Brocade Scraps Reyes

10:00 AM -- Maybe there's more to this corporate governance business than compliance hassles. Though Brocade Communications Systems Inc. (Nasdaq: BRCD) let ex-CEO Greg Reyes reign supreme for six years, they're pulling the ripcord on his golden parachute.

Last week, the company stopped paying Reyes as a consultant at CEO pay, an arrangement set up when he resigned under a cloud of accounting questions in January (see Brocade Switches CEOs, Restates and SEC Gets Formal With Brocade).

In a tersely worded SEC filing this week, the company had this to say:

Reyes's contract with Brocade was a typical old-school arrangement based on a misplaced sense of entitlement. Though Reyes ruled a company whose financials have been a source of embarrassment, criticism, and investigation, he seemed determined to keep his hand in the till (see Goldman Cites EMC, Bites Brocade).

In a new-school turnabout, Brocade's board insisted instead that Reyes sing for his supper. When that didn't happen, they squawked (see Brocade Blasts 'Consultant' Reyes). Then they shut the tap. In addition to stopping future pay, Brocade is looking to pay Reyes just $100,000 of the enormous compensation expense it had racked up on his behalf earlier this year:

Brocade's action probably would not have happened in the pre-bubble environment that brought Reyes to the helm. He might have been on the payroll for years, prehaps gathering thousands monthly for a home office with paid help. Then again, there's Greg's side of the story. But we probably won't hear that unless this goes to court. For now, Brocade says there's no lawsuit associated with the termination of the Reyes gravy train, as it chugs forlornly over the horizon.

Mary Jander, Site Editor, Byte and Switch