Com Dev acknowledges stock options improperly priced - 21 Nov 2008

Matt Walcoff

RECORD STAFF

CAMBRIDGE

Com Dev International Ltd. said late yesterday it improperly priced at least 1.1 million stock options granted in 1999 and 2006.

It
also said the Ontario Securities Commission had issued warning letters
"admonishing" Com Dev and chair Keith Ainsworth for the company's past
stock-options policies. But the OSC intends no further action against
the company.

The company did not say whether the improper pricing was a result of backdating or other manipulation.

A
batch of 433,400 options granted to employees in 1999 had an exercise
price $1 too low, a special committee of Com Dev's board of directors
determined.

Thirty-three employees have exercised a total of
70,130 of the options, meaning they gained $70,130 more than they would
have had the options been priced properly.

Another 635,779 stock options granted to executives in 2006 should have had an exercise price 70 cents higher, Com Dev said.

The options from 2006 have been repriced, but the company said it will take no action regarding the options from 1999.

If
the exercise price was less than the price of Com Dev shares on the
dates of the grant, the option grants would have violated Com Dev's own
stock-options policies and the policies of the Toronto Stock Exchange.

The
company's chief financial officer, Gary Calhoun, referred questions to
Terry Reidel, one of two board of directors members in charge of the
stock-options review. Reidel could not be reached yesterday evening.

No
changes to previously issued financial statements will be required as a
result of the company's stock-option investigation, Com Dev has said.