Blackberry 2010 Annual Report Download - page 57

RECOMMENDATION RESPONSE
•SP Committee: The SP Committee also has risk oversight
responsibilities. Its charter requires the committee to review
with senior management the risks relevant to the Company’s
strategic initiatives and oversee/monitor the Company’s review
and assessment of external developments/factors that arise
and may impact such initiatives and participate in a periodic
review of such factors.
In addition to the above Board risk oversight and the oversight of the
Company’s Risk Performance and Audit Group, the Risk Council
assists management in fulfilling its responsibilities for assessing,
managing and monitoring risks. Further, the Company’s Corporate
Disclosure Committee, consisting of senior management
representatives, plays an active role in monitoring the Company’s
obligations pursuant to U.S. and Canadian securities laws and its
compliance with such obligations.
11. Internal Audit
The Company should continue its efforts to operationalize the internal
audit function and ensure that internal audit effectively provides the
audit committee with assurance on the state of governance, risk
management, control and compliance in the organization.
Once the internal audit function has been fully operationalized, the
audit committee should consider the conduct of an external
assessment of the internal audit function by a qualified
independent evaluator accredited by the Institute of Internal
Auditors with subsequent reporting to the audit committee on
compliance with professional standards, as well as provide insight
on improvement opportunities relative to general good practices.
This recommendation has been accepted and will be addressed as
follows. The Company is continuing its efforts to operationalize the
Risk Performance and Audit group. As discussed immediately above
(Risk Oversight), the charters of the group and the A&RM Committee
adequately address, in the aggregate, oversight of the state of
governance, risk management, control and compliance in the
Company. Once the internal audit function is fully operationalized,
the A&RM Committee will have an external assessment conducted by
a qualified independent evaluator accredited by the Institute of
Internal Auditors within 12 to 24 months.
12. Stock Options and Other Equity-Based Compensation
(a) Granting Activities
The Company should improve the approval and documentation of stock
option and other equity compensation grants by formalizing and
standardizing grant request forms, adhering to pre-approved ranges
for all types of awards and documenting and retaining evidence of
approval throughout the process prior to Compensation Committee
approval. Compensation Committee review and approval is documented.
This recommendation has been accepted and has been addressed.
The company is nevertheless taking additional measures to further
enhance its processes around granting of equity awards. The
Company has adopted a quarterly grant process with specified
timelines for submission of requests for awards, as well as forms
and processes used to create the grant request list (including pre-
approved ranges for grants) and process for review and approval
prior to submission to the CNG Committee. While the CNG Committee
has approved ranges for all types of awards, there are situations
where deviations from the range are appropriate and, in such
circumstances, the CNG Committee is advised of and, if deemed
appropriate, approves such deviations. Furthermore, in order to
enhance the measures that have already been put in place, the
Company is currently developing a pre-approval request form.
(b) Administrative Activities
The Company should formalize its documentation of the review and
execution of post-granting transactions, and improve certain system
access controls.
This recommendation has been accepted and has been addressed
as follows. The Company has implemented additional monitoring
controls over activities in the existing stock option administration
system. In addition, the Company has entered into an agreement
for the implementation of a new equity program administration
platform and is currently working with the service provider on the
implementation. The implementation of the new platform will allow the
Company to further improve its access controls to sensitive
information. It will also serve as the system of record for equity
related transactions.
(c) Calculation Activities
The Company should improve its documentation of the review of
certain activities undertaken in support of its calculation of the fair
value of equity compensation awards. In particular, the review and
data reconciliation activities performed by the Company in its
calculation of the fair value and compensation expense related to
equity-based compensation should be more consistently executed
and documented in order to ensure consistency and accuracy.
This recommendation has been accepted and has been addressed.
The Company has maintained the necessary documentation to
support the calculation of the fair value and compensation expense
related to equity-based compensation as part of its books and
records. The Company has discussed the recommendation relating
to the consistency of the review activities with Protiviti and has
maintained consistent documentation as suggested by Protiviti
since the second quarter of fiscal year 2010.
MD&A
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