Gareth Hutchens Sydney Morning Herald September 19, 2012
THE former chief executive of St George Bank, Paul Fegan, has appeared in Federal Court to answer claims he engaged in misleading and deceptive conduct while head of the bank in 2008, in the lead-up to the bank's merger with Westpac.
A group of former St George bankers has claimed Mr Fegan made misleading and deceptive representations and acted deceitfully when he wrote to encourage them to remain with the bank while the merger went ahead.
In Mr Fegan's letter, dated June 18, 2008, he said the bankers would be entitled to an ''additional one-off incentive'' if the bank met its "earnings per share [growth] target for the 2007/2008 year'', but he did not specify what the target was.
The seven bankers say they believed that target was ''between 8 to 10 per cent'' because that was the bank's market guidance at the time. But when St George and Westpac merged in November that year - and after St George had achieved actual earnings per share of 8.3 per cent during the period - the bankers were made redundant and no bonuses were paid.
They allege they were not paid their bonuses because it emerged later that they needed to achieve an earnings per share growth of 10.1 per cent, a figure that was not included in Mr Fegan's letter.
But speaking in court yesterday, Mr Fegan - now a non-executive director with AMP - said he did not believe that information was left out of the letter deliberately.
''To incentivise employees, they had to achieve a minimum of 10.1 per cent to get their full [bonus],'' he said. ''I don't know why it was not included [in the letter].''
The court also heard from Sarah Elliott, who worked in the human resources department at St George at the time.
Ms Elliott said she thought the 10.1 per cent figure was not included in the letter because the bank was concerned that if its competitors got their hands on that information then they would be able to poach its staff by making them a better offer.
She said the 10.1 per cent figure was supposed to be communicated ''orally'' to the staff once they had received the letter from Mr Fegan.
She said it was often a "balancing act" between giving commercially sensitive information to employees and choosing to communicate that same information orally.