Our First Nominee for Worst CEO of the Year: Brian Dunn
My praise and contempt for CEO actions is pretty well known around these parts. I've been running a weekly series looking at CEO gaffes for nearly nine months now (with seemingly endless material, may I add), and recently I've begun highlighting incredible CEOs who deserve a pat on the back. Last year I even listed my top 10 CEOs of the year and my 10 worst CEOs of the year.
However, this year we're changing things up a bit, and we're putting the ball in your court! This year The Motley Fool community is going to decide who the best CEO of the year is, and which CEO should be banished to a distant island.
Each week, over the next eight weeks, I'm going to highlight one CEO who's worthy of being the best CEO of 2012, as well as a CEO who could easily be called the worst of 2012. In total, you and your community members will have eight great CEOs and eight terrible ones to choose from when voting commences in November.
In the meantime, I encourage you to get the discussion started on the CEO of the Week board. Although I do have all CEOs hand-picked already, these selections are by no means set in stone. If you can offer me your top picks for best and worst CEO, as well as your reasoning, you may just find your nomination in the spotlight.
Without further ado, I give you the first nominee for Worst CEO of the Year: Brian Dunn, Best Buy's (NYS: BBY) now former CEO.
Why Brian Dunn?
- Improper relations with an employee: I don't know much about running a retail empire, but I do know that it's always a no-no for a boss to be romantically involved with leadership interns. What really stunk from a shareholder perspective during this debacle are the two different stories that emerged about the reason for Dunn's departure. The "by the way" manner that Best Buy's management team informed the market and investors of Dunn's improper actions is unacceptable.
- Failure to innovate: Just two weeks before his resignation, Dunn outlined a comprehensive plan to overhaul Best Buy, including closing 50 bigger stores to instead open 100 smaller ones, focusing on mobile products, and adding sales incentives for employees. That's a fine plan, but it's coming about three years too late. Amazon.com (NAS: AMZN) has been gobbling up electronics market share from Best Buy for years as consumers use the big-box retailer as a show-and-tell space, then make their purchases on Amazon. Best Buy's inability to transition to a larger online sales platform more quickly is crippling its chances of a turnaround.
- Focused on the wrong product: I'm aware that betting on new technologies can be somewhat of a crapshoot, but did anyone really expect 3-D televisions to be the greatest thing since sliced bread? Apparently Best Buy did! All one needs to do is look at the eight straight years of television division losses from Sony (NYS: SNE) to understand that Best Buy should have stopped focusing on television sales much sooner than it did.
- A whopper of a severance package: In spite of the boards' findings regarding the "relationship" between Dunn and the 29-year-old female intern -- which included texts, phone calls, photos, and money exchanges between Dunn and the intern -- the board still awarded Dunn $6.6 million in severance pay! It almost makes me wonder what you have to be found guilty of not to get paid a severance package at Best Buy?
- Significantly underperforming its peers: It's a really sad day when Conn's (NAS: CONN) is kicking Best Buy's butt. The appliance and electronics retailer reported same-store sales rose 21.5% in its most recent quarter as consumers stepped up spending on higher-margin products. Even Wal-Mart (NYS: WMT) , whose primary revenue driver is grocery sales, has been eating into Best Buy's electronic presence by undercutting the big-box retailer's prices online. Best Buy's stock is down 21% year-to-date, and about 60% since November 2010.
- Poor use of company funds: The final nail in the coffin has to be Best Buy's constant use of operation cash to repurchase shares. According to Minyanville, Best Buy has spent $6.4 billion on share buybacks since 2008, which is $360 million higher than where the stock is currently valued. In essence, Dunn and co. completely wasted $6.4 billion in cash that it could direly use right now.
Is Brian Dunn the Worst CEO of the Year? That's going to be up to you and the rest of The Motley Fool community to decide. In the meantime, come back on Tuesdays and Thursdays for the next eight weeks for the latest CEO nominations, and be sure to hit up the CEO of the Week board to voice your opinion to the community.
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The article Our First Nominee for Worst CEO of the Year: Brian Dunn originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves giving credit when credit is due. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Best Buy and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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