Thanking Our Clients and Appreciating the Jefferies Team For Their Amazing Efforts During Covid-19: Strategies to Sustain the Momentum

Dear Clients, Employee-Partners and Friends,

It takes decades to build a special firm, and the graph above shows the most recent three in Jefferies’ six decade span, with yet further acceleration in our momentum in these past 17 months.  We thank you, our clients, for choosing Jefferies as one of your key partners and we look forward to serving you even more and better in the future. 

In March of 2020, nobody (least of all the two of us) anticipated the corporate resiliency, let alone the positive game-changing opportunities that would develop in the midst of such a horrible global pandemic.  To be clear, much credit is due directly to the quick and smart stimulus enacted in mostly a bi-partisan manner early in the crisis.  Additionally, the miraculous discovery of safe and effective vaccines will go down as one of the world’s best technological and medical achievements in history.  That said, the pandemic is not over. One just needs to see the pain in many places around the world where the struggle for mass vaccination is still in the very early stages to realize our fight is far from over.  Variants add yet another serious complexity.  Until the entire world is truly safe, none of us is safe. 

While acknowledging the wonderous forces responsible for Jefferies’ and many of your businesses’ success these past 17 months, in this note we would like to acknowledge and discuss the other major reason why the world is in such good shape: your team and ours.  Below are some thoughts regarding Jefferies’ employee-partners and our culture that we believe helps explain our firm’s resilience and growth through this period.  These are random thoughts that encompass our observations of why things happened and our thoughts on how best to sustain our momentum.  As you read these points, our hope is that you see many of these thoughts applicable to your own businesses and perhaps you will better understand how you came through this period and what strategies will sustain your success into the future.  As always, Jefferies aims to be your partner in helping you achieve your goals and dreams.

Random Thoughts On Our Team Getting Jefferies Through The Pandemic And Sustaining Into The Future:

1. Work From Home. WFH worked because our employee-partners went home for safety and then truly worked from home.  As you can see from the above chart highlighting our momentum, our business has taken off further to the upside.  Our people did not spend the day streaming movies, commiserating about the pain of life in isolation or hiding in any way from their obligations.  They worked harder and more effectively than at any time in our firm’s history.  We suspect the same is true with your employee-partners.  Over the years, we have had bursts of exceptional intensity (usually during periods of extreme market dislocation), but we have never witnessed such an incredibly high level of effort, dedication, tenacity and focus for such a prolonged period of time.  Our first thought is that we can never thank our team enough and look forward to eventually being able to travel around the world to thank in person all 4,000+ of them in our over 30 offices.
2. Back To The Office.  Our employee-partners want to bring our office back into their lives.  The juniors want to be trained and want the comradery of their peers.  Our senior folks want the support and emotion that goes with being with each other and driving Jefferies to the next level.  All of those in between want it all.  We don’t need to give ultimatums to the people who have gotten us through the hardest period we have experienced in our careers.  We need to be as smart as possible about helping them move forward with life and their careers.  This summer will be an enjoyable transition.  The goal is to have enough events in small and large groups to begin to get everyone at Jefferies comfortably re-engaged together.  Even better, we will host many of these with our clients.  Our goal is to be living and working in the “new normal” after Labor Day. 
3. Vaccines. Vaccines are critical.  A very high percentage of our firm has been fully vaccinated and we are hoping to educate and work with those who are not so hopefully they will join the rest of us living with some sense of safety.  Obviously, we will figure out how to work with people who have properly vetted medical reasons to refrain from being vaccinated, but we believe this number is very small.  Since we cannot risk the overwhelming majority for the tiny minority, we expect to implement a plan for those who are not vaccinated to continue to work remotely.  All of this will no doubt evolve as we learn and experience this new normal.
4. Hybrid.  We will have a hybrid future that will offer flexibility to our team.  We will let this process evolve and have pushed down the decision making to the individual businesses, desks and teams.  Our offices will be our meeting places and our homes will continue as additional offices.  During the Covid-19 hiatus, we have reconfigured some of our offices to accommodate this philosophy and look forward to fine tuning and adapting it as we gain more experience and feedback from our employee-partners. 
5. Human Capital.  During these past 17 months, we have implemented a range of programs designed to promote mental and physical health, learning, career advancement, and diversity and inclusion awareness.  This programming has helped us all stay sane, improve ourselves and stay bonded to each other.  We plan on continuing all these efforts (and add new ones) and look forward to having them be “in person,” as well as virtual. 
6. Business Travel.  We anticipate business travel returning, but it will be different than it was before, and we believe it will be better and more valuable.  We have all learned how truly efficient and effective we can be using modern technology to achieve many business goals.  Virtual meetings will continue to have a major share of our interpersonal gatherings.  In fact, it would be impossible to sustain a meaningful portion of our increased efficiency without these tools.  That said, as the world continues to open up, nothing beats face-to-face interactions for developing, maintaining, and enhancing true relationships.  We cannot wait to return to seeing our clients in person.  However, we believe the business travel that was narrow in purpose or duplicative will disappear.  The substantive business travel that helps relationships truly develop will increase.  No face-to-face meetings will ever be taken for granted again.  As we now know, each real human interaction is a privilege and deserves to be celebrated.
7. Next Generation.  We noticed during Covid-19 that our firm got incredibly younger.  We figured this out when we bought Pelotons and other nice gifts for our millennial and Gen Z junior partners to thank them for going beyond the call of duty.  Basically, a third of our company is 30 years old or below.  On the one hand, that is great because we have our future among us already.  On the other hand, shame on us if we cannot figure out a way to make them want to have a career at Jefferies versus having it be a “stopover.”  We do not have the full solution yet, but are going to enlist this critical constituency to help us figure this out.  This will be a priority going forward.
8. Prioritizing Health.  We have to be on the lookout for burnout and be cognizant that the greatly higher speed and incline on the Jefferies treadmill will require a thoughtful and targeted strategy to keep our team healthy and intact.  Hybrid WFH, mental and physical health programs, and a general awareness of this issue will be helpful, but not enough to solve the problem.  The solutions may need to be specifically tailored to the individual and circumstances.  As long as our people are “all in” and willing to continue to go beyond the call of duty for our clients, we need to do the same for them to ensure the longevity of their careers and our partnership. 
9. Playing Offense.  We have continued to recruit aggressively throughout this period.  Our hires have included bringing in a large number of reinforcements at the junior level and select stars at the senior level.  If we want to maintain and improve upon the growth we’ve achieved during this past period, we must continue to invest in our future.   One of the most important reasons we have grown so consistently these past 30 years is because throughout good times and bad, we have continued to invest in our future.  Recent success is not a reason to stop, but instead makes it even easier to continue to do so.
10. Culture.  Culture drove Jefferies through these past 17 months in flying colors.  It was clear that this was going to be an incredibly difficult period and we all came together for our common cause.  We believe it is important to recognize that while it may appear that this next phase of returning to the new normal will be an easy one, we don’t believe this is the case.  People have gotten used to a different way of working, communicating and living their lives.  We are going to ask them all to pivot again and return to a more normal way of life.  In the background, we are all looking over our shoulders at new variants and the global condition, and none of us knows whether this next pivot will be final or temporary.  All of this creates stress and angst for our employee-partners who have delivered herculean results despite truly adverse conditions.  Our priority as we tackle this next phase will be to continue to be honest, open, transparent and inclusive with our treasured partners.  Yet again, they have earned our trust and deserve no less.

Our guess is this list in many ways reminds each of you of your own teammates and businesses.  Hopefully, seeing it in writing sparks a thought or two about how you plan to navigate each of your re-entries into this next phase.  We are confident you are as appreciative of your teams as we are of ours.  We would like to especially thank each of you because as every one of us at Jefferies knows, the overwhelming reason for Jefferies’ success throughout our history is the loyalty, commitment, trust and partnership each one of you have afforded each one of us.

Appreciating and Sustaining Together,

Rich and Brian

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Net Revenues and Net Earnings From 1990 until Q2’21 (Footnotes)

1. The financial measures presented herein include adjusted non-GAAP financial measures for 2011-15, which exclude the impact of the results of operations of Bache, a business substantially exited in 2015. See the Jefferies Financial Group Additional 2020 GAAP Disclosures at http://ir.jefferies.com/2020GAAPDisclosure for a reconciliation to GAAP measures. Net Earnings (Loss) in 1990-2012 are attributable to Common Shareholders. Net Earnings in 2013-2021 are attributable to Jefferies Group LLC. Jefferies Group’s results in 2013 for the Successor period includes the results of operations for the first quarter ending 2/28/13, which are part of the Predecessor period. The Predecessor and Successor periods are separated by a vertical line to highlight the fact that the financial information for such periods have been prepared under two different cost bases of accounting. Results in 2010 are for the 11 months ended November 30, 2010. “Predecessor / Successor” line delineates merger with Jefferies Financial Group (FKA Leucadia).
2. 2008 Net Earnings adjusted to exclude $427 million of expenses related to the modification of employee stock awards and restructuring activities, offset by $434 million equity raise. 2018 GAAP net earnings attributable to Jefferies Group LLC of $159 million are adjusted to exclude the provisional tax charge of $165 million related to the enactment of the Tax Cuts and Jobs Act that was recorded in the year ended November 30, 2018.