Contractual rights and discretionary bonus pools: watch what you say

In Dresdner Kleinwort Ltd & Commerzbank AG v Richard Atrill & ors and Fahmi Anar & ors [2013] EWCA Civ 394, a ‘town hall’ announcement made by the chief executive officer of Dresdner’s investment banking business (known as Dresdner Kleinwort, or DK), to the effect that a ‘guaranteed’ minimum bonus pool would be made available to DK employees, was a contractually binding promise.

Made against the backdrop of the unfolding global financial crisis in 2008, an anticipated mass exodus of key employees and immediately prior to Dresdner’s acquisition by Commerzbank, DK could not renege on this contractual commitment to employees by subsequently introducing a ‘material adverse change’ (MAC) clause that attempted to make payment of the provisional bonus awards conditional upon the bank’s financial performance.

In spring 2008, Dresdner Bank AG announced its intention to separate its commercial and investment banking divisions through either a sale, downsizing or winding down of DK. Many investment bankers began jumping ship and considering resignation. The (then) FSA put Dresdner’s UK-regulated entities on its ‘Watch List’ and required it to take action to reduce the risk of losing key staff…

If you are registered and logged in to the site, click on the link below to read the rest of the Allen & Overy briefing. If not, please register or sign in with your details below.

Analysis from The Lawyer

  • Panel reviews

    Panel reviews 2014: The chosen ones

    Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all

  • training

    Accutrainee: Revolution postponed

    At the time of its launch Accutrainee was described as a revolutionary change to the training model. Has it proved to be so? Not really.

View more analysis from The Lawyer

Overview

One Bishops Square
London
E1 6AD
UK
http://www.allenovery.com

Turnover (£m): 1,189.00
No. of lawyers: 2,304
Jurisdiction: UK
No. of offices: 11
No. of qualified lawyers: 273