An Ontario court has ruled that Bank of Montreal can pay a portion of the bonus owed to a former executive in restricted share units, the bank doesn’t have to pay the bonus all in cash.
The Superior Court of Justice ruled Monday that BMO can pay a third of the $1.5 million bonus it owes to a former executive, Steven Somerville, in restricted share units (RSUs).
According to the decision, Somerville is suing the bank for wrongful dismissal. That case has yet to be heard, but in the meantime, Somerville served a motion for summary judgment seeking his unpaid 2011 bonus. After negotiations, the two sides agreed that his bonus for fiscal 2011 should be $1,478,864; and the bank acknowledged his entitlement to that bonus. They disagreed, however, on the form of payment.
Usually, two thirds of the bonus would be paid in cash and one third in RSUs. The bank sought to pay out the bonus this way, whereas the plaintiff wanted it all paid in cash, arguing that the terms of the bank’s compensation plan prevent it from granting RSUs to a non-employee.
The court sided with the bank, saying that the neither the plan language, nor any other applicable law, expressly prohibits the bank from distributing RSUs. It also noted that requiring the bank to pay cash up front would be to ignore the limitations and restrictions on the RSUs, “which again is something to which the plaintiff is not entitled.”