Executive severance in Canada can include far more than base salary. Bonuses, commissions, equity, pension contributions, benefits and other compensation can materially increase the value of a termination package.
For CEOs, presidents, vice-presidents, directors and other senior leaders, a termination can also affect stock options, long-term incentive plans, restrictive covenants, references and how the departure is communicated.
Samfiru Tumarkin LLP helps non-unionized executives and senior professionals in Ontario, Alberta and British Columbia review severance packages, protect their compensation and negotiate the terms of their departure.
⚠️ Received an executive severance package?
Don’t evaluate the offer by looking only at the number of months of salary. Your employment contract, bonus plans, equity documents and release should be reviewed together before you sign.
On This Page:
- 1. What Is Executive Severance?
- 2. Who Is an Executive?
- 3. What Should a Package Include?
- 4. How Is It Calculated?
- 5. Contracts, Bonuses & Equity
- 6. Negotiating Your Departure
- 7. Demoted or Pushed Out?
- 8. Legal Help by Location
- 9. What to Do Next
- 10. Common Questions
What Is Executive Severance?
Executive severance is the compensation and other terms provided to a senior employee when their employment ends.
It can include pay in lieu of notice, continued compensation during a notice period, a negotiated settlement or a combination of these arrangements.
An executive package can be more complex than an ordinary severance offer because senior employees often receive compensation through several separate agreements and plans.
💡 Executive severance is based on total compensation, not just salary.
An offer that appears strong in months of base pay can still be inadequate if it excludes bonuses, equity, pension contributions or other regular compensation.
Who Is Considered an Executive?
Executive severance issues can arise for:
- Chief executive officers
- Chief financial officers
- Chief operating officers
- Presidents and vice-presidents
- Executive directors
- Senior directors and managers
- Partners and senior professionals who are employees
- Other employees with complex incentive or equity compensation
Your job title does not decide your severance entitlement. Your actual role, responsibilities, compensation and employment relationship matter.
Does every director qualify as an employee?
No. A senior employee with the title of director is different from a corporate board member who has no employment relationship with the company.
Employee severance rights depend on whether there was an employment relationship and how it ended.
What Should an Executive Severance Package Include?
An executive severance package should account for the compensation the employee would have received during the applicable notice period, subject to enforceable contractual terms.
| Compensation | What to review |
|---|---|
| Base salary | The salary that would have continued through the notice period |
| Bonuses and commissions | Annual, performance, sales and incentive compensation that may have been earned |
| Equity compensation | Stock options, RSUs, PSUs, shares and awards scheduled to vest |
| Long-term incentives | LTIPs, profit-sharing and deferred compensation arrangements |
| Pension and retirement | Employer pension, RRSP or retirement-plan contributions |
| Benefits and executive perks | Health coverage, insurance, car allowances and other regular benefits |
Every compensation document should be reviewed together. A severance calculation based only on your employment agreement can miss rights found in a separate bonus, equity or incentive plan.
How Is Executive Severance Calculated?
There is no fixed formula that applies to every executive.
Severance pay can be as much as 24 months’ pay. Important factors can include:
- Age
- Length of service
- Seniority and responsibilities
- Total compensation
- Availability of comparable executive positions
- Employment contract terms
- Whether the employee was recruited from another secure position
Senior executives can face a limited market for comparable work. That can affect the amount of notice or compensation owed after termination.
Read our national guide to severance pay in Canada or use the Severance Pay Calculator for an initial estimate.
⚠️ Don’t rely on a simple “weeks per year” formula.
An executive’s proper severance can depend on much more than length of service.
Executive Employment Contracts, Bonuses and Equity
Your employment contract and compensation-plan documents can dramatically change the value of your severance package.
Termination clauses
An employer may rely on a termination clause to argue that your severance is limited to a specific amount or to minimum employment standards.
Don’t assume the clause is enforceable simply because you signed it. The wording must be reviewed under the law that applies to your employment.
Read our guide to executive employment contracts in Canada.
Bonuses and commissions
A bonus or commission does not automatically disappear because employment ended before the payment date.
The key questions include whether you would have received the compensation during the notice period and whether clear, enforceable terms remove or limit that right.
Learn more about bonus in Canada as well as how bonus and severance pay work.
Stock options, RSUs and other equity
Don’t assume unvested equity is lost because HR says vesting stopped on your last active day.
Your employment agreement, equity plan, grant documents and vesting schedule should be reviewed together.
Read our guide to stock options after termination in Canada.
Can You Negotiate an Executive Severance Package?
Yes. An employer’s first offer does not determine your full legal entitlement.
Executive severance negotiations can address:
- Additional salary or notice-period compensation
- Bonus and commission treatment
- Equity vesting or compensation for lost awards
- Benefits and pension contributions
- Payment timing and structure
- Reference language
- Internal and external departure announcements
- Confidentiality and non-disparagement terms
- Non-compete and non-solicitation restrictions
- Legal fees and transition support
For a senior executive, protecting professional reputation and future career opportunities can matter alongside the financial package.
Learn more about how to negotiate a severance package.
⚠️ Don’t sign a full and final release until every part of your compensation has been reviewed.
Once a valid release is signed, you usually can’t return later to claim bonuses, equity or other amounts that were left out.
Read our guide to full and final releases.
What If You Are Demoted or Pushed Out Instead of Fired?
An executive does not need to receive a formal termination letter for severance rights to arise.
A major unilateral change can amount to constructive dismissal, including a significant:
- Demotion
- Reduction in authority
- Loss of major responsibilities
- Pay cut
- Change to bonus or equity compensation
- Change to reporting structure
Don’t resign before getting legal advice. How you respond to the change can affect your severance rights.
Read our guide to constructive dismissal in Canada.
Executive Severance Help by Location
Executive severance rights depend on the province where you work and the terms of your employment.
Ontario
For Ontario-specific rules, compensation issues and executive termination rights, read our guide to executive and C-suite severance pay in Ontario.
Toronto
Senior leaders in Toronto can have complex compensation tied to bonuses, LTIPs, RSUs, options and restrictive covenants. Learn more from our Toronto executive severance lawyers.
Calgary
Executives in Calgary can have severance rights beyond Alberta’s minimum termination standards. Our Calgary executive severance lawyers can review the package, compensation plans and departure terms.
Samfiru Tumarkin LLP also helps non-unionized executives and senior employees across Ontario, Alberta and British Columbia.
What Should You Do After an Executive Termination?
- Don’t sign the release. Review the package before giving up your rights.
- Collect your employment documents. Keep your contract, amendments and termination letter.
- Collect all compensation plans. Include bonus, commission, LTIP, pension and equity documents.
- Check equity deadlines. Vested options may have a short exercise period after termination.
- Document your total compensation. Keep recent pay statements, tax records and award statements.
- Review post-employment restrictions. Understand any non-compete, non-solicitation and confidentiality terms.
- Get the full package reviewed. Every agreement should be considered together.
If the package does not provide the compensation you are owed, you may have a wrongful dismissal claim.
Executive Severance in Canada: FAQs
What is a typical executive severance package?
There is no standard executive package. The proper amount depends on the executive’s age, service, role, compensation, contract and access to comparable employment.
Does an executive automatically receive more severance?
No. An executive title alone does not determine the amount. Seniority, compensation and the limited availability of comparable positions can increase the entitlement.
Are bonuses included in executive severance?
They can be. The answer depends on whether the bonus would have been earned during the notice period and whether enforceable contractual terms limit the entitlement.
Are stock options and RSUs included?
They can form part of termination compensation if they would have vested or become payable during the applicable notice period, subject to enforceable plan terms.
Can a short-service executive receive substantial severance?
Yes. Length of service is only one factor. Seniority, age, recruitment circumstances and the difficulty of finding comparable work can also matter.
Can an executive negotiate non-financial terms?
Yes. References, departure announcements, confidentiality, non-disparagement and restrictive covenants can all form part of a negotiated exit.
Do you have to sign by the employer’s deadline?
No. An employer’s deadline for accepting its offer is different from the legal deadline for pursuing your severance rights. Get advice promptly, but don’t rush into signing.
What if your position was eliminated through restructuring?
A restructuring does not remove your severance rights. Read our guide to job elimination due to restructuring.
What if you’re unionized?
Your collective agreement and grievance process govern termination and severance disputes. Contact your union. Samfiru Tumarkin LLP’s employment law team does not assist with unionized workplace disputes.
Review Your Executive Severance Package Before You Sign.
One overlooked bonus, equity award, pension contribution or termination clause can materially change the value of an executive severance package.
If your employment has ended, your role was eliminated or you are being pushed out of a senior position, get advice before accepting the offer or signing a release.
The employment lawyers at Samfiru Tumarkin LLP help non-unionized executives and senior professionals across Ontario, Alberta and British Columbia protect their compensation, reputation and severance rights.
Before you sign, always check first.
➡️ Review Your Executive Severance Package or call 1-855-821-5900.