Former Brocade CEO Greg Reyes Exonerated of Options Backdating

Since few others are inclined to provide the service for me, I sometimes feel compelled to pat myself on the back for having managed to get something right every now and again.

Admittedly, as I get older, I’ll probably conduct those self-congratulatory exercises more figuratively than physically, if only to avoid arthritic discomfort. Nonetheless, the practice gives me a fleeting sense of accomplishment and a reassuring confirmation that my powers of observation haven’t gone entirely to seed just yet.

So it was with a measure of satisfaction that I read Peter Burrows’ BusinessWeek piece on the exoneration of Greg Reyes, the former Brocade Communications CEO prosecuted for allegedly defrauding shareholders between 2000 and 2004 by regularly altering the grant dates (otherwise known as backdating) of stock options awarded to employees. He also had been accused of falsifying documents to cover up the scheme.

Here’s an excerpt of what I wrote about that particular backdating saga way back on July 9, 2007:

I am no legal expert, not even close, but I toiled professionally in the information-technology industry during the period in question. As such, I can tell you that what the defense is saying has more than a ring of truth to it. There was intense competition to sign and retain executive, managerial, and engineering talent during the frothiest years of the boom, and it was not unusual for the egos and remuneration packages of existing and prospective employees to expand dizzily during the height of the frenzy. For the best and the brightest talent on the market, it was as close to being a cosseted professional athlete as geeks would get. Ahh, those were the halcyon days.

Of course, for the vendors, such as Brocade in the storage-networking market, that meant having to make increasingly aggressive compensation offers to keep and attract top personnel. At the time, vendors really did believe that making such aggressive offers, which might include the practice now commonly understood as stock-option backdating, was in the competitive interest of the company and in the long-term interest of shareholders. It was endemic behavior. There was madness in the air, and nearly everybody contracted the contagion.

Yes, I would not be surprised in the least to see the case dismissed and Mr. Reyes go free.

Well, the case wasn’t dismissed, but Reyes eventually was exonerated, which belatedly clears his name. It turns out that Reyes might have been thrown under the bus by his own colleagues and company. I wish him luck as he leaves it all behind.

And, yes, it does feel strange quoting my own commentary. I feel like a professional athlete or an entertainer who habitually, and rather disturbingly, refers to himself in the third person. I promise not to do it too often.


One response to “Former Brocade CEO Greg Reyes Exonerated of Options Backdating

  1. Well it looks as though Mr. Reyes’ conviction was overturned and he will get his retrial due to the government misleading the jury and withholding key evidence. It is obviousl many of you think he is a good man and enjoyed working for him. It would be sad to see a man who did not commit a crime have to do the time.
    Check out this website to learn more about “Vindication of the Backdating’s Poster Boy”:

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