OSC v RIM part 2

I’m thinking about Martha, but more on that later. $76.3 million sounds like alot of money, and it is. Broken down, however, the “$100 million fine” headline must have never really been in the cards:

$38.3 million seems to be a disgorgement of option back-dating benefits that had not been previously repaid by the three key players.

$30 million to cover the balance of RIM’s $45 million in investigation costs that had not already been covered by the team.

Penalties for Jim, Mike and Dennis come in at $5 million, $1.5 million and $1.5 million respectively.

All told, the number is closer to $100 million than $20 million, that’s for sure (see prior post “OSC v RIM” February 5-09). But from a pure penalty standpoint, you have to back out the recovery of RIM’s own investigation costs — that’s something of a sop for us shareholders. Which puts the notional “penalty” itself closer to $46 million. A number that is awfully close to last week’s 50 millionth BlackBerry device being shipped.

Jim’s message for the TV cameras was spot on: he’s happy to have this behind him for the benefit of RIM’s employees and shareholders. Amen to that.

As for the appropriateness of the fines, I’m can’t help but think of the penalty that Martha Stewart paid to the SEC to settle her illegal insider trading battle. Remember that figure? US$195,000. Of course she went to jail, but the civil penalty was less than $200k. In the U.S.A., where badly behaving white collar types are perp-walked with much glee by the FBI et al.

In the depths of my memory banks, Ms. Stewart was worth about US$800 million at the time. Less than Jimmy and Mike, but far more than Dennis K. I’d expect.

Scott Brison used to say that you can always tell which are the Canadian lobsters in the tank at a restaurant…they’re the ones who don’t need a lid on the roof. Whenever one does well and tries to climb out, the others just pull them back down.

MRM
(disclosure – I own RIM)