The US corporate world is being roiled by a scandal on bloated stock-option payments that has its epicenter in the Silicon Valley but ripples nation wide with a threat of big-wig arrests.
The first salvo of a prosecutors' campaign that may target 80 companies was fired Thursday with the filing of securities fraud charges against Brocade Communications Systems former chief executive Gregory Reyes and former vice president of human resources Stephanie Jensen.
Allegations focus on options backdating, an obscure practice of manipulating the dates on an option that gives employees the right to buy shares at a set price to make the profits more lucrative.
Under the scheme, the options' original "strike dates" would be brought back through paperwork manipulation to a point in time when the stock price was lowest, so the recipient could reap the maximum profit at the time of sale - a lucrative deal during the late 1990s technology stocks extravaganza.
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