Moody's rips Jefferies' pay


I noted recently that there's a new kingpin on Wall Street in terms of compensation.

For the second time in three years, Richard Handler, CEO of Jefferies has emerged as the industry's the top paid CEO. For work rendered in 2012, the Jefferies board's compensation committee gave Handler $45.2 million in pay, according to the SEC's calculation of compensation. This means he's better paid than even JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein.

But while some might be celebrating, that sort of pay will likely draw some criticism. Moody's has called the massive compensation package "credit negative" for bondholders.

According to Forbes, "the size and form of the award (the short vesting period) for Friedman and Handler could jeopardize the firm's objective of 'motivating employees to perform without exposing the company to risk,' Moody's notes. In other words, the big pay packages signal a greater focus on compensation's relationship with short performance periods. That dangerous relationship, Moody's says, has been 'at the root of many outsized trading, credit and litigation losses at investment banks.'"

It will be interesting to see how shareholders deal with this issue. The company last held a say-on-pay vote in 2011, so another vote may be due soon. The compensation committee would be wise to reach out to proxy advisory firms and shareholders ahead of the annual meetings to make its case.

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- here's the article

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