Ann: GENERAL: DIL: Diligent Board Member Services

• Release Date: 21/02/13 10:30
• Summary: GENERAL: DIL: Diligent Board Member Services Announcement
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DIL
21/02/2013 08:30
GENERAL

REL: 0830 HRS Diligent Board Member Services INC (NS)

GENERAL: DIL: Diligent Board Member Services Announcement

21 February 2013

ANNOUNCEMENT

Diligent Board Member Services, Inc?(Diligent)

On 19 February 2013, Diligent advised the market it was waiting to receive a
report from a major accounting firm that may result in the Diligent Board, on
review of that report, restating its accounts for the 2012 year and some
prior years (Report).  The Report was commissioned by the Special Committee
of independent directors of Diligent.  The Report was not prepared by
Diligent's auditors.

The Report relates to the consequences for Diligent's financial statements of
Diligent cancelling certain option awards to employees as a result of those
options being awarded in excess of caps in Diligent's 2007 Stock Option and
Incentive Plan and its 2010 Stock Option and Incentive Plan (Plans).

The Board has now received the Report and is reviewing it with its advisers
and auditors.  The Report does not make clear recommendations as to any
adjustments to be made.  Rather the Report raises complex accounting issues
for consideration as to how previous years and the current year's accounts
may be affected by Diligent having issued options in excess of caps in the
Plans to employees and cancelling those options. If a restatement is
necessary to reflect these matters, then the Board of Diligent will move to
do that.

The Board of Diligent has yet to form a final view as to whether any
restatement is required and if so, the extent of that and over what financial
years. Diligent will continue to work through the detail of the matters
raised in the Report with its advisers and auditors. Diligent will update the
market as soon as possible. In the meantime Diligent has applied to NZX for
an extension to the trading halt for a further day while it seeks to reach a
conclusion.

The Diligent Board is in the process of taking a variety of steps to seek to
avoid similar issues occurring in the future.  This includes adding
additional internal and external resource to its team in relation to
compliance matters.

Diligent is working to develop appropriate alternative compensation packages
for the affected employees.  The alternative remuneration packages are
intended to replace and not exceed   the value of the options to be
cancelled. As was stated in its announcement to the market on 18 January 2013
the Board notes the award of options to the employees (including its chief
executive, Mr Sodi) were determined to be reasonable compensation at the time
and were an important incentive component of the employees' compensation
packages. The Board does not wish to see highly performing employees such as
Mr Sodi penalised as a result of technical non-compliance by Diligent in
implementing the Plans.

The Board does not consider that these compliance issues, whilst unfortunate,
undermine the overall strength of Diligent's business.

Contact Person:  Sonya Joyce, Diligent NZ

Phone:  64 (3) 977 5500
End CA:00233196 For:DIL    Type:GENERAL    Time:2013-02-21 08:30:05