Former OMERS manager’s $ 65 million lawsuit for unlawful dismissal is “baseless” according to pension fund

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Tim Patterson’s lawsuit alleged that the fund had repeatedly cut its compensation plan

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The retirement fund alleged in its statement of defense and counterclaim that a former executive of the Ontario Municipal Employees Retirement System sued for wrongful termination in an “unfounded” attempt to “obtain a higher payout for themselves” at the expense of OMERS members.

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Tim Patterson, former senior managing director and head of health care investment at OMERS Private Equity, sued the fund for $ 65 million in damages in July, alleging that his former employer had repeatedly cut its investment professionals compensation plan in recent years and fired him for refusing to sign up for the recent changes.

His lawsuit said the changes to the compensation system resulted in a “talent drain,” with Patterson and one other employee allegedly fired and eight other employees resigning after accepting “residency awards” offered by the company. to fend off the anger at the changes.

OMERS argued in its defense that Patterson’s rejection of the recent amendment to his compensation plan meant that his employment “could not be practically continued in the future without variable compensation” because the pension administrator does not offer different compensation plans to employees in the same group – Patterson offered a severance payment .

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The fund said the severance package included all of Patterson’s vested rights in the fund’s long-term investment professional incentive plan and claimed the arrangement was “entirely amicable.” Patterson also received a total of more than $ 560,000 for his 18-month notice period and nearly $ 1.4 million in short-term incentives.

“Essentially, the plaintiff’s lawsuit is about trying to increase the amount of his already considerable ‘bonus’ claims,” says the defense, “and also about additional bonus amounts for the time he is no longer working or to which he no longer makes any contribution. Value-added activities with OMERS PE, all at the expense of the 525,000 members of OMERS. “

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In the counterclaim, the pension administrator is demanding compensation from Patterson in the amount of his severance payment and short-term incentive payment, minus what he would have had to pay him during the minimum notice period under the State Labor Standards Act.

Neither OMERS nor Patterson’s allegations have been considered in court.

In an email to the Financial Post, Patterson’s attorney Howard Levitt said OMERS’s claims that it was protecting retirees’ interests were “rather wealthy.”

“That interest would be better served by paying competitively so that top investment private equity professionals like Mr. Patterson would be attracted, rather than losing as many of them to drastically reduced pay as we did,” Levitt said.

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Levitt, who is also a columnist for the Financial Post, denied OMERS’s claim for damages, calling it “absurd”.

“Imagine if employees in Canada had to worry that if they contest (their) severance pay, they risk paying everything back.”

The dispute with Patterson centers on OMERS Private Equity’s long-term incentive plan, which began in 2013. Patterson’s complaint states that the plan allowed investment professionals a portion of the profits from their businesses as long as their group of businesses annualized eight. achieved percent return over the course of their life.

Patterson claimed OMERS had made a number of changes to the plan since 2013, including an annual salary cap for employees, a lifetime cap and, in 2019, a cut in investment professionals’ share of transaction profits. In February 2020, Patterson claims, the plan was “radically changed” to require all stores to generate an eight percent return on investment each year instead of a cumulative return, resulting in an “employee revolt.”

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OMERS denied the description of the plan, writing that the long-term incentive plan was “never” based on the annualized eight percent hurdle and has been “consistently operated, managed, documented and interpreted” since 2013 as it does all business to achieve the goal require a return of eight percent per year.

It states that Patterson’s claims about calculating his long-term incentive claims were “opportunistic” and “made after the fact”.

The changes that OMERS introduced to the plan served the employees, says the statement of defense. The lifetime earnings cap was introduced to address concerns about the annual earnings cap – the career cap ensured that employees would continue to benefit if certain years failed to meet the eight percent threshold.

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Patterson also recognized and accepted the terms of the long-term incentive plan annually between 2013 and 2019, according to the pension fund‘s claim.

In 2020, OMERS determined that the existing long-term incentive plan was “no longer meeting the performance targets” and decided to discontinue it from the 1st plan to “ease the transition” for investment professionals.

Patterson’s lawsuit argued that the bridge plan further reduced employee compensation and that investment professionals were “inappropriately pressured” to log out, with the threat of dismissal. Patterson and one other employee were fired, the lawsuit said, while eight other employees resigned.

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OMERS said it designed the compensation plans for the bridge and 2021 in consultation with the leadership of OMERS Private Equity, and the decision by employees to join the bridge plan was “entirely voluntary”. However, employees were told that as of January 1, no other incentive plan would be available.

“Basically, they are saying that they have drastically reduced Mr. Patterson’s compensation (retrospectively and prospectively) and because he did not accept that and they would not continue with the existing incentive plan, it is somehow acceptable to fire him because the alternative would be Paying him too little, ”Levitt said in an email. “At first sight it is absurd and corresponds completely to the principle of constructive termination.”

OMERS argued that the compensation change was “entirely at its rightful discretion,” and there had never been any promises or guarantees that the long-term incentive plan would always be renewed annually.

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