Once, all investment banks announced their bonuses before Christmas and the holiday season was spent popping Dom Perignon or snivelling into Advocaat and lemonade. Now, most banks keep their employees in suspense over the holidays. Except the Canadian banks. And Jefferies.
Jefferies' bonuses were announced late last week. Coming on the back of a year when the U.S. 'independent' bank hired many tens of bankers in London and New York, built out its team in Frankfurt, hired in high yield in London, and put the finishing touches to a team of 80 equity research analysts in Europe, this year's awards were always going to be a curiosity - particularly as profits were down nearly 27% in the nine months to the end of August versus the previous year at the same time as headcount rose 7% and compensation spending fell 5%.
Whether Jefferies' most recent bonus round was good or bad, however, seems to be a function of who you speak to. In New York, one headhunter says he's been approached by Jefferies' M&A and leveraged finance bankers complaining of big cuts - something unverified by the bank and possibly reflective of a few disgruntled individuals. In London, some people are happy and some are not.
One junior in Jefferies' London equity research team claims several people were zeroed and others got bonuses of less than £5k. "There's a lot of frustration," he says. "We were told we were gaining market share and that revenues were up, and then this. It feels like we've been paid down in order to pay the people above us."
Some senior Jefferies bankers do indeed appear to be happier. One senior VP in investment banking Europe gave his bonus a score of eight out of ten. Another more senior equity researcher gave his bonus a score of six out of ten, which he said was better than last year's 4/10 score. A different junior equity research proclaimed himself happy with his payment which he said was good but not outstanding. This was the pay-off for working for an up and coming bank with expansionary aspirations, he said: "Our ambition is to become a real global players while competitors are shrinking."
Jefferies is't commenting on exactly what went down with its bonus round, so the truth remains a bit of a mystery. There are rumours that the investment banking pool was up in London, although one VP insists his bonus wasn't "that great" but adds that he wasn't expecting much anyway.
Jefferies has a different approach to variable pay than other banks. Senior staff typically get a percentage of their p&l. And while most banks pay a proportion of bonuses in deferred stock, Jefferies pays the entirety of its bonuses in cash (even in Eurpoe) and claws them back at a diminishing rate if employees leave within a three or four year period after receiving them. There's no sign that this is changing in the coming bonus round, although so far people have only been told their number and not the bonus structure. The structure will only become apparent after Christmas.
Photo by Hello I'm Nik 🇬🇧 on Unsplash
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