BlackBerry CEO Thorsten Heins’s $56-million silver lining
This has been either a really bad week for BlackBerry CEO Thorsten Heins, or a hugely promising one, or perhaps both. The troubling thing is that only Heins knows for sure.
BlackBerry released its second quarter results on Friday morning, and as everyone expected, the numbers were dismal. Beyond bad: Losses of US$965 million; revenue down 45 per cent year over year; only 3.7 million phones sold; a $72-million restructuring charge due to layoffs; plus 4,500 more jobs to go.
The news went from bad to worse, and Heins had not much to offer other than the obvious “we are very disappointed with our operational and financial results”, and some vague promise to improve things going forward.
However, fixing the mess may soon be out of Heins’ hands because, of course, BlackBerry is the target of a $4.7-billion proposed takeover lead by Fairfax Financial Holdings. The company and chief executive Prem Watsa have six weeks to find more than $4 billion in equity and loans, assuming a better suitor doesn't emerge or Fairfax doesn't decide to walk away.
If Fairfax succeeds, and Watsa insists it can, the pride of Waterloo, Ont. will become a private concern, and the days of having to explain to analysts every quarter why business is so bad will be over.
So too, in all likelihood, will be Heins’ short reign at the top. Not that BlackBerry’s misfortunes are entirely, or even chiefly, Heins’ fault. He’s only being CEO since 2011, and by then the company’s phones had fallen irrevocably behind it rivals on almost every conceivable score.
That said, nothing he’s done in the past two years has done much to improve matters. Launches have been delayed, sales have collapsed, the stock continues to sink and the death rattle has only grown louder.
Yet early this year, BlackBerry’s board apparently decided that if the deathblow was struck – the company would be acquired and Heins fired – that he should be compensated. And not merely paid off, but actually rewarded for that outcome. The board more than doubled his pay out package, increasing it from $21 million to $55.6 million if the company is sold and he gets canned.
His senior executive team would share another $25 million if they also lost their jobs in an acquisition (And let’s be clear, they would).
All of this puts somewhat of a silver lining on what would otherwise be a very troubling few days for a CEO, and really begs the question whether when Heins looks back at this week, it’s with a degree of chagrin or a tremendous sense of relief.