RIM chairman quits over stock options
The chairman of handset manufacturer RIM has resigned following an investigation into the backdating of stock options, but will stay on as co-chief executive and director of the BlackBerry-maker.
Jim Balsillie, who had been the Canadian firm's chairman since 1992, stepped down on Monday as the company restated its accounts, knocking $250m (£129m) off its stated earnings for the period between fiscal 2004 and the first fiscal quarter of 2007.
The final figure of $250m was much greater than the $25-$45m that RIM predicted last September would need to be shaved off its stated profits for the period.
A Monday statement from RIM indicated that an audit, begun in August 2006, found problems with "3,231 grants of stock options to acquire common shares that were made between December 1996 and August 2006 to 2,034 employees and RIM's directors". The statement admitted that RIM had been "inconsistent in its approach to selecting dates that determine the exercise price of the options".
The tech industry has been gripped by stock option scandals in recent months, with a string of companies admitting that they backdated options grants. This has meant that executives benefited from lower share prices, thus increasing the value of their options. It's not clear whether this practice is illegal.
The stock option granted by RIM fell into two categories: "new hire grants" for new employees or students who worked for RIM in their holidays and re-joined the company after completing university, and "periodic grants" — awards made to existing employees and directors, including grants given to employees following a promotion to a more senior position.
Balsillie or his delegates had authorised most of the former category, but investigators "did not find intentional misconduct on the part of any director, officer or employee responsible for the administration of the company's stock option grant programme".
RIM is now instituting a new stock option granting process and splitting the roles of chairman and chief executive, so as to be "consistent with current best practices in corporate governance".
Balsillie and co-chief executive Mike Lazaridis have also "voluntarily offered to assist RIM in defraying costs incurred in connection with the review and the restatement" by contributing up to five million Canadian dollars (£2.2m) each.
RIM's troubles represent the second profit restatement in days from a top Canadian technology company, following Nortel's recent announcement of the same.