Morgan Stanley has emerged victorious in a legal battle to annul €1.4 million ($1.5 million) in deferred bonus payments awarded to a managing director who filed a lawsuit seeking the award after departing to join one of his major clients.
The Paris court of appeals ruled against Bernard Mourad, affirming that the bank’s cash and shares incentive schemes were designed to secure his long-term commitment. The judges emphasized that these schemes were separate from performance-related compensation, which was covered by his salary and discretionary bonus. Consequently, Morgan Stanley was deemed entitled to make the payout of deferred compensation contingent upon his continued employment at the bank until a specified date, without it being considered an unjustified or disproportionate restriction on his freedom to work.
This dispute has drawn attention to a practice seldom contested by departing employees, who often opt to waive deferred bonuses to avoid unwarranted scrutiny as they transition to new roles. Similar legal challenges have arisen in France in recent years involving institutions such as BNP Paribas SA, Edmond de Rothschild, and consultancy Bain & Co.
While Morgan Stanley declined to provide further comment aside from expressing satisfaction with the decision, Mourad’s attorney refrained from immediate commentary. However, it’s anticipated that the dispute will progress to France’s highest court, suggesting that the final resolution remains pending.
During the hearings, Mourad’s lawyer, Eric Manca, contended that the deferred bonuses were explicitly tied to performance, arguing that France’s highest court prohibits mandating an employee to remain with the company to receive staggered payments for work already completed.
However, Morgan Stanley countered with the assertion that Mourad implicitly accepted the rules governing the incentive programs, which resonated with the judges. The court of appeals highlighted that Mourad had received numerous emails and accessed a website outlining the conditions of the company’s deferred bonus plan nearly 100 times.
The judges ultimately determined that Mourad was not oblivious to the consequences of resigning, emphasizing that his actions caused him to forfeit rights to amounts they deemed unvested at the time of his departure—namely, nearly €1.2 million in shares and €250,000 for another bonus.
Regular Grievance
Employment laws in France have increasingly posed challenges for Wall Street banks operating within the country, a trend exacerbated by the relocation of staff to Paris following Brexit. This issue has gained prominence, with the co-head of Goldman Sachs Group Inc.’s Paris office advocating for “more flexibility” in response to what he described as the complexities of France’s labor market during a conference last month.
Amid its legal dispute with Mourad, Morgan Stanley’s legal team contended that his initial legal victory in 2019 has broader implications for France’s banking sector and has raised concerns at the governmental level. They argued that the case extends beyond the individual interests of Mourad and Morgan Stanley France.
Mourad’s departure from the US bank approximately ten years ago to join telecom magnate Patrick Drahi marked the beginning of a diverse career path. Despite his brief tenure at Altice Media, he has since held various roles, including involvement in Emmanuel Macron’s successful presidential campaign in 2017 and a short stint at Bank of America Merrill Lynch in Paris.