Under an RSU plan established by the U.S. public-company parent (“USCo”) of CanCo, awards of RSUs are made to participants, including CanCo employees, each February. The RSUs vest on a pro-rata basis over a three-year period and are payable upon vesting in common shares of USCo, except that USCo may, in its discretion, decide that some or all of the RSUs are to be settled in cash rather than Shares.
In indicating that the Plan likely was a salary deferral arrangement, the Directorate stated:
As the RSUs will be granted early in Year One and will have a positive value on the grant date (subject only to vesting conditions which do not carry a substantial risk of forfeiture) it is likely that they would be granted partly in respect of past services rendered to CanCo prior to Year One. If the RSUs are settled in Year Four, more than three years after the end of the year in which these services were rendered, the paragraph (k) exception would not apply … .