Blackberry 2007 Annual Report Download - page 79

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of an option. In each instance, the Company looked for
approval from the highest-ranking individual involved with
the grant. In many cases, this would include Mr. Balsillie
or Mr. Kavelman. In some instances, it would include
other employees of the Company. Additionally, in certain
instances, the Company’s plan administrators looked for
input and approval from other high ranking employees.
In these instances, approval was not considered to be
determined with finality until these other individuals had
provided their approval.
The Company has determined that for the majority of
option grants sufficient objective evidence does exist to
support the determination of appropriate measurement
dates. The Company has aggregated grants into the
following general types:
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