Research In Motion Executives Fined C$9 Million
By Joe Schneider and Hugo Miller
Waterloo - Bloomberg - Research In Motion Ltd. executives James Balsillie, Mike Lazaridis and Dennis Kavelman must pay a combined C$9 million ($7.3 million) in fines and legal costs and repay the company an additional C$68 million to settle charges they benefited from improperly priced stock options.
The maker of the BlackBerry smart phone showed a “fundamental failure of governance” by backdating stock options, Ontario Securities Commission Vice Chairman James Turner said at a hearing in Toronto February 5, 2009. “This was not fraud, rather it was negligence.”
A three-member panel of Canada’s main securities regulator approved a settlement following a probe of stock options awarded over 10 years to the company’s top executives. The Waterloo, Ontario-based company backdated 1,400 options, setting a price lower than the issuance price to increase the value of the securities. The Toronto Stock Exchange prohibits this practice.
Balsillie, Lazaridis, and Kavelman agreed to pay C$44.8 million to the company for investigation costs, and will pay another C$38.3 million for the incorrectly priced options. Balsillie and Lazaridis, 47, have already paid back C$15 million, of the C$83 million ordered by the regulator.
“We are very pleased to put this behind us and get back to work,” Balsillie, the 48-year-old co-chief executive officer, told reporters after the hearing. He declined to comment on the details of the settlement.
“We’ve made mistakes and we’ve done absolutely everything we think appropriate to get our governance practices where they are for the type of company we are,” he said.
Balsillie is not allowed to serve on any publicly traded company’s board for at least 12 months as part of the settlement. Kavelman, the chief operating officer, was barred from joining any board for five years.
Research In Motion rose 84 cents, or 1.2 percent, to C$69.94 at 4:10 p.m. in Toronto Stock Exchange trading. The stock has risen 41 percent this year.
“It sends the right message out,” Sasha Angus, a lawyer with the securities commission, told reporters after the briefing. “It was important to make the company whole.”
The commission is pursuing other cases of backdating options, Angus said, declining to name any companies.
Research In Motion and the executives involved have also proposed settlement offers to the U.S. Securities and Exchange Commission to resolve a separate investigation, the firm said in a Market Wire statement.