As a general matter, employers “win” when they seek to enforce stock plan terms that have been fairly disclosed -- and accepted -- by award recipients. ADP recently had such a victory, through a 3rd Circuit decision granting a preliminary injunction against two former employees who had joined a competitor in violation of restrictive covenants set forth in their stock awards. They argued that ADP’s web-based system for issuing stock awards did not adequately alert them to the consequences of the stock awards they accepted.

The employees lost because ADP’s check-the-box award system involved the following key steps that led the court to bind them to the stock award agreements and the associated noncompetes: