Canada’s Research in Motion held its annual shareholder meeting yesterday, in which the company tried to re-assure investors that the company is poised to regain a competitive edge in the smartphone market and on the verge of launching seven new BlackBerry smartphones. However, investors are understandably concerned that the company’s stock price has lost more than half its value this year, and one is giving RIM a deadline to prove its comeback strategy will pay off: Northwest & Ethical Investing LP (NEI) says RIM can have six months to prove there’s a solid business case for co-CEO’s Jim Balsillie and Mike Lazaridis to also serve as chairmen of the company’s board of directors…or they’re re-introduce a motion to split the roles.
Last month, NEI—a proxy firm—was the first to call for RIM to split the CEO and chairman roles, arguing that having the company CEO’s also lead the board meant investors weren’t being properly represented. The motion was echoed by Institutional Shareholder Services (ISS) and Glass Lewis. RIM advised shareholders against the motion, arguing that independent board member John Richardson acted as the de facto head of the board, and having the Chairman title helped both Balsillie and Lazaridis land clients, particularly in international markets.
NEI withdrew its proposal at the beginning of July, following a promise from RIM’s board to set up a committee of independent directors to study the chairmanship situation and report back by January 31, 2012. However, NEI will play a role in drafting that committee’s mandate, and insisted on the panel’s deadline for reporting: according to reports, RIM originally wanted more time before the committee would be required to report back. The committee will be reporting soon enough that the proposal to split the roles can be re-introduced at the 2012 board meeting.
Roughly 40 percent of S&P 500 companies separate the CEO and chairman roles to avoid conflicts of interest. That figure was under 25 percent in 2000; the change is largely due to 2002’s Sarbanes–Oxley Act, which (among many other things) set and redefined standards for corporate governance and accounting practices in publicly-held companies
In the meantime, RIM has come under renewed criticism for its dual-CEO structure, and some analysts have called for the company to split itself into two separate firms—one handling handsets and devices, with the other running the company’s network operations and services business.
RIM’s seven forthcoming BlackBerry smartphones will run BlackBerry OS 7; it’s expected to be the last release before RIM fully converts its platform to QNX. Currently, the BlackBerry PlayBook runs QNX.
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