This issue reported about RIM in the Globe and Mail doesn’t look good. It talks about a pension fund that invested in RIM is requesting an external review of options saying that the audit committee benefited from options.
Investor confronts RIM on options probe
Ironworkers want independent review
Janet McFarland and Paul Waldie
6 December 2006
One date was April 2, 2001, when RIM granted 100,000 stock options to each of its two co-chief executive officers. Nine days later, RIM disclosed that revenue in its fiscal fourth quarter had risen 249 per cent from the same period a year earlier, sending its share price soaring 29 per cent in one day.
I looked up the stock prices from those days at Yahoo! Finance.
| Date | Open | High | Low | Close |
| 30-Mar-01 | 21.45 | 22.28 | 20.34 | 21.97 |
| 2-Apr-01 | 20.82 | 21.69 | 18.61 | 19.38 |
| 3-Apr-01 | 18.46 | 19.00 | 15.50 | 17.90 |
| 4-Apr-01 | 17.97 | 19.98 | 17.83 | 18.73 |
| 5-Apr-01 | 20.50 | 22.74 | 20.41 | 22.40 |
| 6-Apr-01 | 21.11 | 21.85 | 20.20 | 20.82 |
| 9-Apr-01 | 21.71 | 22.42 | 20.21 | 21.95 |
| 10-Apr-01 | 22.49 | 25.13 | 22.49 | 24.75 |
| 11-Apr-01 | 26.51 | 28.21 | 21.60 | 21.93 |
| 12-Apr-01 | 25.51 | 28.57 | 23.90 | 28.27 |
| 16-Apr-01 | 27.60 | 27.60 | 25.46 | 26.83 |
You can see the stock went up about 6 dollars from the 2 April to 11 April. On 100,000 shares that would be $600,000.
That amount of money is some kind of motive for doing something, whether it be right or wrongdoing.
The letter also demands that if RIM finds any executives received funds improperly, it should insist the money be repaid. If they won’t pay it back, RIM should commence legal proceedings, the letter adds.
This is kind of a strange situation, because by raising this issue the fund investor would seem to hurt the stock price and thence its investment. Allowing people to receive funds improperly, though, is definitely bad and could hurt the company over the long term especially if it continues.
Check this other part of the article, well what’s not part of the article. The co-CEOs are not named. Don’t you think that is significant? They named each of the four external directors who are on the audit committee and conducting the review.
RIM has four independent directors, who make up the audit committee and are conducting the review. They are:
. . . Mr. Wright has been granted more than 50,000 options , . .
. . . Mr. Cork, . . . , has been granted more than 40,000 options . . .
. . . Mr. Estill has been granted 45,000 options . . .
. . . , Mr. Richardson was appointed in 2003 and has been granted 25,000 options. . . .
Maybe Lazaridis and Balsillie just didn’t fit.