Bonus Case Begins

A court case between Dresdner Kleinworts (now Commerzbank) and former and current employees has begun.

The case centres around a promise made by Stefan Jentzsch, former head of Dresdner’s corporate and investment banking team, that a guaranteed bonus pool of € 400 million had been created for front and middle office staff to retain them. The promise was made verbally at a “town hall” meeting.

Lawyers are arguing that this is a “binding and enforceable contractual promise”.

Commerzbank is arguing that Dresdner introduced a material adverse clause allowing the bank to review bonus awards if material deviations occurred in the bank’s revenues. At the time, Dresdner was on an FSA watchlist through fears that staff would depart given the bank’s precarious position.

The case is fascinating in that it challenges the old City principle of “my word is my bond”.