The case centered on interpreting two specific clauses in the employment agreement’s Schedule 2, which outlined alternative methods for receiving the sign-on bonus. The Court of Appeal had to determine whether the worker could invoke either clause to claim the full bonus amount.
Sign-on bonus options in employment contract
The worker began employment with the employer, a licensed financial institution in stock brokerage, under a three-year fixed term contract. He later signed a new employment agreement for 39 months that would continue indefinitely until terminated.
This new agreement included a sign-on bonus outlined in Schedule 2, which gave the worker two choices: either take US$750,000 in cash immediately or receive company shares representing 5% of the company, with provisions to sell these shares back for up to US$1,000,000 under various conditions.
The worker chose the share option in April 2014. The court noted: “Pursuant to clauses 2(a) to (c) of Schedule 2, [the manager], [the director], [the worker] and [the employer] entered into a shareholders agreement in July 2014, and [the director] transferred 5% of the shares in [the employer] to [the worker] on 17 October 2014.”
In December 2014, the worker and company directors entered into a share purchase agreement (SPA) with CBD Investment (Cayman) Corporation (CBD) for the sale of 85% of the company’s shares. As part of this transaction, the shareholders agreement was terminated through a Deed of Termination.
