Jefferies may be a small investment bank with big bonuses that make it difficult for their staff to leave, but it’s been showing a large proportion of employees the door over the past 12 months.
Jefferies has just posted a $166.8m loss for the first quarter following an “exceptionally volatile and turbulent market”, according to chairman and chief executive Rich Handler.
But while revenues have tumbled in the past three months, headcount has been heading down for the past year. Jefferies had a headcount of 3,439 people at the end of February, its report shows, a decline of nearly 500 people on the same period last year – or a 14% drop. 118 people have left so far in 2016.
If the first quarter is anything to go by, equities traders at the bank are most at risk. Revenues fell from $203.4m in 2015, to just $1.7m in the first quarter of this year. Fixed income revenues also, predictably, struggled, slipping from $126m in 2015 to $56.7m this year.
Despite all this, Jefferies has still accrued a larger compensation pot in the first quarter of 2016 on a per head basis. It’s paid $101.6k on average for each employee this quarter, compared to $92.7k in 2015.
In London, Jefferies falls under the ‘tier 3’ category of organisations under the Financial Conduct Authority's classification. This means that it falls outside the 200% bonus cap and can both allocate a higher proportion of its compensation in variable pay and offer bigger cash bonuses.
Unfortunately, there's a downside. Jefferies' employment contracts state that if you leave the bank for a competitor within a year of receiving the bonus, you must pay it back – plus income tax.
This is may not apply if you’re on the receiving end of a cost-cutting programme, but a lot of people have walked away from some very generous compensation schemes.