BlackBerry has agreed to pay John Chen, the technology industry veteran picked to try and rescue the troubled smartphone maker, $3m a year in cash and bonuses, and provide him with 13m restricted shares worth about $85m, based on the current share price.
Mr Chen, named executive chairman and acting chief executive on Monday after Fairfax Financial abandoned its $4.7bn bid for BlackBerry, will be paid a base salary of $1m and a performance bonus of $2m, according to a regulatory filling.
A separate filing reveals that Qatar Holding, the sovereign investment fund, and Brookfield Asset Management are among the investors that, together with Fairfax Financial, have agreed to invest $1bn in BlackBerry in the form of convertible bonds.
The Qatar fund and Markel, another investor, will each provide $100m, Brookfield will contribute $50m, while Canso Investment Counsel is providing $300m, Mackenzie Financial $200m and Fairfax the remaining $250m.
The pay package, coupled with a generous $250m break fee that Fairfax and other new investors will be paid if BlackBerry is acquired before the refinancing deal closes, are likely to fuel investor concerns about governance issues.
Commenting on Mr Chen’s compensation package Lucy Marcus, chief executive of Marcus Venture Consulting, said that “while the total amount is very high”, if he cannot turn round the company, the restricted shares will not have any value anyway.
Ms Marcus said it was disappointing that BlackBerry had not split the roles of executive chairman and chief executive. “I’m not comfortable that, even on a temporary basis, the two roles are combined.”
Governance issues came to the fore in September after an analysis of earlier regulatory filings undertaken by Reuters. It showed that just months before Fairfax made its tentative multibillion-dollar bid for BlackBerry, Prem Watsa, Fairfax’s chief executive and one of three directors on BlackBerry’s compensation committee at the time, played a role in securing a golden parachute worth as much as $55m for Thorsten Heins, BlackBerry’s outgoing chief executive, if the company was acquired.
BlackBerry did not respond to a request for details of how much compensation Mr Heins will receive after stepping down, but estimates range from $14m to $22m.
In addition, according to Canadian press reports, Mr Chen will continue to live in California and will commute to BlackBerry’s Waterloo, Ontario headquarters in one of the company’s three corporate jets.
The Wall Street Journal revealed that BlackBerry acquired the third corporate jet, a 2006 Bombardier aircraft, in July this year, shortly before it reported a loss of almost $1bn for the quarter ended August and announced 4,500 job cuts.
BlackBerry said at the time that it planned to sell all the aircraft, but did not respond to a request earlier this week for clarification on the planned sale.
Mr Watsa resigned from the BlackBerry board ahead of Fairfax’s $4.7bn bid for the company.