Morgan Stanley Paris Bonus Case May Change Banker Pay in Europe
It’s a case that will go all the way to France’s Supreme Court whoever wins and is set to become an important precedent for banker pay across the country, if not the European Union.
That, at least, is according to the lawyer for former Morgan Stanley deal maker Bernard Mourad, who says the American lender unfairly withheld $1.5 million in deferred pay a year after he raked in more than $100 million in fees.
“There isn’t just one Mr. Mourad, there are many,” the lawyer, Eric Manca, said in an interview Tuesday morning after a brief hearing at the employment tribunal in Paris where he pleaded Mourad’s case for a second time. “It’s become a battle of principles and is a case that will go to the Cour de Cassation, no matter the outcome.”
The two sides are arguing over whether Mourad, who quit Morgan Stanley in 2015 to become chairman of French billionaire Patrick Drahi’s Altice Media Group, knew about the terms of a compensation scheme designed to “reward loyalty” tied to continued presence at the firm. But the case also raises a broader question of whether New York law that applies to Wall Street banks trumps French and European Union legislation when it comes to how American bank executives in Paris, London or Frankfurt are compensated.
Francois Farmine, Morgan Stanley’s lawyer in the case, said Mourad was well aware of how the loyalty scheme worked and that New York law should prevail in the case. Hugh Fraser, a spokesman for Morgan Stanley, declined to comment.
Manca argues that Morgan Stanley’s compensation scheme is illegal under French law if Mourad did not give his express consent to it, which he didn’t, and is illogical to boot.
“Imagine you’ve worked the month of April but your employer says you’ll only be paid in three years,’’ said Manca. “That’s wrong.’’
Mourad, who left Altice in 2016 to take a role on Emmanuel Macron’s presidential campaign, is seeking 160,000 euros ($181,000) in damages on top of 1.3 million euros in deferred pay for work he performed between 2012 and 2014 -- the vast majority in shares.
The incentive plan, which was set up in the U.S., implements a delayed vesting schedule to acquire the rights to the payout, Farmine told the court. There is an internal website for eligible employees that explains how the scheme works, which Mourad consulted nearly 100 times, Farmine said.
“Mr. Mourad understood this system perfectly well,’’ said Farmine. “It’s pretty implausible that he only learned about it in the course of debate at this employment tribunal.”
Manca says that just because his client consulted the site to better understand the way the scheme worked, it doesn’t mean he gave his consent to the New York system prevailing over French law.
“The bank is American and put this in place because it’s impossible to put in 50, 60 or 70 different plans for all the different countries where senior management may be based,’’ said Farmine. “That’s why New York law applies here.’’
The employment tribunal is scheduled to rule on the case on June 25.
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