JEF - Jefferies Group

[biaggio]

Agree with you guys. Hopefully he comes through. Will feel better and less critical then.

[fareastwarriors]

more JEF CEO pay news

http://dealbook.nytimes.com/2013/01/30/the-rich-math-behind-the-handler-handout/

One of Wall Street’s relative minnows is getting a whale-size paycheck. The Jefferies Group is paying its boss, Richard B. Handler, $19 million for the year to November 2012.

That might not sound too rich considering that the Goldman Sachs chief executive, Lloyd C. Blankfein, raked in $21 million. But Jefferies is a much smaller firm, meaning Mr. Handler’s compensation equates to a huge 5.9 percent of earnings

[Grenville]

My two cents on Richard Handler's pay:

1. Read Handler's 10 page letter during the misinformation attack in Nov 2011.

2. Brian Friedman and Handler devised and executed a plan that saved Knight Capital and grossed the firm a huge mark to market profit.

3. Friedman and Handler requested their bonus to be 0 in 2011.

4. For 2012 they asked for their bonus to be reduced.

5. Joseph Steinberg & Ian Cumming are both on the compensation committee for JEF.

2012 10K:
According to the Pay for Performance program for Mr. Handler, his bonus should have been $8,116,669, but Mr. Handler volunteered to reduce his bonus compensation to $5,000,000, for a reduction of $3,116,669. The subcommittee of the Compensation Committee accepted Mr. Handler’s proposal and awarded him a $5,000,000 cash bonus for fiscal 2012.

According to the Pay for Performance program for Mr. Friedman, his bonus should have been $6,087,502, but Mr. Friedman volunteered to reduce his bonus compensation to $3,750,000, for a reduction of $2,337,502, which was proportionately commensurate with Mr. Handler’s voluntary reduction. The subcommittee of the Compensation Committee accepted Mr. Friedman’s proposal and awarded him a $3,750,000 cash bonus for fiscal 2012.

2011 proxy:
"In early 2011, the Committee established a 2011 Pay for Performance program for Mr. Handler that included a Base Salary, Cash Bonus and Long-Term Equity Incentive. According to the Pay for Performance program for Mr. Handler, his bonus would have been $4,879,565, but Mr. Handler requested that the Committee exercise its negative discretion to reduce this award to zero. "

[twacowfca]

My two cents on Richard Handler's pay:

1. Read Handler's 10 page letter during the misinformation attack in Nov 2011.

2. Brian Friedman and Handler devised and executed a plan that saved Knight Capital and grossed the firm a huge mark to market profit.

3. Friedman and Handler requested their bonus to be 0 in 2011.

4. For 2012 they asked for their bonus to be reduced.

5. Joseph Steinberg & Ian Cumming are both on the compensation committee for JEF.

2012 10K:
According to the Pay for Performance program for Mr. Handler, his bonus should have been $8,116,669, but Mr. Handler volunteered to reduce his bonus compensation to $5,000,000, for a reduction of $3,116,669. The subcommittee of the Compensation Committee accepted Mr. Handler’s proposal and awarded him a $5,000,000 cash bonus for fiscal 2012.

According to the Pay for Performance program for Mr. Friedman, his bonus should have been $6,087,502, but Mr. Friedman volunteered to reduce his bonus compensation to $3,750,000, for a reduction of $2,337,502, which was proportionately commensurate with Mr. Handler’s voluntary reduction. The subcommittee of the Compensation Committee accepted Mr. Friedman’s proposal and awarded him a $3,750,000 cash bonus for fiscal 2012.

2011 proxy:
"In early 2011, the Committee established a 2011 Pay for Performance program for Mr. Handler that included a Base Salary, Cash Bonus and Long-Term Equity Incentive. According to the Pay for Performance program for Mr. Handler, his bonus would have been $4,879,565, but Mr. Handler requested that the Committee exercise its negative discretion to reduce this award to zero. "

Outstanding!

[Kraven]

In my view all the consternation about Handler's pay package is a lot of wasted energy.  Here is a truism for you - Wall Street overpays it's people and pays them more than generously.  JEF is an investment bank.  Handler runs JEF.  Therefore, handler will be overpaid and be paid more than generously.  If you don't like it, don't invest in JEF (or now LUK).  I mean what's the thought, that he is going to be some guy that takes $100k a year?  Come on, what's the difference between making $20 mil and making $18 mil as far as the angst is concerned?

[biaggio]

In my view all the consternation about Handler's pay package is a lot of wasted energy.  Here is a truism for you - Wall Street overpays it's people and pays them more than generously.  JEF is an investment bank.  Handler runs JEF.  Therefore, handler will be overpaid and be paid more than generously.  If you don't like it, don't invest in JEF (or now LUK).  I mean what's the thought, that he is going to be some guy that takes $100k a year?  Come on, what's the difference between making $20 mil and making $18 mil as far as the angst is concerned?

Kraven, you re a wise man + you are probably right.

Its just that I would rather have the CEO, "my partner" as Giofranco" would put it, to be concerned with the financial well being of the organization as a whole rather than just enriching himself. I want him to make money with me not off of me (or off of share holder capital). I prefer the frugal partner. At the same time I don t want to be stupid about it.

20 million or 18 million no big deal. Every year for the next 10 years? As long as I am enriched as well I probably will overlook this most likely.

It concerns me that you would need to pay your CEO so much. Kind of the opposite of what you normally look for - a good business that any "idiot" could run. Investment banking, insurance, capital allocating- all operations where the management is very important + probably smart to pay them well.

[Kraven]

In my view all the consternation about Handler's pay package is a lot of wasted energy.  Here is a truism for you - Wall Street overpays it's people and pays them more than generously.  JEF is an investment bank.  Handler runs JEF.  Therefore, handler will be overpaid and be paid more than generously.  If you don't like it, don't invest in JEF (or now LUK).  I mean what's the thought, that he is going to be some guy that takes $100k a year?  Come on, what's the difference between making $20 mil and making $18 mil as far as the angst is concerned?

Kraven, you re a wise man + you are probably right.

Its just that I would rather have the CEO, "my partner" as Giofranco" would put it, to be concerned with the financial well being of the organization as a whole rather than just enriching himself. I want him to make money with me not off of me (or off of share holder capital). I prefer the frugal partner. At the same time I don t want to be stupid about it.

20 million or 18 million no big deal. Every year for the next 10 years? As long as I am enriched as well I probably will overlook this most likely.

It concerns me that you would need to pay your CEO so much. Kind of the opposite of what you normally look for - a good business that any "idiot" could run. Investment banking, insurance, capital allocating- all operations where the management is very important + probably smart to pay them well.

I can't disagree with anything you said at all.  All very true.  I just think one needs to think about the arena in which they are applying their ideals.  Why do middling right fielders make $13 mil a year?  That's just how it is.  People don't like it, don't go to baseball games and don't watch them on tv.  Pretty soon the revenue will drop and those kinds of salaries won't be able to be paid.

JEF is an investment bank.  Bankers want to get paid.  That's the environment.  It's tough for me to really think about whether one gauges more than another, it's kind of all the same.  It's very hard to apply the Buffett ideals to IBs.  Handler isn't your partner.  He runs a business you (may) happen to have a share in.  He doesn't care about you.  It is what it is.  There's plenty of other businesses, but IBs are going to have over the top pay structures.  It will never change.  Even when they mess around with making it seem like everyone is taking less, it just gets picked up somewhere else with a wink and nod.

[roundball100]

[...]  Why do middling right fielders make $13 mil a year?  That's just how it is.  People don't like it, don't go to baseball games and don't watch them on tv.  Pretty soon the revenue will drop and those kinds of salaries won't be able to be paid.

Something must be going right if there is $13m/player per year available in the system.  Perhaps the analogy to draw here is that in both ML baseball, and investment banking, there are strong barriers to entry.  Otherwise, everyone would be launching their own ML team or league, or bank.

[racemize]

Crimson Wine spinoff:

http://finance.yahoo.com/news/leucadia-national-corporation-declares-spin-210500459.html

[scorpioncapital]

What about when a company founder or leader who develops the business gets shares out of thin air? And then sells it on the open market later on because he wants $$$ to spend? The sums there are much, much larger than any yearly compensation I've ever seen.