Best Buy Co has accomplished something remarkable. In a few short hours, it took a fairly routine CEO resignation and turned it into a scandal.
Early this morning, just after the opening of trading, Best Buy issued a brief statement saying CEO Brian Dunn resigned. It wasn’t a big surprise; after all, Dunn had been criticized for failing to address the company’s serious competitive challenges. The press release included nice words from Dunn, and from the interim CEO, Mike Mikan. So far, so good.
But that apparently wasn’t the whole story.
In the afternoon, a company spokesperson was forced to acknowledge – following an inquiry by the Minneapolis Star-Tribune – that Best Buy’s board of directors had initiated in investigation into Dunn’s “personal conduct.” The second statement said:
“Certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated,” the company said in a statement. “Prior to the completion of the investigation, Mr. Dunn chose to resign.”
This is a great example of how a company can lose its credibility in the blink of an eye.
It appears that the board thought it could keep the existence of the investigation from becoming public. Or it might have believed they could not say anything until the investigation was completed. They were wrong on both counts.
Now the company will be under intense pressure in the coming days to say more about the circumstances of Dunn’s departure. His severance package will be a flashpoint for critics. Media attention will continue unabated. Speculation will ignite on the blogosphere. Nervous investors will head for the exits.
The only way out of this mess for Best Buy is to tell the entire story – quickly and by a senior executive.