Welcome to the annual meeting for Best Buy Co., Inc. I will now introduce our host for today, Chair of the Board, David Kenny.
Good morning, everyone. On behalf of the Board of Directors and the entire Best Buy organization, I would like to thank you for your interest in our company. We know your time is valuable, and we appreciate you taking the time to be with us online today. At this time, I would like to call the 2025 regular meeting of shareholders to order. Joining us today are my fellow board members, Corie Barry, our CEO, Lisa Caputo, Dave Kimbell, Mario Marte, Karen McLoughlin, Claudia Munce, Rochelle Parham, Steve Rendle, Sima Sistani, and Melinda Whittington. In addition to our board members, Todd Hartman, our Chief Legal and Risk Officer and Secretary, is also present, along with other members of our executive team.
Representatives from Deloitte & Touche, our independent auditing firm, are also present and available to answer appropriate questions you may have for them as auditors of the company's financial statements. The meeting agenda, which will govern the order of business at this meeting and the rules of conduct, is available on our virtual shareholder forum. The meeting will be conducted in accordance with that agenda and those rules. Please note that only business matters appropriate for shareholder action may be considered at this meeting. At the end of the meeting, we will have a question-and-answer session. Shareholders of record can submit questions at any time during the meeting through the virtual meeting platform. Please keep in mind that comments made during the meeting may contain forward-looking statements, which are subject to risks and uncertainties.
For more information about the factors that could cause actual results to differ from management's expectations, please see our most recent 10-K and 10-Q filings on our website or on the SEC's website. The board has appointed Jan Cecilio of Broadridge to take an oath and act as inspector of election for this meeting. The polls are open for voting online during the meeting. Most shareholders have already voted by proxy, and we have tallied your proxy votes. For those of you who have not yet voted or who want to change your vote, please vote now by following the instructions online. The polls will close after we announce the items to be voted upon. Until the polls close, any shareholder may revoke or change his or her proxy and may vote on any matter.
The notice of meeting and our proxy materials were mailed by Broadridge, our transfer agent, beginning May 1, 2025, to all shareholders of record as of April 14, 2025, and as a result, the meeting is being held pursuant to proper notice. Proxies representing approximately 90% out of the approximately 211 million shares of the company's outstanding shares eligible to vote have been received, and accordingly, a quorum is present, and the meeting is duly constituted and should proceed. Upon motion, the reading of the minutes of the regular meeting of shareholders held on June 12, 2024, will be waived.
So moved.
I second.
We have requested our shareholders vote on the following items as set forth in our proxy statement. The first item of business is the election of 11 directors nominated by the board, including Corie Barry, Lisa Caputo, David Kenny, Dave Kimbell, Mario Marte, Karen McLoughlin, Claudia Munce, Rochelle Parham, Steve Rendle, Sima Sistani, and Melinda Whittington, each to serve for a one-year term. Our board unanimously recommends a vote in favor of each nominee. The second item of business is the ratification of the appointment of Deloitte & Touche LLP as the company's independent auditor for the current fiscal year ending on January 31, 2026. The board also recommends a vote for this proposal. The third item of business is an advisory vote on the compensation of our named executive officers, or Say-on-Pay, as disclosed in our proxy statement. The board recommends a vote in favor of this proposal.
The fourth item of business is approval of amendment number one to our 2020 Omnibus Incentive Plan, our primary vehicle to award long-term incentive-based compensation. The board recommends a vote for this proposal. Finally, we are seeking your vote on four shareholder proposals if properly presented at the meeting. The company's response to each of these proposals is set forth in our Proxy Statement. The presenting shareholder has three minutes to present their proposal and will be notified when there are 30 seconds remaining, so they may conclude their remarks. Shareholders should restrict their comments to the proposal before the meeting. Out of fairness to all shareholders and in accordance with the rules of conduct, if the shareholder proponent has questions, those questions should be submitted through the virtual meeting platform. The first shareholder proposal was submitted by and will be presented by Mr. John Chevedden. If Mr.
John Chevedden is on the line, I would now ask the operator to unmute his line and allow him to present the proposal.
Mr. Chevedden, your line is open.
Hello, this is John Chevedden. Proposal five, title right to act by written consent. Shareholders request the board of directors take the necessary steps to allow written consent by shareholders entitled to cast a number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon are present and voted. This includes shareholder ability to initiate any appropriate tactic for written consent. Best Buy stock is in the long-term slump. Best Buy stock is significantly below its $142 price in 2021. Now it is at $72. To guard against the Best Buy Board of Directors becoming complacent during the current Best Buy long-term stock price slump, Best Buy shareholders need the ability to act by written consent to potentially help the Best Buy Board adopt new strategies to get out of the current Best Buy stock price slump.
A shareholder ability to act by written consent would be a welcome incentive for Best Buy directors to turn around the current long-term slump in the Best Buy stock price since the continued service of certain Best Buy directors could be terminated by Best Buy shareholders acting by written consent. This is a good incentive for Best Buy directors to act for the benefit of all Best Buy shareholders. This proposal received significant support at the 2021 Best Buy annual meeting. It is needed now more than in 2025 because Best Buy was not in the long-term slump in 2021. Please vote yes. Show the right to act by written consent to proposal five.
Thank you, Mr. Chevedden. Our board of directors has unanimously recommended that our shareholders vote against this proposal for the reasons described in our proxy statement. The second shareholder proposal was submitted by and will be presented by the National Center for Public Policy Research. If a representative of the National Center for Public Policy Research is on the line, I would now ask the operator to unmute the line to allow them to present the proposal.
Ladies and gentlemen of the board and to all listening shareholders, thank you for affording me the time to speak in favor of our proposal, which requests that Best Buy end its affiliation with the Human Rights Campaign's Corporate Equality Index, or CEI. The Corporate Equality Index, for those that do not know, is a voluntary assessment metric published by the Human Rights Campaign, which specifically scores companies on their commitments to the promotion of LGBTQ causes and inclusion. Close attention to the index's metrics, however, reveals that the basis by which companies are graded is apparently arbitrary. As far as we can tell, there do not appear to be any numerical metrics nor objective criteria listed, and each grade appears to be merely the opinion of an ideologically motivated assessor.
Thus, while this metric may be useful for promoting Best Buy to partisans whose political goals are furthered by the CEI, it appears to provide little in the way of shareholder value and has, in fact, historically exposed other companies within the CEI to retaliatory boycotts and diminutions in shareholder value. Additionally, to receive a high score in the CEI, a company's policies seemingly must actively discriminate. Bostock v. Clayton County held five years ago now that policies which discriminate on the basis of sexual orientation and gender identity are violative of the Civil Rights Act. A majority of the criteria within the CEI apparently requires that a company in good standing elevate specific sexual orientations over others, which arguably constitutes actionable discrimination. Continued involvement in the CEI accordingly appears to incentivize corporate practices which cognitively violate anti-discrimination law. Such violations can invite lawsuits from both private and government actors.
Thus, their investment should be viewed as being in everyone's best interest. This proposal is not an attempt to compel Best Buy to discriminate against or exclude employees with non-traditional sexual orientations from corporate life. Rather, withdrawal from the CEI is a prudential move to safeguard shareholder value from needless and eminently foreseeable risk. I concur with the board's statement in opposition in that Best Buy has considerable internal resources to ensure inclusivity and prevent discrimination. I would encourage the board to leverage those resources and exclude outside metrics which are anathema to their own efforts. Thank you for your time and attention, and I encourage you all to vote in favor of our proposal. Thank you.
Thank you. Our board of directors has unanimously recommended that our shareholders vote against this proposal for the reasons described in our proxy statement. The third shareholder proposal was submitted by and will be presented by the Comptroller of the State of New York on behalf of the New York State Common Retirement Fund and Segal Marco Advisors on behalf of the AFL-CIO Equity Index Funds. If a representative of the Comptroller of the State of New York is on the line, I would now ask the operator to unmute the line and allow them to present their proposal.
Mr. White, your line is open.
Thank you. Good morning, Chairman Kenny, directors, members of management, stakeholders, and fellow Best Buy company shareholders. My name is John White. On behalf of New York State Comptroller Tom DiNapoli, trustee of the New York State Common Retirement Fund, which as of March 31 of this year holds approximately 127,000 shares of common stock valued at about $10 million, and on behalf of the fund's co-filer, the AFL-CIO Equity Index Funds, I am here to introduce proposal seven on the proxy report on the company's LGBTQ inclusion efforts in its human capital management strategy. In 2023, Best Buy joined with hundreds of U.S.
companies to sign the Human Rights Campaign's national business statement opposing anti-LGBTQ state legislation and the Count Us In Pledge for the purpose of rejecting anti-LGBTQ threats to Best Buy's values and in order to send a strong message to employees and shareholders and customers that equal treatment for all is not negotiable. Shareholders, including the fund, applauded the company's decision to sign the letter and the pledge as it was a sound business decision. But on March 29, 2024, NBC News reported that Best Buy offered to screen donations from its employee resource groups to LGBTQ causes following outside pressure. Since then, despite additional negative media reports and multiple engagement efforts by the New York State Common Retirement Fund, Best Buy has still not disclosed sufficient detail to explain how this decision is aligned with the company's commitment to LGBTQ inclusion for its employees.
Inclusion is a fundamental value of companies with sound, sustainable, and profitable long-term strategies, and it's essential for employee recruitment and retention. It's a driver of innovation and an element of consumer brand loyalty. The U.S. Chamber of Commerce, in its report, "Business Success and Growth through LGBTQ Inclusive Culture," tells us that the business benefits of inclusion are clear.
We have 30 seconds left.
Thank you. The business benefits of inclusion are clear. Companies that adopt LGBTQ inclusive practices tend to improve their financial standing and do better than companies that do not adopt them. Given stakeholder perception that the company's long commitment to anti-discrimination and inclusiveness for LGBTQ employees has been called into question, along with the growing number of these individuals entering the workforce.
We have three-minute time availability.
Thank you, Mr. White. Our board of directors has unanimously recommended that our shareholders vote against this proposal for the reasons described in our proxy statement. The fourth shareholder proposal was submitted by and will be presented by Globalance Bank on behalf of Mr. Norbert Bärlocher. If a representative of Globalance Bank is on the line, I would now ask the operator to unmute the line to allow them to present their proposal.
Mr. Zollinger, your line is open.
My name is Peter Zollinger. On behalf of Globalance Bank and representing the proponent, I move item of business number eight on the proxy statement, which requests that Best Buy publish a climate transition plan. Whereas we acknowledge Best Buy's existing targets and efforts regarding new emissions, we are concerned that the current approach fails to adequately address the company's operational, competitive, and reputational risks and underestimates the positive competitive business potential. Systematic disclosure is of particular interest to investors given that since 2021, the company's Scope 3 emissions have increased year over year, whereas the bulk of the company's Scope 3 emissions are driven by the energy consumption used by customers to power sold products. The company insufficiently communicates what their planned measures are to reduce the use of sold product emissions.
One example of potential measure would be more prominent energy efficiency labeling, which helps both Best Buy to reduce emissions via the use of sold products, as well as your customers to save money by reducing their household energy bills. To the other shareholders, we invite you to vote for this proposal. Thank you.
Thank you, Mr. Zollinger. Our board of directors has unanimously recommended that our shareholders vote against this proposal for the reasons described in our proxy statement. Each director must receive a majority of votes cast. Each of the other items requires a majority of votes present in person or represented by proxy and entitled to vote in order to be approved. Preliminary results show shareholder approval in alignment with the board's recommendation on all of the proxy items. We expect to post the final voting results on these matters within four business days on a Form 8-K. We have now completed the business portion of our meeting. Is there a motion to adjourn the business portion of the 2025 regular meeting of shareholders?
So moved. I second.
I declare the business portion of our regular meeting of shareholders adjourned. And now we will proceed to the question and answer portion of the meeting facilitated by Molly O'Brien, our Head of Investor Relations.
Thank you, David. Our first question is, why do we give shares to executives and directors? Could we instead just pay them and allow them to purchase shares at a reduced rate with holding period requirements?
Let me take that. The company's compensation policy is performance-based and designed to ensure that executive compensation and shareholder interests are aligned. To that end, the Compensation Committee works to ensure that base salaries are market competitive in order to attract top talent, but weighted similar to those of peers to ensure that the vast majority of direct compensation is variable via both our short-term and long-term incentive programs that tie payouts to achievement of key performance goals and changes in shareholder value. On the director question, every year, the Compensation Committee reviews the total compensation paid to our directors. The purpose of this review is to ensure that the level of compensation is appropriate to attract and retain a diverse group of directors with the breadth of experience necessary to perform the board's duties and to fairly compensate directors for their service.
Our second question is, does Best Buy plan share buybacks in 2025 and how much? Yes, we plan to repurchase approximately $300 million of shares. Our third question, describe a number of means for Best Buy to adapt to tariffs. I appreciate the question that talks about the hard work our team is doing. As a quick reminder, Best Buy only directly imports 2% to 3% of our overall assortment. And the country of origin data has shifted pretty meaningfully on the remainder of that assortment. And that's due to many of our vendors' ability to use production capabilities in multiple countries and leveraging this ability to have different sourcing options to the U.S. So just quickly, the combination of the U.S. and Mexico are about 25% of product cost of goods sold at this point. Those have zero tariffs.
China has come down to 30%-35% of the COGS compared to the 55% metric we had shared in March. About half of that China-sourced products are at the 30% tariffs and roughly half are at 20%. And that leaves roughly 40% of the remaining CE products coming from other countries like Vietnam, India, South Korea, and Taiwan, which are currently at 10% tariffs. And due to the mitigation efforts by both our vendors and by Best Buy, the increased product costs that are flowing to us are actually lower than the overall tariff rates. And I group those mitigation strategies into five main themes. The first we just talked about, which is leveraging that manufacturing flexibility. Since 2018, many vendors, including our own exclusive brands, have created new manufacturing locations that provide great optionality. Two, obviously negotiating costs.
We work with our vendor partners to absorb part of the tariff burden, cost-optimize products, and maybe consolidate volume into fewer partners for leverage in our negotiations. Three, there is ongoing increasing country diversification. We influence some of our partners to start or continue building resiliency into their supply chains by ensuring there are at least two locations available for manufacture. Four, we can adjust assortments. We review and modify assortments to ensure a wide range of customer needs and budgets are met, and then we can also rationalize where appropriate to consolidate volume, and then finally, as a last resort, we are adjusting prices. But I would note and be clear that the cost increase we see does not automatically translate into the consumer price increase, as we always will be competitive in our category. Thank you, Corie. This concludes our question and answer session.
I'll turn the meeting back over to David.
At this time, we conclude the meeting and look forward to connecting with you again next year. Thank you for attending our 2025 shareholder meeting. Have a wonderful day.
The meeting has now concluded. Thank you for joining.