Details of the kickback contracts
Kail entered into two types of service agreements with the vendors: advisory agreements—which allowed him to receive monthly consulting fees or to purchase share options in the companies—and sales representative agreements.
Evidence presented at trial showed that Kail signed a sales representative agreement with IT service management company Netenrich Inc. on Feb. 5, 2012. The collusion granted him commissions amounting to 12% of the billing payments Netenrich received from Netflix for its staffing and IT services. Later in 2012, Kail began receiving 15% of all billing payments that VistaraIT LLC, a wholly-owned subsidiary of Netenrich, received from Netflix.
Trial evidence further showed that Kail received share options with vendors Platfora Inc., Sumo Logic Inc., ElasticBox Inc., Numerify Inc., Netskope Inc., and Maginatics Inc.
For example, Kail signed a vendor contract with Sumo Logic in July 2012, one month after receiving share options. The vendor contract led to more than $300,000 in payments by Netflix. Kail then approved a further $800,000 two-year contract with Sumo Logic, despite complaints from his IT team that the product underperformed.
In another instance, Kail made as much as $120,000 by exercising his stock option at Maginatics when the business was sold to EMC.