The CEO of Best Buy received a pay package worth about $5 million in the most recent fiscal year, half what he got the year before, as the largest U.S. electronics retailer faces a slowdown in demand as consumers change the way they buy electronics, according to a document the company filed Friday with the Securities and Exchange Commission.
Brian Dunn, 50, received a base salary of $1 million and a performance-based bonus of $746,667, down 75 percent from his performance based bonus the year before. Dunn received option awards valued at $3.2 million when they were granted, down 48 percent.
The company said its worse-than-expected performance led to lower performance-based bonuses for top executives, including Dunn.
Best Buy, the largest U.S. electronics chain, is contending with a sales slowdown due to a changing electronics market as more people buy online or in discount stores such as Wal-Mart. In response, Best Buy, based in Minneapolis, has been shrinking its stores, expanding online offerings and focusing on more profitable businesses like mobile phones and accessories.
Best Buy's net income fell 3 percent in 2010, while its revenue edged up 1 percent to $50.27 billion.
The retailer's shares fell 13 percent during the year.
Dunn received other compensation worth $15,168, including contributions to his retirement plan, insurance premiums and a tax services reimbursement.
Best Buy is based in Richfield, Minn.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.