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NOTICE OF 2009 REGULAR MEETING OF SHAREHOLDERS

Regardless of whether you expect to attend the meeting in person, please vote your shares in one of the three ways outlined above.

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE REGULAR MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 24, 2009:

This Notice of 2009 Regular Meeting of Shareholders and Proxy Statement and our Annual Report on Form
10-K for the fiscal year ended February 28, 2009, are available at www.proxyvote.com.

Help us make a difference by eliminating paper proxy mailings to your home or business. As permitted by rules adopted by the U.S. Securities and Exchange Commission, we are pleased to make our proxy materials available electronically via the Internet. If you received by mail a Notice of Internet Availability, you will not receive a printed copy of the proxy materials. You may, however, opt to receive a printed copy of our proxy materials by following the instructions for requesting our proxy materials included in such Notice.

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BEST BUY CO., INC.
7601 Penn Avenue South
Richfield, Minnesota 55423

PROXY STATEMENT

REGULAR MEETING OF SHAREHOLDERS — JUNE 24, 2009

GENERAL INFORMATION

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Best Buy Co., Inc. (“Best Buy,” “we,” “us,” or “our”) to be voted at our 2009 Regular Meeting of Shareholders (the “Meeting”) to be held on Wednesday, June 24, 2009, at 9:30 a.m., Central Time, at the Best Buy Corporate Campus — Theater, 7601 Penn Avenue South, Richfield, Minnesota, or at any postponement or adjournment of the Meeting. The proxy materials were either made available to you over the Internet or mailed to you beginning on or about [May 12, 2009].

Background

What is the purpose of the Meeting?

At the Meeting, shareholders will vote on the items of business outlined in the Notice of 2009 Regular Meeting of Shareholders (the “Meeting Notice”), included as the cover page to this proxy statement. In addition, management will report on our business and respond to questions from shareholders.

Why did I receive a Notice of Internet Availability or why did I receive this proxy statement and a proxy card?

You received a Notice of Internet Availability or this proxy statement and a proxy card because you owned shares of Best Buy common stock as of April 27, 2009, the record date for the Meeting, and are entitled to vote on the items of business at the Meeting. This proxy statement describes the items of business that will be voted on at the Meeting and provides information on these items so that you can make an informed decision.

Who may vote?

In order to vote at the Meeting, you must be a shareholder of record of Best Buy as of April 27, 2009, which is the record date for the Meeting. If your shares are held in “street name” (that is, through a bank, broker or other nominee), you will receive instructions from the shareholder of record that you must follow in order for your shares to be voted as you choose.

When is the record date?

The Board has established April 27, 2009, as the record date for the Meeting.

How many shares of Best Buy common stock are outstanding?

As of the record date, there were [                      ] shares of Best Buy common stock outstanding. There are no other classes of capital stock outstanding.

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Voting Procedure

On what items of business am I voting?

You are being asked to vote on the following items of business:

·      The election of seven Class 2 directors for a term of two years and the ratification of the appointment of one Class 1 director;

·      The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending February 27, 2010;

·      The approval of amendments to our 2004 Omnibus Stock and Incentive Plan, as amended (the “Omnibus Plan”);

·      The approval of amendments to our Amended and Restated Articles of Incorporation; and

·      Such other business as may properly come before the Meeting.

How do I vote?

If you are a shareholder of record (that is, if your shares are owned in your name and not in “street name”), you may vote:

·      Via the Internet at www.proxyvote.com;

·      By telephone (within the U.S. or Canada) toll-free at 1-800-690-6903;

·      By signing and returning the enclosed proxy card; or

·      By attending the Meeting and voting in person.

If you wish to vote by Internet or telephone, you must do so before 11:59 p.m., Eastern Time, on Tuesday, June 23, 2009. After that time, Internet and telephone voting will not be permitted, and a shareholder wishing to vote, or revoke an earlier proxy, must submit a signed proxy card or vote in person.

In accordance with the rules of the U.S. Securities and Exchange Commission (“SEC”), we are sending all shareholders who have not affirmatively opted to receive paper materials, all of their proxy materials via the Internet. However, you may opt to receive paper copies of proxy materials, at no cost to you, by following the instructions contained in the Notice of Internet Availability.

“Street name” shareholders who wish to vote at the Meeting will need to obtain a proxy form from the institution that holds their shares of record.

How are my voting instructions carried out?

When you vote via proxy, you appoint Richard M. Schulze and Elliot S. Kaplan (the “Proxy Agents”) as your representatives at the Meeting. The Proxy Agents will vote your shares at the Meeting, or at any postponement or adjournment of the Meeting, as you have instructed them on the proxy card. If you return a properly executed proxy card without specific voting instructions, the Proxy Agents will vote your shares in accordance with the Board’s recommendations. With proxy voting, your shares will be voted regardless of whether you attend the Meeting. Even if you plan to attend the Meeting, it is advisable to vote your shares via proxy in advance of the Meeting in case your plans change.

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If an item comes up for vote at the Meeting, or at any postponement or adjournment of the Meeting, that is not described in the Meeting Notice, the Proxy Agents will vote the shares subject to your proxy at their discretion.

How many votes do I have?

You have one vote for each share you own, and you can vote those shares for each item of business to be addressed at the Meeting.

How many shares must be present to hold a valid Meeting?

For us to hold a valid Meeting, we must have a quorum, which means that a majority of the outstanding shares of our common stock that are entitled to vote are present at the Meeting. Your shares will be counted as present at the Meeting if you:

·      Vote via the Internet or by telephone;

·      Properly submit a proxy card (even if you do not provide voting instructions); or

·      Attend the Meeting and vote in person.

How many votes are required to approve an item of business?

Pursuant to our Amended and Restated Articles of Incorporation and our Amended and Restated By-laws, each item of business to be voted on by the shareholders requires the affirmative vote of the holders of a majority of the shares of Best Buy common stock present at a meeting and entitled to vote.

The election of directors and the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm are considered “routine” matters under New York Stock Exchange (“NYSE”) rules. The NYSE rules allow brokerage firms to vote their clients’ shares on routine matters if the clients do not provide voting instructions at least 10 days prior to the shareholder meeting. The approval of amendments to our 2004 Omnibus Stock and Incentive Plan and Amended and Restated Articles of Incorporation are considered “non-routine” matters under NYSE rules. The NYSE rules do not allow brokerage firms to vote their clients’ shares on non-routine matters in the absence of affirmative voting instructions.

If your brokerage firm votes your shares on routine matters because you do not provide voting instructions, your shares will be counted for purposes of establishing a quorum to conduct business at the Meeting and in determining the number of shares voted for or against the routine matter. If your brokerage firm lacks discretionary voting power with respect to an item that is not a routine matter and you do not provide voting instructions (a “broker non-vote”), your shares will be counted for purposes of establishing a quorum to conduct business at the Meeting, but will not be counted in determining the number of shares voted for or against the non-routine matter. Abstentions are counted as present and entitled to vote for purposes of determining a quorum and will have the same effect as votes against a proposal.

What if I change my mind after I vote via proxy?

You may revoke your proxy at any time before your shares are voted by:

·      Submitting a later-dated proxy prior to the Meeting (by mail, Internet or telephone);

·      Voting in person at the Meeting; or

·      Providing written notice to Best Buy’s Secretary at our principal office.

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Where can I find the voting results of the Meeting?

We will announce the preliminary voting results at the Meeting. We will publish the final voting results in our Quarterly Report on Form 10-Q for our second fiscal quarter ending August 29, 2009. Our Quarterly Report on Form 10-Q is required to be filed with the SEC within 40 days of the end of our fiscal quarter.

Proxy Solicitation

How are proxies solicited?

We will request that brokerage firms, banks, other custodians, nominees, fiduciaries and other representatives of shareholders forward the Notice of Internet Availability and, as applicable, the proxy materials, themselves, to the beneficial owners of our common stock. We expect to solicit proxies primarily by Internet and mail, but directors, officers, other employees and agents of Best Buy may also solicit proxies in person, by telephone, through electronic transmission and by facsimile transmission. Directors and employees of Best Buy do not receive additional compensation for soliciting shareholder proxies.

Who will pay for the cost of soliciting proxies?

We pay all of the costs of preparing, printing and distributing proxy materials. We will reimburse brokerage firms, banks and other representatives of shareholders for reasonable expenses incurred as defined in the NYSE schedule of charges.

How can multiple shareholders sharing the same address request to receive only one set of proxy materials and other investor communications?

If you opt to continue to receive paper copies of our proxy materials, you may elect to receive future proxy materials, as well as other investor communications, in a single package per address. This practice, known as “householding,” is designed to reduce our printing and postage costs. To make the election, please indicate on your proxy card under “Householding Election” your consent to receive such communications in a single package per address. Once we receive your consent, we will send a single package per household until you revoke your consent by notifying our Investor Relations Department at 7601 Penn Avenue South, Richfield, MN 55423, or by telephone at (612) 291-6147. We will start sending you individual copies of proxy materials and other investor communications within 30 days of your revocation.

Can I receive the proxy materials electronically?

Yes. Shareholders who have not affirmatively opted to receive paper proxy materials through the mail will receive a Notice of Internet Availability and may access our proxy materials electronically via the Internet. Electronic delivery saves us the costs of printing and mailing these materials. We encourage our shareholders to access our proxy materials via the Internet because it reduces our expenses for, and reduces the environmental impact of, our shareholder meetings. In 2008, electronic delivery saved approximately 50 tons of paper that would otherwise have been consumed in the production of proxy materials. You may opt to receive paper copies of proxy materials, at no cost to you, by following the instructions we will provide in advance of the distribution of our 2009 proxy materials.

An electronic version of this proxy statement is posted on our Web site at www.BestBuy.com — select the “For Our Investors” link and then either the “SEC Filings” link or the “Corporate Governance” link.

Additional Information

Where can I find additional information about Best Buy?

Our reports on Forms 10-K, 10-Q and 8-K, and other publicly available information should be consulted for other important information about Best Buy. You can also find additional information about Best Buy on our Web site at www.BestBuy.com.

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CORPORATE GOVERNANCE AT BEST BUY

Our Board is elected by the shareholders to oversee our business and affairs. In addition, the Board advises management regarding a broad range of subjects including Best Buy strategies and operating plans. Members of the Board monitor and evaluate our business performance through regular communication with our Chief Executive Officer (“CEO”) and other members of management, and by attending Board meetings and Board committee meetings.

The Board values effective corporate governance and adherence to high ethical standards. As such, the Board has adopted Corporate Governance Principles for our directors and our Code of Business Ethics, both of which are posted on our Web site at www.BestBuy.com — select the “For Our Investors” link and then the “Corporate Governance” link. Paper copies of these documents are available to shareholders free of charge upon request.

Board Meetings and Attendance

The Board held four regular meetings and two special meetings during the fiscal year ended February 28, 2009. Each incumbent director attended, in person or by telephone, at least 75% of the meetings of both the Board and Board committees on which he or she served. In fiscal 2009, the average attendance by our incumbent directors at Board and Board committee meetings exceeded 95%. Our Board does not have a formal policy relating to director attendance at our regular meetings of shareholders; however, our directors generally attend the shareholders’ meeting each year. Each of the then-serving directors attended the 2008 Regular Meeting of Shareholders.

Committees of the Board

The Board has the following four committees:

·      Audit Committee;

·      Compensation and Human Resources Committee;

·      Nominating, Corporate Governance and Public Policy Committee; and

·      Finance and Investment Policy Committee.

The charters for each of the Board committees are posted on our Web site at www.BestBuy.com — select the “For Our Investors” link and then the “Corporate Governance” link. The charters include information regarding the committees’ composition, purpose and responsibilities. Paper copies of these documents are available to shareholders free of charge upon request.

The Board has determined that all members of the Audit Committee, Compensation and Human Resources Committee, and Nominating, Corporate Governance and Public Policy Committee are independent directors as defined under the SEC and NYSE corporate governance rules, as applicable.

The Board committees have responsibilities as follows:

Audit Committee.  This committee discharges the Board’s oversight responsibility to Best Buy’s shareholders and the investment community regarding: (i) the integrity of our financial statements and financial reporting processes; (ii) our internal accounting systems and financial and operational controls; (iii) the qualifications and independence of our independent registered public accounting firm; (iv) the performance of our internal audit function and our independent registered public accounting firm; and (v) our compliance with ethics programs, including our Code of Business Ethics, and legal and regulatory requirements.

In carrying out these duties, this committee maintains free and open communication between the Board, our independent registered public accounting firm, our internal auditors and management. This committee meets with management, our internal audit staff and our independent registered public accounting firm at least quarterly. In addition, this committee

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conducts quarterly conference calls with management and our independent registered public accounting firm prior to our earnings releases to discuss the results of our independent registered public accounting firm’s quarterly reviews and fiscal year-end audit.

Compensation and Human Resources Committee.  This committee discharges the Board’s responsibilities related to executive officer and director compensation, including the establishment of our executive and director compensation philosophies, and evaluation of our CEO. This committee also oversees the development and evaluation of, and approves, equity-based and other incentive compensation and other employee benefit plans of a compensatory nature, and oversees our human capital policies and programs.

Nominating, Corporate Governance and Public Policy Committee.  This committee discharges the Board’s responsibilities related to general corporate governance, including Board organization, membership, training and evaluation. It also reviews and recommends to the Board corporate governance principles, presents qualified individuals for election to the Board, and oversees the evaluation of the performance of the Board and its committees. Finally, this committee oversees matters of public policy and social responsibility that affect us domestically and internationally. For additional information regarding our director nomination process, see Director Nomination Process on page [      ].

Finance and Investment Policy Committee.  This committee advises the Board regarding our financial policies and financial condition to help enable us to achieve our long-range goals. It evaluates and monitors the: (i) protection and safety of our cash and investments; (ii) achievement of reasonable returns on financial assets within acceptable risk tolerance; (iii) maintenance of adequate liquidity to support our activities; (iv) assessment of the cost and availability of capital; and (v) alignment of our strategic goals and financial resources.

The following table shows the date each committee was established, the number of meetings held in fiscal 2009 and the names of the directors serving on each committee as of April 23, 2009:

*                                            Chairman

Director Nomination Process

The Nominating, Corporate Governance and Public Policy Committee (“Nominating Committee”) is responsible for screening and recommending to the full Board director candidates for nomination. The Nominating Committee will often engage a third-party search firm to assist in identifying appropriate candidates to consider as additions to our Board. When there is an opening on the Board, the Nominating Committee will also consider nominations received from our shareholders, provided that proposed candidates meet the requisite director qualification standards discussed below.

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When the Board elects to fill a vacancy on the Board, the Nominating Committee will announce the open position and post any additional search criteria on our Web site at www.BestBuy.com — select the “For Our Investors” link and then the “Corporate Governance” link. Candidates recommended by shareholders, if qualified, will be considered in the same manner as any other candidate.

The Nominating Committee will then evaluate the resumes of any qualified candidates recommended by a search firm or shareholders, as well as by members of the Board. Generally, in order to be considered for nomination, a candidate must have:

·      High professional and personal ethics and values;

·      A strong record of significant leadership and meaningful accomplishments in his or her field;

·      Broad policy-making experience;

·      The ability to think strategically;

·      Sufficient time to carry out the duties of Board membership; and

·      A commitment to enhancing shareholder value and representing the interests of all shareholders.

All candidates are evaluated based on these qualification standards and the current needs of the Board.

Shareholder nominations must be accompanied by a candidate resume which addresses the extent to which the nominee meets the director qualification standards and any additional search criteria posted on our Web site. Nominations will be considered only if we are currently seeking to fill an open director position. All nominations by shareholders should be submitted as follows:

Chairman, Nominating, Corporate Governance and Public Policy Committee

c/o Mr. Joseph M. Joyce

Senior Vice President, General Counsel and Assistant Secretary

Best Buy Co., Inc.

7601 Penn Avenue South

Richfield, Minnesota, 55423

Director Independence

Pursuant to its Corporate Governance Principles, the Board has established independence standards consistent with the requirements of the SEC and NYSE corporate governance rules, as applicable. To be considered independent under the NYSE rules, the Board must affirmatively determine that a director or director nominee does not have a material relationship with Best Buy (directly, or as a partner, shareholder or officer of an organization that has a relationship with Best Buy). In addition, NYSE rules provide that no director or director nominee may be deemed independent if the director or director nominee

— has in the past three years:

·      Received (or whose immediate family member has received as a result of service as an executive officer) more than $120,000 during any 12-month period in direct compensation from Best Buy, other than director and committee fees and certain pension payments and other deferred compensation;

·      Been an employee of Best Buy;

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·                   Had an immediate family member who was an executive officer of Best Buy;

·                   Worked on (or whose immediate family member has worked on) our audit as a partner or an employee of our internal auditors or independent registered public accounting firm; or

·                   Been (or whose immediate family member has been) employed as an executive officer of another company whose compensation committee at that time included a present executive officer of Best Buy; or

— is:

·                   A partner of our internal auditor or independent registered public accounting firm, or an employee of our internal auditor or independent registered public accounting firm personally working on our audit (or whose immediate family member is a partner of such firm or is employed by such firm to personally work on our audit); or

·                   An employee (or has an immediate family member who is an executive officer) of another company that makes payments to Best Buy, or receives payments from Best Buy, for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues.

Under our director independence standards described above, the Board has determined that each director (including former director Mary A. Tolan), with the exception of Messrs. Anderson, Kaplan, Lenzmeier and Schulze, is independent. The Board based these determinations primarily on a review of the responses of the directors to questions regarding employment and compensation history, affiliations, and family and other relationships, and on discussions with our directors. The Board also reviewed the relationships between Best Buy and companies with which our directors are affiliated and determined that the relationships with affiliates of current directors Messrs. Mikan, Trestman and Tyabji are not material and do not impair the directors’ independence. For additional information regarding these relationships, see Certain Relationships and Related-Party Transactions on page [    ].

Mr. Mikan, a director since April 2008, is executive vice president and chief financial officer of UnitedHealth Group Incorporated (“UnitedHealth”). Since 2003, we have had a health benefit services agreement with UnitedHealth. The amounts we have paid to UnitedHealth, most of which are for employee medical and pharmaceutical costs administered on our behalf by UnitedHealth, were an insignificant portion of the annual consolidated revenue of each of the companies for each of the past three fiscal years. In addition, Mr. Mikan did not participate in negotiating or executing our agreement with UnitedHealth.

Mr. Trestman has been a director since 1984. We lease retail space in a real estate development in which Mr. Trestman and his son-in-law have an interest. Their interest in the development was not deemed material to Mr. Trestman’s independence because the amount of our annual lease payment is less than $1 million and the retail square-footage leased constitutes less than 15% of the total leasable square-footage in the development. In addition, Mr. Trestman did not participate in negotiating or executing our lease agreement.

Mr. Tyabji, a director since 1998, has served as chairman of the board of directors of Jasper Wireless, Inc. (“Jasper”) since November 2008. We purchase wireless data connectivity services from Jasper for our private label mobile navigation devices. We paid $2 million to Jasper in fiscal 2009, which represented approximately 10% of its recognized revenue for the year. Mr. Tyabji is not an employee of Jasper, nor did he participate in negotiating or executing our agreement with Jasper.

Board Composition

The Board is committed to highly effective corporate governance that reflects the interests of our shareholders, customers and employees. To ensure a diversity of perspectives, the Board seeks a balance of internal experience and external independent expertise.  This combination of perspectives also helps to ensure that we sustain our corporate culture, which is a cornerstone of our legacy and a key competitive advantage. In addition, the Board has diligently focused on the

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succession and development of our senior officers including, in particular, the internal candidates for our CEO, who also serves on the Board.

In accordance with these interests and the principles of effective corporate governance, in April 2009, the Board adopted a long-term goal recommended by the Nominating Committee to have at least 75% of our directors be independent.  However, in the short-term, we expect the number of non-independent directors to increase due to the likely appointment of the incoming CEO to the Board.  In addition, consistent with the Board’s careful planning for the director skill sets required today and in the future, and in order to have an orderly succession and transition of directors, the Board has determined that it is in the best interests of our company and shareholders that the incumbent non-independent directors complete the terms to which they have been elected or will likely be elected this year.

The Board believes that the careful stewardship of our company and culture during a time of leadership transition merits a temporary increase in the total number of directors and the ratio of non-independent directors.  We expect that at least 75% of the directors will be independent following the 2011 regular meeting of shareholders.

Executive Sessions of Non-Management, Independent Directors

In order to promote open discussion among non-management directors, the Board has a policy of conducting executive sessions of independent directors during each regularly scheduled Board meeting. This session is chaired by the independent directors on a rotating basis.

Communications With the Board

Shareholders and interested parties who wish to contact the Board, any individual director, or the non-management or independent directors as a group, are welcome to do so in writing, addressed to such person(s) in care of:

Mr. Joseph M. Joyce

Senior Vice President, General Counsel and Assistant Secretary

Best Buy Co., Inc.

7601 Penn Avenue South

Richfield, Minnesota 55423

Mr. Joyce will forward all written shareholder correspondence to the appropriate director(s), except for spam, junk mail, mass mailings, customer complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. Mr. Joyce may, at his discretion, forward certain correspondence, such as customer-related inquiries, elsewhere within Best Buy for review and possible response. Comments or questions regarding Best Buy’s accounting, internal controls or auditing matters will be referred to members of the Audit Committee. Comments or questions regarding the nomination of directors and other corporate governance matters will be referred to members of the Nominating Committee.  Comments or questions regarding executive compensation will be referred to members of the Compensation and Human Resources Committee (“Compensation Committee”).

Director Orientation and Continuing Education

Our Nominating Committee oversees the orientation and continuing education of our directors. Director orientation familiarizes directors with our strategic plans; significant financial, accounting and risk management issues; compliance programs and other controls; policies; principal officers and internal auditors; and our independent registered public accounting firm. The orientation also addresses Board procedures, directors’ responsibilities, Corporate Governance Principles and our Board committee charters.

We also offer continuing education programs to assist the directors in maintaining their expertise in these areas. In addition, our directors have the opportunity to attend commercial director education seminars related to the director’s committee assignment(s) or to the work of the Board. In fiscal 2009, we conducted an orientation for one new member of the Board and conducted one continuing education session for the Board.

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Director Compensation

Overview of Director Compensation

In April of each year, the Compensation Committee reviews the total compensation paid to non-management directors. The purpose of the 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. The review is comprehensive and includes consideration of qualitative and comparative factors. To ensure directors are compensated relative to the scope of their responsibilities, the Compensation Committee considers: (i) the time and effort involved in preparing for Board, committee and management meetings and the additional duties assumed by committee chairs; (ii) the level of continuing education required to remain informed of broad corporate governance trends, and material developments and strategic initiatives within Best Buy; and (iii) the risks associated with fulfilling fiduciary duties. To supplement the qualitative analysis, the Compensation Committee also considers the total value of the compensation as compared with director compensation at other Fortune 100 companies and our peer group of companies, which is described in How We Determine Compensation on page [      ].

Director Summary Compensation Table

The following table summarizes the compensation earned by our non-management directors and management directors that are not named executive officers (as described on page [    ]), during fiscal 2009:

1                                            Management directors did not receive any cash compensation for their service as directors during fiscal 2009. The cash compensation in fiscal 2009 for each of our non-management directors consisted of:

The annual retainer and the annual committee chair retainer for non-management directors who serve during only a portion of a fiscal year are prorated. All annual retainers are paid in quarterly installments.

2                                            These amounts reflect the expense recognized for financial statement reporting purposes in fiscal 2009 in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), Share-Based Payment (“123(R)”), for stock options granted under our Omnibus Plan. The amounts reported have been adjusted to eliminate service-based forfeiture assumptions used for financial reporting purposes. The assumptions used in calculating these amounts are set forth in Note 7, Shareholders’ Equity, to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

At February 28, 2009, the aggregate number of shares subject to outstanding stock option awards was: Ms. Higgins Victor — 45,000 shares; Mr. James — 45,000 shares; Mr. Kaplan — 101,250 shares; Mr. Khosla — 3,750 shares; Mr. Lenzmeier —

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825,000 shares; Mr. Mikan — 7,500 shares; Mr. Paull — 45,000 shares; Mr. Rebolledo — 20,000 shares; Mr. Schulze — 1,736,250 shares; Mr. Trestman — 101,250 shares; Mr. Tyabji — 78,750 shares; and Mr. Vittecoq — 3,750 shares.

3                                            We do not provide guaranteed, above-market or preferential earnings on compensation deferred under our Fourth Amended and Restated Deferred Compensation Plan (“Deferred Compensation Plan”). The options available for notional investment of deferred compensation are similar to those available under the Best Buy Retirement Savings Plan (“Retirement Savings Plan”) and are described in Non-Qualified Deferred Compensation on page [      ].

4                                            Mr. Khosla was appointed as a Class 2 director effective October 15, 2008.

5                                            The amount includes: (a) payment of $60,000 in salary for Mr. Lenzmeier’s employment as Vice Chairman, as described below in Employment Arrangement for Allen U. Lenzmeier; (b) payment of $2,100 in matching contributions under our Retirement Savings Plan; (c) payment of $72 in premiums for executive long-term disability insurance; (d) reimbursement of $2,000 for tax preparation expenses and (e) payment of $166 in tax gross-ups.

6                                            Mr. Mikan was appointed as a Class 2 director effective on April 9, 2008.

7                                            Mr. Schulze requested that he not be granted a long-term incentive award and that options to purchase the number of shares he would have received be contributed to a discretionary award pool to be distributed to our employees.

8                                            The amount includes: (a) payment of $150,000 in salary for Mr. Schulze’s employment as Chairman of the Board, as described below in Employment Arrangement for Richard M. Schulze; (b) payment of $5,250 in matching contributions under our Retirement Savings Plan; (c) payment of $9,144 in premiums for life insurance coverage exceeding $50,000; and (d) payment of $260 in premiums for executive long-term disability insurance. Not reflected in the amount are the following benefits Mr. Schulze received from third-parties in connection with his relationship with Best Buy: (a) satellite TV service; and (b) cellular phone equipment and service.

9                                            For professional reasons, Ms. Tolan resigned from the Board of Directors on August 14, 2008. Her resignation was effective immediately.

10                                        Mr. Vittecoq was appointed as a Class 1 director effective September 26, 2008.

Employment Arrangement for Richard M. Schulze In April 2007, we entered into an amended employment arrangement with Richard M. Schulze, a founder of Best Buy, our current Chairman of the Board and our former CEO. Mr. Schulze is responsible as Chairman for Board oversight, corporate strategic planning and mentoring company officers. Mr. Schulze also periodically represents Best Buy at public functions and actively engages with employees at designated company functions. Pursuant to our employment arrangement with Mr. Schulze, he received an annual salary of $150,000 for as long as he is physically and mentally proficient to act as Chairman, subject to his election as a director by our shareholders. The arrangement allows for annual increases based on the consumer price index. Mr. Schulze is not eligible to participate in our equity-based compensation programs for employees. However, he is eligible to receive options to purchase the same number of shares granted to non-management directors, as described in Director Equity Awards on page [      ]. In addition, we provided the following benefits to Mr. Schulze in fiscal 2009: (i) reimbursement of all business-related expenses, including travel, entertainment, room and board; (ii) eligibility for Mr. Schulze and his spouse to participate in health benefit programs generally available to our employees; (iii) office facilities at our corporate campus, including full administrative support services; and (iv) eligibility to participate in our Retirement Savings Plan and Deferred Compensation Plan.

Employment Arrangement for Allen U. Lenzmeier

In fiscal 2009, Allen U. Lenzmeier, a Vice Chairman, provided consulting services to us in connection with our international expansion projects. Pursuant to our employment arrangement with Mr. Lenzmeier, we paid Mr. Lenzmeier an annual salary of $60,000 to work on a part-time basis. Mr. Lenzmeier was not eligible to participate in our equity-based compensation programs for employees, except our 2008 Employee Stock Purchase Plan (“ESPP”). However, he received options to purchase the same number of shares granted to non-management directors, as described in Director Equity Awards below. In addition, we provided the following benefits to Mr. Lenzmeier in fiscal 2009: (i) reimbursement of all business-related expenses, including travel, entertainment, room and board; (ii) office facilities at our corporate campus, including administrative support services; and (iii) eligibility to participate in our Retirement

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Savings Plan and Deferred Compensation Plan. Mr. Lenzmeier terminated his employment arrangement with us as of the end of fiscal 2009 but will continue to serve as a director for the remainder of his term through June 2010.

Director Equity Awards

A significant portion of director compensation is linked to our stock performance in the form of stock option grants. Each April, in connection with the Compensation Committee’s annual review of director compensation, the Compensation Committee considers a stock option award for directors. On April 8, 2008, the Compensation Committee granted to each then-serving director, other than management directors who are eligible to participate in our equity-based compensation programs for employees, an option to purchase 7,500 shares of Best Buy common stock at an exercise price of $42.19 per share. Mr. Schulze requested that he not be granted a long-term incentive award and that options to purchase the number of shares he would have received be contributed to a discretionary award pool to be distributed to our employees. The grants were made under the Omnibus Plan, vested immediately on the grant date and can generally be exercised over a 10-year period.

The Compensation Committee also considers stock option grants for new directors at the time they are appointed to the Board. Because annual director stock option grants are made in April, special appointment-based grants are prorated based on the number of months remaining prior to the time when the Compensation Committee expects to consider the next annual director grant.

Director Stock Ownership Guidelines

The Compensation Committee has established stock ownership guidelines for our non-management directors. Each non-management director is expected to own shares of our common stock equivalent in value to five times their annual cash retainer. Newly appointed directors have five years from their date of appointment to achieve the expected level of stock ownership.

Deferred Compensation Plan

Each calendar year, we offer directors the right to defer up to 100% of their annual and committee chair retainers under our Deferred Compensation Plan which is described in Non-Qualified Deferred Compensation Plan on page [    ]. No company contributions or matching contributions are made for the benefit of directors under the Deferred Compensation Plan.

Other Benefits

We reimburse all directors for travel and other necessary business expenses incurred in performance of their services for us. In addition, all directors are covered under a directors’ and officers’ indemnity insurance policy.

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ITEM OF BUSINESS NO. 1 — ELECTION OF DIRECTORS

General Information

Our Amended and Restated By-laws provide that the Board may consist of a maximum of 13 directors, six of whom are designated as Class 1 directors and seven of whom are designated as Class 2 directors. Directors are elected for a term of two years, and the terms are staggered so that Class 1 directors are elected in even-numbered years and Class 2 directors are elected in odd-numbered years.

Board Structure

Our Board is committed to having a sound governance structure that promotes the best interests of all Best Buy shareholders. To that end, our Board has evaluated and actively continues to examine emerging corporate governance trends and best practices. Shareholder perspectives play an important role in that process. The level of importance afforded to shareholder perspectives by our Board is evident upon a closer review of the Board’s governance structure. Some key points regarding that structure are as follows:

·                   We believe that two-year terms allow our directors to have a longer-term orientation to our business and encourage long-term, strategic thinking. At the same time, this structure holds the directors accountable to our shareholders, as the entire Board is subject to re-election as early as 53 weeks from any regular meeting of shareholders. Moreover, we believe that the two-year terms promote continuity and foster an appropriate “institutional memory” among directors.

·                   Our Board is predominantly independent. Of our 13 directors, only three are Best Buy employees (including our Chairman of the Board, who is a founder of Best Buy and a major shareholder). Further, the Board has affirmatively determined that nine of our 13 directors are independent under SEC and NYSE corporate governance rules, as applicable.

·                   We have separated the roles of Chairman of the Board and CEO. Our Chairman focuses on Board oversight responsibilities, strategic planning and mentoring company officers. Our Chairman also periodically represents Best Buy at public functions and actively engages with employees at designated company functions. Our CEO focuses on the development and execution of company strategies.

·                   Our Board is very active. Our directors attended, on average, over 95% of fiscal 2009 Board and Board committee meetings.

We believe our Board structure serves the interests of shareholders by balancing Board continuity and the promotion of long-term thinking with the need for director accountability.

Voting Information

You may vote for all, some or none of the nominees to be elected to the Board. However, you may not vote for more individuals than the number nominated. Each of the nominees has agreed to continue serving as a director if elected. However, if any nominee becomes unwilling or unable to serve and the Board elects to fill the vacancy, the Proxy Agents named in the proxy will vote for an alternative person nominated by the Board. Our Amended and Restated Articles of Incorporation prohibit cumulative voting, which means you can vote only once for any nominee. The affirmative vote of a majority of the voting power of the shares present and entitled to vote at the Meeting is required to elect each director nominee.

IF YOU RETURN A PROXY CARD THAT IS PROPERLY SIGNED BUT YOU HAVE NOT MARKED YOUR VOTE, THAT PROXY WILL BE VOTED TO ELECT ALL OF THE NOMINEES.

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Board Voting Recommendation

Management and the Board recommend that shareholders vote FOR the re-election of Ronald James, Elliot S. Kaplan, George L. Mikan III, Matthew H. Paull, Richard M. Schulze and Hatim A. Tyabji as Class 2 directors. Management and the Board also recommend that shareholders vote FOR the election of Sanjay Khosla. If elected, each Class 2 director will hold office until the election of directors at our 2011 Regular Meeting of Shareholders and until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.

The Board appointed Gérard R. Vittecoq as a Class 1 director, effective September 26, 2008. Mr. Vittecoq was recommended to the Board by an independent third-party search firm. Management and the Board recommend that shareholders vote FOR the ratification of Mr. Vittecoq’s appointment as a Class 1 director at the Meeting. If his appointment is ratified, Mr. Vittecoq will hold office until the election of directors at the 2010 Regular Meeting of Shareholders and until his successor has been duly elected and qualified, or until his earlier death, resignation or removal.

All of the nominees are currently members of the Board.

Nominees and Directors

There are no family relationships among the nominees or between any nominees and any of our other directors.

ITEM OF BUSINESS NO. 1.1

Class 2 Director Nominees

(ages as of February 28, 2009)

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ITEM OF BUSINESS NO. 1.2

Nominee for Ratification as Class 1 Director — Term expires in 2010

(age as of February 28, 2009)

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Class 1 Directors — Terms expire in 2010

(ages as of February 28, 2009)

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information about the number of shares of Best Buy common stock beneficially owned at February 28, 2009, by our Chairman of the Board, our CEO, our Chief Financial Officer and each of our three other most highly compensated executive officers during the most recent fiscal year. The table provides similar information for each director including the director nominees, all directors and executive officers as a group, and each person we know who beneficially owns more than 5% of the outstanding shares of Best Buy common stock.

*                                            Less than 1%.

1                                            The business address for all directors and executive officers is 7601 Penn Avenue South, Richfield, Minnesota 55423.

2                                            The figure represents: (a) 60,035,576 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Schulze, of which up to $150 million aggregate amount of shares have been

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pledged by the trust as collateral to secure a line of credit (b) 4,465,930 outstanding shares registered in the name of Mr. Schulze and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Schulze and his family; (c) 1,326,769 outstanding shares registered in the name of Mr. Schulze and a co-trustee, and held by them as trustees of the Sandra Schulze Revocable Trust dated June 14, 2001; (d) 950,169 outstanding shares held by a limited partnership of which Mr. Schulze is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of these shares except to the extent of his monetary interest therein); (e) 252,312 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of these shares except to the extent of his monetary interest therein); (f) 31,672 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Schulze is the sole general partner (Mr. Schulze has disclaimed beneficial ownership of these shares except to the extent of his monetary interest therein); (g) 18,906 outstanding shares registered in the name of Mr. Schulze and held by him as trustee of trusts for the benefit of the children of Mr. Schulze’s spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (h) 11,728 outstanding shares registered in the name of Mr. Schulze’s spouse and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Schulze’s spouse (Mr. Schulze has disclaimed beneficial ownership of these shares); (i) 2,061 outstanding shares held in Mr. Schulze’s individual retirement account; (j) 1,955,558 outstanding shares owned by The Richard M. Schulze Family Foundation, of which Mr. Schulze is the sole director; (k) 77,001 outstanding shares registered in the name of JPMorgan Chase Bank (the “Trustee”), and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Mr. Schulze; and (l) options to purchase 1,736,250 shares, which he could exercise within 60 days of February 28, 2009.

3                                            The figure represents: (a) 1,636,255 outstanding shares owned by Mr. Anderson; (b) 65,893 outstanding shares registered in the name of Mr. Anderson and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Anderson; (c) 65,893 outstanding shares registered in the name of Mr. Anderson’s spouse and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Anderson’s spouse (Mr. Anderson has disclaimed beneficial ownership of these shares); (d) 337,839 outstanding shares held by a limited partnership of which a limited liability company owned by Mr. Anderson and his spouse is the sole general partner and of which Mr. Anderson and his spouse are limited partners individually; (e) 85,984 outstanding shares registered in the name of Mr. Anderson’s spouse and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Anderson’s spouse (Mr. Anderson has disclaimed beneficial ownership of these shares); (f) 1,800 outstanding shares registered in the name of Mr. Anderson and held by him as custodian for the benefit of his children (Mr. Anderson has disclaimed beneficial ownership of these shares); (g) 195,505 outstanding shares owned by the Anderson Family Foundation, of which Mr. Anderson is a director; (h) 85,984 outstanding shares registered in the name of Mr. Anderson and co-trustees, and held by them as trustees of trusts for the benefit of Mr. Anderson and his family; (i) 12,316 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Mr. Anderson; and (j) options to purchase 1,338,750 shares, which he could exercise within 60 days of February 28, 2009.

4                                            The figure represents: (a) 25,180 outstanding shares owned by Mr. Muehlbauer; (b) 1,514 outstanding shares held in Mr. Muehlbauer’s individual retirement account; (c) 911 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Mr. Muehlbauer; and (d) options to purchase 120,567 shares, which he could exercise within 60 days of February 28, 2009.

5                                            The figure represents: (a) 38,540 outstanding shares owned by Mr. Dunn; (b) 15,265 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Mr. Dunn; and (c) options to purchase 445,699 shares, which he could exercise within 60 days of February 28, 2009.

6                                            The figure represents: (a) 190,463 outstanding shares owned by Mr. Willett; (b) 1,596 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Mr. Willett; and (c) options to purchase 297,816 shares, which he could exercise within 60 days of February 28, 2009.

7                                            The figure represents: (a) 41,526 outstanding shares owned by Ms. Ballard; (b) 11,904 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of Ms. Ballard; and (d) options to purchase 123,829 shares, which she could exercise within 60 days of February 28, 2009.

8                                            The figure represents: (a) 5,730 outstanding shares owned by Ms. Higgins Victor; and (b) options to purchase 45,000 shares, which she could exercise within 60 days of February 28, 2009.

9                                            The figure represents: (a) 3,504 outstanding shares owned by Mr. James; and (b) options to purchase 45,000 shares, which he could exercise within 60 days of February 28, 2009.

10                                        The figure represents: (a) 64,311 outstanding shares owned by Mr. Kaplan; and (b) options to purchase 101,250 shares, which he could exercise within 60 days of February 28, 2009.

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11                                        The figure represents options to purchase 3,750 shares, which Mr. Khosla could exercise within 60 days of February 28, 2009.

12                                        The figure represents: (a) 1,452,134 outstanding shares owned by Mr. Lenzmeier; (b) 150,000 outstanding shares registered in the name of Mr. Lenzmeier and a co-trustee, and held by them as trustees of a trust for the benefit of Mr. Lenzmeier; (c) 51,900 outstanding shares held by the Lenzmeier Family Foundation, of which Mr. Lenzmeier and his spouse are the sole directors and officers; and (d) options to purchase 825,000 shares, which he could exercise within 60 days of February 28, 2009.

13                                        The figure represents options to purchase 7,500 shares, which Mr. Mikan could exercise within 60 days of February 28, 2009.

14                                        The figure represents: (a) 10,169 outstanding shares owned by Mr. Paull; and (b) options to purchase 45,000 shares, which he could exercise within 60 days of February 28, 2009.

15                                        The figure represents options to purchase 20,000 shares, which Mr. Rebolledo could exercise within 60 days of February 28, 2009.

16                                        The figure represents: (a) 70,535 outstanding shares owned by Mr. Trestman; (b) 25,000 outstanding shares registered in the name of Mr. Trestman’s spouse as trustee of an irrevocable family trust (Mr. Trestman has disclaimed beneficial ownership of these shares); and (c) options to purchase 101,250 shares, which Mr. Trestman could exercise within 60 days of February 28, 2009.

17                                        The figure represents: (a) 48,000 outstanding shares owned by Mr. Tyabji; and (b) options to purchase 78,750 shares, which he could exercise within 60 days of February 28, 2009.

18                                        The figure represents options to purchase 3,750 shares, which Mr. Vittecoq could exercise within 60 days of February 28, 2009.

19                                        The figure represents: (a) outstanding shares and options described in the preceding footnotes; (b) 143,931 outstanding shares owned by other executive officers, including 51,710 shares owned by David J. Morrish, a named executive officer, who voluntarily terminated his employment with us effective February 28, 2009, pursuant to our Voluntary Separation Program, described on page [    ]; (c) options granted to other executive officers to purchase 539,323 shares, which they could exercise within 60 days of February 28, 2009, including 52,018 shares owned by Mr. Morrish; and (d) 10,529 outstanding shares registered in the name of the Trustee, and held by the Trustee in connection with Best Buy’s Retirement Savings Plan for the benefit of other executive officers.

20                                        As reported on the owner’s most recent Schedule 13G that reported beneficial ownership as of December 31, 2008. Capital Research Global Investors has sole voting power over 13,393,000 shares and sole dispositive power over 22,170,850 shares.

21                                        As reported on the owner’s most recent Schedule 13G that reported beneficial ownership as of December 31, 2008. Capital World Investors has sole voting power over 7,851,350 shares and sole dispositive power over 40,486,680 shares.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and shareholders who own more than 10% of our common stock file initial reports of ownership with the SEC and the NYSE. They must also file reports of changes in ownership with the SEC and the NYSE. In addition, they are required by SEC regulations to provide us copies of all Section 16(a) reports that they file with the SEC. Based solely on a review of such Section 16(a) reports, management and the Board believe our directors, executive officers and shareholders who own more than 10% of our outstanding equity securities complied with the reporting requirements during the fiscal year ended February 28, 2009, except that due to an administrative delay, a report was not filed in a timely manner for a purchase of common stock on October 22, 2008, by Richard M. Schulze, Chairman.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our Compensation Discussion and Analysis describes the material elements of compensation for our “named executive officers” who are:

·                   Bradbury H. Anderson, Vice Chairman and Chief Executive Officer;

·                   James L. Muehlbauer, Executive Vice President – Finance and Chief Financial Officer;

·                   Brian J. Dunn, President and Chief Operating Officer;

·                   Robert A. Willett, Chief Executive Officer – Best Buy International and Chief Information Officer;

·                   Shari L. Ballard, Executive Vice President – Retail Channel Management; and

·                   David J. Morrish, former Executive Vice President – Connected Digital Solutions.

For fiscal 2009, the named executive officers generally participated in the same compensation programs and were evaluated similarly. However, Mr. Morrish voluntarily terminated his employment with us effective February 28, 2009, and is included as a named executive officer as a result of the payment he received pursuant to our Voluntary Separation Program, as described below. In some instances, Mr. Morrish was evaluated under a different set of factors than the other named executive officers.

For ease of use, the Compensation Discussion and Analysis is divided into three sections:

Compensation Philosophy, Objectives and Process

“Total Rewards” Philosophy.   We believe our success depends on employees at all levels using their unique strengths, experiences and ideas to foster innovation and build strong customer relationships. While our compensation and benefit programs are important tools in attracting and retaining talented employees, we also believe that non-monetary factors such as work environment, learning and development opportunities, and relationships between employees and managers are critical to provide a rewarding employee experience. Collectively, these elements comprise our “Total Rewards” philosophy. We believe this company-wide approach to attracting, motivating and retaining talent is a competitive advantage.

Our Total Rewards philosophy seeks to:

·                   Provide employees a wide array of rewards;

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·                   Differentiate rewards to individuals, based on their contributions;

·                   Encourage and recognize experimentation, entrepreneurship and innovation; and

·                   Reward employee contributions for achieving desired financial and non-financial results.

Our compensation philosophy drives both what we do and do not offer to our employees.

We implement the Total Rewards philosophy by employing broad-based programs that are designed to align employee interests with company goals and create a common vision of success.

Compensation Objectives.  Our compensation program and policies serve the following objectives:

·                   Reward employees for creating shareholder value and for achieving key strategic objectives;

·                   Align long-term employee and shareholder interests;

·                   Motivate employees to achieve short-term financial, operational, customer and employee outcomes that materially contribute to the sustainable, long-term health of Best Buy;

·                   Attract talent necessary to develop new capabilities and enhance existing competencies; and

·                   Maintain a flexible compensation structure that allows employees to share in our success.

How We Determine Compensation.  The Compensation Committee is responsible for determining and approving executive compensation. In addition, the Compensation Committee oversees the development, evaluation and approval of incentive compensation, equity-based pay and other employee benefit plans for all employees, including our named executive officers. The Compensation Committee is authorized to delegate to management certain responsibilities regarding our employee compensation and benefit plans, as specified in the Compensation Committee’s charter, which is posted on our Web site at www.BestBuy.com — select the “For Our Investors” link and then the “Corporate Governance” link.

The Compensation Committee established and reviews our Total Rewards philosophy and our compensation objectives, and oversees the design, competitiveness and effectiveness of compensation programs for our executive officers. During the first quarter of each fiscal year, our Human Resources leadership team (“HR”) provides the Compensation Committee with compensation recommendations for the executive officers. HR’s presentation includes an analysis prepared in support of the recommendations. The analysis includes a summary of the results of our application of our “Executive Compensation Framework” to each of our executive officers. Our “Executive Compensation Framework” includes a variety of internal and external factors, and is described in greater detail below. The internal factors are generally applied and analyzed by HR. HR has engaged a third-party compensation consultant, Towers Perrin, a global professional services firm, to assist in the development of compensation data that is used to facilitate the application and analysis of the external factors. The Compensation Committee reviews the recommendations with The Delves Group, an independent compensation consulting firm retained by the Compensation Committee, and discusses them with HR. The Compensation Committee’s review is comprehensive and considers factors such as: (i) the alignment of the proposed compensation with our Total Rewards philosophy; (ii) the alignment of the proposed compensation with our compensation objectives; (iii) the overall value of the compensation package, relative to internal factors and external benchmarks; and (iv) our decision not to offer supplemental compensation, benefits, perquisites and protections commonly extended to executive officers of other large companies. The process for evaluating the named executive officers’ compensation packages based on internal factors, external benchmarks and the lack of supplemental compensation is described in greater detail below.

Executive Compensation Framework.   For fiscal 2009, each element of compensation and the level of total direct compensation for our named executive officers (other than pursuant to our Voluntary Separation Program) was determined by referring to our Executive Compensation Framework to each individual. Our Executive Compensation Framework consists of a set of internal and external factors that allow for a comprehensive, multi-faceted evaluation of

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total compensation based on each individual’s personal attributes and talents, and objective external market data. The factors are not required to carry equal weight, but are all considered in determining the compensation recommendation for each individual. We believe that the diversity of the factors included in our Executive Compensation Framework and our flexibility in their application allows us to attribute appropriate value to each individual and enhances our ability to develop compensation packages that (i) further our compensation objectives, (ii) further one or more of our strategic initiatives, (iii) maximize each individual’s perceived value of his or her total compensation and (iv) produce the highest return on our compensation investment.

For fiscal 2009, the internal and external factors that comprised our Executive Compensation Framework were as follows:

We assessed the internal factors contained in the Executive Compensation Framework for each of the continuing named executive officers based on a review of executive profiles developed for succession planning purposes. The individual profiles were developed through a comprehensive process, which included discussions with the CEO, the individuals’ peers, third-party executive coaches and each individual personally. The profiles contain analyses and information regarding factors similar to the internal factors contained in the Executive Compensation Framework. The internal factors were applied to Mr. Anderson based on an evaluation of his performance conducted by the Board.

We applied the external factors to each continuing named executive officer based on a review of publicly available compensation data for our peer group of companies and the Fortune 100. We also considered actions taken by companies with which we compete for executive talent. We used available information and monitored actions taken by our peers to evaluate market trends and to assess the overall competitiveness of our executive compensation levels. We did not, however, seek to establish total direct compensation that falls within a prescribed range relative to our peer group of companies or the Fortune 100. In addition, the Compensation Committee may at times use our peer group of companies to evaluate:

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·                   The cost of the total direct compensation paid to our named executive officers;

·                   The relationship between our financial performance and compensation paid to our named executive officers; and

·                   The relative difficulty of our incentive performance targets.

The criteria used to determine the peer group of companies in fiscal 2009 was unchanged from the criteria we used in fiscal 2008. We continue to compare ourselves predominantly to companies with the following attributes: (i) more than $5 billion in revenue, (ii) retail or wholesale operations, (iii) high growth rates and (iv) significant revenue generated outside of the United States. We also used lists published by Business Week and Fortune magazines to identify companies recognized as top employers, innovators and customer service providers, and other qualitative factors, for purposes of applying our selection criteria. Our peer group at the time compensation was determined for our named executive officers in fiscal 2009 was comprised of the following companies:

·                   Amazon.com, Inc.

·                   Apple Inc.

·                   Circuit City Stores, Inc.

·                   Costco Wholesale Corporation

·                   Dell Inc.

·                   eBay Inc.

·                   FedEx Corporation

·                   Harley-Davidson, Inc.

·                   Lowe’s Companies, Inc.

·                   Nordstrom, Inc.

·                   Staples, Inc.

·                   Starbucks Corporation

·                   Target Corporation

·                   The TJX Companies, Inc.

·                   Wal-Mart Stores, Inc.

·                   Walgreen Co.

·                   The Walt Disney Company

·                   Whole Foods Market, Inc.

·                   Yahoo! Inc.

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In fiscal 2010, we plan to review and modify our peer group to ensure that we are including relevant comparable companies. As our company evolves, the challenge of identifying appropriate peers becomes increasingly difficult. Some of our competitors, most notably Circuit City, have been adversely affected by recent macro-economic conditions and are no longer appropriate peer group members.   Other peers are significantly larger than us and/or have products and business models which are experiencing dramatically different growth patterns than ours.

Certain Benefits and Perquisites.  In addition to our evaluation of total compensation under the Executive Compensation Framework, we also considered that many companies offer the following supplemental compensation, benefits, perquisites and protections to their executive officers:

·                   Employment agreements

·                   Severance or change-in-control agreements

·                   Pension plan benefits

·                   Supplemental retirement plan benefits

·                   Executive life insurance benefits

·                   Automobile allowances

·                   Country club memberships

During fiscal 2009, we did not provide these types of compensation, benefits and perquisites to our executive officers because they are contrary to our culture and are not consistent with our compensation objectives. Our decision not to provide them generally reduces the amount of total compensation received by our executive officers relative to other large companies, although we seek to compensate our executive officers utilizing our Executive Compensation Framework with elements of compensation that recognize them for their past and expected future contributions and performance. Additional information regarding the benefits and perquisites available to the named executive officers is included in Benefits and Perquisites on page [    ].

Role of Independent Compensation Consultant in Determining Compensation.  The Compensation Committee reviews HR’s executive compensation recommendations with The Delves Group, an independent compensation consulting firm retained by the Compensation Committee. The Compensation Committee believes that this review helps ensure that HR’s compensation recommendations are in line with our stated objectives and reasonable when compared to the market for executive talent. In addition, the engagement of an independent consultant enhances the overall independence of the Compensation Committee’s decision-making. The Delves Group reports directly to the Compensation Committee and does not provide any consulting or other services to Best Buy.

Role of Management Compensation Consultant in Determining Compensation.  HR has engaged a third-party compensation consultant, Towers Perrin, a global professional services firm, to assist in the development and analysis of external compensation data that is used to facilitate HR’s executive compensation recommendations to the Compensation Committee. At the request of HR and with the consent of the Compensation Committee, a representative of Towers Perrin regularly attends meetings of the Compensation Committee to address matters directly related to the engagement, including questions regarding external market data and related analyses. Towers Perrin reports directly to HR and does not engage with the Compensation Committee, except at the request and under the direction of HR.

Role of Chief Executive Officer in Determining Compensation.  Our CEO does not participate in or otherwise influence HR’s compensation recommendations for himself. However, our CEO generally is present when HR presents compensation recommendations to the Compensation Committee for our other executive officers (except for recommendations regarding his own compensation) and provides his perspective regarding the recommendations. Our CEO’s performance ratings of, and his comments about, his direct reports impact the compensation of this direct reports, but his input is only one of many factors considered in determining total compensation. Our other executive officers do

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not participate in the development of compensation recommendations or the approval process, although they may provide perspective on recommendations for their direct reports.

Summary of Compensation and Benefit Programs.  We maintain a variety of compensation and benefit programs in which our executive officers and other selected employees participate. These programs include, but are not limited to, our Omnibus Plan, our Executive Officer Short-Term Incentive Program (“Executive Officer STIP”), our Long-Term Incentive Program (“LTIP”), our Deferred Compensation Plan, our Retirement Savings Plan and our ESPP.

Voluntary Separation Program.  We believe that the most engaged and productive employees are those employees who are in the position they desire. Accordingly, and with the objective of reducing expense from our corporate payroll, we adopted a one-time Voluntary Separation Program in fiscal 2009. A voluntary separation offer was made to most of our corporate employees, including Ms. Ballard and Mr. Morrish. The offer was not extended to Messrs. Anderson, Muehlbauer, Dunn and Willett. Employees who agreed to leave received an enhanced separation package, based on their grade level. Employees meeting certain years of service and age criteria received an additional enhancement to the separation package. Mr. Morrish decided to accept the voluntary separation offer in January 2009. Additional information regarding the specific payout received by Mr. Morrish begins on page [___].

Compensation for Named Executive Officers

Elements of Compensation.  The fiscal 2009 compensation for our named executive officers included the following elements:

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1                                            Enterprise leadership long-term incentive awards were granted to 20 senior officers, including Messrs. Muehlbauer, Dunn, Willett and Morrish and Ms. Ballard during fiscal 2009.

2                                            An individual recognition restricted stock award was granted only to Mr. Muehlbauer during fiscal 2009.

Analysis of Compensation Elements

Base Salary.  The Compensation Committee generally determines base salary levels for the named executive officers and other executive officers early in the fiscal year, with changes becoming effective during the first quarter of each fiscal year. The base salaries for the named executive officers that became effective in the first quarter of fiscal 2009 were established based on an assessment of each officer under our Executive Compensation Framework. For fiscal 2009, the changes in base salaries for the named executive officers and the key factors considered were as follows:

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Mr. Morrish’s base salary increased by 15.9% during fiscal 2009 to $478,950 from $413,288. The increase was made at the time of Mr. Morrish’s promotion from Senior Vice President—PC and Mobility Solutions to Executive Vice President — Connected Digital Solutions. Mr. Morrish’s compensation was determined through application of our Executive Compensation Framework, with emphasis on positioning his total compensation in line with the total compensation paid to other executive vice presidents with similar scopes of responsibility.

Short-Term Incentive.  For fiscal 2009, the named executive officers were eligible for performance-based, short-term incentive awards pursuant to our Executive Officer STIP. Executive Officer STIP awards, payable in cash, were expressed as a percentage ranging from 125% to 200% of each named executive officer’s base salary, called the “Incentive Target Percentage.” The Incentive Target Percentage for each named executive officer was determined based on application of our Executive Compensation Framework, with particular emphasis placed on the internal job ranking of each position. We emphasized internal job ranking because we believe that it is important that a higher percentage of cash compensation for higher ranking positions be linked to our performance. In addition, we considered the value of total cash compensation in light of the external factors described in Base Salary, above, to ensure that we remain competitive in the market for executive talent. Based on actual performance compared with specific goals, the named executive officers could earn zero to two times their Incentive Target Percentage. We call this factor the “Incentive Multiplier.” The purpose of the Incentive Multiplier is to modify the incentive payout based on actual performance compared with targets approved by the Compensation Committee. The performance results are translated to company and team performance scores, which are then multiplied to determine the Incentive Multiplier. The formula below shows how the short-term incentive payments were determined for fiscal 2009:

Base Salary × Incentive Target Percentage × Incentive Multiplier1 = Incentive Payout

1Incentive Multiplier = Company Performance 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:

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 the overall EVA objective described above. For fiscal 2009, the enterprise and domestic comparable store sales and enterprise SG&A rate ranges, and corresponding Team Performance scores were as follows:

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For fiscal 2009, our enterprise comparable store sales rate was (1.3%), our domestic comparable store sales rate was (1.3%) and our adjusted enterprise SG&A rate was 19.4%.

Based on these results, the Team Performance score for Messrs. Anderson, Muehlbauer, Dunn and Willett was computed as follows:

1The Team Performance score was computed as the average of the scores for both metrics.

Based on the results above, the Team Performance score for Ms. Ballard and Mr. Morrish was computed as follows:

1The Team Performance score was computed as the average of the scores for both metrics.

To determine the Incentive Multiplier, the Company Performance and Team Performance scores are multiplied. Based on the actual Company Performance and Team Performance scores, the Incentive Multiplier for fiscal 2009 was 0.00. Accordingly, no payments pursuant to the Executive Officer STIP were made to any named executive officer for fiscal 2009. The fiscal 2009 short-term incentive payment computation, as determined based on the formulas described above, was as follows:

Long-Term Incentive.   Pursuant to our LTIP, established under the Omnibus Plan, we make annual long-term incentive awards to our named executive officers and other eligible employees (typically, manager level and above). For fiscal 2009, our named executive officers received their LTIP award in the form of stock options.  However, Mr. Anderson requested that he not be granted a long-term incentive award and that his options to purchase shares that would have received be contributed to a discretionary award pool to be distributed to employees who are not otherwise eligible to receive LTIP awards. For fiscal 2008, our named executive officers were able to select from among four long-term incentive mix choices, which included combinations of stock options, restricted stock and performance-based awards that are settled in stock or cash (our “LTIP Choice” feature). For fiscal 2009, we awarded our officers stock options only. We believe that stock options are the best way to align our officers’ interests with our shareholders’ interests and to drive performance intended to increase our stock price. The LTIP award amounts for the named executive officers were

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reviewed and approved by the Compensation Committee. The stock options we issue to our named executive officers are non-qualified stock option awards that have a term of 10 years and become exercisable over a four-year period at the rate of 25% per year, beginning one year from the date of grant. The stock option exercise price is equal to the closing price of our common stock on the grant date, as quoted on the NYSE.

Additional information regarding LTIP awards granted to Messrs. Dunn, Muehlbauer, Willett and Morrish and Ms. Ballard in fiscal 2009 is included in Grants of Plan-Based Awards on page [    ].  Due to Mr. Morrish’s voluntary separation from the company, his LTIP award was forfeited.

Enterprise Leadership Long-Term Incentive.  In fiscal 2009, we granted enterprise leadership long-term incentive awards to 20 of our senior officers, including Messrs. Dunn, Muehlbauer, Willett and Morrish, and Ms. Ballard.  The purpose of the award was to provide additional incentive to achieve specified revenue and profit growth for the company and to retain our key executives needed to deliver those results. This award was in the form of performance shares, with each performance share representing, at the time of vesting, the right to receive one share of common stock. The award is based on the following metrics:

·      Compound annual revenue growth rate

·      Compound annual profit growth rate

·      Compound annual comparable store sales growth rate

There are two separate, but partially overlapping, performance periods covered by the awards. The first period began on June 1, 2008, and ends on February 26, 2011 (end of fiscal 2011). The second period also began on June 1, 2008, but ends on March 3, 2012 (end of fiscal 2012). One-half of the total award opportunity is available with respect to each performance period.

The number of performance shares earned at each vesting date, as set forth below, will be determined based on application of the following formula:

Award Percentage of Target × Comparable Store Sales Factor = Final Award

Award Percentage of Target will be determined based on the following table:

Comparable Store Sales Factor will be determined based on the following table:

The Award Percentage of Target multiplied by the Comparable Store Sales Factor will result in a final award equal to 0% to 250% of the target award.  In order for any portion of a performance award to be earned, we must achieve a minimum of 7% compound annual revenue growth (coupled with a minimum 17% compound annual profit growth) or 7% compound annual profit growth (coupled with a minimum 14% compound annual revenue growth) during one of the performance periods.

The following table shows the target award in shares for each of our named executive officers, excluding Mr. Anderson, who was not eligible for this award:

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The Compensation Committee approved target and maximum award sizes that would provide significant incremental reward potential beyond the value already available under existing incentive schemes for high levels of performance. Additional information regarding the special long-term incentive awards granted to Messrs. Dunn, Muehlbauer, Willett and Morrish and Ms. Ballard in fiscal 2009 is included in Grants of Plan-Based Awards on page [    ]. Due to Mr. Morrish’s voluntary separation from the company, his enterprise leadership incentive award was forfeited.

Individual Recognition Restricted Stock Award.  From time to time, we grant individual restricted stock awards to recognize superior performance. In fiscal 2009, we granted a special restricted stock award of 20,000 shares to Mr. Muehlbauer to recognize his strong performance as interim Enterprise Chief Financial Officer and to reinforce his importance to us in his new role as Executive Vice President — Finance and Chief Financial Officer. The Compensation Committee considered the impact of the restricted stock award’s value on Mr. Muehlbauer’s total compensation, relative to comparable positions within our peer group of companies and the Fortune 100, and deemed that Mr. Muehlbauer’s total compensation was reasonable. The restricted shares awarded to Mr. Muehlbauer vested 25% on the grant date, and will vest an additional 25% on each of the next three anniversaries of the grant date, provided he has been continually employed with us through those dates. Additional information regarding the special restricted stock award granted to Mr. Muehlbauer in fiscal 2009 is included in Grants of Plan-Based Awards on page [    ].

Voluntary Separation Benefits.  Mr. Morrish was one of the approximately 500 employees who accepted the separation offer we made pursuant to our Voluntary Separation Program. Mr. Morrish’s age (51) and years of service (10) qualified him for an additional 25% of base salary as part of his separation offer.  By accepting the separation offer, Mr. Morrish received a one-time lump sum payment equal to 45 months of salary, or $1,796,063, paid in cash. Mr. Morrish may also opt to receive 18 months of COBRA continuation, 18 months of life insurance premiums and $5,000 for tax planning services relating to his termination.

Anticipated Fiscal 2010 Named Executive Officer Compensation Structure Changes

For fiscal 2010, HR recommended and the Compensation Committee approved, certain changes to short- and long-term incentive awards that will impact our named executive officers as well as certain other employees eligible for short- and long-term incentive awards.

Short-Term Incentive. We are changing the short-term incentive plan structure to create an incentive plan that directly supports our fiscal 2010 business priorities: (i) taking market share, (ii), efficient and effective enterprise, (iii) connected digital solutions and (iv) international growth. We also want to ensure that our senior officers and other eligible employees have opportunities to be rewarded should performance improve during the fiscal year.  As a result, we have opted to change the structure by which we measure our short-term incentive awards for our senior officers to be based on the following metrics:

·                   Enterprise operating income

·                   Enterprise SG&A rate

·                   Domestic market share

In addition, under the short-term incentive plan design for fiscal 2010, we will measure each metric independently, with achievement of one or all metrics to be additive to the individual’s total short-term incentive award and earned regardless of the results of other metrics. We have made this change to reward individuals for SG&A reductions and/or market share gains rather than have the awards earned be dependent on the achievement of all of the metrics, which could potentially result in a zero payout if one metric is not achieved.

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Long-Term Incentive.  We are changing the timing of our long-term incentive plan to grant long-term incentive awards in June, September and January of fiscal 2010. Thereafter, in fiscal 2011, we plan to grant long-term incentives on a quarterly basis at the time of Board meetings. The decision to grant long-term incentive awards at multiple times each year addresses employee concerns regarding stock price volatility over the past few years. In addition, multiple grants during the year are expected to reinforce the value of long-term incentive award opportunities to participants on a more frequent basis.

Other Compensation Matters

The programs and policies described below are generally applicable to all our named executive officers, unless otherwise noted.

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Benefits and Perquisites.  Our named executive officers are generally offered the same employee benefits and perquisites offered to all U.S.-based employees, as summarized in the table below:

We provide the executive benefits and perquisites denoted above to compete for executive talent and to promote the health, well-being and financial security of our named executive officers. A description of executive benefits and perquisites, and the costs associated with providing them for the named executive officers, are reflected in the “All Other Compensation” column of the Summary Compensation Table on page [    ].

Retirement Savings Plan.  Our Retirement Savings Plan is intended to meet the requirements of Section 401(k) of the Internal Revenue Code of 1986 (the “Code”). All of our named executive officers are eligible to participate in the plan. The plan provides a safe harbor that allows U.S.-based employees to contribute pre-tax income and immediately vest in company matching contributions. The plan is expected to provide an improved opportunity for such employees to achieve retirement income security. However, the plan is not expected to provide sufficient income replacement relative to our named executive officers’ anticipated retirement needs. The potential retirement income gap for our U.S.-based named executive officers may be filled by other reward elements, including long-term incentives, or by the deferral of a portion of base salary or short-term incentive awards under our Deferred Compensation Plan. Under the Retirement Savings Plan, we match employee contributions, including those made by our U.S.-based named executive officers, at rates approved by the Compensation Committee. For fiscal 2009, we matched 100% of the first 3% and 50% of the next 2% of eligible pre-tax earnings (up to IRS limits) contributed by plan participants.

Although we currently intend to continue the Retirement Savings Plan, as well as to make matching contributions, the Compensation Committee may terminate the plan or discontinue the matching contributions at its sole discretion. If the Retirement Savings Plan were to be terminated, all company-matching funds would immediately vest. JPMorgan Chase has served as the trustee for the Retirement Savings Plan since April 1, 2004. We do not sponsor any other retirement plans in which our named executive officers participate.

Deferred Compensation Plan.  We sponsor an unfunded, unsecured Deferred Compensation Plan. We believe the plan provides a tax-deferred retirement savings vehicle that plays an important role in attracting and retaining executive talent. Additional information about our Deferred Compensation Plan is included in Non-Qualified Deferred Compensation Plan on page [    ].

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Equity Award Grant Practices

All equity-based incentive awards, including awards to our named executive officers and directors, must be approved by the Compensation Committee.

Timing of Awards.  Annual long-term incentive awards are granted in October of each year. This year there was also a special, non-recurring long-term incentive award granted in August. Special long-term incentive awards may be granted at any time, as deemed necessary for new hires, promotions, recognition, or retention purposes. In April of each year, the Compensation Committee considers a stock option grant for directors. The Compensation Committee also considers stock option grants for new directors upon their appointment to the Board. We do not coordinate or time the release of material information around our grant dates in order to affect the value of the compensation. Our named executive officers do not play a role in the selection of grant dates.

Determination of Grant Date.  The grant date is the date that the Compensation Committee approves the equity award.

Determination of Exercise Price.  The exercise price for stock option awards is equal to the last reported sale price of our common stock, as quoted on the NYSE, on the grant date. Under the terms of the Omnibus Plan, we may not grant stock options at a discount to fair market value. Unless otherwise determined by the Compensation Committee, “fair market value” as of a given date is the closing sale price of our common stock as quoted on the NYSE on such date or, if the shares were not traded on that date, the most recent preceding date when the shares were traded.

Re-pricing of Stock Options.  Under the terms of our Omnibus Plan, a stock option may not, without the approval of our shareholders, be: (i) amended to reduce its initial exercise price, except in the case of a stock split or similar event; or (ii) canceled and replaced by a stock option having a lower exercise price.

Stock Ownership Guidelines

The Compensation Committee has established stock ownership guidelines to promote the alignment of officer and shareholder interests and to encourage behaviors that have a positive influence on stock price appreciation and total shareholder return. The guidelines apply to all officers, including the named executive officers, and are part of an effort to encourage employee stock ownership. Under the guidelines, we expect our officers, including the named executive officers, to acquire ownership of a fixed number of shares, based on their position, within five fiscal years of assuming their current position. The stock ownership expectation generally remains effective for as long as the officer holds the position. The guidelines provide for stock ownership levels for our continuing named executive officers as follows: