Possible Replacement Not a Positive

 | Jan 03, 2012 | 2:00 PM EST  | Comments
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Stock quotes in this article:

rimm

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ry

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bmo

According to a report in Canada's Financial Post last night, Research In Motion (RIMM) is leaning toward appointing Barbara Stymiest as their first Chairman who is neither Jim Balsillie nor Mike Lazaridis.

At first glance, you might think this would be a positive for the stock. Unfortunately, it's not, and here's why.

Imagine that you were Balsillie or Lazaridis now. Your stock was down 75% last year. Shareholders and friends in Waterloo, Ont., are angry at you. The media (especially in the U.S.) keeps portraying you as fools. And, some analysts who used to sing your praises are now openly critical of you.

So, you want to quiet people -- without actually giving up any control.

The first step in this achieving this goal occurred during the December earnings call when the co-chairmen of the board announced that they would start accepting a $1 a year salary, which made it seem as if they were working on behalf of shareholders. In reality, Balsillie and Lazaridis are (still) nearly billionaires, and their annual salary (without bonus) was always considered pocket change.

Last summer, RIM shareholders decided to politely request that the CEOs no longer serve as Chairmen. The company responded by stating it would form an independent committee and study the issue for seven months, after which, they would issue a report (due at the end of this month). According to the settlement terms with the shareholder group, the co-CEOs would have 30 days to study the report and issue a response after the study was finished.

Does one really need six months to study this issue? It's surprising that the shareholders even agreed to this.

Given the stock performance and the reputational hit that all RIM directors have taken in the last year, it's not surprising that this independent committee is now leaning toward recommending an independent Chairman -- supposedly, Barbara Stymiest.

So what about Stymiest? Arguably, she's the most prestigious director on RIM's board, which means that she has the most to lose from continuing to preside over this modern-day Titanic.

Investors are bidding up RIM's shares this morning since they think she will bring some tougher, independent thinking to RIM's boardroom. I don't think she will, and today's announcement means nothing.

Stymiest has been on the board since 2007. If she was an independent-minded thinker, why hasn't she exhibited this stance in meetings thus far to prevent this collapse? Or, if she has shared her independent views, why would a change in her title change anything materially in board meetings?

Remember, Balsillie or Lazaridis only would have agreed to this change if it was for appearances only and they were still able to run the show at RIM. Mission accomplished, guys.

Who is Stymiest? She's an unknown quantity in the U.S., but very well known in Canadian business circles (which are small) because of her time as CEO of the Toronto Stock Exchange from 1999 to 2004. She is now retired after her post of Group Head of Strategy, Treasury & Corporate Services, and COO of the Royal Bank of Canada (RY).

In Canada, once semi-prominent executives retire, they usually sit on a dozen boards and collect pay checks for doing nothing. That's where Stymiest is at in her career. Therefore, it doesn't surprise me that she wants to step up and try to burnish her image of setting the RIM co-CEOs straight.

But, how is Barbara Stymiest going to "push" Lazaridis to get the QNX-based phones out the door before the end of this year? What does she know about QNX or mobile phones for that matter? She's an accountant by training with an MBA who served as CFO of the Bank of Montreal (BMO) before taking her CEO job at the Toronto Stock Exchange.

Before anyone tries to defend her by arguing that she dealt with complex IT infrastructure at the Toronto Stock Exchange, I will add that IT has nothing to do with mobile devices, and Stymiest's tenure at the Toronto Stock Exchange will always -- at least for me -- be associated with a series of IT failures that persistently halted electronic trading.

Stymiest knows nothing about how to save RIM. And, even if she chairs future meetings, she won't be running them.

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