Backdating of executive stock options
"We are responsible, Mike and I are the CEOs and we don't duck it.We put our money on the table and we stand behind it," Mr. The company said its executives will also repay all the benefit they received from options that were incorrectly priced. Balsillie said his own obligation will be "far, far less" than the $5-million he has volunteered to pay to cover the investigation costs.
The SEC’s Enforcement Division and the offices of the United States Attorney are investigating the option granting practices of dozens of companies and actions taken by their executives.After all, stock option backdating is all the rage these days.You'd think they'd be up to their eyeballs in rope.Furthermore, in those cases in which grants are reported within one day of the grant date, the pattern has completely vanished, but it continues to exist for grants reported with longer lags, and its magnitude tends to increase with the reporting delay.We interpret these findings as evidence that most of the abnormal return pattern around option grants is attributable to backdating of option grant dates. despite the Black Berry maker announcing a change to its board of directors and taking a $250-million (U. Options are supposed to be granted with an exercise price equal to the company's share price, so they only become valuable in the future if the share price rises. Lascaris added his client will proceed with its lawsuit despite yesterday's announcement.
regulators will continue to investigate Research in Motion Ltd. The review found instances in which "hindsight was used" to select favourable dates to grant stock options, resulting in employees getting options that were already valuable when they were granted.
The stock plans of many public companies prohibit the granting of below-market options; other companies disclose in their SEC reports that stock options are granted at market and prepare their financial statements on that basis.
The term “backdating” refers to a number of option granting practices in which the reported grant date is different from the date on which the option is actually awarded, resulting in an option that is already “in-the-money” at the time of the grant.
S.) accounting charge because of major problems with stock option grants. Backdating occurs when companies look backward to pick a favourable date in the past to grant options. "We'll be paying particular attention to the question of whether the corporate governance changes disclosed today constitute meaningful reform and whether they are adequate to prevent problems of this nature in the future," he said.
James Balsillie, RIM's co-chief executive officer, admitted yesterday his company backdated stock options granted to employees. While RIM's special committee described a number of instances of improper options-granting practices, it said it found no "intentional misconduct" on the part of any director or employee. Securities and Exchange Commission and the Ontario Securities Commission are reviewing RIM. "It's just a road map." Dimitri Lascaris, a lawyer acting for the Ironworkers Ontario Pension Fund, which owns 13,200 RIM shares, filed a lawsuit against the company in January. RIM announced a series of board and executive changes yesterday. Balsillie will remain co-CEO but will give up the title of chairman to an as-yet unnamed independent director, while chief financial officer Dennis Kavelman will leave his position to become chief operating officer.
Several companies have expressed their intent to restate financial statements due to option timing issues, and opportunistic attorneys have already filed derivative and class action lawsuits.