RIM Sees $250 Million Option Hit

Research In Motion (RIMM Quote - Cramer on RIMM - Stock Picks) 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.