The Court of Queen’s Bench of Alberta has ruled that a former pension fund executive is owed more than $400,000 in long-term incentive pay after he was terminated without cause and denied those payouts.

The court ruled that Alberta Investment Management Corp. (AIMCo.), owes $444,205 to president David Styles, a former vice president who was dismissed from the firm in mid-2013 after approximately three years on the job. At the time, he was paid three months’ salary in severance, but received nothing under AIMCo’s annual incentive plan (AIP) or long term incentive plan (LTIP).

The question for the court was whether Styles was entitled to anything under the LTIP. According to the court decision, AIMCo argued that he was not entitled to any payout under the terms of the LTIP agreement that were part of his employment contract. However, the court disagreed.

“While there is no evidence that the termination in this case was done in bad faith, the employer’s actions have created circumstances under which the employee is unable to receive his LTIP grants. The employer has provided no evidence as to the reasons for termination and no reasonable explanation for the associated or consequential denial of the LTIP grants,” the court said in its decision.

The court indicated that it was unfair of the firm to benefit from the employee’s hard work, but then to deny compensation earned for that hard work. “It is only reasonable in the circumstances of this case for the plaintiff to have assumed that as long as he performed, he would be compensated as promised, and that the defendant would not act in an arbitrary manner to unfairly take away that compensation,” the court said.

“In this case, the employer exercised its discretion to terminate the contract. It also exercised its discretion not to pay the employee his earned LTIP benefits. The employer’s contractual discretionary powers were not exercised fairly and reasonably in the circumstances,” the court said.

The court ruled that AIMCo breached the employment contract and the LTIP agreement when it “failed to exercise its contractual discretionary powers reasonably in dismissing the plaintiff while at the same time refusing to pay the plaintiff any of his earned, awarded and approved LTIP grants.”

The court found that the plaintiff suffered damages as a result of that breach. It calculated the damages at $444,205, and awarded them to Styles.