Best Buy 2009 Annual Report Download - page 35

salary, called the ‘‘Incentive Target Percentage.’’ The officers could earn zero to two times their Incentive
Incentive Target Percentage for each named executive Target Percentage. We call this factor the ‘‘Incentive
officer was determined based on application of our Multiplier.’’ The purpose of the Incentive Multiplier is to
Executive Compensation Framework, with particular modify the incentive payout based on actual
emphasis placed on the internal job ranking of each performance compared with targets approved by the
position. We emphasized internal job ranking because Compensation Committee. The performance results are
we believe that it is important that a higher percentage translated to company and team performance scores,
of cash compensation for higher ranking positions be which are then multiplied to determine the Incentive
linked to our performance. In addition, we considered Multiplier. The formula below shows how the short-term
the value of total cash compensation in light of the incentive payments were determined for fiscal 2009:
external factors described in Base Salary, above, to Base Salary  Incentive Target Percentage  Incentive
ensure that we remain competitive in the market for Multiplier(1) = Incentive Payout
executive talent. Based on actual performance (1) Incentive Multiplier = Company Performance
compared with specific goals, the named executive score  Team Performance score
The ‘‘Company Performance’’ score was determined based on our company’s Economic Value Added, or EVA
(‘‘EVA’’) performance for fiscal 2009 compared with a target approved by the Compensation Committee. We believe
the use of EVA as a primary incentive factor demonstrates our desire to link executive compensation with increasing
shareholder value. EVA measures the amount by which our after-tax profits, after certain adjustments, exceed our cost
of capital. Certain unplanned events, such as acquisitions and the effect of accounting changes, are excluded for
purposes of determining EVA. The EVA target for fiscal 2009 was established based on historical company
performance and target-setting practices, as well as investor and market expectations. Based on an analysis of those
factors, our fiscal 2009 EVA target was $476 million, equivalent to approximately 6.5% growth in diluted earnings per
share. The potential EVA ranges and corresponding Company Performance score values for fiscal 2009 were as
follows:
Company
EVA Percentage of Performance
($ in millions) Target Score
$590 or greater 124% or greater 1.60
519 - 589 108% - 124% 1.10 - 1.40
476 - 518 100% - 108% 1.00
396 - 475 83% - 100% 0.50 - 0.90
Less than 395 Less than 83% 0.00
For fiscal 2009, our actual EVA performance was $323 million, which resulted in a Company Performance score of
0.00.
For Messrs. Anderson, Muehlbauer, Dunn and Willett, the ‘‘Team Performance’’ score was determined based on the
average of: (i) our enterprise comparable store sales growth rate, and (ii) our enterprise selling, general and
administrative expenses (‘‘SG&A’’) rate, excluding the acquisition of Best Buy Europe, but including restructuring
charges. For Ms. Ballard and Mr. Morrish, the ‘‘Team Performance’’ score was determined based on the average of:
(i) our domestic comparable store sales growth rate, and (ii) our enterprise SG&A rate, excluding the acquisition of Best
Buy Europe, but including restructuring charges. Our fiscal 2009 performance against each of these metrics was
compared with targets approved by the Compensation Committee. The Team Performance targets were derived from
35