Victoria von Wachter explains how Keen restricts the scope of possible challenge to discretionary bonus decisions
City traders and bankers are well known for having to carry their remuneration home in a wheelbarrow. In many cases a significant part of this remuneration takes the form of bonuses which depend on the ability of Gordon Gekko figures to deal with the hype, hunches and predictions of the
future. Huge amounts can be gained and lost on intuition, and rewards are commensurate with performance.
In Keen v Commerzbank AG [2006] EWCA Civ 1536, [2006] All ER (D) 239 (Nov) the Court of Appeal considered the contractual position with respect to the award of bonuses. The case concerned a city trader for the investment banking division of the defendant bank.
Background
James Keen earned a base salary plus the facility for megabucks from bonuses. The canny bank had framed the contract such that its award was discretionary:
“The decision as to whether or not to award a bonus, the amount of any award and the timing and
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