Blackberry 2007 Annual Report Download - page 21

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New Hire Grants:
• Grants to new hires
Grants to Existing Employees:
• Grants to the co-CEOs;
• Grants on promotion;
• Group grants;
• Periodic grants;
• Option repricing; and
• Options granted with administrative delays and errors.
New Hire Grants
Grants to New Hires
• Grants made before employment commences – From
the inception of the Stock Option Plan in December
1996 to August 2006, it was common practice for the
Company to include stock options in certain prospective
employees’ offers for employment. The Company was,
however, inconsistent in its approach to selecting dates
that determine the exercise price of the options. The
majority of employee offer letters provided for the
employee to receive a set number of options at a grant
price equal to the closing price of the Company’s shares
on the day prior to their start date. In some instances,
however, the offer letter provided for pricing based on a
date prior to the employee’s start date (e.g., the date the
prospective employee accepted the offer of employment
or at a price representing a low trading price between the
date of the offer letter or acceptance and the start date).
The Company identified 82 of these instances involving
options to acquire an aggregate of 2,731,100 common
shares in the period prior to February 27, 2002, and no
instances involving options to acquire common shares
subsequent to that date. Under U.S. GAAP, generally it is
not possible to have an accounting measurement date for
a new hire award prior to the date the employee begins
rendering services in exchange for the award.
• Grants made to new employees upon commencement
of employment in accordance with their offer letter but
subsequently modified – The Company has determined
that the acceptance of an offer letter containing details
on (i) the number of options to be granted and (ii) the
establishment of the exercise price as the share price
on the date immediately prior to the employment
start date, constitutes finality of a measurement date
upon commencement of employment. For purposes
of the Restatement, the Company is required to treat
instances where options were modified subsequent to the
commencement of employment to provide the employee
with better pricing as a modification to the award and is
required to apply variable plan accounting to the award.
The Company identified 102 of these instances involving
options to acquire an aggregate of 1,893,400 common
shares in the period prior to February 27, 2002, and two
instances involving options to acquire an aggregate of
30,000 common shares subsequent to that date.
• Grants made to new employees upon commencement of
employment with the option priced as of the closing price
on the stock exchange on the day of their start date rather
than the closing price on the day immediately prior to their
start date – The Stock Option Plan provides for options to
be granted at an exercise price not less than the market
price of the Company’s shares on the date immediately
prior to the grant of the options. In the case of new hires,
the options were to be priced using the closing price
immediately prior to the respective employee’s start
date. In many instances, the options were priced using
the closing price on the respective employee’s start date.
The Company identified 37 such instances, only one of
which occurred after February 27, 2002, involving options
to acquire an aggregate of 375,000 common shares where
the resulting exercise price was lower than the closing
price of the common shares on the day immediately prior
to the respective employee’s start date.
Grants to Existing Employees
Grants to the co-CEOs
• From December 1996 to August 2006, the Company made
eight grants of stock options to each of the co-CEOs
involving options to acquire an aggregate of 3,700,000
common shares. As set out above, grants to the co-
CEOs were approved by the Company’s Compensation
Committee or the Board. The Company found that
four of the grants to the co-CEOs involving options to
acquire an aggregate of 1,300,000 common shares had no