Shareholders of Research In Motion didn’t rise up in revolt at the company’s annual general meeting over the company’s fading performance in the past 12 months.
Instead, in a meeting in Waterloo, Ont., they elected board of directors proposed by management slate that included only one new face.
However, there were signs of disappointment.
During the voting, 30 per cent of the votes were withheld for one director, 22 per cent were withheld for chair Barbara Stymiest and 19 per cent were withheld for founder and former co-CEO Mike Lazaridis. No director had fewer that 14 per cent of the votes withheld.
That led activist shareholder Vic Alboini, chairman and CEO of Jaguar Financial Corp., a Toronto merchant bank that has been highly critical of RIM management, to declare that "this is not an overwhelming approval for each of the directors.” He asked Stymiest if the board will discuss the meaning of the vote with “the shareholders effectively saying no to some of the directors being elected.”
Yes it will, she replied, as part of the board’s deliberations on renewing itself.
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Earlier Albonini asked Stymiest if the board is “aggressively” looking for “technology experienced board members, consumer marketing stars, people in Silicon Valley, people in the United states who would bolster this board?”
In reply, Stymiest said the board recognized it had gaps in its experience.
The only time things got heated was when one shareholder said he is “extremely, extraordinarily critical” of the board for letting the company get into financial trouble before doing something. “Why did they let it get out of hand so badly and so much before they did something about it?
None of the “old” members of the board should hold their seats, he said.
He got a round of applause when he said “what this company needs is an upheaval like the CPR (Canadian Pacific Railway),” he said, which last month saw directors resign under shareholder pressure.
Stymiest and CEO Thorsten Heins took pains to make sure shareholders realize management understands their discomfort. RIM shares have been fallen since the fall of 2008 from $140 to $7.50-range today. During that time BlackBerry sales in the U.S. have plunged as well. RIM is behind schedule on releasing the next-generation BlackBerry 10 smart phones that it hopes will boost sales The company has had two quarters of losses, and Heins expects “the next several quarters to be very challenging.”
That has lead Jaguar Financial and others to call for the company to be broken up to maximize shareholder value.
So while Stymiest opened the meeting by repeating there will be challenges, she said the board is very supportive of Heins’ management team, which includes a new chief marketing officer, and, soon, a new chief operating officer.
The board understands that the company’s performance “has not met expectations” of shareholders, she said. The board will be “unwavering” in its goal of trying to increase shareholder value, she added.
Heins emphasized – as he has in recent sessions with financial analysts -- that he isn’t satisfied with the performance of the company. Nor, added, does the board take shareholder support as unconditional.
He admitted that in North America RIM is facing the popularity of devices running Apple Inc.’s iOS and Android operating systems.
But he wanted to assure shareholders that he has a plan for turning things around.
He also pointed out the company’s strengths, pointing to sales growth in some countries in the Asia-Pacific region, Latin America and Africa. BlackBerrys are “the first choice for countless government agencies,” he said, and more than 90 per cent of Fortune 500 companies deploy BlackBerrys globally.
RIM has 78 million subscribers, 56 million who use BlackBerry Messenger, a prime source of revenue for the company.
As for BlackBerry 10, he repeated that it won’t go out the door until it is ready, which he expects will be in the first three months of 2013.
One reason he’s upbeat, Heins said, is that carriers tell him they want BB10 to succeed so they have competition for other mobile platforms.
Heins has also streamlined management since he became CEO earlier this year and announced RIM’s staff will be cut by 5,000 to make the company a “lean mean hunting machine.”
For all this, he warned, benefits the BB10 will bring to RIM’s bottom line “will take time.”
The meeting was not without its lighter moments. One shareholder wondered how the board could give Heins a salary increase when he moved from COO to chief executive officer. “When it came to negotiations, how much of what you asked for did you actually get?” the shareholder asked to a few chuckles. Heins hadn’t been a CEO before, the shareholder noted, and in recognition of the company’s position Lazaridis and co-CEO Jim Balsillie were being paid $1 a year.
Heins replied that before coming to RIM he’d headed several billion-dollar divisions at Siemens, including one that he helped turn around. Stymiest said the board’s compensation committee looked at the market and did due diligence.
Then there was the new shareholder who complained the RIM-made combination cover and rapid charger he wants to buy for his PlayBook tablet has been out of stock since January.
Heins vowed to look into the availability of the accessory. “If not,” he added, “I’ll get you one.”