An influential proxy advisory firm is blasting BlackBerry Ltd. over its executive compensation practices.

In a scathing report ahead of the tech company’s June 23 annual general meeting, Glass Lewis recommended investors vote against BlackBerry’s executive pay plan, and said the company’s compensation compared with overall corporate performance merits an “F” grade.

At the core of the issue is BlackBerry’s share-based compensation plan. Glass Lewis noted that the recent Reddit-fuelled rally in shares of the company could result in outsized share awards compared to the underlying fundamentals of the business.

Glass Lewis said that the long-term incentives outlined in fiscal 2019, combined with the rally, could result in BlackBerry Chair and Chief Executive Officer John Chen receiving $106 million in performance share units (PSUs) and restricted share units (RSUs), along with a $90-million cash incentive.

The PSU performance hurdles – ascending price targets between $16 and $20 per share on a volume-weighted average price basis – have been easier to achieve during the current mania. Glass Lewis noted that three out of the five PSU tranches were achieved, unlocking three million PSUs.

At the height of the frenzy, shares of BlackBerry peaked north of $30, though they have since slid to $17.

In the report, Glass Lewis said that given the anomalous nature of the Reddit rally, it appeared those share awards were divorced from the fundamentals shown by the company prior to the frenzy.

“Based on the company's share price performance over the past fiscal year -- prior to January 2021 the price hovered around $5 and peaked around $8.50 -- it appears to us that these tranches were earned as a result of the company’s sudden share price increase concurrent with the retail trading phenomenon observed in January 2021, which was characterized by extremely volatile trading patterns of shares in certain publicly traded brands, most famously GameStop.”

Chen was not immediately available for comment when contacted by BNN Bloomberg.

Glass Lewis also recommended investors withhold support for Prem Watsa – one of Canada’s most famous investors – who chairs BlackBerry’s compensation committee. The proxy advisory firm said it has “severe concerns” over the executive payouts, and cautioned that Fairfax’s significant holdings in some of BlackBerry’s outstanding debentures could potentially misalign Watsa’s priorities with those of other shareholders.

Glass Lewis has recommended shareholders vote against BlackBerry’s executive compensation plan in each of the last three years, with 23 per cent of the votes cast last fiscal year following the proxy advisor’s recommendation.