Best Buy 2009 Annual Report Download - page 41

executive officers, to acquire ownership of a fixed excess of $1 million paid to the CEO or any of the
number of shares, based on their position, within five three other most highly compensated executive officers,
fiscal years of assuming their current position. The stock unless the compensation qualifies as ‘‘performance-
ownership expectation generally remains effective for as based compensation.’’ Among other things, in order to
long as the officer holds the position. The guidelines be deemed performance-based compensation, the
provide for stock ownership levels for our continuing compensation must be based on the achievement of
named executive officers as follows: pre-established, objective performance criteria and must
be pursuant to a plan that has been approved by our
Name Ownership(1)
shareholders. It is intended that all performance-based
Mr. Anderson 140,000 shares compensation paid in fiscal 2009 to our named
Mr. Muehlbauer 55,000 shares executive officers under the plans and programs
Mr. Dunn 70,000 shares
described above will qualify for deductibility, either
Mr. Willett 55,000 shares
because the compensation is below the threshold for
Ms. Ballard 55,000 shares
non-deductibility provided in Section 162(m), or
(1) Ownership targets will be adjusted for stock splits, stock because the payment of amounts in excess of $1 million
dividends or similar events.
qualify as performance-based compensation under the
The Compensation Committee reviews progress toward provisions of Section 162(m).
achievement of the ownership target at least annually. In
We believe that it is important to continue to be able to
addition to shares personally owned by each officer, the
take available company tax deductions with respect to
following forms of stock ownership count toward the
the compensation paid to our named executive officers.
ownership target:
Therefore, we strive to take all actions that may be
• Equivalent shares owned in the Best Buy Stock necessary under Section 162(m) to qualify for available
Fund within our Retirement Savings Plan; and tax deductions related to executive compensation. We
do not, however, make compensation decisions based
• 50% of non-vested performance shares (based
solely on the availability of a deduction under
on Total Shareholder Returns) granted under our
Section 162(m).
LTIP.
Until the ownership target is met, we expect officers to Accounting Treatment. We account for stock-based
retain: (i) 25% of the net proceeds received from the awards based on their grant date fair value, as
exercise of a stock option in the form of Best Buy determined under SFAS No. 123(R), Share-Based
common stock; and (ii) 100% of shares net of taxes Payment. Compensation expense for these awards is
issued in connection with the lapse of restrictions on recognized on a straight-line basis over the requisite
restricted stock or performance share awards. service period of the award (or to an employee’s eligible
retirement date, if earlier). If the award is subject to a
Tax and Other Considerations
performance condition, however, the cost will vary based
Tax Deductibility of Compensation. Section 162(m) of on our estimate of the number of shares that will
the Code limits the deductibility of compensation in ultimately vest.
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