Jefferies aims to reduce compensation ratio-CEO

Sept 20 Thu Sep 20, 2012 10:08am EDT

Sept 20 (Reuters) - Jefferies Group Inc executives said on Thursday the investment bank aimed to pay less of its revenue to employees over the next two years but will not down to the 50 percent ratio that many industry peers target.

"We have obviously a long way to go from where we are to where we need to get," Chief Executive Richard Handler said on a conference call with analysts to discuss the firm's fiscal third-quarter earnings.

Jefferies paid out 59.6 percent of its net revenue in compensation and benefits last quarter. Handler said the ratio will come down as revenues rise with better market conditions, as employees become more productive and as retention bonuses promised to woo talent in recent years wind down.

On the call, executives said market activity in September has improved because of actions by the U.S. Federal Reserve and signs that the European debt crisis is closer to being resolved.

They also said a potential Moody's downgrade will not lead to significant collateral calls because Jefferies does not have meaningful exposure to over-the-counter derivatives, and that the bank does not need to add deposits to its funding model.

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