Rim stock options backdating
Sorin were all charged with conspiracy to commit securities fraud. Lin was accused of backdating stock option documents in order to give the appearance that options were granted on earlier dates than issued. He said this suggests the company was timing its option grants to correspond with news announcements. Belli-Bivar said Canada's different approach to enforcement may result in fewer cases being uncovered, but he believes the practice has been as common in Canada as in the U. Whether anything is done here is another thing.
The case is before the courts. He also found that Nortel issued fewer press releases before option grants and far more afterward. Annual and quarterly reports filed by the company did not include the compensation costs that stemmed from the options backdating incidents. The company said its executives will also repay all the benefit they received from options that were incorrectly priced. Backdating occurs when companies look backward to pick a favourable date in the past to grant options.
We didn't expect to find much of a pattern in this aggregate data. The company itself has launched an internal review of its past stock option grants.
Balsillie's authority, and were not approved by the board as the company had previously reported. Normally options are granted at the price of the company's stock that day. Brocade Communications Systems Inc. Balsillie said in an interview.
Story continues below advertisement Canadian companies may not have disclosed cases of option backdating, but experts say many are now looking at past practices. Kreinberg have pleaded guilty to fraud. But legal and accounting experts believe Canada will not remain immune to the scandal. Some studies have suggested there is a problem in Canada based on a broader market review. Companies would simply wait for a period in which the company's stock price fell to a low and then moved higher within a two-month period.
Options are supposed to be granted with an exercise price equal to the company's share price, so they only become valuable in the future if the share price rises. Companies involved in backdating use the benefit of hindsight to look back and choose a date when their share price was low, then falsely claim that the options were granted on that date.
Canada has another rule that differs from U. Backdating involves manipulating the date that stock options are granted to executives. Disordered, untimely paperwork was cited as the cause in some cases of unintentional backdating.
Alexander fled to Namibia and is still wanted in the U. McGuire agreed to have the exercise prices of all his options with grant dates from to reset to the highest share price during the grant year. When the options scandal exploded in the U.
This is the question being pondered by investors and regulators. And while Canada had tougher rules for options than the U. Compensation consultant Ken Hugessen said the extra barriers in Canada provide a stronger barrier to cheating, and make it unlikely backdating happened widely.
Story continues below advertisement As well, the company announced Mr. This included options backdating presented in offer letters to new hires. It's as if a participant in a hockey pool could retroactively pick winners of games after they were played.
Options backdating - The Globe and Mail
But experts say there was still some window of opportunity to backdate in Canada, even with shorter deadlines. The timing was fortuitous for the executives. That means the options only have value if the share price climbs in the future. Lascaris added his client will proceed with its lawsuit despite yesterday's announcement. Initially, lax enforcement of the reporting rule was also blamed for allowing many companies to sidestep the rule adjustment that stemmed from Sarbanes-Oxley.
While that amount hasn't been revealed, Mr. The company would then grant the option but date it at or near its lowest point.
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