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RIM execs to pay $92M settlement for options scandal

updated 10:50 pm EST, Thu February 5, 2009

RIM execs settle dispute

Research in Motion has announced the approval of a $92 million settlement between a group of current and former company officers and the Ontario Securities Commission, bringing closure with the Canadian government over a stock option investigation that dates back to 2006. The settlement combines $9 million in fines with $83 million in restitution to be paid back to the smartphone-maker, although company Co-founders Jim Balsillie and Mike Lazaridis have already paid a total of $15 million to offset the costs of the investigation.

RIM had been included in the plethora of companies under investigation by government regulators in 2006. The OSC accused the executives of backdating and repricing stock options to make illicit profits from trades, although the negative effect on RIM was estimated to reach roughly $66 million. An internal investigation in 2007 revealed that 40 percent of employee stock options granted since 1996 had been improperly backdated to a time when the stock price was lower, while 12 of 16 option grants to the CEOs showed similar discrepancies.

The two CEOs and former CFO Dennis Kavelman are likely to contribute the majority of restitution and fines, although the agreement also includes RIM's vice president of corporate operations, Angelo Loberto.

The OSC terms extended beyond the payments, effectively banning Balsillie from serving as the director or officer for a period of a year. Kavelman received a ban of five years and the requirement that he complete a course regarding the duties of directors and officers of public companies.

Although the settlement appears to overcome the dispute in Canada, a resolution still must be met with the US Securities Exchange Commission. The executives have allegedly proposed a settlement, although the terms await approval by the Commissioners.



By Electronista Staff
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