A 59-year-old IBM executive was awarded $682,151.18 in wrongful dismissal damages – but it's the novel approach to valuing cancelled equity that employers and employees alike should be watching.
The answer the court landed on — tying equity valuation to an individual employee's documented investment behaviour — may be the most consequential aspect of a decision that otherwise follows well-established case law. This is the part of the case in Adelman v. IBM Canada Limited, 2026 ONSC 420 (CanLII)
Mr. Adelman disagreed. He sued for 24 months' notice, bonus entitlements, and damages for cancelled restricted stock units (RSUs) and stock options that would have vested during what would have been his notice period.
IBM's position was conventional: value the shares on the date they would have vested. Simple, predictable, administratively tidy. Mr. Adelman's lawyers argued for something different. Mr. Adelman testified that his investing philosophy was what he called “passive” – when equity vested, he tended to leave it alone until he needed the money. His shares from the February 2023 vesting had been held an average of 402 days before sale. He said he would likely have done the same with the February 2024 shares., 2019 ONCA 991 (CanLII), the court held that damages should be assessed on the basis of what would “probably have happened” – and that an employee's own prior conduct with identical awards was the best available evidence of that probability. The implied sale dates were set 402 days after each vesting date, and IBM shares had appreciated meaningfully by then. The result: $269,508.27 in equity damages, compared to a figure that would have been materially lower on IBM's preferred vesting-date approach.
The implication for future cases is significant. Employees in wrongful dismissal litigation who hold equity have an incentive to document their investment behaviour carefully – both before and after termination. An employee who has consistently held shares for months or years after vesting now has grounds to argue for a valuation date that reflects that pattern, potentially capturing substantial post-vesting appreciation. Conversely, an employer faced with such a claim can challenge it only if the employee's alleged behaviour is inconsistent, poorly documented, or implausibly self-serving.
The Bonus Rulings: Two Different Outcomes, One Coherent Principle
On the notice-period bonus, the court applied the familiar two-part test from Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 (CanLII): first, was the bonus integral to compensation? Only if yes does the court ask whether plan language removes the entitlement. Justice Parghi found the bonus was not integral, pointing to inconsistent historical payments (including zero in his last year of employment), IBM's explicit evidence that base salaries – not bonuses – drive market competitiveness, and the relatively modest size of past awards (16.6% of base in 2020, just 3.6% in 2021). No integrality, no notice-period claim.
What Employers Should Take From This and Why it Matters
- Courts have generally valued cancelled equity at the date of vesting. Mr. Adelman introduces a different approach: use the employee's own documented trading history to determine when they would likely have sold – and value the shares at that point instead. The result, in a rising market, can be dramatically higher.
- When denying a discretionary bonus to a departing employee, document the actual performance rationale – and make sure the people who testify about it are the people who made the decision. Post-hoc rationalization does not survive cross-examination when the employer's own documents say something else.
- Equity plan language needs to unambiguously extinguish common law vesting rights upon termination. IBM has now lost the same argument twice – in Milwid and again here.
- The equity valuation methodology in Adelman opens new territory. Employers should consider whether their equity plans can contractually specify the valuation methodology to reduce litigation risk.
About the Author
Chris Randall is the Founder of Randall Law, an employment law and litigation firm based in Toronto that provides pragmatic, client-centred, and strategic legal advice to both employers and employees. In 2025, Chris was elected to the Ontario Bar Association’s Labour and Employment Law Section as a Member-at-Large.
Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.