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Research in Motion, maker of the BlackBerry, will restate $250m in earnings and Jim Balsillie, its co-chief executive, will step down as chairman after a seven-month probe into backdating of stock options grants.
Mr Balsillie and Mike Lazaridis, the other chief executive, have also agreed to pay C$5m each to help cover the costs of the probe and restatement to the Waterloo, Ontario-based company, the company said on Monday.
RIM is one of the best known of the more than 160 North American companies caught up in the options scandal, which involves manipulating grant dates for executives’ options to maximise their personal gain.
Federal prosecutors and the US Securities and Exchange Commission have brought fraud charges against nearly a dozen individuals and are investigating dozens of other companies.
Most of the cases have involved fraudulent documents or self-dealing, where individuals were allegedly involved in misdating their own options.
A special committee of RIM independent directors to investigate the options said that it found no evidence of “intentional misconduct” in the stock-option programme.
It noted Mr Balsillie’s explanation that grants were made to attract and retain staff to a fast-growing technology company operating in an intensely competitive environment.
“The informality of the option granting process was, in part, a reflection of the stage of development of the company and the rapid growth occurring within the organisation at the time,” the report says.
All options granted before February 2002 were accounted for incorrectly as were two-thirds of the grants between 2002 and last August, when the scandal broke.
The probe has delayed RIM’s financial statements for the second and third quarter.
Nonetheless, the committee expressed full confidence in Mr Balsillie and his senior managers, pointing to a 450-fold increase in RIM’s annual revenues and a more than 100-fold surge in its shares since the company went public a decade ago.
In addition to splitting the jobs of chairman and chief executive, both held until now by Mr Balsillie, RIM has added two new outside directors and named the current chief financial officer, Dennis Kavelman, chief operating officer.
Mr Balsillie and Mr Lazaridis have agreed to put into escrow all RIM shares that they acquired by exercising options since the committee began its review.
The committee will decide whether any of the shares should be returned once it has determined the costs of the review.
RIM shares were about 1.7 per cent lower by early afternoon on Monday.