Research in Motion (RIM) will search for a new chairman of its board after CEO Jim Balsillie stepped down from the job Monday, taking blame for his role in a stock-option scam that will cost the company US$250 million in restated earnings.

RIM, which makes the BlackBerry smartphone, will restate its annual earnings statements for fiscal years 2004, 2005 and 2006, and its statement for the first quarter of 2007. The changes could also affect its second and third quarter statements for 2007, which are not yet filed, since RIM's internal audit is not complete.

Balsillie will keep his other titles as co-CEO and a member of the board, but he and other top managers will be forced to pay back the profits they made by hand picking the most profitable dates for buying their stock options instead of receiving them the same date they were awarded, the company said.

Employees can inflate their profits by claiming they received stock options on a day when the market was low, then selling them when the market rises again. Many technology companies have restated earnings caused by that practice in recent months, including Apple, Broadcom, McAfee and Monster Worldwide, as well as Pixar, the computer animation film studio.

Hoping to avoid lawsuits and regulatory censure, RIM began an internal investigation of stock option granting and accounting in August 2006, and predicted one month later that the damage would be between US$25 million and US$45 million. The company now says the true amount will be nearly 10 times that estimate. RIM also says it is cooperating with accounting investigations by the U.S. Securities and Exchange Commission (SEC), the Ontario Securities Commission and a shareholder lawsuit filed in Canada's Ontario Superior Court of Justice.

RIM's investigation covered more than 3,200 grant packages made between December 1996 and August 2006. So far, the review committee has found incorrect accounting for all options granted before Feb. 27, 2002, and in 63 percent of the grants made since then. The recent batch includes 321 grants for a total of 4.6 million shares.

Balsillie resigned as chairman because the review showed that he had personally made or approved all grants made since RIM went public in 1997, except for those to himself and co-CEO Mike Lazaridis. RIM Chief Financial Officer Dennis Kavelman also helped to administer the awards.

Balsillie told an internal review committee that he used the grants to attract skilled employees to the company in a competitive industry, and he made them so informally because of the RIM's rapid growth at that time, according to a company statement released Monday about the review. Balsillie and Kavelman also told the committee "they had a general understanding" that options could be granted at any chosen date within the fiscal reporting period.

"Their understanding was incorrect," the committee said in its report. "The Special Committee determined that the company failed to maintain adequate internal and accounting controls with respect to the issuance of options in compliance with the company's stock option plan ... the grant process was characterized by informality and a lack of definitive documentation, and lacked safeguards to ensure compliance with applicable accounting, regulatory and disclosure rules."

In other fallout from the investigation, Kavelman will step down as CFO, taking a new job as chief operating officer for administration and operations. Balsillie and Lazaridis will pay the company US$5 million each to defray the cost of the investigation, and RIM accepted the resignations of Kendall Cork and Doug Wright, two members of the board's compensation committee. Finally, RIM promised to establish an oversight committee, charged with examining executive compensation, insider trading and hiring practices.