Both Jim Balsillie and Mike Lazaridis are incredible philanthropists. Their contributions to the social sciences, sciences and academia have really helped advance our understanding of this world. These philanthropic ventures require an incredible amount of cash and equity on a regular basis in order for these ventures to succeed as planned.
Recently, RIM’s executives Jim and Mike adopted what are called Automatic Securities Disposition Plans or ASDPs. ASDPs are plans that will allow Jim Balsillie and Mike Lazaridis to sell shares of RIM at a predetermined interval, regardless of whether or not they are under a “blackout” period. A “blackout” period, would include such times as when quarterly financial reports are released. Normally, an executive would be barred from selling shares during a financial report release, due to concerns over insider trading and how their selling of shares would affect the market.
WIth the ASDPs in place, charitable foundations will be able to rely on the vast amount of funds being sent their way from RIM’s top executives. One example of this includes Jim Balsillie’s weekly share donations of up to C$100 million over 24 months to a charity he founded. Balsillie will also donate another C$57 million of shares to the Center for International Governance Innovation (CIGI), an Ontario-based think tank. Co-CEO Mike Lazaridis is matching Jim Balsillie’s contributions with about C$190 million over 22 months to his charitable foundation.
Jim Balsillie and Mike Lazaridis, RIM’s Co-Chief Executive Officers, have each adopted new automatic securities disposition plans (“ASDPs”) in accordance with the Securities and Exchange Commission’s Rule 10b5-1 (“Rule 10b5-1”), applicable Canadian provincial securities legislation, including the guidance under Ontario Securities Commission’s Staff Notice 55-701 (the “Canadian Legislation”), and RIM’s Insider Trading Policy.
Rule 10b5-1 and the Canadian Legislation permit insiders to adopt written ASDPs (generally referred to in the United States as “Rule 10b5-1 Plans”) to sell, donate or otherwise transfer shares in the future (including upon exercise of stock options) according to the ASDP on an automatic basis regardless of any subsequent material non-public information they receive. Once an ASDP is established, the insider is not permitted to exercise any further discretion or influence over how dispositions will occur under the ASDP. RIM recognizes that insiders may have reasons unrelated to their assessment of a company or its prospects in determining to effect transactions in that company’s common shares under an ASDP. These reasons might include, for example, charitable donations, tax and estate planning, retirement planning, the purchase of a home, the payment of university tuition for a child, the establishment of a trust, the balancing of assets and diversification of investments in an orderly manner, or other personal reasons. RIM also recognizes that many of its officers and employees have a substantial portion of their personal net worth represented by securities of RIM.
In addition to meeting the basic requirements of Rule 10b5-1 and Canadian Legislation, RIM has in place additional measures that are designed to conform with “best practices” relating to ASDPs. Those measures include the following: (i) ASDPs may only be adopted during a trading window; (ii) a “cooling-off” period of three months will generally be required between the adoption of the ASDP and the first disposition under the ASDP; (iii) an ASDP should generally have a duration of 12-24 months; (iv) the ASDP must contain meaningful restrictions on the ability of the insider to modify or terminate the ASDP; and (v) the ASDP should generally provide for regular sales of smaller amounts (relative to an insider’s holdings) over a period of time rather than large sales during a short period of time after adoption of the ASDP. In addition, RIM’s Insider Trading Policy requires all ASDPs to be pre-cleared by the Compensation, Nomination & Governance Committee (the “Committee”) of RIM’s Board of Directors, which is comprised of independent directors. The Committee will also consider such other “best practices” as they exist at the time an insider adopts an ASDP and may impose such additional requirements, or grant such exceptions, as it determines are necessary or appropriate.
The new ASDPs are summarized below:
Mr. Balsillie’s ASDP provides for weekly donations of RIM shares to a registered charitable foundation established by Mr. Balsillie up to a maximum value of Cdn$100 million over the up to 24-month duration of the ASDP as well as weekly donations of RIM Shares to the Centre for International Governance Innovation (“CIGI”) up to a maximum value of Cdn$57 million of donations over the up to 24-month duration of the ASDP, subject to limit order prices in certain cases. Each of the foundation and CIGI will immediately sell the shares received from Mr. Balsillie, subject to certain limits in the case of the foundation. The ASDP also provides for weekly sales of RIM shares up to a maximum value of Cdn$360 million of sales over the 24-month duration of the ASDP, subject to a limit order price. The shares being donated and/or sold by Mr. Balsillie include up to 600,000 shares issuable upon exercise of stock options that are scheduled to expire during the term of the ASDP. Donations and sales under Mr. Balsillie’s ASDP will not commence until after the expiry of the three-month cooling-off period described above. Mr. Balsillie currently beneficially owns approximately 34.97 million RIM shares, including the shares that will be subject to the ASDP (determined in accordance with the rules of the Securities and Exchange Commission (the “SEC”), and including shares underlying stock options that are exercisable within 60 days).
Mr. Lazaridis’ ASDPs provide for weekly donations of RIM shares to a registered charitable foundation established by Mr. Lazaridis in an aggregate amount of approximately Cdn$190 million over the up to 22-month duration of the ASDPs (assuming that donations are made at the current market price for RIM shares – the actual amount of the donations will depend on the market price for RIM shares at the time of the donations), subject to limit order prices. The foundation will immediately sell the shares received from Mr. Lazaridis, subject to a limit order price. In addition to sales by the foundation, the ASDPs also provide for weekly sales of RIM shares up to a maximum value of Cdn$200 million over the up to 22-month duration of the ASDPs, subject to a limit order price. The shares being donated and/or sold by Mr. Lazaridis include up to 600,000 shares issuable upon exercise of stock options that are scheduled to expire during the term of the ASDPs. Donations and sales under Mr. Lazaridis’ ASDPs will not commence until after the expiry of the three-month cooling-off period described above. Mr. Lazaridis currently beneficially owns approximately 34.81 million RIM shares, including the shares that will be subject to the ASDPs (determined in accordance with the rules of the SEC, and including shares underlying stock options that are exercisable within 60 days).
Dispositions by the insiders under their respective ASDPs will be reported in accordance with applicable Canadian securities laws (RIM’s insiders are exempt from filing insider reports under U.S. securities laws) and on Forms 144 filed with the SEC for sales on the Nasdaq Stock Market. Each such filing will bear a notation to advise readers that the dispositions relate to an ASDP.