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Anonymous ID: 67529e March 10, 2020, 2:44 p.m. No.8370557   🗄️.is đź”—kun   >>0833 >>0899 >>1000 >>1042

Jefferies Board Approved Massive Executive Bonuses Despite Firm's $182 Million WeWork Write Down

 

Bringing back memories of 2008, WeWork's dramatic collapse leading up to its IPO didn't deter bankers at Jefferies from taking bonuses - rather, it encouraged them.

 

After Jefferies wrote down the stake of its WeWork holdings by $182.3 million last year, its board authorized $10.7 million in cash payouts to its CEO and three of his top lieutenants, according to Bloomberg, who cited a regulatory filing.

 

Better yet, writing down WeWork's IPO wound up cutting into an earnings ratio that would have been effectively denied senior management their payouts. But the board used the excuse that WeWork’s valuation collapse was “completely unanticipated and dramatic” and made with the bonuses anyway. Maybe someone should tell them that's what can happen when you're making investments for a living.

 

In the past, Jefferies' board had said there should be a "strong link between executive compensation and performance." It appears as though that is only true in cases where executives are entitled to their bonuses.

Without the collapse of WeWork, executives would have met the ratio parameters necessary to get their bonuses. Occasionally, directors have discretion over adjusting bonus awards for unforeseen circumstances, which can sometimes draw criticism from proxy firms and investors. The bonuses were issued to CEO Richard Handler, President Brian Friedman, Chief Financial Officer Teresa Gendron and General Counsel Michael Sharp. For the year, Handler was paid $43 million in stock, $1 million in a cash salary and a $4.5 million bonus. The bonuses are generally linked to a metric that compares the firm’s net income to book value and the bank posted a 5.89% return for 2019, which was short of the company's 6% bonus threshold.

 

Without WeWork, the ratio would have been 7.74%. So, like every company does now with non-GAAP earnings "ex-items", Jefferies simply played pretend and acted as though WeWork, the largest IPO blowup story possible of the last decade, never happened.

 

The Board defended the payouts citing hiring a new class of investment bankers that's 49% female and avoiding regulatory scrutiny for the year. A spokesman for Jefferies declined to comment to Bloomberg. We wonder why.

https://www.zerohedge.com/markets/jefferies-board-approved-massive-executive-bonuses-despite-firms-182-million-wework-write