Two former Investec Bank Plc derivatives traders lost a court fight over 6.76 million pounds ($11.4 million) in unpaid bonuses they said they were owed after their ex-employer failed to honor an unwritten agreement.
Judge George Leggatt said that while the pair are “decent and highly talented individuals,” they “had no right to be paid any bonus for the 2010-2011,” financial year.
Andrew Brogden and Robert Reid, ex-head and deputy head of the bank’s structured equity derivatives desk, said at a July trial they agreed to join Investec on the understanding that their bonuses would be calculated based on an “economic value added” formula and it was orally agreed that an institutional market rate would be used, rather than a discretionary component. The bank had described their argument as “fiction.”
Financial firms have come under intense scrutiny from governments and regulators to cut excessive compensation, leading to legal skirmishes between banks and bankers over bonuses, as well as European Union-wide curbs on payments that reward risk-taking.
“I doubt there are many outside the world in which the claimants operate who would think they were under-rewarded by Investec,” Leggatt said in his ruling. He denied the pair permission to appeal.
Doyle Clayton Solicitors Ltd., who represented Brogden and Reid, didn’t immediately respond to a request for comment.
“This was a baseless claim, and an unwarranted attack on our institution, our culture and values,” said David Van Der Walt, the chief executive officer of Investec’s London unit. “It is unfortunate that these claims were ever issued, but we move on from here vindicated in our approach.”
The bank said during the trial it paid bonuses of 150,000 pounds to Brogden and 100,000 pounds to Reid in June 2011, which the bankers accepted.
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