In case you missed the news over the weekend -- and Best Buy
Hubert Joly sold nearly $1.2 million worth of Best Buy stock on Wednesday. The filing claims that the shares were "automatically withheld upon vesting of shares to satisfy tax withholding obligation." A Best Buy statement on Friday night also confirmed that the transaction was done solely to cover the tax hit associated with stock grants.
"These sales are commonplace and done at predetermined dates," the statement reads.
It still looks bad. It's just a reminder of how stupid it was for Best Buy to take on a new CEO -- a foreign CEO for which there were even penalty contingencies coming out of the retailer's pockets if Joly couldn't secure the appropriate work visas -- at a time when founder Richard Schulze was trying to orchestrate a buyout.
Joly's excessive pay package and Best Buy's horrendous quarterly report filed the following day point to the board's ineptitude in positioning the company for a buyout that would maximize shareholder value.
Even if investors aren't incensed at the transaction that saw Joly unload a sliver of his freshly acquired effective stake in Best Buy at a mere average price of $18.02 last week -- when Schulze was offering an exit strategy for the entire company in the mid-$20s earlier this summer -- they should still be worried.
Best Buy's model may be irreparable. Even if it emphasizes big-ticket appliances along the lines of hhgregg
Automatic? Commonplace? Predetermined? It doesn't matter. Best Buy clearly is overpaying its new CEO -- perhaps its final CEO -- if a seven-figure sale is necessary just to satisfy a tax bite.
Best Buy is not a good buy
I entered a bearish CAPScall on Best Buy in Motley Fool CAPS last year. The call is beating the market so far -- because Best Buy is not. It's a gutsy call now, but I'll stick with it on paper. I wouldn't short Best Buy with real money.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.