The firm grip of two co-CEOs on BlackBerry maker Research In Motion (RIM) loosened on Thursday, with the two bosses bending to shareholder demands to review the company's executive structure.
Amid RIM's plunging stock after poor quarterly results, shrinking profits and sales and delays in replacing the aged handsets, frustrated investors have been pressuring the two co-CEOs, Mike Lazaridis and Jim Balsillie, to give independence to the board from management.
Lazaridis and Balsillie are not only the co-CEOs of the company but also co-chairmen of the board of directors. They also have the largest individual shares of 10%. Thus, the two men control management as well as the board of directors.
They have resisted the investors' pressure so far.
But with Northwest & Ethical Investments LP (one of the major shareholder group) proposing a vote to split the roles of CEO and chairman at the July 12 annual general meeting, the two co-CEOs Thursday relented to head off the crisis.
In a statement, the BlackBerry company said a committee of independent directors will be set up to "study the appropriate balance between an independent lead director or chair with full and exclusive authority customarily held by such an office holder".
The committee will also "determine the business necessity for RIM's co-CEOS to have significant board level titles to assist their selling and other responsibilities with certain large customers in overseas markets, and propose and provide a rationale for a recommended governance structure for RIM, which will include clarifications of the co-CEOs and chair roles, as well as the board's mandate".
The committee will present its report by Jan 31.
Because of acceptance of its demand, Northwest & Ethical Investments LP will not press its proposal at the annual general meeting and no vote will be taken on the proposal.
At about $27, RIM stock is at its lowest level in six years. The iconic company's market value has sunk to just $14 billion from $83 billion in June 2008 when its stock soared to $150.