Saturday, November 12, 2011

Assessing RIM's Approach to Corporate Governance

Yesterday, RIM's stock closed at somewhere near $19 on the TSX. The stock has fallen off so much that the value of the Company hovers around it's book value.

As a key role of the Board of Directors is to protect share holders, it got me wondering about how well RIM's Board has performed it's governance duties - and why there hasn't been more focus on RIM's Board.

Based on RIM's definition of the role of their Board from their website, here's my assessment:

Board Responsibilities from RIM Company Site
Rating (1 low – 5 high)
Ensure that a culture of integrity is created throughout the organization
Not taking accountability for the Company's performance is a powerful signal.
Oversee and approve the Corporation’s strategic initiatives and implementation of such initiatives
Key strategies have failed and implementation (BBX, Playbook) has been chaotic and disappointing.
Assessing the principle business risks of the organization.
The Company's product and infrastructure strategies are key risks the Board apparently missed.
Overseeing the Company’s compliance activities, including the areas of legal/regulatory compliance…
The Company appears to meet it’s basic legal/regulatory obligations however it’s approach to disclosure (below) is questionable.
Monitoring the Co-Chief Executives performance.
Tough to argue that the co-CEO's have performed well. Even worse, the co-CEO's are also the Co-Chairs of the Board, making it impossible for the Board to fulfill this responsibility.
Adopting and monitoring a disclosure policy for the organization.
RIM has consistently failed to announce the departure of key senior execs, raising a question about what else the Board has deemed not material.
Monitoring the integrity of internal control and management information systems
Developing the Corporation’s approach to Corporate governance
What approach to Corporate governance?

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