NEW YORK (Reuters) - Best Buy Co Inc (BBY.N), the world’s largest consumer electronics chain, said it has selected headhunter Spencer Stuart Inc to conduct the search for a new chief executive.
The news came almost six weeks after Brian Dunn resigned as CEO. Following his departure, the company said an internal probe found that Dunn had an improper relationship with a female employee.
Best Buy is under pressure to find a replacement for Dunn soon. At least two brokerages have downgraded the company this month citing lack of leadership.
“Best Buy does not plan to name a replacement anytime soon, which likely means the company will not have established leadership heading into the crucial 2012 holiday selling season,” said BB&T Capital Markets analyst Anthony Chukumba, who downgraded the retailer to “hold” from “buy.”
“Without knowing who will be leading the company and what their plan will be, we think the shares will likely be at best dead money for awhile,” Chukumba said on Monday, ahead of the company’s earnings report on Tuesday.
Best Buy is in the midst of what it expects to be a six- to nine-month search for a successor to Dunn. Board member G. Mike Mikan is acting as interim CEO. The company said it will consider internal and external candidates for the job.
On Monday, Best Buy also revealed the terms of its contract with Mikan, 41, who was appointed interim CEO on April 10.
Mikan will get bi-weekly payments based on annual cash compensation of $3.3 million, according to a filing with the U.S. Securities & Exchange Commission.
That represents an annual base salary of $1.1 million and $2.2 million in lieu of Mikan’s participation in the executive short-term incentive plan.
Mikan will also get up to 263,000 shares of Best Buy stock, valued at about $5 million, on completing his service as interim CEO.
The final amount of Mikan’s stock award will be based on length of service and otherwise determined by the compensation and human resources committee of the board, the retailer said.
Best Buy shares were up 0.9 percent at $18.18 on Monday afternoon. They have fallen almost 45 percent since touching a year high of $32.85 last June.
Reporting By Dhanya Skariachan; Editing by Maureen Bavdek, John Wallace and M.D. Golan