Investec Bank has won a three-year bonus battle with two former employees.
The High Court handed Investec a comprehensive victory against Andrew Brogden and Robert Reid, the former head and deputy head of its structured equity desk in London.
The pair joined Investec from Santander in 2007 and had claimed in excess of £6 million in bonuses for the financial year 2010/2011. This was despite the business making substantial losses.
Brogden and Reid had claimed that their bonus formula had been pre-agreed in an oral contract with the bank and was intended to operate in a way which ignored the actual profit and loss of their business.
They claimed that, instead of reported profit and loss, their bonuses were to be based on economic accounting measures related to theoretical savings made by the bank calculated by reference to rates in the bond market.
All their claims were dismissed with costs and the pair have to pay Investec £1.5 million in legal costs. They were denied permission to appeal against the judgement.
Investec's London chief executive, David Van Der Walt, said in a statement: 'We are delighted with this result. Investec had to take a stand in this matter, we had to do the right thing by our shareholders and our dedicated employees. This was a baseless claim, and an unwarranted attack on our institution, our culture and values.'
He added: 'The judge has rejected the claims in their entirety and found that we operate a fair and rational bonus system which rewards those who generate returns for our stakeholders and clients. It is unfortunate that these claims were ever issued, but we move on from here vindicated in our approach.'
Justice Leggatt said he regarded their claim that an oral agreement was made to use the 'institutional market rate' in calculating their bonuses as 'wholly incredible'.
Leggatt also pointed out there was no documentary evidence or proof of such an agreement. The '(second reason) why I regard the claimants case as incredible is that throughout the period of four years during which they were employed by Investec, not once did they suggest that the agreement now alleged had been made or allude to its existence'.
The judge went to say that Brogden's account of events 'does not stand a moment's serious scrutiny' and described the claimants' bonus claims as 'commercially absurd'.
The case was managed by Investec's general counsel Lauren Ekon, who instructed Sidley Austin partner Matthew Shankland and Jonathan Nash QC of 3 Verulam Buildings.
Shankland said: 'This is the clearest of victories for Investec and the judgment is notable for the guidance that it provides on the role of discretion and rationality in the bonus process.
'Investec deserve this success, their senior management took a principled approach against an unmeritorious claim and Leggatt found that they were fully justified in doing so.'