14 DAY TRIAL // The Ontario Securities Commission has reached a decision for a possible settlement with RIM in what concerns the company's backdating scandal. According to the news, Research In Motion Co-Chief Executive Jim Balsillie will have to step down from the board. At the same time, he and other executives of the company will repay more than C$90 million to the settle stock-option allegations dated 1996.
The agreement with Ontario Securities Commission, which was approved on Thursday, states that Balsillie will have to pay C$5 million ($4.1 million) in penalties, while Co-Chief Executive Mike Lazaridis will pay penalties of C$1.5 million. At the same time, the two will have to pay the investigation costs to the regulator.
“We take this very seriously, the trust of the public markets, and we’ve made mistakes,” Balsillie told reporters after the hearing. “Absolutely, we take full responsibility,” he said, adding that, “We’re 100 percent focused on work and moving forward.”
According to the settlement, the two co-CEOs along with RIM’s former CFO, Dennis Kavelman, will have to repay the BlackBerry maker C$38.3 million. At the same time, they will also repay approximately C$30 million, which includes the costs for the voluntary internal probe RIM has undertaken into the matter earlier.
The two have already paid C$15 million for the company’s internal review costs. The agreement also stipulates that Balsillie will not be able to serve for at least one year on RIM’s board, while Kavelman has to pay C$1.5 million in penalties.
Carmi Levy, an independent technology analyst, said that the size of the settlement was “not material at all,” but that the company should be happy to have settled the problem down. “It means that they can finally put this tenuous chapter behind them and get on with the business of competing in the smartphone market,” he added.
The executives were alleged to have backdated and repriced stock options for dates when RIM’s shares had a low price on the market. By doing so, the recipients were improperly enriched, said OSC, while RIM was deprived of around C$66 million.
“The sanctions send the right message that the conduct that we saw here will not be tolerated by anyone,” OSC litigator Sasha Angus said regarding the pact.