If (and this is hypothetical, obviously) the guy open sourced something uncomfortably close to one of their products and uncomfortably close to what he does for his day job, I don't think this is unreasonable.

I am a huge fan of Open Source, but not every company is, and I don't think it makes them a bad employer to have acted this way, given these supposed preconditions. You're correct that pay is only part of the equation, loyalty and respect are also very important. This action doesn't necessarily mean that these things are lacking.

It may well do of course, the world is full of assholes :)