Best Buy Founder Richard Schulze Steps Down as Chairman

Loss of Schulze is another blow to the beleaguered retailer
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The probe into "inappropriate conduct" by former CEO Brian Dunn, led to the announcement Monday that Best Buy's founder and its largest shareholder Richard Schulze will leave his post of as chairman next month at the company's annual meeting.

A company announcement noted that "as part of the investigation, it was determined that the Chairman of the Board of Directors acted inappropriately when he failed to bring the matter to the Audit Committee of the Board of Directors in December 2011, when the allegations were first raised with him."

The company also announced that on Saturday, May 12, the company's Board of Directors elected director Hatim Tyabji to succeed Richard Schulze as chairman of the company. Tyabji, who is currently chairman of the Audit Committee, has served as a director since 1998. He will become chairman at the conclusion of the annual meeting on June 21.

"When Mr. Schulze steps down as Chairman, he will become Founder and Chairman Emeritus, an honorary position," the company reported. He will continue to serve as a corporate director through the remainder of his term, which ends on June 2013.

The loss of two top executives in recent months is bad news both for the retailer, which is struggling with loses and intense competition from online outlets and for broadcasters, who might lose of a major advertisers if Best Buy is forced to close more stores or slips into bankruptcy.

Along with the news of Schulze's upcoming resignation, the company also released top line results of its internal investigation into former CEO Brian Dunn, who resigned in March shortly before it a company probe into his behavior became public.

In a release, the company noted that when the "Audit Committee was first informed of the allegations in mid-March 2012, it hired outside law firm WilmerHale to conduct an independent investigation."

Key findings of that probe included the conclusion that "the CEO violated Company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment" and that "the CEO's relationship with the female employee demonstrated extremely poor judgment and a lack of professionalism, but the inquiry revealed no misuse of Company resources."

In a statement responding to the investigation, which found that Schulze did not bring the matter to the Audit Committee when he first learned of the allegations, Schulze noted: "In December, when the conduct of our then-CEO was brought to my attention, I confronted him [Dunn] with the allegations (which he denied), told him his conduct was totally unacceptable and contrary to Best Buy's policies and everything I, and the Company, stand for."

Schulze also noted that "I understand and accept the findings of the Audit Committee."

In March, Best Buy reported a net loss of $1.7 billion and announced that it was working to cut some $800 million in costs by shutting unprofitable stores and shedding staff.

The Wall Street Journal reported that "Best Buy shares rose 29 cents, or 1.5%, to $19.57 Monday on the New York Stock Exchange after the announcement. The company's shares remain down about 40% over the last 12 months."

Along with the conclusions of the report into Dunn, the company also announced that it would pay Dunn a severance package valued at $6,639,311.

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