By WILL CONNORS
TORONTO—After a disastrous year at Research in Motion Ltd., Wall Street and a wide swath of corporate Canada are now asking: Where's the board?
RIM shares hit a series of multiyear lows after warning on Dec. 15 its new BlackBerry won't be out until later next year. Its current line isn't selling well in the U.S., as Apple Inc.'s iPhone and other competitors gobble up market share.
Once Canada's biggest company by market capitalization, RIM has shed about $30 billion in value so far this year. It's now worth just over $7 billion, less than that other Canadian icon, coffee and doughnut chain Tim Hortons Inc.
Amid the carnage, a growing chorus of investors and analysts are calling for RIM's independent directors to take firmer control of the company, either by forcing a big strategic shift, selling the company or ousting co-Chief Executives Jim Balsillie and Mike Lazaridis, who also serve as co-chairmen.
Mr. Balsillie has long been seen as the company's driving corporate force, taking charge of financial and marketing matters and leaving Mr. Lazaridis, who co-founded the company, to focus on engineering. This year, both are being widely blamed for not taking action to stem RIM's woes.
RIM said neither executive was available to comment.
Intensifying calls for management change, RIM agreed in June to review its unusual co-CEO and co-chairmen structure, bowing to pressure from shareholder activists. A small Canadian fund threatened to put the structure up for a vote at RIM's last annual meeting. The board committee is expected to issue a report next month.
In the meantime, investors and corporate-governance experts have urged bolder public action from independent board members. Jaguar Financial Corp., a small Toronto merchant bank and RIM investor, recently called for two prominent independent directors "to take the lead in making dramatic governance change or else resign," part of a public campaign to urge a sale of the company. A broad call for board action has echoed in private by bigger investors, and publicly by a growing number of Wall Street analysts.
RIM defends its board makeup, noting seven of nine directors are independent, elected annually and "deeply committed to building long-term value for all shareholders."
RIM has said the board's lead director, John Richardson, provides a strong, independent voice.
But shareholder-rights groups have long targeted Mr. Richardson, a 78-year-old former Canadian insurance executive, as ineffective. He's been on the board since 2003, and has been lead director since 2007. Institutional Shareholder Services Inc. recently wrote that he "does not provide a sufficient counterbalance" to management.
Mr. Richardson didn't respond to requests for comment.
According to a person familiar with the matter, independent directors have long deferred to Mr. Balsillie. Mr. Richardson runs the agenda in board meetings and Mr. Lazaridis typically makes short presentations, outlining the company's "technical roadmap" or detailing new products, this person said, but Mr. Balsillie controls the floor.
Mr. Balsillie is "the most forceful presence in the room by far," this person said. The two co-CEOs also have long prevented other executives at RIM from accessing the board, or from gaining insight into what goes on at board meetings, according to another person close to the company.
RIM's independent directors are drawn mostly from Canada's relatively small business world, most of whom joined in 2007. At the time, RIM still dominated the smartphone market, but it was also investigating claims of backdated stock options. The probe found sloppiness, not criminal activity, but RIM later settled with the Ontario Securities Commission and the U.S. Securities and Exchange Commission, agreeing to pay fines and restate earnings.
Mr. Balsillie admitted mistakes at the time, and he agreed to step down as chairman. The company said it would separate the roles of CEO and chairman. But late last year, Mr. Balsillie rejoined Mr. Lazaridis as co-chair.
RIM's highest-profile independent director is Barbara Stymiest, who joined the board in 2007. She was a former chief executive of the Toronto Stock Exchange and served as a top executive at Royal Bank of Canada, the country's largest lender.
Another prominent director is Roger Martin, the dean of the University of Toronto's Rotman School of Business and a corporate-governance advocate. In a critically acclaimed book published earlier this year, he draws business lessons from the National Football League, arguing among other things, for revamping corporate governance, including boosting the role of the independent director.
[RIMBOARD]
Referring to corporate boards generally, he writes that the members "can choose to accept a check-the-box meeting, or they can rise above it and focus on doing their important public-service job: helping their company to perform well," he writes.
The two have become a lightning rod for criticism because of their high profile in Canada and their corporate-governance experience. "It would seem to be a joke to have two people on the board who claim to be experts in corporate governance," said an executive at one big RIM investor.
Mr. Martin declined to comment.
Ms. Stymiest didn't respond to requests for comment.
—Ben Dummett and Joann S. Lublin contributed
to this article.
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