It’s always the cover-up that gets you. Richard Schulze, i.e. Mr. Best Buy, is the latest casualty of the Brian Dunn misadventure. Says Paul Walsh at the Strib: “Best Buy founder Richard Schulze is stepping down as chairman of the troubled electronics retailer just as an independent committee releases its findings into the questionable behavior of former CEO Brian Dunn and Schulze’s failure to act when he first learned of the allegations against Dunn, the Richfield-based company announced Monday. Schulze, who has been with the company since its inception in 1966, will step down as chairman of the board on June 21 and remain on the board until June 2013. … Schulze acted inappropriately when he failed to bring the matter to the Audit Committee of the Board of Directors in December, when the allegations were first raised with him. The report’s implication of Schulze shocked former executives, who say Schulze had always possessed strong moral values. ‘I’m surprised,’ said former CEO Brad Anderson, who has worked with Schulze for more than 30 years. ‘I’m trying to figure out why Dick didn’t take stronger action. I think [Dunn’s behavior] was a red line. That information had to get to the board of directors.’ ”
At Bloomberg, Chris Burritt writes: “Schulze was made aware of the allegations about Dunn in December. While he confronted Dunn with the complaints, he failed to inform the board’s audit committee about them, the company said. It also was ‘inappropriate’ for Schulze to reveal to Dunn the identity of the employee who raised the concerns because of ‘serious risks of employee retaliation and company liability,’ Best Buy said. Schulze helped start Best Buy as a single store with three employees in 1966. … Schulze had known Dunn for years and supported his promotion to CEO, saying in 2009 that he was a product and steward of Best Buy’s ‘unique culture.’ It’s problematic ‘if you’re very close to the person whom you’re monitoring,’ said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. ‘The closer you are, the less objective you are and the less effective you’re going to be, that’s the issue.’ Schulze still is Best Buy’s largest investor with 69.2 million shares, a stake of 20 percent, according to a filing with the U.S. Securities and Exchange Commission last week.”
You want snark with your Best Buy scandal? Sean Williams of The Motley Fool says: “Shares of Best Buy … hit a 52-week low on Friday. Let’s take a look at how it got there and see whether cloudy skies remain in the forecast. Best Buy should be sending thank-you cards to companies like Research In Motion and Chesapeake Energy, because without them, it’d be the laughingstock of Wall Street. …What investors are having the toughest time with is in realizing that Best Buy is no longer a growth company; it’s a value play. At just two times cash flow and roughly five times forward earnings, Best Buy investors look to be getting a legal five-finger discount (aka a steal). … Best Buy does have its fair share of problems; there’s little denying that. But it’d be wrong to ignore that Best Buy is strongly cash flow positive and valued far below its sector peers, who arguably aren’t growing that fast either (Amazon excluded).”
And just for good/bad measure, The Consumerist notes a hacking issue via Best Buy in the past few hours: “Have phantom orders been placed using your Best Buy website account that you had nothing to do with? Since the wee hours of this morning, we’ve heard from two separate readers who write that their accounts and credit cards were used to order downloadable content that was delivered to another person’s email address. And if posts on the Best Buy user forums are any indication, they’re far from alone. … H. wrote in first, telling us that three separate orders were placed on her account. ‘Just discovered today that someone had hacked my Best Buy account which I hadn’t used in over a year, and has been using my account to purchase downloadable content and is sending it to an email address different from the one I used for my account. I was never sent an order confirmation for the first transaction, but fortunately, I did receive a confirmation for the second and third, which tipped me off to the activity so I was able to contact the Fraud dept. After I called Best Buy’s fraud department and filed a report with my local police, I discovered that this is happening to Best Buy customers all over the country.’ ”
Since no one expects the Minneapolis City Council to say “no” at this point, the deed is done. Martiga Lohn of the AP reports: “With team owners Zygi and Mark Wilf looking on, Dayton signed the bill to mostly cheers, whistles and chants of `Skol, Vikings,’ the NFL team’s fight song. However, one protester yelled “Shame on you! Shame on you!” as the governor put pen to paper — underscoring the strong opposition by some critics who said taxpayers shouldn’t have to shoulder so much of the cost of the new venue. ‘This is what makes Minnesota special,’ Dayton said before signing the bill, noting that Minneapolis-St. Paul is the smallest of a dozen metropolitan areas with all four major league sports teams.” I’ve never felt so “major league.”
The Strib’s Mike Kaszuba was also there: “[A] small group of homeless advocates held signs that criticized the DFL governor — one read, ‘Why Not Get This Fired Up to Stop Homelessness’? — and shouted ‘Shame! Shame!’ as Dayton and Rybak spoke. The protesters however were drowned out by Vikings supporters, many wearing team jerseys, who sang the Vikings fight song and gave the governor a standing ovation. ‘I give credit to Governor Dayton and all that he’s done,’ said Al Kolberg, a 74-year-old fan from Burnsville who has been a season-ticket holder for 52 years. Kolberg and his wife, Verla, said the only thing missing from the $1 billion stadium is a commitment from Wilf to include a retractable roof. ‘Definitely need a [retractable] roof,’ said Verla Kolberg. Angel Buechner of Minneapolis however just shook her head. Dayton ‘ran his campaign on taxing the rich. [Now] he’s protecting a rich team owner who could basically buy his own stadium,’ she said.” Maybe if the Commissioner for the Homeless had flown in and got everyone “on the same page”?
As for what happens next … Tim Nelson at MPR writes: “[T]here’s a lot of homework to be done before the shovels start turning in downtown Minneapolis. ‘The general schedule that has been laid with this project is that we would start in earnest in the second and third quarter of 2013,’ said Ken Sorenson, vice president at Mortenson Construction, speaking at a recent state Senate Jobs and Economic Growth committee hearing. Mortenson built Target Field and TCF Bank Stadium, and is a likely prospect to build the Vikings’ new home. He was predicting what might happen if his firm were selected for the project. ‘We could be on site early next year, to start relocating utilities, to start accommodating some of the back of house restructuring that needs to be done for the Metrodome,’ he said.” When are the Vikings scheduled to win the Super Bowl?
The Central Corridor LRT is half finished. Paul Walsh (again) reports: “Just as the Metropolitan Council declared construction of the Central Corridor Light Rail Transit line halfway done Monday, significant highway closures connected with the project are just around the bend. Starting Friday night, a cluster of disruptions is coming to where Interstates 35E and 94 mingle in St. Paul, according to the Minnesota Department of Transportation. The closures are needed as workers prepare for the installation of light rail tracks on the Cedar Street bridge that spans the interstate commons section. Both directions of 35E are closing between 10th Street/Wacouta Avenue and 11th Street. Also, both directions of I-94 are closing between 5th Street/10th Street and the ramp to 12th Street.”
In the face of those worst-in-the-nation job creation numbers, Wisconsin’s Gov. Scott Walker is promising “revised” numbers before his recall election on June 5. Scott Bauer of the AP writes: “Walker said Monday that Wisconsin’s job creation numbers for his first year in office will be revised this week, less than three weeks before he faces a recall election that could turn based on his success in improving the state’s struggling economy. While the June 5 recall was prompted by Walker’s curbing of public worker union rights, it also hinges on how well he’s met his 2010 campaign promise to create 250,000 jobs over four years. His Democratic challenger in the recall, Milwaukee Mayor Tom Barrett, accused Walker of ‘fixing the books’ to make the jobs numbers appear better than they are. ‘They brought in a fiction writer,’ Barrett said. ‘They don’t like their numbers. They’re going to make up their own numbers.’ “
