Executive compensation and severance lawyer.

Executive Severance in Ontario

Executive compensation is where the real money is lost

For senior employees and executives, base salary is only part of the picture. Annual bonuses, long-term incentive plans (LTIPs), stock options, restricted share units (RSUs), deferred compensation, defined contribution or defined benefit pensions, RRSP-match, and benefits can make up the majority of total compensation, and they are exactly what employers most often try to exclude from a severance package.

What you may be owed on termination

When you're dismissed without cause, you're generally entitled to compensation for the full reasonable notice period, and for executives, that period is often at the longer end of the scale, given seniority, specialization, age, and the time it realistically takes to find a comparable role. Critically, "compensation" isn't just salary.

Bonus and incentive pay during the notice period

The starting point in Canadian law is that you're entitled to the bonus and incentive compensation you would have earned and would have been paid, had you remained otherwise employed, during your reasonable notice period. An employer can attempt to remove that entitlement, with clear, unambiguous contractual language that was properly brought to your attention at the time of hiring, and courts read those clauses narrowly. A clause that merely requires "active employment" to receive a bonus is frequently found insufficient to remove a wrongfully dismissed employee's bonus and other entitlement, following their termination.

The Supreme Court of Canada has confirmed that removing an employee's common-law entitlement to bonus or incentive pay during the notice period requires clear language; boilerplate "active employment" wording often isn't enough.

Equity: options, RSUs, and vesting

Stock options and RSUs that would have vested during your notice period are often recoverable, again depending on the precise wording of the plan documents. The interaction between your employment agreement, the equity plan, and the individual grant agreement is technical, and small differences in language can mean a significant difference in your compensation.

Constructive dismissal at the executive level

A significant demotion, a stripped-down role after a reorganization or change of control, a material change to your compensation structure, or being sidelined can amount to a dismissal in all but name. That can trigger the same severance entitlements as an outright termination.

How we help

We act for executives and senior professionals on the way out, and, where it helps, on the way in. That work typically includes:

• Evaluating your full severance entitlement, including bonus, equity, LTIP, pension, and benefits
• Analyzing whether your plan and contract language actually limits what you're owed
• Negotiating an enhanced package, including the treatment of unvested equity and pro-rated incentives
• Advising on change-of-control, retention, and executive agreements before you sign
• Pursuing a claim where a fair resolution can't be reached