Research In Motion (NASDAQ: RIMM) is based in Canada but it is listed on the Nasdaq and a large portion of its investor base is in America. RIM is an unusual corporation from a governance standpoint. Its two CEOs and large shareholders, James Balsillie and Michael Lazardiris, have operating control of RIM. This presents a problem like the one that faces Dell (NASDAQ: DELL). Performance of the company may be poor, but how can founders and large shareholders be pressured to improve?
The responsibility to manage the activities of the co-CEOs at RIM falls primarily to John E. Richardson. Richardson is the lead director and a member of the Audit and Risk Management and Compensation, Nomination and Governance committees. He has not done a good job of it. RIM’s management has allowed itself to be flanked by Apple (NASDAQ: AAPL) and several other makers of handheld and smartphone devices which include HTC and Motorola. RIM’d share price is down 25% in the last year. Nasdaq is up over 10% over the same period.
The trouble at RIM has already been blamed on the co-CEOs who have been remarkably slow to react to threats from Apple and Google (NASDAQ: GOOG) Android-powered phones. RIM controlled the corporate smartphone business for years with its BlackBerry device. That market was RIM’s to lose and it has lost much of it to Apple. The company was also very slow to introduce products into the consumer market. And, RIM has been late to the tablet sector as well. Its recently launched Playbook has received poor reviews, particularly because it requires an independent BlackBerry to run its e-mail function.
Richardson would have trouble pushing the founders out, but he has put no pressure on them in the public markets. RIM’s performance continue to deteriorate
Richardson joined the board in 2003. None of the other outside directors have been with the company more than four years. Richardson is the only logical person to press RIM management for radical change, and, if anything, the firm’s dire position has only gotten worse.
Douglas A. McIntyre