Research In Motion Ltd. shareholders and others close to the company increasingly believe the board needs stronger directors and a new chair.
A day after the BlackBerry-maker’s board came under heightened scrutiny for not providing oversight as their situation worsened, many were calling for dramatic change at the top to reflect RIM’s drastic management changes and the international scope of the company’s now very global business.
And some feel the board’s sense of deferral under founders Mike Lazaridis and Jim Balsillie has continued, given that many of the directors – with the exception of one new addition since board chair Barbara Stymiest took over – remain from the old era.
Although there is a new set of executives led by CEO Thorsten Heins, including new marketing and legal chiefs, shareholders and observers still think the board is stuffed with people from the “Mike and Jim” era at RIM.
“Mike and Jim were passionate people with persuasive personalities, and I think it was difficult for the board members to influence them,” says Adam Belsher, a former RIM executive who is now CEO at JADsoftware Inc. in Waterloo, Ont.
At the AGM this week, one shareholder said RIM needed the type of proxy battle that has since reshaped Canadian Pacific. Another asked why there was not a Muslim board member, who may have been able to help the company through its regulatory hurdles in the Middle East and Southeast Asia.
Ms. Stymiest, a director who became board chair in the January shakeup, acknowledged this week that the board has “gaps,” and said that the board has enlisted a search firm to help “augment” the board in certain areas.
“I think the board’s got to realize that the company’s changed – it’s going through a new era, the post-Lazaridis-Balsillie, dual-CEO, dual-chair era,” says Garfield Emerson, a veteran Canadian executive who served as chairman of Rogers Communications Inc. for more than a decade and currently sits on the board of Canadian Tire Corp.
One former RIM executive, who spoke on condition of anonymity, said many members of management never took the board too seriously –– that it was perceived as being purposely weak, composed of famous Canadians with very little relevant experience in high technology. Now, shareholders apparently see that: When asked to elect directors at the company’s annual meeting, the withhold rates, usually much less than 10 per cent, were incredibly high, with Ms. Stymiest receiving 23.1 per cent, management guru and Rotman School dean Roger Martin receiving 22.6 and the former lead independent director John Richardson receiving 30.2 per cent.
“When you get that degree of withholding, you’ve got to step down,” the executive said.
There is also a lot of interrelations between the board members, which strikes shareholders and observers as odd. Many know each other either through the board at the University of Waterloo, at accounting giant Ernst and Young or through relationships at the Rotman School of Management at the University of Toronto.
“The board is too clubby, too Toronto-based, and needs to reflect the company’s international business,” says RIM shareholder and activist investor Vic Alboini, CEO of Jaguar Financial.
“Based on the AGM, I think there was a pretty strong signal to the effect that the board should be revamped. It seems that Barbara is on side for that, but the problem is, we’re six months into her reign and we’ve only had one director who’s been appointed. I’d have thought the company would move much more quickly.”