RIM Sees $250 Million Option Hit
Research In Motion (RIMM) said restating earnings to fix accounting errors tied to questionable stock option grants will wipe $250 million off past profits.
The Waterloo, Ontario, maker of the BlackBerry wireless email device said CEO Jim Balsillie will step down as chairman as a result of the probe. RIM said Balsillie was responsible for authorizing stock option grants, which turned out to be backdated in 63% of cases between 2002 and 2006, the company said.
"In many instances, including in connection with some option grants to the co-CEOs, COOs and the CFO (the 'C-level officers')," RIM said, "hindsight was used to select grant dates with favorable pricing on grants, resulting in grantees receiving an in-the-money benefit that was not recorded in the financial statements as stock-based compensation."
RIM said its finance chief, Dennis Kavelman, will become operating chief, and that Balsillie and co-CEO Mike Lazaradis have agreed to give the company 10 million Canadian dollars to defray costs tied to the probe.RIM had previously predicted that the option probe would result in a charge of $25 million to $45 million. The company said it continues to work on its restatement. RIM had previously said it aimed to file restatement paperwork by the end of its March 3 fiscal year.
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