A federal jury in San Francisco found the former chief executive officer of Brocade Communications guilty on 10 counts relating to backdating of stock options. The verdict against Gregory Reyes represents the first conviction of a CEO for the practice. Bloomberg reports:
Reyes was charged a year ago with securities fraud and conspiracy for misleading investors by backdating hundreds of employee stock grants in 2001 and 2002, including giving grants with dates that preceded hiring dates, and altering documents to hide the practice and inflate Brocade’s financial results.
Improper backdating enhances the grantees’ compensation at the expense of the company that granted the options.