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July 1, 2011 1:10 am
Research in Motion has bowed to institutional shareholder pressure agreeing to consider splitting the roles of its two co-chief executives and avoiding a potentially embarrassing showdown at its annual meeting next month.
Institutional shareholders, led by Northwest & Electric Investments, agreed after meeting RIM on Thursday to withdraw a proposal that could have forced the manufacture of the BlackBerry device to separate the roles of chairman and chief executive.
In return, RIM will set up a committee of independent directors to study the merits of appointing a ‘lead director’ on the board, and the business necessity for the company’s co-chief executives to hold “significant” board-level titles.
Jim Balsillie and Mike Lazaridis are currently co-chief executives and co-chairmen of the Canada-based company. The committee is due to report by January 31 2012.
While NEI holds a relatively small stake in RIM, two institutional shareholder advisory groups joined NEI’s call last week for the top roles to be split. RIM’s concession to shareholders came on the same day that a highly critical anonymous letter purportedly written by “a senior RIM employee” was published online.
The open letter, published by Boy Genius Report, an online news site that claims to have verified the author’s identity, accused RIM’s two co-CEOs of mismanaging the company and called on them to consider stepping aside.
It underscored the turmoil inside the company that is struggling to replace its ageing BlackBerry product line with new handsets better able to compete with rivals including Apple’s iPhone and smartphones running Google’s Android operating system.
“We are in the middle of a major ‘transition’ and things have never been more chaotic,” the author wrote. “Almost every project is falling further and further behind schedule at a time when we absolutely must deliver great, solid products on time. We urge you to make bold decisions about our organisational structure, about our culture and most importantly our products.”
Responding to the letter, RIM said it was difficult to believe an employee would write anonymously, rather than address their concerns directly to the company.
However, it added that “the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities”.
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