What’s the hidden meaning?

February 13, 2007

03363i1132000.jpegLate yesterday, Brocade Communications (BRCD) filed this preliminary proxy which included some interesting footnotes buried deep in the summary comp table. But first, some back-story: Brocade was the first company to be targeted in the options back-dating scandal and according to this Bloomberg story two weeks ago, is still waiting to see if the SEC will accept its settlement offer of $7 million.

Now, back to yesterday’s filing: footnote 20 “helpfully” explains that the $585K that VP for product development Don Jaworski received in “all other compensation” was primarily due to the $544K in cash that he received in January to “cancel a portion of his non-qualified stock option grant dated May 23, 2003. Though Jaworski received the largest one of these oddly named (or perhaps phrased) payments, he wasn’t the only one. Footnotes 5, 10, 15, and 26 (quick brain-teaser: which number doesn’t fit the pattern?) disclose similar payments to other executives for various canceled options. Unfortunately, the footnotes don’t provide enough information to really figure out what the payments are all about and how they’re related to Brocade’s stock option problems.

There’s also one other question about the odd footnotes: if Brocade’s fiscal year ends in October, why are they disclosing payments made in January 2007 in the proxy? Perhaps it’s an attempt to put the scandal behind them by the time next year’s proxy rolls around. Or, maybe it’s yet another odd curiosity.

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