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Financial well-being (for officers).

Set yourself up for a prosperous future.

2022
benefits guide.

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Incentive pay

A key element of Best Buy’s pay for performance philosophy is incentive pay. In addition to your base pay, incentive pay aligns behaviors and directly links the financial results of your team, location of the company to your actual earnings for the period.

The charts and details shown below reflect plan designs for a typical year. The final STI and LTI plans are decided by the Compensation Committee and Board of Directors each year. Refer to your current plan documents on Best Buy Connect for full details. Incentive pay varies for officers at the Executive Team (ET) level.

Short-Term Incentives (STI)

Your annual STI opportunity is designed to align behaviors to drive strong company performance over the fiscal year by closely linking our pay to company results.

Your position has an incentive target that (typically) ranges from 40 to 75 percent of your base pay. The design of the Officer STI program provides you with the potential to earn up to two times your incentive target. You must be an active employee at the end of the fiscal year to be eligible. Your award is prorated based on the number of months you are in your role.

All Officers are on the same STI program:

  • Enterprise Revenue
  • Enterprise Operating Income
  • Shared Success (Employee and Customer Well-being, Financial Strength, Strategic Progress)

Officer STI

Enterprise Operating Income:
1/3

Enterprise Revenue:
1/3

Shared Success:
1/3

Long-Term Incentives (LTI)

The LTI program is intended to align your interests with those of our shareholders and offers you a significant incentive to lead strategic business initiatives that will keep Best Buy strong in the future. Here’s how the LTI program works:

  • You are eligible to receive LTI grants each year, subject to the Board of Directors’ approval.
  • As a new hire, you will receive a prorated grant for the first year based on your hire date.
  • LTI grants vary by position.

Officer LTI

Restricted Stock

  • Attract talented leaders
  • Retain key employees

Performance Shares

  • Motivate key employees to achieve company strategies
  • Reward employees for achieving longer term goals

Performance Shares – 25%

Time-based Restricted Shares – 75%

Pay and taxes

It’s important to understand how taxes are withheld from different types of pay. See the table below for definitions, examples and tax withholding requirements.

  Definition Tax Withholding Examples

Regular Earnings

Earnings paid for time worked

Federal and state taxes are calculated with each payment, utilizing W-4 selections

  • Salary
  • Paid Time Off

Supplemental Earnings

Non-recurring earnings

  • Federal rate is 22%, increased to 37% when wages exceed $1 million
  • Medicare is 1.45%
  • Additional Medicare is 0.9% (when wages exceed $200,000)
  • Social Security is 6.2% for wages below $142,800
  • State rates vary (MN is 6.25%)

Rates shown are for 2021 and are subject to change for 2022

  • Annual STI Payments
  • Deferred Comp Distribution
  • Signing Bonus
  • Stock Option Exercise
  • Restricted Stock Vesting
  • Relocation

Imputed Earnings

Non-cash taxable awards and fringe benefits

W-4 rate is used

Executive Long-Term Disability Premiums

Tax preparation services

Available to Senior Vice Presidents and above only.

To help you prepare your annual federal and state income taxes, including year-end planning, Best Buy offers you an annual benefit of $7,500 to pay for tax services. This benefit covers tax-preparation services provided by any tax accountant— so you can choose any accounting service. Your annual benefit amount will be included as income on your W-2 Tax Statement.

Here’s what you need to do:

  1. You pay for the tax services you use through the accounting service of your choice.
  2. Send your invoice to the Best Buy HR Support Center via fax at 1-952-430-3006 or scan the invoice and email it to [email protected].
  3. The amount of your tax services, up to $7,500, will be reimbursed via payroll within one to two pay periods.

Deferred Compensation Plan

As an Officer, you are eligible to enroll in the Deferred Compensation Plan within 30 days of your hire date or date of promotion to an Officer level or during open enrollment in the fall. In some years, a mid-year enrollment in July is made available for STI only; you will receive communication if a mid-year enrollment is offered.

Reasons to defer:

  • Save additional money—tax-deferred—above what you can save in your 401(k).*
  • Plan for long-term savings goals such as education, major purchases or retirement, while saving on your taxable income.
  • Reduce your current tax liability by saving a portion of your compensation for the future.
  • Utilize tax-advantaged investment options to help your savings grow and realize your goals.

Compare plan features

Many features of a deferred compensation plan are similar to a 401(k) plan. There are some differences, most notably with flexibility and risk. Here are some similarities and differences.

  401(k) Savings Plan Deferred Compensation Plan

Pre-Tax Deferral Limits

  • $19,500 for 2021**
  • $26,000 for those age 50 and older in 2021**
  • Up to 75% of Base Salary
  • Up to 100% of Cash Bonus and Short-Term Incentive

Employer Matching Contributions

Eligible after one year of service:

  • 100% on the first 3% of eligible pay contributed
  • 50% on the next 2% of eligible pay contributed

None

Changing Deferral Amounts

May change contribution percentage at any time during the year

  • Irrevocable elections
  • May only be changed during open enrollment (effective the next plan year) or may change STI election if a mid-year enrollment is offered

Distribution Elections

Made at time of distribution

  • Made during each enrollment period
  • Apply to that plan year’s account balance

Tax-Deferred Status

Contributions and investment earnings may be tax-deferred until withdrawn (depending on Roth election)

Contributions and investment earnings are tax-deferred until withdrawn or paid

Access to Your Money

  • Hardship withdrawals
  • Withdrawals before age 59½ generally result in a 10% penalty
  • Hardship withdrawals
  • Penalty-free, scheduled distributions available while employed

Portability

You may roll your balance into an IRA or other qualified plan upon termination

No rollover is available

Distribution Options at Termination

  • Partial or lump sum
  • If distributed before age 59½, a 10% penalty may apply
  • May be rolled into an IRA or other qualified plan within 60 days following distribution
  • Lump sum or installment payments (if qualified)
  • No penalty on termination distributions at any age
  • No rollover is available

Investing

You specify among different investment options

You specify among different deemed investment crediting options

Risk

  • Investment risk based on fund selection and market performance
  • Balances are secured by the 401(k) trust
  • Investment risk based on fund selection and market performance
  • The unsecured nature of the plan should be considered before you elect to participate
  • Deferrals and earnings are general, unsecured obligations of the company, subject to claims of the company’s general creditors in the event of bankruptcy or insolvency

*IRS requirements state 401(k) eligible pay must be reduced by the deferred compensation deduction before the 401(k) deduction can be taken; therefore, if you opt to defer your salary for DCP, you may need to increase your 401(k) deferral percentage to achieve your desired savings target for the year
**For current limits, visit www.voya.com/IRSlimits.

Stock Management and Guidelines

Officer stock ownership guidelines

Best Buy has stock ownership requirements because we believe that material ownership will align Officer behaviors with the interests of stakeholders—shareholders, employees, suppliers/partners and the company itself.

These behaviors include:

  • Focusing on new sources for Best Buy’s growth, which, if successful, will drive the future earnings potential of Best Buy’s stock price;
  • Acting like a business owner with a personal stake in matters that affect the long-term health of Best Buy;
  • Instilling a pay-for-performance culture within Best Buy so that our Rewards bear a positive relationship to the shareholder value we have created;
  • Supporting strong governance mechanisms so that we actively protect the investment of all shareholders; and
  • Abiding by standards of conduct that explicitly demonstrate a commitment to our stakeholders in times of high corporate scrutiny.

Please read the following guidelines carefully to ensure that you comply with them.

Covered Employees

All Officers (VPs and up)

Ownership Target Method

Fixed number of shares by Officer position or tier

Ownership Target

  • SVPs: 15,000 shares
  • VPs: 6,000 shares

Multiple Ownership Targets

May have more than one target with different compliance periods

Compliance Requirement

50% holding requirement (of after-tax value) until target ownership level is obtained; ownership target does not need to be met within a certain time frame, as long as progress toward target is being made

Shares Counted Toward Ownership Target

  • 401(k) Co. Stock Fund: Yes
  • ESPP Shares: Yes
  • Personal Holdings (including spouse’s): Yes
  • Vested Stock Options: Yes, limited to 50% of intrinsic value
  • Unvested Stock Options: No
  • Unvested Restricted Stock: Yes, limited to 100% of the after-tax value
  • Unvested Performance Share Awards: No

Stock Retention Requirements

  • Stock Option Exercises: Must retain 50% of net proceeds until target is attained
  • Restricted Stock Vesting: Must retain 50% of shares acquired (net of taxes) until target is attained
  • Performance Share Awards: Must retain 50% of shares acquired (net of taxes) until target is attained
  • Up to 50% of each restricted stock grant can be sold on top of the shares sold to cover taxes

Financial hardship exception

Your compliance with the ownership target may be postponed on account of a financial hardship that cannot be resolved through the use of your other assets or that would be worsened by borrowing. A financial hardship is a significant, immediate financial burden that arises from either:

  • An unforeseeable or unexpected event—such as a divorce or your spouse becoming unemployed; or
  • A foreseeable or planned event—such as college education expenses, family member financial support, tax obligations or home foreclosure.

The process for requesting a financial hardship exception will be administered by the Rewards department with approval by the CEO. All information submitted with the request will be held in strict confidence.

You should be aware that with all investments there is a risk of losing your investment. It is very important to do your own analysis before making any investment based on your own personal circumstances. Past stock performance is no guarantee of future stock performance.

Securities Trading Policy

The Best Buy Securities Trading Policy prohibits employees and their immediate family members from trading in Best Buy securities for 24 hours after the release of material, non-public information, including earnings releases, and any time an individual is in possession of material, non-public information—regardless of whether an official trading ban is in place at that time. Officers are subject to an extended closed trading period that begins a week prior to the end of the quarter through 24 hours following the release of earnings. A closed trading period calendar is available on Best Buy Connect, and a reminder email is sent out to those subject to the extended closed trading period.

The Securities Trading Policy includes a requirement that all Senior Vice Presidents and above receive preclearance from the Best Buy Legal Department before engaging in any transactions involving Best Buy stock. If you wish to engage in a BBY stock transaction, send an email to [email protected] with the details of what you’d like to do (e.g., buy, sell, exercise) and the number of shares to be impacted, along with confirmation in the email that you are not currently in possession of material nonpublic information. A member of the legal team will reply and either request more information or approve or deny your preclearance request.

Manage your stock accounts

Fidelity Mobile® lets you manage your stock plan accounts any time, anywhere. View summaries, get grant and vesting balances and access your personal portfolio on the go at netbenefits.com.

Fidelity Executive Services provides white glove executive support to help with urgent trading and service needs, specialized stock services, activating your Fidelity account, account service and updates, resolution of any service issues or concerns and much more.

Access Fidelity Executive Services through netbenefits.com or call 1-800-823-0217.