Blackberry 2010 Annual Report Download - page 24

Company and its current governance practices, to determine which of the recommendations are necessary or
appropriate for the Company and how such recommendations should be implemented.
Attached as Appendix A are the recommendations made by Protiviti in its final report, together with the
Company’s response to each recommendation. Where the Company has declined to adopt a
recommendation, that decision was made by the Company’s independent directors, and the reasons for that
decision are set out in Appendix A. Appendix A also contains a brief discussion about Protiviti’s scope of review
as set out in Attachment “I” to Protiviti’s final report.
SEC Settlements
As discussed in greater detail under “Restatement of Previously Issued Financial Statements — SEC
Settlements” in the MD&A for the fiscal year ended February 28, 2009, on February 17, 2009, the Company, and
certain of its officers, including its Co-CEOs, entered into settlements with the SEC that resolved the previously
disclosed SEC investigation of the Company’s historical stock option granting practices.
Actions Taken as a Result of the Review
As previously disclosed and before the retention of Protiviti, the Board, based on the recommendations of the
Special Committee, implemented a number of measures in response to the findings of the Special Committee,
including measures that are designed to enhance the oversight and corporate governance of the Company
and to strengthen the Company’s control over its stock option granting process in particular. These measures
include:
• Benefits from Option Grants — All directors and each of RIM’s Co-CEOs 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 president. All of the stock options held by directors, c-level officers and vice presidents that were
subject to such repricing have been repriced, and the Company received $8.7 million, including interest, in
restitution payments from its directors, c-level officers and vice presidents in fiscal 2008. In addition to the
repricings described above, certain employees of the Company agreed in fiscal 2008 and fiscal 2009 to
reprice stock options held by them that were incorrectly priced. In fiscal 2010, the Company completed the
repricing to a higher exercise price of certain of its outstanding stock options. Repriced options in fiscal
2010, which were all done on a voluntary basis between the Company and the option holder, include 27
stock option grants in respect of options to acquire 456,800 common shares and in fiscal 2009 43 stock
option grants in respect of options to acquire 752,775 common shares.
• Changes to the Company’s Stock Option Granting Practices — In June 2007, the Board approved a formal
policy on granting equity awards, the details of which are described in the Company’s Management
Information Circular, dated May 28, 2008 (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 independent directors from future stock option grants.
• Changes to the Board, Board Committees and Organizational Structure — In accordance with the Special
Committee’s recommendations and other considerations, the Board established in 2007 an Oversight
Committee, separated the roles of Chairman and Chief Executive Officer, implemented other changes to the
Board, Audit Committee, Compensation Committee, and Nominating Committee, and changed various
management roles. In addition to Barbara Stymiest and John Wetmore, who became directors of the
Company in March 2007, David Kerr and 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
Douglas Fregin, Kendall Cork and Douglas Wright did not stand for re-election at the Annual General
Meeting of the Company in 2007. Kendall Cork and Douglas 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 established 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,
Risk Performance and Audit. This new officer reports directly to the Audit & Risk Management Committee as
well as administratively to the Co-Chief Executive Officer, Jim Balsillie. Additionally, the Company enhanced
its capabilities in U.S. GAAP and in securities disclosure and compliance matters issues by establishing two
MD&A
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