A senior employee who was terminated from a company demanded to receive 20% of its shares, claiming that according to the employment agreement, he is entitled to 5% of the shares of its subsidiary, which was not actually established, because the value of the employing company is four times the value of the subsidiary.
The Labor Court rejected the claim and found that the employee was not entitled to any allocation of shares or options. A written employment contract signed by the parties reflects their final and absolute intentions. When an employee is granted a contractual right that is contingent on future events, the non-fulfillment of the conditions eliminates the basis for the employee's entitlement to the exercise of the right. Here, the employment agreement stipulates that the employee will be entitled to options at the rate of 5% of the shares of the subsidiary that will be established, or alternatively, he will be entitled to options at the rate of 1.25% of the shares of the employing company, as part of an option plan that will be formulated for the employees and subject to its terms. In practice, the subsidiary was not established and the employing company did not formulate an option plan. Therefore, the obligation to grant options remains theoretical and the employee is not entitled to the grant of shares at all.