Following the Termination of a Senior Executive, a Clause in a Stock Option Plan is Declared Abusive and the Behaviour of the Employer Deemed Oppressive 

March, 2014 - Émilie Laplante Paquin and Marie-Hélène Jolicoeur

In Dollo v. Premier Tech Ltée,1 the Superior Court of Québec declared a clause contained in the Stock Option Plan (the “Plan”) offered by Premier Tech Ltée (“Premier Tech”) to some of its employees to be abusive and also declared Premier Tech’s conduct towards a dismissed senior executive to be oppressive within the meaning of the Canada Business Corporations Act (“CBCA”).

THE FACTS
In May 1999, Premier Tech hired Christian Dollo (“Dollo”) as vice‑president, finance. In 2001, Dollo was offered the opportunity to acquire stock options (hereinafter, the “Options”) of the corporation over time by participating in the Plan. Premier Tech’s shares then became publicly traded and Dollo acquired some of the shares in accordance with the Plan. In June 2004, he became president of Premier Horticulture, one of Premier Tech’s main subsidiaries.

Premier Tech once again became a private corporation in February 2007. At that time, some executives holding Options, including Dollo, were asked to acquire shares. As part of the privatization of Premier Tech, new Options were offered to Dollo.

During 2009, members of Premier Tech’s management team felt that Dollo’s performance fell short of the corporation’s expectations and that the relationship of trust was deteriorating. At the same time, Dollo became aware of clause 8.01.2 of the Plan, which stipulated that in the event of termination for any reason other than the death, retirement or disability of the participant, he or she would lose all of his or her Options which were vested but not yet exercised unless the Board of Directors decided otherwise. Worried about the existence of this clause, he requested information from the corporation’s management team and was reassured with respect to the possibility of losing his vested Options in the event of his termination.

In August 2010, Dollo was terminated. At the time, he held 71,100 shares of the corporation and 207,619 vested Options. During the months that followed, Premier Tech and Dollo settled their disputes, with the exception of Dollo’s Options. During the fall of 2010, Dollo requested that the Board of Directors exercise its discretion under clause 8.01.2 of the Plan in order to allow him to retain his vested Options. The Board of Directors refused.



Footnotes:
1. 2013 QCCS 6100.
2. Paragraph 356 of the decision.

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