Alexiou v Australia and New Zealand Banking Group Limited

ASIC began investigating whether banks had manipulated the bank bill swap rate. In November 2014, ANZ stood down seven traders while that investigation continued. Mr Alexiou was the most senior of them.

The traders kept their base pay, but that description hid the commercial effect. Mr Alexiou's remuneration depended heavily on bonuses. The stand-down had the practical effect of preventing him from performing his duties and therefore from having the opportunity to earn further performance bonuses. The stand-down was reported publicly, and he was later named in the financial press.

ANZ's review of trading communications also uncovered Bloomberg chat messages that it considered unprofessional and contrary to workplace policies. Mr Alexiou accepted that the language was inappropriate. He argued that it reflected the culture in Global Markets at the time and that he had later stopped using that language.

ANZ gave him a detailed schedule of messages, conducted a disciplinary process and terminated his employment on 1 September 2015. It then dealt separately with his bonus and deferred shares.

The incentive arrangements produced three different consequences. ANZ later decided not to grant the provisionally determined 2014 bonus after deferring a final decision in November 2014, treated one unvested share tranche as automatically forfeited, and purported to claw back four other deferred-equity tranches.

The successful contract claim concerned only the four discretionary clawbacks. The Court analysed the source of each consequence instead of assuming that the termination decided every entitlement.

The clawback clause did not simply ask whether Mr Alexiou had engaged in serious conduct. It required the decision-maker to consider whether information that came to light after the grants meant the original grants were not justified.

ANZ's recommendation and approval papers focused on policy breaches and the seriousness of the chat messages. The Court held that the decision process did not record or communicate the contractual state of satisfaction required by the clause. It accepted Ms Babani's affidavit evidence that she personally formed that view, but it was not recorded in contemporaneous materials and did not become the recorded view of the CRG in the papers sent to Mr Liebelt.

The Court held that the documentary record did not establish that the contractual view required to trigger clawback had been formed through ANZ's decision process. The Court accepted Ms Babani's affidavit evidence that she personally formed that view, but it was not recorded in contemporaneous materials and did not appear in the papers sent forward for approval. The Court directed the parties to calculate the resulting judgment amount.

Mr Alexiou's adverse action and whistleblower claims were dismissed. The Court's reasons examine those claims in detail, including the alleged complaints and the reasons for ANZ's decisions, but they did not provide an alternative statutory basis for recovery.

Before reducing or recovering an incentive, read the employment contract, plan rules, grant conditions and delegation together. Then separate each proposed consequence and identify its own legal source.