Brian Friedman
Jefferies Financial GroupAbout Brian Friedman
Brian P. Friedman is President of Jefferies Financial Group and a director since March 2013, with over eleven years in the role and a prior tenure as an executive officer of legacy Jefferies Group from July 2005 until its merger with Jefferies in November 2022 . He holds a J.D. from Columbia Law School and a B.S. in Economics (summa cum laude) and M.S. in Accounting from The Wharton School, University of Pennsylvania . The Compensation Committee judged him to have “far exceeded performance expectations” in 2024 across financial performance, capital allocation, business strength, and leadership/culture, and awarded $30 million of incentive compensation split among cash, RSUs, and PSUs . Company performance commentary highlights a “far more than doubling” of Jefferies share value in 2024; PSUs for CEO/President use three-year Return on Tangible Equity (ROTE) targets of 7.5% threshold, 10% target, and 15% maximum with linear interpolation .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Jefferies Group (legacy) | Executive Officer & Director | 2005–Nov 2022 | Senior leadership through merger into Jefferies Financial Group |
| Furman Selz LLC & successors | Head of Investment Banking; Member of Management & Operating Committees | Prior to 1997 (17 years total) | Built IB platform and management capabilities; broad transactional expertise |
| Wachtell, Lipton, Rosen & Katz | Attorney | Early career | Legal foundation in complex transactions and governance |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Vitesse Energy, Inc. | Director | Since Jan 2023 | Spin-off to Jefferies shareholders; ongoing energy sector oversight |
| Fiesta Restaurant Group | Director (Jefferies representative) | 2012–Apr 2021 | Portfolio company governance and value realization |
| HomeFed Corporation | Director (Jefferies representative) | 2014–Jul 2019 | Real estate investment oversight |
| Strive | Co-Chairman of the Board | Not disclosed | Workforce training and philanthropy |
| HC Leukemia Foundation | Board Member | Not disclosed | Philanthropy and community engagement |
| Jefferies | Co-Chair, Global Diversity Council | Not disclosed | Culture, inclusion, and talent initiatives |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,000,000 | 1,000,000 | 1,000,000 |
| All Other Compensation ($) | 421,333 | 436,824 | 442,085 |
| Personal Aircraft Use Policy | — | — | Permitted up to $350,000 per year; reimbursement above cap |
Notes:
- Employee directors do not receive director fees; Friedman receives no director compensation separate from executive pay .
- Standard benefits include medical, dental, life, disability, savings, retirement plans; NEOs have access to perquisites (cars/drivers, paid parking, personal security) reported under “All Other Compensation” .
Performance Compensation
| Component (FY 2024) | Metric | Target | Actual/Payout | Vesting/Terms |
|---|---|---|---|---|
| Annual Cash Bonus ($) | Committee evaluation of Firm & individual performance | Target $9,000,000; Cap $12,000,000 | $12,000,000 (remarkable performance year) | Paid post-year; subject to Committee discretion |
| RSUs ($) | Service-based; post-vesting holding | — | $9,000,000 awarded | 3-year cliff vest; plus 3-year holding for ≥75% of after-tax shares |
| PSUs ($) | ROTE (3-year) | Threshold 7.5% (75% payout); Target 10%; Max 15% (150%) | $9,000,000 awarded; ongoing 3-year performance | Earned based on 3-year ROTE; linear interpolation; service vesting applies |
Multi-year incentive compensation awarded by performance year:
| Performance Year | Cash ($) | RSUs ($) | PSUs ($) | Total Incentive ($) |
|---|---|---|---|---|
| 2022 | 10,000,000 | 6,250,000 | 6,250,000 | 22,500,000 |
| 2023 | 8,000,000 | 5,714,000 | 4,286,000 | 18,000,000 |
| 2024 | 12,000,000 | 9,000,000 | 9,000,000 | 30,000,000 |
Additional plan details:
- Outstanding PSUs are based on the fiscal 2023–2025 performance period; ROTE achieved in fiscal 2023–2024, projected at same level for the remainder, would be below target as of Nov 30, 2024 .
- 2023 grant details (awarded 12/13/2023): PSUs estimated future payouts (Threshold 85,697; Target 114,262; Max 171,393 shares) and RSUs 152,332 shares; grant-date fair values $3,447,838 and $5,462,626 respectively .
Equity Ownership & Alignment
Stock ownership guidelines and alignment:
- Executives (CEO/President) must hold equity equal to ten times base salary (i.e., $10 million), with a long-term orientation; approximately 71% of Friedman’s direct compensation historically has been non-cash equity vesting over 3–5 years . Including earned/unearned deferred shares and options at target performance, CEO and President combined would beneficially own 26,007,426 shares (~11.6% of outstanding) as of the record date .
Beneficial ownership detail (as of Jan 27, 2025):
| Measure | Value |
|---|---|
| Pro forma beneficial ownership (incl. earned and unearned deferred shares/options at target) | 7,183,843 shares (3.4% of outstanding) |
| Presently exercisable options (JEF) | 2,532,370 shares |
| PSP and ESOP shares | 43,148 shares |
| Vested, non-forfeitable RSUs not settleable within 60 days | 169,106 shares |
| Shares in brokerage margin account (available as security) | 789,214 shares |
| Beneficial ownership excluding RSUs not settleable within 60 days | 5,208,218 shares (2.5% of outstanding) |
Outstanding equity awards at fiscal year-end 2024 (market values at JEF $79.14; VTS $28.08 on Nov 30, 2024):
| Award | Ticker | Quantity | Exercise/Type | Expiration | Market Value ($) |
|---|---|---|---|---|---|
| Options (exercisable) | JEF | 2,532,370 | $22.69 | 12/5/2030 | — |
| Options (exercisable) | VTS | 228,933 | $8.97 | 12/5/2030 | — |
| Unvested RSUs | JEF | 156,035 | RSU | — | 12,348,643 |
| Unearned PSUs (target basis) | JEF | 117,040 | PSU | — | 9,262,536 |
| Additional unvested RSUs | JEF | 348,642 | RSU | — | 27,591,524 |
| Additional unvested RSUs | JEF | 616,719 | RSU | — | 48,807,140 |
| Additional unvested RSUs | JEF | 957,500 | RSU | — | 75,776,539 |
| Additional unvested RSUs | VTS | 38,683 | RSU | — | 1,086,224 |
| Additional unvested RSUs | VTS | 57,364 | RSU | — | 1,610,771 |
| Additional unvested RSUs | VTS | 106,238 | RSU | — | 2,983,174 |
Vesting schedules (selected footnote dates for outstanding awards):
- Service-based vesting through December 16, 2024 for certain awards (including PSUs earned for 2021–2023 performance) .
- Service-based vesting through December 16, 2025 for certain awards .
- Service-based vesting through December 13, 2026 for certain awards .
- RSUs have a mandatory post-vesting holding period: at least 75% of after-tax shares must be held for three additional years .
Pledging/hedging:
- Shares held in a brokerage margin account available as collateral (789,214 shares): a pledging exposure and a governance red flag for alignment risk .
- RSU holding requirements materially limit near-term selling pressure for a majority of vested shares .
Employment Terms
| Term | Detail |
|---|---|
| Employment Agreement | None; named executive officers do not have employment agreements |
| Change-in-Control Agreements | None; no single-trigger CIC agreements; no equity accelerates solely upon CIC |
| Severance Policy | Jefferies policy: generally 0.5 month’s salary per year of service, up to 6 months; up to 12 months if age + years of service ≥ 60; applies to Handler, Friedman, Sharp, Larson |
| Golden Parachute Tax Gross-ups | None; no gross-up payments for 280G excise taxes |
| Clawback Policy | Compliant with NYSE rules; recovers excess incentive compensation (cash/equity, vested or unvested) upon restatements due to material noncompliance; applies to compensation received on/after Oct 2, 2023 within the three completed fiscal years preceding restatement determination |
| Perquisites | Personal aircraft use allowed up to $350,000 annually (reimbursement above cap); cars/drivers, parking, personal security as needed; reported as “All Other Compensation” |
| Deferred Compensation | Jefferies maintains a separate deferred compensation plan; none of the named executive officers participate in it; legacy pension applies only to Handler |
| Potential Payments (Nov 30, 2024 hypothetical) | Involuntary termination or CIC: $178,529,954; death/disability: $177,557,789; includes ~$972,165 severance and value of unvested RSUs that vest upon termination not for cause or upon CIC with good reason |
Board Governance
- Board service: Director since 2013; President; committee memberships: None .
- Dual-role implications: As President serving on the Board, Friedman is an inside director; the Board maintains a Lead Independent Director role (additional retainer) and committee chair retainers to support independent oversight . Employee directors do not receive director fees .
- Director stock ownership guidelines: For non-employee directors, five times annual cash retainer ($625,000 required holding), with compliance for directors serving ≥5 years; executives have a stricter 10x salary guideline .
Related Party Transactions
- Legacy Private Equity Funds managed by companies controlled by Mr. Friedman: Jefferies investments of $3.1 million and undrawn commitments of $9.7 million as of Nov 30, 2024; investment in Fund Managers of $27,400 and undrawn commitment $100,000; Mr. Friedman had remaining investments of $1.0 million (Funds) and $31,300 (Fund Managers); Fund Manager reimbursed ~$200,000 for shared employee costs in FY 2024 .
- HomeFed residential development syndication (Jan 2022): Mr. Friedman invested $1.0 million (6.02% of third-party capital); FY 2024 distribution of $369,010; arm’s-length terms .
- Direct Lending CLO investment (June 2024): Mr. Friedman purchased $5 million of subordinated notes in JCP Direct Lending CLO 2024-1; total subordinated tranche $55.2 million; no favorable treatment .
Performance & Track Record
- 2024 outcomes: Committee cited Friedman’s role in “driving Investment Banking and all of Jefferies to strong results,” transitioning IB leadership, recruiting/retention, strengthening SMBC alliance, and branding, with direct revenue generation .
- Strategic alliances: SMBC-Jefferies Strategic Alliance expanded in 2023 to broader U.S. collaboration and launched joint investment-grade coverage; further extended in 2024 to EMEA and Canada; includes business referral arrangements and credit facilities; nothing currently outstanding on those facilities .
- Shareholder value: Company highlights “far more than doubling” the value of Jefferies shares in 2024 .
Company revenue trajectory:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($) | 4,647,337,000* | 4,570,888,000* | 6,297,478,000* |
Values retrieved from S&P Global.*
Compensation Structure Analysis
- Mix and risk: 2024 incentive mix was 40% cash, 30% RSUs, 30% PSUs; RSU 3-year cliff + 3-year holding and PSU 3-year ROTE targets create long-term alignment with meaningful deferral and performance risk .
- Target changes and rigor: PSU ROTE targets unchanged (7.5%/10%/15%); as of Nov 30, 2024, aggregate ROTE projection for 2023–2025 below target, suggesting potential PSU under-earn unless performance improves .
- Guaranteed vs at-risk: No employment agreements; no single-trigger CIC acceleration; clawback applies broadly to cash/equity (including vested) under restatement scenarios .
- Repricing/modifications: Not disclosed.
Equity Ownership & Alignment Red Flags
- Pledging: 789,214 shares held in a brokerage margin account and available as collateral; pledging introduces forced-sale risk under market stress .
- Deep ITM options: 2,532,370 JEF options at $22.69 (vs $79.14 market on Nov 30, 2024) are materially in-the-money, representing potential future selling pressure if exercised and monetized; option expiration 12/5/2030 .
- Strong alignment: Executive ownership guidelines (10x salary) and long holding periods for RSUs mitigate short-term selling .
Equity Ownership & Vesting Schedules (specific dates)
- Awards vest through Dec 16, 2024 (includes PSUs earned for 2021–2023) .
- Awards vest through Dec 16, 2025 .
- Awards vest through Dec 13, 2026 .
- RSUs must retain ≥75% of after-tax shares for an additional three years post-vesting .
Director Compensation (for reference)
- Non-employee director pay: Equity grant $205,000; cash retainer $125,000; additional retainers: $40,000 (Audit Chair, Lead Independent Director), $30,000 (Compensation Chair), $10,000 (other Chairs); employees (including Friedman) do not receive director compensation .
Employment & Change-in-Control Economics
| Scenario (Nov 30, 2024) | Estimated Value ($) |
|---|---|
| Involuntary Termination (not for cause) | 178,529,954 (incl. ~$972,165 severance; unvested RSUs vest) |
| Involuntary Termination following CIC (good reason) | 178,529,954 |
| Death or Disability | 177,557,789 (unvested RSUs vest automatically) |
Structural features:
- No single-trigger CIC; equity does not accelerate solely on change-in-control .
- No 280G tax gross-ups .
Investment Implications
- Alignment vs liquidity: Large, long-dated RSU holding and 3-year post-vesting retention for ≥75% of after-tax shares anchor alignment and dampen near-term selling; however, deep ITM options and pledged margin collateral introduce eventual monetization and forced-sale risks under stress .
- Incentive design: The 2024 40/30/30 cash/RSU/PSU mix and three-year ROTE PSU structure tie payouts to sustainable profitability; current ROTE trajectory below target for 2023–2025 increases execution urgency for improving returns, a potential catalyst for strategic actions in IB and capital allocation .
- Retention risk: The magnitude of unvested equity (and large potential termination values) creates strong retention incentives without contractual employment guarantees, aligning leadership continuity with shareholder outcomes while limiting CIC windfalls (no single-trigger, no gross-ups) .
- Governance watchpoints: Inside directorship (no committee roles), pledging exposure, and legacy related-party linkages (private equity funds; CLO investment) warrant ongoing monitoring, partially mitigated by Lead Independent Director structure and stringent clawback policy .