Research in Motion's Chairman is stepping down after his company admitted it has failed to properly account for employee stock options.
RIM has become yet another company to admit that it has made a habit of back-dating stock options that it gave to its senior executives in such a way that the options were made more valuable.
As a way of rewarding their employees, some companies will grant them the options to buy company stock at some point in the future at a pre-determined price. There is no word as to whether RIM was doing this.
When granting stock options to its executives, RIM wouldn't date them for the current day. Instead, the granting date would be moved back to before a run-up in RIM's share price. This meant that even if the executive exercised their option immediately, they would make money.
RIM announced today that Jim Balsillie has stepped down from the role of Chairman. However, will retain his roles as co-CEO and Director. Mike Lazaridis will continue as co-CEO.
RIM has now made it impossible to be both Chairman and CEO, as Balsillie was.
All of RIM's executives have agreed to return any benefit they received on previously exercised options and to re-price unexercised options that were incorrectly priced.
Both Balsillie and Lazaridis are expected to pay back about $4.25 million.
Also, Dennis Kavelman is being demoted from his position as Chief Financial Officer to become the RIM's Chief Operating Officer - Administration and Operations.
And RIM is preparing to restate the past three years of its financial statements so that they properly account for the stock options granted.