TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant ☒ Filed by a Party other than the Registrant o Check the appropriate box: o Preliminary Proxy Statement o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☒ Definitive Proxy Statement o Definitive Additional Materials o Soliciting Material pursuant to § 240.14a-12 BEST BUY CO., INC. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): ☒ No fee required. o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: o Fee paid previously with preliminary materials. o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed:
PaymentofFilingFee(Checktheappropriatebox):☒ Nofeerequired. o FeecomputedontablebelowperExchangeActRules14a-6(i)(1)and0-11. (1) Titleofeachclassofsecuritiestowhichtransactionapplies: (2) Aggregatenumberofsecuritiestowhichtransactionapplies: (3) PerunitpriceorotherunderlyingvalueoftransactioncomputedpursuanttoExchangeActRule0-11(setforth
theamountonwhichthefilingfeeiscalculatedandstatehowitwasdetermined): (4) Proposedmaximumaggregatevalueoftransaction: (5) Totalfeepaid: o Feepaidpreviouslywithpreliminarymaterials. o CheckboxifanypartofthefeeisoffsetasprovidedbyExchangeActRule0-11(a)(2)andidentifythefilingforwhich
Helpusmakeadifferencebyeliminatingpaperproxymailingstoyourhomeorbusiness.AspermittedbyrulesadoptedbytheU.S.SecuritiesandExchangeCommission(“SEC”),wearefurnishingproxymaterialstoourshareholdersprimarilyviatheinternet. Onorabout May1, 2019, wemailedor madeavailabletoourshareholdersaNoticeof Internet Availabilitycontaininginstructionsonhowtoaccessourproxymaterials, includingourproxystatementandourAnnualReport. TheNotice of Internet Availability also includes instructions to access your form of proxy to vote via the internet. Certainshareholders, in accordance with their prior requests, have received e-mail notification of how to access our proxymaterialsandvoteviatheinternetorhavebeenmailedpapercopiesofourproxymaterialsandproxycard.
Internet distribution of our proxy materials is designed to expedite receipt by our shareholders, lower the cost of theRegular Meeting of Shareholders and conserve precious natural resources. If you would prefer to receive paper proxymaterials, please follow the instructions included in the Notice of Internet Availability. If you have previously elected toreceiveourproxymaterialselectronically,youwillcontinuetoreceivee-mailnotificationwithinstructionstoaccessthesematerialsviatheinternetunlessyouelectotherwise.
willnotbeaphysicalmeetingatthecorporatecampus.YouwillbeabletoattendtheMeetingvirtually,voteyourshares electronically, and submit your questions during the Meeting by visiting:www.virtualshareholdermeeting.com/BBY2019 andfollowingtheinstructionsonyourproxycard.
• TheMeetingstartsat9:00a.m.CentralTime.
• You do not need to attend the Meeting online to vote if you submitted your vote via proxy in advance of theMeeting.
On behalf of the entire Board of Directors (the “Board”), we welcome the opportunity to invite you to attend our 2019RegularMeetingofShareholdersonTuesday,June11,2019.
Duringthispastyear,yourBoardhascontinueditsdiligentworkinitskeyareasofresponsibility.InthesecondyearofourBestBuy2020:BuildingtheNewBluegrowthstrategy,wecontinuedtofocusoureffortsaroundourpurposetoenrichlivesthroughtechnologyandourphilosophytocontributetothecommongood.Weareproudofouraccomplishmentsoverthepast year, including strong financial performance, significant achievements in our Environmental, Social & Governanceinitiatives,andtheadditionofthreenewBoardmembers.Wealsojustannouncedanevolutionofourleadershiprolesthatwebelievewillsupportthelong-termsuccessoftheCompany.
Purpose, Culture & Long-term Value Creation
The Board has continued to be active and engaged in the development and oversight of programs that support ourpurpose, culture andlong-termvaluecreation. Duringfiscal 2019, this resulted in enhancedbenefits for our employees,expansionofourIn-HomeAdvisorprogram,thenation-widelaunchofourTotalTechSupportoffering,andtheacquisitionof GreatCall, a leading connected health services provider for aging consumers. We are proud of the performance weachieved,includingrevenueof$42.9billionand4.8percententerprisecomparablesalesgrowth(ontopof5.6percentinfiscal 2018). Our total shareholder return for 2016 to 2018 is 125.5 percent, while the average of the S&P 500 is 64.5percent. Concurrently, we maintained high employee engagement scores and further reduced store turnover rates torecordlows.
Environmental, Social & Governance
Weseektoapplyoursenseofcorporateresponsibilityandfocusonsustainabledevelopmenttoourinteractionswithallour stakeholders, including our customers, our employees, our vendor partners, our stockholders, the communities inwhichweoperateandtheenvironment.WeareproudthatwewererecentlyrankedNo.1onBarron’sMostSustainableCompanieslistandwereoneoftwoU.S.retailersnamedtoEthisphere’sWorld’sMostEthicalCompanieslist.TheBoardcontinuestobeactivelyinvolvedinourvariousprograms, includingtheexpansionof ourTeenTechCentersacrossthecountry.
Board Composition
Asacompany,webelievediversityandinclusionisimportanttoouremployees,customersandshareholders.Insupportofourstrategyandthisbelief,weareproudofthehighlyrelevantanddiversesetofskillswehaveassembledonourBoardoverthelastseveralyears.WenotethatourBoardisnowcomprisedofsixwomenandsixmen,andthatathirdofourBoard members are people of color, which makes us a leader in gender and ethnic diversity among public companyBoards.
CEO Succession
Werecentlyannouncedanevolutioninleadershiproles.Aftersevenyearsofleadingthecompany,Hubertwilltransitiontothe role of Executive Chairman of the Board, effective at the end of our Meeting. At that time, Corie Barry, our ChiefFinancialandStrategicTransformationOfficer,willbecomeChiefExecutiveOfficer.Coriehasplayedacriticalroleinthedevelopmentandexecutionofourprovengrowthstrategy,andweareconfidentshehasthevision,skills,experienceandleadershipcapabilitiesnecessarytobeourCEO.Atthesametime,MikeMohan,currentU.S.ChiefOperatingOfficer,willbepromotedtoPresidentandChiefOperatingOfficer.WebelievethisorderlytransitionisatributetotheBoard’sattentiontosuccessionplanningandwillensuregreatcontinuityfromastrategicandleadershipstandpoint.
Your feedbackis important to us, andweencourageyouto vote for theproposals set forth in this proxystatement andparticipateinourupcomingshareholdermeeting.Withgratitudeforyourconfidenceandsupport,
CAUTIONARYSTATEMENTPURSUANTTOTHEPRIVATESECURITIESLITIGATIONREFORMACTOF1995Section27AoftheSecuritiesActof1933,asamended(“SecuritiesAct”),andSection21EoftheSecuritiesExchangeActof1934,asamended(“ExchangeAct”),providea“safeharbor”forforward-lookingstatementstoencouragecompaniestoprovideprospectiveinformationabouttheircompanies.Withtheexceptionofhistoricalinformation,themattersdiscussedinthisproxystatement onForm14Aareforward-lookingstatementsandmaybeidentifiedbytheuseof wordssuchas“anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “foresee,” “outlook,” “plan,” “project” and other words andtermsofsimilarmeaning.Suchstatementsreflectourcurrentviewwithrespecttofutureeventsandaresubjecttocertainrisks, uncertainties and assumptions. A variety of factors could cause our future results to differ materially from theanticipated results expressed in such forward-looking statements. Readers should review Item 1A,Risk Factors,ofourAnnual Report onForm10-Kfor adescriptionof important factors that couldcauseour futureresults todiffer materiallyfromthosecontemplatedbytheforward-lookingstatementsmadeinthisproxystatementonSchedule14A.Ourforward-lookingstatementsspeakonlyasofthedateofthisproxystatementorasofthedatetheyaremade,andweundertakenoobligationtoupdateourforward-lookingstatements.
2019ProxyStatement
TABLE OF CONTENTS
At our 2019 Regular Meeting of Shareholders, we are asking shareholders to vote on three key items. This sectionhighlights information contained in other parts of this proxy statement. We encourage you to review the entire proxystatement for more detail on these items, as well as our Annual Report and our Chairman and CEO’s Letter toShareholderspostedonourwebsiteatwww.investors.bestbuy.com.
TheMeetingwillbeconductedonline,inafashionsimilartoanin-personmeeting.Allofourboardmembersandexecutiveofficers will attend the Meeting and be available for questions. You may attend the Meeting online, vote your shareselectronically, and submit your questions during the Meeting by visiting our virtual shareholder forum at:www.virtualshareholdermeeting.com/BBY2019andfollowingtheinstructionsonyourproxycard.
HowcanIaskquestionsduringtheMeeting?
QuestionsmaybesubmittedpriortotheMeetingoryoumaysubmitquestionsinrealtimeduringtheMeetingthroughourvirtualshareholderforum.Wearecommittedtoacknowledgingeachquestionwereceive.Wewill allotapproximately15minutes for questions during the Meeting and submitted questions should follow our Rules of Conduct in order to beaddressedduringtheMeeting.OurRulesofConductarepostedontheforum.
Youdonot needtoattendtheonlineMeetingtovoteif yousubmittedyourvoteviaproxyinadvanceof themeeting. Areplay of the Meeting, including the questions answered during the meeting, will be available onwww.investors.bestbuy.com.
Additional information about how to vote your shares and attend our Meeting can be found in theGeneralInformationsectionofthisproxystatement.
CorporateGovernance
Ourlong-standingapproachtocorporategovernanceistodevelopandimplementprinciplesthat:(1)enablethesuccessofour strategy and business objectives; (2) are rooted in a robust ongoing dialogue with our shareholders; and (3) areinspired by best practices. Consistent with this approach, we continue to build upon a strong framework of corporategovernancepoliciesandpractices,includingthefollowing:Board Structure • LeadIndependentDirector • AllIndependentCommittees• AnnualDirectorElections • NoDirectorRelatedPartyTransactions• RobustAnnualBoardEvaluationProcess • DirectorOverboardingPolicy• MajorityVoteforDirectors • DirectorRetirementPolicy Shareholder Rights Compensation• NoCumulativeVotingRights • PayforPerformanceCompensationPrograms• NoPoisonPill • AnnualSay-on-PayVote• ProxyAccessBy-laws • Anti-hedgingand-pledgingPolicies• NoExclusiveForum/VenueorFee-Shifting
TheBoardseeksawiderangeofexperienceandexpertisefromavarietyofindustriesandprofessionaldisciplinesinitsdirectors and carefully assesses and plans for the director skill sets, qualifications and diverse perspectives required tosupporttheCompany’slong-termstrategicgoals.Ourslateofdirectornomineesreflectsthestrongresultsoftheseefforts.
OurBoard,withoversightbytheNominating,CorporateGovernanceandPublicPolicyCommittee,isintegrallyinvolvedintheCompany’senvironmental,socialandgovernance(“ESG”)initiatives.Weareanorganizationbuiltuponvalues-drivenleadershipandwearefocusedonourpurposetoenrichlivesthroughtechnology.WhenwebegantheRenewBluestageof our transformation strategy in 2012, we identified five strategic pillars focused on the needs and interests of ourstakeholders – our customers, employees, vendor partners, shareholders, and communities. These five stakeholderscontinuetobeourmotivationtoday.Wearehonoredthatourcommitmenttoandprogressineffectingpositivechangeforourstakeholdershasbeenrecognizedwithinthecorporatecommunity.
Additional information regarding our purpose and programs relating to our ESG efforts can be found in theCorporateGovernanceatBestBuy—Environment,Social&Governancesectionofthisproxystatement.
Deloitte&ToucheLLP(“D&T”)servedasourauditorsforfiscal2019.OurAuditCommitteehasselectedD&Ttoauditourfinancialstatementsforfiscal2020andissubmittingitsselectionofourindependentregisteredpublicaccountingfirmforratification by the shareholders in order to ascertain the view of our shareholders on this selection. The following tablesummarizes the aggregate fees incurred for services rendered by D&T during fiscal 2019 and fiscal 2018. Additionalinformationcanbefoundin ItemofBusinessNo.2—Ratificationof Appointmentof ourIndependentRegisteredPublicAccountingFirm.ServiceType Fiscal2019 Fiscal2018AuditFees $ 2,912,000 $ 2,770,000Audit-RelatedFees 654,000 334,000TaxFees — —TotalFees $ 3,566,000 $ 3,104,000
Pay is tied to performance. The majority of executive compensation is not guaranteed and is based on performancemetricsdesignedtodriveshareholdervalue.
Additional information can be found in Item of Business No. 3 — Advisory Vote to Approve Named Executive OfficerCompensationandtheCompensationDiscussionandAnalysissectionsofthisproxystatement.
GENERALINFORMATIONThisproxystatementisfurnishedinconnectionwiththesolicitationofproxiesbytheBoardofDirectors(“Board”)ofBestBuyCo.,Inc.(“BestBuy,”“we,”“us,”“our”orthe“Company”)tobevotedatour2019RegularMeetingofShareholders(the“Meeting”) to be held virtually on Tuesday, June 11, 2019, at 9:00 a.m., Central Time, atwww.virtualshareholdermeeting.com/BBY2019oratanypostponementoradjournmentoftheMeeting.On,oraboutMay1,2019, we mailed or made available our proxy materials, including the proxy statement, our Annual Report and form ofproxyortheNoticeofInternetAvailability.
Background
WhatisthepurposeoftheMeeting?
At the Meeting, shareholders will vote on the items of business outlined in the Notice of 2019 Regular Meeting ofShareholders(“MeetingNotice”)includedasthecoverpagetothisproxystatement.Inaddition,managementwillprovideabriefupdateonourbusinessandrespondtoquestionsfromshareholders.
YoureceivedthisproxystatementandaproxycardortheNoticeofInternetAvailabilitybecauseyouownedsharesofBestBuycommonstockasofApril15,2019,therecorddatefortheMeetingandareentitledtovoteontheitemsofbusinessatthe Meeting. This proxy statement describes the items of business that will be voted on at the Meeting and providesinformationontheseitemssothatyoucanmakeaninformeddecision.
HowcanIattendtheMeeting?
You can attend the meeting online by logging on to www.virtualshareholdermeeting.com/BBY2019 and following theinstructionsprovidedonyourproxyornoticecard.
HowwilltheMeetingbeconducted?
TheMeetingwillbeconductedonline,inafashionsimilartoanin-personmeeting.Allofourboardmembersandexecutiveofficers will attend the Meeting and be available for questions. You will be able to attend the Meeting online, vote yourshares electronically, and submit your questions during the Meeting by visiting our virtual shareholder forum at:www.virtualshareholdermeeting.com/BBY2019andfollowingtheinstructionsonyourproxycard.
HowcanIaskquestionsduringtheMeeting?
Questions may be submitted prior to the Meeting through our virtual shareholder forum atwww.virtualshareholdermeeting.com/BBY2019 , oryoumaysubmitquestionsinrealtimeduringthemeetingthroughtheforum.Wearecommittedtoacknowledgingeachquestionwereceive.Wewillallotapproximately15minutesforquestionsduringtheMeetingandsubmittedquestionsshouldfollowourRulesofConductforthemeetinginordertobeaddressedduringtheMeeting.OurRulesofConductarepostedontheforum.
Youdonot needtoattendtheonlineMeetingtovoteif yousubmittedyourvoteviaproxyinadvanceof themeeting. Areplay of the Meeting, including the questions answered during the meeting, will be available onwww.investors.bestbuy.com.
• “FOR”theelectionofdirectorsassetforthinthisproxystatement;• “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public
Ifyouwishtovotebytelephoneorviatheinternet,youmustdosobefore11:59p.m.,EasternTime,onMonday,June10,2019.After thattime,telephoneandinternetvotingonwww.proxyvote.comwill not bepermittedandanyshareholderofrecordwishingtovotethereaftermustvoteonlineduringtheMeeting.Shareholdersofrecordwillbeverifiedonlinebywayofthepersonalidentificationnumberincludedonyourproxyornoticecard.VotingbyashareholderduringtheMeetingwillreplaceanypreviousvotessubmittedbyproxy.
We have made all proxy materials available via the internet. However, you may opt to receive paper copies of proxymaterials,atnocosttoyou,byfollowingtheinstructionscontainedintheNoticeofInternetAvailabilitythatwehavemailedtomost shareholders. Weencourageyouto takeadvantageof theoptionto voteyour shareselectronically throughtheinternetorbytelephone.DoingsowillresultincostsavingsfortheCompany.
Howaremyvotinginstructionscarriedout?
Whenyouvoteviaproxy,youappointtheChairmanoftheBoard,HubertJolyandtheSecretaryoftheCompany,ToddG.Hartman(collectively,the“ProxyAgents”),asyourrepresentativestovoteattheMeeting.TheProxyAgentswillvoteyoursharesattheMeeting,oratanypostponementoradjournmentoftheMeeting,asyouhaveinstructedthemontheproxycard. If you return a properly executed proxy card without specific voting instructions, the Proxy Agents will vote yoursharesinaccordancewiththeBoard’srecommendationsasdisclosedinthisproxystatement.Ifyousubmitaproxy,yourshareswillbevotedregardlessofwhetheryouattendtheMeeting.EvenifyouplantoattendtheMeeting,itisadvisabletovoteyoursharesviaproxyinadvanceoftheMeetingincaseyourplanschange.
If anitemproperlycomesupforvoteattheMeeting,oratanypostponementoradjournmentoftheMeeting,thatisnotdescribedintheMeetingNotice,includingadjournmentoftheMeetingandanyothermattersincidenttotheconductoftheMeeting,theProxyAgentswillvotethesharessubjecttoyourproxyintheirdiscretion.Discretionaryauthorityforthemtodosoiscontainedintheproxy.
PursuanttoourAmendedandRestatedArticlesofIncorporation(“Articles”)andourAmendedandRestatedBy-laws(“By-laws”),eachitemofbusinesstobevotedonbytheshareholdersattheMeeting,withtheexceptionofItem1,requirestheaffirmative vote of the holders of a majority of the voting power of the shares of Best Buy common stock present at ameetingandentitledtovote.Item1,theelectionofdirectors,requirestheaffirmativevoteofamajorityofvotescastwithrespecttothedirector.
Whenabroker, bankornomineevotesabeneficial owner’ssharesoncertainbut not all of theproposals, becauseit isunabletovoteduetothebeneficialowner’sfailuretoprovidevotinginstructionsonamatterastowhichthebroker,bankornomineehasnodiscretiontovoteotherwise,themissingvotesarereferredtoas“brokernon-votes.”
If your shares are held in a brokerage account by a broker, bank or other nominee, you should follow the instructionsprovidedbyyourbroker,bankorothernominee.
WeplantopublishthefinalvotingresultsinaCurrentReportonForm8-K(“Form8-K”)filedwithinfourbusinessdaysofthe Meeting. If final voting results are not available within the four business day timeframe, we plan to file a Form 8-Kdisclosingpreliminary voting results within therequired four businessdays, to befollowedassoonaspracticable byanamendmenttotheForm8-Kcontainingfinalvotingresults.
ProxySolicitation
Howareproxiessolicited?
Weexpecttosolicitproxiesprimarilybyinternetandmail,butourdirectors,officers,otheremployeesandagentsmayalsosolicit proxies in person, bytelephone, throughelectronic communication andbyfacsimile transmission. Wewill requestthatbrokeragefirms,banks,othercustodians,nominees,fiduciariesandotherrepresentativesofshareholdersforwardtheNotice of Internet Availability and, as applicable, the proxy materials and Annual Reports themselves, to the beneficialowners of our common stock. Our directors and employees do not receive additional compensation for solicitingshareholder proxies. We have retained Georgeson Inc. as our proxy solicitor for a fee estimated to be $15,000, plusreimbursementofout-of-pocketexpenses.
You may elect to receive future proxy materials, as well as other investor communications, in a single package peraddress.Thispractice,knownas“householding,”isdesignedtoreduceourpaperuseandprintingandpostagecosts.Tomake the election, please indicate on your proxy card under “Householding Election” your consent to receive suchcommunicationsinasinglepackageperaddress.Oncewereceiveyourconsent,wewillsendasingle
Yes. All shareholders mayaccessour proxy materials electronically via theinternet. Weencourageour shareholders toaccess our proxy materials via the internet because it reduces the expenses for, and the environmental impact of, ourshareholder meetings. You may opt to receive paper copies of proxy materials, including our Annual Report, proxystatementandproxycardatnocosttoyou,byfollowingtheinstructionsonyourNoticeofInternetAvailability.
OurreportsonForms10-K,10-Qand8-Kandotherpubliclyavailableinformationshouldbeconsultedforotherimportantinformation about Best Buy. You can find these reports and additional information about us on our website atwww.investors.bestbuy.com.
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2019ProxyStatement
TABLE OF CONTENTS
CORPORATEGOVERNANCEATBESTBUYOurBoardiscommittedtodevelopingandimplementingcorporategovernanceprinciplesthat: (1)enablethesuccessofour strategy and business objectives; (2) are rooted in a robust ongoing dialogue with our shareholders; and (3) areinspired by best practices. Consistent with this approach, we continue to build upon a strong framework of corporategovernancepractices.Shareholderperspectivesplayanimportantroleinthatprocess.SomekeyaspectsofourcurrentBoardandgovernancestructureandpracticesareasfollows:Board Leadership & Composition• OurBoardhasbeenledbyourChairmanandCEO.OurLeadIndependentDirectorensuresindependentoversight
OurBoardhasbeenledbyourChairmanandCEO,Mr.Joly,andourLeadIndependentDirector, Mr.Fradin.OurLeadIndependent Director complements our Chairman by providing effective, independent leadership on the Board throughclearlydefinedauthority. Additionalleadershiprolescontinuetobefilledbyotherdirectors, all of whomareindependentand play an active role in our strategic planning, risk oversight and governance. Webelieve this leadership structure isideallysuitedtothisstageofourCompany.AspartofourCEOsuccession,Mr.JolywilltransitiontotheroleofExecutiveChairmanat theendof theMeeting, withsubstantially similar responsibilities asthoseset forth below. Theindependentdirectors believethat Mr. Joly’s continuedleadershipof theBoardwill provideavaluableresourcetotheBoardandwillhelpfacilitateasmoothtransitionoftheCEOrole.
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OurLeadIndependentDirectorisnominatedbytheNominating,CorporateGovernanceandPublicPolicyCommittee,andfinal selection is subject to ratification by the vote of a majority of the independent directors on the Board. The LeadIndependent Director serves for an annual term beginning at the Board meeting following the first regular meeting ofshareholdersatwhichdirectorsareelected.InApril2019,theBoardappointedMr.DoyletosucceedMr.FradinasLeadIndependentDirector,effectiveattheMeeting.
• Setting the agenda for Board meetings (in partnership with the CEO and Lead Independent Director) andpresidingoverandleadingdiscussionatmeetingsofthefullBoard;
TheBoardseeksawiderangeofexperienceandexpertisefromavarietyofindustriesandprofessionaldisciplinesinitsdirectors. It carefully assesses the director skill sets, qualifications and diverse perspectives required to support theCompany’s long-term strategic goals, and for an orderly succession and transition of directors, as evidenced by thecomposition changes over the past seven years. We believe our Board should be composed of individuals with highlyrelevant skills, independence, integrity, sound judgment, proven records of accomplishments and diverse genders,ethnicities, ages and geographic locations. In addition, the Board emphasizes independent voices and adding newperspectives to its membership. Eleven of our 13 director nominees are independent, and the average tenure of ourdirector nominees is 5 years. More information regarding our Director Qualification Standards and Director NominationProcesscanbefoundwithinItem1ofthisproxystatement.
DirectorIndependence
PursuanttoourCorporateGovernancePrinciples,theBoardhasestablishedindependencestandardsconsistentwiththerequirementsoftheSECandNYSE.TobeconsideredindependentundertheNYSErules, theBoardmustaffirmativelydetermine that a director or director nominee does not have a material relationship with us (directly, or as a partner,shareholderorofficerofanorganizationthathasarelationshipwithus). Inaddition,eachmemberoftheCompensationandHumanResourcesCommitteemustmeetastandardof“enhancedindependence”suchthattheBoardmustconsiderthe source of compensation of the director and whether the director is affiliated with us or one of our subsidiaries todeterminewhether there areanyfactors that wouldmaterially affect a director’s ability to beindependent, specifically inregardtotheirdutiesasacompensationcommitteemember.
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2019ProxyStatement
TABLE OF CONTENTS
Our Director Independence Guidelines, consistent with the NYSE rules, generally provide that no director or directornomineemaybedeemedindependentifthedirectorordirectornominee:
— hasinthepastthreeyears:
• received(or whoseimmediatefamily member hasreceivedasaresult of serviceasanexecutiveofficer) morethan $120,000 during any 12-month period in direct compensation from Best Buy, other than director andcommitteefeesandcertainpensionpaymentsandotherdeferredcompensation;
Under our director independence standards described above, the Board has determined that each director who servedduringanypartoffiscal2019andeachdirectornomineeisindependent,withtheexceptionofMr.Joly,ourChairmanandCEO,andMs.Barry,ourChiefFinancialOfficerandStrategicTransformationOfficer.Ms.BarrywasnominatedtostandforelectiontotheBoardinconnectionwithherappointmentasournewCEO,effectiveattheMeeting.TheBoardbasedthese determinations primarily on a review of the responses of the directors to questions regarding employment andcompensationhistory,affiliations,familyandotherrelationshipsandondiscussionswithourdirectors.
As part of its independenceanalysis, the Board reviewedour relationships with companies with which our directors areaffiliated.Aspartofthatreview,theBoardconsideredourrelationshipwithNielsen,acompanyaffiliatedwithMr.Kenny.Mr.Kenny,adirectorsinceSeptember2013,servesasCEOandadirectorofNielsen.Since1999,Nielsenhasprovideduswithdataanalyticsservices.TheamountswehavepaidtoNielsenwerelessthan2%oftheannualconsolidatedgrossrevenues of Nielsen for each of the past three fiscal years. In addition, Mr. Kenny did not influence or participate innegotiating our agreements with Nielsen. The Board determined that the Company’s relationship with Nielsen was notmaterialanddidnotimpairMr.Kenny’sindependence.
Inaddition,theBoardalsoconsideredourrelationshipwithCognizantTechnologySolutionsCorp.,whichhasprovideduswithinformationtechnologyandbusinesssolutionservicessince2017.Ms.McLoughlin,adirectorsinceSeptember2015,is the Chief Financial Officer of Cognizant. The amounts paid to Cognizant were less than 2% of Cognizant’s annualconsolidatedgrossrevenuesforthepastthreefiscalyears.Ms.McLoughlindidnotinfluenceorparticipateinnegotiatingouragreementswithCognizant. TheBoarddeterminedthattheCompany’srelationshipwithCognizantwasnotmaterialanddidnotimpairMs.McLoughlin’sindependence.
BoardMeetingsandAttendance
Duringfiscal 2019,theBoardheldfour regular meetingsandonespecial meeting. Eachincumbentdirector attended, inperson or by telephone, 100 percent of the meetings of both the Board and committees on which he or she served.Directors are required to attend our regular meetings of shareholders, and all of our director nominees that were thendirectorsattendedthe2018Meetingeitherin-personortelephonically.
ExecutiveSessionsofIndependentDirectors
Ourindependent directors, ledbyMr. Fradin, meet in executivesessionsof independent directors duringeachregularlyscheduledBoardmeeting.IndependentdirectorsusethesesessionsasaforumforopendiscussionabouttheCompany,ourseniormanagement,andanyothermatterstheydeemappropriate.
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CommitteesoftheBoard
TheBoardhasfourcommittees:Audit, CompensationandHumanResources(the“CompensationCommittee”), Financeand Investment Policy, and Nominating, Corporate Governance and Public Policy (the “Nominating Committee”). Thechartersforeachcommitteearepostedonourwebsiteatwww.investors.bestbuy.com.Thechartersarereviewedannuallyandincludeinformationregardingeachcommittee’scomposition,purposeandresponsibilities.
In March 2019, Ms. Kent was appointed to the Finance & Investment Policy Committee, and in April 2019, the Boardapprovedseveralchangestothecommitteecomposition,effectivefollowingtheMeeting.Atthattime,thecommitteeswillbecomprisedofthefollowingindividualsandMr.DoylewillserveasLeadIndependentDirector:
In additionto its responsibilities asset forth above, theBoardandits committees takeanactive role in theoversight ofvariousriskstotheCompany.Theseriskoversightresponsibilitiesaresetforthbelow.
TheAuditCommitteealsooverseesmanagement’sprocessestoidentifyandquantifythematerialrisksthatweface.OurChief Risk and Compliance Officer is a direct liaison to the Audit Committee on our risk oversight processes andprocedures. In connection with its risk oversight role, the Audit Committee meets privately with representatives of ourindependentregisteredpublicaccountingfirm,theChiefRiskandComplianceOfficer,ourinternalauditstaffandourlegalstaff. Our internal audit staff, which reports directly to the Audit Committee at least quarterly, assist management inidentifying,evaluatingandimplementingcontrolsandprocedurestoaddressidentifiedrisks.
CompensationRiskAssessment
Inconnectionwiththeir oversightofcompensation-relatedrisks,CompensationCommitteemembersannuallyreviewthemost important enterprise risks to ensure that compensation programs do not encourage risk-taking that is reasonablylikelytohaveamaterialadverseeffectonus.Asinpastyears,thereviewprocessinfiscal2019identifiedourexistingriskmanagement framework and the key business risks that may materially affect us, reviewed all compensation plans andidentifiedthoseplansthataremostlikelytoimpacttheserisksorintroducenewrisks,andbalancedtheserisksagainstourexistingprocessesandcompensationprogramsafeguards.Thereviewprocessalsotookintoaccountmitigatingfeaturescontained within our compensation plan design, which includes elements such as: metric-based pay, time-matchingperformance periods, payment for outputs, goal diversification, stock ownership guidelines, payment caps, and ourclawbackpolicy.
Our Nominating Committee oversees the Board’s composition, effectiveness, accountability and evaluation of theperformanceoftheBoard,itscommitteesandindividualdirectors.Onanannualbasis,membersoftheBoardcompleteaquestionnaire evaluating the performance of the Board as a whole, each member’s respective committee and theperformanceoftheChairmanandLeadIndependentDirector.Directorsareaskedaboutrolesandresponsibilities,aswellas moregeneral performance-relatedquestions. TheNominatingCommitteereviewstheresults of thesequestionnairesanddetermineswhethertheresultswarrantanyaction.TheresultsandanyproposedactionsarethensharedwiththefullBoardforfurtherdiscussionandapprovaloffinalactionplans.
Inaddition,theChairofourNominatingCommittee,theBoardChairmanandtheLeadIndependentDirectorrevieweachindividual director’s contributions to the Board during the past year and his or her performance against the directorqualificationstandardsandBoardneeds.TheNominatingCommitteealsoannuallyreviewstheskillsandqualificationsofeachBoardmemberandthestrategicgoalsoftheCompanytodeterminewhethertheskillsetsoftheindividualdirectorson the Board continue to support the Company’s long-term strategic goals. This process is utilized by the NominatingCommittee to assess whether a director should continue to serve on the Board and stand for re-election at the nextRegularMeetingofShareholdersandtootherwiseaddressBoardcompositionneeds.
Inadditiontotheprocessdescribedabove,theNominatingCommitteeengagedanindependentthird-partyconsultantin2016 to conduct individual interviews with each director and certain senior executives and perform a comprehensiveanalysis of the Board’s overall effectiveness. The Committee anticipates utilizing this approach periodically to obtainindependent assessments of the Board’s performance and has engaged an independent third party to conduct anevaluationoftheBoard’seffectivenessin2019.
CEOEvaluationProcess
OurCompensationCommitteeconductsarobustannualCEOevaluationprocess,consistingofbothaperformancereviewand a compensation analysis. The performance evaluation component includes an assessment of the Company’sperformanceinlightofsetobjectives,personalinterviewswiththeindividualBoardmembersandtheCEO’sdirectreports,and feedback evaluations provided by several individuals who interact with the CEO. Separately, the CompensationCommittee’s compensationconsultant conducts extensivemarket research. CEOcompensationmarket datais collectedfrom Fortune 100 companies, our peer group, and a retail-industry focused subset of our peer group, to ensure bothmarket competitiveness and appropriateness of our CEO’s compensation relative to his peers. The CompensationCommittee’s independent consultant reviews the market data and provides its recommendations to the CompensationCommittee. Once all of the relevant performance and compensation data has been collected, the CompensationCommitteemeetsinexecutivesessiontodiscusstheCEOperformanceevaluationresultsandCEOcompensation.Afterreviewingallofthecollecteddataregardingperformance,theCompensationCommitteemakesitsdecisionregardingCEOcompensation for the forthcoming year. The Compensation Committee then provides its final assessment on CEOperformance and decision regarding CEO compensation to the Board for discussion during executive session. OurChairmanandCEOabstainsfromparticipatinginallrelateddiscussionsoftheCompensationCommitteeandBoardpriortodeliveryofthefinalassessment.
DirectorOrientationandContinuingEducation
Our Nominating Committee oversees the orientation and continuing education of our directors. Director orientationfamiliarizes directors with our strategic plans, significant financial, accounting and risk management issues, complianceprograms, policies, principal officers, internal auditors and our independent registered public accounting firm. TheorientationalsoaddressesBoardprocedures,directorresponsibilities,ourCorporateGovernancePrinciplesandourBoardcommitteecharters.Eachofournewdirectorsattendedadirectororientationfollowingtheirappointment.
OurexecutiveofficersandBoardmembersareprohibitedfrompledgingCompanysecuritiesascollateralforaloanorfromholding Company securities in a margin account. In addition, all employees and Board members are prohibited fromhedgingCompanysecurities,includingbywayofforwardcontracts,equityswaps,collars,exchangefundsorotherwise.
DirectorStockOwnership
Our stock ownership guidelines require each of our non-management directors to own 10,000 shares and to hold 50percent of their granted equity until that ownership target is met. Directors are required to hold all restricted stock unitsgrantedtothemduringtheirBoardtenureuntiltheirserviceontheBoardends.Infiscal2019,allofournon-managementdirectors were in compliance with the ownership guidelines. Our stock ownership guidelines for executive officers arediscussed in the Executive and Director Compensation — Compensation Discussion and Analysis — ExecutiveCompensationElements—OtherCompensationsection.
ShareholderEngagement
Akeypartofourcorporategovernanceprogramisourannualshareholderengagementprocess.Weregularlyengagewithourshareholdersonavarietyoftopicsthroughouttheyeartoensureweareaddressingtheirquestionsandconcerns,toseek input and to provide perspective on Company policies and practices. Our typical engagement follows a seasonalcycle,asoutlinedbelow.
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We have taken several actions in prior years in consideration of shareholder feedback elicited during this process,including: adoption of proxy access, declassification of our Board, the determination to hold the advisory vote on ourexecutivecompensationonanannualbasis,adjustmentstothedirectorappointmentsonourBoardcommittees,andthedevelopmentofourcorporatesocialresponsibilityprogramandreporting.Wealsocontinuetofacilitatedirectshareholdercommunication with management and members of our Board and the ability to easily access and obtain informationregarding our Company on our website at www.investors.bestbuy.com . Please see the Executive and DirectorCompensation —Introductionsection for more information regarding actions taken as a result of shareholder feedbackreceivedregardingourprioryear’sexecutivecompensationdecisions.
Environment,Social&Governance
We take our role in corporate social responsibility and sustainability seriously, aiming to positively impact people,communities and the environment and contribute to the commongood. Webelieve businesses exist to deliver value tosociety,notjusttoshareholders.Simplyput,weaimtodowellbydoinggood.
Here are a number of ways that we reflect this approach in the management of the Company’s corporate socialresponsibilityandsustainabilityinitiatives:
Employee Engagement & Diversity . We invest in the long-term development and engagement of our employees byaspiringtohaveanincreasinglydiverseworkforceandinclusiveenvironment,robusttraininganddevelopmentprogramsandaculturewhereourpeoplecanthrive.WerankedthirdintheworldforemployeetraininganddevelopmentbyTrainingMagazineandouremployeescompleted22milliononlinelearningmoduleslastyear.Wealsoreceivedaperfectscoreof100intheHumanRightsCampaignFoundation’sCorporateEqualityIndexforthefourteenthyear.
VendorPartners . Wepartner with our private label suppliers to ensuretheymeet our expectations for safe workplaceswhere workers are treated fairly. We perform audits, led by either us or third parties, to identify gaps between factoryperformanceandourSupplierCodeofConduct,whichisalignedwiththecodeestablishedbytheResponsibleBusinessAlliance,wherewe’vebeenamembersince2011.Wealsoprovidesuppliertrainingandassistinprogramdevelopmenttosupport best practices in relation to conflict minerals, customs and trade anti-terrorism measures and factory workingconditions.
Environment.Wearereducingourimpactontheenvironmentandareproudofoureffortsinthisarea.Wehaveloweredourcarbonemissionsbymorethan51percent andareonourwaytoa60percent reductionby2020.Infact, wewererecentlynamedthemostsustainablecompanyintheUnitedStatesbyBarron’s.Also,wewerenamedtoCDP’sCarbonAList, for leadership in carbonreduction andmanagement, for the third time. Recycling is a key part of our sustainabilityeffortsasweoperatethemostcomprehensiverecyclingserviceintheU.S.Werepairnearly5millioncustomerelectronicproductseachyearandhavecollectednearly2billionpoundsofelectronicsandappliancesforrecyclingsince2009.Weare committed to providing an assortment of sustainable technology, including ENERGYSTAR®certified products, andhavehelpedcustomersrealizenearly$800millioninutilitysavingssince2009.
Community . We are committed to helping prepare teens from underserved communities for tech-reliant jobs. We areaccomplishing this through the creation and operation of 29 Best Buy Teen Tech Centers (year-round after schoolprograms),withplanstoexpandtomorethan60centersby2020;careermentoringandinternshipopportunitiesthroughour Career Pathways Program; and, the hosting of Geek Squad Academy events (free, interactive technology camps)across the country. Our employees also volunteer more than 100,000 hours each year, and Best Buy was the topfundraiserforSt.JudeChildren’sResearchHospitalduringthisyear’sThanksandGivingcampaign,raising$20.8millioninemployeeandcustomerdonations.Weareproudtohaveraisedmorethan$80millionintotalforSt.Judesince2013.
OurCodeofEthicsandadditionalinformationregardingtheseinitiativesandourprogresstowardsthemcanbefoundinour annual Corporate Responsibility and Sustainability report, available at www.investors.bestbuy.com , and athttps://corporate.bestbuy.comunder“Sustainability.”
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PublicPolicy
Asamajorcorporationandcorporatecitizen,webelievethatitisimportanttoworkwithpolicymakersonissuesimpactingour customers, employees, businesses, shareholders and communities. We know that collaboration helps bring aboutchange that better serve our industry and the communities where we live and work. In fiscal 2019, our public policyprioritiesincluded: tariffs/fair tradepractices; marketplacefairness; competitiveworkplace; privacy, datasecurity andtheinternet of things; and fair competition through emerging technologies and innovation. More information about thesepriorities,aswellasourannualpoliticalactivityreportsandrelatedpolicies,canbefoundathttps://corporate.bestbuy.comunder“GovernmentAffairs.”
Mr.Hartmanwillforwardallwrittenshareholdercorrespondencetotheappropriatedirector(s),exceptforspam,junkmail,mass mailings, customer complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, orpatentlyoffensiveorotherwiseinappropriatematerial.Mr.Hartmanmay,athisdiscretion,forwardcertaincorrespondence,such as customer-related inquiries, elsewhere within the Company for review and possible response. Comments orquestionsregardingouraccounting,internalcontrolsorauditingmatterswillbereferredtotheAuditCommittee.Commentsor questions regarding the nomination of directors and other corporate governance matters will be referred to theNominatingCommittee. Commentsor questionsregardingexecutivecompensationwill bereferredtotheCompensationCommittee.
OurBy-lawsprovidethatourBoardconsistofoneormoredirectorsandthatthenumberofdirectorsmaybeincreasedordecreasedfromtimetotimebytheaffirmativevoteofamajorityofthedirectorsservingatthetimethattheactionistaken.The number of directors on our Board is reviewed and set by our Board no less often than annually. In April 2019 inconnection with our CEOsuccession announcement, the Board set the number of directors at thirteen, effective at theMeeting.TheBoardwillcontinuetoevaluatethesizeoftheBoardandmakeadjustmentsasneededtomeetthecurrentandfutureneedsoftheCompany.
DirectorNominationProcess
The Nominating Committee is responsible for screening and recommending to the full Board director candidates fornomination.WhentheBoardanditsNominatingCommitteedeterminesthatadirectornominationorsearchisnecessary,theprocessisrobust,thoroughanddeliberate.
Ms. Kent and Mr. Woods, who were appointed by the Board in September and December 2018, respectively, werepresented to the Nominating and Governance Committee by a third-party search firm as part of the NominatingCommittee’sdirectorsearch.AfterreviewingMs.KentandMr.Woods’qualifications,meetingwiththemseveraltimesanddiscussing their potential nominations, the Nominating Committee voted unanimously to recommend Ms. Kent and Mr.WoodstotheBoard,whichunanimouslyapprovedtheappointments.
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TheNominatingCommitteewillconsiderdirectorcandidatesnominatedbyshareholders.Shareholdernominationsmustbeaccompanied by a candidate resume that addresses the extent to which the nominee meets the director qualificationstandards and any additional search criteria posted on our website. Nominations will be considered only if we are thenseekingtofillanopendirectorposition.Allnominationsbyshareholdersshouldbesubmittedasfollows:
Inseekingnewboardmembers,ourobjectiveistoidentifyandretaindirectorsthatcaneffectivelydeveloptheCompany’sstrategy and oversee management’s execution of that strategy. We only consider director candidates who embody thehighest standards of personal and professional integrity and ethics and are committed to a culture of transparency andopen communication at the Board level and throughout the Company. Successful candidates are dedicated toaccountability and continuous improvement with a belief in innovation as a key business success factor. They are alsoactivelyengagedandhaveaninnateintellectualcuriosityandentrepreneurialspirit.
Aspartofitsannualevaluationprocessfordirectornominees,theNominatingCommitteeconsidersothercriteria,includingthecandidate’shistoryofachievementandsuperiorstandards,abilitytothinkstrategically,willingnesstoshareexamplesbased upon experience, policy-making experience, and ability to articulate a point of view, take tough positions andconstructively challenge management. Directors must also be committed to actively engaging in their Board roles, withsufficienttimetocarryoutthedutiesofBoardandBoardcommitteemembership.Finally,oneormoreofourdirectorsmustpossesstheeducationorexperiencerequiredtoqualifyasan“auditcommitteefinancialexpert”pursuanttoSECrules.
Our Corporate Governance Principles describe our policy of considering diversity in the director identification andnominationprocess.WhenconsideringBoardcandidates,theNominatingCommitteeseeksnomineeswithabroadrangeof experience from a variety of industries and professional disciplines, such as finance, professional services andtechnology,alongwithadiversityofgender,ethnicity,ageandgeographiclocation.TheNominatingCommitteedoesnotassignspecificweightstoparticularcriteria,andnoparticularcriterionisnecessarilyappliedtoallprospectivenominees.Aspart of its annual reviewof theBoard’scompositionanddirector nominees, theNominatingCommitteeassessestheeffectiveness of its approach to diversity. When the Nominating Committee identifies an area of which the Board maybenefit from greater representation, it may focus its candidate search on particular experience, background or diversitycharacteristics,includinggender,ethnicandgeographicalattributes.TheBoardbelievesthatdiversityinthebackgroundsandqualificationsof Boardmembersensuresthemixof experience, knowledgeandabilitiesnecessaryfor theBoardtofulfillitsresponsibilitiesandleadstoamoreeffectiveoversightanddecision-makingprocess.
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Thegridbelowsummarizesthekeyqualificationsandskillseachofourdirectornomineespossessthatweremostrelevantto the decision to nominate himor her to serve onthe Board. Thelack of a mark doesnot meanthe director doesnotpossessthat qualificationorskill; ratheramarkindicatesaspecific areaof focusorexpertiseonwhichtheBoardreliesmostheavily.Eachdirector’sbiographydescribesthesequalificationsandrelevantexperienceinmoredetail.
The biographies of each of the nominees include information regarding the person’s service as a director, businessexperience,publiccompanydirectorpositionsheldcurrentlyoratanytimeduringthelastfiveyears,informationregardinginvolvement 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 shouldserveasadirector.
There are no family relationships among the nominees or between any nominee and any director, executive officer orperson chosen to become an executive officer. There are also no material proceedings to which any director, officer,affiliateoftheCompany,any5percentshareholderoranyassociateisapartyadversetotheCompanyoritssubsidiariesorhasamaterialinterestadversetotheCompanyoritssubsidiaries.
• Growth/TransformationExperience—AsakeymemberoftheBestBuyexecutiveteam,Ms.Barryhasplayedacriticalroleinthecompany’ssuccessfulRenewBluetransformationandindevelopingandexecutingtheprovengrowthstrategyinplacetoday.ShehasledBestBuy’sstrategictransformationandgrowthefforts,includingthelaunchofitsIn-HomeConsultationprogramanditsexpansioninthehealthspace.Ms.Barryhasdemonstratedtrack record of advocating for andmentoring womenin the workplace andin the community throughher closeinvolvement with the company’s women’s development group, local women’s leadership organizations and heralmamater.
• KnowledgeofBestBuyand/orIndustry—AsBestBuy’sChiefFinancialOfficerandincomingCEO,Ms.Barryhasadeepknowledgeofthecompany,itsbusinesspartnersandthebroaderindustryinwhichitcompetes.Shehas worked at the company for nearly 20 years across a wide variety of roles, both in the field and at thecorporateoffice.
• Founder, Chairman and Chief Executive Officer of Citi’s Women & Co., a membership service that providesfinancialeducationandservicesforwomen(2000-2011).
CommunicationsandCustomerExperienceofTheTravelersCompanies,Inc.,makesherinvaluabletoBestBuy’seffortstobroadenitsbrand,rejuvenatethecustomerexperienceandtransformitsmarketingandcommunicationsefforts to drivegrowth. In addition, her perspective gainedfromdrivinginnovationefforts to explorepartnershipandinvestment opportunitiesat Travelersishelpful aswedevelopgrowthinitiativeswithintheCompany’sBestBuy2020strategy.Ms.Caputoalsospent11yearsatCitigroup,advisingthreeCEOsontopicsfrommarketingandcommunicationstogovernmentaffairsandcommunityrelations.
• Environmental,Social&GovernanceExpertise-Ms.Caputohasanexceptionaltrackrecordthroughouthercareer of enhancing community and employee engagement, building social impact strategies and leadingcorporateresponsibilityandsustainability.
• CorporatePublicAffairsExpertise-Ms.CaputohasalsobeenaseniorexecutiveatWaltDisneyCo.andCBSCorp., and she spent more than a decade in the public sector, serving as Deputy Assistant to President BillClintonandPressSecretarytoFirstLadyHillaryRodhamClinton.Herdiversepublic/privatebackgroundlendsanimportant voice to Board deliberations, particularly those that involve the Company’s government relations andcommunicationsefforts.
• Digital / E-Commerce Expertise - Under Mr. Doyle’s leadership, Domino’s significantly enhanced itsmultichannel presence, with digital channels now accounting for 60 percent of U.S. orders. That expertisesupportsBestBuy’sgoalofincreasingitsonlinemarketshare.
• Growth / Transformation Experience - Having led remarkable growth and transformation at Domino’s, Mr.Doyle’s experience and insights are valuable to the Board and senior management as Best Buy undertakes asimilar effort. Under Mr. Doyle, Domino’s rebuilt its reputation among consumers and nearly doubled its globalretailsalesfrom$5.5billionin2008to$10.9billionin2016.DuringDomino’stransformation,Mr.Doyleincreasedthe company’s contributions to communities and disaster relief and initiated a partnership to support studentsinterestedincareersinagriculture.
his role as Best Buy’s Lead Independent Director. He has firsthand insight into the partnership between anengagedboard andaneffective, high-performing management team. AsCEOof SunGard, Mr. Fradin affirmedthecompany’sobligationandcommitmenttohelpraiseethical,socialandenvironmentalstandardswherevertheydidbusiness.
• Business Operations / Services Expertise - As the former CEO of Hewitt Associations and AonHewitt, Mr.Fradin is able to provide valuable advice on issues such as developing service-based initiatives, streamliningoperations,reducingcostsandestablishingappropriateexecutivecompensation.Earlierinhiscareer,hespent18years at McKinsey and Co., where he specialized in providing Fortune 500 clients advice on newproduct andserviceinnovations.
• CEOExperience- Mr. Fradin currently servesasOperating Partner at Clayton, Dubilier &Rice. Hepreviouslyserved as CEO of SunGard (now acquired by Fidelity National Information Services, Inc.), Aon Hewitt, HewittAssociatesandTheBISYSGroup,Inc.
development and leadership coaching firm. She has extensive experience in human resources, talentmanagement,organizationalcultureandsuccessionplanning.WhileservingasChiefHumanResourcesOfficerat Northwest Airlines, Inc., she was responsible for executive compensation, employee benefits and laborrelations. She also held Human Resource-related leadership roles at The Pillsbury Co. and Burger King Corp.earlierinhercareer.
as President and Chief Executive Officer of Carlson, Inc., a worldwide hospitality and travel company, andPresidentandChiefExecutiveOfficerofCarlsonWagonlitTravel,abusinesstravelmanagementcompany.
• Growth/ TransformationExperience- Mr. JolyledBestBuythroughitssuccessfulcustomer-focusedRenewBlue transformation, which delivered improved customer satisfaction, market share gains, revenue growth andimproved margins, and reduced costs by $1.4 billion to fund necessary investments. He is now leading theCompany’sBestBuy2020growthstrategy,focusedonenrichinglivesthroughtechnology.Duringbothphases,Mr. Joly has pursued a purposeful leadership approach, focused on positively impacting all stakeholders. Thecompany’srenewedsuccesswithcustomershasbeenfueledbytheenhancedengagementandproficiencyofitsemployees, investments in their compensation and benefits and a strong focus on diversity and inclusion. Inaddition, corporate social responsibility and sustainability efforts have been embedded in all aspects of thecompany’soperations,notablyresultinginareducedcarbonfootprint.
• Knowledge of Best Buy and/or Industry - As the Company’s Chief Executive Officer, Mr. Joly has a deepknowledgeofBestBuy,itsbusinesspartnersandthebroaderindustryinwhichitcompetes.Healsositsontheexecutivecommitteesfor theRetail Industry LeadersAssociationandtheMinnesotaBusinessPartnership, andservesastheViceChairmanofTheBusinessCouncil.
• TechnologyExpertise-AsSeniorVicePresidentofIBMWatson,Mr.Kennyledthecompany’sgrowthinitiativesaround cloud and artificial intelligence services. His online leadership dates to 1997, when he founded Digitas,Inc., a provider of technology and marketing solutions for e-commerce and multichannel companies. Hisexperience leading The Weather Company offers the Company strong environmental leadership and climatechangeexpertise.
• CustomerEngagementExpertise-AschairmanandchiefexecutiveofficerofTheWeatherCompany,acquiredby IBM in 2016, Mr. Kenny helped turn the organization into a media heavyweight that produced televisionprogramming, developed apps, published content and used analytics to connect businesses to consumersthroughweatherandclimate-relatedcontent.HeusesthoseconsumercentricandstrategicskillstosupportBestBuy’sgrowthandtransformationefforts,includingourgoalofcapturingonlineshareandresponsibleuseofdatatoservecustomersbasedonhow,whereandwhentheywanttobeserved.
of the health care industry. She most recently served as president and general manager of the InfectionPrevention Division at 3M Co. She also previously worked at medical device maker Medtronic Inc. andpharmaceutical company Eli Lilly & Co. This expertise will be invaluable as the company pursues its Best Buy2020: Building the New Blue growth strategy, which includes an emphasis on growing a strong health andwellnessbusiness.
• Growth / Transformation Experience - At 3M, Ms. Kent was tasked with reinvigorating growth in multipledivisions.Underherleadership,theInfectionPreventionDivisionunitpostedsomeofthehighestgrowthnumbersin the past two decades. She also championed an agile innovation process that led to one of the fastest newproduct introductions, requiring regulatory clearance, in the history of the company’s healthcare business. Shehasastrongunderstandingofthemarketplace,whichwillbevaluableastheCompanypursuesthenextphaseofitsgrowth.
• Marketing Expertise & Civic Leadership - Ms. Kent has spent much of her career leading organizations inmarketing roles, influencing corporate reputation. She has a proven track record of civic leadership andphilanthropy, focusing on advocating for and mentoring women in STEM careers, both of which are highlyvaluabletotheCompany’ssocialimpactwork.
KeyQualifications&Experience:• FinanceExpertise - As the Chief Financial Officer of Cognizant Technology Solutions Corp., Ms. McLoughlin
brings strong financial acumen to the Best Buy board. Prior to that, she spent more than 20 years in variousfinancemanagementrolesatCognizant,SpherionandRiderSystemInc.
• Services Expertise - Having been at Cognizant since 2003, she has developed a deep knowledge of the ITservicessector,whichwillbeinvaluabletoBestBuyasweconsiderourowninternalITprocessesandcontinuetoemphasizeServicesacrosstheorganizationaspartofitsBestBuy2020growthstrategy.
• Growth/TransformationExpertise-DuringMs.McLoughlin’stimeatCognizant,thecompanyhasexperiencedtremendousgrowth,withrevenueincreasingfrom$368millionin2003to$14.81billionin2017.CognizantrankedNo. 205 on the 2017 Fortune 500 list. Ms. McLoughlin brings experience in social impact through Cognizant’seffortstohelpyouthbuildtheskillstocompeteandthriveintheglobaleconomy.HerleadershipinCognizant’sWomenEmpoweredprogram,whichaimstoelevatewomenatalllevels,isbeneficialintheCompany’sdiversityandinclusionwork.
PriorRoles:• Chief Executive Officer and a Director of Cabela’s Inc., a leading multi-channel retailer of hunting, fishing and
campingproducts(2009-2017);
• President and Chief Executive Officer of Freedom Group, Inc. and its successor company, Remington ArmsCompany,Inc.,afirearmsandammunitionmanufacturer(1999-2009).
and camping products, from 2009 to 2017. He also previously served as CEO of Freedom Group, Inc. andRemingtonArmsCo.,Inc.,afirearmsandammunitionmanufacturer.
• Growth / Transformation Expertise - Mr. Millner has experience leading a specialty retailer through atransformationandsignificantgrowth,takingCabela’sfrom$2.6billioninrevenuein2009to$4.13billionin2016.Bass Pro Shops Inc. bought the company for $4.0 billion in 2017. Throughout this period of Mr. Millner’sleadership,Cabela’smaintaineditsdedicationtoconservingfish,gameandnaturalresources,andcreatedCampCabela, a program dedicated to providing thousands of underprivileged inner-city children the opportunity tocamp,fishandenjoytheoutdoors.
• KnowledgeofBestBuyand/orIndustry-AstheformerpresidentandCEOofCabela’s,Inc.,Mr.Millnerwasaprominent playerinmultichannel retail. HebringstotheBest BuyBoardexpertiseinsupport of theCompany’sBest Buy 2020 growth strategy, particularly priorities concerning effective merchandising and multichanneloperations.
• TechnologyExpertise-Ms.Munce’smanyyearsoffocusingonemergingmarketsanddisruptivetechnologyarevaluabletoBestBuyasitexploresgrowthopportunitiesconsistentwithitsBestBuy2020strategy.Shebringstheperspective of someone with a highly technical engineering and computer science background, as well asbusinessacumenandastrategicmindset.SheisalsoaNACDcertifiedCybersecurityOversightdirector.
• Growth/TransformationExperience-Ms.MuncewasafoundingmemberoftheIBMVentureCapitalGroup,aunit within IBM that drives non-organic growth through partnerships and M&A activities globally, focusing ongrowthmarkets anddisruptivetechnologyandbusinessmodels. Whileat IBM,sheworkedwithmorethan300venture capital firms across 30 countries to advance the company’s strategic goals for developing innovationsworldwide.Ms.Munceisanadvocateforwomen’sleadershipinthetechnologyindustryandworkstoclosethegendergapatthehighestlevelsofbusiness.
transforming the company’s brand reputation. She focused on optimizing the company’s marketing budget toimprovereturnoninvestmentandnewrevenuestreams,andshehelpeddecreaseattritionratesbybuildingoutthecompany’sCRMstrategyandbetter understandingthecustomer’s pathtomakingpurchasedecisions. Shehas strong knowledge of how to use data analytics for more effective targeting and pricing. Her experience innonprofit andsocial impact, including work to encouragegirls to pursue STEM, are in line with the Company’sprogramstoprepareyouthfromunderservedcommunitiesforhighereducationandtechnologycareers.
• Digital / E-commerce Experience -With extensive experience in e-commerce, Ms. Parham takes pride inunderstanding the fundamental needs of consumers, rethinking what is possible and executing effectively atscale.Shehasledstrategyandbuiltbrandsviavariousdigitalchannels.HerinsightwillbehighlyvaluabletotheBoardasitmovesforwardwiththeBestBuy2020strategy.
• BusinessOperations/StrategyExpertise-Ms.Parhamisaseasoned,senior-levelexecutivewithmorethan25yearsofexperienceatbest-in-classcorporationssuchaseBay,Visa,DigitasandCitibank.Shehasaproventrack record of leading high-performing teams and using strategic planning and analytical decision-making tosuccessfullydrivekeybusinessperformance.
and for-profit hospitals, academic and community-based delivery systems and rural and urban facilities. He iscurrentlypresidentandCEOofAtriumHealth,ahealthcaresystemwithnearly$10billionofannualrevenue,55hospitalsand900carelocations.HerankedNo.25onModernHealthcare’slistofthe100MostInfluentialPeopleinHealthcarefor2018andistheformerChairoftheAmericanHospitalAssociationBoard.
• CEOExperience-Mr.WoodshasservedasCEOofAtriumHealth,oneofthenation’smostcomprehensiveandhighlyintegratedandinnovativehealthcaresystems,since2016.HealsopreviouslyservedasPresident&COOof CHRISTUSHealth andwasSVPof CHI Divisional Operations/CEOof Saint JosephHealth System. Hehasalsoheldavarietyofotherseniorleadershiprolesathealthcareorganizationsthroughoutthecountry.
• Growth / Transformation Expertise - Since becoming CEO in 2016, Mr. Woods has led Atrium Health’sexpansion beyond the Carolinas into other areas of the Southeast, including Georgia. He also has led adigitalization initiative by building out Atrium’s strong telehealth program, and he is working on newmodels forlong-termcostofcareandchangingquality-of-caremetrics.Mr.WoodsbringstotheCompanyatrackrecordofleadershipinunitingalargeorganizationaroundavisionandmission,fosteringadiverse,inclusiveandengagingworkenvironment,andastrongcommitmenttoservingthecommunity.
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VotingInformation
You may vote for all, some or none of the nominees for election to the Board. However, you may not vote for moreindividuals than the number nominated. Each of the nominees has agreed to continue serving as a director if elected.However,ifanynomineebecomesunwillingorunabletoserveandtheBoardelectstofillthevacancy,theProxyAgentsnamed in the proxy will vote for an alternative person nominated by the Board. Our Articles prohibit cumulative voting,whichmeansyoucanvoteonlyonceforanynominee.Theaffirmativevoteofamajorityofthevotescastwithrespecttothedirectorisrequiredtoelectadirector.
The Board recommends that shareholders voteFOR the election of Corie S. Barry, Lisa M. Caputo, J. Patrick Doyle,RussellP.Fradin,KathyJ.HigginsVictor,HubertJoly,DavidW.Kenny,CindyR.Kent,KarenA.McLoughlin,ThomasL.Millner,ClaudiaF.Munce,RichelleP.Parham,andEugeneA.Woodsforatermofoneyear.Allofthenominees,otherthanMs.Barry,arecurrentmembersoftheBoard.
(11) Mr.SchulzeisourFounderandChairmanEmeritus.HeisnotamemberofourBoardandisnotconsideredanexecutiveofficerbutislistedhereduetohisstatusasabeneficialownerofmorethan5%ofourcommonstock.Thefigurerepresents:(a)1,732,500outstandingsharesownedbyMr. Schulze; (b) 16,545,801outstandingsharesregisteredin thenameof Mr. Schulzeandaco-trustee, andheldbythemastrusteesofatrustforthebenefitofMr.Schulze,ofwhichupto$150millioninaggregatevalueofshareshavebeenpledgedbythetrustascollateraltosecurealineofcredit;(c)13,943,296outstandingsharesregisteredinthenameofMr.Schulzeandco-trustees,andheldbythem as trustees of Grantor Retained Annuity Trusts for the benefit of Mr. Schulze and his family; (d) 1,143,043 outstanding sharesregistered in the nameof Mr. Schulze and a co-trustee, and held by themas trustees of the Sandra Schulze Grantor Retained AnnuityTrust; (e) 950,169 outstanding shares held by a limited partnership of which Mr. Schulze is the sole general partner (Mr. Schulze hasdisclaimedbeneficialownershipofthesesharesexcepttotheextentofhispecuniaryinteresttherein);(f)252,312outstandingsharesheldbyalimitedpartnershipofwhichalimitedliabilitycompanyownedbyMr.Schulzeisthesolegeneralpartner;(g)31,672outstandingsharesheldbyalimitedpartnershipofwhichalimitedliabilitycompanyownedbyMr.Schulzeisthesolegeneralpartner;(h)11,998outstandingshares 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’sspouse(Mr.Schulzehasdisclaimedbeneficialownershipoftheseshares);(i)183,726outstandingsharesregisteredinthenameofMr.Schulzeandaco-trustee,andheldbythemastrusteesoftheSandraSchulzeRevocableTrustdatedJune14,2001(Mr.Schulzehasdisclaimedbeneficialownershipoftheseshares);(j)2,568outstandingsharesregisteredinthenameofMr.Schulze’ssisterandco-trustees,andheldbythemastrusteesoftrustsforthebenefitofMr.Schulze’ssister(Mr.Schulzehasdisclaimedbeneficialownershipoftheseshares);(k)2,061outstandingsharesheldinMr.Schulze’sindividualretirementaccount;(l)1,960,643outstandingsharesownedbyTheRichardM.SchulzeFamilyFoundation,ofwhichMr.Schulzeisthesoledirectorand(m)72,740outstandingsharesregisteredinthenameoftheTrusteeinconnectionwiththeRetirementSavingPlanforthebenefitofMr.Schulze.
(13) Asreportedontheowner’smostrecentSchedule13GfiledwiththeSEConFebruary13,2019,toreportownershipasofDecember31,2018. FMRLLC and certain related entities have sole voting power over 2,565,529 shares and sole dispositive power over 23,545,958shares.
SECTION16(a)BENEFICIALOWNERSHIPREPORTINGCOMPLIANCESection16(a)oftheSecuritiesExchangeActof1934requiresthatourdirectors,executiveofficersandshareholderswhobeneficially ownmore than 10%of our commonstock file initial reports of ownership with the SEC. They must also filereportsofchangesinownershipwiththeSEC.Inaddition,theyarerequiredbySECregulationstoprovideuscopiesofallSection16(a)reportsthattheyfilewiththeSEC.BasedsolelyonareviewofsuchSection16(a)reports,managementandtheBoardbelieveour directors, andexecutive officers whoservedduringanypart of fiscal 2019andshareholders whobeneficiallyownmorethan10%ofourcommonstockcompliedwiththeSection16(a)filingrequirementsduringthefiscalyearendedFebruary2,2019,exceptthatoneequityaward,whichwasgrantedtoMathewR.WatsononMarch12,2018,wasreportedonadelayedbasisduetoadministrativeerror(seeMr.Watson’sForm4datedMarch15,2018,foradditionaldetail).
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CERTAINRELATIONSHIPSANDRELATEDPARTYTRANSACTIONSOurRelatedPartyTransactionsPolicyprohibits“relatedpartytransactions”unlessapprovedbytheAuditCommitteeandtheBoard.Forpurposesofourpolicy,a“relatedpartytransaction”isatransactionorseriesoftransactionsinwhich(a)theCompany or a subsidiary is a participant, (b) the aggregate amount involved exceeds $120,000 and (c) any director,executiveofficerorshareholderbeneficiallyowningmorethan5percentofourcommonstock,oranyoftheirrespectiveimmediatefamilymembershasadirectorindirectmaterialinterest.
Arelatedpartytransactionwillgenerallynotbeapprovedunlessitprovidesuswithademonstrableincrementalbenefitandthe terms are competitive with those available fromunaffiliated third parties. Only Board members who do not have aninterest in the transaction are permitted to vote on a related party transaction. In addition, ongoing related partytransactionsarereviewedbytheAuditCommitteeandtheBoardtoensurethatsuchtransactionscontinuetoprovidethenecessaryincrementalbenefittousandhavecompetitiveterms.Eachofthetransactionsdiscussedbelowwereapproved(orre-approvedifongoing)bytheAuditCommitteeandtheBoardinMarch2019,unlessotherwisenoted,inaccordancewith our Related Party Transactions Policy. We do not have any credit arrangements between our officers, directors,controllingpersonsandotherinsiders.
RichardM.Schulze
Asofthedateofthisfiling,Mr.Schulzeownedapproximately13.75percentofourcommonstock.OnMarch25,2013,weenteredintoaletteragreementwithMr.Schulzepursuanttowhich,amongotherthings,Mr.Schulzewasgiventhelifetimehonorary title of “Founder andChairmanEmeritus” of theCompany, althoughheis not anexecutive andis nolonger amemberofourBoard.Underthisletteragreement,weagreedtocompensateMr.Schulzewithanannualbasesalaryof$150,000throughfiscal2018forhisservicesasChairmanEmeritus,andtoprovidelifetimemedicalbenefitsforhim,hisspouseandhiseligibledependentsinaccordancewithourplans,practices,programsandpoliciesineffectgenerallyforourexecutivesandtheirdependents.Wealsoagreedtoprovideofficespaceandadministrativesupport,andtoreimburseMr.Schulzeforhiscostsandout-of-pocketexpensesincurredintheperformanceofhisdutiesasChairmanEmeritus.Theletter agreement’s term was renewed in January 2018 through the end of fiscal 2020, except as specifically describedaboveinregardtocertainlifetimehealthbenefits.
Ryan Green, Mr. Schulze’s step-son, is employed with us as a Senior Director in our Properties department at ourcorporate headquarters in Richfield, Minnesota. Mr. Green’s total cash compensation in fiscal 2019 was approximately$271,000.Mr.Greenalsoreceivedanannuallong-termincentiveawardof1,075time-basedrestrictedshares,whichvestinone-thirdincrementsoneachanniversaryofthegrantforthreeyears.Hisawardisconsistentforotheremployeesathislevel.Mr.Greeniseligibletoreceiveemployeebenefitsgenerallyavailabletoallemployees.Mr.Green’semploymentwithusbeganinAugust2012.Mr.Schulze’sfamilymemberiscompensatedatalevelcomparabletothecompensationpaidtonon-familymembersinsimilarpositionsatBestBuy.
Fidelity
FMRLLC(“Fidelity”)filedanamendedSchedule13GinFebruary2019,statingthatitbeneficiallyowns8.75percentoftheCompany’scommonstock.Asaresultofbeneficiallyowningmorethan5percentofourcommonstock,Fidelityiscurrentlyconsidereda“relatedparty”underourRelatedPartyTransactionsPolicy.CertainaffiliatesofFidelityprovideservicestousinconnectionwiththerecordkeepingandadministrationofourstockplans(includingtheEmployeeStockPurchasePlanandtheLong-TermIncentivePlan).Wepaidtheseentitiesapproximately$354,000fortheseservicesforfiscal2019.Theadministrative services contracts were initially entered into prior to Fidelity’s Schedule 13G filing and 5 percent holderstatus. The contracts were negotiated at arm’s length, and there is no indication that the Company or Fidelity receivedpreferentialtreatmentasaresultoftherelationship.
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AUDITCOMMITTEEREPORTThekeyresponsibilityoftheAuditCommitteeistoassisttheBoardinoverseeingtheintegrityoftheCompany’sfinancialstatementsandfinancialreportingprocesses.TheAuditCommittee’scharter,whichwasapprovedbyourBoard,ispostedonourwebsiteatwww.investors.bestbuy.com.Duringfiscal2019,theAuditCommitteeincludedfourmembers.AllAuditCommittee members meet the SEC and NYSE definitions of independence and financial literacy for audit committeemembers. The Board has determined that Ms. McLoughlin and Mr. Millner are “audit committee financial experts” forpurposes of SEC rules based on their relevant experience. No member of the Audit Committee serves on the auditcommitteeofmorethanthreepubliccompanies.
CommitteeMeetings
The Audit Committee met nine times during fiscal 2019, including five times via conference call. The Audit Committeeschedules its meetings to ensure it has sufficient time to devote appropriate attention to all of its tasks. The AuditCommitteemeetingsincluderegularexecutivesessionswithourindependentregisteredpublicaccountingfirm,Deloitte&ToucheLLP(“D&T”),ourinternalauditorsandmanagement.TheAuditCommitteealsodiscusseswithourinternalauditorsandD&Ttheoverallscopeandplansfortheirrespectiveaudits.
TheAudit CommitteereviewedanddiscussedwithD&Tits independencefromusandourmanagement. Aspart of thatreview,theAudit CommitteereceivedfromD&Tthewrittendisclosuresandtheletter requiredbyapplicablerulesof thePublic Company Accounting Oversight Board (U.S.) regarding the independent accountant’s communications with auditcommitteesconcerningindependence.Inaddition,theAuditCommitteereviewedallservicesprovidedbyandtheamountof fees paid to D&T in fiscal 2019. In reliance on the reviews and discussions with management and D&T, the AuditCommitteebelievesthattheservicesprovidedbyD&Twerecompatiblewith,anddidnotimpair,itsindependence.
TheAuditCommitteeisdirectlyresponsiblefortheappointment,compensation,retentionandoversightoftheindependentregisteredpublicaccountingfirmretainedtoaudittheCompany’sfinancialstatements.Aspartofthisoversight,theAuditCommitteeconsidersthefirm’sindependence,qualifications,performance,andwhethertheindependentregisteredpublicaccounting firm should be rotated, as well as the impact of such a rotation. Deloitte & Touche LLP (“D&T”) has beenretained as our independent registered public accounting firm since fiscal 2006. In compliance with Sarbanes-Oxleyrequirements,theLeadAuditPartnerfromD&Trotatesoffouraccounteveryfiveyears,withoversightinselectionbytheAuditCommittee.ThelastLeadAuditPartnerrotationoccurredinMarch2016.TheAuditCommitteehasappointedD&TasourindependentregisteredpublicaccountingfirmforthefiscalyearendingFebruary1,2020.WewillaskshareholderstoratifytheappointmentofD&TasourindependentregisteredpublicaccountingfirmattheMeeting.RepresentativesofD&TareexpectedtoattendtheMeeting.Theywillhavetheopportunitytomakeastatementiftheydesiretodosoandareexpectedtobeavailabletorespondtoappropriatequestions.
PrincipalAccountantServicesandFees
The Audit Committee is responsible for the audit fee negotiations associated with the retention of our independentregisteredpublicaccountingfirm.ForthefiscalyearsendedFebruary2,2019,andFebruary3,2018,D&Tservedasourindependent registered public accounting firm. The following table presents the aggregate fees incurred for servicesrenderedbyD&Tduringfiscal 2019andfiscal 2018,respectively. Thefeeslistedbelowwerepre-approvedbyourAuditCommitteepursuanttotheAuditCommittee’spre-approvalpolicyasdescribedbelow:ServiceType Fiscal2019 Fiscal2018AuditFees(1) $ 2,912,000 $ 2,770,000Audit-RelatedFees(2) 654,000 334,000TaxFees — —TotalFees $ 3,566,000 $ 3,104,000
(1) Consists of fees for professional services rendered in connection with the audits of our consolidated financial statements and theeffectivenessofourinternalcontroloverfinancialreportingforthefiscalyearsendedFebruary2,2019,andFebruary3,2018;thereviewsoftheconsolidatedfinancialstatementsincludedineachofourQuarterlyReportsonForm10-Qduringthosefiscalyears;andconsultationsonaccountingmatters.
(2) Consists primarily of fees for statutory audit filings, as well as the audits of our retirement savings plans andfoundation, as well as duediligenceservicesrelatedtotheacquisitionofGreatCall,Inc.forthefiscalyearendedFebruary2,2019.
It is our policy that our independent registered public accounting firm be engaged to provide primarily audit and audit-relatedservices.However,pursuanttothepolicy,incertaincircumstancesandusingstringentstandardsinitsevaluation,the Audit Committee may authorize our independent registered public accounting firm to provide tax services when itdeterminesthatD&Tisthemostefficientandeffectivetaxserviceprovider.
Pre-ApprovalPolicy
ConsistentwithSECrulesregardingauditorindependence,theAuditCommitteeisresponsibleforappointing,settingfeesforandoverseeingtheworkofourindependentregisteredpublicaccountingfirm.InrecognitionofthisresponsibilityandinaccordancewiththeSecuritiesExchangeActof1934,asamended,itisthepolicyoftheAuditCommitteetopre-approveall permissible services provided by our independent registered public accounting firm, except for minor audit-relatedengagements which in the aggregate do not exceed 5 percent of the fees we pay to our independent registered publicaccountingfirmduringafiscalyear.
Each year, prior to engaging our independent registered public accounting firm, management submits to the AuditCommitteeforapprovalalistofservicesexpectedtobeprovidedduringthatfiscalyearwithineachofthethreecategoriesofservicesdescribedbelow,aswellasrelatedestimatedfees,whicharegenerallybasedontimeandmaterials.
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Audit services include audit work performed on the financial statements, as well as work that generally only theindependent registered public accounting firm can reasonably be expected to provide, including comfort letters anddiscussionssurroundingtheproperapplicationoffinancialaccountingand/orreportingstandards.
Audit-related services include assurance and related services that are traditionally performed by the independentregisteredpublicaccountingfirm,includingduediligencerelatedtomergersandacquisitions, statutoryaudits, employeebenefitplanauditsandspecialproceduresrequiredtomeetcertainregulatoryrequirements.
Tax services include compliance and other non-advisory services performed by the independent registered publicaccountingfirmwhenitismostefficientandeffectivetousesuchfirmasthetaxserviceprovider.
Asappropriate,theAuditCommitteethenpre-approvestheservicesandtherelatedestimatedfees.TheAuditCommitteerequires our independent registered public accounting firm and management to report actual fees versus the estimateperiodically throughout the year by category of service. During the year, circumstances may arise when it becomesnecessary to engage our independent registered public accounting firm for additional services not contemplated in theinitial annual proposal. In those instances, the Audit Committee pre-approves the additional services and related feesbeforeengagingourindependentregisteredpublicaccountingfirmtoprovidetheadditionalservices.
BoardVotingRecommendation
The members of the Audit Committee and the Board believe that the continued retention of D&T to serve as theCompany’s independent registeredpublic accountingfirmis in thebest interests of theCompanyandour shareholders.TheBoard recommends that shareholders voteFORthe proposal to ratify the appointment of D&Tas our independentregisteredpublicaccountingfirmforthefiscalyearendingFebruary1,2020.
AlthoughratificationisnotrequiredpursuanttoourBy-lawsorotherwise,theBoardissubmittingtheselectionofD&Ttoour shareholders for ratification because we value our shareholders’ views on the Company’s independent registeredpublicaccountingfirm.IftheappointmentofD&Twerenottoberatifiedbytheshareholders,theAuditCommitteewouldnot be required to appoint another independent registered public accounting firm, but would give consideration to anunfavorablevote.Eveniftheselectionisratified,theAuditCommittee,initsdiscretion,mayselectadifferentindependentregistered public accounting firm at any time during the year if it determines that such a change would be in the bestinterestsoftheCompanyandourshareholders.
InformationAbouttheAdvisoryVotetoApproveNamedExecutiveOfficerCompensationTheCompensation Committee establishes, recommends andgoverns all of the compensation andbenefits policies andactionsfortheCompany’sNEOs.Whiletheadvisoryvotetoapprovethecompensationofournamedexecutiveofficersisnotbinding,itprovidesusefulinformationtoourBoardandCompensationCommitteeregardingourshareholders’viewsofour executive compensation philosophy, policies and practices. The Compensation Committee values our shareholders’opinionsandwill taketheresultsofthevoteintoconsiderationwhendeterminingthefuturecompensationarrangementsforournamedexecutiveofficers.AttheCompany’s2018RegularMeetingofShareholders,ourshareholdersvotedtoholdthenon-bindingshareholdervotetoapprovethecompensationofournamedexecutiveofficerseachyear.Accordingly,theCompanycurrentlyintendstoholdsuchvotesannually.ThenextsuchvoteisexpectedtobeheldattheCompany’s2020RegularMeetingofShareholders.
AsdetailedintheExecutiveandDirectorCompensation—CompensationDiscussionandAnalysissection,webelieveourfiscal2019executivecompensationprogramreflectsmarketappropriatepracticesandbalancesriskandrewardinrelationto our overall business strategy. Our executive compensation programis focused on pay-for-performance and seeks tomitigaterisksrelatedtocompensationinordertofurtheralignmanagement’sinterestswithshareholders’interestsinlong-termvaluecreation.
Accordingly,weaskthatourshareholderscastanadvisoryvotetoapprovethefollowingresolution:RESOLVED,thattheshareholdersoftheCompanyapprove,onanadvisorybasis,thecompensationofthenamedexecutiveofficersforthefiscalyearendedFebruary2,2019,asdescribedintheExecutiveand Director Compensation — Compensation Discussion and Analysis section and the compensationtablesandrelatedmaterialdisclosedintheCompany’sproxystatementforits2019RegularMeetingofShareholders pursuant to the compensation disclosure rules of the Securities and ExchangeCommission.
InApril2019,weannouncedseveraladditionalchangestoourleadershipteam.FollowingtheMeetinginJune,Ms.Barrywill become our CEO. Mr. Joly will continue to serve as an advisor to Ms. Barry and as our Executive Chairman. Mr.Nelsen transitioned to an advisory role through September 2019 in support of his successor, Mr. Todd Hartman, ourGeneralCounsel,ChiefRisk&ComplianceOfficerandSecretary.
We believe the high level of support we received from shareholders for the last several years is driven in part by ourperformanceandinpartbyourcontinuedcommitmenttoalignpayandperformance.Inthefalloffiscal2019,followingour2018 Meeting, we reached out to all of our top twenty shareholders, representing approximately 65 percent of ouroutstandingshares,offeringtodiscussanyquestionsorconcernsregardingexecutivecompensationpracticesandothergovernanceissues.Asaresultoftheseoutreachefforts,weengagedindirectconversationswithseveralshareholderstoanswerquestions,providecommentaryonthecompensationdecisionsmadeduringtheyear,andreceivedfeedbacktobeconsideredwhenmakingfuturedecisions.Further,asdiscussedintheCorporateGovernanceatBestBuy—ShareholderEngagementsection,weregularlyengagewithourshareholdersthroughouttheyearregardingtheirvariouspriorities,andwewelcometheirfeedbackonourpracticesandpolicies.
• We tie pay to performance by setting clear financial goals and delivering the majority of each NEO’scompensation opportunity through variable incentives in which payout is based on performance againstpredeterminedgoalsorabsoluteandrelativechangesinourstockpriceovertime.
• A significant amount of our long-term incentive program is performance based, and long-term and short-termincentivescompriseamajorityofourtotalcompensationopportunity(92percentfortheCEOand82percent,onaverage,fortheotherNEOs).
• Our clawback policy provides for potential recoupment of both cash and equity executive compensation in theeventoftriggeringevents,suchasviolationsofourCodeofBusinessEthicsorcertainfinancialrestatements.
In fiscal 2018, wedeclared RenewBlue complete andunveiled a newstrategy: Best Buy 2020: Building the NewBlue.Takingthestrongfiscal2018resultsintoaccount,inMarch2018,theCompensationCommitteemadeafewadjustmentsto the NEOcompensation for fiscal 2019compensation. A summary of the changesis includedbelowandexplainedinfurtherdetailwithinourCompensationDiscussionandAnalysis:
• Short-TermIncentives:Wemade no changes to the short-term incentive plan target payout percentages otherthan an increase to Ms. Scarlett’s payout percentage, commensurate with her increased responsibilities. TheCommitteealsomadesomechangestomorecloselyaligntheperformancemetricswithourstrategy.
• Other Compensation:We made no material changes to the employee benefits, perquisites or other rewardsofferedtoourNEOs.
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Fiscal2019PayandPerformanceOutcomes
In fiscal 2019, we made significant progress on implementing our Best Buy 2020 strategy to enrich lives throughtechnology and further develop our competitive differentiation. We believe that our fiscal 2019 results confirm that ourstrategyisworking.Onafull-yearbasisinfiscal2019,wegrewourenterprisecomparablesalesby4.8percentontopof5.6percentinfiscal2018,increasedGAAPdilutedEPSby59.5percentto$5.20andincreasedournon-GAAPdilutedEPSby20.4percentto$5.32*.Inaddition,werecordedannualrevenueof$42.9billion,GAAPoperatingincomeof$1.9billionand non-GAAP operating income of $2.0 billion in fiscal 2019.* With these results, we essentially met our fiscal 2021targets providedat our Investor Dayin 2017twoyearsearlier thananticipated. Fromacapital allocationstandpoint, wereturned$2.0billiontoourshareholderthroughsharerepurchasesanddividends.Inadditiontotheseresults,thefollowingperformancemeasuresweretiedspecificallytothecompensationofourexecutivesandresultedintheshort-termincentiveandlong-termincentiveawardpayoutsshownbelow.
Enterprise Revenue was added to the Performance Share Award mix in fiscal 2018. The first year of potential payoutapplyingthismetric will beinfiscal 2020.Theseawardsandpayoutsareexplainedinfurther detail withintheExecutiveCompensationElementssectionofthisproxystatement.
*For GAAP to non-GAAP reconciliations, please refer to the schedule entitled Reconciliation of Non-GAAP FinancialMeasures.
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CompensationChangesRelatedtoCEOSuccession
AspartofourrecentlyannouncedCEOsuccessionplaneffectiveattheendoftheMeeting,Mr.Joly’sannualbasesalarywill decreaseto$650,000,andhisannualshort-termincentiveawardtargetwill decreaseto100%ofbasesalaryfortheportionoftheyearheholdsthepositionofExecutiveChair.HewillcontinuetoparticipateinallbenefitprogramsavailabletotheCompany’sseniorexecutives.UponherpromotiontoCEO,Ms.Barry’sbasesalarywillincreaseto$1.1millionandherannualshort-termincentiveawardtargetwillincreaseto175%ofbasesalaryfortheportionoftheyearsheholdstheposition of CEO. Upon her promotion, Ms. Barry will also receive a true-up equity award with a target value of $5.475million comprised of 50% of the value in performance shares, 20% in stock options, and 30% in restricted shares,consistentwiththefiscal2020annualawards.UponMr.Mohan’spromotiontoPresidentandChiefOperatingOfficer,hisbasesalarywillincreaseto$1millionandhisshort-termincentiveawardtargetwillincreaseto160%ofbasesalaryfortheportionoftheyearheholdsthisrole.Atthetimeofthispromotion,Mr.Mohanwillalsoreceiveatrue-upequityawardwithatargetvalueof$2.475millioncomprisedof50%ofthevalueinperformanceshares,20%instockoptions,and30%inrestrictedshares,consistentwiththefiscal2020annualawards.Mr.Mohanwillalsoreceiveaadditionalgrantofrestrictedshares valued at $2.5 million that will vest in full on the second anniversary of the grant date. Consistent with theCompensation Committee’s approach in setting annual compensation levels, in determining these compensationadjustments, the Compensation Committee considered each NEO’s prior performance, Company performance, thecompensation levels paid to similarly situated executive officers at the Company, the competitive median of the marketdata to provide a perspective on external practices, and input from the Compensation Committee’s independentcompensationconsultant.AdditionaldetailsregardingourCEOsuccessionplanandrelatedcompensationwasdisclosedinaCurrentReportonForm8-KfiledbytheCompanyonApril15,2019.
• Mitigateunduerisk.Wemitigateundueriskby,amongotherthings,utilizingcapsonincentiveawardpaymentsand vesting periods on long-term incentive awards, clawback provisions, restrictive covenants and multipleperformancemetrics.TheCompensationCommitteeannuallyreviewsourcompensationriskprofiletoensurethatourcompensation-relatedrisksarenotreasonablylikelytohaveamaterialadverseeffectontheCompany.
• Independent Compensation Committee and compensation consultant. The Compensation Committee iscomprisedsolelyofindependentdirectors.TheCompensationCommittee’sindependentcompensationconsultantis retaineddirectly by the Compensation Committee andperforms noother consulting or other services for theCompany.
• Re-pricingofstockoptions.Stockoptionsmaynot,withouttheapprovalofourshareholders,be(i) amendedtoreducetheirinitialexerciseprice(exceptforadjustmentsinthecaseofastocksplitorsimilarevent);(ii)canceledand replaced by stock options having a lower exercise price; or (iii) canceled and replaced with cash or othersecurities.
• Stock ownership and trading policies.Wehave stock ownership guidelines for all of our executive officers andBoardmembers.Asoftheendoffiscal2019,eachNEOanddirectorwasincompliancewiththeguidelines.Weprohibit all employees, including the NEOs and members of the Board, from hedging Company securities.ExecutiveofficersandBoardmembersarealsoprohibitedfrompledgingCompanysecuritiesascollateral for aloanorfromholdingCompanysecuritiesinamarginaccount.
TheCompensationCommitteereviewedtheindependenceofFredericW.Cook&Co.,Inc.underNYSEandSEClistingstandards. Based on its reviewand information provided by Frederic W. Cook & Co., Inc. regarding the provision of itsservices, fees, policies and procedures, presence (if any) of any conflicts of interest, ownership of Best Buy stock, andother relevant factors, the Compensation Committee concluded that the work of Frederic W. Cook & Co., Inc. has notraisedanyconflictsofinterestanddeemedthemtobeanindependentadvisortotheCompensationCommittee.
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FactorsinDecision-Making
MarketCompetitiveData.Forfiscal2019,eachelementofcompensationandtheleveloftotaldirectcompensationforourNEOs was considered against market benchmarks and views of individual performance. Our Compensation Committeereviewed publicly available compensation data and private surveys for our peer group of companies, Fortune 100companiesandgeneralandretailindustrysurveydata.Weusedavailableinformationandmonitoredactionstakenbyourpeergrouptoevaluatemarket trendsandtoassessthelong-termincentiveprogramandoverall competitivenessof ourexecutivecompensationlevels.Wedidnot,however,seektoestablishanyspecificelementofcompensationortotaldirectcompensationthatfallswithinaprescribedrangerelativetoourpeergroupofcompaniesortheFortune100companies.
Change in Peer Group for Fiscal 2019.We review our peer group annually. The Compensation Committee strives toensurethatourpeergroupisanaccuratereflectionofourbusinessmodel,representsthelabormarketforexecutivetalentand includes external perspectives. For fiscal 2019, the peer group was approved after consideration of the followingcriteria:
• Current peers: preference, but not obligation, towardconsistency in aneffort to maintain reliability fromyear toyearintheresultsofourcompensationanalysis;and
The Compensation Committee considered the Company’s position relative to the peer group on the basis of earnings,revenueandmarketcap,andmadenochangestoourpeergroupforfiscal2019fromfiscal2018.Forfiscal2019,ourpeergroupconsistedofthefollowingcompanies:Alphabet,Inc. Kohl’sCorporation OfficeDepot,Inc.Amazon.com,Inc. Lowe’sCompaniesInc. Staples,Inc.AppleInc. Macy’s,Inc. TargetCorporationCostcoWholesaleCorporation MicrosoftCorporation Wal-Mart,Inc.eBayInc. Nike,Inc. WalgreensBootsAlliance,Inc.TheHomeDepot,Inc. Nordstrom,Inc.
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ExecutiveCompensationElements
Overview. Our NEOs’ compensation in fiscal 2019 included the following elements (for additional details on specificawards,seethediscussionbelowandtheCompensationofExecutiveOfficers—SummaryCompensationTablesection):CompensationComponent KeyCharacteristics Purpose PrincipalFiscal2019ActionsBaseSalary Cash;reviewedannually
Fiscal2019PayMix.TheCompensationCommitteeemphasizesvariableperformance-basedpaywhensettingthetargetpaymixforourexecutiveofficers,butdoesnotestablishasetpaymixforthem.Thetargetpaymixforfiscal2019forourCEOand other NEOs, on average, is shown below. Actual salary levels, STI awards (discussed in further detail in theShort-TermIncentivesection)andLTIawards(discussedinfurtherdetailintheLong-TermIncentive
Each element in the pay mix is discussed below and shown in the Summary Compensation Table as found in theCompensationofExecutiveOfficerssectionofthisproxystatement.
(1) Ms. Scarlett’s salary increased twice during the year: from $550,000 to $700,000 in April 2018, and to $800,000 in January 2019 inconnectionwithherroleasPresident,U.S.RetailStores.
Short-Term Incentive
Ourexecutivecompensationprogramsaredesignedtoensurethatasignificantpercentageoftotalcompensationislinkedto Company performance. For fiscal 2019, the NEOs were eligible for performance-based, short-term incentive cashawardspursuanttoourfiscal2019STIplan.
Fiscal 2019 STI Performance Criteria. In December 2017, the Compensation Committee approved the performancemetricsforthefiscal2019STIplan.Forfiscal2019,theCompensationCommitteeapprovedsimilarperformancemetricsasinfiscal2018,exceptdomesticservicesproductiverevenuewasreplacedwithdomesticservicespointofsalerevenue.Thereasonforthischangewastoalignthetimingofrecognitionofservicesrevenuewithsalesbehaviorsandcustomeractions.Theothermetricsforfiscal2019remainedconsistentwithfiscal2018.
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Accordingly, financial metrics under the fiscal 2019 STI were: compensable enterprise operating income, enterprisecomparablesalesgrowth,U.S.netpromoterscore,U.S.onlinerevenuegrowth,U.S.servicespointofsalerevenue,andU.S.costreduction.STIMetric MetricWeighting DefinitionCompensableEnterpriseOperatingIncome
InMarch2018,theCompensationCommitteeapprovedtheperformancegoalsforeachmetric.Theminimum,targetandmaximum goals for each metric were evaluated to ensure they would incent the desired level of performance for eachpriority. For some metrics, this evaluation resulted in changes to the minimum, target, and maximum goals in light ofanticipatedyear-over-yearindustrytrends,productcycles,andothermarketfactors.
Thefollowingchartshowsactualfiscal2019performancecomparedtotheminimum,targetandmaximumgoalsforeachmetric. Minimumperformanceagainst thegoal results in anopayout, Target performanceresults in a1.00payout, andMaximum performance results in a 2.00 payout. The final metric score is interpolated as an exact point somewherebetween0.00and2.00.Thechartalsoincludesthesameinformationfromfiscal2018,ifapplicable(aspresentedinlastyear’sproxystatement)toillustratehowthegoalschangedandhowouractualperformancecomparedtolastyear.
(2) Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of$1,988millioninourAnnualReportonForm10-Kforfiscal2019,adjustedfordifferencesfromtargetedforeignexchangerates.
(3) Compensable Enterprise Operating Income was determined based on the non-GAAP operating income from continuing operations of$1,953millioninourAnnualReportonForm10-Kforfiscal2018,adjustedfordifferencesfromtargetedforeignexchangerates.
(4) U.S. Net Promoter score is a customer experience metric that measures a customer’s likelihood to recommend Best Buy. Methods ofmeasuringU.S.NetPromoterScorecandifferwidelyamongdifferentretailers,withmanyretailersmeasuringonlypurchasersatisfaction;however, we measure both purchasing and non-purchasing customers across our sales channels and therefore our total score may belowerthanothercompaniesasnon-purchaserresultsaremateriallylowerthanthoseofpurchasers.
(6) U.S. Services Productive Revenue is the net revenue associated with sales of warranty, tech support, services, and installation, butexcludingdeliveryandreimbursementrevenue.
Forfiscal2019,thetieredtargetopportunitieswere100percentto200percentofsalary.ThetargetpayoutpercentagesforeachNEOremainedthesameasinfiscal2018,exceptforMs.ScarlettwhoseSTIincreasedatthesametimeasherbase salary increased. For each of the metrics, the NEOs could earn zero to two times their weighted target payoutpercentageforthatmetric.
Preview — Fiscal 2020 STI Performance Metrics. In December 2018, the Compensation Committee approved theperformancecriteriaintheformofmetricsforthefiscal2020STI,asfollows:
• CompensableEnterpriseOperatingIncome—40%
• EnterpriseRevenueGrowth—30%
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• BestBuy2020Priorities:
• RelationshipNetPromoterScore—15%
• DomesticCostReduction–15%
Long-Term Incentive
Awardsofequity-basedLTIcompensationtoourexecutiveofficersenhancethealignmentof interestsof ourNEOsandshareholders. All LTI awards for our NEOsanddirectors must be approvedby the Compensation Committee. In March2018, the Compensation Committee approved long-term incentive awards to our NEOs pursuant to our fiscal 2019 LTIprogramunderourAmended&Restated2014OmnibusIncentivePlan.
Thefiscal2019LTIprogramfeaturedamixofperformanceshareawards,performanceconditionedtime-basedrestrictedshares, and stock options. This results in a balanced portfolio of compensation rewards consisting of, for the CEO, 50percent performance share awards based on relative total shareholder return (to reward relative performance) andenterpriserevenuegrowth(torewardgrowth),30percentperformance-conditionedtime-basedrestrictedshares,basedonadjustednetearnings(torewardearningsandpromoteretention),and20percentstockoptions(torewardabsoluteshareprice appreciation), as shown below. The mix for the other NEOs was 50 percent performance share awards and 50percent performance-conditioned time-based restricted shares, both with the same performance metrics as the CEO’sawards.
Formof Fiscal 2019LTI Award.TheNEOsreceive an LTI grant once per year at a regularly scheduled CompensationCommittee meeting that typically occurs in the first quarter of our fiscal year. In fiscal 2019, the closing price of ourcommonstockonthegrantdatewasusedtoconverttheawarddollarvaluetoanumberofunits.
In March 2018, the Compensation Committee approved the addition of dividend equivalents to restricted stock andperformanceshareawards.Thesedividendequivalentsbegintoaccrueforeachdeclareddividendfollowingthegrantbutarenotconvertedintodividendsuntiltherestrictedsharesunderlyingthegrantsareearned,vestedorpayable.
Determination of Fiscal 2019 LTI Target Award Values . The Compensation Committee approved the executive team’sfiscal2019compensation,whichincludedincreasedtargetawardvaluesforMr.Joly,Ms.Barry,Ms.Ballard,Mr.MohanandMs.Scarletttoreflectincreasedresponsibilities,rolechangesandmarketadjustments.
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LTI award amounts are determined based upon analysis of external market data, with overall compensation mix andexternalmarketdataforequivalentrolesbeingkeyfactorsinthedeterminationoftheawardmadetoeachNEO.Thefiscal2019LTIawardsforeachNEOaresetforthbelow:
(1) Ms. Scarlett received her annual LTI grant in March 2018, before her promotion, plus a stock option grant with a 4-year cliff vesting inJanuary2019inrecognitionofherincreasedresponsibilities.ThegrantdatevaluereflectsherannualLTItargeteffectiveforfiscal2020.
PerformanceShareAwards.Theperformanceshareawardsareearnedbasedontwometrics: half ontotal shareholderreturn (“TSR”) relative to the S&P 500 Index and the other half on enterprise revenue growth, both over a three-yearperiod.TSRwasselectedasoneofthemetricsbasedonitsdirectlinktoshareholdervaluecreation.TheS&P500wasused as a proxy for the broad variety of other investment opportunities available to investors. The relative TSRperformancegoalswereasfollows:
The number of performance shares earned are interpolated on a linear basis for performance between Threshold andTargetandbetweenTargetandMaximum.
The other half of the performance share awards are earned based on the compound annual growth rate of enterpriserevenueoverthethreefiscalyearsendingontheendoffiscal2021.TheCompensationCommitteechosethismetricinfiscal2017tosharpenourfocusonprofitablegrowthandtofurtheralignourperformancemetricswithourBestBuy2020growth strategy. The Committee believes this metric is an effective measurement of Company performance, particularlywhen combined with our TSR based awards. Although the Committee has not specifically assessed the probability ofachieving any performance metric, based on the Company’s historical results and its assessment of the Company’sstrategy,it believesachievingtargetperformanceunderthisawardisreasonablyattainablewhileprovidingappropriatelychallengingincentives,andthatachievingmaximumperformancewouldbedifficult.Shareswillbeearnedunderthismetricasfollows: No.ofSharesEarned(as%ofTarget)LessthanThreshold —%ThresholdtoTarget 50%to100%TargettoMaximum 100%to150%AboveMaximum 150%
Performance-conditioned Time-based Restricted Share Awards. The performance-conditioned time-based restrictedsharesalsovest in equal installments of one-third onthethreesuccessiveanniversaries of thegrant date, providedtheperformanceconditionhasbeenmetinanyfiscalyearduringthetermoftheaward.Theperformanceconditionwasaddedtothetime-basedrestrictedsharestofurtheraligncompensationwithshareholderinterests.Thevestingofthesesharesisconditioned upon the Company’s achievement of positive Adjusted Net Earnings. Adjusted Net Earnings means netearningsdeterminedinaccordancewithGAAP,adjustedtoeliminatethefollowing:(1)the
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cumulative effect of changes in GAAP; (2) gains and losses from discontinued operations; (3) extraordinary gains andlosses; and (4) other unusual or nonrecurring gains or losses which are separately identified and quantified, includingmerger-relatedcharges.AchievementofpositiveAdjustedNetEarningsmayoccurinanyfiscalyearduringthetermoftheawardfortheawardtobegintovest.Forexample,iftheperformanceconditionisnotachieveduntilyeartwo,two-thirdsofthe award will vest following Compensation Committee approval of achievement of the performance condition, with theremainingone-thirdtovestinthethirdyearoftheaward.
StockOptions.Thenon-qualifiedstockoptionsgrantedtoMr.JolyandMs.Scarletthaveatermoftenyearsandbecomeexercisable over either a three-year period at the rate of one-third per year, beginning one year from the grant date orbecomefullyvestedafterafour-yearperiod,subjecttobeingemployedonthevestingdate.Theexercisepriceforsuchoptionsisequaltotheclosingpriceofourcommonstockonthegrantdate,asquotedontheNYSE.UnderthetermsoftheAmendedandRestated2014OmnibusIncentivePlan,wemaynotgrantstockoptionswithastrikepriceatadiscounttofairmarketvalue.UnlessotherwisedeterminedbytheCompensationCommittee,“fairmarketvalue”asofagivendateistheclosingpriceofourcommonstockasquotedontheNYSEonsuchdateor, if theshareswerenottradedonthatdate,themostrecentprecedingdatewhenthesharesweretraded.
Performance Share Payout. In March 2015, the Compensation Committee adopted a performance share plan design,basedonrelativeTSRversustheS&P500Indexoverthe36-monthperiodfromMarch1,2015toFebruary28,2018.Thesharesvested(0to150%)afterthethree-yearperiodif theperformancecriteriawasmet. BecausetheCompany’sTSRduringtheperformanceperiodexceededthe70thpercentileofallcompaniesintheS&P500,thesesharespaidoutatthemaximumof150percentinfiscal2019andarereflectedintheCompensationofExecutiveOfficers—OptionExercisesandStockVestedsection.
Canadian Special Award. In January 2016, the Compensation Committee approved a special cash-based long-termincentive plan for the Best Buy Canada executive team which was tied to the profitability of our Canadian business,specifically thelevel of Canadianoperatingincomeachievedduringfiscal 2019. Prior tobecomingtheCompany’sChiefHumanResourcesOfficerinJune2017,Ms.ScarlettwastheSeniorVicePresidentofRetailandChiefHumanResourcesOfficerforBestBuyCanadaandwas,therefore,eligibleforaproratedpayoutunderthisawardforhertimeinthatrole.Ms.Scarlett’spayoutunderthisawardisreflectedintheCompensationofExecutiveOfficers—SummaryCompensationTablesection.
Weprovidetheexecutivebenefitsnotedabovetocompeteforexecutivetalentandtopromotethehealth,well-beingandfinancial security of our NEOs. Adescription of executive benefits, andthecosts associatedwith providing themfor theNEOs, are reflected in the “All Other Compensation” column of the Summary Compensation Table as found in theCompensationofExecutiveOfficerssectionofthisproxystatement.
PrivateJetUsePolicy.InJune2018,theAuditCommitteeadoptedaPrivateJetUsePolicygoverningtheuseofprivatejetservices bytheCEO.Under thepolicy, only theCEOis allowedtorequest private jet services for businessor personaltravel. Whenrequestingthejet for personal travel, thepolicydictatesthat Mr. Jolypaythejet providerdirectly for thoseservices. Forflightsthat will befor bothbusinessandpersonal purposes, Mr. Jolyis toreimbursetheCompanyfor anyamountsthatdonotqualifyasbusinessexpense,uptoanylimitationsimposedbytheFederalAviationAdministration.
Severance Plan.We have a severance plan that complies with the applicable provisions of the Employee RetirementIncomeSecurityAct(“ERISA”). Thepurposeoftheseveranceplanistoprovidefinancial assistancetoemployeeswhiletheyseekotheremployment,inexchangeforareleaseofanyclaims.Althoughtherearedifferencesinbenefitsdependingontheemployee’sjoblevel,thebasicelementsoftheplanarecomparableforalleligibleemployees.Theplangenerallycoversallfull-timeandpart-timeU.S.employeesofBestBuyCo.,Inc.andBestBuyStores,L.P.andtheirrespectivedirectandindirectU.S.-domiciledsubsidiaries,includingtheNEOs,exceptforthosesubjecttoaseparateseveranceagreementorspecificallyexcluded.
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 severancepayment basedontheir role andtimewith theCompany, with basic employeebenefits suchasmedical, dental andlifeinsurancecontinuedfor anequivalent period. Except asmodifiedorreplacedbyindividual employmentagreements, theNEOs (other than Mr. Joly and Ms. Barry who currently have employment agreements) are eligible for the followingseverancebenefits:Mses.BallardandScarlettandMessrs.MohanandNelsen,atanenterpriseexecutivevicepresidentlevel,areeligiblefortwoyearsofsalary,apaymentof$25,000inlieuofoutplacementandothertaxandfinancialplanningassistance,andapaymentof150%ofthecostof24monthsofbasicemployeebenefitssuchasmedical,dentalandlifeinsurance.
See Compensation of Executive Officers - Potential Payments Upon Termination or Change-of-Control for moreinformationregardingpotentialpaymentsfollowinganinvoluntaryterminationandfortheseveranceprovisionsofMr.Joly’sandMs.Barry’semploymentagreements.Uponherdeparture,Ms.Ballarddidnotreceiveanyseverancepayments.
Executive Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines topromotethealignmentof officer andshareholderinterestsandtoencouragebehaviorsthat haveapositiveinfluenceonstockpriceappreciationandtotalshareholderreturn.Undertheguidelines,weexpectourNEOstoacquireownershipofafixednumberofshares,basedontheirpositions.Thestockownershipexpectationgenerallyremainseffectiveforaslongastheofficerholdstheposition.
• 50%of theintrinsic valueof vestedstockoptions(denominatedasanumber of shares) grantedunder our LTIprogram.
Werequirethatuntiltheownershiptargetismet,NEOswillretain:(i)50%ofthenetproceedsreceivedfromtheexerciseofastockoptionintheformofBestBuycommonstock;(ii)50%ofvestedtime-basedrestrictedshares(netoftaxes);and(iii) 50%of all performanceshareawards(net of taxes) issued. Theownership target doesnot needto bemet within acertain time frame, and our NEOs are considered in compliance with the guidelines as long as progress towards theownershiptargetisbeingmadeconsistentwiththeexpectationsnotedabove.
TaxDeductibility of Compensation.Until recently, Section 162(m) of the Internal Revenue Code (“Section 162(m)”) haslimitedthedeductibility of compensationinexcessof $1millionpaidtothechief executiveofficer andeachof our threemost highly compensated executive officers (other than the chief financial officer), unless the compensation qualifies as“performance-basedcompensation.”TheTaxCutsandJobsActof 2017amendedSection162(m)withrespecttofiscalyears beginning after December 31, 2017 to remove the performance-based compensation exception and expand thescopeof Section 162(m) to apply to our chief financial officer andcertain other NEOs, other thanin the caseof certainarrangementsinplaceasofNovember2,2017,whichqualifyfortransitionrelief.TheCommitteehashistoricallyattemptedtostructureitscompensationarrangementstoachievedeductibility underSection162(m)oftheInternal RevenueCode,unlessthebenefitofsuchdeductibilitywasconsideredbytheCommitteetobeoutweighedbytheneedforflexibilityortheattainmentofotherobjectives.AswasthecasepriortotheenactmentoftheTaxCutsandJobsAct,theCommitteewillcontinue to monitor issues concerning the deductibility of executive compensation. We do not, however, makecompensationdecisionsbasedsolelyontheavailabilityofadeductionunderSection162(m).Accordingly,weexpectthatatleastaportionofthecompensationpaidtoourNEOsinexcessof$1millionperofficerwillbenon-deductible.
ForpurposesofSection162(m),wecreatedasub-planunderourAmended&Restated2014OmnibusIncentivePlanforour fiscal year endedFebruary 2, 2019. The sub-plan sets the maximumaward pool for the CEOand five other NEOs(excludingtheCFO)at7percentofadjustednetearningstoaligncompensationwithshareholderinterests.Themaximumpotentialindividualallocationsfromthatpoolweresetat2percentfortheCEOand1percentforeachofthethreeotherNEOs (excluding the CFO). The Committee then used negative discretion to reduce the amounts that were potentiallypayableunderthesub-planawardpooltoequalamountsbasedonachievementofSTIplanmetrics.
ClawbackandRestrictiveCovenantProvisions.AllSTIandLTIawardsgrantedtoourNEOsaresubjecttoourclawbackpolicy. Thetriggersfor potential recoupment of suchawardsincludebreachof therestrictive covenantsinourlong-termincentiveawardagreements,breachofourCodeofBusinessEthics,andissuanceofafinancialrestatementasaresultoffraud or misconduct. We also include confidentiality, non-compete, non-solicitation and, in select situations, non-disparagementprovisionsinourlong-termincentiveawardagreements.
ProhibitiononHedgingandPledgingCompanySecurities.Weprohibitallemployees,includingNEOs,andmembersoftheBoardfromhedgingCompanysecurities,includingbywayofforwardcontracts,equityswaps,collars,exchangefundsorotherwise. In addition, our executive officers and Board members are prohibited from holding Company securities in amarginaccountorpledgingCompanysecuritiesascollateralforaloan.
TheCompensationCommitteehasreviewedanddiscussedtheCompensationDiscussionandAnalysiswithmanagement.Basedonthis reviewanddiscussion, the Compensation Committee recommendedto the Board that theCompensationDiscussion and Analysisbe incorporated by reference into our Annual Report on Form 10-K for the fiscal year endedFebruary2,2019,andinthisproxystatement.
The Compensation Committee is comprised entirely of independent directors. At no time during fiscal 2019 was anymemberoftheCompensationCommitteeacurrentorformerofficeroremployeeoftheCompanyoranyofitssubsidiaries.Duringfiscal2019,nomemberoftheCompensationCommitteehadarelationshipthatmustbedescribedpursuanttoSECdisclosurerulesonrelatedpartytransactions.Infiscal2019,noneofourexecutiveofficersservedontheboardofdirectorsor compensation committee of another company that had one or more executive officers serving on our Board orCompensationCommittee.
(1) Theseamountsreflectactualearningsbasedonablendofpriorannualbasesalaryratesandthego-forwardbasesalaryratesapprovedbythe Compensation Committee during its annual review in March of each year, as well as any off-cycle increases approved by theCompensationCommitteeduringtheyear.Further,theseamountsarebeforeanydeferralsundertheDeferredCompensationPlan.Wedonot provide guaranteed, above-market or preferential earnings on compensation deferred under the Deferred Compensation Plan. TheinvestmentoptionsavailablefornotionalinvestmentofdeferredcompensationaresimilartothoseavailableundertheRetirementSavingsPlanandcanbefound,alongwithadditionalinformationaboutdeferredamounts,intheNonqualifiedDeferredCompensationsection.
(2) These amounts reflect the aggregate grant date fair value for stock-based awards granted to our NEOs for all fiscal years reflected;however,fiscal2019amountsareexplainedingreaterdetail undertheheadingGrantsofPlan-BasedAwards.Thegrantdatefairvaluereflectedforanyawardsubjecttoperformanceconditionsisthevalueatthegrantdateoftheprobableoutcomeoftheaward.ThegrantdatefairvalueofanawardismeasuredinaccordancewithFinancialAccountingStandardsBoardAccountingStandardsCodificationTopic718,Compensation-StockCompensation (“ASCTopic 718”). Theamounts reportedhavenot beenadjustedto eliminateservice-basedforfeitureassumptions.TheotherassumptionsusedincalculatingtheseamountsaresetforthinNote7,Shareholders’Equity,oftheNotestoConsolidatedFinancialStatementsincludedinourAnnualReportonForm10-KforthefiscalyearendedFebruary2,2019.
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(3) Thefiscal2019amountsreflectedinthiscolumnincludetheprobablegrantdatefairvalueof:(a)oneormorerestrictedshareawardsthatvestonatime-basedschedulesubjecttoachievementofpositiveadjustednetearningsinanyfiscalyearduringthethree-yeartermoftheaward(describedingreaterdetailintheGrantsofPlan-BasedAwardssection),and(b)oneormoreperformanceshareawardsthatwillbeearneddependingontheperformanceof our stock’s total shareholder return, relativetotheS&P500Index, over athree-year periodordependingonthecompoundannualgrowthrateofourenterpriserevenueoverathree-yearperiod(alsodescribedingreaterdetailintheGrantsofPlan-BasedAwardssection).ThemaximumvalueoftheperformanceshareawardsforeachNEOasofthegrantdate,assumingthehighestlevelofperformance,isnotedinthefollowingtable:
(4) TheseamountsreflectSTIpaymentsmadeforallfiscalyearsshown,exceptforMs.Scarlett’sfiscal2019amountwhichincludesherfiscal2019STIpayment($1,153,706)aswellasherCanadianspecialawardpayment($290,745*).Thefiscal2019STIplanisdescribedinthesectionCompensationDiscussionandAnalysis–ExecutiveCompensationElements–Short-TermIncentive.TheCanadianspecialawardrelative to Ms. Scarlett is described in the sectionCompensation Discussion and Analysis – Executive Compensation Elements – Long-TermIncentive.
* Ms.Scarlett’s Canadianspecial awardpaymentisreflectedinUSDusingarateof1.3095CADperUSD,whichwastheUSD:CADexchange rate as determined by the Board of Governors of the Federal Reserve Bank of NewYork for February 1, 2019 (the lastbusinessdayoffiscal2019).
(c) Theamountreflectspremiumspaidbyusforsupplementalexecutivelong-termdisabilityinsurance($63,215),thecostofanexecutivephysicalandtheincrementalcostofMr.Joly’suseofprivatejetservicesfortraveltooutsideboardmeetings($129,763).TheCompanyconsiders travel to outside board meetings to be business-related as part of Mr. Joly’s professional development asdetermined by our Board, and therefore, Mr. Joly is not required to reimburse the Company for those flights. Nevertheless, theincrementalcosttotheCompanyofthoseflightsisbeingreportedhereandincludestheleasecostandothervariablecharges.
(f) The amount reflects premiums paid by us for supplemental executive long-term disability insurance ($20,000) and the cost of anexecutivephysical($4,033).
(g) Theamountreflectspremiumspaidbyusforsupplemental executivelong-termdisabilityinsuranceandbenefitsprovidedaspartofMs. Scarlett’s relocation fromCanada to the United States, including company-paid estate planning services, tax gross-ups on theestateplanningservices($2,850),company-paidtaxpreparationandplanningservices($47,377),taxgross-upsonthetaxpreparationandplanningservices($39,713),taxequalizationpaymentsmadeonMs.Scarlett’sbehalftocoverincrementaltaxes($26,263),taxgross-upsonthetaxequalizationpayments($22,015)andcompany-paidgreencardexpenses.
(1) Theseamountsreflectthepotentialthreshold,targetandmaximumpayoutforeachNEOunderourfiscal2019STI,whichisdescribedingreaterdetailundertheheadingCompensationDiscussionandAnalysis–ExecutiveCompensationElements–Short-TermIncentive.Theactual payout to each NEO for fiscal 2019 is provided in the following sections: Compensation Discussion and Analysis – ExecutiveCompensationElements–Short-TermIncentiveandtheSummaryCompensationTable.
(3) Mr.Jolywillmeettheageandserviceconditionsforqualifiedretirement,asdefinedinourawardagreements,inAugust2019,priortothesecond scheduled vesting of his fiscal 2019 time-based awards and prior to the end of the performance period for his fiscal 2019performanceshareawards.TheeffectofqualifiedretirementonallofouroutstandingequityawardsisdiscussedinthePotentialPaymentsUponTerminationorChange-of-Controlsection.
(4) The amounts reflect nonqualified stock options, as discussed under the heading Compensation Discussion and Analysis – ExecutiveCompensationElements–Long-TermIncentive,thathaveatermoftenyearsandbecomeexercisableinthreeequalinstallmentsofone-thirdoneachofthefirstthreeanniversariesofthegrantdateprovidedtheNEOhasbeencontinuallyemployedwithusthroughthosedates.Theoptionexercisepriceisequaltotheclosingpriceofourcommonstockonthegrantdate,asquotedontheNYSE.
thefirstthreeanniversariesofthegrantdate,providedtheNEOhasbeencontinuallyemployedwithusthroughthosedatesandprovidedthatwehaveachievedpositive“adjustednetearnings”asoftheendofanyfiscalyearduringthethree-yeartermoftheaward.TheNEOisalso entitled to an accrual of dividend equivalents, equal to the cash amount that would havebeenpayable on the number of restrictedstockunitsheldbythemasofthecloseofbusinessontherecorddateforeachdeclareddivided,whichshallbecreditedtothemastheequivalent amount of shares that could have been purchased as of the close of business on the dividend payment date. The accrueddividendequivalentswillbepayablewhentherestrictedstockunitsonwhichsuchdividendequivalentswerecreditedhavebecomeearned,vestedandpayable.
(6) The amounts reflect performance share awards, as discussed under the headingCompensation Discussion and Analysis – ExecutiveCompensationElements–Long-TermIncentive,that,ifearned,willvestatorbetweenthethreshold(50%oftarget)andmaximum(150%oftarget) levels dependingontheperformanceof our stock’s total shareholder return, relativeto theS&P500Index, over the36-monthperiodcommencingonFebruary4,2018,andendingonJanuary30,2021.TheNEOisalsoentitledtoanaccrualofdividendequivalents,equaltothecashamountthatwouldhavebeenpayableonthenumberofperformancesharesheldbythemasofthecloseofbusinessonthe record date for each declared divided, which shall be credited to them as the equivalent amount of shares that could have beenpurchased as of the close of business on the dividend payment date. The accrued dividend equivalents will be payable when theperformancesharesonwhichsuchdividendequivalentswerecreditedhavebecomeearned,vestedandpayable.
(7) The amounts reflect performance share awards, as discussed under the headingCompensation Discussion and Analysis – ExecutiveCompensationElements–Long-TermIncentive,that,ifearned,willvestatorbetweenthethreshold(50%oftarget)andmaximum(150%of target) levels depending on the compound annual growth rate of our enterprise revenue, over the 36-month period commencing onFebruary 4, 2018, and ending on January 30, 2021. The NEO is also entitled to an accrual of dividend equivalents, equal to the cashamountthatwouldhavebeenpayableonthenumberofperformancesharesheldbythemasofthecloseofbusinessontherecorddateforeachdeclareddivided,whichshallbecreditedtothemastheequivalentamountofsharesthatcouldhavebeenpurchasedasofthecloseofbusinessonthedividendpaymentdate.Theaccrueddividendequivalentswillbepayablewhentheperformancesharesonwhichsuchdividendequivalentswerecreditedhavebecomeearned,vestedandpayable.
(8) Theamountsreflectperformance-conditionedtime-basedrestrictedshares,asdiscussedundertheheadingCompensationDiscussionandAnalysis–ExecutiveCompensationElements–Long-TermIncentive,whichwillvestinthreeequalinstallmentsofone-thirdoneachofthefirstthreeanniversariesofthegrantdate,providedtheNEOhasbeencontinuallyemployedwithusthroughthosedatesandprovidedthatwehaveachievedpositive“adjustednetearnings”asoftheendofanyfiscalyearduringthethree-yeartermoftheaward.TheNEOisalsoentitledtoanaccrualofdividendequivalents,equaltothecashamountthatwouldhavebeenpayableonthenumberofrestrictedsharesheldbythemasofthecloseofbusinessontherecorddateforeachdeclareddivided,whichshall becreditedtothemastheequivalentamount of shares that could have been purchased as of the close of business on the dividend payment date. The accrued dividendequivalentswillbepayablewhentherestrictedsharesonwhichsuchdividendequivalentswerecreditedhavebecomeearned,vestedandpayable.
(9) The amounts reflect nonqualified stock options, as discussed under the heading Compensation Discussion and Analysis – ExecutiveCompensation Elements –Long-TermIncentive, that haveatermof tenyears andbecomeexercisable onthefourth anniversary of thegrantdate, providedtheNEOhasbeencontinuallyemployedwithusthroughthatdate. Theoptionexercisepriceisequaltotheclosingpriceofourcommonstockonthegrantdate,asquotedontheNYSE.
(3) Mr. Joly will meet theageandserviceconditionsfor qualified retirement, asdefinedin our awardagreements, in August 2019, whichisduringthetermofhisfiscal2018andfiscal2019time-basedawardsandpriortotheendoftheperformanceperiodforhisfiscal2018andfiscal 2019 performance share awards (see awards with March 13, 2017, and March 13, 2018, grant dates). The effect of qualifiedretirementonallofouroutstandingequityawardsisdiscussedinthePotentialPaymentsUponTerminationorChange-of-Controlsection.
(5) The amount reflects performance-conditioned time-based restricted stock units (49,287 restricted stock units remaining fromthe originalgrantand1,357restrictedstockunitsaccruedasdividendequivalents)thatvestoverathree-yearperiodattherateofone-thirdperyear,beginningoneyearfromthegrantdate,providedMr.Jolyhasbeencontinuallyemployedwithusthroughthosedatesandprovidedthatwehaveachievedpositive“adjustednetearnings”asoftheendofanyfiscalyearduringthethree-yeartermoftheaward(the“PerformanceCondition”).ThePerformanceConditionwasachievedasoftheendoffiscal2019.
(6) Theamountreflectsanoutstandingperformanceshareawardassumingathresholdpayout(50%ofthetargetgrant,or19,938shares)plusaccrued dividend equivalents as of fiscal year-end (1,098 shares). The number of shares ultimately earned will be based on theperformanceofourstock’stotalshareholderreturn,relativetotheS&P500Index,overthe36-monthperiodcommencingonFebruary4,2018,andendingonJanuary30,2021.Asoftheendoffiscal2019,performancewasbelowthethresholdpayoutlevelfortheseshares.Dividendequivalentsharesaccrueassumingatargetpayoutandareadjustedandissuedattheendoftheperformanceperiodbasedonactualperformance.
(7) Theamountreflectsanoutstandingperformanceshareawardassumingamaximumpayout(150%ofthetargetgrant,or61,610shares)plus accrued dividend equivalents as of fiscal year-end (1,132 shares). The number of shares ultimately earned will be based on thecompound annual growth rate of our enterprise revenue, over the 36-month period commencing on February 4, 2018, and ending onJanuary30,2021.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.Dividendequivalentsharesaccrueassumingatargetpayoutandareadjustedandissuedattheendoftheperformanceperiodbasedonactualperformance.
(9) The amount reflects an outstanding performance share award assuming a maximumpayout (150%of the target grant). The number ofsharesultimatelyearnedwillbebasedontheperformanceofourstock’stotalshareholderreturn,relativetotheS&P500Index,overthe36-monthperiodcommencingonJanuary29,2017,andendingonFebruary1,2020.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.
(10) The amount reflects an outstanding performance share award assuming a maximumpayout (150%of the target grant). The number ofshares ultimately earned will be based on the compound annual growth rate of our enterprise revenue, over the 36-month periodcommencingonJanuary29,2017,andendingonFebruary1,2020.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.
(11) Theamount reflects performance-conditionedtime-basedrestrictedsharesthat vest over a three-year periodat therate of one-third peryear,beginningoneyearfromthegrantdate,providedtheNEOhasbeencontinuallyemployedwithusthroughthosedatesandprovidedthatwehaveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2017.
(12) The amount reflects an outstanding performance share award assuming a maximumpayout (150%of the target grant). The number ofsharesultimatelyearnedwillbebasedontheperformanceofourstock’stotalshareholderreturn,relativetotheS&P500Index,overthe36-monthperiodcommencingonMarch1,2016,andendingonFebruary28,2019.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.
(13) Theamountreflectsperformance-conditionedtime-basedrestrictedshares(20,819restrictedsharesremainingfromtheoriginalgrantand574restrictedsharesaccruedasdividendequivalents)thatvestoverathree-yearperiodattherateofone-thirdperyear,beginningoneyear from the grant date, provided Ms. Barry has been continually employed with us through those dates and provided that we haveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2019.
(14) Theamountreflectsanoutstandingperformanceshareawardassumingathresholdpayout(50%ofthetargetgrant,or5,053shares)plusaccrueddividendequivalentsasoffiscalyear-end(280shares).Thenumberofsharesultimatelyearnedwillbebasedontheperformanceof our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 4, 2018, andendingonJanuary30, 2021. Asof theendof fiscal 2019, performancewasbelowthethresholdpayout level for theseshares. Dividendequivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actualperformance.
(15) Theamountreflectsanoutstandingperformanceshareawardassumingamaximumpayout(150%ofthetargetgrant,or15,615shares)plus accrued dividend equivalents as of fiscal year-end (288 shares). The number of shares ultimately earned will be based on thecompound annual growth rate of our enterprise revenue, over the 36-month period commencing on February 4, 2018, and ending onJanuary30,2021.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.Dividendequivalentsharesaccrueassumingatargetpayoutandareadjustedandissuedattheendoftheperformanceperiodbasedonactualperformance.
(16) Theamount reflects performance-conditionedtime-basedrestrictedsharesthat vest over a three-year periodat therate of one-third peryear,beginningoneyearfromthegrantdate,providedtheNEOhasbeencontinuallyemployedwithusthroughthosedatesandprovidedthatwehaveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2018.
(17) Theamountreflectsperformance-conditionedtime-basedrestrictedshares(24,636restrictedsharesremainingfromtheoriginalgrantand680restrictedsharesaccruedasdividendequivalents)thatvestoverathree-yearperiodattherateofone-thirdperyear,beginningoneyear from the grant date, provided the NEO has been continually employed with us through those dates and provided that we haveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2019.
(18) Theamountreflectsanoutstandingperformanceshareawardassumingathresholdpayout(50%ofthetargetgrant,or5,980shares)plusaccrueddividendequivalentsasoffiscalyear-end(331shares).Thenumberofsharesultimatelyearnedwillbebasedontheperformanceof our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 4, 2018, andendingonJanuary30, 2021. Asof theendof fiscal 2019, performancewasbelowthethresholdpayout level for theseshares. Dividendequivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actualperformance.
(19) Theamountreflectsanoutstandingperformanceshareawardassumingamaximumpayout(150%ofthetargetgrant,or18,477shares)plus accrued dividend equivalents as of fiscal year-end (340 shares). The number of shares ultimately earned will be based on thecompound
(20) Theamountreflectsperformance-conditionedtime-basedrestrictedshares(11,451restrictedsharesremainingfromtheoriginalgrantand318restrictedsharesaccruedasdividendequivalents)thatvestoverathree-yearperiodattherateofone-thirdperyear,beginningoneyear from the grant date, provided Mr. Nelsen has been continually employed with us through those dates and provided that we haveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2019.
(21) Theamountreflectsanoutstandingperformanceshareawardassumingathresholdpayout(50%ofthetargetgrant,or2,780shares)plusaccrueddividendequivalentsasoffiscalyear-end(156shares).Thenumberofsharesultimatelyearnedwillbebasedontheperformanceof our stock’s total shareholder return, relative to the S&P 500 Index, over the 36-month period commencing on February 4, 2018, andendingonJanuary30, 2021. Asof theendof fiscal 2019, performancewasbelowthethresholdpayout level for theseshares. Dividendequivalent shares accrue assuming a target payout and are adjusted and issued at the end of the performance period based on actualperformance.
(23) Theamountrepresentsnonqualifiedstockoptionsthat will becomeexercisableonthefourthanniversaryof thegrant date, providedMs.Scarletthasbeencontinuallyemployedwithusthroughthatdate.
(24) Theamountreflectsperformance-conditionedtime-basedrestrictedshares(6,246restrictedsharesremainingfromtheoriginalgrantand174restrictedsharesaccruedasdividendequivalents)thatvestoverathree-yearperiodattherateofone-thirdperyear,beginningoneyear fromthe grant date, provided Ms. Scarlett has been continually employed with us through those dates and provided that we haveachievedthePerformanceCondition.ThePerformanceConditionwasachievedasoftheendoffiscal2019.
(26) Theamountreflectsanoutstandingperformanceshareawardassumingamaximumpayout(150%ofthetargetgrant,or4,684shares)plusaccrueddividendequivalents as of fiscal year-end(88shares). Thenumber of sharesultimately earnedwill bebasedonthecompoundannualgrowthrateofourenterpriserevenue,overthe36-monthperiodcommencingonFebruary4,2018,andendingonJanuary30,2021.Asoftheendoffiscal2019,performancewasatthemaximumpayoutlevelfortheseshares.Dividendequivalentsharesaccrueassumingatargetpayoutandareadjustedandissuedattheendoftheperformanceperiodbasedonactualperformance.
The table below provides a summary of the value realized in connection with stock option awards exercised and stockawardsvestedforourNEOsduringfiscal2019.
(b) theshares(177,561)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018.
(a) thevestingofrestrictedsharesgrantedunderourLTIprogram:1,330sharesthatweregrantedonMarch12,2015,whichvestedonMarch12,2018;7,890sharesthatweregrantedonMarch13,2017,whichvestedonMarch13,2018;9,658sharesthatweregrantedon March 15, 2016, which vested on March 14, 2018; and 6,480 shares that were granted on October 1, 2015, which vested onOctober1,2018;
(b) theshares(5,511)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018;and
(c) theshares(14,906)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonOctober1,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonSeptember30,2018.
(6) On March 16, 2018, Mr. Mohan exercised options to purchase 17,605 shares at an exercise price of $40.85 and 20,443 shares at anexercisepriceof$29.91.TheseoptionswereexercisedwhenthemarketpriceofashareofBestBuycommonstockwas$70.00.
(7) Theamountrepresents:
(a) thevestingofrestrictedsharesgrantedunderourLTIprogram:5,715sharesthatweregrantedonMarch12,2015,whichvestedonMarch 12, 2018; 11,835 shares that were granted on March 13, 2017, which vested on March 13, 2018; 11,038 shares that weregrantedonMarch15,2016,whichvestedonMarch14,2018;and5,743sharesthatweregrantedonMay24,2016,whichvestedonMay24,2018;and
(b) theshares(23,675)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018.
(8) On September 4, 2018, Mr. Nelsen exercised options to purchase 14,524 shares at an exercise price of $40.85. These options wereexercisedwhenthemarketpriceofashareofBestBuycommonstockwas$80.33.
(b) theshares(19,532)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018.
(b) theshares(5,814)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018.
(b) theshares(47,350)acquireduponthevestingandsettlementofaperformanceshareawardwhichwasgrantedonMarch12,2015,and was based on the performance of our stock’s total shareholder return, relative to the S&P500 Index, over a 36-month periodwhichendedonFebruary28,2018.
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NonqualifiedDeferredCompensation
ThefollowingtableshowstheaccountbalancesatFebruary2,2019,andthecontributionsandearningsduringfiscal2019,for participating NEOs under the Best Buy Sixth Amended and Restated Deferred Compensation Plan (“DeferredCompensationPlan”), whichisdescribedingreaterdetail belowthetable.ThetablealsoincludesthevalueofrestrictedstockunitsgrantedtoMr.Jolyin2012thathavevestedbut,asoftheendoffiscal2019,havenotbeenissuedassharespursuanttothetermsofhisemploymentarrangementwiththeCompany,asdisclosedontheCurrentReportonForm8-Kfiled by the Company on August 21, 2012. Such restricted stock units were part of the equity granted to Mr. Joly tocompensatehimforcertainforfeituresheincurreduponterminationofhisemploymentwithhisformeremployer.
(2) This amount reflects the end of fiscal year value of all vested restricted stock units and related dividend equivalents from Mr. Joly’sSeptember 4, 2012, restricted stock unit award (in total, 332,964 units and 76,152 dividend equivalent units), calculated based on theclosing price of our common stock ($58.47) as quoted on the NYSE on February 1, 2019, the last business day in fiscal 2019. Of thisamount,$5,051,064hasbeenpreviouslyreportedinthe“StockAwards”columnoftheSummaryCompensationTable.
(4) This amount includes$859,369that haspreviously beenreportedaseither “Salary” or “Non-Equity Incentive PlanCompensation” in theSummaryCompensationTable.
DeferredCompensationPlan.TheCompany’sDeferredCompensationPlanisunfundedandunsecured.Webelievetheplanprovidesatax-deferred retirement savingsvehicle that playsanimportant role in attracting andretainingexecutivetalent.TheDeferredCompensationPlanallowshighlycompensatedemployees,includingtheNEOs,todefer:
AmountsdeferredunderandcontributedtotheDeferredCompensationPlanarecreditedorchargedwiththeperformanceof investment options selected by the participants. The investment options are notional and do not represent actualinvestments,butratherserveasameasurementofperformance.TheoptionsavailableundertheDeferredCompensationPlanandtheirone-yearannualizedaverageratesofreturnasoftheendoffiscal2019wereasfollows:Investment RateofReturn(1)NVITMoneyMarket 1.54%PIMCOVITTotalReturn 1.81%PIMCOVITHigh-YieldBond 1.65%FidelityVIPBalanced-ServiceClass (1.99)%VanguardVIFEquityIncome (3.88)%VanguardVIFEquityIndex (2.44)%T.RowePriceBlueChipGrowth 2.35%FranklinVIPTSmallCapValueSecurities (5.25)%VanguardVIFSmallCompanyGrowth (1.19)%VanguardVIFInternational (13.15)%
Participants who elect to defer compensation under the Deferred Compensation Plan also select when the deferredamountswillbedistributedtothem.Distributionsmaybemadeinaspecificyear,orataspecifiedtimethatbeginsonorafter the participant’s retirement. Distributions are paid in a lump sum or in quarterly installments, depending on theparticipant’selectionatthetimeofdeferral.However,ifaparticipant’semploymentendspriortoretirement,adistributionismadepromptlyinalumpsumorinquarterlyinstallments,dependingontheirinitialelectionandaccountbalance.
Cashcompensation.Pursuanttothetermsofourseveranceplan,andsubjecttoenteringintoaseparationagreementwithus,ourNEOsareeligiblefor:severancepayequaltotwoyearsofbasesalary;apaymentequalto150%ofthecostof24monthsofbasicemployeebenefits,suchasmedical,dentalandlifeinsurance;andpaymentof$25,000inlieuofprovidingoutplacementservicesandothertaxandfinancialassistanceuponinvoluntaryterminationduetojobelimination,reductionin force, business restructuring or other circumstances as wedetermineat our discretion. For more detail regarding ourseverance plan, see the Compensation Discussion and Analysis — Executive Compensation Elements — OtherCompensation—SeverancePlansection.
Mr.Joly’semploymentagreemententitleshimtoparticipateintheCompany’sseveranceplan,asdetailedabove,butalsoprovidesthatheiseligibleforthesameseverancepayifheweretobeinvoluntarilyterminatedwithoutCauseorweretovoluntarily terminate his employment for Good Reason. Additionally, upon involuntary termination without Cause orvoluntaryterminationforGoodReasononorwithin12monthsfollowing(orinanticipationof)achange-of-control,Mr.Jolyis eligible for enhanced severance equal to (a) two times the sum of base salary plus target bonus and (b) a pro-rataannualbonuspayment, dependentonactualperformanceundertheCompany’sSTIplanforthefiscalyearinwhichtheterminationoccurs.
(1) PursuanttoourSeverancePlan,ourNEOsareeligibleforcashseverance,asdetailedabovethetable,iftheyareinvoluntarilyterminatedasaresultofjobelimination,reductioninforceorbusinessrestructuring(orothercircumstancesatourdiscretion).Sincetheapplicabilityofthe Severance Plan is more narrow than is implied by the column heading “Involuntary Termination without Cause”, the severancepaymentstheNEOsareeligibleforunderthoselimitedcircumstancesaredetailedseparatelyinthiscolumn.
(2) Specifically, involuntary termination without Cause or voluntary termination for Good Reason on or within 12 months following (or inanticipationof)achange-of-control.
(3) OnApril12,2019,Mr.NelsensteppeddownfromhisroleasGeneralCounselandSecretaryandtransitionedintoanadvisorycapacitywiththeCompany. Theamount reportedherereflects theseverancepayment Mr. Nelsenwouldhavebeenentitled toasof theendof fiscal2019.WhenMr.Nelsen’sadvisoryroleterminatesonSeptember1,2019,hewillbeeligibleforasimilarseparationpaymentwhichwillbecalculatedusingMr.Nelsen’sthen-currentsalaryandbenefitselections.
Under our STI plan, which is discussed in more detail in the Compensation Discussion and Analysis – ExecutiveCompensationElements–Short-TermIncentivesection,ourNEOsmustremainemployedwithusthroughtheendoftheperformance period in order to receive any payouts under the plan. If an NEO is terminated with Cause, they are noteligibleforanySTIplanpayments.Infiscal2019,allofourNEOswereemployedwithusthroughtheendoffiscal2019,which was the end of the fiscal 2019 STI plan. Each of their fiscal 2019 payments are discussed in theCompensationDiscussionandAnalysis–ExecutiveCompensationElements–Short-TermIncentiveandSummaryCompensationTablesections.
Nonqualifiedstockoptions.Ourawardagreementsdictatewhathappenstounvestedstockoptionsandhowlongvestedstockoptionsareexercisable followingdifferent typesof termination events. Thefollowingchart illustrates thesevarioustreatments under each possible scenario for stock options granted to our NEOs under our long-term incentive awardprogramsandtoMr.JolyaspartofhisSeptember4,2012,sign-onequityaward(the“Sign-OnStockOptions”).
(2) GoodReasonisusuallydeemedtoexistiftheCompanymakesamaterialadversechangetotheNEO’stitle,responsibilitiesorsalaryorrequires the NEOto work more than 50 miles fromthe corporate office location in Richfield, MN(except for temporary business-relatedtravel).
(4) QualifiedRetirementisdefinedinouremploymentandawardagreementsas:retirementbyanemployee,includingourNEOs,onoraftertheir 60 thbirthday, so long as they have been employed with the Company continuously for at least the five-year period immediatelyprecedingtheirretirementdate.
Thetablebelowprovides,forthespecifiedNEOs,asoftheendoffiscal2019,thevalueoftheirunvested,in-the-moneystockoptions(asdetailedintheOutstanding Equity Awardsat Fiscal Year Endsection), underthesituationsdiscussedabove.AllvaluesbelowwerecalculatedusingtheclosingpriceofourcommonstockasquotedontheNYSEonFebruary1,2019,thelastbusinessdayinfiscal2019.
Name DeathorDisabilityTerminationfollowingChange-of-Control(1)
(1) Specifically, termination on or within 12 months of a change-of-control. For awards granted prior to fiscal 2015, this means involuntarytermination without Cause or voluntary termination for Good Reason. For awards granted in fiscal 2015 and thereafter, this means onlyinvoluntaryterminationwithoutCause.
Restrictedshareawards.Pursuanttoourawardagreements,allunvestedrestrictedshareandrestrictedstockunitawards(includingbothtime-basedawardsandtime-basedawardssubjecttoperformanceconditions)heldbyourNEOsfullyvestintheeventofdeathorterminationduetodisability.Additionally,uponqualifiedretirementanyunvestedrestrictedsharesand restricted stock units would continue to vest according to their normal vesting schedule, subject to achievement ofperformanceconditions(whereapplicable).Underallotherterminationscenarios,unvestedrestrictedsharesandrestrictedstockunitsareforfeitedandtherearenochange-of-controlprovisionswhichimpactthem.
Thetablebelowprovides,forthespecifiedNEOs,asoftheendoffiscal2019,thevalueoftheirunvestedrestrictedshareandrestrictedstockunitawards(asdetailedintheOutstandingEquityAwardsatFiscalYearEndsection)intheeventoftheir deathor disability. All valuesbelowwerecalculatedusingtheclosingpriceof ourcommonstockasquotedontheNYSEonFebruary1,2019,thelastbusinessdayinfiscal2019.
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Name DeathorDisabilityMr.Joly $ 7,872,752Ms.Barry 2,738,209Mr.Mohan 3,845,396Mr.Nelsen 1,981,724Ms.Scarlett 1,166,988
(1) Reflects value realizable upona change-of-control event, but assumesthat the NEOwill stay with the Companythroughthe endof theperformanceperiodofeachoutstandingperformanceshareaward.
Restrictive Covenants. As further described in the Compensation Discussion and Analysis – Executive CompensationElements–OtherCompensation–ClawbackandRestrictiveCovenantProvisionssection,ourexecutiveofficerseparationagreementsandLTIawardagreementsgenerallyincludeconfidentiality, non-compete, andnon-solicitationprovisionsasgenerallydescribedbelow:
Confidentiality . Awardrecipients agreetomaintain theconfidentiality of Best Buy’s “confidential information” andtousesuchinformationfortheexclusivebenefitofBestBuy.Thisobligationhastheappropriateapplicationtothepost-terminationperiod.
Non-Compete . Awardrecipients agreenot to engagein“competitive activity” for aperiodof oneyear followingthelaterofterminationofemploymentforanyreason,orthelastscheduledawardvestingdate.
Upon violation of a restrictive covenant, unexercised options and unvested shares related to the respective awardagreementunderwhichtheywereissuedmaybecanceledandforfeited,andlikewise,theCompanymayrequirethattherelatedissuedshares(ortheirfairmarketvalue,asmeasuredontheoptionexercisedateorsharevestingdate)mustbereturnedtotheCompany.Additionally,theCompanymayseekinjunctiveorotherappropriateequitablerelief.
Employmentagreements. InconnectionwiththeCEOsuccessiondescribedabove,weenteredintoanemploymentwithMs.BarryandanewemploymentagreementwithMr.Joly.PursuanttothetermsoftheemploymentagreementwithMs.Barry, Ms. Barry’s annual base salary will increase to $1.1 million andher annual short-term incentive award target willincreaseto175%ofbasesalaryfortheportionoftheyearsheholdsthepositionofCEO.AtthetimeoftheMeeting,shewillalsoreceiveatrue-upequityawardwithatargetvalueof$5.475million.Thetrue-upawardwillbecomprisedof50%ofthevalueinperformanceshares,20%instockoptions,and30%inrestrictedshares,consistentwiththefiscal2020annualawards.PursuanttotheagreementwithMs.Barry,sheisentitledtoparticipateintheCompany’sseveranceplanandiseligibleforthesameseverancepayifsheweretobeinvoluntarilyterminatedwithoutcauseorweretovoluntarilyterminateheremploymentforgoodreason.Additionally,uponinvoluntaryterminationwithoutcauseorvoluntaryterminationforgoodreasononorwithin12monthsfollowingachange-of-control,Ms.Barryiseligibleforenhancedseveranceequalto(a)twotimes the sum of base salary plus target bonus and (b) a pro-rata annual bonus payment, dependent on actualperformanceundertheCompany’sshort-termincentiveplanforthefiscalyearinwhichtheterminationoccurs.Theinitialterm of Ms. Barry’s employment agreement is three years from the Meeting, and the term will automatically renew forsuccessive 12-month periods unless either the Company or Ms. Barry gives at least 60 days advance notice of non-renewal.
Pursuant to the employment agreement with Mr. Joly, Mr. Joly’s annual base salary will decrease to $650,000 and hisannual short-term incentive award target will decrease to 100%of base salary for the portion of the year he holds thepositionof ExecutiveChairman. Hewill continuetoparticipateinall benefit programsavailabletotheCompany’sseniorexecutives.Undertheagreement,theCompanyhassecuredMr.Joly’sservicesasExecutiveChairmanatleastthroughMarch 31, 2020. At or prior to March 31, 2020, the Board and Mr. Joly will discuss howlong to extend his services asExecutiveChairman.
DirectorCompensationOverview
Eachyear,theCompensationCommitteereviewsthetotalcompensationpaidtonon-managementdirectors.ThepurposeofthereviewistoensurethatthelevelofcompensationisappropriatetoattractandretainadiversegroupofdirectorswiththebreadthofexperiencenecessarytoperformtheBoard’sduties,andtofairlycompensatedirectorsfortheirservice.Aspart of their analysis, the Compensation Committee considers the total value of the compensation as compared withdirector compensation at other Fortune 100 companies and our peer group of companies, which is described inCompensationDiscussionandAnalysis—FactorsinDecision-Making.InMarch2018,theCompensationCommitteeandBoardreviewedandapprovedthefiscal2019compensationfornon-managementdirectors,includingthevalueandtermsoftheequitycompensationcomponent,asdescribedinmoredetailbelow.
On June 11, 2018, the Compensation Committee approved an annual equity award for each of the then-serving non-managementdirectorsintheformofrestrictedstockunits.Theawardseachhadavalueof$195,000,whichtranslatedinto2,649restrictedstockunits.Therestrictedstockunitsareentitledtodividendequivalents,whicharesubjecttothesamerestrictionsandvestingcriteriaastheunderlyingunits.Allrestrictedstockunitsgrantedtoourdirectorsfullyvestoneyearfromthegrant dateandmust behelduntil thedirector leavestheBoard. Director equity awardsareproratedthroughadirector’sterminationdateifadirectorleavestheBoardbeforetherestrictedstockunitshavevested,unlessthedirectoristerminatedforCause,inwhichcaseallunvestedrestrictedstockunitsareforfeited.
TheCompensationCommitteealsoconsidersproratedannualequityawardsfor newdirectorswhoareappointedtotheBoard between each annual grant. As such, the Compensation Committee approved prorated equity awards for newdirectors, Ms. Kent (1,843 restricted stock units) and Mr. Woods (1,761 restricted stock units) in November, 2018, andJanuary,2019,respectively.
(2) Theamountsinthiscolumnreflecttheaggregategrantdatefairvalueforrestrictedstockunitsgrantedtoournon-managementdirectorsduringfiscal2019,measuredinaccordancewithASCTopic718.AsofFebruary2,2019,ournon-managementdirectorsheldoutstandingstock units including both unvested restricted stock units and restricted stock units that have vested, but that are subject to a holdingrequirementuntilthedirectorleavestheboard(“deferredunits”)asfollows:Ms.Caputo—2,706unvestedunitsand27,694deferredunits;Mr.Doyle—2,706unvestedunitsand18,316deferredunits; Mr.Fradin—2,706unvestedunitsand27,694deferredunits; Ms.HigginsVictor—2,706unvestedunitsand27,694deferredunits;Mr.Kenny—2,706unvestedunitsand23,671deferredunits;Ms.Kent—1,859unvestedunitsand0deferredunits;Ms.McLoughlin—2,706unvestedunitsand13,534deferredunits;Mr.Millner—2,706unvestedunitsand 22,158 deferred units; Ms. Munce — 2,706 unvested units and 11,311 deferred units; Ms. Parham —2,706 unvested units and 0deferredunits;andMr.Woods—1,761unvestedunitsand0deferredunits.
(3) We did not grant stock option awards to our non-management directors in fiscal 2019. As of February 2, 2019, our non-managementdirectorsheldoutstandingstockoptionsasfollows:Ms.Caputo—12,500stockoptions;Mr.Doyle—0stockoptions;Mr.Fradin—0stockoptions;Ms.HigginsVictor—10,000stockoptions;Mr.Kenny—0stockoptions;Ms.Kent—0stockoptions;Ms.McLoughlin—0stockoptions;Mr.Millner—0stockoptions;Ms.Munce—0stockoptions;Ms.Parham—0stockoptions;andMr.Woods—0stockoptions.
(4) Pursuanttothetermsoftherestrictedstockunitsgrantedtoournon-managementdirectorsonJune19,2013,directorsareentitledtoanaccrualofdividendequivalentsfromthevestingdate(June19,2014)throughthedatetherestrictedstockunitsareissuedtothedirectorasshares (upon departure from the Board). Dividend equivalent accruals are settled in cash at the time the shares are delivered to thedepartingdirector.TheamountinthiscolumnreflectsthedividendequivalentpaymenttoMr.Vittecoquponhisdeparture.
The Compensation Committee has established stock ownership guidelines requiring our non-management directors toown,indirectlyordirectly, 10,000shares.Historically, wehaveexpectedthat, until theownershiptargetismet, directorswouldretain50percentoftheirgrantedequity(netoftaxes).Infurthersupportofdirectorstockownership,webeganinfiscal2014grantingdirectorequitysubjecttoaholdingrequirementforthedurationofadirector’sserviceontheBoard.Infiscal2019,allofournon-managementdirectorswereincompliancewiththeownershipguidelines,eitherbymeetingtheownership target or by making progress towards the ownership target. Our stock ownership guidelines for executiveofficers are discussed in the Compensation Discussion and Analysis — Executive Compensation Elements — OtherCompensationsection.
DeferredCompensationPlan
Eachcalendaryear,weofferourdirectorstheopportunitytodeferupto100percentoftheirannualandcommitteechairretainersundertheDeferredCompensationPlanwhichisdescribedinthesectionCompensationofExecutiveOfficers—Nonqualified Deferred Compensation . No Company contributions or matching contributions are made for the benefit ofdirectorsundertheDeferredCompensationPlan.
Forfiscal2019,ourlastcompletedfiscalyear,Mr.Jolyhadannualtotalcompensationof$17,382,486asreflectedintheCompensation of Executive Officers — Summary Compensation Table section of this proxy statement. Our medianemployee’s annual total compensationfor fiscal 2019was$28,500. Asaresult, weestimatethat Mr. Joly’s annual totalcompensationwasapproximately605timesthatofourmedianemployee.
Indeterminingthemedianemployee:
• We prepared a list of all Best Buy employees as of November 1, 2018. As of November 1, 2018, we hadapproximately 127,580 employees, including 111,830 U.S. employees, and 15,750 non-U.S. employees. Inidentifyingourmedianemployee,weincludedourapproximately13,290Canadianemployees,but,inaccordancewithSECrules,weexcludedouremployeesinChinaandMexicowherewehaveabout175and2,290employeesrespectively,representingapproximately1.9percentintheaggregateofourworldwideworkforce.Afterexcludingemployeesinthesecountries,asofNovember1,2018,wehad125,114employees.Additionally,thesenumbersexcludeapproximately1,200GreatCallemployees.WeacquiredtheGreatCallbusinessonOctober1,2018.
• As permitted under SEC rules, we used compensation that would equate to W-2 wages for the prior twelvemonthsasourconsistentlyappliedcompensationmeasure,whichwebelieveprovidesareasonableestimateofannual compensation for our employees. We annualized W-2 wages for employees, other thanoccasional/seasonalemployees,whowerenotemployedforthefulltwelvemonths.Themedianamountwasthenidentifiedfromtheannualizedlist.
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OTHERBUSINESSManagementandtheBoardarenotawareofanyotheritemofbusinessthatwillbeaddressedattheMeeting.IfanitemproperlycomesupforvoteattheMeeting,oratanypostponementoradjournmentoftheMeeting,thatisnotdescribedintheMeetingNotice,includingadjournmentoftheMeetingandanyothermattersincidenttotheconductoftheMeeting,theProxy Agents will vote the shares subject to your proxy in their discretion. Discretionary authority for them to do so iscontainedintheproxy.
(1) Beginninginthefirstquarteroffiscal2018,wenolongerexcludenon-restructuringpropertyandequipmentimpairmentchargesfromournon-GAAP financial measures. To ensure our financial results are comparable, we have recast fiscal 2017 balances to conform to thispresentation.RefertotheOverviewsectionincludedinItem7,Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,withinourAnnualReportonForm10-Kforfiscal2019formoreinformation.
(6) Represents charges related to the Canadian brand consolidation initiated in the first quarter of fiscal 2016, primarily due to retentionbonusesandotherstore-relatedcoststhatwereadirectresultoftheconsolidationbutdidnotqualifyasrestructuringcharges.
(8) Represents the summation of the calculated income tax charge related to each non-GAAP non-income tax adjustment. The non-GAAPadjustmentsrelateprimarilytoadjustmentsintheU.S.andCanada.Assuch,theincometaxchargeiscalculatedusingthestatutorytaxrates for the U.S. (24.5%, 36.7% and 38.0% for fiscal 2019, fiscal 2018 and fiscal 2017, respectively) and Canada (26.9%, 26.6% and26.6%forfiscal2019,fiscal2018andfiscal2017,respectively),appliedtothenon-GAAPadjustmentsofeachcountry.
