Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

Two major proxy advisory companies say BlackBerry Ltd .’s shareholders should reject the company’s pay practices.

Institutional Shareholder Services Inc. and Glass Lewis & Co. recommend “no” votes on BlackBerry’s non-binding vote on executive compensation, known informally as “say on pay.” Glass Lewis gave BlackBerry an “F” grade in its pay-for-performance system. It also recommends shareholders withhold votes from Prem Watsa, the Fairfax Financial chief executive officer who also serves as BlackBerry’s lead independent director and chairs the board’s compensation committee.

The company’s shareholders’ meeting is June 23. BlackBerry, in its proxy circular to shareholders, says “maintaining a world-class executive team” and clearly linking compensation to business performance are among the objectives of its compensation plans.

Story continues below advertisement

BlackBerry’s compensation practices typically make headlines every few years when the company gives CEO John Chen a gigantic block of stock awards. In 2013, when Mr. Chen joined the company, he received a long-term stock award valued at $85-million at the time. In 2018, he received a stock award of five million shares plus a long-term bonus plan that could yield close to $400-million if BlackBerry shares reached the $30 level in the next five years.

Glass Lewis, which had previously recommended “no” votes for BlackBerry’s say-on-pay, noted that some of Mr. Chen’s most-recent awards have vested, or become usable, largely because BlackBerry shares have been caught up in the “meme stock” fervor of recent months. (Meme stocks are shares in companies that have been seeing wild swings in trading by retail investors, who often promote the stocks in social media.)

Mr. Chen earns each block of one million shares from the 2018 award if BlackBerry’s share price hits targets in one-dollar increments from US$16 to US$20 (its shares trade in Toronto and New York). When BlackBerry awarded Mr. Chen the shares in 2018, they traded at US$10.63, and the targets seemed aggressive, but achievable. BlackBerry needed to return 50 per cent to 90 per cent over five years for the awards to kick in, and the stock needed to nearly triple for the big cash award.

It looked much harder in November of last year, when BlackBerry traded below US$5.

In late January of this year amid the “meme stock” rally, BlackBerry stock doubled in less than a week and blew through all five price targets in one day, briefly trading above $28. BlackBerry disclosed in its proxy circular that three million of the five million awards will vest this year because of the recent share-price action. The shares were down more than 9 per cent in early afternoon trading on Wednesday.

“Our continued concerns with the structure of incentives and reliance on one-time grants merit a vote against the advisory vote on executive compensation in our view,” Glass Lewis wrote in its proxy paper. The vesting of the stock awards “as a result of extreme short-term stock price volatility illustrates how narrow targets and short measurement periods can enable potentially excessive windfalls based on factors wildly outside the influence of managers.”

BlackBerry has said that Mr. Watsa personally negotiated Mr. Chen’s 2018 contract extension and share award.

Story continues below advertisement

ISS, the older and more established of the two firms, had different concerns. ISS dislikes Mr. Chen’s guaranteed bonus, and says that the bonus and Mr. Chen’s salary are above average compared with the company’s peers. ISS says BlackBerry doesn’t disclose the goals behind the incentive pay for other executives, which makes it difficult to assess the link between pay and performance. The board also modified the terms of BlackBerry’s September 2019 stock awards in response to COVID-19, ISS says.

“A pay-for-performance misalignment exists,” ISS concluded.

In 2020, ISS recommended a “Yes” vote on BlackBerry’s say-on-pay, and the company received support from 93.9 per cent of votes cast.

Shareholders can vote in favour of director nominees or withhold their votes, but cannot vote against. Last year, all BlackBerry directors received at least 90 per cent of votes cast.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies