Shareholders' Equity

12 Months Ended

Feb. 03, 2024

Shareholders' Equity [Abstract]

Shareholders' Equity

9.   Shareholders’ Equity

Stock Compensation Plans

The Best Buy Co., Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”) approved by shareholders in June 2020 authorizes us to issue up to 18.6 million shares plus the remaining unused shares available for issuance under the Best Buy Co., Inc. Amended and Restated 2014 Omnibus Incentive Plan (the “2014 Plan”). In addition, shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the Company are available for reissuance under the 2020 Plan. The 2014 Plan was terminated as to the grant of any additional awards, but prior awards remain outstanding and continue to vest in accordance with the original terms of such plan.

The 2020 Plan authorizes us to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards. We have not granted incentive stock options. Under the terms of the 2020 Plan, awards may be granted to our employees, officers, advisers, consultants and directors. Awards issued under the 2020 Plan vest as determined by the Compensation and Human Resources Committee of our Board of Directors (“Board”) at the time of grant. Dividend equivalents accrue on restricted stock and restricted stock units during the vesting period, are forfeitable prior to the vesting date and are settled in shares of our common stock at the vesting or distribution date. As of February 3, 2024, a total of 13.0 million shares were available for future grants under the 2020 Plan.

Stock-based compensation expense was as follows ($ in millions):

	2024		2023		2022
Share awards:
Time-based	$	126	$	121	$	109
Market-based		19		14		12
Performance-based		-		-		17
Stock options		-		3		3
Stock-based compensation expense		145		138		141
Income tax benefits		27		27		26
Stock-based compensation expense, net of tax	$	118	$	111	$	115

Time-Based Share Awards

Time-based share awards vest solely upon continued employment, generally 33% on each of the three annual anniversary dates following the grant date. Time-based share awards to directors vest one year from the date of grant. Information on our time-based share awards was as follows (shares in thousands):

Time-Based Share Awards	Shares	Weighted-Average Fair Value per Share
Outstanding as of January 28, 2023	3,046	$	90.96
Granted	2,003	$	77.70
Vested and distributed	(1,476)	$	85.71
Forfeited	(307)	$	91.83
Outstanding as of February 3, 2024	3,266	$	85.71

The total fair value vested and distributed during fiscal 2024, fiscal 2023 and fiscal 2022 was $114 million, $159 million and $194 million, respectively. The actual tax benefits realized for the tax deductions related to vesting in fiscal 2024, fiscal 2023 and fiscal 2022 were $24 million, $33 million and $41 million, respectively. As of February 3, 2024, there was $140 million of unrecognized compensation expense related to non-vested time-based share awards that we expect to recognize over a weighted-average period of 1.8 years.

Market-Based Share Awards

Market-based share awards vest at the end of a three-year incentive period based upon our total shareholder return ("TSR") compared to the TSR of companies that comprise Standard & Poor's 500 Index. The number of shares of common stock that could be distributed at the end of the three-year TSR-incentive period may range from 0% to 150% of each share granted (“target”). Shares are granted at 100% of target. Information on our market-based share awards was as follows (shares in thousands):

Market-Based Share Awards	Shares	Weighted-Average Fair Value per Share
Outstanding as of January 28, 2023	514	$	96.61
Granted	267	$	86.95
Adjustment for performance achievement	(178)	$	53.18
Forfeited	(24)	$	98.03
Outstanding as of February 3, 2024	579	$	106.38

Distributions of market-based share awards in fiscal 2024 were not significant. The total fair value distributed during fiscal 2023 and fiscal 2022 was $18 million and $27 million, respectively. The actual tax benefits realized for the tax deductions related to distributions were $2 million and $3 million in fiscal 2023 and fiscal 2022, respectively. As of February 3, 2024, there was $21 million of unrecognized compensation expense related to non-vested market-based share awards that we expect to recognize over a weighted-average period of 1.7 years.

Performance-Based Share Awards

Performance-based share awards generally vest upon the achievement of company performance goals based upon certain revenue or profitability measures. For revenue-based performance awards, the number of shares of common stock that could be distributed at the end of the incentive period may range from 0% to 150% of each share granted (“target”). Shares are granted at 100% of target. Awards based on profitability measures vest 33% on each of the three annual anniversary dates following the grant date if the measure of profitability goal has been met. Information on our performance-based share awards was as follows (shares in thousands):

Performance-Based Share Awards	Shares	Weighted-Average Fair Value per Share
Outstanding as of January 28, 2023	288	$	67.36
Granted	2	$	111.87
Adjustment for performance achievement	(46)	$	51.79
Distributed	(195)	$	61.07
Forfeited	(4)	$	77.40
Outstanding as of February 3, 2024	45	$	111.68

The total fair value distributed during fiscal 2024, fiscal 2023 and fiscal 2022 was $15 million, $37 million and $43 million, respectively. The actual tax benefits realized for the tax deductions related to distributions in fiscal 2024, fiscal 2023 and fiscal 2022 were $1 million, $3 million and $3 million, respectively. As of February 3, 2024, there was less than $1 million of unrecognized compensation expense related to non-vested performance-based share awards that we expect to recognize over a weighted-average period of 0.2 years.

Stock Options

Our outstanding stock options have a 10-year term and generally vest 33% on each of the three annual anniversary dates following the grant date. All outstanding stock options were vested and exercisable as of February 3, 2024. Information on our stock options was as follows:

	Stock Options ‎(in thousands)	Weighted-Average ‎ Exercise Price ‎per Share		Weighted-Average ‎ Remaining Contractual Term ‎(in years)		Aggregate ‎Intrinsic Value ‎(in millions)
Outstanding as of January 28, 2023	720	$	60.91
Exercised	(152)	$	62.97
Forfeited	(39)	$	69.11
Outstanding as of February 3, 2024	529	$	59.71		4.9	$	8

No stock options were granted in the fiscal years presented. The aggregate intrinsic value of our stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during fiscal 2024, fiscal 2023 and fiscal 2022 was $2 million, $6 million and $19 million, respectively. As of February 3, 2024, there was no unrecognized compensation expense related to stock options that we expect to recognize.

Net cash proceeds from the exercise of stock options were $9 million, $4 million and $18 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Income tax benefits realized from stock option exercises were immaterial for all periods presented.

Earnings per Share

We compute our basic earnings per share based on the weighted-average number of common shares outstanding, and our diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive securities include stock options and non-vested share awards. Non-vested market-based share awards and non-vested performance-based share awards are included in the average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods.

As of February 3, 2024, all outstanding options to purchase common stock were exercisable and in-the-money, with a weighted-average price per share of $59.71.

Reconciliations of the numerators and denominators of basic and diluted earnings per share were as follows ($ and shares in millions, except per share amounts):

	2024		2023		2022
Numerator
Net earnings	$	1,241	$	1,419	$	2,454
Denominator
Weighted-average common shares outstanding		217.7		224.8		246.8
Dilutive effect of stock compensation plan awards		0.8		0.9		2.5
Weighted-average common shares outstanding, assuming dilution		218.5		225.7		249.3
Potential shares which were anti-dilutive and excluded from weighted-average share computations		-		0.7		0.1
Basic earnings per share	$	5.70	$	6.31	$	9.94
Diluted earnings per share	$	5.68	$	6.29	$	9.84

Repurchase of Common Stock

On February 28, 2022, our Board approved a $5.0 billion share repurchase program, which replaced the $5.0 billion share repurchase program authorized on February 16, 2021. The program had $3,784 million remaining available for repurchases as of February 3, 2024. There is no expiration date governing the period over which we can repurchase shares under this authorization.

Information regarding the shares we repurchased and retired was as follows ($ and shares in millions, except per share amounts):

	2024		2023		2022
Total cost of shares repurchased	$	340	$	1,001	$	3,504
Average price per share	$	72.52	$	84.78	$	108.97
Number of shares repurchased and retired		4.7		11.8		32.2

We currently expect to spend approximately $350 million on share repurchases in fiscal 2025.