Research in motion stock option backdating
Photo from December, 1984 at a mall in Waterloo, ON.From left; Mike Lazaridis, Chris Shaw and Doug Fregin.
Someday the person who puts wireless and computers together is really going to make something.” The first few years of RIM, launched in 1984, were focused on a variety of products, none of them wireless.Today, RIM’s Blackberry has become a household name and the company an unrivaled Canadian success story.Research in Motion has sold over 75 million smartphones -nearly half of those in the past year alone. Also, Sycamore Networks has been named in a lawsuit brought by a former employee, in which the former employee alleges that his employment contract was terminated because he complained about the company’s stock option practices. In addition, the plaintiffs allege that the M-Systems officers and directors breached their fiduciary duty to M-Systems shareholders by backdating stock options and sought to further their own interests by approving the merger. Special thanks to Adam Savett of the Lies, Damned Lies blog for bringing this lawsuit to the attention of .Rather, the practice of backdating stock option is a non-event in Canada due to the Income Tax Act.
Here’s how a corporate lawyer and a former chair of a Bay Street law firm’s partnership board explained it to me recently:…
From December 1996 to July 2006, Jim Balsillie, Dennis Kavelman (then CFO), Mike Lazaridis and certain other RIM officers and directors engaged in improper stock option granting practices, including backdating and repricing of executive, director and employee stock option awards. In the February 2009 settlement of the Ontario Securities Commission’s enforcement action, Balsillie, Lazaridis and Kavelman agreed that they engaged in option backdating and repricing and that the total “in-the-money” undisclosed benefit from the incorrect option dating practices was approximately $66 million.
Following an internal investigation, in May 2007, RIM restated its historical financial statements with a cumulative, non-cash, stock-based compensation expense of U. They confirmed that they returned the improper financial benefits they received from the incorrectly priced options and undertook to contribute, in aggregate, $83.1 million to RIM and to pay administrative penalties and OSC costs totalling $9 million.
Readers interested in keeping up to date on the number of lawsuits will want to check back frequently.
The running tallies below are meant to include a listing of any company that has been sued based on allegations of options timing manipulations, regardless whether the allegations are based on options backdating, options springloading, or hiring-related options timing.
RIM was involved with film editing equipment, they made giant LED signs for GM, high tech toothbrushes, even had a brush with the space arm.