by: By Vanda Carson From: The Daily Telegraph April 03, 2012 7:41AM
MORE than 100 former staffers of St George Bank could be eligible for a cash bonanza after an embarrassing legal backdown by the bank that could cost it more than $3 million.
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In the Federal Court yesterday, the bank agreed to pay seven former staff the "retention incentive bonus" promised to 118 key staff nearly four years ago.
The bonuses were promised by then-St George chief executive Paul Fegan on June 18, 2008, and were aimed at keeping the senior executives at the bank during the group's merger with Westpac.
Many of the staff were currency traders and money market dealers who were in high demand at rival banks.
If the staff agreed to stay at the bank during the merger, and the bank achieved its earnings per share growth target in 2007-08, they would be paid a bonus.
The bonus was worth between $30,000 and $50,000 each, and was equal to 25 per cent of their bonus the previous year. The staff believed the target was between 8 and 10 per cent earnings per share growth, and the bank achieved 8.3 per cent in October 2008.
But the target was changed to 10.1 per cent without staff knowledge, the court heard.
The bank yesterday agreed in court to pay the seven former executives.
It will also pay interest dating back to November 13, 2008 - the day the bonus was due to be paid. The legal backdown comes two years after a group of staff sued the bank over the bonus and redundancy payouts.
The bank's change of tune was announced by its barrister Noel Hutley SC in court on March 12. Mr Hutley told the court he believed the bank had a contractual liability to pay the bonus.
Barrister for the bank, Mark Steele, yesterday told the court "the bank does not accept it was in any way improper for the bank to have defended (the claim for the bonus)".
Outside court, bank spokesman Coran Lill denied that as many as 118 staff would be eligible to receive the bonus.
Of those staff who were eligible for the retention payment, 15 settled lawsuits with the bank last year and three were settled yesterday.
Those to settle yesterday were St George's former head of group tax Lucky Poulos, former St George foreign exchange trading manager Stuart Moore and former manager of institutional fixed-income sales Danielle Lavars.