A CEO's Big Stake in Saving Jefferies

After MF Global filed for bankruptcy on Oct. 31, the spotlight shifted to Jefferies Group, another New York investment bank, as investors looked for other firms that might suffer losses on bonds of troubled European nations. When speculation arose that a liquidity crunch and bond losses would sink the company, Jefferies Chief Executive Officer Richard Handler rushed to counter it, branding those ideas “malicious lies” spread by people “whose interests are absolutely opposed to yours and ours,” in a letter to “Clients, Shareholders, Bondholders, Employees and Friends” posted on the company’s website on Nov. 21.

For Handler, 50, the 60 percent decline in Jefferies’s stock this year is more than just business—much of his personal wealth is tied up in the firm. He owns 6 percent of the company, a far bigger stake than CEOs at the largest Wall Street houses have in their companies. Also, Handler hasn’t had an employment contract in the 21 years he’s worked at the New York-based investment bank, meaning there’s no golden parachute for him if the firm goes under. “He’s being a good CEO in staying in front of the story,” says Tim White, a managing partner at Dallas-based executive search firm Kaye/Bassman International. “When CEOs own a big piece of a company, then they’re going to act in the interest of shareholders more stridently than they might if they didn’t.”