The Ontario Securities Commission is trying to force Jim Balsillie off the board of directors at Research In Motion, and may be seeking a record penalty against Balsillie and Mike Lazaridis, the co-CEOs of RIM (NSDQ: RIMM), for a stock option accounting controversy dating back to 1996, reports the Globe and Mail. It’s a bit unclear what the Commission is seeking, but the Globe and Mail outlined two possibilities: that Balsillie would have to pay the bulk of any penalty and step down from the company’s board, or an agreement will be worked out in which a penalty may soar as high as $100 million. Of course, with anything like this, the fines and penalties are important, but most damaging is the distraction by executives in their duties of running the company, especially for RIM, which is trying to move from the enterprise into the consumer segment.
The Globe reached Balsillie, who declined to comment, and Lazaridis and his lawyer could not be reached. A spokeswoman for the OSC also declined to comment.
In 2007, a special committee of RIM’s board determined the company had backdated more than 40 percent of stock options granted to employees since 1996. It also concluded that 12 of the 16 option grants made to the co-founders between 1996 and 2006, were priced using an incorrect date. The committee estimated the value of benefit at about $1.6-million each, gains that they have already repaid, along with full legal costs, to the company.