Roles of chair, CEO may be split
“In a perfect world, it would be great if RIM had a non-executive board chair with a tech background,” said Beverly Behan, president of New York-based governance advisory firm Board Advisor, LLC. Along with more tech industry experience, the RIM board needs “a director from an important international market, preferably in Asia,” Behan said. Evercore Partners analyst Alkesh Shah said he would not be surprised if RIM moves to separate the roles of chair and CEO, given the pressure for change coming from investors, who have watched the value of their RIM holdings decline by more than 70 per cent over the past 12 months. But Shah said the co-ceos, who together control nearly 11 per cent of the company’s stock, would likely remain in their executive roles, meaning that major strategic changes at RIM might be hard to envision. He said appointing an independent chair could be a prelude to more governance changes, or it could simply be a way for the company to buy time as it struggles to convert its smartphones to a new operating system. William Blair & Co. analyst Anil Doradla said RIM might use the time to weigh a variety of options. Shah said there is no indication RIM plans to take the company private, but he said its depressed share price, the absence of a new product lineup until the end of 2012 and its recurring cash flow create classic conditions for a move away from the demands of public ownership.
“Given the problems RIM has, it would be incumbent on the board to consider every strategic possibility under the sun,” Albioni noted. RIM declined comment on the board shakeup report, saying only that its committee examining corporate governance will report on schedule by the end of the month, with RIM directors to then respond to the report within 30 days.
The governance committee was established after mutual fund company Northwest & Ethical Investments LP brought a proxy resolution last summer arguing that the board needs independent oversight of management.
RIM agreed to set up the governance committee to avoid a vote on the proxy motion at its annual meeting in July.
Northwest vice-president Robert Walker said he would be satisfied “for now” with a move to strike an independent chair, noting that the person would have authority to hire and fire senior executives.