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Thursday, January 16, 2014

Dissecting Best Buy’s Ethic: Where There's Smoke, There's Fire

In 2010, Best Buy’s management adopted executive compensation principles that included a provision that “pay is clearly tied to . . . performance.” Frank Trestman, then chairman of the company’s compensation and human resources committee, made this statement with rose-colored glasses. After just two years, Target's board and upper management abandoned the provision amid poor numbers. Even as the management laid off 2,400 employees (1.4% of the total), the board's compensation committee approved cash bonuses of $500,000 and $2 million in restricted stock for four executives. The interim CEO, Mike Mikan, was at the time hauling in $3.3 million in annual total compensation. In the analysis that follows, I subject this "dual strategy" to two criteria: institutional conflicts-of-interest and distributive justice.

The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.