Hiring and Firing the Big Brass: - Stewart McKelvey

Hiring and Firing the Big Brass: 

Executive Terminations 

Presented by: 

Cathy Lahey 

Jennifer Ronalds 

JUNE 13, 2013 

© 2012 Stewart McKelvey. All rights reserved. Not to be copied or used in whole or in part without the express written consent of Stewart McKelvey

HIRING AND FIRING THE 

BIG BRASS 

I. The Executive Employment 

Agreement 

1. Duties/reporting relationships 

• change of control? 

2. Compensation including bonus/LTIP/share arrangements 

3. SERP 

4. Termination 

• “no cause” severance arrangements 

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2013 NB IN-HOUSE COUNSEL 

PROFESSIONAL DEVELOPMENT DAY 

© 2012 Stewart McKelvey all rights reserved


BIG BRASS 

II. Termination – No Cause 

1. Meeting the statutory minimum – New Brunswick s. 30 (1). 

2. The trend towards term contracts – succession, retirement, the 

importance of appropriate early termination clauses. 

3. Severance Compensation: 

• the “executive premium”? 

• reasonable notice range based on court decisions 

• market circumstances 

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BIG BRASS 

4. The duty to mitigate vis-à-vis severance compensation 

• must be explicit 

5. Compensation as part of the reasonable notice period 

• what is included? 

6. Bridging and transition to other employment 

• non-compete / non-solicit 

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BIG BRASS 

IV. Supplemental Executive Retirement 

Plans (SERPs) 

Funding Arrangements: 

• not funded / “pay as you go” 

• letter of credit 

• retirement compensation arrangement 

• trust 

• life insurance policies 

• annuities (purchased at time of retirement) 

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BIG BRASS 

V. Change of Control 

Move towards “double trigger”: 

1. Change of control 

2. Good reason 

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BIG BRASS 

“Good Reason” 

• constructive dismissal 

• change in position or responsibilities 

(other than promotion) 

• reduction in salary, benefits or 

remuneration 

• failure to maintain any compensation plan 

• relocation 

• reduction in vacation entitlement 

• breach of failure to assume the employment contract 

• company ceases its activities in the normal course of business 

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BIG BRASS 

VI. Bonus and Profit Sharing 

• Issue: does a bonus or profit sharing have to be paid for common 

law notice period where the employee is no longer actively 

employed with the organization? 

• Where employee would have met any eligibility conditions if he had 

received working notice of termination, damages will generally be 

allowed unless the contractual terms clearly state otherwise. 

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BIG BRASS 

• Where contractual terms do not clearly disentitle employee to 

payments: 

‣ If notice period expires before full bonus period: employee may 

receive a prorated amount of the bonus. 

‣ If notice period covers multiple bonus periods: employee may 

be entitled to a full bonus for any completed bonus period and a 

pro-rated bonus for a partial bonus period. 

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BIG BRASS 

VII. Stock Options 

• Employers can limit vesting of stock options and the exercise of 

stock options during period of reasonable notice with the use of 

extremely clear language. 

• “Terminated for any reason”, whether the termination was “voluntary 

or involuntary” presupposed that the termination was lawful and, 

therefore, termination was interpreted as being the end of the period 

of reasonable notice: Veer v. Dover Corp. (1999, OCA). 

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BIG BRASS 

• “Ceases to be employed” read as contemplating a reasonable notice 

period: Gryba (2000, OCA). 

• Contrast: The employee’s right to exercise stock options ended 

when he “ceases to perform services … without regard to whether 

[he] continues thereafter to receive any compensatory payments 

therefrom or is paid salary thereby in lieu of notice of termination.”: 

Kieran v. Ingram Micro (2004, OCA). 

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BIG BRASS 

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BIG BRASS 

These materials are intended to provide brief informational 

summaries only of legal developments and topics of general 

interest. This constitutes legal advice and is protected by 

solicitor-client privilege. The materials should not be relied upon 

as a substitute for consultation with a lawyer with respect to the 

reader’s specific circumstances. Each legal or regulatory 

situation is different and requires review of the relevant facts and 

applicable law. If you have specific questions related to these 

materials or their application to you, you are encouraged to 

consult a member of our Firm to discuss your needs for specific 

legal advice relating to the particular circumstances of your 

situation. Due to the rapidly changing nature of the law, Stewart 

McKelvey is not responsible for informing you of future legal 

developments. 

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Catherine Lahey 

Rough seas, safe passage 

Cathy is committed to securing the best possible outcome for her clients’ interests. She helps 

them fulfill their objectives by assisting them in the development of policies and procedures 

designed to avoid claims and minimize liability. When litigation is required, Cathy develops 

strategies to secure the best possible outcome. 

Representative matters 

Commercial and employment-related litigation are two issues facing Catherine’s clients, 

who include financial institutions, commercial creditors, employers, retailers, manufacturers, 

professional service firms and institutional clients. Some of the ways she helps these clients 

minimize their exposure to liability include: 

• Providing in-house training for clients and their employees regarding litigationmanagement 

issues, such as litigation-response strategies, document preservation and 

disclosure obligations and e-discovery process. 

• Advising institutional clients on administrative law issues, risk management, policy 

development and regulation, litigation-related issues and access to information issues. 

• Providing in-house training for clients and their employees on various employmentrelated 

issues, such as occupational health and safety, workplace harassment, 

performance management, discipline and termination. 

Contact information 

Suite 1000, Brunswick House 

44 Chipman Hill 

P.O. Box 7289, Postal Station A 

Saint John, NB E2L 4S6 

Direct Dial: 506.632.8307 

Direct Fax: 506.634.3579 

Email: clahey@stewartmckelvey.com

Areas of practice 

Litigation 

Labour and Employment 

Environmental 

Insurance 

Corporate Restructuring and Insolvency 

Occupational Health and Safety 

Education 

Dalhousie University, LL.B., 1991 

University of New Brunswick, B.A. (honours), 1988 

Bar admission(s) 

New Brunswick, 1992 

Languages 

English 

Ratings 

Best Lawyers: Corporate and Commercial Litigation, 2012-2013 

Martindale-Hubbell (CV) 

Law society memberships 

Law Society of New Brunswick 

Activities 

• Member, Canadian Bar Association 

• Regional managing partner, New Brunswick, 2008-present 

Presentations 

• Speaker, Canadian Bar Association – NB, “Women Lawyers Forum: Climbing the 

Ladder to Partnership”, 2011 

• Speaker, Canadian Bar Association – NB, Health Law Developments Panel, 2010 

• Speaker, Canadian Bar Association – NB, E-Discovery 

• Instructor, New Brunswick Law Society Bar Admission Course, Civil Procedure section, 

ongoing

Jennifer Ronalds 

“It is our choices that show what we truly are, far more than our abilities.” 

– J.K. Rowling 

Helping businesses thrive 

The regulatory framework surrounding labour and employment is complex. It creates rights 

and obligations for employers which impact their operations and business decisions. By 

having a thorough understanding of the client’s business, Jennifer ensures they clearly 

understand this framework and finds practical solutions that achieve the client’s business 

objectives. Jennifer’s practice areas include labour and employment, litigation and workplace 

human rights. 

Representative matters 

Understanding the legal implications that could arise from workplace issues are a challenge 

Jennifer’s clients face. Working with banks, communications firms, insurers, municipalities 

and the public sector, Jennifer helps her clients navigate these stressful situations. Her past 

experience includes: 

• Representing a municipal employer at an interest arbitration. 

• Acting for a business in the mediation of a human rights complaint. 

• Making a judicial review application to have the decision of a licensing body overturned. 

• Representing an international shipping company in collective bargaining negotiations. 

• Acting as defence counsel in personal injury and property damage claims. 

Contact information 

Suite 601, Blue Cross Centre 

644 Main Street 

P.O. Box 28051 

Moncton, NB E1C 9N4 

Direct Dial: 506.853.1979 

Direct Fax: 506.858.8454 

Email: jronalds@stewartmckelvey.com

Areas of practice 

Labour and Employment 

Litigation 

Employment Law 

Workplace Human Rights 

Labour Relations 

Education 

Dalhousie University, LL.B., 2006 

Dalhousie University, B.A., 2003 

Aix-Marseilles Trois (Diploma in French Studies), 2001 

Bar admission(s) 

Nova Scotia, 2007 

New Brunswick, 2010 

Languages 

English 

French 

Law society memberships 

Nova Scotia Barristers’ Society 

Law Society of New Brunswick 

Activities 

• Member, Canadian Bar Association 

• Human Resources Association of New Brunswick, 2010-present 

• Board member, North End Community Health Center, Halifax, 2007-2009 

Publications 

• Regular contributor, Atlantic Employers’ Counsel 

Presentations 

• Presenter, “Navigating Social Media in the Workplace”, July 2011 

• Presenter, Workplace Investigations, November, 2010 

• Presenter, “Hiring (and Firing) Temporary Foreign Workers”, Panel presentation at CBAns 

Annual Professional Development Conference, January 2010 

• Regular presenter, Labour and Employment Client Seminars, Stewart McKelvey

Hiring and Firing the Big Brass: - Stewart McKelvey

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