Stock option rights sticky subject in wrongful dismissals

By Melanie Polowin
|Canadian HR Reporter|Last Updated: 04/12/2001

Employers should be aware of rights arising under employee stock options plans (ESOPs) since they are popular — and expensive — subjects of dispute in wrongful dismissal litigation.

Despite a growing trend to grant stock options as part of a standard compensation package for all employees, from mailroom staff to presidents, companies generally do not want ex-employees to retain a stake in the company after they leave. Therefore “termination of employment” clauses in ESOPs commonly provide that termination of employment triggers the following:

•a time-limited exercise window for the forced sale of those options already given as of the trigger date; and