193,336, which is based on calculating her entire fiscal 2020 bonus using the annual bonus target applied to the portion of the year she served as CEO; Long-term Incentive: the full value of her long-term incentive awards granted in fiscal 2020, which includes the additional grant she received at the time of promotion; and All Other Compensation: as reported in the Compensation of Executive Officers — Summary Compensation Table. Due to the flexibility afforded by the rules of the SEC in calculating the pay ratio amount, the ratio we calculated may not be comparable to the CEO pay ratio presented by other companies. Based on our calculation as described above, Ms. Barry’s annualized total compensation for fiscal 2020, our last completed fiscal year, was $11,826,252 (as compared to $11,440,664 reflected in the Compensation of Executive Officers — Summary Compensation Table section of this proxy statement). Our median employee’s annual total compensation for fiscal 2020 was $27,005. As a result, we estimate that Ms. Barry’s annual total compensation was approximately 438 times that of our median employee. In determining the median employee: We prepared a list of all Best Buy employees as of November 1, 2019. As of November 1, 2019, we had approximately 127,688 employees, including 112,791 U.S. employees, and 14,897 non-U.S. employees. In identifying our median employee, we included our approximately 12,241 Canadian employees, but, in accordance with SEC rules, we excluded our employees in China and Mexico, where we have about 160 and 2,496 employees, respectively, representing approximately 2.0 percent in the aggregate of our worldwide workforce. After excluding employees in these countries, as of November 1, 2019, we had 125,032 employees. As permitted under SEC rules, we used compensation that would equate to W-2 wages for the prior twelve months as our consistently applied compensation measure, which we believe provides a reasonable estimate of annual compensation for our employees. We annualized W-2 wages for employees, other than occasional/seasonal employees, who were not employed for the full twelve months. The median amount was then identified from the annualized list. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 82 | | | | | | |
TABLE OF CONTENTS
ITEM OF BUSINESS NO. 34 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATIONAPPROVAL OF THE BEST BUY CO., INC. 2020 OMNIBUS INCENTIVE PLANOn April 13, 2020, the Board adopted, subject to shareholder approval, the Best Buy Co., Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”). The purpose of the 2020 Plan is to promote the interests of Best Buy and our shareholders by aiding us in attracting and retaining employees, officers, consultants, advisors and non-employee directors who we expect will contribute to our growth and financial performance for the benefit of our shareholders. Upon adoption by shareholders, the 2020 Plan will replace the Best Buy Co., Inc. Amended and Restated 2014 Omnibus Incentive Plan (the “2014 Plan”), which is scheduled to expire April 21, 2024. The Board believes that the continuation of long-term incentive compensation is essential in attracting, retaining and motivating individuals to enhance the likelihood of our future success. In addition, a plan that permits awards with more flexible terms is essential to allowing us to align incentive compensation with increases in shareholder value. The flexibility of the 2020 Plan is consistent with our 2014 Plan in the types and specific terms of awards, allowing future awards to be based on then current objectives for aligning compensation with shareholder value. Shareholder approval of the 2020 Plan will permit us to award short term and long-term incentives that achieve these goals. We are submitting the 2020 Plan to a vote of the shareholders in order to comply with New York Stock Exchange rules and to allow us to grant incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (called the “Code” in this Item, and such incentive stock options). If the 2020 Plan is approved by our shareholders, the aggregate number of newly authorized shares that may be issued under the 2020 Plan is 18,600,000 shares of common stock, plus approximately 3,100,000 shares, which represents the unused shares that we expect to have available for issuance of awards under the 2014 Plan as of June 11, 2020, the effective date of the new 2020 Plan. In addition, shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the Company will become available for reissuance under the 2020 Plan. If the 2020 Plan is approved by our shareholders, the 2014 Plan will be terminated as to the grant of any additional awards, but prior awards will remain outstanding in accordance with the terms of such plan. If the 2020 Plan is not approved, then the 2014 Plan will remain in effect, and approximately 3,100,000 shares will be available for issuance thereunder. Our three-year average “burn rate” was 2.19% for fiscal years 2018 through 2020. We define burn rate as the total number of shares subject to awards granted to participants in a single year expressed as a percentage of our weighted average Shares outstanding. Our three-year average burn rate (2.70%) is equal to the 3-year average burn rate of our benchmarking peer group for the period 2017 through 2019 (the most recent 3-year period for which burn rate data is publicly available). We expect to make equity-based awards under the 2020 Plan at an annual rate of 3.04% to 3.82% of our outstanding common stock based on our current assumptions and compensation strategies. Each stock option granted under the 2020 Plan would count for one share and each “full value award” would count for two. A full value award is any award other than a stock option, stock appreciation right or similar award, the value of which is based solely on an increase in the value of the shares after the date of grant of such award. A grant of restricted stock is an example of a full value award. Based on the requested number of shares to be reserved under the 2020 Plan and on our three-year average burn rate, we expect that the requested share reserve will cover awards for approximately two years. As of February 1, 2020, we had approximately 9,400,000 shares of common stock subject to outstanding awards (under the 2014 Plan as amended and prior plans) or available for future awards under that Plan, which represented approximately 6.43% of our fully diluted common stock outstanding, such percentage referred to as the “overhang percentage.” If the 2020 Plan is approved, we will have 18,600,000 shares under the 2020 Plan, and the shares remaining under the 2014 Plan as of the effective date of the 2020 Plan (which are estimated at 3,100,000 shares) will be available for issuance under the 2020 Plan. The 18,600,000 additional shares proposed to be included in the 2020 Plan reserve would increase the overhang percentage by approximately 7.25% to approximately 13.68%. This level of total overhang is +3.25% above the mean, and +1.27% above the 75th percentile of total overhang level of our benchmarking peer group. | | | | | | | | | | | | | | | | | | | 83 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS The following table identifies key features of the 2020 Plan: | Independent Committee Administration | | | The 2020 Plan is administered by our Compensation Committee comprised entirely of non-employee directors. | | | No Evergreen Provision | | | The 2020 Plan does not contain an “evergreen” provision that will automatically increase the number of shares authorized for issuance under the 2020 Plan. | | | Limit on Shares Authorized | | | Under the 2020 Plan, the aggregate number of shares that may be issued is 18,600,000 newly requested shares plus the shares available for grant under our 2014 Plan as of the effective date of the 2020 Plan, which are estimated at approximately 3,100,000 shares. In addition, any outstanding award under any of our prior stock incentive plans that are forfeited, cancelled or reacquired by the Company will become available for reissuance under the 2020 Plan. | | | Plan Uses “Fungible” Share Counting | | | All shares subject to stock options, stock appreciation rights or similar awards, the value of which awards are based solely on an increase in the value of the shares after the date of grant, will count against the 2020 Plan’s reserve on 1:1 basis for each share subject to the award. For all other awards (generally referred to as “full value” awards), shares subject to such awards will count against the 2020 Plan’s reserve on a 2:1 basis for each share subject to the award | | | No Discounted Stock Options or Stock Appreciation Rights | | | Stock options and stock appreciation rights must have an exercise price equal to or greater than the fair market value of our common stock on the date of grant (unless such award is granted in substitution for a stock option or stock appreciation right previously granted by an entity that is acquired by or merged with the Company). | | | No Repricing of Stock Options or Stock Appreciation Rights | | | The 2020 Plan prohibits the re-pricing of stock options and stock appreciation rights (including a prohibition on the repurchase of “underwater” stock options or stock appreciation rights for cash or other securities) without shareholder approval. | | | No Liberal Share “Recycling” | | | The 2020 Plan provides that any share (i) surrendered to pay the exercise price of an options, (ii) withheld by the Company or tendered to satisfy any tax withholding obligation with respect to any award, (iii) covered by a stock appreciation right issued under the plan that are not issued in connection with settlement in shares upon exercise, or (iv) repurchased by the Company using option exercise proceeds will not be added back (“recycled”) to the 2020 Plan. | | | Minimum Vesting Period | | | A maximum of 5% of the aggregate number of shares available for issuance under the 2020 Plan may be issued without a vesting period of at least one year following the date of grant. All other awards will have a minimum vesting period of at least one year, subject to limited exceptions in case of a change in control, awards received in lieu of other earned compensation, and certain awards granted to non-employee directors. | | | No Liberal Change in Control Definition | | | The 2020 Plan prohibits any award agreement from having a change in control provisions that has the effect of accelerating the exercisability of any award or the lapse of restrictions relating to any award upon only the announcement or shareholder approval (rather than the consummation) of a change in control transaction. | | | No Dividends or Dividend Equivalent Amounts Paid on Unvested Awards | | | The 2020 Plan prohibits the payment of dividends or dividend equivalent amounts on awards until those awards are earned and vested. In addition, the 2020 Plan prohibits the granting of dividend equivalent amounts with respect to stock options, stock appreciation rights or an award the value of which is based solely on an increase in the value of the Company’s shares after the grant of the award. | | | Award Subject to Forfeiture or Clawback | | | Awards under the 2020 Plan will be subject to any Company recovery or clawback policy, as well as any other forfeiture and penalty conditions determined by the Compensation Committee. | |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 84 | | | | | | |
TABLE OF CONTENTS Our 2014 Plan supported our compensation program by including a combination of stock options with time-based vesting, and restricted stock and restricted stock units with both time-based and performance-based vesting. Our proposed 2020 Plan is consistent with this compensation program. The Board believes that the continuation of long-term incentive compensation is essential in attracting, retaining and motivating individuals to enhance the likelihood of our future success. In addition, a plan that permits awards with more flexible terms is essential to allowing us to align incentive compensation with increases in shareholder value. The flexibility of the 2020 Plan is consistent with our 2014 Plan in the types and specific terms of awards, allowing future awards to be based on then-current objectives for aligning compensation with shareholder value. Shareholder approval of the 2020 Plan will permit us to award short-term and long-term incentives that achieve these goals. The following is a summary of the material terms of the 2020 Plan and is qualified in its entirety by reference to the 2020 Plan, a copy of which is attached as Appendix A to this proxy statement, which may be obtained from us free of charge upon written request, and is also available on our website at www.investors.bestbuy.com - select the “Corporate Governance” link. Summary of the 2020 Omnibus Plan Administration The Compensation and Human Resources Committee of the Board (the “Compensation Committee”) will administer the 2020 Plan and will have full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment and other terms and conditions of each award, consistent with the provisions of the 2020 Plan. The Compensation Committee may delegate the authority to grant awards to one or more officer or director, subject to any terms, conditions or limitations the Compensation Committee may impose. However, the Compensation Committee may not delegate such authority with respect to awards granted to officers subject to Section 16 of the Exchange Act or if such delegation would cause the 2020 Plan not to comply with applicable laws or exchange rules. In addition, the Compensation Committee can specify whether, and under what circumstances, awards to be received under the 2020 Plan may be deferred automatically or at the election of either the holder of the award or the Compensation Committee. Subject to the provisions of the 2020 Plan, the Compensation Committee may amend or waive the terms and conditions, or accelerate the exercisability or the lapse of any restrictions relating to any outstanding award. The Compensation Committee has authority to interpret the 2020 Plan, and establish rules and regulations for the administration of the 2020 Plan. In addition, the Board may exercise the powers of the Compensation Committee at any time, except with respect to the grant of awards to our executive officers. Eligible Participants Any employee, officer, non-employee director, consultant, independent contractor or advisor providing services to us or any of our affiliates, who is selected by the Compensation Committee, is eligible to receive an award under the 2020 Plan. As of the date of this proxy statement, if the 2020 Plan were in effect, approximately 2,460 employees and officers, plus our non-employee directors would be eligible as a class to be selected by the Compensation Committee to receive awards under the 2020 Plan. Shares Available For Awards and Other Limits on Awards The 2020 Plan would provide for the issuance of up to 18,600,000 newly authorized shares of common stock. In addition, approximately 3,100,000 unused shares from the 2014 Plan would be available for issuance under the 2020 Plan, as well as shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the Company will become available for re-issuance under the 2020 Plan. In addition, if awards issued under the 2020 Plan expire or otherwise terminate without being exercised or settled, the shares of common stock not acquired pursuant to such awards again become available for issuance under the 2020 Plan. The number of shares available for awards under the 2020 Plan will be reduced by two shares for each share covered by a “full value award”. A full value award is any award other than a stock option, stock appreciation right or similar award, the value of which is based solely on an increase in the value of the shares after the date of grant of such award. | | | | | | | | | | | | | | | | | | | 85 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Certain awards under the 2020 Plan are subject to the following limitations: The maximum number of shares subject to any award or awards denominated in shares granted to any one person who is an employee, consultant, independent contractor or advisor may not exceed 2,500,000 shares in the aggregate in any calendar year. A maximum of 18,600,000 shares will be available for granting incentive stock options under the 2020 Plan, subject to the provisions of Sections 422 or 424 of the Internal Revenue Code or any successor provision. The maximum value of all equity and cash-based compensation granted to a non-employee director in any calendar year cannot exceed $500,000 (and for this purpose, equity value is determined using grant date value under applicable financial accounting rules). Furthermore, the independent members of the Board may make exceptions to this limit for a non-executive chair of the Board, provided that the non-employee Director receiving such additional compensation may not participate in the decision to award such compensation. The Compensation Committee may adjust the number of shares and share limits described above in the case of a stock dividend or other distribution, including a stock split, merger or other similar corporate transaction or event, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be provided under the 2020 Plan. If any shares subject to any award, or to which an award relates, granted under the 2014 Plan and the 2020 Plan are forfeited or are reacquired by us, or if any award terminates without the delivery of any shares, such shares will again be available for future awards under the 2020 Plan. Any shares subject to an award granted under either plan (a) used to pay the exercise price of stock options via a “net exercise” or otherwise, (b) withheld or tendered to pay tax withholding obligations with respect to an award, (c) subject to a stock appreciation right that are not issued when such right is settled, and (d) repurchased using stock option exercise proceeds will not be available for future issuance under the 2020 Plan. Types of Awards and Terms and Conditions The 2020 Plan permits the granting of: stock options (including both incentive and non-qualified stock options); stock appreciation rights (“SARs”); restricted stock and restricted stock units (including performance shares and performance share units); dividend equivalents; and other stock-based awards (which may be payable in shares, cash, or other forms). Awards may be granted alone, in addition to, in combination with or in substitution for, any other award granted under the 2020 Plan or any other compensation plan. Awards can be granted for no cash consideration or for cash or other consideration as determined by the Compensation Committee or as required by applicable law. Awards may provide that upon the Dodd-Frank Wall Street Reformgrant or exercise thereof, the holder will receive cash, shares of our common stock or other securities, or property, or any combination of these in a single payment, installments or on a deferred basis. The exercise price per share under any stock option and Consumer Protection Act and Section 14Athe grant price of any SAR may not be less than the fair market value on the date of grant of such option or SAR except if the award is in substitution for an award previously granted by an entity acquired by us. The fair market value of a share will be the closing price of one share as reported on the NYSE as of the Securities Exchange Actapplicable date, unless otherwise determined by the Compensation Committee. The term of 1934,awards will not be longer than ten (10) years (except that award agreements may provide, to the extent consistent with Section 409A of the Internal Revenue Code, in the event the exercise of the award is tolled not more than thirty (30) days because the exercise would otherwise violate applicable law or any Company policy). Stock Options. The holder of an option will be entitled to purchase a number of shares of our common stock at a specified exercise price during a specified time period, all as amended, wedetermined by the Compensation Committee. The option exercise price may be payable either in cash or, at the discretion of the Compensation Committee, in other securities or other property having a fair market value on the exercise date equal to the exercise price. Stock Appreciation Rights. The holder of a SAR is entitled to receive the excess of the fair market value (calculated as of the exercise date or, at the Compensation Committee’s discretion, as of any time during a specified period before or after the exercise date) of a specified number of shares of our common stock over the grant price of the SAR. SARs vest and become exercisable in accordance with a vesting schedule established by the Compensation Committee. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 86 | | | | | | |
TABLE OF CONTENTS Restricted Stock and Restricted Stock Units. The holder of restricted stock will own shares of our common stock subject to restrictions imposed by the Compensation Committee for a specified time period determined by the Compensation Committee. The holder of restricted stock units will have the right, subject to any restrictions imposed by the Compensation Committee, to receive shares of our common stock, or a cash payment equal to the fair market value of those shares, at some future date determined by the Compensation Committee. The grant, issuance, retention, vesting and/or settlement of restricted stock and restricted stock units will occur at such times and in such installments as are providingdetermined by the Compensation Committee, subject to the minimum vesting provisions described above. For example, awards may, at the Compensation Committee’s discretion, be conditioned upon a participant’s completion of a specified period of service, or upon the achievement of one or more performance goals (including goals specific to the participant's individual performance) established by the Compensation Committee, or upon any combination of service-based or performance-based conditions (subject to minimum vesting requirements). A restricted stock or restricted stock unit award that is conditioned in whole or in part upon the achievement of one or more financial or other company-related performance goals (other than performance of service alone) is generally referred to as a performance share or performance share unit (PSU) award. Rights to dividends or dividend equivalent amounts during the restricted period are discussed below. Dividend Equivalents. Dividend equivalents entitle holders to receive payments (in cash, shares of our common stock, other securities or other property) equivalent to the amount of dividends paid by us to our shareholders, with respect to the number of shares determined by the Compensation Committee. Dividend equivalents may not be awarded with respect to grants of options, stock appreciation rights or any other awards the value of which is based solely on an opportunity to cast an advisory vote, a "Say on Pay," regarding the fiscal 2016 compensation of our NEOs, as describedincrease in the Executivevalue of shares after the grant date. Dividends and Director Compensation section of this proxy statement.dividend equivalent amounts with respect to any share underlying any other award may be accrued but not paid to a holder until all conditions or restrictions relating to such share have been satisfied.
In June 2011, in consideration of the results of the fiscal 2011 advisory vote on the frequency of "Say on Pay" votes, the Board determined to hold such votes on an annual basis until the next vote on the frequency of "Say on Pay" votes. Accordingly, the next "Say on Pay" vote will be held at the Company's 2016 Meeting.
Information about the Advisory Vote to Approve Named Executive Officer Compensation
Other Stock-Based Awards. The Compensation Committee establishes, recommends and governs allmay grant other awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, our shares of common stock. Any shares of our common stock delivered pursuant to a purchase right must be purchased for consideration having a value equal to at least one hundred percent (100%) of the compensationfair market value of the shares on the date the purchase right is granted. Duration, Termination and benefits policiesAmendment. If approved, unless discontinued or terminated by the Board, the 2020 Plan will expire on April 13, 2030. No awards may be made after that date. However, unless otherwise expressly provided in an applicable award agreement, any award granted under the 2020 Plan prior to expiration may extend beyond the end of such period through the award’s normal expiration date. The Board and, actions for the Company's NEOs, as defined in the Introductionpursuant to the Executive and Director Compensation — Compensation Discussion and Analysis sectiondelegation of this proxy statement. While the advisory vote to approve NEO compensation is not binding on us, it will provide useful information to our Board andits authority, the Compensation Committee regarding our shareholders' viewsmay amend, alter or discontinue the 2020 Plan at any time, although prior shareholder approval must be obtained for any action that would increase the number of shares of our executive compensation philosophy,common stock available, increase the award limits under the 2020 Plan, permit awards of options or SARs at a price less than fair market value, permit repricing of options or SARs, or expand the class of persons eligible to receive awards under the 2020 Plan. Shareholder approval is also required for any action that would, absent such approval, violate the rules and regulations of the NYSE or any other securities exchange applicable to us. Any amendment to the 2020 Plan, or any outstanding award, is subject to compliance with all applicable laws, rules and policies and practices. of any applicable governmental entity or securities exchange, including any required approval. The Compensation Committee values our shareholders' opinions and will takemay amend or terminate any outstanding award, but (except as provided below with respect to certain corporate transactions) not without the resultsconsent of any award recipient or beneficiary if such action would adversely affect the rights of the vote into consideration when determiningholder of the future compensation arrangementsaward. Corporate Transactions Upon any reorganization, merger, consolidation, split-up, spin-off, take-over bid, or any other similar corporate transaction, the Compensation Committee or the Board may, in its discretion, provide for any of the following: Termination of any award, whether or not vested, in exchange for the amount of cash and/or property that would have been received upon the exercise of the award or the realization of the award holder’s vested rights or the replacement of the award with other rights or property in the discretion of the Compensation Committee or the Board; Assumption or substitution of any award by the successor or survivor corporation, with appropriate adjustment to the number and kind of shares and exercise price; | | | | | | | | | | | | | | | | | | | 87 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Subject to the limitations provided below, acceleration of the exercisability or the vesting of any award, notwithstanding the terms in any award agreement; or Prevention of additional vesting or exercisability of any award after a specified date. Notwithstanding the Compensation Committee’s discretion described above, no award agreement may contain a change in control definition that would accelerate the exercisability or the lapse of restrictions of any award upon only the announcement or shareholder approval (rather than the consummation of) any reorganization, merger, consolidation, split-up, spin-off, combination, or any other similar corporate transaction. Prohibition on Repricing Awards Without the approval of our NEOs. To the extent there are significant negative "Say on Pay" advisory votes, we planshareholders, (a) no option or SAR may be amended to consult directlyreduce its exercise or grant price, (b) no option or SAR may be cancelled and replaced with shareholders to better understand the concerns that influenced the votean option or SAR having a lower exercise price and consider constructive feedback(c) no option or SAR may be cancelled or repurchased for cash or other securities, except in making future decisions about our executive compensation program.
As detailed in our CD&A, we believe our fiscal 2016 executive compensation program reflects market appropriate practices and balances risk and reward in relation to our overall business strategy and ongoing business transformation. Our executive compensation program is focused on pay-for-performance and seeks to mitigate risks related to compensationconnection with a stock dividend or other distribution, including a stock split, merger or other similar corporate transaction or event, in order to further align management's interests with shareholders' interests in long-term value creation.
Accordingly, we ask that our shareholders cast an advisory vote to approve the following resolution:
RESOLVED, that the shareholdersprevent dilution or enlargement of the Company approve, onbenefits, or potential benefits intended to be provided under the 2020 Plan.
Transferability of Awards No award under the 2020 Plan (other than fully vested and unrestricted shares) and no right under any such award are transferable other than by will or by the laws of descent and distribution, and no award (other than fully vested and unrestricted shares) or right under any such award may be pledged, alienated, attached or otherwise encumbered. However, the Compensation Committee may permit an advisory basis,award to be transferred to family members if such transfer is for no value and in accordance with the compensationrules of Form S-8. The Compensation Committee may allow award recipients to designate a beneficiary or beneficiaries to exercise the rights of the award recipient and receive any property distributable with respect to any award in the event of an award recipient’s death. Clawback and Recoupment All awards granted under the 2020 Plan will be subject to forfeiture or other penalties in accordance with our clawback and recoupment policy. Federal Income Tax Consequences Grant of Options and SARs. The grant of a stock option or SAR is not expected to result in any taxable income for the recipient. Exercise of Options and SARs. Upon exercising a non-qualified stock option, the optionee must recognize ordinary income equal to the excess of the fair market value of the shares of our common stock acquired on the date of exercise over the exercise price, and we will generally be entitled at that time to an income tax deduction for the same amount. The holder of an incentive stock option generally will have no taxable income upon exercising the option (except that an alternative minimum tax liability may arise), and we will not be entitled to an income tax deduction. Upon exercising a SAR, the amount of any cash received and the fair market value on the exercise date of any shares of our common stock received are taxable to the recipient as ordinary income and generally deductible by us. Disposition of Shares Acquired Upon Exercise of Options and SARs. The tax consequence upon a disposition of shares acquired through the exercise of an option or SAR will depend on how long the shares have been held and whether the shares were acquired by exercising an incentive stock option or by exercising a non-qualified stock option or SAR. Generally, there will be no tax consequence to us in connection with the disposition of shares acquired under an option or SAR, except that we may be entitled to an income tax deduction in the case of the disposition of shares acquired under an incentive stock option before the applicable incentive stock option holding periods set forth in the Internal Revenue Code have been satisfied. Restricted Stock Awards. Recipients of grants of restricted stock generally will be required to include as taxable ordinary income the fair market value of the restricted stock at the time it is no longer subject to a substantial risk of forfeiture. In contrast, unrestricted stock grants are taxable at grant. An award holder who makes an 83(b) election within 30 days of the date of grant of the restricted stock will incur taxable ordinary income on the date of grant equal to the fair market value of such shares of restricted stock (determined without regard to forfeiture restrictions). With respect to the sale of shares after the forfeiture restrictions have expired, the holding period to determine whether the award recipient has long-term or short-term capital gain (or loss) generally begins when the restrictions expire, and | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 88 | | | | | | |
TABLE OF CONTENTS the tax basis for such shares will generally be based on the fair market value of the shares on that date. However, if the award holder made an 83(b) election as described above, the holding period commences on the date of such election, and the tax basis will be equal to the fair market value of the shares on the date of the election (determined without regard to the forfeiture restrictions on the shares). If the award permits dividends to accrue while the restricted stock is subject to a substantial risk of forfeiture, such dividends will be paid if and when the underlying stock vests and will also be taxed as ordinary income. We generally will be entitled to an income tax deduction equal to amounts the award holder includes in ordinary income at the time of such income inclusion. Restricted Stock Units and Other Stock-Based Awards. Recipients of grants of restricted stock units (including performance share units) will not incur any federal income tax liability at the time the awards are granted. Award holders will recognize ordinary income equal to (a) the amount of cash received under the terms of the award or, as applicable, (b) the fair market value of the shares received (determined as of the date of receipt) under the terms of the award. If the award permits dividend equivalent amounts to accrue while the restricted stock unit is subject to a substantial risk of forfeiture, such dividend equivalent amounts will be paid if and when the underlying stock unit vests and will also be taxed as ordinary income. Cash or shares to be received pursuant to any other stock-based award generally become payable when applicable forfeiture restrictions lapse; provided, however, that, if the terms of the award so provide, payment may be delayed until a later date to the extent permitted under applicable tax laws. We generally will be entitled to an income tax deduction for any amounts included by the award holder as ordinary income. For awards that are payable in shares, participant’s tax basis is equal to the fair market value of the shares at the time the shares become payable. Upon the sale of the shares, appreciation (or depreciation) after the shares are paid is treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held. Income Tax Deduction. Subject to the usual rules concerning reasonable compensation, including our obligation to withhold or otherwise collect certain income and payroll taxes, we generally will be entitled to a corresponding income tax deduction at the time a participant recognizes ordinary income from awards made under the 2020 Plan. However, Section 162(m) of the Code prohibits publicly held corporations from deducting more than $1 million per year in compensation paid to certain named executive officers forofficers. Therefore, compensation paid annually to an executive covered by Section 162(m) of the fiscal year ended January 30, 2016, as describedCode under the 2020 Stock Plan in excess of $1 million generally will not be deductible. Application of Section 16. Special rules may apply to individuals subject to Section 16 of the Executive and Director Compensation — Compensation Discussion and Analysis section and the compensation tables and related material disclosed in the Company's proxy statement for its 2016 Regular Meeting of ShareholdersExchange Act. In particular, unless a special election is made pursuant to the compensation disclosure rulesInternal Revenue Code, shares received through the exercise of a stock option or SAR may be treated as restricted as to transferability and subject to a substantial risk of forfeiture for a period of up to six (6) months after the date of exercise. Accordingly, the amount of any ordinary income recognized and the amount of our income tax deduction will be determined as of the Securitiesend of that period. Delivery of Shares for Tax Obligation. Under the 2020 Plan, the Compensation Committee may permit participants receiving or exercising awards, subject to the discretion of the Compensation Committee and Exchange Commission.upon such terms and conditions as it may impose, to deliver shares of our common stock (either shares received upon the receipt or exercise of the award or shares previously owned by the holder of the option) to us to satisfy federal and state income tax obligations. New Plan Benefits No benefits or amounts have been granted, awarded or received under the 2020 Plan. In addition, the Compensation Committee in its discretion will determine the number and types of awards that will be granted. Thus, it is not possible to determine the benefits that will be received by eligible participants if the 2020 Plan were to be approved by the shareholders. The closing price of a share of our common stock as reported on the NYSE on April 13, 2020, was $68.34. Equity Compensation Plan Information The following table provides information about Best Buy common stock that may be issued under our existing equity compensation plans as of February 1, 2020. | | | | | | | | | | | | | | | | | | | 89 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS The table does not include information about our proposed Plan which is being submitted for shareholder approval at the Meeting. If the 2020 Plan was to be approved by our shareholders, the 2014 Plan will be terminated, and no further awards will be made pursuant to it. | Equity compensation plans approved by security holders | | | 4,360,967 | | | $54.38 | | | 13,126,195 | |
(1)
| Includes grants of stock options and restricted stock units (which may be market-based, performance-based or time-based) awarded under our restricted stock under our 2004 Omnibus Stock and Incentive Plan, as amended; and our 2014 Omnibus Stock and Incentive Plan, as amended. |
(2)
| Includes weighted-average exercise price of outstanding stock options only. |
(3)
| Excludes securities to be issued upon exercise of outstanding options and rights. Includes 9,375,630 shares of our common stock available for issuance under the 2014 Omnibus Incentive Plan, as amended plus 3,750,565 shares of our common stock which have been reserved for issuance under our 2008 and 2003 Employee Stock Purchase Plans. |
Registration with the SEC If the 2020 Plan is approved by shareholders, the Company will file a Registration Statement on Form S-8 with the SEC with respect to the additional shares of the Company’s common stock authorized for issuance pursuant to the 2020 Plan as soon as reasonably practicable following shareholder approval. Board Voting Recommendation
OurUpon the recommendation of management, the Board adopted the Best Buy Co., Inc. 2020 Omnibus Incentive Plan and recommends an advisoryto the shareholders that they vote FOR the approval of the fiscal 2016 compensation of our NEOs as disclosed in this proxy statement pursuant to the SEC's compensation disclosure rules.
2020 Plan.
The affirmative vote of at leastthe holders of a majority of the voting power of the shares present, in person or by proxy, and entitled to vote (excluding broker non-votes) is required for advisory approval of our NEO compensation. to approve the Best Buy Co., Inc. 2020 Omnibus Incentive Plan.
IT IS INTENDED THAT, UNLESS OTHERWISE INSTRUCTED, THE SHARES REPRESENTED BY THE PROXY (OTHER THAN BROKER NON-VOTES) WILL BE VOTED "FOR"“FOR” THE ADVISORY VOTE ON EXECUTIVE COMPENSATION.APPROVAL OF THE BEST BUY CO., INC. 2020 OMNIBUS INCENTIVE PLAN. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 90 | | | | | | |
TABLE OF CONTENTS ITEMS OF BUSINESS NOS. 5 - 8 — APPROVAL OF AMENDMENTS TO ARTICLES IX AND X OF OUR CHARTER We are proposing four amendments to our Amended and Restated Articles of Incorporation (the “Current Articles”). Three of the proposed amendments eliminate the existing supermajority voting provisions contained in Article IX, Regulation of Certain Events, and Article X, Stock Repurchases from Certain Shareholders, of the Current Articles. The fourth proposed amendment amends the voting standard in Article X, Section 2 to the affirmative vote of a majority of the voting power of the shares present and entitled to vote at a meeting of shareholders, except where a larger proportion is required by law, which is the same standard that would apply under Article III, Shareholder Voting, of the Current Articles. This summary does not contain all the information that may be important to you. The complete text of the Amended and Restated Articles of Incorporation, as they are proposed to be amended (the “Amended Articles”), is included in Appendix B to this proxy statement. The following summary is qualified in its entirety by reference to the text of the Amended Articles. You are urged to read the Amended Articles in their entirety. Information About the Amendments to Article IX and X Elimination of Supermajority Voting Provisions The Board, in its continuing review of best practices in corporate governance, has evaluated the supermajority voting provisions in Articles IX and X of the Current Articles. Pursuant to Articles IX and X, the affirmative vote of at least 662∕3% of the then-outstanding voting power is required for the amendment of Articles IX and X of the Current Articles and Section 1 of our Amended and Restated By-laws (the “By-laws”) and, in the case of amendments to Article IX, the affirmative vote of the holders of at least 662∕3% of our outstanding shares entitled to vote that are beneficially owned by shareholders other than related persons. The Board is proposing to amend Articles IX and X to eliminate the supermajority approval requirements to amend Articles IX and X of the Current Articles and Article III, Section 1 of the By-laws. If the proposed amendments to Articles IX and X are approved by our shareholders at the Meeting, they will be effective following the Meeting. Item No. 5 – Amendment of Article IX, Section 9. The Board has concluded that it is in the best interests of Best Buy and its shareholders to eliminate the supermajority shareholder vote required to amend, alter or repeal the provisions of Article IX that is contained in Article IX, Section 9 of the Current Articles. As a result of this proposed amendment, the affirmative vote of a majority of the voting power of the shares present and entitled to vote would be required to amend, alter or repeal Article IX, except where a larger proportion is required by law. Item No. 6 – Amendment of Article IX, Section 10 Relating to Amendments to the Election of Directors By-laws Provision. The Board has concluded that it is in the best interests of Best Buy and its shareholders to eliminate the supermajority shareholder vote required under Article IX, Section 10 of the Current Articles to amend Section 1, Election of Directors, of Article III of the By-laws, which addresses the number of members of the Board of Directors, the term to be served by directors and related matters. As a result of this proposed amendment, the affirmative vote of a majority of the voting power of the shares present and entitled to vote would be required to amend Section 1 of Article III of the By-laws, except where a larger proportion is required by law. Item No. 7 – Amendment of Article X, Section 4. The Board has concluded that it is in the best interests of Best Buy and its shareholders to eliminate the supermajority shareholder vote required under Article X, Section 4 of the Current Articles to amend, alter or repeal the provisions of Article X. As a result of this proposed amendment, the affirmative vote of a majority of the voting power of the shares present and entitled to vote would be required to amend, alter or repeal Article X, except where a larger proportion is required by law. Amendment of Voting Standard Applicable to the Anti-Greenmail Provision Item No. 8 – Amendment of the Anti-Greenmail Provision Voting Standard in Article X, Section 2. The Board has concluded that it is in the best interests of Best Buy and its shareholders to amend the voting standard that applies to shareholder approval of certain “greenmail” transactions. Under Section 2 of Article X of the Current Articles, our repurchase or other acquisition of capital stock from a Substantial Shareholder (as defined in Article X) requires the affirmative vote of holders of a majority of outstanding shares entitled to vote. The Board is proposing to amend this voting standard to replace it with a requirement for the affirmative vote of a majority of the voting power of the shares present and entitled to vote at a meeting of shareholders, except where a larger proportion is required by law, which is the same standard that would apply generally under Article III, Shareholder Voting, of the Current Articles. | | | | | | | | | | | | | | | | | | | 91 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Under the Minnesota Business Corporation Act (the “MBCA”), we are prohibited from buying shares at an above-market price from a shareholder of 5% or more of the Company’s outstanding shares entitled to vote who has held the shares for less than two years unless (i) the purchase is approved by holders of a majority of the outstanding shares entitled to vote or (ii) all other holders of shares of the same class or series are given the opportunity to sell the same percentage of their shares on substantially as favorable terms. Article X of the Current Articles was intended to conform to the applicable provisions of the MBCA. Given that the proposed amendments to the Current Articles would eliminate supermajority voting provisions such that the regular voting standard contained in Article III, Shareholder Voting, would apply to amendments to the applicable provisions of the Amended Articles and By-laws, the Board has concluded that it is in the best interests of Best Buy and its shareholders that a consistent voting standard apply to shareholder approval pursuant to Section 2 of Article X of the Amended Articles as well. However, so long as the applicable provisions of the MBCA remain in effect, the voting standard provided under the MBCA will continue to apply to shareholder approval of share purchases subject to the statute. Potential Anti-Takeover Effect of Our Articles and By-laws and Certain Provisions of Minnesota Law Notwithstanding the proposed amendments, the business combination provisions of Article IX of the Articles and the MBCA and the anti-greenmail provisions of Article X of the Articles and the MBCA could continue to have an anti-takeover effect by, in certain circumstances, creating an impediment that may frustrate or delay persons seeking to effect a takeover or otherwise gain control of our company, as described below. Business Combination Provision. Section 302A.673 of the MBCA and the Articles generally prohibit the Company or any of its subsidiaries from entering into any merger, share exchange, sale of material assets or similar transaction with a beneficial owner of 10% or more of the voting power of the Company’s shares entitled to vote within four years following the date the person became a 10% shareholder, unless either the transaction or the person’s acquisition of shares is approved prior to the person becoming a 10% shareholder by a committee of disinterested members of the Board of Directors. Although the proposed amendment to Article IX, Section 9 the Current Articles would eliminate the supermajority voting requirement to amend Article IX, the other provisions of Article IX will remain in effect. Anti-Greenmail Provisions. Under Section 302A.553 of the MBCA and the Current Articles, as described above, we are prohibited from buying shares at an above-market price from a shareholder of 5% or more of the Company’s outstanding shares entitled to vote who has held the shares for less than two years unless (i) the purchase is approved by holders of a majority of the outstanding shares entitled to vote or (ii) all other holders of shares of the same class or series are given the opportunity to sell the same percentage of their shares on substantially as favorable terms. The proposed amendment to Article X, Section 2 of the Current Articles would amend the voting standard in the preceding sentence so that we are prohibited from buying shares at an above-market price from a shareholder of 5% or more of the Company’s outstanding shares entitled to vote who has held the shares for less than two years unless (i) the purchase is approved by the affirmative vote of a majority of the voting power of the shares present and entitled to vote at a meeting of shareholders, except where a larger proportion is required by law, or (ii) all other holders of shares of the same class or series are given the opportunity to sell the same percentage of their shares on substantially as favorable terms. Although the proposed amendment to Article X, Section 2 of the Current Articles would eliminate the supermajority voting requirement to amend Article X and the proposed amendment to Article X, Section 2 would amend the voting standard as described above, the other provisions of Article X will remain in effect. In addition, so long as the applicable provisions of the MBCA remain in effect, the voting standard provided under the MBCA will continue to apply to shareholder approval of share purchases subject to the statute. In addition, the following existing provisions of our Articles, By-laws and the MBCA could continue to have an anti-takeover effect: Requirements for Advance Notification of Director Nominations and Shareholder Proposals. The By-laws establish advance notice procedures with respect to shareholder proposals and the nomination of candidates for election as directors and the proposal of any business not intended to be included in the corporation’s proxy statement, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. In order for any matter to be “properly brought” before a meeting, a shareholder must comply with advance notice requirements and provide us with certain information. Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 120 days nor more than 150 days prior to the anniversary of the immediately preceding annual meeting of shareholders. The By-laws also specify requirements as to the form and content of a shareholder’s notice. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | 92 | | | | | | |
TABLE OF CONTENTS In addition to the director nomination provisions described above, the By-laws contain a “proxy access” provision that provides that any shareholder or group of up to twenty shareholders, who qualify as an eligible shareholder under the proxy access provisions of our By-laws, and who may nominate and include in our proxy materials director candidates constituting up to 20% of our board of directors or two directors, whichever is greater. In order for a shareholder or group of shareholders to be eligible under the proxy access provisions of our By-laws to nominate a director, such shareholder or group of shareholders must, among other criteria, be eligible to vote at the Company’s annual meeting and have owned or together with other group shareholders owed 3% or more of the voting power of our issued and outstanding common stock continuously for at least three years. In order to use the proxy access provisions of our By-laws, shareholders and their nominees must satisfy all the eligibility and notice requirements specified in our By-laws. A shareholder proposing to nominate a person for election to our board of directors through the proxy access provision must provide us with a notice requesting the inclusion of the director nominee in our proxy materials and other required information not less than 120 days nor more than 150 days prior to the first anniversary of the date on which our definitive proxy statement was released to shareholders in connection with the prior year’s annual meeting. The complete proxy access provision for director nominations are set forth in the By-laws. Additional Authorized Shares of Capital Stock. The additional shares of authorized common stock and preferred shares available for issuance under the Articles could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control. Special Meetings of Shareholders; Shareholder Action by Unanimous Written Consent. Section 302A.433 of the MBCA and the By-laws provide that special meetings of the Company’s shareholders may be called by the Company’s chief executive officer, chief financial officer, two or more directors, the chairman of the board of directors, or shareholders holding 10% or more of the voting shares of the Company, except that a special meeting called by shareholders for the purpose of considering any action to directly or indirectly facilitate or effect a business combination, including any action to change or otherwise affect the composition of the Company’s Board of Directors for that purpose, must be called by 25% or more of the voting shares of the Company. Section 302A.441 of the MBCA and the By-laws also provide that action may be taken by shareholders without a meeting only by unanimous written consent. Control Share Provision. Section 302A.671 of the MBCA applies, with certain exceptions, to any acquisition of the Company’s voting stock (from a person other than the Company and other than in connection with certain mergers and exchanges to which the Company is a party) resulting in the acquiring person owning 20% or more of the Company’s voting stock then outstanding. Section 302A.671 requires approval of any such acquisitions by both (i) the affirmative vote of the holders of a majority of the shares entitled to vote, including shares held by the acquiring person, and (ii) the affirmative vote of the holders of a majority of the shares entitled to vote, excluding all interested shares. In general, shares acquired in the absence of such approval are denied voting rights and are redeemable at their then fair market value by the Company within 30 days after the acquiring person has failed to give a timely information statement to the Company or the date the shareholders voted not to grant voting rights to the acquiring person’s shares. Takeover Offer; Fair Price. Under Section 302A.675 of the MBCA, an offeror may not acquire shares of a publicly held corporation within two years following the last purchase of shares pursuant to a takeover offer with respect to that class, including acquisitions made by purchase, exchange, merger, consolidation, partial or complete liquidation, redemption, reverse stock split, recapitalization, reorganization, or any other similar transaction, unless (i) the acquisition is approved by a committee of the board’s disinterested directors before the purchase of any shares by the offeror pursuant to the earlier takeover offer, or (ii) shareholders are afforded, at the time of the proposed acquisition, a reasonable opportunity to dispose of the shares to the offeror upon substantially equivalent terms as those provided in the earlier takeover offer. Board Voting Recommendation The Board approved each of the four amendments to Articles IX and X of our Amended and Restated Articles of Incorporation described above, and recommends that shareholders vote FOR each of the amendments. The affirmative vote of a majority of the voting power of the shares present, in person or by proxy, and entitled to vote or, if greater, a majority of the voting power of the minimum numer of shares entitled to vote that would constitute a quorum at the Meeting is required to approve each of Items No. 5 (Amendment of Article IX, Section 9), 7 (Amendment of Article X, Section 4) and 8 (Amendment of Article X, Section 2). | | | | | | | | | | | | | | | | | | | 93 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS The affirmative vote of 662∕3% of the outstanding shares entitled to vote is required to approve Item No. 6, the Amendment of Article IX, Section 10, of the Current Articles. IT IS INTENDED THAT, UNLESS OTHERWISE INSTRUCTED, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED “FOR” EACH OF THE FOUR PROPOSALS TO AMEND ARTICLES IX AND X OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION.
Management and the Board are not aware of any other item of business that will be addressed at the Meeting. If an item properly comes up for vote at the Meeting, or at any postponement or adjournment of the Meeting, that is not described in the Meeting Notice, including adjournment of the Meeting and any other matters incident to the conduct of the Meeting, the Proxy Agents will vote the shares subject to your proxy in their discretion. Discretionary authority for them to do so is contained in the proxy.
PROPOSALS FOR THE NEXT REGULAR MEETING OF SHAREHOLDERS
Any shareholder proposal intended to be presented for consideration at our 20172021 Regular Meeting of Shareholders and to be included in our proxy statement for that meeting must be received by our Secretary no later than January 3, 2017,2, 2021, at our principal executive office, addressed as follows:
Mr. Keith J. Nelsen Todd G. Hartman General Counsel, Chief Risk & Compliance Officer and Secretary Best Buy Co., Inc.
7601 Penn Avenue South
Richfield, Minnesota 55423
In accordanceOur By-laws establish advance notice procedures with our By-laws,respect to shareholder proposals and the nomination of candidates for election as directors and the proposal of any shareholder proposal, including any director nominations, received andbusiness not intended to be presented for consideration at our 2017 Regular Meeting of Shareholders, though not included in ourthe corporation’s proxy statement, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. In order for thatany matter to be “properly brought” before a meeting, a shareholder must comply with advance notice requirements and provide us with certain information. Generally, to be timely, a shareholder’s notice must be received byat our Secretary at the address set forth above noprincipal executive offices not less than 120 days nor more than 150 days and no less than 120 days beforeprior to the anniversary of the prior year's regularimmediately preceding annual meeting of shareholders. Accordingly, such proposals will be considered untimely if received before January 15, 2017,12, 2021, or after February 14, 2017.11, 2021. Any such shareholder proposal must also comply with the procedural requirements of our By-laws. The advance notice requirement in our By-laws supersedes the notice period in Rule 14a-4(c)(1) of the Securities Exchange Act of 1934 regarding discretionary proxy voting authority with respect to shareholder business.
By Order of the Board of Directors
Todd G. Hartman Secretary April 29, 2020 | | | | | | | | | By Order of the Board of Directors | | | | | | | | | | | | | | | Keith J. Nelsen | 2020 Proxy Statement | | | 94 | | | | | | |
TABLE OF CONTENTS Reconciliation of Non-GAAP Financial Measures Reconciliations of operating income and diluted earnings per share (“EPS”) (GAAP financial measures) to non-GAAP operating income and non-GAAP diluted EPS (non-GAAP financial measures) were as follows ($ in millions, except per share amounts): | Operating income | | | $2,009 | | | $1,900 | | | Intangible asset amortization(1) | | | 72 | | | 22 | | | Restructuring charges(2) | | | 41 | | | 46 | | | Acquisition-related transaction costs(1) | | | 3 | | | 13 | | | Tax reform-related item - employee bonus(3) | | | — | | | 7 | | | Tax reform-related item - charitable contribution(3) | | | — | | | — | | | Non-GAAP operating income | | | $2,125 | | | $1,988 | | | | | | | | | | | | Diluted EPS | | | $5.75 | | | $5.20 | | | Intangible asset amortization(1) | | | 0.27 | | | 0.08 | | | Restructuring charges(2) | | | 0.15 | | | 0.16 | | | Acquisition-related transaction costs(1) | | | 0.01 | | | 0.05 | | | (Gain) loss on sale of investments, net(4) | | | — | | | (0.04) | | | Tax reform - repatriation tax(3) | | | — | | | (0.07) | | | Tax reform - deferred tax rate change(3) | | | — | | | (0.02) | | | Tax reform-related item - employee bonus(3) | | | — | | | 0.02 | | | Tax reform-related item - charitable contribution(3) | | | — | | | — | | | Income tax impact of non-GAAP adjustments(5) | | | (0.11) | | | (0.06) | | | Non-GAAP diluted EPS | | | $6.07 | | | $5.32 | |
(1)
| Represents charges associated with acquisitions, including (1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and developed technology, and (2) acquisition-related transaction costs primarily comprised of professional fees. Refer to Note 2, Acquisitions, and Note 3, Goodwill and Intangible Assets, in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for fiscal 2020 for additional information regarding the nature of these charges. |
(2)
| Represents charges and adjustments associated with U.S. retail operating model changes in fiscal 2020, and the closure of Best Buy Mobile stand-alone stores in the U.S. in fiscal 2019. Refer to Note 9, Restructuring, in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for fiscal 2020 for additional information regarding the nature of these charges. |
(3)
| Represents charges and subsequent adjustments resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”) enacted into law in the fourth quarter of fiscal 2018, including amounts associated with a deemed repatriation tax and the revaluation of deferred tax assets and liabilities, as well as tax reform-related items announced in response to future tax savings created by tax reform, including a one-time bonus for certain employees and a one-time contribution to the Best Buy Foundation. Refer to Note 11, Income Taxes, in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for fiscal 2020 for additional information regarding the nature of these charges. |
(4)
| Represents (gain) loss on sale of investments and investment impairments included in Investment income and other on our Consolidated Statements of Earnings. |
(5)
| Represents the summation of the calculated income tax charge related to each non-GAAP non-income tax adjustment. The non-GAAP adjustments relate primarily to adjustments in the U.S. and Canada. As such, the income tax charge is calculated using the statutory tax rate of 24.5% for the U.S. and 26.9% for Canada applied to the non-GAAP adjustments of each country. |
| | | | | | | | | | | | | May 3, 2016 | | Secretary | | | | 95 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS BEST BUY CO., INC. 2020 OMNIBUS INCENTIVE PLAN Section 1. Purpose
The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock and cash-based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders.
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As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” shall mean (i) any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee.
Forward-Looking(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award granted under the Plan.
(c) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan. An Award Agreement may be in an electronic medium and Cautionary Statementsneed not be signed by a representative of the Company or the Participant. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. (d) “Board” shall mean the Board of Directors of the Company.
This proxy material contains forward-looking statements(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.
(f) “Committee” shall mean the Compensation and Human Resources Committee of the Board or such other committee designated by the Board to administer the Plan. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “non-employee director” within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27ARule 16b-3. (g) “Company” shall mean Best Buy Co., Inc., a Minnesota corporation, and any successor corporation. (h) “Director” shall mean a member of the SecuritiesBoard. (i) “Dividend Equivalent” shall mean any right granted under Section 6(d) of the Plan. (j) “Effective Date” shall mean June 11, 2020, the date this Plan was approved by the shareholders of the Company at the annual meeting of shareholders of the Company. (k) “Eligible Person” shall mean any employee, officer, non-employee Director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any person to whom an offer of employment or engagement with the Company or any Affiliate is extended. An Eligible Person must be a natural person. (l) “Exchange Act of 1933 and Section 21E of” shall mean the Securities Exchange Act of 1934, that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, business prospects, new strategies, the competitive environment andas amended. (m) “Fair Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe," "assume,” “estimate,” “expect,” “intend,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: macro-economic conditions (including fluctuations in housing prices, oil markets and jobless rates), conditions in the industries and categories in which we operate, changes in consumer preferences, changes in consumer confidence, consumer spending and debt levels, online sales levels and trends, average ticket size, the mix of products and services offered for sale in our physical stores and online, credit market changes and constraints, product availability, competitive initiatives of competitors (including pricing actions and promotional activities of competitors), strategic and business decisions of our vendors (including actions that could impact promotional support, product margin and/or supply)securities), the successfair market value of new product launches, the impact of pricing investments and promotional activity, weather, naturalsuch property determined by such methods or man-made disasters, attacks on our data systems, the company’s ability to prevent or react to a disaster recovery situation, changes in law or regulations, changes in tax rates, changes in taxable income in each jurisdiction, tax audit developments and resolution of other discrete tax matters, foreign currency fluctuation, availability of suitable real estate locations, the company’s ability to manage its property portfolio, the impact of labor markets, the company’s ability to retain qualified employees, failure to achieve anticipated expense and cost reductions from operational and restructuring changes, disruptions in our supply chain, the costs of procuring goods the company sells, failure to achieve anticipated revenue and profitability increases from operational and restructuring changes (including investments in our multi-channel capabilities and brand consolidations), inability to secure or maintain favorable vendor terms, failure to accurately predict the duration over which we will incur costs, acquisitions and development of new businesses, divestitures of existing businesses, failure to complete or achieve anticipated benefits of announced transactions, integration challenges relating to new ventures, and our ability to protect information relating to our employees and customers. A further list and description of these risks, uncertainties and other matters canprocedures as shall be found in the company’s Annual Report and other reports filedestablished from time to time withby the Committee. Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market Value of a Share as of a given date shall be, if the Shares are then traded on the | | | | | | | | | | | | | | | | | | | A-1 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS New York Stock Exchange, the closing price of one Share as reported on the New York Stock Exchange on such date or, if the New York Stock Exchange is not open for trading on such date, on the most recent preceding date when the New York Stock Exchange is open for trading. (n) “Full Value Award” shall mean any Award other than an Option, Stock Appreciation Right or similar Award, the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award. (o) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision. (p) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (q) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase shares of the Company. (r) “Other Stock-Based Award” shall mean any right granted under Section 6(e) of the Plan. (s) “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan. (t) “Person” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust. (u) “Plan” shall mean the Best Buy Co., Inc. 2020 Omnibus Incentive Plan, as amended from time to time. (v) “Prior Plans” shall mean the Best Buy Co., Inc. 2014 Omnibus Stock and Incentive Plan, as amended from time to time and any predecessor plan thereto. (w) “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan. (x) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date. (y) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission (“SEC”)under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation. (z) “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder. (aa) “Securities Act” shall mean the Securities Act of 1933, as amended. (bb) “Share” or “Shares” shall mean a share or shares of common stock, $.10 par value per share, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan. (cc) “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A. (dd) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. Section 3. Administration (a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | A-2 | | | | | | |
TABLE OF CONTENTS conditions of any Award or Award Agreement, subject to the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations under Section 6 and Section 7, (vii) determine whether, to what extent and under what circumstances Awards may be exercised, or canceled, forfeited or suspended; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A and Section 6; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and sub-plans as may be necessary or desirable to comply with provisions of the laws of non-United States jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate. (b) Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers of the Company or any Affiliate who are subject to Section 16 of the Exchange Act or (ii) in such a manner as would cause the Plan not to comply with applicable exchange rules or applicable law. (c) Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3; and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of the New York Stock Exchange or any other securities exchange applicable to the Company) may grant Awards to Directors who are not also employees of the Company or an Affiliate. (d) Indemnification. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. To the full extent permitted by law, the provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company. Section 4. Shares Available for Awards (a) Shares Available. (i)
| Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall equal the sum of (x) 18,600,000 (the authorized net increase of Shares in connection with the adoption of the Plan), (y) shares available for grant under the Best Buy Co., Inc. Amended & Restated 2014 Omnibus Stock and Incentive Plan as of the Effective Date and (z) any Shares subject to any outstanding award under the Prior Plans that, after the Effective Date, are not purchased or are forfeited or reacquired by the Company, or otherwise not delivered to the Participant due to termination or cancellation of such award, subject to the share counting provisions of Section 4(b) below. |
(ii)
| On and after the Effective Date, no awards shall be granted under the Prior Plans, but all outstanding awards previously granted under the Prior Plans shall remain outstanding and subject to the terms of the Prior Plans. |
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TABLE OF CONTENTS The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards issued under the Plan in accordance with the Share counting rules described in Section 4(b) below. When determining the Shares added to and subtracted from the aggregate reserve under paragraphs (ii) and (iii) above, the number of Shares added or subtracted shall be also determined in accordance with the Share counting rules described in Section 4(b) below (including, for avoidance of doubt, the fungibility ratio and Share recycling rules). (b) Counting Shares. For purposes of this Section 4, except as set forth in this Section 4(b), if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. For purposes of determining the number of Shares covered on the date of grant by a Stock Appreciation Right that is to be settled in Shares, the aggregate number of Shares with respect to which the Stock Appreciation Right is to be exercised shall be counted against the number of Shares available for Awards under the Plan (without regard to the number of actual Shares issued upon settlement). With respect to any Full Value Award, the number of Shares available for Awards under the Plan shall be reduced by two (2) Shares for each Share covered by the Full Value Award. Notwithstanding the foregoing, the following special rules shall apply with respect to share counting under the Plan: (i)
| Shares Added Back to Reserve. Subject to the limitations in Section 4(b)(ii) below, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company, or if an Award otherwise terminates or is canceled without delivery of any Shares, then the number of Shares counted pursuant to Section 4(b) of the Plan against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan. |
(ii)
| Shares Not Added Back to Reserve. Notwithstanding anything to the contrary in this Section 4(b), the following Shares will not again become available for issuance under the Plan: (A) any Shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6(a)(iii)(B) or any Shares tendered in payment of the exercise price of an Option; (B) any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation with respect to an Award; (C) Shares covered by a Stock Appreciation Right issued under the Plan that are not issued in connection with settlement in Shares upon exercise; or (D) Shares that are repurchased by the Company using Option exercise proceeds. |
(iii)
| Cash-Only Awards. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan. |
(iv)
| Substitute Awards Relating to Acquired Entities. Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the Plan. |
(c) Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d)(i) below; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | A-4 | | | | | | |
TABLE OF CONTENTS (d) Award Limitations Under the Plan. (i)
| Annual Limitations for Awards Granted to Eligible Persons Other Than Non-Employee Directors. No Eligible Person who is an employee, officer, consultant, independent contractor or advisor may be granted any Award or Awards denominated in Shares, for more than 2,500,000 Shares (subject to adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any calendar year. |
(ii)
| Annual Limitations for Awards Granted to Non-Employee Directors. Notwithstanding any provision to the contrary in the Plan, the sum of the grant date fair value of equity-based Awards (such value computed as of the date of grant in accordance with applicable financial accounting rules) and the amount of any cash-based compensation granted to a non-employee Director during any calendar year shall not exceed $500,000. The independent members of the Board may make exceptions to this limit for a non-executive chair of the Board, provided that the non-employee Director receiving such additional compensation may not participate in the decision to award such compensation. |
Section 5. Eligibility Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision. Section 6. Awards (a) Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: (i)
| Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of such Option; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate. |
(ii)
| Option Term. The term of each Option shall be fixed by the Committee at the time but shall not be longer than ten (10) years from the date of grant. Notwithstanding the foregoing, the Committee may provide in the terms of an Option (either at grant or by subsequent modification) that, to the extent consistent with Section 409A, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option shall be extended for a period of not more than thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement. |
(iii)
| Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised within the Option term, either in whole or in part, and the method of exercise, except that any exercise price tendered shall be in either cash, Shares having a Fair Market Value on the exercise date equal to the applicable exercise price or a combination thereof, as determined by the Committee. |
(A)
| Promissory Notes. For avoidance of doubt, the Committee may not accept a promissory note as consideration. |
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TABLE OF CONTENTS (B)
| Net Exercises. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised, on the date of exercise, over the exercise price of the Option for such Shares. |
(iv)
| Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: |
(A)
| The aggregate number of Shares that may be issued under all Incentive Stock Options under the Plan shall be 18,600,000. |
(B)
| The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000. |
(C)
| All Incentive Stock Options must be granted within ten (10) years from the earlier of the date on which this Plan was adopted by the Board and the Effective Date. |
(D)
| Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than ten (10) years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five (5) years from the date of grant. |
(E)
| The purchase price per Share for an Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than one hundred ten percent (110%) of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option. |
(F)
| Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. |
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than one hundred percent (100%) of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, that the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the same limitations described in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | A-6 | | | | | | |
TABLE OF CONTENTS (c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: (i)
| Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. For purposes of clarity and without limiting the Committee’s general authority under Section 3(a), vesting of such Awards may, at the Committee’s discretion, be conditioned upon the Participant’s completion of a specified period of service with the Company or an Affiliate, or upon the achievement of one or more performance goals established by the Committee, or upon any combination of service-based and performance-based conditions (subject to minimum requirements in this Section 6). Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(d). |
(ii)
| Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units. |
(d) Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other Awards the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts with respect to any Share underlying any other Award may be accrued but not paid to a Participant until all conditions or restrictions relating to such Share have been satisfied. (e) Other Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No Award issued under this Section 6(e) shall contain a purchase right or an option-like exercise feature. (f) General. (i)
| Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law. |
(ii)
| Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award |
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TABLE OF CONTENTS granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iii)
| Limits on Transfer of Awards. No Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Notwithstanding the foregoing, the Committee may permit the transfer of an Award to family members if such transfer is for no value and in accordance with the rules of Form S-8. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. |
(iv)
| Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. |
(v)
| Prohibition on Option and Stock Appreciation Right Repricing. Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company’s shareholders, seek to effect any re-pricing of any previously granted “underwater” Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units or Other Stock-Based Award in exchange; or (iii) cancelling or repurchasing the underwater Options or Stock Appreciation Rights for cash or other securities. An Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of the Award. |
(vi)
| Minimum Vesting and Limits on Acceleration. Except as provided below, no Award shall be granted with terms providing for any right of exercise or lapse of any vesting obligations earlier than a date that is at least one year following the date of grant (or, in the case of vesting based upon performance based objectives, exercise and vesting restrictions cannot lapse earlier than the one year anniversary measured from the commencement of the period over which performance is evaluated). Notwithstanding the foregoing, the following Awards that do not comply with the one year minimum exercise and vesting requirements may be issued: |
(A)
| substitute Awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction entered into by the Company or any of its subsidiaries; |
(B)
| shares delivered in lieu of fully vested cash Awards or any cash incentive compensation earned by a Participant, provided that the performance period for such incentive compensation was at least one fiscal year; |
(C)
| any additional Awards the Committee may grant, up to a maximum of five percent (5%) of the aggregate number of Shares available for issuance under this Plan. For purposes of counting Shares against the five percent (5%) limitation, the Share counting rules under Section 4(b) of the Plan apply; and |
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TABLE OF CONTENTS (D)
| Awards issued to non-employee Directors so long as the Awards provide for a right of exercise or lapse of any vesting obligations no earlier than the next annual shareholder meeting date following the grant date, so long as the next annual shareholder meeting date is at least fifty (50) weeks after the immediately preceding annual meeting date. |
If either the Committee or an Award Agreement waives the one-year minimum, such waiver shall cause the Award to count against the five percent (5%) pool unless the acceleration is limited to the events of the Participant’s death, disability, retirement or a change-in-control of the Company. Neither the Committee nor an Award Agreement shall accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change-in-control of the Company unless such acceleration occurs upon the consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such change-in-control event. (vii)
| Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control of the Company or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control, disability or separation from service meet the definition of a change in ownership or effective control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six (6) months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. |
Section 7. Amendment and Termination; Corrections (a) Amendments to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Plan) adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. For greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award that would: (i)
| require shareholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange or any other securities exchange that are applicable to the Company; |
(ii)
| increase the number of shares authorized under the Plan as specified in Section 4(b) of the Plan; |
(iii)
| increase the number of shares or value subject to the limitations contained in Section 4(d) of the Plan; |
(iv)
| permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(f)(v) of the Plan; or |
(v)
| permit the award of Options or Stock Appreciation Rights at a price less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan. |
(b) Corporate Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Shares or other | | | | | | | | | | | | | | | | | | | A-9 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof: (i)
| either (A) termination of any such Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s vested rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s vested rights, then such Award may be terminated by the Company without any payment) or (B) the replacement of such Award with other rights or property selected by the Committee or the Board, in its sole discretion; |
(ii)
| that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; |
(iii)
| that subject to Section 6(f)(vi), the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or |
(iv)
| that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of such event. |
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan. Section 8. Income Tax Withholding In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, for avoidance of doubt, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any limitations required by ASC Topic 718 to avoid adverse accounting treatment); (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (c) by any other means set forth in the applicable Award Agreement. Section 9. General Provisions (a) No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. (b) Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | A-10 | | | | | | |
TABLE OF CONTENTS (c) Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. (d) No Rights of Shareholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued. (e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases. (f) No Right to Employment or Directorship. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, or the right to be retained as a Director, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment, or remove a Director who is a Participant, free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee or Director of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee or Director might otherwise have enjoyed but for termination of employment or directorship, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. (g) Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award. (h) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. (i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. (j) Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan. (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated. (l) Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. | | | | | | | | | | | | | | | | | | | A-11 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Section 10. Clawback or Recoupment All Awards under this Plan shall be subject to forfeiture or other penalties pursuant to the Company’s clawback policy, as amended from time to time, and such forfeiture and/or penalty conditions or provisions as determined by the Committee and set forth in the applicable Award Agreement. Section 11. Effective Date of the Plan The Plan was adopted by the Board on April 13, 2020, and was approved by the shareholders of the Company at the annual meeting of shareholders of the Company held on the Effective Date. Section 12. Term of the Plan No Award shall be granted under the Plan, and the Plan shall terminate, on April 13, 2030 or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan. Adopted by the Board of Directors on April 13, 2020, and approved by the shareholders of the Company on June 11, 2020. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | A-12 | | | | | | |
TABLE OF CONTENTS AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BEST BUY CO., INC. ARTICLE I NAME The name of this corporation shall be Best Buy Co., Inc. ARTICLE II REGISTERED OFFICE; REGISTERED AGENT The registered office of this corporation is located at 100 South Fifth Street, Suite 1075, Minneapolis, Minnesota 55402. Its registered agent at such address is CT Corporation System. ARTICLE III SHAREHOLDER VOTING Except with respect to the election of directors, the shareholders shall take action at a meeting of shareholders by the affirmative vote of a majority of the voting power of the shares present and entitled to vote, except where a larger proportion is required by law or these Articles of Incorporation. Subject to the rights, if any, of the holders of one or more classes or series of Preferred Stock voting separately by class or series to elect directors in accordance with the terms of such Preferred Stock, each director shall be elected at a meeting of shareholders by the vote of a majority of the votes cast with respect to the director. ARTICLE IV CAPITAL The aggregate number of shares of all classes of stock which this corporation shall have the authority to issue is One Billion Four Hundred Thousand (1,000,400,000) shares consisting of: (1)
| 1,000,000,000 shares of Common Stock, par value of $.10 per share; and |
(2)
| 400,000 shares of Preferred Stock, par value of $1.00 per share. |
The holders of shares of Common Stock shall have one vote for each share of Common Stock held of record on each matter submitted to the holders of shares of Common Stock. ARTICLE V CLASSES AND SERIES OF STOCK The shares of the Preferred Stock may be issued from time to time by the Board of Directors in one or more series with such designations, relative rights, preferences, limitations, dividends, rights, redemption prices, liquidation prices, conversion rights, sinking or purchase fund rights or other privileges as the Board of Directors may establish, fix or determine. ARTICLE VI BOARD ACTION WITHOUT A MEETING Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting by written action signed by a majority of the Board of Directors then in office, except as those matters which require shareholder approval, in which case the written action shall be signed by all members of the Board of Directors then in office. | | | | | | | | | | | | | | | | | | | B-1 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS ARTICLE VII CUMULATIVE VOTING No shareholder of this corporation shall be entitled to any cumulative voting rights. ARTICLE VIII PREFERENTIAL RIGHTS No shareholder of this corporation shall have any preferential, pre-emptive, or other rights of subscription to any shares of any class or series of stock of this corporation allotted or sold or to be allotted or sold whether now or hereafter authorized, or to any obligations or securities convertible into any class or series of stock of this corporation. ARTICLE IX REGULATION OF CERTAIN EVENTS Section 1. Definitions. As used in this Article IX (and, in some cases, Article X, hereof) the following terms and phrases shall have the respective meanings hereinafter set forth. (a) The term “Affiliate” means a Person that directly or indirectly Controls, is Controlled by, or is under common Control with, a specified Person. (b) The term “Associate,” when used to indicate a relationship with any Person, means any of the following: (1)
| any organization of which the Person is an officer or partner or is, directly or indirectly, the Beneficial Owner of ten percent (10%) or more of any class or series of shares entitled to vote or other equity interest; or |
(2)
| any trust or estate in which the Person has a substantial beneficial interest or as to which the Person serves as trustee or executor or in a similar fiduciary capacity; or |
(3)
| any relative or spouse of the Person, or any relative of the spouse, residing in the home of the Person. |
(c) “Beneficial Owner,” when used with respect to shares or other securities, includes, but is not limited to, Best Buy’s Annual Report on Form 10-K filed withany Person who, directly or indirectly, through any written or oral agreement, arrangement, relationship, understanding or otherwise, has or shares the SEC on March 23, 2016. Best Buy cautions thatpower to vote, or direct the foregoing listvoting of, important factorsthe shares or securities or has or shares the power to dispose of, or direct the disposition of, the shares or securities, except that: (1)
| a Person shall not be deemed the Beneficial Owner of shares or securities tendered pursuant to a tender or exchange offer made by the Person or any of the Person’s Affiliates or Associates until the tendered shares or securities are accepted for purchase or exchange; and |
(2)
| a Person shall not be deemed the Beneficial Owner of shares or securities with respect to which the Person has the power to vote or direct the voting arising solely from a revocable proxy given in response to a proxy solicitation required to be made and made in accordance with the applicable rules and regulations under the Securities Exchange Act of 1934 and is not then reportable under that act on a Schedule 13D or comparable report, or, if this corporation is not subject to the rules and regulations under the Securities Exchange Act of 1934, would have been required to be made and would not have been reportable if this corporation had been subject to such rules and regulations. |
“Beneficial ownership” includes, but is not complete,limited to, the right to acquire shares or securities through the exercise of options, warrants or rights, or the conversion of convertible securities, or otherwise. The shares or securities subject to the options, warrants, rights or conversion privileges held by a Person shall be deemed to be outstanding for the purpose of computing the percentage of outstanding shares or securities of the class or series owned by the Person, but shall not be deemed to be outstanding for the purpose of computing the percentage of the class or series owned by any other Person. A Person shall be deemed the Beneficial Owner of shares and securities Beneficially Owned by any relative or spouse of the Person or any relative of the spouse, residing in the home of the Person, any trust or estate in which the Person owns ten percent (10%) or more of the total beneficial interest or serves as trustee or executor or in a similar fiduciary capacity, any organization in which the Person owns ten percent (10%) or more of the equity, and any forward-looking statements speak onlyAffiliate of the Person. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | B-2 | | | | | | |
TABLE OF CONTENTS When two or more Persons act or agree to act as a partnership, limited partnership, syndicate or other group for the purposes of acquiring, owning or voting shares or other securities of a corporation, all members of the partnership, syndicate or other group are deemed to constitute a “Person” and to have acquired Beneficial Ownership, as of the date they are made, and Best Buy assumes no obligationfirst so act or agree to updateact together, of all shares or securities of the corporation Beneficially Owned by the Person. (d) The phrase “Business Combination” means any forward-looking statement that it may make.of the following: (1)
| any merger of this corporation or any Subsidiary of this corporation with (a) a Related Person or (b) any other organization (whether or not itself a Related Person) that is, or after the merger would be, an Affiliate or Associate of a Related Person, but excluding (i) the merger of a wholly owned Subsidiary of this corporation into this corporation, (ii) the merger of two or more wholly owned Subsidiaries of this corporation, or (iii) the merger of an organization, other than a Related Person or an Affiliate or Associate of a Related Person, with a wholly owned Subsidiary of this corporation pursuant to which the surviving organization, immediately after the merger, becomes a wholly owned Subsidiary of this corporation; or |
(2)
| any exchange of shares or other securities of this corporation or any Subsidiary of this corporation or money or other property for shares, other securities, money or property of (a) a Related Person or (b) any other organization (whether or not itself a Related Person) that is, or after the exchange would be, an Affiliate or Associate of a Related Person, but excluding the exchange of shares of a domestic or foreign corporation, other than a Related Person or an Affiliate or Associate of a Related Person, pursuant to which the domestic or foreign corporation, immediately after the exchange, becomes a wholly owned Subsidiary of this corporation; or |
(3)
| any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in a single transaction or a series of transactions), other than sales of goods or services in the ordinary course of business or redemptions pursuant to Minnesota Statutes, Section 302A.671, subdivision 6, to or with a Related Person or any Affiliate or Associate of a Related Person, other than to or with this corporation or a wholly owned Subsidiary of this corporation, of assets of this corporation or any Subsidiary of this corporation (a) having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the assets, determined on a consolidated basis, of this corporation, (b) having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the outstanding shares of this corporation, or (c) representing ten percent (10%) or more of the earning power or net income, determined on a consolidated basis, of this corporation except a cash dividend or distribution paid or made pro rata to all shareholders of this corporation; or |
(4)
| the issuance or transfer by this corporation or any Subsidiary of this corporation (in a single transaction or a series of transactions) of any shares of, or other ownership interests in, this corporation or any Subsidiary of this corporation that have an aggregate market value equal to five percent (5%) or more of the aggregate market value of all the outstanding shares of this corporation to a Related Person or any Affiliate or Associate of a Related Person, except pursuant to the exercise of warrants or rights to purchase shares offered, or a dividend or distribution paid or made, pro rata to all shareholders of this corporation other than for the purpose, directly or indirectly, of facilitating or effecting a subsequent transaction that would have been a Business Combination if the dividend or distribution had not been made; or |
(5)
| the adoption of any plan or proposal for the liquidation or dissolution of this corporation, or any reincorporation of this corporation in another state or jurisdiction, proposed by or on behalf of, or pursuant to any written or oral agreement, arrangement, relationship, understanding or otherwise with, a Related Person or any Affiliate or Associate of a Related Person; or |
(6)
| any reclassification of securities (including without limitation any share dividend or split, reverse share split or other distribution of shares in respect of shares), recapitalization of this corporation, merger of this corporation with any Subsidiary of this corporation, exchange of shares of this corporation with any Subsidiary of this corporation, or other transaction (whether or not with or into or otherwise involving a Related Person), proposed by or on behalf of, or pursuant to any written or oral agreement, arrangement, relationship, understanding or otherwise with, a Related Person or any Affiliate or Associate of a Related Person, that has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of shares entitled to vote, or securities that are |
| | | | | | | | | | | | | | | | | | | B-3 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS exchangeable for, convertible into, or carry a right to acquire shares entitled to vote, of this corporation or any Subsidiary of this corporation that is, directly or indirectly, owned by a Related Person or any Affiliate or Associate of a Related Person, except as a result of immaterial changes due to fractional share adjustments; or (7)
| any receipt by a Related Person or any Affiliate or Associate of a Related Person of the benefit, directly or indirectly (except proportionately as a shareholder of this corporation), of any loans, advances, guarantees, pledges or other financial assistance, or any tax credits or other tax advantages provided by or through this corporation or any Subsidiary of this corporation. |
(e) The term “Control” and all words derived therefrom mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. A Person’s beneficial ownership of ten percent (10%) or more of the voting power of this corporation’s outstanding shares entitled to vote in the election of directors creates a presumption that the Person has control of this corporation. Notwithstanding the foregoing, a Person is not considered to have Control of this corporation if the Person holds voting power, in good faith and not for the purpose of avoiding this Article IX, as an agent, bank, broker, nominee, custodian or trustee for one or more beneficial owners who do not individually or as a group have Control of this corporation. (f) The term “Disinterested” describes any director of this corporation or any other individual that is neither an officer nor an employee, nor has been an officer or employee within five (5) years immediately prior to the formation of the Disinterested Committee, of this corporation or of a Related Organization of this corporation.
(g) The phrase “Disinterested Committee” means a committee formed by the Board of Directors that is composed of (1) one or more Disinterested directors, or (2) if there are no Disinterested directors, three (3) or more Disinterested individuals.
(h) The term “Person” means any individual, firm, corporation or other entity. (i) The phrase “Related Organization” of a specified corporation, means: (1)
| a parent or Subsidiary of the specified corporation; or |
(2)
| another Subsidiary of a parent of the specified corporation; or |
(3)
| a limited liability company owning, directly or indirectly, more than fifty percent (50%) of the voting power of the shares entitled to vote for directors of the specified corporation; or |
(4)
| a limited liability company having more than fifty percent (50%) of the voting power of its membership interests entitled to vote for members of its governing body owned directly or indirectly by the specified corporation; or |
(5)
| a limited liability company having more than fifty percent (50%) of the voting power of its membership interests entitled to vote for members of its governing body owned directly or indirectly either (i) by a parent of the specified corporation or (ii) a limited liability company owning, directly or indirectly, more than fifty percent (50%) of the voting power of the shares entitled to vote for directors of the specified corporation; or |
(6)
| a corporation having more than fifty percent (50%) of the voting power of its shares entitled to vote for directors owned directly or indirectly by a limited liability company owning, directly or indirectly, more than fifty percent (50%) of the voting power of the shares entitled to vote for directors of the specified corporation. |
| | | | | | | | | | | | | | | | 2020 Proxy Statement | | | B-4 | | | | | | |
TABLE OF CONTENTS (j) The phrase “Related Person” means any Person that is (1) the Beneficial Owner, directly or indirectly, of ten percent (10%) or more of the voting power of this corporation’s outstanding shares entitled to vote or (2) an Affiliate or Associate of this corporation that, at any time within the four (4) year period immediately prior to the date in question, was the Beneficial Owner, directly or indirectly, of ten percent (10%) or more of the voting power of this corporation’s then outstanding shares entitled to vote; provided, however, that if a Person who has not been a Beneficial Owner of ten percent (10%) or more of the voting power of this corporation’s outstanding shares entitled to vote immediately prior to a repurchase of shares by, or recapitalization of, this corporation or similar action shall become a Beneficial Owner of ten percent (10%) or more of the voting power solely as a result of the share repurchase, recapitalization or similar action, the Person shall not be deemed to be the Beneficial Owner of ten percent (10%) or more of the voting power for purposes of the foregoing, unless:
(i)
| the repurchase, recapitalization, conversion or similar action was proposed by or on behalf of, or pursuant to any agreement, arrangement, relationship, understanding or otherwise (whether or not in writing) with, the Person or any Affiliate or Associate of the Person; or |
(ii)
| the Person thereafter acquires Beneficial Ownership, directly or indirectly, of this corporation’s outstanding shares entitled to vote and, immediately after the acquisition, is the Beneficial Owner, directly or indirectly, of ten percent (10%) or more of the voting power of this corporation’s outstanding shares entitled to vote. |
Notwithstanding the foregoing, “Related Person” does not include: (1)
| this corporation or any of its Subsidiaries; |
(2)
| a savings, employee stock ownership, or other employee benefit plan of this corporation or any of its Subsidiaries, or a fiduciary of the plan when acting in a fiduciary capacity pursuant to the plan; or |
(3)
| a licensed broker/dealer or licensed underwriter who: |
(i)
| purchases shares of this corporation solely for purposes of resale to the public; and |
(ii)
| is not acting in concert with a Related Person. |
For purposes of this definition, shares Beneficially Owned by a plan, or by a fiduciary of a plan pursuant to the plan, as described in (2), above, are not deemed to be Beneficially Owned by the Person who is a fiduciary of the plan. (k) The phrase “Share Acquisition Date,” with respect to any Person, means (1) the date that the Person first becomes a Related Person, or (2) if the Person becomes, on one or more dates, a Related Person, but thereafter ceases to be a Related Person, and subsequently again becomes a Related Person, the date on which the Person most recently became a Related Person.
(l) The term “Subsidiary” of a specified organization means an organization having more than fifty percent (50%) of the voting power of its shares or other ownership interests entitled to vote for directors or other members of the governing body of the organization owned directly, or indirectly through Related Organizations, by the specified organization. Section 2. Business Combinations. Except as set forth in Section 4 of this Article IX, and notwithstanding any other provision seemingly to the contrary in law, these Articles of Incorporation or the By-laws of this corporation, this corporation may not engage in any Business Combination, or vote, consent or otherwise act to authorize a Subsidiary of this corporation to engage in any Business Combination, with, with respect to, proposed by or on behalf of, or pursuant to any written or oral agreement, arrangement, relationship, understanding or otherwise with, any Related Person or any Affiliate or Associate of a Related Person for a period of four (4) years following the Related Person’s Share Acquisition Date.
Section 3. Procedure. Upon receipt of a good faith, definitive written proposal relating to a Business Combination or an acquisition of shares pursuant to which a Person will become a Related Person, the Board of Directors shall promptly form a Disinterested Committee to consider and take action on the proposal. The Disinterested Committee shall respond in writing within thirty (30) days after receipt of the proposal, setting forth its decision regarding the proposal. | | | | | | | | | | | | | | | | | | | B-5 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS Section 4. When Inapplicable. The provisions of Section 2 of this Article IX shall not be applicable to a Business Combination, and such Business Combination shall require only such affirmative vote as may otherwise be required by law or otherwise, if: (a) the Business Combination or the acquisition of shares made by the Related Person on the Related Person’s Share Acquisition Date is approved before the Related Person’s Share Acquisition Date, or on the Related Person’s Share Acquisition Date but prior to the Related Person becoming a Related Person on the Related Person’s Share Acquisition Date, by the affirmative vote of a majority of the members of the Disinterested Committee; or (b) the Business Combination is with, with respect to, proposed by or on behalf of, or pursuant to any written or oral agreement, arrangement, relationship, understanding or otherwise with any Related Person whose Share Acquisition Date is either before the effective date of this Article IX, or on the effective date, but prior to the effective time of this Article IX. Section 5. Disinterested Committee. The Disinterested Committee shall not be subject to any direction or control by the Board of Directors with respect to the committee’s consideration of, or any action concerning, a Business Combination or acquisition of shares pursuant to this Article IX. Section 6. Fiduciary Duty. Nothing contained in this Article IX shall be construed to relieve any Related Person of any fiduciary obligation imposed upon it by law. Section 7. Powers of Board. A majority of the voting power of the entire Board of Directors shall have the power and duty to determine on the basis of the definitions provided in Section 1 of this Article IX and the information then known to them, whether (a) any Person is a Related Person, (b) any Person is an Affiliate or Associate of another, and (c) any director or individual is Disinterested. Any such determination made in good faith by a majority of the voting power of the entire Board of Directors shall be conclusive and binding for all purposes of this Article IX. Section 8. Duties. The fact that any action or transaction complies with the provisions of this Article IX shall not be construed to waive or satisfy any other requirements of law, these Articles of Incorporation or the By-laws of this corporation, or to impose any fiduciary duty, obligation or responsibility in connection with the approval of such action or transaction or the recommendation to the shareholders of this corporation of its adoption or approval, nor shall such compliance limit, prohibit or otherwise restrict in any manner the evaluations of or actions and responses taken with respect to such action or transaction. All relevant factors, including without limitation, the social and economic effects on the employees, customers, suppliers and other constituents of this corporation and its Subsidiaries and on the communities in which this corporation and its Subsidiaries operate or are located, may be considered when evaluating any Business Combination. ARTICLE X STOCK REPURCHASES FROM CERTAIN SHAREHOLDERS Section 1. Definitions. As used in this Article X, the following terms and phrases shall have the respective meanings hereinafter set forth. (a) The term “Affiliate” has the same meaning as provided in Subsection 1(a) of Article IX of these Articles of Incorporation. (b) The term “Associate” has the same meaning as provided in Subsection 1(b) of Article IX of these Articles of Incorporation. (c) The phrases “Beneficial Owner” and “Beneficially Owned” have the same meanings as provided in Subsection 1(c) of Article IX of these Articles of Incorporation. (d) The term “Person” has the same meaning as provided in Subsection 1(i) of Article IX of these Articles of Incorporation. (e) The phrase “Public Transaction” means any (1) purchase of voting securities offered pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, or (2) open market purchase of voting securities if, in either such case, the price and other terms of sale are not negotiated by the purchaser and seller of the legal or beneficial interest in such voting securities. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | B-6 | | | | | | |
TABLE OF CONTENTS (f) The term “Subsidiary” has the same meaning as provided in Subsection 1(k) of Article IX of these Articles of Incorporation. (g) The phrase “Substantial Shareholder” means any Person or group of two or more Persons who have agreed to act together for the purpose of acquiring, holding, voting or disposing of voting securities of this corporation who, (1) individually or together with its or their Associates or Affiliates, in the aggregate, is or are the Beneficial Owner(s) of securities of this corporation, or securities convertible into securities of this corporation, representing five percent (5%) or more of this corporation’s outstanding shares entitled to vote, or (2) is or are assignee(s) of or has or have otherwise succeeded as, directly or indirectly, the Beneficial Owner(s) of any voting securities, or securities convertible into voting securities, of this corporation which were at any time within the three (3) year period immediately prior to the date in question Beneficially Owned by a Substantial Shareholder or any of its Associates or Affiliates, unless such assignment or succession shall have occurred pursuant to any Public Transaction or series of Public Transactions; provided, however, that the term “Substantial Shareholder” shall not include any benefit plan or trust now or hereafter established by this corporation or any of its Subsidiaries for the benefit of the employees of this corporation and/or any of its Subsidiaries or any trustee, agent or other representative of any such plan or trust. (h) The phrase “Unaffiliated Director” means a director who is not a Substantial Shareholder, its Affiliate or Associate, or is not otherwise related thereto; provided, however, that no director shall be considered to be an Unaffiliated Director unless such director became a director of this corporation prior to the transaction or transactions in which such Substantial Shareholder or Substantial Shareholders became such, or was nominated, appointed or elected as a director of this corporation with the approval of at least two-thirds (2/3) of the Unaffiliated Directors in office at the time of such director’s nomination, appointment or election. Section 2. Vote of Shareholders. Except where a larger proportion is required by law, the affirmative vote of a majority of the voting power of the shares present and entitled to vote at a meeting of shareholders shall be required to approve the purchase or other acquisition by this corporation of shares of capital stock of this corporation if: (a) such shares of capital stock are purchased from any Substantial Shareholder, its Affiliates or Associates at a price more than the average closing price for shares of capital stock of the same class (as the shares of capital stock being purchased from the Substantial Shareholder, its Affiliates or Associates), in the principal public market in which such shares of capital stock are actively traded, during the most recent five (5) trading days during which such shares have been traded preceding such purchase, or, if earlier, during the most recent five (5) trading days during which such shares have been traded preceding the date upon which this corporation and the Substantial Shareholder, its Affiliates or Associates enter into a binding agreement for such purchase; or if such shares are of a class or series not traded in a public market, then at a price more than the redemption price, if any, pertaining to such shares; or, if there is no such redemption price, at a price more than the liquidation preference, if any, pertaining to such shares; or, if there is no such liquidation preference, at a price more than the price(s) paid by such Substantial Shareholder, its Affiliates or Associates in acquiring such shares, determined on a first-in, first-out basis; and (b) the Substantial Shareholder, its Affiliates or Associates has Beneficially Owned the shares of capital stock being purchased or any of them for less than two (2) years; and (c) all other holders of shares of capital stock of the same class or series are not contemporaneously afforded the opportunity to sell to this corporation or any other Person, on terms and at a price determined by a majority of the Unaffiliated Directors of this corporation to be substantially as favorable as those afforded to the Substantial Shareholder, its Affiliates or Associates, the same percentage of such shares of capital stock held by them as equals that percentage of the shares of capital stock Beneficially Owned by the Substantial Shareholder which are to be purchased from the Substantial Shareholder, its Affiliates or Associates by this corporation. Section 3. Determinations By Unaffiliated Directors. In the context of any transaction described in Section 2 of this Article X, the majority of the directors who are Unaffiliated Directors with respect to such transaction shall have the exclusive power and duty to determine, on the basis of information known to them after reasonable inquiry, whether a Person is (a) a Substantial Shareholder, (b) an Affiliate or Associate of a Substantial Shareholder, and (c) an Unaffiliated Director. Any such determination of a majority of the Unaffiliated Directors shall be final and binding in the absence of fraud or gross negligence by such Unaffiliated Directors. | | | | | | | | | | | | | | | | | | | B-7 | | | | | | 2020 Proxy Statement |
TABLE OF CONTENTS ARTICLE XI LIMITATION OF DIRECTOR LIABILITY No director of the corporation shall be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director; provided, however, that this Article XI shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 302A.559 or Section 80A.76 of the Minnesota Statutes, (iv) for any transaction from which the director derived an improper personal benefit, or (v) for any act or omission occurring prior to the effective date of this Article XI. If, after the effective date of this Article XI, the Minnesota Business Corporation Act is amended to authorize the further elimination or limitation of the liability of directors, then, in addition to the limitation on personal liability provided herein, the liability of a director of the corporation shall be limited to the fullest extent permitted by such amended Act. Any repeal or modification of this Article XI by the shareholders of the corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification. | | | | | | | | | | | | | | | | 2020 Proxy Statement | | | B-8 | | | | | | |
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