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Canadian and U.S. regulators will continue to investigate Research in Motion Ltd. despite the BlackBerry maker announcing a change to its board of directors and taking a $250-million (U.S.) accounting charge because of major problems with stock option grants.

James Balsillie, RIM's co-chief executive officer, admitted yesterday his company backdated stock options granted to employees. He said it was an error due to a misunderstanding of accounting rules.

The admission makes RIM the first major Canadian company to get caught up in an options backdating scandal that has swept through the United States, leading to charges against some executives and forcing billions of dollars in earnings to be restated. More than 40 U.S. executives and directors have resigned or been fired after internal reviews of options backdating problems.

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"So did we do backdating? Yeah, we did backdating," Mr. Balsillie said in an interview. "Did we do it knowingly to line our pockets? No. Did we do it recklessly? No."

RIM's special committee of the board, which conducted a seven-month internal probe of stock option practices, said yesterday no one at the company will lose his or her job over the options problems.

The review found instances in which "hindsight was used" to select favourable dates to grant stock options, resulting in employees getting options that were already valuable when they were granted.

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. Backdating occurs when companies look backward to pick a favourable date in the past to grant options.

While RIM's special committee described a number of instances of improper options-granting practices, it said it found no "intentional misconduct" on the part of any director or employee.

The company hopes to put its stock options issues in the past, but regulators say they are continuing to probe RIM's options practices.

Both the U.S. Securities and Exchange Commission and the Ontario Securities Commission are reviewing RIM.

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"When a company does an internal review, that helps speed our process, but it's not a substitute for our process," one U.S. regulatory source said. "It's just a road map."

Dimitri Lascaris, a lawyer acting for the Ironworkers Ontario Pension Fund, which owns 13,200 RIM shares, filed a lawsuit against the company in January.

"We want a more fulsome explanation," Mr. Lascaris said yesterday.

Mr. Lascaris added his client will proceed with its lawsuit despite yesterday's announcement.

"We'll be paying particular attention to the question of whether the corporate governance changes disclosed today constitute meaningful reform and whether they are adequate to prevent problems of this nature in the future," he said.

RIM announced a series of board and executive changes yesterday. Mr. Balsillie will remain co-CEO but will give up the title of chairman to an as-yet unnamed independent director, while chief financial officer Dennis Kavelman will leave his position to become chief operating officer. RIM also announced it has appointed two new independent directors and is searching for two others.

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As well, the company announced Mr. Balsillie and co-CEO Mike Lazaridis will pay $5-million each to cover the company's costs of investigating the options problems. The special committee report said all option grants, except those to the co-CEOs, were made under Mr. Balsillie's authority, and were not approved by the board as the company had previously reported.

"We are responsible, Mike and I are the CEOs and we don't duck it. We put our money on the table and we stand behind it," Mr. Balsillie said.

The company said its executives will also repay all the benefit they received from options that were incorrectly priced. While that amount hasn't been revealed, Mr. Balsillie said his own obligation will be "far, far less" than the $5-million he has volunteered to pay to cover the investigation costs.

Ontario Securities Commission spokeswoman Wendy Dey said the commission's review is continuing, but would not comment on whether RIM negotiated its proposed governance changes with the OSC prior to yesterday's announcement.

She stressed RIM's news release yesterday was "a report of RIM's own investigation -- it is RIM's own report."

Mr. Balsillie said the mistake stemmed from his belief that options could be dated on the day they were promised to an executive, and said he was surprised to discover they should have been dated when they were actually approved by the board and granted.

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"We thought the day of the decision was when you priced it. And if the price went up $10 [by the grant date] well, guess what, that's backdating."

But the special committee report does not attribute all the company's backdating problems to a mistaken belief that options were to be priced at the time they were promised to an executive or future hire.

Indeed, the report says the company was "inconsistent" about when it chose a date to determine the exercise price of its options. In some cases, the report says, options were repriced after an employee joined the company to provide the employee with "better pricing. In limited cases, the company repriced options to existing executives after they were granted if the stock price decreased.

The report says that after 2002, 63 per cent of options granted to existing executives contained "incorrect measurement dates" for accounting purposes.

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