Table of Contents
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.___)
Filed by the Registrantx
Filed by a Party other than the Registranto
Check the appropriate box:
o | Preliminary Proxy Statement | |
x | 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 sec. 240.14a-11(c) or sec. 240.14a-12 |
Jefferies Group, Inc.
Payment of Filing Fee (Check the appropriate box):
x | Fee not required. | ||||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: |
Table of Contents
1. Elect five directors to serve until our next Annual Meeting, and | |
2. Conduct any other business that properly comes before the meeting. |
For the Board of Directors, | |
Lloyd H. Feller | |
Secretary |
Table of Contents
Jefferies Group, Inc. | |
c/o American Stock Transfer & Trust Company | |
6201 15th Avenue, 3rd Floor / Proxy Department | |
Brooklyn, NY 11219 |
Table of Contents
• | 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. |
2
Table of Contents
Shares of | Percentage of | ||||||||
Common Stock | Common Stock | ||||||||
Beneficially | Beneficially | ||||||||
Name and Address of Beneficial Owner | Owned | Owned | |||||||
Jefferies Group, Inc. Employee Stock Ownership Plan | 6,366,007 | (1) | 11.1 | % | |||||
Richard B. Handler | 4,023,275 | (2) | 6.8 | % | |||||
Earnest Partners LLC | 3,875,615 | (3) | 6.8 | % | |||||
Residence 75 Fourteenth Street, Suite 2300 | |||||||||
Atlanta, Georgia 30309 | |||||||||
John C. Shaw, Jr. | 1,207,084 | (4) | 2.1 | % | |||||
Richard G. Dooley | 219,209 | (6) | * | ||||||
Joseph A. Schenk | 218,372 | (5) | * | ||||||
Frank J. Macchiarola | 179,338 | (7) | * | ||||||
Maxine Syrjamaki | 144,412 | (8) | * | ||||||
Lloyd H. Feller | 83,342 | (9) | * | ||||||
W. Patrick Campbell | 42,813 | (10) | * | ||||||
All Directors and Executive Officers | 5,552,768 | (11) | 9.8 | % |
* | The percentage of shares beneficially owned does not exceed one percent of the class. |
(1) | Under the Jefferies Group, Inc. Employee Stock Ownership Plan (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. As of December 31, 2004, 6,366,007 shares of Common Stock were held in the ESOP Trust, and 6,362,176 of those shares were allocated to the accounts of ESOP participants. The remaining 3,831 shares held in the ESOP were held in a general account for future allocation. 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. Because of its role as trustee for the ESOP, Wells Fargo Bank, N.A. may also be deemed to have shared dispositive power over the shares held by the ESOP. 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 Richard B. Handler, our Chief Executive Officer, John C. Shaw, Jr., our President and Chief Operating Officer, Joseph A. Schenk, our Chief Financial Officer, and Melvin W. Locke, Jr., our Director of People Services. These individuals each disclaim beneficial ownership of the shares held by the ESOP except those shares allocated to his ESOP account. Wells Fargo & Company, on behalf of Wells Fargo Bank, N.A. and Wells Fargo Funds Management, LLC has filed a Schedule 13G with the SEC. In its 13G, Wells Fargo reported that as of December 31, 2004, it had sole voting power over 5,437 shares, shared voting power over 6,366,007 shares, sole dispositive power over no shares and shared dispositive power over no shares. We believe that the shares referred to in the Wells Fargo filing include the shares held by the ESOP. | |
(2) | Assuming Mr. Handler’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Handler would beneficially own 5,416,505 shares (representing 9.5% of the currently outstanding class). The table above includes 806,664 shares subject to immediately exercisable |
3
Table of Contents
options; 25,076 shares subject to immediately exercisable options held under the DCP; 1,571,127 vested restricted stock units (“RSUs”) which Mr. Handler has a right to acquire within 60 days from February 1, 2005; 52,988 shares held under the ESOP; and 20 shares held in an account for the benefit of Mr. Handler’s immediate family. The table above excludes 1,136,747 RSUs which do not represent a right to acquire within 60 days from February 1, 2005; 133,336 options subject to vesting later than 60 days after February 1, 2005; 136 deferred shares of restricted stock held by the trustee of the ESPP as to which Mr. Handler has neither voting nor dispositive power; and 123,012 share denominated deferrals under the Deferred Compensation Plan (“DCP”). | ||
(3) | The indicated interest was reported on a Schedule 13G filed with the SEC by Earnest Partners, LLC on February 14, 2005. In its Schedule 13G, Earnest reported that as of December 31, 2004, it had sole voting power over 2,277,710 shares, shared voting power over 920,005 shares, sole dispositive power over 3,875,615 shares and shared dispositive power over no shares. | |
(4) | Assuming Mr. Shaw’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Shaw would beneficially own 1,308,691 shares (representing 2.3% of the currently outstanding class). The table above includes 196,664 shares subject to immediately exercisable options; 13,886 shares subject to immediately exercisable options held under the DCP; 222,403 shares of unvested restricted stock as to which Mr. Shaw has sole voting and no dispositive power; 134,514 shares held under the ESOP; and 1,771 shares held by the 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. The table above excludes 33,336 options subject to vesting later than 60 days after February 1, 2005; 25,438 RSUs which do not represent a right to acquire within 60 days from February 1, 2005; 136 vested and deferred shares under the ESPP and 42,697 share denominated deferrals under the DCP. | |
(5) | Assuming Mr. Schenk’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Schenk would beneficially own 340,630 shares (representing less than 1% of the currently outstanding class). The table above includes 105,466 shares subject to immediately exercisable options; 11,948 shares subject to immediately exercisable options held under the DCP; 26,365 vested RSUs which Mr. Schenk has a right to acquire within 60 days after February 1, 2005; 1,568 shares held under the ESOP; 9,841 shares under the PSP; and 60 shares held in accounts for the benefit of Mr. Schenk’s immediate family. The table above excludes 73,982 unvested RSUs which do not represent a right to acquire within 60 days from February 1, 2005; 305 deferred shares of restricted stock held by the trustee of the ESPP as to which Mr. Schenk has neither voting nor dispositive power; and 47,971 share denominated deferrals under the DCP. | |
(6) | Assuming the expiration of all applicable vesting and deferral periods, Mr. Dooley would beneficially own 249,708 shares (representing less than 1% of the currently outstanding class). The table above includes 74,730 shares subject to immediately exercisable options and 2,529 shares of restricted stock as to which Mr. Dooley has sole voting and no dispositive power. The table above excludes 30,499 deferred shares under our Director Stock Compensation Plan (the “DSCP”) which do not reflect a right to acquire within 60 days after February 1, 2005. | |
(7) | Assuming the expiration of all applicable vesting and deferral periods, Mr. Macchiarola would beneficially own 194,535 shares (representing less than 1% of the currently outstanding class). The table above includes 94,306 shares subject to immediately exercisable options and 2,529 restricted shares under the DSCP as to which Mr. Macchiarola has sole voting and no dispositive power. The table above excludes 15,197 deferred shares under the DSCP which do not reflect a right to acquire within 60 days after February 1, 2005. | |
(8) | Assuming Ms. Syrjamaki’s continued employment with us through the expiration of all applicable vesting and deferral periods, Ms. Syrjamaki would beneficially own 152,798 shares (representing less than 1% of the currently outstanding class). The table above includes 2,931 unvested shares of restricted stock as to which Ms. Syrjamaki has sole voting and no dispositive power; 1,708 shares subject to immediately exercisable options held under the DCP; 78,749 shares held under the ESOP; and 28,131 shares under the PSP. The table above excludes 1,241 unvested RSUs which do not represent a |
4
Table of Contents
right to acquire within 60 days from February 1, 2005; and 7,145 share denominated deferrals under the DCP. | ||
(9) | Assuming Mr. Feller’s continued employment with us through the expiration of all applicable vesting and deferral periods, Mr. Feller would beneficially own 105,371 shares (representing less than 1% of the currently outstanding class). The table above includes 30,000 shares of unvested restricted stock as to which Mr. Feller has sole voting and no dispositive power; and 33,332 shares subject to immediately exercisable options. The table above excludes 5,362 share denominated deferrals under the DCP; 10 shares held under the ESOP and 16,668 options subject to vesting later than 60 days after February 1, 2005. |
(10) | Assuming the expiration or termination of all applicable vesting and deferral periods, Mr. Campbell would beneficially own 50,005 shares (representing less than 1% of the currently outstanding class). The table above includes 37,284 shares subject to immediately exercisable options and 2,529 restricted shares under the DSCP as to which Mr. Campbell has voting but no dispositive power. The table above excludes 7,192 deferred shares under the DSCP which do not reflect a right to acquire within 60 days after February 1, 2005. |
(11) | Includes 1,348,446 shares subject to immediately exercisable options; 255,334 shares of unvested restricted stock; 1,597,492 RSUs which employees have a right to acquire within 60 days from February 1, 2004; 52,618 options held under the DCP; 267,829 shares held under the ESOP for the listed directors and executive officers as a group; and 39,743 shares under the PSP for the listed directors and executive officers as a group. |
W. Patrick Campbell, 59, 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. | |
Richard G. Dooley, 75, a nominee, has been one of our Directors since November 1993. From 1978 until his retirement in June 1993, Mr. Dooley was Executive Vice President and Chief Investment Officer of Massachusetts Mutual Life Insurance Company (“Mass Mutual”). Mr. Dooley was a consultant to Mass Mutual from 1993 to 2003. Mr. Dooley has been a director of Kimco Realty Corporation since 1990. Mr. Dooley is also a trustee of Saint Anselm College and member of the Board of The Nellie Mae Education Foundation, Inc. Mr. Dooley is Chairman of our Compensation Committee and a member of our Audit Committee and Corporate Governance and Nominating Committee. |
5
Table of Contents
Richard B. Handler, 43, 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, 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. He is also the President and Chief Executive Officer of the Jefferies Partners Opportunity family of funds. Mr. Handler received an MBA from Stanford University in 1987 and a BA in Economics from the University of Rochester in 1983. | |
Frank J. Macchiarola, 63, a nominee, has been one of our Directors since August 1991. He is currently the President of St. Francis College, where he has served in that capacity since July 1996. He also serves as special counsel to the law firm of Tannenbaum, Halpern, Syracuse & Hirschtritt, LLP. Previously, Mr. Macchiarola was a Professor of Law and Political Science and the Dean of the Benjamin N. Cardozo School of Law at Yeshiva University in New York City from 1991 to 1996, Professor of Business in the Graduate School of Business at Columbia University from 1987 to 1991, and President and Chief Executive Officer of the New York City Partnership, Inc. from 1983 to 1987. Prior to 1985, Mr. Macchiarola was a faculty member at the City University of New York and Chancellor of the New York City Public School System. Mr. Macchiarola has been a Trustee of the Manville Personal Injury Trust since 1991. Mr. Macchiarola is Chairman of our Corporate Governance and Nominating Committee and a member of our Audit Committee and Compensation Committee. | |
John C. Shaw, Jr., 58, a nominee, has been our President and Chief Operating Officer since January 2001, and served in the same capacity at Jefferies during that time. Mr. Shaw has also been one of our Directors since January 2000. Mr. Shaw also served as our Co-President and Co-Chief Operating Officer during 2000, and as Executive Vice President and National Sales Manager of the Equity Division of Jefferies from 1997 to 2000. Mr. Shaw was Executive Vice President and Regional Manager of our Boston office from 1994 to 1997 and began his tenure at Jefferies in 1983 as a Senior Vice President and Regional Manager of the firm’s Chicago office. Before joining Jefferies, Mr. Shaw was a Senior Vice President and Institutional Branch Manager at First Boston in Chicago, and previously, was a Senior Vice President and Branch Manager at Cantor Fitzgerald in Chicago, where he started in 1976. |
Joseph A. Schenk, 46, has been our Chief Financial Officer and Executive Vice President since January 2000, Executive Vice President of Jefferies since January 2000, and was a Senior Vice President, Corporate Services, of Jefferies from September 1997 through December 1999. From January 1996 through September 1997, Mr. Schenk was Chief Financial Officer and Treasurer of Tel-Save Holdings, Inc., now Talk America Holdings, Inc. From September 1993 to January 1996, Mr. Schenk was Vice President, Capital Markets Group, with Jefferies. | |
Lloyd H. Feller, 62, has been our Executive Vice President, General Counsel and Secretary since December 2002. Mr. Feller was a Senior Vice President, Secretary and General Counsel of SoundView Technology Group from 1999 to December 2002. Prior to joining SoundView’s predecessor, Wit Capital Group, in 1999, Mr. Feller was a partner at Morgan Lewis & Bockius LLP, where he was the leader of that firm’s securities regulation practice group. Before joining Morgan Lewis in 1979, Mr. Feller worked at the SEC as the Associate Director of the Division of Market Regulation, a position in which he was in charge of the Office of Market Structure and Trading Practices. | |
Maxine Syrjamaki, 60, has been our Controller since May 1987, an Executive Vice President of Jefferies since November 1986, and Chief Financial Officer of Jefferies since September 1984. Ms. Syrjamaki was also Chief Financial Officer of Bonds Direct Securities LLC from 2001 through 2004, |
6
Table of Contents
and Chief Financial Officer of Quarterdeck Investment Partners, LLC since 2001. Prior to joining Jefferies in 1983, Ms. Syrjamaki was a C.P.A. in the audit group of Peat Marwick (now KPMG) specializing in financial institutions. |
Number of Securities | ||||||||||||
Number of Securities | Remaining Available for | |||||||||||
to be Issued Upon | Weighted-Average | Future Issuance Under | ||||||||||
Exercise of | Exercise Price of | Equity Compensation Plans | ||||||||||
Outstanding Options, | Outstanding Options, | (Excluding Securities | ||||||||||
Warrants and Rights | Warrants and Rights | Reflected in Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 2,472,397 | $ | 16.39 | 9,052,885 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 2,472,397 | $ | 16.39 | 9,052,885 |
(1) | The weighted average exercise price of outstanding options, warrants and rights is calculated based solely on those awards that have a specified exercise price. If outstanding RSUs and similar rights were included, and deemed to have an exercise price of zero, the weighted average exercise price for plans approved by security holders would be $6.96. |
(2) | Of the shares remaining available for future issuance, as of December 31, 2004, the numbers of shares that may be issued as restricted stock or deferred stock were as follows: 7,039,586 shares under the 2003 Incentive Compensation Plan (the “2003 Plan”) for general use; 4,449,372 shares under the 2003 Plan designated for use under the Deferred Compensation Plan, as amended and restated (the “DCP”); and 860,861 shares under the Director Stock Compensation Plan. 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 outstanding 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. 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. In prior years participants chose whether their deferred compensation was allocated to a cash denominated investment subaccount or to an equity subaccount which permitted a combination of shares, options and other specified equity investment vehicles. Current participants choose whether their deferred compensation is allocated to a cash subaccount or share denominated subaccount. Restricted shares are allocated to a participant’s subaccount 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 2004 was 10%. A maximum of 8,000,000 shares are reserved for restricted share units and options under the DCP. Restricted share units will be credited with dividend equivalents on the last day of each quarter, which will be converted into additional share units in accordance with the terms of the DCP. Restricted share units and options, and the terms thereof, are subject to equitable adjustment by the Compensation Committee in the event of certain extraordinary corporate events. The discounted portion of any amounts credited is forfeitable until the participant has participated in the DCP for three consecutive years or until the participant’s age plus the number of years of service equals 65. Options will |
7
Table of Contents
become exercisable on the first anniversary of the third year after the year in which the option was granted, or earlier upon the participant’s death or retirement. Options expire at the end of the fifth year after the year of grant or 60 days after termination of employment other than due to death. |
8
Table of Contents
9
Table of Contents
Annual Compensation(2)(3) | Long-Term Compensation | ||||||||||||||||||||||||||||||||||||
Awards | |||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||||||||||
Underlying | |||||||||||||||||||||||||||||||||||||
Other Annual | Restricted | Options/ | All Other | ||||||||||||||||||||||||||||||||||
Name and | Salary | Bonus | Compensation | Stock Award(s)(4) | SARs | Compensation(5) | |||||||||||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | # | ($) | ||||||||||||||||||||||||||||||
Richard B. Handler | 2004 | 1,000,000 | 6,862,000 | — | 16,000,000 | (1) | — | 17,052 | |||||||||||||||||||||||||||||
Chairman & Chief | Consisting of: | ||||||||||||||||||||||||||||||||||||
Executive Officer | 2005 Long Term | 8,000,000 | |||||||||||||||||||||||||||||||||||
2006 Long Term | 8,000,000 | ||||||||||||||||||||||||||||||||||||
Total | 16,000,000 | ||||||||||||||||||||||||||||||||||||
2003 | 1,000,000 | 4,466,447 | — | 14,653,588 | (1) | — | 3,218 | ||||||||||||||||||||||||||||||
Consisting of: | |||||||||||||||||||||||||||||||||||||
2003 Related | 8,515,588 | ||||||||||||||||||||||||||||||||||||
2004 Long Term | 6,138,000 | ||||||||||||||||||||||||||||||||||||
Total | 14,653,588 | ||||||||||||||||||||||||||||||||||||
2002 | 350,000 | 1,587,170 | — | 8,018,821 | 416,980 | 31,650 | |||||||||||||||||||||||||||||||
John C. Shaw, Jr. | 2004 | 1,000,000 | 1,532,400 | — | 1,021,600 | — | 13,862 | ||||||||||||||||||||||||||||||
President & Chief | 2003 | 1,000,000 | 1,695,696 | — | 4,909,572 | (1) | — | 3,218 | |||||||||||||||||||||||||||||
Operating Officer | Consisting of: | ||||||||||||||||||||||||||||||||||||
2003 Related | 2,863,572 | ||||||||||||||||||||||||||||||||||||
2004 Long Term | 2,046,000 | ||||||||||||||||||||||||||||||||||||
Total | 4,909,572 | ||||||||||||||||||||||||||||||||||||
2002 | 250,000 | 1,222,273 | — | 2,483,386 | 108,488 | 16,832 | |||||||||||||||||||||||||||||||
Joseph A. Schenk | 2004 | 275,000 | 725,000 | — | 1,333,333 | — | 14,072 | ||||||||||||||||||||||||||||||
Executive Vice Pres. & | 2003 | 275,000 | 765,492 | — | 1,305,805 | — | 3,218 | ||||||||||||||||||||||||||||||
Chief Financial Officer | 2002 | 275,000 | 757,005 | — | 637,502 | 42,194 | 7,919 | ||||||||||||||||||||||||||||||
Lloyd H. Feller | 2004 | 250,000 | 893,000 | — | — | — | 22,207 | ||||||||||||||||||||||||||||||
Executive V.P., General | 2003 | 250,000 | 840,291 | — | 8,357 | — | 3,218 | ||||||||||||||||||||||||||||||
Counsel & Secretary | 2002 | 20,833 | 54,167 | — | 1,108,750 | 50,000 | 100,000 | ||||||||||||||||||||||||||||||
Maxine Syrjamaki | 2004 | 161,500 | 290,365 | — | 50,000 | — | 15,203 | ||||||||||||||||||||||||||||||
Controller | 2003 | 161,500 | 271,750 | — | 72,948 | — | 3,218 | ||||||||||||||||||||||||||||||
2002 | 161,500 | 228,590 | — | 6,111 | 632 | 6,495 |
(1) | The Compensation Committee considers that, for 2004, cash and restricted stock compensation to Mr. Handler had a value of $14.008 million, not including stock options. In conjunction with negotiating 2005 and 2006 Pay-for-Performance Plans for Mr. Handler in 2004, the Committee had determined to make grants of restricted stock that would cover 2005 and 2006. The restricted stock grant was made in 2004. As required by SEC rules, the dollar value of the restricted stock grants for 2005 and 2006 ($8,000,000 for each) is included in the line showing 2004 compensation in the Table above. As discussed in the “Report of the Compensation Committee on Executive Compensation,” the Compensation Committee considers those grants as part of 2005 and 2006 compensation. |
(2) | By early 2004, the Compensation Committee had authorized annual bonuses under the Pay-for-Performance Incentive Program payable for achievement of specified performance goals. Under the |
10
Table of Contents
approved bonus formulas, our actual performance in 2004 would have entitled Mr. Handler to a cash bonus of $11,131,000 and Mr. Shaw to a cash bonus of $4,636,000. The Compensation Committee also intended that Mr. Schenk would receive a cash bonus under a comparable bonus formula, which would have resulted in a cash bonus of $2,770,333. However, the three executive officers requested that the Committee substantially reduce their 2004 bonus payouts as they did in 2002 and 2003. The Committee agreed to their request. The reduction for each of the executives was as follows: $4,269,000 for Mr. Handler, $2,082,000 for Mr. Shaw and $712,000 for Mr. Schenk, for a total reduction of $6,351,712. The bonus amounts that were paid under this Program for 2004 were as follows: Mr. Handler, total bonus of $6,862,000, in cash; Mr. Shaw, total bonus of $2,554,000, consisting of $1,532,400 cash and 25,438 shares of restricted stock; and Mr. Schenk, total bonus of $2,058,333, consisting of $725,000 cash and 26,985 shares of restricted stock. The “Bonus” column in the table above includes current year deferrals of $1,000,000 for Mr. Handler, $100,000 for Mr. Feller, and $25,000 for Ms. Syrjamaki through our Deferred Compensation Plan (the “DCP”). The dollar value of restricted stock units acquired under the DCP, which represents the discount on stock units, is reflected in the Other Annual Compensation column. The DCP restricted stock units are non-forfeitable once a participant has participated in the DCP for three consecutive years, a condition met by all of the named executive officers other than Mr. Feller. |
(3) | 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. In addition, we have established investment entities and permitted executive officers and others to acquire interests in these entities, or have permitted deferred bonus amounts shown in the table above to be deemed invested in those entities. Some of these investment entities are funds managed by Jefferies or its affiliates, some hold equity and derivative securities in companies for which Jefferies or its affiliates have provided investment banking and other services, and others invest on apari passubasis in all trading and investment activities undertaken by Jefferies’ High Yield Division. See “Certain Relationships and Related Transactions.” |
(4) | On December 31, 2004, the five individuals in the table held our restricted shares or restricted stock units (“RSUs”) with an aggregate market value as follows: Mr. Handler held 1,259,507 with a market value of $50,732,942; Mr. Shaw held 252,463 with a market value of $10,169,210; Mr. Schenk held 83,610 with a market value of $3,367,811; Mr. Feller held 30,536 with a market value of $1,229,997; and Ms. Syrjamaki held 2,671 with a market value of $107,588. In the case of Mr. Handler, restrictions on 122,760 shares granted on January 28, 2003 lapsed on January 28, 2005; restrictions on 600,000 shares granted on May 5, 2003 will lapse on May 5, 2006; restrictions on 62,110 shares granted on January 20, 2004 will lapse on January 20, 2007; and restrictions on 474,637 shares granted on August 20, 2004 will lapse on January 1, 2008. The totals above do not include certain RSUs which Mr. Handler has deferred the receipt of for tax purposes, including 472,144 RSUs arising upon Mr. Handler’s election to defer the gains from options, 945,972 RSUs arising upon the deferral of the receipt of restricted stock which have now vested, and 29,083 RSUs arising upon the deferral of dividends on existing RSUs. Deferrals on these RSUs will lapse upon the earliest to occur of his reaching age 65 or termination of employment and dividends payable on deferred RSUs will continue to be reinvested in additional vested and deferred RSUs. In the case of Mr. Shaw, restrictions on 30,060 restricted shares granted January 28, 2003 lapsed on January 28, 2005; restrictions on 200,000 shares granted May 5, 2003 will lapse on May 5, 2006; and restrictions on 22,403 shares granted on January 20, 2004 will vest on January 20, 2007. In the case of Mr. Schenk, restrictions on 25,616 shares granted January 28, 2003 lapsed on January 28, 2005; restrictions on 10,997 shares granted October 18, 2004 will lapse on October 18, 2007; restrictions on 9,327 shares granted April 12, 2004 will lapse on April 12, 2007; restrictions on 28,506 shares granted January 20, 2004 will lapse on January 20, 2007; and restrictions on 9,164 shares granted August 4, 2003 will lapse on August 4, 2006. Mr. Schenk has also deferred the receipt of certain vested RSUs for tax purposes, including 749 RSUs arising upon the deferral of dividends on existing RSUs. Deferrals on these vested and deferred RSUs will lapse upon the earliest to occur of his reaching age 65 or termination of employment and dividends payable on deferred RSUs will continue to be reinvested in additional vested and deferred RSUs. In the case of Mr. Feller, restrictions on 10,000 restricted shares will lapse on December 2 of each of 2005, 2006 and 2007. In the case of Ms. Syrjamaki, restrictions on 1,460 shares |
11
Table of Contents
granted January 21, 2003 will lapse January 23, 2006; and restrictions on 1,211 shares granted January 20, 2004 will lapse on January 20, 2007. In addition, each of the named executive officers held share denominated deferrals under the DCP as follows: Mr. Handler, 123,012; Mr. Shaw, 42,697; Mr. Schenk, 47,971; Mr. Feller, 4,825 and Ms. Syrjamaki 7,145. | |
(5) | The total amounts for 2004 shown in the “All Other Compensation” column include the following: |
• | Matching contributions under our 401(k)/ Profit Sharing Plan (“PSP”). During the plan year ended November 30, 2004, Messrs. Handler, Shaw, Schenk, Feller and Ms. Syrjamaki each received $3,250 as our matching contribution. | |
• | Matching contributions under our Employee Stock Ownership Plan (“ESOP”). During the plan year ended November 30, 2004, each of the five executive officers received $8,618 as our matching contribution under the ESOP. | |
• | Reallocation of forfeitures under our ESOP. During the plan year ended November 30, 2004, we credited the accounts of the five executive officers with 9.376 shares of Common Stock at an original cost of $11.754 per share, for a total value of $110 as a result of such forfeitures. | |
• | Reallocation of forfeitures under the PSP. During the plan year ended November 30, 2004, we credited the accounts of the five executive officers with $188 as a result of PSP forfeitures. | |
• | The value of discount shares acquired under our deferred compensation plans as follows: Mr. Handler, $4,886; Mr. Shaw, $1,696; Mr. Schenk, $1,906; Mr. Feller $10,041; and Ms. Syrjamaki, $3,037. |
Number of Securities | Value of Unexercised | |||||||||||||||
Underlying Unexercised | In-the-Money | |||||||||||||||
Shares | Options/SARs at FY- | Options/SARs at FY- | ||||||||||||||
Acquired on | Value | End (#) Exercisable (E)/ | End ($) Exercisable/ | |||||||||||||
Name | Exercise (#) | Realized ($) | Unexercisable (U) | Unexercisable(1) | ||||||||||||
Richard B. Handler | 672,976 | $ | 19,775,794 | 831,740 | (E) | $ | 18,639,576 | (E) | ||||||||
133,336 | (U) | $ | 2,237,378 | (U) | ||||||||||||
John C. Shaw, Jr. | 169,934 | $ | 4,928,086 | 510,550 | (E) | $ | 13,512,715 | (E) | ||||||||
33,336 | (U) | $ | 559,378 | (U) | ||||||||||||
Joseph A. Schenk | 3,652 | $ | 85,150 | 117,414 | (E) | $ | 2,175,726 | (E) | ||||||||
Lloyd H. Feller | — | — | 33,332 | (E) | $ | 603,476 | (E) | |||||||||
16,668 | (U) | $ | 301,774 | (U) | ||||||||||||
Maxine Syrjamaki | 1,708 | (E) | $ | 37,447 | (E) |
(1) | At December 31, 2004, the closing price of our Common Stock was $40.28, which was the price used to determine the year-end value tables. |
12
Table of Contents
• | Provide incentives that reward productivity and profitability, and keep expense of the program in line with performance | |
• | Provide competitive levels of compensation in order to attract talented employees | |
• | Provide compensation that is perceived as fair, in comparison to other companies and within the Company | |
• | Encourage long-term service and loyalty to the Company | |
• | Promote our entrepreneurial culture, in which executives and employees are shareholders and act in the interest of shareholders. |
13
Table of Contents
• | Many of our determinations concerning the 2004 program were made before 2004. In this way we can set performance goals for executives to achieve in the up-coming year, and actual performance in that year becomes the key determinant of the amount of compensation earned. | |
• | We decided in 2002 to grant awards that provide the long-term component of compensation over a period of two years. Thus, stock options granted in 2002 and restricted stock granted in 2003 constituted part of the total direct compensation of the Chief Executive Officer (“CEO”) and the President in 2004. | |
• | Under applicable SEC rules, the Summary Compensation Table shows equity compensation based on the year stock options or restricted stock were actually granted (i.e., some of the options shown as granted in 2002 and some of the restricted stock shown as granted in 2003 are amounts which we view as equity compensation for 2004). | |
• | In 2004, we granted restricted stock that constitutes the long-term component of the CEO’s compensation for 2005 and 2006; this amount is shown in the Summary Compensation Table as a grant in 2004). | |
• | We pay part of the short-term incentive to our most senior officers in the form of restricted stock, which is shown as long-term compensation in the Summary Compensation Table. | |
• | We provide benefits to executives and other employees that are not part of what we consider direct compensation. As discussed further below, we intend these benefits to be generally competitive and to promote other compensation program objectives, but, our evaluation of these benefits generally is separate from our decisions on total direct compensation. |
14
Table of Contents
15
Table of Contents
16
Table of Contents
Bonus | Equity Incentives(1) | Totals | ||||||||||||||||||||||||||
Salary | Threshold | Target | Superior Plus | Restricted Stock | Options | At Target | ||||||||||||||||||||||
Amount/ Value | $ | 1,000,000 | $ | 2,600,000 | $ | 7,600,000 | $ | 12,600,000 | 300,000 shares/ $6,138,000 | 200,000 shares/ $1,650,000 | $ | 16,388,000 |
(1) | The restricted stock was granted May 5, 2003, upon approval by shareholders of the 2003 Plan, and is valued in the table at $20.46 per share, the market value of Company common stock on that date. The options were granted on August 16, 2002, and are valued in the table at $8.25 per share, based on our valuation of those options at the date of grant. When we authorized the grant of restricted stock and options we estimated its aggregate value at $6.4 million, but for purposes of this table we are showing the value of the restricted stock calculated in the same way as in the Summary Compensation Table under applicable SEC rules. |
17
Table of Contents
18
Table of Contents
Audit Fees —Our independent auditors have billed us for audit fees in an aggregate amount of $2,223,181 for 2004 and $714,500 for 2003. These amounts include fees for professional services rendered as our principal accountant for the audit of our annual financial statements, review of financial statements included in our Form 10-Q filings, the audit of various affiliates and investment funds managed by Jefferies or its affiliates, the audit of management’s assessment that our internal controls and procedures are effective, the attestation required by Sarbanes-Oxley Item 404 and for other services that are normally provided in connection with statutory and regulatory filings or engagements. The Audit Committee preapproves all auditing services and permitted non-audit services to be performed for us by our independent auditor, subject to certain small exceptions for non-audit services, which are approved by the Audit Committee prior to the completion of the audit. In 2004, the Audit Committee preapproved all auditing services performed for us by the independent auditors. | |
Audit-Related Fees —Our independent auditors have billed us for audit-related fees in an aggregate amount of $216,000 for 2004, and $153,646 for 2003. These amounts include fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees” above. Specifically, the services provided included accounting questions regarding various issues including compensation, benefits, stock compensation, compliance issues regarding funds managed by Jefferies Asset Management and questions related to the Bonds Direct transaction (see “Certain Relationships and Related Transactions”). | |
Tax Fees —Our independent auditors have billed us for tax fees in an aggregate amount of $359,254 for 2004, and $198,512 for 2003. These amounts include fees for tax compliance, tax advice and tax planning. | |
All Other Fees —Our independent auditors did not bill us for any services not falling within the above categories during 2004 or 2003. |
19
Table of Contents
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||||||||||
Jefferies Group Inc. | 100 | 143 | 196 | 195 | 310 | 381 | |||||||||||||||||||||||||
FSA Composite | 100 | 149 | 116 | 91 | 136 | 154 | |||||||||||||||||||||||||
S&P 500 | 100 | 91 | 80 | 62 | 80 | 89 | |||||||||||||||||||||||||
* | Normalized so that the value of our Common Stock and each index was $100 on December 31, 1999. |
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
For the Board of Directors, | |
Lloyd H. Feller, | |
Secretary |
24
Table of Contents
ANNUAL MEETING OF SHAREHOLDERS OF
JEFFERIES GROUP, INC.
May 23, 2005
Please date, sign 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
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx
1. Election of Directors.
NOMINEES: | ||||
oFOR ALL NOMINEES | ¡ | W. Patrick Campbell | ||
¡ | Richard G. Dooley | |||
oWITHHOLD AUTHORITY | ¡ | Richard B. Handler | ||
FOR ALL NOMINEES | ¡ | Frank J. Macchiarola | ||
¡ | John C. Shaw, Jr. | |||
oFOR ALL EXCEPT | ||||
(See instructions below) |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“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 |
2. | 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: |
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. |
Table of Contents
We are proud to announce our fifth consecutive year of record total revenues and net earnings, and earnings per share. For five years we have invested heavily in our most valuable asset, human capital. We have worked hard to expand and diversify our product offerings throughout the firm to add value for our clients. By combining our substantial investment in human capital and leveraging one of the strongest capital markets platforms on Wall Street, we have evolved into a well-positioned full service investment bank and institutional securities firm focused on growing and mid-sized companies and their investors.
We will continue to work our hardest to achieve superior short- and long-term results for our shareholders. We will also continue to invest heavily in our unique platform to best position ourselves as a leader for middle market issuers and investors. We will strive to maintain a high employee ownership level. We will work hard to maintain our high ethical standards, our variable cost structure, our non-bureaucratic and responsive management structure, and our entrepreneurial spirit. We will differentiate ourselves by providing the best client service in the industry.
We are thankful to all of our constituents and could not have achieved these results without the loyalty and support of an active and successful client base, the hard work and dedication of our employees, the guidance and wisdom of our fellow Board and Executive Committee members, and the confidence of our shareholders.
Richard B. Handler Chairman and CEO | John C. Shaw, Jr. President and COO |
PROXY
JEFFERIES GROUP, INC.
Proxy for the Annual Meeting of Shareholders May 23, 2005
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 John C. Shaw Jr., 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 23, 2005, 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:
Table of Contents
ANNUAL MEETING OF SHAREHOLDERS OF
JEFFERIES GROUP, INC.
May 23, 2005
PROXY VOTING INSTRUCTIONS
MAIL —Date, sign and mail your proxy card in the
envelope provided as soon as possible.
- OR -
TELEPHONE —Call toll-free1-800-PROXIES (1-800-776-9437) from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.
- OR -
INTERNET —Access “www.voteproxy.com” and follow the on-screen instructions. Have your proxy card available when you access the web page.
COMPANY NUMBER | |||||
ACCOUNT NUMBER | |||||
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:59 PM
Eastern Time the day before the cut-off or meeting date.
â Please detach along perforated line and mail in the envelope providedIF you are not voting via telephone or the Internet.â
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx
1. Election of Directors.
NOMINEES: | ||||
oFOR ALL NOMINEES | ¡ | W. Patrick Campbell | ||
¡ | Richard G. Dooley | |||
oWITHHOLD AUTHORITY | ¡ | Richard B. Handler | ||
FOR ALL NOMINEES | ¡ | Frank J. Macchiarola | ||
¡ | John C. Shaw, Jr. | |||
oFOR ALL EXCEPT | ||||
(See instructions below) |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“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 |
2. | 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: |
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. |