Incentive Plans Entitlements Mushroom in the Dark: Khatib v. GoEasy Ltd., 2026 ONSC 3513

Dan Wilband, JD/BCL, MA

He left a six-figure job he wasn't looking to leave.

The forfeiture and bonus clauses looked airtight.

What happened next is a lesson employers need to understand about LTIP, bonus entitlements, and the cost of ambiguous termination language.

A senior executive was recruited away from stable employment with a compensation package built around long-term equity incentives: restricted stock units and share options worth hundreds of thousands of dollars. When he was terminated without cause, the employer pointed to the forfeiture clauses in the grant documents and argued those stock units were gone.

The court disagreed.

The termination provisions in the grant documents failed to define a critical term: "Termination Date." Did it include a period of reasonable notice? The employer could not say. That silence on a single undefined term, was enough to render the stock forfeiture clauses unenforceable.

The employee was entitled not just to all the equity that vested during his notice period, but to pro-rated vesting on unvested units as well.

The short-term incentive plan had similar problems. The employer's "active employment" forfeiture clause was never demonstrably provided to the employee at hiring. Without proof of that, the clause could not override his common law entitlement to his bonus throughout the notice period.

The court fixed reasonable notice at eight months — less than the employee's claimed twelve, and more than the employer's offered six.

For employers relying on equity and incentive plans to attract and retain senior talent: the grant documents matter as much as the employment agreement. Vague or undefined termination language does not protect you.

If your LTIP and bonus plans have not been reviewed recently alongside your termination provisions, now is a good time to dust them off and tune them up. We’re happy to help if you need us.

Khatib v. GoEasy Ltd., 2026 ONSC 3513