Research in motion stock option backdating
It was forced to restate earnings by recognizing a stock-based expense increase of 3 million between 19, after allegedly manipulating its stock options grants for the benefit of its senior executives.It allegedly failed to inform investors, or account for the options expense(s) properly.S.) accounting charge because of major problems with stock option grants. Backdating occurs when companies look backward to pick a favourable date in the past to grant options. "We'll be paying particular attention to the question of whether the corporate governance changes disclosed today constitute meaningful reform and whether they are adequate to prevent problems of this nature in the future," he said.James Balsillie, RIM's co-chief executive officer, admitted yesterday his company backdated stock options granted to employees. While RIM's special committee described a number of instances of improper options-granting practices, it said it found no "intentional misconduct" on the part of any director or employee. Securities and Exchange Commission and the Ontario Securities Commission are reviewing RIM. "It's just a road map." Dimitri Lascaris, a lawyer acting for the Ironworkers Ontario Pension Fund, which owns 13,200 RIM shares, filed a lawsuit against the company in January. RIM announced a series of board and executive changes yesterday. Balsillie will remain co-CEO but will give up the title of chairman to an as-yet unnamed independent director, while chief financial officer Dennis Kavelman will leave his position to become chief operating officer.Options backdating may still occur under the new reporting regulations, but Sarbanes-Oxley compliant backdating is far less likely to be used for dishonest reasons due to the short time frame that is allowed for reporting.
The SEC’s opinions regarding backdating and fraud were primarily due to the various tax rules that apply when issuing “in the money” stock options vs. No." RIM's special committee of the board, which conducted a seven-month internal probe of stock option practices, said yesterday no one at the company will lose his or her job over the options problems.Balsillie's authority, and were not approved by the board as the company had previously reported."We are responsible, Mike and I are the CEOs and we don't duck it.
We put our money on the table and we stand behind it," Mr. The company said its executives will also repay all the benefit they received from options that were incorrectly priced. Balsillie said his own obligation will be "far, far less" than the -million he has volunteered to pay to cover the investigation costs.
To avoid having to pay higher taxes, many companies adopted a policy of issuing “at the money” stock options in lieu of additional income, with the idea that the executive or employee would benefit through the option by working to increase the value of the company without exceeding the one million dollar deductibility cap for executive income.