Equity Compensation at Termination: Court of Appeal Awards US$4.7 Million for Lost RSUs

By: Adam Lawson

In Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, the Court of Appeal for Ontario considered the intersection of termination clauses, the Employment Standards Act, 2000 (“ESA”, the Ontario legislation prescribing certain minimum standards of employment), and equity-based compensation.

The Court upheld the finding that Facebook Canada’s termination provisions were unenforceable because they did not comply with the ESA. More significantly, it held that provisions purporting to stop the vesting of restricted stock units (“RSUs”) immediately upon termination also contravened the ESA. The result was an additional award of US$4,711,647.29 for RSUs that would have vested during the employee’s 10-month common law reasonable notice period.

Background

Dr. Daniel Wigdor joined Facebook Canada in September 2020 after Meta acquired his company, Chatham Inc. As part of his compensation, he received significant grants of Meta RSUs vesting quarterly over time.

Facebook Canada terminated Dr. Wigdor’s employment in December 2023. It took the position that his unvested RSUs ceased vesting upon termination. The application judge found the employment agreement’s termination provisions unenforceable and awarded Dr. Wigdor damages based on 10 months of common law reasonable notice but declined to award damages for the RSUs. The Court of Appeal upheld the finding that the termination clause was unenforceable but reversed the decision concerning the RSUs.

The Termination Clause Was Invalid

Dr. Wigdor’s employment agreement provided that, during his first three months with Facebook Canada, his employment could be terminated on two weeks’ notice or base pay in lieu. However, because Facebook Canada had acquired Chatham and Dr. Wigdor continued working for the purchaser, s. 9 of the ESA required his prior service with Chatham to be recognized when calculating his statutory termination entitlements. Based on approximately nine years of recognized service, Dr. Wigdor was entitled to substantially more than two weeks of base pay, including eight weeks of statutory notice and nine weeks of severance pay.

The Court agreed the clause contemplated a termination that would provide less than the ESA minimums and was unenforceable. General language elsewhere in the agreement promising compliance with the ESA could not cure the specific contractual violation providing otherwise.

The Court also rejected Facebook’s reliance on Dr. Wigdor’s sophistication and the fact that he had legal counsel when the transaction and employment agreement were negotiated. Access to legal advice did not lessen the requirement for clear and ESA-compliant termination language.

RSU Vesting Was Protected During the Statutory Notice Period

Sections 60 and 61 of the ESA govern an employee’s entitlements during statutory notice and providing pay in lieu of notice. Section 60 prohibits an employer from reducing an employee’s wage rate or altering “any other term or condition of employment” during the statutory notice period. Section 61 requires pay in lieu to equal what the employee would have received had working notice been provided.

The Court held that these provisions must be read together. An employee receiving pay in lieu of notice must therefore be placed in the same financial position they would have occupied had they worked through the statutory notice period.

The Court found there could be “no real doubt” that Dr. Wigdor’s RSUs were a term or condition of his employment. They formed part of his compensation, vested over time in exchange for continued service, and were treated as taxable employment income.

The RSU agreements nevertheless provided that unvested RSUs would be forfeited upon termination. The 2020 agreement expressly stated that vesting would not continue during any statutory, contractual or common law notice period. Later agreements similarly provided that vesting would cease at termination unless continued vesting was “explicitly required” by applicable legislation.

The Court held that these provisions violated the ESA, which did not explicitly require vesting, because they purported to alter Dr. Wigdor’s terms and conditions of employment during the statutory notice period. They were therefore void. Because the forfeiture provisions were void, they could not operate to remove entitlement to damages during the reasonable notice period.

It was undisputed that 9,405 RSUs worth US$4,711,647.29 would have vested during Dr. Wigdor’s 10-month reasonable notice period. The Court added the full amount to his damages.

Practical takeaways

• Employers involved in acquisitions should ensure termination provisions properly account for prior service that must be recognized under s. 9 of the ESA.

  
  

• Employment terms must comply with the ESA when the contract is entered into. Compensation plans stopping vesting immediately on termination will likely be unenforceable if altering a term or condition of employment in the statutory notice period.

• A provision must comply with the ESA before it can effectively limit common law entitlements. Common law forfeiture language will not save a provision that violates minimum employment standards.

• While the Court left open whether RSUs are “wages” under the ESA, Wigdor confirms that RSUs structured as compensation and tied to continued employment will likely  constitute a protected “term or condition of employment.”

• A general ESA-saving clause will not cure a clear ESA breach, and an employee’s sophistication or access to legal advice does not relax requiring ESA compliance.