Bed Bath & Beyond (BBBY)

No Willful Misconduct

·                                          The special committee found no evidence that either the Company or any person involved in the grant process had engaged in willful misconduct.

·                                          The grant process was characterized by informality which lacked safeguards to ensure compliance with applicable accounting and disclosure rules.  For example, the process did not require any contemporaneous documentation or other action evidencing the selection of a grant date.

·                                          The special committee found no evidence demonstrating that those who were responsible for selecting option grant dates (the Company’s co-chairmen and chief executive officer) appreciated the accounting or disclosure implications of the practices used for selecting those dates.

·                                          The special committee found no evidence demonstrating that those responsible for the accounting and disclosure functions were aware of the deficient practices used for selecting grant dates.  As a result, they did not consider the accounting or disclosure implications of those practices.  To the extent they were aware of any other processes now determined to have been deficient, the special committee has found no evidence demonstrating that they appreciated the accounting or disclosure implications of those deficiencies.

·                                          The Company and directors regularly sought advice from and relied on outside counsel.

·                                          The special committee found no evidence that the directors were aware of the practices used for the selection of grant dates (other than the co-chairmen and chief executive officer as discussed above) or other significant process deficiencies, and consequently, they did not believe that the accounting or disclosures were inaccurate.

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·                                          The special committee found no evidence that outside counsel was aware of any facts which led them to believe that the accounting or disclosures were inaccurate.

·                                          The co-chairmen and chief executive officer (and others involved in the grant process) believed that, in granting options as described herein, they were acting in the best interests of the Company with the purpose of attracting and retaining employees.