BlackBerry CEO John Chen has a pay package that is “complete greed”: Gallander

BlackBerry (TSX:BB, NYSE:BB) shareholders have voted in favour of a compensation package for CEO John Chen that could see the architect of the company’s recent transformation rake in over US$400 million for the next five years if he and the company reach a set of performance goals.

That’s just greed, claims portfolio manager Benj Gallander, who says that the package hurts BlackBerry shareholders.

Earlier this week at the company’s annual meeting in Waterloo, BlackBerry investors voted 91 per cent in favour of the compensation package which expands on the compensation stated in the five-year contract John Chen received in March and depends on the company’s share price on the NYSE hitting US$30 at any point before November 3, 2023.

The figure is just too much, says Gallender. “I hate his pay package,” he told BNN Bloomberg. “It’s just greed, complete greed. I think he’s a great operator but it doesn’t make any sense.”

“I always find it bizarre how some people can take so much money and then maybe they have a hospital area named after them. Well, it’s very nice that you’re giving back but at the same time, this does hurt shareholders. Some people say it does not hurt shareholders. If he’s getting $400 million, that means there’s less money for shareholders,” he says.

While there was some dissent on the package, advisory firm Institutional Shareholder Services (ISS) recommended that it be approved, arguing that Chen’s work on behalf of the company should be rewarded.

“The pay opportunity offered by [John Chen’s] contract is very high by standards of the Canadian market, but similar to other technology giants in the US,” ISS stated. “When Chen was hired from the US in 2013 to turn the company around, the company was in a state of dramatic decline. The fall has been arrested and the company has done exceptionally well in the [current fiscal year], both in terms of shareholder experience and operations.”

On Friday, BlackBerry posted its quarterly financials, showing revenue and profit that beat analysts’ expectations. But the company’s share price fell in trading as the quarterly revenue was nearly 20 per cent lower than the same quarter last year, with BlackBerry’s enterprise income said to be the culprit. The company’s net loss for the quarter was US$60 million, compared to a profit of US$671 million last year.

Gallander also had words for Fairfax Holdings CEO Prem Watsa, whose company is a BlackBerry investor and who acts as lead independent director for BB.

“Prem Watsa, another person who I admire like I admire John. I mean, he approved this, helped put it in place, and I think he was very, very misguided in doing it,” says Gallander.