BlackBerry co-CEOs and top executives were collectively fined $77 million Thursday for their role in a stock option backdating controversy at the wireless communication giant.
The provincial Ontario Securities Commission, which has been investigating the two co-CEOs - Jim Balsillie and Michael Lazaridis - and other executives for their role in the controversy dating from 1996 to 2006, handed down the biggest fine in its history for financial irregularities.
It said the top bosses at BlackBerry maker Research In Motion (RIM) were not involved in the fraud but negligent in letting option backdating take place.
Under the deal with the market watchdog, the two co-CEOs and a former chief financial officer will pay the bulk of $77 million in fines and legal costs for settlement of the controversy.
Stock options backdating set the grant date of RIM shares retrospectively when the stock was low, thus giving instant paper gain for top employees.
The RIM board set up a special committee to investigate the backdating issue in 2007 and reportedly found that the company had backdated more than 40 per cent of stock options granted to employees since 1996.
The investigation also found that 12 of the 16 option grants made to the two co-CEOs between 1996 and 2006, to acquire a total of two million shares, were priced using an incorrect date.
The stock option backdating reportedly benefited the two co-CEOs to the tune of US $1.6 million each.
As per the settlement, Lazaridis, who founded RIM in 1984, will also pay $1.5 million in penalty and $150,000 in legal costs to the market watchdog.
Co-CEO Balsillie will also pay $5 million as administrative penalty to the securities commission.
Under the settlement, the two c-CEOS and senior executive Dennis Kavelman will repay $38.3 million to the BlackBerry maker company. This amount includes $5.3 million in interest to RIM.
They will also have to pay $44.8 million to cover RIM's investigative costs.
``We are very pleased to put this behind us, for the employees and for the shareholders, and really get back to work 100 per cent,'' Balsillie said after the settlement.
He added, ``It's highly inappropriate for me to talk about specifics of the settlement and so I just won't. But I really want to re-emphasize that we take this very seriously.''
The launch of BlackBerry smart phones - which serve as mobile phones as well as send secure email messages - in 1999 has made RIM a major global brand. More than 50 million BlackBerry devices have been sold so far, making the two co-CEOs billionaires in the process.
While Balsillie holds shares worth $2.4 billion in the company, Lazaridis' stake is valued at $2.5 billion.