The Delves Group Advises Best Buy on New Executive Compensation Principles
CHICAGO, June 15, 2010 – Best Buy Co. (BBY) became the first major company to adopt executive compensation principles based on work by the Independent Directors Executive Compensation (IDEC) Project. The Fortune 100 company worked with executive compensation consultancy The Delves Group to adopt principles to keep compensation in tune with corporate strategies and goals.
“Because certain organizations were being abusive, it was giving a lot of companies who were acting appropriately a bad name,” said Frank Trestman, chairman of the Best Buy Board of Directors’ Compensation Committee in an article published in Agenda, a news outlet targeted to corporate directors. “My compensation committee and our independent compensation consultant thought it was appropriate that we be proactive in establishing guiding principles.”
Best Buy adopted five principles to guide executive compensation last month: alignment, accountability, engagement, purpose, and optimization. The principles are listed in the company’s proxy statement, filed on May 11 and posted on the Market Watch website at http://www.marketwatch.com/investing/stock/BBY/secfilings?subview=proxy.
“Executive compensation principles provide a common language for a more meaningful dialogue with shareholders and employees,” said Don Delves, president of The Delves Group. “Principles-based executive compensation is the cutting edge of corporate governance because it provides a solid conceptual framework for making tough decisions, designing incentives, and creating optimal alignment.”
The Delves Group is working with board and compensation-committee clients like Best Buy to develop executive compensation principles that bring greater clarity and accountability to executive pay. Delves is one of the driving forces behind the IDEC Project, which is “a collective effort by directors, academics and compensation experts to create executive compensation principles that independent directors and boards will voluntarily adopt.”
Best Buy started with the IDEC principles and ultimately used three of its principles. “The IDEC Project’s principles best suited Best Buy’s “culture and objectives”,” stated the Agenda article, quoting Trestman. “Best Buy is the first company known to adopt the principles in some form.”
Other organizations have developed executive compensation principles, including the National Association of Corporate Directors and the Conference Board. For more information and links to executive compensation principles, visit the Principles page of IDEC website at http://www.idecproject.org/principles/.
The complete Agenda article “Best Buy Adopts New Exec Comp ‘Principles’” is available at http://www.agendaweek.com
