DEF 14A 1 a2198535zdef14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

  Filed by the Registrant ý

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o

 

Preliminary Proxy Statement

 

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

ý

 

Definitive Proxy Statement

 

o

 

Definitive Additional Materials

 

o

 

Soliciting Material Pursuant to §240.14a-12

 

BEST BUY CO., INC.
 
(Name of Registrant as Specified In Its Charter)

 

    
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

GRAPHIC   BEST BUY CO., INC.
7601 Penn Avenue South
Richfield, Minnesota 55423
   


NOTICE OF 2010 REGULAR MEETING OF SHAREHOLDERS

Time:   9:30 a.m., Central Time, on Thursday, June 24, 2010

Place:

 

Best Buy Corporate Campus — Theater
7601 Penn Avenue South
Richfield, Minnesota 55423

Internet:

 

Attend the Regular Meeting of Shareholders online, including submitting questions, at www.proxyvote.com or www.virtualshareholdermeeting.com/bby.

Items of Business:

 

1.

 

To elect five Class 1 directors to serve on our Board of Directors for a term of two years.
    2.   To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending February 26, 2011.

 

 

3.

 

To transact such other business as may properly come before the meeting.

Record Date:

 

You may vote if you were a shareholder of record of Best Buy Co., Inc. as of the close of business on Tuesday, April 27, 2010.

Proxy Voting:

 

Your vote is important. You may vote via proxy:

 

 

 

 

1.

 

By visiting www.proxyvote.com on the Internet;

 

 

 

 

2.

 

By calling (within the U.S. or Canada) toll-free at 1-800-690-6903; or

 

 

 

 

3.

 

By signing and returning the enclosed proxy card.

Regardless of whether you expect to attend the meeting in person, please vote your shares in one of the three ways outlined above.

    By Order of the Board of Directors

 

 

GRAPHIC

Minneapolis, Minnesota

 

Elliot S. Kaplan
May 11, 2010   Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE REGULAR MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 24, 2010:

This Notice of 2010 Regular Meeting of Shareholders and Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended February 27, 2010, are available at www.proxyvote.com.

Help us make a difference by eliminating paper proxy mailings to your home or business. As permitted by rules adopted by the U.S. Securities and Exchange Commission, we are pleased to make our proxy materials available electronically via the Internet. We are furnishing proxy materials to our shareholders primarily via the Internet. On or about May 11, 2010, we mailed to our shareholders a Notice of Internet Availability containing instructions on how to access our proxy materials, including our proxy statement and our annual report. The Notice of Internet Availability also includes instructions to access your proxy card to vote via the Internet or by telephone. Other shareholders, in accordance with their prior requests, have received e-mail notification of how to access our proxy materials and vote via the Internet, or have been mailed paper copies of our proxy materials and proxy card.

Internet distribution of our proxy materials is designed to expedite receipt by our shareholders, lower the cost of the Regular Meeting of Shareholders and conserve precious natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability. If you have previously elected to receive our proxy materials electronically, you will continue to receive emails with instructions to access these materials via the Internet unless you elect otherwise.

 


ATTENDING THE REGULAR MEETING OF SHAREHOLDERS

Attending in person

    Doors open at 9:00 a.m. Central Time

    Meeting starts at 9:30 a.m. Central Time

    You do not need to attend the Regular Meeting of Shareholders to vote if you submitted your proxy in advance of the meeting

    Security measures may include bag search, bag scan, metal detector and hand-wand search

    The use of cameras and recording devices is prohibited


Attending and participating via the Internet

    Webcast starts at 9:30 a.m. Central Time

    Shareholders may vote and submit questions while attending the meeting via the Internet

    Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com

    You may directly link to the virtual shareholder forum and virtual shareholder meeting at www.virtualshareholdermeeting.com/bby

    Anyone can view the Regular Meeting of Shareholders live via the Internet at www.bby.com

    Webcast replay available until July 10, 2010


TABLE OF CONTENTS

GENERAL INFORMATION

  4
 

Background

  4
 

Voting Procedure

  4
 

Proxy Solicitation

  6
 

Additional Information

  7

CORPORATE GOVERNANCE AT BEST BUY

  8
 

Board Structure

  8
 

Board Composition

  9
 

Director Independence

  9
 

Board Leadership

  10
 

Executive Sessions of Independent Directors

  11
 

Board Meetings and Attendance

  11
 

Committees of the Board

  11
 

Board Risk Oversight

  13
 

Communications With the Board

  14

ITEM OF BUSINESS NO. 1 — ELECTION OF DIRECTORS

  15
 

General Information

  15
 

Director Qualification Standards

  15
 

Director Nomination Process

  15
 

Board Diversity

  16
 

Director Orientation and Continuing Education

  16
 

Voting Information

  16
 

Board Voting Recommendation

  16
 

Nominees and Directors

  17

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  22

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

  25

EXECUTIVE AND DIRECTOR COMPENSATION

  26
 

Compensation Discussion and Analysis

  26
   

Compensation Philosophy, Objectives and Process

  26
   

Compensation for Named Executive Officers

  32
   

Other Compensation Matters

  43
 

Compensation and Human Resources Committee Report on Executive Compensation

  48
 

Compensation Committee Interlocks and Insider Participation

  48
 

Compensation of Executive Officers

  49
   

Summary Compensation Table

  49
   

Grants of Plan-Based Awards

  52
   

Outstanding Equity Awards at Fiscal Year-End

  53
   

Options Exercised and Stock Vested

  55
   

Non-Qualified Deferred Compensation

  56
   

Potential Payments Upon Termination or Change-in-Control

  57
 

Director Compensation

  60

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

  63

AUDIT COMMITTEE REPORT

  66

ITEM OF BUSINESS NO. 2 — RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  68
 

Principal Accountant Fees and Services

  68
 

Board Voting Recommendation

  68

OTHER BUSINESS

  69

PROPOSALS FOR THE NEXT REGULAR MEETING

  69

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BEST BUY CO., INC.
7601 Penn Avenue South
Richfield, Minnesota 55423



PROXY STATEMENT



REGULAR MEETING OF SHAREHOLDERS — JUNE 24, 2010


GENERAL INFORMATION

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Best Buy Co., Inc. ("Best Buy," "we," "us," or "our") to be voted at our 2010 Regular Meeting of Shareholders (the "Meeting") to be held on Thursday, June 24, 2010, at 9:30 a.m., Central Time, at the Best Buy Corporate Campus — Theater, 7601 Penn Avenue South, Richfield, Minnesota, and on the Internet at www.proxyvote.com or www.virtualshareholdermeeting.com/bby, or at any postponement or adjournment of the Meeting. The proxy materials were either made available to you over the Internet or mailed to you beginning on or about May 11, 2010.


Background

What is the purpose of the Meeting?

At the Meeting, shareholders will vote on the items of business outlined in the Notice of 2010 Regular Meeting of Shareholders (the "Meeting Notice"), included as the cover page to this proxy statement. In addition, management will report on our business and respond to questions from shareholders.

Why did I receive a Notice of Internet Availability or why did I receive this proxy statement and a proxy card?

You received a Notice of Internet Availability or this proxy statement and a proxy card because you owned shares of Best Buy common stock as of April 27, 2010, the record date for the Meeting, and are entitled to vote on the items of business at the Meeting. This proxy statement describes the items of business that will be voted on at the Meeting and provides information on these items so that you can make an informed decision.

Who may vote?

In order to vote at the Meeting, you must be a shareholder of record of Best Buy as of April 27, 2010, which is the record date for the Meeting. If your shares are held in "street name" (that is, through a bank, broker or other nominee), you will receive instructions from the shareholder of record that you must follow in order for your shares to be voted as you choose.

When is the record date?

The Board has established April 27, 2010, as the record date for the Meeting.

How many shares of Best Buy common stock are outstanding?

As of the record date, there were 421,962,573 shares of Best Buy common stock outstanding. There are no other classes of capital stock outstanding.


Voting Procedure

On what items of business am I voting?

You are being asked to vote on the following items of business:

    The election of five Class 1 directors for a term of two years;

    The ratification of the appointment of Deloitte & Touche LLP as our independent registered public

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      accounting firm for the fiscal year ending February 26, 2011; and

    Such other business as may properly come before the Meeting.

How do I vote?

If you are a shareholder of record (that is, if your shares are owned in your name and not in "street name"), you may vote:

    Via the Internet at www.proxyvote.com;

    By telephone (within the U.S. or Canada) toll-free at 1-800-690-6903;

    By signing and returning the enclosed proxy card; or

    By attending the Meeting and voting in person.

If you wish to vote by telephone, you must do so before 11:59 p.m., Eastern Time, on Wednesday, June 23, 2010. After that time, telephone voting will not be permitted, and a shareholder wishing to vote, or revoke an earlier proxy, must submit a signed proxy card or vote in person. Shareholders can vote in person or via the Internet during the Meeting. Shareholders of record will be on a list held by the inspector of elections. "Street name" shareholders, also known as beneficial holders, must obtain a proxy from the institution that holds their shares, whether it is their brokerage firm, a bank or other shareholder of record, and present it to the inspector of elections with their ballot. Shareholders attending via the Internet will need to follow the instructions at www.proxyvote.com or www.virtualshareholdermeeting.com/bby in order to vote or submit questions at the Meeting. Voting in person or via the Internet by a shareholder will replace any previous votes submitted by proxy.

In accordance with the rules of the U.S. Securities and Exchange Commission ("SEC"), we are sending all shareholders who have not affirmatively opted to receive paper materials, all of their proxy materials via the Internet. However, you may opt to receive paper copies of proxy materials, at no cost to you, by following the instructions contained in the Notice of Internet Availability.

How are my voting instructions carried out?

When you vote via proxy, you appoint Richard M. Schulze and Elliot S. Kaplan (the "Proxy Agents") as your representatives at the Meeting. The Proxy Agents will vote your shares at the Meeting, or at any postponement or adjournment of the Meeting, as you have instructed them on the proxy card. If you return a properly executed proxy card without specific voting instructions, the Proxy Agents will vote your shares in accordance with the Board's recommendations. With proxy voting, your shares will be voted regardless of whether you attend the Meeting. Even if you plan to attend the Meeting, it is advisable to vote your shares via proxy in advance of the Meeting in case your plans change.

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, the Proxy Agents will vote the shares subject to your proxy at their discretion.

How many votes do I have?

You have one vote for each share you own, and you can vote those shares for each item of business to be addressed at the Meeting.

How many shares must be present to hold a valid Meeting?

For us to hold a valid Meeting, we must have a quorum, which means that a majority of the outstanding shares of our common stock that are entitled to vote are present at the Meeting. Your shares will be counted as present at the Meeting if you:

    Vote via the Internet or by telephone;

    Properly submit a proxy card (even if you do not provide voting instructions); or

    Attend the Meeting and vote in person.

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How many votes are required to approve an item of business?

Pursuant to our Amended and Restated Articles of Incorporation and our Amended and Restated By-laws, each item of business to be voted on by the shareholders requires the affirmative vote of the holders of a majority of the shares of Best Buy common stock present at a meeting and entitled to vote.

The rules of the New York Stock Exchange ("NYSE") allow brokerage firms to vote their clients' shares on routine matters if the clients do not provide voting instructions at least 10 days prior to the shareholder meeting. The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter under NYSE rules. The election of directors is not considered a routine matter under NYSE rules. The NYSE rules do not allow brokerage firms to vote their clients' shares on non-routine matters, including the election of directors, in the absence of affirmative voting instructions.

If your brokerage firm votes your shares on routine matters because you do not provide voting instructions, your shares will be counted for purposes of establishing a quorum to conduct business at the Meeting and in determining the number of shares voted for or against the routine matter. If your brokerage firm lacks discretionary voting power with respect to an item that is not a routine matter and you do not provide voting instructions (a "broker non-vote"), your shares will be counted for purposes of establishing a quorum to conduct business at the Meeting, but will not be counted in determining the number of shares voted for or against the non-routine matter. Abstentions are counted as present and entitled to vote for purposes of determining a quorum and will have the same effect as votes against a proposal.

What if I change my mind after I vote via proxy?

You may revoke your proxy at any time before your shares are voted by:

    Submitting a later-dated proxy prior to the Meeting (by mail, Internet or telephone);

    Voting in person at the Meeting; or

    Providing written notice to Best Buy's Secretary at our principal office.

Where can I find the voting results of the Meeting?

We will announce preliminary voting results at the Meeting. We plan to publish the final voting results in a Current Report on Form 8-K ("Form 8-K") filed within four business days of the Meeting. If final voting results are not available within the four business day timeframe, we plan to file a Form 8-K disclosing preliminary voting results within the required four business days, to be followed as soon as practicable by an amendment to the Form 8-K containing final voting results.


Proxy Solicitation

How are proxies solicited?

We will request that brokerage firms, banks, other custodians, nominees, fiduciaries and other representatives of shareholders forward the Notice of Internet Availability and, as applicable, the proxy materials themselves, to the beneficial owners of our common stock. We expect to solicit proxies primarily by Internet and mail, but our directors, officers, other employees and agents may also solicit proxies in person, by telephone, through electronic transmission and by facsimile transmission. Our directors and employees do not receive additional compensation for soliciting shareholder proxies.

Who will pay for the cost of soliciting proxies?

We pay all of the costs of preparing, printing and distributing proxy materials. We will reimburse brokerage firms, banks and other representatives of shareholders for reasonable expenses incurred as defined in the NYSE schedule of charges.

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How can multiple shareholders sharing the same address request to receive only one set of proxy materials and other investor communications?

If you opt to continue to receive paper copies of our proxy materials, you may elect to receive future proxy materials, as well as other investor communications, in a single package per address. This practice, known as "householding," is designed to reduce our paper use, printing and postage costs. To make the election, please indicate on your proxy card under "Householding Election" your consent to receive such communications in a single package per address. Once we receive your consent, we will send a single package per household until you revoke your consent by notifying our Investor Relations Department at 7601 Penn Avenue South, Richfield, MN 55423, or by telephone at (612) 291-6147. We will start sending you individual copies of proxy materials and other investor communications within 30 days of your revocation.

Can I receive the proxy materials electronically?

Yes. Shareholders who have not affirmatively opted to receive paper proxy materials through the mail will receive a Notice of Internet Availability and may access our proxy materials electronically via the Internet. Electronic delivery saves us the costs of printing and mailing these materials. We encourage our shareholders to access our proxy materials via the Internet because it reduces the expenses for, and environmental impact of, our shareholder meetings. In 2009, electronic delivery saved approximately 50 tons of paper that would otherwise have been consumed in the production of proxy materials. You may opt to receive paper copies of proxy materials, at no cost to you, by following the instructions we will provide in advance of the distribution of our 2010 proxy materials.

An electronic version of this proxy statement is also posted on our Web site at www.bby.com — select the "Investor Relations" link and then either the "SEC Filings" link or the "Corporate Governance" link.


Additional Information

Where can I find additional information about Best Buy?

Our reports on Forms 10-K, 10-Q and 8-K, and other publicly available information should be consulted for other important information about Best Buy. You can also find additional information about us on our Web site at www.bby.com.

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CORPORATE GOVERNANCE AT BEST BUY

Our Board is elected by our shareholders to oversee our business and affairs. In addition, the Board counsels, advises and oversees management in the long-term interests of our company and our shareholders regarding a broad range of subjects including:

    Selecting and evaluating the performance of our Chief Executive Officer ("CEO") and other senior executives;

    Planning for succession with respect to the position of CEO and monitoring management's succession planning for other senior executives;

    Reviewing and approving major financial, strategic and operating decisions and other significant actions;

    Overseeing the conduct of our business and the assessment of our business risks to evaluate whether our business is being properly managed; and

    Overseeing the processes for maintaining integrity with regard to our financial statements and other public disclosures, and compliance with law and ethical standards.

Members of the Board monitor and evaluate our business performance through regular communication with our CEO and other members of management, and by attending Board meetings and Board committee meetings.

The Board values effective corporate governance and adherence to high ethical standards. As such, the Board has adopted Corporate Governance Principles for our directors and our Code of Business Ethics, both of which are posted on our Web site at www.bby.com — select the "Investor Relations" link and then the "Corporate Governance" link.


Board Structure

Our Board is committed to having a sound governance structure that promotes the best interests of our shareholders. To that end, our Board has evaluated and actively continues to examine emerging corporate governance trends and best practices. Shareholder perspectives play an important role in that process. Some key points regarding our board governance are as follows:

    We believe that two-year terms allow our directors to have a longer-term orientation to our business and encourage long-term, strategic thinking. At the same time, this structure holds the directors accountable to our shareholders, as the entire Board is subject to re-election as early as 53 weeks from any regular meeting of shareholders. Moreover, we believe that two-year terms promote continuity and foster an appropriate "institutional memory" among directors. In January 2010, we implemented a director resignation policy which requires any director not receiving a majority of the vote cast in favor of his or her election to tender their resignation.

    Our Board is predominantly independent. Of our 15 directors, only three are Best Buy employees (including our Chairman of the Board, who is a founder of Best Buy and a major shareholder). Further, the Board has affirmatively determined that ten of our 15 directors are independent under SEC and NYSE corporate governance rules, as applicable. After the June Meeting, we anticipate that of our twelve remaining directors, only two will be Best Buy employees and nine of our twelve directors will be independent under SEC and NYSE corporate governance rules, as applicable.

    Our Board is very active and engaged. Our directors attended, on average, over 95% of fiscal 2010 Board and Board committee meetings.

We believe our Board structure serves the interests of our shareholders by balancing Board continuity and the promotion of long-term thinking with the need for director accountability.

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Board Composition

To ensure a diversity of perspectives, the Board seeks a balance of internal experience and external independent expertise. This combination of perspectives also helps to ensure that we sustain our corporate culture, which is a cornerstone of our business legacy and a key competitive advantage. In addition, the Board is diligently focused on the succession and development of our senior officers, as most recently exhibited during the June 2009 CEO transition with the internal promotion of Brian J. Dunn to the CEO position.

In accordance with these interests and the principles of effective corporate governance, in April 2009, the Board adopted a goal to have at least 75% of our directors be independent by June 2011. In addition, consistent with the Board's careful planning for the director skill sets required today and in the future, and in order to have an orderly succession and transition of directors, the Board determined that it is in the best interests of our company and shareholders that the incumbent non-independent directors complete the terms to which they have been elected.

The Board believes that the careful stewardship of our company and culture during a time of leadership transition merited a temporary increase in the total number of directors and the ratio of non-independent directors. Following the 2010 Regular Meeting of Shareholders, we anticipate that 75% of the Board will be considered independent, a full year ahead of our previously announced goal.


Director Independence

Pursuant to its Corporate Governance Principles, the Board has established independence standards consistent with the requirements of the SEC and NYSE corporate governance rules, as applicable. To be considered independent under the NYSE rules, the Board must affirmatively determine that a director or director nominee does not have a material relationship with Best Buy (directly, or as a partner, shareholder or officer of an organization that has a relationship with Best Buy). In addition, NYSE rules provide that no director or director nominee may be deemed independent if the director or director nominee

— has in the past three years:

    Received (or whose immediate family member has received as a result of service as an executive officer) more than $120,000 during any 12-month period in direct compensation from Best Buy, other than director and committee fees and certain pension payments and other deferred compensation;

    Been an employee of Best Buy;

    Had an immediate family member who was an executive officer of Best Buy;

    Worked on (or whose immediate family member has worked on) our audit as a partner or an employee of our internal auditors or independent registered public accounting firm; or

    Been (or whose immediate family member has been) employed as an executive officer of another company whose compensation committee at that time included a present executive officer of Best Buy; or

— is:

    A partner of our independent registered public accounting firm, or an employee of our independent registered public accounting firm personally working on our audit (or whose immediate family member is a partner of such firm or is employed by such firm to personally work on our audit); or

    An employee (or has an immediate family member who is an executive officer) of another company that makes payments to Best Buy, or receives payments from Best Buy, for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.

Under our director independence standards described above, the Board has determined that each continuing

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director, with the exception of Messrs. Dunn, Kaplan and Schulze, is independent. The Board based these determinations primarily on a review of the responses of the directors to questions regarding employment and compensation history, affiliations, and family and other relationships, and on discussions with our directors. The Board also reviewed our relationships with companies with which our directors are affiliated and determined that the relationships with affiliates of current directors Lisa M. Caputo, George L. Mikan III and Hatim A. Tyabji are not material and do not impair such directors' independence.

Ms. Caputo, a director since December 2009, is executive vice president, global marketing and corporate affairs at Citigroup, Inc. ("Citi"). Citi and/or its subsidiaries provide financial services to us. Citi is also a lender under our Revolving Credit Agreement ("Revolver"). We do not make direct payments to or receive direct loan proceeds from Citi under the Revolver, but Citi does receive interest payments through our lending agent from this relationship to the extent the agent has drawn down funds from Citi, as well as, fees for providing us access to funds through the Revolver. We entered into the Revolver and all other existing relationships with Citi prior to Ms. Caputo's consideration as a director and Ms. Caputo did not play any role in the negotiation of the Revolver.

Mr. Mikan, a director since April 2008, is executive vice president and chief financial officer of UnitedHealth Group Incorporated ("UnitedHealth"). Since 2003, we have had a health benefit services agreement with UnitedHealth. The amounts we have paid to UnitedHealth, most of which are for employee medical and pharmaceutical costs administered on our behalf by UnitedHealth, were an insignificant portion of the annual consolidated revenue of Best Buy and UnitedHealth for each of the past three fiscal years. In addition, Mr. Mikan did not influence or participate in negotiating or executing our agreement with UnitedHealth.

Mr. Tyabji, a director since 1998, has served as chairman of the board of directors of Jasper Wireless, Inc. ("Jasper") since November 2008. Through a services agreement with AT&T, we purchase wireless data connectivity services from Jasper for certain exclusive brand devices. We paid $1.1 million to Jasper in fiscal 2010, which represented a material portion of its recognized revenue for the year. Mr. Tyabji is not an employee of Jasper, nor did he influence or participate in negotiating our agreement for the purchase of Jasper services.


Board Leadership

We separate the roles of CEO and Chairman of the Board in recognition of the differences between the two roles. Our CEO is responsible for setting our strategic priorities, in collaboration with the Board, and focuses on the development and execution of our strategies. He is also responsible for our ongoing leadership and performance. The Chairman of the Board provides guidance to the CEO, and sets the agenda for Board meetings and presides over meetings of the full Board. He focuses on Board oversight responsibilities, strategic planning and mentoring company officers. Our Chairman also periodically represents our company at public functions and actively engages with our employees at designated company functions.

Our Board has implemented the position of Lead Independent Director to preside at all executive sessions of independent directors, as defined under the rules of the NYSE. The Nominating Committee nominates an independent director to serve as the Lead Independent Director, the selection of whom is subject to ratification by the vote of a majority of the independent directors of the Board. In addition to presiding over executive sessions of the independent directors, the Lead Independent Director is responsible for calling meetings of the independent directors as appropriate, serving as a stakeholder liaison on behalf of the independent directors and performing such other duties as may be requested from time to time by the Board, the independent directors, the CEO or the Chairman of the Board.

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Executive Sessions of Independent Directors

In order to promote open discussion among independent directors, the Board has a policy of conducting executive sessions of independent directors during each regularly scheduled Board meeting. These executive sessions have historically been chaired by independent directors on a rotating basis. However, beginning in June 2010, the executive sessions of independent directors will be chaired by the Lead Independent Director. The independent directors have elected Matthew H. Paull to serve as the initial Lead Independent Director.


Board Meetings and Attendance

The Board held four regular meetings and one special meeting during the fiscal year ended February 27, 2010. Each incumbent director attended, in person or by telephone, at least 75% of the meetings of both the Board and Board committees on which he or she served. In fiscal 2010, the average attendance by our incumbent directors at Board and Board committee meetings exceeded 95%. Our Board requires director attendance at our regular meetings of shareholders and 100% of the then-serving directors attended the 2009 Meeting.


Committees of the Board

The Board has the following five committees:

    Audit Committee;

    Compensation and Human Resources Committee ("Compensation Committee");

    Nominating, Corporate Governance and Public Policy Committee ("Nominating Committee");

    Finance and Investment Policy Committee; and

    Global Strategy Committee.

The charters for each of the Board committees are posted on our Web site at www.bby.com — select the "Investor Relations" link and then the "Corporate Governance" link. The charters include information regarding each committee's composition, purpose and responsibilities.

The Board has determined that all members of the Audit Committee, Compensation Committee and Nominating Committee are independent directors as defined under the SEC and NYSE corporate governance rules, as applicable. The Board has further determined that all members of the Audit Committee qualify as financial experts under SEC rules.

The Board committees have responsibilities as follows:

Audit Committee.    This committee discharges the Board's oversight responsibility to our shareholders and the investment community regarding: (i) the integrity of our financial statements and financial reporting processes; (ii) our internal accounting systems and financial and operational controls; (iii) the qualifications and independence of our independent registered public accounting firm; (iv) the performance of our internal audit function and our independent registered public accounting firm; and (v) our compliance with ethics programs, including our Code of Business Ethics, and legal, regulatory and risk oversight requirements.

In carrying out these duties, this committee maintains free and open communication between the Board, our independent registered public accounting firm, our internal auditors and management. This committee meets with management, our internal audit staff and our independent registered public accounting firm at least quarterly. In addition, this committee conducts quarterly conference calls with management and our independent registered public accounting firm prior to our earnings releases to discuss the results of our independent registered public accounting firm's quarterly reviews and fiscal year-end audit.

Compensation and Human Resources Committee.    This committee discharges the Board's responsibilities related to executive officer and director compensation, including the establishment of our executive officer and director compensation philosophies, and evaluation of our CEO. Oversight responsibilities of this committee include succession planning and compensation-related risk oversight. This committee also oversees the development

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and evaluation of, and approves, equity-based and other incentive compensation and other employee benefit plans of a compensatory nature, and oversees our human capital policies and programs.

Nominating, Corporate Governance and Public Policy Committee.    This committee discharges the Board's responsibilities related to general corporate governance, including Board organization, membership, training and evaluation. It also reviews and recommends to the Board corporate governance principles, presents qualified individuals for election to the Board, and oversees the evaluation of the performance of the Board and its committees. Finally, this committee oversees matters of public policy and social responsibility that affect us domestically and internationally. For additional information regarding our director nomination process, see Director Nomination Process beginning on page 15.

Finance and Investment Policy Committee.    This committee advises the Board regarding our financial policies and financial condition to help enable us to achieve our long-range goals. It evaluates and monitors the: (i) protection and safety of our cash and investments; (ii) achievement of reasonable returns on financial assets within acceptable risk tolerance; (iii) maintenance of adequate liquidity to support our activities; (iv) assessment of the cost and availability of capital; and (v) alignment of our strategic goals and financial resources.

Global Strategy Committee.    This committee was established in January 2010, but did not have assigned members or meet during the fiscal year. The committee was created to provide insight, advice and counsel with respect to our strategic plans regarding connectivity, marketing, branding, customer centricity, and related enterprise initiatives. The committee will also provide an ongoing critical evaluation of, and accountability for performance within, our strategic plans and vision. The following table shows the date each committee was established, the number of meetings held in fiscal 2010 and the names of the directors serving on each committee as of April 23, 2010:

Committee
  Date
Established

  Number of
Meetings
During
Fiscal 2010

  Members
 
Audit   June 1, 1984   10   Hatim A. Tyabji*†
George L. Mikan III†
Matthew H. Paull†
Gérard R. Vittecoq†
 
Compensation and Human Resources   February 13, 1997   8   Frank D. Trestman*
Kathy J. Higgins Victor
Ronald James
Hatim A. Tyabji
 
Nominating, Corporate Governance and Public Policy   February 13, 1997   4   Kathy J. Higgins Victor*
Ronald James
Sanjay Khosla
Rogelio M. Rebolledo
 
Finance and Investment Policy   September 13, 2006   5   Elliot S. Kaplan*
Allen U. Lenzmeier
Matthew H. Paull
Frank D. Trestman

*
Chairman

Designated as an "audit committee financial expert" per SEC rules.

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As previously announced, Committee membership is scheduled to change after the June 2010 Meeting as presented below:

Committee
  Members
 
Audit   Hatim A. Tyabji*†
George L. Mikan III†
Matthew H. Paull†
Gérard R. Vittecoq†
 
Compensation and Human Resources   Ronald James*
Kathy J. Higgins Victor
George L. Mikan III
Hatim A. Tyabji
 
Nominating, Corporate Governance and Public Policy   Kathy J. Higgins Victor*
Sanjay Khosla
Rogelio M. Rebolledo
 
Finance and Investment Policy   Elliot S. Kaplan*
Ronald James
Matthew H. Paull
Gérard R. Vittecoq
 
Global Strategy Committee   Sanjay Khosla*
Lisa M. Caputo
Rogelio M. Rebolledo

*
Chairman

Designated as an "audit committee financial expert" per SEC rules.


Board Risk Oversight

Our Board is responsible for oversight of enterprise risk. The Board considers enterprise risk factors as a critical element of its review of business strategy and performance and ensures that there is an appropriate balance of risk and opportunity. Management is responsible for the day-to-day risk management processes and their activities include assessing and taking actions necessary to manage risk incurred in connection with the operation of our business. Management reviews significant enterprise risks and our general risk management strategy with the Board. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that our Board leadership structure supports this approach.

In connection with the Board's oversight function, each of the committees of the Board has principal responsibility for reviewing and discussing with management those risk exposures (i) specified in their charters, or (ii) identified from time to time by the committees themselves, as follows:

    Our Audit Committee is responsible for oversight of risk associated with our financial controls and compliance activities. The Audit Committee also oversees management's processes to identify and quantify the material risks facing us. Our internal audit staff, who report directly to the Audit Committee, assists us in identifying, evaluating and implementing risk management controls and procedures to address identified risks. Internal audit reports to the Audit Committee at least quarterly. In connection with its risk oversight

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      role, the Audit Committee meets privately with members of our independent registered public accounting firms, our internal audit staff and the legal staff.

    Our Compensation Committee is responsible for oversight associated with our compensation plans.

    Our Finance and Investment Policy Committee is responsible for oversight of risk associated with our investment portfolio and liquidity risks.

    Our Nominating Committee is responsible for the oversight of board processes and corporate governance related risk, as well as, our activities in the public policy and social responsibility arenas.

In connection with their oversight of compensation-related risks, Compensation Committee members periodically review the most important enterprise risks to ensure that compensation programs do not encourage risk-taking that is reasonably likely to have a material adverse effect on us. With the help of the Compensation Committee's independent compensation consultant, in fiscal 2010, the Compensation Committee reviewed our compensation policies and practices for all employees, including executive officers. The review process identified our existing risk management framework and the key business risks that may materially affect us; reviewed all compensation plans and identified those plans that are most likely to impact these risks or introduce new risks; and balanced these risks against our existing processes and compensation program safeguards. The review process also took into account mitigating features contained within our compensation plan design which includes elements such as:

    metric-based pay,

    time matching,

    payment for outputs,

    goal diversification,

    payment caps, and

    clawbacks.

The Compensation Committee also considered other controls outside of compensation plan design which contribute to risk mitigation, including the weight placed on values in our performance management process, the independence of our performance measurement teams, and our internal control environment.

Based upon the process we employed, we determined that our compensation programs do not encourage risk-taking that is reasonably likely to result in a material adverse effect on us.


Communications with the Board

Shareholders and interested parties who wish to contact the Board, the Lead Independent Director, any other individual director, or the non-management or independent directors as a group, are welcome to do so in writing, addressed to such person(s) in care of:

    Mr. Joseph M. Joyce
    Senior Vice President, General Counsel and Assistant Secretary
    Best Buy Co., Inc.
    7601 Penn Avenue South
    Richfield, Minnesota 55423

Mr. Joyce will forward all written shareholder correspondence to the appropriate director(s), except for spam, junk mail, mass mailings, customer complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. Mr. Joyce may, at his discretion, forward certain correspondence, such as customer-related inquiries, elsewhere within our company for review and possible response. Comments or questions regarding our accounting, internal controls or auditing matters will be referred to the Audit Committee. Comments or questions regarding the nomination of directors and other corporate governance matters will be referred to the Nominating Committee. Comments or questions regarding executive compensation will be referred to the Compensation Committee.

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ITEM OF BUSINESS NO. 1 — ELECTION OF DIRECTORS


General Information

Our Amended and Restated By-laws provide that the Board may consist of a maximum of 15 directors, eight of whom are designated as Class 1 directors and seven of whom are designated as Class 2 directors. Directors are elected for a term of two years, and the terms are staggered so that Class 1 directors are elected in even-numbered years and Class 2 directors are elected in odd-numbered years.


Director Qualification Standards

We only consider director candidates who embody the highest standards of personal and professional integrity and ethics and are committed to a culture of transparency and open communication at the Board level and throughout our company. Successful candidates are dedicated to accountability and continuous improvement with a belief in innovation as a key business success factor. They are also actively engaged, and have an innate intellectual curiosity and entrepreneurial spirit. Commitment to enhancing shareholder value and representing the interests of all shareholders is also required.

In evaluating candidates for nomination as a director, the Nominating Committee considers other criteria, including a history of achievement and superior standards, ability to think strategically, a willingness to share examples based upon experience, policy-making experience, and an ability to articulate a point of view, take tough positions, and constructively challenge management. In addition, the Nominating Committee may also consider gender, ethnic and geographical diversity; independence; and general criteria such as an ability to provide informed and thoughtful counsel, mature judgment, and listening skills.

Directors must also be committed to actively engaging in his or her Board roles, with sufficient time to carry out the duties of Board and Board committee membership.

Finally, one or more of our directors must possess the education or experience required to qualify as an "audit committee financial expert" pursuant to SEC rules.


Director Nomination Process

The Nominating Committee is responsible for screening and recommending to the full Board director candidates for nomination. The Nominating Committee often engages a third-party search firm to assist in identifying appropriate candidates to consider as additions to our Board. When the Board is seeking to fill an open director position, the Nominating Committee will also consider nominations received from our shareholders, provided that proposed candidates meet the requisite director qualification standards discussed above.

When the Board elects to fill a vacancy on the Board, the Nominating Committee will announce the open position and post any additional search criteria on our Web site at www.bby.com — select the "Investor Relations" link and then the "Corporate Governance" link. Candidates recommended by shareholders, if qualified, will be considered in the same manner as any other candidate.

The Nominating Committee will then evaluate the resumes of any qualified candidates recommended by a search firm or shareholders, as well as by members of the Board. Generally, in order to be considered for nomination, a candidate must have:

    High professional and personal ethics and values;

    A strong record of significant leadership and meaningful accomplishments in his or her field;

    Broad policy-making experience;

    The ability to think strategically;

    Sufficient time to carry out the duties of Board membership; and

    A commitment to enhancing shareholder value and representing the interests of all shareholders.

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All candidates are evaluated based on the qualification standards discussed above and the current needs of the Board.

Shareholder nominations must be accompanied by a candidate resume which addresses the extent to which the nominee meets the director qualification standards and any additional search criteria posted on our Web site. Nominations will be considered only if we are then seeking to fill an open director position. All nominations by shareholders should be submitted as follows:

    Chairman, Nominating, Corporate Governance and Public Policy Committee
    c/o Mr. Joseph M. Joyce
    Senior Vice President, General Counsel and Assistant Secretary
    Best Buy Co., Inc.
    7601 Penn Avenue South
    Richfield, Minnesota 55423


Board Diversity

Our Corporate Governance Principles specify that diversity on the Board be considered by the Nominating Committee in the director identification and nomination process. When considering candidates, the Nominating Committee seeks nominees with a broad range of experience from a variety of industries and professional disciplines, such as finance, academia, law and government, along with a diversity of gender, ethnicity, age and geographic location. The Nominating Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applied to all prospective nominees. The Board believes that diversity in the backgrounds and qualifications of the full Board should provide a significant mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities.


Director Orientation and Continuing Education

Our Nominating Committee oversees the orientation and continuing education of our directors. Director orientation familiarizes directors with our strategic plans, significant financial, accounting and risk management issues, compliance programs and other controls, policies, principal officers and internal auditors, and our independent registered public accounting firm. The orientation also addresses Board procedures, directors' responsibilities, our Corporate Governance Principles, and our Board committee charters.

We also offer continuing education programs to assist our directors in maintaining their expertise in these areas. In addition, our directors have the opportunity to attend commercial director education seminars related to their committee assignment(s) or to the work of the Board. In fiscal 2010, we conducted an orientation for two new members of the Board. We also conducted one half-day continuing education session for the Board, facilitated by the National Association of Corporate Directors.


Voting Information

You may vote for all, some or none of the nominees for election to the Board. However, you may not vote for more individuals than the number nominated. Each of the nominees has agreed to continue serving as a director if elected. However, if any nominee becomes unwilling or unable to serve and the Board elects to fill the vacancy, the Proxy Agents named in the proxy will vote for an alternative person nominated by the Board. Our Amended and Restated Articles of Incorporation prohibit cumulative voting, which means you can vote only once for any nominee. The affirmative vote of a majority of the voting power of the shares present and entitled to vote at the Meeting is required to elect each director nominee.

PROXY CARDS THAT ARE PROPERLY SIGNED AND RETURNED WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES UNLESS OTHERWISE SPECIFIED.


Board Voting Recommendation

Management and the Board recommend that shareholders vote FOR the re-election of Lisa M. Caputo, Brian J. Dunn, Kathy J. Higgins Victor, Rogelio M. Rebolledo, and Gérard R. Vittecoq as Class 1 directors. If elected, each Class 1 director will hold office until the election of directors at our 2012 Regular Meeting of Shareholders and until his or her

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successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.

All of the nominees are currently members of the Board.


Nominees and Directors

The biographies of each of the nominees and continuing directors below contains information regarding the person's service as a director, business experience, public company director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings during the last ten years if applicable, and the experiences, qualifications, attributes or skills that caused the Nominating Committee and the Board to determine that the person should serve as a director.

There are no family relationships among the nominees or between any nominees and any of our other directors.

ITEM OF BUSINESS NO. 1

Class 1 Director Nominees:
(ages as of February 27, 2010)


GRAPHIC
  Lisa M. Caputo, 46, has been a director since December 2009. Ms. Caputo is executive vice president and chief marketing officer for Citigroup Inc., a leading global financial services company. Since January 2000, she has been founder, chairman and chief
executive officer of Citi's Women & Co. business, a membership service that provides financial education and services for women. As such, she is a driving force for women in leadership, an area of focus for us. From 1998 to 1999, Ms. Caputo was vice president, global communications and synergy for Disney Publishing Worldwide, the world's largest publisher of children's books and magazines. From 1996 to 1998, she was vice president of corporate communications for CBS Corporation, a mass media company. From 1992 to 1996, Ms. Caputo served in President Bill Clinton's administration, both as press secretary for First Lady Hillary Rodham Clinton, and as deputy assistant to the President. Ms. Caputo also serves on the boards of WNET Channel 13, The Sesame Workshop, New Visions for Public Schools and The Creative Coalition. She is a member of the International Steering Committee for FINCA International, The New York Presbyterian Sloane Hospital Advisory Committee, the Women@NBCU Advisory Board, the Council on Foreign Relations and the Financial Women's Association. With her broad background with various for-profit companies and non-profit organizations, Ms. Caputo brings to the Board extensive marketing expertise, global and corporate communications experience and political savvy. She is also a highly respected, well-connected leader and is credited for her comprehensive approach, intelligence and tenacity.

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GRAPHIC

 

Brian J. Dunn, 49, has been a director since June 2009 when he was also named our CEO. A 25-year veteran of our company, Mr. Dunn began his career with us as a store associate in 1985 when we operated only a dozen stores. From February 2006 until being
named to his current position, Mr. Dunn served as President and Chief Operating Officer. Prior to that, he held numerous positions within our company, including President — Retail, North America, Executive Vice President, Senior Vice President, Regional Vice President, Regional Manager, District Manager and Store Manager. During his time with us, Mr. Dunn has made significant contributions to our market share growth, employee retention, vendor relationships and customer satisfaction scores. Mr. Dunn also serves on the board of Dick's Sporting Goods, Inc., a full-line sporting goods retailer, as well as on the board of The Best Buy Children's Foundation. Mr. Dunn plans to complete his term on the board of Dick's Sporting Goods, Inc., but will not stand for re-election at their June 2010 meeting. Mr. Dunn has established himself as a powerful representative of our brand, an advocate for our unique culture, and a decisive architect of organizational transformation. His personal involvement in the site selection and opening process of over five hundred stores provides him with valuable commercial real estate experience. In addition, Mr. Dunn's day-to-day leadership provides him with intimate knowledge of our operations. His reputation as a leader and success in retail, branding and market expansion are valuable assets to the Board as it looks to move forward in an ever-changing retail environment.


GRAPHIC

 

Kathy J. Higgins Victor, 53, has been a director since November 1999. Since 1994, she has been president of Centera Corporation, an executive development and leadership coaching firm that she founded, located in Minneapolis, Minnesota. From 1991 to 1994,
she was senior vice president of human resources at Northwest Airlines, Inc. (now Delta Air Lines), a commercial airline, and prior to that held senior executive positions at The Pillsbury Company (subsequently acquired by General Mills, Inc.), a producer of grain and other foodstuffs, and Burger King Corporation, which operates and franchises a worldwide system of Burger King restaurants. She is also on the board of trustees of the University of St. Thomas. Ms. Higgins Victor's roles with these strongly-branded public companies and academic institution give her extensive experience in the areas of established company cultures, executive compensation and human resources. Through her professional background, Ms. Higgins Victor brings to the Board large company leadership expertise, a dedication to continuous improvement and entrepreneurial experience. In addition, her experience in executive development, succession planning and leadership coaching continues to be a valuable asset to the Board.


GRAPHIC

 

Rogelio M. Rebolledo, 65, has been a director since August 2006. In 2007, Mr. Rebolledo retired from his position as chairman of PBG Mexico, the Mexican operations of The Pepsi Bottling Group, Inc., a manufacturer and distributor of Pepsi-Cola beverages. He began
his 30-year career with PepsiCo in 1976 at Sabritas, the salty snack food unit of Frito-Lay International in Mexico. He was responsible for the development of the international Frito-Lay business, first in Latin America and then in Asia. From 2001 to 2003, he was president and chief executive officer of Frito-Lay International, a producer of snack foods. He also served as president and chief executive officer of The Pepsi Bottling Group's Mexico operations from January 2004 until being named chairman. Mr. Rebolledo also serves on the board of Kellogg Company, a manufacturer and marketer of ready-to-eat cereal and convenience foods. He previously served on the boards of The Pepsi Bottling Group; Applebee's International, Inc., a restaurant chain (now DineEquity, Inc.); and ALFA Corporation, a manufacturer of high-tech aluminum engine heads and blocks based in Mexico. His experience in oversight responsibility for multi-national operations and international expansion at Pepsi and Frito-Lay is highly valuable to the Board as it makes decisions about our international expansion. Through his time with these companies, in addition to his board service at Kellogg, Applebee's and ALFA, he brings a wealth of knowledge and experience in large company leadership, marketing, branding, international business and global market entry — key elements of our strategic priorities.

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GRAPHIC

 

Gérard R. Vittecoq, 61, has been a director since September 2008. Since 2004, he has been a group president of Caterpillar, Inc., a manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines based in Peoria,
Illinois. He has responsibility for the company's Europe-Africa-Middle East ("EAME"), CIS (EAME) Distribution Services division, EAME Operations division, Marine, Petroleum and Power division, Electric Power division, and for the Caterpillar Production Center of Excellence division. He joined Caterpillar in 1975 and has held various accounting and finance positions within the company. From 1987 to 1990, he was in charge of strategy projects and was appointed director of strategy & planning in 1990. From 1995 to 1997, he was managing director of Caterpillar France S.A. In 1997, he became managing director of Caterpillar Belgium S.A. He was elected a vice president in January 2001, overseeing the EAME Product Development & Operations division. Through Mr. Vittecoq's tenure with Caterpillar, he has gained international management experience, branding knowledge and financial expertise. He is a member of the IMD (International Institute for Management Development) Foundation board, a member of the Evian Group: Free Trade Think Tank, an executive member of the World Business Council for Sustainable Development and a vice president of the board of the Swiss-American Chamber of Commerce. Mr. Vittecoq's background as an accomplished business leader and his financial acumen, in addition to his political savvy, are valuable assets to the Board as it focuses on our further expansion in the global marketplace.

Class 2 Directors — Terms expire in 2011
(ages as of February 27, 2010)


GRAPHIC
  Ronald James, 59, has been a director since May 2004. Since 2000, he has served as president and chief executive officer of the Center for Ethical Business Cultures in Minneapolis, Minnesota, which assists business leaders in building ethical and profitable business
cultures at the enterprise, community and global levels. From 1996 to 1998, he was president and chief executive officer of the Human Resources Group, a division of Ceridian Corporation, a business services company located in Minneapolis, Minnesota. From 1971 to 1996, he was with US West Communications, Inc. (now Qwest Communications), most recently serving as Minnesota's top executive officer. He gained investment fund knowledge through his service on the boards of RBC Funds, an investment fund of the Royal Bank of Canada, and Bremer Financial Corporation, a regional community banking company. Having served on an advisory group to the United States Sentencing Commission, Mr. James speaks regularly at conferences on the subject of the Board's role in creating and sustaining ethical cultures. He also serves on the boards of The Travelers Foundation, Speak the Word Church International, and the Guthrie Theater in Minneapolis, Minnesota and on a board committee for the Center for Healthcare Innovation, Allina Hospitals and Clinics in Minneapolis, Minnesota. He previously served as a director of St. Paul Companies (now The Travelers Companies, Inc.), Ceridian Corporation, Automotive Industries, and on the boards of Allina Hospitals and Clinics and the Greater Twin Cities United Way. Mr. James brings governance expertise; large company leadership; telecommunications experience; a commitment to integrity, ethics and culture; and executive wisdom to the Board. In addition, his active participation as a consultant and educator in business ethics in academic settings, as well as for national and global organizations, provides valuable insight to the Board.

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GRAPHIC

 

Elliot S. Kaplan, 73, has been a director and Secretary since January 1971. Since 1961, he has been an attorney with the law firm of Robins, Kaplan, Miller & Ciresi L.L.P., Minneapolis, Minnesota, which serves as our primary external general counsel. He is also an
owner and director of the Bank of Naples in Naples, Florida. In addition, he serves on the executive board of the Minnesota Historical Society and the board of the Robins, Kaplan, Miller & Ciresi Foundation for Children, and is a trustee of the University of Minnesota Foundation. He also previously served on the boards of infoUSA, Inc, a direct marketing company; The Minneapolis Institute of Arts; and PACER Center, an organization that seeks to expand opportunities for children and young adults with disabilities. His years of legal practice provide Mr. Kaplan with a deep understanding of business litigation, intellectual property litigation and licensing, antitrust and trade regulation, and corporate governance, all of which help Mr. Kaplan provide an experienced legal perspective to our Board. Mr. Kaplan also brings historical knowledge of our culture to the Board.


GRAPHIC

 

Sanjay Khosla, 58, has been a director since October 2008. In January 2007, he joined Kraft Foods, Inc., an international food and beverage company. He currently serves as executive vice president and president of Kraft developing markets and global
categories. Prior to joining Kraft, he was with Fonterra Co-operative Group Ltd., a multi-national dairy company based in New Zealand, where he served as managing director of its consumer and food service business. Before joining Fonterra in 2004, he had a 27-year career with Unilever PLC in India, the U.K. and Europe, culminating as senior vice president, global beverages, and chairman of Unilever's beverages category. Mr. Khosla also serves on the boards of NIIT Ltd., an IT-enabled education company in India, and Goodman Theatre in Chicago, Illinois. His many years in the consumer products industry provide Mr. Khosla with an extensive background in consumer marketing, branding, global expansion and multi-national operations. His background in these areas, along with his international perspective and history of transformational leadership, is valuable as the Board continues to focus on our global expansion and transformation.


GRAPHIC

 

George L. Mikan III, 38, has been a director since April 2008. Since November 2006, he has been the executive vice president and chief financial officer of UnitedHealth Group Incorporated. Mr. Mikan joined UnitedHealth in 1998 and has held various executive positions
of increasing responsibility from 1998 to the present, including an executive role on the corporate development group responsible for merger and acquisition activities. From 1994 to 1998, he was employed at Arthur Andersen LLP. From his years at UnitedHealth and Arthur Andersen, Mr. Mikan gained solid financial and merger and acquisitions expertise, as well as public company leadership experience. This knowledge and experience is a valuable asset to the Board as we continue to explore growth opportunities, provide benefits for thousands of employees and position our company for financial growth.


GRAPHIC

 

Matthew H. Paull, 58, has been a director since September 2003. He has also been named our first Lead Independent Director and plans to serve in that role for the upcoming year. Mr. Paull is the former corporate senior executive vice president and chief financial officer
for McDonald's Corporation, which develops, operates, franchises and services a worldwide system of McDonald's restaurants. He retired from that position in January 2008. At McDonald's, Mr. Paull acquired a background in strong branding and consumer trends, knowledge that is highly relatable to our company. Prior to joining McDonald's Corporation in 1993, he was a partner at Ernst & Young LLP, specializing in international tax. He also serves on the advisory board of Pershing Square Capital Management, a New York-based hedge fund. Mr. Paull previously served as a trustee of the Ravinia Festival Association, which offers concerts and other entertainment in suburban Chicago, Illinois, and as an advisory council member for the Federal Reserve Bank of Chicago. As a former executive professor in residence at the University of San Diego, Mr. Paull also possesses an understanding of the academic world. Because of his professional experience, Mr. Paull has significant financial acumen, knowledge of hedge funds and investments, broad experience in global operations and extensive experience in tax matters, all of which enable Mr. Paull to make valuable contributions to our Board.

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GRAPHIC

 

Richard M. Schulze, 69, is a founder of Best Buy. He has been an officer and director from our inception in 1966 and currently serves as our Chairman of the Board. Effective in June 2002, he relinquished the duties of CEO, having served as our principal
executive officer for more than 30 years. He is on the board of trustees of the University of St. Thomas, chairman of its Executive and Institutional Advancement Committee, and a member of its Board Affairs Committee. Mr. Schulze is also chairman of the board of governors of the University of St. Thomas Business School and serves on the board of the Richard M. Schulze Family Foundation. He previously served on the board of Pentair, Inc., a diversified industrial manufacturing company, and The Best Buy Children's Foundation. Mr. Schulze holds an honorary doctorate of laws degree from the University of St. Thomas. As a founder of our company with over 40 years experience in the retail industry, and having built our company from a single store and three employees to a multi-national organization with over 4,000 locations and over 180,000 employees, he has an in-depth view of our business and branding. In addition, Mr. Schulze's deep knowledge of our culture and commitment to preserving our entrepreneurial environment provide continuity and long-term thinking to the Board.


GRAPHIC

 

Hatim A. Tyabji, 65, has been a director since April 1998. Since July 2001, he has been executive chairman of Bytemobile, Inc., a wireless Internet infrastructure provider in Santa Clara, California. From 1998 to 2000, he served as chairman and chief executive officer
of Saraïde, Inc., a provider of Internet and wireless data services; and from 1986 to 1998, as president and chief executive officer (and as chairman from 1992 until 1998) of VeriFone, Inc., a global transaction automation enterprise. He is also chairman of Jasper Wireless, a global networking device company. Mr. Tyabji also serves on the boards of Merchant eSolutions, Inc.; Sierra Atlantic, Inc.; Touch Networks (Australia); and the Missile Defense Advocacy Alliance, and as an ambassador at large for Benchmark Capital. He previously served on the boards of Ariba Inc.; Bank of America Merchant Services; Deluxe Corporation; eFunds Corporation; Novatel Wireless, Inc.; PubliCard Inc.; SmartDisk Corporation; Datacard Group; Depotpoint, Inc.; Impresse Corporation and Norand Corporation, as well as on the boards of the Carnegie Institute, the Dean's Council of the Leavey School of Business at Santa Clara University and the Dean's Council of the School of Engineering at the State University of New York at Buffalo. In 2007, Mr. Tyabji published "Husband, Wife & Company: An Honest Perspective on Success in Life and Work," a book on the interrelationships between family and career. Mr. Tyabji brings a wealth of experience in broadband and wireless technologies and is a significant contributor to the development of our technological growth and connected world strategy. His financial acumen and his background as an entrepreneurial business leader are valuable assets to the Board.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information about the number of shares of Best Buy common stock beneficially owned at February 27, 2010, by our Chairman of the Board, our CEO, our Chief Financial Officer and each of our three other most highly compensated continuing executive officers during the most recent fiscal year. The table provides similar information for each director including the director nominees, all directors and executive officers as a group, and each person we know who beneficially owns more than 5% of the outstanding shares of Best Buy common stock.

Name and Address(1)
  Number of Shares
Beneficially Owned

  Percent of Shares
Beneficially Owned

 

Richard M. Schulze
Founder and Chairman of the Board

  70,162,859(2)   16.69%

Brian J. Dunn
Chief Executive Officer and Director

  603,712(3)   *

James L. Muehlbauer
Executive Vice President — Finance and Chief Financial Officer

  187,449(4)   *

Shari L. Ballard
Executive Vice President, President — Americas

  226,085(5)   *

Michael A. Vitelli
Executive Vice President, President — Americas

  103,413(6)   *

Scott Wheway
Chief Executive Officer — Best Buy Europe

  0(7)   *

Bradbury H. Anderson
Vice Chairman and Director

  2,862,126(8)   *

Lisa M. Caputo
Director

  2,500(9)   *

Kathy J. Higgins Victor
Director

  46,980(10)   *

Ronald James
Director

  57,965(11)   *

Elliot S. Kaplan
Secretary and Director

  148,061(12)   *

Sanjay Khosla
Director

  12,250(13)   *

Allen U. Lenzmeier
Vice Chairman and Director

  2,321,684(14)   *

George L. Mikan III
Director

  17,000(15)   *

Matthew H. Paull
Director

  62,669(16)   *

Rogelio M. Rebolledo
Director

  28,350(17)   *

Frank D. Trestman
Director

  193,085(18)   *

Hatim A. Tyabji
Director

  134,250(19)   *

Gérard R. Vittecoq
Director

  14,682(20)   *

All directors and executive officers, as a group (26 individuals)

  77,875,199(21)   18.37%

*
Less than 1%.

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(1)
The business address for all directors and executive officers is 7601 Penn Avenue South, Richfield, Minnesota 55423.

(2)
The figure represents: (a) 236,250 outstanding shares owned by Mr. Schulze; (b) 59,221,143 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Schulze, of which up to $150 million aggregate amount of shares have been pledged by the trust as collateral to secure a line of credit; (c) 4,465,930 outstanding shares registered in the name of Mr. Schulze and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Schulze and his family; (d) 1,143,043 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of the Sandra Schulze Revocable Trust dated June 14, 2001; (e) 950,169 outstanding shares held by a limited partnership of which Mr. Schulze is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of these shares except to the extent of his monetary interest therein); (f) 252,312 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze as the sole general partner; (g) 31,672 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is the sole general partner; (h) 24,318 outstanding shares registered in the name of Mr. Schulze and held by him as trustee of trusts for the benefit of the children of Mr. Schulze's spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (i) 10,728 outstanding shares registered in the name of Mr. Schulze's spouse and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Schulze's spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (j) 183,726 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of the Sandra Schulze Revocable Trust dated June 14, 2001 (Mr. Schulze has disclaimed beneficial ownership of these shares); (k) 2,061 outstanding shares held in Mr. Schulze's individual retirement account; (l) 1,835,756 outstanding shares owned by The Richard M. Schulze Family Foundation, of which Mr. Schulze is the sole director; (m) 77,001 outstanding shares registered in the name of JPMorgan Chase Bank (the "Trustee"), and held by the Trustee in connection with the Best Buy Retirement Savings Plan ("Retirement Savings Plan") for the benefit of Mr. Schulze; and (n) options to purchase 1,728,750 shares, which he could exercise within 60 days of February 27, 2010.

(3)
The figure represents: (a) 35,496 outstanding shares owned by Mr. Dunn; (b) 15,892 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of Mr. Dunn; and (c) options to purchase 552,324 shares, which he could exercise within 60 days of February 27, 2010.

(4)
The figure represents: (a) 24,081 outstanding shares owned by Mr. Muehlbauer; (b) 1,514 outstanding shares held in Mr. Muehlbauer's individual retirement account; (c) 936 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of Mr. Muehlbauer; and (d) options to purchase 160,918 shares, which he could exercise within 60 days of February 27, 2010.

(5)
The figure represents: (a) 32,526 outstanding shares owned by Ms. Ballard; (b) 12,567 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of Ms. Ballard; and (c) options to purchase 180,993 shares, which she could exercise within 60 days of February 27, 2010.

(6)
The figure represents: (a) 32,772 outstanding shares owned by Mr. Vitelli; (b) 647 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of Mr. Vitelli; and (c) options to purchase 69,994 shares, which he could exercise within 60 days of February 27, 2010.

(7)
Mr. Wheway beneficially owned no shares of Best Buy common stock as of February 27, 2010. Mr. Wheway has options to purchase 50,000 shares, but these options do not begin to vest until June 23, 2010 and will vest in four equal annual installments beginning on that date.

(8)
The figure represents: (a) 437,530 outstanding shares owned by Mr. Anderson; (b) 702,321 outstanding shares registered in the name of Mr. Anderson and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Anderson; (c) 58,343 outstanding shares registered in the name of Mr. Anderson's spouse and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Anderson's spouse (Mr. Anderson has disclaimed beneficial ownership of these shares); (d) 337,839 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Anderson and his spouse is the sole general partner and of which Mr. Anderson and his spouse are limited partners individually (Mr. Anderson has disclaimed beneficial ownership of these shares except to the extent of his monetary interest therein); (e) 177,138 outstanding shares registered in the name of Mr. Anderson's spouse and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Anderson's spouse (Mr. Anderson has disclaimed beneficial ownership of these shares); (f) 225,833 outstanding shares owned by the Anderson Family Foundation, of which Mr. Anderson is a director; (g) 177,138 outstanding shares registered in the name of Mr. Anderson and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Anderson and his family; (h) 12,484 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of Mr. Anderson; and (i) options to purchase 733,500 shares, which he could exercise within 60 days of February 27, 2010.

(9)
The figure represents options to purchase 2,500 shares, which Ms. Caputo could exercise within 60 days of February 27, 2010.

(10)
The figure represents: (a) 5,730 outstanding shares owned by Ms. Higgins Victor; and (b) options to purchase 41,250 shares, which she could exercise within 60 days of February 27, 2010.

(11)
The figure represents: (a) 5,465 outstanding shares owned by Mr. James; and (b) options to purchase 52,500 shares, which he could exercise within 60 days of February 27, 2010.

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(12)
The figure represents: (a) 61,811 outstanding shares owned by Mr. Kaplan; and (b) options to purchase 86,250 shares, which he could exercise within 60 days of February 27, 2010.

(13)
The figure represents: (a) 1,000 outstanding shares owned by Mr. Khosla; and (b) options to purchase 11,250 shares, which he could exercise within 60 days of February 27, 2010.

(14)
The figure represents: (a) 1,407,584 outstanding shares owned by Mr. Lenzmeier; (b) 150,000 outstanding shares registered in the name of Mr. Lenzmeier and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Lenzmeier; (c) 81,600 outstanding shares held by the Lenzmeier Family Foundation, of which Mr. Lenzmeier and his spouse are the sole directors and officers; and (d) options to purchase 682,500 shares, which he could exercise within 60 days of February 27, 2010.

(15)
The figure represents: (a) 2,000 outstanding shares owned by Mr. Mikan; and (b) options to purchase 15,000 shares, which he could exercise within 60 days of February 27, 2010.

(16)
The figure represents: (a) 10,169 outstanding shares owned by Mr. Paull; and (b) options to purchase 52,500 shares, which he could exercise within 60 days of February 27, 2010.

(17)
The figure represents: (a) 850 outstanding shares owned by Mr. Rebolledo; and (b) options to purchase 27,500 shares, which he could exercise within 60 days of February 27, 2010.

(18)
The figure represents: (a) 70,585 outstanding shares owned by Mr. Trestman; (b) 25,000 outstanding shares registered in the name of Mr. Trestman's spouse as trustee of an irrevocable family trust (Mr. Trestman has disclaimed beneficial ownership of these shares); and (c) options to purchase 97,500 shares, which he could exercise within 60 days of February 27, 2010.

(19)
The figure represents: (a) 70,500 outstanding shares owned by Mr. Tyabji; and (b) options to purchase 63,750 shares, which he could exercise within 60 days of February 27, 2010.

(20)
The figure represents: (a) 3,432 outstanding shares owned by Mr. Vittecoq; and (b) options to purchase 11,250 shares, which he could exercise within 60 days of February 27, 2010.

(21)
The figure represents: (a) outstanding shares and options described in the preceding footnotes; (b) 48,242 outstanding shares owned by other executive officers; (c) 33,004 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with the Retirement Savings Plan for the benefit of other executive officers; and (d) options grants to other executive officers to purchase 608,832 shares, which they could exercise within 60 days of February 27, 2010.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and shareholders who own more than 10% of our common stock file initial reports of ownership with the SEC and the NYSE. They must also file reports of changes in ownership with the SEC and the NYSE. In addition, they are required by SEC regulations to provide us copies of all Section 16(a) reports that they file with the SEC. Based solely on a review of such Section 16(a) reports, management and the Board believe our directors, executive officers and shareholders who own more than 10% of our outstanding equity securities complied with the reporting requirements during the fiscal year ended February 27, 2010, except that (i) due to administrative delay, a report was not filed in a timely manner for a purchase of common stock on April 2, 2009, by Mr. James; (ii) due to administrative delay, a report was not filed in a timely manner for a grant of stock options on June 23, 2009, to the spouse of Michael J. Pratt, President and Chief Operating Officer — Best Buy Canada; and (iii) due to administrative delay, a report was not filed in a timely manner for several transfers of common stock on December 28, 2009, by Mr. Anderson.

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Our Compensation Discussion and Analysis describes the material elements of compensation for our "named executive officers" who are:

    Brian J. Dunn, Chief Executive Officer;

    James L. Muehlbauer, Executive Vice President — Finance and Chief Financial Officer;

    Shari L. Ballard, Executive Vice President, President — Americas*;

    Michael A. Vitelli, Executive Vice President, President — Americas*;

    J. Scott Wheway, Chief Executive Officer — Best Buy Europe;

    Bradbury H. Anderson, Vice Chairman and former Chief Executive Officer;

    John E. Pershing, former Executive Vice President — Human Capital; and

    Robert A. Willett, former Chief Executive Officer — Best Buy International.

*
Ms. Ballard and Mr. Vitelli's titles changed effective March 1, 2010 to the titles listed above.

For fiscal 2010, the named executive officers generally participated in the same compensation programs and were evaluated similarly, with the exception of Mr. Wheway's program which is tailored to our European business. Mr. Anderson retired from the position of CEO effective June 24, 2009, and is included as a named executive officer as a result of his former CEO status. Likewise, Mr. Willett retired from our company effective January 4, 2010, and Mr. Pershing left us on February 5, 2010. Based on SEC rules, we are required to include Messrs. Anderson, Pershing and Willett as named executive officers in this proxy statement. Hereinafter, Messrs. Dunn, Muehlbauer, Vitelli, Wheway and Ms. Ballard are referred to as our continuing named executive officers. For ease of use, our Compensation Discussion and Analysis is divided into three sections:

 
  Page
Compensation Philosophy, Objectives and Process   26

A discussion of our compensation philosophy for all employees, the objectives of our compensation programs and policies, and the process we use to determine compensation for our named executive officers.

 

 

Compensation for Named Executive Officers

 

32

A discussion and analysis of individual compensation elements and the process used to determine fiscal 2010 compensation for our named executive officers.

 

 

Other Compensation Matters

 

43

A discussion of programs and policies which are generally applicable to the named executive officers.

 

 


Compensation Philosophy, Objectives and Process

"Total Rewards" Philosophy.    We believe our success depends on employees at all levels using their unique strengths, experiences and ideas to foster innovation and build strong customer relationships. While our compensation and benefit programs are important tools in attracting and retaining talented employees, we also believe that non-monetary factors such as work environment, learning and development opportunities, and relationships between employees and managers are critical to provide a rewarding employee experience.

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Collectively, these elements comprise our "Total Rewards" philosophy. We believe this approach to attracting, motivating and retaining talent creates a competitive advantage.

Our Total Rewards philosophy seeks to:

    Provide employees a wide array of rewards;

    Differentiate rewards to individuals, based on their contributions;

    Encourage and recognize experimentation, entrepreneurship and innovation; and

    Reward employee contributions toward achieving desired financial and non-financial results.

We implement the Total Rewards philosophy by employing broad-based programs that are designed to align employee interests with company goals and create a common vision of success.

Compensation Objectives.    Our compensation program and policies serve the following objectives:

    Reward employees for creating shareholder value and for achieving key strategic objectives;

    Align long-term employee and shareholder interests;

    Motivate employees to achieve short-term financial, operational, customer and employee outcomes that materially contribute to our sustainable, long-term corporate success;

    Attract and retain talent necessary to develop new capabilities and enhance existing competencies; and

    Maintain a flexible compensation structure that allows employees to share in our success.

How We Determine Compensation.    The Compensation Committee is responsible for determining and approving executive compensation. In addition, the Compensation Committee oversees the development, evaluation and approval of incentive compensation, equity-based pay and other material employee benefit plans for all employees, including our named executive officers. The Compensation Committee is authorized to delegate to management certain responsibilities regarding our employee compensation and benefit plans, as specified in the Compensation Committee's charter, which is posted on our Web site at www.bby.com — select the "Investor Relations" link and then the "Corporate Governance" link.

The Compensation Committee established and reviews our Total Rewards philosophy and our compensation objectives, and oversees the design, competitiveness and effectiveness of compensation programs for our executive officers. During the first quarter of each fiscal year, our Human Resources leadership team ("HR") provides the Compensation Committee with compensation recommendations for the executive officers. HR's presentation includes an analysis prepared in support of the recommendations. The analysis includes a summary of the results of our application to each of our executive officers of several internal and external factors, as set forth below, which we refer to as our "Executive Compensation Framework." The internal factors are generally applied and analyzed by HR. HR has engaged a third-party compensation consultant, Towers Watson (formerly Towers Perrin), a global professional services firm, to assist in the development of compensation data that is used to facilitate the application and analysis of the external factors. The Compensation Committee reviews HR's recommendations with The Delves Group, an independent compensation consulting firm retained by the Compensation Committee, and discusses them with HR. The Compensation Committee's review is comprehensive and considers factors such as: (i) the alignment of the proposed compensation with our Total Rewards philosophy; (ii) the alignment of the proposed compensation with our compensation objectives; (iii) the overall value of the compensation package, relative to internal factors and external benchmarks; and (iv) our decision not to offer certain benefits and perquisites offered to executive officers of other large companies.

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The Compensation Committee recently adopted Principles of Executive Compensation (the "Principles") intended to further assist the Compensation Committee in its review of HR's compensation proposals. Working with The Delves Group, HR and senior management, the Compensation Committee developed and approved the following principles and criteria for defining and implementing each principle:

Principle
  Criteria
 
Purpose  

•       Support the Company's mission and vision

   

•       Support the Company's strategy and objectives

   

•       Reflect the Company's culture and values

 
Alignment  

•       Ensure common financial interest with shareholders

   

•       Ensure common financial interest throughout the company

   

•       Provide a balance between short- and long-term objectives

 
Accountability  

•       Ensure financial interests align with the employee's area of impact

   

•       Ensure the timing of performance periods align with the timing of the employee's impact

   

•       Articulate well defined metrics, goals, ranges, limits and results

   

•       Metrics focused primarily on delivery of outcomes rather than inputs to business processes

   

•       Maintain a consistent link between performance, rewards and consequences

 
Engagement  

•       Attract and retain talent

   

•       Create a sense of urgency

   

•       Motivate dedication, hard work and results

   

•       Inspire creativity and innovation

   

•       Clearly communicate the link between pay and performance

 
Optimization  

•       Promote highly differentiated positive results

   

•       Reward exceptional performance with exceptional pay

 

On a going-forward basis, the Compensation Committee plans to use the Principles as a means to assess executive compensation programs and to provide guidance to management on the Compensation Committee's expectations for overall executive compensation structure.

Executive Compensation Framework.    For fiscal 2010, each element of compensation and the level of total direct compensation for each of our named executive officers was determined by referencing our Executive Compensation Framework. Our Executive Compensation Framework consists of a set of internal and external factors that allow for a comprehensive, multi-faceted evaluation of total compensation based on each individual's personal attributes and talents, the internal "value" of their role, and objective external market data. The factors are not required to carry equal weight and not all of the factors are considered in determining the compensation recommendation for each individual. We believe that the diversity of the factors included in our Executive Compensation Framework and our flexibility in their application enhances our ability to develop compensation packages that (i) further our compensation objectives, (ii) further one or more of our strategic initiatives, and (iii) produce the highest return on our compensation investment.

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For fiscal 2010, the internal and external factors that comprised our Executive Compensation Framework were as follows:

Factor
  Description
 
Internal   Job Value   The internal value of the position relative to other executive officer positions, based on the primary job responsibilities, expected scope and nature of the job's impact — relative rank within the organization depends upon the extent to which the executive will be accountable for specific strategic and operational challenges.

 

 

Personal Attributes

 

The executive's industry and functional knowledge, intuition and insight, diversity of experience, entrepreneurial disposition and personal networks — in order to be considered for compensation purposes, these factors must be highly related to the success of the business strategies to be led by the executive.

 

 

Leadership/Values

 

The executive's demonstration of our values, and ability to inspire and influence others.

 

 

Talent Development

 

The executive's ability to cultivate talent that enhances business results, including succession planning.

 

 

Existing Compensation Arrangements

 

The executive's outstanding equity awards, performance-based incentives and compensation history.

External

 

Peer Group Observations

 

Includes publicly available information regarding actions taken by peer companies to attract and retain senior leadership talent.

 

 

Market Data

 

Includes compensation data for our peer group of companies (as determined by the Compensation Committee), the Fortune 100 companies and other salary surveys.

We applied the external factors to each continuing named executive officer based on a review of publicly available compensation data for our peer group of companies, the Fortune 100 and, in some instances, we also consulted survey data.(1) We used available information and monitored actions taken by our peers to evaluate market trends and to assess the overall competitiveness of our executive compensation levels. We did not, however, seek to establish total direct compensation that falls within a prescribed range relative to our peer group of companies or the Fortune 100. In addition, the Compensation Committee may at times use our peer group of companies to evaluate:


(1)
The surveys we consulted, as well as the companies they surveyed, are listed in Appendix A.

The cost of the total direct compensation paid to our named executive officers;

The relationship between our financial performance and the compensation paid to our named executive officers; and

The relative difficulty of our incentive performance targets.

The criteria we used to determine our peer group of companies in fiscal 2010 was unchanged from the criteria we used in fiscal 2009. We continue to compare ourselves predominantly to companies with the following

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attributes: (i) more than $5 billion in revenue, (ii) retail or wholesale operations, (iii) high growth rates, and (iv) significant revenue generated outside of the U.S. We also used lists published by Business Week and Fortune magazines to identify companies recognized as top employers, innovators and customer service providers, and other qualitative factors, for purposes of applying our selection criteria. Our peer group at the time compensation was determined for our named executive officers in fiscal 2010 was comprised of the following companies:

    Amazon.com, Inc.

    Apple Inc.

    Costco Wholesale Corporation

    Dell Inc.

    eBay Inc.

    FedEx Corporation

    Harley-Davidson, Inc.

    Lowe's Companies, Inc.

    Nordstrom, Inc.

    Staples, Inc.

    Starbucks Corporation

    Target Corporation

    The TJX Companies, Inc.

    Wal-Mart Stores, Inc.

    Walgreen Co.

    The Walt Disney Company

    Whole Foods Market, Inc.

    Yahoo! Inc.

Role of Independent Compensation Consultant in Determining Compensation.    The Compensation Committee reviews HR's executive and director compensation recommendations with The Delves Group, an independent compensation consulting firm retained by the Compensation Committee. The Compensation Committee believes that this review helps ensure that HR's compensation recommendations are aligned with our stated objectives and are reasonable when compared to our peer market for executive and director talent. In addition, the engagement of an independent consultant enhances the overall independence of the Compensation Committee's decision-making and mitigates the potential for a conflict of interest involving the compensation consultant hired by HR. The Delves Group reports directly to the Compensation Committee and does not provide any consulting or other services to us.

Role of Management Compensation Consultant in Determining Compensation.    HR has engaged a third-party compensation consultant, Towers Watson, a global professional services firm, to assist in the development and analysis of external compensation data that is used to facilitate HR's executive and director compensation recommendations to the Compensation Committee. At the request of HR and with the consent of the Compensation Committee, a representative of Towers Watson regularly attends meetings of the Compensation Committee to address matters directly related to their engagement, including questions regarding external market data and related analyses. Towers Watson reports directly to HR and does not engage with the Compensation Committee, except with regard to the aforementioned matters and at the request and under the direction of HR. Towers Watson also provides non-executive compensation consulting and other services to us expressly at the direction of HR and without the direct engagement of the Compensation Committee.

Role of Chief Executive Officer in Determining Compensation.    Our CEO does not participate in or otherwise influence HR's compensation recommendations for himself. However, our CEO is generally in attendance when HR presents compensation recommendations to the Compensation Committee for our other executive officers and provides his perspective regarding the recommendations. Our CEO's performance ratings of, and his comments about, his direct reports impact the compensation of his direct reports, but his input is only one of many factors considered in determining total compensation for those

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individuals. Our other executive officers do not participate in the development of compensation recommendations or the approval process, although they may provide perspective on recommendations for their direct reports.

Summary of Compensation and Benefit Programs.    We maintain a variety of compensation and benefit programs in which our executive officers and other selected employees participate. These programs include, but are not limited to, our 2004 Omnibus Stock and Incentive Plan, as amended ("Omnibus Plan"), our Executive Officer Short-Term Incentive Program ("Executive Officer STIP"), our Long-Term Incentive Program established under the Omnibus Plan ("LTIP"), our 2008 Employee Stock Purchase Plan ("ESPP"), our Retirement Savings Plan and our Fifth Amended and Restated Deferred Compensation Plan ("Deferred Compensation Plan").

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Compensation for Named Executive Officers

Elements of Compensation.    The fiscal 2010 compensation for our named executive officers included the following elements:

Element
  Form(s) of Compensation
  Purpose
  Performance Metric(s)
 

Base Salary

  Cash   Provide competitive, fixed compensation to attract and retain exceptional executive talent   Not performance-based
 

Short-Term Incentive

  Cash   Create a strong financial incentive for achieving or exceeding company goals   Operating income; SG&A; domestic market share
 

Long-Term Incentive

  Stock options   Create a strong financial incentive for increasing shareholder value and encourage a significant equity stake in our company   Best Buy common stock price
 

Individual Recognition Restricted Stock Award

  Restricted stock   Recognize superior performance rendered and retain exceptional executive talent   Performance- and not performance-based
 

Health, Retirement and Other Benefits

  Eligibility to participate in benefit plans generally available to our employees, including retirement, stock purchase, health, severance, life insurance and disability plans   Plans are part of our broad-based employee benefits program   Not performance-based
 

Executive Benefits and Perquisites

  Annual executive physical exam, supplemental long-term disability insurance, four weeks of paid vacation, expanded employee discount, stock ownership target planning and tax planning/preparation services   Provide competitive benefits to promote the health, well-being and financial security of our executive officers   Not performance-based
 

During fiscal 2010, special circumstances or events arose which resulted in unique compensation arrangements. Those arrangements for the named executive officers are described in Special Circumstances, on page 40.

Analysis of Compensation Elements

Fiscal 2010 Target Compensation.    The Compensation Committee does not establish a set pay mix for our executive officers. However, our executive compensation program does emphasize long-term compensation versus short-term compensation. As a result of the decisions the Compensation Committee made, the target pay mix for our CEO and

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our other executive officers, on average, for fiscal year 2010 is shown below. Actual salary levels, short-term incentive awards and long-term incentive awards vary based on factors in the Executive Compensation Framework.

GRAPHIC   GRAPHIC

Each element in the target pay mix is discussed below and shown in the Summary Compensation Table on page 49.

Base Salary.    The Compensation Committee generally determines base salary levels for the named executive officers and other executive officers during the first quarter of each fiscal year, with changes becoming effective during such quarter. The base salaries for the named executive officers that became effective in the first quarter of fiscal 2010 were established based on an assessment of each officer under our Executive Compensation Framework. For fiscal 2010, the base salaries at the end of fiscal 2010 and fiscal 2009, respectively, for the continuing named executive officers and the key factors considered were as follows:

Name
  Fiscal 2010 Ending Base Salary
  Fiscal 2009 Ending Base Salary
  Percent
Change

  Key Factors
 
Mr. Dunn   $1,000,000   $900,000   11%   Internal Factors:
               

•       Promoted to highest ranking officer in our company in June 2009

               

•       Highly complex position responsible for balancing short- and long-term strategic and operational decisions

               

•       Increased accountability for driving company growth in the connected world

               

•       Strong motivator and leader; established record of building markets while living and teaching company values


 

 

 

 

 

 

 

 

External Factors:
               

•       New salary and total direct compensation are below median of Fortune 100 and our peer group

               

•       Initial salary increase is consistent with a Towers Watson report on pay practices for internal promotion to CEO versus external CEO hire

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Name
  Fiscal 2010 Ending Base Salary
  Fiscal 2009 Ending Base Salary
  Percent
Change

  Key Factors
 
Mr. Muehlbauer   $642,000   $600,000   7%   Internal Factors:
               

•       Strong aptitude for risk mitigation and process development

               

•       Manages communication to investor community with transparency

               

•       Able to execute against strategic opportunities


 

 

 

 

 

 

 

 

External Factors:
               

•       Total direct compensation below median of Fortune 100, and between median and 75th percentile of our peer group

               

•       High level of turnover among Fortune 100 chief financial officers


Ms. Ballard

 

$650,000

 

$650,000

 

0%

 

Internal Factors:
               

•       Strong internal advocate of customer focus

               

•       Proven ability to rally teams around our philosophy and approach

               

•       Ability to execute against strategic opportunities


 

 

 

 

 

 

 

 

External Factors:
               

•       Total direct compensation below median of Fortune 100, and between median and the 75th percentile of our peer group


Mr. Vitelli

 

$600,000

 

$478,950

 

25%

 

Internal Factors:
               

•       Increased role for fiscal 2010

               

•       Extremely strong and deep industry knowledge and networks

               

•       Manages communication to vendor community with high degree of authority and influence

               

•       Routinely demonstrates exceptional levels of personal integrity, maturity and professionalism


 

 

 

 

 

 

 

 

External Factors:
               

•       Total direct compensation below median of Fortune 100, and between median and the 75th percentile of our peer group

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Name
  Fiscal 2010 Ending Base Salary
  Fiscal 2009 Ending Base Salary
  Percent
Change

  Key Factors
 
Mr. Wheway   $711,392   n/a   n/a   Internal Factors:
    (£440,000
GBP)(1)
         

•       Deep retail knowledge and insight in European market, with over twenty years of experience

               

•       Extensive international retail experience


 

 

 

 

 

 

 

 

External Factors:
               

•       Total direct compensation consistent with similar U.K.-based positions at large, multi-national companies


(1)
Mr. Wheway's compensation has been converted to United States dollars from pound sterling using a conversion rate of 1.6168, the average conversion rate from May 2009 to the end of the fiscal year.

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Prior to entering into his employment arrangement in June 2009, Mr. Anderson's annual salary remained unchanged at $1,265,000 from fiscal 2009 for the first four months of fiscal 2010. The employment arrangement for Mr. Anderson is discussed as part of Director Compensation on page 60 and as part of Special Circumstances, beginning on page 40. The fiscal 2010 base salaries for Messrs. Pershing and Willett remained unchanged from fiscal 2009 at $414,000 and $850,000, respectively.

Short-Term Incentive.    For fiscal 2010, the named executive officers, except for Mr. Wheway, were eligible for performance-based, short-term incentive awards pursuant to our Executive Officer STIP. From May 2009, through July 2009, Mr. Wheway was eligible for the International Leadership STIP. Beginning in August 2009, Mr. Wheway was eligible for a performance-based, short-term incentive award tailored to provide a balanced score card between Best Buy brand operations in Europe and CPW brand/operations in Europe. Mr. Wheway's fiscal 2010 short-term incentive award is described in Special Circumstances, beginning on page 40. Fiscal 2010 Executive Officer STIP payments were made in two installments, at the mid-point and end of the fiscal year.

Fiscal 2010 Executive Officer STIP awards were payable in cash and were expressed as a target payout percentage of each eligible named executive officer's base salary. The target payout percentages for each of our eligible named executive officers fell within a range of 65% to 200%. The target payout percentage for each eligible named executive officer was set within this range based on the application of our Executive Compensation Framework, with particular emphasis placed on the internal job ranking of each position and taking into consideration external market data factors for equivalent roles. We believe that it is important that a higher percentage of total cash compensation for higher ranking positions be linked to our performance. In addition, we considered the value of total cash compensation in light of the external factors described in Base Salary, beginning on page 33, to ensure that we remain competitive in the market for executive talent.

For fiscal 2010, our Executive Officer STIP was structured to support our fiscal 2010 business priorities: (i) increasing domestic market share, (ii) efficient and effective enterprise, (iii) connected world, and (iv) international growth. As a result, we measured our short-term incentive awards for our eligible named executive officers on the following weighted performance metrics:

    Operating income (40%);

    Selling, general and administrative expenses ("SG&A") (30%); and

    Domestic market share (30%).

The Compensation Committee established the target performance metrics for fiscal 2010 based on our historical performance and target setting practices, as well as investor and market expectations.

Under the fiscal 2010 Executive Officer STIP design, we measured the actual performance of each metric independently against targets, with achievement of one or all metrics to be additive to the individual's total short-term incentive award. Due to the uncertain economic challenges present at the beginning of fiscal 2010, the Compensation Committee elected to create a program with risk mitigating features, namely SG&A and domestic market share, thereby giving us the opportunity to be in the strongest possible position to take advantage of economic recovery long term, but not at the expense of operating income.

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The fiscal 2010 Executive Officer STIP payment computation for eligible named executive officers was based on the weighted metrics described above, at target, as follows:


Target Payout Percentage(1)

 
  Performance Metrics    
   
 
 
  Operating Income
(40%)

   
  SG&A
(30%)

   
  Domestic
Market Share
(30%)

   
  Total Target
Payout as a %
of Salary

 
   
Mr. Dunn(2)     73.8 % +     55.3 % +     55.4 % =     184.5 %
Mr. Muehlbauer     50 % +     37.5 % +     37.5 % =     125 %
Ms. Ballard     50 % +     37.5 % +     37.5 % =     125 %
Mr. Vitelli(3)     42 % +     31.5 % +     31.5 % =     105 %
Mr. Anderson(4)     80 % +     60 % +     60 % =     200 %
Mr. Pershing     26 % +     19.5 % +     19.5 % =     65 %
Mr. Willett     50 % +     37.5 % +     37.5 % =     125 %

(1)
"Target Payout Percentage" for each respective performance metric computed as the "Total Target Payout as a % of Salary" multiplied by the relative weighting of each metric, 40% or 30%.

(2)
The "Total Target Payout as a % of Salary" for Mr. Dunn was increased from 150% to 200% in connection with his appointment as our chief executive officer in June 2009. Accordingly, the "Total Target Payout as a % of Salary" was computed proportionately based on the number of months he served in each position.

(3)
The "Total Target Payout as a % of Salary" for Mr. Vitelli was increased from 65% to 125% in connection with the increased responsibilities he assumed in June 2009. Accordingly, the "Total Target Payout as a % of Salary" was computed proportionately based on the number of months he served in each role.

(4)
The "Total Target Payout as a % of Salary" listed for Mr. Anderson was premised on a full year in the designated role. Mr. Anderson served in the position for a portion of the year and he remained eligible to receive a pro-rated amount in accordance with the amount of time served in the role.

Based on our actual performance for each of the metrics against the target performance for the metrics, respectively, an Executive Officer STIP score was derived and applied to the target payout percentages. Eligible named executive officers could earn zero to two times their target payout percentage for each respective performance metric, making their maximum Executive Officer STIP payout two times their total target payout.

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For fiscal 2010, the operating income, adjusted SG&A and domestic market share Executive Officer STIP targets and corresponding scores were as follows:

 
  Operating Income
$'s in millions
  Adjusted SG&A
$'s in millions
  Domestic Market Share
Improvement
   
   
 
  STI Score
   
 
  LOW
  HIGH
  LOW
  HIGH
  LOW
  HIGH
   
 
       
 
  $
   
  $
   
   
   
   
   

    2,250     >/=     9,460     </=     2.00 %   >/=     2.0    

    2,200     2,249     9,520     9,461     1.80 %   1.99 %   1.8    

    2,150     2,199     9,580     9,521     1.60 %   1.79 %   1.6    

    2,100     2,149     9,640     9,581     1.40 %   1.59 %   1.4    

    2,050     2,099     9,700     9,641     1.20 %   1.39 %   1.2    

    2,000     2,049     9,760     9,701     1.00 %   1.19 %   1.0   <--Target

    1,900     1,999     9,820     9,761     0.80 %   0.99 %   0.8    

    1,800     1,899     9,880     9,821     0.60 %   0.79 %   0.6    

    1,700     1,799     9,940     9,881     0.40 %   0.59 %   0.4    

    </=     1,699     >/=     9,941     0.00 %   0.39 %   0.0    

For fiscal 2010, our operating income was $2,235 million, a 20% improvement compared to our fiscal 2009 operating income of $1,870; our adjusted SG&A was $9,691 million; and our domestic market share improved by 2.60 percentage points compared to fiscal 2009.

Our adjusted SG&A of $9,691 million compared to reported SG&A of $9,873 million in fiscal 2010 includes certain adjustments for expenses that were likely to vary with volume and performance in an uncertain sales volume environment. Such adjustments were provided for in the plan target design. Accordingly, adjusted SG&A included the impact of restructuring charges of $52 million not included in reported SG&A and was further adjusted for the following: (i) higher incentive pay due to better than planned financial performance as well as higher sales volume than planned that impacted store labor and volume related transactional costs, $121 million, (ii) utilization of budgeted foreign exchange translation rates in our international businesses versus actual translation rates, $94 million, and (iii) greater investment gains than expected in fiscal 2010 on our deferred compensation assets, $19 million (an offset to which is recorded in investment income with no impact to net earnings). Based on these results, the Executive Officer STIP scores for the eligible named executive officers were as follows:

Metric
  Score
 
   

Operating Income

    1.8  

Adjusted SG&A

    1.2  

Domestic Market Share

    2.0  

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The fiscal 2010 Executive Officer STIP payment computations, based on the formula described above, were as follows:

 
  Performance Metrics    
   
   
 
 
  Total Payout
as a % of
Salary(1)

   
   
 
 
  Operating
Income

   
  Adjusted
SG&A

   
  Domestic Market
Share

   
  Eligible
Earnings(2)

  STIP Incentive
Payment(3)

 
   

Mr. Dunn

    132.8 % +     66.4 % +     110.7 % =     309.9 % $ 966,669   $ 2,996,009  

Mr. Muehlbauer

    90 % +     45 % +     75 % =     210 %   624,500     1,311,450  

Ms. Ballard

    90 % +     45 % +     75 % =     210 %   650,001     1,365,002  

Mr. Vitelli

    75.6 % +     37.8 % +     63 % =     176.4 %   559,653     987,228  

Mr. Anderson

    144 % +     72 % +     120 % =     336 %   421,668     1,416,806  

Mr. Pershing

    46.8 % +     23.4 % +     39 % =     109.2 %   414,002     452,090  

Mr. Willett

    90 % +     45 % +     75 % =     210 %   850,003     1,785,007  

(1)
Total Payout as a % of Salary computed as the "Target Payout Percentage" noted above for each performance metric multiplied by the respective Executive Officer STIP score.

(2)
STIP eligible earnings are determined by taking the annual salary as of the 15th of each fiscal month, rather than using actual paid fiscal year earnings.

(3)
"STIP Incentive Payment" computed as the '`Total Payout as a % of Salary" multiplied by the "Eligible Earnings" for each named executive officer.

Mr. Anderson was eligible for a prorated portion of the Executive Officer STIP for the first four months of fiscal 2010 while he served as our Chief Executive Officer. Messrs. Pershing and Willett remained eligible for participation in the Executive Officer STIP without proration for fiscal 2010.

Long-Term Incentive.    During fiscal 2010, we made long-term incentive awards to our named executive officers, except for Messrs. Anderson and Wheway (see Special Circumstances, beginning on page 40), and other eligible employees (typically, manager level and above) pursuant to our LTIP.

Compensation mix is an important factor in determining the LTIP award amounts for our named executive officers. The LTIP award amounts for the named executive officers for fiscal 2010 were reviewed and approved by the Compensation Committee and were determined based upon the application of our Executive Compensation Framework. The annualized value of the fiscal 2010 LTIP award granted to each of our eligible named executive officers was below the median of both the Fortune 100 and our peer group.

For fiscal 2010, the LTIP awards made to our eligible named executive officers were in the form of non-qualified stock options that have a term of ten years and become exercisable over a four-year period at the rate of 25% per year, beginning one year from the date of grant. The exercise price for such options was equal to the closing price of our common stock on the grant date, as quoted on the NYSE. In addition, for fiscal 2010, we changed the frequency and timing of our LTIP awards and granted awards in June, September and January. Beginning in fiscal 2011, the LTIP awards are being granted quarterly.

Our eligible named executive officers received their LTIP awards in the form of stock options because we believe stock options provide the maximum leverage and are the most efficient manner of focusing an executive officer's interests on long-term performance and shareholder value creation. Because our stock price is the performance measure, we believe that stock options are the best way to align our executive officers' interests with our shareholders' interests and to drive performance intended to increase our stock price over the four-year vesting period and ten-year option term. We believe there is greater incentive to drive

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shareholder value by using stock options rather than restricted stock as our long-term executive officer incentive vehicle because of the potential for a great reward and the potential for no reward.

The stock options awarded pursuant to our LTIP to the eligible continuing named executive officers in fiscal 2010 and fiscal 2009 are shown below:

Name
  Fiscal 2010
(number of
shares
subject to
options)

  Fiscal 2009
(number of
shares
subject to
options)

  Percent
Change

 
   

Mr. Dunn(1)(2)

    200,000     138,000     +45 %

Mr. Muehlbauer

    80,000     80,000     0 %

Ms. Ballard

    66,251     66,250     0 %

Mr. Vitelli(2)

    66,251     40,000     +66 %

(1)
Mr. Dunn received his fiscal 2010 LTIP award in full on June 23, 2009, rather than in three installments. In fiscal 2011, we intend to grant Mr. Dunn quarterly LTIP awards, consistent with our grant schedule for eligible employees.

(2)
Messrs. Dunn and Vitelli received an increase in their 2010 LTIP awards due to their changes in role during the fiscal year.

Mr. Wheway did not receive a LTIP award in fiscal 2010. After his change in role to Chief Executive Officer — Best Buy Europe, we intended to include Mr. Wheway in a Best Buy Europe long-term incentive program to create better incentive alignment throughout our European business.

Mr. Pershing's LTIP award for fiscal 2010 was options to purchase 40,000 shares, also unchanged from fiscal 2009. He received three grants prior to his departure in February 2010, all of which were forfeited upon his departure.

Mr. Willett's LTIP award for fiscal 2010 was options to purchase 110,500 shares, unchanged from his LTIP award in fiscal 2009. During fiscal 2010, he received two grants: one in June 2009 (55,250 options) and one in September 2009 (27,625 options). He received these grants prior to his departure in January 2010, and as a qualified retiree, has one year from his departure date to exercise his options.

Additional information regarding LTIP awards granted to the named executive officers in fiscal 2010 is included in Grants of Plan-Based Awards on page 52.

Individual Recognition Restricted Stock Award.    From time to time, we grant individual restricted stock awards to recognize superior performance. In May 2009, Mr. Willett received the following retention awards, which were granted at a time of CEO transition and after he had reached retirement age: (1) 25,000 shares of restricted stock, with vesting to occur three years after the date of grant, and (2) as further incentive to drive operating income by delivering exceptional international results, 50,000 shares of performance-based restricted stock, with vesting based on the achievement of certain performance factors. He forfeited both awards when he retired because they had not yet vested. Additional information about the grants is included in Grants of Plan-Based Awards on page 52.

Special Circumstances.    During fiscal 2010, special circumstances or events arose which resulted in the unique compensation arrangements for the individuals named below.

Mr. Dunn.    In June 2009, Mr. Dunn received options to purchase 300,000 shares as a special grant because of his promotion to CEO. This one-time grant was intended to increase his alignment with shareholders by having a greater portion of his compensation tied to shareholder value creation. The special grant stock options have the same terms as the LTIP stock options.

Mr. Wheway.    Mr. Wheway was hired in May 2009 as Executive Vice President and Chief Operating Officer — International with a salary of £440,000 (or $711,392 based on the average exchange rate in fiscal 2010), a 65% International Leadership STIP target payout percentage, and a special new hire grant of options to purchase 50,000 shares that vest 25% on the first anniversary of the award and annually for three additional years. The performance metrics for the International Leadership STIP are Operating Income, SG&A, International Revenue and Individual Performance Appraisal. In August 2009, he was appointed to the position of Chief Executive Officer — Best Buy Europe and, because of the changes in his

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duties and scope of responsibility, his short-term incentive and LTIP opportunities were revised accordingly.

Mr. Wheway's appointment as Chief Executive Officer — Best Buy Europe was subject to the approval of the Best Buy-appointed directors of the Best Buy Europe board of directors pursuant to the terms of the Shareholders Agreement between The Carphone Warehouse Group PLC and us, dated June 30, 2008, which governs the operations of Best Buy Europe. The Best Buy-appointed directors on the Best Buy Europe board, with the approval of the Compensation Committee and after taking into consideration the recommendation of the full Best Buy Europe board, have the authority under such agreement to select, terminate and set the compensation of the Chief Executive Officer — Best Buy Europe.

Upon becoming Chief Executive Officer — Best Buy Europe, Mr. Wheway became eligible for a performance-based, short-term incentive award payable in cash and expressed as a target payout percentage of his base salary. Mr. Wheway's target payout percentage for fiscal 2010 was 100%, which matches the incentive opportunity of his direct reports. There is no minimum guaranteed payout under the applicable short-term incentive award program, and Mr. Wheway's maximum incentive payout is 200%.

Mr. Wheway's short-term incentive was tailored to align his compensation with his responsibility for the primary retail brands housed in Best Buy Europe. The performance metrics of the incentive are split evenly between (i) the Best Buy retail operations in the U.K. ("Best Buy U.K.") and (ii) The Carphone Warehouse (including The Phone House) retail operations across Europe ("CPW"). The break-out of Mr. Wheway's target and maximum payout percentages for each brand are as follows:


Target Payout Percentage — Wheway

 
  Brand  
 
  Best Buy
U.K.

   
  CPW
   
  Payout as a
% of Salary

 
   

Target

    50 % +     50 % =     100 %

Maximum

    100 % +     100 % =     200 %

The metrics for each brand were determined by identifying which key performance indicators are the most relevant and most strongly correlated to the overall business strategy of each brand. Both brands include customer-focused, employee-focused and financial metrics in order to incent a balanced approach to running the business. In addition, each brand's metrics include a metric from the other brand to ensure leverage across both brands.

The Best Buy U.K. brand metrics include opening plan, profit, cash (capital expenditures per store), employee engagement and earnings before interest and taxes ("EBIT") metrics. Metrics for the Best Best U.K. brand during fiscal 2010 were created with the anticipation that the brand would be in initial stages of store opening during the year and are gauged accordingly. These metrics have weights ranging between 15% and 40%. The CPW brand metrics include EBIT, customer satisfaction, customer complaint run rate, cash flow, employee engagement, trading margin, post pay connections, and opening plan (a cross-over metric from the Best Buy U.K. brand). These metrics have weights ranging between 5% and 7.5%, except for EBIT which is weighted at 50%. We believe disclosure of the specific metric target amounts and actual performance against the targets would cause us material competitive harm and, therefore, have not included such disclosure in this Proxy Statement.

In March 2010, the Compensation Committee approved a payment of 80% of Mr. Wheway's expected short-term incentive payout. This payment was comprised of a prorated 17% expected payout under the International Leadership STIP of £51,861 ($83,849 using the average exchange rate from May 2009

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through the end of the fiscal year), a prorated 33% expected payout at target under the CPW brand metrics of £178,347 ($288,351) and a prorated 33% expected payout at target under the Best Buy U.K. brand metrics of £160,747 ($259,896). Because Best Buy Europe's fiscal year ends one month after ours, the final short-term incentive results and the remainder of Mr. Wheway's payout will likely be determined by the Compensation Committee in June 2010.

Mr. Anderson.    Upon his retirement from the position of CEO in June 2009, Mr. Anderson entered into a part-time employment arrangement through the end of his elected term as Vice Chairman on June 2010. The continued board service and employment arrangement were designed to ensure both a smooth transition for Mr. Dunn to the position of CEO and continuity for our customer centricity strategy. Mr. Anderson's annual salary was reduced to $75,000 effective June 24, 2009, and he remained eligible for the Executive Officer STIP in fiscal 2010, with proration, which resulted in an incentive payment of $1,416,806. He was not eligible for an LTIP award in fiscal 2010. In addition, though he does not receive director fees, he is eligible for stock options and expense reimbursement, as received by the other directors. See Employment Arrangement with Bradbury H. Anderson on page 61.

Mr. Pershing.    On February 5, 2010, Mr. Pershing left our company. In recognition of his 20 years of service, during which he served in many key capacities and was an influential voice within the executive team and for employee engagement, and for his efforts during a time of CEO transition, Mr. Pershing received a payment of $1,293,755, and remained eligible for the Executive Officer STIP for the remainder of fiscal 2010, without proration, which resulted in an incentive payment of $452,090. In addition, the service condition of a performance-based grant of 2,615 shares of restricted stock awarded to Mr. Pershing in October 2006 was waived, allowing Mr. Pershing to be eligible for the award which vested at 46%, or 1,203 shares. Finally, Mr. Pershing received $10,000 for routine tax planning and outplacement services, and coverage of COBRA life insurance, medical and dental benefit premiums for 18 months.

Mr. Willett.    Mr. Willett, age 63, retired from our company effective January 4, 2010. In recognition of Mr. Willett's past contributions to our success and his efforts to ensure an orderly transition, his time-based restricted stock award granted in April 2007 was accelerated, and he became fully vested in 103,820 shares of Best Buy common stock. In addition, he remained eligible to participate in the Executive Officer STIP for the remainder of fiscal 2010, without proration, which resulted in an incentive payment of $1,785,007. Mr. Willett continued to be eligible to receive certain perquisites and benefits following his retirement, including an executive physical exam during 2010, approximately $20,000 for routine tax planning and retirement planning services, and coverage of COBRA life insurance, medical and dental benefit premiums for 12 months.

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Other Compensation Matters

The programs and policies described below are generally applicable to all our named executive officers, unless otherwise noted.

Benefits and Perquisites.    Our named executive officers are generally offered the same employee benefits and perquisites offered to all U.S.-based employees, as summarized in the table below:

Benefit or Perquisite
  All
Full-Time
U.S.-Based
Employees

  Named
Executive
Officers

 
   

Deferred Compensation Plan

    ü(1)     ü(1)  

Employee Discount

    ü     ü  

— Expanded Employee Discount(2)

          ü  

Employee Stock Purchase Plan

    ü     ü  

Health Insurance

    ü     ü  

— Executive Physical Exam

          ü  

Life Insurance

    ü     ü  

Long-Term Disability

    ü     ü  

— Executive Long-Term Disability

          ü  

Paid Time Off

    ü     ü  

Retirement Savings Plan

    ü     ü  

Severance Plan

    ü     ü  

Short-Term Disability

    ü     ü  

Stock Ownership Target Planning

          ü  

Tax Planning and Preparation

          ü  

(1)
Only highly compensated employees and directors are eligible to participate in our Deferred Compensation Plan.

(2)
Our named executive officers are eligible to receive the same employee discount at U.S. Best Buy stores as all U.S.-based employees. However, they are also eligible to receive discounts at stores operated by certain of our subsidiaries that are not generally available to all employees.

We provide the executive benefits and perquisites denoted above to compete for executive talent and to promote the health, well-being and financial security of our named executive officers. A description of executive benefits and perquisites, and the costs associated with providing them for the named executive officers, are reflected in the "All Other Compensation" column of the Summary Compensation Table on page 49.

Deferred Compensation Plan.    We sponsor an unfunded, unsecured Deferred Compensation Plan. We believe the plan provides a tax-deferred retirement savings vehicle that plays an important role in attracting and retaining executive talent. Additional information about our Deferred Compensation Plan is included in Non-Qualified Deferred Compensation Plan on page 56.

Employee Stock Purchase Plan.    Our ESPP allows employees, including our named executive officers, to purchase Best Buy common stock at a discount. The stock purchase price is 85% of the lesser of the closing price on the NYSE at the beginning or at the end of a semi-annual purchase period. There is a maximum purchase value of $25,000 per calendar year for all plan participants.

Retirement Savings Plan.    Our Retirement Savings Plan is intended to meet the requirements of Section 401(k) of the Internal Revenue Code of 1986 (the "Code"). All of our named executive officers are eligible to participate in the plan. The plan provides a safe harbor that allows U.S.-based employees to contribute pre-tax income and immediately vest in company matching contributions. The plan is expected to provide an improved opportunity for such employees to achieve retirement income security. However, the plan is not expected to provide sufficient income replacement relative to our named executive officers' anticipated retirement needs. The potential retirement income gap for our U.S.-based named executive officers may be filled by other reward elements, including long-term incentives, or by the deferral of a portion of base salary or short-term incentive awards under our Deferred Compensation Plan. Under the Retirement Savings Plan, we match employee contributions, including those made by our U.S.-based named executive officers, at rates approved by the Compensation Committee. For fiscal 2010, we matched 100% of the first 3% and 50% of the next 2% of eligible pre-tax earnings (up to IRS limits) contributed by plan participants.

Although we intend to continue the Retirement Savings Plan, as well as to make matching contributions, the

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Compensation Committee may terminate the plan or discontinue the matching contributions at its sole discretion. If the Retirement Savings Plan were to be terminated, all company-matching funds would immediately vest. JPMorgan Chase Bank has served as the trustee for the Retirement Savings Plan since April 1, 2004. We do not sponsor any other retirement plans in which our named executive officers participate.

Severance Plan.    We have adopted a severance plan for nearly all of our employees, including the named executive officers. Although there are differences in benefits depending on the employee's job level, the basic elements of the plan are comparable for all regular employees. The plan covers regular full-time and part-time U.S. employees of Best Buy Co., Inc., Best Buy Stores, L.P., Best Buy International Holdings, Inc. and Best Buy Enterprise Services, Inc., and their domestic subsidiaries, who have at least six months of continuous service, except for those with a separate agreement. The plan covers involuntary terminations due to job elimination and discontinuation, office closing, reduction in force, business restructuring or other circumstances as we determine. Eligible terminated employees would receive a severance payment ranging from two weeks to 96 weeks base salary. Basic employee benefits such as medical, dental and life insurance would be continued for six months to up to 18 months. The named executive officers are eligible for 96 weeks of base salary and 18 months of benefit continuation.

Equity Award Grant Practices.    All equity-based incentive awards, including awards to our named executive officers and directors, must be approved by the Compensation Committee.

Timing of Awards.    Beginning in June 2009, we changed the frequency and timing of our long-term incentive awards for eligible employees from single annual grants to three grants in fiscal 2010 and quarterly grants starting in fiscal 2011. Special long-term incentive awards may be granted at any time, as deemed necessary for new hires, promotions, recognition or retention purposes. In April of each year, the Compensation Committee considers a stock option grant for directors. The Compensation Committee also considers stock option grants for new directors upon their appointment to the Board. We do not coordinate or time the release of material information around our grant dates in order to affect the value of the compensation. Our named executive officers do not play a role in the selection of grant dates.

Determination of Grant Date.    The grant date is the date that the Compensation Committee approves the equity award.

Determination of Exercise Price.    The exercise price for stock option awards is equal to the last reported sale price of our common stock, as quoted on the NYSE, on the grant date. Under the terms of the Omnibus Plan, we may not grant stock options at a discount to fair market value. Unless otherwise determined by the Compensation Committee, "fair market value" as of a given date is the closing price of our common stock as quoted 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.

Re-pricing of Stock Options.    Under the terms of our Omnibus Plan, a stock option may not, without the approval of our shareholders, be: (i) amended to reduce its initial exercise price, except in the case of a stock split or similar event; or (ii) canceled and replaced by a stock option having a lower exercise price.

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. The guidelines apply to all officers, including the named executive officers, and are part of an effort to encourage employee stock ownership. Under the guidelines, we expect our officers, including the named executive officers, to acquire ownership of a fixed number of shares, based on their position, within five fiscal years of assuming their current position. The stock ownership expectation generally remains effective for as long as the officer holds the position. The guidelines

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provide for stock ownership levels for our continuing named executive officers as follows:

Name
  Ownership Target
  (1)
 

Mr. Dunn

  140,000 shares    

Mr. Muehlbauer

  55,000 shares    

Ms. Ballard

  55,000 shares    

Mr. Vitelli

  55,000 shares    

Mr. Wheway

  35,000 shares    

(1)
Ownership targets will be adjusted for stock splits, stock dividends or similar events.

The Compensation Committee reviews progress toward achievement of the ownership target at least annually. 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; and

    50% of non-vested shares subject to performance conditions granted under our LTIP.

Until the ownership target is met, we expect officers to retain: (i) 25% of the net proceeds received from the exercise of a stock option in the form of Best Buy common stock; and (ii) 100% of shares net of taxes issued in connection with the lapse of restrictions on restricted stock or performance share awards. In fiscal 2010, all continuing named executive officers were in compliance with the ownership guidelines.

Clawback Provisions.    Our senior management performance awards typically include clawback provisions, particularly where it is difficult to match the period of an employee's influence on business results. We may exercise our rights under such provisions particularly when other mitigation strategies are difficult to achieve.

Tax and Other Considerations.

Tax Deductibility of Compensation.    Section 162(m) of the Code limits the deductibility of compensation in excess of $1 million paid to the CEO or any of the three other most highly compensated executive officers, unless the compensation qualifies as "performance-based compensation." Among other things, in order to be deemed performance-based compensation, the compensation must be based on the achievement of pre-established, objective performance criteria and must be pursuant to a plan that has been approved by our shareholders. It is intended that all performance-based compensation paid in fiscal 2010 to our named executive officers under the plans and programs described above will qualify for deductibility, either because the compensation is below the threshold for non-deductibility provided in Section 162(m), or because the payment of amounts in excess of $1 million qualify as performance-based compensation under the provisions of Section 162(m).

We believe that it is important to continue to be able to take available company tax deductions with respect to the compensation paid to our named executive officers. Therefore, we strive to take all actions that may be necessary under Section 162(m) to qualify for available tax deductions related to executive compensation. We do not, however, make compensation decisions based solely on the availability of a deduction under Section 162(m).

Accounting Treatment.    We account for stock-based awards based on their grant date fair value, as determined under ASC Topic 718, Compensation — Stock Compensation. Compensation expense for these awards is recognized on a straight-line basis over the requisite service period of the award (or to an employee's eligible retirement date, if earlier). If the award is subject to a performance condition, however, the cost will vary based on our estimate of the number of shares that will ultimately vest.

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APPENDIX A

Towers Perrin U.S. CDB General Industry Executive Database 2009 Report
General Industry >$20B
Number of Participants: 107

3M
7-Eleven*
Abbott Laboratories
Accenture
Alcoa
Amazon.com
American Airlines
AstraZeneca
AT&T
BAE Systems*
Bayer CropScience*
Bayer*
Benjamin Moore*
Best Buy
Boeing
Cardinal Health
Cargill
Caterpillar
Chrysler
CHS
CITGO Petroleum
Coca-Cola Enterprises
Continental Automotive Systems*
CVS Caremark
Daimler Trucks North America*
Dannon*
Delta Air Lines
DIRECTV
Dow Chemical
DuPont
Eli Lilly
Fairchild Controls*
Fluor
Ford
Freeport-McMoRan Copper & Gold
Gavilon
  Genentech*
General Dynamics
General Electric
General Motors
GlaxoSmithKline
Goodyear Tire & Rubber
Henkel of America*
Hess
Hitachi Data Systems*
Hoffmann-La Roche*
Honeywell
IBM
IKON Office Solutions*
Intel
International Paper
Johns-Manville*
Johnson & Johnson
Johnson Controls
Koch Industries
Lafarge North America*
Lockheed Martin
McDonald's
McKesson
Medco Health Solutions
MedImmune*
Merck & Co.
Microsoft
Motorola
Neoris USA*
Nestle USA*
Nokia
Novartis
Novartis Consumer Health*
Occidental Petroleum
Orange Business Services*
Panasonic of North America*
  PepsiCoPepsiCo
Pfizer
Pioneer Hi-Bred International*
Raytheon
Rio Tinto*
Roche Diagnostics*
Sanofi-Aventis*
Sanofi-Pasteur*
Schering-Plough
Schlumberger
Schneider Electric*
Siemens*
Sodexo USA*
Sony Corporation of America*
Sprint Nextel
Staples
Sunoco
Target
Time Warner
Time Warner Cable
T-Mobile USA*
U.S. Foodservice
Unilever United States*
Union Pacific
United Airlines
United States Steel
United Technologies
Valero Energy
Verizon
Volvo Group North America*
Walt Disney
Whirlpool
Wm. Wrigley Jr.*
Wyeth Pharmaceuticals
Xerox

* Subsidiary

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Towers Perrin U.S. CDB Retail/Wholesale Executive Database 2009 Report
Retail/Wholesale Database
Number of Participants: 41

7-Eleven
A&P
Abercrombie & Fitch
Aeropostale
Avon
Best Buy
Big Lots
Blockbuster
Brown Shoe
Columbia Sportswear
CVS Caremark
Denny's
Gap
Hanesbrands
  Hannaford
Harry Winston
J. Crew
J.C. Penney Company
Kenneth Cole
Kohl's
L.L. Bean
Limited
Mary Kay
NIKE
Office Depot
Papa John's
PetSmart
Phillips-Van Heusen
  School Specialty
Staples
Starbucks
Target
United Rentals
Valero Energy
VF
Warnaco
Wendy's/Arby's Group
Whole Foods Market
Williams-Sonoma
Winn-Dixie Stores
Zale

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Table of Contents


Compensation and Human Resources Committee Report on Executive Compensation

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis, above, with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2010, and in this Proxy Statement.

    COMPENSATION AND HUMAN RESOURCES COMMITTEE

      Frank D. Trestman, Chairman
      Kathy J. Higgins Victor
      Ronald James
      Hatim A. Tyabji


Compensation Committee Interlocks and Insider Participation

Frank D. Trestman, Chairman of the Compensation Committee.    The Avalon Group is a real estate development partnership in which Mr. Trestman and his son-in-law each own one-third interests. Mr. Trestman is the chairman of The Avalon Group, with the other partners responsible for operations. In fiscal 2007, we entered into a 10-year lease with Avalon-Timbercrest IV, LLC ("Avalon-Timbercrest") for a retail store located in a development in which The Avalon Group has an interest. Mr. Trestman and his son-in-law each own a 20% interest in the property we lease. Our real estate department has determined that the rental payments under the lease are competitive for the real estate market in the relevant geographic area. In fiscal 2010, we paid aggregate rents to Avalon-Timbercrest of approximately $884,000. The Board determined that the lease is in our best interest and has terms that are competitive with terms available from unaffiliated third parties.

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Compensation of Executive Officers

Summary Compensation Table

The table below summarizes the total compensation earned by each of our named executive officers during fiscal 2010:

Name and Title
  Fiscal
Year

  Base
Salary

  (1)
  Bonus
  (2)
  Stock
Awards

  (3)
  Option
Awards

  (4)
  Non-Equity
Incentive Plan
Compensation

  (5)
  Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings

  (6)
  All Other
Compensation

  (7)
  Total
 
   
Brian J. Dunn     2010   $ 961,541       $       $       $ 6,220,000       $ 2,996,009               $ 54,510       $ 10,232,060  
  Chief Executive     2009     876,926                 0   (8)     1,487,640                         15,140         2,379,706  
  Officer     2008     774,231                         2,190,060         988,125                 11,980         3,964,396  

James L. Muehlbauer

 

 

2010

 

 

622,616

 

 

 

 


 

 

 

 


 

 

 

 

1,012,000

 

 

 

 

1,311,450

 

 

 

 


 

 

 

 

12,145

 

 

 

 

2,958,211

 
  Executive Vice     2009     551,878                 876,600   (8)     862,400                         16,541         2,307,419  
  President —     2008     345,013         75,000                 650,194         296,596                 10,099         1,376,902  
  Finance and Chief                                                                                    
  Financial Officer                                                                                    

Shari L. Ballard

 

 

2010

 

 

650,001

 

 

 

 


 

 

 

 


 

 

 

 

838,075

 

 

 

 

1,365,002

 

 

 

 


 

 

 

 

67,090

 

 

 

 

2,920,168

 
  Executive Vice     2009     630,770                 0   (8)     714,175                         12,329         1,357,274  
  President,     2008     540,385                         1,050,594         509,583                 9,340         2,109,902  
  President —                                                                                    
  Americas                                                                                    

Michael A. Vitelli

 

 

2010

 

 

553,445

 

 

 

 


 

 

 

 


 

 

 

 

838,075

 

 

 

 

987,228

 

 

 

 


 

 

 

 

41,153

 

 

 

 

2,419,901

 
  Executive Vice     2009     474,278                 0   (8)     431,200                         13,649         919,127  
  President,     2008     471,160                 182,399         166,397         226,205                 16,056         1,062,217  
  President —                                                                                    
  Americas                                                                                    

J. Scott Wheway(9)

 

 

2010

 

 

547,225

 

 

 

 


 

 

 

 


 

 

 

 

622,000

 

 

 

 

632,096

 

(10)

 

 


 

 

 

 

4,618

 

 

 

 

1,805,939

 
  Chief Executive     2009                                                              
  Officer —     2008                                                              
  Best Buy Europe                                                                                    

Bradbury H.

 

 

2010

 

 

532,694

 

 

 

 


 

 

 

 


 

 

 

 


 

 

 

 

1,416,806

 

 

 

 


 

 

 

 

57,359

 

 

 

 

2,006,859

 
  Anderson(11)     2009     1,247,311                                                 15,869         1,263,180  
  Vice Chairman     2008     1,172,995                                 1,994,092                 16,151         3,183,238  
  and former                                                                                    
  Chief Executive                                                                                    
  Officer                                                                                    

John E. Pershing(12)

 

 

2010

 

 

406,040

 

 

 

 


 

 

 

 


 

 

 

 

506,000

 

 

 

 

452,090

 

 

 

 


 

 

 

 

1,367,991

 

 

 

 

2,732,121

 
  Former Executive     2009     411,309                 0   (8)     431,200                         11,293         853,802  
  Vice President —     2008     286,668                         160,684         129,391                 9,730         586,473  
  Human Capital                                                                                    

Robert A. Willett(13)

 

 

2010

 

 

751,926

 

 

 

 


 

 

 

 

2,325,000

 

(14)

 

 

1,051,684

 

 

 

 

1,785,007

 

 

 

 


 

 

 

 

228,665

 

 

 

 

6,142,282

 
  Former Chief     2009     821,157                 0   (8)     1,191,190                         44,047         2,056,394  
  Executive Officer — Best Buy International     2008     685,577                 5,961,129         876,818         730,469                 29,893         8,283,886  

(1)
These amounts are before any deferrals under the Deferred Compensation Plan. Additional information about deferred amounts can be found in the Non-Qualified Deferred Compensation table on page 56.

(2)
Our named executive officers were not entitled to receive any payments that would be categorized as a "Bonus" payment for fiscal 2010.

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Table of Contents

(3)
These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board ASC Topic 718, Compensation — Stock Compensation, for stock-based incentive awards granted under our long-term incentive programs during fiscal 2010. The amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. Any performance-based awards included in these amounts have been valued based on the probable outcome of the performance condition(s) as of the grant date.

(4)
These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board ASC Topic 718, Compensation — Stock Compensation, for stock-based incentive awards granted under our long-term incentive programs during fiscal 2010. The amounts reported have not been adjusted to eliminate service-based forfeiture assumptions.

(5)
These amounts reflect short-term incentive payments made under our Executive Officer STIP. The respective short-term incentive programs are described in Short-Term Incentive for Messrs. Dunn, Muehlbauer, Vitelli, Anderson, Pershing and Willett and Ms. Ballard beginning on page 36 and in Special Circumstances for Mr. Wheway beginning on page 40.

(6)
We do not provide guaranteed, above-market or preferential earnings on compensation deferred under our Deferred Compensation Plan. The investment options available for notional investment of deferred compensation are similar to those available under our Retirement Savings Plan and are described in Non-Qualified Deferred Compensation on page 56.

(7)
For fiscal 2010, these amounts include All Other Compensation as described in the following table:

  Name
  Retirement Plan
Contribution

  (a)
  Life and Long-Term
Disability Insurance
Premiums

  (b)
  Tax Services
Reimbursement

  (c)
  Executive
Physical

  (d)
  Other
  Total
 
     
 

Brian J. Dunn

  $ 9,127       $ 2,390       $ 1,930               $ 41,063 (e) $ 54,510  
 

James L. Muehlbauer

   
10,059
       
2,086
       
       
       
   
12,145
 
 

Shari L. Ballard

   
8,625
       
1,505
       
       
4,740
       
52,220

(f)
 
67,090
 
 

Michael A. Vitelli

   
10,545
       
2,744
       
1,930
       
       
25,934

(e)
 
41,153
 
 

J. Scott Wheway

   
       
4,618
       
       
       
   
4,618
 
 

Bradbury H. Anderson

   
2,176
       
7,555
       
2,000
       
       
45,628

(e)
 
57,359
 
 

John E. Pershing

   
9,909
       
1,083
       
       
       
1,356,999

(g)
 
1,367,991
 
 

Robert A. Willett

   
8,492
       
7,443
       
21,970
       
       
190,760

(h)
 
228,665
 

    (a)
    These amounts reflect our matching contributions to the named executive officer's Retirement Savings Plan account.

    (b)
    Except for Mr. Wheway, these amounts reflect the portions of premiums paid by us for: (i) life insurance coverage exceeding $50,000, and (ii) supplemental executive long-term disability insurance. For Mr. Wheway, the amount represents the premiums paid by us for life assurance and Permanent Health Insurance coverage in the United Kingdom.

    (c)
    These amounts reflect reimbursement for tax planning and preparation expenses.

    (d)
    The amount in this column reflects payment for a physical exam.

    (e)
    The amount reflects a dividend equivalent payment.

    (f)
    The amount reflects a dividend equivalent payment and imputed income from health benefits.

    (g)
    The amount reflects payments received related to Mr. Pershing's termination from Best Buy, payment for accrued vacation days, COBRA coverage following Mr. Pershing's departure and a dividend equivalent payment. For additional information about payments received due to Mr. Pershing's termination see Special Circumstances beginning on page 40.

    (h)
    The amount reflects tax gross-up payments, immigration-related payments, a dividend equivalent payment, payment for accrued vacation days and COBRA coverage following Mr. Willett's retirement.
(8)
This amount includes the grant date fair value of the probable outcome of a performance-based restricted stock award that will be earned depending on the level of achievement of performance goals established for the following metrics: (i) comparable store sales; (ii) profit growth; and (iii) revenue growth. The earned portion, if any, of the first 50% of the award, is scheduled to vest by February 26, 2011, with the remaining 50% of the award, if

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Table of Contents

    any, scheduled to vest by March 3, 2012. The maximum value of the performance-based award, assuming the highest level of performance conditions is as follows:

  Name
  Probable Grant Date
Fair Value of
Performance-Based
Award

  Target Grant
in Shares

  Maximum Grant
in Shares

  Maximum Grant Date
Fair Value of
Performance-Based
Award

   
 

Brian J. Dunn

  $0   190,000   475,000   $19,565,250
 

James L. Muehlbauer

 
0
 
100,000
 
250,000
 
10,297,500
 

Shari L. Ballard

 
0
 
82,750
 
206,875
 
8,521,181
 

Michael A. Vitelli

 
0
 
50,000
 
125,000
 
5,148,750
 

John E. Pershing(a)

 
0
 
50,000
 
125,000
 
5,148,750
 

Robert A. Willett

 
0
 
190,000
 
475,000
 
19,565,250

    (a)
    Mr. Pershing forfeited this award when he terminated employment with us on February 5, 2010.

    Targets for this award, which require material enterprise growth, were previously disclosed on Form 8-K filed with the SEC on August 8, 2008.

(9)
Mr. Wheway joined Best Buy in May 2009. His compensation has been converted to United States dollars from pound sterling using a conversion rate of 1.6168, the average rate from May 2009 through the end of the fiscal year.

(10)
This amount reflects Mr. Wheway's payment of 80% of his expected total fiscal 2010 short-term incentive payout as described in Special Circumstances beginning on page 40.

(11)
Mr. Anderson is included as a named executive officer because he served as our Chief Executive Officer through June 24, 2009.

(12)
Mr. Pershing terminated his employment on February 5, 2010. Mr. Pershing is included as a named executive officer because of the lump sum separation package he received upon his departure, as described in Special Circumstances beginning on page 40.

(13)
Mr. Willett's last day with the Company was January 4, 2010. Mr. Willett is included as a named executive officer because of the compensation he earned through the date of his retirement.

(14)
This amount reflects a time-based restricted stock award ($930,000) scheduled to vest three years after the grant date, on May 1, 2012, and a performance-based restricted stock award ($1,395,000) earned based on the level of enterprise operating income in fiscal 2010. The earned portion of the performance-based award was scheduled to vest on February 26, 2011. The maximum value of the performance-based award, assuming the highest level of performance conditions, was $1,860,000. Mr. Willett forfeited both awards when he terminated employment with us on January 4, 2010.

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Table of Contents

Grants of Plan-Based Awards

The table below summarizes grants under our long-term incentive programs to each of our named executive officers during fiscal 2010:

 
   
   
   
   
   
   
   
   
   
  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)

  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

   
   
   
 
   
   
   
  Estimated Future Payouts Under Non-Equity Incentive Plan Awards   Estimated Future Payouts Under Equity Incentive Plan Awards    
  Exercise
or Base
Price of
Option
Awards
($/Sh)

   
Name
  Grant
Date

  Grant Date
Fair Value

  (1)
  Threshold
($)

  Target
($)

  Maximum
($)

  Threshold
(#)

  Target
(#)

  Maximum
(#)

  (2)
  (2)
 

Brian J. Dunn

    6/23/2009   $ 2,488,000                                     200,000       $ 32.98    

    6/23/2009 (3)   3,732,000                                                   300,000         32.98    

James L.

   
6/23/2009
   
497,600
                                                 
40,000
       
32.98
   
 

Muehlbauer

    9/17/2009     263,800                                                   20,000         37.59    

    1/13/2010     250,600                                                   20,000         39.73    

Shari L. Ballard

   
6/23/2009
   
412,075
                                                 
33,125
       
32.98
   

    9/17/2009     218,466                                                   16,563         37.59    

    1/13/2010     207,534                                                   16,563         39.73    

Michael A. Vitelli

   
6/23/2009
   
412,075
                                                 
33,125
       
32.98
   

    9/17/2009     218,466                                                   16,563         37.59    

    1/13/2010     207,534                                                   16,563         39.73    

J. Scott Wheway

   
6/23/2009

(4)
 
622,000
                                                 
50,000
       
32.98
   

Bradbury H.

                                                                             
 

Anderson(5)

                                                       

John E. Pershing(6)

   
6/23/2009
   
248,800
                                                 
20,000
       
32.98
   

    9/17/2009     131,900                                                   10,000         37.59    

    1/13/2010     125,300                                                   10,000         39.73    

Robert A. Willett

   
5/1/2009

(7)
 
930,000
                                           
25,000
                   

    5/1/2009 (8)   1,395,000                           12,500     37,500     50,000                          

    6/23/2009 (9)   687,310                                                   55,250         32.98    

    9/17/2009 (9)   364,374                                                   27,625         37.59    

(1)
These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board ASC Topic 718, Compensation — Stock Compensation.

(2)
Non-qualified stock options that have a term of 10 years and become exercisable over a four-year period at the rate of 25% per year, beginning one year from the grant date. The option exercise price is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. The stock option awards are described in greater detail in Long-Term Incentive beginning on page 39.

(3)
As discussed in Special Circumstances beginning on page 40, Mr. Dunn received this special one-time option grant because of his promotion to CEO.

(4)
As discussed in Special Circumstances beginning on page 40, Mr. Wheway's stock option grant was a new hire award.

(5)
Mr. Anderson did not receive LTIP awards during fiscal 2010.

(6)
All plan-based awards granted to Mr. Pershing during fiscal 2010 were irrevocably forfeited when he terminated employment with us on February 5, 2010.

(7)
Time-based restricted stock award that was scheduled to vest three years after the grant date, on May 1, 2012. This award was irrevocably forfeited when Mr. Willett terminated employment with us on January 4, 2010.

(8)
Performance-based restricted stock award that was to be earned based on the level of enterprise operating income in fiscal 2010. The earned portion of the award was scheduled to vest on February 26, 2011. The maximum value of the award, assuming the highest level of performance conditions, was $1,860,000. This award was irrevocably forfeited when Mr. Willett terminated employment with us on January 4, 2010.

(9)
Mr. Willett has one year from his qualified retirement date to exercise these awards.

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Table of Contents

Outstanding Equity Awards at Fiscal Year-End

The following table provides a summary of equity awards outstanding for each of the named executive officers as of the end of fiscal 2010:

 
  Option Awards   Stock Awards
Name
  Option
Grant Date

  (1)(2)
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

  Option
Exercise
Price

  Option
Expiration
Date

  Stock
Award
Grant Date

  (1)
  Number of
Shares or
Units of
Stock That
Have Not
Vested(#)

  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested

  (3)
  Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Right
That Have
Not Vested
(#)

  Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)

  (3)
 

Brian J.

  6/23/2009               200,000   $ 32.98   6/23/2019                                      
 

Dunn

  6/23/2009               300,000     32.98   6/23/2019                                      

  10/31/2008         34,500     103,500     26.88   10/31/2018   8/5/2008   (4)                   190,000   $ 6,935,000    

  10/18/2007         69,000     69,000     47.84   10/17/2017                                      

  10/23/2006         103,500     34,500     55.46   10/22/2016                                      

  11/8/2005         80,000           46.80   11/7/2015                                      

  10/11/2004         47,250           36.73   10/10/2014                                      

  11/3/2003         51,750           39.59   11/2/2013                                      

  1/16/2003         30,000           19.11   1/15/2013                                      

  4/11/2002         65,588           34.18   4/10/2012                                      

  4/27/2001         48,938           24.71   4/26/2011                                      

  12/15/2000         4,923           11.11   12/14/2010                                      

  4/14/2000         16,875           31.17   4/13/2010                                      
     

James L.

  1/13/2010               20,000   $ 39.73   1/13/2020                                      
 

Muehlbauer

  9/17/2009               20,000     37.59   9/17/2019                                      

  6/23/2009               40,000     32.98   6/23/2019                                      

  10/31/2008         20,000     60,000     26.88   10/31/2018   8/5/2008   (4)                   100,000   $ 3,650,000    

                                4/18/2008   (5)   10,000   $ 365,000                    

  10/18/2007         20,485     20,485     47.84   10/17/2017                                      

  10/23/2006         7,785     2,595     55.46   10/22/2016                                      

  11/8/2005         30,053           46.80   11/7/2015                                      

  10/11/2004         28,500           36.73   10/10/2014                                      

  11/3/2003         25,500           39.59   11/2/2013                                      

  1/16/2003         7,500           19.11   1/15/2013                                      

  4/11/2002         16,875           34.18   4/10/2012                                      

  3/4/2002         4,220           31.04   3/3/2012                                      
     

Shari L.

 
1/13/2010
             
16,563
 
$

39.73
 
1/13/2020
                                     
 

Ballard

  9/17/2009               16,563     37.59   9/17/2019                                      

  6/23/2009               33,125     32.98   6/23/2019                                      

  10/31/2008         16,562     49,688     26.88   10/31/2018   8/5/2008   (4)                   82,750   $ 3,020,375    

  10/18/2007         33,100     33,100     47.84   10/17/2017                                      

  10/23/2006         49,650     16,550     55.46   10/22/2016                                      

  11/8/2005         30,005           46.80   11/7/2015                                      

  10/11/2004         19,350           36.73   10/10/2014                                      

  11/3/2003         32,325           39.59   11/2/2013                                      
     

Michael A.

 
1/13/2010
             
16,563
 
$

39.73
 
1/13/2020
                                     
 

Vitelli

  9/17/2009               16,563     37.59   9/17/2019                                      

  6/23/2009               33,125     32.98   6/23/2019                                      

  10/31/2008         10,000     30,000     26.88   10/31/2018   8/5/2008   (4)                   50,000   $ 1,825,000    

  10/18/2007         5,242     5,243     47.84   10/17/2017   10/18/2007   (6)                   3,495     127,568    

  10/23/2006         17,598     5,867     55.46   10/22/2016                                      

  11/08/2005         15,027           46.80   11/07/2015                                      

  10/11/2004         3,000           36.73   10/10/2014                                      

  02/09/2004         19,125           35.73   02/08/2014                                      
     

J. Scott Wheway

 
6/23/2009
             
50,000
 
$

32.98
 
6/22/2019
                                     
     

Bradbury H.

  4/14/2003         11,250         $ 20.65   4/13/2013                                      
 

Anderson

  1/16/2003         112,500           19.11   1/15/2013                                      

  4/11/2002         348,750           34.18   4/10/2012                                      

  4/27/2001         168,750           24.71   4/26/2011                                      

  4/14/2000         92,250           31.17   4/13/2010                                      
     

                                                                   

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Table of Contents

 
  Option Awards   Stock Awards
Name
  Option
Grant Date

  (1)(2)
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

  Option
Exercise
Price

  Option
Expiration
Date

  Stock
Award
Grant Date

  (1)
  Number of
Shares or
Units of
Stock That
Have Not
Vested(#)

  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested

  (3)
  Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Right
That Have
Not Vested
(#)

  Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)

  (3)
 

John E.

  10/18/2007         5,062         $ 47.84   10/17/2017                                      
 

Pershing(7)

  10/23/2006         3,922           55.46   10/22/2016                                      

  11/8/2005         6,147           46.80   11/7/2015                                      

  10/11/2004         5,434           36.73   10/10/2014                                      

  11/3/2003         9,450           39.59   11/2/2013                                      
     

Robert A.

 
9/17/2009
       
27,625
       
$

37.59
 
9/17/2019
                                     
 

Willett(8)

  6/23/2009         55,250           32.98   6/23/2019                                      

  10/31/2008         110,500           26.88   10/31/2018                                      

                                8/5/2008   (4)(9)                   190,000   $ 6,935,000    

  10/18/2007         55,250           47.84   10/17/2017   10/18/2007   (6)(9)                   18,417     672,221    

  10/23/2006         110,500           55.46   10/22/2016                                      

  11/8/2005         30,005           46.80   11/7/2015                                      

  10/11/2004         45,000           36.73   10/10/2014                                      

  4/23/2004         150,000           37.00   4/22/2014                                      

  4/12/2002         11,250           34.44   4/11/2012                                      

(1)
For a better understanding of the equity awards included in this table, we have provided the grant date of each award.

(2)
All stock option awards reported become exercisable over a four-year period at the rate of 25% per year, beginning one year from the grant date indicated, except for the following grants which became exercisable immediately: (i) the grants to Mr. Anderson for his service as a director on April 14, 2003 — 11,250 shares; April 11, 2002 — 11,250 shares; April 27, 2001 — 11,250 shares; and April 14, 2000 — 11,250 shares.

(3)
These values were determined based on the closing price of Best Buy common stock on February 26, 2010, the last trading day in fiscal 2010. The closing price as reported by the NYSE on February 26, 2010, was $36.50.

(4)
Performance-based restricted stock award that will be earned depending on the level of achievement of performance goals established for the following metrics: (i) comparable store sales; (ii) profit growth; and (iii) revenue growth. The earned portion of the first 50% of the award, if any, is scheduled to vest by February 26, 2011, with the remaining 50% of the award, if any, scheduled to vest by March 3, 2012. The number of shares reflected is the target grant.

(5)
Time-based restricted stock award which vested 25% on the grant date, and will vest an additional 25% on each of the next three anniversaries of the grant date, provided the executive has been continually employed with us through those dates.

(6)
Performance-based restricted stock award, scheduled to vest in a range from 0% to 100% on February 26, 2011 (end of fiscal 2011), depending on the level of total shareholder return ("TSR" is the compound annual growth rate that shareholders receive on their investment, including both paid dividends and stock price appreciation) achieved by our common stock compared to the TSR of companies that comprise the S&P 500 during a three-year incentive period.

(7)
Mr. Pershing was eligible to exercise his vested stock options for 60 days following his last day of employment on February 5, 2010.

(8)
Mr. Willett can exercise his vested stock options for a period of one year following his retirement on January 4, 2010.

(9)
Mr. Willett remains eligible to receive a prorated share of this award when it vests.

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Table of Contents

Options Exercised 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 named executive officers during fiscal 2010:

 
  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)
    

 

Brian J. Dunn

    16,875 (3) $ 302,738           $    

James L. Muehlbauer

                8,013 (4)   306,200    

Shari L. Ballard

                       

Michael A. Vitelli

                5,000 (5)   160,400    

J. Scott Wheway

                       

Bradbury H. Anderson

    605,250 (6)   8,076,995                

John E. Pershing

    10,000 (7)   139,050         1,046 (8)   38,179    

Robert A. Willett

                103,820 (9)   4,172,526    

(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)
Mr. Dunn exercised options to purchase 16,875 shares on April 9, 2009, at an exercise price of $23.19 and an average market price of $41.13.

(4)
The number reported reflects two time-based restricted stock awards and one performance-based restricted stock award. The first time-based award was granted on June 20, 2006, vested 25% on the grant date and vested another 25% on each of the next two anniversaries of the grant date. The remaining 25% (625 shares) vested on June 20, 2009. The second time-based award was granted on April 18, 2008, vested 25% on the grant date, vested 25% (5,000 shares) on April 18, 2009, and is scheduled to vest 25% on each of the next two anniversaries of the grant date. The performance-based restricted stock award vested on February 27, 2010. The number of shares awarded (2,388 shares) was determined by the level of TSR achieved by our common stock compared to the TSR of companies that comprise the S&P 500 during a three-year incentive period.

(5)
The number reported reflects a time-based restricted stock award which was granted on July 5, 2006, vested 25% on the grant and another 25% on each of the two subsequent anniversaries of the grant date. The remaining 25% (5,000 shares) vested on July 5, 2009.

(6)
Mr. Anderson exercised options to purchase shares as follows:

  Number of Shares
  Exercise Date
  Exercise Price
  Average Market Price
   
  50,000   March 31, 2009   $23.19   $37.44
  50,000   April 1, 2009   $23.19   $37.37
  46,250   April 2, 2009   $23.19   $39.77
  31,000   November 3, 2009   $31.17   $39.15
  30,000   November 11, 2009   $24.71   $43.00
  31,000   November 17, 2009   $31.17   $42.53
  60,000   November 23, 2009   $24.71   $43.77
  31,000   December 1, 2009   $31.17   $43.31
  90,000   December 14, 2009   $24.71   $45.10
  31,000   December 15, 2009   $31.17   $42.36
  31,000   December 29, 2009   $31.17   $40.73
  31,000   January 12, 2010   $31.17   $38.93
  31,000   January 26, 2010   $31.17   $37.27
  31,000   February 9, 2010   $31.17   $35.83
  31,000   February 23, 2010   $31.17   $36.59

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Table of Contents

(7)
Mr. Pershing exercised options to purchase 5,000 shares on November 16, 2009, at an exercise price of $26.88 and a market price of $42.82 and 5,000 shares on January 21, 2010, at an exercise price of $26.88 and a market price of $38.75.

(8)
Performance-based restricted stock award granted on October 23, 2006, that vested on February 27, 2010. The number of shares awarded (1,046 shares) was determined by the level of TSR achieved by our common stock compared to the TSR of companies that comprise the S&P 500 during a three-year incentive period. Pursuant to the terms of his separation agreement, Mr. Pershing remained eligible for this award after his termination.

(9)
The number reported reflects time-based restricted shares granted on April 26, 2007, which vested 100% on January 4, 2010, upon Mr. Willett's retirement.

Non-Qualified Deferred Compensation

The following table shows the account balances at February 27, 2010, and the contributions and earnings during fiscal 2010, for our named executive officers under our Deferred Compensation Plan, an unfunded plan. The Deferred Compensation Plan allows highly compensated employees, including the named executive officers, and directors to defer:

    Up to 75% of base salary; and

    Up to 100% of a cash bonus (earned and paid in the same year), short-term incentive compensation (earned and paid in different years) and director fees, as applicable.

Name
  Executive
Contributions
in Fiscal 2010

  (1)
  Registrant
Contributions
in Fiscal 2010

  Aggregate
Earnings
(Losses)
in Fiscal 2010

  Aggregate
Withdrawals/
Contributions

  Aggregate
Balance at
February 27, 2010

 
   

Brian J. Dunn

  $       $   $   $   $  

James L. Muehlbauer

                295,075         845,875  

Shari L. Ballard

    113,750             166,844         692,932  

Michael A. Vitelli

                         

J. Scott Wheway

                         

Bradbury H. Anderson

                1,009,428         3,670,031  

John E. Pershing

                6,626     (21,067 )   0  

Robert A. Willett

                         

(1)
These amounts were also reported as either "Base Salary" or "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table on page 49.

Investments.    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

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Table of Contents


investments, but rather serve as a measurement of performance. The options available under the Deferred Compensation Plan and their rates of return for the calendar year ended December 31, 2009, were as follows:

Investment
  Rate of Return(1)
 

NVIT Money Market

  0.00%

PIMCO VIT Total Return

  0.85%

PIMCO VIT High-Yield Bond

  5.97%

Fidelity VIP II Asset Manager

  3.10%

Vanguard VIF Diversified Value

  7.34%

Vanguard VIF Equity Index

  6.03%

MFS VIT Growth Series

  6.78%

NVIT Multi-Manager Small Cap Value

  3.88%

Vanguard VIF Small Company Growth

  4.50%

Vanguard VIF International

  4.29%

(1)
Rate of return is net of investment management fees, fund expenses or administrative charges, as applicable.

Distributions.    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 time that begins at or after the participant's retirement. Distributions are paid in a lump sum or in quarterly installments at the participant's option. 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 the account balance.

Employer-Matching Contributions and Vesting.    Prior to 2004, the Deferred Compensation Plan provided for employer-matching contributions. Since January 1, 2004, we do not provide employer-matching contributions for amounts deferred under the plan. Participants are fully vested in their contributions and employer contributions made before 2004.

Potential Payments Upon Termination or Change-in-Control

We do not have employment or change-in-control agreements or arrangements with our domestic named executive officers. We do however have an ERISA severance plan that includes our named US-based executive officers and covers involuntary terminations due to job elimination and discontinuation, office closing, reduction in force, business restructuring or other circumstances as we determine at our discretion. For more details on the severance plan, see Benefits and Perquisites on page 43. Mr. Wheway has an employment agreement which continues unless terminated by either party on a six-month written notice, or immediately upon termination for cause. In lieu of the notice period, we may terminate the agreement by paying Mr. Wheway's base salary for such period for up to six months.

As such, except for Mr. Wheway, the only contractual payments that would be received by our named executive officers upon termination of employment or a change-in-control would be in connection with the severance plan and with the equity-based incentive awards granted under our long-term incentive programs. The amounts reported below represent the in-the-money value of stock options and value of stock awards, calculated based on the closing price of our common stock on February 26, 2010, the

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last trading day in fiscal 2010. The following table summarizes the potential value of payments made under the severance plan and long-term incentive awards for each named executive officer under various scenarios:

<
 
   
  Termination    
   
   
   
   
Name
   
  Involuntary
  (1)
  Voluntary
  (2)
  Following
Change-in-
Control

  (3)
  Death or
Disability

  (4)
  Retirement
  (5)
 

Brian J. Dunn

  Cash   $ 1,846,154       $       $ 1,846,154       $       $    

  Stock options     1,797,672         1,797,672         4,553,342         4,553,342         4,553,342    

  Stock awards                     6,935,000         6,935,000         6,935,000    
                                             

  Total   $ 3,643,826       $ 1,797,672       $ 13,334,496       $ 11,488,342       $ 11,488,342    
                                             

James L. Muehlbauer

 

Cash

 
$

1,185,231
     
$

     
$

1,185,231
     
$

     
$

   

  Stock options     385,016         385,016         1,103,016         1,103,016         1,103,016    

  Stock awards                     4,015,000         4,015,000         3,650,000    
                                             

  Total   $ 1,570,247       $ 385,016       $ 6,303,247       $ 5,118,016       $ 4,753,016    
                                             

Shari L. Ballard

 

Cash

 
$

1,200,000
     
$

     
$

1,200,000
     
$

     
$

   

  Stock options     159,326         159,326         753,925         753,925         753,925    

  Stock awards                     3,020,375         3,020,375         3,020,375    
                                             

  Total   $ 1,359,326       $ 159,326       $ 4,974,300       $ 3,774,300       $ 3,774,300    
                                             

Michael A. Vitelli

 

Cash

 
$

1,107,692
     
$

     
$

1,107,692
     
$

     
$

   

  Stock options     110,926         110,926         516,126         516,126         516,126    

  Stock awards                     1,952,568         1,952,568         1,952,568    
                                             

  Total   $ 1,218,618       $ 110,926       $ 3,576,386       $ 2,468,694       $ 2,468,694    
                                             

J. Scott Wheway

 

Cash

 
$

355,696
 

(6)

 
$

     
$

355,696
 

(6)

 
$

     
$

   

  Stock options     176,000                 176,000         176,000         176,000    

  Stock awards                                        
                                             

  Total   $ 531,696       $       $ 531,696       $ 176,000       $ 176,000    
                                             

Bradbury H. Anderson

 

Cash

 
$

138,462
     
$

     
$

138,462
     
$

     
$

   

  Stock options     3,435,480         3,435,480         3,435,480         3,435,480         3,435,480    

  Stock awards                                        
                                             

  Total   $ 3,573,942       $ 3,435,480       $ 3,573,942       $ 3,435,480       $ 3,435,480    
                                             

John E. Pershing(7)

 

Cash

 
$

     
$

     
$

     
$

     
$

   

  Stock options                                          

  Stock awards                                        
                                             

  Total   $       $       $       $       $    
                                             

Robert A. Willett(8)

 

Cash