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Jefferies to Reclaim Cash Bonuses If Employees Join Competitors

Jefferies Group Inc., the investment bank that boosted staff after the financial crisis, said it will claw back 2011 bonuses from any employees who defect to competitors next year.

Jefferies will award discretionary cash bonuses with one-year restrictions, requiring they be repaid if workers join a rival firm during that period, according to a memo sent to employees today. Restricted cash paid in lieu of restricted stock at the request of employees is subject to a separate 20-month clawback, Chief Executive Officer Richard Handler and Brian Friedman, chairman of the New York-based firm’s executive committee, wrote in the memo.

“We believe this approach assures that our year-end compensation pool will only accrue to the benefit of those who are committed to the long-term success of our firm,” Handler and Friedman said in the memo, which was reported earlier today by Fox Business Network.

Jefferies set aside $1.17 billion for employee compensation in the first nine months of its fiscal year, amounting to about 59 percent of net revenue, according to the firm’s latest quarterly report. The one-year deferral applies to cash payments that aren’t already subject to other terms, such as contractual agreements, according to the memo.

“We are paying out a full compensation rate as a percentage of revenues (albeit revenues below our collective expectations), and the portion of our compensation that will be paid in cash is among the highest percentages of cash among our major competitors,” the two executives said in the memo.

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