The retirement incentive agreement was approved by the board of directors of an Alberta non-profit society in late 2016, following the announcement that the organization's long-serving executive director would be stepping down after 22 years of service. The board resolution authorized a monthly payment of $4,200 to the departing executive director for the remainder of her life, beginning on the 1st day of the month following her final day of employment. The resolution passed unanimously at a properly constituted board meeting, and the minutes recorded both the motion and the rationale: recognition of the executive director's decades of leadership and a desire to provide financial security in her retirement. What the minutes did not record, and what the board did not execute, was a standalone written agreement between the society and the executive director setting out the terms, conditions, and enforceability of this commitment.
The executive director retired in March 2017 at age 63, and payments began the following month. For the next 5 years, the society transferred $4,200 on the 1st of each month without incident. The executive director received $252,000 over that period and had every expectation that payments would continue for the rest of her life. During those same years, however, the society's financial position deteriorated. A major funding partner withdrew support, program revenues declined, and by early 2022, the board was confronting the prospect of insolvency. In June 2022, the board passed a resolution to begin voluntary dissolution under the Alberta Societies Act.
The wind-up process surfaced uncomfortable questions about the society's obligations. The executive director's retirement incentive arrangement appeared nowhere in the society's audited financial statements as a recognized liability. No actuarial estimate of its present value had ever been prepared. The society's legal counsel at the time of dissolution expressed uncertainty about whether the arrangement constituted a binding contractual obligation or something more precarious. Payments stopped in August 2022 after 64 months. The executive director, then 68 years old, was informed by letter that the society could no longer honour the commitment and that dissolution would extinguish any remaining obligation.
The executive director retained employment counsel and brought an action against the society and, individually, against 3 members of the board who had served during the dissolution period. The claim alleged breach of contract, sought damages representing the present value of the remaining lifetime payments, and raised questions about fiduciary duty and the proper treatment of creditor claims during a society wind-up. The society defended on the basis that the arrangement was never a binding contract, that it was unenforceable for want of documentation, and that in any event the dissolution process would extinguish any surviving obligation.