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Best Buy names CEO as former chairman seeks control

Hubert Joly is the new CEO at Best Buy.

Best Buy named former food service and hospitality executive Hubert Joly as president and CEO even as uncertainty lingers regarding a possible leveraged buyout engineered by former chairman and founder Richard Schulze.

Joly joins Best Buy after serving since 2008 as CEO of Minneapolis-based Carlson, a global hospitality and travel company known for such brands as Radisson hotels and TGI Friday’s restaurants. From 2003 to 2007, he led Carlson’s travel division.

In announcing Joly’s appointment, Best Buy touted the executive’s experience in turnaround situations. In the case of Carlson’s travel unit, Best Buy said Joly increased sales to $25 billion in 2007 from $8 billion in 2003 and positioned the company as a leading edge, technology empowered, professional services provider that delivered savings, service and security to corporate and government clients, both off-line and on-line. As CEO of Carlson, Best Buy said Joly crafted and led the implementation of a strategy called Ambition 2015 that was designed to strengthen the company’s 900 T.G.I. Friday’s restaurants and worldwide network of 1,000 hotels.

Prior to Carlson, Joly was with media company Vivendi from 1999 to 2001 and with EDS from 1996 to 1999. Much of his career, from 1983 to 1996, was spent with McKinsey & Company Inc., working in the firm’s Paris, New York and San Francisco offices. He is a graduate of École des Hautes Études Commerciales de Paris and of the Institut d'Etudes Politiques de Paris. He is expected to join Best Buy early next month after securing a visa.

“Hubert was an outstanding candidate for this position and I am confident he will be a great fit for Best Buy,” said Best Buy chairman Hatim Tyabji. “Hubert’s range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.”

Joly replaces interim CEO Mike Mikan who stepped in back in April to fill the void created when Best Buy dismissed former CEO Brian Dunn after it was determined he had an inappropriate relationship with a subordinate. After Joly joins the company, Mikan will remain on the board as serve as chairman of the audit committee.

 “I look forward to working with the company’s management team and employees to pursue what are exciting growth opportunities for Best Buy – both online and offline, through a combination of competitive prices, superior service, new growth engines and innovations, as we deliver to millions of customers the technology solutions that enable easy access to people, knowledge, ideas and fun,” Joly said in a statement. “Building on the company’s strengths and ongoing work, I believe Best Buy has the capacity to write an exciting new chapter in its history. I sincerely look forward to writing this chapter with the Best Buy team and putting in place the short term and medium term actions that will help ensure its success.”

His appointment comes as Best Buy’s future as a public or private company remains murky. Company founder, former chairman and Best Buy’s largest shareholder, Richard Schulze, has indicated he would like to take the company private, but over the weekend those plans seemed to unravel. In a statement, Best Buy said Schulze declined to participate in a due diligence arrangement that would have given him access to material non-public information so as to better evaluate a buyout.

In response, Schulze issued a statement indicating he was disappointed and surprised that the Best Buy board terminated discussions around a possible buyout.

“For the record, we engaged in good-faith negotiations with Best Buy’s board and its
advisors over the weekend and expected to conclude this matter before the company’s earnings announcement early this week,” Schulze said.

He said terms of the board’s proposal were completely unacceptable given urgent change is needed at Best Buy the company’s value is eroding every day change isn’t made.
Schulze said he was shocked by the company’s announcement that he had declined to participate in the due diligence arrangement.

“I am shocked by this course of action but as the largest shareholder of Best Buy, I remain hopeful that the board will engage in good faith discussions with us for the benefit of shareholders, employees and customers. Time is of the essence, and it is imperative that shareholders’ interests are not further jeopardized,” Schulze said in a statement.

 

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