Stock options backdating issue xp wireless connection validating identity
Simply put, backdating a stock option grant amounts to ripping off shareholders by shortchanging the company treasury.Shares are issued to option holders at artificially low prices and the company gets an artificially low amount of capital in return for its shares.As CEO of Brocade Communications, Reyes sold SAN (storage area network) infrastructure to a number of companies, including IBM, EMC Corp., Compaq, Dell, NEC, and HP.During Reyes's time as CEO, Brocade was the largest manufacturer of networking equipment that provides data storage in the world.Reyes was originally convicted in 2007, Reyes's trial began on June 18, 2007, making it the first criminal trial in which a backdating prosecution was considered before a jury.In the trial, Reyes stated that he had no intent to deceive anyone, and that his decisions relied largely in good faith on the accuracy of documentation provided by Brocade's finance department, which incorrectly accounted for stock options in Brocade's financial statements that he signed in good faith and with the belief that they had been properly accounted for.But are options really as great for all parties as many have assumed?
On June 24, 2010, Reyes was sentenced to 18 months' incarceration and a million fine.
Stock options are promoted by their supporters as the most effective way to align executive and employee interests with those of shareholders.
They are supposed to transform executives from fly-by-night plunderers in the mold of former Tyco or World Com executives into rational leaders who make prudent, long-term-oriented decisions with shareholder capital.
Elizabeth Moore, a key witness to Reyes's conviction and the only employee of Brocade's finance department to be called during the proceedings, testified that neither she nor any other members of the finance department had any knowledge of backdating or fraudulent occurrences within the organization.
After the trial's conclusion, however, Moore recanted her testimony, claiming that she had been bullied and pressured by the prosecution to give false testimony.