(2) | Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,953 million in our Annual Report on Form 10-K for fiscal 2018, adjusted for differences from budgeted | (2) | 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. |
| | (3) | Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,759 million in our Annual Report on Form 10-K for fiscal 2017, adjusted for differences from budgeted | (3) | Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,953 million in our Annual Report on Form 10-K for fiscal 2018, adjusted for differences from targeted foreign exchange rates. |
| (4) | U.S. Net Promoter score is a customer experience metric that measures a customer’s likelihood to recommend Best Buy. 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. | (4) | U.S. Cost Reduction is the annualized year-over-year cost savings (compared to fiscal 2017 expense) as a result of cost reduction actions put into effect in fiscal 2018. |
| (5) | U.S. Services POS Revenue is the point of sales revenue associated with warranty, tech support, services, installation, delivery, and repair sales |
| (6) | U.S. Services Productive Revenue is the net revenue associated with sales of warranty, tech support, services, and installation, but excluding delivery and reimbursement revenue. |
| (7) | U.S. Cost Reduction is the annualized year-over-year cost savings (compared to fiscal 2018 expense) as a result of cost reduction actions put into effect in fiscal 2019. Cost savings must be permanent changes to the business. |
| | (5) | U.S. Net Promoter score is a customer experience metric that measures a customer’s likelihood to recommend Best Buy. 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. The methodology utilized to measure Net Promoter Score at Best Buy was updated in fiscal 2018 to better align with industry standards, provide a more consistent and streamlined measurement system across experiences and to increase survey completion rates. The updated methodology was piloted in parallel with the previous methodology throughout fiscal 2017 in order to create a true baseline in establishing the fiscal 2018 performance target. |
| | (6) | U.S. Services Productive Revenue is the net revenue associated with sales of warranty, tech support, services, and installation, but excluding delivery and reimbursement revenue. |
Determination of Fiscal 2018 STI Target Payout. The Compensation Committee reviewed the target payout percentages for our NEOs under the fiscal 2018 STI plan as part of their review of the NEOs’ total fiscal 2018Determination of Fiscal 2019 STI Target Payout. The Compensation Committee reviewed the target payout percentages for our NEOs under the fiscal 2019 STI plan as part of its review of the NEOs’ total fiscal 2019 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 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 2019, the tiered target opportunities were 100 percent to 200 percent of salary. The target payout percentages for each NEO remained the same as in fiscal 2018, except for Ms. Scarlett whose STI increased at the same time as her base salary increased. For each of the metrics, the NEOs could earn zero to two times their weighted target payout percentage for that metric. The following chart shows fiscal 2019 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): Name | Fiscal 2019
Annual
Base Salary(1) | Target
Payout
Percentage | Annual
Target
Payout
Value,
based on
Annual
Earnings | Fiscal 2019
Blended
STI Score | Fiscal 2019
STI
Payment | Fiscal 2019
STI Payment,
as a
Percentage
of Annual
Earnings | Mr. Joly | $ | 1,275,000 | | | 200 | % | $ | 2,550,000 | | | 1.663 | | $ | 4,240,650 | | | 333 | % | Ms. Barry | | 833,333 | | | 150 | % | | 1,250,000 | | | 1.663 | | | 2,078,750 | | | 249 | % | Mr. Mohan | | 891,666 | | | 150 | % | | 1,337,500 | | | 1.663 | | | 2,224,262 | | | 249 | % | Mr. Nelsen | | 740,000 | | | 100 | % | | 740,000 | | | 1.663 | | | 1,230,620 | | | 166 | % | Ms. Scarlett(2) | | 683,333 | | | 102 | % | | 693,750 | | | 1.663 | | | 1,153,706 | | | 169 | % | Ms. Ballard | | 891,666 | | | 150 | % | | 1,337,500 | | | 1.663 | | | 2,224,262 | | | 249 | % |
| (1) | Annual base salary is based on the average of each NEO's eligible earnings as ofNEO’s annual base salary rate on the 15thfifteenth fiscal day of each month for twelve months of the fiscal month. The specific target payout percentage for each NEO is determinedyear. This number may differ slightly from actual earnings listed in the Summary Compensation Table. |
| (2) | Ms. Scarlett’s Annual Base Salary and STI Target increased twice during fiscal 2019 based on external market data (including surveychanges in role 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 2018, the tiered target opportunities were 100 percent to 200 percent of salary. The target payout percentages for each NEO remained the same as in fiscal 2017. For each of the metrics, the NEOs could earn zero to two or three times their weighted target payout percentage for that metric (e.g. the U.S. Cost Reduction metric has a three times opportunity), but the maximum fiscal 2018 STI payout was capped at two times their target payout percentage.
The following chart shows fiscal 2018 STI opportunities and payments as a dollar value and percent of annual earnings (based on their eligible earnings as of the 15th day of each fiscal month):responsibilities.
|
Preview — Fiscal 2020 STI Performance Metrics. In December 2018, the Compensation Committee approved the performance criteria in the form of metrics for the fiscal 2020 STI, as follows: Compensable Enterprise Operating Income — 40% Enterprise Revenue Growth — 30% | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fiscal 2018 Annual Earnings(1) | | Target Payout Percentage | | Annual Target Payout Value, based on Annual Earnings | Fiscal 2018 Blended STI Score | Fiscal 2018 STI Payment | Fiscal 2018 STI Payment, as a Percentage of Annual Earnings | | Mr. Joly | | $ | 1,258,333 |
| | 200 | % | | $ | 2,516,666 |
| | 1.829 |
| | $ | 4,602,983 |
| | 366 | % | | Ms. Barry | | 750,000 |
| | 150 | % | | 1,125,000 |
| | 1.829 |
| | 2,057,625 |
| | 274 | % | | Ms. Ballard | | 841,667 |
| | 150 | % | | 1,262,501 |
| | 1.829 |
| | 2,309,113 |
| | 274 | % | | Mr. Mohan | | 850,000 |
| | 150 | % | | 1,275,000 |
| | 1.829 |
| | 2,331,975 |
| | 274 | % | | Mr. Nelsen | | 683,333 |
| | 100 | % | | 683,333 |
| | 1.829 |
| | 1,249,817 |
| | 183 | % |
| | (1) | Annual earnings are based on the average of each NEO's annual base salary rate on the fifteenth fiscal day of each month for twelve months of the fiscal year. This number may differ slightly from actual earnings listed in the Summary Compensation Table.
| | | | |
| | Fiscal 2019 STI Performance Criteria. In December 2017, the Compensation Committee approved the performance criteria in the form of metrics for the fiscal 2019 STI, and in March 2018, the Compensation Committee approved the target performance levels for each metric. The same metrics as used in fiscal 2018 will be used in fiscal 2019, as listed below:Proxy Statement
|
55
| Compensable Enterprise Operating Income - 40%
| Enterprise Comparable Sales Growth - 30%
Best Buy 2020 Priorities (maintaining the four fiscal 2018 priorities, except replacing Services Productive Revenue with Services Point of Sale Revenue) - 30%
|
TABLE OF CONTENTS Best Buy 2020 Priorities: Relationship Net Promoter Score — 15% Domestic Cost Reduction – 15% Long-Term Incentive Awards 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 2018, the Compensation Committee approved long-term incentive awards to our NEOs pursuant to our fiscal 2019 LTI program under our Amended & Restated 2014 Omnibus Incentive Plan. The fiscal 2019 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 consisting of, for the CEO, 50 percent performance share awards based on relative total shareholder return (to reward relative performance) and enterprise revenue growth (to reward growth), 30 percent performance-conditioned time-based restricted shares, based on adjusted net earnings (to reward earnings and promote retention), and 20 percent stock options (to reward absolute share price appreciation), as shown below. The mix for the other NEOs was 50 percent performance share awards and 50 percent performance-conditioned time-based restricted shares, both with the same performance metrics as the CEO’s awards. 
Form of Fiscal 2019 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 fiscal 2019, the closing price of our common stock on the grant date was used to convert the award dollar value to a number of units. In March 2018, the Compensation Committee approved the addition of dividend equivalents to restricted stock and performance share awards. These dividend equivalents 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 2019 LTI Target Award Values. The Compensation Committee approved the executive team’s fiscal 2019 compensation, which included increased target award values for Mr. Joly, Ms. Barry, Ms. Ballard, Mr. Mohan and Ms. Scarlett to reflect increased responsibilities, role changes and market adjustments. TABLE OF CONTENTS 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 2019 LTI awards for each NEO are set forth below: Name | No. of Stock Options | No. of Performance-
Conditioned Time-
Based Restricted
Shares | Target No. of Shares
under Performance
Share Award(2) | Target Grant Date
Value | Mr. Joly | | 103,981 | | | 49,287 | | | 80,950 | | $ | 11,750,000 | | Ms. Barry | | — | | | 20,819 | | | 20,517 | | | 3,000,000 | | Mr. Mohan | | — | | | 24,636 | | | 24,278 | | | 3,550,000 | | Mr. Nelsen | | — | | | 11,451 | | | 11,285 | | | 1,650,000 | | Ms. Scarlett(1) | | 57,109 | | | 6,246 | | | 6,155 | | | 1,250,000 | | Ms. Ballard | | — | | | 24,636 | | | 24,278 | | | 3,550,000 | |
| (1) | Ms. Scarlett received her annual LTI grant in March 2018, before her promotion, plus a stock option grant with a 4-year cliff vesting in January 2019 in recognition of her increased responsibilities. The grant date value reflects her annual LTI target effective for fiscal 2020. |
| (2) | Performance Share Awards include shares for both the TSR and Revenue performance metrics, as described below. |
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: | 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 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 on the end of fiscal 2021. The Compensation Committee chose this metric in fiscal 2017 to sharpen our focus on profitable growth and to further align our performance metrics with our Best Buy 2020 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: | No. of Shares Earned (as % of Target) | Less than Threshold | —% | Threshold to 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-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 TABLE OF CONTENTS 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. Stock Options. The non-qualified stock options granted to Mr. Joly and Ms. Scarlett 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. Performance Share Payout. In March 2015, the Compensation Committee adopted a performance share plan design, based on relative TSR versus the S&P 500 Index over the 36-month period from March 1, 2015 to February 28, 2018. The shares vested (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 percent in fiscal 2019 and are reflected in the Compensation of Executive Officers — Option Exercises and Stock Vested section. Canadian Special Award. In January 2016, the Compensation Committee approved a special cash-based long-term incentive plan for the Best Buy Canada executive team which was tied to the profitability of our Canadian business, specifically the level of Canadian operating income achieved during fiscal 2019. Prior to becoming the Company’s Chief Human Resources Officer in June 2017, Ms. Scarlett was the Senior Vice President of Retail and Chief Human Resources Officer for Best Buy Canada and was, therefore, eligible for a prorated payout under this award for her time in that role. Ms. Scarlett’s payout under this award is reflected in the Compensation of Executive Officers — Summary Compensation Table section. Preview - Fiscal 2020 LTI Program Design. For fiscal 2020, the Committee aligned the mix of equity vehicles for Ms. Barry, Ms. Scarlett and Mr. Mohan with Mr. Joly’s mix. Other Compensation Benefits. Our executive officers, including our NEOs, are generally offered the same employee benefits offered to all U.S.-based officers, except as summarized in the following table: Benefit | All Full-Time
U.S.-Based Employees | 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(2) | | | | | • | |
| (1) | 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. |
| (2) | Only Senior Vice Presidents and above are eligible to receive the tax planning and preparation benefit. |
TABLE OF CONTENTS 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. Private Jet Use Policy. In June 2018, the Audit Committee adopted a Private Jet Use Policy governing the use of private jet services by the CEO. Under the policy, only the CEO is allowed to request private jet services for business or personal travel. When requesting the jet for personal travel, the policy dictates that Mr. Joly pay the jet provider directly for those services. For flights that will be for both business and personal purposes, Mr. Joly is to reimburse the Company for any amounts that do not qualify as business expense, up to any limitations imposed by the Federal Aviation Administration. 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. Barry who currently have employment agreements) are eligible for the following severance benefits: Mses. Ballard and Scarlett 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. Barry’s employment agreements. Upon her departure, Ms. Ballard did not receive any severance payments. 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, 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. TABLE OF CONTENTS In fiscal 2019, all NEOs were in compliance with the ownership guidelines. The ownership targets and ownership levels as of the end of fiscal 2019 for our continuing NEOs are shown below. Name | Ownership Target
(in shares) | Ownership as of Fiscal 2019
Year-End Using Guidelines
(in shares) | Mr. Joly | | 200,000 | | | 800,660 | | Ms. Barry | | 55,000 | | | 101,729 | | Mr. Mohan | | 55,000 | | | 99,340 | | Mr. Nelsen | | 35,000 | | | 80,522 | | Ms. Scarlett | | 35,000 | | | 23,538 | |
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 Committee will continue to monitor issues concerning 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. For purposes of Section 162(m), we created a sub-plan under our Amended & Restated 2014 Omnibus Incentive Plan for our fiscal year ended February 2, 2019. The sub-plan sets the maximum award pool for the CEO and five other NEOs (excluding the CFO) at 7 percent of adjusted net earnings to align compensation with shareholder interests. The maximum potential individual allocations from that pool were set at 2 percent for the CEO and 1 percent for each of the three other NEOs (excluding the CFO). The Committee then used negative discretion to reduce the amounts that were potentially payable under the sub-plan award pool to equal amounts based on achievement of STI plan metrics. 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 2, 2019, and in this proxy statement. COMPENSATION AND HUMAN RESOURCES COMMITTEE Russell P. Fradin (Chair)
Lisa M. Caputo
J. Patrick Doyle
Kathy J. Higgins Victor TABLE OF CONTENTS Compensation and Human Resources Committee Interlocks and Insider Participation The Compensation Committee is comprised entirely of independent directors. At no time during fiscal 2019 was any member of the Compensation Committee a current or former officer or employee of the Company or any of its subsidiaries. During fiscal 2019, no member of the Compensation Committee had a relationship that must be described pursuant to SEC disclosure rules on related party transactions. In fiscal 2019, 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. 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 2019 and the two preceding fiscal years (if applicable). Name and Principal Position | Year | Salary(1) | Stock
Awards(2)(3) | Option
Awards(2) | Non-Equity
Incentive
Plan Compensation(4) | All Other
Compensation(5) | Total | Hubert Joly(7)
Chairman and Chief
Executive Officer | | 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 | (6) | | 16,813,704 | | | 2017 | | | 1,175,000 | | | 7,689,879 | | | 1,800,076 | | | 2,878,750 | | | 494,275 | | | 14,037,980 | | Corie S. Barry
Chief Financial Officer and Strategic
Transformation Officer | | 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 | | | 2017 | | | 713,462 | | | 1,689,495 | | | — | | | 1,184,167 | | | 14,893 | | | 3,602,017 | | R. Michael Mohan
Chief Operating Officer,
Best Buy U.S. | | 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 | | | 2017 | | | 833,654 | | | 2,895,073 | | | — | | | 1,531,251 | | | 55,284 | | | 5,315,262 | | Keith J. Nelsen(8)
General Counsel and
Secretary (Former) | | 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 | | | 2017 | | | 650,000 | | | 1,592,960 | | | — | | | 796,250 | | | 68,761 | | | 3,107,971 | | Kamy Scarlett
Chief Human Resources
Officer and President, U.S
Retail Stores | | 2019 | | | 684,615 | | | 899,283 | | | 1,009,116 | | | 1,444,451 | | | 165,029 | | | 4,202,494 | | Shari L. Ballard(9)
President, Multi-Channel
Retail (Former) | | 2019 | | | 892,308 | | | 3,547,097 | | | — | | | 2,224,262 | | | 41,430 | | | 6,705,097 | | | 2018 | | | 859,616 | | | 3,012,512 | | | — | | | 2,309,113 | | | 24,367 | | | 6,205,608 | | | 2017 | | | 800,000 | | | 1,930,865 | | | — | | | 1,470,000 | | | 62,737 | | | 4,263,602 | |
| (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. InCommittee during its annual review in March 2017,of each year, as well as any off-cycle increases approved by the Compensation Committee approved long-term incentiveduring 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 pursuantfor all fiscal years reflected; however, fiscal 2019 amounts are explained in greater detail under the heading Grants of Plan-Based Awards. The grant date fair value reflected for any award subject to performance conditions 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”). The amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders’ Equity, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal 2018 LTI program under our 2014 Omnibus Incentive Plan.year ended February 2, 2019. |
TABLE OF CONTENTS | (3) | The fiscal 2018 LTI program featured2019 amounts reflected in this column include the probable grant date fair value of: (a) one or more restricted share awards that vest on a mixtime-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), and (b) one or more performance share awards that will be earned depending on the performance conditioned time-based restricted shares, and stock options. This resultsof our stock’s total shareholder return, relative to 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 a balanced portfoliogreater detail in the Grants of compensation rewards consistingPlan-Based Awards section). The maximum value of for the CEO, 50 percent performance share awards based on relative total shareholder return (to reward relative performance) and enterprise revenue growth (to reward growth), 30 percent performance-conditioned time-based restricted shares, based on adjusted net earnings (to reward earnings and promote retention), and 20 percent stock options (to reward absolute share price appreciation),for each NEO as shown below. The mix forof the other NEOs was 50 percentgrant date, assuming the highest level of performance, is noted in the following table: |
Name | Target
Performance
Grant
(in Shares) | Probable Grant
Date Fair Value
of Performance
Grant (as
reflected in Stock
Awards Column) | Maximum
Performance
Grant (in Shares) | Maximum Grant
Date Fair Value of
Performance Grant | Mr. Joly | | 80,950 | | $ | 5,866,507 | | | 121,425 | | $8,799,760 | Ms. Barry | | 20,517 | | | 1,497,554 | | | 30,776 | | 2,246,331 | Mr. Mohan | | 24,278 | | | 1,772,074 | | | 36,417 | | 2,658,110 | Mr. Nelsen | | 11,321 | | | 826,296 | | | 16,982 | | 1,239,444 | Ms. Scarlett | | 6,155 | | | 449,259 | | | 9,233 | | 673,888 | Ms. Ballard | | 24,278 | | | 1,772,074 | | | 36,417 | | 2,658,110 |
| * | Multiple performance share awards for each NEO have been aggregated in the table above. For additional detail, see the Grants of Plan-Based Awards section. |
| (4) | These amounts reflect STI payments made for all fiscal years shown, except for Ms. Scarlett’s fiscal 2019 amount which includes her fiscal 2019 STI payment ($1,153,706) as well as her Canadian special award payment ($290,745*). The fiscal 2019 STI plan is described in the section Compensation Discussion and 50 percent performance-conditioned time-based restricted shares, bothAnalysis – Executive Compensation Elements – Short-Term Incentive. The Canadian special award relative to Ms. Scarlett is described in the section Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive. |
| * | Ms. Scarlett’s Canadian special award payment is reflected in USD using a rate of 1.3095 CAD per USD, which was the USD:CAD exchange rate as determined by the Board of Governors of the Federal Reserve Bank of New York for February 1, 2019 (the last business day of fiscal 2019). |
| (5) | The fiscal 2019 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 | $ | 11,000 | | $ | 492 | | $ | 196,005 | (c) | $ | 207,497 | | Ms. Barry | | 8,260 | | | 492 | | | — | (d) | | 8,752 | | Mr. Mohan | | 11,154 | | | 492 | | | 18,452 | (e) | | 30,098 | | Mr. Nelsen | | 10,077 | | | 492 | | | 24,033 | (f) | | 34,602 | | Ms. Scarlett | | 11,615 | | | 345 | | | 153,069 | (g) | | 165,029 | | Ms. Ballard | | 11,481 | | | 492 | | | 29,457 | (h) | | 41,430 | |
| (a) | These amounts reflect our matching contributions to the NEOs’ Retirement Savings Plan accounts. |
| (b) | These amounts reflect premiums paid by us for group term life insurance coverage. |
| (c) | The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($63,215), the cost of an executive physical and the incremental cost of Mr. Joly’s use of private jet services for travel to outside board meetings ($129,763).
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 Company for those flights. Nevertheless, the incremental cost to the Company of those flights is being reported here and includes the lease cost and other variable charges. |
| (d) | Any perquisites and other benefits provided to Ms. Barry for fiscal 2019 were less than $10,000 and information regarding any such perquisites or other personal benefits has therefore not been included. |
| (e) | The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($16,512) and company-paid tax preparation and planning services ($1,940). |
| (f) | The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($20,000) and the cost of an executive physical ($4,033). |
| (g) | The amount reflects premiums paid by us for supplemental executive long-term disability insurance and benefits provided as part of Ms. Scarlett’s relocation from Canada to the United States, including company-paid estate planning services, tax gross-ups on the estate planning services ($2,850), company-paid tax preparation and planning services ($47,377), tax gross-ups on the tax preparation and planning services ($39,713), tax equalization payments made on Ms. Scarlett’s behalf to cover incremental taxes ($26,263), tax gross-ups on the tax equalization payments ($22,015) and company-paid green card expenses. |
| (h) | The amount reflects premiums paid by us for supplemental executive long-term disability insurance. |
| (6) | Mr. Joly’s “All Other Compensation” total for fiscal 2018 has been amended to include the incremental cost of Mr. Joly’s use of private jet services for travel to outside board meetings in fiscal 2018 ($53,251), which had been inadvertently excluded. |
| (7) | On June 11, 2019, Mr. Joly will step down from his role as our CEO and transition to the role of Executive Chairman. |
TABLE OF CONTENTS | (8) | On April 12, 2019, Mr. Nelsen stepped down from his role as General Counsel and Secretary and transitioned into an advisory capacity with the same performance metricsCompany. |
| (9) | During fiscal 2019, Ms. Ballard stepped down from her role as President, Multi-Channel Retail and transitioned into an advisory capacity with the CEO’s awards.Company. |
Grants of Plan-Based Awards The table below summarizes the grants made to each of our NEOs during fiscal 2019 under the 2014 Omnibus Incentive Plan and the Short-Term Incentive Plan: Name | Grant Date | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under
Equity Incentive Plan Awards |  
Option
Awards:
Number of
Securities
Underlying
Options
(#) | Form Exercise
or
Base Price
of Fiscal 2018 LTI Award. Option
Awards
($ / Sh)
| Grant Date
Fair Value
of Stock
and
Option
Awards
($)(2) | Threshold ($) | Target
($) | Maximum ($) | Threshold (#) | Target
(#) | Maximum
(#) |
Mr. Joly(3) | | — | | $ | 510,000 | | $ | 2,550,000 | | $ | 5,100,000 | | | — | | | — | | | — | | | — | | $ | — | | $ | — | | | 3/12/2018 | (4) | | — | | | — | | | — | | | — | | | — | | | — | | | 103,981 | | | 71.52 | | | 2,267,826 | | | 3/12/2018 | (5) | | — | | | — | | | — | | | — | | | 49,287 | | | 49,287 | | | — | | | — | | | 3,525,006 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 19,939 | | | 39,877 | | | 59,816 | | | — | | | — | | | 2,928,966 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 20,537 | | | 41,073 | | | 61,610 | | | — | | | — | | | 2,937,541 | | Ms. Barry | | — | | | 250,000 | | | 1,250,000 | | | 2,500,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/12/2018 | (8) | | — | | | — | | | — | | | — | | | 20,819 | | | 20,819 | | | — | | | — | | | 1,500,009 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 5,054 | | | 10,107 | | | 15,161 | | | — | | | — | | | 747,514 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 5,205 | | | 10,410 | | | 15,615 | | | — | | | — | | | 750,041 | | Mr. Mohan | | — | | | 267,000 | | | 1,337,500 | | | 2,675,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/12/2018 | (8) | | — | | | — | | | — | | | — | | | 24,636 | | | 24,636 | | | — | | | — | | | 1,775,024 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 5,980 | | | 11,960 | | | 17,940 | | | — | | | — | | | 884,562 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 6,159 | | | 12,318 | | | 18,477 | | | — | | | — | | | 887,512 | | Mr. Nelsen | | — | | | 148,000 | | | 740,000 | | | 1,480,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/12/2018 | (8) | | — | | | — | | | — | | | — | | | 11,451 | | | 11,451 | | | — | | | — | | | 825,045 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 2,780 | | | 5,559 | | | 8,339 | | | — | | | — | | | 411,144 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 2,881 | | | 5,762 | | | 8,643 | | | — | | | — | | | 415,152 | | Ms. Scarlett | | — | | | 138,750 | | | 693,750 | | | 1,387,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/12/2018 | (8) | | — | | | — | | | — | | | — | | | 6,246 | | | 6,246 | | | — | | | — | | | 450,024 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 1,516 | | | 3,032 | | | 4,548 | | | — | | | — | | | 224,247 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 1,562 | | | 3,123 | | | 4,685 | | | — | | | — | | | 225,012 | | | 1/24/2019 | (9) | | — | | | — | | | — | | | — | | | — | | | — | | | 57,109 | | | 57.60 | | | 1,009,116 | | Ms. Ballard | | — | | | 267,500 | | | 1,337,500 | | | 2,675,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3/12/2018 | (8) | | — | | | — | | | — | | | — | | | 24,636 | | | 24,636 | | | — | | | — | | | 1,775,024 | | | 3/12/2018 | (6) | | — | | | — | | | — | | | 5,980 | | | 11,960 | | | 17,940 | | | — | | | — | | | 884,562 | | | 3/12/2018 | (7) | | — | | | — | | | — | | | 6,159 | | | 12,318 | | | 18,477 | | | — | | | — | | | 887,512 | |
| (1) | These amounts reflect the potential threshold, target and maximum payout for each NEO under our fiscal 2019 STI, which is described in greater detail under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive. The NEOs receive an LTI grant once per year at a regularly scheduled Compensation Committee meeting that typically occursactual payout to each NEO for fiscal 2019 is provided in the first quarterfollowing 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 amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders’ Equity, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019. The value reflected for any performance-conditioned award is the value at the grant date based upon the probable outcome of the award – see footnote (3) to the Summary Compensation Table. |
| (3) | Mr. Joly will meet the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019, prior to the second scheduled vesting of his fiscal 2019 time-based awards and prior to the end of the performance period for his fiscal 2019 performance share awards. The effect of qualified retirement on all of our fiscal year. In fiscal 2018,outstanding equity awards is discussed in the Potential Payments Upon Termination or Change-of-Control section. |
| (4) | 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, was used to convertas quoted on the award dollar value to a numberNYSE. |
| (5) | 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 units.one-third on each of |
Performance Share Awards.TABLE OF CONTENTS 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. | (6) | The amounts reflect performance share awards, areas discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that, if earned, basedwill vest at or between the threshold (50% of target) and maximum (150% of target) levels depending on two metrics: half onthe performance of our stock’s total shareholder return, (“TSR”) relative to the S&P 500 Index, over the 36-month period commencing on February 4, 2018, and ending on January 30, 2021. The NEO is also entitled to an accrual of dividend equivalents, equal to the other halfcash amount that would have been payable on enterprise revenue growth, both over a three-year period. TSR was selectedthe number of performance shares held by them as one of the metrics basedclose of business on its direct linkthe record date for each declared divided, which shall be credited to shareholder value creation.them as the equivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The S&P 500 was used as a proxy for other investment opportunities available to investors. accrued dividend equivalents will be payable when the performance shares on which such dividend equivalents were credited have become earned, vested and payable. |
| (7) | 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 other half of theamounts reflect performance share awards, areas discussed under the heading Compensation Discussion and Analysis – Executive Compensation Elements – Long-Term Incentive, that, if earned, basedwill 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 three fiscal years36-month period commencing on February 4, 2018, and ending on January 30, 2021. The NEO is also entitled to an accrual of dividend equivalents, equal to the end of fiscal 2020. The Compensation Committee chose this new metric last year to sharpen our focus on profitable growth and to further align our performance metrics with our Best Buy 2020 growth strategy. The Committee believes this metric will be 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, basedcash amount that would have been payable 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:
| | | | No. of Shares Earned (as % of Target) | Less than Threshold | —% | Threshold to Target | 50% to 100% | Target to Maximum | 100% to 150% | Above Maximum | 150% |
The final 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, are interpolated on a linear basis for performance between Thresholdvested and Target and between Target and Maximum.payable.
|
Performance-conditioned Time-based Restricted Stock Awards. | (8) | The amounts reflect performance-conditioned time-based restricted shares, alsoas 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 successive anniversaries of the grant date, provided the performance
conditionNEO has been met incontinually 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 was addedNEO is also entitled to an accrual of dividend equivalents, equal to the time-basedcash amount that would have been payable on the number of 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 termheld by them as of the awardclose of business on the record date for each declared divided, which shall be credited to them as the award to begin to vest. For example, if the performance condition is not achieved until year two, two-thirdsequivalent amount of shares that could have been purchased as of the awardclose of business on the dividend payment date. The accrued dividend equivalents will vest following Compensation Committee approval of achievement ofbe payable when the performance condition, with the remaining one-third to vest in the third year of the award.restricted shares on which such dividend equivalents were credited have become earned, vested and payable.
|
Stock Options. | (9) | The non-qualifiedamounts reflect nonqualified stock options, granted to Mr. Jolyas 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. |
TABLE OF CONTENTS Outstanding Equity Awards at Fiscal Year-End The following table provides a summary of the NEO’s equity-based awards outstanding as of the end of fiscal 2019: | | 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) | | 3/13/2018 | | | | | | 103,981 | (4) | $ | 71.52 | | | 3/12/2028 | | | 50,644 | (5) | $ | 2,961,155 | | | 21,037 | (6) | $ | 1,230,004 | | | 3/13/2018 | | | | | | | | | | | | | | | | | | | | | 62,742 | (7) | | 3,668,496 | | | 3/13/2017 | | | 58,532 | | | 117,064 | (4) | | 44.85 | | | 3/12/2027 | | | 50,889 | (8) | | 2,975,480 | | | 97,277 | (9) | | 5,687,757 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 98,342 | (10) | | 5,750,028 | | | 3/15/2016 | | | 149,260 | | | 74,630 | (4) | | 31.79 | | | 3/14/2026 | | | 33,113 | (11) | | 1,936,117 | | | 234,984 | (12) | | 13,739,514 | | | 3/12/2015 | | | 158,445 | | | | | | 40.85 | | | 3/11/2025 | | | | | | | | | | | | | | | 8/18/2014 | | | 183,990 | | | | | | 29.91 | | | 8/17/2024 | | | | | | | | | | | | | | | 4/16/2013 | | | 250,358 | | | | | | 23.66 | | | 4/15/2023 | | | | | | | | | | | | | | | 9/4/2012 | | | 350,468 | | | | | | 18.02 | | | 9/3/2022 | | | | | | | | | | | | | | Ms. Barry | | 3/12/2018 | | | | | | | | | | | | | | | 21,393 | (13) | | 1,250,849 | | | 5,334 | (14) | | 311,850 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 15,903 | (15) | | 929,848 | | | 3/13/2017 | | | | | | | | | | | | | | | 15,780 | (16) | | 922,657 | | | 18,099 | (9) | | 1,058,249 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 18,297 | (10) | | 1,069,826 | | | 3/15/2016 | | | | | | | | | | | | | | | 9,658 | (11) | | 564,703 | | | 41,123 | (12) | | 2,404,433 | | | 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 | | | | | | | | | | | | | | | 1/21/2011 | | | 2,125 | | | | | | 35.67 | | | 1/12/2021 | | | | | | | | | | | | | | | 9/20/2010 | | | 2,125 | | | | | | 38.32 | | | 9/20/2020 | | | | | | | | | | | | | | | 6/23/2010 | | | 463 | | | | | | 36.63 | | | 6/23/2020 | | | | | | | | | | | | | | | 4/7/2010 | | | 523 | | | | | | 44.20 | | | 4/7/2020 | | | | | | | | | | | | | | | 1/13/2010 | | | 523 | | | | | | 39.73 | | | 1/13/2020 | | | | | | | | | | | | | | | 9/17/2009 | | | 523 | | | | | | 37.59 | | | 9/17/2019 | | | | | | | | | | | | | | Mr. Mohan | | 3/12/2018 | | | | | | | | | | | | | | | 25,316 | (17) | | 1,480,227 | | | 6,311 | (18) | | 369,004 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 18,817 | (19) | | 1,100,230 | | | 3/13/2017 | | | | | | | | | | | | | | | 23,670 | (16) | | 1,383,985 | | | 27,147 | (9) | | 1,587,285 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 27,444 | (10) | | 1,604,651 | | | 5/24/2016 | | | | | | | | | | | | | | | 5,743 | (11) | | 335,793 | | | 24,453 | (12) | | 1,429,767 | | | 3/15/2016 | | | | | | | | | | | | | | | 11,038 | (11) | | 645,392 | | | 46,998 | (12) | | 2,747,973 | | Mr. Nelsen | | 3/12/2018 | | | | | | | | | | | | | | | 11,769 | (20) | | 688,133 | | | 2,936 | (21) | | 171,639 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 8,749 | (22) | | 511,554 | | | 3/13/2017 | | | | | | | | | | | | | | | 13,018 | (16) | | 761,162 | | | 14,931 | (9) | | 873,016 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 15,095 | (10) | | 882,575 | | | 3/15/2016 | | | | | | | | | | | | | | | 9,106 | (11) | | 532,428 | | | 38,774 | (12) | | 2,267,087 | | Ms. Scarlett | | 1/24/2019 | | | | | | 57,109 | (23) | | 57.60 | | | 1/23/2029 | | | | | | | | | | | | | | | 3/12/2018 | | | | | | | | | | | | | | | 6,420 | (24) | | 375,377 | | | 1,602 | (25) | | 93,669 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 4,773 | (26) | | 279,048 | | | 6/1/2017 | | | | | | | | | | | | | | | 5,481 | (16) | | 320,474 | | | 6,288 | (9) | | 367,659 | | | 6/1/2017 | | | | | | | | | | | | | | | | | | | | | 6,357 | (10) | | 371,694 | | | 3/13/2017 | | | | | | | | | | | | | | | 4,546 | (27) | | 265,805 | | | 5,214 | (10) | | 304,863 | | | 3/14/2016 | | | | | | | | | | | | | | | 3,420 | (27) | | 199,967 | | | 7,280 | (12) | | 425,632 | | | 3/12/2015 | | | 4,098 | | | | | | 40.85 | | | 3/11/2025 | | | | | | | | | | | | | | Ms. Ballard | | 3/12/2018 | | | | | | | | | | | | | | | 25,316 | (17) | | 1,480,227 | | | 6,311 | (18) | | 369,004 | | | 3/12/2018 | | | | | | | | | | | | | | | | | | | | | 18,817 | (19) | | 1,100,230 | | | 3/13/2017 | | | | | | | | | | | | | | | 23,670 | (16) | | 1,383,985 | | | 27,147 | (9) | | 1,587,285 | | | 3/13/2017 | | | | | | | | | | | | | | | | | | | | | 27,444 | (10) | | 1,604,651 | | | 3/15/2016 | | | | | | | | | | | | | | | 11,038 | (11) | | 645,392 | | | 46,998 | (12) | | 2,747,973 | |
| (1) | For a better understanding of the equity-based awards included in this table, we have provided the grant date of each award. |
TABLE OF CONTENTS | (2) | These amounts were determined based on the closing price of Best Buy common stock on the NYSE of $58.47 on February 1, 2019, the last trading day in fiscal 2019. |
| (3) | Mr. Joly will meet the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019, which is during the term of his fiscal 2018 and fiscal 2019 time-based awards and prior to the end of the performance period for his fiscal 2018 and fiscal 2019 performance share awards (see awards with March 13, 2017, and March 13, 2018, grant dates). 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. |
| (4) | 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, subject to beingprovided Mr. Joly has been continually employed onwith us through those dates. |
| (5) | The amount reflects performance-conditioned time-based restricted stock units (49,287 restricted stock units remaining from the vesting date. The exercise price for such options is equal tooriginal grant and 1,357 restricted stock units accrued as dividend equivalents) that vest over a three-year period at the closing pricerate of our common stock onone-third per year, beginning one year from the grant date, provided Mr. Joly has been continually employed with us through those dates and provided that we have achieved positive “adjusted net earnings” as quoted on the NYSE. Under the terms of the 2014 Omnibus Plan, we may not grant stock options with a strike price at a discount to fair market value. Unless otherwise determined byend of any fiscal year during 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.
Determination of Fiscal 2018 LTI Target Award Values. The Compensation Committee approved the executive team’s fiscal 2018 compensation, which included increased target award values for Mr. Joly, Ms. Barry and Ms. Ballard to reflect increased responsibilities, role changes and market adjustments.
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 determinationthree-year term of the award made to each NEO.(the “Performance Condition”). The Performance Condition was achieved as of the end of fiscal 2018 LTI awards for each NEO are set forth below:
2019. |
| | | | | | | | | | | Annual Fiscal 2018 Award Details | | Name | | No. of Stock Options | | No. of Performance-Conditioned Time-Based Restricted Shares | | Target No. of Shares under Performance Share Award | | Target Grant Date Value | | Mr. Joly | | 175,596 | | 76,331 | | 130,412 | | $10,750,000 | | Ms. Barry | | — | | 23,670 | | 24,264 | | 2,000,000 | | Ms. Ballard | | — | | 35,505 | | 36,394 | | 3,000,000 | | Mr. Mohan | | — | | 35,505 | | 36,394 | | 3,000,000 | | Mr. Nelsen | | — | | 19,528 | | 20,017 | | 1,650,000 |
Performance Share Payout. In March 2014, the Compensation Committee adopted a | (6) | The amount reflects an outstanding performance share plan design,award assuming a threshold payout (50% of the target grant, or 19,938 shares) plus accrued dividend equivalents as of fiscal year-end (1,098 shares). The number of shares ultimately earned will be based on the performance of our stock’s total shareholder return, relative TSR versusto the S&P 500 Index, over the 36-month period from August 1, 2014 to July 31, 2017. Thecommencing on February 4, 2018, and ending on January 30, 2021. As of the end of fiscal 2019, performance was below the threshold payout level for these shares. Dividend equivalent shares would vest (0 to 150%) afteraccrue assuming a target payout and are adjusted and issued at the three-year period if the performance criteria was met. Because the Company’s TSR duringend of the performance period exceededbased on actual performance. |
| (7) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the 70th percentiletarget grant, or 61,610 shares) plus accrued dividend equivalents as of all companies infiscal year-end (1,132 shares). The number of shares ultimately earned will be based on the S&P 500, these shares paid outcompound 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 2019, performance was at the maximum of 150 percent in fiscal 2018payout level for these shares. Dividend equivalent shares accrue assuming a target payout and are reflected inadjusted and issued at the Compensation of Executive Officers - Option Exercises and Stock Vested section.
Fiscal 2019 LTI Program Design. For fiscal 2019, the mix of equity vehicles in the LTI program will be consistent with fiscal 2018.
Benefits. Our executive officers, including our NEOs, are generally offered the same employee benefits offered to all U.S.-based officers, as summarized in the following table:
| | | | | | Benefit | | All Full-Time
U.S.-Based Employees
| | 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(2)
| | | | ● |
| | (1) | 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.
|
| | (2) | Only Senior Vice Presidents and above are eligible to receive the tax planning and preparation benefit. |
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" columnend of the Summary Compensation Table as found in the Compensation of Executive Officers section of 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 paymentperformance period based on their role and time withactual performance.
|
| (8) | The amount reflects performance-conditioned time-based restricted stock units that vest over a three-year period at 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,rate of one-third per year, beginning one year from the NEOs (other thangrant date, provided Mr. Joly who has an employment agreement) are eligible forbeen continually employed with us through those dates and provided that we have achieved the following severance benefits: Mses. Ballard and Barry 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 employment agreement.
Executive Stock Ownership Guidelines. Performance Condition. 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, 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 2018, all NEOs were in compliance with the ownership guidelines. The ownership targets and ownership levelsPerformance Condition was achieved as of the end of fiscal 2018 for our NEOs are shown below.
2018. |
| | | | | | | Name | | Ownership Target (in shares) | | Ownership as of Fiscal 2018 Year-End Using Guidelines (in shares) | | Mr. Joly | | 200,000 | | 922,363 | | Ms. Barry | | 55,000 | | 77,875 | | Ms. Ballard | | 55,000 | | 69,869 | | Mr. Mohan | | 55,000 | | 77,854 | | Mr. Nelsen | | 35,000 | | 83,477 |
Tax Deductibility of Compensation. Until recently, Section 162(m) | (9) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the Internal Revenue Code ("Section 162(m)") has limitedtarget grant). The number of shares ultimately earned will be based on the deductibilityperformance of compensation in excess of $1 million paidour stock’s total shareholder return, relative to the chief executive officerS&P 500 Index, over the 36-month period commencing on January 29, 2017, and eachending on February 1, 2020. As of the end of fiscal 2019, 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 three most highly compensated executive officers (other thanenterprise revenue, over the chief financial officer), unless the compensation qualifies as "performance-based compensation." The Tax Cuts36-month period commencing on January 29, 2017, 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)ending on February 1, 2020. As of the Internal Revenue Code, unless the benefitend of such deductibilityfiscal 2019, performance 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 Committee will continue to monitor issues concerning 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.
For purposes of Section 162(m), we created a sub-plan under our 2014 Omnibus Incentive Plan for our fiscal year ended February 3, 2018. The sub-plan sets the maximum award poolpayout level for the CEO and three other NEOs (excluding the CFO) at 5 percent of adjusted net earnings to align compensation with shareholder interests. The maximum potential individual allocations from that pool were set at 2 percent for the CEO and 1 percent for each of the three other NEOs (excluding the CFO). The Committee then used negative discretion to reduce the amounts that were potentially payable under the sub-plan award pool to equal amounts based on achievement of STI plan metrics.
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 3, 2018, and in this proxy statement.
COMPENSATION AND HUMAN RESOURCES COMMITTEE
Russell P. Fradin (Chair)
Lisa M. Caputo
J. Patrick Doyle
Kathy J. Higgins Victor
Compensation and Human Resources Committee Interlocks and Insider Participation
The Compensation Committee is comprised entirely of independent directors. At no time during fiscal 2018 was any member of the Compensation Committee a current or former officer or employee of the Company or any of its subsidiaries. During fiscal 2018, no member of the Compensation Committee had a relationship that must be described pursuant to SEC disclosure rules on related party transactions. In fiscal 2018, 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.
Compensation of Executive Officers
Summary Compensation Table
The table below summarizes the total compensation earned by each of our NEOs during fiscal 2018 and the two preceding fiscal years (if applicable). There were 53 weeks in fiscal 2018 as compared to 52 weeks in fiscal 2017 and fiscal 2016.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | |
Salary(1) | | 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 | | 2018 | | $ | 1,286,058 |
| | $ | 8,644,644 |
| | $ | 2,198,462 |
| | $ | 4,602,983 |
| | $ | 28,307 |
| | $ | 16,760,453 |
| | | 2017 | | 1,175,000 | | 7,689,879 | | 1,800,076 | | 2,878,750 | | 494,275 | | 14,037,980 | | | 2016 | | 1,175,000 | | 8,011,688 | | 1,842,715 | | 3,814,050 | | 68,670 | | 14,912,123 | Corie S. Barry(6) Chief Financial Officer | | 2018 | | 764,423 |
| | 2,008,397 |
| | — |
| | 2,057,625 |
| | 8,203 |
| | 4,838,648 |
| | | 2017 | | 713,462 | | 1,689,495 | | — |
| | 1,184,167 | | 14,893 | | 3,602,017 | | | | | | | | | | | | | | | | Shari L. Ballard President, Multi-Channel Retail | | 2018 | | 859,616 |
| | 3,012,512 |
| | — |
| | 2,309,113 |
| | 24,367 |
| | 6,205,608 |
| | | 2017 | | 800,000 | | 1,930,865 | | — |
| | 1,470,000 | | 62,737 | | 4,263,602 | | | 2016 | | 790,385 |
| | 2,672,270 |
| | 1,228,476 |
| | 1,927,311 |
| | 24,641 |
| | 6,643,083 |
| R. Michael Mohan Chief Merchandising and Marketing Officer
| | 2018 | | 866,346 |
| | 3,012,512 |
| | — |
| | 2,331,975 |
| | 22,907 |
| | 6,233,740 |
| | | 2017 | | 833,654 | | 2,895,073 | | — |
| | 1,531,251 | | 55,284 | | 5,315,262 | | | 2016 | | 790,385 |
| | 1,336,135 |
| | 614,238 |
| | 1,927,311 |
| | 10,323 |
| | 4,678,392 |
| Keith J. Nelsen General Counsel and Secretary
| | 2018 | | 697,885 |
| | 1,656,905 |
| | — |
| | 1,249,817 |
| | 22,507 |
| | 3,627,114 |
| | | 2017 | | 650,000 | | 1,592,960 | | — |
| | 796,250 | | 68,761 | | 3,107,971 | | | 2016 | | 640,385 |
| | 1,102,314 |
| | 506,742 |
| | 1,027,899 |
| | 10,482 |
| | 3,287,822 |
|
| | (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; however, fiscal 2018 amounts are explained in greater detail under the heading Grants of Plan-Based Awards. The grant date fair value reflected for any award subject to performance conditions 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"). The amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders' Equity, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018.
|
| | (3) | The fiscal 2018 amounts reflected in this column include the probable grant date fair value of: (a) one or more 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), and (b) one or more performance share awards that will be 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:
|
| | | | | | | | | | | | | | | | | Name | | Target Performance Grant (in Shares) | | Probable Grant Date Fair Value of Performance Grant (as reflected in Stock Awards Column) | | Maximum Performance Grant (in Shares) | | Maximum Grant Date Fair Value of Performance Grant | | Mr. Joly | | 130,412 |
| | $ | 5,419,532 |
| | 195,619 |
| | $ | 8,129,298 |
| | Ms. Barry | | 24,264 |
| | 1,008,339 |
| | 36,396 |
| | 1,512,509 |
| | Ms. Ballard | | 36,394 |
| | 1,512,426 |
| | 54,591 |
| | 2,268,637 |
| | Mr. Mohan | | 36,394 |
| | 1,512,426 |
| | 54,591 |
| | 2,268,639 |
| | Mr. Nelsen | | 20,017 |
| | 831,467 |
| | 30,026 |
| | 1,247,770 |
|
*Multiple performance share awards for each NEO have been aggregated in the table above. For additional detail, see the Grants of Plan-Based Awards section.
| | (4) | These amounts reflect STI payments made for all fiscal years shown. The fiscal 2018 STI plan is described in the section Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term Incentive.
|
(5)The fiscal 2018 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 | | $ | 10,800 |
| | $ | 492 |
| | $ | 17,015 |
| (c) | $ | 28,307 |
| | Ms. Barry | | 7,615 |
| | 492 |
| | 96 |
| (d) | 8,203 |
| | Ms. Ballard | | 9,450 |
| | 492 |
| | 14,425 |
| (e) | 24,367 |
| | Mr. Mohan | | 10,800 |
| | 492 |
| | 11,615 |
| (f) | 22,907 |
| | Mr. Nelsen | | 7,408 |
| | 492 |
| | 14,607 |
| (g) | 22,507 |
|
| | (a) | These amounts reflect our matching contributions to the NEOs' Retirement Savings Plan accounts.these shares. |
| | (b) | These amounts reflect the portions of premiums paid by us for group term life insurance coverage. |
| | (c) | The amount reflects portions of premiums paid by us for supplemental executive long-term disability insurance. |
| | (d) | In accordance with the SEC’s disclosure rules, the amount reflected does not include perquisites and other personal benefits provided to Ms. Barry for fiscal 2018 because the aggregate incremental value was less than $10,000. |
| | (e) | The amount includes portions of premiums paid by us for supplemental executive long-term disability insurance ($13,923). |
| | (f) | The amount reflects portions of premiums paid by us for supplemental executive long-term disability insurance ($9,725) and company-paid tax preparation and planning services ($1,890). |
| | (g) | The amount reflects portions of premiums paid by us for supplemental executive long-term disability insurance ($12,607) and company-paid tax preparation and planning services ($2,000). |
| | (6) | Ms. Barry was appointed as our CFO on June 14, 2016. |
Grants | (11) | The amount reflects performance-conditioned time-based restricted shares that vest over a three-year period at the rate of Plan-Based Awards
one-third per year, beginning one year from the grant date, provided the NEO has been continually employed with us through those dates and provided that we have achieved the Performance Condition. The table below summarizes the grants made to each of our NEOs during fiscal 2018 under the 2014 Omnibus Incentive Plan and the Short-Term Incentive Plan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($ / 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(3) | | — |
| | $ | 629,167 |
| | $ | 2,516,666 |
| | $ | 5,033,332 |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
| | | | 3/13/2017 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 175,596 |
| | 44.85 | | 2,198,462 |
| | | | 3/13/2017 |
| (5) | — |
| | — |
| | — |
| | — |
| | 76,334 |
| | 76,344 |
| | — |
| | — |
| | 3,225,112 |
| | | | 3/13/2017 |
| (6) | — |
| | — |
| | — |
| | 32,426 |
| | 64,851 |
| | 97,277 |
| | — |
| | — |
| | 2,730,876 |
| | | | 3/13/2017 |
| (7) | — |
| | — |
| | — |
| | 32,781 |
| | 65,561 |
| | 98,342 |
| | — |
| | — |
| | 2,688,657 |
| | Ms. Barry | | — |
| | 281,250 |
| | 1,125,000 |
| | 2,250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | | 3/13/2017 |
| (8) | — |
| | — |
| | — |
| | — |
| | 23,670 |
| | 23,670 |
| | — |
| | — |
| | 1,000,058 |
| | | | 3/13/2017 |
| (6) | — |
| | — |
| | — |
| | 6,033 |
| | 12,066 |
| | 18,099 |
| | — |
| | — |
| | 508,099 |
| | | | 3/13/2017 |
| (7) | — |
| | — |
| | — |
| | 6,099 |
| | 12,198 |
| | 18,297 |
| | — |
| | — |
| | 500,240 |
| | Ms. Ballard | | — |
| | 315,625 |
| | 1,262,500 |
| | 2,525,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | | 3/13/2017 |
| (8) | — |
| | — |
| | — |
| | — |
| | 35,505 |
| | 35,505 |
| | — |
| | — |
| | 1,500,086 |
| | | | 3/13/2017 |
| (6) | — |
| | — |
| | — |
| | 9,049 |
| | 18,098 |
| | 27,147 |
| | — |
| | — |
| | 762,107 |
| | | | 3/13/2017 |
| (7) | — |
| | — |
| | — |
| | 9,148 |
| | 18,296 |
| | 27,444 |
| | — |
| | — |
| | 750,319 |
| | Mr. Mohan | | — |
| | 318,750 |
| | 1,275,000 |
| | 2,550,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | | 3/13/2017 |
| (8) | — |
| | — |
| | — |
| | — |
| | 35,505 |
| | 35,505 |
| | | | — |
| | 1,500,086 |
| | | | 3/13/2017 |
| (6) | — |
| | — |
| | — |
| | 9,049 |
| | 18,098 |
| | 27,147 |
| | — |
| | — |
| | 762,107 |
| | | | 3/13/2017 |
| (7) | — |
| | — |
| | — |
| | 9,148 |
| | 18,296 |
| | 27,444 |
| | — |
| | — |
| | 750,319 |
| | Mr. Nelsen | | — |
| | 170,833 |
| | 683,333 |
| | 1,366,667 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | | 3/13/2017 |
| (8) | — |
| | — |
| | — |
| | — |
| | 19,528 |
| | 19,528 |
| | — |
| | — |
| | 825,058 |
| | | | 3/13/2017 |
| (6) | — |
| | — |
| | — |
| | 4,977 |
| | 9,954 |
| | 14,931 |
| | — |
| | — |
| | 419,163 |
| | | | 3/13/2017 |
| (7) | — |
| | — |
| | — |
| | 5,032 |
| | 10,063 |
| | 15,095 |
| | — |
| | — |
| | 412,684 |
|
| | (1) | These amounts reflect the potential threshold, target and maximum payout for each NEO under our fiscal 2018 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 2018 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 amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders' Equity, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018. The value reflected for any performance-conditioned award is the value at the grant date of the probable outcome of the award – see footnote (3) to the Summary Compensation Table.
|
| | (3) | Mr. Joly will meet the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019, which is prior to the third scheduled vesting of his fiscal 2018 time-based awards and prior to the end of the performance period for his fiscal 2018 performance share awards. 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.
| | (4) | 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.
|
| | (5) | 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 havePerformance Condition was achieved positive "adjusted net earnings" as of the end of any fiscal year during the three-year term of the award.
|
| | (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 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 January 29, 2017, and ending on February 1, 2020.
|
| | (7) | 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 January 29, 2017, and ending on February 1, 2020.
|
| | (8) | 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.
|
Outstanding Equity Awards at Fiscal Year-End
The following table provides a summary of the NEOs' equity-based awards outstanding as of the end of fiscal 2018:2017.
|
| (12) | 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 March 1, 2016, and ending on February 28, 2019. As of the end of fiscal 2019, performance was at the maximum payout level for these shares. |
| (13) | The amount reflects performance-conditioned time-based restricted shares (20,819 restricted shares remaining from the original grant and 574 restricted shares accrued as dividend equivalents) that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided Ms. Barry has been continually employed with us through those dates and provided that we have achieved the Performance Condition. The Performance Condition was achieved as of the end of fiscal 2019. |
| (14) | The amount reflects an outstanding performance share award assuming a threshold payout (50% of the target grant, or 5,053 shares) plus accrued dividend equivalents as of fiscal year-end (280 shares). 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 2019, performance was below the threshold 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. |
| (15) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant, or 15,615 shares) plus accrued dividend equivalents as of fiscal year-end (288 shares). 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 2019, 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. |
| (16) | The amount reflects performance-conditioned time-based restricted shares 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 the Performance Condition. The Performance Condition was achieved as of the end of fiscal 2018. |
| (17) | The amount reflects performance-conditioned time-based restricted shares (24,636 restricted shares remaining from the original grant and 680 restricted shares accrued as dividend equivalents) 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 the Performance Condition. The Performance Condition was achieved as of the end of fiscal 2019. |
| (18) | The amount reflects an outstanding performance share award assuming a threshold payout (50% of the target grant, or 5,980 shares) plus accrued dividend equivalents as of fiscal year-end (331 shares). 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 2019, performance was below the threshold 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. |
| (19) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant, or 18,477 shares) plus accrued dividend equivalents as of fiscal year-end (340 shares). The number of shares ultimately earned will be based on the compound |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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) | | 3/13/2017 | | | | 175,596(4) | | $ | 44.85 |
| | 3/12/2027 | | 76,334(5) | | $ | 5,438,034 |
| | 97,277(6) | | $ | 6,929,978 |
| | | | 3/13/2017 | | | | | | | | | | | | | | 98,342(7) | | 7,005,848 |
| | | | 3/15/2016 | | 74,630(4) | | 149,260(4) | | 31.79 |
| | 3/14/2026 | | 66,225(8) | | 4,717,869 |
| | 234,984(9) | | 16,740,260 |
| | | | 3/12/2015 | | 105,630(4) | | 52,815(4) | | 40.85 |
| | 3/11/2025 | | 25,714(10) | | 1,831,865 |
| | 177,561(11) | | 12,649,446 |
| | | | 8/18/2014 | | 183,990(4) | | | | 29.91 |
| | 8/17/2024 | | | |
| |
| |
| | | | 4/16/2013 | | 250,358(4) | | | | 23.66 |
| | 4/15/2023 | | | | | | | | | | | | 9/4/2012 | | 350,468(12) | | | | 18.02 |
| | 9/3/2022 | | | | | | | | | | Ms. Barry | | 3/13/2017 | | | | | | | | | | 23,670(13) | | 1,686,251 |
| | 18,099(6) | | 1,289,373 |
| | | | 3/13/2017 | | | | | | | | | | | | | | 18,297(7) | | 1,303,478 |
| | | | 3/15/2016 | | | | | | | | | | 19,316(8) | | 1,376,072 |
| | 41,123(9) | | 2,929,567 |
| | | | 10/1/2015 | | 22,168(4) | | 11,085(4) | | 37.16 |
| | 9/30/2025 | | 6,480(10) | | 461,635 |
| | 14,906(14) | | 1,061,868 |
| | | | 3/12/2015 | | 8,195(4) | | 4,098(4) | | 40.85 |
| | 3/11/2025 | | 1,330(10) | | 94,749 |
| | 5,511(11) | | 392,604 |
| | | | 8/18/2014 | | 14,730(4) | | | | 29.91 |
| | 8/17/2024 | | | |
|
| |
| |
|
| | | | 6/19/2013 | | 3,246(4) | | | | 27.66 |
| | 6/18/2023 | | | | | | | | | | | | 4/16/2013 | | 3,243(4) | | | | 23.66 |
| | 4/15/2023 | | | | | | | | | | | | 1/21/2011 | | 2,125(15) | | | | 35.67 |
| | 1/12/2021 | | | | | | | | | | | | 9/20/2010 | | 2,125(15) | | | | 38.32 |
| | 9/20/2020 | | | | | | | | | | | | 6/23/2010 | | 463(15) | | | | 36.63 |
| | 6/23/2020 | | | | | | | | | | | | 4/7/2010 | | 523(15) | | | | 44.20 |
| | 4/7/2020 | | | | | | | | | | | | 1/13/2010 | | 523(15) | | | | 39.73 |
| | 1/13/2020 | | | | | | | | | | | | 9/17/2009 | | 523(15) | | | | 37.59 |
| | 9/17/2019 | | | | | | | | | | | | 8/5/2008 | | 3,700(15) | | | | 41.19 |
| | 8/4/2018 | | | | | | | | | | Ms. Ballard | | 3/13/2017 | | | | | | | | | | 35,505(13) | | 2,529,376 |
| | 27,147(6) | | 1,933,952 |
| | | | 3/13/2017 | | | | | | | | | | | | | | 27,444(7) | | 1,955,111 |
| | | | 3/15/2016 | | | | | | | | | | 22,076(8) | | 1,572,694 |
| | 46,998(9) | | 3,348,138 |
| | | | 3/12/2015 | | | | 35,210(4) | | 40.85 |
| | 3/11/2025 | | 11,430(10) | | 814,273 |
| | 47,350(11) | | 3,373,143 |
| | Mr. Mohan | | 3/13/2017 | | | | | | | | | | 35,505(13) | | 2,529,376 |
| | 27,147(6) | | 1,933,952 |
| | | | 3/13/2017 | | | | | | | | | | | | | | 27,444(7) | | 1,955,111 |
| | | | 5/24/2016 | | | | | | | | | | 11,486(8) | | 818,263 |
| | 24,453(9) | | 1,742,032 |
| | | | 3/15/2016 | | | | | | | | | | 22,076(8) | | 1,572,694 |
| | 46,998(9) | | 3,348,138 |
| | | | 3/12/2015 | | | | 17,605(4) | | 40.85 |
| | 3/11/2025 | | 5,715(10) | | 407,137 |
| | 23,675(11) | | 1,686,571 |
| | | | 8/18/2014 | | 20,443(4) | | | | 29.91 |
| | 8/17/2024 | | | |
|
| |
| |
|
| | Mr. Nelsen | | 3/13/2017 | | | | | | | | | | 19,528(13) | | 1,391,175 |
| | 14,931(6) | | 1,063,684 |
| | | | 3/13/2017 | | | | | | | | | | | | | | 15,095(7) | | 1,075,332 |
| | | | 3/15/2016 | | | | | | | | | | 18,212(8) | | 1,297,423 |
| | 38,774(9) | | 2,762,224 |
| | | | 3/12/2015 | | | | 14,524(4) | | 40.85 |
| | 3/11/2025 | | 4,715(10) | | 335,897 |
| | 19,532(11) | | 1,391,424 |
|
TABLE OF CONTENTS 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 2019, 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. | (20) | The amount reflects performance-conditioned time-based restricted shares (11,451 restricted shares remaining from the original grant and 318 restricted shares accrued as dividend equivalents) that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided Mr. Nelsen has been continually employed with us through those dates and provided that we have achieved the Performance Condition. The Performance Condition was achieved as of the end of fiscal 2019. |
| (21) | The amount reflects an outstanding performance share award assuming a threshold payout (50% of the target grant, or 2,780 shares) plus accrued dividend equivalents as of fiscal year-end (156 shares). 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 2019, performance was below the threshold 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. |
| (22) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant, or 8,589 shares) plus accrued dividend equivalents as of fiscal year-end (160 shares). 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 2019, 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. |
| (23) | The amount represents nonqualified stock options that will become exercisable on the fourth anniversary of the grant date, provided Ms. Scarlett has been continually employed with us through that date. |
| (24) | The amount reflects performance-conditioned time-based restricted shares (6,246 restricted shares remaining from the original grant and 174 restricted shares accrued as dividend equivalents) that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided Ms. Scarlett has been continually employed with us through those dates and provided that we have achieved the Performance Condition. The Performance Condition was achieved as of the end of fiscal 2019. |
| (25) | The amount reflects an outstanding performance share award assuming a threshold payout (50% of the target grant, or 1,516 shares) plus accrued dividend equivalents as of fiscal year-end (86 shares). 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 2019, performance was below the threshold 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. |
| (26) | The amount reflects an outstanding performance share award assuming a maximum payout (150% of the target grant, or 4,684 shares) plus accrued dividend equivalents as of fiscal year-end (88 shares). 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 2019, 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. |
| (27) | The amount reflects time-based restricted stock units that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided Ms. Scarlett has been continually employed with us through those dates. |
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 2019. Name | Option Awards | | Stock Awards | Number of Shares
Acquired on Exercise
(#) | Value Realized
on Exercise(1)
($) | | Number of Shares
Acquired on Vesting
(#) | Value Realized
on Vesting(2)
($) | Mr. Joly | | — | | $ | — | | | | | | 261,832 | (3) | $ | 18,780,319 | | Ms. Barry | | 3,700 | (4) | | 129,093 | | | | | | 45,775 | (5) | | 3,327,187 | | Mr. Mohan | | 38,048 | (6) | | 1,332,746 | | | | | | 58,006 | (7) | | 4,142,724 | | Mr. Nelsen | | 14,524 | (8) | | 573,442 | | | | | | 39,863 | (9) | | 2,849,101 | | Ms. Scarlett | | — | | | — | | | | | | 15,842 | (10) | | 1,098,151 | | Ms. Ballard | | 35,210 | (11) | | 995,355 | | | | | | 81,653 | (12) | | 5,853,094 | |
| (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. |
| | (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 February 2, 2018, the last trading day in fiscal 2018. The closing price quoted on the NYSE on that date was $71.24. |
| | (3) | Mr. Joly will meet the age and service conditions for qualified retirement, as defined in our award agreements, in August 2019, which is prior to the third scheduled vesting of his fiscal 2018 time-based awards and prior to the end of the performance period for his fiscal 2018 performance share awards (see awards having a March 13, 2017, grant date). 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.
|
| | (4) | 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. |
| | (5) | The amount reflects performance-conditioned time-based restricted stock units that vest over a three-year period at the rate of one-third per year, beginning one year from the grant date, provided Mr. Joly 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"). The Performance Condition was achieved as of the end of fiscal 2018. |
| | (6) | 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 January 29, 2017, and ending on February 1, 2020. As of the end of fiscal 2018, performance was at the maximum 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 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 2018, performance was at the maximum payout level for these shares. |
| | (8) | The amount reflects performance-conditioned time-based restricted shares 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"). The Performance Condition was achieved as of the end of fiscal 2017. |
| | (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 a peer group comprised of the S&P 500 Index, over the 36-month period commencing on March 1, 2016, and ending on February 28, 2019. As of the end of fiscal 2018, performance was at the maximum payout level for these shares. |
| | (10) | The amount reflects time-based restricted shares 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. |
| | (11) | 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 March 1, 2015, and ending on February 28, 2018. As of the end of fiscal 2018, performance was at the maximum payout level for these shares. |
| | (12) | The amount reflects nonqualified stock options that became exercisable 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. |
| | (13) | The amount reflects performance-conditioned time-based restricted shares 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"). The Performance Condition was achieved as of the end of fiscal 2018. |
| | (14) | 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 October 1, 2015, and ending on September 30, 2018. As of the end of fiscal 2018, performance was at the maximum payout level for these shares. |
| | (15) | The amount represents nonqualified stock options that became exercisable in four equal annual installments of 25% each, with the first installment vesting one year from the grant date. |
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 2018.
| | | | | | | | | | | | | | | | | | | 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 | | — |
| | $ | — |
| | 313,506 |
| (3) | $ | 16,586,154 |
| | Ms. Barry | | 1,643 |
| (4) | 11,189 |
| | 26,282 |
| (5) | 1,346,569 |
| | Ms. Ballard | | 203,764 |
| (6) | 1,384,135 |
| | 47,627 |
| (7) | 2,390,565 |
| | Mr. Mohan | | 108,967 |
| (8) | 1,166,681 |
| | 64,453 |
| (9) | 3,296,270 |
| | Mr. Nelsen | | 189,635 |
| (10) | 3,422,605 |
| | 41,079 |
| (11) | 2,119,465 |
|
| | (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: |
| | (a) | the vesting of restricted shares granted under our LTI program: 33,112 shares that were granted on March 15, 2016, which vested on March 14, 2017; 25,714 shares that were granted on March 12, 2015, which vested on March 13, 2017; and 30,794 shares that were granted on August 18, 2014, which vested on August 18, 2017; | (a) | the vesting of restricted shares granted under our LTI program: 25,714 shares that were granted on March 12, 2015, which vested on March 12, 2018; 25,445 shares that were granted on March 13, 2017, which vested on March 13, 2018; and 33,112 shares that were granted on March 15, 2016, which vested on March 14, 2018; and |
| (b) | the shares (177,561) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018. | (b) | the shares (223,886) acquired upon the vesting and settlement of a performance share award which was granted on August 18, 2014, 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 July 31, 2017. |
TABLE OF CONTENTS | (4) | On August 3, 2018, 3,700 stock options held by Ms. Barry auto-exercised on their expiration date. The options had an exercise price of $41.19 and were exercised when the market price of a share of Best Buy common stock was $76.08. |
| | (4) | On October 17, 2017, 1,643 stock options held by Ms. Barry auto-exercised on their expiration date. The options had an exercise price of $47.84 and were exercised when the market price of a share of Best Buy common stock was $54.65. |
| | | (5) | The amount represents: |
| (a) | the vesting of restricted shares granted under our LTI program: 1,330 shares that were granted on March 12, 2015, which vested on March 12, 2018; 7,890 shares that were granted on March 13, 2017, which vested on March 13, 2018; 9,658 shares that were granted on March 15, 2016, which vested on March 14, 2018; and 6,480 shares that were granted on October 1, 2015, which vested on October 1, 2018; | (a) | the vesting of restricted shares granted under our LTI program: 9,658 shares that were granted on March 15, 2016, which vested on March 14, 2017; 6,480 shares that were granted October 1, 2015, which vested on October 2, 2017; 1,330 shares that were granted on March 12, 2015, which vested on March 13, 2017; and 1,644 shares that were granted August 18, 2014, which vested on August 18, 2017; |
| (b) | the shares (5,511) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018; and |
| (c) | the shares (14,906) acquired upon the vesting and settlement of a performance share award which was granted on October 1, 2015, 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 September 30, 2018. | (b) | the shares (7,170) acquired upon the vesting and settlement of a performance share award which was granted on August 18, 2014, 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 July 31, 2017. |
| (6) | On March 16, 2018, Mr. Mohan exercised options to purchase 17,605 shares at an exercise price of $40.85 and 20,443 shares at an exercise price of $29.91. These options were exercised when the market price of a share of Best Buy common stock was $70.00. |
| | (6) | On March 30, 2017, Ms. Ballard exercised options to purchase 66,200 shares at an exercise price of $47.84; 16,563 shares at an exercise price of $39.73; 16,563 shares at an exercise price of $44,20; 70,420 shares at an exercise price of $40.85; and 20,000 shares at an exercise price of $38.32. These options were exercised when the market price of a share of Best Buy common stock ranged from $48.42 to $48.64. On November 21, 2017, Ms. Ballard exercised options to purchase 14,018 shares at an exercise price of $29.91. These options were exercised when the market price of a share of Best Buy common stock was $56.21. |
| | | (7) | The amount represents: |
| | (a) | the vesting of restricted shares granted under our LTI program: 11,037 shares that were granted on March 15, 2016, which vested on March 14, 2017; 11,428 shares that were granted on March 12, 2015, which vested on March 13, 2017; and 4,693 shares that were granted on August 18, 2014, which vested on August 18, 2017; | (a) | the vesting of restricted shares granted under our LTI program: 5,715 shares that were granted on March 12, 2015, which vested on March 12, 2018; 11,835 shares that were granted on March 13, 2017, which vested on March 13, 2018; 11,038 shares that were granted on March 15, 2016, which vested on March 14, 2018; and 5,743 shares that were granted on May 24, 2016, which vested on May 24, 2018; and |
| (b) | the shares (23,675) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018. | (b) | the shares (20,469) acquired upon the vesting and settlement of a performance share award which was granted on August 18, 2014, 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 July 31, 2017. |
| (8) | On September 4, 2018, Mr. Nelsen exercised options to purchase 14,524 shares at an exercise price of $40.85. These options were exercised when the market price of a share of Best Buy common stock was $80.33. |
| | (8) | On April 3, 2017, Mr. Mohan exercised options to purchase 6,250 shares at an exercise price of $37.59; 6,250 shares at an exercise price of $39.73; 6,250 shares at an exercise price of $44.20; 5,000 shares at an exercise price of $36.63; 15,129 shares at an exercise price of $25.79; 20,000 shares at an exercise price of $41.19; 35,210 shares at an exercise price of $40.85; 5,000 shares at an exercise price of $38.32; and 5,000 shares at an exercise price of $35.67. These options were exercised when the market price of a share of Best Buy common stock ranged from $48.65 to $48.82. On May 26, 2017, Mr. Mohan exercised options to purchase 4,878 shares at an exercise price of $47.84. These options were exercised when the market price of a share of Best Buy common stock was $60.23. |
| | | (9) | The amount represents: |
| | (a) | the vesting of restricted shares granted under our LTI program: 5,743 shares that were granted on May 24, 2016, which vested May 24, 2017; 11,037 shares that were granted on March 15, 2016, which vested on March 14, 2017; 5,714 shares that were granted on March 12, 2015, which vested on March 13, 2017; 6,843 shares that were granted on August 18, 2014, which vested on August 18, 2017; and 5,264 shares that were granted on March 12, 2014, which vested March 13, 2017; | (a) | the vesting of restricted shares granted under our LTI program: 4,715 shares that were granted on March 12, 2015, which vested on March 12, 2018; 6,510 shares that were granted on March 13, 2017, which vested on March 13, 2018; and 9,106 shares that were granted on March 15, 2016, which vested on March 14, 2018; and |
| (b) | the shares (19,532) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018. | (b) | the shares (29,852) acquired upon the vesting and settlement of a performance share award which was granted on August 18, 2014, 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 July 31, 2017. |
| | | (10) | On March 3, 2017, Mr. Nelsen exercised options to purchase 10,500 shares at an exercise price of $32.98; 40,000 shares at an exercise price of $23.66; 30,372 shares at an exercise price of $29.91; and 9,375 shares at an exercise price of $31.54. These options were exercised when the market price of a share of Best Buy common stock ranged from $44.48 to $44.64. On May 31, 2017, Mr. Nelsen exercised options to purchase 4,403 shares at an exercise price of $47.84; 5,250 shares at an exercise price of $37.59; 5,250 shares at an exercise price of $39.73; 5,250 shares at an exercise price of $44.20; 5,000 shares at an exercise price of $36.63; 20,000 shares at an exercise price of $41.19; 5,000 shares at an exercise price of $38.32; and 5,000 shares at an exercise price of $35.67. These options were exercised when the market price of a share of Best Buy common stock ranged from $59.00 to $59.02. On November 22, 2017, Mr. Nelsen exercised options to purchase 29,048 shares at an exercise price of $40.85 and 15,187 shares at an exercise price of $29.91. These options were exercised when the market price of a share of Best Buy common stock ranged from $56.78 to $56.79. |
| | (11) | 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, 2017; 4,714 shares that were granted on March 12, 2015, which vested on March 13, 2017; and 5,084 shares that were granted on August 18, 2014, which vested on August 18, 2017; | (a) | the vesting of restricted shares granted under our LTI program: 1,235 shares that were granted on March 12, 2015, which vested on March 12, 2018; 2,273 shares that were granted on March 13, 2017, which vested on March 13, 2018; 3,419 shares that were granted on March 15, 2016, which vested on March 14, 2018; and 2,741 shares that were granted on June 1, 2017, which vested on June 1, 2018; and |
| (b) | the shares (5,814) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018. | (b) | the shares (22,175) acquired upon the vesting and settlement |
| (11) | On March 20, 2018, Ms. Ballard exercised options to purchase 35,210 shares at an exercise price of $40.85. These options were exercised when the market price of a share of a performance share award which was granted on August 18, 2014, 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 July 31, 2017. |
Nonqualified Deferred Compensation
The following table shows the account balances at February 3, 2018, and the contributions and earnings during fiscal 2018, for participating NEOs under the Best Buy Sixth Amendedcommon stock ranged from $68.85 to $69.39.
|
| (12) | The amount represents: |
| (a) | the vesting of restricted shares granted under our LTI program: 11,430 shares that were granted on March 12, 2015, which vested on March 12, 2018; 11,835 shares that were granted on March 13, 2017, which vested on March 13, 2018; and Restated Deferred Compensation Plan ("Deferred Compensation Plan"11,038 shares that were granted on March 15, 2016, which vested on March 14, 2018; and |
| (b) | the shares (47,350) acquired upon the vesting and settlement of a performance share award which was granted on March 12, 2015, 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, 2018. |
TABLE OF CONTENTS Nonqualified Deferred Compensation The following table shows the account balances at February 2, 2019, and the contributions and earnings during fiscal 2019, for participating NEOs under the Best Buy Sixth Amended and Restated Deferred Compensation Plan (“Deferred Compensation 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 2019, have not been issued as shares pursuant to the terms of his 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. 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 | $ | — | | $ | — | | $ | 723,439 | (1) | $ | — | | $ | 23,921,013 | (2) | Ms. Barry | | — | | | — | | | — | | | — | | | — | | Mr. Mohan | | — | | | — | | | (2,901 | ) | | — | | | 179,040 | (3) | Mr. Nelsen | | — | | | — | | | — | | | — | | | — | | Ms. Scarlett | | — | | | — | | | — | | | — | | | — | | Ms. Ballard | | — | | | — | | | (44,232 | ) | | — | | | 2,447,450 | (4) |
| (1) | This amount reflects the value of the dividend equivalents earned by Mr. Joly (10,948 dividend equivalent units) relative to his September 4, 2012, restricted stock unit award. The 10,948 units are payable to Mr. Joly in 2012 that have vested but, asthe 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 end of fiscal 2018, have not been issued as shares pursuant to the termsyear value of his employment arrangement with the Company, as disclosed on the Current Report on Form 8-K filed by the Company on August 21, 2012. Suchall vested restricted stock units were partand related dividend equivalents from Mr. Joly’s September 4, 2012, restricted stock unit award (in total, 332,964 units and 76,152 dividend equivalent units), calculated based on the closing price of our common stock ($58.47) as quoted on the NYSE on February 1, 2019, the last business day in fiscal 2019. Of this amount, $5,051,064 has been previously reported in the “Stock Awards” column of the equity granted to Mr. Joly to compensate him for certain forfeitures he incurred upon terminationSummary Compensation Table. |
| (3) | No portion of his employment with his former employer.this amount has been previously reported in 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. |
Deferred Compensation Plan. The Company’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. | | | | | | | | | | | | | | | | | | | | | | | | 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 | | $ | — |
| | $ | — |
| | $ | 533,935 |
| (1) | $ | — |
| | $ | 28,365,488 |
| (2) | | Ms. Barry | | — |
| | — |
| | — |
| | — |
| | — |
| | | Ms. Ballard | | — |
| | — |
| | 430,504 |
| | — |
| | 2,491,683 |
| (3) | | Mr. Mohan | | — |
| | — |
| | 32,042 |
| | — |
| | 181,940 |
| (4) | | Mr. Nelsen | | — |
| | — |
| | — |
| | — |
| | — |
| |
| | (1) | This amount reflects the value of the dividend equivalents earned by Mr. Joly (9,363 dividend equivalent units) relative to his September 4, 2012, restricted stock unit award. The 9,363 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 end of fiscal year value of all vested restricted stock units and related dividend equivalents from Mr. Joly's September 4, 2012, restricted stock unit award (in total, 332,964 units and 65,204 dividend equivalent units), calculated based on the closing price of our common stock ($71.24) as quoted on the NYSE on January 27, 2017, the last business day in fiscal 2017. Of this amount, $5,051,064 has been previously reported in the “Stock Awards” column of the Summary Compensation Table.
| | | | |
| | (3) | This amount includes $859,369 that has previously been reported as either "Salary" or "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table.
|
| 70 | | 2019 Proxy Statement | (4) | No portion of this amount has been previously reported in the Summary Compensation Table.
|
Deferred Compensation Plan. The Company'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.
| |
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 average rates of return as of the end of fiscal 2019 were as follows: Investment | Rate of Return(1) | NVIT Money Market | 1.54% | PIMCO VIT Total Return | 1.81% | PIMCO VIT High-Yield Bond | 1.65% | Fidelity VIP Balanced-Service Class | (1.99)% | Vanguard VIF Equity Income | (3.88)% | Vanguard VIF Equity Index | (2.44)% | T. Rowe Price Blue Chip Growth | 2.35% | Franklin VIPT Small Cap Value Securities | (5.25)% | Vanguard VIF Small Company Growth | (1.19)% | Vanguard VIF International | (13.15)% |
| (1) | Rate of return is net of investment options selected by the participants. The investment options are notional and do not represent actual investments, but rather servemanagement fees, fund expenses or administrative charges, as a measurement of performance. The options available under the Deferred Compensation Plan and their one-year annualized average rates of return as of the end of fiscal 2018 were as follows: |
| NVIT Money Market | | 0.55 | % | PIMCO VIT Total Return | | 3.22 | % | PIMCO VIT High-Yield Bond | | 5.93 | % | Fidelity VIP Balanced-Service Class | | 18.76 | % | Vanguard VIF Diversified Value | | 22.16 | % | Vanguard VIF Equity Index | | 26.23 | % | T. Rowe Price Blue Chip Growth | | 43.75 | % | Franklin VIPT Small Cap Value Securities | | 11.43 | % | Vanguard VIF Small Company Growth | | 25.97 | % | Vanguard VIF International | | 45.24 | % |
| | (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's retirement. Distributions are paid in a lump sum or in quarterly installments, depending on the participant's election at the time of deferral. However, if a participant'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 3, 2018, the end of fiscal 2018.
Cash compensation. Pursuant to the terms of our severance plan, and subject to entering into a separation agreement with us, our NEOs are eligible for: severance pay equal to two years of base salary; a payment equal to 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 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's employment agreement entitles him to participate in the Company'sParticipants 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’s retirement. Distributions are paid in a lump sum or in quarterly installments, depending on the participant’s election at the time of deferral. However, if a participant’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 2, 2019, the end of fiscal 2019, for each NEO with the exception of Ms. Ballard. Ms. Ballard’s employment with us ended in March 2019; she did not receive any severance payments in connection with her departure and all of her then-unvested equity awards were forfeited. Cash compensation. Pursuant to the terms of our severance plan, and subject to entering into a separation agreement with us, our NEOs are 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 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’s employment agreement entitles him to participate in the Company’s severance plan, as detailed above, but also provides that he is eligible for the same severance pay if he were to be involuntarily terminated without Cause or were to voluntarily terminate his 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, Mr. Joly is eligible for enhanced severance equal to (a) two times the sum of base salary plus target bonus and (b) a pro-rata annual bonus payment, dependent on actual performance under the Company’s STI plan for the fiscal year in which the termination occurs. TABLE OF CONTENTS The following table provides, for the specified NEOs, as of the end of fiscal 2019, the potential severance amount they are eligible for under the scenarios discussed above. Name | Voluntary Termination
for Good Reason | Involuntary Termination
without Cause | Involuntary Termination
— under Severance Plan(1) | Termination following
Change-of-Control(2) | Mr. Joly | $ | 2,611,228 | | $ | 2,611,228 | | $ | 2,611,228 | | $ | 11,951,578 | | Ms. Barry | | — | | | — | | | 1,777,839 | | | — | | Mr. Mohan | | — | | | — | | | 1,877,295 | | | — | | Mr. Nelsen(3) | | — | | | — | | | 1,468,161 | | | — | | Ms. Scarlett | | — | | | — | | | 1,702,246 | | | — | |
| (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). Since the applicability of the Severance Plan is more narrow than is implied by the column heading “Involuntary Termination without Cause”, the severance payments the NEOs are eligible for under those limited circumstances are detailed separately in this column. |
| (2) | Specifically, involuntary termination without Cause or voluntary termination for Good Reason on or within 12 months following (or in anticipation of) a change-of-control,change-of-control. |
| (3) | On April 12, 2019, Mr. Joly is eligible for enhancedNelsen stepped down from his role as General Counsel and Secretary and transitioned into an advisory capacity with the Company. The amount reported here reflects the severance equalpayment Mr. Nelsen would have been entitled to (a) two times the sum of base salary plus target bonus and (b) a pro-rata annual bonus payment, dependent on actual performance under the Company's STI plan for the fiscal year in which the termination occurs.
The following table provides, for each NEO, as of the end of fiscal 2018, the potential severance amount they are2019. When Mr. Nelsen’s advisory role terminates on September 1, 2019, he will be eligible for under the scenarios discussed above.
| | | | | | | | | | | | | | | | | | | Name | | Voluntary Termination for Good Reason | | Involuntary Termination without Cause | | Involuntary Termination — under Severance Plan(1) | | Termination following Change-of-Control(2) | | Mr. Joly | | $ | 2,608,825 |
| | $ | 2,608,825 |
| | $ | 2,608,825 |
| | $ | 12,311,809 |
| | Ms. Barry | | — |
| | — |
| | 1,575,369 |
| | — |
| | Ms. Ballard | | — |
| | — |
| | 1,756,211 |
| | — |
| | Mr. Mohan | | — |
| | — |
| | 1,773,909 |
| | — |
| | Mr. Nelsen | | — |
| | — |
| | 1,464,566 |
| | — |
|
| | (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). Since the applicability of the Severance Plan is more narrow than is implied by the column heading "Involuntary Termination without Cause", the severance payments the NEOs are eligible for under those limited circumstances are detailed separately in this column.a similar separation payment which will be calculated using Mr. Nelsen’s then-current salary and benefits elections. |
| | (2) | Specifically, involuntary termination without Cause or voluntary termination for Good Reason on or within 12 months following (or in anticipation of) a change-of-control. |
Under our STI plan, which is discussed in more detail in the Compensation Discussion and Analysis – Executive Compensation Elements – Short-Term IncentiveUnder our STI plan, which is discussed in more detail in the 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 2019, all of our NEOs were employed with us through the end of fiscal 2019, which was the end of the fiscal 2019 STI plan. Each of their fiscal 2019 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 these various treatments under each possible scenario for stock options granted to our NEOs under 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 | 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.
Mr. Joly’s Sign-On Stock 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’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. |
TABLE OF CONTENTS Event | Effect on Vested Stock Options(1) | Effect on Unvested Stock
Options | Involuntary termination without Cause | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Mr. Joly’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’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. | Continue to vest according to their normal vesting terms. |
| (1) | Stock options may not be exercised after their expiration dates under any circumstance. |
| (2) | Good Reason is usually deemed to exist if the Company makes a material adverse change to the NEO’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. |
The table below provides, for the specified NEOs, as of the end of fiscal 2019, the value of their unvested, in-the-money stock options (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 February 1, 2019, the last business day in fiscal 2019. Name | Death or Disability | Termination following
Change-of-Control(1) | Mr. Joly | $ | 3,585,540 | | $ | 3,585,540 | | Ms. Barry | | — | | | — | | Mr. Mohan | | — | | | — | | Mr. Nelsen | | — | | | — | | Ms. Scarlett | | 65,104 | | | 65,104 | |
| (1) | Specifically, termination on or within 12 months of a change-of-control. 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. |
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. The table below provides, for the specified NEOs, as of the end of fiscal 2019, 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 February 1, 2019, the last business day in fiscal 2019. TABLE OF CONTENTS Name | Death or Disability | Mr. Joly | $ | 7,872,752 | | Ms. Barry | | 2,738,209 | | Mr. Mohan | | 3,845,396 | | Mr. Nelsen | | 1,981,724 | | Ms. Scarlett | | 1,166,988 | |
Performance share awards. The following chart illustrates the treatment of outstanding performance share awards under various scenarios pursuant to our award agreements. Event | Effect on Unearned Shares | -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 Cause
-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 | -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 (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’s continued employment through the end of the performance period | -Termination following a change-of-control due to: death or disability, 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 2019, 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 February 1, 2019, the last business day in fiscal 2019, and assume the same vesting percentage (50% or 150%) as reflected in the Outstanding Equity Awards at Fiscal Year End section. Name | Death or Disability | Involuntary Termination
without Cause | Change-of-Control(1) | Mr. Joly | $ | 23,011,148 | | $ | 23,011,148 | | $ | 30,359,466 | | Ms. Barry | | 4,273,424 | | | 4,273,424 | | | 5,774,439 | | Mr. Mohan | | 6,805,031 | | | 6,805,031 | | | 8,839,173 | | Mr. Nelsen | | 3,661,613 | | | 3,661,613 | | | 4,705,987 | | Ms. Scarlett | | 1,264,876 | | | 1,264,876 | | | 1,842,624 | |
| (1) | Reflects value realizable upon a change-of-control event, but assumes that the NEO will stay with the Company 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 2018, all of our NEOs were employed with us through the end of fiscal 2018, which was the end of the fiscal 2018 STI plan. Each of their fiscal 2018 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 these various treatments under each possible scenario for stock options granted to our NEOs under 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 | | 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.
Mr. Joly's Sign-On Stock 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'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. | Involuntary termination without
Cause
| | Stock options granted under our LTI program are exercisable for a 60-day period following the termination date.
Mr. Joly'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'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. | | Continue to vest according to their normal vesting terms. |
| | (1) | Stock options may not be exercised after their expiration dates under any circumstance. |
| | (2) | Good Reason is usually deemed to exist if the Company makes a material adverse change to the NEO'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.
|
The table below provides, for each NEO, as of the end of fiscal 2018, the value of their unvested, in-the-money stock options (as detailed in the Outstanding Equity Awards at Fiscal Year End section), under the situations discussed above, with the exception of qualified retirement, which none of our NEOs are currently eligible for. All values below were calculated using the closing price of our common stock as quoted on the NYSE on February 2, 2018, the last business day in fiscal 2018.
| | | | | | | | | | | Name | | Death or Disability | | Termination following Change-of-Control(1) | | Mr. Joly | | $ | 12,127,333 |
| | $ | 12,127,333 |
| | Ms. Barry | | 502,315 |
| | 502,315 |
| | Ms. Ballard | | 1,070,032 |
| | 1,070,032 |
| | Mr. Mohan | | 535,016 |
| | 535,016 |
| | Mr. Nelsen | | 441,384 |
| | 441,384 |
|
| | (1) | Specifically, termination on or within 12 months of a change-of-control. 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. |
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.
The table below provides, for each NEO, as of the end of fiscal 2018, 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, with the exception of qualified retirement, which none of our NEOs are currently eligible for. All values below were calculated using the closing price of our common stock as quoted on the NYSE on February 2, 2018, the last business day in fiscal 2018.
| | | | | | | Name | | Death or Disability | | Mr. Joly | | $ | 11,987,767 |
| | Ms. Barry | | 3,618,707 |
| | Ms. Ballard | | 4,916,344 |
| | Mr. Mohan | | 5,327,470 |
| | Mr. Nelsen | | 3,024,494 |
|
Performance share awards. The following chart illustrates the treatment of outstanding performance share awards under various scenarios pursuant to our award agreements.
| | | | Event | | Effect on Unearned Shares | -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 Cause
-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
| -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 (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's continued employment through the end of the performance period
| -Termination following a change-of-control due to: death or disability, 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 each NEO, as of the end of fiscal 2018, 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, with the exception of qualified retirement which none of our NEOs are currently eligible for. All values below were calculated using the closing price of our common stock as quoted on the NYSE on February 2, 2018, the last business day in fiscal 2018, and assume a vesting percentage of 150%, which is the estimated vesting percentage for each outstanding performance share award as of the end of fiscal 2018.
award. |
Restrictive Covenants. As further described in the Compensation Discussion and Analysis – Executive Compensation Elements – Other Compensation – Clawback and Restrictive Covenant Provisions section, our executive officer separation agreements and LTI award agreements generally include confidentiality, non-compete, and non-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 later of termination of employment for any reason, or the last scheduled award vesting date. | | | | | | | | | | | | | | | Name | | Death or Disability | | Involuntary Termination without Cause | | Change-of-Control(1) | | Mr. Joly | | $ | 27,819,377 |
| | $ | 27,819,377 |
| | $ | 43,325,532 |
| | Ms. Barry | | 3,970,953 |
| | 3,970,953 |
| | 6,976,889 |
| | Ms. Ballard | | 6,759,245 |
| | 6,759,245 |
| | 10,610,343 |
| | Mr. Mohan | | 6,231,171 |
| | 6,231,171 |
| | 10,665,803 |
| | Mr. Nelsen | | 3,856,350 |
| | 3,856,350 |
| | 6,292,665 |
|
| | (1) | Reflects value realizable upon a change-of-control event, but assumes that the NEO will stay with the Company through the end of the performance period of each outstanding performance share award. |
Restrictive Covenants. As further described in the Compensation Discussion and Analysis – Executive Compensation Elements – Other Compensation – Clawback and Restrictive Covenant Provisions section, our executive officer separation agreements and LTI award agreements generally include confidentiality, non-compete, and non-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 later 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 later of termination of employment for any reason, or the last scheduled award vesting date.
| | | | | | | 74 | | 2019 Proxy Statement |
TABLE OF CONTENTS 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 later of termination of employment for any reason, or the last scheduled award vesting date. Upon violation of a restrictive covenant, unexercised options and unvested shares related to the respective award agreement under which they were issued may 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. Employment agreements. In connection with the CEO succession described above, we entered into an employment with Ms. Barry and a new employment agreement with Mr. Joly. Pursuant to the terms of the employment agreement with Ms. Barry, Ms. Barry’s annual base salary will increase to $1.1 million and her annual short-term incentive award target will increase to 175% of base salary for the portion of the year she holds the position of CEO. At the time of the Meeting, she will also receive a true-up equity award with a target value of $5.475 million. The true-up award will be 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. Pursuant to the agreement with Ms. Barry, she is entitled to participate in the Company’s severance plan and is eligible for the same severance pay 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 a change-of-control, Ms. Barry is eligible for enhanced severance equal to (a) two times the sum of base salary plus target bonus and (b) a pro-rata annual bonus payment, dependent on actual performance under the Company’s short-term incentive plan for the fiscal year in which the termination occurs. The initial term of Ms. Barry’s employment agreement is three years from the Meeting, and the term will automatically renew for successive 12-month periods unless either the Company or Ms. Barry gives at least 60 days advance notice of non-renewal. Pursuant to the employment agreement with Mr. Joly, Mr. Joly’s annual base salary will decrease to $650,000 and his annual short-term incentive award target will decrease to 100% of base salary for the portion of the year he holds the position of Executive Chairman. He will continue to participate in all benefit programs available to the Company’s senior executives. Under the agreement, the Company has secured Mr. Joly’s services as Executive Chairman at least through March 31, 2020. At or prior to March 31, 2020, the Board and Mr. Joly will discuss how long to extend his services as Executive Chairman. 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’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 2018, the Compensation Committee and Board reviewed and approved the fiscal 2019 compensation for non-management directors, including the value and terms of the equity compensation component, as described in more detail below. Cash Compensation The fiscal 2019 cash compensation for our non-management directors consisted of the following annual retainers: | AnnualAmount | Annual retainer | $ | 90,000 | | 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 | | 15,000 | | Annual committee chair retainer - Finance and unvested shares related to the respective award agreement under which they were issued may 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.Investment Policy | | 10,000 | |
| | 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'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 with2019 Proxy Statement
| 75 | | |
TABLE OF CONTENTS 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. Equity Compensation On June 11, 2018, the Compensation Committee approved an annual equity award for each 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 2,649 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 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. As such, the Compensation Committee approved prorated equity awards for new directors, Ms. Kent (1,843 restricted stock units) and Mr. Woods (1,761 restricted stock units) in November, 2018, and January, 2019, respectively. Director Compensation Table The following table summarizes the compensation earned during fiscal 2019 by our non-management directors: Name(1) | Fees Earned or
Paid In Cash | Stock
Awards(2) | Option
Awards(3) | All Other
Compensation (4) | Total | Lisa M. Caputo | $ | 90,000 | | $ | 195,072 | | $ | — | | $ | — | | $ | 161,124 | | J. Patrick Doyle(5) | | 96,044 | | | 195,072 | | | — | | | — | | | 291,116 | | Russell P. Fradin(6) | | 210,000 | | | 195,072 | | | — | | | — | | | 405,072 | | Kathy J. Higgins Victor(7) | | 105,000 | | | 195,072 | | | — | | | — | | | 300,072 | | David W. Kenny | | 90,000 | | | 195,072 | | | — | | | — | | | 285,072 | | Cindy R. Kent(8) | | 31,648 | | | 122,430 | | | — | | | — | | | 154,078 | | Karen L. McLoughlin | | 90,000 | | | 195,072 | | | — | | | — | | | 285,072 | | Thomas L. Millner(9) | | 115,000 | | | 195,072 | | | — | | | — | | | 310,072 | | Claudia F. Munce | | 90,000 | | | 195,072 | | | — | | | — | | | 285,072 | | Richelle P. Parham(10) | | 77,637 | | | 195,072 | | | — | | | — | | | 272,709 | | Gérard R. Vittecoq(11) | | 35,440 | | | — | | | — | | | 35,684 | | | 71,124 | | Eugene A. Woods(12) | | 12,610 | | | 101,434 | | | — | | | — | | | 114,044 | |
| (1) | Mr. Joly, our only management 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 2017, the Compensation Committee and Board reviewed and approved theduring fiscal 20182019, did not receive any compensation for non-management directors, includinghis service as a director. |
| (2) | The amounts in this column reflect the aggregate grant date fair value and terms of the equity compensation component, as described in more detail below.
Cash Compensation
The fiscal 2018 cash compensation for our non-management directors consisted of the following annual retainers:
| | | | | | | Annual Amount |
| | Annual retainer | $ | 90,000 |
| | 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 | 15,000 |
| | Annual committee chair retainer - Finance and Investment Policy | 10,000 |
|
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.
Equity Compensation
On June 12, 2017, the Compensation Committee approved an annual equity award for each 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 3,414 restricted stock units. All restricted stock units granted to our non-management directors fully vest one year from the grant dateduring fiscal 2019, measured in accordance with ASC Topic 718. As of February 2, 2019, our non-management directors held outstanding stock units including both unvested restricted stock units and must be heldrestricted stock units that have vested, but that are subject to a holding requirement until the director leaves the Board. Director equityboard (“deferred units”) as follows: Ms. Caputo — 2,706 unvested units and 27,694 deferred units; Mr. Doyle — 2,706 unvested units and 18,316 deferred units; Mr. Fradin — 2,706 unvested units and 27,694 deferred units; Ms. Higgins Victor — 2,706 unvested units and 27,694 deferred units; Mr. Kenny — 2,706 unvested units and 23,671 deferred units; Ms. Kent — 1,859 unvested units and 0 deferred units; Ms. McLoughlin — 2,706 unvested units and 13,534 deferred units; Mr. Millner — 2,706 unvested units and 22,158 deferred units; Ms. Munce — 2,706 unvested units and 11,311 deferred units; Ms. Parham — 2,706 unvested units and 0 deferred units; and Mr. Woods — 1,761 unvested units and 0 deferred units.
|
| (3) | We did not grant stock option awards are prorated through a director’s termination date if a director leavesto our non-management directors in fiscal 2019. As of February 2, 2019, our non-management directors held outstanding stock options as follows: Ms. Caputo — 12,500 stock options; Mr. Doyle — 0 stock options; Mr. Fradin — 0 stock options; Ms. Higgins Victor — 10,000 stock options; Mr. Kenny — 0 stock options; Ms. Kent — 0 stock options; Ms. McLoughlin — 0 stock options; Mr. Millner — 0 stock options; Ms. Munce — 0 stock options; Ms. Parham — 0 stock options; and Mr. Woods — 0 stock options. |
| (4) | Pursuant to the Board beforeterms of the restricted stock units have vested, unlessgranted to our non-management directors on June 19, 2013, directors are entitled to an accrual of dividend equivalents from the director is terminated for Cause, in which case all unvestedvesting date (June 19, 2014) through the date the restricted stock units are forfeited.issued to the director as shares (upon departure from the Board). Dividend equivalent accruals are settled in cash at the time the shares are delivered to the departing director. The amount in this column reflects the dividend equivalent payment to Mr. Vittecoq upon his departure. |
| (5) | Mr. Doyle was appointed chair of the Finance and Investment Policy Committee on June 12, 2018. |
| (6) | Mr. Fradin is our Lead Independent Director. He is also chair of the Compensation Committee. |
| (7) | Ms. Higgins Victor is chair of the Nominating Committee. |
| (8) | Ms. Kent was appointed to the Board on September 28, 2018. |
| (9) | Mr. Millner is chair of the Audit Committee. |
TABLE OF CONTENTS | (10) | Ms. Parham was appointed to the Board on March 16, 2018. |
| (11) | Mr. Vittecoq’s Board service ended June 12, 2018. |
| (12) | Mr. Woods was appointed to the Board on December 14, 2018. |
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. Historically, we have expected that, until the ownership target is met, directors would retain 50 percent of their granted equity (net of taxes). In further support of director stock ownership, we began in fiscal 2014 granting director equity subject to a holding requirement for the duration of a director’s service on the Board. In fiscal 2019, 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. Deferred Compensation Plan Each calendar year, we offer our directors the opportunity to defer up to 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’ and officers’ indemnity insurance policy. CEO Pay Ratio 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 Mr. Joly, our Chairman and CEO. 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. For fiscal 2019, our last completed fiscal year, Mr. Joly had annual total compensation of $17,382,486 as reflected in the Compensation of Executive Officers — Summary Compensation Table section of this proxy statement. Our median employee’s annual total compensation for fiscal 2019 was $28,500. As a result, we estimate that Mr. Joly’s annual total compensation was approximately 605 times that of our median employee. In determining the median employee: We prepared a list of all Best Buy employees as of November 1, 2018. As of November 1, 2018, we had approximately 127,580 employees, including 111,830 U.S. employees, and 15,750 non-U.S. employees. In identifying our median employee, we included our approximately 13,290 Canadian employees, but, in accordance with SEC rules, we excluded our employees in China and Mexico where we have about 175 and 2,290 employees respectively, representing approximately 1.9 percent in the aggregate of our worldwide workforce. After excluding employees in these countries, as of November 1, 2018, we had 125,114 employees. Additionally, these numbers exclude approximately 1,200 GreatCall employees. We acquired the GreatCall business on October 1, 2018. 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. Director Compensation TableTABLE OF CONTENTS OTHER BUSINESS 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 2020 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 2, 2020, at our principal executive office, addressed as follows: Mr. Todd G. Hartman
General Counsel, Chief Risk & Compliance Officer and Secretary
Best Buy Co., Inc.
7601 Penn Avenue South
Richfield, Minnesota 55423 In accordance with our By-laws, any shareholder proposal, including any director nominations, received and intended to be presented for consideration at our 2020 Regular Meeting of Shareholders, though not included in our proxy statement for that meeting, must be received by our Secretary at the address set forth above no more than 150 days and no less than 120 days before the anniversary of the prior year’s regular meeting of shareholders. Accordingly, such proposals will be considered untimely if received before January 13, 2020, or after February 12, 2020. 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 
| May 1, 2019 | Todd G. Hartman
Secretary |
| The following table summarizes
| | | | | | 78 | | 2019 Proxy Statement |
TABLE OF CONTENTS Reconciliation of Non-GAAP Financial Measures The following table reconciles operating income, effective tax rate and diluted earnings per share from continuing operations (GAAP financial measures) for the periods presented to non-GAAP operating income, non-GAAP effective tax rate and non-GAAP diluted earnings per share from continuing operations (non-GAAP financial measures) for the periods presented ($ in millions, except per share amounts): | Fiscal Year | | 2019 | 2018 | 2017(1) | Operating income | $ | 1,900 | | $ | 1,843 | | $ | 1,854 | | Restructuring charges(2) | | 46 | | | 10 | | | 39 | | Intangible asset amortization(3) | | 22 | | | — | | | — | | Acquisition-related transaction costs(3) | | 13 | | | — | | | — | | Tax reform-related item - employee bonus(4) | | 7 | | | 80 | | | — | | Tax reform-related item - charitable contribution(4) | | — | | | 20 | | | — | | Net CRT/LCD settlements(5) | | — | | | — | | | (161 | ) | Other Canada brand consolidation charges - SG&A(6) | | — | | | — | | | 1 | | Non-GAAP operating income | $ | 1,988 | | $ | 1,953 | | $ | 1,733 | | | | | | | | | | | | Diluted earnings per share from continuing operations | $ | 5.20 | | $ | 3.26 | | $ | 3.74 | | Restructuring charges(2) | | 0.16 | | | 0.03 | | | 0.12 | | Intangible asset amortization(3) | | 0.08 | | | — | | | — | | Acquisition-related transaction costs(3) | | 0.05 | | | — | | | — | | Tax reform - repatriation tax(4) | | (0.07 | ) | | 0.68 | | | — | | Tax reform - deferred tax rate change(4) | | (0.02 | ) | | 0.24 | | | — | | Tax reform-related item - employee bonus(4) | | 0.02 | | | 0.26 | | | — | | Tax reform-related item - charitable contribution(4) | | — | | | 0.07 | | | — | | Net CRT/LCD settlements(5) | | — | | | — | | | (0.50 | ) | Other Canada brand consolidation charges - SG&A(6) | | — | | | — | | | 0.01 | | (Gain) loss on sale of investments, net(7) | | (0.04 | ) | | 0.02 | | | (0.01 | ) | Income tax impact of non-GAAP adjustments(8) | | (0.06 | ) | | (0.14 | ) | | 0.15 | | Non-GAAP diluted earnings per share from continuing operations | $ | 5.32 | | $ | 4.42 | | $ | 3.51 | |
| (1) | Beginning in the compensation earned duringfirst quarter of fiscal 2018, bywe no longer exclude non-restructuring property and equipment impairment charges from our non-management directors:
| | | | | | | | | | | | | | | | | | Name(1) | | Fees Earned or Paid In Cash |
| | Stock Awards(2) |
| | Option Awards(3) |
| | Total |
| | Lisa M. Caputo | | $ | 90,000 |
| | $ | 190,467 |
| | $ | — |
| | $ | 280,467 |
| | J. Patrick Doyle | | 90,000 |
| | 190,467 |
| | — |
| | 280,467 |
| Russell P. Fradin(4) | | 210,000 |
| | 190,467 |
| | — |
| | 400,467 |
| Kathy J. Higgins Victor(5) | | 105,000 |
| | 190,467 |
| | — |
| | 295,467 |
| | David W. Kenny | | 90,000 |
| | 190,467 |
| | — |
| | 280,467 |
| | Karen L. McLoughlin | | 90,000 |
| | 190,467 |
| | — |
| | 280,467 |
| Thomas L. Millner(6) | | 115,000 |
| | 190,467 |
| | — |
| | 305,467 |
| | Claudia Munce | | 90,000 |
| | 190,467 |
| | — |
| | 280,467 |
| Gérard R. Vittecoq(7)* | | 100,000 |
| | 190,467 |
| | — |
| | 290,467 |
|
*Indicates a director who is not standing for re-election at the Meeting.
| | (1) | Mr. Joly, our only management director during fiscal 2018, did not receive any compensation for his service as a director. |
| | (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 2018, measured in accordance with ASC Topic 718. As of February 3, 2018, 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") as follows: Ms. Caputo — 3,414 unvested units and 24,280 deferred units; Mr. Doyle — 3,414 unvested units and 14,902 deferred units; Mr. Fradin — 3,414 unvested units and 24,280 deferred units; Ms. Higgins Victor — 3,414 unvested units and 24,280 deferred units; Mr. Kenny — 3,414 unvested units and 20,257 deferred units; Ms. McLoughlin — 3,414 unvested units and 10,120 deferred units; Mr. Millner — 3,414 unvested units and 18,744 deferred units; Ms. Munce — 3,414 unvested units and 7,897 deferred units; and Mr. Vittecoq — 3,414 unvested units and 24,280 deferred units. |
| | (3) | We did not grant stock option awards to our non-management directors in fiscal 2018. As of February 3, 2018, our non-management directors held outstanding stock options as follows: Ms. Caputo — 12,500 stock options; Mr. Doyle — 0 stock options; Mr. Fradin — 0 stock options; Ms. Higgins Victor — 10,000 stock options; Mr. Kenny — 0 stock options; Ms. McLoughlin — 0 stock options; Mr. Millner — 0 stock options; Ms. Munce — 0 stock options; and Mr. Vittecoq — 21,250 stock options. |
| | (4) | Mr. Fradin is our Lead Independent Director. He is also chair of the Compensation Committee. |
| | (5) | Ms. Higgins Victor is chair of the Nominating Committee. |
| | (6) | Mr. Millner is chair of the Audit Committee. |
| | (7) | Mr. Vittecoq is chair of the Finance and Investment Policy Committee. |
Director Stock Ownership Guidelines
The Compensation Committee has established stock ownership guidelines requiringnon-GAAP financial measures. To ensure our non-management directors to own, indirectly or directly, 10,000 shares. Historically,financial results are comparable, we have expected that, untilrecast fiscal 2017 balances to conform to this presentation. Refer to the ownership target is met, directors would retain 50 percent of their granted equity (net of taxes). In further support of director stock ownership, we beganOverview section included in fiscal 2014 granting director equity subject to a holding requirement for the duration of a director's service on the Board. In fiscal 2018, 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 CompensationItem 7, Management’s Discussion and Analysis — Executive Compensation Elements — Other Compensation section.
Deferred Compensation Plan
Each calendar year, we offerof Financial Condition and Results of Operations, within our directors the opportunityAnnual Report on Form 10-K for fiscal 2019 for more information.
|
| (2) | Refer to defer up to 100 percent of their annual and committee chair retainers under the Deferred Compensation Plan which is describedNote 9, Restructuring Charges, in the section CompensationNotes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of Executive Officers — Nonqualified Deferred Compensation. No Company contributions or matching contributions are madeour Annual Report on Form 10-K for fiscal 2019 for additional information regarding the nature of these charges. For fiscal 2019, $47 million related to the U.S. and a 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' and officers' indemnity insurance policy.
CEO Pay Ratio
Pursuant$1 million related 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 Mr. Joly, our Chairman and CEO. 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.
Canada. For fiscal 2018, our last completed$9 million related to the U.S. and $1 million related to Canada. For fiscal year, Mr. Joly had annual total compensation2017, $31 million related to the U.S. and $8 million related to Canada. |
| (3) | Represents charges associated with the acquisition of $16,760,453 as reflectedGreatCall, including (1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and technology, and (2) acquisition-related transaction costs primarily comprised of professional fees. Refer to Note 2, Acquisition, in the CompensationNotes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of Executive Officers — Summary Compensation Table section of this proxy statement. Our median employee’s annual total compensationour Annual Report on Form 10-K for fiscal 2018 was $23,980. As a result, we estimate that Mr. Joly’s annual total compensation was approximately 699 times that of our median employee.2019 for additional information. |
In determining | (4) | Represents charges and subsequent adjustments resulting from the median employee:We prepared a list of all employees as of November 1, 2017. As of November 1, 2017, we had approximately 128,700 employees, including 113,760 U.S. employees, and 14,940 non-U.S. employees. In identifying our median employee, we included our approximately 12,950 Canadian employees, but, in accordance with SEC rules, we excluded our employees in China and Mexico where we have about 1,990 employees in aggregate, representing approximately 1.6 percentTax Act enacted into law in the aggregatefourth quarter of our worldwide workforce. After excluding employees in these countries, as of November 1, 2017 we had 126,710 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 providesfiscal 2018, including amounts associated with 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.
OTHER BUSINESS
Managementdeemed repatriation tax and the Board are not awarerevaluation of any other item of business that will be addressed atdeferred tax assets and liabilities, as well as tax reform-related items announced in response to future tax savings created by 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 2019 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 2, 2019, at our principal executive office, addressed as follows:
Mr. Keith J. Nelsen
General Counsel and Secretary
Best Buy Co., Inc.
7601 Penn Avenue South
Richfield, Minnesota 55423
In accordance with our By-laws, any shareholder proposal, including any director nominations, received and intended to be presented for consideration at our 2019 Regular Meeting of Shareholders, though not included in our proxy statement for that meeting, must be received by our Secretary at the address set forth above no more than 150 days and no less than 120 days before the anniversary of the prior year's regular meeting of shareholders. Accordingly, such proposals will be considered untimely if received before January 13, 2019, or after February 12, 2019. 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 ExchangeTax Act, of 1934 regarding discretionary proxy voting authority with respect to shareholder business.
| | | | | | | | | By Order of the Board of Directors | | | | | | Keith J. Nelsen | May 2, 2018 | | Secretary |
BEST BUY CO., INC.
NON-GAAP RECONCILIATIONS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
The following information provides reconciliations of the most comparable financial measures from continuing operations calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”) to presented non-GAAP financial measures. The company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP measures. Generally, presented non-GAAP measures include adjustments for items such as restructuring charges, goodwill impairments and gains or losses on investments. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in the company's earnings releases, financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
The following tables reconcile operating income and diluted earnings per share ("EPS") for the periods presented for continuing operations (GAAP financial measures) to non-GAAP operating income and non-GAAP diluted EPS for continuing operations (non-GAAP financial measures) for the periods presented.
| | | | | | | | | | | | | | | | | | | | | | | | | | | FY131,2 | | FY142 | | FY152 | | FY162 | | FY172 | | FY18 | | Enterprise - Continuing Operations | | | | | | | | | | | | | Operating income as a % of revenue | 0.9 | % | | 2.8 | % | | 3.6 | % | | 3.5 | % | | 4.7 | % | | 4.4 | % | | Restructuring charges | 1.0 | % | | 0.4 | % | | — | % | | 0.5 | % | | 0.1 | % | | — | % | | Goodwill impairment | 1.5 | % | | — | % | | — | % | | — | % | | — | % | | — | % | Net CRT/LCD settlements3 | — | % | | (0.6 | )% | | — | % | | (0.2 | )% | | (0.4 | )% | | — | % | Tax reform-related item - employee bonus4 | — | % | | — | % | | — | % | | — | % | | — | % | | 0.2 | % | | Non-GAAP operating income as a % of revenue | 3.4 | % | | 2.7 | % | | 3.6 | % | | 3.8 | % | | 4.4 | % | | 4.6 | % | | | | | | | | | | | | | | | *Note - percentages may not food due to rounding | | | | | | | | | | | | | | | | | | | | | | | | | | | FY131,2 | | FY142 | | FY152 | | FY162 | | FY172 | | FY18 | | Enterprise - Continuing Operations | | | | | | | | | | | | | Diluted EPS | $ | (0.16 | ) | | $ | 2.00 |
| | $ | 3.53 |
| | $ | 2.30 |
| | $ | 3.74 |
| | $ | 3.26 |
| | Restructuring charges | 1.24 |
| | 0.43 |
| | 0.01 |
| | 0.58 |
| | 0.12 |
| | 0.03 |
| | Goodwill impairment | 1.80 |
| | — |
| | — |
| | — |
| | — |
| | — |
| Net CRT/LCD settlements3 | — |
| | (0.66 | ) | | — |
| | (0.22 | ) | | (0.50 | ) | | — |
| | (Gain) loss on investments, net | — |
| | (0.06 | ) | | (0.03 | ) | | 0.01 |
| | (0.01 | ) | | 0.02 |
| Best Buy Europe sale5 | — |
| | 0.05 |
| | — |
| | — |
| | — |
| | — |
| Europe legal entity reorganization6 | — |
| | — |
| | (1.00 | ) | | — |
| | — |
| | — |
| Other Canada brand consolidation charges - SG&A7 | — |
| | — |
| | — |
| | 0.02 |
| | 0.01 |
| | — |
| | Restructuring charges - COGS | — |
| | — |
| | — |
| | 0.01 |
| | — |
| | — |
| Tax reform-related item - employee bonus4 | — |
| | — |
| | — |
| | — |
| | — |
| | 0.26 |
| Tax reform-related item - charitable contribution4 | — |
| | — |
| | — |
| | — |
| | — |
| | 0.07 |
| Tax reform - repatriation tax4 | — |
| | — |
| | — |
| | — |
| | — |
| | 0.68 |
| Tax reform - deferred tax rate change4 | — |
| | — |
| | — |
| | — |
| | — |
| | 0.24 |
| Non-GAAP adjustments8 | (0.43 | ) | | 0.12 |
| | 0.01 |
| | (0.03 | ) | | 0.15 |
| | (0.14 | ) | | Non-GAAP diluted EPS | $ | 2.45 |
| | $ | 1.88 |
| | $ | 2.52 |
| | $ | 2.67 |
| | $ | 3.51 |
| | $ | 4.42 |
|
| | (1) | FY13 represents the recast 12-months ended February 2, 2013, which included 53 weeks. |
| | (2) | In Q1 FY18, the company stopped excluding non-restructuring property and equipment impairment charges from its non-GAAP financial measures. To ensure its financial results are comparable, the company has recast prior periods to reflect the previously excluded impairments now being included in non-GAAP SG&A. |
| | (3) | Represents cathode ray tube ("CRT") and LCD litigation settlements reached, net of related legal fees and costs. Settlements related to products purchased and sold in prior fiscal years. |
| | (4) | Represents charges resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”) enacted into law in Q4 FY18, including charges associated with a deemed repatriation tax and the revaluation of deferred tax assets and liabilities, as well as tax reform-related items the company 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. |
| | (5) | Represents the tax impact of the Best Buy Europe sale and resulting required tax allocation between continuing and discontinued operations. | (5) | Represents CRT and LCD litigation settlements reached related to the U.S., net of related legal fees and costs. The settlements related to products purchased and sold in prior fiscal years. |
| | (6) | Represents the acceleration of a non-cash tax benefit as a result of reorganizing certain European legal entities to simplify our overall structure. |
| | (7) | Represents charges related to the Canadian brand consolidation initiated in the Q1 FY16, | (6) | Represents charges related to the Canadian brand consolidation initiated in the first quarter of fiscal 2016, primarily due to retention bonuses and other store-related costs that were a direct result of the consolidation but did not qualify as restructuring charges. |
| (7) | Represents (gain) loss on sale of investments and investment impairments included in Investment income and other on our Consolidated Statements of Earnings. | (8) | Income tax impact of non-GAAP adjustments is 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 United States, Canada and Europe and as such, the income tax charge is calculated using the statutory tax rates of each country in effect during the period of the related non-GAAP adjustment. |
BEST BUY CO. | (8) | 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 rates for the U.S. (24.5%, INC.NON-GAAP RECONCILIATIONS
($ in millions, except per share amounts)
(Unaudited36.7% and subject to reclassification)
The following table includes a reconciliation38.0% for fiscal 2019, fiscal 2018 and fiscal 2017, respectively) and Canada (26.9%, 26.6% and 26.6% for fiscal 2019, fiscal 2018 and fiscal 2017, respectively), applied to the calculationnon-GAAP adjustments of return on total assets ("ROA") (GAAP financial measure), along with the calculation of non-GAAP return on invested capital (“ROIC”) for total operations, which includes both continuing and discontinued operations (non-GAAP financial measure) for the periods presented. The company defines non-GAAP ROIC as non-GAAP net operating profit after tax divided by average invested capital using the trailing four-quarter average. The company believes non-GAAP ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the use of capital and believes non-GAAP ROIC is an important component of shareholders' return over the long term. This method of determining non-GAAP ROIC may differ from other companies' methods and therefore may not be comparable to those used by other companies.each country.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Calculation of Return on Assets ("ROA") | | | February 2, 20131 | | February 1, 20141 | | January 31, 20151 | | January 30, 20161 | | January 28, 20171 | | February 3, 20181 | | Net earnings including noncontrolling interests | $ | (233 | ) | | $ | 523 |
| | $ | 1,235 |
| | $ | 897 |
| | $ | 1,228 |
| | $ | 1,000 |
| | Total assets | 16,551 |
| | 14,174 |
| | 14,819 |
| | 13,995 |
| | 13,638 |
| | 13,558 |
| | ROA | (1.4 | )% | | 3.7 | % | | 8.3 | % | | 6.4 | % | | 9.0 | % | | 7.4 | % | | | | Calculation of Non-GAAP Return on Invested Capital ("ROIC") | | | February 2, 20131 | | February 1, 20141 | | January 31, 20151 | | January 30, 20161 | | January 28, 20171 | | February 3, 20181 | | Net Operating Profit After Taxes (NOPAT) | | | | | | | | | | | | | Operating income - continuing operations | $ | 391 |
| | $ | 1,144 |
| | $ | 1,450 |
| | $ | 1,375 |
| | $ | 1,854 |
| | $ | 1,843 |
| | Operating income (loss) - discontinued operations | (236 | ) | | (210 | ) | | (19 | ) | | 90 |
| | 27 |
| | 1 |
| | Total operating income | 155 |
| | 934 |
| | 1,431 |
| | 1,465 |
| | 1,881 |
| | 1,844 |
| Add: Operating lease interest2 | 352 |
| | 310 |
| | 275 |
| | 240 |
| | 232 |
| | 235 |
| Add: Non-GAAP operating income adjustments3 | 1,288 |
| | 115 |
| | 23 |
| | 130 |
| | (147 | ) | | 110 |
| | Add: Investment income | 50 |
| | 53 |
| | 35 |
| | 15 |
| | 34 |
| | 49 |
| | Add: Net earnings (loss) attributable to noncontrolling interest | (16 | ) | | 9 |
| | (2 | ) | | — |
| | — |
| | — |
| Less: Income taxes4 | (686 | ) | | (531 | ) | | (660 | ) | | (697 | ) | | (750 | ) | | (810 | ) | | Non-GAAP NOPAT | $ | 1,143 |
| | $ | 890 |
| | $ | 1,102 |
| | $ | 1,153 |
| | $ | 1,250 |
| | $ | 1,428 |
| | | | | | | | | | | | | | | Average Invested Capital | | | | | | | | | | | | | Total assets | $ | 16,551 |
| | $ | 14,174 |
| | $ | 14,819 |
| | $ | 13,995 |
| | $ | 13,638 |
| | $ | 13,558 |
| Less: Excess cash5 | (554 | ) | | (1,564 | ) | | (2,922 | ) | | (3,068 | ) | | (2,995 | ) | | (2,969 | ) | Add: Capitalized operating lease obligations2 | 5,862 |
| | 5,173 |
| | 4,583 |
| | 3,995 |
| | 3,872 |
| | 3,914 |
| | Total liabilities | (12,485 | ) | | (10,453 | ) | | (10,188 | ) | | (9,365 | ) | | (9,210 | ) | | (9,406 | ) | Exclude: Debt6 | 2,140 |
| | 1,674 |
| | 1,635 |
| | 1,648 |
| | 1,373 |
| | 1,346 |
| | Less: Noncontrolling interest | (627 | ) | | (160 | ) | | (4 | ) | | — |
| | — |
| | — |
| | Average invested capital | $ | 10,887 |
| | $ | 8,844 |
| | $ | 7,923 |
| | $ | 7,205 |
| | $ | 6,678 |
| | $ | 6,443 |
| | | | | | | | | | | | | | | Non-GAAP ROIC | 10.5 | % | | 10.1 | % | | 13.9 | % | | 16.0 | % | | 18.7 | % | | 22.2 | % |
| | (1) | Income statement accounts represent the activity for the trailing 12-months ended as of each of the balance sheet dates. Balance sheet accounts represent the average account balances for the four-quarters ended as of each of the balance sheet dates. | | | | | | 2019 Proxy Statement | 79 | | |
| | (2) | Operating lease interest represents the add-back to operating income driven by the capitalization of operating lease obligations using the multiple of five times annual rent expense and represents 30% of annual rental expense. Similarly, the capitalized operating lease obligations represent annual rental expense times the multiple of five. This multiple is used for the retail sector by one of the nationally recognized credit rating agencies that rates the company’s credit worthiness, and the company considers it to be an appropriate multiple for its lease portfolio. Prior to Q1 FY17, the company used an add-back multiple of 50% and a capitalized lease multiple of eight times annual rent expense; however, due to changes in the average remaining lease life of the company’s operating leases, the company has lowered multiples. The prior period calculations have been updated to reflect the use of the changes. |
| | (3) | Includes continuing operations adjustments for tax reform-related items, restructuring charges in costs of goods sold and operating expenses, net CRT/LCD settlements, other Canada brand consolidation charges in SG&A, goodwill and tradename impairments, the Best Buy Europe transaction costs and a discontinued operations adjustment for a gain on a property sale. Beginning in Q1 FY18, the company stopped excluding non-restructuring property and equipment impairment charges from its non-GAAP financial measures. To ensure its financial results are comparable, the company has recast prior periods to reflect the previously excluded impairments now being included in non-GAAP SG&A. |
| | (4) | Income taxes are calculated using a blended statutory rate at the Enterprise level based on statutory rates from the countries in which the company does business. |
| | (5) | Cash and cash equivalents and short-term investments are capped at the greater of 1% of revenue or actual amounts on hand. The cash and cash equivalents and short-term investments in excess of the cap are subtracted from the company’s calculation of average invested capital to show their exclusion from total assets. |
| | (6) | Debt includes short-term debt, current portion of long-term debt and long-term debt and is added back to the company’s calculation of average invested capital to show its exclusion from total liabilities. |
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