Despite the embarrassment of investigations, accounting blunders, and a financial restatement that will cost a quarter-of-a-billion dollars, Research In Motion Ltd. found time to pull off something of a public relations coup Monday: wooing Barbara Stymiest as a director and putting her on the company's audit committee.
Hiring a senior banker to sit on a corporate board is no easy feat — especially when your company is under the regulatory glare for a stock options scandal. But getting one of the most powerful women executives in North America is a noteworthy bonus, one observers say should help confer immediate credibility on RIM's internal governance reforms.
“It adds a significant and independent level of ongoing assurance,” said Peter Misek, an analyst at Canaccord Adams. “It should give investors confidence that RIM's world-class technology and operations will be matched by a world-class accounting and back office.”
Ms. Stymiest, 50, was a high-profile agitator on corporate governance rules in her previous job as head of the Toronto Stock Exchange before she moved to Royal Bank of Canada in 2005 to become chief operating officer. She said she is confident that RIM's problems with stock option grants have been addressed by a special committee of existing directors. The committee released the results of its independent review Monday, and said the cost of the financial restatements would be approximately $250-million (U.S.). Jim Balsillie, meanwhile, resigned as chairman of the BlackBerry maker, but will remain as co-chief executive officer.
“I had long discussions with management and other board members and recognized as I'm stepping in, I'm coming in at the end of the issue that's been resolved on a going-forward basis,” Ms. Stymiest said in an interview. “It always needs to be resolved to the regulator's satisfaction, but I think certainly the special committee's work has been completed.”
Bank officials have largely steered clear of director assignments at public companies in recent years, in part because the increasing emphasis on governance has made board work much more time consuming.
Consider Rick Waugh, the CEO at Bank of Nova Scotia. Mr. Waugh joined the board of Inco Ltd. in the summer of 2005, making him the only CEO of a Big Six bank to sit on the board of a public company, other than his own.
Within a year, Inco was in the middle of a massive industry consolidation, and Mr. Waugh conceded his time commitment was likely “double or triple” what it would normally have been. Some also believe his presence on the board created a conflict that cost Scotiabank a shot at millions of dollars in merger advisory fees.
That said, he insisted it was a valuable experience that helped him in his role at the bank.
Ms. Stymiest, who was ranked 27th in Fortune Magazine's list of the 50 most powerful women in business last year, acknowledged that RBC is “very circumspect” about its senior managers hiring out their services as directors, and said she will only serve on RIM's board. RBC CEO Gordon Nixon serves on the bank's board, but is not a director of other companies.
Joining RIM's board should offer her a window on a Canadian company, as well as a better understanding of the global technology industry, she said. She added that the bank has a solid relationship with the Waterloo, Ont.-based company, and with Mr. Balsillie.
“I think it is a good experience,” she said of the decision to join RIM's board. “I work for the shareholders of Royal Bank, so it has to be worthwhile for me in terms of does it have a relationship to the bank.”
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