Bonus and Compensation Disputes

Compensation issues frequently arise in the financial services industry. Employment agreements are often negotiated detailing annual salaries and “discretionary,” “incentive” or “guaranteed” bonuses. For some employees, such as traders, investment bankers, senior managers or analysts, such bonuses comprise a significant portion of their annual compensation and may even exceed their base salary.

Retail brokers frequently receive up front bonuses or forgivable loans as an incentive to move from one brokerage firm to another. In the case of a merger between firms or the acquisition of one firm by another, select employees may be offered retention bonuses to incent them to remain at the newly combined entity.

While the financial arrangements described above frequently occur without any problems, there are nevertheless many instances of conflicts that erupt between an employee and his employer over compensation issues. Such conflicts may arise before, during or after an agreement is reached and employment has begun. In such instances, both the employer and the employee require the assistance of experienced securities employment attorneys like those at Lubiner, Schmidt & Palumbo.

One way to avoid conflicts or industry arbitrations involving employment agreements is to retain a knowledgeable securities employment attorney prior to entering into any type of employment agreement, retention bonus agreement, retired broker program agreement, etc. Experienced securities employment attorneys such as those at Lubiner, Schmidt & Palumbo can review the proposed agreement and advise an employee of the possible pitfalls, ramifications and longterm effects of the agreement. Lubiner, Schmidt & Palumbo securities employment attorneys can engage with counsel for the employer to insist on modifications to the proposed agreement for the benefit their client – and ultimately provide the client with the comfort of knowing that the agreement protects them as well as the employer.

Wall Street employs different types of bonuses for different employees. “Incentive” or “discretionary” bonuses are calculated based the performance of the individual, the individual’s group or department or the firm as a whole – or some combination thereof.

“Guaranteed” bonuses may be written into an employee’s contract. A retail branch office manager may receive a defined percentage of the branch office’s profit for the calendar year. Similarly, a trader may receive a percentage of the trading desk’s profit for the portion that she covers.

Unless specified otherwise in an employment agreement, bonuses in the financial services industry are often paid early in the first quarter of the year following the calendar year in which the bonus was earned. Employment agreements and firms’ employee handbooks/personnel policies routinely state that an employee must be employed on the date the bonus is to be paid in order to receive the bonus. What happens when an employee voluntarily resigns late in the calendar year, prior to the payment of the bonus he might have otherwise earned? What happens if an employee is terminated for cause late in the year? Lastly, what happens if that termination for cause was not justified?

In any of the scenarios described above, an experienced securities employment lawyer can assist an employee obtain all or at least a portion of his earned bonus. Notwithstanding the language of a contract or stated personnel policies, an employee may have strong, credible claims for at least a pro rata portion of the bonus he otherwise earned.

Similarly, brokers, managers and others often receive incentive compensation that vests over a period time. Under the terms of the firm’s personnel policies, it may be several years before an employee can collect that compensation. If an employee is wrongfully terminated or discharged prior to that vesting date, does the employee lose the right to collect those funds?

The experienced securities employment lawyers at Lubiner, Schmidt & Palumbo can insure that an employee is treated fairly and properly and receives all forms of compensation from her employer to which she is entitled.

If you are an employee embarking on a new job with an unsigned employment agreement in front of you, or believe you have not been paid compensation to which you are entitled, contact the securities employment attorneys at Lubiner, Schmidt & Palumbo for a consultation. We can fight for the monies which are owed to you.