If you think performance shares are yours even if you leave your firm, a new Ontario ruling strongly suggests otherwise. The Ontario Superior Court has ruled against a former TD Securities investment banker who was seeking $1.6 million in deferred compensation, saying he knowingly disqualified himself from the bonus when he left to form a hedge fund.
For 11 years Levinsky worked for the TD Securities’ Investment Banking Group at Inc. In January, 2010, Levinsky resigned from TD to start his own hedge fund. Since 2002, when he had been promoted to Vice-President, he had participated in the bank’s long term compensation plan (LTCP), under which he was granted a certain number of restricted share units (RSUs) which matured and became payable in cash three years after their grant.
“Evidence indicates that Levinsky knew full well the implications of section 6.5 of the LTCP; he signed participation agreements assenting to the terms of the LTCP, knowing that their enforcement by the Bank would result in him forfeiting allocated RSUs upon his resignation,” ruled Justice David Brown.
“Finally, the simple fact remains that Levinsky was able to choose, without interference from the Bank, the commercial activity in which he desired to engage following his resignation. As it turned out, the Bank supported that choice by becoming a client of [Levinsky’s fund] Waratah.”
Brown conclude that the LTCP was a valid, binding and enforceable term of the contract of employment between Levinsky and the bank. “It follows that I dismiss Levinsky’s claim for payment of the amounts he forfeited in respect of the RSUs allocated to him in 2007, 2008 and 2009,” Brown said.
The two sides were encouraged to settle the costs the trial, and were invited to consult the court should they be unable to do this independently.