Jim Balsillie and Mike Lazaridis, the onetime billionaire leaders of Research In Motion, have cut their salaries to a symbolic $1 in a sign of their commitment to turning around the struggling Canadian tech icon. But it’s not enough. While many irate investors and analysts are calling for the co-resignation of the co-CEOs, at the very least, the duo needs to hang up their conflicted co-chairmanship of RIM’s board of directors and give corporate governance a chance.
It has truly been an annus horribilis for RIM. Its stock price, at a lofty $148 in 2008, now hovers around $14, tracking a series of ever larger gaffes, from the disappointing launch of RIM’s PlayBook tablet, now selling at half price, to a three-day global outage of the firm’s secure servers. Perhaps most critically, the launch of its new BB10 operating system has been delayed until the end of 2012 at a time when RIM’s share of the North American market is in freefall.
What is perplexing is how RIM’s situation was allowed to deteriorate so dramatically. And the answer, in part, lies in poor corporate governance. In 2007, Jim Balsillie was forced to resign as chair over the backdating of stock options. High-profile directors Roger Martin, the dean of the Rotman School of Management, and Barbara Stymiest, of TSX and Royal Bank fame, were added to the board to buff up governance. But a new chair to challenge the CEOs and hold them to account was never named. Instead, a “lead director” was appointed and Mr. Balsillie was reinstated in 2010.
When investors began clamouring for a board shake-up last spring, the board struck up a committee that will not present its findings until the end of January, an eternity in tech time. In the interim, Goldman Sachs began evaluating the company as a takeover target.
Mr. Balsillie and Mr. Lazaridis have built RIM into a world-class company. With 70 million subscribers worldwide, no debt and the most secure mobile technology around, RIM has been an industry leader and it surely still has a fighting chance. But it is time for them both to step down as chairs. After Nortel, Canada can’t afford to lose another tech giant.