At This Point, RIM's Shareholders Are Getting What They Deserve
Earlier today, RIM’s shareholders decided that logic is no fun, and that reason is a downer. What indicated this? Only that the board of directors would be re-elected with nary a word of complaint. Yes, this is the same board that has let the company slip into the abyss, that is hopelessly tied to the past, that was unable to protect the company from the onslaught of iOS and Android, and that has overseen the impressive slide of the stock price. It’s flabbergasting.
For some background, let’s look at the composition of this board. Barbara Stymiest, the Chair of the Board, has been with the company since 2007. Mike Lazaridis, the founder of the company, oversaw the company’s collapse as co-CEO. Thorsten Heins, the recently appointed CEO of the company, is not a product-oriented manager, and doesn’t seem to be inclined towards radical change. Then, there are two other members that were appointed in the last year, with the remaining five members having been with the company since the mid-2000s.
The board has undergone some change recently. Claudia Kotchka was appointed in 2011, and Prem Watsa was appointed in January of this year. Yet, despite these small changes, the bulk are the same people that have overseen the company's slow march of death. And to reiterate, Mike Lazaridis is still around even though his reaction to the iPhone was to not believe it was possible.
At this point, if the shareholders aren’t waging a war against the board a la Dan Loeb and Yahoo, then they have no right to complain when the company continues to slide. There are rumors that some shareholders may sue the company, but at this point, after years of apparent incompetence, there has been little action on the part of anyone. This is not like seeing the ship is about to hit the iceberg. It’s like knowing the iceberg is in the middle of the ocean, and steering towards it.
If the company wants to break from the past and plan for the future, it needs a massive overhaul of every piece of the company. It needs a Steve Jobs-returns-to-Apple moment, and however unlikely that is, it’s even less likely with the same old CEO and same old Board of Directors. Even when Jobs returned to Apple, it wasn’t enough to have a new CEO, he had to kick most of the Board out of the company just to remove the bureaucracy.
The impending collapse gels with a report by Morgan Stanley released at the end of June, which said in no uncertain terms that RIM is in an incredibly precarious position. “The next [nine] months likely see rapidly deteriorating fundamentals on the one hand,” according to the report, “offset by stories of potential strategic options on the other.”
Unless something drastic changes, the shareholders that just approved this slate of managers are going to be the same shareholders that lose quite a bit of money as the company continues to die. And the shame of it is that the collapse can be been prevented.