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Options Bite Rim Hard – Twice

Posted on Monday 5 March 2007

Problems accounting for previously issued stock options – and not a few of them – have cost Rim more than embarrassment: they’ve cost them their chairman. According to The Wall Street Journal, Jim Balsillie has stepped down as chairman but will remain as co-CEO. Former CFO Dennis Kavelman has assumed the title of COO for operations and finance.

RIM said that Mr. Balsillie was directly involved in approving grants following the company’s initial public offering in 1997, including grants that have been found to have been accounted for incorrectly. Mr. Balsillie’s role in approving grants decreased over time, as more responsibility for approving certain grants was given to Mr. Kavelman and other employees.

The company said it will restate earnings as far back as fiscal 2004 as a result of its investigation into the options accounting and will take a charge of $250M rather than the $25-45M charge it anticipated last September. The company said that 63% of all options grants made since the end of February, 2002 and last August were accounted for incorrectly.


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