JEFFERIES GROUP, INC.

520 Madison Avenue

New York, New York 10022

April ~~9, 2009~~7, 2010

PROXY STATEMENT

The Board of Directors of Jefferies Group, Inc. requests that each shareholder provide a proxy for use at our Annual Meeting of Shareholders. The meeting will be held at our principal executive offices at 520 Madison Avenue, New York, New York, 10022, on Monday, May ~~18, 2009,~~17, 2010, at 9:30 a.m., local time. You are entitled to receive notice of the meeting and to vote at the meeting if you were a shareholder of record at the close of business on March ~~30, 2009.~~19, 2010. We are first mailing this Notice of Annual Meeting, Proxy Statement and proxy card to shareholders on or about April ~~9, 2009.~~7, 2010.

Eligible shareholders may vote by telephone, on the Internet, by mail or by attending the meeting and voting by ballot as described below. If you vote by telephone or on the Internet, you do not need to return a proxy card. Telephone and Internet voting facilities will be available 24 hours a day, and will close at 11:59 p.m. on May ~~17,~~16, 2008, the night before the meeting. To vote by telephone, please call 1-800-PROXIES(1-800-776-9437). To vote on the Internet, go towww.voteproxy.com and follow the on-screen instructions. To vote by mail, simply mark the enclosed proxy, date and sign it, and return it to American Stock Transfer & Trust Company in the postage-paid envelope provided. If the envelope is missing, please mail the completed proxy card to us at:

Jefferies Group, Inc.

c/o American Stock Transfer & Trust Company

6201 ~~15th~~15^th Avenue

Brooklyn, NY11219-9821

We will use any votes received by telephone, internet or mail at the annual meeting and any adjournment of the meeting if an adjournment is necessary. If you change your mind after voting by telephone or on the Internet, simply call the number again or return to the website again to change your vote. You may also revoke your vote, whether by telephone, internet or by mail, by (i) delivering a written notice of revocation to our Secretary on or before the closing of the polls at the meeting, (ii) delivering a new proxy card with a later date to our Secretary on or before the closing of the polls at the meeting or (iii) attending the meeting and voting in person. If your Jefferies shares are held for you in a brokerage, bank or other institutional account, you must obtain a proxy from that entity and bring it with you to hand in with your ballot in order to be able to vote your shares at the annual meeting.

If you indicate how you would like your shares voted by returning a proxy card, voting by telephone or voting on the Internet, we will vote your shares at the meeting in accordance with your directions. If you do not indicate how you want your shares voted, but return a proxy card, your shares will be voted FOR the election of the eight nominees for Director whose names are listed in this Proxy Statement, ~~and~~ FOR ratification of the ~~ratification~~selection of our independent ~~auditors. If~~registered public accounting firm, and if any other matters are properly raised at the meeting, your shares will be voted as directed by ~~the persons named as proxies,~~ Richard Handler, our Chief Executive Officer, or Brian P. Friedman, the Chairman of our Executive Committee.

Each person we list in this Proxy Statement as a nominee for Director has agreed to serve if elected. Although we expect that all the nominees will be able to serve if elected, if a nominee becomes unable to serve between now and the meeting date, we will vote any shares for which we have received proxies in favor of a substitute nominee recommended by our Board of Directors.

We are paying for all costs associated with soliciting proxies from our shareholders. Although there are no formal agreements to do so, we will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their reasonable expenses incurred in sending proxy materials and annual reports to our shareholders. In addition to solicitation by mail, our directors and officers may solicit proxies in person, by telephone, or by fax, but they will not receive special compensation for such solicitation.

On March ~~30, 2009,~~19, 2010, the record date for determining which shareholders are entitled to vote at the annual meeting, there were ~~169,194,358~~171,842,231 shares of our Common Stock outstanding. We do not have cumulative voting, and

Each share you hold on the record date will give you the right to one vote for each Director to be elected ~~one vote on the ratification of our independent auditors,~~ and one vote on each separate matter of business properly brought before the meeting. The ratification of the appointment of KPMG as our independent auditor and any other item of business (other than the election of directors) properly brought before the annual meeting will be approved by the affirmative vote of holders of a majority of the shares present in person or by proxy and entitled to vote on the matter.

The eight directors who receive the most votes from the shares properly voting at the meeting will be elected, even if one or more directors does not receive a majority of the votes cast. Withholding a vote for a particular director will not count as a vote against that director, since there is no minimum number of votes necessary to elect a director. However, in accordance with our Board of Directors Corporate Governance Guidelines, any nominee for director who receives a greater number of votes “withheld” from his election than votes “for” his election is required to promptly tender his resignation to the Chairman of the Board. The Corporate Governance and Nominating Committee will promptly consider the resignation and recommend to the Board whether to accept the tendered resignation or reject it in accordance with the Corporate Governance Guidelines. In considering whether to accept or reject the tendered resignation, the Corporate Governance and Nominating Committee will consider all factors deemed relevant by the members of the committee, including any stated reasons why shareholders withheld votes, the length of service and qualifications of the Director whose resignation has been tendered, the Director’s contributions to the Company, and our Corporate Governance Guidelines. The Board will act on the Corporate Governance and Nominating Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting where the election occurred. In considering the committee’s recommendation, the Board will consider the factors considered by the committee, and such additional information and factors the Board believes to be relevant. Following the Board’s decision on the resignation, we will promptly disclose the Board’s decision and a description of the process we undertook. If the Board rejects the tendered resignation, we will also disclose the reasons for the rejection. If the Board accepts the resignation, the Corporate Governance and Nominating Committee will recommend whether to fill the vacancy or reduce the size of the Board. Any Director who tenders his or her resignation as described above will not participate in the committee or board consideration of his or her tendered resignation.

If your shares are held in your broker’s name and you do not give your broker timely voting instructions ~~your~~on certain matters, the broker ~~can vote your shares for the election of directors but~~ cannot vote your ~~shares on certain other matters.~~shares. Such a broker “non-vote” will have no effect on the election of directors ~~the ratification of our independent auditors~~ or any other item properly raised at the meeting. ~~Shares subject to a broker non-vote will nevertheless be present for purposes of determining a quorum. Abstentions will have the effect of a vote against the ratification of our independent auditors.~~

We have retained our transfer agent, American Stock Transfer & Trust Company, as independent inspector of election to receive and tabulate the votes. Our transfer agent will also certify the results and perform any other acts required by the Delaware General Corporation Law.

Security Ownership Of Certain Beneficial Owners And Management

The following table sets forth certain information regarding beneficial ownership of our common stock by


	•	each person we know of who beneficially owns more than 5% of our common stock,

	•	each of our directors,

	•	each executive officer named in the Summary Compensation Table and

	•	all directors and executive officers as a group.

The information set forth below is as of February 1, ~~2009,~~2010, unless otherwise indicated. ~~The percentage beneficially owned in all cases is calculated using the number of outstanding shares at February 1, 2009.~~ Information regarding shareholders other than directors and executive officers ~~and employee benefit plans~~ is based upon information contained in documents filed with the Securities and Exchange Commission (“SEC”). The number of shares beneficially owned by each shareholder and the percentage of the outstanding common stock those shares represent include shares that may be acquired by that shareholder within 60 days through the exercise of any option or right, but do not take into consideration the potential application of Section 409A of the Internal Revenue Code (the “Code”) which in some cases could result in a delay of the distribution beyond 60 days. Unless otherwise indicated, the mailing address of the parties listed below is our principal business address and the parties have sole voting power and sole dispositive power over their shares.


	Shares of Common			Percentage of			Shares of Common
	Stock Beneficially			Common Stock			Stock Beneficially			Percentage of Common
Name and Address of Beneficial Owner	Owned			Beneficially Owned			Owned			Stock Beneficially Owned

Leucadia National Corporation		48,585,385	(1)		29.5	%		48,585,385	(1)		28.3	%
315 Park Avenue South New York, New York 10010
Richard B. Handler		11,015,771	(2)		6.4	%		11,512,144	(2)		6.4	%
Marsico Capital Management, LLC		10,140,611	(3)		6.2	%		8,621,826	(3)		5.0	%
1200 17th Street, Suite 1600 Denver, Colorado 80202
Earnest Partners, LLC		8,296,315	(4)		5.0	%
1189 Peachtree Street NE, Suite 2300 Atlanta, Georgia 30309
Jefferies Group, Inc. Employee Stock Ownership Plan		6,501,190	(5)		4.0	%
Baron Capital Group, Inc.		4,356,000	(6)		2.7	%
767 Fifth Avenue New York, New York 10153
1200 17^th Street, Suite 1600 Denver, Colorado 80202
Brian P. Friedman		3,033,323	(7)		1.8	%		3,232,100	(4)		1.9	%
Richard G. Dooley		306,276	(8)		*			268,062	(5)			*
Peregrine C. Broadbent								190,128	(6)			*
Lloyd H. Feller		171,393	(9)		*			119,587	(7)			*
Peregrine C. Broadbent		107,966	(10)		*
W. Patrick Campbell		67,560	(11)		*			65,463	(8)			*
Charles Hendrickson		35,742	(12)		*			30,648	(9)			*
Robert Joyal		20,598	(13)		*			20,598	(10)			*
Joseph S. Steinberg		5,479	(14)		*			10,511	(11)			*
Ian M. Cumming		5,479	(15)		*			5,479	(12)			*
Michael T. O’Kane		0	(16)		*			0	(13)			*
All directors and executive officers as a group		14,769,587	(17)		8.6	%		15,454,720	(14)		8.6	%


*		The percentage of shares beneficially owned does not exceed one percent of the class.

(1)		The indicated interest was reported on a ~~Statement of Beneficial Ownership on~~ Form 4 filed with the SEC by Leucadia National Corporation (“Leucadia”) on May 27, 2008, reporting interests held by Baldwin Enterprises, Inc.


		Mr. Handler has a right to acquire within 60 days from February 1, ~~2009; 110,216~~2010; 112,772 shares held under the Jefferies Group, Inc. Employee Stock Ownership Plan (the “ESOP”) as to which Mr. Hander has sole voting power and no dispositive power; 506,936 RSUs resulting from dividend reinvestments which Mr. Handler has a right to acquire within 60 days from February 1, ~~2009; 3,081,770~~2010; 3,109,664 shares which Mr. Handler has shared voting and dispositive power with his wife through a family trust; 11 shares held by the Trustee of our profit sharing plan (the “PSP”); and 40 shares held in an account for the benefit of Mr. Handler’s immediate family. As of February 1, 2009, 1,643,876 shares beneficially owned by Mr. Handler were pledged to secure outstanding margin debits. The table above excludes 739,073 RSUs which do not represent a right to acquire shares within 60 days from February 1, 2009; 200 shares of vested and deferred restricted stock held byParticipants in the trustee of our Employee Stock Purchase Plan (the “ESPP”) as to which Mr. Handler has neither voting nor dispositive power; and 263,542 share denominated deferrals under the Jefferies Group, Inc. Deferred Compensation Plan (the “DCP”).

~~(3)~~		The indicated interest was reported on Amendment No. 2 to Schedule 13G filed with the SEC by Marsico Capital Management, LLC on February 12, 2009. In its filing, Marsico reported that as of December 31, 2008, it hadPSP have sole voting power ~~over 10,059,759 shares~~ and ~~sole~~limited dispositive power over ~~10,140,611 shares.~~

~~(4)~~		~~The indicated interest was reported on Amendment No. 5~~shares allocated to Schedule 13G filed with the SEC by Earnest Partners, LLC on February 13, 2009. In its Schedule 13G, Earnest Partners reported that as of December 31, 2008, it had sole voting power over 3,425,101 shares, shared voting power over 2,215,514 shares, sole dispositive power over 8,296,315 shares and shared dispositive power over no shares.

~~(5)~~		their PSP accounts. Under the ESOP, shares are allocated to accounts in the name of the individuals who participate in the ESOP. The voting rights for shares in each individual participant’s account are passed through to that participant. Because participants can vote shares in their ESOP accounts, but cannot sell them, participants in the ESOP have sole voting power and no dispositive power over shares allocated to their accounts. AsThe table above excludes 1,987,427 RSUs which do not represent a right to acquire shares within 60 days from February 1, 2010; 200 shares of December 31, 2008, 6,501,190 shares were held in the ESOP Trust, of which 6,499,538 shares were allocated to the accounts of ESOP participants. The ESOP had sole dispositive power over all the sharesvested and voting power over 1,652 shares not allocated to participants’ accounts at December 31, 2008. Those shares allocated to the accounts of directors and executive officers are indicated on their respective entries in the table and are also included in the ESOP figure. The ESOP is directed by a committee which serves as its Plan Administrator. Our Board of Directors appoints the members of the committee, which currently consist of Robert J. Welch, David J. Losito and Richard B. Shane, Jr. These individuals are each employees of Jefferies & Company, Inc., and each disclaim beneficial ownership of the sharesdeferred stock held by the ~~ESOP except those shares allocated~~trustee of our Employee Stock Purchase Plan (the “ESPP”) as to ~~his ESOP account.~~which Mr. Handler has neither voting nor dispositive power; and 263,542 share denominated deferrals under the DCP.

~~(6)~~(3)		The indicated interest was reported on a Schedule 13G filed ~~on February 12, 2008,~~ with the SEC by ~~Baron Capital Group, Inc. (“BCG”) on behalf of itself, BAMCO, Inc., Baron~~Marsico Capital Management, ~~Inc. (“BCM”) and Ronald Baron.~~LLC on February 11, 2010. In its Schedule 13G, ~~the reporting persons~~Marsico reported ~~ownership~~that as of December 31, ~~2007 as follows:~~2009, it had sole voting power over 8,456,945 shares and sole dispositive power over 8,621,826 shares.

Beneficial
Sole Voting
Shared Voting
Sole Dispositive
Shared Dispositive

Ownership Power Power Power Power

BCG 4,356,000 0 3,644,900 0 4,356,000
BAMCO 3,997,100 0 3,296,000 0 3,997,100
BCM 358,900 0 348,900 0 358,900
Ronald Baron 4,360,730 4,730 3,644,900 4,730 4,356,000


		includes ~~10,524 RSUs and 1,108 RSUs resulting from dividend reinvestments on RSUs, all of~~15,193 shares which Mr. Hendrickson has a right to acquire within 60 days from February 1, ~~2009. The table above excludes 4,067 unvested~~2010; 1,108 shares resulting from dividend reinvestments on RSUs which ~~Mr. Hendrickson does not have~~represent a right to acquire within 60 days from February 1, ~~2009.~~2010; and 4,564 shares held by the trustee of the PSP. The table above excludes 14,084 unvested RSUs which do not represent a right to acquire within 60 days from February 1, 2010.

~~(13)~~(10)		~~After~~Assuming the expiration or termination of all applicable deferral periods, Mr. Joyal would beneficially own ~~33,023~~38,055 shares (representing less than 1% of the currently outstanding class). The table above excludes ~~12,425~~17,457 deferred shares under the DSCP which do not represent a right to acquire shares within 60 days from February 1, ~~2009.~~2010.

~~(14)~~(11)		~~As of February 1, 2009, Mr. Steinberg had sole voting and no dispositive power over the shares.~~ Excludes shares held by Leucadia as to which Mr. Steinberg disclaims beneficial ownership.

~~(15)~~(12)		Includes 5,032 shares held under the DSCP which do not represent a right to acquire shares within 60 days from February 1, 2010. Excludes shares held by Leucadia as to which Mr. Cumming disclaims beneficial ownership.

~~(16)~~(13)		~~After~~Assuming the expiration or termination of all applicable deferral periods, Mr. O’Kane would beneficially own ~~13,063~~18,095 shares (representing less than 1% of the currently outstanding class). The table above excludes all ~~13,063~~18,095 shares which reflect deferred shares under the DSCP and do not represent a right to acquire shares within 60 days from February 1, ~~2009.~~2010.

~~(17)~~(14)		Includes ~~20,568~~9,428 shares subject to immediately exercisable options; ~~8,199,585~~8,377,869 vested RSUs which employees have a right to acquire within 60 days from February 1, ~~2009; 585,277 RSUs~~2010; 565,529 shares representing dividend reinvestments on RSUs which may be acquired within 60 days from February 1, ~~2009; 1,242,010~~2010; 1,481,170 shares of restricted stock as to which employees have sole voting and no dispositive power; ~~112,010~~114,631 shares held under the ESOP; and ~~13,023~~15,811 shares under the PSP for the listed directors and executive officers as a group. ~~After~~Assuming the expiration of all applicable vesting and deferral periods, the directors and named executive officers as a group would beneficially own ~~16,791,448~~19,985,731 shares (representing ~~10.2%~~11.6% of the currently outstanding class).

Nominees

The following information relates to the nominees for election as directors:

Richard B. Handler,age~~47,~~48, a nominee, has been our Chairman since February 2002, and our Chief Executive Officer since January 2001. Mr. Handler has also served as Chief Executive Officer of Jefferies & Company, Inc., our principal operating subsidiary (“Jefferies”), since January 2001, as President of Jefferies since May 2006, and as Co-President and Co-Chief Operating Officer of both companies during 2000. Mr. Handler was first elected to our Board in May 1998. He was Managing Director of High Yield Capital Markets at Jefferies from May 1993 until February 2000, after co-founding that group as an Executive Vice President in April 1990. Mr. Handler ~~has also been the~~was President and Chief Executive Officer of the Jefferies Partners Opportunity family of funds and is Chief Executive Officer of ~~their successor entities,~~ Jefferies High Yield Trading, LLC and Jefferies High Yield Holdings, LLC. He is also Chairman and Chief Executive Officer of the Handler Family Foundation, a non-profit foundation working primarily with underprivileged children. Mr. Handler received an MBA from Stanford University in 1987, where he serves on the Business School Advisory Board. He received his BA in Economics from the University of Rochester in 1983 where he also serves on the Board of Trustees and is Chairman of the University’s Finance Committee. For the 20 year period Mr. Handler has worked at Jefferies, our shares compounded annually at 20.4%. Since Mr. Handler joined Jefferies in 1990, he has always taken a significant portion of his compensation in equity form. For the 10 year period since he became CEO, over 70% of Mr. Handler’s compensation has consisted of non-cash equity related securities vesting over three to five years. Aside from charitable donations, Mr. Handler has never sold any of his Jefferies shares. We view Mr. Handler’s broad experience in the securities industry, long history with Jefferies, years of demonstrated leadership in both favorable and difficult markets and commitment to the Company, including his significant stock ownership, as key attributes and skills that make him uniquely suited to continue to serve as a director, our Chief Executive Officer, and Chairman of our Board.

Brian P. Friedman,age ~~53,~~54, a nominee, has been one of our directors and an executive officer since July 2005, and has been Chairman of the Executive Committee of Jefferies since 2002. Since 1997, Mr. Friedman has also been President of Jefferies Capital Partners (formerly known as FS Private Investments). Mr. Friedman splits his time between his role with us and his position with Jefferies Capital Partners. Mr. Friedman was previously employed by Furman Selz LLC and its successors, including serving as Head of Investment Banking and a member of its Management and Operating Committees. Prior to his 17 years with Furman Selz and its successors, Mr. Friedman was an attorney with the New York City law firm of Wachtell Lipton Rosen & Katz. As a result of his management of various private equity funds and the significant equity positions those funds hold in their portfolio companies, Mr. Friedman serves on several boards of directors of private portfolio companies, and has served on the Board of the general partner of ~~one public portfolio company,~~ K-Sea Transportation L.P., since ~~2004.~~2004 and of Carrols Restaurant Group, Inc. since June 2009. Since Mr. Friedman became associated with Jefferies in May 2001, initially as an advisor and since 2005 as an executive officer, he has been instrumental in helping us establish and implement a focused and consistent strategy that has guided our growth and development, including business unit buildouts and acquisitions. Over 90% of Mr. Friedman’s compensation from Jefferies has consisted of non-cash equity related securities vesting over three to five years. Additionally. Mr. Friedman’s experience analyzing, selecting and managing private equity investments as well as his prior experience in building and managing another Wall Street firm, have provided him skills, knowledge and insights valuable to Jefferies’ growth and management. In light of his management experience and track record both at the company and previously, Mr. Friedman has been a significant addition to the Board and we believe he should continue to serve as a director.

W. Patrick Campbell,age~~63,~~64,a nominee, has been one of our directors since January 2000. Mr. Campbell was Chairman and Chief Executive Officer of Magex Limited from August 2000 through April 2002 and is currently an independent consultant in the media and telecom field. From 1994 until October 1999, Mr. Campbell was Executive Vice President of Corporate Strategy and Business Development at Ameritech Corp. where he was a member of the Management Committee and directed all corporate strategy and merger and acquisition activity. From 1989 to 1994, Mr. Campbell served as President and Chief Executive Officer of Columbia TriStar Home Video, a Sony Pictures Entertainment Company, and has previously been President of RCA/Columbia Pictures International Video. Mr. Campbell has also been a director of Black & Veatch since November 1999. Mr. Campbell is Chairman of our Audit Committee, and a member of our Compensation

Committee and Corporate Governance and Nominating Committee. Mr. Campbell brings the Board the perspective of an experienced business leader from outside the financial services industry. His merger and acquisition experience provides familiarity with a key component of our investment banking and capital market business and his understanding of the media and telecom field provides him insight in a key industry where we have a significant research presence. Mr. Campbell’s mix of strategic planning experience and understanding of our business lines has made him a valuable contributor to the Board and supports our conclusion that he should continue to serve as a director.

Ian M. Cumming, age ~~68,~~69, a nominee, has been one of our directors since April 2008 and a director of Jefferies High Yield Holdings, LLC since April 2007. Mr. Cumming has served as a director and Chairman of the Board of Leucadia since June 1978. Leucadia is a diversified holding company engaged in a variety of businesses, including manufacturing, telecommunications, property management and services, gaming entertainment, real estate activities, medical product development and winery operations. Mr. Cumming iswas also Chairman of the Board of The FINOVA Group ~~Inc., formerly~~Inc, a middle market lender. Mr. Cumming is a director of Skywest, Inc., a Utah-based regional air carrier, HomeFed Corporation (“HomeFed”), a publicly

Placements from 1986 through 1990, then as Managing Director — Structured Finance from 1990 through 1996 and finally as Senior Managing Director — Securities Division from 1986 through 2004, when he was responsible for approximately $120 billion of fixed income and $3.5 billion of private equity assets under management. Since August 2005, Mr. O’Kane has also served on the Board of Directors and on the Audit, Finance and Risk Oversight Committee of Assured Guaranty, Ltd. In addition, Mr. O’Kane served on the Board of Trustees of Scholarship America, a non profit company engaged in providing scholarships for young students to attend college, from 2001 through 2006. Mr. O’Kane is a member of our Corporate Governance and Nominating Committee, Audit Committee and Compensation Committee. Mr. O’Kane’s experience in two of our key industries, fixed income investments and asset management, required that he conduct financial analysis in many companies. This experience, together with his experience as the Chief Financial Officer of another public company, Motor Coils Manufacturing Company, during 1984 and 1985, provide him with an understanding of key issues and a unique perspective. We believe he continues to be an asset to the Board and recommend that he continue to serve as a director.

Joseph S. Steinberg,, age 65, a nominee, has been one of our directors since April 2008 and a director of Jefferies High Yield Holdings, LLC since April 2007. Mr. Steinberg has served as a director of Leucadia since December 1978 and as its President since January 1979. In addition, Mr. Steinberg is Chairman of the Board of HomeFed, ~~and~~was a director of FINOVA, and is an alternate director of Fortescue. Mr. Steinberg is a member of our Compensation Committee and Corporate Governance and Nominating ~~Committee~~Committee. Like Mr. Cumming, Mr. Steinberg has had experience in finance and investments and brings the perspective of both a client, business partner and now significant strategic investor. Mr. Steinberg occupies the second of two board seats committed to Leucadia as a result of its strategic investment in the company in April 2008 and has been nominated by Leucadia to continue to serve as a director.

Other Executive Officers

Our Executive Officers are appointed by the Board of Directors and serve at the discretion of the Board. Other than Messrs. Handler and Friedman, for whom information is provided above, the following sets forth information as to the Executive Officers:

Peregrine C. Broadbent,, age ~~45,~~46, has been our and Jefferies’ Executive Vice President and Chief Financial Officer since November 2007. Prior to joining us, Mr. Broadbent was employed by Morgan Stanley for 16 years, including serving as Managing Director, Head of Institutional Controllers (Fixed Income, Equity and Investment Banking) of Morgan Stanley ~~since~~from November 2003 through November 2007, and was Morgan Stanley’s Managing Director, Head of Fixed Income Infrastructure (Operations and Controllers) from March 2002 through November 2003. Mr. Broadbent is a Chartered Accountant in the United Kingdom.

Charles J. Hendrickson,, age 59, has been our Treasurer and the Treasurer and a Managing Director of Jefferies since July 2006. Mr. Hendrickson was Managing Director and Treasurer atof Donaldson, Lufkin & Jenrette, Inc. from March 1984 to September 2000, when it was acquired by Credit Suisse, and provided continuing services to Credit Suisse through the transition until February 2001. Mr. Hendrickson has served as a director of ImaginAsian Entertainment, Inc. since 2004 and served as its interim Chief Financial Officer from 2005 to 2006 when he joined Jefferies. From 2001 through 2005 Mr. Hendrickson also served on the Board of

Equity Compensation Plan Information

The following table provides information regarding our compensation plans (other than our tax qualified ESOP and 401(k) Plan), under which our equity securities were authorized for issuance as of December 31, ~~2008.~~2009.


							Number of Securities
	Number of Securities			Weighted-Average			Remaining Available for			Number of Securities			Weighted-Average			Number of Securities
	to be Issued Upon			Exercise Price of			Future Issuance Under			to be Issued upon			Exercise Price of			Remaining Available for
	Exercise of Outstanding			Outstanding			Equity Compensation Plans			Exercise of			Outstanding			Future Issuance Under
	Options, Warrants and			Options, Warrants			(Excluding Securities			Outstanding Options,			Options, Warrants			Equity Compensation Plans
	Rights			and Rights			Reflected in Column (a))			Warrants and Rights			and Rights			(Excluding Column (a))
Plan Category	(a)			(b)			(c)			(a)			(b)			(c)

Equity compensation plans approved by security holders		39,796,099	(1)	$	.05	(2)		36,855,951(3	)		12,627,356	(1)	$	.01	(2)		49,849,383	(3)
Equity compensation plans not approved by security holders		—			—			—			—			—			—
Total		39,796,099		$	.05			36,855,951			12,627,356		$	.01			49,849,383


(1)		Includes ~~34,260,077~~1,198,080 RSUs ~~59,720~~which were granted in 2009; 7,933,147 shares of restricted stock granted in 2009; 47,484 options under our ~~DSCP~~Director’s Stock Compensation Plan; and ~~5,476,302~~3,448,645 share ~~denominated deferrals~~equivalents under our deferred compensation plans.

(2)		The weighted average exercise price of outstanding options, warrants and rights is calculated including RSUs and similar rights which have an exercise price of zero. If the weighted average exercise price was calculated including only those awards that have a specified exercise price, which in our case is only options, the weighted average exercise price for plans approved by security holders would be ~~$7.24.~~$7.65.

(3)		When we changed the terms of our restricted stock grants in late 2008 to eliminate the continuing service requirement, which resulted in the immediate expensing of the shares, shares issued prior to January 1, 2008 no longer qualify as outstanding under the terms of our Amended and Restated 2003 Incentive Compensation Plan (the “2003 Plan”). Of the shares remaining available for future issuance under the 2003 Plan, as of December 31, ~~2008,~~2009, the numbers of shares that may be issued as restricted stock, RSUs or deferred stock were as follows: ~~27,416,841~~40,560,039 shares under the 2003 Plan for general use; and ~~7,009,068~~6,893,211 shares under the 2003 Plan designated for use under the DCP. These plans also authorize the grant of options and other types of equity awards. The number of shares available for future grants under the 2003 Plan changes pursuant to a formula set forth in the plan. The formula establishes that the number of shares available for grant under the plan shall be equal to 30% of the total number of shares outstanding immediately prior to the grant, less shares subject to outstanding awards under the 2003 Plan and the 1999 Incentive Compensation Plan. For this purpose, an option is “outstanding” until it is exercised and any other award is “outstanding” in the calendar year in which it is granted and for so long thereafter as it remains subject to any vesting condition requiring continued employment. A maximum of 16,000,000 shares are reserved for restricted stock units and options under the DCP. Restricted stock equivalent units will be credited with dividend equivalents on the last day of each quarter, which will be converted into additional stock units in accordance with the terms of the DCP. The number of shares remaining available under the 2003 Plan, and outstanding restricted stock units, options, and other share based awards, and the terms thereof, are subject to equitable adjustment by the Compensation Committee in the event of certain extraordinary corporate events.

Board has determined that directors who comply with the standards in the Corporate Governance Guidelines have no material relationship with us as required by New York Stock Exchange Rules. The Board has noted relationships by and among its Board members and nominees that may give rise to conflicts, in particular, the board has noted that


	•	Mr. Campbell also serves on the Compensation Committee of Black & Veatch,

	•	Mr. Dooley also serves on the Compensation Committee of Kimco Realty Corp.

	•	Mr. Dooley was an associate of Mr. Joyal prior to Mr. Dooley’s retirement from Mass Mutual

	•	Mr. Cumming and Mr. Steinberg, each serves in various capacities at Leucadia and its affiliates,

	•	Mr. Steinberg also serves on the Compensation Committee of HomeFed Corp.

	•	Mr. Joyal also serves on the board of First Israel Opportunity Funds, which deliberates on the funds executive compensation issues

	•	Mr. Cumming and Mr. Steinberg have had prior social and business relationships ~~with~~between and various members of our management, including Mr. ~~Handler~~Handler.

The Board has determined that these facts do not impair the independence of these directors or lessen their qualifications to serve on the Board, or on any committees. ~~The Board has determined that Messrs. Campbell, Dooley, Cumming, Joyal, O’Kane~~

Audit Committee and ~~Steinberg each meet the independence standards as set forth in the Corporate Governance Guidelines.~~Financial Expert Determination

The current Audit Committee members are W. Patrick Campbell, Chairman, Richard G. Dooley, Robert E. Joyal and Michael T. O’Kane. ~~The Board has determined that each member of the Audit Committee is a “Financial Expert” as defined by applicable New York Stock Exchange and SEC rules.~~ The Audit Committee is appointed by the Board to assist the Board in monitoring (1) the integrity of our financial statements, (2) our independent ~~auditor’s~~registered public accounting firm’s qualifications and independence, (3) the performance of our internal audit function and independent ~~auditors,~~registered public accounting firm, and (4) our compliance with legal and regulatory requirements. The Audit Committee has adopted a written charter which is available on our website as described below. During ~~2008,~~2009, there were 89 meetings of the Audit Committee. We anticipate the Audit Committee to consist of W. Patrick Campbell, Chairman, Richard G. Dooley, Robert E. Joyal and Michael T. O’Kane after the annual meeting. The Board has determined that the members of its audit committee, Messrs. Campbell, Dooley, Joyal and O’Kane, each meet the independence standards as set forth in the Corporate Governance Guidelines and is a “Financial Expert” as defined by applicable New York Stock Exchange and SEC rules.

Compensation Committee

The current Compensation Committee members are Richard G. Dooley, Chairman, W. Patrick Campbell, Ian M. Cumming, Robert E. Joyal, Michael T. O’Kane and Joseph S. Steinberg. The Compensation Committee is appointed by the Board to (1) advise senior management on the administration of our compensation programs, (2) review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation, (3) make recommendations to the board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to board approval; and (4) produce a compensation committee report on executive compensation required by the rules and regulations of the SEC. The Compensation Committee has the sole authority to select, retain and terminate a compensation consultant and to approve the consultant’s fees and other retention terms. The ~~Committee did not retain a compensation consultant in 2008. The~~ Compensation Committee has adopted a written charter which is available on our website as described below. During ~~2008,~~2009, there were 89 meetings of the Compensation Committee. We anticipate the Compensation Committee will consist of Richard G. Dooley, Chairman, W. Patrick Campbell, Ian M. Cumming, Robert E. Joyal, Michael T. O’Kane and Joseph S. Steinberg after the annual meeting.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee during 2009 were our current or former employees or officers. The Compensation Committee members other than Messrs. Cumming and Steinberg were not involved in

transactions with us which would require disclosure as related party transactions. Messrs. Cumming and Steinberg were not involved in transactions which would required disclosure other than the transactions by and involving Leucadia National Corporation which are described in detail under the heading “Transactions With Related Persons — Leucadia National Corporation”.

Use of Compensation Consultant

The Committee retained the services of Mercer as its compensation consultant in 2009. Mercer was engaged directly by the Compensation Committee to provide advice and counsel to the Committee generally, and specifically, to:


	•	provide the Committee with an executive compensation assessment for the CEO and Chairman of the Executive Committee,

	•	outline potential bonus approaches for 2009,

	•	develop recommended short and long-term incentive program approaches and levels for 2010, and

	•	support our disclosure efforts.

Mercer assisted the Committee in proposing its new peer group, provided benchmarking for the compensation arrangements of the CEO and Chairman of the Executive Committee against the peer group, outlined potential 2009 bonus and long term compensation approaches for the CEO and Chairman of the Executive Committee, and developed preliminary2010-12 compensation recommendations for review by the Committee. In 2010, we paid Mercer $78,450 for its services related to 2009 and2010-12 executive compensation, and $23,358 to affiliates of Mercer for providing background investigative services. Affiliates of Mercer also received $740,200 in commissions as a result of commercial insurance policies we purchased through those affiliates. The decisions to use Mercer affiliates for these other services are made in the ordinary course of our business and are generally recommended by our business department heads with the approval of management. We view these decisions as unrelated to our discussion of executive compensation and we do not require the Compensation Committee or the Board to review each use of an affiliate of Mercer.

Compensation Committee Subcommittee

In order to ensure that the directors making compensation decisions qualify as “outside directors” under Section 162(m) of the Internal Revenue Code and non-employee directors for purposes ofRule 16b-3 under the Securities Exchange Act of 1934, the Compensation Committee formed a subcommittee for consideration of executive officer compensation comprised of Messrs. Dooley, Campbell, Joyal and O’Kane, the outside directors not including the Leucadia directors. On December 30, 2009, the subcommittee approved the equity grants to Mr. Broadbent and Mr. Hendrickson and the adjustment of Mr. Friedman’s salary ratio as described in further detail under the headingElements of Compensation: Base Salarybelow.

Corporate Governance and Nominating Committee

The current Corporate Governance and Nominating Committee members are Robert E. Joyal, Chairman, W. Patrick Campbell, Ian M. Cumming, Richard G. Dooley, Michael T. O’Kane and Joseph S. Steinberg. The Corporate Governance and Nominating Committee (1) identifies individuals to the Board who are qualified to become board members consistent with criteria approved by the board, (2) recommends individuals to the Board for nomination as members of the Board and its committees, (3) develops and recommends to the Board a set of

would consider the same factors in making its recommendation as it uses when evaluating candidates proposed by management or the Board. To suggest a nominee, address your correspondence to Lloyd H. Feller, our corporate Secretary, at our address listed at the top of the front page of this Proxy Statement. The Corporate Governance and Nominating Committee has adopted a written charter which is available on our website as described below. During ~~2008,~~2009, there were 42 meetings of the Corporate Governance and Nominating Committee. We anticipate the Corporate Governance and Nominating Committee will consist of Robert E. Joyal, Chairman, W. Patrick Campbell, Ian M. Cumming, Richard G. Dooley, Michael T. O’Kane and Joseph S. Steinberg.

Board Organization, Leadership and Accessibility

The ~~non-management~~non-employee directors of the Board of Directors meet in executive session at each meeting of the Board of Directors. These executive sessions are led by the ~~non-management directors~~non-employee members of the board on a rotating basis. The ~~non-management~~non-employee directors have the authority to retain outside consultants and to schedule additional meetings. Mr. Handler continues to serve as both Chairman of the Board and Chief Executive Officer and we do not have a lead independent director. The Board believes a lead independent director is not desirable for 3 reasons: (1) the Board’s size makes interaction among all Directors relatively easy; (2) the existence of a lead independent director may cut off or reduce access of other directors to the CEO and management and result in a less informed and less effective Board; and (3) the Board has a procedure for determining who shall lead non-employee executive sessions of the Board.

Important documents related to our corporate governance are posted on our website athttp://www.jefferies.com/and may be viewed by following the ~~“About Us”~~“Shareholders” link near the ~~top~~lower middle of the ~~left menu,~~screen and then the “Corporate Governance” link in the menu that follows. Documents posted include our Code of Ethics, Corporate Governance Guidelines and the Charters for each of the board committees mentioned above, which may be accessed directly athttp://www.jefferies.com/charters/. We will also provide you with any of these documents in print upon request without charge. You may direct your request to Investor Relations, Jefferies & Company, Inc., 520 Madison Avenue, New York, NY 10022, or by calling203-708-5975 or sending an email toinfo@jefferies.com.

We have established a process by which shareholders and other interested parties can contact our Board of Directors, the non-management directors as a group, or a committee of the Board of Directors. To contact our Board, you can send an email to Lloyd H. Feller, our Corporate Secretary, atlfeller@jefferies.com, or write to: Lloyd H. Feller, Executive Vice President and General Counsel, Jefferies Group, Inc., 520 Madison Avenue, New York, NY, 10022. To contact our non-management directors as a group, a committee of the Board of Directors directly, or the chairman of the next executive session of the non-management directors, write to the party you wish to contact,c/o the General Counsel’s Office, Attention: Corporate Secretary, Jefferies Group, Inc. 520 Madison Avenue, New York, NY, 10022.

Compensation Discussion and Analysis

This section provides a narrative discussion of our objectives when compensating the named executive officers, and the policies we have implemented to achieve those objectives. It also outlines what the compensation program is designed to reward, each element of compensation, why we chose to pay each element, how we determined the amount we would pay, and how each compensation element fits into our overall compensation objectives. Although we include examples in this discussion to illustrate how our policies have been implemented, you should also refer to the tables following this discussion for specific disclosures about the compensation of each named executive officer. The specific disclosures in the tables and the narrative following the tables together with this general discussion of objectives and policies should provide you with a complete picture of how we approach and implement compensation for our named executive officers.

Objectives of our Compensation Programs

Our compensation policies, plans and programs ~~for executive officers~~ are intended to meet three key objectives:


	•	Provide competitive levels of compensation in order to attract and retain talented executives and firm leaders.

	•	Encourage long-term service and loyalty.


	•	Provide compensation that is perceived as fair ~~in comparison to other companies,~~ within the Company and consistent with employee and executive contributions to the Company.

of the Chairman of the Executive Committee, subject to approval by the Compensation Committee. The Chairman of the Executive Committee was the principal negotiator regarding the compensation of the Chief Financial Officer, subject to the review and approval of the Compensation Committee. The negotiation regarding the amounts of total compensation and the amount of long term equity awards for the CEO and Chairman of the Executive Committee occurs primarily between the CEO and the Chairman of the Compensation Committee, but the final decision, and the analysis relied upon to reach that decision, are the Committee’s.

Base Salary

We pay our named executive officers a base salary in order to provide them a predictable level of income and enable the executive to meet living expenses and financial commitments. We view base salary as a way to provide a non-performance based element of compensation that is certain and predictable. Though we make our decisions on executive compensation focusing on total direct compensation for a given year including base salary, annual bonus and long-term awards, we are sensitive to the needs of our executives for a certain level of compensation stability. The base salaries we have established for the named executive officers reflects our understanding of the trade-off that exists between aligning the interests of the named executive officers as closely as possible with those of the Company’s shareholders and our desire to avoid exposing them to compensation risk. We believe the base salary levels we have established strike the proper balance and that providing a predictable base salary is essential to attract and retain talented executives and provide a compensation package that is perceived as fair, in comparison to other companies and within the Company.

With respect to the base salary paid to executives, our Compensation Committee’s determination of the appropriate level of base salary is subjective and not formulaic. ~~For~~The base salary for the CEO ~~and Chairman of the Executive Committee, base salaries are~~is largely a result of previous negotiation and historical precedent. The salaries for the CEO and Chairman of the Executive Committee were part of the originally negotiated arrangements agreed upon by each executive when they assumed their current roles and the Committee has not seen a performance based reason to change this arrangement. At that time, the Committee agreed to pay the CEO the maximum base salary permitted within the limits of Internal Revenue Code § 162(m) ~~and subsequently,~~. Subsequently, the Committee agreed to pay the Chairman of the Executive Committee a base salary equal to 50% of the CEO’s base ~~salary.~~salary, which was the level used for all of 2009. However, in December 2009, the Compensation Committee increased the ratio to 75% of the CEO’s salary beginning January 1, 2010, based on its recognition of the important contributions to the firm’s growth Mr. Friedman has made and the growing amount of managerial time required to manage an increasingly complex firm. The Compensation Committee ~~has continued following this historical precedent in recent years and prefers~~continues to prefer to address performance related compensation through the bonus process rather than through adjustments to base salary. Though the continuation of this relationship is not guaranteed, the Committee has viewed it as an effective way to align the interests of the CEO and Chairman of the Executive Committee and to simplify a highly subjective process that is not the product of any additional quantitative or qualitative analysis. The Committee continues to use base salary to provide a non-performance based cash component to their compensation, and provides performance based and retention oriented compensation through bonuses and long term equity grants.

The base salaries for our other named executive officers are ~~arrived at through a process of negotiation between the named executive officer and~~determined by the Chief Executive Officerand/or the Chairman of the Executive Committee and are viewed in light of historical precedent within the firm, competitive factors, the limits of § 162(m), and the desire to provide a non-performance based cash component of compensation.

Bonuses

We use annual bonuses as our primary tool for encouraging executives to maximize short-term productivity and profitability. Annual incentive awards provide executives with an incentive to focus on aspects of Company performance that we believe are key to its success. Accordingly, we ~~determine~~have traditionally determined bonuses in whole or in part by reference to, for certain executives, earnings per share, return on equity, and pre-tax profit margin. These financial measures are calculated using our consolidated financial results, adjusted to add back the negative effect of extraordinary transactions (e.g. mergers, acquisitions, or divestitures), if any.

~~Our~~In years past the Compensation Committee ~~generally determines the~~has determined targets for payment of annual bonuses ~~to executive officers~~ by a date early in the calendar year, so that the performance goals and potential rewards can positively influence executives during the year and meet the requirements of Code Section 162(m). ~~These formula determinations are highly subjective and not the result of specific quantitative or qualitative analysis. The Compensation Committee reserves the right~~We expect to ~~adjust bonus amounts downward,~~return to this pattern in its discretion. These formulas are set, taking into account other components of compensation, with a view to providing a compensation opportunity that is competitive and comparable to our established levels of recent compensation for similar performance results. When setting the threshold, target and maximum performance goals and payouts early in the calendar year, we take into account the current business conditions we face and our budgets for the year in an effort to establish incentives that will not become irrelevant due to business setbacks or unusually strong performance part way through the year.future

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~~In the case of Mr. Feller, we eliminated the minimum guaranteed bonus initially established by his employment agreement and adjusted his base salary by a corresponding amount. We believe~~years, but did not follow this ~~structure preserves the spirit of his employment agreement while tying his annual bonus to firm performance. His entire annual bonus for 2008 was therefore determined with reference~~formula in 2009 due to the ~~Company’s financial performance. Since minimum~~unpredictability of the market in early 2009. Bonuses for 2009 were awarded in late 2009 based on exceptional performance ~~targets were not met, Mr. Feller did not receive an annual bonus for 2008.~~in a very difficult environment.

In implementing our compensation policies, plans, and programs, we consider the effects of Code Section 162(m). Section 162(m) generally disallows a public company’s tax deduction for the named executive officers ~~(other than the chief financial officer)~~ in excess of $1 million in any tax year. Under Section 162(m), compensation that qualifies as “performance-based compensation” is excluded from the $1 million deductibility cap, and therefore remains fully deductible even though the executive’s total ~~taxable~~direct compensation may exceed $1 million in a given year. We seek to preserve the tax deductibility of the compensation we pay to executive officers, to the extent we can do so without impairing the operation and effectiveness of our compensation policies and programs.

We have traditionally preserved the right for the Committee to grant stock awards in lieu of annual bonus amounts, but did not issue any stock awards in lieu of bonus during 2009.

We have also adopted programs permitting deferrals of compensation, so that potentially non-deductible compensation will be paid following termination of an executive’s service, at a time when payment of such compensation will not be subject to limits on deductibility under Section 162(m). None of our named executive officers deferred income during 2009. We retain the flexibility to enter into arrangements that may result in non-deductible compensation to executive officers, which may include non-qualifying awards under the 2003 Plan.

Long-Term Awards

Long-term equity-based awards serve both to align the interests of executive officers with those of shareholders and to promote retention and long-term service to the Company. These awards provide increasing rewards to executives if the value of the Company’s stock rises during the life of the award, thus encouraging a long-term focus and aligning the interests of executive officers with the interests of shareholders. Since he assumed the duties of CEO, the Compensation Committee has tied Mr. Handler’s performance based compensation to performance of the Company as a whole, and has provided an incentive for him to focus on creating long-term shareholder value through an emphasis on stock awards.

~~During 2008, employees who received long term equity compensation (including grants in early 2008 that related to compensation for 2007) were given~~In 2009 the ~~choice whether to receive restricted stock units (“RSUs”) or shares~~Committee continued its pattern of ~~restricted stock. The Committee also began~~ granting shares that generally vested annually over four ~~years instead of five years in recognition of the need of its employees for greater liquidity during this difficult financial market.~~years. We believe a four year vesting cycle ~~will accomplish~~accomplishs the objective of preserving long term ~~service~~loyalty to the Company while remaining sensitive to the needs of employees, many of whom have received a large component of their recent compensation in the form of long-term restricted equity grants.

Grants of RSUs or restricted stock to our executive officers are based on a review by our Compensation Committee of trends in the compensation of executives in the securities industry and its subjective judgment as to the appropriate level of total compensation for the executive officer. The Committee’s determination of the number of equity grants and their vesting terms is highly subjective and generally follows a negotiation with our CEO. The Committee intends these grants to be more focused on long-term employee retention rather than current year performance metrics. With respect to our Chief Executive Officer and Chairman of the Executive Committee, a significant factor in our Compensation Committee’s determination of the amount of equity-based awards granted is the fact that such producer-executives have forgone other internal and external opportunities for increasing their personal earnings that would have arisen if they had focused solely on their production capabilities, but have instead agreed to serve in management roles in addition to producing responsibilities. We believe that the long-term equity-based component of such executives’ overall compensation allows us to retain such talented individuals, while also aligning their interests with those of our other shareholders. Equity awards provide compensation linked to the performance of our stock, with a strong inducement to long-term service.

~~Our~~In 2002, our Compensation Committee ~~decided in 2002~~began using multi-year grants to ~~alter~~establish the ~~timing~~compensation of ~~long-term equity incentive grants by granting awards that provide the long-term component of compensation to~~ our CEO, ~~over a period of two years. A two-year long term grant resolves annual compensation related distraction for the executive~~ and ~~fosters a long-term~~

~~view on building equity value for the shareholders. The grants made~~continued this pattern in 2006 provide for vesting over a 5 year period. The Compensation Committee used the five year vesting period for these long term grants to encourage long term retention and to further align the executive’s incentives with those of the shareholders.2010. Since the Company does not have employment contracts with any of the executive officers, the long term grants to the CEO and Chairman of the Executive Committee help ensure that hethey will stay committed to the Company’s success. ~~By making equity award grants in advance of~~In early 2010, the ~~year to which they apply, the~~Compensation Committee provided an opportunity to the executive to benefit from a sustained period of good performance, which occurred from 2002 until 2007. We continued this practice for the CEO in 2006, and made similar grants to the Chairman of the Executive Committee. Accordingly, the restricted stock units granted ~~in 2006 constituted part of the total direct compensation of~~ the CEO and Chairman of the Executive Committee shares intended to serve as long-term compensation for ~~2007~~2010, 2011 and ~~2008.~~2012, and which vest based on our performance in those years. Through these grants, we sought to provide a

substantial component of compensation that would focus the CEO and Chairman of the Executive Committee on long-term growth in the value of the Company’s stock. As a result of our lower than anticipated operating results primarily in the fourth quarter of 2007, the CEO and Chairman of the Executive Committee have requested that the Committee reduce their future compensation by the number of shares they were granted in 2006 which were intended to relate to 2007. As a result of the loss we reported for 2008, the CEO and Chairman of the Executive Committee requested that the Committee also reduce their future compensation by the number of shares they were granted in 2006 which were intended to relate to 2008.

In December 2008, the Board modified all outstanding stock-based compensation awards of active employees, such that employees who terminate their employment or are terminated without cause may continue to vest, so long as the awards are not forfeited as a result of the other forfeiture provisions of those awards, the most significant of which requires that the employee not compete with us after termination. This amendment resulted in the immediate expensing of all unamortized stock awards in respect of historic stock-based compensation. Though continuing service is no longer required, “vesting” as used in this Proxy Statement, continues to refer to the point at which the stock-based compensation becomes non-forfeitable. In the future, including equity awards that will be issued this year-end, as a result of comparable termination provisions in new grants of stock-based compensation, Jefferies’ annual compensation expense will reflect 100% of the expense associated with stock-based compensation awarded in respect of each year. This approach to expense recognition will more closely match the economic cost of stock-based compensation to the period in which the related service is performed.

The number of shares or units awarded is determined through a highly subjective process designed to encourage long term retention more than short term performance. ~~The~~In late 2009, the Committee ~~has historically~~engaged Mercer to assist in establishing the compensation for the CEO and Chairman of the Executive Committee. We used ~~information obtained from an analysis of our~~a peer group of companies ~~in this process,~~to provide context for our 2009 compensation decisions, but ~~has not done so for this year. The~~the determination of the amounts granted ~~has historically been~~is the result of a negotiation and is not formulaic.

Other Benefits

The Company provides medical, dental, life insurance, disability and other similar benefits to executives and other employees that are not part of what we consider direct compensation. We intend these benefits to be generally competitive, in order to help in our efforts to recruit and retain talented executives. We have not implemented severance arrangements with our executive officers; however, the Company has adopted a firm wide severance policy which limits severance payments to no more than six months ~~salary.~~salary for seasoned senior employees. We do not provide significant enhancements to compensation in connection with a change in control. We believe that the substantial equity stake of our executives provides alignment with the interests of shareholders, so that the executives can be expected to consider potential strategic transactions that might affect the control of ~~the Company~~Jefferies consistent with their interests as shareholders and consistent with their fiduciary duties. We do not provide for payment ofgross-ups to offset golden parachute excise taxes. Executives who worked for us in periods before April 1, 1997 are also entitled to benefits under our pension plan. In the aggregate, we believe our severance,change-in-control and pension benefits are quite modest compared to general business practices for companies of comparable size and character. We have considered this fact in setting the levels of total direct compensation for senior executives.

We provide the CEO with a driver for his increased business transit, including his commute to several of our different offices, and ~~reimburse~~provide fuel and maintenance for the vehicle the CEO purchased in exchange for ~~mileage~~the availability of the vehicle for other business purposes when ~~his vehicle is driven on Company business.~~not needed by the CEO.

How Our Compensation Decisions Fit our Overall Objectives

~~Use of Outside Advisors~~

We used outside advisors to study a peer group of companies in 2004 and 2006, but did not use outside advisors or consultants during 2008. Instead, the Committee used the same compensation structure for 2008 as it used for 2007 and plans to wait until future years to determine whether to use a peer group of companies again and which companies should be considered within its peer group.

Role of Individual Performance

~~Rather~~Since the compensation committee did not establish bonus targets and objectives for 2009, it relied on its subjective evaluation of individual performance in 2009 more than ~~focus executive compensation on performance of~~in typical years. In future years, the ~~business units within an executive officer’s specific area of expertise, the Compensation Committee views~~committee expects to return to using overall firm performance as the best indicator of individual performance of our named executive officers and ~~has therefore tied~~to tie their individual compensation to firm wide performance as a whole. The Compensation Committee believes this focus creates a greater enhancement to firm-wide profitability and teamwork, a key goal of our compensation policies, rather than a more segmented approach which rewards individual productivity.

The Committee retains the ability to exercise negative discretion in bonus amounts. Since no incentive bonuses were paid for 2008, no negative discretion was exercised with respect to 2008 compensation. The circumstances in which the Committee exercises this discretion are highly subjective and not formulaic. The Committee has exercised this negative discretion in the past, but has not established specific criteria or any further qualitative or quantitative analysis for when it will do so in the future.

The Committee considers individual performance and initiative when determining the amount of long-term equity compensation it will award each year. The Committee’s impressions of each named executive’s past performance are a factor taken into account when considering the desirability of the employee’s long-term retention and therefore the amount of shares awarded in long-term equity grants. As a result, exceptional individual initiative or performance may generate larger long-term equity grants, but typically will not affect base salary. ~~Individual~~In typical years, individual initiative will affect the amount of bonus paid only to the extent such individual performance resulted in achieving firm wide performance required in our targets for a particular year, although it may impact future compensation opportunities.

Culture of Long-Term Stock Ownership

Except for donations to charitable foundations and trusts, our CEO has never sold any of the equity interests granted to him as part of his compensation. Other than similar donations and shares surrendered ~~by the Chairman of the Executive Committee~~ in connection with option exercises and payment of related taxes, ~~and charitable donations,~~ the Chairman of the Executive Committee also has never sold any of the equity interests granted to him as part of his ~~compensation.~~compensation or which he otherwise has acquired. We believe their

retention of shares preserves their incentive to act in the Company’s long-term ~~interests even after the applicable vesting periods have expired.~~interests. To date, our CEO has generally elected to defer equity awards under our deferral programs, including restricted stock, restricted stock units, and stock units representing the gain from exercises of stock options. Our Chairman of the Executive Committee has similarly deferred most of his equity awards. These arrangements provide ~~to him~~them the advantages of tax deferral, but provide no enhancement by the Company of the net value of ~~his~~their restricted stock or restricted stock ~~units or options.~~units. In this type of deferral arrangement, the Company’s tax deduction is delayed until the year in which the executive recognizes income, and is generally based on the value of shares delivered at the time of settlement of the deferral arrangement. Our insider trading policy precludes short sales, purchases or sales of options and other derivatives, and other transactions that offset or hedge the risk of ownership of our stock.

We have established our DCP and permit the deferral of restricted stock units, option gains and other awards under our Amended and Restated 2003 Incentive Compensation Plan (the “Plan”) as a method for providing our employees advantages of tax deferral and also encouraging long-term retention of equity positions. We believe these policies serve to align the interests of executives with shareholder interests in return on equity and appreciation over time. In this type of deferral arrangement, the Company’s tax deduction is delayed until the year in which the executive recognizes income, and is generally based on the value of shares delivered at the time of settlement of the deferral arrangement.

We do not consider gains or losses from equity awards in setting other elements of compensation but the Compensation Committee may consider the effect of the vesting of prior compensation on employee retention.

Compatible Investment Opportunities

In addition, we have established investment entities and permitted executive officers and others to acquire interests in these entities, and have permitted deferred bonus amounts to be deemed invested in those entities. Some of ~~those~~these investment entities are funds we manage, some hold equity ~~securities~~ and derivative ~~instruments~~securities in companies for which we have provided investment banking and other services, and others that share in the profitability of Jefferies’ High Yield Division, which now operates as Jefferies High Yield ~~Holdings,~~Trading, LLC. See “Transactions with Related Persons.” We believe that an executive’s participation in these investments helps to further align the executive’s interests with our long term success and profitability. Our offering these kinds of opportunities also helps us compete for executive talent in the financial services industry, in which our competitors, particularly non-public companies, offer wealth-building investment opportunities as a way to attract and retain executives and producers.

Disparities in Executive Compensation

We view the disparities in compensation between our named executive officers as a result of the relative “market” for each individual employee, our anticipated replacement cost for the employee, and the applicable competitive environment. With respect to our Chief Executive Officer and Chairman of the Executive Committee, a significant factor in our Compensation Committee’s determination of the amount of equity-based awards granted is the fact that ~~such producer-executives~~these executives have forgone other internal and external opportunities for increasing their personal earnings that would have arisen if they had focused solely on their production capabilities, but have instead agreed to serve in management roles in addition to producing responsibilities. We recognize the significant compensation these individuals have earned in the past when focusing on their specific business units and understand that our competitors will also consider these production opportunities. As a result, we continue to consider the compensation potential of these two individuals in particular when setting targets and long-term equity compensation that is intended to encourage long-term retention, including the continuing opportunity for the Chairman of the Executive Committee to earn compensation directly from his ownership interest in Jefferies Capital Partners. See “Transactions with Related Persons — Private Equity Funds.” This is the primary reason for the disparity between the compensation of the CEO and Chairman of the Executive ~~Committee and the other named executive officers.~~

With respect to Mr. Feller, we note that the increase in his base salary for 2008 corresponds to the elimination of his guaranteed annual bonus. This adjustment was intended to preserve the spirit of his compensation arrangement rather than constitute an increase in overall compensation.Committee.

With respect to Mr. Broadbent, his compensation was negotiated at the time of his hiring and is also not based entirely on the Company’s financial performance. Mr. Hendrickson’s compensation is not tied directly to firm performance in recognition of the fact that he answers directly to Mr. Broadbent, and that his scope of duties does not permit him to influence firm policy and ~~decision making~~decisionmaking outside his area of direct responsibility in the same manner as the other named executive officers. Compensation for all five named executive officers is impacted by

competitive considerations, including the Company’s understanding of the cost of replacing these executives with similarly experienced and skilled individuals; in other words, the compensation is impacted by the “market” for such individuals.

~~Reduction In Force~~Relationship of Compensation Policies and Practices to Risk Management

~~In connection~~The Board has discussed whether our compensation policies are reasonably likely to have a material adverse effect on our results. The Board noted that, consistent with our “Wall Street” performance-based model, many of our employees receive a ~~reduction in force~~significant portion of their compensation through commission-based, net-revenue-based, profit-based or discretionary compensation tied to their individual or business unit performance, or a combination thereof. The Company generally uses a netting approach, which nets losses against their individual or group revenues. As a result, management believes that employees and business units are appropriately motivated to seek the ~~firm commenced~~maximum revenue-enhancing opportunities, while managing the firm’s (and their individual or group’s) exposure to risk. The Board noted that an immaterial portion of the Company’s revenues are derived from proprietary trading businesses and that a significant portion of many employees’ compensation is provided in the ~~first half~~form of ~~2008, management determined~~equity linked compensation that ~~it would be appropriate to waive~~vests over time, which has the ~~non-competition aspect~~effect of tying the continued vesting requirement for those who are let go without cause as part of the reduction in force. The Committee concurred with this judgment and delegated to management the authority to waive the non-competition forfeiture event contained in the grant documents for those employees that were terminated as part of a reduction in force and who agreedindividual employee’s long term financial interest to the ~~terms of~~firm’s overall success. The Board believes that this helps mitigate the risks inherent in our ~~separation agreement.~~business models.

The Board noted that our risk management team continuously monitors our various business groups, the level of risk they are taking and the efficacy of potential risk mitigation strategies. Senior management also monitors risk and the Board is provided with data relating to risk at each of its regularly scheduled meetings. The Chief Risk Officer meets with the Board at each of those meetings to present his views and to respond to questions.

Summary Compensation Table

Shown below is information concerning the compensation we paid to ~~or amortized in respect of,~~ those persons who were, during ~~2008,~~2009, our (a) Principal Executive Officer, (b) Principal Financial Officer, ~~and~~ (c) the other three most highly compensated executive officers as specified by SEC ~~rules. The compensation described relates~~rules, and (d) up to ~~services~~two additional individuals who were Executive Officers during 2009 and for whom disclosure would have been provided ~~for us by the individuals~~but for the ~~fiscal year ended~~fact that the individual was not serving as an executive officer on December 31, ~~2008.~~

As noted previously, Messrs. Handler and Friedman did not receive bonuses during 2007 and 2008. Amounts listed under their “Stock Awards” column below in respect of 2007 and 2008 reflect the value of stock grants from prior years that were recognized in 2008 in accordance with FAS 123R, which requires the reporting of historical grants on an amortized basis. Mr. Handler and Mr. Friedman each received long term equity grants in 2006, which were intended by the Committee to relate equally to 2007 and 2008 compensation. Similar to 2007, they have each requested that the Compensation Committee reduce their future compensation by the number of shares they were granted in 2006 which were intended to relate to 2008. Because a significant amount of the equity related expense had already been recognized and could not be reversed under applicable rules without incurring additional expense, it was preferable for the Company to reduce anticipated future grants by these amounts.2009.


												Change in																			Change in
												Pension																			Pension
												Value and																			Value and
										Non-Equity		Nonqualified																			Nonqualified
								Stock		Incentive Plan		Deferred														Stock			Non-Equity		Deferred
								Awards		Compensation		Compensation			All Other											Awards			Incentive Plan		Compensation			All Other
Name and Principal Position	Year		Salary ($)			Bonus ($)		($)(1)		($)(1)		Earnings ($)			Compensation ($)			Total ($)		Year		Salary ($)		Bonus ($)		($)(1)			Compensation ($)		Earnings ($)			Compensation ($)			Total ($)
(a)	(b)		(c)			(d)		(e)		(g)		(h)			(i)			(j)		(b)		(c)		(d)		(e)			(g)		(h)			(i)			(j)

Richard B. Handler		2008		1,000,000			—		7,126,652		—		—	(2)		367,422	(3)		8,494,074		2009		1,000,000	$	6,000,000		—			—		—	(2)		145,270	(3)		7,145,270
Chairman & Chief		2007		1,002,319			—		21,850,638		—		—			137,996			22,990,953
Executive Officer		2006		1,000,000			—		10,870,672		7,908,122		8,000			114,997			19,901,791
Chairman &																					2008		1,000,000		—		—			—		—			367,422			1,367,422
Chief Executive Officer																					2007		1,002,319		—		3,953,975			—		—			137,996			5,094,290
Brian P. Friedman		2008		500,000			—		9,349,872		—		—			7,752			9,857,624		2009		500,000		—		—			—		—			4,987			504,987
Chairman of the		2007		500,000			—		12,322,292		—		—			8,005			12,830,297		2008		500,000		—		—			—		—			7,752			507,752
Executive Committee		2006		500,000			—		5,281,808		3,954,024		—			3,997			9,739,829		2007		500,000		—		3,953,975			—		—			8,005			4,461,980
Peregrine C. Broadbent		2008		1,000,000			1,300,000		5,974,469							5,527			8,279,996		2009		1,000,000		1,312,500		687,500			—		—			4,515			3,004,515
Executive V.P. & Chief		2007		121,795			1,300,000		128,461		—		—			—			1,550,256		2008		1,000,000		1,300,000		699,991			—		—			5,527			3,005,518
Financial Officer																					2007		121,795		1,300,000		6,349,981			—		—			—			7,771,776
Lloyd H. Feller		2008		900,000	(4)		—		616,649		—		—			20,252	(5)		1,536,902		2009		900,000		1,000,000		999,995	(4)		—		—			6,224			2,906,219
Executive V.P., General		2007		500,000			400,000		384,786		—		—			18,005			1,302,791		2008		900,000		—		—			—		—			20,252			920,252
Counsel & Secretary		2006		500,000			400,000		288,694		421,731		—			13,996			1,624,421		2007		500,000		400,000		—			—		—			18,005			918,005
Charles J. Hendrickson		2008		250,000			352,500		522,263		—					7,752			1,132,515		2009		250,000		542,500		107,488			—		—			1,279			901,267
Treasurer		2007		250,000			400,000		103,199							9,505			762,704		2008		250,000		352,500		172,488			—		—			7,752			782,740
																					2007		250,000		400,000		99,997			—		—			9,505			759,502


(1)		~~For a discussion~~In accordance with revised disclosure rules, historical years have been restated to show the fair market value of ~~the assumptions made~~awards in the ~~valuation of shares reported in~~years they were granted, rather than the “Stock Awards” and “Non-Equity Incentive Plan Compensation” columns above, see the “Stock Based Compensation” heading in footnote 1, and the “Compensation Plan” discussion in footnote 22amount accrued with respect to ~~the Notes to our Consolidated Financial Statements~~those years as ~~reported in our Annual Statement onForm 10-K.~~ ~~In December 2008, we removed the continuing service requirement applicable to all outstanding restricted shares and restricted stock units, resulting in an acceleration of their amortization. As noted~~was previously ~~this did not result in new grants or any early vesting of grants, and the grants remain subject to a risk of forfeiture due to non-competition clauses contained in the grants.~~required. The amounts shown include cash and non-cash compensation earned by the Named


		Executive Officers as well as amounts earned but deferred under our deferred compensation plans, as identified in the footnotes for each executive officer.

(2)		The actuarial present value of the accumulated pension benefit decreased by ~~$2,743~~$1,182 under the terms of our Pension Plan, as more fully described in the Pension Benefits Table.

(3)		Includes ~~$117,000~~$137,500 related to a driver we provide to Mr. Handler to facilitate his transportation to and from meetings, between our offices and ~~on occasion~~ for his personal ~~use, and $250,420 which constituted a deferred payout related to an escrow from an historical investment in a transaction that closed in July 1997.~~use.

(4)		~~Includes $125,000~~The long-term equity incentive referred to above consists of restricted stock granted on February 26, 2009 to replace the grant Mr. Feller received in 2008 which ~~was deferred through our DCP as described in the Nonqualified Deferred Compensation — 2008 table below.~~

~~(5)~~		~~Includes $12,500 as the value of discounts on shares purchased through our DCP.~~he forfeited.

Grants of Plan Based Awards — ~~2008~~2009

The following table describes ~~actions~~grants issued taken by the Compensation Committee during ~~2008~~2009 in which it (a) established the ranges of possible compensation for certain of the named executives, and (b) granted shares of restricted stock or restricted stock units as long term compensation. ~~Due to the difficult financial markets in 2008, none of the threshold performance objectives were achieved and therefore none of the amounts listed below as estimated possible payouts were paid.~~


										All Other			Grant Date											Estimated Future		All Other			Grant Date
										Stock Awards:			Fair Value											Payouts Under		Stock Awards:			Fair Value
			Estimated Possible Payouts Under							Number of			of Stock and					Estimated Possible Payouts Under						Equity Incentive		Number of			of Stock and
	Grant		Non-Equity Incentive Plan Awards							Shares of			Option			Grant		Non-Equity Incentive Plan Awards						Plan Awards		Shares of			Option
Name	Date		Threshold ($)		Target ($)		Maximum ($)			Stock or Units (#)			Awards ($)			Date		Threshold ($)		Target ($)		Maximum ($)		Target Shares (#)		Stock or Units (#)			Awards ($)
(a)	(b)		(c)		(d)		(e)			(i)			(l)			(b)		(c)		(d)		(e)		(g)		(i)			(l)

Richard B. Handler		3/25/2008	$	1,000,000	$	6,000,000	$	11,000,000			—			—
Brian P. Friedman		3/25/2008	$	500,000	$	3,000,000	$	5,500,000			—			—
Peregrine C. Broadbent		3/25/2008		—		—	$	750,000	(2)		—			—			12/30/2009		—	$	1,312,500		—		—		—			—
Peregrine C. Broadbent		12/30/2008		—		—		—			50,724		$	699,991	(1)		12/30/2009		—		—		—		—		28,923	(1)	$	687,500
Lloyd Feller		3/25/2008	$	225,000	$	600,000	$	1,050,000			—			—			2/26/2009		—	$	1,000,000		—		—		—			—
Lloyd Feller		1/22/2008		—		—		—			59,311	(3)	$	999,983	(3)		2/26/2009		—		—		—		—		95,785	(2)	$	999,995
Charles J. Hendrickson		12/30/2008		—		—		—			5,253		$	72,491	(1)		12/30/2009		—	$	542,500		—		—		—			—
Charles J. Hendrickson		1/22/2008		—		—		—			5,931		$	99,997	(1)		12/30/2009		—		—		—		—		4,522	(1)	$	107,488


(1)		Shares granted on December 30, ~~2008~~2009 were of restricted stock valued at ~~$13.80 per share,~~$23.77, the closing price of our common stock on the ~~date of grant.~~grant date. Shares granted on ~~January 22, 2008~~February 26, 2009 were of restricted stock units valued at ~~$16.86 per share,~~$10.77, the closing price of our common stock on the date of grant.

(2)		For performance exceeding the target level but less than the maximum level, award would have been payable in the range from $0 to $750,000, with the amount payable correlating to the level of performance.

~~(3)~~		Restricted stock shares were granted on ~~January 22, 2008~~February 26, 2009 and were subject to performance criteria for ~~2008~~2009 and 2010 performance. ~~In January of 2009 the Compensation Committee certified that the performance criteria had not been achieved and the shares were forfeited.~~

The following provides background information to give a better understanding of the compensation amounts shown in the Summary Compensation Table and Grants of Plan-Based Awards Table above.

Summary of Equity and Non-Equity Incentive Plan Grants

~~In addition to~~Richard Handler 2009 Compensation

With the ~~grants described~~difficult year we experienced in ~~the table above, on August 25, 2006 we granted shares which were viewed by~~2008, the Compensation Committee determined that it would not establish a new Executive Compensation Direct Pay Program for Mr. Handler in early 2009, as was its custom. Rather, the committee considered Mr. Handler’s prior request to attribute shares previously granted in 2008 toward future compensation and decided not to establish a ~~component~~bonus structure for 2009, but reserved the right to review potential bonuses at the end of ~~2008~~2009. The Board began its discussion of a bonus and long-term incentive grant for Mr. Handler prior to year end, but did not conclude those discussions until January 2010, at which point it established the 2009 cash bonus and long term equity compensation for Mr. Handler as follows:

The bonus and stock bonus described above were not granted by the Committee until January 2010 and are therefore not reflected on the Grants of Plan Based Awards — 2009 table above. The stock bonus described above was granted to Mr. ~~Friedman. For these executives, the grants formed one component of their overall compensation packages which included salary, annual bonuses based on achievement of certain~~Handler as restricted stock and is subject to 2010 performance criteria and ~~grants~~will vest ratably over three years.

The restricted stock agreement for Mr. Handler and the restricted stock unit agreement for Mr. Friedman contain a provision that provides that the restricted stock or restricted stock units will vest if the executive’s employment is terminated by reason of the executive’s death or disability. The agreements contain a provision that provides that the restricted stock or restricted stock units will continue to vest if the Company terminates the executive’s employment without Cause (as defined in the agreement) and the executive thereafter does not compete with the Company. Unlike the standard grant given as part of our year-end compensation process, if the executive’s employment is terminated by the executive, other than by death or disability, the unvested restricted stock and restricted stock units will be forfeited.

Brian Friedman 2009 Compensation

An approach simiar to that taken when determining the CEO’s compensation was used to establish the compensation for the Chairman of the Executive Committee. The committee considered Mr. Friedman’s prior request to attribute shares previously granted in 2008 toward future compensation and decided not to establish a bonus structure for 2009, but reserved the right to review potential bonuses at the end of 2009. The committee began its discussion of a bonus and long-term incentive grant for Mr. Friedman prior to year end, but did not conclude those discussions until January 2010, at which point it established the 2009 stock bonus for Mr. Friedman as follows:

The stock bonus described above was not granted by the Committee until January 2010 and is therefore not reflected on the Grants of Plan Based Awards — 2009 table above. The stock bonus was in the form of RSUs granted to Mr. Friedman and are subject to 2010 performance criteria and will vest ratably over three years.

Peregrine C. Broadbent 2009 Compensation

The compensation arrangement for Mr. Broadbent for 2009 was as follows:

The stock bonus described above was paid in the form of 28,923 shares of restricted stock ~~as long-term equity incentives which were intended to both align the interests of the executive with those of shareholders~~in February 2010 and to promote retention and long-term service to the Company. The August 2006 grants constitute the entire Long-Term Equity Incentive for Messrs. Handler and Friedman for 2008 and are described in detail below.will vest ratably over four years.

~~Richard Handler 2008~~Lloyd Feller 2009 Compensation

For Mr. ~~Handler,~~Feller, the ~~2008~~2009 Executive Compensation Direct Pay Program included:


~~Base Salary~~	~~Bonus Range~~	~~Long-Term Equity Incentive~~

~~$1,000,000~~	~~$0 to $11 million~~	~~$13 million~~

Mr. Handler did not receive any annual bonus with respect to 2008. Mr. Handler did receive a long-term equity incentive grant in August of 2006 which was intended to relate to his 2008 compensation, of 540,091 restricted stock units (on a split-adjusted basis), valued at $13 million at that time. Mr. Handler has requested thatThough the ~~Compensation~~ Committee ~~reduce his future compensation by the number of shares he was~~ granted ~~in 2006 in respect of 2008. The grant was subject to 2007 performance criteria and vested 20% on January 22, 2008 when the~~

~~Compensation Committee certified that the 2007 performance criteria had been met, 20% vested on August 25, 2008, and 20% will vest on August 25 of each of 2009, 2010 and 2011.~~

~~Brian Friedman 2008 Compensation~~

~~For Mr. Friedman, the 2008 Executive Compensation Direct Pay Program included:~~


~~Base Salary~~	~~Bonus Range~~	~~Long-Term Equity Incentive~~

~~$500,000~~	~~$0 to $5.5 million~~	~~$6.5 million~~

Mr. Friedman did not receive any annual bonus with respect to 2008. Mr. Friedman did receive a long-term equity incentive grant in August of 2006 which was intended to relate to his 2008 compensation, of 270,045.5 restricted stock units (on a split-adjusted basis), valued at $6.5 million at that time. Mr. Friedman has requested that the Compensation Committee reduce his future compensation by the number of shares he was granted in 2006 in respect of 2008. The grant was subject to 2007 performance criteria. The grant vested 20% on January 22, 2008 when the Compensation Committee certified that the 2007 performance criteria had been met, 20% on August 25, 2008, and will vest 20% on August 25 of each of 2009, 2010 and 2011.

~~Peregrine C. Broadbent 2008 Compensation~~

Mr. Broadbent joined us as our Chief Financial Officer on October 11, 2007, and his compensation arrangement was governed by his employment agreement with us through December 31, 2008. His employment agreemement provided compensation for 2008 as follows:

Guaranteed Cash
Performance-Based
Guaranteed Long-Term
Base Salary
Bonus Bonus Range Equity Incentive

$1,000,000 $1,300,000 $0 to $750,000 $700,000

~~Mr. Broadbent received the $2,000,000 guaranteed bonus called for by his employment agreement, payable $1,300,000 in cash and $700,000 in~~new shares of restricted stock ~~but~~with a market value of $1 million to Mr. Feller on February 26, 2009, it did not ~~receive any additional annual bonus with respect to 2008. The restricted shares vest 25% on December 30 of each of 2010, 2011, 2012 and 2013.~~

~~Lloyd Feller 2008 Compensation~~

~~For Mr. Feller,~~view the ~~2008 Executive Compensation Direct Pay Program included:~~

Base Salary
Bonus Range Long-Term Equity Incentive

$900,000 $0 to $1,050,000 $1,000,000

~~Mr. Feller did not receive any annual bonus with respect to 2008. Mr. Feller received~~grant as a new long-term equity incentive for Mr. Feller, but a replacement of the grant ~~of 59,311 shares~~he received in ~~January of~~ 2008 ~~valued at $1,000,000 at that time,~~ which ~~was~~he forfeited. The grant will vest ratably over two years and is subject to performance criteria which must be satisfied at each vesting. The Committee decided to provide this replacement grant as recognition of his strong performance during a difficult market, and recognition that Mr. Feller had been disproportionaly affected when firm-wide performance ~~goal for the company for 2008. Because the performance goal was~~criteria were not achieved ~~the shares were~~and as a result forfeited in January 2009. Since it was probable that the performance goal would not be met prior to year end, we made corresponding adjustments to our financial statements, effectively removing any 2008 accrued expense related to this grant. Accordingly, the amount appearing in the Summary Compensation Table — 2008 under Stock Awards does not reflect the amortized valuea significant portion of ~~the forfeited shares.~~his long term-equity incentive.

Charles J. Hendrickson ~~2008~~2009 Compensation

For ~~2008,~~2009, Mr. Hendrickson’s compensation arrangement was as follows:


Base Salary	Bonus	Long-Term Equity Incentive	Cash Bonus	Stock Bonus	Long-Term Equity Incentive

$250,000	$352,500	$172,491	$542,500	$107,488	$0

~~Mr. Hendrickson received a long-term equity incentive grant on January 22, 2008~~The stock bonus referred to above was paid in the form of 5,931 restricted stock units, valued at $100,000 at that time. The restricted stock units vested 25% on January 22, 2009 and the remainder will vest 25% on January 22 of each of 2010, 2011 and 2012. Mr. Hendrickson also received a long-term equity incentive grant of 5,2534,522 shares of restricted stock ~~valued at $72,491 at that time. The shares~~granted on December 31, 2009, which will vest ~~25% on December 30 of each of 2009, 2010, 2011 and 2012.~~ratably over four years.

No Ongoing Employment Agreements

We generally do not enter into employment agreements with our named executive officers after the initial employment agreement negotiated when they are ~~hired. Mr. Broadbent’s compensation was governed by his~~hired and we presently have no employment ~~agreement during all of 2008. His agreement expired on December 31, 2008 and his employment is no longer governed by an employment agreement.~~agreements with our named executive officers.

Performance Criteria and Targets

The ~~2008~~2009 annual bonuses for ~~Messrs. Handler, Friedman and Feller, and~~ the ~~performance-based annual bonus for Mr. Broadbent,~~named executives were dependent on our earnings per share, return on equity and pre-tax profit margin. These financial measures were calculated using consolidated after-tax earnings from our continuing operations. All financial results were subject to adjustment to add back the negative effect of extraordinary transactions (e.g. mergers, acquisitions, divestitures), if any, occurring during 2008. No adjustments were made in 2008. These formulas were approved for the executivesdetermined by the ~~Compensation~~ Committee and provide for no annual bonus if minimum threshold levels of performance are not achieved and maximum bonus if our performance equals or exceeds the top performance threshold level. The total direct compensation earnable for target performance for Messrs. Handler and Freidman did not increase in 2008 over 2007.

~~The Committee established six performance tiers for each of the three performance criteria as follows:~~


~~Threshold~~		~~25% below Target~~
~~Below Target~~		~~10% below Target~~
~~Target~~		~~Target~~
~~Above Target~~		~~15% above Target~~
~~Superior~~		~~25% above Target~~
~~Superior+~~		~~30% above Target~~

~~The Committee then assigned a weight to each~~based on their subjective view of the performance ~~criteria (earnings per share, return on equity~~of each executive in a difficult financial environment, were not based upon an objective or formulaic approach and ~~pre-tax profit margin), and~~did not reference the targets or weighting used ~~that weighting, together with the threshold category achieved to determine what portion of the executive’s target bonus the individual would be entitled to receive, as follows:~~


~~Earnings per Share~~	55	%
~~Return on Equity~~	40	%
~~Pre-tax Profit Margin~~	5	%

The Committee interpolates the amount of bonus between the set thresholds of performance when our performance falls between the set tiers, and reserves the right to take into consideration additional performance measures in ~~determining whether to reduce calculated bonus awards, but does not have discretion to increase the bonus awards.~~

For 2008, our performance fell below the “Threshold” tier for all three performance criteria, resulting in no bonus payout for Messrs. Handler, Friedman or Feller and only the minimum guaranteed bonus for Mr. Broadbent.past years.

Other Terms of Restricted Stock and Restricted Stock Units

In late 2008, the Compensation Committee determined to modify the terms of all outstanding restricted stock and restricted stock unit agreements held by employees. In order to better align compensation expense with the period in which a grant was made, the Committee eliminated the future service requirement. These changes also applied to agreements with the named executive officers.

All of the incentive plans and arrangements described above that result in the issuance of restricted stock and restricted stock units have been adopted pursuant to our Amended and Restated 2003 Incentive Compensation Plan (the “Plan”) as approved by our shareholders. ~~If we pay dividends on our common stock in a given quarter, we also~~We pay dividends on restricted stock and credit dividend equivalents on restricted stock units. We have implemented a program under the Plan permitting employees and executive officers to defer equity awards, including restricted stock units. Deferrals of restricted stock units enable the employee to specify that shares will be delivered in

settlement at a date later than the date the risk of forfeiture will lapse. This program encourages long-term ownership of a significant equity stake in the Company, which we believe is important to promoting a culture of entrepreneurship. Prior to settlement, the restricted stock units carry no voting or dividend rights, but dividend equivalents are accrued if a cash dividend is paid on our common stock. ~~If a dividend is paid, it is~~Dividend equivalents are converted to additional restricted stock units at the end of the quarter in which the dividend equivalent is credited based on the price of a share of our common stock on the last trading day of the quarter. On the settlement date for the stock units (which are no longer “restricted” once the risk of forfeiture lapses), we deliver to the executive one share of common stock for each stock unit being settled, including the stock units resulting from the credited dividend equivalents. Executives are not permitted to switch stock units into some other form of investment prior to settlement.

Options

We have not granted options to our executive officers since January 2003 and although our 2003 Plan still permits us to grant options, at the present time, we do not view options as a desirable method of compensation. None of our named executive officers had any options outstanding as of December 31, ~~2008.~~

2009.

Outstanding Equity Awards at Fiscal Year-End — ~~2008~~2009

~~The table below reflects the value at December 31, 2008, of each share of restricted stock or RSU which was unvested as of December 31, 2008 for each of the named executive officers.~~


						Stock Awards
													Equity Incentive
	Stock Awards										Equity Incentive		Plan Awards:
				Market					Market		Plan Awards:		Market or
	Number of			Value of		Number of			Value of		Number Of		Payout Value
	Shares or			Shares or		Shares or			Shares or		Unearned		Of Unearned
	Units of			Units of		Units of			Units of		Shares, Units or		Shares, Units
	Stock That			Stock That		Stock That			Stock That		Other Rights		or Other Rights
	Have Not			Have Not		Have Not			Have Not		That Have		That Have
Name	Vested (#)			Vested ($)		Vested (#)			Vested ($)		Not Vested (#)		Not Vested ($)
(a)	(g)			(h)		(g)			(h)		(i)		(j)

Richard B. Handler		742,600	(1)	$	10,440,956		564,766	(1)	$	13,401,897		—		—
Brian Friedman		626,876	(2)	$	8,813,877		336,227	(2)	$	7,978,667		—		—
Peregrine C. Broadbent		263,632	(3)	$	3,706,666		239,328	(3)	$	5,679,253		—		—
Lloyd H. Feller		81,237	(4)	$	1,142,192		110,402	(4)	$	2,619,839		—		—
Charles Hendrickson		24,006	(5)	$	337,524		23,859	(5)	$	566,174		—		—


(1)		Of these stock awards, 41,950 will vest on December 29, ~~of each of 2009 and~~ 2010; 3,530 vested on February 1, ~~of 2009, 3,530 will vest on February 1, 2010,~~2010; 3,532 will vest on December 15, ~~2010, and~~2010; 216,036 will vest on August 25 of each of ~~2009,~~ 2010 and ~~2011.~~2011; and 27,894 will vest on January 17 of each of 2010, 2011 and 2012.

(2)		Of these stock awards, ~~6,000 vested on January 20, 2009; 60,000 vested on January 18, 2009 and 60,000 will vest on December 16, 2009; 20,976 will vest on December 29, 2009; 20,972~~20,975 will vest on December 29, 2010; 7,766 shares vested ~~on February 1, 2009, 7,766 shares will vest~~ on February 1, 2010, and 7,766 shares will vest on December 15, 2010; 108,018 shares will vest on August 25, ~~of each of 2009, 2010 and~~2010; 108,020 shares will vest on August 25, 2011; 27,894 vested February 15, ~~2009,~~2010, and 27,894 shares will vest on Februrary 15 of each of ~~2010,~~ 2011 and 2012.

(3)		Of these RSU awards, 53,227 will vest on each of November 19, ~~2009,~~ 2010, 2011 and 2012; ~~and~~12,681 shares vested on January 31, 2010; 12,681 will vest on each of January 31, ~~2010,~~ 2011, 2012 and ~~2013.~~2013; and 7,230 shares will vest on January 31 of each of 2011, 2012, 2013 and 2014.

(4)		Of these RSU awards, 7,308 vested on February 1, ~~2009, 7,308 will vest on February 1, 2010, and~~2010; 7,310 will vest on December 15, ~~2010. The remaining 59,311 with a market value at December 31, 2008 of $833,913 were forfeited~~2010; 47,892 vested on ~~January 22, 2009 when the Compensation Committee certified that we did not meet 2008 performance criteria.~~February 26, 2010; and 47,892 will vest on February 26, 2011.

(5)		Of these RSU awards, 4,669 will vest on July 17, ~~of each of 2009 and~~ 2010 and 4,670 will vest on July 17, 2011; 1,186 vested on February 15, ~~2009,~~2010, 1,186 will vest on February 15 of each of ~~2010~~2011 and ~~2011,~~2012, and 1,187 will vest on February 15, ~~2012;~~2013; 1,313 vested on January 31, 2010, 1,313 will vest on ~~each of~~ January 31 ~~2010,~~of each of 2011 and 2012, and 1,314 will vest on December 30, ~~2013.~~2013; 1,130 will vest on January 31 of each of 2011 and 2013, and 1,131 will vest on January 31 of each of 2012 and 2014.

Option Exercises and Stock Vested — ~~2008~~2009

The table below reflects the restricted stock or RSUs which becamenon-forfeitable (vested) during ~~2008~~2009 for each of the named executive officers. Shares are valued on the day they became vested.


	Option Awards				Stock Awards					Option Awards				Stock Awards
	Number of				Number of							Value		Number of Shares			Value
	Shares		Value		Shares			Value		Number of Shares		Realized		Acquired			Realized
	Acquired on		Realized on		Acquired on			Realized on		Acquired		on		on			on
Name	Exercise (#)		Exercise ($)		Vesting (#)			Vesting ($)		on Exercise (#)		Exercise ($)		Vesting (#)			Vesting ($)
(a)	(b)		(c)		(d)			(e)		(b)		(c)		(d)			(e)

Richard B. Handler		—		—		1,454,721	(1)	$	26,894,081		—		—		289,411	(1)	$	6,279,920
Brian Friedman		—		—		633,005	(2)	$	11,209,420		—		—		290,652	(2)	$	5,632,395
Peregrine Broadbent		—		—		53,227		$	586,029		—		—		53,227		$	1,460,549
Lloyd H. Feller		—		—		7,308		$	218,144		—		—		7,308		$	87,343
Charles Hendrickson		—		—		4,669		$	79,653		—		—		5,855		$	110,328


(1)		Includes ~~949,274 shares the settlement of which has been deferred until the earlier of Mr. Handler reaching age 65 or termination of employment;~~ 45,481 RSUs the settlement of which has been deferred until April 30, 2011; ~~432,072~~216,036 RSUs the settlement of which has been deferred until October 25, 2011; and RSUs acquired as a result of dividend reinvestments which are deferred to the same extent as the underlying grants generating those dividends are deferred.

(2)		Includes ~~60,000~~120,000 RSUs the settlement of which has been deferred until April 30, 2010; 28,740 RSUs the settlement of which has been deferred until April 30, 2011; ~~216,036~~108,018 RSUs the settlement of which has been deferred until October 25, 2011; ~~6,000 RSUs the settlement of which has been deferred until April 12, 2009; 294,334 RSUs the settlement of which has been deferred until April 30, 2009;~~ 27,894 RSUs the settlement of which has been deferred until February 15, 2012; and RSUs acquired as a result of dividend reinvestments which are deferred to the same extent as the underlying grants generating those dividends are deferred.

Pension Benefits — ~~2008~~2009

Number of

Present

Number of

Present

Years

Value of

Payments

Years

Value of

Payments

Credited

Accumulated

During Last

Credited

Accumulated

During Last

Name

Plan Name

Service (#)

Benefit ($)

Fiscal Year ($)

Plan Name

Service (#)

Benefit ($)

Fiscal Year ($)

(a)

(b)

(c)

(d)

(e)

(b)

(c)

(d)

(e)

Richard B. Handler

Jefferies Group, Inc.
Employees’ Pension Plan

115,464

Jefferies Group, Inc.
Employees’ Pension Plan

114,282

To calculate the values in the table above, we needed to make certain assumptions about the employees, their retirement age, interest rates and discount rates, as follows:


	•	Benefit commencement is at age 65, our Pension Plan’s normal retirement age

	•	Benefit is paid as a lump sum

	•	GATT actuarial basis as of December 31, ~~2008~~2009 was used to determine the lump sum amount at age 65, including an interest rate of 4.69%

	•	The benefit is discounted to the employee’s age at December 31, ~~2008~~2009 using a discount rate of ~~6.25%~~5.75%.

	•	No pre-retirement decrements (other than discount rate) have been assumed in determining the Present Value of Accumulated Benefits

We first adopted our pension plan in 1964 and stopped admitting new participants into the plan on April 1, 1997. Effective December 31, 2005, benefits under the Pension Plan were frozen. All persons who were our employees prior to April 1, 1997, who are citizens or residents of the United States, who are 21 years of age, and who have completed one year of service are covered by our pension plan. The plan is a defined benefit plan, and is funded through our ongoing contributions and through earnings on existing plan assets. The amount an employee

will receive as a plan benefit depends on the person’s covered compensation during specific plan years. An employee retiring at age 65 with fifteen years of service will receive 1% of the employee’s covered compensation from January 1, 1987, until termination of employment plus 20% of the first $4,800 and 50% of amounts exceeding $4,800 of annual average covered compensation for 1985 and 1986. If the employee was employed less than 15 years on the date of termination, the amount of benefit will be reduced proportionately. Benefits under the plan are payable for the remaining life of the participant, and are not subject to deduction for Social Security benefits or other offsets.

The amount of covered compensation used to calculate the benefit earned in a given year includes salaries, bonuses and commissions, but is capped each year. Since 2004, the amount of covered compensation has been capped at $210,000 per year. An employee who retires upon normal retirement at age 65 with at least four years of service will receive a full vested benefit. An employee who retires at age 55 with at least four years of service will receive the normal retirement benefit reduced by1/2% for each month benefit payments commence before age 65. Employees who terminate employment with us for reasons other than death or retirement will be entitled to the vested portion of their benefits at their normal or early retirement age. Benefits vest at the rate of 0% for the first year of service, 33% for each of the next two years of service, and 34% for the fourth year of service. The retirement benefits payable at age 65 for those employees with service prior to January 1, 1987, will be composed of two items: (1) a benefit for service up to December 31, 1986, in accordance with the original Pension Plan formula recognizing pay as the average of 1985 and 1986 compensation up to $100,000, and (2) a benefit for service commencing on January 1, 1987, equal to 1% of covered compensation through the date of termination.

Nonqualified Deferred Compensation — ~~2008~~2009


						Aggregate					Aggregate							Aggregate					Aggregate
	Executive		Registrant			Earnings					Balance			Executive		Registrant		Earnings					Balance
	Contributions		Contributions			in Last			Aggregate		At Last			Contributions		Contributions		In Last FY			Aggregate		At Last
Name	in Last FY ($)		in Last FY ($)			FY ($)			Withdrawals/		FYE ($)(1)			In Last FY ($)		In Last FY ($)(1)		($)			Withdrawals/		FYE ($)(2)
(a)	(b)		(c)			(d)			Distributions ($)		(f)			(b)		(c)		(d)			Distributions ($)		(f)

Richard B. Handler		—	$	26,393,105	(2)	$	(87,670,950	)(3)	$	500,976	$	153,958,516	(4)		—	$	5,932,919	$	78,014,357	(3)	$	26,076,168	$	211,829,624	(4)
Brian Friedman		—	$	11,209,420	(2)	$	(7,826,071	)(5)		—	$	15,259,551	(6)		—	$	5,563,155	$	8,968,742	(5)	$	8,228,218	$	21,563,230	(6)
Peregrine C. Broadbent		—	$	586,029	(2)	$	218,791	(7)		—	$	804,820			—	$	1,460,549	$	356,004	(7)		—	$	2,621,373	(8)
Lloyd H. Feller	$	125,000	$	230,644	(8)	$	(414,571	)(9)	$	161,298	$	817,787	(10)		—	$	87,343	$	251,957	(9)	$	263,750	$	702,746	(10)
Charles Hendrickson		—	$	79,653	(2)	$	(38,822	)(11)		—	$	163,549	(12)		—	$	110,328	$	112,951	(11)		—	$	386,828	(8)


(1)		The Registrant Contribution column reflects the value of RSUs which vested but by their terms will not be distributed until a later date. RSUs are subject to a mandatory period following vesting during which they are not distributed. We have chosen to show this mandatory deferral as a Registrant Contribution, but the value of the RSUs at the vesting date is reflected in full in the Options Exercised and Stock Vested table as compensation to the named executive officer.

(2)		Amounts in the table do not reflect compensation granted in any single year but include reported compensation that has been deferred and market returns on investments that deferred amounts were deemed invested in which have accrued over time. Specifically, amounts in the table consist of (i) contributions resulting from compensation which has been disclosed in ~~our~~ previous Jefferies proxy statements (to the extent the executive was a named executive officer in the year of deferral and the amount was otherwise required to be disclosed under SEC rules then in effect), plus (ii) earnings on deferred amounts, (iii) less distributions. For purposes of this table, earnings includes gains and losses in value of the investments into which deferred amounts are deemed invested, including the value of stock units resulting from deferrals of vested restricted stock shares, restricted stock units and resulting from option gain deferrals.

~~(2)~~		The value of RSUs which vested but by their terms will not be distributed until a later date. RSUs are subject to a mandatory period following vesting during which they are not distributed. We have chosen to show this mandatory deferral as a Registrant Contribution, but the value of the RSUs at the vesting date is reflected in full in the Options Exercised and Stock Vested table as compensation to the named executive officer.

(3)		Includes ~~$2,908,596~~$662,687 in ~~losses from~~increased value in Mr. Handler’s self-directed deferred compensation account, ~~$3,610,090~~$2,431,792 in ~~decreased~~increased value of investments in our DCP and ~~$81,152,264~~$74,919,878 in ~~decreased~~increased value of ~~RSUs which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Handler.~~RSUs.

(4)		Includes ~~$108,152,609~~$188,658,405 attributable to RSUs originally awarded from 2000 through ~~2008; $7,353,512~~2006. The value of RSUs represents both compensation originally earned and the appreciation of our common stock. For the 20 year period Mr. Handler has worked at Jefferies, our shares compounded annually at 20.4%. Since Mr. Handler joined Jefferies in 1990, he has always taken a significant portion of his compensation in equity form. For the 10 year period since he became CEO, over 70% of Mr. Handler’s compensation has consisted of non-cash equity related securities vesting over three to five years. Also includes $8,051,230 in amounts deferred through our generally available DCP ~~and $38,452,395~~on terms that are the same as other Jefferies employees who participate in the DCP. Includes $15,119,989 in deferred ~~amounts~~compensation and gains on investments in Mr. ~~Handler~~Handler’s self-directed deferred compensation account which was in place before he became CEO in 2000. The amount reflected is the result of deferring compensation earned ~~from 1998~~

listed above was derived from the value of deferred stock or other investments after the compensation was credited to the employee and were not the amounts we actually paid the executive. When an executive’s deferred compensation is not denominated in cash, but is deemed invested in a particular fund or security, the executive’s deemed investment subjects their earnings to market risk that may produce gain or loss depending on the performance of the investments selected.

Deferred Compensation Plan

We provide an opportunity for executives to defer receipt of cash portions of annual bonus awards, and to have deferred amounts be deemed invested in specified investment vehicles during the period of deferral. The Company has implemented the Jefferies Group, Inc. Deferred Compensation Plan (the “DCP”), which permits executive officers and other eligible employees to defer cash compensation, some or all of which may be deemed invested in stock units. A portion of the deferrals may also be directed to notional investments in a money market fund or certain of the employee investment opportunities described under the caption “Transactions with Related Persons.” We believe this discount encourages employee participation in the DCP and accordingly, enhances long term retention of equity interests and alignment of executive interests with those of shareholders. The amounts of ~~2008~~2009 salary, bonus and non-equity incentive plan compensation deferred by named executive officers are reflected in the Summary Compensation Table without regard to deferral. The portion of the deferrals under the DCP representing the value of the discount on stock units is reflected in the Summary Compensation Table in the column captioned “All Other Compensation” and in the table above in the column captioned “Registrant Contributions in Last FY.”

The DCP provides eligible employees with the opportunity to defer receipt of cash compensation for five years, with an optional deferral of an additional five years. Participants chose whether their deferred compensation is allocated to a cash denominated investment subaccount, to an equity subaccount which permits amounts to be deemed to be invested in a combination of stock units or other specified equity investment vehicles. Credits of stock units to a participant’s subaccount occur at a predetermined discount of up to 15% of the volume weighted average market price per share of our common stock on the last day of the quarter. The predetermined discount amount for ~~2008~~2009 was 10%. The discounted portion of any amounts credited, or the additional stock units credited as a result of those discounts, is forfeitable upon termination of employment until the earliest of the time the participant has participated in the DCP for three consecutive years, the participant’s age plus the number of years of service

these descriptions, we also provide a summary of the amounts that would have been payable to each named executive officer as a specific result of termination if the person’s employment had been terminated on December 31, ~~2008~~2009 under various circumstances. We anticipate that all of the payments described in this section will be subject to applicable taxes and withholding requirements and no payments will be made to employees until applicable tax requirements have been met. As a result, the actual amount paid to the employees will be substantially less than the amounts set forth below. We also anticipate that we will receive the positive benefits of a corresponding tax deduction which is also not accounted for in the analysis or tables below.

Description of Agreements, Relationships and Investments

Restricted Stock ~~and Restricted Stock Units~~Agreements

Under the terms of the restricted stock agreements entered into by our named executive officers, the restrictions on restricted stock will lapse and the restricted stock will immediately vest if employment is terminated by the Company without “cause” following a change in control. Under the terms of the restricted stock unit agreements entered into by our named executive officers, the RSUs will immediately vest and be distributed if employment is terminated by the Company without “cause” following a change in control. Such distribution may be subject to delay to comply with Code Section 409A. The vesting terms of restricted stock and RSUs no longer provide for forfeiture upon the employee voluntarily quitting, but provide for forfeiture in the event of competition following termination, so the effect of a termination not for cause following a change in control is to cause a lapse of the non-competition obligation.

Except when otherwise decided by the compensation committee or required by an employment agreement, our policy applicable to all continuing employees is that equity grants will continue to vest normally following a termination without “cause” that is not following a change in control.

Deferred Compensation Plan

Amounts that executive officers have deferred through the Jefferies Group, Inc. Deferred Compensation Plan (the “DCP”) would continue to be deferred through the expiration of the applicable deferral period and at the conclusion of that period, would result in a payment to the former executive of the deferred amounts. In some cases

department head for the High Yield Division and were based on the productivity of that division. The last deferrals into Mr. Handler’s individual Deferred Compensation Plan was in 2000. With respect to amounts deferred through this plan, we may determine to terminate a portion of his deferred compensation arrangement in the event of a change in control and make a full distribution of the deferred amounts, to the extent permitted under Code Section 409A. The decision to terminate the deferral arrangement must be made by our Board of Directors prior to consummation of the transaction that constitutes a change in control. If a change in control had occurred on December 31, ~~2008~~2009 and the board had elected to make a full distribution, Mr. Handler would have received a payment of ~~$38,452,395~~$15,119,989 in settlement of his individual Deferred Compensation Plan. This amount would be in addition to any unscheduled payout he is entitled to receive under our DCP as discussed above. Absent a change in control, Mr. Handler’s deferrals under this Plan generally will be settled upon his termination of employment, although settlement may be delayed for up to six months if ~~required under~~subject to Code Section 409A.

High Yield Trading Desk Investments

In connection with the reorganization of our high yield funds, Jefferies Employees Special Opportunity Partners, LLC (“JESOP”) was formed to permit employees to invest in the continuing operations of our high yield trading desk. Investors in JESOP, would have the right to redeem their investment should Mr. Handler cease actively managing the high yield trading desk. If an executive officer other than Mr. Handler is terminated, we anticipate that we would repurchase that person’s interest in JESOP at his or her current capital account balance.

Mr. Handler’s investments in JESOP are in the form of deferred compensation arrangements which follow the performance of JESOP. As a result, a liquidation of the fund would not result in a cash payout to Mr. Handler unless the circumstances also resulted in a payout of his deferred compensation as described above.

Severance Policy

We have adopted a firm-wide severance policy that applies to employees, including our named executive officers, if they are laid off. It is not paid to employees who resign voluntarily or are terminated for cause. Employees are eligible for two weeks of severance for each year of service, up to a maximum of six months pay. If

period thereafter. Employees are also eligible to purchase additional coverage through our negotiated rates at their own cost. Employees are entitled to continue this coverage after termination by completing appropriate documentation and paying premiums directly to the carrier.

We provide life insurance to our employees which would result in a payment to an employee’s designee upon death. Our basic insurance policy would cover each employee for the amount of his or her annual compensation up to $200,000 through age 65, with age based reductions in the covered amount thereafter. Employees are also eligible to purchase additional coverage through our negotiated rates at their own cost. Retirees who meet certain eligibility requirements and who choose to participate in our retiree medical policy have a life insurance benefit of $10,000. Employees who are terminated may elect to continue coverage after employment for both the basic coverage and any additional coverage they have purchased at their own expense.

We also provide business travel accident insurance to all our ~~employees. The~~employees with a benefit ~~would result in a payment~~ of $250,000 in the event of an employee’s death as the result of an accident while ~~traveling on~~traveling. For our ~~business.~~named executive officers and executive committee, the benefit would result in a payment of $1 million in the event of an employee’s death as the result of an accident while traveling.

Summary of Payments on Termination After a Change in Control

As described above, certain of our policies or agreements would result in payments to a named executive officer or enhancement of rights if the person is terminated without cause following a change in control, but we do not have any single-trigger policies or agreements that would entitle an executive to a payment or enhanced rights solely as a result of a change in control and we treat our named executive officers generally the same way we treat other employees in this regard. The table below shows the estimated value of the enhancements to payments

Summary of Payments on Termination or Change in Control


	Retirement or				Involuntary			Retirement or				Involuntary
	Voluntary				Termination			Voluntary				Termination
	Termination by		Involuntary		following a Change			Termination by		Involuntary		following a Change
	Employee		Termination		in Control			Employee		Termination		in Control

Richard B. Handler		—	$	500,000	$	9,711,690	(1)		—	$	500,000	$	10,920,650	(1)
Brian Friedman		—	$	154,514	$	5,518,924	(2)		—	$	175,347	$	6,168,216	(2)
Peregrine C. Broadbent		—	$	4,993,486	$	4,993,486	(3)		—	$	3,876,036	$	3,876,036	(3)
Lloyd H. Feller		—	$	228,125	$	433,654	(4)		—	$	265,625	$	612,510	(4)
Charles C. Hendrickson		—	$	26,042	$	306,384	(5)		—	$	36,458	$	509,611	(5)


(1)		Consists of ~~$9,211,690~~$10,420,650 in restricted stock units which would immediately become vested and $500,000 as a payment under our Severance Policy.

(2)		Consists of ~~$5,364,410~~$5,992,869 in restricted stock units which would immediately become vested and ~~$154,514~~$175,347 as a payment under our Severance Policy.

(3)		Consists of ~~$2 million as a guaranteed bonus and $2,993,486 of restricted stock units~~$3,789,230 in RSUs which would immediately become ~~vested.~~vested and $86,806 as a payment under our Severance Policy.


(8)		~~Mr. Macchiarola did not stand for re-election in 2008 and ceased being a director when his term expired at our 2008 Annual Meeting on May 19, 2008.~~

~~(9)~~		At December 31, ~~2008,~~2009, Mr. O’Kane had the following stock awards outstanding: ~~12,177~~17,209 unvested ~~restricted stock units,~~RSUs, and 886 vested and deferred shares. The grant date fair value of Mr. O’Kane’s restricted stock grants for 2006, 2007, 2008 and ~~2008~~2009 were $100,000 each, in accordance with our ~~DSCP~~Director’s Stock Compensation Plan as described below.

Each member of the Board of Directors of Jefferies Group, Inc. who is also a non-employee is entitled to receive the following compensation under the terms of policies approved by the Board from time to time and the terms of the Jefferies Group, Inc. 1999 Directors’ Stock Compensation Plan:


	•	an annual retainer of $50,000;

	•	an annual grant of $100,000 in our restricted common stock or restricted stock units;

Report of the Compensation Committee

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis. Based on our review and discussions, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation Committee of the Board of Directors, the members of which in ~~2008~~2009 were Messrs. Campbell, Dooley, Joyal, Steinberg, Cumming and O’Kane, has furnished this report.

Richard G. Dooley, Chairman, W. Patrick Campbell, Robert E. Joyal
Joseph S. Steinberg, Ian M. Cumming and Michael T. O’Kane

* * *

Report of the Audit Committee

The Audit Committee has reviewed and discussed the audited financial statements with management to ensure that the financial statements were prepared in accordance with generally accepted accounting principles and accurately reflect our financial position. The Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by ~~applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence,~~Statement on Auditing Standards No. 61, and has received written disclosures and a required letter from the independent registered public accounting firm regarding their independence. Based upon its discussions with management, review of the independent ~~auditor’s~~registered public accounting firm’s letter, discussions with the independent registered public accounting firm and other appropriate investigation, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in our Annual Report onForm 10-K. The Audit Committee has reviewed the non-audit fees described below and has concluded that the amount and nature of those fees is compatible with maintaining the independent registered public accounting firm’s independence.

The foregoing report has been furnished by:

W. Patrick Campbell, Chairman, Richard G. Dooley,
Robert E. Joyal
and Michael T. O’Kane

* * *

Ratification of Appointment of Independent ~~Auditor~~Registered Public Accounting Firm

The Audit Committee has decided that, after more than 40 years of utilizing the same firm as our independent auditors, it is time for a change. Deloitte & Touche LLP has been appointed as our independent registered public accounting firm for 2010. The selection of Deloitte followed a competitive process in which the Committee solicited proposals from three independent public accounts, including KPMG. As a result of this process, the Committee believes we will receive a higher level of service, while reducing the overall cost of the audit services for 2010 and subsequent years. We thank the professionals at KPMG ~~LLP as independent auditor~~ for ~~fiscal 2009 and presents this selection~~their many years of service to the Company. We ask that you the shareholders ~~for ratification. KPMG~~ratify our selection of Deloitte & Touche.

Deloitte will ~~audit~~begin auditing our consolidated financial statements for ~~fiscal 2009~~2010 and perform other permissible, pre-approved services.

We paid KPMG the following fees for services rendered ~~during 2007~~for the 2008 and ~~2008:~~2009 audits and other services.


	2007		2008		2008		2009

Audit Fees	$	4,903,901	$	5,218,704	$	5,710,654	$	5,801,757
Audit-Related Fees	$	1,194,114	$	752,950	$	291,125	$	361,233
Tax Fees	$	497,188	$	678,991	$	678,991	$	300,014
All Other Fees	$	333,706	$	30,125	$	0	$	0
Total All Fees	$	6,928,909	$	6,680,770	$	6,680,770	$	6,463,005

As indicated above, we expect significant savings in our audit fees in 2010 and subsequent years.

Audit Fees — The Audit Fees reported above reflect what KPMG has billed us for during ~~2007~~2008 and ~~2008.~~2009. These amounts include fees for professional services rendered as our principal accountant for the audit of our consolidated financial statements included in the ~~audit~~Company’s Annual Report onForm 10-K, the audits of various affiliates and investment funds managed by Jefferies or its affiliates, the audit of internal controls over financial reporting required by Section 404 of Sarbanes-Oxley, reviews of the interim consolidated financial statements included in our quarterly reports onForm 10-Q, the issuance of comfort letters, consents and other services related to SEC and other regulatory filings, and for other services that are normally provided in connection with statutory and regulatory filings or engagements. At the advice of KPMG, we have reclassified certain 2008 fees to conform to the 2009 period classification. The

the 1.5% fee for services described above, for a total fee of 2%. Jefferies High Yield Trading continues to be overseen by Richard Handler. We have offered our qualified employees the option to invest in the operations of ~~Holdings~~Jefferies High Yield Trading through investments in Jefferies Employees Special Opportunity Partners, LLC (“JESOP”). As of December 31, ~~2008,~~2009, Mr. Handler held an economic interest through his individual deferred compensation plan and the DCP with a value of ~~20.7%~~20.95% of JESOP. Mr. Handler’s interest in JESOP is calculated on the same basis, and charged the same fees, as any other third party investor in JESOP.

Private Equity Funds

We have also invested in ~~two~~three private equity funds managed by companies controlled by Mr. Friedman, one of our directors, Chairman of the Executive Committee and a nominee, and have acquired interests in the profit participation earned by ~~two~~three of those management ~~companies, and another company that manages a third private equity fund and is controlled by Mr. Friedman.~~companies. These three management companies (the “Fund Managers”) serve as the managers of the three private equity funds (the “Private Equity Funds”) and have varying profit participations and other interests in those funds. Mr. Friedman founded the business of the Fund Managers before he became associated with us. As of December 31, ~~2008,~~2009, we had committed an aggregate of approximately ~~$62.3~~$61.8 million to two of these funds, and had funded approximately ~~$36.2~~$45.8 million of these commitments. We have also guaranteed a $36 million bank loan issued to a Jefferies employee fund related to one of those funds. As a result of those investments, commitments and profit participations ~~for the period from January 1 through December 31, 2008,~~in 2009, we received distributions from the Private Equity Funds ~~and the Fund IV manager~~ of approximately ~~$2.9~~$0.3 million and profit participations from the Fund Managers in the amount of ~~$5.5~~$1.5 million. Included in the $1.225 billion in total equity committed to funds over which Mr. Friedman has control are individual investments of certain of our named executive officers. As a result of their individual cash commitments, as of December 31, ~~2008,~~2009, Mr. Handler, had an aggregate interest ~~of .12%~~ in the total committed capital in such funds ~~and~~of .12%, Mr. Friedman had an aggregate interest of ~~2.34% in such total committed capital.~~2.0%, and Mr. Hendrickson had an aggregate interest of .08%. In addition, Mr. Friedman has a substantial economic interest in the Fund Managers and, directly and indirectly, in the carried interest paid by the Private Equity Funds.

On August 11, 2008, we entered into a Credit Agreement (the “Credit Facility”) with JCP Fund V Bridge Partners, LLC, a Delaware limited liability company (the “Borrower”), pursuant to which we may make loans to the Borrower in an aggregate principal amount of up to $50.0 ~~million at any time until August 10, 2009.~~million. The Borrower is owned by its two managing members ~~which~~who are James L. Luikart, executive vice president of Jefferies Capital Partners, and Mr. Friedman. The loans may be used by the Borrower to make investments that are expected to be sold to Jefferies Capital Partners V, L.P. (“Fund V”) upon its capitalization by third party investors. Fund V will be managed by a team led by ~~Messrs. Luikart and~~Mr. Friedman. We anticipate as provided in the July 2005 agreement, provided that the preconditions are met, we will commit to directly or indirectly invest or guarantee the investment of up to $140 million in Fund V and its related parallel funds.

In ~~connection with any loan made under the Credit Facility, the members~~July of 2009, the Borrower ~~agreed~~exercised its right to ~~make a capital commitment to~~extend the ~~Borrower in an amount equal to 12.5% of the investment to be made with the proceeds of the loan. The~~ final maturity date of the Credit Facility isfrom August 12, 2009 ~~subject~~ to ~~a six-month extension at the option of~~January 11, 2010; and in October 2009, we and the Borrower agreed to ~~February 11,~~extend the final maturity date to June 30, 2010. As a condition to making any loan, the Borrower must certify, among other things, that the representations and warranties in the Credit Facility are true and correct in all material respects, no Default or Event of Default exists as of the date the loan is made, and the investment to be made with the loan proceeds has received internal approval. The interest rate on any loans made under the Credit Facility is the Prime Rate (as defined in the Credit Facility) plus 200 basis points, payable at the final maturity date, or upon repayment of any principal amounts, as applicable. The ~~Credit Facility contains customary events of default and restrictions on the activities of the Borrower. The~~ obligations of the Borrower under the Credit Facility are secured by its interests in each investment. ~~On August 11,~~As of December 31, 2009 and 2008, loans in the aggregate principal amount of approximately $45.7 million and $31.3 million, respectively, were ~~made to the Borrower~~outstanding under the Credit ~~Facility.~~Facility and recorded in other investments on our consolidated statements of financial condition.

Through our subsidiaries, we have performed investment banking and other services for companies in which the Private Equity Funds have invested. In some cases, the Private Equity Funds control those companies in which they have invested. ~~From January 1 through December 31, 2008,~~In 2009, we received ~~$2.2~~$5.3 million in fee income for

2001. Jefferies Capital Partners reimburses us on an annual basis for our direct employee costs, office space costs and other direct costs. In ~~2008,~~2009, we billed and received approximately ~~$7.4~~$6.8 million in cash for such expenses.

Leucadia National Corporation

On April 20, 2008, we entered into an Investment Agreement and Standstill Agreement (the “Agreements”) with Leucadia National Corporation (“Leucadia”). On ~~April 21, 2008, as more fully set forth in the Agreements, which are attached to our Current Report onForm 8-K~~ ~~filed on~~ April 21, 2008, we purchased from Leucadia 10,000,000 common shares of Leucadia in exchange for our issuance of 26,585,310 shares of our common stock, representing 16.7% of our outstanding shares (after giving effect to the Transaction), and a payment to Leucadia of $100,021,353 in cash. We ~~reported in our Current Report onForm 8-K~~ ~~filed on June 9, 2008 that we had~~ completed our sale of the 10,000,000 shares of Leucadia for aggregate proceeds of $535.2 million.

Pursuant to the Agreements, we increased the size of our board of directors by two and elected two designees selected by Leucadia to fill the new directorships. Leucadia designated Ian M. Cumming, Leucadia’s Chairman, and Joseph S. Steinberg, a director of Leucadia and its President, to fill the two newly created vacancies on our board. Our board elected Messrs. Cumming and Steinberg to our board on April 21, 2008, and our shareholders re-elected Messrs. Cumming and Steinberg on May 19, ~~2008.~~2008 and May 18, 2009. Leucadia will continue to have the right to appoint two directors for two years so long as Leucadia maintains at least 15% beneficial ownership of our outstanding shares. Leucadia agreed that for a period of two years, subject to certain exceptions (i) not to sell any of our shares acquired in the transaction, (ii) not to acquire additional shares of our voting securities if such acquisition would result in Leucadia beneficially owning more than 30% of our outstanding shares, and (iii) to vote its shares of our common stock in favor of the slate of directors nominated by our board of directors.

On February 19, 2010, we purchased 30 million common shares of Fortescue Metals Group Ltd., an Australian Stock Exchange listed company, from Baldwin Enterprises, a wholly-owned subsidiary of Phlcorp, which is a wholly-owned subsidiary of Leucadia. Leucadia beneficially owns 28.3% of our outstanding common stock. Mr. Cumming and Mr. Steinberg, two of our directors, may be viewed as having an indirect financial interest in the transaction by virtue of their ownership of Leucadia shares and their positions as the Chairman of the Board and President of Leucadia. Mr. Cumming and Mr. Steinberg are also directors of Fortescue. We purchased the shares for $123 million, or US$4.10 per share. The closing price on the Australian Stock Exchange on February 19, 2010, when converted to US dollars at then current exchange rates, was US$4.56 per share. We realized a profit on the disposition of the shares.

We also continue to ~~perform~~provide various services ~~on behalf of~~to Leucadia in the ordinary course of our business. Through Jefferies High Yield Trading, we purchase and sell Leucadia’s debt securities from time to time in unsolicited transactions, selling to independent third parties through Rule 144. ~~On February 27,~~During 2009, Leucadia announced that its Board of Directors had authorized the company to make purchases, from time to time, of its outstanding indebtedness. Between February 27, 2009 and March 13, 2009, Leucadia purchased $26,935,000 aggregate principal amount of its debt securities from Jefferies High Yield Trading, some of which we had previously held in inventory and some of which we acquired from third parties in riskless principal transactions. In each case the trades were at prices negotiated by the parties relative to the current market price for the securities. We also acted as financial advisor to Leucadia in connection with the early conversion of some of its convertible debt securities. Through negotiations directly with existing convertible security holders, approximately $100 million aggregate principal amount of its convertible notes were early converted and we received ~~a financial advisory fee of $1.3 million for our services relating to the conversions. We have also received $2,069,077~~$181,749 in commissions and commission equivalents for conducting brokerage services on behalf of Leucadia affiliates. These transactions took place in the ordinary course of our business on substantially the same terms as those prevailing at the time for comparable transactions with persons not related to Jefferies and did not involve more than the normal market risk.

~~On June 4, 2008,~~At December 31, 2009, we had commitments to purchase $53.4 million in ~~separate transactions, we purchased 650,000 common shares of Leucadia~~agency commercial mortgage-backed securities from ~~a charitable trust created by Joseph S. Steinberg and from a corporation~~Berkadia Commercial Mortgage, LLC, which is partially owned by a trust for the benefit of Mr. Steinberg’s family and an aggregate of 650,000 common shares of Leucadia from Ian M. Cumming. We purchased the aggregate 1,300,000 common shares of Leucadia for $63,635,000, or $48.95 per share. The closing price of the Leucadia common stock on June 4, 2008 was $51.01. On June 9, 2008, Leucadia registered the resale of the shares. We realized a substantial loss on the resale of these securities over the next five and a half months. We have in the past entered into similar transactions in the ordinary course of our business with Messrs. Steinberg and Cumming in which we recognized gains, and we may enter into similar transactions in the ordinary course of our business in the future.Leucadia.

Director of Marketing

We have employed Thomas E. Tarrant, thebrother-in-law of our Chief Executive Officer, as our Director of Marketing since 1997, three years before Mr. Handler was appointed ~~as Chairman, CEO or President.~~CEO. For his services during ~~2008, he~~2009, Mr. Tarrant was paid ~~$324,997~~$340,000 in a combination of cash and restricted stock.

Review, Approval or Ratification of Related Person Transactions

We have adopted a written Code of Ethics which is available both on our public website and on our corporate intranet. The Code of Ethics governs the behavior of all our employees, officers and directors, including our named executive officers. Our Code of Ethics provides that no employee shall engage in any transaction involving the Company if the employee or a member of his or her immediate family has a substantial interest in the transaction or

can benefit directly or indirectly from the transaction (other than through the employee’s normal compensation), unless the transaction or potential benefit and the interest have been disclosed to and approved by the Company.

If one of our executive officers has the opportunity to invest or otherwise participate in such a transaction, our policy requires that the executive prepare a memorandum describing the proposed transaction. The memo must be submitted to the Global Head of Compliance or the General Counsel or his designee, and a copy of the memorandum will be provided to the Chairman of the Corporate Governance and Nominating Committee of the Board of Directors, or any other member designated by the Committee, for consideration and action by that committee. After consideration of the matter, the Corporate Governance and Nominating Committee will provide written notice to the executive of the action taken.

Our Code of Ethics has been adopted by the Board of Directors and any exceptions to the policies set forth therein must be requested in writing addressed to the Corporate Governance and Nominating Committee of the Board of Directors. If an executive officer requests an exception, the request must be delivered to the General Counsel and no exceptions shall be effective unless approved by the Corporate Governance and Nominating Committee.

Shareholder Proposals

Shareholder proposals for inclusion in the proxy material relating to our ~~2010~~2011 Annual Meeting of Shareholders should be sent to our principal executive offices at 520 Madison Avenue, New York, New York, 10022, Attention: Lloyd H. Feller. To be considered timely under federal securities laws, any proposals must be received no later than December 8, ~~2009,~~2010, to be included in next year’s proxy statement and proxy card, and no later than March ~~19, 2010,~~18, 2011, if to be presented at the meeting but not included in the proxy statement or proxy card. Though we will consider all proposals, we are not required to include any shareholder proposal in our proxy materials relating to next year’s annual meeting unless it meets all of the requirements for inclusion established by the SEC and our By-Laws.

For the Board of Directors,

Lloyd H. Feller, Secretary

April ~~9, 2009~~7, 2010

~~ANNUAL MEETING OF SHAREHOLDERS OF~~

~~JEFFERIES GROUP, INC.~~

~~May 18, 2009~~

~~PROXY~~~~VOTING~~~~INSTRUCTIONS~~

~~INTERNET~~-~~Access “~~~~www.voteproxy.com~~~~” and follow the on-screen instructions. Have your proxy card available when you access the web page, and use the Company Number and Account Number shown on your proxy card.~~

~~TELEPHONE~~-~~Call toll-free~~~~1-800-PROXIES~~ ~~(1-800-776-9437) in the United States or~~~~1-718-921-8500~~~~from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call and use the Company Number and Account Number shown on your proxy card.~~

~~Vote online/phone until 11:59 PM EST the day before the meeting.~~

~~MAIL~~-~~Sign, date and mail your proxy card in the envelope provided as soon as possible.~~

~~IN PERSON~~-~~You may vote your shares in person by attending the Annual Meeting.~~


	~~COMPANY~~~~NUMBER~~
	~~ACCOUNT~~~~NUMBER~~

Fellow Shareholder: You are cordially invited to attend the Annual Meeting of Shareholders of Jefferies Group, Inc. The meeting will be held at our offices at 520 Madison Avenue, 10th Floor, New York, New York 10022, on Monday, May 17, 2010, at 9:30 a.m. Enclosed you will find a copy of our Proxy Statement, 2009 Annual Report on Form 10-K, with letter to shareholders, and your Proxy Voting Card. We urge you to exercise your right as a shareholder of Jefferies and part of our Firm to vote your shares, regardless of how many you own. Sincerely, Richard B. Handler Brian P. Friedman Chairman and CEO Chairman of the Executive Committee 1 PROXY JEFFERIES GROUP, INC. Proxy for the Annual Meeting of Shareholders May 17, 2010 Solicited on Behalf of the Board of Directors of the Company The undersigned holder(s) of common shares of JEFFERIES GROUP, INC., a Delaware corporation (the “Company”), hereby appoints Richard B. Handler and Brian P. Friedman, and each of them, attorneys of the undersigned, with power of substitution, to vote all shares of the common shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held on Monday, May 17, 2010, at 9:30 a.m. local time, and at any adjournment thereof, as directed on the reverse hereof, hereby revoking all prior proxies granted by the undersigned. (Continued and to be signed on the reverse side) COMMENTS: 14475

~~NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL~~~~: The Notice of meeting, proxy statement and proxy card are available at www.jefferies.com/proxy~~

ê ~~Please detach along perforated line and mail in the envelope provided~~IF ~~you are not voting via telephone or the Internet.~~ê


	n	~~2 0 8 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0~~ANNUAL MEETING OF SHAREHOLDERS OF JEFFERIES GROUP, INC. May 17, 2010 NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at www.jefferies.com/proxy Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20830000000000000000 4	~~0 5 1 8 0 9~~

~~THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” THE RATIFICATION OF THE AUDITORS.~~
~~PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE~~x


051710 THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” THE RATIFICATION OF THE AUDITORS. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x FOR AGAINST ABSTAIN 1.		Election of Directors.


		2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm. NOMINEES:
o	FOR ALL NOMINEES	¡ ¡	O Richard B. Handler O Brian P. Friedman
o	3. In their discretion, upon such other business as may properly come before the O W. Patrick Campbell meeting, or at any adjournment thereof. WITHHOLD AUTHORITY FOR ALL NOMINEES	¡ ¡ ¡	~~W. Patrick Campbell~~ O Ian M. Cumming O Richard G. Dooley
o	TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE FOR ALL EXCEPT ~~(See instructions below)~~	¡ ¡ ¡	O Robert E. Joyal SIDE OF THIS CARD. (See instructions below) O Michael T. O’Kane O Joseph S. Steinberg







INSTRUCTIONS:	To withhold authority to vote for any individual nominee(s), mark~~“FOR~~ “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here: l

















To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.		o

~~FOR~~

~~AGAINST~~

~~ABSTAIN~~

~~Ratify the appointment of KPMG as independent auditors.~~

~~In their discretion, upon such other business as may properly come before the meeting, or at any adjournment thereof.~~

~~TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.~~

Signature of Shareholder

Date:

Signature of Shareholder

Date:


n		Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.	n

~~Fellow Shareholder:~~

You are cordially invited to attend the Annual Meeting of Shareholders of Jefferies Group, Inc. The meeting will be held at our offices at 520 Madison Avenue, 10th Floor, New York, New York 10022, on Monday, May 18, 2009, at 9:30 a.m.

Enclosed you will find a copy of our Proxy Statement, 2008 Annual Report on Form 10-K, with letter to shareholders, and your Proxy Voting Card. We urge you to exercise your right as a shareholder of Jefferies and part of our Firm to vote your shares, regardless of how many you own.

~~Sincerely,~~


ANNUAL MEETING OF SHAREHOLDERS OF JEFFERIES GROUP, INC. May 17, 2010 PROXY VOTING INSTRUCTIONS INTERNET — Access “www.voteproxy.com” and follow the on-screen instructions. Have your proxy card available when you access the web page, and use the Company Number and Account Number shown on your proxy card. TELEPHONE — Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any COMPANY NUMBER touch-tone telephone and follow the instructions. Have your proxy card available when you call and use the Company Number and Account Number shown on your proxy card. ACCOUNT NUMBER Vote online/phone until 11:59 PM EST the day before the meeting. MAIL — Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON — You may vote your shares in person by attending the Annual Meeting. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of meeting, proxy statement and proxy card are available at www.jefferies.com/proxy Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 20830000000000000000 4 051710 THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” THE RATIFICATION OF THE AUDITORS. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x FOR AGAINST ABSTAIN 1. Election of Directors. 2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm. NOMINEES: FOR ALL NOMINEES O Richard B. Handler		O Brian P. Friedman
~~Chairman and CEO~~		~~Chairman of~~ 3. In their discretion, upon such other business as may properly come before the ~~Executive Committee~~


	1	n

~~PROXY~~

~~JEFFERIES GROUP, INC.~~

~~Proxy for the Annual Meeting of Shareholders May 18, 2009~~

~~Solicited on Behalf of the Board of Directors of the Company~~

The undersigned holder(s) of common shares of JEFFERIES GROUP, INC., a Delaware corporation (the “Company”), hereby appoints Richard B. Handler and Brian P. Friedman, and each of them, attorneys of the undersigned, with power of substitution, to vote all shares of the common shares that the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held on Monday, May 18, 2009, at 9:30 a.m. local time, and at any adjournment thereof, as directed on the reverse hereof, hereby revoking all prior proxies granted by the undersigned.

~~(Continued and to be signed on the reverse side)~~

~~COMMENTS:~~


n		~~14475~~ n

~~ANNUAL MEETING OF SHAREHOLDERS OF~~

~~JEFFERIES GROUP, INC.~~

~~May 18, 2009~~

~~NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:~~
~~The Notice of Meeting, proxy statement and proxy card~~
~~are available at www.jefferies.com/proxy~~

~~Please sign, date and mail~~
~~your proxy card in the~~
~~envelope provided as soon~~
~~as possible.~~

â ~~Please detach along perforated line and mail in the envelope provided.~~ â


	n	~~2 0 8 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4~~	~~0 5 1 8 0 9~~


1.		~~Election of Directors.~~


		~~NOMINEES:~~
o	O W. Patrick Campbell meeting, or at any adjournment thereof. WITHHOLD AUTHORITY FOR ALL NOMINEES	¡ ¡	~~Richard B. Handler~~ ~~Brian P. Friedman~~
o	~~WITHHOLD AUTHORITY~~ ~~FOR ALL NOMINEES~~	¡ ¡ ¡	~~W. Patrick Campbell~~ O Ian M. Cumming O Richard G. Dooley
o	TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE FOR ALL EXCEPT ~~(See instructions below)~~	¡ ¡ ¡	O Robert E. Joyal SIDE OF THIS CARD. (See instructions below) O Michael T. O’Kane O Joseph S. Steinberg







INSTRUCTIONS:	To withhold authority to vote for any individual nominee(s), mark~~“FOR~~ “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here: l

















JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.		o

~~FOR~~

~~AGAINST~~

~~ABSTAIN~~

~~Ratify the appointment of KPMG as independent auditors.~~

~~In their discretion, upon such other business as may properly come before the meeting, or at any adjournment thereof.~~

~~TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.~~

Signature of Shareholder

Date:

Signature of Shareholder

Date:


n		Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.	n


xo		~~Definitive~~Preliminary Proxy Statement




oþ		~~Preliminary~~Definitive Proxy Statement




o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))




o		Definitive Additional Materials




o		Soliciting Material Pursuant to §240.14a-12


xþ	~~No fee~~Fee not required.




o	Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.




		(1)	Title of each class of securities to which transaction applies:




		(2)	Aggregate number of securities to which transaction applies:




		(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):




		(4)	Proposed maximum aggregate value of transaction:




		(5)	Total fee paid:




o		Fee paid previously with preliminary materials.




o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.




		(1)	Amount Previously Paid:




		(2)	Form, Schedule or Registration Statement No.:




		(3)	Filing Party:




		(4)	Date Filed:


~~NOTICE OF ANNUAL MEETING OF SHAREHOLDERS~~
~~PROXY STATEMENT~~
~~Security Ownership Of Certain Beneficial Owners And Management~~
~~Election Of Directors~~
~~Information Concerning Nominees For Director And Executive Officers~~
~~Equity Compensation Plan Information~~
~~Corporate Governance~~
~~Compensation Discussion and Analysis~~
~~Summary Compensation Table~~
~~Grants of Plan Based Awards -- 2008~~
~~Outstanding Equity Awards at Fiscal Year-End -- 2008~~
~~Option Exercises and Stock Vested -- 2008~~
~~Pension Benefits -- 2008~~
~~Nonqualified Deferred Compensation -- 2008~~
~~Potential Payments Upon Termination or Change in Control~~
~~Director Compensation~~
~~Section 16(a) Beneficial Ownership Reporting Compliance~~
~~Report of the Compensation Committee~~
~~Report of the Audit Committee~~
~~Ratification of Appointment of Independent Auditor~~
~~Transactions with Related Persons~~
~~Shareholder Proposals~~


(4)
~~(7)~~		~~After~~Assuming Mr. Friedman’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Friedman would beneficially own ~~3,580,502~~5,063,233 shares (representing ~~2.2%~~2.94% of the currently outstanding class). The table above includes ~~922,379~~794,803 vested RSUs which Mr. Friedman has a right to acquire within 60 days from February 1, ~~2009; 1,218~~2010; 52,359 RSUs resulting from dividend reinvestments which Mr. Friedman has a right to acquire within 60 days from February 1, 2010; 1,254 shares held under the ESOP; and ~~8,855~~11,215 shares held by the ~~Trustee~~trustee of ~~our profit sharing plan (the “PSP”). Participants in~~ the ~~PSP have sole voting power and limited dispositive power over shares allocated to their PSP accounts.~~PSP. The table above excludes ~~525,219~~1,809,297 unvested RSUs which do not represent a right to acquire shares within 60 days from February 1, ~~2009; 124 shares of vested and deferred restricted stock held by the trustee of our ESPP as to which Mr. Friedman has neither voting nor dispositive power;~~2010; and 21,835 share denominated deferrals under the DCP.

~~(8)~~(5)		~~After~~Assuming the expiration of all applicable deferral periods, Mr. Dooley would beneficially own ~~470,355~~429,104 shares (representing less than 1% of the currently outstanding class). The table above excludes ~~164,079~~161,042 stock units held under our Director Stock Compensation Plan (the “DSCP”), which do not represent a right to acquire shares within 60 days after February 1, ~~2009.~~2010. Directors holding shares under the DSCP have voting but no dispositive power over those shares.

~~(9)~~(6)		~~After~~Assuming the expiration or termination of all applicable vesting and deferral periods, Mr. Broadbent would beneficially own 349,809 shares (representing less than 1% of the currently outstanding class). The table above includes 106,454 vested RSUs which Mr. Broadbent has a right to acquire within 60 days from February 1, 2010; 4,013 RSUs resulting from dividend reinvestments which Mr. Broadbent has a right to acquire within 60 days from February 1, 2010; 11 shares held by the trustee of the PSP; and 3 shares held under the ESOP. The table above excludes 159,681 unvested RSUs which do not represent a right to acquire shares within 60 days from February 1, 2010.

(7)		Assuming Mr. Feller’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Feller would beneficially own ~~207,034~~158,192 shares (representing less than 1% of the currently outstanding class). The table above includes ~~21,924 RSUs, 1,855~~1,113 vested RSUs arising from dividend reinvestments ~~and 6,247 share denominated deferrals under the DCP, all of~~ which Mr. Feller ~~had~~has a right to acquire within ~~sixty~~60 days ofafter February 1, ~~2009,~~2010; 11 shares held by the trustee of the PSP; and ~~574~~593 shares held under the ESOP. The table above excludes ~~14,618 unvested~~14,617 vested RSUs ~~21,023 share denominated deferrals under the DCP.~~

~~(10)~~		After the expiration of all applicable vesting and deferral periods, Mr. Broadbent would beneficially own 320,874 shares (representing less than 1% of the currently outstanding class). The table above includes 53,227 RSUs and 4,015 RSUs arising from dividend reinvestments, all of which Mr. ~~Broadbent has~~Feller does not have a right to acquire within ~~sixty~~60 days offrom February 1, ~~2009. The table above excludes 212,908~~2010; 7,309 unvested RSUs which do not represent a right to acquire within 60 days from February 1, ~~2009.~~2010; and 16,679 share denominated deferrals under the DCP which do not represent a right to acquire within 60 days from February 1, 2010.

~~(11)~~(8)		~~After~~Assuming the expiration or termination of all applicable deferral periods, Mr. Campbell would beneficially own ~~97,242~~100,177 shares (representing less than 1% of the currently outstanding class). The table above includes ~~20,568~~9,428 shares subject to immediately exercisable options and ~~8,813~~34,714 shares of restricted stock under the DSCP as to which Mr. Campbell has voting but no dispositive power. The table above excludes 29,682 deferred shares under the DSCP which Mr. Campbell does not have a right to acquire within 60 days from February 1, 2009.DSCP.

~~(12)~~(9)		~~After~~Assuming the expiration or termination of all applicable vesting and deferral periods, Mr. Hendrickson would beneficially own ~~39,810~~44,732 shares (representing less than 1% of the currently outstanding class). The table above


Bank Holding Companies	Limited Service Investment Banks	Non-Investment Banks

Barclays	FBR Capital Markets	Affiliated Managers Group
Credit Suisse	Greenhill & Co.	Allied Capital
Deutsche Bank	Lazard	American Capital
Goldman Sachs Group	Piper Jaffray	Blackrock
Morgan Stanley	Stifel Financial
UBS	Raymond James Financial


		(“Baldwin”) as of May ~~22,~~27, 2008. In accordance with Amendment No. 2 to Schedule 13D filed with the SEC by Leucadia on May 20, 2008, reporting interests held as of May 20, 2008, the position is directly owned by Baldwin and indirectly owned by Phlcorp, Inc. (“Phlcorp”) and Leucadia. Baldwin is a wholly-owned subsidiary of Phlcorp and Phlcorp is a wholly-owned subsidiary of Leucadia. Leucadia, Baldwin and Phlcorp reported shared voting and dispositive power over the shares.

(2)		~~After~~Assuming Mr. Handler’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Handler would beneficially own ~~12,018,587~~13,763,313 shares (representing ~~7.3%~~8.0% of the currently outstanding class). The table above includes ~~7,185,284~~7,446,802 vested restricted stock units (“RSUs”) which


	Beneficial		Sole Voting		Shared Voting		Sole Dispositive		Shared Dispositive
	Ownership		Power		Power		Power		Power

BCG		4,356,000		0		3,644,900		0		4,356,000
BAMCO		3,997,100		0		3,296,000		0		3,997,100
BCM		358,900		0		348,900		0		358,900
Ronald Baron		4,360,730		4,730		3,644,900		4,730		4,356,000


	•	Executive efforts at enhancing firm-wide productivity and profitability, and

	•	Entrepreneurial behavior, in which executives and employees are shareholders and act to maximize long-term equity value in the interest of all shareholders.


	•	base salary

	•	annual bonus

	•	long-term awards

	•	other benefits


	Guaranteed Cash	Performance-Based	Guaranteed Long-Term
Base Salary	Bonus	Bonus Range	Equity Incentive

$1,000,000	$1,300,000	$0 to $750,000	$700,000


		~~through 2000 as head~~while he was Head of the High Yield Division, ~~which were deferred through~~before implementing our generally applicable DCP and prior to his becoming an executive officer. The last deferral into Mr. Handler’s self-directed deferred compensation ~~plan.~~account was in 2000.

(5)		Includes ~~$7,509,455~~$8,696,289 in ~~decreased~~increased value of RSUs ~~which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Friedman~~ and ~~$316,616~~$272,453 in ~~decreased~~increased value of investments in our DCP.

(6)		Includes ~~$1,371,900~~$19,918,877 attributable to RSUs and $1,644,353 in amounts deferred through our ~~DCP and $13,887,651 reflecting~~DCP.

(7)		Reflects the increase in value of RSUs.

(8)		Reflects the value of RSUs.

~~(7)~~		~~Consists of the earnings on vested RSUs which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Broadbent.~~

~~(8)~~		~~Includes $218,144 as the value of RSUs which have vested but by their terms will not be distributed until a later date and $12,500 in DCP discounts on new cash amounts deferred during 2008.~~

(9)		Includes ~~$162,498~~$67,680 in ~~decreased~~increased value of RSUs ~~which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Feller~~ and ~~$252,073~~$184,278 in ~~decreased~~increased value of investments in our DCP.

(10)		Includes ~~$395,623~~$199,846 as the value of RSUs and $502,901 as the value of investments in ~~amounts deferred through~~ our ~~DCP and $422,164 in RSUs.~~DCP.

(11)		~~Consists of the decreased~~Reflects an increase in value of ~~RSUs which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Hendrickson.~~

~~(12)~~		~~Consists of the value of RSUs which have vested but by their terms will not be distributed until a later date or which have been deferred by Mr. Hendrickson.~~RSUs.


	•	If an executive has received a restricted stock unit or share of restricted stock which has fully vested and is non-forfeitable, or holds vested and deferred stock units ~~which by their terms are not distributable until a later date or have been deferred by the employee~~ that are similarly non-forfeitable, the executive would retain that interest following termination and we therefore do not view the retention of those interests as resulting in a payment or enhancement of rights on ~~termination, except following a termination not for “cause” following a change in control.~~termination.

	•	Shares of restricted stock or restricted stock units which immediately vest if the executive is terminated following a change in control are valued at ~~$14.06~~$23.73 per share, the closing price of our common stock on December 31, ~~2008.~~2009.

	•	The value of restricted stock units that remain unvested and do not accelerate is not included in the totals below but will continue to vest according to their terms. For the purposes of the table below we have also assumed that the executive complies with any post-termination non-competition and similar obligations under the “continued vesting” provisions described above.

	•	Amounts an employee has deferred through our DCP will continue to be deferred and therefore will not result in a payment upon termination in the table below.

	•	Each employee agreed to sign our standard settlement and release agreement as required under his or her restricted stock or restricted stock unit agreements.

	•	No payment to a named executive officer would need to be reduced so that the executive and Jefferies would avoid adverse tax consequences under Code Sections 4999 and 280G. As discussed above, some of our stock awards contain a “cut-back” provision of this type. We have no obligation to any named executive officer to pay a“gross-up” to offset golden parachute excise taxes under Code Section 4999 or to reimburse the executive for related taxes.

	•	Any withdrawals from an employee’s profit sharing plan ~~pension plan~~ or ESOP account, or the decision of an employee to transfer balances into another qualified account are entirely within the discretion of the employee, will not result in a payment by us, and are not included in the table below.

	•	Except as otherwise indicated all amounts reflected in the table would be paid on a lump sum ~~basis, though in some cases distributions will be delayed as required by Code Section 409A.~~basis.

	•	The named executive officers have satisfied all applicable requirements for receiving severance payments in accordance with our generally applicable severance practices.


(4)		Consists of ~~$205,529~~$346,885 in restricted stock units which would immediately become vested and ~~$228,125~~$265,625 as a payment under our Severance Policy.

(5)		Consists of ~~$280,342~~$473,152 in restricted stock units which would immediately become vested and ~~$26,042~~$36,458 as a payment under our Severance Policy.


	Fees										Fees
	Earned or			Stock			All Other				Earned or			Stock			All Other
	Paid in			Awards			Compensation				Paid in			Awards			Compensation
Name	Cash ($)			($)(1)			($)(2)		Total ($)		Cash ($)			($)(1)			($)(2)		Total ($)
(a)	(b)			(c)			(g)		(h)		(b)			(c)			(g)		(h)

W. Patrick Campbell	$	85,000		$	98,990	(3)		—	$	183,990	$	85,000		$	100,000	(3)		—	$	185,000
Ian M. Cumming	$	45,000		$	100,000	(4)		—	$	145,000	$	65,000		$	100,000	(4)		—	$	165,000
Richard G. Dooley	$	75,000	(5)	$	100,000	(6)	$	3,000	$	178,000	$	75,000	(5)	$	100,000	(6)	$	3,000	$	178,000
Robert E. Joyal	$	73,750		$	105,833	(7)		—	$	179,583	$	75,000		$	100,000	(7)	$	500	$	175,500
Frank Macchiarola(8)	$	18,750			—			—	$	18,750
Michael T. O’Kane	$	72,500		$	91,667	(9)		—	$	164,167	$	72,500		$	100,000	(8)		—	$	172,500
Joseph S. Steinberg	$	45,000		$	77,778	(4)		—	$	122,778	$	65,000		$	100,000	(4)		—	$	165,000


(1)		Amounts reflect the dollar amount recognized for financial statement reporting purposes with respect to each director for 2008 in accordance with FAS 123R including expense from stock awards granted in earlier years but which required service in all or partgrant date fair value of 2008. The compensation amounts were not discounted for estimated forfeitures related to the service-based vesting condition. For a discussion of the assumptions made in the valuation of shares reported in the “Stock Awards” column above, see the “Stock Based Compensation” heading in footnote 1, and the “Compensation Plan” discussion in footnote 22 to the Notes to our Consolidated Financial Statements as reported in our Annual Report on Form~~10-K.~~equity awards.

(2)		Amounts shown in the All Other Compensation column are the amounts we contributed in ~~2008~~2009 to charities designated by the named persons as part of our Charitable Gifts Matching Program described below.

(3)		At December 31, ~~2008,~~2009, Mr. Campbell had the following stock awards outstanding: ~~8,813~~4,754 shares of unvested restricted stock, 5,032 unvested RSUs, 29,682 vested and deferred shares and ~~20,568~~9,428 vested stock options. The grant date fair value of Mr. Campbell’s restricted stock grants for ~~2005 was $80,000, and for~~ 2006, 2007, 2008 and ~~2008~~2009 were $100,000 each, in accordance with our Director’s Stock Compensation Plan (the “DSCP”) as described below.

(4)		~~Consists of a~~At December 31, 2009, Mr. Cumming had the following stock ~~award outstanding for 5,479~~awards outstanding: 3,653 shares of unvested restricted ~~stock.~~stock, and 5,032 unvested RSUs. The grant date fair value of ~~this~~his restricted stock grant for 2008 and 2009 was $100,000, in accordance with our DSCP as described below.

(5)		Amounts were credited as deferred shares under our DSCP.

(6)		At December 31, ~~2008,~~2009, Mr. Dooley had the following stock awards outstanding: ~~12,177~~17,209 unvested ~~restricted stock units,~~RSUs, and ~~151,902~~143,833 vested and deferred shares. The grant date fair value of Mr. Dooley’s restricted stock grants for ~~2005 was $80,000 each, and for~~ 2006, 2007, 2008 and ~~2008~~2009 were $100,000 each, in accordance with our DSCP as described below.

(7)		At December 31, ~~2008,~~2009, Mr. Joyal had the following stock awards outstanding: ~~12,177~~17,209 unvested ~~restricted stock units,~~RSUs, and 248 vested and deferred shares. The grant date fair value of Mr. Joyal’s restricted stock grants for 2006, 2007, 2008 and ~~2008~~2009 were $100,000 each, in accordance with our DSCP as described below.


	•	an annual retainer of $7,500 for each committee membership;

	•	an annual retainer of $20,000 to the Chairman of the Audit Committee; and

	•	an annual retainer of $10,000 to the Chairman of the Compensation Committee and the Chairman of the Governance and Nominating Committee.

Base Salary

Cash Bonus

Stock Bonus

Long-Term Equity Incentive

$1,000,000

$6 million

$6 million