Blackberry 2008 Annual Report Download - page 28

RESEARCH IN MOTION LIMITED
management’s discussion and analysis of financial
condition and results of operations continued
FOR THE THREE MONTHS AND FISCAL YEAR ENDED MARCH 1, 2008
26
• Benefits from Option Grants — All directors and each of
RIM’s co-Chief Executive Officers and Chief Operating
Officers (“c-level officers”) agreed in respect of options
that were incorrectly priced to return any benefit on
previously exercised options and to reprice unexercised
options that were incorrectly priced. All vice presidents of
the Company were asked to agree to similar treatment for
their options that have dating issues, where those options
were granted after the employee’s commencement of
employment and in the employee’s capacity as vice
presidents. As of the date hereof, all of the stock options
held by directors, c-level officers and vice presidents that
are subject to such repricing have been repriced, and the
Company has received $8.7 million, including interest, in
restitution payments from its directors, c-level officers and
vice presidents.
• Changes to the Company’s Stock Option Granting
Practices — In June 2007, the Board of Directors
approved a formal policy on granting equity awards,
the details of which are described in the Company’s
Management Information Circular, dated June 14, 2007
(the “Management Information Circular”), a copy of which
can be found on SEDAR at www.sedar.com and on the
SEC’s website at www.sec.gov. In addition, in July 2007, the
Board of Directors determined to exclude non-employee
directors from future stock option grants.
• Changes to the Company’s Board of Directors, Board
Committees and Organizational Structure — In accordance
with the Special Committee’s recommendations and other
considerations, the Board of Directors has established
a new Oversight Committee, separated the roles of
Chairman and CEO, implemented other changes to the
Company’s Board, Audit Committee, Compensation
Committee, and Nominating Committee, and has changed
various management roles. In addition to Ms. Barbara
Stymiest and Mr. John Wetmore, who became directors of
the Company in March 2007, Mr. David Kerr and Mr. Roger
Martin were elected as directors of the Company at the
annual general meeting of the Company on July 17, 2007.
Each of the new directors is “independent” within the
meaning of applicable securities laws and stock exchange
rules. As previously disclosed, each of Mr. Douglas Fregin,
Mr. Kendall Cork and Dr. Douglas Wright did not stand
for re-election at the Annual General Meeting of the
Company. Mr. Cork and Dr. Wright were appointed to
the honorary position of Director Emeritus of the Board
effective July 17, 2007 in recognition of their substantial
contributions to the Company over many years.
• Other Changes — The Company is establishing an
internal audit department and an individual commenced
employment with the Company in the fourth quarter
of fiscal 2008 in the position of Senior Vice President,
Internal Audit. This new officer reports directly to the
chair of the Audit Committee as well as the Co-Chief
Executive Officer, Jim Balsillie. Additionally, the Company
is enhancing its capabilities in U.S. GAAP and in securities
disclosure and compliance matters issues by establishing
two new permanent full-time positions to be filled,
respectively, by an employee with expertise in U.S. GAAP
and an employee with expertise in securities disclosure
and compliance. The latter employee will be responsible
for administering RIM’s stock option granting program.
Two finance employees have recently joined the Company
with U.S. GAAP expertise and the Company will continue
to expand its capabilities in this area as required. A
candidate selection process is underway to fill the position
related to securities disclosure and compliance matters.
Review Costs
Included in the Company’s selling, marketing and
administrative expenses in fiscal 2007 and fiscal 2008 are
legal, accounting and other professional costs incurred by
the Company as well as other costs incurred by the Company
under indemnity agreements in favor of certain officers and
directors of the Company, in each case in connection with the
Review, the Restatement and the regulatory investigations
and litigation related thereto.
Mr. Jim Balsillie and Mr. Mike Lazaridis, the Company’s
Co-Chief Executive Officers, voluntarily offered to assist
the Company in defraying costs incurred in connection
with the Review and the Restatement by contributing CAD
$10.0 million (CAD $5.0 million each) of those costs. The
Company received these voluntary payments in the second
quarter of fiscal 2008, which were recorded net of income
taxes as an increase to paid-in capital. In addition, as part
of the Notice of Application that was filed with the Ontario