The embattled public face of Research In Motion Ltd. who stepped down as chairman Monday said it's business as usual for the company as it sorts out accounting problems.
Jim Balsillie resigned as chairman of the BlackBerry maker after taking responsibility for errors that will lead to an approximate $250-million (U.S.) restatement of earnings. It is also still possible that the bookkeeping problems could lead to disciplinary action by securities regulators in the United States and Canada, which are conducting their own separate reviews of how RIM accounted for its stock option grants.
But in an interview with The Globe and Mail, Mr. Balsillie insisted that the leadership ranks at the Waterloo, Ont., company remain firmly intact and that the bookkeeping problems were errors that could befall any rapidly growing Canadian firm operating in the U.S. market. “We're still co-CEOs. I just don't chair the meeting and there's a lead director for four times a year,” he said.
RIM has not yet announced a new non-executive chairman, but said existing director John Richardson has been appointed lead director of the board. Separating the roles of chairman and CEO was a necessary step to improve corporate governance, Mr. Balsillie said.
“We were a bit of a holdout for not changing it, but when you're so busy sometimes you just don't do things as soon as you should. And I'm not making any excuses.”
RIM will remain, however, one of the few public companies in North America that shares the CEO title between two executives. Mike Lazaridis, inventor of the BlackBerry, manages the technical side of the company and serves as president.
Mr. Balsillie, a Harvard business grad, handles most business matters. He is the public voice of RIM who is personally responsible for many of the partnerships with the phone companies around the world that sell the BlackBerry on their networks. Mr. Balsillie also retains his seat on the board.
Analysts and academics have questioned how such different personalities can run a $2-billion operation so effectively.
“Mike Lazaridis is the true visionary behind the parrot,” Mr. Balsillie likes to tell his audiences. “But I'm an exceptional parrot.”
The yin and yang of RIM ran into trouble when their internal corporate controls didn't keep pace with the rapid growth of the company. Mr. Balsillie says RIM was tripped up by complicated accounting rules around the issuance of stock option grants that were different in the U.S. and Canada.
“It's been 45,000-per-cent growth in 10 years. You're flying all over the place, running around real busy. Imagine granting 1,000 options in a month when the stock is swinging wildly,” he said.
“We thought the day of the decision was when you priced it. And if the price went up 10 bucks, guess what, that's backdating. So did we do backdating? Yeah. We did backdating. Did we do it knowingly to line our pockets? No. No. Did we do it recklessly? No.”
Mr. Balsillie and Mr. Lazaridis have agreed to pay up to $5-million (Canadian) each toward costs of the internal review that was launched seven months ago. In addition, they and other senior executives and directors have agreed to repay any benefits they gained from incorrectly pricing the options.
A special committee of independent directors and external accounting and legal advisers found that stock option accounting errors had been made and Mr. Balsillie was directly involved in approving grants.
“You're doing this stuff by e-mail and quick phone calls in a very fast-moving organization and dealing with issues that, quite frankly, not many people, if anyone, in Canada ever dealt with before,” Mr. Balsillie said.
The two men chose unusual paths in their careers that led them to a chance encounter some 17 years ago in Kitchener, Ont., where Mr. Balsillie had taken a job as vice-president of finance with a small technology company called Sutherland Schultz Inc. He had recently graduated from Harvard Business School and rather than chase a high-paying Wall Street job, he opted for a $70,000 position with a local firm where he thought he could learn how to run his own business.
Mr. Lazaridis, meanwhile, had left his engineering studies at the University of Waterloo in his final year in 1984 to pursue his entrepreneurial idea of wireless communications.
They met through an executive at Sutherland Schultz, where Mr. Lazaridis was doing some contract work, and in 1992 Mr. Balsillie joined RIM, mortgaging his home to buy a share in the startup.
“It is very, very important that we get this right,” he said of the review. “I think trust of the system is important. I don't think anyone doubts that we work hard and we care greatly about the company.
“You've got to remember that Mike and I are 45 years old. His dad was a line worker in Chrysler. My dad was an electrician in Peterborough. You grow like stink, and 10 years later you've got to pay attention to all these governance things. Honestly, even though we're trained, we weren't trained in these matters. That's what good board members do and good advisers [do]. Don't get me wrong — we're CEOs and we're responsible. But there was no intent in any of this. There was no maliciousness.”
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