Bank CEO negotiated away all pension entitlements

No right to share in winding up of pension fund

The British Columbia Court of Appeal has held that the former president of a bank gave up any right to participate in the staff pension plan. The bank paid him $975,000 severance, and that is all he is going to see.

Edgar Kaiser Jr. headed the bank in the mid-1980s when it was in bad financial condition. A buyout by the Hongkong Bank of Canada saved it, but Kaiser resigned.

The bank paid Kaiser the $975,000 “in full settlement of salary for the unexpired term of his employment agreement and all other payments or benefits due or accruing due under any agreement or any arrangement with the bank.”

Kaiser’s severance agreement with the bank also cancelled his “supplemental retirement income agreement,” which explicitly incorporated the staff pension plan.

On its plain meaning, this seems to say clearly that, upon paying Kaiser $975,000, the bank owed him nothing else. However, Kaiser claimed that in settling, he waived his right only to the supplemental plan for executives.

He argued that this did not affect any of his rights under the original plan, which he maintained from being an employee when the plan began.

Therefore, he said, he was entitled to be included in the distribution of money when the bank wound up the plan.

He also said that the terms of the regular plan prevented him from waiving his rights. The plan “restrained” all participants from “selling, transferring, anticipating, assigning, hypothecating, or otherwise disposing of his benefit, prospective benefit or any other rights and interest.”

As well, it said that the board of directors could not amend the plan in a way that would open it to uses other than for the “exclusive benefit of participants...and their beneficiaries or joint annuitants.”

The court has said that neither of these restrictions had anything to do with “the voluntary relinquishment of entitlement” to benefits. They concerned transfer of the benefits, or diversion of them by directors for improper purposes, not a waiver of benefits by the employee.

More generally, the court has held that, when he settled with the bank, Kaiser clearly was waiving all other claims, including all claims under the pension agreements.

The regular plan, the court has held, obviously was incorporated in the supplemental executive plan, and therefore it fell within the terms of Kaiser’s termination settlement.

For more information:

Bank of British Columbia Pension Plan v. Kaiser, 2000 BCCA 291,Vancouver registry no. CA023627, May 3/00.

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