Parentco funded and administered a performance share plan (“PSP”) for employees of group companies, including Canco (a subsidiary). A PSP award is a conditional award of Parentco shares to be delivered upon vesting, which occurs based on performance conditions which are measured over the subsequent 3-year period. A vested award may be settled in either shares or the cash equivalent, at the discretion of Canco or Parentco. Canco makes reimbursement payments to Parentco pursuant to a recharge agreement for the value of shares distributed to Canco’s employees in satisfaction of vested PSP awards.
There was insufficient information to determine whether s. 7 could have applied even absent Transalta. Headquarters stated:
[S]ection 7 does not apply where an employer contributes to a trust and the trust uses the contributions to purchase employer shares (or shares of a corporation with which it does not deal at arm’s length) on the open market for eventual distribution to its employees. Instead, the arrangement is subject to the EBP rules.