Ex-Davy employee sues over €260,000 bonus

A stockbroker is suing his former employer for €260,000 in deferred bonus payments.

Eamon Finnegan yesterday began a High Court case against stockbrokers, J&E Davy, seeking payment of bonuses he earned in 1998 and 1999.

Mr Finnegan worked for Davy between 1990 and 2000. He was an equity analyst until 1995, when he was promoted to the share trading desk.

The bonuses were tied to the firm's profitability and his own performance. In evidence, Mr Finnegan said the amounts were decided at a yearly meeting with his superiors, where his performance was assessed.

He did not receive a bonus in 1992, but in the other years between 1990 and 1997, he earned bonuses of between £3,000 (€3,800) and £30,000. The entire sum was paid shortly after the review.

In 1997, the firm began deferring part of the payments. The court heard that, at the beginning of 1998, he and Davy's then joint chief executive, Kyran McLaughlin (now a member of the board) agreed his bonus for 1997 at £100,000. He was paid £60,000 immediately, but £40,000 was deferred for a year. Its payment was conditional on him staying with the firm.

He objected to this, particularly the condition that he stay with the company. Mr McLaughlin told him that Davy's biggest shareholder, Bank of Ireland, stipulated that bonuses be paid in this way. He added that Mr Finnegan would receive the interest earned on the money.

A year later, his bonus for 1998 was set at £200,000, payable in three instalments, the first immediately, the second a year later and the third a year after that.

His 1999 bonus was fixed at £210,000, payable in three equal instalments over two years. All deferred payments depended on him remaining with the company.

He left Davy to join rival, NCB, in September 2000. As a result, he did get not one instalment of his 1998 bonus and two-thirds of his 1999 payment, a total equivalent to just over €260,000.

Mr Finnegan is claiming that Davy had no right to make such a radical change to the bonus payment system. He is also arguing that the condition demanding that he stay with the firm to receive the entire bonus was a restraint of trade.

J&E Davy intends arguing that Mr Finnegan knew that bonuses were only payable once the employee was working for the firm at the date of payment. The company will also say that bonuses are discretionary and that it is entitled to change the terms and conditions. The case resumes in seven days' time.