Former Rogers CEO departed with a $14.1 million package and is now suing Rogers for $24 million for wrongful dismissal and additional compensation.
Boards and leadership teams need to consider thebmonetary and reputational risks associated with dismissals and associated severance pay. It is prudent for boards to complete a risk assessment audit to determine good-better-best scenarios for a dismissal and plan accordingly for each outcome. Arcus helps boards and leadership teams in this process.
Joe Natale case
Joe Natale, the former CEO of Rogers Communications Inc., recently received more than $14,000,000 in severance after his employment at the telecommunication giant was terminated.
Natale, who worked for Rogers since 2017, was publicly removed from his position in 2021. He currently serves on the board of Sunlife Financial.
What does Joe Natale’s severance package contain?
Here is a breakdown of what Natale’s severance package contains:
Compensation for base salary ($2,705,300)
Bonus (at target) ($2,705,300)
Executive allowance ($200,000)
Insurance benefits ($38,500)
Outstanding vacation ($125,901)
Deferred share units ($530,891)
Stock options ($739,967)
Restricted share units for 2019 ($2,971,040) vesting over 2-year period
Restricted share units for 2020 ($4,089,714) vesting over 2-year period
Variables to consider for severance pay
Here are some variables for boards and leadership teams to consider when reviewing severance packages and for or without cause dismissals.
Loss of benefits
These are all relevant components that must considered when a company calculates severance pay for an employee, including senior executives.
Employee rights when dealing with service provider outages
Tim Patterson and OMERS severance package
Severance pay facts for Canadian employers
If you are a non-unionized employee in Ontario, BC, or Alberta, and have been terminated or dismissed without cause, you are generally entitled to severance pay.
A wrongful dismissal takes place when an employee is fired by their employer without being given the appropriate amount of severance pay.
There is no mathematical formula to determine how much severance pay someone is owed when they are dismissed from their employment. Instead, there are a number of factors that, when taken together, are used to determine what that person should receive. These include the employee’s length of employment, their age, the position they held, and the availability of new employment.
Length of employment
The length of employment is often a factor that significantly influences an individual’s severance. However, it is a common misunderstanding that severance entitlements are calculated solely on this factor on a ratio of one month per year of service. In many cases, employees with the shortest service time are provided with comparably higher severance payments.
For example, a 50-year-old individual with 30 years of service might be owed 24 months’ compensation in the form of severance, while a 60-year-old employee with only two years of service might be owed 8 months’ severance. Therefore, it is very important to always speak with an employment lawyer to determine exactly what you are owed.
Age is another very important factor when calculating severance. Generally, older employees are entitled to more severance pay to account for the increased difficulty they will face when seeking new employment.Despite the way that advanced age can increase severance entitlements, younger people are nonetheless owed severance.
Therefore, it is always important to determine what you are owed when your employment is terminated, regardless of your age.
Typically, senior employees or those with specialized skills are owed larger amounts of severance when their employment comes to an end. This has become less relevant in recent years. However, the example of Natale’s significant severance package following the termination of his employment as a CEO suggests that it can still be a significant factor.
Availability of Employment
Today’s job market is increasingly competitive and challenging to navigate. It often takes people longer to secure employment after they are dismissed. This is one of the most important factors in determining the amount of severance pay owed and it applies to individuals of all ages, who are both short- and long-service employees.
An employee working in a declining industry, such as manufacturing, will not be able to replace their position as quickly as someone in a booming industry. Given that the purpose of severance pay is to compensate you for the time you are out of a job, the availability of new employment is always a factor in determining what amount of severance you are owed.
Severance Offers and Deadlines
When an employer presents a severance package to an employee, they will almost always include a deadline for an employee to accept the offer.
Employees do not have to sign by your employer’s deadline. They have a right to have their severance package reviewed by an employment lawyer before they sign anything.