Jefferies: Are these rumors true?
Heard from a peer on the street, wondering if anyone could verify? The policy on comp is the one that has me making this post.
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Seniors are jumping ship like crazy right now
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It is an absolute sweatshop nowadays for analysts
3. Any year's bonus must be paid back if you leave before hitting the 4-year mark at Jefferies.. yes, 4 years.
Why would Jefferies claw back your bonus for the last four years? I thought they were performing really well? The only similar policy I've heard is that Centerview will get back the 50k signing bonus from you if you leave before your 2-3 year analyst stint.
Heard they claw back the gross not net after taxes, which is all kinds of messed up.
I can confirm that this is the same at my bank, except it’s 3 years. I’ve also heard that this is the same at Citi. Apparently it’s a new strategy to prevent analysts from leaving ... except they’re not promising they’re going to make everyone associates in year 2. All that’s going to happen is PE is going to just pay out the difference.
When PE shops will finally have a good incentive to hire bottom buckets analysts
Can confirm (2) for the London office.
Wow, I guess banks are taking the concept of "golden handcuffs" to a new level. 4 years is pretty intense -- not sure, but this will likely backfire in their recruiting efforts
Just being devil's advocate, but it's possible that Jefferies is trying to attract people who really want banking as a career, not as a stepping stone to PE/HF/something else. Not saying it will work, but it's well known that every firm is frustrated by how few talented analysts they can retain and promote into associate roles.
If that is the case. What lovely logic to implement golden handcuffs versus ....treating your employees better so they stay.
This is what happens when you work for a company with public shareholders.
You work for the shareholders, people you don't know and don't give a single shit about you. Not for yourself or your immediate boss (such as in a partnership)
This is nuts. Your bonus is supposed to be paid based on your performance in the year leading up to the day you receive it. There should honestly be labor laws that prevent firms from forcing employees to pay back ~100k in fees for leaving the bank, especially when you’re not even guaranteed to be offered a spot past your analyst stint.
If you’re recruiting for SA or FT right now, I wouldn’t take an offer from Jefferies without shopping it at literally every other BB and MM firm in existence. This is straight up bs and anyone defending this is a world class bootlicker.
From my bud in the tech group
How would the company force this other than stubbing your final months salary? Can't you just tell them to go kick rocks?
Have you never heard of the court system?
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Wow, reading this thread, I wonder why they found themselves short-handed of junior bankers?
They’d still have plenty of junior bankers right now if they actually answered the emails of people trying to network with them.
why don't you just get yourself fired if you really wanted to leave?
And just like that, a website full of staunch "pro-business, union busting, greed is good, govt regulations are bad" College Republicans discover that they are in fact, pro-labor
We're not trying to unionize or anything, we are just sharing info... Hiring is tough, and will only get tougher for Jefferies with these ridiculous policies
Which policies exactly? The 4 year clawback claim by OP hasn't been verified by anyone. The clawback of the previous bonus for going to a competitor has been a Jefferies policy for 5+ years.
If we're talking about taking away an analyst's bonus for going to PE, that is certainly a questionable policy. So questionable that I wonder how true it really is. Is it one incident? Were there unusual circumstances?
You in particular may not be trying to unionize but taking the thread as a whole, there is a vibe of disbelief and outrage. So I'm curious as to what are the actual facts that are getting people so riled up.
What a straw man. Yeah, if we oppose indentured servitude that means we're "pro labor" in the crazy leftist sense. You can oppose these sorts of draconian policies and still be a "college Republican."
It’s just so delicious to watch.
These companies don’t give a rat’s ass about employees. They will never pay you what you’re worth and will always do the absolute least required to keep you coming in and being overworked.
Yup, and that goes for bankers, teachers, auto workers, etc. But, but, if we don't cut taxes, wages and benefits to the bare minimum, how will our American corporations survive?! Won't somebody think of the shareholders!
WAAAAAH IT’S DIFFERENT BECAUSE IT IMPACTS ME
I can confirm this is true. This applies to London, not sure about the US. They pressure, nearly threaten analysts (yes analysts) to sign 1 year clawbacks, which is laughable. VPs are made to sign clawback for 4 years effectively regardless of where they leave for. There are a bunch of other clauses which are borderline criminal. They also work with a law firm that goes after all people who leave. So think very hard before joining this place that calls itself an investment bank because if you leave you have to repay it before tax. Unless you really want to pull 120hr weeks on pitches for the rest of your life...
I can confirm from experience: they first make you sign a contract with no clawbacks.
Then, a few weeks before bonuses, they cut a large group of analysts and associates, team by team over a week.
And then, the following week after the cuts, those that were still around (and relieved enough to have “survived”), got asked to sign clawbacks as an addendum to their original contracts...
True story. How can a company with ethics such as those be a allowed to exist?
Knowing juniors and seniors from that firm, I would avoid working there like one should avoid the bubonic plague.
This is factually correct but presented in a way that makes it seem so much worse than other banks, and I don't think that's accurate.
"Contract with no clawbacks" is the most misleading part. Yes, the contract has no clawbacks but the contract also doesn't promise a specific bonus either, so it doesn't make sense that the clawbacks should be included.
Jefferies has been clawing back bonuses for those who leave for competitors for a long time, so the idea that they hid this by leaving it out of the contract isn't reasonable.
Also, many banks have some form of clawback. Whether it's unvested stock, unvested 401k, this is standard practice.
Is Jefferies somewhat worse, maybe. But I've worked at an EB that gets a lot of love on WSO and I can tell you the degree of BS I saw there in terms of various scummy HR practices and broken promises makes Jefferies look highly ethical by comparison. So taking this thread on the whole, I think it's pretty misinformed.
spill the tea on the EB - think WSO is the best place to out bad policies.
It's partially true. The below is my understanding.
I'm starting FT IB at Jefferies NY this summer and I have a few close friends in one of their top groups (HC/LevFin) from my alma mater. If you are a lateral, you do not have a great contract - there are clawbacks and restrictions on who is eligible for a bonus. There were a few who got a PE gig and were told they would not be receiving a bonus, so some refused outright to continue working.
If you came up through the intern program, you have a comparably great (fair) contract - I know second years who left for PE last year who received and were allowed to retain their bonus. Second years this year also will receive a bonus (rankings were already determined) even if their group knows they are leaving. Some analysts leaving to PE funds (HC and Industrials have great exits from what I hear) were known to be since the 2017 recruiting cycle, and they still will be receiving a bonus. Not subject to a clawback. It's bad business to clawback analyst bonuses as they become clients in the future and Jefferies works with a lot of sponsor-backed companies.
If you get a 3am call from a Swedish number, pick up. It's the Nobel Prize committee.
I left Jefferies a little over a year ago, and can confirm this is all true.
The clawback you’re describing is applied to associates and up, and I believe only kicks in if your all-in compensation is in excess of $250k (which, it will be, if you’re a top bucket first year associate). They’ve been brutal about holding onto analysts for extended periods when they give notice off-cycle, even if its for a buyside opportunity. Six months is the new standard language in their analyst contracts for notice, as well. Haven’t heard of them going that long yet, but they surely could, and it wouldn’t surprise me. The culture is pretty toxic.
It is definitely an absolute sweatshop for analysts, but I think placements have been improving from what I could tell. I also generally feel that most banks are sweatshops, based on conversations with my peers.
There’s been a lot of turnover there at all levels in the past couple of years. For example, there was a bake-off that I worked on for a client that they also baked-off for about two years prior. If you compared the team sheet between the two decks, which included about 20 people, only one person from the initial deck was still there. Bake-off was lost, with that being cited as a reason.
Not any more than the typical movement you will see at other (including BB) banks, maybe even less so. Their top groups (healthcare, energy, consumer, tech, others?) have been more or less intact. Jefferies recently poached RBC's head of M&A, Credit Suisse's head of activist defense, JPM's asia co-head of healthcare, DB's converts team, among others. While there have been a few one-off departures from other groups, I wouldn't liken that to "seniors are jumping ship like crazy right now".
This is highly group dependent. Yes, healthcare and energy tend to have rough hours but are among the top on the street and pay well with solid exits (including top-tier MM PE with the occasional megafund, Carlyle I think). Other groups, barring M&A (tech, consumer, A&D, industrials, lev fin) will have the occasional rough week or two every month but are not "sweatshops".
Yes, but a few nuances. Clawbacks do not apply to Analysts, except for the standard 1-year clawback on a signing bonus. Associates and above do have a clawback, but only above a certain total comp threshold. Jefferies pays all cash bonuses, unlike many competitors, and clawbacks reduce every year (meaningfully so after the first anniversary of receiving a bonus). Clawbacks only apply if you are leaving for a competitor (so you keep your bonus if you are going buyside or say, joining a client).
Other banks pay a portion of the bonus in stock, which may have a vesting schedule. This is essentially the same as what Jefferies does, except cash is paid upfront, with the clawback'able bonus decreasing over time. Probably a good incentive to not blow all your cash.
This is NOT similar to what BB shops do in paying in stock. If you leave JEF you need to repay GROSS your last bonus, 50% of the one before and 25% of the two before that. When I left my BB I had to forego the stock that was issued and unvested which comprised ~35% of my bonus in any year and vested over 3 years.
What this essentially means is that you need to find another bank to make you whole in order to continue your sellside career at another shop. Once you make VP this is a huge amount to repay and puts you at an enormous disadvantage to other candidiates competing for jobs.
I can confirm the horrible rumors about Jefferies. DO NOT ACCEPT AN OFFER AT JEFFERIES OR YOU WILL GET SCREWED BY THE CLAWBACK.
Bonuses at Jefferies are structured like a loan, they gave me a loan which vested/matured over 4 years. So if you got a $100K bonus, you have to pay back the FULL 100% amount if you leave within a year. On the 4th year, you finally get to keep the entire bonus. This amount stacks over time so as you become more senior, the clawback becomes ridiculous.
There are horrible tax consequences. Let's say you earn a $100K bonus, but receive $50K in after-tax cash. When you leave, you need to pay back the full $100K. (My bonus vested over 4 years, 100% paid back if you leave within 1 year, 50% paid back between 1-2 years, etc). When you eventually leave Jefferies, your new firm is expected to pay your clawback which puts you at an absolutely MASSIVE disadvantage to other applicants. So if you jump ship to Citi, they pay you $100K, and you write a check to Jefferies for $100K. But this 2nd check from Citi is AGAIN counted as income, and you need to pay an additional $50K worth of taxes to the IRS next April.
I thought the culture was horrendous and couldn't wait to get out the door. I think the clawback works against the firm as loads of people seem to be rotting in their chairs, hoping to get fired so their clawback problem goes away.
DO NOT WORK AT JEFFERIES.
OK, get ready for a long post. There is too much BS on this thread and lack of understanding about the industry for me to keep working and focus on actual work lol. I have been at JEF for a number of years now and have been through the internship in undergrad and multiple promotions. I've seen the bank grow and change over the years.
Maybe it is just that I notice it more, but I think JEF more than any other IB is subject to more misinformation and unwarranted slander on WSO. I really do not think people here appreciate the platform that has been created and the continued progress. I could guess from where this maybe comes from (Sage Kelly stories, Ben Lorello stories, HC group stories, etc.). Could write a whole post on that maybe, but I'll spare everyone my theories.
On the first point about clawbacks that this forum started with: you need to understand how the industry generally works before you can comment on this (this will be obvious to those who have been in the industry for more than 2 years). A lot of banks pay bonuses in 20, 30, 40% stock that you do not actually get to keep unless you are still employed at that bank in X number of years (could even be a 5 year vesting schedule). That means if you quit for whatever reason or join a different industry firm (assuming they do not buy you out for the value of those shares at the time), you lose that stock. JEF pays (like other banks) pays all cash bonuses. You get that cash all upfront and can do whatever you want with it. There are clawbacks on that all-cash bonus (once you are over $250K - most of the analyst discussion around clawbacks are pointless here) but they do not work like how it is being described on this thread. If you quit the industry before this period, you do not have to pay it back. In the vast, vast majority of cases if you join a buyside firm or corporation you do not have to pay back anything (think about it, why would they come after a potential new client that would give them fees if everyone stays on good terms??). If you leave for a competing IB firm, yes they will claw it back - but you are getting bought out by that amount anyway to make up for it by the IB firm you are going to so you are not losing any money for jumping ships - this is a standard industry practice (you wouldn't leave JP Morgan for GS if you were about to lose $500K of your net worth, it wouldn't make any economical sense).
I've seen people post things like "Oh, well if you don't make the VP promote, you have to pay back your associate bonuses pre-tax!" - again, not sure where this is coming from but this is not true. JEF gives these clawbacks to avoid people from jumping ship right after they get a fat bonus bc there is not vesting stock concept like the big banks. So please realize this --- every big bank has clawbacks - it is just called vesting stock for some and other names for others that are all cash (some firms are all cash and have no limitations I realize this). IMO, being paid in all cash that you can do whatever you want with is far superior than being paid in bank stock for many reasons.
There are no clawbacks to analysts coming from intern class - again not sure where this is coming from. Should not be a factor at all when thinking about where you are going to do your internship / analyst stint. There are different clawbacks for experienced analyst lateral hires usually for a 1 year period on whatever bonus you get that year - but again, the same rules above are applying, it is not handcuffing you and making you an indentured servant to IB. If you want to join the buyside, go do it, I guarantee they won't come after you. If you want to quit, then quit - they can't come after you. If another IB firm won't buy you out from one analyst bonus to come join them then they don't really want you that bad. JEF does this to protect themselves a little from laterals jumping ship after 1 year.
A note about the culture - I truly believe JEF has an above average culture compared to most other places. There has been a ton of progress over the past 7-8 years. Yes there are groups that are tougher than others, but every bank has these. I've heard horror stories from many other banks of stuff I would never hear happening at JEF. Culture at banks is very, very group dependent. I think somehow JEF got this reputation from its early days and is perpetuated. Look the IB world is hard everywhere you go, JEF is not any worse than the other banks. It's super hard to talk about culture and policies without getting into a group specific conversation. I've heard a bunch of crap from my analyst peers from other banks back in the day, and never once did I think "wow the culture at Jefferies is worse than this place". Could be that I was fortunate to be surrounded by good people in a good group, but I've never had problems with people from other groups either.
No MD's are not jumping ship. Again, not sure where this came from. If anything, JEF continues to grow every group and hire more senior level talent. This post is way to long but I have just seen recently too many "interns, 1st year analysts types" trashing JEF with false information when they do not understand the industry. Jefferies was #7 in Global M&A in 2020 (according to Dealogic) in terms of fee % market share and #6 in US M&A in 2020 and continues to have momentum. That's better than quite a few names that the WSO clout chasers love to orgasm over :)