Best Buy 2009 Annual Report Download - page 51

CERTAIN RELATIONSHIPS AND RELATED-PARTY
TRANSACTIONS
It is our policy not to participate in material related-party options could extend the lease through 2021. The other
transactions with officers, directors, controlling persons lease expires in 2011 and has renewal options that
and other insiders unless the transaction provides us could extend the lease through 2023 at our option. We
with a demonstrable incremental benefit and the terms entered into both real estate leases with Mr. Schulze
are competitive with terms available from unaffiliated prior to 1990, and the Board negotiated and approved
third parties. Pursuant to our Related-Party Transactions the leases (with Mr. Schulze not voting). The Board
Policy, if a transaction with a related party involving an relied on one or more of its members who had no
amount greater than $120,000 is proposed, members financial interest in the properties to review market
of the Audit Committee who have no financial interest in comparisons, look into alternative rental agreements
the transaction review the transaction to determine and negotiate with Mr. Schulze. The Board determined
whether the necessary incremental benefit is present and that these real estate leases were in our best interest
whether the transaction should be recommended to the and had terms that are competitive with terms available
Board for approval. Members of the Board who have from unaffiliated third parties. Real estate lease renewals
no financial interest in the transaction then review and, are reviewed by the Audit Committee pursuant to our
if appropriate, approve the transaction. In addition, Related-Party Transactions Policy.
ongoing related-party transactions are reviewed We also lease, on a non-exclusive basis, airplanes from
periodically by the Board to ensure that such a corporation owned by the Richard M. Schulze
transactions continue to provide the necessary Revocable Trust, of which Mr. Schulze is a trustee.
incremental benefit to us. Periodically, the Board reviews the terms of the lease
We have a policy of not participating in real estate agreement to ensure that they are competitive with terms
transactions with officers, directors, controlling persons available from unaffiliated third parties. We pay an
and other insiders unless they are approved by the hourly rate for use of the airplanes, without any required
members of the Board who have no financial interest in fractional ownership. Our senior management generally
the transaction. The Board must determine that any real use the airplanes when it is more economical or
estate transaction with an insider has terms that are practical than flying commercial airlines. The total
competitive with terms available from unaffiliated third amount paid to Mr. Schulze’s corporation for use of the
parties. airplanes during fiscal 2009 was $895,000.
We do not have any credit arrangements between our We purchase certain store fixtures from Phoenix
officers, directors, controlling persons and other insiders. Fixtures, Inc. (‘‘Phoenix’’), a company owned by
Mr. Schulze’s brother. Our decision to conduct business
Richard M. Schulze with Phoenix was based on both qualitative and
quantitative factors including product quality, pricing,
We lease two of our U.S. Best Buy stores from customer service and design flexibility. In light of
Richard M. Schulze, a founder of Best Buy and our Mr. Schulze’s relationship with Phoenix, the Board
Chairman of the Board. During fiscal 2009, we paid reviewed our transactions with Phoenix and determined
aggregate rents for the two stores leased from that the transactions were on fair terms to us and that
Mr. Schulze of $1.1 million. The leases include Phoenix provides significant advantages with respect to
escalation clauses, and one provides for percentage rent service and delivery as compared with its competitors.
based on gross sales. One of the leases was scheduled Accordingly, the Board approved the transactions and
to expire in 2008, but we exercised a renewal option in our continued business dealings with Phoenix. The total
fiscal 2009 to continue to lease the store. The renewal
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