Stock option exercised after termination

Court considered stock option exercise reasonable, as if it were exercised during the employment term
|Canadian Employment Law Today

After six years as the purchasing manager for Pacific Insight Electronics Corp. (P.I.), Jim McClarty’s employment was terminated without notice in August 2001. At the time of his dismissal he was paid a lump sum of $11,491.72. According to P.I. this amount was considered appropriate severance and holiday pay. No breakdown of the $11,491.72 was ever provided to Mr. McClarty. However the record of employment provided to Mr. McClarty indicated that he was paid severance pay of $8,076.95.

P.I. is a manufacturer of electronic products for use in the automotive and marine fields. When it was formed in 1984 it was a small company. By the time Mr. McClarty joined in 1995 the company had 30 employees. At the time of Mr. McClarty’s dismissal P.I. had grown to approximately 220 people and sales of $18.5 million in 2001.

When Mr. McClarty began working for P.I. he did all or most of the purchasing himself. By August 2001 the purchasing department was comprised of Mr. McClarty and eight other people, three of whom were supervised by Mr. McClarty.