Chen's Compensation
While I share the outrage of most regarding Mr. Chen's compensation package, I do think we need to temper that outrage somewhat given that the odds are against him recouping anywhere near the ~$80M being quoted in the press. First of all, the 13M shares he will be awarded will not fully vest until five years from now. When you consider Blackberry's current position, the shares are likely to be worth either nothing (or next to nothing) or a lot more than $6.50. Under the first scenario, Chen walks away with his salary, which is actually quite modest for a large company CEO. Under the second scenario, he becomes an outrageously rich man; then again, so do all other shareholders (at least, relative to where the stock is priced now).
I will say this - Chen seems to be a much better man for the job than Heins. I of course would prefer the board would not have paid him so much, but then you have to consider that Blackberry's current position doesn't exactly have experienced, credible executives lining up around the corner. If bringing Chen on board is the difference between turning this ship around and seeing the company go bankrupt in three years, then it was money well spent. Still outrageous, but also money well spent.
Re: the debentures, I continue to think that was a good deal for Blackberry. The lenders only make money if a) the company is still around in 6-7 years to repay the loan or b) the stock is trading higher than $10 at that point or c) the company is bought out at some point during the duration. Really, throwing a $1B at Blackberry at this point is a pretty big risk, and given that, these terms are quite favourable to Blackberry.
The stock is now trading below $7, which was the target I had been waiting for to consider re-entry. I like the Chen hire, but his compensation and the debenture offering change my valuation calculus a little bit. Taking a flyer at these levels could yield some very handsome rewards if Blackberry is able to have a success or two in the next year.