Until recently, being chief executive officer of Jefferies was an exercise in getting shit on. As the man in charge for the last 13 years, Richard Handler has had to put up with a lot of hurtful remarks that, while nothing to the person tossing them off, undoubtedly stung quite badly. “Third-tier bank.” Place “I wouldn’t let my maid’s kid work.” “Poor man’s Morgan Keegan.” So you can imagine that after a string of victories over the last several months that included getting involved in the slaughterhouse business and paying all-cash bonuses unlike some people, Handler and Co. would be feeling pretty good about themselves and that after announcing to the world they were getting paid more this year than their counterparts at big kid banks, they’d be feeling REALLY good about themselves. That payday, however, did not go over well when input into Moody’s proprietary just-make-it-up credit-rating model, and now Handler’s plan to gather everyone up to watch as the board shoots his compensation out of a tee-shirt gun in hundred dollar bills is completely ruined.*
The credit rating agency said in a note on Monday that it regarded the paychecks awarded to the top managers — its chief executive, Richard B. Handler, and its executive committee chairman, Brian Friedman — as a potentially ominous event for bondholders. (In Moody’s words, “credit negative,” meaning that the pay could contribute to a downgrade of the investment bank’s debt rating.) Mr. Handler’s pay in particular drew a lot of attention. He earned about $19 million last year, including a $5 million cash bonus and a $13 million long-term equity incentive award. And he had the chance to earn about $39 million in restricted stock through 2015 if he met certain performance targets…“While Jefferies has outperformed its peers, an excessive focus on short-term compensation has been at the root of many outsized trading, credit and litigation losses at investment banks,” the Moody’s analysts wrote. They added that the firm has not put in place measures like longer award vesting periods and more expansive powers to claw back compensation.
You couldn’t have let him have this?
Moody’s Warns Jefferies on ‘Excessive’ Executive Pay [Dealbook]
Related: Bonus Watch ’13: Jefferies CEOs; Jefferies’ Investment Bank Will Fit In Nicely With Leucadia’s Casino And Slaughterhouse; Bonus Watch ’12: Jefferies Has Got Your Cold Hard Cash Right Here; Bonus Watch ’13: Jefferies Wonders Aloud How Its Ass Tastes
*A committee debated the denomination quite seriously, going back and forth over the merits of singles (takes longer, a plus), hundreds “(I don’t know, would $100 bills be impressive enough?”) and some combination thereof. Ultimately it was decided that $5 million in cash would still be a lot of 100s, but it was a tough one.