If you’ve been paying attention, you’ll know that Best Buy has had a rough go in the business world for the last few years. However, with a new CEO at the helm since September of 2012, the company has been performing better and seems steady. Until recently, when news broke that CEO, Hubert Joly, was selling about 450,000 of his shares in the company, despite Best Buy’s stellar performance since he grabbed the reigns.
So why the sale?
It turns out it’s for completely personal reasons - not something that CEOs of big companies are known for.
A Divorce Worth 451,153 Shares
Chris Isidore reported on CNN Money that “Joly disclosed in a filing that he sold 451,153 shares … for a total of $16.7 million.†The motivation is clear: Joly has to pay for a pricey divorce settlement. The problem here is that the actions of a CEO (especially when involved with his own company) generally reflect the health of the company and how others perceive it. Wall Street is definitely watching. But even without a public IPO, the same holds true for small business owners to an extent as well.
Despite the clear (and maybe a little sheepish) explanation that Joly is selling his shares for his divorce payment, those keeping an eye on the company might still suspect that something is going wrong at the highest levels. This sort of change in perception can cause serious problems for a public company and for their board of directors.
Remember, it was less than 18 months ago that the previous Best Buy CEO, Brian Dunn, had resigned “upon mutual agreement.† His resignation was colored by allegations that he’d had an affair with a subordinate (he was married).
Most people, like Dhanya Skariachan in the Christian Science Monitor, recognize that Best Buy is currently on a comeback - with stock tripling over last year’s. In reality, Joly has done an excellent job at turning Best Buy around from a 9-year low on Wall Street.
But this is what makes his recent sell-off even stranger - it will no doubt work against the strong progress the company has made under his leadership. It looks like the company has managed to pull itself out of a troubling spot with Joly’s help. Yet the move to sell his shares in such a way could be seen as unprofessional.
I’m sure he and Best Buy wish the sale could remain private.
Small or Large Businesses: The Choices We Make
Running a small business is often a difficult and overwhelming task. I know it requires a great deal of time, especially for whoever is at the helm. We can say the same for the CEOs of many of the biggest companies. Of course, those bigwigs often get a bit more compensation for their work than small business owners do, however, they are also more constrained as to the actions they can take compared to small business owners.
Small business owners can be relatively lax when it comes to involving their personal issues in business, and using the business as a way to help deal with unplanned problems. This can be a risky choice to make as a business owner. There is a chance that everything will be fine, but other times, it can hurt the business immensely. Joly is certainly in a peculiar position with the selling of his shares, as it’s extremely rare for this to happen to CEOs at his level.
Whether large or small, business is business - and we can all learn from Joly’s actions when it comes to making risky or questionable moves with a business, particularly for personal reasons.
Have you ever made risky financial move like this with your business?
Shutterstock: divorce image
