RIM Restates, Balsillie to Vacate Chair
The restatement, which covers the period from 2004 to the first quarter of 2007, is much larger than the company had initially said. This is because RIM's seven-month long internal review eventually found that all options granted prior to February 27, 2002, were accounted for incorrectly. In addition, 63 percent of the total options awarded -- between the end of February 2002, and August 2006 -- were incorrect. (See Off With Their Heads!, RIM Reports, to Review Options, and RIM Delays Q2 Filing.)
Balsillie will retain his co-CEO post after stepping down as chairman, the Waterloo, Ontario-based company said. RIM said in a statement that it had not found any evidence of intentional misconduct in the option backdating. Balsillie and his co-CEO, Mike Lazaridis, will, however, contribute $8.5 million between them to defray the cost of the review.
The investigation showed that Balsillie and -- to a lesser extent -- CFO Dennis Kavelman were directly involved in the grant process. "The Review revealed that until after the commencement of the Review in August 2006, all stock option grants, except grants to RIM’s co-CEOs, were made by or under the authority of co-CEO Jim Balsillie or his delegate in accordance with an apparent delegation of such authority by RIM’s Board," the company said in a statement.
"Backdating" is a way of artificially timing the day on which stock options are granted to correspond to a low point in the share price, thereby increasing the payoff when the options are exercised. It's not an illegal practice per say. It is, however, against securities regulations to keep the backdating secret.
The stock flap doesn't seem to have peturbed the market unduly. The firm's shares were down just over one percent at the close of trading.
— Dan Jones, Site Editor, Unstrung