A small investor in Research In Motion Ltd. is anticipating big support for a shareholder resolution calling on the BlackBerry maker to split the jobs of CEO and chairman.
Mutual fund company Northwest & Ethical Investments LP has argued RIM co-CEOs Jim Balsillie and Mike Lazaridis should not also be co-chairs of the company's board, arguing a "high performance" board needs independent oversight of management.
Bob Walker, vice-president of Ethical Funds at NEI, said his firm has talked informally with other institutional investors and believes its RIM proxy resolution will win significant votes because there is strong support for dividing chair and CEO roles.
"It has become standard practice, not just best practice," he said.
The campaign won a significant backer this week when proxy advisory firm Glass Lewis & Co., which advises institutional investors on shareholder voting matters, threw its support behind the resolution, saying there are "inadequate independent checks on executives and management" with both jobs held jointly by Mr. Balsillie and Mr. Lazaridis.
The resolution will be voted on at RIM's annual meeting on July 12.
RIM has had "a turbulent first half" of fiscal 2012 and investor confidence is waning, Glass Lewis noted. RIM has seen significant management turnover in recent months, the report notes, with the chief marketing officer, the vice-president of brand creativity and the vice-president of digital marketing and media all departing.
"We are concerned that the current co-chair/co-CEO structure provides inadequate independent checks on executives and management, particularly since the co-CEOs founded the company and are its largest shareholders," the Glass Lewis report says.
Mr. Lazaridis, who was a co-founder of RIM, owns 5.05 per cent of RIM shares, while Mr. Balsillie, who joined the company after its founding, owns 5.09 per cent.
The Ethical Funds resolution notes RIM previously pledged to appoint an independent chairman in 2007 following a stock option backdating scandal. The appointment never happened, however, and the company announced in December that Mr. Balsillie and Mr. Lazaridis would be "co-chairs" of the board as well as co-CEOs.
Mr. Walker said Ethical Funds, which owns more 500,000 shares of RIM, tabled its resolution earlier this year before RIM's share price began to slide, but recent financial concerns will likely increase investor support for a change.
"I think investors are in the mood to be a bit more assertive when it comes to a standard practice for good governance," Mr. Walker said.
A spokeswoman for the Canada Pension Plan Investment Board, which owned almost 2 million RIM shares when it last disclosed its holdings as of March 31, said the pension fund could not discuss its voting intentions on the proxy resolution.
But she noted CPPIB has a proxy voting guideline saying it will support separation of chair and CEO roles. "These different responsibilities warrant different leaders," the guideline notes.
The Ontario Teachers' Pension Plan has a similar guideline, said spokeswoman Deborah Allen. "We certainly are strong proponents of splitting the chair and CEO positions in general. That's one of the founding principles of our governance guidelines."
RIM has urged shareholders to vote against the proxy resolution, arguing it has an independent lead director, John Richardson, who holds the traditional responsibilities of an independent chairman. RIM argues the current board structure does not detract from independent oversight of the board, and the board is "highly independent."
RIM said having its CEOs also carry the chairman title helps the company deal with business interests in international markets. "It is not an uncommon practice, internationally, for a company's most senior executive(s) to also carry the chair title," the company said.
Glass Lewis has also recommended shareholders vote against the re-election of Mr. Richardson, saying he was a member of the audit committee during the time of the company's stock option backdating scandal, which led to a $250-million financial restatement.