Jefferies: Are these rumors true?

topboy's picture
Rank: Senior Neanderthal | 4,023

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.

  1. Seniors are jumping ship like crazy right now
  2. 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.

Comments (144)

May 17, 2019

Which location? NYC?

May 17, 2019

NYC from my source

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May 17, 2019

Heard they claw back the gross not net after taxes, which is all kinds of messed up.

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May 17, 2019

I wonder why this isn't news that has made the rounds yet. That's pretty fucked up.

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May 17, 2019

If you're going to claw back, you should claw back gross. Employee can claw back the difference from the IRS.

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May 17, 2019

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.

Array

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May 17, 2019

When PE shops will finally have a good incentive to hire bottom buckets analysts

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May 17, 2019

Citi??? Jefferies is one thing. The deal flow is solid, they pay all cash, and there's at least a decent chance that your comp will be above market. But Citi...?

May 18, 2019

Not accurate at Citi... My source is in S&T though so might be different though I doubt it.

May 17, 2019

Are any other banks besides Jefferies implementing this policy? It is crazy that they expect you to give back a year-end bonus you have already earned with these clawback provisions.

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May 17, 2019

Can confirm (2) for the London office.

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May 17, 2019

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

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May 21, 2019

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.

May 21, 2019

If that is the case. What lovely logic to implement golden handcuffs versus ....treating your employees better so they stay.

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May 17, 2019

Can confirm for continental Europe.

It's nothing new btw; just google it. First reports about paying back bonuses were released in January 2017.

May 17, 2019

Can confirm point #2..absolute sweatshop...

May 17, 2019

This is what happens when you work for a company with public shareholders.

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May 20, 2019

Not seeing the connection.

May 20, 2019

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)

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May 21, 2019

Public company management still has discretion, and capital markets rules and regs typically keep would be bad actors in line.

Pathological behavior within private company walls is often FAR worse.

Jul 5, 2019

I disagree. I think it's more working for a company of that size. I've worked for large private companies that do the same thing, but they don't report to any public shareholders.

Most Helpful
May 17, 2019

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.

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Jun 1, 2019

The original post is false. The clawback only kicks in once you make above certain amount, which generally occurs 1st or 2nd year as an associate. Not to analysts.

There is consistent culling of senior underperformers. No one is jumping ship. People that perform are getting paid very well.

Jun 3, 2019
NYC10023:

The original post is false. The clawback only kicks in once you make above certain amount, which generally occurs 1st or 2nd year as an associate. Not to analysts.

There is consistent culling of senior underperformers. No one is jumping ship. People that perform are getting paid very well.

How much clawback is typical for A1's?

May 17, 2019

From my bud in the tech group

  1. Not sure this is true, says good groups (HC/Tech/LevFin/Energy) are paying top dollar and pulling in senior people, especially from lower BBs. Maybe other groups?
  2. Jefferies has been, is, and always will be a sweatshop. Part of their "old-school" investment banking culture like Moelis, etc.
  3. The way he described it is that you pay back only that year's bonus if you leave before the end of the year (still bad imo). He wasn't sure how much it is actually enforced. According to him most PE firms would pay the difference so exiting analysts just paid it.
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May 20, 2019

Didn't realize they have a good Tech group. Who's over there these days?

May 20, 2019

This won't answer your question definitively but I know they had a good tech group when I left there in 2014. I was in another group but from my vantage point, HC was the top group by far and no group was a clear 2nd, but Tech had at least as good a claim to 2nd as any other group.

In last 5 years, just looking at LinkedIn I see the senior leaders have turned over quite a bit. Then again that happens a lot in banking, so you'll need someone else to tell you whether the group has weakened or not. But what I can say is that at least a few years ago it was strong.

May 18, 2019

How would the company force this other than stubbing your final months salary? Can't you just tell them to go kick rocks?

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May 18, 2019

Have you never heard of the court system?

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May 18, 2019

Have YOU seen the AMERICAN court system lately???

May 19, 2019

So if you sign a contract where a company is allowed to put you in literal chains and all slavery under certain conditions then that can be enforced by the courts your saying? Just seems like this is something that could be argued out in courts by lawyers as it's bonus for past performance not some staying loyalty bonus.

May 18, 2019

I'm sure they make u sign some contract.

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May 19, 2019

They don't have clawbacks for analysts outside of the typical sign on bonus.

Associate+ clawback is only when exiting to a competitor

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May 20, 2019

I'm sure their list of competitors is pretty comprehensive

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Jun 3, 2019
nontargetfromtarget:

I'm sure their list of competitors is pretty comprehensive

And totally open to interpretation in the courts, which would be costly to find out.

May 19, 2019

beggar

What concert costs 45 cents? 50 Cent feat. Nickelback.

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May 19, 2019

1 is false except for 1/2 groups, 2 is true but its not just "nowadays", 3 is misleading and makes 0 sense in its current wording on this post

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May 19, 2019

Straight up disgusting corporate move if this is true. I hope the company fails and then the government claws back the managements pay.

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May 19, 2019

FWIW, another recent move by Jefferies to "retain" analysts (laterals specifically) is implementing a 6-month notice period in analyst contracts which states that you must notify Jefferies 6 months in advance prior to leaving. Once you provide notice, you forfeit all incentive comp and Jefferies has the right to let you go on the spot (without severance) or keep you on during the notice period.

Do not lateral to Jefferies.

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May 19, 2019

What's the motivation to give the six month noice? Avoids prior bonus clawback?

May 20, 2019

I've heard this only applies if you leave for another bank, not buyside.

May 20, 2019
itdiestoday1557:

I've heard this only applies if you leave for another bank, not buyside.

It applies more broadly than just leaving for another bank

May 20, 2019

Analysts who left for buyside were shafted by Jefferies. Did not matter if you were going to a client or a competitor.

May 19, 2019

guess to give them time to find your replacement--have heard from friends that they've found themselves severely short handed at times due to departures at the associate and analyst level

May 22, 2019

Wow, reading this thread, I wonder why they found themselves short-handed of junior bankers?

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May 22, 2019

They'd still have plenty of junior bankers right now if they actually answered the emails of people trying to network with them.

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May 19, 2019

why don't you just get yourself fired if you really wanted to leave?

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May 19, 2019

Jefferies sounds like a terrible place to work at, however, also seems like the only IB still hiring in volume so they can do this to candidates.. I know they hired a ton of Wells people who were laid off after they were fired for the seamless issues.

Seems like other IBs are hiring a lot more selectively.

May 20, 2019
  1. depends on group
  2. unequivocally true
  3. unequivocally false at least for analysts / associates
Jun 3, 2019
IBERST:

1. depends on group

  1. unequivocally true
  2. unequivocally false at least for analysts / associates

How bad is it at Jefferies vs other banks for associates?

May 20, 2019

I think people are overreacting a bit. Labor laws? LOL. Didn't know Elizabeth Warren was on WSO.

We don't know if its true, and even if its true the clawbacks probably only apply to people who leave for competitors. Probably wouldn't apply at all to analysts leaving for PE or anyone else leaving IB.

Details are important on things like this, hopefully someone on the message board actually has them.

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May 21, 2019

LOL. OP makes outlandish claim (4 yr clawback). Nobody verifies it. At least one commenter says its not true. And I get the MS for saying everyone calm down. Just another week in WSO land.

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May 23, 2019

Welcome to the internet.

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May 23, 2019
PteroGonzalez:

LOL. OP shares outlandish claim (4 yr clawback). Nobody verifies it.

Fixed that for you chief

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May 20, 2019

Know a guy leaving for PE and getting owned. Hard pass on Jefferies

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May 20, 2019

Hello there! Would you be able to shed some light on whether this was an incident specific to him or if it happened to other analysts as well? Does the firm do claw backs across cities?

May 20, 2019

Not sure about geographies. I think this is group-specific as well

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Funniest
May 20, 2019

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

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May 20, 2019
Alt-Ctr-Left:

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

May 23, 2019

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.

May 21, 2019

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."

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May 21, 2019

Nice cope

1488

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May 21, 2019

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.

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May 21, 2019
MitchMitchell:

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!

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May 21, 2019

What a company will pay you IS what you are worth. If you're at a job that pays you more than you could make anywhere else, you're being paid what you're worth. If you're in a job that doesn't pay you as much as you could make somewhere else (all other things being equal), leave.

May 23, 2019
MitchMitchell:

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.

You realize that "what you're worth" has everything to do with what other companies are willing to pay you right? Such that if all of "these companies" don't want to pay you, you're not worth much.

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May 21, 2019

WAAAAAH IT'S DIFFERENT BECAUSE IT IMPACTS ME

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May 20, 2019

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...

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May 20, 2019

Surprising we didn't see a thread about this earlier - wow.

May 21, 2019

Can you speak to the 1 year clawback for analysts? Do they make you sign that before you receive your year end bonus or do you sign that early on when you accept the offer?

A couple kids from my school are heading to Jefferies this year and they didn't mention signing anything about a 1 year clawback on bonuses when they signed back in the fall (other than the usual 10k signing bonus).

May 21, 2019

There is no clawback for analysts (at any BB/EB/MM for that matter) outside of the sign-on bonus.....

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May 21, 2019

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.

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May 21, 2019

Why hasn't this been talked about more often on this site then? I've only heard about layoffs like that at firms that are seriously struggling financially. Do you / have you worked at Jefferies? Did you sign that weird clawback addendum?

May 22, 2019

what if you refuse to sign the clawbacks, do you get cut?

if all the analysts band together and all refuse to sign the clawbacks then there's not much they can do

May 23, 2019

Yeah but its a classic prisoner's dilema - is everyone not gonna sign or is just one analyst gonna sign and everyone will rush to change their minds...

May 23, 2019
Tamino:

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.

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May 23, 2019

spill the tea on the EB - think WSO is the best place to out bad policies.

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May 22, 2019

Thankful to you for this update. I always like to read posts that shares useful information.

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May 22, 2019

I cant figure out if people are talking about Jefferies in particular or if they're talking about their own IB experiences more broadly.

May 22, 2019

It's Jefferies specifically, no BB I know of does any of this 6 month notice period / bonus clawback and addendum switcheroo / penalizing you for leaving for a competitor/client garbage.

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May 22, 2019

So its confirmed that Jefferies actually does this?

May 22, 2019

https://news.efinancialcareers.com/us-en/272313/je...
Yes it's true and yes it's gross of taxes. It only hit once your total comp was over $250k but they may have changed it for analyst recently.
It can make for a tough culture as certain senior guys who didnt get paid but couldnt find another bank to make them whole on their clawback stick around and make life tough for junior bankers.
The language is only included in your bonus docs so it's not in the employment contract. And it includes leaving for competitive activity which has a very broad definition.

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May 22, 2019

Where did you hear it was for comp over $250? Does the broad competitive activity include PE?

May 22, 2019

I read it with my own eyes.

And yes competitive activity can mean whatever they want it to mean and then it's up to you to litigate. They usually roll over for PE because they don't want to irritate Sponsors. Once you make SVP and up you could quit to teach gym and it kicks in.

What I did hear however was that any lawyer will take it up on contingency because it's not completely kosher that it's not in the handbook and they spring it on you as you get your first bonus which pushes you above $250k. But lawyers will want ~30% of the savings.

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May 22, 2019

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.

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May 23, 2019
MintzBalls:

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.

This is consistent with my understanding as well.

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May 23, 2019

I can confirm that this is accurate as well.

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May 22, 2019

That is insane! It's almost a trap to keep you there for four years. I'm guessing its to help keep their turnover rate down.

May 23, 2019

Seems like the 4 years is really only for VP and above.

May 23, 2019

Plenty of Associates make over $250k. A1/A2/A3 salaries alone are 150/175/200.

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May 23, 2019
Devin-Parker:

I'm guessing its to help keep their turnover rate down.

If you get a 3am call from a Swedish number, pick up. It's the Nobel Prize committee.

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May 23, 2019

Yes, it's true...

this man has no dick...

May 23, 2019

Why not just do absolutely nothing and get yourself fired. They can't claw it back then because you did not willingly leave.

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May 24, 2019

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.

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May 24, 2019

Healthcare?

May 25, 2019
  1. Seniors are jumping ship like crazy right now

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".

  1. It is an absolute sweatshop nowadays for analysts

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".

  1. Any year's bonus must be paid back if you leave before hitting the 4-year mark at Jefferies.. yes, 4 years.

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.

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May 25, 2019

Jeffries still sucks. You are delusional.

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Jun 3, 2019
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