In a judgment handed down today, two former executive directors of Lloyds Bank have succeeded in their application for summary judgment for an award of shares.
Mr Daniels and Mr Tate sought an order for the transfer of shares that they claimed were due to them under a long tem incentive plan with the Bank. The Bank claimed that it was entitled to withhold the shares because of a discretionary rule in the rules of the plan which had been introduced after the expiry of the performance period under the plan and which, they said, enabled them to cancel an award of shares and to do so without notice to the participants. The Bank said that its Board was entitled to refuse to award the shares and that it had done so.
Mrs Justice Cockerill said that the discretionary rule was invalid and that Lloyds were not entitled to introduce it since it would amount to a power to retrospectively rewrite the terms of the long term incentive plan. This point of law was suitable for summary determination because it was not necessary to decide it by reference to assumed facts and there was no suggestion that the issue of construction would be informed by any factual matrix not before the court.
The Judge said that in any event, the awards to Mr Daniels and Mr Tate had vested following a decision of the Remuneration Committee, which was tasked with making that decision under the plan rules. The Remuneration Committee had determined that the performance conditions under the plan had been met and the shares were therefore to be transferred. The Bank’s Board had purported to exercise a further discretion thereafter to deny the transfer of shares, but it had no power to do so.
The Bank’s reliance on an exclusion clause also failed.
The Court awarded Mr Daniels and Mr Tate their shares under the plan together with damages and ordered the Bank to pay their costs.
David Craig QC and Iain Quirk acted for Mr Tate. Andrew Hochhauser QC and Jane Russell acted for Lloyds Bank.
