The so called “shareholder spring” that has brought down three top chief executives may be tackling excessive executive pay but it seems to have done little to curb the voracious appetites of bonus hungry bankers.
That seems to be the conclusion after more than 100 London based bankers won their claim for around $68 million in unpaid bonuses against Germany's Commerzbank. At least five people will get their hands on a minimum of $1.6 million each
The case centres on 104 people working in the investment banking division of their former employer, Dresdner Kleinwort, now owned by Commerzbank. The staff say that the bonuses should be paid because of agreement signed in 2008.
Commerzbank took the case to the High Court in London claiming that the awards were discretionary but this was thrown out by the judge Mr. Justice Owen.
The decision was seen as a personal blow to the chief executive of the German banking giant Martin Blessing. Commerzbank said it would appeal.
Clive Zietman, head of commercial litigation at Stewarts Law, who represented 83 of the bankers, said: "In our view it was quite wrong of the bank to renege on its commitment. By doing so, it acted contrary to well-established principles of English contract and employment law. It would be a pity if this case were to continue since it would seem to us that the only beneficiaries of further action will be the lawyers, not the parties," he added.
The biggest claimants include Jonathan Powell who was due £1.34m, Jeremy Thomas £1.28m, Ian Robertson £1.21m, Steven Garrett £1.16m and Amir Berberian £1.03m.
If interest for the last three years is paid on the unpaid bonuses, the final figures are likely to be much higher.A further 21 bankers were represented by Mishcon de Reya.
The Commerzbank case centered on its claim that after it bought Dresdner in late 2008 profit collapsed so it did not have to pay out the bonuses because of a "material adverse change" in its economic fortunes.
Dresdner racked up huge losses and Commerzbank required a multibillion-Euro bailout by German taxpayers. A Commerzbank spokesman said: "The bank believes that the decision to reduce discretionary bonuses in light of €6.5bn of losses at Dresdner Kleinwort for 2008 was responsible and justified. The main argument revolves around whether the announcement on 18 August amounted to a legally binding agreement. It is the bank's submission is that there is every prospect that the Court of Appeal would come to a different view on this matter."