Best Buy Looks Into Allegations of Misconduct by CEO Barry
(Bloomberg) -- Best Buy Co. said it’s investigating Chief Executive Officer Corie Barry’s personal conduct, a potential blow to the electronics retailer that comes eight years after a former CEO resigned amid a similar probe.
The board received an anonymous letter with the allegations against Barry, according to a statement. Best Buy hired the law firm Sidley Austin LLP to conduct an independent review and encouraged “the letter’s author to come forward and be part of that confidential process,” the company said.
“The board has my full cooperation and support as it undertakes this review, and I look forward to its resolution in the near term,” Barry, who is 44, said in the statement that was emailed to Bloomberg News. The company declined to comment beyond the statement.
Earlier, the Wall Street Journal reported that Barry was in a romantic relationship with former Senior Vice President Karl Sanft, citing a copy of the anonymous letter. The Dec. 7 letter alleges the relationship occurred before she took over as CEO last year, the Journal said.
Best Buy shares fell as much as 2.3% after the close of regular trading before paring most of the decline. Sanft could not immediately be reached for comment when contacted on LinkedIn and email.
“This situation usually happens when there’s a huge power differential,” said Taekjin Shin, associate professor at the Fowler College of Business at San Diego State University. He noted that in the case of Barry, it’s also “reverse gender” and based on what had been reported, the pair were at the same level, he said.
It’s not the first time Best Buy has had issues related to office romances. Former CEO Brian Dunn resigned in 2012 after an inappropriate relationship, with the founder stepping down as chairman shortly afterwards for failing to tell the board.
Best Buy will have to be particularly careful in treating the two situations consistently, according to Shin.
If the probe leads to Barry’s departure, her predecessor Hubert Joly, who’s currently leading the board as executive chairman, could return as CEO on an interim basis, according to Michael Pachter, an analyst at Wedbush Securities.
“I am not worried about future of the company at all,” he said. “But this does speak to something culturally odd about Best Buy. I just don’t get it.”
The announcement could be a distraction for the company as it prepares to release results for the all-important holiday period. The year-end shopping season was marred by a poor selection of electronics goods, experts say, which has dented the results of other retailers. Best Buy, given its market position, may be especially affected by the trend.
The company’s stock surged 66% in 2019, its best annual gain in six years and more than double the return of the S&P 500 Index, as Best Buy expanded its array of services designed to help consumers integrate electronics in their homes.
Barry took over as CEO last year after serving as chief financial and strategic transformation officer. She helped create plans to find new revenue streams, including an in-home advisory program she spearheaded to help customers with any tech-related issue. That focus on services, coupled with expanded e-commerce operations, have helped Best Buy to bounce back after years of losing market share to Amazon.com Inc. and other competitors.
The stock climbed 38% since Barry became CEO in June, while the S&P 500 increased 15%.
Barry was married almost two decades ago, according to a profile of her on Best Buy’s corporate website. She and her husband, Marty, have two children.
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