Stevenson v. Branch Banking & Trust Corp.

ADKINS, Judge. Branch Banking and Trust Company (BB & T), appellee and cross-appellant, fired Senior Vice President J. Diane Stevenson, appellant and cross-appellee, because her leadership of the bank’s Maryland Region did not satisfy its post-merger expectations. Stevenson sued BB & T for breach of her written employment contract and for violation of the Maryland Wage Payment and Collection Law (the Wage Payment Act). See Md.Code (1991, 1999 Repl.Vol., 2004 Cum.

Supp.), § 3-501 et seq. of the Labor & Employment Article (LE). Both of Stevenson’s claims arise from BB & T’s contractual obligation to pay “Termination Compensation” equal to Stevenson’s “annual cash compensation” before her termination. The jury’s special verdict was in Stevenson’s favor on both counts, but the court ordered a remittitur, reducing the award to $60,540.00. Stevenson asks us to reverse the judgment, arguing inter alia that it was too small because, in calculating the amount of severance that the bank owed under the terms of her employment contract, the court erroneously prevented the jury from considering earnings from the exercise of bank stock options that generated a significant portion of her compensation pack ⁶²⁵ age.

BB & T cross-appeals, arguing inter alia that the Wage Payment Act does not extend to an employer’s failure to pay severance. On a question of first impression regarding whether the Wage Payment Act affords relief to employees claiming severance pay, we conclude that non-payment of severance pay representing deferred compensation for services performed during the employment may be grounds for relief under the Act. In this instance, however, the Termination Compensation owed to Stevenson was not the type of “wages for work performed before termination” that gives rise to a Wage Payment Act claim. We shall vacate the judgment for that reason, and because the trial court should have let the jury decide whether Stevenson’s severance benefit included her stock option earnings and should not have awarded Stevenson four times her unpaid wages.

FACTS AND LEGAL PROCEEDINGS BB & T merged with Maryland Federal Bancorp, Inc. in 1998. At the time, Stevenson was a Senior Vice President of branch operations with Maryland Federal. BB & T offered Stevenson a position as Senior Vice President of the Maryland Region, with a three year written employment agreement beginning September 20,1998. Section 4 of the proposed agreement contained a non-compete clause. “[I]n consideration of the mutual covenants” in the employment agreement, Stevenson was asked to promise that, “upon termination of [her] employment,” she would not “directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever,” compete with BB & T. Specifically, Stevenson could not “engage in a Competitive [banking, financial services, insurance, mortgage, or trust] Business anywhere in the States of Maryland, Virginia, North Carolina, or South Carolina, or the District of Columbia, or any county contiguous to” those jurisdictions.

She also would be barred from soliciting BB & T customers and employees. ⁶²⁶ Just as when she worked for Maryland Federal, Stevenson’s compensation was to include bank stock options. These options allowed her to purchase shares of bank common stock at a below-market price, then sell that stock for a profit at a higher market price, at a time she selected. The employment contract also provided in Section 6 for “Termination Compensation” if either BB & T or Stevenson terminated the contract before its term expired. The contract stated in pertinent part: 6c.

Employer may terminate Employee’s employment other than for “Just Cause,” as described in Subparagraph (b) above, at any time upon written notice to Employee, which termination shall be effective immediately. In the event Employer terminates Employee pursuant to this Subparagraph (c),(l) Employee will receive the highest amount of the annual cash compensation (including cash bonuses and other cash-based benefits, including for these purposes amounts earned or payable whether or not deferred) received from Maryland Federal or Employer during any of the three calendar years immediately preceding such termination (“Termination Compensation”) in each year until the end of the Term (prorated for any partial year).... In addition, Employee shall continue to participate in the same group hospitalization plan, health care plan, dental care plan, life or other insurance or death benefit plan, ... on the same terms as were in effect prior to Employee’s termination, either under Employer’s plans or comparable coverage, for all periods Employee receives Termination Compensation .... 6e. In the event Employee elects to resign from employment under this Agreement for other than “Good Reason,” death or disability following the one-year anniversary of the date of this Agreement, Employee shall be entitled to receive a lump sum amount equal to his annual Termination Compensation times the lesser of (i) the number of years until the end of the term, ⁶²⁷ with partial years rounded to two decimal places, or (ii) 2. 6f.

In receiving any payments pursuant to this Section 6, Employee shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Employee hereunder, and such amounts shall not be reduced or terminated whether or not Employee obtains other employment. (Emphasis added.) Before executing this agreement, Stevenson had a face-to-face conversation with Robert Halleck, Regional President of BB & T, about whether “other cash-based benefits” meant that her earnings from the exercise of stock options would be included in the calculation of Termination Compensation. In her employment with Maryland Federal, Stevenson’s profits from exercising her stock options had been a significant amount of her overall earnings. In 1997, she earned $60,476.80 as a result of buying and selling Maryland Federal stock.

At trial, Stevenson testified that Halleck assured her that “other cash-based benefits” meant the cash she received as a result of exercising her stock options. Stevenson “chose to go with BB & T ... because of [her] conversations with Mr. Halleckf.]” In accepting the position at BB & T, she declined another position, as President of Enterprise Federal Bank. Stevenson’s employment with BB & T ended just over a year after it began. In the 13 months she worked for BB & T, Stevenson earned a significant portion of her income from the exercise of bank stock options.

In 1998, she earned $81,380 in base salary plus twice that amount—$162,601.86—by exercising her options on five different occasions. All five were “cashless same day exercises” in which she purchased and sold bank shares in a single trading session. These stock options were reported to the IRS as employment compensation to Stevenson. The bank direct-deposited into Stevenson’s bank account the cash proceeds of her stock option earnings, in the same manner her paycheck was deposited. ⁶²⁸ On October 81, 1999, Halleck met with Stevenson and told her that he was “going to have to let [her] go” because “the powers that be were , very disappointed with the Maryland region,' and ... they want to bring somebody in from down south, somebody that was BB & T born and bred, and they felt that they would do a better job.” At trial, both Stevenson and Halleck testified that BB & T did not give her an opportunity to stay with the bank in another capacity.

Although Halleck gave her the option of resigning, Stevenson rejected that offer because she was aware that she would not have health insurance or stock options for the remaining two years of her contract if she resigned, and that her Termination Compensation otherwise would last through the time she was required to comply with the non-compete clause. In paying the Termination Compensation due under Stevenson’s employment contract, however, BB & T took the position that Stevenson voluntarily resigned, rather than that she was terminated. By letter dated November 9, BB & T informed Stevenson that she was entitled to a lump sum payment of $156,250.18 under section 6(e) of the employment agreement. The letter detailed how the bank calculated the proffered payment: There are 23 months remaining in the term of your contract as of your termination date.

This equates to a multiplier of 1.92. Phil Burrows confirmed that your termination compensation was $81,380.30, which was your 1998 compensation. So, the payment is calculated as $81,380.30 x 1.92 = $156,250.18. Thus, BB & T’s payment formula excluded from Stevenson’s benchmark “1998 compensation” the $162,601.86 she earned that year from the exercise of her stock options.

The bank did not provide Stevenson with any information regarding health insurance. In November 2001, Stevenson filed suit against BB & T, claiming (1) the bank underpaid her because it mischaracterized her termination as a resignation; (2) the bank failed to include the money she earned in exercising her stock options ⁶²⁹ in its calculation of Termination Compensation, resulting in an underpayment of $314,844.63; and (3) the bank also failed to provide health insurance and other benefits. A year after Stevenson filed suit, BB & T amended its interrogatory answers to acknowledge that it had underpaid Stevenson by $6,444.04. BB & T explained how it calculated the underpayment: In determining [Stevenson’s] Termination Compensation, [BB & T] inadvertently failed to include certain deferred cash compensation in the amount of $5,967.00, resulting in an underpayment of severance pay in the amount of $11,456.64.

As of [Stevenson’s] termination of her employment, [Stevenson] had accrued, but unused vacation with a value of $3,567.90. The combined amount of the deferred cash compensation plus accrued vacation is $15,024.04. [Stevenson] terminated her employment effective October 31, 1999, and should have ceased receiving wages, contributions to [BB & T’s] 401K plan and health care benefits as of that date. Notwithstanding [Stevenson’s] termination of her employment as of October 31,1999, [BB & T] inadvertently paid to [Stevenson] additional salary after that date in the aggregate amount of $7,730.46, made contribution to [BB & T’s] 401K plan for the benefit of [Stevenson] in the amount of $463.82, and provided her health care benefits with an aggregate value of at least $386.22. The combined amount of these benefits was $8,580.50.

As a result, [Stevenson] has been underpaid severance in the approximate amount of $6,444.04 through the [BB & T], (Emphasis added.) Thus, the bank maintained its position that Stevenson’s stock option earnings did not constitute “Annual Cash Compensation” for purposes of determining her Termination Compensation. BB & T issued Stevenson a check in the net after-tax amount of $3,729.75. Viewing the payment as “too little, too late,” Stevenson proceeded to trial on her breach of contract and Wage Payment Act claims. ⁶³⁰ On the first day of Stevenson’s jury trial, the court ruled that the phrase “and other cash-based benefits” in section 6(c) of Stevenson’s employment agreement is ambiguous. The trial court allowed parol evidence solely on the meaning of that term.

At the conclusion of all the evidence, BB & T moved for judgment on any claim arising from the bank’s failure to include profits from the exercise of stock options in its calculation of Stevenson’s Termination Compensation. The court granted the motion, citing “the nature of what a stock option is and what happens when it’s exercised, and the limiting language in termination as being [’Jreceived from Maryland Federal or employer!?]” Stevenson’s breach of contract and Wage Payment Act claims went to the jury on the remaining issues, so that the jury did not factor Stevenson’s earnings from the exercise of her stock options into its calculation of the Termination Compensation due under her employment agreement. The jury returned a special verdict in favor of Stevenson, finding that Stevenson did not resign from BB & T, that BB & T breached the employment contract by underpaying her Termination Compensation, and that there was no bona fide dispute justifying the bank’s refusal to pay the full amount owed. The jury awarded damages on Stevenson’s common law breach of contract claim in the total amount of $81,452.41. 1 On her statutory Wage Payment Act claim, the jury awarded $244,357.13—three times the damage award on the breach of contract claim.

Dismayed that the jury awarded more damages than Stevenson requested, the trial court immediately announced that it intended to order either a remittitur or a new trial. ⁶³¹ I believe this verdict is the result of my fault in not reminding [jurors] that they can’t speculate, and both of [counsels’ fault] by not laying out a specific figure.... What I intend to do is rule on a remittitur either today or.... Tuesday.... [I]f it’s not accepted, we’re going to pick a new jury and retry this case and correct all of the mistakes that I made before. These amounts are not based on the evidence, are clearly the result of guesswork and speculation.

They exceed what [Stevenson’s counsel] said [he] thought [she] was entitled. What I should have done is put those amounts on the verdict sheet, and put them in as options, as plaintiff alleges, as defendant alleges, or other, and remind them that they can’t guess. And it has to be proven by a preponderance of the evidence or they must enter zero. That’s what I should have told them.... [W]hen I got that question [from the jury during deliberations] about what amount does each side claim, I should have had them come out and have you all re-argue and put the figures down specifically.

That’s what I should have done. I never make the same mistake twice. The court concluded that Stevenson had proven actual underpayment of only $15,185.00. It proposed a judgment in favor of Stevenson in an amount equal to four times that amount, or $60,540.00. 2 Although she objected to the size ⁶³² of this reduction, Stevenson decided to accept the reduced damage award in the belief that “the issue on the stock options is still available for an appeal.” The court ordered judgment in the remitted amount on May 23, 2003.

The clerk entered judgment on June 6, 2003. At that point, Stevenson’s claim for attorney’s fees and litigation costs was still unresolved. Stevenson petitioned for $76,074.75 in attorney’s fees and $1,693.45 in expenses. The court conducted hearings on the attorney’s fees claim on June 23 and June 30.

At the first hearing, the trial court held that a reasonable fee for the services rendered by Stevenson’s attorneys should not include the time spent on the unsuccessful stock option claim. At the court’s request, Stevenson’s counsel eliminated time expended on that issue. Counsel also supplied the court with a copy of the retainer agreement, which provides for a legal fee in the amount of One-third of all sums recovered. These fees are contingent on recovery....

I also agree to pay an hourly, non-contingent fee of $110 per hour for all time spent on the case. This will be paid monthly.... The contingency fee shall be reduced by the amount of any hourly fees paid. By order dated June 30, 2003, the court awarded Stevenson $20,180 in counsel fees and litigation expenses, an amount equal to the one-third contingency fee set out in the fee agreement.

DISCUSSION To resolve this appeal and cross-appeal, we consider the following issues, which we have consolidated, rephrased, and reordered for clarity: ⁶³³ I. Did the trial court err in denying BB & T’s request for entry of a satisfaction of judgment?

II

Did the trial court err in instructing the jury to treat any unpaid Termination Compensation as unpaid wages that were subject to the prompt payment requirements of the Wage Payment Act?

III

Did the trial court err in removing from the jury’s consideration the issue of whether Stevenson’s Termination Compensation should have included profits she earned from the exercise of her stock options?

IV

Did the trial court err in awarding four times Stevenson’s unpaid wages or in awarding attorney’s fees? I. The Court Did Not Err In Refusing To Enter A Satisfaction Of Judgment As a threshold matter, we reject BB & T’s cross-appeal challenging the denial of its motion for entry of a satisfaction of judgment. BB & T premised that request on its June 10, 2003 proffer of a bank check in the amount of $60,722.45, representing the post-remittitur award plus 10 days post-judgment interest. A determination of whether judgment has been satisfied is a question of law that we review de novo 3 See Md. Rule 2-622; Underwood-Gary v. Mathews, 366 Md. 660, 667 , 785 A.2d 708 (2001). “A satisfaction of a judgment is an ⁶³⁴ acceptance of full compensation for the injury.” Id. at 663 n. 2, 785 A.2d 708 (quotation marks and citations omitted).

Here, the proffered bank check did not represent “full compensation” for Stevenson’s injuries. The check was delivered after the court-ordered remittitur reduced the amount the jury awarded Stevenson. Subsequent correspondence between counsel concerning this check reflects that Stevenson refused to cash it because counsel was concerned that BB & T would claim she had waived her appellate right to challenge the court’s stock option ruling and/or her right to recover attorney’s fees. In the May 23 colloquy concerning remittitur, the trial court acknowledged that the reduced award of $60,540.00 did not compensate Stevenson for her attorney’s fees, and that Stevenson was entitled to recover at least some of her fees and expenses. 4 After the court ordered judgment in the remitted amount, it held two hearings on Stevenson’s claim for attorney’s fees and expenses.

The court received detailed records in support of Stevenson’s claim for fees and costs. On June 24, BB & T filed a motion seeking a declaration that the judgment had been satisfied. On June 30, the trial court ordered payment of an additional $20,180.00 in “reasonable counsel fees.” We have not been directed to any evidence that BB & T proffered the $20,180.00 to Stevenson. By order dated August 28, the trial court denied the bank’s motion for an entry of satisfaction.

Thus, the check proffered by BB & T on June 10 represented only partial compensation for Stevenson’s claimed injuries, in that it did not purport to compensate Stevenson for the attorney’s fees and expenses she allegedly incurred in her efforts to obtain full payment of her wages. In these circum ⁶³⁵ stances, BB & T’s payment could not be considered “full compensation,” and the trial court did not err in refusing to enter a satisfaction of judgment.

II

The Trial Court Correctly Ruled That Severance Pay May Be Recovered Under Maryland’s Wage Payment Act, But Erred In Affording Stevenson A Statutory Remedy For The Bank’s Underpayment Of “Termination Compensation” Maryland’s Wage Payment Act protects employees from wrongful withholding of wages by employers upon termination. LE section 3-505, governing payment upon termination of employment, provides: Each employer shall pay an employee ... all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not been terminated. (Emphasis added.) Section 3-507.1 creates a private right of action to recover unpaid wages: [IJf an employer fails to pay an employee in accordance with ... § 3-505 of this subtitle, after 2 weeks have elapsed from the date on which the employer is required to have paid the wages, the employee may bring an action against the employer to recover the unpaid wages.... If ... a court finds that an employer withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs.

(Emphasis added.) “The principal purpose of the Act ‘[isj to provide a vehicle for employees to collect, and an incentive for employers to pay, back wages.’ ” Medex v. McCabe, 372 Md. 28, 39 , 811 A.2d 297 (2002). The focus of the subtitle is not on “the amount of wages payable but rather the duty to pay whatever ⁶³⁶ wages are due on a regular basis and to pay all that is due following termination of the employment.” Friolo v. Frankel, 373 Md. 501, 513 , 819 A.2d 354 (2003). In its cross-appeal, BB & T argues that “[cjontractually established severance due after employment ends falls outside the Wage [Payment] Act” because “the General Assembly has chosen not to include severance payments within the definition of wages.” In support, the bank cites two decisions from other state courts holding that severance pay does not constitute “wages.” In Dep’t of Labor ex rel. Commons v. Green Giant Co., 394 A.2d 753, 755 (Del.Sup.Ct.1978), a Delaware trial court held that severance pay was not “wages” within the meaning of that state’s prompt payment law.

The review of the word usage in the statute indicates that the word “wages” was used to refer to the regular direct compensation which would ordinarily be paid at the end of each period of a certain number of work days.... The usage ... does not adapt- itself to the concept that “wages” include nonrecurrent benefits such as severance pay. Id. In McGowan v. Administrator, Unemployment Compensation Act, 153 Conn. 691 , 220 A.2d 284, 286 (1966), the Connecticut Supreme Court held that severance pay is not “wages” for purposes of determining whether a terminated employee qualifies for unemployment.

The court reasoned that, in the connotation of the statute, wages cease when employment does, severance pay cannot be considered wages. Severance pay is “a form of compensation for the termination of the employment relation, for reasons other than the displaced employees’ misconduct, primarily to alleviate the consequent need for economic readjustment but also recompense him for certain losses attributable to the dismissal.” Id. (citations omitted). Our research also revealed more recent decisions holding that severance pay should not be considered wages for purposes of prompt payment statutes. 5 ⁶³⁷ When construing the Wage Payment Act, our goal is to determine the General Assembly’s intent so that we can apply the statute in the manner designed by the legislature.

See Whiting-Turner Contracting Co. v. Fitzpatrick, 366 Md. 295, 301 , 783 A.2d 667 (2001). We begin with the “the words of the statute, which we give their ordinary and common meaning.” Id. at 302 , 783 A.2d 667 . “We consider the meaning of the statutory language in the context of the overall statutory scheme. Only if the words of the statute are ambiguous need we seek the Legislature’s intent in the legislative history or other extraneous sources.” Id. (citation omitted).

LE section 3-501 (c) defines “wage” broadly and specifically identifies a non-exclusive list of compensation categories as wages for purposes of the Act: (1) ”Wage” means all compensation that is due to an employee for employment. (2) “Wage” includes: (i) A bonus; (ii) A commission; (iii) A fringe benefit; or ⁶³⁸ (iv) Any other remuneration promised for service. (Emphasis added.) The Maryland Wage Payment Act does not specifically mention severance pay. 6 Nor has there been any reported Maryland decision concerning whether severance pay constitutes “wages” within the meaning of the Act. Stevenson contends that severance pay fits within the broad definition of wages under LE subsection 3-501(c)(l).

She argues that severance pay is both “compensation for employment” and “other remuneration promised for service.” LE § 3-501(c). In support, Stevenson points to the Court of Appeals’ rationale for its decisions in Whiting-Turner v. Fitzpatrick, 366 Md. 295 , 783 A.2d 667 (2001), and Medex v. McCabe, 372 Md. 28 , 811 A.2d 297 (2002), in which the Court recognized that profit sharing and incentive payments, respectively, may qualify as wages that are subject to the Wage Payment Act. Stevenson also claims that the out-of-state cases cited by BB & T represent the minority view. According to Stevenson, the decisions holding that severance pay may constitute wages that must be paid in compliance with statutory prompt payment requirements represent the prevailing and better reasoned position. ⁶³⁹ We begin our analysis of this issue by examining the two Maryland decisions construing LE sections 3-505 and 3-507.1.

Although neither Whiting-Tv,mer nor Medex specifically addresses whether Maryland’s Wage Payment Act provides relief to employees seeking to recover severance pay, the interpretation of the Wage Payment Act in those cases necessarily frames our analysis. In Whiting-Turner , the Court of Appeals discussed the meaning of “wage” under LE section 3—501(c). When he was hired, Fitzpatrick agreed to a weekly salary. After two years of employment, depending on the company’s profits, he would also receive a profit sharing bonus.

At the time he resigned, Fitzpatrick had worked less than two years, but Whiting-Turner nevertheless had drawn up a bonus check for him that represented a profit sharing bonus. Although Whiting-Turner offered Fitzpatrick the check if he stayed with the company instead of leaving to work for its competitor, Fitzpatrick elected to resign. He then sued to collect the bonus pay. The Court of Appeals held that the bonus was not a “wage” subject to the prompt payment requirements of LE section 3-505 because Fitzpatrick had not earned it by fulfilling the two year employment condition.

See Whiting-Turner, 366 Md. at 306 , 783 A.2d 667 . In doing so, the Court considered the meaning of “other remuneration promised for service” under subsection 3-501 (c)(2) (iv) and distinguished between a gratuitous bonus and compensation earned according to the terms of an employment contract. [Sjubsection (c)(2)(iv) .... has a meaning that is significant to an understanding of why “bonus,” and for that matter, “commission” and “fringe benefit” were included as examples of the kind of “other remuneration” that could constitute “wages.” Section 501(c)(2)(iv) serves two functions: it makes clear both that the listed forms of remuneration are simply examples, by the use of the phrase “any other remuneration,” and that the “other remuneration” that may be included in ... wages must have been “promised for service.” ⁶⁴⁰ The [employee] would read out of the statute the words “promised for service.” But reading the statute as including a bonus for wages only when it has been promised as part of the compensation for employment is logical and makes good common sense. The conditions of employment are determined in advance of the employment. What, if anything beyond the basic salary, the employee will receive is a matter for discussion, consideration and agreement.

If a bonus is to be made part of the wage package, it can be negotiated and included in what has been promised. Similarly, whether commissions are to be paid or what fringe benefits attach are matters for agreement in advance of the employment or to become a part of the undertaking during the employment. Once a bonus, commission or fringe benefit has been promised as part of the compensation for service, the employee would be entitled to its enforcement as wages.... [T]his reading gives effect to the plain language of the statute and, we believe, is reflective of the Legislature’s intent in enacting it. Id. at 304-05 , 783 A.2d 667 .

Applying a “bright line test,” the Court of Appeals held that the profit sharing bonus Whiting-Turner planned to give Fitzpatrick if he stayed with the company was not a “wage” because his right to receive that bonus had not'yet vested. See id. at 305-06 , 783 A.2d 667 . The Court reasoned that, although he had been promised a bonus as compensation for service, Fitzgerald had not earned the bonus before his employment terminated. 7 The bonus therefore did not qualify as a “wage” recoverable under the Wage Payment Act. ⁶⁴¹ In Medex , the Court of Appeals applied the same rationale in concluding that an incentive payment qualified as a “wage” under section 3-501 (c). McCabe was employed as a sales representative for a medical supplies manufacturer, whose employment terms provided for a salary plus “incentive fees” that were paid out according to “a series of [annual] incentive compensation plans.” See id. at 38 , 811 A.2d 297 .

The employee manual stated that incentive payments were “conditional upon meeting targets and the participant being an employee at the end of the incentive plan (generally the fiscal year) and being employed at the time of actual payment.” Id. McCabe resigned four days after an incentive plan ended, but before payments under that plan were due to be made. Medex refused to pay McCabe, citing his failure to satisfy the last condition of “employment at the time of actual payment.” This Court concluded the incentive payments were “commissions” and that McCabe had earned them as wages under section 3-501 (c). See McCabe v. Medex, 141 Md.App. 558, 564-65 , 786 A.2d 57 (2001), aff'd, 372 Md. 28 , 811 A.2d 297 (2002).

We held, inter alia, that the third requirement of employment at the time of payment was “invalid in light of Maryland statutory and common law.” Id. The Court of Appeals agreed. See Medex, 372 Md. at 35-36 , 811 A.2d 297 . The Court emphasized that “it is the exchange of remuneration for the employee’s work that is crucial to the determination that compensation constitutes a wage[.]” Id. at 36 , 811 A.2d 297 .

McCabe’s work to meet the company’s sales targets satisfied that test. “In accordance with the policy underlying the Maryland Act, an employee’s right to compensation vests when the employee does everything required to earn the wages.” Id. at 41 , 811 A.2d 297 . In McCabe’s case, “[t]he right to future commissions formed part of the inducement for his initial and continuing employment.” Id. at 42 , 811 A.2d 297 . Because “the incentive fees were related directly to sales made by the employees during a defined fiscal year” and “McCabe had performed all the work necessary to earn the fees,” “the fees were compensation for ⁶⁴² work performed, and, thus, wages under the Act.” Id. at 37 , 811 A.2d 297 . Applying the lessons of Whiting-Turner and Medex, we have no trouble rejecting BB & T’s argument that Maryland’s Wage Payment Act excludes severance pay because it does not mention this particular type of compensation.

The trial court correctly concluded that “the listed forms of remuneration are simply examples” of different types of “wages.” Whiting-Turner, 366 Md. at 304 , 783 A.2d 667 . Consequently, the legislature’s failure to explicitly define severance pay as a “wage” does not necessarily mean that Stevenson’s Termination Compensation is not covered by the Act. 8 ⁶⁴³ We turn next to BB & T’s alternative argument that severance pay falls outside the scope of the Act because it does not compensate employees for work performed before termination. BB & T points out that, by legislative directive, the prompt payment protections of LE section 3-505 extend only to terminated employees who have not been paid “wages due for work performed before termination,” and that the statutory remedy in section 3-507.1 is available only when there is a violation of section 3-505. In our view, however, BB & T’s theory that this excludes severance pay rests on the incorrect factual premise that severance pay can never be remuneration for an employee’s services.

Many courts have recognized that severance pay often represents a type of deferred compensation for work performed during the employment. See, e.g., Fang v. Showa Entetsu Co., 91 P.3d 419, 422 (Colo.Ct.App.2003), cert. denied, 2004 WL 1301893 (Colo. June 14, 2004)(“In the absence of controlling statutory provisions, severance payments are generally viewed as consideration for past services” so that contractual severance provision, which was “determinable and vested upon entering the contract, payable under the contract upon termination,” constituted “wages”); Ferry v. XRG Internat'l, Inc., 492 So.2d 1101, 1103-04 (Fla.Ct.App.1986)(severance was “wages” because “one year’s salary provided for in the contract should the [employee] be terminated without cause was an inducement to procure his services and to help ensure the continued quality of those services once he was employed”); Triad Data Serv., Inc. v. Jackson, 153 Cal. App.3d Supp. 1, 200 Cal.Rptr. 418, 423 (1984)(“severance pay constitute[s] wages” given “the present day concept of employer-employee relations” as including “not only the periodic monetary earnings of the employee but also the other benefits to which he is entitled as part of his compensation”); Heimenz v. Pa.

Power & Light Co., 23 Wage & Hour Cas. (BNA) 227 ⁶⁴⁴ (Pa. Ct. Common Pleas 1976)(severance pay under company plan was “wages” because calculation formula based on years of service showed pay “is clearly intended to be a form of compensation for labor or services rendered over time”). Our Court of Appeals long ago subscribed to that view in Dahl v. Brunswick Corp., 277 Md. 471, 480 , 356 A.2d 221 (1976)(ap-proving the “generally accepted” view of severance pay as “a reward for past services,” rather than “a form of unemployment insurance”).

These courts view severance pay as compensation that is “earned” before termination and payable at the time employment ends. The oft-cited explanation was offered in a New Jersey case involving the arbitrability of a dispute over vacation benefits in a collective bargaining agreement. In deciding that issue, the court examined the nature of both vacation pay and severance pay: Vacation pay, as well as severance pay, has often been said to be in the nature of deferred compensation, in lieu of wages, earned in part each week the employee works, and payable at some later time. In the case of vacation pay, the future date is usually fixed; with severance pay it is dependent on termination of employment.

In this sense such benefits “accrue” during the work year, not merely on the date when they become payable. Botany Mills, Inc. v. Textile Workers Union of Am., 50 N.J.Super. 18 , 141 A.2d 107, 113 (1958)(emphasis added). See also Owens v. Press Publ’g Co., 20 N.J. 537 , 120 A.2d 442, 446 (1956)(“In a real sense, [severance pay] is remuneration for services rendered during the period covered by the agreement”). Given the broad language of the statute and its remedial purpose, we conclude that the scope of Maryland’s Wage Payment Act extends to the type of severance pay that represents deferred compensation for work performed during the employment.

Thus, a severance benefit that is based on the length and/or nature of the employee’s service, and promised upon termination, may be recoverable under the Wage Payment Act. ⁶⁴⁵ The problem for Stevenson, though, is that her Termination Compensation does not fit this description. After examining Stevenson’s employment agreement, we conclude that the Wage Payment Act does not provide her a remedy for BB & T’s underpayment of Termination Compensation. We explain. Unlike severance pay that is tied to length of employment, Stevenson’s contractual severance benefit compensates her for the nearly two years remaining in her three year employment term.

The terms of the employment contract make it clear that Stevenson’s Termination Compensation is payment for her agreement not to compete following termination. Stevenson’s right to receive Termination Compensation is explicitly tied to her duty not to compete with the bank after the end of her employment: [Section 4(d)]: If Employee’s employment is terminated by Employer for reasons other than Just Cause ... at any time, Employee will be subject to the [non-compete] provisions of Section 4(a) until the later of: (i) the first anniversary of Employee’s termination or (ii) the date as of which Employee ceases to receive Termination Compensation as provided in Section 6(e).... [Section 6(c)]:.... Notwithstanding anything in this Agreement to the contrary, if Employee breaches [the non-compete provisions in] section 4(a) of this Agreement during the period that [s]he is receiving Termination Compensation, Employee will not be entitled to receive any further Termination Compensation!.] (Emphasis added.) The cross-referenced provisions in Stevenson’s employment agreement establish that, even if Stevenson’s Termination Compensation fits the definition of a “wage,” in that it was “remuneration promised for [Stevenson’s] services” in refraining from competing with the bank, 9 that wage was not “due for ⁶⁴⁶ work that [Stevenson] performed before the termination of [her] employment[.]” See LE § 3-501(c), § 3-505. The Termination Compensation was promised to Stevenson in exchange for the 23 months she agreed to refrain from competing with the bank, not for the 13 months she actually worked at BB & T. Given that the payment was explicitly a quid pro quo for this non-compete, Stevenson could not possibly “perform all the work necessary to earn” the Termination Compensation until after her 13 month employment ended.

Cf Medex, 372 Md. at 36-37 , 811 A.2d 297 . In summary, Stevenson does not have a Wage Payment Act claim with respect to the bank’s underpayment of Termination Compensation because (1) LE section 3-507.1 may be invoked only when the employer “fails to pay an employee in accordance with section 3-505,” (2) LE section 3-505 applies only to employers who do not promptly pay all “wages due for work that the employee performed before the termination of employment[,]” and (3) Stevenson’s Termination Compensation was not payment “for work [she] performed before the termination of employment.” A contrary conclusion would require us to ignore the limiting phrase “due for work performed before termination” in section 3-505. We may not do so. See Whiting-Turner, 366 Md. at 304 , 783 A.2d 667 .

As the Court of Appeals emphasized in Whiting-Turner and Medex, “an employee’s right to compensation vests [only] when the employee does everything required to earn the wages” and the Wage Payment Act affords relief only when the employee “ha[s] performed all the work necessary to earn the [compensation]” ⁶⁴⁷ before termination. See Medex, 372 Md. at 37, 41 , 811 A.2d 297 ; Whiting-Turner, 366 Md. at 304-05 , 783 A.2d 667 . We therefore find merit in BB & T’s cross-appeal challenging the Wage Payment Act judgment. We must vacate that judgment and remand for further proceedings, as we shall discuss in greater detail following our consideration next of the primary issue raised by Stevenson’s appeal.

See infra Section III.C. III. The Trial Court Erred In Ruling As A Matter Of Law That Earnings From The Exercise Of Stock Options Were Excluded From Termination Compensation In her appeal, Stevenson challenges the trial court’s decision to remove from the jury the issue of whether her stock option profits should have been used in calculating her Termination Compensation. The Termination Compensation that BB & T voluntarily paid Stevenson reflected Stevenson’s 1998 salary income, but excluded the $162,601.86 in gross earnings from her exercise of stock options during that period. Stevenson argues the bank’s failure to use these stock option profits to calculate her Termination Compensation resulted in a significant underpayment, in breach of her employment contract.

Section 6c of Stevenson’s employment agreement defines-“Termination Compensation” as the highest amount of the annual cash compensation (including cash bonuses and other cash-based benefits, including for these purposes amounts earned or payable whether or not deferred) received from Maryland Federal or Employer during any of the three calendar years immediately preceding such termination[.] (Emphasis added.) In Stephenson’s view, “other cash based benefits” includes her stock option earnings because (1) the meaning of Termination Compensation under the contract is ambiguous and (2) ⁶⁴⁸ Halleck explicitly told her that her stock option profits would .be treated as “cash based benefits,” while she was in the process of deciding between BB & T’s offer and the presidency of another bank. In BB & T’s view, any discussion between Halleck and Stevenson regarding the meaning of “other cash based benefits” is immaterial because such earnings are neither “cash based,” nor “annual cash compensation,” nor “received from Maryland Federal or [BB & T].” A. The Trial Court’s Rulings The trial court initially ruled that the Termination Compensation provision is ambiguous due to the disputed meaning of “other cash based benefits.” On the first day of trial, while considering pre-trial motions, the court pointed out the uncertain meaning of this phrase: The Court: It amazes me.... I have had several major cases with banking institutions, ... and the documents were written, in my opinion, as if they were written by a second year law student---- [T]hat could have [been] explained with another couple sentences what the parties meant, but it did not. Now, ... there are ambiguities in the direct language.

For example, ... [o]ther cash based benefits. Now, that’s as clear as mud. Other cash based benefits. (Emphasis added.) Rejecting the bank’s argument that “other cash based benefits” clearly excludes earnings from the exercise of stock options, the court acknowledged that the phrase “other cash based benefits” is “qualified by[,] as is the entire annual cash ■compensation^” the phrase “paid by the employer or Maryland Federal.” Notwithstanding the latter term, the court found that portion is ambiguous.... [A] reasonable person similarly situated at the time could read and other cash based benefits in a number of ways, received from the employer. ⁶⁴⁹ Because of this ambiguity, the trial court allowed Stevenson to testify about pre-contractual discussions concerning the meaning of “other cash based benefits.” On direct, Stevenson related that she “asked Mr. Halleck what did cash based benefits mean.” [H]e assured me that, the cash I received from my stock options was on my W-2’s, and .... that’s what cash based benefits were....

I was concerned with this particular question.... I was giving up a pretty good package [with a competitor bank] if I accepted the position. So, I wanted to make sure that it would be advantageous for me to stay with BB & T, to sign the contract with BB & T.... I wanted to verify -with him what other cash based benefits included....

He assured me that cash based benefits was the cash I received from my stock options. Halleck disputed Stevenson’s testimony. He testified that he never discussed the meaning of “other cash based benefits” with Stevenson, and denied telling her that stock option earnings would qualify as income for purposes of her severance package. After hearing that testimony, as well as testimony about the mechanics and reporting practices involved in the exercise of Stevenson’s stock options, the court reversed its earlier holding that the Termination Compensation provision was ambiguous.

The court reasoned that any ambiguity in the phrase “other cash-based benefits” was eliminated by the ensuing phrase “... received from Maryland Federal or employer.” The court explained why it believed Stevenson’s Termination Compensation could not include her stock option profits: I’ve got ... problems with including the monies earned from the stock option plan as termination comp.... [Reading it in a light most favorable to [Stevenson], and mindful that the [bank] drafted this agreement, it’s inescapable that the words [”]received from Maryland Federal or employer[”] ... do not fit a situation where a stock option is exercised.... It’s the right to purchase company stock at a ⁶⁵⁰ fixed period of time. That’s all a stock option is. That may- or may not be exercised.

However, the moment it is exercised, that gives the right in exchange for the amount involved, the employee to purchase company stock at that price for however brief a period of time____The stock is then sold on the market, and at whatever price it’s sold at,