DEF 14A 1 bbydefinitiveproxy2017.htm DEF 14A Document


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

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
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Definitive Proxy Statement
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Soliciting Material pursuant to §240.14a-12
 
BEST BUY CO., INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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bestbuylogoa01a02.jpg
 
BEST BUY CO., INC.
 
 
 
7601 Penn Avenue South
 
 
 
Richfield, Minnesota 55423
 
 
 
 
 
 

NOTICE OF 2017 REGULAR MEETING OF SHAREHOLDERS

It is our pleasure to invite you to attend our 2017 Regular Meeting of Shareholders, which for the first time, will be completely virtual and conducted live via webcast. You may attend the virtual Meeting, vote your shares electronically, and submit questions during the virtual Meeting at www.virtualshareholdermeeting.com/BBY2017. We believe a virtual meeting gives our shareholders great options to engage with us and is consistent with our mission to be the leader in connecting consumers with the best technology.
Time:
 
9:00 a.m., Central Time, on Tuesday, June 13, 2017
Place:
 
Online at www.virtualshareholdermeeting.com/BBY2017
Internet:
 
Submit pre-meeting questions online by visiting www.proxyvote.com and attend the Regular Meeting of Shareholders online at www.virtualshareholdermeeting.com/BBY2017
Items of Business:
 
1.
 
To elect the ten directors listed herein to serve on our Board of Directors for a term of one year.
 
2.
 
To ratify the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for the fiscal year ending February 3, 2018.
 
 
3.
 
To conduct a non-binding advisory vote to approve our named executive officer compensation.
 
 
4.
 
To conduct an advisory vote on the frequency of holding the shareholder advisory vote on executive compensation.
 
 
5.
 
To request approval of our amended and restated 2014 Omnibus Incentive Plan.
 
 
6.
 
To transact such other business as may properly come before the meeting.
Record Date:
 
You may vote if you were a shareholder of Best Buy Co., Inc. as of the close of business on Monday, April 17, 2017.
Proxy Voting:
 
Your vote is important. You may vote via proxy as a shareholder of record:
 
 
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 your proxy card if you have received paper materials.
For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions to your broker, bank or other nominee.
Regardless of whether you expect to attend the meeting, please vote your shares in one of the ways outlined above.
 
 
 
 
 
By Order of the Board of Directors
 
 
nelsensignaturea01a02.jpg
Richfield, Minnesota
 
Keith J. Nelsen
May 1, 2017
 
General Counsel & Secretary







IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
REGULAR MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 13, 2017:
This Notice of 2017 Regular Meeting of Shareholders and Proxy Statement and our Annual Report on
Form 10-K for the fiscal year ended January 28, 2017, 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 ("SEC"), we are furnishing proxy materials to our shareholders primarily via the internet. On or about May 1, 2017, 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 form of proxy to vote via the internet or by telephone. Certain 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. If you would prefer to receive paper 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 email notification with instructions to access these materials via the internet unless you elect otherwise.


ATTENDING THE REGULAR MEETING OF SHAREHOLDERS


This year we invite you to attend the 2017 Regular Meeting of Shareholders (the "Meeting") online. There will not be a physical meeting at the corporate campus. You will be able to attend the Meeting online, vote your shares electronically, and submit your questions during the Meeting by visiting: www.virtualshareholdermeeting.com/BBY2017 and following the instructions on your proxy card.

The Meeting starts at 9:00 a.m. Central Time.

You do not need to attend the meeting online to vote if you submitted your proxy in advance of the meeting.

Shareholders attending the Meeting via the internet can vote or submit questions by following the instructions at www.proxyvote.com or www.virtualshareholdermeeting.com/BBY2017.
    
A replay of the Meeting will be available on www.investors.bestbuy.com until June 27, 2017.










TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Forward-Looking and Cautionary Statements
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” ”assume,” “estimate,” “expect,” “intend,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: macro-economic conditions (including fluctuations in housing prices, oil markets and jobless rates), conditions in the industries and categories in which we operate, changes in consumer preferences or confidence, changes in consumer spending and debt levels, the mix of products and services offered for sale in our physical stores and online, credit market changes and constraints, product availability, trade restrictions or changes in the costs of imports, competitive initiatives of competitors (including pricing actions and promotional activities), strategic and business decisions of our vendors (including actions that could impact promotional support, product margin and/or supply), the success of new product launches, the impact of pricing investments and promotional activity, weather, natural or man-made disasters, attacks on our data systems, the company’s ability to prevent or react to a disaster recovery situation, changes in law or regulations, changes in tax rates, changes in taxable income in each jurisdiction, tax audit developments and resolution of other discrete tax matters, foreign currency fluctuation, the company’s ability to manage its property portfolio, the impact of labor markets, the company’s ability to retain qualified employees and management, failure to achieve anticipated expense and cost reductions, disruptions in our supply chain, the costs of procuring goods the company sells, failure to achieve anticipated revenue and profitability increases from operational and restructuring changes (including investments in our multi-channel capabilities), inability to secure or maintain favorable vendor terms, failure to accurately predict the duration over which we will incur costs, development of new businesses, failure to complete or achieve anticipated benefits of announced transactions, and our ability to protect information relating to our employees and customers. A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the Securities and Exchange Commission(“SEC”), including, but not limited to, Best Buy’s Report on Form 10-K filed with the SEC on March 24, 2017. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.




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bestbuylogoa01a02.jpg
 
 
 
PROXY SUMMARY
 
 
 

At our upcoming 2017 Regular Meeting of Shareholders, we are asking shareholders to vote on five key items. This summary provides context for those items and highlights why we are asking you to vote in alignment with the recommendations of the Board. The context includes a review of our fiscal 2017 financial and strategic performance, an introduction to the new phase of our Company strategy and an overview of our corporate governance program. In addition, we summarize the items of business for which we are requesting your vote and provide further information to help you consider those items. We encourage you to review the entire proxy statement for more detail on these items, as well as our Annual Report and our Chairman and CEO's Letter to Shareholders posted on our website at www.investors.bestbuy.com.

Fiscal 2017 Performance

During fiscal 2017 we delivered strong financial performance for our shareholders. Fiscal 2017 was the third year in a row that the Company grew its Domestic comparable sales and operating income. We delivered the topline performance we outlined at the beginning of the year - with materially better earnings growth than originally expected. On fiscal 2017 Enterprise revenue of $39.4 billion, we increased our GAAP operating income rate from 3.5% in fiscal 2016 to 4.7% in fiscal 2017 and our GAAP diluted earnings per share (“EPS”) from continuing operations by 63% from $2.30 in fiscal 2016 to $3.74 in fiscal 2017. Non-GAAP operating income rate increased from 4.0% in fiscal 2016 to 4.5% in fiscal 2017 and non-GAAP diluted EPS from continuing operations grew 28% from $2.78 in fiscal 2016 to $3.56 in fiscal 2017.*

We achieved these results in fiscal 2017 by executing against our three priorities for the year: (1) build on our strong industry position and multi-channel capabilities to drive the existing business; (2) drive cost reduction and efficiencies; and (3) advance key initiatives to drive future growth and differentiation.

Successful execution against these priorities drove our positive results for the year and included the following achievements: (1) gains in market share, which offset overall market declines; (2) an increase in our Net Promoter Score by over 350 basis points; (3) domestic segment online comparable sales growth of 20.8%; (4) a successful transformation in Canada resulting in international segment GAAP operating income of $90 million (compared to a loss of $210 million in fiscal 2016); (5) $350 million in cumulative savings against a three-year target of $400 million; and (6) successful testing of several compelling customer experience concepts, a number of which will be rolled out across our stores in the coming year.

Looking Ahead - Best Buy 2020: Building the New Blue
In November 2012, we introduced our transformation strategy called Renew Blue. Since initiating Renew Blue, we have stabilized comparable sales, increased our operating income rate, achieved substantial growth in our diluted EPS from continuing operations and delivered significant improvement in our return on assets and non-GAAP return on invested capital.* The progress made over the past four years supports our recent announcement to conclude our Renew Blue efforts and formally enter the new phase of our business strategy, Best Buy 2020: Building the New Blue (“Best Buy 2020”).

Our customers are at the core of Best Buy 2020. Technology continues to evolve, creating more excitement and opening up an increasing range of possibilities for our customers. It is also creating more complexity and we believe many of our customers need our help. Our purpose is to help customers pursue their passions and enrich their lives with the help of technology. We want to play two roles for them: be their trusted adviser and solution provider; and be their source for technology services for their home. Our customer value proposition is to be the leading technology expert who makes it easy for our customers to learn about and confidently enjoy the best technology.
From a financial standpoint, the equation that we are seeking to solve with Best Buy 2020 is to gradually increase our rate of topline growth, pursue material ongoing cost savings necessary to both offset inflationary pressures and fund investments and build a more predictable set of revenue streams with a foundation of recurring revenues and stickier customer relationships.
There are three growth pillars we will be pursuing as part of Best Buy 2020:
1.
Maximize the multi-channel retail business;


6



2.
Provide services and solutions that solve real customer needs and help us build deeper customer relationships; and

3.
Accelerate growth in our International segment, consisting of Canada and Mexico.

Regarding the first pillar, Maximize the multi-channel retail business, we plan to continue to enhance the customer experience and increase revenue by growing both existing and new channels, by growing certain key product categories, as well as by developing broader, stickier customer relationships.

As for the second pillar, Provide services and solutions that solve real customer needs, we plan to meet the significant technical support needs of customers across their home, without regard to where they may have purchased their technology products. We also plan to offer more complete solutions to our customers that meet their underlying needs. For example, instead of just selling security cameras, we are beginning to sell a security monitoring and home automation service in certain markets across the country.
   
Our third pillar concerns our transformation efforts in Canada and Mexico. In both cases, the multichannel improvements we have made, along with the services-related experimentation we have undertaken in Canada, give us reasons to believe that a key part of Best Buy 2020 will be derived from the opportunity to accelerate our growth in both markets.

With the launch of Best Buy 2020, fiscal 2018 will revolve around the following four priorities:

1.
Explore and pursue growth opportunities around the pillars described above; for example: (a) innovate digital capabilities to effectively assist customers; (b) pursue growth in key product categories, including categories such as connected home, appliances and mobile; (c) expand our in-home advisor ("IHA") program, in which customers receive a free in-home consultation with an experienced technology advisor who can identify their needs, design personalized solutions and become a personal resource over time; (d) continue to test new compelling customer experience concepts around the country; and (e) pursue international segment growth by continuing to drive our online channel and expand successful store remodels in Canada and open new stores in Mexico.

2.
Improve our execution in key areas. We believe we continue to have significant opportunities from improving our sales effectiveness and proficiency, our supply chain for large product fulfillment and small package delivery and our services fulfillment capabilities.
3.
Continue to reduce costs and drive efficiencies through the business. As stated previously, we have achieved $350 million of our current $400 million cost reduction target. We are working on the next phase of cost savings and will provide updates on the next goal once we complete our current program.
4.
Build the capabilities necessary to deliver on the first three priorities, which will involve making investments in people and systems to drive growth, execution and efficiencies.
As we work to continue to strengthen and grow our business, we remain committed to our previously articulated capital allocation strategy which is to first fund operations and growth investments, including potential partnerships and acquisitions and then to return the remaining excess free cash flow to our shareholders over time with dividends and share repurchases, while maintaining investment grade credit metrics.
During fiscal 2017, we continued our long-term capital allocation strategy with an emphasis on returns to shareholders by returning $1.2 billion through dividends and share repurchases. In fiscal 2017 we increased our dividend 22% to $0.28 per share, repurchased $743 million against our previously announced two-year, $1 billion share repurchase program and paid a special dividend of $0.45 per share. This decision followed our shareholder-focused actions in fiscal 2016 when we returned $1.5 billion to our shareholders through $1 billion in share repurchases, $320 million in regular quarterly dividends, a 21% increase per share and a special dividend of $180 million or $0.51 per share. In March 2017, we announced the continuation of this strategy for fiscal 2018 by way of a 21% increase in our quarterly dividend to $0.34 per share and our plan to spend $3 billion on share repurchases over the next two years. This plan accelerates our repurchases over the next two years over what we originally planned.

Board and Corporate Governance

As we embark on Best Buy 2020, our Board of Directors continues to play a critical role in shaping and supporting our strategy. In fiscal 2017, this role included a budget and capital plan review at the beginning of the fiscal year and an extended strategic offsite mid-year to review and discuss management's long-term plan for growing the Company and creating shareholder value.

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Also during fiscal 2017, in consideration of shareholder dialogue and best practices, the Board engaged an independent third-party consultant as part of its annual Board evaluation process to conduct individual interviews with each director and certain senior executives and perform a comprehensive analysis of the Board's governance, structure, evaluation process and overall effectiveness. The results were positive and confirmed our Board's commitment to high levels of Board effectiveness and governance. This review helped us shape the focus of our Board's work as we continue to move ahead.

These actions are consistent with and a product of our longstanding approach to corporate governance, which is to develop and implement principles that: (1) support the success of the Company’s strategy and business objectives;(2) are rooted in a robust ongoing dialogue with our shareholders; and (3) are inspired by best practices. Consistent with this approach, we continue to build upon a strong framework of corporate governance practices. Some key points regarding our Board and governance policies and practices are as follows:
Board Structure
 
 
ü
Lead Independent Director
ü
All Independent Committees
ü
Predominantly Independent Board (90%)
ü
No Director Related Party Transactions
ü
Annual Director Elections
ü
Balance of Tenure and Gender Diversity among Directors
ü
Robust Annual Board Evaluation Process
ü
High Shareholder Support for Directors
ü
Majority Vote for Directors
ü
Director Retirement Policy
Shareholder Rights
Compensation
ü
No Cumulative Voting Rights
ü
Annual Say-on-Pay Vote
ü
No Poison Pill
ü
Anti-Hedging and Pledging Policies
ü
Special Meeting Threshold of 10% (25% if related to a business combination)
ü
Director & Executive Officer Stock Ownership Guidelines
ü
No Exclusive Forum/Venue or Fee-shifting Provisions
ü
Clawback Provisions on both Cash and Equity Awards

More information on our Corporate Governance policies and practices can be found in the Corporate Governance section of this proxy statement.

Shareholder Engagement

A key part of our corporate governance program is our robust annual shareholder engagement process, which continued to be a priority in fiscal 2017. We reached out to all of our top 20 shareholders, representing approximately 70% of the outstanding shares, as well as several other of our top 50 shareholders. We engaged in discussions with several of our top shareholders and generally received positive feedback about our performance, corporate governance and compensation practices. This support was evident at our 2016 Meeting, when all Items of Business received over 94% support from shareholders. Our typical engagement follows a seasonal cycle, as outlined below. Additional information can be found in the Corporate Governance — Shareholder Engagement section of this proxy statement.

 
Spring
è
Summer
 
Follow-up engagement with proxy advisory firms and our largest shareholders to address important issues within our proxy statement in advance of the annual meeting.
Review of feedback received from shareholders at our annual meeting and current trends in governance.
 
 
 
é
 
ê
 
 
 
 
 
Winter
 
Fall
 
Review shareholder feedback from fall engagement with the Board and integration of feedback in governance practices and proxy disclosure.
 
 
Primary engagement season with focus on our top 20 shareholders and proxy advisory firms through both in-person and telephonic conversations. Company participants include representatives from Legal, Investor Relations and Human Resources - Rewards.
 
 
ç
 
 
 
 
 
 
 

*For GAAP to non-GAAP reconciliations, please refer to the attached schedule titled Reconciliation of non-GAAP Financial Measures.


8



Items of Business for Vote at our Regular Meeting of Shareholders

This year, we are requesting shareholder support in alignment with the recommendations of our Board of Directors for the following Items of Business:
Item Number
Item Description
Board Recommendation
1
Election of Directors
FOR Each Nominee
 
We have ten director nominees standing for election this year. You will find more information about our nominees' qualifications and experience starting on page 25.
 
2
Ratification of Appointment of our Independent Registered Public Accounting Firm
FOR
 
We are asking our shareholders to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2018.
 
3
Advisory Vote to Approve our Named Executive Officer Compensation
FOR
 
For the seventh year, we are seeking advisory approval by our shareholders of our named executive officer compensation, the "Say on Pay" vote. In evaluating this proposal, please review our Compensation Discussion & Analysis ("CD&A"), which begins on page 39 and describes how we have engaged with shareholders and the compensation decisions of our Compensation and Human Resources Committee.
 
4
Advisory Vote on the Frequency of Holding the Shareholder Advisory Vote to Approve Executive Compensation
EVERY YEAR
 
We are required to offer our shareholders an opportunity to tell us how often they wish to vote on our named executive officer compensation, the "Say When on Pay" vote. In 2011, in response to shareholder feedback, the Board determined to hold this vote every year. We recommend this annual vote frequency continue. Additional information on this Say When on Pay vote is included on page 69.
 
5
Approval of our Amended and Restated 2014 Omnibus Incentive Plan
FOR
 
We are requesting shareholder approval of our amended and restated 2014 Omnibus Incentive Plan (the "amended 2014 Plan"), our primary vehicle to award long-term incentive-based compensation. The amendments primarily focus on a request for additional shares under the Plan. In-depth detail about the amended 2014 Plan can be found beginning on page 70 .
 

All of these matters, for various reasons, play an important role in how we operate and we value shareholder input regarding our corporate governance (including our director nominees and auditor selection) and our executive compensation (including our Named Executive Officer compensation structure, the frequency of the shareholder vote on that structure and our equity incentive plan used as part of our compensation structure). Summary information regarding our director nominees and executive compensation is provided below and additional detail regarding each item can be found in the relevant section of this proxy statement.

This year we will be conducting our 2017 Regular Meeting of Shareholders exclusively online as a live virtual shareholder meeting. We believe this approach provides our shareholders the option to attend from locations convenient to them, while still maintaining access to our Board of Directors and management through the ability to submit questions on our virtual shareholder forum. As a technology leader, conducting our annual meeting virtually is consistent with our approach of connecting technology and consumers and provides resource efficiencies.


9



Overview of Director Nominees

All of our director nominees have relevant skills, proven leadership, sound judgment and integrity. They also bring a wide range of backgrounds, experience and expertise necessary to our strategy. As a Board, our director nominees represent the following composition characteristics, among others:

bbydefinitiv_chart-43856.jpgbbydefinitiv_chart-44727.jpgbbydefinitiv_chart-45396.jpg


The following individuals are standing for election to our Board. Additional information about our nominees can be found in Item of Business No. 1 — Election of Directors.

Name
Age
Director Since
Position/Company
Independence
Current Committees
Other For-Profit Directorships (*Public Company)
Lisa M. Caputo
53
2009
Executive Vice President, Chief Marketing & Communications Officer
The Travelers Companies, Inc.
ü
Compensation & Human Resources
Nominating, Corporate Governance & Public Policy
J. Patrick Doyle
53
2014
President & CEO
Domino’s Pizza, Inc.
ü
Compensation & Human Resources
Finance & Investment Policy
Domino’s Pizza, Inc.*
Russell P. Fradin
61
2013
 Operating Partner Clayton, Dubilier & Rice
ü
Compensation & Human Resources (Chair)
Hamilton Insurance Tranzact
Kathy J. Higgins Victor
60
1999
President & Founder
Centera Corporation
ü
Compensation & Human Resources
Nominating, Corporate Governance & Public Policy (Chair)
Hubert Joly
57
2012
Chairman & CEO
Best Buy Co., Inc.
None
Ralph Lauren Corporation*
David W. Kenny
55
2013
Senior Vice President,
IBM Watson & IBM Cloud IBM Corporation
ü
Finance & Investment Policy Nominating, Corporate Governance & Public Policy
Karen A. McLoughlin
52
2015
Chief Financial Officer Cognizant Technology Solutions Corp.
ü
Audit Finance & Investment Policy
Thomas L. Millner
63
2014
CEO
Cabela’s Inc.
ü
Audit (Chair)
Nominating, Corporate Governance & Public Policy
Cabela’s Inc.* Total Wine & More
Claudia F. Munce
57
2016
Venture Advisor New Enterprise Associates
ü
Audit Finance & Investment Policy
Bank of the West
Gérard R. Vittecoq
68
2008
Group President & Executive Office Member (Retired)
Caterpillar, Inc.
ü
Audit
Finance & Investment Policy (Chair)
Ariel Compressors
Vanguard Logistics Services
Mantrac Group ManCapital





10



Overview of Executive Compensation

As supported by the financial results outlined above, we utilize a pay-for-performance compensation structure that provides stable compensation practices with a strong focus on performance outcomes. For the past six years, our shareholders have had an annual opportunity to share their opinion of our compensation practices through a non-binding advisory "Say on Pay" vote. This year, we again ask for our shareholders' support of our executive compensation practices and look forward to receiving feedback on our program and practices. We also believe an annual vote continues to be in the best interest of our shareholders and recommend that shareholders support that practice for the "Say When on Pay" frequency vote. Finally, we are requesting approval of our Amended and Restated 2014 Omnibus Incentive Plan, our primary vehicle for awarding performance-based compensation to our employees. Subject to shareholder approval, the 2014 Plan was amended to increase the number of shares available for issuance pursuant to the amended 2014 Plan provisions, which are also summarized within this proxy statement.

For more information, see the Executive and Director Compensation — Compensation Discussion and Analysis, Item of Business No. 3 — Advisory Vote to Approve Named Executive Officer Compensation, Item of Business No. 4 — Advisory Vote on the Frequency of Holding the Shareholder Advisory Vote to Approve Named Executive Officer Compensation and Item 5 — Approval of our Amended and Restated 2014 Omnibus Incentive Plan sections in this proxy statement.

Fiscal 2017 Named Executive Officer Compensation Overview

The compensation of our Named Executive Officers ("NEOs") in fiscal 2017 included the following ongoing elements :
 
Base Salary
Bonus
Performance Share Awards
Performance-Conditioned Time-Based Shares
Stock Options (CEO only)
Incentive Focus
Short-Term
Short-Term
Long-Term
Long-Term
Long-Term
Performance Period
Ongoing
Annual
3 years
Vest over 3 years, contingent upon achievement of performance objectives
Vest over 3 years, with a 10-year term
Performance / Value Metrics
N/A
Compensable Enterprise Operating Income, Domestic Comparable Sales, Renew Blue Priorities
Total Shareholder Return ("TSR")
Adjusted Net Earnings & Stock price appreciation
Stock price appreciation

The table below summarizes the total compensation earned by our NEOs during fiscal 2017. Please review the Compensation of Executive Officers — Summary Compensation Table section for more details.
Name and Principal Position
 

Salary
 
Stock
Awards(1)
 
Option
Awards(1)
 
Short-Term Incentive Plan Payout
 
All Other
Compensation
 
Total
Hubert Joly
Chairman and
Chief Executive Officer
 
$
1,175,000

 
$
7,689,879

 
$
1,800,076

 
$
2,878,750

 
$
494,275

 
$
14,037,980

Corie S. Barry                                         Chief Financial Officer
 
$
713,462

 
$
1,689,495

 
$

 
$
1,184,167

 
$
14,893

 
$
3,602,017

Sharon L. McCollam
Former Chief Administrative and Chief Financial Officer
 
$
925,000

 
$
4,392,616

 
$

 
$
1,699,688

 
$
142,808

 
$
7,160,112

Shari L. Ballard
President, Multi-Channel Retail and Operations
 
$
800,000

 
$
1,930,865

 
$

 
$
1,470,000

 
$
62,737

 
$
4,263,602

R. Michael Mohan
Chief Merchandising & Marketing Officer
 
$
833,654

 
$
2,895,073

 
$

 
$
1,531,251

 
$
55,284

 
$
5,315,262

Keith J. Nelsen
General Counsel and Secretary
 
$
650,000

 
$
1,592,960

 
$

 
$
796,250

 
$
68,761

 
$
3,107,971

(1)
Represents the grant date fair value of one or more awards as measured in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation ("ASC Topic 718"). The amounts reported have not been adjusted to eliminate service-based forfeiture assumptions. The other assumptions used in calculating these amounts are set forth in Note 7, Shareholders' Equity, to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017. The grant date fair value for any award subject to performance conditions is the value at the grant date of the probable outcome of the award.


11



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

PROXY STATEMENT
_______________________________________________________________________________


REGULAR MEETING OF SHAREHOLDERS — JUNE 13, 2017


GENERAL INFORMATION

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors ("Board") of Best Buy Co., Inc. ("Best Buy," "we," "us," "our" or the "Company") to be voted at our 2017 Regular Meeting of Shareholders (the "Meeting") to be held virtually on Tuesday, June 13, 2017, at 9:00 a.m., Central Time, at www.virtualshareholdermeeting.com/BBY2017 or at any postponement or adjournment of the Meeting. The proxy materials, including the proxy statement, our Annual Report and form of proxy or the Notice of Internet Availability, were mailed to you beginning on or about May 1, 2017.

Background

What is the purpose of the Meeting?

At the Meeting, shareholders will vote on the items of business outlined in the Notice of 2017 Regular Meeting of Shareholders ("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 this proxy statement and a proxy card or the Notice of Internet Availability?

You received this proxy statement and a proxy card or the Notice of Internet Availability because you owned shares of Best Buy common stock as of April 17, 2017, 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.

How can I attend the Meeting?

You can attend the meeting online by logging on to www.virtualshareholdermeeting.com/BBY2017 and following the instructions provided on your proxy or notice card.

Who may vote?

In order to vote at the Meeting, you must have been a shareholder of record of Best Buy as of April 17, 2017, 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 bank, broker or nominee 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 17, 2017, as the record date for the Meeting.

How many shares of Best Buy common stock are outstanding?

As of the record date, there were 307,410,253 shares of Best Buy common stock outstanding. There are no other classes of capital stock outstanding.

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Voting Procedures

On what items of business am I voting?

1.
The election of the ten directors listed herein for a term of one year expiring in 2018;

2.
The ratification of the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for the fiscal year ending February 3, 2018;

3.
The non-binding advisory vote to approve our named executive officer compensation;

4.
The advisory vote on the frequency of holding the shareholder advisory vote on our executive compensation;

5.
The approval of our amended and restated 2014 Omnibus Incentive Plan; and

6.
Such other business as may properly come before the Meeting.

How does the Board recommend that I vote?

Our Board recommends that you vote your shares:

“FOR” the election of directors as set forth in this proxy statement;
 
“FOR” the ratification of the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for the fiscal year ending February 3, 2018;

“FOR” the non-binding advisory vote to approve our named executive officer compensation;

"ONE YEAR" on the frequency of the shareholder advisory vote on our named executive officer compensation; and

"FOR" our amended and restated 2014 Omnibus Incentive Plan.

If you are a record holder and you sign and submit your proxy card without indicating your voting instructions, your shares will be voted as indicated above.

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 mail, by signing and returning the enclosed proxy card if you have received paper materials; or

?    By attending the virtual Meeting and voting online during the Meeting at www.virtualshareholdermeeting.com/BBY2017.

If your shares are held in a brokerage account by a broker, bank or other nominee, you should follow the voting instructions provided by your broker, bank or other nominee.

If you wish to vote by telephone or via the internet, you must do so before 11:59 p.m., Eastern Time, on Monday, June 12, 2017. After that time, telephone and internet voting on www.proxyvote.com will not be permitted and any shareholder of record wishing to vote thereafter must vote online during the Meeting. Shareholders of record will be verified online by way of the

13



personal identification number included on your proxy or notice card. Voting by a shareholder during the Meeting will replace any previous votes submitted by proxy.

In accordance with the SEC rules, we are making available to 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 that we have mailed to most shareholders. We encourage you to take advantage of the option to vote your shares electronically through the internet or by telephone. Doing so will result in cost savings for the Company.

How are my voting instructions carried out?

When you vote via proxy, you appoint the Chairman of the Board, Hubert Joly and the Secretary of the Company, Keith J. Nelsen (collectively, the "Proxy Agents"), as your representatives to vote 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 as disclosed in this proxy statement. If you submit a proxy, 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, including adjournment of the Meeting and any other matters incident to the conduct of the Meeting, the Proxy Agents will vote the shares subject to your proxy in their discretion. Discretionary authority for them to do so is contained in the proxy.

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. In order to have a quorum, a majority of the outstanding shares of our common stock that are entitled to vote need to be present or represented by proxy at the Meeting. Your shares will be counted as present at the Meeting if you:

vote prior to the Meeting via the internet or by telephone;

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

vote while attending the Meeting online.

Broker non-votes, as defined below, will be included in determining the presence of a quorum at the Meeting so long as there is at least one routine matter which the broker, bank or other nominee can vote on, as is the case with the Meeting. In addition, abstentions on any matter are included in determining the presence of a quorum.

How many votes are required to approve an item of business and what are the effects of abstentions and broker non-votes on the voting results?

Pursuant to our Amended and Restated Articles of Incorporation ("Articles") and our Amended and Restated By-laws ("By-laws"), each item of business to be voted on by the shareholders at the Meeting, with the exception of Item 1, requires the affirmative vote of the holders of a majority of the voting power of the shares of Best Buy common stock present at a meeting and entitled to vote. Item 1, the election of directors, requires the affirmative vote of a majority of votes cast with respect to the director.

Under the rules of the New York Stock Exchange (“NYSE”), if you are a beneficial owner of shares and you do not provide voting instructions to your broker, bank or nominee, that firm has discretion to vote your shares for certain routine matters. Item 2, the ratification of the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm, is considered a routine matter under NYSE rules. However, your broker, bank or nominee does not have discretion to vote your shares for non-routine matters. Items 1, 3, 4 and 5, the election of directors, the advisory vote related to named executive officer

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compensation, the advisory vote related to the frequency of the vote related to our executive compensation and the vote on our amended and restated 2014 Omnibus Incentive Plan, respectively, are not considered routine matters under NYSE rules.

When a broker, bank or nominee votes a beneficial owner's shares on certain but not all of the proposals, because it is unable to vote due to the beneficial owner's failure to provide voting instructions on a matter as to which the broker, bank or nominee has no discretion to vote otherwise, the missing votes are referred to as “broker non-votes.”

Abstentions will have the same effect as votes against Items 2, 3, 4 and 5 described in this proxy statement, but will have no effect on Item 1. Broker non-votes will have no effect on Items 1 and 3, 4 and 5.

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

If you are a shareholder of record, 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 online during the Meeting (attendance will not, by itself, revoke a proxy); or

Providing written notice of revocation to Best Buy's Secretary at our principal office at any time before your shares are voted.

If your shares are held in a brokerage account by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee.

Who will count the vote?

Representatives of Broadridge will tabulate the vote and act as the inspector of elections.

Where can I find the voting results of 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 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 communication and by facsimile transmission. 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 and Annual Reports themselves, to the beneficial owners of our common stock. 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 our 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 in connection with proxy solicitations.

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

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 and 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 or request separate copies of our proxy materials by notifying our Investor Relations Department in writing at 7601

15



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 following receipt of your revocation.

Can I receive the proxy materials electronically?

Yes. All shareholders may access our proxy materials electronically via the internet. We encourage our shareholders to access our proxy materials via the internet because it reduces the expenses for, and the environmental impact of, our shareholder meetings. You may opt to receive paper copies of proxy materials, including our Annual Report, proxy statement and proxy card at no cost to you, by following the instructions on your Notice of Internet Availability.

An electronic version of this proxy statement is posted on our website at www.investors.bestbuy.com. 

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 find these reports and additional information about us on our website at www.investors.bestbuy.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 the Company, our shareholders and other stakeholders regarding a broad range of subjects, including:

Reviewing and approving major strategic, financial and operating decisions, and other significant actions;
Selecting and evaluating the performance of our CEO (this duty is performed by the independent directors, with the Chairman and CEO abstaining from all discussions);
Overseeing the conduct of our business and the assessment of our business risks to evaluate whether our business is being properly managed;
Overseeing the processes for maintaining the integrity of our financial statements and other public disclosures and complying with legal and ethical standards; and
Planning for CEO succession and monitoring management's succession planning for other senior executives.

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

Our Board is committed to developing and implementing corporate governance principles that: (1) support the success of the Company’s strategy and business objectives, (2) are rooted in a robust ongoing dialogue with our shareholders and (3) are inspired by best practices. Consistent with this approach, we continue to build upon a strong framework of corporate governance practices. Shareholder perspectives play an important role in that process. Some key points regarding our Board and governance structure and practices are as follows:
Board Leadership & Composition
l
Our Board is led by our Chairman and CEO. Per our Corporate Governance Principles, we also have a Lead Independent Director with specific responsibilities to ensure independent oversight of management whenever our Chairman is not independent.
l
All of our directors, other than the CEO, are independent.
l
Our Board places an emphasis on diverse representation among its members. Four of our ten director nominees are women.
l
The average tenure of our directors is 5.7 years, with a balance of new perspectives and historical knowledge.
l
None of our director nominees serves on more than two public company boards.
l
All Committees are comprised exclusively of independent directors.
l
Our directors are required to retire at the expiration of their term upon reaching the age of 75 and must tender their resignation for consideration when their principal employment or affiliation changes.
Board Accountability
l
We utilize a robust annual Board, individual director & CEO evaluation process, and periodically engage an independent third party to provide independent assessments on Board and director performance.
l
None of our directors are involved in a material related party transaction.
l
We prohibit both hedging and pledging of Company securities by directors and executive officers.
l
Our directors and executive officers are required to comply with stock ownership guidelines.
l
Our Board has adopted Corporate Governance Principles as part of its commitment to good governance practices. These principles are available on our website at www.investors.bestbuy.com.
Shareholder Rights & Engagement
l
We have no shareholder rights plan (commonly known as a "Poison Pill").
l
 We have no cumulative voting rights and our only class of voting shares is our common stock.
l
 A shareholder(s) must own 10% of the voting shares of our stock to call a special meeting, or 25% if the special meeting relates to a business combination or change in our Board composition.
l
We regularly engage with shareholders to solicit feedback, address questions and concerns and provide perspective on Company policies and practices.


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In this section of our proxy statement, we provide detail on specific aspects of our Corporate Governance program, policies and practices, as well as additional information on the operations and composition of our Board.

Board Leadership

Our Board is led by our Chairman and CEO, Mr. Joly, as well as by our Lead Independent Director, Mr. Fradin. Our Lead Independent Director role was established in January 2010 in order to provide independent leadership on the Board during times when our Chairman is not independent. Additional leadership roles continue to be filled by other directors, all of whom are independent and continue to play an active role in our strategic planning, risk oversight and governance. We believe this leadership structure is ideally suited to this stage of our growth transformation. The Board leadership duties and responsibilities are outlined below and in our Corporate Governance Principles, which are also posted online at www.investors.bestbuy.com.

Our Chairman is responsible for: (1) setting the agenda for Board meetings (in partnership with the Lead Independent Director) and presiding over and leading discussion at meetings of the full Board; (2) presiding over the Company's annual meeting of shareholders; (3) Board oversight and setting the Board meeting calendar; (4) building the Company's strategy with the Board and carrying it out with management; (5) ensuring the Board has sufficient oversight of the Company's risks; (6) speaking on behalf of the Company to both internal and external stakeholders, as appropriate; and (7) serving as the Board's liaison to management.

The duties of our Lead Independent Director include: (1) partnering with the Chairman to set the Board meeting agenda and being available for ongoing counsel to the Chairman regarding key items of business; (2) presiding at all Board meetings at which the Chairman is not present; (3) presiding at executive sessions of independent directors (which take place at each regular Board meeting); (4) calling additional meetings of the independent directors, as appropriate; (5) serving as a stakeholder liaison on behalf of the independent directors by being available for direct consultation and communication with interested parties, as appropriate; (6) being available for ongoing counsel to the Chairman regarding key items of business and overall Board functions; and (7) performing other such duties as may be requested from time to time by the Board as a whole, the independent directors and the Chairman.

Both our Chairman and our Lead Independent Director partner with the Chair of our Nominating, Corporate Governance and Public Policy Committee to conduct individual director assessment as part of the annual Board evaluation process, and perform such other functions and responsibilities as set forth in the Corporate Governance Principles or as requested by the Board from time to time.

Our Lead Independent Director is nominated by the Nominating, Corporate Governance and Public Policy Committee, and final selection is subject to ratification by the vote of a majority of the independent directors on the Board. The Lead Independent Director serves for an annual term beginning at the Board meeting following the first Regular Meeting of Shareholders at which directors are elected. Mr. Fradin was re-appointed to the Lead Independent Director role in June 2016.

Board Composition

The Board seeks a wide range of relevant experience and expertise in its directors. In addition, the Board emphasizes independent voices and adding new perspectives to its membership. Currently 90% of our directors are independent, with an average tenure of 5.7 years. In addition, the Board carefully assesses and plans for the director skill sets required in the future, and for an orderly succession and transition of directors, as evidenced by the composition changes over the past five years. More information regarding our Director Qualification Standards and Director Nomination Process can be found within Item 1 of this proxy statement.

Director Independence

Pursuant to our Corporate Governance Principles, the Board has established independence standards consistent with the requirements of the SEC and NYSE. 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 us (directly, or as a partner, shareholder or officer of an organization that has a relationship with us). In addition, each member of the Compensation and Human Resources Committee must meet a standard of “enhanced independence” such that the Board must consider the source of compensation of the director and whether the director is affiliated with us or one of our subsidiaries to determine whether there are any factors that would materially affect a director's ability to be independent, specifically in regards to their duties as a compensation committee member.


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NYSE rules generally 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;

personally worked on (or whose immediate family member has personally worked on) our audit as a partner or an employee of our internal or external 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 or employee of our independent registered public accounting firm, or a director whose immediate family member is a partner of such firm or is employed by such firm and personally works on our audit; or

an employee (or has an immediate family member who is an executive officer) of another company that has made payments to Best Buy, or received 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 director who served during any part of fiscal 2017 and each director nominee is independent, with the exception of Mr. Joly, our Chairman and CEO. The Board based these determinations primarily on a review of the responses of the directors to questions regarding employment and compensation history, affiliations, family and other relationships and on discussions with our directors.

As part of its independence analysis, the Board reviewed our relationships with companies with which our directors are affiliated. As part of that review, the Board considered our relationship with IBM Corp., a company affiliated with Mr. Kenny. Mr. Kenny, a director since September 2013, serves as Senior Vice President of IBM Watson and IBM Cloud, divisions of IBM Corp. Since 2000, IBM Corp. has provided us with information technology-related services. The amounts we have paid to IBM Corp. were less than 2% of the annual consolidated revenue of IBM for each of the past three fiscal years. In addition, Mr. Kenny did not influence or participate in negotiating our agreements with IBM. The Board determined that the Company's relationship with IBM Corp. was not material and did not impair Mr. Kenny's independence.

In addition, the Board also considered our relationship with Cognizant Technology Solutions Corp., which provided us with information technology and business solution services during fiscal 2017. Ms. McLoughlin, a director since September 2015, serves as Chief Financial Officer of Cognizant. The amounts paid to Cognizant were less than 2% of Cognizant's gross revenues for the past fiscal year. Ms. McLoughlin did not influence or participate in negotiating our agreements with Cognizant. The Board determined that the Company's relationship with Cognizant was not material and did not impair Ms. McLoughlin's independence.

Committees of the Board

The Board has the following four committees: the Audit Committee, the Compensation and Human Resources Committee (the "Compensation Committee"); the Finance and Investment Policy Committee; and the Nominating, Corporate Governance and Public Policy Committee (the "Nominating Committee"). The charters for each committee are posted on our website at www.investors.bestbuy.com. The charters are reviewed annually and 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 rules, and all members of the Compensation Committee are "outside directors" for purposes of Internal Revenue Code section 162(m). The Board has also determined that three of the four

19



members of the Audit Committee during fiscal 2017 qualified as audit committee financial experts under SEC rules, and that each of the members of the Audit Committee has accounting and related financial management expertise in accordance with the NYSE listing standards.

The key responsibilities, fiscal 2017 membership and number meetings for each committee are set forth below:
Committee
Key Responsibilities
Fiscal 2017 Members
Number of Meetings held in Fiscal 2017
Audit
Ÿ
Assists the Board in its oversight of:
Tommy Millner*†
8
 
Ÿ
the integrity of our financial statements and financial reporting processes;
Karen A. McLoughlin†
 
Ÿ
our internal accounting systems and financial and operational controls;
 
Ÿ
the qualifications and independence of our independent registered public accounting firm;
Claudia F. Munce
 
Ÿ
the performance of our internal audit function and our independent registered public accounting firm;
Gerard R. Vittecoq†
 
Ÿ
our legal compliance and ethics programs, our legal, regulatory and risk oversight requirements, and the major risks facing the Company (including risks related to finance, operations and cyber-security), related party transactions and our Code of Business Ethics.
 
Ÿ
Responsible for the preparation of a report as required by the SEC to be included in this proxy statement.
 
Compensation & Human Resources
Ÿ
Responsible for executive officer and director compensation, including the establishment of our executive officer and director compensation philosophies, evaluating the performance of our CEO, approving CEO and executive officer compensation, and preparation of a report as required by the SEC to be included in this proxy statement.
Russell P. Fradin*
5
 
Lisa M. Caputo
Ÿ
Responsible for succession planning and compensation-related risk oversight.
J. Patrick Doyle
Ÿ
Approves and oversees the development and evaluation of equity-based and other incentive compensation and certain other employee benefit plans.
Kathy J. Higgins Victor
Finance & Investment Policy
Ÿ
Provides oversight of, and advises the Board regarding, our financial policies and financial condition to help enable us to achieve our long-range goals.
Gerard R. Vittecoq*
4
Ÿ
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.
J. Patrick Doyle
 
David W. Kenny
 
Karen A. McLoughlin
Ÿ
Responsible for ensuring we have adequate liquidity and approving certain significant contractual obligations.
Claudia F. Munce
Nominating, Corporate Governance, & Public Policy
Ÿ
Reviews and recommends corporate governance principles to the Board, screens and presents qualified individuals for election to the Board, and oversees the evaluation of the performance of the Board and its committees.
Kathy J. Higgins Victor*
4
Ÿ
Assists the Board with general corporate governance, including Board organization, membership, training and evaluation.
Lisa M. Caputo
Ÿ
Oversees matters of public policy and corporate responsibility and sustainability that affect us domestically and internationally.
David W. Kenny
 
 
 
Tommy Millner
*
Chair
Designated as an "audit committee financial expert"

Board Risk Oversight

Our Board is responsible for oversight of enterprise risk. The Board considers enterprise risk factors as critical in its review of business strategy and performance and ensures that there is an appropriate balance of risk and opportunity.

The Board approaches its risk oversight responsibilities by reviewing management’s assessment of enterprise risks based on internal and external factors and ensuring appropriate Board oversight of ongoing management efforts to address those risks. Management is responsible for the day-to-day risk management processes, including assessing and taking actions necessary to manage risk incurred in connection with the operation of our business. Management then reviews significant enterprise risks and our general risk management strategy with the Board as follows:

20




Key strategic risk factors, such as the competitive environment, strategic prioritization, and global brand issues, are considered by the full Board as part of the Board’s overall review of the Company’s strategy and strategic plans.

Risks associated with our financial reporting processes, legal and regulatory compliance, data privacy and security (including cyber-security) and other operational matters are reviewed by our Audit Committee.

Risks associated with our compensation plans, benefits and management succession are reviewed by our Compensation Committee.

Risks associated with our investment portfolio, capital markets and liquidity are reviewed by our Finance and Investment Policy Committee.

Risks associated with our Board processes, corporate governance, public policy and social responsibility are reviewed by our Nominating Committee.

Risk items reviewed in Board committees are then escalated to the full Board as necessary.

The Audit Committee also oversees management's processes to identify and quantify the material risks that we face. In connection with its risk oversight role, the Audit Committee meets privately with representatives of our independent registered public accounting firm, our internal audit staff and our legal staff. Our internal audit staff, who report directly to the Audit Committee at least quarterly, assist management in identifying, evaluating and implementing risk management controls and procedures to address identified risks.

Compensation Risk Assessment

In connection with their oversight of compensation-related risks, Compensation Committee members annually 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. As in past years, the review process in fiscal 2017 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 performance periods;
payment for outputs;
goal diversification;
stock ownership guidelines;
payment caps; and
clawbacks.

The Compensation Committee also considered additional controls outside of compensation plan design which contribute to risk mitigation, including the independence of our performance measurement teams and our internal control environment.

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

Board Meetings and Attendance

During fiscal 2017, the Board held four regular meetings. Each incumbent director attended, in person or by telephone, at least 75% of the meetings of both the Board and committees on which he or she served, and the average attendance of all directors was 98%. Directors are required to attend our Regular Meetings of Shareholders, and all director nominees attended the 2016 Meeting.

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. During fiscal 2017, our Lead Independent Director, Mr.

21



Fradin, chaired the executive sessions of independent directors in accordance with our Corporate Governance Principles and consistent with NYSE rules regarding executive sessions.

Board Evaluation Process
Our Nominating Committee oversees the evaluation of the performance of the Board, its committees and individual directors. On an annual basis, members of the Board complete a questionnaire evaluating the performance of the Board as a whole, each member’s respective committee, and the performance of the Chairman and Lead Independent Director. The questionnaire reflects responsibilities and roles as outlined within the Corporate Governance Principles and each committee’s respective charter, as well as more general performance-related questions. The Nominating Committee reviews the results of these questionnaires and determines whether the results warrant any action. The results and any proposed action are then shared with the full Board for further discussion and approval of final action plans.

In addition, the Chair of our Nominating Committee, the Board Chairman, and the Lead Independent Director conduct individual director assessments to review each director’s contributions to the Board during the past year and his or her performance against the director qualification standards and Board needs. As part of this process, the Nominating Committee Chair conducts confidential interviews with each director on an annual basis to discuss each director's engagement and desire to continue service, as well as their feedback on Board effectiveness. The Nominating Committee also annually reviews the skills and qualifications of the Board members and the strategic goals of the Company to determine whether the skills on the Board continue to align with the Company’s strategy. The interviews, board composition analysis and individual assessments are utilized by the Nominating Committee to assess whether a director should continue to serve on the Board and stand for re-election at the next Regular Meeting of Shareholders and to otherwise address Board composition needs.

In fiscal 2017, in addition to the process described above, the Nominating Committee engaged an independent third-party consultant to conduct individual interviews with each director and certain senior executives and perform a comprehensive analysis of the Board's governance structure, evaluation process and overall effectiveness. The Committee anticipates utilizing this approach periodically to obtain independent assessments of its performance.

CEO Evaluation Process

Our Compensation Committee conducts a robust annual CEO evaluation process, consisting of both a performance review and a compensation analysis. The performance evaluation component includes an assessment of the Company's performance in light of set objectives, personal interviews with the individual Board members and the CEO's direct reports, 360 feedback evaluations provided by over 30 individuals who interact with the CEO, and a detailed CEO self-assessment. Separately, the Company's Human Resources consultant conducts extensive market research. CEO compensation market data is collected from Fortune 100 companies, the retail industry generally, and our peer group to ensure both market competitiveness and appropriateness of our CEO's compensation relative to his peers. The Compensation Committee's independent consultant reviews the market data and provides its recommendations to the Compensation Committee. Once all of the relevant performance and compensation data has been collected, the Compensation Committee meets in executive session to discuss the CEO performance evaluation results and CEO compensation. After reviewing all of the collected data regarding performance, the Compensation Committee makes its decision regarding CEO compensation for the forthcoming year. The Compensation Committee then provides its final assessment on CEO performance and decision regarding CEO compensation to the Board for discussion during executive session. Our Chairman and CEO abstains from participating in all related discussions of the Compensation Committee and Board prior to delivery of the final assessment.

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, policies, principal officers, internal auditors and our independent registered public accounting firm. The orientation also addresses Board procedures, director responsibilities, our Corporate Governance Principles and our Board committee charters.

We also offer continuing education programs and provide opportunities to attend commercial director education seminars outside of the Company to assist our directors in maintaining their expertise in areas related to the work of the Board and the directors' committee assignments.

In fiscal 2017, the Board conducted its annual continuing education seminar for the full Board on the topics of cyber-security and privacy in June 2016.


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Anti-Hedging and Anti-Pledging Policies

Our executive officers and Board members are prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account. The Board recently strengthened the policy by removing the ability for the Compensation Committee to approve exceptions in advance. In addition, all employees and Board members are prohibited from hedging Company securities, including by way of forward contracts, equity swaps, collars, exchange funds or otherwise.

Director Stock Ownership

Historically, our stock ownership guidelines have required each of our non-management directors to own 10,000 shares and to hold 50% of their granted equity until that ownership target is met. In fiscal 2014, we began granting directors restricted stock units subject to a holding requirement. Directors must hold these units during their Board tenure until their service on the Board ends. In fiscal 2017, all of our non-management directors were in compliance with the ownership guidelines. Our stock ownership guidelines for executive officers are discussed in the Executive and Director Compensation —Compensation Discussion and Analysis — Executive Compensation Elements — Other Compensation section.

Shareholder Engagement

We regularly engage with our shareholders on a variety of topics throughout the year to ensure we are addressing their questions and concerns, to seek input and to provide perspective on Company policies and practices. We have taken several actions in recent years in consideration of shareholder feedback elicited during this process, including: declassification of our Board, the determination to hold the advisory vote on our executive compensation on an annual basis, adjustments to the director appointments on our Board committees, and the development of our corporate social responsibility program and reporting. We also continue to facilitate direct shareholder communication with management and members of our Board and the ability to easily access and obtain information regarding our Company on our website at www.investors.bestbuy.com. Please see Executive and Director Compensation — Introduction for more information regarding actions taken as a result of shareholder feedback received regarding our prior year's executive compensation decisions.

Public Policy

As a leading global retailer and corporate citizen, we believe that it is important to work with policymakers on issues impacting our customers, employees, businesses, shareholders and communities. We know that collaboration helps bring about change that better serves our communities where we live and work. Our public policy work directly aligns with our aspiration to be environmentally and socially accountable for our brands and business operations worldwide. In fiscal 2017, our public policy priorities included: marketplace fairness, financial services, cybersecurity and data privacy, competitive workplace, supply chain, energy & environment, and emerging technologies. More information about these priorities, as well as our annual political activity reports and related policies can be found at https://corporate.bestbuy.com under "Government Affairs."

Communications with the Board

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

Mr. Keith J. Nelsen
General Counsel and Secretary
Best Buy Co., Inc.
7601 Penn Avenue South
Richfield, Minnesota 55423

Mr. Nelsen 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. Nelsen may, at his discretion, forward certain correspondence, such as customer-related inquiries, elsewhere within the 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.

23






Corporate Governance Website

If you would like additional information about our corporate governance practices, you may view the following documents at www.investors.bestbuy.com in the Corporate Governance section.

Amended and Restated Articles of Incorporation
Amended and Restated By-laws
Corporate Governance Principles
Audit Committee Charter
Compensation and Human Resources Committee Charter
Finance and Investment Policy Committee Charter
Nominating, Corporate Governance and Public Policy Committee Charter
Code of Business Ethics
Best Buy Co., Inc. 2014 Omnibus Incentive Plan
Policy for Shareholder Nomination of Candidates to Become Directors of the Company
Process for Communication with the Board

24



ITEM OF BUSINESS NO. 1 — ELECTION OF DIRECTORS

General Information

Our By-laws provide that our Board consist of one or more directors and that the number of directors may be increased or decreased from time to time by the affirmative vote of a majority of the directors serving at the time that the action is taken. The number of directors on our Board is reviewed and set by our Board no less often than annually. In March 2017, the Board set the number of directors at ten, based on the number of directors currently serving. The Board will continue to evaluate the size of the Board and make adjustments as needed to meet the current and future needs of the Company.

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 within this section of our proxy statement.

When the Board elects to add a director to the Board, the Nominating Committee will announce the search and post any additional search criteria on our website at www.investors.bestbuy.com. 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 search firms or shareholders, as well as by members of the Board. All candidates are evaluated based on the director qualification standards and the current and future needs of the Board.

Shareholder nominations must be accompanied by a candidate resume that addresses the extent to which the nominee meets the director qualification standards and any additional search criteria posted on our website. 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:

Chair, Nominating, Corporate Governance and Public Policy Committee
c/o Mr. Keith J. Nelsen
General Counsel and Secretary
Best Buy Co., Inc.
7601 Penn Avenue South
Richfield, Minnesota 55423

Director Qualification Standards

In seeking new board members, we focus on adding new skills and experiences necessary to oversee the Company's business strategy and fulfill the Board's risk oversight obligations. Our objective is to identify and retain directors that can effectively develop the Company's strategy and oversee management's execution of that strategy. 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 the 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.

As part of its annual evaluation process for director nominees, the Nominating Committee considers other criteria, including the candidate's history of achievement and superior standards, ability to think strategically, willingness to share examples based upon experience, policy-making experience, and ability to articulate a point-of-view, take tough positions and constructively challenge management. Directors must also be committed to actively engaging in their 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.

Our Corporate Governance Principles establish our policy of considering diversity in the director identification and nomination process. When considering Board candidates, the Nominating Committee seeks nominees with a broad range of experience from a variety of industries and professional disciplines, such as finance, professional services, and technology, along with a diversity of gender, ethnicity, age and geographic location. The Nominating Committee does not assign specific weights to

25



particular criteria, and no particular criterion is necessarily applied to all prospective nominees. When the Nominating Committee identifies an area of which the Board may benefit from greater representation, it may focus its candidate search on particular experience, background or diversity characteristics, including gender, ethnic and geographical attributes. The Board believes that diversity in the backgrounds and qualifications of Board members ensures the mix of experience, knowledge and abilities necessary for the Board to fulfill its responsibilities and leads to a more effective oversight and decision-making process.

The grid below summarizes the key qualifications and skills each of our directors possess that were most relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill; rather a mark indicates a specific area of focus or expertise on which the Board relies most heavily. Each director’s biography describes these qualifications and relevant experience in more detail.
 
Caputo
Doyle
Fradin
Higgins Victor
Joly
Kenny
McLoughlin
Millner
Munce
Vittecoq
Academia / Education
ü
 
 
ü
 
 
 
 
 
 
Significant experience in roles at one or more academic institutions; helpful in bringing thought leadership to the development of our business strategy
Business Operations
 
ü
ü
 
ü
ü
 
ü
ü
ü
Experience in an operational role with one or more businesses; provides understanding to assess our business strategy and execution
Chief Executive Officer
 
ü
ü
 
ü
ü
 
ü
 
 
Past or current service as a chief executive in a for-profit company; provides an enhanced ability to support our CEO and develop our leadership team
Corporate Governance
ü
 
ü
ü
 
 
 
 
 
 
Experience in managing or advising on corporate governance matters for corporations; supports our objective to have corporate governance practices that reflect industry best practices
Customer Engagement / Marketing
ü
ü
 
 
ü
ü
 
ü
 
 
Past or current service in, or oversight of, a senior marketing position; important in understanding the needs of our customers
Digital / E-commerce
ü
ü
 
 
ü
ü
 
ü
ü
 
Overseeing part or all of a significant E-commerce business; relevant to the development of our multi-channel strategy
Finance
 
ü
ü
 
ü
ü
ü
ü
 
ü
Having served as or overseen a senior financial officer; important to oversee and understand our financial statements, capital structure and internal controls
Government / Public Policy
ü
 
 
 
 
 
 
 
 
 
Having held one or more significant positions in local, state or federal government; valuable in assessing the impact of new regulations on our industry
Investments / Venture Capital
 
 
ü
 
 
 
 
 
ü
 
Having held a significant position with an investment or venture capital firm; relevant to evaluating our growth, innovation and investment strategies
Professional Services
 
 
ü
 
ü
ü
ü
 
 
 
Experience in overseeing or managing a professional services business; important in understanding the needs of our services strategy
Retail / Consumer Services
ü
ü
 
ü
ü
ü
 
ü
 
 
Experience at a major retailer or consumer services-oriented business; important in understanding our industry, business needs and strategic goals
Talent Management
 
 
ü
ü
 
 
 
 
 
 
Current or past experience managing or advising human resource functions; helpful to our efforts to attract, retain and motivate talent
Technology
 
 
ü
 
ü
ü
ü
 
ü
 
Having served in a senior technology role or a senior role in a technology company; important as we assess our technology needs and those of our customers

Director Nominees (Ages and Committee roles as of May 1, 2017)

The biographies of each of the nominees include 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 any, and the key experiences, qualifications, attributes or skills that led 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 nominee and any director, executive officer or person chosen to become an executive officer. There are also no material proceedings to which any director, officer, affiliate of the

26



Company, any 5% shareholder or any associate is a party adverse to the Company or its subsidiaries or has a material interest adverse to the Company or its subsidiaries.
lcaputo2.jpg
Lisa M. Caputo
 
 
 
Age: 53
 
Committees:
 
Director Since: December 2009
 
l Compensation Committee
ü Independent
 
l Nominating Committee
 
 
 
Other For-Profit Directorships (*Public Company):
 
 
None
 
 
 
 
 
 
 
 
 
Background: Executive Vice President and Chief Marketing and Communications Officer of The Travelers Companies, Inc., a property casualty insurer (2011-present); Managing Director and Senior Banker of the Public Sector Group of the Institutional Clients Group of Citigroup, Inc., a financial services company (2010-2011); Global Chief Marketing Officer and Executive Vice President of Citigroup, Inc. (2007-2010); Founder, Chairman and Chief Executive Officer of Citi’s Women & Co., a membership service that provides financial education and services for women (2000-2011).

What she brings to the Board: Ms. Caputo’s position as Executive Vice President of Marketing and Communications of The Travelers Companies makes her critical to Best Buy’s efforts to broaden its brand, rejuvenate the customer experience and transform its marketing efforts from analog and mass to digital and personal. She also spent 11 years at Citigroup, advising three chief executive officers on topics from marketing and communications to government affairs and community relations. Ms. Caputo has an exceptional track record of enhancing corporate social responsibility and employee engagement, key components of Best Buy’s ongoing transformation. She has also been a senior executive at the Walt Disney Company and at the CBS Corporation, and spent more than a decade in the public sector, serving as Deputy Assistant to President Bill Clinton and Press Secretary to First Lady Hillary Rodham Clinton. Ms. Caputo’s diverse public/private background lends an important voice to the Board deliberations, particularly those that involve the Company’s efforts to communicate with customers.

Education: Ms. Caputo holds degrees from Brown University and Northwestern University.

patrickdoyle2a03.jpg
J. Patrick Doyle
 
 
 
Age: 53
 
Committees:
 
Director Since: October 2014
 
l Compensation Committee
ü Independent
 
l Finance & Investment Policy Committee
 
 
Other For-Profit Directorships (*Public Company):
 
 
l Domino's Pizza, Inc.*
 
 
 
 
 
 
 
 
 
Background: President and CEO of Domino’s Pizza, Inc., the second-largest pizza company in the world (2010-present); President of Domino’s Pizza (2007-present); Executive Vice President of Team U.S.A. at Domino’s Pizza (2004-2007); Executive Vice President of Domino’s Pizza International (1999-2004); Senior Vice President of Marketing for Domino’s Pizza (1997-1999).

What he brings to the Board: Having led a remarkable transformation at Domino’s Pizza, Inc., Mr. Doyle’s experience and insights are valuable to the Board of Directors and senior management as Best Buy is in the midst of a similar effort. His experience rebuilding Domino’s reputation among consumers is a great benefit to Best Buy, particularly as it evolves its own marketing initiatives. Under Mr. Doyle, Domino’s significantly grew its digital presence, with online orders now accounting for 40 percent of U.S. sales. That expertise supports Best Buy’s continued work in meeting customers where, how and when they want to shop — in store or online — and its goal of increasing its online market share. Mr. Doyle previously served on the board of directors of G&K Services, Inc.

Education: Mr. Doyle holds degrees from The University of Chicago Booth School of Business and from the University of Michigan.

27



rfradin.jpg
Russell P. Fradin
 
 
 
Age: 61
 
Committees:
 
Director Since: April 2013
 
l Compensation Committee (Chair)
ü Independent
 
 
Lead Independent Director
 
Other For-Profit Directorships (*Public Company):
 
 
l Hamilton Insurance
 
 
 
l Tranzact
 
 
 
 
 
Background: Operating Partner at Clayton, Dubilier, & Rice, a private investment firm (April 2016-present); Chief Executive Officer and President of SunGard, a leading software and technology services company now acquired by Fidelity National Information Services, Inc. (2011-2015); Chairman and Chief Executive Officer of AonHewitt, a global provider of human resources consulting and outsourcing solutions (2010-2011); Chief Executive Officer of Hewitt Associates (2006-2010); President and Chief Executive Officer of The BISYS Group, Inc., a provider of outsourcing solutions for the financial services sector (2004-2006).

What he brings to the Board: With experience as both a CEO and an executive board chair, Mr. Fradin is well suited to be Best Buy’s Lead Independent Director. He has firsthand insight into the partnership between an engaged Board and an effective, high-performing management team. In his role as a director, Mr. Fradin offers Best Buy the benefit of a 20-year career leading some of the country’s top services businesses, including more than a decade in a CEO role. This experience is of particular value given the Company’s emphasis on rejuvenating its services business as part of its transformation efforts. Additionally, Mr. Fradin’s previous leadership of Hewitt Associates and, ultimately, AonHewitt, allows him to offer valuable advice on issues that include streamlining operations, reducing costs and establishing appropriate executive compensation. Earlier in his career, Mr. Fradin ran the Global Employer Services business of Automatic Data Processing, Inc., where he nearly doubled revenues, significantly improved margins and diversified that business’s operations. He also spent 18 years at McKinsey and Company, specializing in offering Fortune 500 clients advice on new product and services innovations. Mr. Fradin previously served on the boards of directors of SunGard Data Systems, Inc. and Gartner, Inc.
  
Education: Mr. Fradin holds degrees from the Wharton School of the University of Pennsylvania and from Harvard University.
kathyhigginsvictorphoto20162.jpg
Kathy J. Higgins Victor
 
 
 
Age: 60
 
Committees:
 
Director Since: November 1999
 
l Compensation Committee
ü Independent
 
l Nominating Committee (Chair)
 
 
Other For-Profit Directorships (*Public Company):
 
 
None
 
 
 
 
 
 
 
 
 
Background: President and Founder of Centera Corporation, an executive development and leadership coaching firm (1995-present); Senior Vice President, Chief Human Resources Officer at Northwest Airlines, Inc., a global commercial airline now merged with Delta Air Lines (1991-1995).
  
What she brings to the Board: Ms. Higgins Victor, Founder and President of Centera Corporation, an executive development and leadership coaching firm, brings highly experienced leadership to support Best Buy’s goal of developing and retaining the industry’s best talent. She uses leadership development and change management strategies to help numerous domestic and international companies build sustainable competitive advantage and has extensive experience in executive development, human resources, talent management, organizational culture and succession planning. She led the Board’s efforts to recruit the Company’s Chairman and CEO, Hubert Joly, as well as several recent directors. Ms. Higgins Victor brings a global business perspective, having held international leadership roles with Northwest Airlines, Inc. (now Delta Air Lines), where she was responsible for executive compensation, employee benefits and labor relations, as well as a people-centric point of view gleaned from human resources-related leadership roles at The Pillsbury Company and Burger King Corporation earlier in her career. Because of her combination of decades of experience advising senior Fortune 100 executives and expertise in governance, change management and human resources, Best Buy has relied on Ms. Higgins Victor to offer insight regarding its goal of building foundational capabilities necessary to unlock future growth strategies, and will continue to rely on her as it

28



implements its Best Buy 2020 strategy. She also serves on the board of trustees for the University of St. Thomas, Minnesota’s largest private university.

Education: Ms. Higgins Victor holds a degree from the University of Avila.
jolyhuberta01a02.jpg
Hubert Joly
 
 
 
Age: 57
 
Committees:
 
Director Since: September 2012
 
None
Appointed Chairman in June 2015
 
 
 
 
Other For-Profit Directorships (*Public Company):
 
 
l Ralph Lauren Corporation*
 
 
 
 
 
 
 
 
 
Background: Chairman (2015-present) and Chief Executive Officer of Best Buy Co., Inc. (2012-present); President and Chief Executive Officer of Carlson, Inc., a worldwide hospitality and travel company (2008-2012); President and Chief Executive Officer of Carlson Wagonlit Travel, a business travel management company (2004-2008); senior executive positions with Vivendi S.A., a French multinational media and telecommunications company (1999-2004).

What he brings to the Board: Mr. Joly has a strong reputation as a turnaround and transformation expert. Since joining Best Buy in September 2012, Mr. Joly has led the Company’s Renew Blue transformation. As a result, Best Buy has delivered improved domestic comparable sales and profit; an increase in customer satisfaction and employee engagement; an enhanced in-store experience with the addition of thousands of stores-within-a-store developed in partnership with many of the world’s leading technology companies; and a richer online shopping experience on bestbuy.com. Before joining Best Buy, Mr. Joly was CEO of Carlson, Inc., a global hospitality and travel company. He previously led Carlson Wagonlit Travel, Vivendi Universal Games and Electronic Data Systems’ French business. He began his career with McKinsey and Company, where he was a partner.

Education: Mr. Joly holds degrees from the École des Hautes Études Commerciales de Paris (HEC Paris) and the Institut d’Etudes Politiques de Paris.
kennydavidbd031214a02.jpg
David W. Kenny
 
 
 
Age: 55
 
Committees:
 
Director Since: September 2013
 
l Finance & Investment Policy Committee
ü Independent
 
l Nominating Committee
 
 
Other For-Profit Directorships (*Public Company):
 
 
None
 
 
 
 
 
 
 
 
 
Background: Senior Vice President of IBM Watson (January 2016-present) and IBM Cloud (November 2016-present), business units of IBM, an American multinational technology and consulting corporation; Chairman and Chief Executive Officer of The Weather Company, a leading provider of weather forecasts and information (2012-2015); President of Akamai, a leading cloud platform technology company (2011-2012); Managing Partner of VivaKi, a provider of integrated strategy, technology and marketing solutions for internet-based ecommerce companies (2006-2010); Founder and Chief Executive Officer of Digitas, Inc., which was later merged with VivaKi (1997-2006).

What he brings to the Board: Mr. Kenny has an impressive track record of transforming companies, a valuable asset for Best Buy’s business imperatives. He was recently appointed the leader of IBM Watson and IBM Cloud, tasked with overseeing the development of the company’s cognitive technology business and its related partnerships with outside software developers. As the former Chairman and Chief Executive Officer of The Weather Company (now acquired by IBM), Mr. Kenny helped turn that organization into a multi-platform media heavyweight that produced television programming, developed apps, published content and used analytics to connect businesses to consumers through weather and climate-related content. Mr. Kenny uses his consumer-centric and strategic skills to support Best Buy’s transformation efforts, including its goal of capturing online share and serving customers based on how, where and when they want to be served. Mr. Kenny’s online leadership dates to 1997,

29



when he founded Digitas, Inc., a provider of technology and marketing solutions for e-commerce and multi-channel companies. He previously served on the board of directors of SessionM, The Weather Company, The Corporate Executive Board, Akamai Technologies and Yahoo! Inc.

Education: Mr. Kenny holds degrees from the GM Institute (now Kettering University) and Harvard University.
kmcloughlin2.jpg
Karen A. McLoughlin
 
 
 
Age: 52
 
Committees:
 
Director Since: September 2015
 
l Audit Committee
ü Independent
 
l Finance & Investment Policy Committee
 
 
Other For-Profit Directorships (*Public Company):
 
 
None
 
 
 
 
 
 
 
 
 
Background: Chief Financial Officer of Cognizant Technology Solutions Corporation, a Fortune 500 company and leading provider of information technology, business process and consulting services (2012-present); Senior Vice President, Financial Planning & Analysis and Enterprise Transformation of Cognizant (2008-2012); Vice President, Global Financial Planning & Analysis of Cognizant (2003-2008); Vice President, Finance of Spherion Corp., now SFN Group Inc., which was acquired by Randstadt (1997-2003).

What she brings to the Board: As the Chief Financial Officer of Cognizant Technology Solutions Corp., Ms. McLoughlin brings strong financial acumen to the Best Buy Board. Having been at Cognizant since 2003, she has developed extensive knowledge of the IT services sector, which is critical to Best Buy as it considers its own internal IT processes and continues to emphasize Services as part of its ongoing transformation and Best Buy 2020 strategy. Further, since joining Cognizant, Ms. McLoughlin has spearheaded several critical transformational initiatives that made significant contributions to the efficiency and effectiveness of the company’s operations. Through this work, she developed a deep understanding of the company’s financial and business operations perspectives, experience that will greatly benefit Best Buy as it looks to continually improve its operational structure. During Ms. McLoughlin’s time at Cognizant, the company has experienced tremendous growth, with revenue increasing from $368 million to $10.3 billion (fiscal 2014). Prior to joining Cognizant, Ms. McLoughlin built upon her strong financial background with leadership roles at Spherion Corp. and Price Waterhouse (now PricewaterhouseCoopers).

Education: Ms. McLoughlin holds degrees from Wellesley College and Columbia University.
tmillner.jpg
Thomas L. "Tommy" Millner
 
 
 
Age: 63
 
Committees:
 
Director Since: January 2014
 
l Audit Committee (Chair)
ü Independent
 
l Nominating Committee
 
 
Other For-Profit Directorships (*Public Company):
 
 
l Cabela's Inc.*
 
 
 
l Total Wine & More
 
 
 
 
 
Background: Chief Executive Officer of Cabela’s Inc., a leading omni-channel retailer of hunting, fishing and camping products (2009-present); President and Chief Executive Officer of Freedom Group, Inc. and its successor company, Remington Arms Company, Inc., a firearms and ammunition manufacturer (1999-2009).

What he brings to the Board: As the Chief Executive Officer of Cabela’s Inc., Mr. Millner is a prominent presence in multi-channel retail. As the Chief Executive Officer of North America’s foremost outdoors retailer, Mr. Millner brings to the Best Buy Board expertise in support of the Company strategic priorities, particularly those concerning effective merchandizing and multi-channel operations. He has experience leading a specialty retailer through a transformation. When he joined Cabela’s, the company’s market capitalization hovered near $500 million; five years later, it exceeded $5.0 billion. Before leading that remarkable growth, Mr. Millner was President and Chief Executive Officer of Remington Arms Company. Earlier in his career he was Chief Executive Officer and President of Pilliod Cabinet and held various leadership positions at Broyhill Furniture and

30



Thomasville Furniture. Experience gained throughout his career complements Best Buy’s strategy for enhanced personalized consumer marketing.

Education: Mr. Millner holds a degree from Randolph Macon College.
cmuncebw2a01.jpg
Claudia F. Munce
 
 
 
Age: 57
 
Committees:
 
Director Since: March 2016
 
l Audit Committee
ü Independent
 
l Finance & Investment Policy Committee
 
 
Other For-Profit Directorships (*Public Company):
 
 
l Bank of the West
 
 
 
 
 
 
 
 
 
Background: Venture Advisor at New Enterprise Associates (NEA), one of the world’s largest and most active venture capital firms (January 2016-present); Managing Director of IBM Venture Capital Group and Vice President of Corporate Strategy at IBM Corp. (2004-15); Director of Strategy, IBM Venture Capital Group (2000-04); Head of Technology Transfer and Licensing, IBM Research (1994-2000).

What she brings to the Board: Ms. Munce is a seasoned venture capital leader who has developed a deep knowledge of global partnerships and M&A activities. Her many years of focusing on emerging markets and disruptive technology have been and will continue to be valuable to Best Buy as it explores growth opportunities as part of its ongoing transformation and Best Buy 2020 strategy. She brings the perspective of someone with a highly technical engineering background as well as business acumen and a strategic mindset. Ms. Munce serves as a board member for Bank of the West, the National Venture Capital Association and Global Corporate Venturing.

Education: Ms. Munce holds degrees from the Santa Clara University School of Engineering and the Stanford University Graduate School of Business.
gvittecoq.jpg
Gérard R. Vittecoq
 
 
 
Age: 68
 
Committees:
 
Director Since: September 2008
 
l Audit Committee
ü Independent
 
l Finance & Investment Policy Committee (Chair)
 
 
Other For-Profit Directorships (*Public Company):
 
 
l Ariel Compressors
l Mantrac Group
 
 
l ManCapital
l Vanguard Logistics Services
 
 
 
 
Background: Group President and Executive Office Member of Caterpillar Inc., a manufacturer of construction and mining equipment (2004-2013); Vice President overseeing Europe-Africa-Middle East Product Development and Operations division of Caterpillar Inc. (2001-2004); Managing Director of Caterpillar Belgium S.A. (1997-2001).

What he brings to the Board: Mr. Vittecoq’s global perspective and international business acumen are key to the Company's work to transform its business and improve operational efficiencies. As a Group President of Caterpillar Inc., he was responsible for the development and implementation of Lean manufacturing, an effort that drove meaningful results for Caterpillar. Before he retired in 2013, Mr. Vittecoq led a strategic initiative to deliver world-class results for the company, focusing on customer expectations and driving competitive advantage, two elements crucial to Best Buy’s transformation. He is an innovator when it comes to supply chain and logistics and brings that creative, world-view thinking to Best Buy.

Education: Mr. Vittecoq holds degrees from École Supérieure de Commerce in France and Laval University in Canada.


31



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 Articles prohibit cumulative voting, which means you can vote only once for any nominee. The affirmative vote of a majority of the votes cast with respect to the director is required to elect a director.

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

Board Voting Recommendation

The Board recommends that shareholders vote FOR the election of Lisa M. Caputo, J. Patrick Doyle, Russell P. Fradin, Kathy J. Higgins Victor, Hubert Joly, David W. Kenny, Karen A. McLoughlin, Thomas L. Millner, Claudia F. Munce and Gérard R. Vittecoq for a term of one year. All of the nominees are current members of the Board.


32




SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information about the number of shares of our common stock beneficially owned on March 31, 2017 (unless otherwise indicated), by our CEO, any individual who served as our Chief Financial Officer ("CFO"), and our three other most highly compensated executive officers during the most recent fiscal year. The table provides similar information for each director and director nominee, all directors and executive officers as a group, and each person, or any group that we know who beneficially owns more than 5% of the outstanding shares of our common stock.

Name and Address(1)
 
Number of Shares
Beneficially Owned

 
 
 
Percent of Shares
Beneficially Owned

Hubert Joly, Chairman and Chief Executive Officer
 
1,758,649

 
(2
)
 
*

Corie S. Barry, Chief Financial Officer
 
68,971

 
(3
)
 
*

Sharon L. McCollam, Former Chief Administrative Officer and Chief Financial Officer
 
335,154

 
(4
)
 
*

Shari L. Ballard, President, Multi-Channel Retail and Operations
 
52,745

 
(5
)
 
*

R. Michael Mohan, Chief Merchandising & Marketing Officer
 
187,847

 
(6
)
 
*

Keith J. Nelsen, General Counsel & Secretary
 
126,389

 
(7
)
 
*

Lisa M. Caputo, Director
 
46,512

 
(8
)
 
*

J. Patrick Doyle, Director
 
14,634

 
(9
)
 
*

Russell P. Fradin, Director
 
24,012

 
(10
)
 
*

Kathy J. Higgins Victor, Director
 
44,742

 
(11
)
 
*

David W. Kenny, Director
 
19,989

 
(12
)
 
*

Karen A. McLoughlin, Director
 
9,852

 
(13
)
 
*

Thomas L. Millner, Director
 
18,476

 
(14
)
 
*

Claudia F. Munce, Director
 
7,629

 
(15
)
 
*

Gérard R. Vittecoq, Director
 
47,696

 
(16
)
 
*

All current directors and executive officers, as a group (19 individuals)
 
2,588,569

 
(17
)
 
0.84
%
Richard M. Schulze, Founder and Chairman Emeritus 3033 Excelsior Blvd., Suite 525 Minneapolis, MN 55416
 
41,555,355

 
(18
)
 
13.50
%
FMR LLC ("Fidelity") 245 Summer Street
Boston, MA 02210
 
34,139,138

 
(19
)
 
10.88
%
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
 
31,885,583

 
(20
)
 
10.16
%
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
 
19,927,143

 
(21
)
 
6.30
%
*
Less than 1%.
 
(1)
The business address for all current directors and executive officers is 7601 Penn Avenue South, Richfield, Minnesota, 55423.

(2)
The figure represents: (a) 466,098 outstanding shares owned by Mr. Joly; (b) 388,805 restricted stock units, which Mr. Joly could convert to shares within 60 days of March 31, 2017; and (c) options to purchase 903,746 shares, which Mr. Joly could exercise within 60 days of March 31, 2017.

(3)
The figure represents: (a) 21,758 outstanding shares owned by Ms. Barry; and (b) options to purchase 47,213 shares, which Ms. Barry could exercise within 60 days of March 31, 2017.

(4)
The figure represents: (a) 295,103 outstanding shares owned by Ms. McCollam as of January 28, 2017 (her last day of employment with us); and (b) options to purchase 40,051 shares, which Ms. McCollam could exercise within 60 days of January 28, 2017.

(5)
The figure represents 52,745 outstanding shares owned by Ms. Ballard.

(6)
The figure represents: (a) 73,137 outstanding shares owned by Mr. Mohan; (b) 5,743 restricted shares subject to a time-based vesting schedule, which vest within 60 days of March 31, 2017; and (c) options to purchase 108,967 shares, which Mr. Mohan could exercise within 60 days of March 31, 2017.

33




(7)
The figure represents: (a) 41,295 outstanding shares owned by Mr. Nelsen; (b) 894 outstanding shares held in the name of the Trustee in connection with the Retirement Saving Plan for the benefit of Mr. Nelsen; and (c) options to purchase 84,201 shares, which Mr. Nelsen could exercise within 60 days of March 31, 2017.

(8)
The figure represents: (a) 10,000 outstanding shares owned by Ms. Caputo; (b) 24,012 restricted stock units, which Ms. Caputo could convert to shares within 60 days of March 31, 2017; and (c) options to purchase 12,500 shares, which Ms. Caputo could exercise within 60 days of March 31, 2017.

(9)
The figure represents 14,634 restricted stock units, which Mr. Doyle could convert to shares within 60 days of March 31, 2017.

(10)
The figure represents 24,012 restricted stock units, which Mr. Fradin could convert to shares within 60 days of March 31, 2017.

(11)
The figure represents: (a) 10,730 outstanding shares owned by Ms. Higgins Victor; (b) 24,012 restricted stock units, which Ms. Higgins Victor could convert to shares within 60 days of March 31, 2017; and (c) options to purchase 10,000 shares, which Ms. Higgins Victor could exercise within 60 days of March 31, 2017.

(12)
The figure represents 19,989 restricted stock units, which Mr. Kenny could convert to shares within 60 days of March 31, 2017.

(13)
The figure represents 9,852 restricted stock units, which Ms. McLoughlin could convert to shares within 60 days of March 31, 2017.

(14)
The figure represents 18,476 restricted stock units, which Mr. Millner could convert to shares within 60 days of March 31, 2017.

(15)
The figure represents 7,629 restricted stock units, which Ms. Munce could convert to shares within 60 days of March 31, 2017.

(16)
The figure represents: (a) 2,434 outstanding shares owned by Mr. Vittecoq; (b) 24,012 restricted stock units, which Mr. Vittecoq could convert to shares within 60 days of March 31, 2017; and (c) options to purchase 21,250 shares, which Mr. Vittecoq could exercise within 60 days of March 31, 2017.

(17)
The figure represents: (a) the outstanding shares, restricted stock units and options described in the preceding footnotes (2), (3) and (5) thru (16); (b) 31,581 outstanding shares owned by other executive officers; (c) 23,826 restricted shares subject to time-based vesting schedules, which are held by other executive officers and which vest within 60 days of March 31, 2017; and (d) options to purchase 105,016 shares, which the other executive officers could exercise within 60 days of March 31, 2017.

(18)
Mr. Schulze is our Founder and Chairman Emeritus. He is not a member of our Board and is not considered an executive officer but is listed here due to his status as a beneficial owner of more than 5% of our common stock. The figure represents: (a) 1,732,500 outstanding shares owned by Mr. Schulze; (b) 19,840,438 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 in aggregate value of shares have been pledged by the trust as collateral to secure a line of credit; (c) 14,255,047 outstanding shares registered in the name of Mr. Schulze and co-trustees, and held by them as trustees of Grantor Retained Annuity 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 Grantor Retained Annuity Trust; (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 pecuniary interest therein); (f) 252,312 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is 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) 12,309 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); (i) 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); (j) 2,061 outstanding shares held in Mr. Schulze's individual retirement account; (k) 3,076,143 outstanding shares owned by The Richard M. Schulze Family Foundation, of which Mr. Schulze is the sole director and (l) 75,935 outstanding shares registered in the name of the Trustee in connection with the Retirement Saving Plan for the benefit of Mr. Schulze.

(19)
As reported on the owner's most recent Schedule 13G filed with the SEC on February 13, 2017, to report ownership as of December 30, 2016. FMR LLC and certain related entities have sole voting power over 3,284,447 shares and sole dispositive power over 34,139,138 shares.

(20)
As reported on the owner's most recent Schedule 13G filed with the SEC on February 10, 2017, to report ownership as of January 31, 2017. The Vanguard Group has sole voting power over 441,261 shares, shared voting power over 55,930 shares, sole dispositive power over 31,396,286 shares and shared dispositive power over 489,297 shares.

(21)
As reported on the owner's most recent Schedule 13G filed with the SEC on January 18, 2017, to report ownership as of December 31, 2016. BlackRock, Inc. has sole voting power over 16,261,621 shares and sole dispositive power over 19,927,143 shares.

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 beneficially own more than 10% of our common stock file initial reports of ownership with the SEC. They must also file reports of changes in ownership with the SEC. 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 beneficially own more than 10% of our common stock complied with the Section 16(a) filing requirements during the fiscal year ended January 28, 2017.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Related Party Transactions Policy prohibits "related party transactions" unless approved by the Audit Committee and the Board. For purposes of our policy, a "related party transaction" is a transaction or series of transactions in which (a) the Company or a subsidiary is a participant, (b) the aggregate amount involved exceeds $120,000 and (c) any director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any of their respective immediate family members has a direct or indirect material interest.

A related party transaction will generally not be approved unless it provides us with a demonstrable incremental benefit and the terms are competitive with those available from unaffiliated third parties. Only Board members who do not have an interest in the transaction are permitted to vote on a related party transaction. In addition, ongoing related party transactions are reviewed by the Audit Committee and the Board to ensure that such transactions continue to provide the necessary incremental benefit to us and have competitive terms. Each of the transactions discussed below were approved (or re-approved if ongoing) by the Audit Committee and the Board in March 2017, unless otherwise noted, in accordance with our Related Party Transactions Policy.

We do not have any credit arrangements between our officers, directors, controlling persons and other insiders.

Richard M. Schulze

As of the date of this filing, Mr. Schulze owned approximately 13.5% of our common stock. On March 25, 2013, we entered into a letter agreement with Mr. Schulze pursuant to which, among other things, Mr. Schulze was given the lifetime honorary title of "Founder and Chairman Emeritus" of the Company, although he is not an executive and is no longer a member of our Board. Under this letter agreement, we agreed to compensate Mr. Schulze with an annual base salary of $150,000 through fiscal 2018 for his services as Chairman Emeritus, and to provide lifetime medical benefits for him, his spouse and his eligible dependents in accordance with our plans, practices, programs and policies in effect generally for our executives and their dependents. We also agreed to provide office space and administrative support, and to reimburse Mr. Schulze for his costs and out-of-pocket expenses incurred in the performance of his duties as Chairman Emeritus. The letter agreement's term expired when Mr. Schulze reached the age of 75 (which occurred in January 2016), except as specifically described above.

During the beginning of fiscal 2017, we had ongoing lease obligations for one of our former U.S. Best Buy store locations leased from Mr. Schulze. In April 2016, with Audit Committee and Board approval, we entered into a lease termination agreement for this location in which we agreed to pay a termination fee of approximately $300,000 in exchange for a release from our future rent and other obligations under the lease (which totaled approximately $1.1 million). During fiscal 2017, we paid aggregate rent and lease termination fees of approximately $427,000 for this former store location.

Ryan Green, Mr. Schulze's step-son, is employed with us as a Senior Director in our Properties department at our corporate headquarters in Richfield, Minnesota. Mr. Green's total cash compensation for fiscal 2017 was approximately $229,000. Mr. Green also received an annual long-term incentive award of 2,300 time-based restricted shares, which vest in one-third increments on each anniversary of the grant for three years, and which award is consistent for other employees at his level. Mr. Green is eligible to receive employee benefits generally available to all employees. Mr. Green's employment with us began in August 2012. Mr. Schulze's family member is compensated at a level comparable to the compensation paid to non-family members in similar positions at Best Buy.

Fidelity

FMR LLC ("Fidelity") filed an amended Schedule 13G in February 2017, stating that it beneficially owns 10.88% of the Company's common stock. As a result of beneficially owning more than 5% of our common stock, Fidelity is currently considered a “related party” under our Related Party Transactions Policy. Certain affiliates of Fidelity provide services to us in connection with the record keeping and administration of our stock plans (including the Employee Stock Purchase Plan and the Long-Term Incentive Plan). We paid these entities approximately $528,000 for these services for fiscal 2017. The administrative services contracts were initially entered into prior to Fidelity's Schedule 13G filing and 5% holder status. The contracts were negotiated at arm's length, and there is no indication that the Company or Fidelity received preferential treatment as a result of the relationship.



35



AUDIT COMMITTEE REPORT

The information contained in this Audit Committee Report shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

During the majority of fiscal 2017, the Audit Committee included four members. The Audit Committee acts under a written charter adopted and approved by the Board. The Audit Committee's charter is posted on our website at www.investors.bestbuy.com. All members of the Audit Committee meet the SEC and NYSE definitions of independence and financial literacy for audit committee members. In addition, the Board has determined that Ms. McLoughlin and Messrs. Millner and Vittecoq are "audit committee financial experts" for purposes of SEC rules based on their relevant experience. Ms. McLoughlin is employed as a principal financial officer at Cognizant Technology Solutions. Mr. Millner has experience actively supervising a principal financial officer in his role as a principal executive officer of a public company, and Mr. Vittecoq previously served in various accounting and finance positions at his prior employer. No member of the Audit Committee serves on the audit committee of more than three public companies.

In June 2016, Mr. Kenny and Mr. Doyle transitioned off of the Audit Committee, and Mr. Millner was appointed as Chair of the Committee. Ms. McLoughlin, Mr. Millner, Ms. Munce and Mr. Vittecoq continued their service on the Audit Committee throughout fiscal 2017.

Committee Meetings

The Audit Committee met eight times during fiscal 2017, including four times via conference call. The Audit Committee schedules its meetings to ensure it has sufficient time to devote appropriate attention to all of its tasks. The Audit Committee meetings include regular executive sessions with our independent registered public accounting firm, Deloitte & Touche LLP ("D&T"), our internal auditors and management. The Audit Committee also discusses with our internal auditors and D&T the overall scope and plans for their respective audits.

Recommendation Regarding Financial Statements

The Audit Committee, on behalf of the Board, reviewed and discussed with both management and D&T our annual audited consolidated financial statements for the fiscal year ended January 28, 2017, and our quarterly operating results for each quarter in such fiscal year, along with the related significant accounting and disclosure issues. The Audit Committee has discussed with the independent auditors the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301 "Communications with Audit Committees."

The Audit Committee reviewed and discussed with D&T its independence from us and our management. As part of that review, the Audit Committee received from D&T the written disclosures and the letter required by applicable rules of the Public Company Accounting Oversight Board (U.S.) regarding the independent accountant's communications with audit committees concerning independence. In addition, the Audit Committee reviewed all services provided by and the amount of fees paid to D&T in fiscal 2017. In reliance on the reviews and discussions with management and D&T, the Audit Committee believes that the services provided by D&T were compatible with, and did not impair, its independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that our annual audited consolidated financial statements be included in our Annual Report on Form 10-K for the period ended January 28, 2017, as filed with the SEC.

AUDIT COMMITTEE

Thomas L. Millner (Chair)
Karen A. McLoughlin
Claudia F. Munce
Gérard R. Vittecoq


36



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

THIS SECTION SHOULD BE READ IN CONJUNCTION WITH THE "AUDIT COMMITTEE REPORT"

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. As part of this oversight, the Audit Committee considers the firm’s independence, qualifications, performance, and whether the independent registered public accounting firm should be rotated, as well as the impact of such a rotation. Deloitte & Touche LLP ("D&T") has been retained as our independent registered public accounting firm since fiscal 2006. In compliance with Sarbanes-Oxley requirements, the Lead Audit Partner from D&T rotates off our account every five years, with oversight in selection by the Audit Committee. The last Lead Audit Partner rotation occurred in March 2016. The Audit Committee appointed D&T as our independent registered public accounting firm for the fiscal year ending February 3, 2018. We will ask shareholders to ratify the appointment of D&T as our independent registered public accounting firm at the Meeting. Representatives of D&T are expected to attend the Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Principal Accountant Services and Fees

The Audit Committee is responsible for the audit fee negotiations associated with the retention of our independent registered public accounting firm. For the fiscal years ended January 28, 2017, and January 30, 2016, D&T served as our independent registered public accounting firm. The following table presents the aggregate fees incurred for services rendered by D&T during fiscal 2017 and fiscal 2016, respectively. The fees listed below were pre-approved by our Audit Committee pursuant to the Audit Committee's pre-approval policy as described below:
Service Type
 
Fiscal 2017

 
Fiscal 2016

Audit Fees(1)
 
$
2,515,000

 
$
2,740,000

Audit-Related Fees(2)
 
375,000

 
400,000

Tax Fees(3)
 

 
50,000

Total Fees
 
$
2,890,000

 
$
3,190,000

 
(1)
Consists of fees for professional services rendered in connection with the audits of our consolidated financial statements and the effectiveness of our internal control over financial reporting for the fiscal years ended January 28, 2017, and January 30, 2016; the reviews of the consolidated financial statements included in each of our Quarterly Reports on Form 10-Q during those fiscal years; and consultations on accounting matters.
 
(2)
Consists primarily of fees for statutory audit filings, as well as the audits of our retirement savings plans and foundations.
 
(3)
Consists primarily of tax compliance services based on time and materials.
 
It is our policy that our independent registered public accounting firm be engaged to provide primarily audit and audit-related services. However, pursuant to the policy, in certain circumstances and using stringent standards in its evaluation, the Audit Committee may authorize our independent registered public accounting firm to provide tax services when it determines that D&T is the most efficient and effective tax service provider.

Pre-Approval Policy

Consistent with SEC rules regarding auditor independence, the Audit Committee is responsible for appointing, setting fees for and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility and in accordance with the Securities Exchange Act of 1934, as amended, it is the policy of the Audit Committee to pre-approve all permissible services provided by our independent registered public accounting firm, except for minor audit-related engagements which in the aggregate do not exceed 5% of the fees we pay to our independent registered public accounting firm during a fiscal year.

Each year, prior to engaging our independent registered public accounting firm, management submits to the Audit Committee for approval a list of services expected to be provided during that fiscal year within each of the three categories of services described below, as well as related estimated fees, which are generally based on time and materials.

Audit services include audit work performed on the financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters and discussions surrounding the proper application of financial accounting and/or reporting standards.

37




Audit-related services include assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, statutory audits, employee benefit plan audits and special procedures required to meet certain regulatory requirements.

Tax services include compliance and other non-advisory services performed by the independent registered public accounting firm when it is most efficient and effective to use such firm as the tax service provider.

As appropriate, the Audit Committee then pre-approves the services and the related estimated fees. The Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the estimate periodically throughout the year by category of service. During the year, circumstances may arise when it becomes necessary to engage our independent registered public accounting firm for additional services not contemplated in the initial annual proposal. In those instances, the Audit Committee pre-approves the additional services and related fees before engaging our independent registered public accounting firm to provide the additional services.

Board Voting Recommendation

The members of the Audit Committee and the Board believe that the continued retention of D&T to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and our shareholders. The Board recommends that shareholders vote FOR the proposal to ratify the appointment of D&T as our independent registered public accounting firm for the fiscal year ending February 3, 2018.
 
The affirmative vote of a majority of the voting power of the shares present and entitled to vote at the Meeting is required to ratify D&T as our independent registered accounting firm.
 
Although ratification is not required pursuant to our By-laws or otherwise, the Board is submitting the selection of D&T to our shareholders for ratification because we value our shareholders' views on the Company's independent registered public accounting firm. If the appointment of D&T were not to be ratified by the shareholders, the Audit Committee would not be required to appoint another independent registered public accounting firm, but would give consideration to an unfavorable vote. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.

38



EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Introduction

The following Compensation Discussion and Analysis describes how the Compensation Committee of the Board decided to compensate our fiscal 2017 Named Executive Officers ("NEOs"):
 
Name
Principal Position
hjoly4a01.jpg
Hubert Joly
Chairman & Chief Executive Officer
coriepicproxya01.jpg
Corie S. Barry 
Chief Financial Officer
smccollama02.jpg
Sharon L. McCollam
Former Chief Administrative & Chief Financial Officer
sballarda03.jpg
Shari L. Ballard
President, Multi-Channel Retail and Operations
mmohana03.jpg
R. Michael Mohan
Chief Merchandising and Marketing Officer
knelsena03.jpg
Keith J. Nelsen
General Counsel & Secretary

On June 14, 2016, Ms. Barry replaced Ms. McCollam as our Chief Financial Officer. Ms. McCollam stayed with the Company in an advisory capacity through the end of the fiscal year (January 28, 2017). In March 2017, Ms. Ballard and Mr. Mohan took on additional responsibilities, resulting in changes to their titles to President, Multi-Channel Retail and Operations and Chief Merchandising and Marketing Officer, respectively. In addition to their prior responsibilities, Ms. Ballard is now overseeing our e-commerce channel, while Mr. Mohan has oversight of our marketing functions.

The Compensation Discussion and Analysis portion of our proxy statement includes the following:
 
CD&A Section
What's included?
l
Executive Summary
Highlights of our executive compensation program, a summary of our fiscal 2017 executive compensation decisions, and a preview of our fiscal 2018 executive compensation
l
Compensation Philosophy, Objectives & Policies
Overview of the philosophy, objective & policies utilized by the Compensation Committee in implementing our executive compensation program
l
Governance
Summary of the key participants in our executive compensation process and the role each plays in the decision-making
l
Factors in Decision-Making
Overview of factors considered by the Compensation Committee in its decision-making process
l
Executive Compensation Elements
Description of each element of our NEO pay-mix within our executive compensation program, including specific details regarding decisions made within each element



39



Consideration of Prior “Say on Pay” Votes

At our 2016 Meeting, 95% of our shareholders voted in support of our “Say on Pay” proposal, which was on par with our results in 2015 and 2014.

bbydefinitiv_chart-43660.jpg

We believe the level of support we received from shareholders for the last three years was driven in part by our improved performance and continued commitment to align pay and performance, which we communicated to investors through shareholder outreach prior to each annual meeting. In the fall of fiscal 2017, following our 2016 Meeting, we reached out to all of our top twenty shareholders, representing approximately 70% of our outstanding shares, offering to discuss any concerns regarding executive compensation practices and other governance issues. As a result of these outreach efforts, we engaged in direct conversations with several shareholders to answer their questions, provide commentary on the compensation decisions made during the year, and receive feedback to be considered when making future decisions. Further, as discussed in the Corporate Governance at Best Buy — Shareholder Engagement section, we regularly engage with our shareholders throughout the year regarding their various priorities, and we welcome their feedback on our practices and policies.

Summary of Executive Compensation Practices

Pay for Performance

ü
We tie pay to performance by setting clear financial goals and delivering the majority of compensation opportunity through variable incentives in which payout is based on performance against predetermined goals or absolute and relative changes in our stock price over time.

ü
We use multiple performance metrics that differ for long-term and short-term plans.

ü
Our short-term incentive plan includes a minimum performance threshold that requires a minimal level of operating income be achieved before any aspect of the bonus plan may be earned.

ü A large portion of our long-term incentive program (50% for the CEO and the other NEOs) is performance based, and long-term and short-term incentives comprise a large portion of our total compensation opportunity (90% for the CEO and 80%, on average, for the other NEOs).

Risk Mitigators

ü
We review peer group market data when making executive compensation decisions.

ü
We have share ownership and trading guidelines for executive officers and Board members.

ü
We have anti-hedging and anti-pledging policies and clawback provisions.

ü
We have robust processes to identify and mitigate compensation risk.


40



ü
Our Compensation Committee uses an outside independent compensation consulting firm that performs no other services for the Company.

Shareholder Engagement

ü
We have a shareholder engagement program that covers, among other things, executive compensation issues.

ü
We provide shareholder feedback to the Compensation Committee, which considers the feedback when reviewing executive compensation programs and policies.

Key Fiscal 2017 Compensation Decisions

In fiscal 2016, we continued to make progress in our transformation journey. It marked the second year in a row that we increased our domestic revenue and expanded our operating margins. We saw a continued improvement in customer satisfaction as our Net Promoter Score (including both purchasers and non-purchasers) improved by more than 300 basis points and we grew online revenue 13% to more than $4 billion, or 11% of total domestic revenue. We also delivered $150 million against our $400 million cost reduction and gross profit optimization efforts, which was in addition to the $1 billion in costs we already removed from our business since fiscal 2013.

Following our fiscal 2016 performance, the Compensation Committee made few adjustments to the NEO compensation for fiscal 2017. A summary of the changes is included below and explained in further detail within our Compensation Discussion and Analysis:

Base Salaries: We made base salary changes for Ms. Barry and Mr. Mohan in recognition of Ms. Barry's appointment as Chief Financial Officer and changes to the scope of Mr. Mohan's responsibilities.

Short-Term Incentives: There were no material changes to the short-term incentive targets for the NEOs, with the exception of Ms. Barry upon her appointment as Chief Financial Officer. The Renew Blue Priority financial metrics for the short-term incentive program were slightly modified to include an additional metric related to Services. In addition, the weighting of the short-term incentive metrics shifted to place an increased weight on Domestic comparable sales.

Long-Term Incentives: Our long-term incentive program changes included increased targets for Ms. Barry and Mr. Mohan in light of their increasing responsibilities. The Compensation Committee also approved the addition of a performance component to the time-based restricted share portion of the long-term incentive awards for NEOs in order to further promote alignment between pay and performance.

Other Compensation: The NEOs continue to receive the same employee benefits, perquisites and other rewards offered to our U.S.-based officers. We do not provide special pension benefits or other non-performance-based entitlements to the NEOs that are inconsistent with our compensation philosophy.

Preview of Key Fiscal 2018 Compensation Decisions

In the past year, we continued to make focused and well-executed moves consistent with our objectives, resulting in delivery of topline performance in line with our goals and materially better earnings growth than originally expected. Our fiscal 2017 revenue was $39.4 billion, with an increase in non-GAAP operating income rate from 4% to 4.5% and growth of non-GAAP diluted EPS from continuing operations by 28% from $2.78 to $3.56. We also increased our Net Promoter Score by over 350 basis points. From a multi-channel perspective, we grew the Domestic segment online revenue with comparable sales of 20.8% in fiscal 2017. In our international market, the successful Canadian brand consolidation was the primary driver of operating income of $90 million in our International segment for fiscal 2017 compared to a loss of $210 million in fiscal 2016. To meet our goal of driving cost reduction and efficiencies, we made continued progress against our three-year target to reduce cost and optimize gross profit by $400 million and achieved $350 million cumulative savings by the end of fiscal 2017; these savings enabled us to invest in customer experience improvements while maintaining near flat SG&A.*



41



This performance and the shift in our Company strategy to Best Buy 2020 resulted in only modest compensation changes for fiscal 2018, a summary of which is included below:

Base Salaries: We made slight increases to the base salary rates for two of the NEOs in light of the scope of their roles and responsibilities.

Short-Term Incentives: We made no changes to the short-term incentive plan target payout percentages for the NEOs.

Long-Term Incentives: Our long-term incentive program changes focused on changing the "mix" of metrics for the performance share award portion to reflect the stage of growth Best Buy is in currently and to promote performance and retention of key leadership. In fiscal 2018, the performance share awards, which comprise 50% of the NEO long-term incentive program, include two performance components - total shareholder return (25%) and revenue (25%).

Other Compensation: No material changes were made to the employee benefits, perquisites or other rewards offered to our NEOs.


*For GAAP to non-GAAP reconciliations, please refer to the attached supporting schedule titled Reconciliation of non-GAAP Financial Measures..


Compensation Philosophy, Objectives and Policies

The Company’s compensation philosophy is to align executive compensation with shareholders’ interests. To that end, the Compensation Committee works to ensure that base salaries are market competitive, and short- and long-term incentives are heavily weighted toward Company performance and are within the range of market practice.
We achieve these objectives by using programs that are designed to align employee interests with Company goals and create a common vision of success without undue risk.

Consistent with prior years, we utilized the following executive compensation policies and practices during fiscal 2017:

Pay-for-performance. We tie pay to performance. The majority of executive pay is not guaranteed but instead is tied to performance metrics designed to drive shareholder value. If performance goals are not attained, no incentive compensation is paid.

Mitigate undue risk. We mitigate undue risk by, among other things, utilizing caps on incentive award payments and vesting periods on potential equity payments, clawback provisions, restrictive covenants and multiple performance metrics. The Compensation Committee annually reviews our compensation risk profile to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company.

Independent Compensation Committee and Committee Consultant. The Compensation Committee is comprised solely of independent directors. The Compensation Committee's independent compensation consultant is retained directly by the Compensation Committee and performs no other consulting or other services for the Company.

Shareholder engagement. We routinely engage with shareholders regarding executive compensation and related issues.

Re-pricing of stock options. Stock options may not, without the approval of our shareholders, be (i) amended to reduce their initial exercise price (except for adjustments in the case of a stock split or similar event); (ii) canceled and replaced by stock options having a lower exercise price; or (iii) canceled and replaced with cash or other securities.

Stock ownership and trading policies. We have stock ownership guidelines for all of our executive officers and Board members. As of the end of fiscal 2017, each NEO and director was in compliance with the guidelines. We prohibit all employees, including the NEOs and members of the Board, from hedging Company securities. Executive officers and Board members are also prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account.

NEO benefits. Our executive officers, including the NEOs, generally receive the same employee benefits as other officers. We do not have an executive retirement plan that provides extra benefits to the NEOs.

42



Governance

The following table summarizes the roles of each of the key participants in the executive compensation decision-making process for our NEOs.
Key Participant
 
 
 
 
Compensation Committee
 
 
 
 
Role in Decision-Making Process
Establishes our compensation objectives.
 
Determines, approves and oversees executive compensation, including the design, competitiveness and effectiveness of our compensation programs. Also oversees the development, evaluation and approval of incentive compensation, equity-based pay and other material employee benefit plans for all employees. The Compensation Committee may delegate its responsibility to oversee compensation employees other than for the NEOs or other Section 16 officers.
 
The Compensation Committee's charter is available on our website at www.investors.bestbuy.com.
 
Compensation Committee's Independent Compensation Consultant
Role in Decision-Making Process
Reviews the recommendations of management with the Compensation Committee to ensure that the recommendations are aligned with our objectives and are reasonable when compared to our market for executive and director talent.
 
Assists the Compensation Committee in the design of the variable incentive plans, the determination of the overall compensation mix, the selection of performance metrics and the setting of the performance goals and ranges.
 
Provides analysis and crafts recommendations for the Compensation Committee in the setting of CEO compensation opportunity.
 
Reviews the results of the compensation risk assessment with the Compensation Committee and identifies key takeaways.
 
Provides perspective on market practice and information about emerging trends.
 
The Compensation Committee has sole discretion and adequate funding to engage consultants in connection with compensation-related matters. Frederic W. Cook & Co., Inc. has served as the Compensation Committee's independent compensation consultant since the fall of 2012.
 
CEO
 
 
 
 
Role in Decision-Making Process
Creates and presents recommendations to the Compensation Committee for our other executive officers and provides his perspective. Does not participate in, or otherwise influence, recommendations regarding his own compensation.
 
 
 
 
 
Human Resources ("HR")
 
 
 
 
Role in Decision-Making Process
Provides the Compensation Committee with market analytics in support of the CEO's recommendations for our executive officers, other than the CEO. Management does not make recommendations on CEO compensation. As necessary, HR engages outside consultants to assist with its analytics and recommendations.
 
Finance
Role in Decision-Making Process
Provides the Compensation Committee with financial analytics in support of the short- and long-term program design and target setting.

Compensation Consultant Independence

The Compensation Committee reviewed the independence of Frederic W. Cook & Co., Inc. under NYSE and SEC listing standards. Based on its review and information provided by Frederic W. Cook & Co., Inc. regarding the provision of its services, fees, policies and procedures, presence (if any) of any conflicts of interest, ownership of Best Buy stock, and other relevant factors, the Compensation Committee concluded that the work of Frederic W. Cook & Co., Inc. has not raised any conflicts of interest and it is deemed to be an independent advisor to the Compensation Committee.

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Factors in Decision-Making

Market Competitive Data. For fiscal 2017, each element of compensation and the level of total direct compensation for our NEOs was considered against market benchmarks and views of individual performance. Our Compensation Committee reviewed publicly available compensation data for our peer group of companies, Fortune 100 companies and general industry survey data. We used available information and monitored actions taken by our peer group to evaluate market trends and to assess the long-term incentive program and overall competitiveness of our executive compensation levels. We did not, however, seek to establish any specific element of compensation or total direct compensation that falls within a prescribed range relative to our peer group of companies or the Fortune 100 companies.

Change in Peer Group for Fiscal 2017. We review our peer group annually. The Compensation Committee strives to ensure that our peer group is an accurate reflection of our business model, represents the labor market for executive talent and includes external perspectives. For 2017, the peer group was approved after consideration of the following criteria:

Business model: combination of physical retailers, e-commerce retailers, digital companies, global companies and iconic brands;

Size: revenue similar to ours;

Current peers: preference, but not obligation, toward consistency in an effort to maintain reliability from year to year in the results of our compensation analysis; and

Labor market consideration: companies that listed us as a peer.

The Compensation Committee considered the Company’s position relative to the peer group on the basis of earnings, revenue and market cap, and made no changes to our peer group for fiscal 2017 from fiscal 2016. For fiscal 2017, our peer group consisted of the following companies:
Alphabet, Inc.
Kohl's Corporation
Office Depot, Inc.
Amazon.com, Inc.
Lowe's Companies Inc.
Staples, Inc.
Apple Inc.
Macy’s, Inc.
Target Corporation
Costco Wholesale Corporation
Microsoft Corporation
Wal-Mart Stores, Inc.
eBay Inc.
Nike, Inc.
Walgreens Boots Alliance
The Home Depot, Inc.
Nordstrom, Inc.
 





44



Executive Compensation Elements

Overview. Our NEOs' compensation in fiscal 2017 included the following elements (for additional details on specific awards, see the discussion below and the Compensation of Executive Officers — Summary Compensation Table section):
Compensation Component
 
Key Characteristics
 
Purpose
 
Principal Fiscal 2017 Actions
Base Salary
 
Cash; reviewed annually and adjusted if appropriate.
 
Provide competitive, fixed compensation to attract and retain executive talent.
 
Base salary increases for Ms. Barry and Mr. Mohan due to increased responsibility.
Short-Term Incentive
("STI")


 
Cash. Variable compensation component. Performance-based award opportunity. Payable based on financial metrics.
 
Create a strong financial incentive for achieving or exceeding Company goals.
 
Ms. Barry’s STI target was increased once she assumed full CFO responsibilities. There were no changes to the STI targets for the other NEOs. Financial metrics for fiscal 2017 were compensable enterprise operating income, domestic comparable sales, U.S. “waste and efficiency,” U.S. online revenue growth, U.S. net promoter score and U.S. services productive revenue. The NEOs received payouts equal to 122.5% of target based on performance results.
Long-Term Incentive
("LTI")
 
Performance share awards, stock options and restricted shares, subject to certain performance-conditions and time-based vesting requirements.
 
Create a strong financial incentive for increasing shareholder value, encourage ownership stake, and promote retention.

 
LTI changes included increased targets for Ms. Barry and Mr. Mohan to reflect increased responsibility.
Health, Retirement and Other Benefits
 
Eligibility to participate in benefit plans generally available to our employees, including health, retirement, stock purchase, severance, paid time off, life insurance and disability plans.
 
Plans are part of our broad-based employee benefits program.
 
No material changes were made to the NEOs' health, retirement and other benefits in fiscal 2017.
Executive Benefits
 
Annual executive physical exam, supplemental long-term disability insurance, and tax planning/preparation services.
 
Provide competitive benefits to promote the health, well-being and financial security of our executive officers.
 
No material changes were made to the NEOs' benefits in fiscal 2017.

Fiscal 2017 Pay Mix. The Compensation Committee emphasizes variable performance-based pay when setting the target pay mix for our executive officers, but does not establish a set pay mix for them. The target pay mix for fiscal 2017 for our CEO and other NEOs, on average, is shown below. Actual salary levels, STI awards (discussed in further detail in the Short-Term Incentive section) and LTI awards (discussed in further detail in the Long-Term Incentive section) vary based on the market analysis described above. Approximately 90% of the CEO’s target pay and, on average, 80% of the other NEOs’ target pay is variable based on operating performance, changes in our stock price and/or total shareholder return relative to the S&P 500 companies.
bbydefinitiv_chart-43742.jpgbbydefinitiv_chart-44853.jpg
Each element in the pay mix is discussed below and shown in the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement.

45



Base Salary

In March 2016, the Compensation Committee reviewed the total compensation for each NEO, including their base salaries. Based on the stage of the Company's transformation, its assessment of each officer relative to market data, and the departure of the former CFO and re-distribution of responsibilities, the Compensation Committee approved base salary increases for Ms. Barry and Mr. Mohan due to increased responsibilities and in recognition of each of their changing positions or continued growth in their respective roles.
Name
 
Fiscal 2017 Annual Base Salary
 
Fiscal 2016 Annual Base Salary
 
Percent Change
Mr. Joly
 
$
1,175,000

 
$
1,175,000

 
0%
Ms. Barry
 
$
750,000

 
$
650,000

 
15.4%
Ms. McCollam
 
$
925,000

 
$
925,000

 
0%
Ms. Ballard
 
$
800,000

 
$
800,000

 
0%
Mr. Mohan
 
$
850,000

 
$
800,000

 
6.25%
Mr. Nelsen
 
$
650,000

 
$
650,000

 
0%
Short-Term Incentive

Our executive compensation programs are designed to ensure that a significant percentage of total compensation is linked to Company performance. For fiscal 2017, the NEOs were eligible for performance-based, short-term incentive cash awards pursuant to our fiscal 2017 STI.

The fiscal 2017 STI is structured as a “plan within a plan,” pursuant to the 2014 shareholder-approved Omnibus Incentive Plan. The 2014 Omnibus Incentive Plan sets the maximum award pool for the CEO and three other NEOs (excluding the CFO) at 5% of adjusted net earnings to align compensation with shareholder interests. Individual allocations of that pool are set annually. Specific performance goals are established such that the maximum payout potential does not exceed the maximum award pool or the individual allocations.
Fiscal 2017 STI Performance Criteria. In January 2016, the Compensation Committee approved the performance criteria for the fiscal 2017 STI. For fiscal 2017, the Compensation Committee approved generally the same performance metrics as in fiscal 2016, with some refinement of the Renew Blue Priorities. Operating income, comparable sales, U.S. online revenue growth, and customer experience remained in the mix, and Services Productive Revenue was added as a metric due to the increasing importance of our services business. The weighting of the priorities changed to placing the greatest emphasis on profit, while also giving significant weight to Domestic comparable sales and our fiscal 2017 Renew Blue strategic priorities.

Financial metrics for fiscal 2017 were: Enterprise operating income, Domestic comparable sales, U.S. “waste and efficiency,” U.S. online revenue growth, U.S. net promoter score and U.S. services productive revenue.


46



STI Metric
 
Metric Weighting
 
Definition
Compensable Enterprise Operating Income
 
40%. Served as the minimum threshold for STI awards to be paid
 
Enterprise revenue less Enterprise cost of goods sold less Enterprise SG&A expenses.
Domestic Comparable Sales
 
30%
 
Domestic revenue at websites, stores, and call centers operating for at least 14 full months, compared to revenue from similar channels open at least 14 full months in the prior fiscal year.
Renew Blue Priorities:
 
 
 
 
U.S. Waste and Efficiency
 
7.5%
 
Annualized net year-over-year cost savings (gross savings less reinvestment, compared to fiscal 2016 expense) of cost reduction actions put into effect in fiscal 2017.
U.S. Online Revenue Growth
 
7.5%
 
Total fiscal 2017 online revenue less total fiscal 2016 online revenue divided by total fiscal 2016 online revenue.
U.S. Net Promoter Score
 
7.5%
 
Customer experience metric in which customers (both purchasers and non-purchasers) are asked how likely they are to recommend Best Buy to a friend, colleague or family member; the percent of those likely to recommend less the percent of those unlikely to recommend is Net Promoter Score.
U.S. Services Productive Revenue
 
7.5%
 
Focus on the overall growth of Services inclusive of the recurring sales of services as measured by productive revenue, which includes sales of warranty, tech support, services and installation.
In March 2016, the Compensation Committee approved the performance goals for each metric. The minimum, target and maximum goals for each metric were evaluated in order to ensure they would incent the desired level of performance for each priority. For some metrics, this evaluation resulted in changes to the minimum, target, and maximum goals in light of anticipated year-over-year industry trends, product cycles, and other market factors.

The following chart shows actual fiscal 2017 performance compared to the minimum, target and maximum goals for each metric. 'Minimum' performance against the goal results in a 0.00 payout, 'Target' performance results in a 1.00 payout, and 'Maximum' performance results in a 2.00 payout. The final metric score is interpolated as an exact point somewhere between 0.00 and 2.00. The chart also includes the same information from fiscal 2016, if applicable (as presented in last year’s proxy statement) to illustrate how the goals changed and how our actual performance compared to last year.
Metric ($ in millions)
 
Minimum
 
Target
 
Maximum
 
Actual Result
 
Metric Score
Compensable Enterprise Operating Income (40%)(1)(2)
 
$1,505
 
$1,595
 
$1,775
 
$1,751
 
1.86
Fiscal 2016 Compensable Enterprise Operating Income (50%)(1)(3)
 
$1,408
 
$1,498
 
$1,678
 
$1,610
 
1.62
Domestic Comparable Sales (30%)
 
0.24%
 
0.70%
 
1.62%
 
0.13%
 
Fiscal 2016 Enterprise Comparable Sales (20%)
 
(0.06)%
 
0.4%
 
1.32%
 
0.9%
 
1.54
Renew Blue Priorities:
 
 
 
 
 
 
 
 
 
 
U.S. Waste and Efficiency (7.5%)(4)
 
$130
 
$150
 
$230
 
$187
 
1.92
Fiscal 2016 Waste & Efficiency (10%)
 
$100
 
$120
 
$160
 
$154
 
1.83
U.S. Online Revenue Growth (7.5%)
 
7.90%
 
12.90%
 
22.90%
 
20.73%
 
1.78
Fiscal 2016 U.S. Digital Revenue Growth (10%)
 
5.95%
 
10.95%
 
20.95%
 
13.24%
 
1.22
U.S. Net Promoter Score (7.5%)(5)                                               (for purchasers and non-purchasers)
 
38.5
 
38.9
 
39.7
 
42.0
 
2.00
Fiscal 2016 U.S. Net Promoter Score (10%) (for purchasers and non-purchasers)
 
35.4
 
35.7
 
36.4
 
38.5
 
2.00
U.S. Services Productive Revenue (7.5%)(6)
 
$1.398
 
$1.458
 
$1.578
 
$1.422
 
0.70
 
 
 
 
Fiscal 2017 Blended Score:
 
1.225
 
 
 
 
Fiscal 2016 Blended Score:
 
1.623
(1)
Actual performance for this metric had to be above the minimum threshold in order for STI payments to be made. A result lower than the minimum threshold would have resulted in an overall blended score of zero, and no STI payments.
(2)
Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,759 million in our fiscal 2017 Annual Report on Form 10-K for fiscal 2017, adjusted for differences from budgeted foreign exchange rates.
(3)
Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of $1,566 million in our fiscal 2016 Annual Report on Form 10-K for fiscal 2016, adjusted for differences from budgeted foreign exchange rates and Canadian restructuring

47



(4)
U.S. Waste and Efficiency is the annualized net year-over-year cost savings (gross savings less reinvestment, compared to fiscal 2016 expense) of cost reduction actions put into effect in fiscal 2017. Cost savings must be permanent and driven by structural changes to the business.
(5)
U.S. Net Promoter score is a customer experience metric that measures a customer’s likelihood to recommend Best Buy and is one of many standard industry metrics for measuring customer satisfaction. Methods of measuring U.S. Net Promoter Score can differ widely among different retailers, with many retailers measuring only purchaser satisfaction; however, we measure both purchasing and non-purchasing customers across our sales channels and therefore our total score may be lower than other companies as non-purchaser results are materially lower than those of purchasers.
(6)
U.S. Services Productive Revenue is the net revenue associated with sales of warranty, tech support, services, and installation, but excluding delivery and reimbursement revenue.

Determination of Fiscal 2017 STI Target Payout. The Compensation Committee reviewed the target payout percentages for our NEOs under the fiscal 2017 STI plan as part of their review of the NEOs’ total fiscal 2017 target compensation. The Compensation Committee generally applies a tiered approach in determining the potential target payout ranging from 100% to 200% of annual earnings based on each NEO's eligible earnings as of the 15th day of each fiscal month. The specific target payout percentage for each NEO is determined based on external market data (including survey and proxy data from the Fortune 100 and our peer group) for equivalent roles, with emphasis placed on job value and internal pay equity among the NEOs.

For fiscal 2017, the tiered target opportunities were 100% to 200% of salary. The target payout percentages for each NEO remained the same as in fiscal 2016. For each of the metrics, the NEOs could earn zero to two or three times their weighted target payout percentage for that metric (e.g. the U.S. Waste & Efficiency metric has a three times opportunity), but the maximum fiscal 2017 STI payout was capped at two times their target payout percentage.

The following chart shows fiscal 2017 STI opportunities and payments as a dollar value and percent of annual earnings (based on their eligible earnings as of the 15th day of each fiscal month):
Name
 
Fiscal 2017 Annual Earnings(1)
 
Target Payout
Percentage

 
Annual Target Payout Value,
based on Annual Earnings

 
Fiscal 2017
Blended STI Score

 
Fiscal 2017
STI Payment

 
Fiscal 2017
STI Payment,
as a Percentage of Annual Earnings

Mr. Joly
 
$1,175,000
 
200
%
 
$
2,350,000

 
1.225

 
$
2,878,750

 
245
%
Ms. Barry
 
$716,667
 
135
%
 
$
966,667

 
1.225

 
$
1,184,167

 
165
%
Ms. McCollam
 
$925,000
 
150
%
 
$
1,387,500

 
1.225

 
$
1,699,688

 
184
%
Ms. Ballard
 
$800,000
 
150
%
 
$
1,200,000

 
1.225

 
$
1,470,000

 
184
%
Mr. Mohan
 
$833,334
 
150
%
 
$
1,250,000

 
1.225

 
$
1,531,251

 
184
%
Mr. Nelsen
 
$650,000
 
100
%
 
$
650,000

 
1.225

 
$
796,250

 
123
%
(1)
Annual earnings are based on the average of each NEO's annual base salary rate on the fifteenth fiscal day of each month for twelve months of the fiscal year. This number may differ slightly from actual earnings listed in the Summary Compensation Table.

Fiscal 2018 STI Performance Criteria. In January 2017, the Compensation Committee approved the performance criteria in the form of metrics for the fiscal 2018 STI, and in March 2017, the Compensation Committee approved the target performance levels for each metric. Similar metrics as used in fiscal 2017 will be used in fiscal 2018, as listed below:

Enterprise Operating Income - 40%
Enterprise Comparable Sales - 30%
Renew Blue Priorities (maintaining the four fiscal 2017 priorities) - 30%

The Compensation Committee approved replacing Domestic Comparable Sales with Enterprise Comparable Sales, to align with the strategic direction of Best Buy 2020, as accelerating growth in our international segment is one of the pillars of our Best Buy 2020 strategy and International revenue is once again comparable following the March 2015 brand consolidation.
Long-Term Incentive

Awards of equity-based LTI compensation to our executive officers encourage a strong ownership stake in the Company and enhance the alignment of interests of our NEOs and shareholders. All LTI awards for our NEOs and directors must be approved by the Compensation Committee. In March 2016, the Compensation Committee approved long-term incentive awards to our NEOs pursuant to our fiscal 2017 LTI program under our 2014 Omnibus Incentive Plan.
The fiscal 2017 LTI program featured a mix of performance share awards, stock options and performance conditioned time-based restricted shares. This results in a balanced portfolio of compensation rewards consisting of, for the CEO, 50%

48



performance share awards based on relative total shareholder return (to reward relative performance), 20% stock options (to reward absolute share price appreciation) and 30% performance-conditioned time-based restricted shares, based on adjusted net earnings (to reward earnings and promote retention), as shown below. The mix for the other NEOs was 50% performance share awards and 50% performance-conditioned time-based restricted shares, both with the same performance metrics as the CEO’s awards. The Compensation Committee removed stock options from the mix of equity vehicles for the other NEOs to more closely align the performance share percentage amounts of the CEO and the other NEOs, also as shown below.
bbydefinitiv_chart-45757.jpgbbydefinitiv_chart-46618.jpg
Form of Fiscal 2017 LTI Award. The performance share awards are earned based on our Total Shareholder Return ("TSR") relative to the S&P 500 Index over a three-year period. TSR was selected as the metric based on its direct link to shareholder value creation. The S&P 500 was used as a proxy for other investment opportunities available to investors. The relative TSR performance goals were as follows:
 
Relative TSR Percentile Ranking
No. of Shares Earned (as % of Target)
Less than Threshold
Less than 30th Percentile
—%
Threshold
30th Percentile
50%
Target
50th Percentile
100%
Maximum
70th Percentile
150%
The number of performance shares earned are interpolated on a linear basis for performance between Threshold and Target and between Target and Maximum.

The NEOs receive an LTI grant once per year at a regularly scheduled Compensation Committee meeting that typically occurs in the first quarter of our fiscal year. In fiscal 2017, the closing price of our common stock on the grant date was used to convert the award dollar value to a number of units. The non-qualified stock options have a term of ten years and become exercisable over a three-year period at the rate of one-third per year, beginning one year from the date of grant, subject to being employed on the vesting date. The exercise price for such options is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. The performance-conditioned time-based restricted shares also vest in equal installments of one-third on the three successive anniversaries of the grant date, provided the performance condition has been met in any fiscal year during the term of the award. The final number of shares issued under performance share awards will not be known until performance has been measured following the performance period (which goes from March 1, 2016 through February 28, 2019).

The performance condition was added to the time-based restricted shares to further align compensation with shareholder interests. The vesting of these shares is conditioned upon the Company's achievement of positive Adjusted Net Earnings. Adjusted Net Earnings means net earnings determined in accordance with GAAP, adjusted to eliminate the following: 1) the cumulative effect of changes in GAAP; (2) gains and losses from discontinued operations; (3) extraordinary gains and losses; and (4) other unusual or nonrecurring gains or losses which are separately identified and quantified, including merger-related charges. Achievement of positive Adjusted Net Earnings may occur in any fiscal year during the term of the award in order for the award to begin to vest. For example, if the performance condition is not achieved until year two, two-thirds of the award will vest following Compensation Committee approval of achievement of the performance condition, with the remaining one-third to vest in the third year of the award.


49



Under the terms of the 2014 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.

Determination of Fiscal 2017 LTI Target Award Values. The Compensation Committee approved the executive team’s fiscal 2017 compensation, which included increased target award values for Ms. Barry and Mr. Mohan to reflect increased responsibilities and role changes.

LTI award amounts are determined based upon analysis of external market data, with overall compensation mix and external market data for equivalent roles being key factors in the determination of the award made to each NEO. The fiscal 2017 LTI awards for each NEO are set forth below:
Annual Fiscal 2017 Award Details
Name
 
No. of Stock Options
 
No. of Restricted Shares
 
Target No. of Shares under Performance Share Award
 
Target Grant Date Value
Mr. Joly
 
223,890
 
99,337
 
156,656
 
$10,000,000
Ms. Barry
 
 
28,974
 
27,415
 
$1,750,000
Ms. McCollam
 
 
75,330
 
71,279
 
$4,550,000
Ms. Ballard
 
 
33,113
 
31,332
 
$2,000,000
Mr. Mohan
 
 
50,342
 
47,634
 
$3,000,000
Mr. Nelsen
 
 
27,318
 
25,849
 
$1,650,000

Performance Share Payout. In March 2013, the Compensation Committee adopted a performance share plan design (that had been initially adopted the year before), based on relative TSR versus the S&P 500 Index over the 36-month period from April 1, 2013 to March 31, 2016. The shares would vest (0 to 150%) after the three-year period if the performance criteria was met. Because the Company’s TSR during the performance period exceeded the 70th percentile of all companies in the S&P 500, these shares paid out at the maximum of 150% in fiscal 2017 and are reflected in the Option Exercises and Stock Vested table.

Fiscal 2018 LTI Program Design. For fiscal 2018, a new revenue performance metric was added to the performance share awards in order to place greater emphasis on topline growth in alignment with our Best Buy 2020 strategy. The mix of equity vehicles in the LTI program will otherwise be consistent with fiscal 2017, and include the following:

For the CEO, 50% performance share awards (one-half of the award based on TSR and one-half of the award based on revenue), 20% stock options and 30% performance-conditioned time-based restricted shares.

For the other NEOs: 50% performance share awards (one-half of the award based on TSR and one-half of the award based on revenue) and 50% performance-conditioned time-based restricted shares.
bbydefinitiv_chart-47440.jpgbbydefinitiv_chart-48371.jpg

50



Other Compensation

Benefits. Our executive officers, including our NEOs, are generally offered the same employee benefits offered to all U.S.-based officers, as summarized in the following table:
Benefit
 
All Full-Time
U.S.-Based Employees
 
Executive
Officers
Accidental Death & Dismemberment
 
 
Deferred Compensation Plan(1)
 
 
 
Employee Discount
 
 
Employee Stock Purchase Plan
 
 
Health Insurance
 
 
— Executive Physical Exam
 
 
 
Life Insurance
 
 
Long-Term Disability
 
 
— Executive Long-Term Disability
 
 
 
Retirement Savings Plan
 
 
Severance Plan
 
 
Short-Term Disability
 
 
Tax Planning and Preparation(2)
 
 
 
(1)
Only officers and directors are eligible to participate in the Deferred Compensation Plan, as described in the Compensation of Executive Officers – Nonqualified Deferred Compensation – Deferred Compensation Plan section.
(2)
Only Senior Vice Presidents and above are eligible to receive the tax planning and preparation benefit.

We provide the executive benefits noted above to compete for executive talent and to promote the health, well-being and financial security of our NEOs. A description of executive benefits, and the costs associated with providing them for the NEOs, are reflected in the "All Other Compensation" column of the Summary Compensation Table as found in the Compensation of Executive Officers section of this proxy statement.

Severance Plan. We have a severance plan that complies with the applicable provisions of the Employee Retirement Income Security Act ("ERISA"). The purpose of the severance plan is to provide financial assistance to employees while they seek other employment, in exchange for a release of any claims. Although there are differences in benefits depending on the employee's job level, the basic elements of the plan are comparable for all eligible employees. The plan generally covers all full-time and part-time U.S. employees of Best Buy Co., Inc. and Best Buy Stores, L.P. and their respective direct and indirect U.S.-domiciled subsidiaries, including the NEOs, except for those subject to a separate severance agreement or specifically excluded.

The plan covers involuntary terminations due to job elimination and discontinuation, office closing, reduction in force, business restructuring and other circumstances as we determine. Eligible terminated employees receive a severance payment based on their role and time with the company, with basic employee benefits such as medical, dental and life insurance continued for an equivalent period. Except as modified or replaced by individual employment agreements, the NEOs (other than Mr. Joly and Ms. McCollam who have employment agreements) are eligible for the following severance benefits:
Mses. Ballard and Barry and Messrs. Mohan and Nelsen, at an enterprise executive vice president level, are eligible for two years of salary, a payment of $25,000 in lieu of outplacement and other tax and financial planning assistance, and a payment of 150% of the cost of 24 months of basic employee benefits such as medical, dental and life insurance.

See Compensation of Executive Officers — Potential Payments Upon Termination or Change-of-Control for more information regarding potential payments following an involuntary termination and for the severance provisions of Mr. Joly's and Ms. McCollam's employment agreements.

Stock Ownership, Tax and Other Policies

Executive Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines to promote the alignment of officer and shareholder interests and to encourage behaviors that have a positive influence on stock price appreciation and total shareholder return. Under the guidelines, we expect our NEOs to acquire ownership of a fixed number of

51



shares, based on their positions. The stock ownership expectation generally remains effective for as long as the officer holds the position.

In addition to shares personally owned by each officer, the following forms of stock ownership count toward the ownership target:

Equivalent shares owned in the Best Buy Stock Fund within our Retirement Savings Plan;

100% of non-vested shares subject to time-based conditions granted under our LTI program; and

50% of the intrinsic value of vested stock options (denominated as a number of shares) granted under our LTI program.

We require that until the ownership target is met, NEOs will retain: (i) 50% of the net proceeds received from the exercise of a stock option in the form of Best Buy common stock; (ii) 50% of vested time-based restricted shares (net of taxes); and (iii) 50% of all performance share awards (net of taxes) issued. The ownership target does not need to be met within a certain time frame, and our NEOs are considered in compliance with the guidelines as long as progress towards the ownership target is being made consistent with the expectations noted above.
   
In fiscal 2017, all NEOs were in compliance with the ownership guidelines. The ownership targets and ownership levels as of the end of fiscal 2017 for our continuing(1) NEOs are shown below.
Name
 
Ownership Target (in shares)
 
Ownership as of Fiscal 2017 Year-End Using Guidelines (in shares)
Mr. Joly
 
200,000
 
723,666
Ms. Barry
 
55,000
 
46,917
Ms. Ballard
 
55,000
 
77,851
Mr. Mohan
 
55,000
 
106,478
Mr. Nelsen
 
35,000
 
79,668
(1) The table excludes our former CFO, Ms. McCollam, who retired from the Company in January 2017.

Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits the deductibility of compensation in excess of $1 million paid to the chief executive officer and each of our three most highly compensated executive officers (other than the chief financial officer), unless the compensation qualifies as "performance-based compensation." 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. 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 NEOs. We do not, however, make compensation decisions based solely on the availability of a deduction under Section 162(m).

Clawback and Restrictive Covenant Provisions. Our senior management performance awards have typically included clawback provisions, particularly where it has been difficult to match the period of an employee's influence on business results. We may exercise our rights under such provisions if other strategies to mitigate unjust rewards are difficult to achieve. In September 2010, we adopted new guidelines with respect to clawback provisions to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act, with final clawback language to be determined after the SEC adopts related rules. In addition to the clawback provisions, we include confidentiality, non-compete, non-solicitation and, in select situations, non-disparagement provisions in our long-term incentive award agreements.

Prohibition on Hedging and Pledging Company Securities. We prohibit all employees, including NEOs, and members of the Board from hedging Company securities, including by way of forward contracts, equity swaps, collars, exchange funds or otherwise. In addition, our executive officers and Board members are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan.


52



Compensation and Human Resources Committee Report on Executive Compensation

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended January 28, 2017, and in this proxy statement.

COMPENSATION AND HUMAN RESOURCES COMMITTEE

Russell P. Fradin (Chair)
Lisa M. Caputo
J. Patrick Doyle
Kathy J. Higgins Victor

Compensation and Human Resources Committee Interlocks and Insider Participation

The Compensation Committee is comprised entirely of independent directors. At no time during fiscal 2017 was any member of the Compensation Committee a current or former officer or employee of the Company or any of its subsidiaries. During fiscal 2017, no member of the Compensation Committee had a relationship that must be described pursuant to SEC disclosure rules on related party transactions. In fiscal 2017, none of our executive officers served on the board of directors or compensation committee of another company that had one or more executive officers serving on our Board or Compensation Committee.

53



Compensation of Executive Officers

Summary Compensation Table

The table below summarizes the total compensation earned by each of our NEOs during fiscal 2017 and the two preceding fiscal years.
Name and Principal Position
 
Year
 

Salary(1)
 
Stock
Awards(2)(3)
 
Option
Awards(2)
 
Non-Equity
Incentive Plan
Compensation(4)
 
All Other
Compensation(5)
 
Total

Hubert Joly
Chairman and
Chief Executive Officer
 
2017
 
$
1,175,000

 
$
7,689,879

 
$
1,800,076

 
$
2,878,750

 
$
494,275

 
$
14,037,980

 
2016
 
1,175,000
 
8,011,688
 
1,842,715
 
3,814,050
 
68,670
(6) 
14,912,123
 
2015
 
1,175,000

 
6,986,928

 
1,654,070

 
3,078,500

 
69,962

(6) 
12,964,460

Corie S. Barry(7)
Chief Financial Officer
 
2017
 
$
713,462

 
$
1,689,495

 
$

 
$
1,184,167

 
$
14,893

 
$
3,602,017

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sharon L. McCollam(8)
Former Chief Administrative and Chief Financial Officer
 
2017
 
$
925,000

 
$
4,392,616

 
$

 
$
1,699,688