Two former City bankers have lost their appeal against Investec Bank for multi-million pound bonuses in Brogden & Anor v Investec [2016] EWCA Civ 1031.
The former head and deputy head of Investec’s structured equity derivatives desk argued they had agreed to move to the bank after being promised bonuses of £6.2m and £3.8m, respectively, in their first year of employment, on top of their salary. They claimed that, in subsequent years, they were told their bonus would depend on the profitability of the desk.
The dispute centred on the meaning of “economic value added”, on the basis of which their bonuses were to be calculated.
The bankers said the bonuses should relate to how much the bank benefited from their activities, best calculated by referring to the cost to the bank if it had raised an equivalent amount on the capital markets. They argued that the chief executive of Investec had made an oral agreement with them that special provisions would apply when determining their bonuses.The bank countered that its established practice was to take all areas of activity into account and base bonuses on profits for the business as a whole.
Matthew Shankland, partner at Sidley Austin, which acted for Investec, said: “The judges have made it clear that the courts should not strain contractual construction to find discretions which do not exist. They have ensured that this claim did not undermine the bank’s longstanding policies and clear contractual arrangements with employees.”
