Options back dating scandal


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.Academics had long recognised an odd phenomenon of share prices appearing to rocket on the day after senior executives were given stock options.



Also, the backdating of options brings with it accounting obligations: the backdating has to be recognised as a compensation expense."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 $5-million he has volunteered to pay to cover the investigation costs.He said it was an error due to a misunderstanding of accounting rules. executives and directors have resigned or been fired after internal reviews of options backdating problems. The company hopes to put its stock options issues in the past, but regulators say they are continuing to probe RIM's options practices. "When a company does an internal review, that helps speed our process, but it's not a substitute for our process," one U. RIM also announced it has appointed two new independent directors and is searching for two others. Balsillie and co-CEO Mike Lazaridis will pay $5-million each to cover the company's costs of investigating the options problems.

The admission makes RIM the first major Canadian company to get caught up in an options backdating scandal that has swept through the United States, leading to charges against some executives and forcing billions of dollars in earnings to be restated. The special committee report said all option grants, except those to the co-CEOs, were made under Mr.

It is simply not an option for publicly listed companies to pretend that an option was granted days or even weeks ago.