Report: RIM co-CEOs may have to give up chairman roles

rim loses another exec reportedly starts layoffs co ceos balsillie and lazaridis

A new report in the Financial Post claims that Canada’s Research in Motion is getting ready to shuffle its corporate structure, potentially stripping its co-CEO’s of their de-facto roles as chairmen of the company board and installing an independent director as chair. And the leading candidate appears to be Barbara Stymiest, a current independent director on RIM’s board. Stymiest recently retired as chief operating officer and group head of strategy, treasury and corporate services at the Royal Bank of Canada. She joined RIM’s board in 2007.

Barbara Stymiest

RIM’s review of its corporate governance comes as a protracted response to shareholder pressure last summer. RIM’s co-CEOs Mike Lazaridis and Jim Balsillie also each hold the title of chairman of the company’s board of directors—while they claim they don’t exercise the power of chairmen, they say having the title is important for them to clinch major deals, particularly in international markets.

The independent governance review is due January 31, at which point the company’s full board—including Balsillie and Lazardis—will have 30 days to respond. It’s important to note RIM has not leaked or released information about the forthcoming report, and the Financial Post does not cite sources for its story.

Nonetheless, the consensus from sources close to RIM is that the report will present a handful of options for making RIM’s leadership more responsive to shareholders, and stripping the co-CEO’s of their chairmanships is likely to be one of them.

Lazaridis and Balsillie represent RIM’s second- and third-largest investors—between them, they control about 12 percent of the company. However, RIM shareholders have grown increasingly concerned that having the same two men as chief executives and leading the company’s board means the company has a lack of independent oversight and its leadership may not be acting in shareholders’ interest. These shareholder concerns have been amplified in recent months, with the stunning sales failure of the RIM PlayBook (now being fire-saled) and the company’s recent announcement that its next-generation BlackBerry 10 smartphones wouldn’t be hitting the market until late 2012. Balsillie and Lazardis recently cut their salaries to $1 as RIM continues to see its once-dominant position in the smartphone market eroded by Apple’s iOS and Google’s Android.

Even if RIM were to appoint an independent director as the chairman of the company board, it’s not clear how a shift in leadership this late in the smartphone game would help RIM. If anything, it may force the company leadership to make short-term decisions designed to maximize value to shareholders: that might include selling off parts of the company’s business and/or patent portfolio for a cash infusion. However, it’s important to remember that while RIM has seen its share of the smartphone market precipitously decline—and the PlayBook failed to make a dent in the tablet market—RIM is still making money. It’s just not making as much as it used to, and its revenue growth is declining where most of the rest of the mobile sector is accelerating.