Commentary

Joe Hernick
 

Virtualized Stock-Option Dates?

If you're a tech exec, is retention of top IT talent worth going to jail?

Stay with me for a minute. I was going to write on topic about storage options for virtualized environments but got led astray by current events.Contemplating storage options for VMs brought me around to Brocade's 4-, 8-, and 10-Gbps Fibre Channel-based solutions and some of the neat things the company is doing to tweak HBAs and leverage NPIV to 'virtualize' Brocade Access Gateway SANs.

And then my thought-train got derailed.


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I was thinking about Brocade in general, which brought my mind 'round to the sentencing of Gregory Reyes this past Wednesday.

For those who missed the story, Reyes was found guilty in August of backdating stock-option grants while serving as Brocade's CEO. In total, he was hit with 10 counts including conspiracy and securities fraud. Sentencing wrapped up this week.

The prosecution pounded on the concept that Reyes knowingly violated the law over a three-year period. The judge tacked on six months to the sentence due to attempts by Reyes to mislead the court during trial.

The final tally? 21 months, $15 million, and two years of supervised release post-prison. Mr. Reyes maintained that he did backdate options but was unaware that he was doing anything wrong; the prosecution informed the jury that Reyes used the practice as a way to attract and retain talent in Silicon Valley.

I'm not offering judgment on anyone's character. I don't know anyone that worked at Brocade during the time in question. We all know folks who have made out well with options at other firms, and there has been plenty of news 'bout senior execs in non-IT sectors profiting directly from dubious back dating practices.

My big question: If you're a tech exec, is retention of top IT skills worth going to jail? The collateral damage from this case has directly hit more than 200 companies in the industry and resulted in $13 billion in restatements. Is our industry that short on talent?

My head hurts. I'm going to go back to thinking about simple things... like finalizing our lab's SAN config or finding a good iSCSI initiator for a Leopard guest running under Parallels Server Beta.If you're a tech exec, is retention of top IT talent worth going to jail?


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