Amid the Wreckage, Where Is RIM's Board?

If you can't trust executive management to get the job done, then whom can you trust? Typically, the answer to that question is the board of directors. That should especially be the case if management has shown an extended disregard for much-needed strategic reform.

With Research In Motion (Nasdaq: RIMM  ) a wreckage, where have RIM's board members been amid the chaos? Why haven't they heeded the calls of shareholders and made any changes? Why are co-CEOs and co-Chairmen Mike Lazaridis and Jim Balsillie allowed to run freely like a pair of escaped misfits who have inherited keys to the vault without parental supervision? Why does RIM still have two CEOs and two chairmen?

While Balsillie and Lazaridis share both roles, they serve different purposes at the company. Lazaridis is more soft-spoken and focuses on technical product details and engineering, while Balsillie handles finances and marketing and leads board meetings.

At the end of June, RIM had agreed to form a "committee of independent directors" to evaluate the company's corporate-governance structure and said a report would be issued by the end of January with a recommendation. I'll offer up a freebie to RIM that doesn't take seven months to conclude: Have one CEO and one chairman, and preferably boot Balsillie and Lazaridis.

Sadly, RIM's board already knows this. Having separate CEO and chairman roles is Chapter 1 in Good Corporate Governance 101. Out of RIM's nine-member board, seven of them (all but Balsillie and Lazaridis) are independent. Out of the seven independent directors, two of them are corporate-governance "experts."

Roger Martin is the dean of the Rotman School of Management at the University of Toronto and has written extensively on the topic. The school also touts itself as an educational honcho on corporate governance. Barbara Stymiest has substantial experience at the Royal Bank of Canada (NYSE: RY  ) and the Toronto Stock Exchange, both of which are dedicated to good corporate governance. She even lists "corporate governance" as one of her areas of expertise.

RIM's board is guilty of complacency. It's not quite as bad as Hewlett-Packard's (NYSE: HPQ  ) board, which has actively made bad calls. Instead, RIM's board continues to look the other way as Lazaridis and Balsillie have set the controls for the heart of the sun. Meanwhile, Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) continue to eat RIM's lunch, and management has potentially spurned being bought out by Amazon.com (Nasdaq: AMZN  ) or Microsoft (Nasdaq: MSFT  ) and Nokia (NYSE: NOK  ) .

Well, at least they have Angry Birds.

Research In Motion is on a crash course and has left the mobile party prematurely, which is a shame, because the mobile revolution is going to be huge. But just because RIM is missing out, that doesn't mean you have to. We've just released a brand-new, 100% free report that details one stock that is in an enviable position powering the mobile Trillion-Dollar Revolution from the inside, while also having exposure to China's red-hot growth. I like the stock so much I've given it an outperform CAPScall. Grab the report now to find out what company I'm talking about.

Fool contributor Evan Niu owns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Apple, Amazon.com, and Microsoft. Motley Fool newsletter services have recommended buying shares of Amazon.com, Google, Apple, and Microsoft and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 27, 2011, at 8:14 PM, plange01 wrote:

    for all the negative talk rimm is not doing that bad. this stock will at least double next year and triple if the company decides to sell itself...

  • Report this Comment On December 28, 2011, at 8:25 AM, Aikon1 wrote:

    Why would RIM be good for Nokia? Nokia bought a Corporate Mobile Email company call Intellisync back in 2006 and by the end of 2008 the canned it. Do you honestly think that Blackberry devices will somehow get Nokia back to where they once were?

    The missing part of Nokia's Strategy is and was MeeGo, they should have never pulled out of it, and instead combined the development effort with WebOS and Blackberry OS 10. And allowed it to run on any of their smartphone devices. Like they always say do not put all your eggs in one basket as Nokia has done with WP7 and how they rejected the notion that Symbian was a tired old Mobile OS until 2011.

    The missing part of RIM’s strategy is like Nokia they were in denial about their smartphone OS, when iOS came out and still in denial when Android OS came out. At Blackberry world I believe someone asked when they would port their smartphone code over to run on Android and the CEO’s said it would ruin the BB experience. Since that time the stock has lost 75% in value and the BES customers are jumping ship to systems that allow BYOD.

    The problem is leadership at the top of these companies lacks in vision, and do not understand the market in in some cases rode the mobile high tech wave 2000 -2008 and then IOS changed things. Then Android came and still they refused to see the writing on the wall. Nokia had a Linux OS back in 2004 – 2005 and only used it for gaming devices.

    I feel there is room for a second Linux based OS like MeeGo/WebOS, just like the PC world has Red Hat, Susse, etc..

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