We said a while back that there would be more surprises coming out of Research In Motion’s options backdating scandal. A big one came today.
Two years ago, I raised a number of concerns about Research In Motion’s corporate governance, describing it as a relic of the past. As its backdating scandal unfolded, I expressed serious reservations about RIM’s board practices, the role of its directors in the backdating review, and, ultimately, the outcome of that internal investigation. Simply put, there was something terribly fishy in the Waterloo-based boardroom, and in the flimsy excuses offered up by RIM’s founders and co-CEOs Jim Balsillie and Mike Lazaridis. As I noted in 2006:
In my view, these most recent developments at RIM are part of a larger problem involving its corporate governance practices, the structure of its board, the practice of awarding stock options to directors, the over-presence of management on a small board, the lack of an independent director as chair or even a lead director, among other concerns.
I said in an earlier posting that we have not seen the last of surprises at RIM over its stock options probe. This is one to add to the list. There will be more to follow.
A big one came today, when the company settled with the Ontario Securities Commission over allegations related to improper options backdating. A number of officers and directors will pay $77 million in fines and penalties. It is a record settlement for the OSC.
We will be taking a further look at the settlement and the failures that led to it in the days ahead. Here’s a clue as to what’s at the center of it. It comes in the words of OSC vice chair James Turner, who cited a “fundamental failure” in RIM’s corporate governance, which gave rise to the improper backdating and a host of misleading and inaccurate company disclosures. Sound corporate governance was definitely absent at RIM. But this costly outcome is also a lesson in the importance of ethics, transparency and integrity -three values that were more than occasionally missing in RIM’s boardroom.
Our previous postings on RIM are available here.