May seems to be the month of forced executive departures. First it was Yahoo CEO Scott Thompson that resigned forced by the academic error allegations and apparently cancer. Now, Richard Schulze steps down as Best Buy Chairman over another scandal.
Unlike Yahoo’s Scott Thompson, Richard Schulze got involved in a much bigger trouble. This Monday, Best Buy announced that Richard Schulze, Chairman and founder, stepped down as CEO after violating a company policy. An investigation ordered by the board of directors found that former Chief Executive Officer Brian Dunn had “an extremely close personal relationship” with a Best Buy female employee. Richard Schulze was considered at blame for not informing the board.
The investigation noted that the relationship between Brain Dunn and the female employee was negatively impacting the workplace. The conclusions read: “The growing awareness and speculation surrounding the friendship created friction and disruption in the workplace and, according to her supervisor, impeded efforts to supervise the female employee”.
From the board’s point of view, Best Buy Chairman Richard Schulze shouldn’t have dealt with the allegations against Dun by himself. The board considered that by not informing and inappropriately revealing the employee that reported Dunn’s relationship, Richard Schulze created an opportunity for “serious risks of employee retaliation and company liability”.
“In December, when the conduct of our then-CEO was brought to my attention, I confronted him with the allegations (which he denied)”, said Richard Schulze. He also added that he informed Dunn “his conduct was totally unacceptable and contrary to Best Buy’s policies and everything I and the Company, stand for”. The end of his statement read that he understands and accepts the decision and findings of the investigation.
Richard Schulze’s resignation comes only two weeks later after Dunn made a similar announcement. The company said it was a mutual decision, and Dunn even received a $2.85 million severance payment , some $1.14 million in earned bonus and stock grants worth $2.54 million.
Although the recent Best Buy management shifts put the company at risk, analyst R.J. Hottovy believes “taking a clean slate and beginning with not only a new director, chairman but also with a new CEO is just what the company needed”.