Happy New (Fiscal) Year – 2021 Will Be a Tough One to Top, But We At Jefferies Always Find Our Way Forward
Yesterday, all 4,542 of us put the finishing touches on Jefferies’ 2021 Fiscal Year, and today we officially begin our journey into Fiscal 2022. While our 2021 results will be published in six weeks on January 11, we are happy to share some basic themes that are a direct result of the commitment, creativity, flexibility, tenacity and perseverance of all of you, our Jefferies partners. Here are just a few of our thoughts about the last 12 months to which we have all dedicated ourselves:
Dealing With COVID-19. Our global firm is today over 95% vaccinated, as virtually all of us have taken the initiative to do what is not just right for our own health and the health of our immediate friends and family, but also for our society. We are incredibly fortunate to have access to the vaccines and by embracing them individually and as an organization, we are paving our own way to a future that will ultimately reflect a constructive and hopefully even better new normal. Boosters are now available for almost all of us and they too will soon be a requirement of our JefVaxPass strategy (details to come). Our entire team has done a remarkable job of rapid and transparent communication when breakthrough cases have emerged, and this vigilance will continue as we do our best to make our offices as safe as humanly possible.
JEFAhead – The Future of Work at Jefferies. Most of us are back in the office +/- 3days per week and there is no doubt that our productivity, growth and development, as well as our personal satisfaction and enjoyment, are all greatly enhanced by being together in person. We are going to closely watch for all signs of spikes in infection rates, but as the world continues to heal, we will all have the privilege of spending more time together and with clients face-to-face. Physical proximity plays a critical role in how we will most effectively mentor and teach our juniors, overcome our challenges and optimize our opportunities. As the world gets safer, the drumbeat for all of us to spend more time with each other will continue to get louder. As for now, we are comfortable with the maturity and commitment of almost all of you on our team who are thankfully balancing your time and flexibility incredibly well. To be clear, even if a world exists without COVID-19, we will still be committed to a hybrid work model that will allow for the flexibility and quality of life that we want every one of us to be able to enjoy.
Human Capital. We played a lot of offense this year in terms of growth initiatives and as a result our headcount has increased by 600, or 15%, since the start of the year. Over the last two years, our headcount has increased by 700, or 18%. For example, we enter fiscal 2022 with 23% more Managing Directors in Investment Banking than one year prior, driven equally between external recruiting of experienced professionals and internal promotions (to be announced shortly) of talented folks we nurtured and trained. We indeed have hired remarkably talented people at all levels, across the firm and around the world. These professionals have joined a vibrant growth company that has a great culture, prioritizes clients, and is on a mission to build one of the best investment banking and capital markets firms possible. Our existing long-term partners did not have sharp elbows for our new joiners, but rather embraced them and recognized that every-increasing quality, breadth and depth throughout our firm makes every one of us more capable of adding value to our clients. The fact that our business has grown more dramatically than our headcount is reflective of our operating leverage, teamwork, scalability and positive attitudes. When you add the high-quality training and development our teams have instituted in partnership with our Human Capital Development effort, our future potential is extremely compelling.
Culture. Zero arrogance. We must earn our client’s trust every single day. We ask that we all treat each other with respect and are honest, inclusive, open and real. Please embrace transparency and take advantage of our relatively flat structure and our entrepreneurial culture that empowers our employee-partners to find innovative new ways to serve our clients and improve our firm. Please be sure to return each other’s emails and calls as quickly as possible. Let’s always marshal all the relevant resources throughout our firm and enable our clients to be the beneficiaries of all that is Jefferies. We can’t compete with each other for clients, recognition, credit or resources. We must always partner and openly collaborate on “win-win” ways to work together every single day. We abhor politics and we celebrate doing the right thing, always. Let’s please have empathy and kindness for each other. In this vein, please respect our analysts and associates and know we are privileged to have them, mentor them and help their careers soar. We’ve relied on our culture to accelerate our Diversity, Equity and Inclusion (DEI) efforts throughout our business. So even as we personally have prioritized the development of extensive training, measurement and reporting for DEI, some of our most impactful programs were created with the initiative of people throughout Jefferies, including our eight distinct employee resource groups to promote DEI in our various regions and to provide affinity groups for our women, LGBTQ+, Black, Latino, Asian, NextGen, disabled and neurologically diverse, and veteran team members. It is this entrepreneurial attitude and employee-driven mindset that gives us the greatest comfort about the future and what Jefferies will look like. We are blessed to be long-term in our vision and commitment, yet we possess a sense of urgency that leaves us all exhausted at the end of each day.
Results. Looking at last year and the first three quarters of this fiscal year, there is no doubt that Jefferies has reached yet another level in terms of brand, market share, client base, global reach and results. We are all living and breathing this and each one of us knows the frenetic pace, overwhelming breadth, and sheer quality and volume of the business we have been executing for our ever increasing global client base. We are not ones to rest on our laurels or strain our arms by patting ourselves on the back. That said, every one of us should be incredibly proud because individually and collectively, this year we again got the job done and as a result, we are once again an even better Jefferies.
Our Ratings. It is a very big deal for all three rating agencies to acknowledge our long-term, methodical, transparent and consistent strategy of protecting the downside for our creditor partners. Far too many financial services companies achieved fleeting short-term success by failing to understand that unless your foundation is strong and secure, long-term value will never be created. We have been building Jefferies the “hard way.” We haven’t changed our risk parameters. We haven’t gone into “flavor of the day” businesses or been seduced by capital intensive, opaque or illiquid opportunities (that always seem to work until they don’t). Since each of us thinks and acts like “owners,” it might have taken us a little longer to get to where we are today, but the likelihood of staying here and building further is much higher.
Our Share Price. We always tell each other and anyone else who will listen that we are never as brilliant as we feel when our stock price is moving upward, nor as dumb as we look when our stock price is in a funk. That said, this year the market has confirmed what we have all known for quite a while: Together we are building a very special, valuable, unique and important Wall Street firm. As we continue our path to simplifying our holding company structure to focus on what we do best – serving our investment banking and investing clients – we believe the opportunity for our shareholders will continue to be very exciting. We have reached meaningful scale in investment banking and capital markets; we are simple enough to allow people to focus on our core business; our remaining non-core assets have significant value that will be realized optimally and as soon as is reasonable; we have more than enough capital to fuel our future; our market share gains across the board are real and we believe sustainable; and our brand and competitive position have never been better. Most stocks do not increase by 65% in any given year, but the foundation of Jefferies is real and we believe the future, while always volatile and unpredictable, is very exciting for all of us.
We recognize that not all of us will live up to the ideals we just laid out each day, but there really is no excuse for not trying to do and be our best. Jefferies has proven that our industry does not have to be “zero sum” and “good people” do win. Let’s take our point about culture and spend some time in December reflecting on what it says. We have a remarkable team and culture at Jefferies, but there is always room for improvement.
Today is December 1st and this is a complicated month for Team Jefferies. In November, we gave everyone a fair year-end personal review including substantive feedback. Within a few weeks, everyone will know their 2021 total compensation. We can then enjoy the holiday season with a chance to recharge our batteries and know exactly where we each stand as we move forward. No drawn-out games like many of our competitors, rather we all can be ready to hit the ground running hard on January 3rd, just the way we like it.
One last thing and perhaps the most important: We need everyone giving 100 percent of their efforts to work full force on behalf of our clients for the entire month of December and again in January. Our investment banking clients predominantly have a different fiscal year-end than we do, and we need to fully execute every engagement. The last month of the calendar year is also usually a complex one for our trading clients. It presents a huge opportunity for us to distinguish ourselves to them as partners they can truly count on when others are gone or distracted. As for us at Jefferies, success just begets an even tougher bar for us to measure ourselves against. We need to start our fiscal 2022 as strong as humanly possible because we are Jefferies and this is what we do.
More to come about how excited we are for 2022, but for now, thank you all for a remarkable 2021!
It’s early and we’d rather be us because we have all of you,
Rich and Brian