Bank executives lose court bid to have bonuses paid

The High Court has today dismissed two senior bank executive's claims that their former employers in Dublin owed them ten of thousands of euros in unpaid bonuses.

Roland Lichters and Jurgen Hass, both with addresses in Dusseldorf, Germany, sued Depfa Bank plc, with registered offices at Commons Street, Dublin for alleged breach of contract and restrain of trade by deferring part of their bonus for work they had done in 2007.

Under the terms of the bonus Mr Lichters, in early 2008, received €200,000 cash with an addition €180,000 cash payment deferred. Mr Hass who was paid a bonus of €40,000 had an additional payment of €40,000 deferred.

Both left the company in 2008 which resulted in the bank's decision not to pay them the deferred bonuses. They claimed the bank had wrongfully withheld the deferred payments from them.

They further argued the bank was not entitled to defer any part of their bonus. Both sought judgment against Depfa for the amounts withheld.

Depfa denied their claims, and argued it was entitled to defer the awards. The sums, it claimed, were only payable if the pair had stayed on with the bank until 2010.

In his judgment today, dismissing both banker's claims, Mr Justice John Hedigan said both men had "fallen a long way short" of meeting the proofs required to overturn the bank's decision not to pay the deferred bonuses.

The Judge said Mr Lichters was employed with Depfa for several years before taking up the post in Dublin in 2004 as Head of Global Market Risk. Mr Hass took up a position as Associate Director Group Strategy with Depfa in Dublin in 2002.

The Judge said both men claimed it was a term of their original contract of employment they would be paid remuneration plus a bonus, paid every February for work done each calendar year.

The bonus, the terms of which the Judge said were discretionary, initially consisted of a cash payment and a stock option with the stock element being deferred for a period of up to three years. This was done with a view to encourage staff to stay in the bank's employment.

Depfa was taken over by the German bank, Hypo Real Estate, in October 2007 and became a wholly owned subsidiary of Hypo.

The takeover of Depfa by Hypo, which the Judge said precipitated the proceedings, resulted in a change in how the bonus arrangements were structured. It resulted in a change to the bonus scheme, which both men claim they never agreed to, as the bank was no longer in a position to award stock options.

The bonus package, the court noted was then split into a cash award and a deferred cash award. For 2007 Mr Lichters received €200,000 in cash with a deferred payment of a €180,000. Mr Hass received a €40,000 bonus cash, plus a deferred cash payment of €40,000.

The Judge said both plaintiffs left the bank in April 2008 to work for competitors, and were not paid the deferred cash bonus. By leaving the bank they had forfeited the deferred cash award.

The Judge added that the bonus scheme applied by the bank following the takeover was "a fair and reasonable one and was in there interests of the both the the plaintiffs and all the employees at the time."

The Judge also said he was taking into account the bank's "absolute discretion" as to whether to award a bonus.