BlackBerry Maker Shuffles Its Executives

Mar 06, 05:00 AM

Current Headlines: By Edward Iwata

Research In Motion, maker of the BlackBerry e-mail device, said Monday that its co-CEO will step down as chairman and the firm will restate more than three years of earnings because of improper backdating of stock-option grants.

Jim Balsillie, a Harvard MBA and chairman of RIM since 1992, will stay on as a director and co-CEO with Michael Lazaridis, RIM said.

The restatements will shrink RIM's earnings by $250 million and cover fiscal 2004, 2005, 2006 and the first quarter of 2007, the company said. Based in Waterloo, Ontario, RIM also said it will make an $8 million adjustment on its tax accounting for the grants.

RIM is among nearly 90 companies so far that have disclosed restatements and charges because of improperly backdated grants, according to proxy-research firm Glass Lewis & Co. in San Francisco.

Backdating inflates the value of option grants because the award dates are chosen that match dates when the stock price was low.

An investigation by a special RIM board committee looked at all of the firm's 3,200 grants made to executives, directors and employees from 1996 to 2002.

The committee found sloppy paperwork and a lack of accounting safeguards but no "intentional misconduct" by executives, directors or employees who oversaw the stock-option grants.

Balsillie, Chief Financial Officer Dennis Kavelman and others authorized the grants, including some that may have been accounted for incorrectly, according to RIM.

RIM did not say how many grants over the 10-year period may have been improperly backdated. But it said 321 grants, or 63% of the grants from 2002 to 2006, had incorrect measurement dates.

RIM said the Ontario Securities Commission and the Securities and Exchange Commission also are looking at its backdating of options.

RIM said all employees and directors who received backdated grants have agreed to return money from their exercised options. Balsillie and Lazaridis have offered to pay up to $4.25 million (U.S.) each to defray the costs of the investigation and restatement.

To beef up the board's watchdog role over management, RIM said, a new oversight committee of independent directors will monitor pay practices. The company also will create an internal audit department that reports to the board. Kavelman steps down as chief financial officer and becomes RIM's chief operating officer, while controller Brian Bidulka, who played no role in the stock-option program, will become chief accounting officer in charge of the grants.

RIM's shares finished the day down $1.45, or 1.1%, at $134.52 on the Nasdaq market. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.