CHAUDHRI: Unvested stock awarded to Alberta employee
· Toronto Sun
When it comes to stock investing, I am a set it and forget it kind of girl.
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Unlike many of my friends who check on their investments as often as they check their email, I figure that taking an unwavering position on investments, most of the time, bears fruit. I check in every so often, and rarely sell if I can help it. I much prefer to hold for the long term.
Why am I sharing my investment style in an employment law column? Because the way you manage employer granted stock can be key evidence in a termination.
Consider the story of Julia McElgunn, a senior geological advisor who worked at Vermilion Energy Inc. for almost nine years when she was terminated. McElgunn was granted shares in Vermilion under its incentive plan. Vermilion’s shares are publicly traded on the TSX.
Under Vermilion’s incentive plan, McElgunn had received a grant of 7,053 Vermilion shares that would vest on April 1, 2023.
Employee disputed her termination
When McElgunn was terminated in August 2022, she disputed her termination by way of arbitration. At the arbitration, McElgunn was awarded damages based on a 10-month notice period ending June 24, 2023.
The arbitrator, however, denied McElgunn’s entitlement to the 7,053 shares.
McElgunn appealed the denial of the vesting of her shares to the court of King’s Bench of Alberta. In two decisions before the Honourable Justice Christopher Simard, Ms. McElgunn was entitled to the vesting of the shares and the court helpfully provided some clarity on how stock may ultimately be valued in a legal dispute.
McElgunn’s appeal on the value of her shares was heard in May 2026 – almost three years after her Vermilion shares would have vested in April 2023. McElgun argued that the shares should be valued using the highest trading price between the vesting date of April 1, 2023 and the court hearing. That amounted to $21.60 per share. Vermilion argued that the court should use the actual share price on the April 1, 2023 vesting date of $17.14.
In finding that applying the $17.14 figure to be appropriate,, the court noted, “Ms. McElgunn bore the onus of leading evidence to prove what she would have done with the Shares, had she received them at that time.”
So, had McElgunn introduced some evidence that she would have held the shares, or had a history of holding vested shares for a period of time before selling them, she would have had better standing to examine the trading prices of Vermillion’s shares beyond the April 1, 2023 date.
Because the court had no evidence that McElgunn would have done anything but sell her shares on April 1, 2023, the share price on that date carried the day.
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Still, McElgunn was awarded $184,389.57 for the value of the shares she was denied as well as pre-judgment interest calculated from April 1, 2023.
This case, while niche and applicable to only some employees, makes a good point about the kind of common sense evidence we can bring forward in employment cases to support higher awards.
Evidence of your routine practice around investing can certainly be relevant when deferred compensation like equity, stock options, an LTIP plan or pension are owed to you.
Have a workplace problem? Maybe I can help! Email me at [email protected] and your question may be featured in a future column.
The content of this article is general information only and is not legal advice.