UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

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:

LEUCADIA NATIONAL CORPORATION

(Name of Registrant as Specified In Its Charter)

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Leucadia National Corporation

520 Madison Avenue
New York, New York 100222018

Notice and Proxy Statement for our 2015 Annual Meeting of Shareholders

Proxy Statement

April 13, 2018

Dear Fellow Shareholders,

We present this year’s Proxy Statement and invite you to our 2018 Annual Meeting of Shareholders on Wednesday, May 23, 2018 at 10:00 a.m. New York City time. The agenda will include a vote to change the name of the corporation to Jefferies Financial Group Inc., the election of directors, an advisory vote to approve our executive compensation program, and a vote on the selection of our independent auditors. In addition, our CEO, Rich Handler, and our President, Brian Friedman, will discuss our strategy and operating performance, and provide a forum to answer your questions.

Achieving Our Goal of Transformation to a Diversified Financial Services Company

A year ago, we expected that our two significant subsidiaries would continue their strong performance and that the imbedded strength in Leucadia’s financial services and merchant banking platforms would continue to bear fruit. We are pleased to report that Jefferies Group LLC realized record net revenues of $3.2 billion and pre-tax income of $528 million, and National Beef recorded its second record-breaking year with $407 million in pre-tax income and $512 million in EBITDA. Likewise, our other financial services businesses generated $192 million in net revenues and our merchant banking businesses generated $616 million in net revenues, all of which contributed to Leucadia’s 2017 net revenues of $11.4 billion, pre-tax income of $1 billion, and 10.7% return on tangible deployable equity. And, after 2016’s 35.5% total shareholder return, 2017 delivered a very respectable 15.4% total shareholder return.

The year 2017 also saw the further repositioning of Leucadia as, among other things, we closed the sale of Conwed Plastics to Schweitzer-Mauduit International, Inc., and sold our holdings in KCG Holdings Inc, via its cash merger with Virtu Financial. In addition, we helped to facilitate HRG’s sale of its approximate 80% interest in Fidelity & Guaranty Life, as well as the recently announced merger of HRG and Spectrum Brands, which we believe will lead to maximizing the value of our interest. As a result, and as is discussed in Rich and Brian’s Annual Letter to Shareholders, which we recommend to you for your reading, 2017 helped to place us well along the path toward realizing our shared goal of a highly effective, combined financial services and merchant banking platform that creates shareholder value through operating excellence and opportunistic acquisitions and divestitures.

As we announced earlier this week, that shared transformation goal was completed with our agreements to sell 48% of our interest in National Beef and our entire ownership interest in Garcadia. In addition to the substantial gains to be realized and meaningful increase in our liquidity, those transactions will result in our having more straightforward financial statements and a clearer business mix, reflecting a focused financial services company engaged in investment banking and capital markets, corporate and real estate finance, merchant banking, and alternative asset management. We are very pleased with our progress over the past few years and very much look forward to reaping the expected further benefits of this transformation.

Jefferies Financial Group Inc.

Reflecting this transformation, we are asking you, our fellow shareholders, to approve our proposal to rename our company Jefferies Financial Group Inc. While the name Leucadia will forever embody the marvelously strong legacy that Ian Cumming and Joe Steinberg built over nearly four decades – and while we will continue to benefit from the cache of the Leucadia name in our asset management and merchant banking business – we believe that changing our parent company name to Jefferies Financial Group Inc. will properly reflect our core focus on creating long-term value for shareholders as a financial services company.

Diversity

Although our name may be changing, our commitment to core values is not. As you will see in this year’s Proxy Statement, feedback from our ongoing investor outreach prompted us to better explain to you, our fellow shareholders, what we have done and are doing to increase the diversity of our Board. Our journey to increasing diversity began shortly after the combination of Leucadia and Jefferies. At that time, we almost completely reconstituted our Board, which resulted in a post-combination Board of four legacy independent directors (three from Jefferies and one from Leucadia). We then set out to double the number of independent directors, prioritizing our goal of increasing Board diversity. We achieved that goal through successfully recruiting two diverse Board members who constitute 50% of our new independent directors and 25% of all our independent directors.

It also bears noting that, as we concurrently reconstituted the Jefferies Board, we made sure to increase the quality of that Board through successfully recruiting a diverse candidate. And as our executive management team has evolved over time, among our top criteria was to increase the number of women in senior leadership roles, which we successfully did with the appointment of Teri Gendron when Leucadia’s prior CFO retired.

All a good start, but more will be done. That is why, as we have discussed before and reiterate in this year’s Proxy Statement, we have committed to ensuring that, every time we seek to enlist a new director, women and minorities will be on our list of candidates. We have also added a Board skills matrix to our Proxy Statement to inform shareholders how we help ensure our Board is diverse in skillset, experience, background and thought, among other traits. As our Board evolves over time, we will be sure to keep you apprised of our progress.

Environmental, Social and Governance Matters

While we have consistently described our significant corporate governance progress since the combination of Leucadia and Jefferies, our engagement with you – during this year in particular – has made plain to us that we need to highlight our corporate social responsibility efforts better. This year’s Proxy Statement shows how our businesses are engaging in smart and responsible ways to limit our impact on the environment and to contribute to the communities in which we operate. We hope you find that discussion enlightening and we look forward to continuing the conversation of this topic.

Shareholder Engagement

Our engagement with you, our fellow shareholders, continued apace in 2017. When our Compensation Committee was contemplating the executive compensation plan for 2018 and beyond, our Compensation Committee Chairman, our President and our General Counsel arranged a series of engagement meetings in November and December of 2017 with holders of more than a majority of our shares, which included virtually all of our top shareholders, so that our shareholders’ feedback would help us formulate this plan. Similarly, we reached out to shareholders holding over 70% of our shares during proxy season last year and we intend to seek further engagement with a comparable or greater proportion this month. As we have stated before, shareholder engagement is crucial to all of us on the Board, and we have been very pleased with the frank and constructive discussions we have had and with the support virtually all of you have shown. Thank you.

Executive Compensation

The 2017 executive compensation plan you will be voting on this year is the exact same plan that nearly 90% of you voted in favor of last year. With the valuable feedback we received from you over the past few years, our Compensation Committee, all of us on the Board and all our top advisors have put significant amounts of consideration and work into deriving a compensation plan that not only rewards our executives for their successes but also promotes a series of long-term incentive goals that further align our executives’ interests with the long-term interests of their fellow shareholders.

Your Vote Matters

In closing, please accept our most sincere gratitude for your investment and partnership with us. We genuinely hope we will see you at our annual shareholders’ meeting. If you are not able to attend in person, we ask you to vote by proxy in support of our recommendations. The proxy materials contain necessary information about the matters on which we are asking you to vote. The Leucadia team is open to addressing any questions regarding these matters you may have. Thank you, again, for your support.

Sincerely,

The Leucadia Board of Directors

Leucadia National Corporation

520 Madison Avenue

New York, New York 10022

Notice of Annual Meeting of Shareholders

This Notice and Proxy Statement is being furnished to our shareholders in connection with the solicitation of proxies by our Board of Directors for use at our 20152018 Annual Meeting of Shareholders.

Purpose of Meeting

Date, Time and Place

May 21, 201523, 2018 at 10:00 a.m. New York City time
AXA Event & Production

The Paley Center
787 Seventh Avenue, Auditorium
for Media

Frank A. Bennack, Jr. Theater

25 West 52nd Street

New York, New York 10019

Matters to be Considered

Our Annual Meeting is being held to:

If any other matters properly come before the meeting, the persons named in the proxy or their substitutes will vote in accordance with their best judgment on such matters.

Required Votes forto Approve Each Proposal and RecommendationRecommendations of theour Board of Directors

What is included in our proxy materials?

Our proxy materials, which are available online atastproxyportal.com/ast/08448/:

Other Important Information

Shareholders should read Important Information for Our Shareholders beginning on page 5355 for other voting and communications information.

Youradditional information, including ways for you to vote is important. Please vote viaprior to the Internet,meeting by internet, telephone by mail or in person at the Annual Meeting.mail.

April 7, 2015

Dear Fellow Shareholders,

We present this year’s Proxy Statement to you, with an invitation to our Annual Meeting of Shareholders on Thursday, May 21, 2015 at 10:00 a.m. New York City time. At the meeting, the principal items of business will be the election of directors, an advisory vote on our executive compensation program, and a vote on the selection of our independent auditors, as well as a brief update about our business and the opportunity for our fellow shareholders to ask questions.

As Rich Handler and Brian Friedman outlined in their Annual Report letter, our entire team is working diligently to position Leucadia to achieve our number one goal: long-term value creation. We aim to achieve this goal by operating a platform that creates, acquires and operates a diversified group of businesses. We are focused, diversified, driven and transparent. We have instilled throughout Leucadia and our businesses a sense of responsibility and urgency, as well as a constant drive to make things better and more valuable.

We expand on these themes in this proxy statement, as do Rich and Brian in their letter to shareholders, which you can find posted on our website:Leucadia.com

Our First Two Years

It has been just over two years since the combination of Leucadia and Jefferies in March 2013. This transformational event created a unique and powerful platform. Since then, we have built on that platform with changes we believe will greatly improve our ability to pursue long-term value creation for our shareholders.

Some of our key transitional accomplishments include:

In addition to those significant changes, we have redoubled our commitment to corporate governance enhancements. Some accomplishments include:

Additional information about these and other corporate governance changes is contained in this proxy statement.

Dedicated to Shareholders’ Interests

As noted above, since the transition we have strived to ensure the governance and compensation structures we have in place provide shareholders with effective, transparent and accountable representation. To be certain that happens, we have greatly expanded our shareholder outreach program to discuss issues that are important to our shareholders and to take their feedback into consideration in all relevant Board decisions.

As we focused on improving our voting results this year, particularly with our executive compensation program, our executive team and independent directors continued to engage directly with shareholders to hear their concerns and share our views on improving the governance and compensation structures at Leucadia. We look forward to continuing this extremely useful dialogue.

Your Vote is Important

We invite you to attend our 2015 annual shareholder meeting. If you are not able to attend in person, we ask you to vote by proxy in support of the Board’s recommendations. These proxy materials contain necessary information about the matters on which we are asking you to vote. Please read them thoroughly before voting.

Sincerely,

The Leucadia Board of Directors

Leucadia National Corporation

Table of Contents

Directors and Board CommitteesProposal I - Approval of Name Change to Jefferies Financial Group Inc.

Since the 2013 combination of Leucadia National Corporation and Jefferies Group LLC (Jefferies), we have been moving toward the transformation to a financial services company that is driven by the performance and opportunities generated by our investment banking and capital markets platform and related financial services businesses supported by that platform. This has been effectively completed with our recent agreements to sell a significant portion of our interest in National Beef and all of our interest in Garcadia. The closing of these deals will result in our having more straightforward financial statements and a clearer business mix reflecting a focused financial services company engaged in investment banking and capital markets, corporate and real estate finance, merchant banking, and alternative asset management.

Executive Officers

Biographies of Directors and Executive Officers

Ownership of Our Common Shares

Proposal 1II - Election of Directors

Shareholders are being asked to re-elect our eleven incumbent directors to serve until our next annual meeting. Leucadiadirectors. Our directors are elected at each annual meeting of shareholders and hold office for a one-year terms.term. Our Nominating and Corporate Governance Committee considers and chooses nominees for theour Board with the primary goal of presenting a diverse slate of candidates thatwho will serve the Board, its Committees, Leucadia and Leucadia’s shareholders, taking into account the attributes of each candidate’s professional skillset and credentials, as well as gender, ethnicity and personal background. In evaluating nominees, the Nominating and Corporate Governance Committee reviews each candidate’s background and assesses each candidate’s independence, skills, experience and expertise based upon myriad factors.factors, including the candidate’s individual director assessment. Directors should have the highest professional and personal ethics, integrity and character that conform to Leucadia’s standards. Directors should also have experience at the governance and policy-making level in their respective fields. The Nominating and Corporate Governance Committee will consider whether a candidate for director has a proven professional background that displays the ability to make important judgments as Board members. The Committee also determines whether a candidate’s skills and experience complement existing Board members’ skills.skills and experience.

As illustrated by their biographies, each of our directors who have been instrumental during our transition following our transaction with Jefferies, werewas chosen because their backgrounds provide themhis or her background provides each director with the experience and skill set that areskillset geared toward helping Leucadiaus succeed. Our directors bring to Leucadiaus strong executive operating experience; deep and ongoing experience as directors of public companies; expertise in the financial services sector; broad experience – both as executives and directors – in such diverse sectors as oil and gas, mining, investment management, insurance, retail food, real estate, private equity, communications, media, government and international banking, among others; and a meaningful commitment to community and public service. That wealth of knowledge and experience is ideally suited to Leucadia’sour diverse financial services and merchant banking platform.platforms.

Just two directors remain from before the 2013 Leucadia/Jefferies combination. Ms. Adamany recently joined our Board and Messrs. Beyer, Borges, Campbell, Friedman, Handler, Joyal, O’Kane and Reese began their directorships after our combination with Jefferies and are essential members as we complete our transformation and move forward. Messrs. Keil and Steinberg are critical legacy members of our Board with important historical knowledge and the requisite experience and leadership necessaryUnless otherwise directed, proxies will be voted for our future. The proxy holders named on the proxy card have advised that, unless contrary instructions are received, they intend to vote for the eleven nominees and, if one or more of the nomineesa nominee becomes unavailable for election, for the substitute nomineesnominee as theproposed by our Board of Directors may propose.Directors.

TheOur Board of Directors recommends a vote FOR our nominees.

Biographies of Directors

Ms. Adamany served in several capacities at BP plc from 1980 until her retirement in August 2007, most recently from April 2005 until August 2007 as a member of the five-person Refining & Marketing Executive Committee responsible for overseeing the day-to-day operations and human resources management of BP plc’s Refining and Marketing business segment. She also served as Executive Assistant to the Group Chief Executive from October 2002 until March 2005 and as Chief Executive of BP Shipping from October 1999 until September 2002.

Ms. Adamany serves as a director of Coeur Mining Inc., the largest U.S.-based silver and gold producer and listed on the NYSE, and is Chair of its Audit Committee and a member of its Environmental, Health, Safety and Social Responsibility Committee. Ms. Adamany also serves as a director and member of the Audit and Safety, Assurance and Business Ethics Committee of Wood, a global leader in the delivery of project, engineering and technical services to energy and industrial markets listed on the London Stock Exchange. Ms. Adamany also serves as a director of BlackRock Institutional Trust Company and previously served on the board of directors of AMEC Foster Wheeler plc, a consultancy, engineering, project management, operations & construction services, project delivery and specialized power equipment services company, from October 2012 until October 2017, as well as National Grid plc, an electricity and gas generation, transmission and distribution company, from November 2006 until October 2012.

Ms. Adamany is a C.P.A. and holds a B.S. in Business Administration with a major in Accounting, magna cum laude, from John Carroll University.

Mr. Beyer is Chairman of Chaparal Investments LLC, a private investment firm and holding company which he founded in 2009. From 2005 to 2009, Mr. Beyer served as Chief Executive Officer of The TCW Group, Inc., a global investment management firm. Mr. Beyer previously served as President and Chief Investment Officer from 2000 until 2005 of Trust Company of the West, the principal operating subsidiary of TCW.

Mr. Beyer serves as the Lead Director, a member of the Financial Policy Committee and the Chair of the Corporate Governance Committee of The Kroger Company, an NYSE listed company. Mr. Beyer is also the Chairman of the Board of Councilors of USC Dornsife School of Letters, Arts and Sciences, a member of the Harvard-Westlake School Board of Trustees and a member of the Advisory Board of Milwaukee Brewers Baseball Club. Mr. Beyer was formerly a director of Société Générale Asset Management, S.A. and The TCW Group, Inc. Mr. Beyer was a director of The Allstate Corporation, an NYSE listed company, from 2006 through 2016.

Mr. Beyer received an M.B.A. from the UCLA Anderson School of Management and a B.S. from the University of Southern California.

Mr. Borges is Chairman of Landmark Partners, LLC, an institutional alternative investment firm, specializing in private equity and real estate secondary market investments, where he has been employed since 1999. Prior to joining Landmark, Mr. Borges served as managing director of Financial Guaranty Insurance Company. Mr. Borges was Treasurer of the State of Connecticut, served as Deputy Mayor of the City of Hartford and legal counsel for The Travelers Insurance Company. In addition, Mr. Borges serves on the Board of Directors of Davis Selected Funds, Connecticut Public Broadcasting Network, Knight Foundation and Millbrook School.

Mr. Borges is Chairman of the Board of Directors of Assured Guaranty, Ltd., an NYSE listed company.

Mr. Borges received a B.A. from Trinity College in Hartford, Connecticut and a J.D. from the University of Connecticut – School of Law.

Mr. Campbell has been a director of Jefferies since January 2000 and currently serves as the Chairman of the Audit Committee of Jefferies. Mr. Campbell was Chairman and Chief Executive Officer of Magex Limited from August 2000 to April 2002 and recently retired from consulting 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 graduated from La Salle College with a B.A. in Political Science.

Mr. Friedman has served as a director and our President since March 1, 2013 and has been a director and executive officer of Jefferies since July 2005 and Chairman of the Executive Committee of Jefferies since 2002. Since 1997, Mr. Friedman has also served as President of Jefferies Capital Partners (formerly known as FS Private Investments), a private equity fund management company controlled by Mr. Friedman and in which Jefferies has an ownership interest. Mr. Friedman was previously employed by Furman Selz LLC and its successors, including serving as Head of Investment Banking and a member of its Management and Operating Committees. Prior to his seventeen years with Furman Selz and its successors, Mr. Friedman was an attorney with the New York City law firm of Wachtell, Lipton, Rosen & Katz.

As a result of his historic management of various private equity funds and the significant equity positions those funds held in their portfolio companies, Mr. Friedman served on a large number of boards of directors of such private portfolio companies. Mr. Friedman serves as Leucadia’s representative on the boards of directors of various Leucadia investee companies, including HomeFed Corporation and Fiesta Restaurant Group, both of which are public companies.

Mr. Friedman received a J.D. from Columbia Law School and a B.S. in Economics and M.S. in Accounting from The Wharton School, University of Pennsylvania.

Mr. Handler has served as a director and as our Chief Executive Officer since March 1, 2013. Mr. Handler has been Chairman of Jefferies since February 2002 and Chief Executive Officer of Jefferies since January 2001. Mr. Handler has also served as Chief Executive Officer of Jefferies LLC, Jefferies’ principal operating subsidiary, since January 2001. Mr. Handler was first elected to the Board of Directors of Jefferies in May 1998. He was Managing Director of High Yield Capital Markets at Jefferies LLC from May 1993 until February 2000, after co-founding that group as an Executive Vice President in April 1990.

Mr. Handler also serves on the boards of directors of several of our subsidiaries and portfolio companies, including serving as Co-Chairman and President of Landcadia Holdings, Inc., a publicly-listed blank-check company co-sponsored by Leucadia to effect a business combination with one or more operating businesses. Mr. Handler is also Chairman and Chief Executive Officer of the Handler Family Foundation, a non-profit foundation working primarily with underprivileged youth.

Mr. Handler received an M.B.A. from Stanford University and a B.A. in Economics from the University of Rochester.

Mr. Joyal has served as a director since March 1, 2013. Mr. Joyal was a director of Jefferies from January 2006 through April 2014. Previously, Mr. Joyal was the President of Babson Capital Management LLC, an investment management firm, a position that he held from 2001 until his retirement in June 2003. Mr. Joyal served as Managing Director of Babson from 2000 to 2001. He also served as Executive Director from 1997 to 1999 and Vice President and Managing Director from 1987 to 1997 of Massachusetts Mutual Life Insurance Company, a mutually owned financial protection, accumulation and income management company. Mr. Joyal was a director of Ormat Technologies from 2012 to 2017.

Mr. Joyal is a trustee of Barings Corporate Investors and Barings Participation Investors (closed end funds), a trustee of the MassMutual Funds (a fund family advised by the Massachusetts Mutual Life Insurance Company) and sits on the investment committees of various private equity and mezzanine funds sponsored by First Israel Mezzanine Investors.

Mr. Joyal received an M.B.A. from Western New England College, received a B.A. in Business Administration from St. Michael’s College and is a Chartered Financial Analyst.

Mr. Keil is a private investor who had been President and a director of Republic New York Corporation and Vice Chairman of Republic National Bank of New York from 1984 to 1996. Mr. Keil is currently a director of two privately held trust companies.

Mr. Keil served as a director of The St. Joe Company from 2011 to 2015 and as its President and Interim CEO during 2014 and 2015.

Mr. Keil received an M.B.A. from Harvard Business School and a B.S. from The Wharton School, University of Pennsylvania.

Mr. O’Kane was a director of Jefferies from May 2006 through April 2014. From 1986 to 2004, Mr. O’Kane served in various capacities for TIAA-CREF, first as a Managing Director – Private Placements from 1986 to 1990, then as Managing Director – Structured Finance from 1990 to 1996 and finally as Senior Managing Director – Securities Division from 1996 to 2004, when he was responsible for approximately $120 billion of fixed income and $3.5 billion of private equity assets under management.

Since August 2005, Mr. O’Kane has also served on the Board of Directors of Assured Guaranty, is currently serving on its Audit Committee, is Chair of its Finance Committee and was previously a member of its Risk Oversight Committee. In addition, Mr. O’Kane served on the Board of Trustees of Scholarship America, a non-profit company engaged in providing scholarships for young students to attend college, from 2001 to 2006. Mr. O’Kane was also the Chief Financial Officer of Motor Coils Manufacturing Company during 1984 and 1985.

Mr. O’Kane received an M.B.A. in Finance from Rutgers Graduate School of Business and an A.B. in Economics from Lafayette College.

Mr. Reese has served as Chairman of MassMutual from 2007 through 2010 and as its CEO and President from 2005 through 2009. Prior to 2005, Mr. Reese served as Executive Vice President and Chief Investment Officer of MassMutual. Mr. Reese also held various leadership positions at several MassMutual subsidiaries, serving as Chairman and CEO of Babson Capital Management LLC, Chairman of Cornerstone Real Estate Advisers LLC and as a director of Oppenheimer Acquisition Corporation. Mr. Reese joined MassMutual in 1993, coming from Aetna Life and Casualty Company. Mr. Reese also previously served as director of the Federal Reserve Bank of Boston.

Mr. Reese serves on the Board of Directors of the Lahey Clinic Foundation, a not-for-profit organization affiliated with Lahey Hospital & Medical Center.

Mr. Reese received an M.B.A. with high distinction at the Amos Tuck School of Business Administration at Dartmouth College and a B.A. in Biology from Gettysburg College.

Mr. Steinberg has served as a director since December 1978, our Chairman since March 1, 2013, and was our President from January 1979 until March 1, 2013. Mr. Steinberg has been a director of Jefferies since April 2008.

Mr. Steinberg serves as Leucadia’s representative on the boards of directors of various other Leucadia subsidiaries and portfolio companies, overseeing our investments in HomeFed as Chairman, HRG Group, Inc. as CEO and Chairman, and Spectrum Brands Holdings, Inc. Mr. Steinberg previously served as a director of Fidelity & Guaranty Life from 2015 to 2017 and currently serves on the Board of Directors of Crimson Wine Group, Ltd., our former winery operations which were spun off to shareholders in February 2013.

Mr. Steinberg received an M.B.A. from Harvard Business School and an A.B. in Government from New York University.

Directors and Board Committees

Board Diversity

The Nominating and Corporate Governance Committee is committed to a policy of inclusiveness and seeks members with diverse backgrounds, an understanding of our business and a reputation for integrity.

In June 2013, our Board of Directors approved the following policy as set forth in our Nominating and Corporate Governance Committee Charter:

“To fulfill its purpose, the Committee shall . . . take reasonable steps to add women and minority candidates to the pool of individuals from which new Board nominees are chosen through, among other things, attempting to seek women and minority candidates as part of every Board search and considering diverse candidates from nontraditional venues.”

Diversity of Board Prior to March 1, 2013

Prior to our March 1, 2013 combination with Jefferies, Leucadia’s Board consisted of eight Directors, none of whom was diverse as to race or gender.

2013 / 2014 Board Restructuring

Immediately following our transaction with Jefferies, our Board size increased from eight to fourteen directors with the addition of Messrs. Handler and Friedman as executive directors and the addition of four legacy Jefferies independent directors. A decision was made to reconfigure what would become the new Leucadia Board. Mr. Cumming, a Leucadia founder and legacy executive director, retired from the Board. Of the six legacy Leucadia independent directors, only one remained on the new Leucadia Board, and of the four legacy Jefferies independent directors, three remained on the new Leucadia Board, resulting at that point in four legacy independent directors on the reconfigured Leucadia Board.

Next, it was decided that an additional four independent directors would join the new Leucadia Board. One of the criteria driving the search for those new directors was the goal of increasing the diversity of the Leucadia Board, and that criterion successfully resulted in two of our four new directors being diverse: Linda Adamany, who joined the Board in 2014, and Frank Borges, who joined the Board in 2013. In total, 25% of our independent directors are diverse.

Diversity of Board Today

Leucadia Board of Directors

We are committed to ensure women and minority candidates are among every pool of individuals from which new Board nominees are chosen as well as consider diverse candidates from nontraditional venues. We are so committed, in fact, that – based on suggestions from our shareholders – we have amended the charter of our Nominating and Corporate Governance Committee to state the following:

“To fulfill its purpose, the Committee shall . . . add women and minority candidates to each pool of individuals from which new Board nominees are chosen and consider diverse candidates from nontraditional venues.”

We intend to succeed in accomplishing that goal through:

We believe the enhanced quality that results from a diverse board is beyond any reasonable dispute. We will continue the progress made to date by continuing to implement our policy of recruiting diverse nominee candidates. We do not see any challenges in doing so.

Our director nominees do reflect a wide array of experience, skills and backgrounds. Each director is individually qualified to make unique and substantial contributions. Collectively, our directors’ diverse viewpoints and independent-mindedness enhance the quality and effectiveness of Board deliberations and decision making. Our Board is a dynamic group, providing an appropriate balance of institutional knowledge across the spectrum of our merchant and investment banking platforms. This blend of qualifications, attributes and tenure results in highly effective leadership and is summarized below.

Board Skills & Experience and Demographic Matrix

Corporate Governance

Recent Corporate Governance Initiatives

SinceOver the last few years, we made multiple corporate governance enhancements to strengthen our March 2013 transactionBoard’s independence, ensure robust risk oversight and bolster alignment, communication and transparency with Jefferies and the appointment of Richard Handler as CEO and Brian Friedman as President, we have made significant changes to the composition of our Board of Directors and its committees.shareholders.

Recent Enhancements:

Earlier Enhancements:

In addition to the structural changes to our Board of Directors and its committees, we have made a commitment to be responsive to shareholder concerns.

Additional information about changes to our compensation policies and practices is contained in our Compensation Discussion and Analysis.

Environmental, Social and Governance Matters

We are committed to sustainable economic development and recognize the impact our businesses have on the world. For us to continue to prosper, the value we create and grow for our shareholders must be sustainable. We believe in making a positive difference in the communities in which we live and work and strive to discharge our corporate social responsibilities from a global perspective and throughout every aspect of our operations. Our Board carefully considers the impact on the environment, people and the communities of which we are a part in deciding where and whether to invest our assets.

While engaging with our fellow shareholders, we have begun to get questions relating to how we ensure our business practices are sustainable including in the context of environmental, social and governance matters. We have provided a good bit of detail related to governance in prior years’ proxies as well as this year’s, but we have not discussed our efforts related to environmental and social matters. As will be noted in this brief summary, we are highly attuned to such matters and working both to reduce our impact on the environment and to be good citizens in the communities in which we operate.

Our Board recognizes the negative effect poor environmental practices and human capital management may have on us and our returns and therefore has established Board reporting requirements regarding risk exposure and risk mitigation efforts in these areas. The periodic reports the Board receives enables the Board to monitor these risks and informs the Boards determination to mitigate, avoid or eliminate such risks.

Environmental

While our portfolio companies take their environmental protection responsibilities seriously, the companies in which we invest that have a direct impact on the environment take great care both to be in full compliance with all applicable rules and regulations intended to protect the environment and to engage in series of voluntary efforts to help avoid harming the environment.

For example, Golden Queen, which mines silver and gold, is a zero-discharge facility that contains all process water; it also operates leakage and recovery detection systems that contain process solution; it carefully monitors wells to detect any leakage of process solution; it monitors upwind and downwind monitoring stations to measure dust emissions; it carefully mitigates dust generation; it collects and disposes of all hazardous waste; it endeavors to protect the burrowing

owl, all bat species, Mojave Shoulder Band snails, Joshua trees and Cholla cactus plants; and it conducts annual awareness programs for employees covering biological, cultural and archaeological aspects of its operations.

Similarly, National Beef, our beef processing company, is a member of the Global Food Safety Initiative, which is a set of food safety and quality standards that have the goal of enhancing food safety and quality, ensuring consumer protection and strengthening consumer confidence. In addition, National Beef uses the Biologic Food Safety System, and is a founding member of the U.S. Roundtable for Sustainable Beef.

Vitesse and JETX, our oil and gas production and development companies, evaluate the environmental stewardship and track record of each of their operating partners. In addition, as a result of the stringent rules that apply to the industry, Vitesse and JETX’s operators carefully monitor compliance with the myriad international, provincial, federal, state, tribal, local and foreign environmental laws and regulations to which they are subject. These include, among many others, the U.S. Clean Air Act, the U.S. Environmental Protections Agency’s global greenhouse gas emissions restrictions; the U.S. Federal Water Pollution Control Act; the U.S Oil Pollution Act; U.S. Department of Interior regulations; the Comprehensive Environmental Response, Compensation and Liability Act; the U.S. Resource Conservation and Recovery Act; the U.S. Safe Drinking Water Act; the U.S. Emergency Planning and Community Right-to-Know Act; the National Environmental Policy Act; and the U.S. Department of Transportation regulations relating to safe transportation of energy and hazardous materials.

Idaho Timber, our wood products company, is committed to thoughtful environmental stewardship including sustainable forestry. Idaho Timber ensures that the harvesting crews with which it contracts comply with all laws and regulations, including compliance with applicable industry practices. To ensure a high level of compliance, Idaho Timber reviews and monitors harvesting operations through on-site inspections and constant feedback. In addition, Idaho Timber’s remanufacturing plants are highly beneficial to the environment because they reprocess low-grade lumber into higher-grade lumber, aiding overall lumber sustainability and reducing the need for additional harvesting.

Social Matters

All of the companies in which we invest contribute to the communities in which they operate through employment and benefits practices aimed toward making the lives of our employees and their families better. Our investee companies also maintain rigorous policies and procedures aimed at ensuring that all employees of the Leucadia companies act with the highest integrity, always respecting each other, their clients, their customers and their counterparties.

In addition, our companies make the communities in which they operate better places. A few examples include:

As noted, this section is a brief summary of our environmental and social activities. In coming years, we will consider whether, as some companies do, to provide a standalone Environmental, Social and Governance brochure.

Outside Directorships

During our 2017 shareholder engagement, we again heard questions from some investors and proxy advisors regarding the time commitment of two of our executive directors who have other public company obligations. (Mr. Steinberg is on the boards of HRG, Spectrum, HomeFed, and Crimson Wine in addition to being on our Board and that of Jefferies, as well as, effective April 14, 2017, serving as the CEO at HRG (Mr. Steinberg receives no incremental compensation in that role). Mr. Friedman holds two directorships, at HomeFed and Fiesta, in addition to being on our Board and that of Jefferies.) The answer to those questions is simple – we have directed them to take on those positions to oversee our investments and they are supported in those roles by our other employees. In each instance, except one, we have a significant investment in those companies: we own 100% of Jefferies; an approximately $790 million (23%) investment in HRG, which in turn owns 59% of Spectrum Brands; a $310 million (70%) investment in HomeFed; and a $61 million (12%) investment in Fiesta. The one exception is Crimson Wine, which is a former portfolio investment of ours that was spun out 100% to our shareholders five years ago and where Mr. Steinberg served as a director prior to the spin off.

It also is important to note that, in each case in which we hold an investment and we ask one of our executives to hold such a position, Messrs. Steinberg and Friedman do not solely oversee our investments; instead, they are joined by at least one other of our officers or directors who also oversees our investment and ensures that those directorships do not become unduly burdensome on either Mr. Steinberg or Mr. Friedman. In addition, they have the full resources of Leucadia to support them. We believe these directorships are crucial to our strategy and prospects, and demonstrate smart and prudent oversight of our capital.

In closing this explanation, two points are worth mentioning. First, because of HRG’s sale of Fidelity & Guaranty Life, Mr. Steinberg is no longer on the Fidelity & Guaranty Life board. Second, with HRG and Spectrum Brand’s recently announced merger, Mr. Steinberg will go from being on two related boards to being on one, and he will no longer be the CEO of HRG. Once the merger closes, there will be one existing board on which we will want Mr. Steinberg to continue to hold a seat to oversee our continuing non-controlling 13% ownership interest in the surviving company. As such, he will sit on five boards, four of which are at our direction.

Director Independence

In accordance with our Corporate Governance Guidelines, a copy of which is available on our website,Leucadia.com, the leucadia.com, our Board of Directors undertook its annual review of director independence. During this review, theour Board considered all transactions and relationships between us and each nominee for director or any member of such person’s immediate family. The purpose of this review is to determine whether any relationship or transaction is considered a “material relationship” that would be inconsistent with a determination that a director is independent. TheOur Board has not adopted any “categorical standards” for assessing independence. However, as stated in the Corporate Governance Guidelines, the Board has determined that friendship among directors shall not be a basis for determining that a director is not independent for purposes of serving on the Board.

TheOur Board affirmatively determined that other than Messrs. Friedman, Handler and Steinberg, each of the otherour non-employee director nominees including each committee member, is independent of us and our management.independent. In making this determination, our Board reviewed the corporate governance rules of the NYSE, the principal exchange on which our shares are traded, and considered commercial, charitable, family and other relationships that directors or members of their immediate family have or have had with us. In addition, for our Audit Committee members, our Board also considered the requirements of Rule 10A-3 under the Exchange Act.

In particular, our Board considered the following relationships: a family member of Mr. Keil is the head of an educational institution to which Mr. Steinberg has made charitable contributions, either directly or through charitable trusts, in amounts not exceeding $100,000; Mr. Keil is a trustee of several trusts (certain of which hold our shares) for the benefit of Mr. Steinberg’s children and other family members (for which Mr. Keil receives no remuneration); Mr. Beyer is an independent director of Allstate and Kroger, each ofa company which has a commercial relationship with one of our subsidiaries; Mr. Reese previously served (prior to 2011) as President and Chief Executive Officer of MassMutual, a holder of our Series A Cumulative Convertible Preferred Stock and a commercial finance joint venture partner with JefferiesJefferies; and Messrs. Joyal and Reese were associated with each other in connection with their prior employment with MassMutual.

TheOur Board has determined that none of these relationships is aare not material relationshiprelationships and therefore doesdo not affect theour Board’s determination of independence.

Majority Voting and Director Resignation Policy

On January 30, 2014, we amended ourOur by-laws to require that each director in an uncontested election be elected by the affirmative vote of thea majority of the votes cast with respect to such director. We previously adopted a director resignation policy, which is incorporated into our Corporate Governance Guidelines. Pursuant to this policy, in an uncontested election of directors, any incumbent director nominee who does not receive the affirmative vote of a majority of the votes cast is required to promptly tender his or her resignation to theour Board of the Directors. A director nominee will have failed to receive the affirmative vote of a majority of votes cast if the number of “against” votes in respect of such director nominee’s election exceeds the number of votes “for” such director nominee’s election (excluding abstentions and broker non-votes). An election is considered “uncontested” if the number of director nominees does not exceed the number of directors to be elected.

TheOur Board of Directors will decide, after considering the recommendation of the Nominating and Corporate Governance Committee, whether to accept or reject a tendered resignation. The nominee in question will not participate in the recommendation or decision-making process. TheOur Board’s explanation of its decision will be publicly disclosed within 90 days from the date of publication of the election results. The Nominating and Corporate Governance Committee and theour Board of Directors may consider any factor deemed appropriate in makingduring this determination.process.

Lead Director Position and Duties

In March 2014 andMr. O’Kane was elected by our Board of Directors in February 2015, the independent members of our Board appointed2017 as its Lead Director, succeeding Mr. Joyal, who served as our Lead Director. The following duties of the Lead Director are set forth in our Corporate Governance Guidelines:for three years.

Other Governance Features & Practices

Anti-Hedging Policy

We recently amended ourOur Insider Trading and Anti-Tipping Policy to expressly prohibitprohibits hedging transactions involving our securities and those of our subsidiaries by our directors, executive officers and all other employees. We believe that hedging against losses in our securities breaks the alignment between our shareholders and our executives that equity grants are intended to build. None of our executive officers have ever hedged our shares. Our anti-hedging policy also prohibits direct and indirect short selling option transactions and derivative transactions involving our securities, other than benefit plan securitiesthe exercise of any options or warrants issued by us.us to our employees or directors.

Risk Oversight

Our Board of Directors is responsible for the general oversight of risks that affect us. Our Board receives regular reports on our operations from our Chief Executive Officer, our President and our Chairman, as well as other members of management. Our Board reviews these reports and makes inquiries whenever appropriate. In exercising its oversight responsibilities, our Board considers potential investments that require expenditure above $150 million, a financial threshold approved by our Board, with general delegation to any two of Messrs. Handler, Friedman and Steinberg, acting together, offor approval forof matters below that threshold.

Our Board also fulfills its oversight role through the operations of its various committees, including our Audit Committee. Our Board receives periodic reports on each committee’s activities. The Audit Committee has responsibility for risk oversight in connection with its review of our financial reports filed with the SEC. The Audit Committee receives reports from our CFO and our independent auditors in connection with the review of our quarterly and annual financial statements regarding significant financial transactions, accounting and reporting matters, critical accounting estimates and management’s exercise of judgment in accounting matters. When reporting on such matters, our independent auditors also provide their assessment of management’s report and conclusions. Our Audit Committee receives reports from our Chief Compliance Officer in accordance with our Whistle Blower Policy. Our Audit Committee also oversees our Related Person Transaction Policy. Additionally, with respect to Jefferies, Jefferies’ risk management team continuously monitors its various business groups, the level of risk they are taking and the efficacy of potential risk mitigation strategies and presents such information to Jefferies’ senior management and our Board.

Additional Information about our Board and Committees

Board of Directors.During fiscal year 2014, allAll directors attended at least 75% of the meetings of theour Board of Directors and Committees on which they served. Weserved during 2017.

All of our directors attended our 2017 shareholder meeting, although we do not have a policy regardingrequiring director attendance at our shareholder meetings, but we encourage our directors to attend. At our 2014 shareholder meeting, ten of our eleven directors attended. attendance.

Our Board has determined that our independent directors will meet regularly in executive session outside the presence of any member of management. No formal Board action may be taken at any executive session. Beginning in March 2014, ourOur Lead Director presides over each executive session and has the authority to call such meetings.

Our Board believes our directors should also be shareholders. Our Corporate Governance Guidelines require each director within five years of joining our Board to accumulate an ownership position in our equity securities equal to five times the value of a director’s annual cash retainer.

Our Board has standing Audit, Compensation and Nominating and Corporate Governance Committees, each of which has adopted a written charter that is available on our website atLeucadia.com.

Our Board believes our directors should also be shareholders. In February 2015, our Board amended our Corporate Governance Guidelines to require each director to accumulate an ownership position in our equity securities equal to three times the value of a director’s annual cash retainer.

Following the completion of our transaction with Jefferies, Mr. Handler became a director and our Chief Executive Officer, Mr. Friedman became a director and our President, and Mr. Steinberg became our Chairman of the Board. Mr. Handler is our principal executive officer and works together with Messrs. Friedman and Steinberg to provide our senior leadership. Messrs. Handler and Friedman operate as a closely paired team as they fulfill their director and executive officer responsibilities with us and Jefferies, where they serve as the top two executives and are fully involved in the day-to-day management and growth of Jefferies. Their partnership has been developed over fourteen years working together, and we believe this approach allows for development and execution of enhanced outcomes and allows the two executives to effectively extend their strong leadership across the wide variety of responsibilities. Our Board believes that we and our shareholders benefit from our leadership structure and Messrs. Handler and Friedman’s partnership and their multiple roles. leucadia.com.

Audit Committee.Our Board determined that each member of the Audit Committee, including Mr. Campbell, the Chairman, is qualified as an audit committee financial expert within the meaning of regulations of the SEC, thereby satisfying the financial literacy expertise requirement of the listing standards of the NYSE.

Our Board’s Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit our financial statements. The Audit Committee has appointed Deloitte & Touche LLP as our independent external auditor for fiscal 2018. This will be Deloitte’s second year auditing us.

The Audit Committee is responsible for the audit fee negotiations associated with our retention of Deloitte.

To assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm.

In conjunction with the mandated rotation of our audit firm’s lead engagement partner, the Audit Committee and its Chair are directly involved in the selection of our audit firm’s new lead engagement partner.

The members of the Audit Committee and our Board believe that the retention of Deloitte to serve as our independent external auditor is in the best interests of us and our investors.

Compensation Committee.Among other responsibilities, our Compensation Committee considers whether our compensation policies and practices reward employees for imprudent risk taking and has determined that our compensation policies and practices, including those of Jefferies, are not reasonably likely to have a material adverse effect on us.

Compensation Committee Interlocks and Insider Participation.Our Compensation Committee members (Messrs. Beyer, Joyal and O’Kane) were never employed by usLeucadia nor served as an officer for us.Leucadia. During 2014,2017, none of our executive officers served on any board or compensation committee of another entity, one of whose executive officers was a member of our Board of Directors or a member of our Compensation Committee.

Nominating and Corporate Governance Committee.A key function of our Nominating and Corporate Governance Committee is to assist our Board by identifying qualified Board candidates and recommending candidates to our Board who will be instrumental to Leucadia’s growth and success. As noted earlier, the Committee takes into consideration such factors as it deems appropriate, which may include:

The Committee seeks members with diverse backgrounds, an understanding of our business and a reputation for integrity and has adopted a written policy with regard to the consideration of diversity in evaluating candidates. The Committee is committed to a policy of inclusiveness and takes reasonable steps to see that women and minority candidates are considered for the pool from which the Board nominees are chosen. Our policy and its implementation have received positive shareholder feedback. In addition to candidates proposed by management, the Committee may consider candidates proposed by shareholders, but is not required to do so. If the Committee considers any candidates proposed by shareholders, it would consider the same factors used in evaluating candidates proposed by management or the Board.

Engagement of Independent Compensation Consultant

In January 2014,During 2017, our Compensation Committee retained Mercer (US) Inc. as an independent compensation consultant to assist the Compensation Committee with conducting a thorough review of our executive compensation practices, including a review of our historical compensation and related practices, an examination of relevant peer and industry practices and recommendations on how best to structure our performance-based and other compensation practices going forward.

Our Compensation Committee considered whether any conflicts of interest would arise due to its engagement of Mercer. The Committee recognized that, during 2013,During 2016 and 2017, we paid Mercer $40,000$153,500 and $163,000 for executive and director compensation consulting services and paid Mercer and its affiliates $772,000$525,000 and $603,000 for services rendered to us in their capacities other than relating to executive and director compensation. During 2014, we paid Mercer $123,500 for executive compensation consulting services and paid Mercer and its affiliates $500,500 for services rendered to us in their capacities other than relating to executive and director compensation.services. The decisions to use Mercer and its affiliates for these other services are made in the ordinary course of our business and are generally recommended by our business department heads with the approval of management. We view these engagements as unrelated to our Compensation Committee’s engagement of Mercer and we do not require the Compensation Committee or theour Board to review each use of Mercer or its affiliates for such purposes. The Compensation Committee also considered that the Mercer consultants providing services to the Compensation Committee do not benefit economically from the provision of the non-executive compensation services and work in a different office separate from the part of Mercer that provides the other services. The Compensation Committee reviewed and analyzed Mercer’s services to and compensation from us prior to its engagement and all other factors deemed relevant and required by SEC rules and concluded that the proposed engagement of Mercer by our Compensation Committee for executive compensation work did not raise a conflict of interest and that Mercer isremained independent.

20142017 Director Compensation

Effective January 1, 2014, our Nominating and Corporate Governance Committee and BoardIn March 2018, we approved the following for our non-employee directors:

Additional annual retainers of $20,000$30,000 to the Chair ofLead Director. We also increased the Audit Committee and $10,000director stock ownership requirement from three times to five times the Chairs of the Compensation Committee and the Nominating and Corporate Governance Committeeannual cash retainer.

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Equity Compensation Plan Information

Outstanding Equity Awards

 

The following table summarizes information regarding our shares under our equity compensation plans as of December 31, 2014.2017.

 

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights					Number of securities remaining available for future issuance under equity compensation plans (excluding outstanding securities)				Number of securities to be issued upon exercise of outstanding options, warrants, and rights				Weighted-average exercise price of outstanding options, warrants, and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding outstanding securities)
Equity compensation plans approved by security holders			18,345,581	(1)			$	9.49	(2)			19,415,553	(3)			17,218,484	(1)			$0.44	(2)			12,181,219	(3)
Equity compensation plans not approved by security holders			—					—				—				—				—				—
Total			18,345,581				$	9.49				19,415,553				17,218,484				$0.44				12,181,219

 

 

(1)

Includes shares to be issued upon: settlement of 12,430,61816,566,146 RSUs under the Leucadia National Corporation 2003 Incentive Compensation Plan; settlement of 274,929321,026 RSUs under our Director’s Stock Compensation Plan;Plan and exercise of 1,640,034331,312 options under our Option Plan and exercise of 4,000,000 warrants under our Warrant Plan.

(2)

The weighted average exercise price is calculated including RSUs and deferred shares which have an exercise price of zero. If the weighted average exercise price was calculated including only those awards that have a specified exercise price, the weighted average exercise price for plans approved by security holders would be $30.88.$23.03.

(3)

Includes 18,975,56511,883,293 shares under our Incentive Plan for general use and 439,988297,926 shares under our Director’s Stock Compensation Plan. In March 2014, we terminated the authorization to issue options and rights under our Option Plan. No shares remain available for future issuances under our Option Plan or Warrant Plan.

Rate of Equity Award Grants

During 2017, we issued a total of 2,998,395 shares under our existing equity plans, representing a rate of equity award grants, or so-called burn rate, of 0.8% of our average outstanding shares, which our Compensation Committee believes is modest for a company of our size and scope of operations.

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Compensation Discussion and Analysis

Overview

 

The Compensation Discussion and Analysis section describes the structure and guiding principles of our executive compensation program forprogram. The plan you are being asked to approve this year is the same executive compensation plan that nearly 90% of you approved in 2017. Our executive compensation plan applies to our named executive officers.

Our current executives,officers (NEOs), who also served in 2014, are:2017 were:

 

Richard B. Handler		Chief Executive Officer
Brian P. Friedman		President
Joseph S. Steinberg		Chairman of the Board
Michael J. Sharp		Executive Vice President and General Counsel
Teresa S. Gendron		Vice President and Chief Financial Officer

 

Teresa Gendron was appointed Vice President and Chief Financial Officer effective September 1, 2014, following the retirement of Joseph Orlando. On January 12, 2015, our Chief Operating Officer, Justin Wheeler, stepped down as one of our executives and was appointed ChiefOur Approach to Executive Officer of Berkadia Commercial Mortgage LLC, our joint venture with Berkshire Hathaway. Our Summary Compensation Table includes information for both of them:

 

Justin R. Wheeler		Former Vice President and Chief Operating Officer
Joseph A. Orlando		Retired Chief Financial Officer

We remain firmly committed to our long-term view in a business environment that we find to be increasingly characterized by impatience and short-term investment horizons. We remain patient, prudent risk-takers, always looking for opportunities to acquire new businesses, securities and assets to maximize returns over the long term.

 

Executive SummaryLeucadia’s compensation program is designed to mirror and sustain this long-term view. We are committed to ensuring that executive compensation is tightly linked to the creation of sustainable value for our shareholders, and that executive interests are aligned with our shareholders over the long run.

 

Business Overview

 

Who We Are

 

Two years ago, Leucadia combined with Jefferies. The Jefferies-Leucadia combination resulted in a fundamental transformation of the company, which created a unique and powerful platform that joins investment banking with merchant banking. Jefferies is our largest portfolio holding and is expected to be a significant engine of company growth in the coming years, including as a source of opportunities in which Leucadia may invest.

Today, Leucadia is built around two primary groups of businesses: (1) oura diversified holding company that invests in financial services investments and (2) our merchant banking investments, a portfolio that includes companies engaged in beef processing, auto retail, manufacturing, natural resources and oil and gas exploration and development.businesses. We acquire businesses and fund investments that we deem attractive, help improve their operational and financial performance, and occasionally exit investments if and when we can realize strong gains on our prior investmentsdeem an exit is in Leucadia’s best interests and believe we can earn superior returns elsewhere.

 

We distinguish ourselves byOur portfolio today consists of a number of businesses that span two primary platforms:

	§	Financial Services
	§	Merchant Banking

Our largest operating company is Jefferies Group LLC (Jefferies), which became a wholly owned subsidiary of Leucadia in March 2013 through a transformative strategic combination that created a powerful platform, linking financial services with merchant banking. In addition to Jefferies, our abilityfinancial services platform includes Berkadia, HomeFed, Leucadia Asset Management, FXCM, and Foursight, which allow us to take a long-term viewadvantage of opportunities, respectively, in commercial mortgage banking, real estate, investment management services, forex trading and automobile financing.

Our merchant banking platform, which in 2017 included National Beef, HRG, Vitesse Energy, JETX Energy, Garcadia, Linkem, Idaho Timber and Golden Queen, engages in a business environment that is increasingly characterized by impatiencevariety of businesses, including beef processing, consumer goods, oil and short-term investment horizons. We are always looking for opportunitiesgas production and development, automobile dealerships, telecommunications services, manufacturing and gold and silver mining.

In 2017, we continued the repositioning of the Leucadia platform as, among other things, we closed the sale of Conwed Plastics to create or acquire new businesses, securitiesSchweitzer-Mauduit International, Inc., and assets on attractive terms.sold our holdings in KCG Holdings Inc, via its merger with Virtu Financial. In addition, we helped to facilitate HRG’s sale of its approximate 80% interest in Fidelity & Guaranty Life as well as the recently announced merger of HRG and Spectrum Brands. That repositioning was furthered in April 2018 with the pending sale of approximately 48% of our interests in National Beef and all of our interests in Garcadia.

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Leucadia’s Unique Nature and Its Impact on Compensation

Our engagement with our fellow shareholders over the past few years almost uniformly includes a discussion of Leucadia’s unique nature. None of the standard peer lists accurately applies to us (indeed, some have us listed as a company in the food industry), and our selected list of peers is only a loose fit based upon those with whom our largest subsidiary, Jefferies, tends to compete or are otherwise in the financial services business. But no entity on that list is like Leucadia - a combination of financial services and merchant banking businesses that operates the largest stand-alone non-bank-holding-company broker dealer, and owns a growing asset management business, along with joint ventures in lending and commercial mortgage businesses, along with myriad public and private operating businesses. The one unifying thread among our peer list, though, is that it represents a fair cross-section of those who would compete for the kind of talent represented by our CEO and President. Accordingly, when our Compensation Committee considers, with the advice of its independent compensation consultant, how to set fair compensation for our executives, which will both reward them for their performance and provide the proper long-term incentives to align them with their fellow shareholders, our peer companies provide useful data.

Mr. Handler is our principal executive officer and works together with Messrs. Friedman and Steinberg to provide our senior leadership. Messrs. Handler and Friedman operate as a closely paired team as they fulfill their director and executive officer responsibilities with us and Jefferies, where they serve as the top two executives and are fully involved in the day-to-day management of Jefferies. Their partnership has been developed over 17 years working together, and this approach contributes to the development and execution of enhanced outcomes and allows the two executives to extend their strong leadership effectively across the wide variety of their responsibilities. Our Board believes that we and our shareholders benefit from our leadership structure, Messrs. Handler and Friedman’s partnership and their multiple roles.

As we have discussed at length with our shareholders and as is outlined later in this proxy statement, the goal of our Compensation Committee is to compensate our executives at or near median for these peer companies, always taking into account the following:

	§	we have two of the more long-tenured executives among this peer group
	§	our two top executives own in the aggregate approximately 6.3% of Leucadia shares (aligning them perfectly with all shareholders regardless of a compensation plan)
	§	neither of our executives has or has ever had an employment or severance contract
	§	neither of our executives is eligible for carried interest on any of our investments
	§	maybe most important – in order to get paid anything other than their base salaries, our executives have to grow tangible deployable equity and total shareholder return over very long measurement periods.

In light of all those factors, our Compensation Committee and our entire Board believe that median-targeted compensation is fair to our executives and that the long-term nature of our compensation plans is well-aligned with the interests of our fellow shareholders.

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Structure of Leucadia National Corporation at December 31, 2017

Leucadia National Corporation

Parent Long-Term Capital – $11.2 Billion (As of December 31, 2017)

 

Corporate & Liquidity
$1.9 Billion
•	Key FactCash & Figures As of December 31, 2014 Investments
•	Deferred Tax Assets

 

Headquarters: New York

Employees: 33,000

2014 Revenue: $12.3B

Total Assets: $52.6B

Total Equity: $10.3B

Market Cap: $8.2B

Jefferies & Other Financial Services $7.1 Billion				Merchant Banking $2.3 Billion
•	Jefferies		•	National Beef	•	Garcadia
•	Leucadia Asset Management		•	HRG Group	•	Linkem
•	FXCM		•	Vitesse Energy	•	Golden Queen
•	HomeFed		•	JETX Energy	•	Idaho Timber
•	Berkadia (50/50 venture with Berkshire Hathaway)
•	Foursight

 

The chart illustrates how we think aboutKey Facts & Figures     

As of December 31, 2017

Ø	Headquarters:New York
Ø	Employees:~36,700*
Ø	Total Assets:$47.2 Billion
Ø	Total Shareholder Equity:$10.1 Billion
Ø	Total Tangible Equity: $7.6 Billion**
Ø	Market Cap:$8.9 Billion (as of 2/26/18)

*		Includes all employees of subsidiaries and 20+ %-owned investee companies.
**		Total Tangible Equity, a non-GAAP financial measure, is defined as Total Shareholder Equity of $10.1 billion less Intangible Assets, Net and Goodwill of $2.5 billion.

Note:

Dollar amounts are Leucadia’s net carrying amount as of 12/31/17 for each investment (for consolidated subsidiaries, net carrying amount equals assets less liabilities and non-controlling interest).

2017 Performance

Leucadia performed well in 2017. Jefferies experienced a record year, with $3.2 billion in net revenues and manage Leucadia today (with some pro forma adjustments for material 2015 transactions$528 million in pre-tax income. National Beef turned in its second consecutive record-breaking year, with $407 million in pre-tax income and events).$512 million in EBITDA. And, although one or two of our investments could have performed better, by and large our financial services and merchant banking business experienced solid performance. And that strong performance contributed to Leucadia’s 2017 net revenues of $11.4 billion, pre-tax income of $1 billion, and 10.7% return on tangible deployable equity. And, after 2016’s 35.5% total shareholder return, 2017 performance followed suit with a very respectable 15.4% total shareholder return.

For the complete picture of our 2017 results, please see our 2017 Annual Report at leucadia.com.

 

Our New2017 Executive Leadership TeamCompensation Plan: Replicating 2016

 

As noted in last year’s proxy and other public filings, for compensation year 2017 our Compensation Committee approved an executive compensation plan that was identical to the 2016 plan for our CEO and President. That is to say, the plan we are asking you to approve is the same plan that nearly 90% of you approved last year.

The March 2013decision to adopt the identical plan was made following extensive engagement with our shareholders prior to the adoption of the plan and reflects our Board and Compensation Committee’s belief that the approved plan is well-aligned with long-term creation of shareholder value and our Board and Compensation Committee’s commitment to ongoing dialogue with our shareholders and to ensuring that the plan they approve reflects our shareholders’ values.

As we have discussed in prior years’ proxies, we substantially redesigned our executive compensation program since the combination of Leucadia and Jefferies transformed our leadership, as Jefferies’ senior leadership team assumedJefferies. The result of those substantial changes was the executive leadership roles at Leucadia,compensation plan that we adopted in addition to maintaining their direct Jefferies oversight. At this point, Leucadia’s Board2016 and management teams have completely transitioned.

	Pre-Jefferies Executive Team	Executive Management Today
Chief Executive Officer	Ian Cumming	Richard Handler (and Jefferies CEO)
President	Joseph Steinberg	Brian Friedman (and Jefferies CEC)
Chief Financial Officer	Joseph Orlando	Teresa Gendron (New)
Executive Vice President	Thomas Mara	Michael Sharp (and Jefferies EVP)
Executive Chairman	—	Joseph Steinberg
Chief Operating Officer	Justin Wheeler	—

As partthat nearly 90% of you approved in last year’s proxy vote. Our 2017 plan mirrored the combination, Leucadia’s co-founders Ian Cumming2016 plan and Joseph Steinberg stepped down from day-to-day operations. Mr. Cumming retired from all positions in March 2013, while Mr. Steinberg agreed to serve as Chairman ofincorporated the Board. Mr. Handler and Mr. Friedman were appointed CEO and President of Leucadia, respectively. They also continue to serve as Jefferies’ CEO and Chairman of the Executive Committee (CEC), respectively. In those roles, Messrs. Handler and Friedman co-lead Leucadia and Jefferies.

Messrs. Handler and Friedman are two of Jefferies’ largest revenue producers, actively source and drive transactions at Leucadia, and are business leaders of both companies and mentors to management throughout Leucadia and Jefferies. They are both highly productive dealmakers who are directly responsible for many noteworthy business opportunities and transactions that were instrumental in generating significant returns. Several investments they conceived and led rescued valuable companies, preserved jobs, and contributed to some level of stability to the financial markets in which we operate. Noteworthy recent transactions led by Messrs. Handler and Friedman include:following features:

 

	§	The Knight Capital Group (KCG) transaction, where Jefferies ledImplementing an investor groupincentive program that had no short-term cash award and has 100% long-term performance-based equity to provide $400 million in capital to rescue KCG and keep it solvent after a significant trading error. The transaction generated an approximately 250% internal rate of return in less than 11 months for Jefferies upon KCG’s sale to Getcofurther align our executive compensation with long-term value creation
	§	The initialUsing total shareholder return (TSR) and follow-on investments of $158.1 million and $317.5 million in Harbinger Group, respectively, which have been very profitablereturn on tangible deployable equity (ROTDE) performance metrics for Jefferies and Leucadia and helped Harbinger Group navigate its own management and Board changesthe long-term incentive program
	§	Most recently, the FXCM transaction where Leucadia provided $300 million in capitalRequiring vested equity awards to rescue currency brokerage FXCM and keep it solventbe held for an additional three-years after the unanticipated actions of the Swiss National Bank caused a rapid devaluation of the Swiss franc, resulting in catastrophic losses at FXCM

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In addition to their leadership, execution and oversight roles at Jefferies, Messrs. Handler and Friedman are also directly responsible for originating and supporting high-profile client relationships that are critical to the success of Jefferies’ investment banking and capital markets activities.

At the Board level, just two of Leucadia’s directors remain from before the 2013 combination. Five of eleven directors, including Messrs. Handler and Friedman, are former directors of Jefferies, and four new independent directors were appointed since the combination.

 

The Compensation Committee is now composed of three new independent directors, and is chaired by Robert D. Beyer, who joined the Board in July 2013.

2014 Performance Overview

Leucadia’s overall performance in 2014, including the Jefferies business, was not as strong as we had hoped. Though the company made significant progress in the first three quarters of the year, we experienced a very challenging fourth quarter that impacted our aggregate annual results.

In the first nine months of the year, we expanded our portfolio in a meaningful way, with investments in Harbinger, asset management, gold and silver mining, and oil and gas exploration and production. Jefferies posted very strong results, including its best third quarter results ever, with investment banking net revenues of $465.2 million and $366.7 million in sales and trading net revenue for the quarter.

In the fourth quarter, however, OW Bunker, a Danish fuel-supplier to which Jefferies provided futures clearing and execution services, was a victim of fraud and abruptly filed for bankruptcy in November 2014, which resulted in a 100% bad debt provision on a $52 million receivable account Jefferies held from OW Bunker. Jefferies’ stand-alone financial statements also reflect a goodwill impairment charge of $52 million related to its Bache business, as a result of Jefferies’ decision to pursue strategic alternatives for Bache. The goodwill attributed to Jefferies’ Bache business came from the goodwill apportionment resulting from our combination with Jefferies. (The goodwill impairment charge will not impact Leucadia’s consolidated results until subsequent periods.)

Despite these results, we believe Jefferies’ prospects for 2015 are solid, and that Leucadia is better positioned for growth as we continue to successfully reposition our portfolio.

As a holding company, Leucadia ultimately generates shareholder returns from value creation through operating results and portfolio company transactions. With this in mind, we have focused on significantly transforming the Leucadia portfolio, while continuing the success at Jefferies. Leucadia is focused on the long-term view, acquiring compelling businesses, partnering strategically, and maintaining liquidity to take advantage of market opportunities. Key transactions since the acquisition that have been instrumental in positioning ourselves for future success include:

	§	Invested approximately $900 million to expand Leucadia Asset Management’s businesses, including $100 million in Topwater Partners and $400 million in Folger Hillperformance period
	§	Increased our stake in Harbinger GroupRequiring a six-year holding period such that no shares granted for 2016 compensation can be sold until 2022, thus bolstering the long-term alignment of the plan
	§	Designing an incentive program with no opportunity to 23%earn an annual cash incentive

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Our 2017 targeted compensation program for each of our CEO and President is illustrated below:

Compensation Element		§	Provided $300 million in rescue financing to the currency brokerage FXCM Inc.2017 Targeted Award
Salary	§	Increased our stake in HomeFed Corporation to 65% through an exchange of certain real estate subsidiaries, investments and cash$1.0 million
Annual Incentive	§	Formed and invested $239 million in Vitesse Energy with a 96% ownership of the business$0
	§	Formed and invested $184 million in Juneau Energy, representing 98% ownership
Long-Term Incentive		$25 million ($20.4 million value on probability adjusted basis1)

(1)	§	Invested $71 millionRepresents fair value on grant date, as partdisclosed in the Summary Compensation Table, based on a Monte-Carlo simulation model for TSR portion of a joint venture to operate the Golden Queen Mining Company
	§	Initiated strategic alternatives for Jefferies’ Bache commodities business in December 2014award.

 

In short, we continueAs was the case in 2016, to be hard at work seekingentitled to deploy fresh capital in smart waystargeted long-term compensation, our executives have to produce both 8% compounded ROTDE and creating enterprise value by building businesses with great managers, one asset at8% compounded TSR over the three-year measuring period. The first table below is a time. Since the combination, we increased our ex-Jefferies operating businesses from 10 to 15, realized $2.5 billion in cash from asset sales, and invested an aggregate of almost $2.2 billion to new investments with unique value opportunities with a favorable risk-reward trade off. A summary of our transitioning operating profile can be found below.2017 executive compensation plan and the second table outlines how our performance metrics operate:

 

Operating Profile in 2014 vs. 2012	December 31, 2014	December 31, 2012
Significant Operating Businesses (ex-Jefferies)	15	10
Average Book Value per Operating Business (ex-Jefferies)	$215 million	$267 million
Asset Management Foundation	Yes	No
Venture Capital Projects (Sangart, Lake Charles)	No	Yes
Non-Core Assets (Crimson, Real Estate)	No	Yes
Next Debt Maturity (ex-Jefferies)	2023(1)	2013

2017 CEO and President Long-term Equity Incentive Plan
Restricted stock units issued	(1)1,075,268 target number of RSUs issued to each executive: — Based on $25 million divided by grant date closing price of our common stock — Grant date fair value of $20.4 million
Performance measurement period	2015 maturity is pre-funded with 2013 capital raises.Compound annual growth rates from January 1, 2017 through December 31, 2019
Performance metrics	50% Return on Tangible Deployable Equity 50% Total Shareholder Return
Service-based vesting	If earned, no vesting until first quarter 2020
Additional post-vesting holding period	Executive cannot sell any vested shares until first quarter 2023
Banking	Under the plan, pro rata portions of the overall awards may be banked after each of 2017 and 2018 based upon compound annual growth rates of TSR and ROTDE for each year
Total potential award	0 shares – 1,612,902 shares (150%)

Shareholder Outreach & Responsiveness to Say on Pay Results

Our shareholders’ views and opinions on our executive compensation practices are extremely important to us. As stewards of good corporate governance, our Compensation Committee evaluates the design of our executive compensation program in light of market conditions, shareholder views, and other governance considerations. We regularly engage with our shareholders through open dialogue and direct individual communication on topics related to the business, financial performance, corporate governance and compensation. Shareholder feedback is important, and the information we glean from these engagements is highly valued.

Last year, at the 2014 annual meeting, our say-on-pay proposal was approved by 62% of votes cast. Though support increased from the 54% of votes cast in favor of the proposal at our 2013 annual meeting, our Board was not satisfied by this level of improvement, and reaffirmed its commitment to design a compensation program that would be broadly acceptable to shareholders while aligning our executive compensation practices with the creation of sustainable long-term value.

In 2014, we made a concerted effort to engage constructively with shareholders. We reached out to forty-eight non-affiliated institutional shareholders (including twenty-four of our top twenty-five shareholders) that held approximately 45% of our outstanding shares and had discussions with twenty-two of them. We found our outreach to be enlightening and extremely informative.

Most of our shareholders expressed support for our guiding principles and commitment to ensuring executive pay is aligned with performance in order to foster the creation of sustainable long-term value. Many also approved of the changes we made to our compensation program since the combination. Some of our shareholders, however, had questions about the degree of our program’s alignment to performance, our benchmarking practices, and our level of disclosure, which we discuss in greater detail in the following section. From these meetings we also realized that we needed to improve our explanation of the Jefferies-Leucadia transaction, its transformational impact on Leucadia’s business, Board and management team, and Messrs. Handler and Friedman’s significantly expanded roles in the context of this transformation.

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Armed with our shareholders’ views, during 2014 we continued the process that we began in March 2013 to enhance our compensation program. Our Compensation Committee believes it has made meaningful strides in designing a program that addresses shareholder concerns and will use the information gathered from shareholder meetings as input for future changes, such as the implementationOverview of a new CEO and President long-term incentive plan for 2016 after the 2013 – 2015 performance cycles are completed.2017 Performance Grid:

 

Compensation Program Changes in Response to Shareholder Feedback

Just over two years have passed since the Jefferies-Leucadia combination formed a newly reconstituted Board and management team. The transition has led to what our shareholders tell us are very positive changes to our compensation governance framework.

In the first year of our transition, we made significant changes to our compensation program.

2013-2014: Changes to our Executive Compensation Practices

Area of FeedbackMetric	Actions Taken
	§	Added vesting conditions on cash performance bonuses for Messrs. Handler, Friedman and Sharp that extend 2 to 4 years after grant to encourage long-term service and loyalty
Improve Alignment
with Long-term50% Shareholder ValueAbsolute TSR	§
50% ROTDE

3-Year Compound Growth Rate	Did not enter into employment agreements or provide other guarantees of payment to ongoing members of the executive team. Limited guaranteed bonuses for 2014 and 2015 were provided to our newly hired CFO and a 2014 guaranteed bonus was provided to one other executive to induce his relocation. We have not guaranteed any bonuses for 2016 or beyond	RSU Value Eligibility
> 12.0%	§	Removed evergreen provision from our equity plans and fixed the number of equity awards that can be made in order to provide shareholders with greater visibility into potential future equity dilution and cost No Additional Award
Equity Plan Features8.0% - 12.0%	§	Prohibited recycling of previously granted awardsUp to an additional 50% in incentive compensation on a pro rata basis
Target = 8.0%	§	Added restrictions$25.0 million ($20.4 million value on transferability of, and payments of dividends on, performance-based equity awardsprobability adjusted basis1)
4.0% < x < 8.0%	§	Prohibited repricing and cash buyouts of underwater options without shareholder approval$12.5 million - $25.0 million
Compensation Risk Oversight
§< 4.0%	Retained Mercer as Leucadia’s new compensation consultant
	No Award $0

§(1)	AdoptedRepresents fair value on grant date, as disclosed in the Summary Compensation Table, based on a claw-back policyMonte-Carlo simulation model for performance-based awards
§	Prohibited hedgingTSR portion of company shares and other securities by directors, executives and employeesthe award.

 

Since our 2014 shareholder vote, weWe now have continuedone year’s worth of performance under the 2017 executive compensation plan, which is set forth below.

	2017 Long-Term Incentive Performance Metrics
	Metric		Target		2017 Actual			Banked Shares Resulting from Performance
								2017
	50% Absolute TSR		8.0% 3-Year Compound Growth Rate		15.4%			268,817
	50% ROTDE		8.0% 3-Year Compound Growth Rate		10.7%			239,813

2017 ROTDE of 10.7% reflects the Compensation Committee’s determination to work closely with Mercerexclude approximately $450.5 million in non-cash charges during the fourth quarter of 2017 related to further enhance our compensation practicesthe Tax Cuts and implement changes that would be welcomed by our shareholders.Jobs Act.

 

2014-2015: Continued Changes toBecause of Leucadia’s strong 2017 performance, our Compensation Programexecutives have exceeded targeted levels of TSR and ROTDE. As a result, our two top executives have each banked 508,630 shares.

§

Robust Shareholder Engagement:Following our 2014 annual meeting, we continued to engage with our shareholders and build on our outreach efforts. So far in 2015, we have reached out to thirty-three non-affiliated institutional shareholders that hold approximately 46% of our outstanding shares. Our efforts are still ongoing and we hope to engage with the entire group by the time of our May 21 Annual Meeting of Shareholders. As was true in 2014, shareholder feedback is enlightening and extremely informative and significantly contributed to the ideas and changes we have implemented. We were pleased that our shareholders expressed support for the evolution of our executive compensation program and satisfaction with the changes that the Board was considering.

As of the date of this proxy, several key areas of focus emerged from our shareholder engagement:

§

Performance-based Annual Bonuses:Many shareholders requested additional information about how annual bonuses are calculated and the performance that is required to earn a bonus. We have increased our disclosure regarding the annual bonus program and highlighted the strong, clear link between company performance and bonus payouts.

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2016 Executive Compensation Plan: Year Two of Three Performance Results

As discussed in last year’s proxy, payouts under our 2016 compensation plan for our CEO and President are based upon our performance for 2016, 2017 and 2018.

Our 2016 targeted compensation program for each of our CEO and President is illustrated below:

§Compensation Element		2016 Targeted Award
Salary		$1.0 million
Annual Incentive		$0
Long-Term Incentive		Compensation Committee Use of Negative Discretion:$25 millionSeveral shareholders asked us to provide further details ($16.3 million value on the Compensation Committee’s use of negative discretion and its relationship with the structure of our performance awards. In response, we have provided additional disclosure this year relating to our use of negative discretion.probability adjusted basis1)

 

The Compensation Committee sets rigorous, objective performance goals for our annual incentive plan that it believes are effective as designed. In 2014, performance targets under the annual incentive plan were partially met, which resulted in a calculated bonus of $2.43 million for each of Messrs. Handler and Friedman; however, each executive recommended that they receive no cash bonus for fiscal year 2014.

(1)	Represents fair value on grant date, as disclosed in the Summary Compensation Table, based on a Monte-Carlo simulation model for TSR portion of the award.

 

In years in which employeeTo be entitled to any compensation other than base salaries, our executives have to perform. To be precise, to receive targeted long-term compensation, our executives have to produce both 8% compounded ROTDE and 8% compounded TSR over the three-year measuring period. The first table below is a summary of our 2016 executive compensation decisionsplan and allocations can be challenging at Jefferies, Messrs. Handler and Friedman strive to lead by example to reduce such challenges. In consideration of the second table outlines how our performance delivered, the executives’ recommendation to forgo their annual formulaic award, and out of respect for their decisions to be aligned with shareholders and to set strong examples for Jefferies employees, the Compensation Committee exercised negative discretion and reduced Messrs. Handler and Friedman’s 2014 cash bonus to $0.metrics operate:

 

§2016 CEO and President Long-term Equity Incentive Plan

Restricted stock units issued

Peer Groups:Several shareholders acknowledged that, though it is difficult1,693,766 target number of RSUs issued to find a set of comparable peer companies for Leucadia, they nevertheless would like to see greater disclosureeach executive: — Based on the process the Compensation Committee used to consider which peers to include in its benchmarks. This year, we re-evaluated and refined our peer group to better reflect Leucadia’s market position, which we describe in greater detail on page 39.

§	Additional Disclosure of Long-Term Equity Program Structure:Some shareholders requested that we provide additional disclosure on the performance metrics used in our long-term equity component – which we have done on page 37 – as well as greater detail on our strategy and its impact on the design$25 million divided by grant date closing price of our compensation program, which cancommon stock — Grant date fair value of $16.3 million
Performance measurement period	Compound annual growth rates from January 1, 2016 through December 31, 2018
Performance metrics	50% Return on Tangible Deployable Equity 50% Total Shareholder Return
Service-based vesting	If earned, no vesting until first quarter 2019
Additional post-vesting holding period	Executive cannot sell any vested shares until first quarter 2022
Banking	Under the plan, pro rata portions of the overall awards may be found in the relevant sectionsbanked after each of 2016 and 2017 based upon compound annual growth rates of TSR and ROTDE for each component of our compensation program.year

§Total potential award

No Multi-Year Guaranteed Bonuses:Our shareholders felt strongly that we should not have multi-year guaranteed bonuses for our executives, and they were pleased to hear that, with one legacy agreement rolling off this year, no such multi-year guarantees exist.

§

Rate of Equity Award Grants (so-called Burn Rate):A question arose with respect to our burn rate, the total equity award0 shares granted over a period divided by common– 2,540,648 shares outstanding. During 2014, we issued a total of 1,067,947 shares under our existing equity plans, representing a burn rate of 0.29%, which the Compensation Committee believes is extremely modest for a company of our size and scope of operations. During our shareholder engagement, we were pleased to hear that our shareholders agreed.

§

Strategy:Our shareholders expressed a strong interest in hearing about Leucadia’s strategy, which meshes completely with our view of being as transparent as possible with where we are going. We direct all our shareholders to review our annual shareholders letter that can be found on our website,Leucadia.com, and in our Annual Report.(150%)

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As noted in the following table, our 2014-2015 compensation actions reflect not only the incorporation

Overview of ongoing feedback from our year-long shareholder outreach but also the highly performance-driven nature of our executive compensation plan.2016 Performance Grid:

 

Area of Feedback	Actions Taken
Performance-based Annual Bonus and Use of Negative DiscretionMetric
	§	Reduced 2015 Cash Bonus Opportunity:Reduced our CEO’s and President’s 2015 cash annual bonus opportunity to 50% of the prior level (target is now $3.0 million versus historical $6.0 million)
	§50% Absolute TSR	Increased 2015 Long-Term Equity Focus:Shifted the reduced cash bonus opportunity value into a performance-based equity vehicle that requires achievement of 2015 operating performance goals to be earned and is subject to a 3-year cliff vesting provision in order to provide greater alignment with shareholder outcomes and encourage sustainability of results
	§50%		Rebalanced 2015 Bonus Performance Emphasis:Increased the weight assigned to Leucadia’s performance in our annual incentive plan from 25% to 50% for our annual bonus calculations beginning in 2015ROTDE

3-Year Compound Growth Rate
§	Provided No 2014 CEO and President Bonus Payout:Exercised negative discretion for 2014 annual bonuses to our CEO and President, who each forfeited a cash bonus of $2.43 million due under our plan formula for 2014 results
§	No Guaranteed Bonuses (other than new hires):Discontinued granting of multi-year guaranteed bonuses other than for new hires; the only 2014 guaranteed payouts related to an initial employment agreement of our former COO Justin Wheeler in connection with his relocation from Salt Lake City to New York, and the employment contract of our newly hired CFO, Teresa GendronRSU Value Eligibility
Peer Benchmarking> 12.0%	§	Refined Peer Group:Reevaluated and adjusted peer group to more accurately reflect Leucadia’s market position, including the addition of peers that engage in activities comparable to our merchant banking businessNo Additional Award
Long-term Equity Incentives8.0% - 12.0%	§	Direct Alignment of Pay and Performance for 2014 CEO and President Long-TermEquity Awards:2014 long-term equity awards earned by Messrs. Handler and Friedman were reduced by 67,040 shares each because net earnings attributableUp to Jefferies Group LLC fell short of performance targetsan additional 50% in incentive compensation on a pro rata basis
Additional Disclosure
§Target = 8.0%		Enhanced Goal Disclosure:$25.0 millionDisclosed explicit performance goals for the 2014 portion of the long-term equity awards for Messrs. Handler and Friedman ($16.3 million value on probability adjusted basis1)
§4.0% < x < 8.0%	Increased Shareholder Engagement and Disclosure:Increased disclosure	$12.5 million - $25.0 million
< 4.0%		No Award $0

(1)

Represents fair value on grant date, as disclosed in the proxy statementSummary Compensation Table, based on a Monte-Carlo simulation model for TSR portion of ongoing shareholder engagement efforts and their direct impact on Board discussions and decisions, and articulated the Leucadia and Jefferies business combination profile and senior executive leadership roles in response to shareholder requestsaward.

We now have two years’ worth of performance under the 2016 executive compensation plan. The actual performance metrics for the first and second measurement years that relate to compensation year 2016 are set forth below.

	2016 Long-Term Incentive Performance Results Over 2-Years
	Metric		Target		2016 Actual		2017 Actual / 2-year CAGR			Banked Shares Resulting from Performance
										2016		2017
	50% Absolute TSR		8.0% 3-Year Compound Growth Rate		35.5%		15.4% / 25.1%			423,441		423,441
	50% ROTDE		8.0% 3-Year Compound Growth Rate		2.7%		10.7% / 6.5%			0		456,137

2017 ROTDE and Two-Year CAGR of 10.7 and 6.5%, respectively, reflects the Compensation Committee’s determination to exclude approximately $450.5 million in non-cash charges during the fourth quarter of 2017 related to the Tax Cuts and Jobs Act.

In summary, now that we are two-thirds of the way through 2016’s three-year performance period, our expectations have exceeded targeted levels of TSR but fallen short of target levels of ROTDE. As a result, our two top executives have each banked 1,303,019 shares.

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Compensation Program Elements

Executives are provided compensation through a variety of elements, which the Compensation Committee has structured in a way that aligns incentives with metrics that directly impact long-term value creation. Our compensation objectives focus on rewarding personal productivity and fostering a results-oriented environment, without exposing the company to excessive risk.

The components of our 2014 compensation program are listed below.

2014 CEO and President Compensation Program

 

Base Salary		•	$1 million for each of our CEO and President, based on the competitive market rate
		•	Mr. Handler and Mr. Friedman have the same salaries due to compensation on and retention considerations, and the partnership nature of their roles
Performance-Based Annual Bonus		•	100% performance-based measured against key financial metrics at both Leucadia and Jefferies
		•	Awards include additional time-vesting requirements: one-third of the award will vest on each of the second, third, and fourth anniversaries of payment
Long-Term Incentive		•	100% performance-linked restricted stock units (RSUs) for 2013-2015 grant (legacy Jefferies)
		•	Subject to 3-year cliff vesting, deferred distribution and forfeiture potential based on GAAP-reported net income
		•	Will implement enhanced plan in 2016 that will directly align with long-term performance and be geared toward longer vesting and distribution periods
Benefits		•	Broad-based plans (medical, dental, life insurance, disability, savings, retirement, voluntary deferred compensation opportunities)
		•	Customary and reasonable executive perquisites

Key Features of Compensation Program

In addition to a robust program that ties executive compensation directly to objective financial metrics and goals, our compensation practices include a number of key features that are highlighted below:

	√	Strong link between pay and performance
	√	Substantial majority of executive compensation at-risk
	√	No acceleration of vesting in the event of a change-in-control for restricted stock and RSUs held by executives
	√	No tax gross-ups on change-in-control payments
	√	Prohibit hedging of company stock
	√	No repricing of stock options without expressed approval from stockholders
	√	Robust claw-back policy
	√	No tax gross-ups on perquisites
	√	Reasonable executive perquisites
	√	Independent compensation consultant

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Components of our Compensation Program Alignment between Pay and Performance Leucadia is strongly committed to ensuring executive pay aligns with performance results. Our culture of ownership closely aligns management and shareholder interests and fosters a program that pays for performance. If the company does not meet rigorous performance hurdles, the executives do not get paid under the performance plan. Now at Leucadia, and previously at Jefferies, if targets were not met, management did not receive performance-based compensation. In some instances, as evidenced in 2014, further negative discretion is also exercised. In 2014, 95% of our CEO and President’s target compensation varied directly with the achievement of performance goals.

2014 Target Compensation At-Risk CEO and President

Executive Compensation Goals and Objectives

 

Our compensation policies are designed to provide competitive levels of compensation in order to attract and retain talented executives and leaders, encourage long-term service and loyalty and align their interests with the creation of long-term value for our shareholders. Each element of our program, base salary, annual incentive, long-term incentive and benefits, is tailored to incentivize a specific area of pay that we believe will promote sustained economic value over time.

 

 

Base Salary	Reward current and past short-term performance and encourage continued service
Performance-based Annual Bonus
	Motivate near-term productivity and profitability
Long-term Incentives (Equity-Based)	Align executive interests with long-term shareholder value
Benefits	Facilitate the productivity of our executives and maintain competitive compensation

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In our investment banking business, relationshipsAlignment between Pay and reputation are instrumental to the creation of long-term shareholder value. Jefferies relies heavily on the productivity of key dealmakers such as Messrs. Handler and Friedman to sustain our level of success. The market for top dealmakers is very competitive, and compensation packages are designed to retain, align, and incentivize top talent in this industry.Performance

 

Messrs. HandlerThe changes we have made over the last several years have resulted in pay and Friedman’s bonus compensation structure reflects their significant direct contributions toperformance being tightly linked, and the elements of our operating results, in particular through identifying strategic opportunities and generating revenues in addition to their executive duties asprogram being completely transparent. In 2017, 96% of our CEO and PresidentPresident’s total target compensation was at risk and 90% of all NEOs’ target compensation was at risk. Equity is a significant component of this compensation, and is a part of both the Annual Bonus program as executive officers at Jefferies.

It is important to note that, although Messrs. Handler and Friedman accepted additional responsibility and assumed senior leadership positions of Leucadia, they received no increase in their compensation.well as the long-term incentive award.

 

Base Salary

 

We pay our named executive officers a base salary in order to provide them a predictable level of income and to reward current and past short-term performance. The base salaries we have established reflect our understanding of the competitive market for these roles.

 

Executive	Role	2017 Base Salary		Role		2014 Base Salary		Commentary
Richard B. Handler		CEO		$1,000,000		§   Former Jefferies salary, which did not increase upon assuming additional responsibilities at Leucadia §   Mr. Handler has not received a base salary increase since 2003
Brian P. Friedman		President		$1,000,000		§   Former Jefferies salary, which did not increase upon assuming additional responsibilities at Leucadia
Joseph S. Steinberg		Chairman of the Board		$810,693		§   Base salary was initially set in 1994 pursuant to his employment agreement, with annual cost of living adjustment only
Michael J. Sharp		EVP & General Counsel		$1,000,000		§   Former Jefferies salary, which did not increase upon assuming additional responsibilities at Leucadia
Teresa S. Gendron		VP & CFO		$500,000		§   Joined Sept. 1, 2014

 

Performance-based Annual Incentive PlanBonuses

 

Performance-based annual incentivesAnnual bonuses are designed to encourage our executive officers to deliver strong annual results, to maximize short-term productivity and profitability and to reward our executive officers for their efforts during the year. Motivating our executive officers to deliver strong short-term results directly impacts our performance, and together with long-term focus and risk mitigation, is key to our success.

 

Annual performance-based incentives for almost all of our named executive officers are based upon pre-determined formulas and financial metrics, which have been chosen because the Compensation Committee believes each is a key driver of the creation of long-term shareholder value. A target level of achievement is set for each metric and executives are compensated based on achievement of each metric. If there are multiple metrics used to rate performance, it is possible to achieve or surpass intended performance on one metric while underperforming on another, resulting in a weighted average earned compensation amount.

Performance Results – Annual Incentive Plans

- CEO and President

 

ForGiven the long-term focus of their compensation plan, our CEOtop two executives, Rich Handler (CEO) and President, our 2014Brian Friedman (President), received no annual short-term incentive bonus plan had a targetin 2016 or 2017. As explained above, 100% of their 2017 incentive value of $6.0 million for each and included two components: 25% of the award was based on Leucadia’s adjusted financial results, while 75% was based on Jefferies’ adjusted financial results. This greater weighting on Jefferies’ results was established to align with the distribution of assets across the Leucadia business portfolio and provide appropriate emphasis on the direct operating results of the respective businesses. For purposes of calculating the formulaic outcome, the Compensation Committee adjusted Leucadia’s performance results to exclude the financial results of Jefferies and the unrealized gain

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on our Harbinger investment. Jefferies’ financial results were also adjusted to exclude the positive accounting impact of the Leucadia combination and the negative impact of Jefferies’ goodwill impairment caused by Jefferies’ decision to find strategic alternatives for its futures business. The Compensation Committee believed that the adjustments were warranted to better reflect Leucadia and Jefferies’ actual results notwithstanding positive GAAP-required adjustments. These adjustments reduced both Leucadia and Jefferies’ performance and, consequently, reduced the formulaic bonuses payable to the executives. The 2014 targets and actual performance metrics, as adjusted, are as follows:

Weight		Sub-		Metric		Target		Adjusted		% Payout of
		Weight						Results		Target
25%		100%		Pre-Tax Operating Profit of Leucadia’s Major Operating Subsidiaries and Associated Companies, excluding Jefferies and Certain Unrealized Gains		$134,771,000		$164,973,000		162%
75%		55%		Jefferies Earnings Before Income Tax		$392,763,000		$284,412,000		0%
		40%		Jefferies Pre-Tax Return on Tangible Equity		12.0%		8.02%		0%
		5%		Jefferies Pre-Tax Profit Margin		13.7%		9.87%		0%

In 2014, Jefferies’ adjusted performance was below target and did not meet the threshold for payment. Leucadia’s adjusted performance, however, was above target. Together, the plan resulted in a formulaic outcome of $2.43 million for each of Messrs. Handler and Freidman.

Although achievement of the Leucadia-related performance target would have entitled Messrs. Handler and Friedman to receive cash bonuses in the amount of $2.43 million each, Messrs. Handler and Friedman recommended to the Compensation Committee that they receive no cash bonus for fiscal year 2014. In consideration of the performance delivered, the executives’ recommendation to forgo their annual formulaic award, and, with a respect for their decisions to be aligned with shareholders and to set strong examples for Jefferies employees, the Compensation Committee exercised negative discretion and reduced Messrs. Handler and Friedman’s 2014 cash bonus to $0.

In direct response to shareholder feedback, for our 2015 incentive plan we removed the pre-tax profit margin metric from the Jefferies portion of the plan and increased the Jefferies pre-tax return on tangible equity to 45%. The Compensation Committee also increased the weight assigned to Leucadia’s broader business from 25% to 50%, while Jefferies’ weight was reduced from 75% to 50%. That change reflected the fact that our Compensation Committee agreed with our shareholders that an equal split was a better reflection on how they expected Messrs. Handler and Friedman to devote their resources.compensation is long-term, performance-based equity.

 

- Chairman

 

At our request, our Chairman serves as a director of some of our portfolio companies. Our portfolio companies benefit from Mr. Steinberg’s investment acumen, years of business experience and his hands-on involvement. Mr. Steinberg serves as Chairman of the Board of both HomeFed and HRG and as a director of Spectrum Brands Holdings, a subsidiary of HRG. Mr. Steinberg also serves on the Jefferies Board. Much of Mr. Steinberg’s time is spent serving our portfolio companies in these capacities. Like his fellow non-employee directors, Mr. Steinberg receives board retainer fees and equity awards in consideration of director services. During 2017, Mr. Steinberg received $596,942 in cash and equity payments as director compensation from our portfolio companies. Our Compensation Committee approved his retaining these amounts and recognized them as constituting his annual incentive bonus plan for our Chairman, which was established in 2003 when he was President of Leucadia, and amended in 2005 and 2006, prior to our combination with Jefferies, contains one metric.

Weight	Metric	Formula	Payout
100%	Pre-Tax Earnings of Leucadia and its Consolidated Subsidiaries	1.35%	$4,936,000

Our Chairman’s bonus of $4,936,000 equaled 1.35% of Leucadia’s pre-tax earnings as required under his legacy bonus agreement, which expired in March 2015 relating to the annual bonus for the period ended December 31, 2014. This is the last contractual bonus payment Mr. Steinberg is set to receive under that agreement.bonus.

 

- General Counsel

 

Our General Counsel’s annual incentive bonus plan was similarprovided that he would receive 0.5% of pre-tax income up to that$800 million in pre-tax income. Our performance of our CEO and President. As mentioned above, Jefferies’ adjusted performance was below target and Leucadia’s adjusted performance was above target. Together, the plan$1 billion in earnings before income taxes resulted in athe maximum formulaic outcome of $693,074$4 million for Mr. Sharp. Based onAfter considering the bonus plan results, as well as Mr. Sharp’s achievements during 2017 as General Counsel and Executive Vice President for Leucadia and Jefferies, the Compensation Committee agreed with Messrs. Handler and Friedman’s recommendation and awarded Mr. Sharp an annual incentive bonus of $4 million payable in cash.

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- Chief Financial Officer

At the recommendation of Messrs. Handler and Friedman, the Compensation Committee awarded Mr. Sharp that performance-based bonus plus an additional $806,926Ms. Gendron $1.15 million as a discretionary bonus. That combined $1.5 million bonus was $500,000 lower than Mr. Sharp’s annual bonus for 2013. The Compensation Committee agreed with Messrs. Handler and Friedman that Ms. Gendron earned the discretionary bonus was warranted to reward Mr. Sharp’s effortsfor her services during 2014 in connection with our transition following our combination with Jefferies as well as his dual roles as General Counsel and Executive Vice President for both Leucadia and Jefferies, and agreed as well that the 25% reduction from the prior’s year’s annual bonus reflected weaker overall businessyear, particularly given Ms. Gendron’s excellent performance statistics.

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- All Named Executive Officers

Below are the year-end bonuses paid to our named executive officers for 2014. Ms. Gendron and Mr. Wheeler’s bonuses were paid pursuant to their respective employment agreements and Mr. Orlando’s bonus was a discretionary bonus awarded to reflect his contributions during 2014 as our CFO prior to his retirement.2017.

	Executive	2014 Bonus
	Richard Handler	$0
	Brian Friedman	$0
	Joseph Steinberg	$4,936,000
	Justin Wheeler	$1,500,000
	Joseph Orlando	$500,000
	Michael Sharp	$1,500,000
	Teresa Gendron	$500,000

 

Long-term Incentive Program2017 Long-Term Equity Incentives

 

Long-term equity incentive compensation provides strong incentives for superior long-term performance and a direct link for our executive officers to the interests of our shareholders, since theshareholders. The value of long-term equity incentive awards increase or decrease based uponon the future price of our shares. Awards of long-term equity incentive compensation also encouragecreate long-term ownership, which we believe is important to promoting a culture of entrepreneurship.

 

In September 2012, Jefferies’- CEO and President

As described above, in December 2016 our Compensation Committee approved the 2013, 2014, and 2015an executive compensation plan for our CEO and President for compensation year 2017 that is based upon performance metrics achieved over a three-year period from 2017 through 2019.

Rigor of Performance Targets

As our shareholders are aware, our Board strongly believes that a well-designed compensation program should align executive interests with the long-term drivers of shareholder value. Therefore, the compensation program is designed to align executive pay with company performance. To incentivize performance, the Compensation Committee set rigorous targets for Messrs. Handlerthe plan that exceeded our historical three-year and Friedman.five-year average performance measurements. In light ofchoosing those targets, the Committee took into account not only the fact that Messrs. Handlerthey exceeded historical targets, but also that Leucadia’s long-term investment horizon naturally results in uneven growth in book value and that, in order to achieve targeted performance, the targeted growth must be compounded over a three-year period. For example, to achieve the target three-year compound annual growth rate of 8% ROTDE for the period January 1, 2017 through December 31, 2019, our tangible deployable equity will have to increase by approximately 26%, or Friedman did not$1.6 billion, to approximately $7.751 billion (and to achieve the maximum performance range of 12%, our tangible deployable equity will have employment agreements with us and consistent with the three-year-grant program that had been in place for a number of years, as part of their 2013, 2014 and 2015 compensation program, our Compensation Committee ratified and approved the 2013-2015 executive compensation program for Messrs. Handler and Friedman that included $13 million of long-term performance-linked restricted stock units for each of 2013, 2014 and 2015 under the Incentive Plan (previously the Jefferies plan)to increase by approximately 40%, or $2.5 billion, to approximately $8.644 billion).

 

Annual ROTDE Targets vs. Historical LUK				Annual TSR Targets vs. Historical LUK
	Performance				Performance

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The 2013, 2014 and 2015 portions of the long-term equity incentive do not appear in the Summary Compensation Table for those years because the entire stock award was granted in 2012, prior to our combination with Jefferies. However, our Compensation Committee views the award as constituting $13 million of each executive’s direct compensation for each of 2013, 2014 and 2015.Performance Metrics

 

The entire long-term equity incentive award granted in 2012Total Shareholder Return (TSR)over a three-year period is subject to the satisfaction of certain performance criteria, with one-thirdused for 50% of the award subjectbecause it is an external measurement directly linked to performanceresults experienced by shareholders. TSR is the annualized rate of return reflecting price appreciation plus reinvestment of dividends and distributions to shareholders and the compounding effect of dividends paid and distributions on reinvested dividends and distributions over each measurement period. After careful consideration we have chosen to use absolute TSR targets rather than relative targets, first, to align more closely to the creation of absolute intrinsic value over time and second, because of the unique and varied components and earnings of Leucadia that make it difficult to find a reasonable comparator.

Three-Year Compound Annual Growth Rate TSR is expressed as the following formula:

[	(Closing Price at December 31, 2019 + Value of Reinvested Dividends)	]	⅓	–1
	Closing Price at December 31, 2016 of $23.25

Return on Tangible Deployable Equity (ROTDE)over a three-year period will be used for each of 2013, 2014 and 2015. If such performance criterion is not met for any of 2013, 2014 or 2015, a portionthe other 50% of the award upbecause the Compensation Committee believes it is an appropriate metric to measure and incentivize the entire award, in respectcreation of intrinsic value for our shareholders. ROTDE is defined as net income adjusted for amortization of intangible assets divided by tangible book value at the beginning of the applicable year will be forfeited. The aggregate grant isadjusted for intangible assets and deferred tax assets. Return metrics such as ROTDE not only measure profitability, but also subjectreflect the use of capital to service-based forfeitureachieve that profitability, which expires at the time Jefferies’ 2015 results are certified.rewards efficient use of our capital.

 

Performance Results – 2014 Portion ofThree-Year Compound Annual Growth Rate ROTDE is expressed as the Long-Term Incentive Planfollowing formula:

 

Metric[	Target((Book Value at December 31, 2016 (less Goodwill, Intangible Assets and Deferred Tax Assets) of $6.153 billion + 3 Years of Net Income (excluding Intangible Amortization and Goodwill and Intangible Impairments))	Actual]	% Payout of Target⅓	–1
	Jefferies Stand-Alone Net Income				$175 million	$157 million	90%Book  Value at December 31, 2016 (less Goodwill, Intangible Assets and Deferred Tax Assets) of $6.153 billion

In 2014, Jefferies’ stand-alone net income of $157 million was below the target performance hurdle of $175 million required to vest this year’s tranche of the 2013-2015 equity award. As such, the target award was reduced by 67,040 shares.

 

Benefits

 

We provide our named executive officers with medical, dental, life insurance, disability, savings, retirement, deferred compensation opportunities and other similar benefits available to employees generally that are not part of what we consider direct compensation. We intend these benefits to be competitive in order to help recruit and retain talented executives. These benefits are designed to facilitate the productivity of our executives, ensure the well-being of our executives, employees and their families, encourage long-term service to us and generally enable our compensation packages to remain competitive. Additionally, certainIn the aggregate, we believe our benefits including perquisites are in-line with or more moderate than general business practices for companies of comparable size and character.

Executive Perquisites

Certain perquisites as disclosed in our Summary Compensation Table are available to executive officers that are not available to other employees. Messrs. Handler, Friedman and Steinberg may use our business aircraft for personal use, subject to an annual $350,000 limitation for each executive, above which reimbursement to us is required. Certain of our executive officers receive the use of cars, drivers for personal and business use, parking expenses and other related benefits. These benefits enhance our executives’ productivity and allow us to be competitive in the talent market. These perquisites are reported as All Other Compensation in our Summary Compensation Table.

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Severance

 

Under our severance policy, employees terminated by us other than for cause are generally entitled to one month’s pay for each year of service, up to a maximum of 24 months. Pay is defined as salary plus bonus (excluding one-time, tenure or holiday bonus). Messrs. Handler, Friedman and Sharp are only entitled to severance under JefferiesJefferies’ policy, which provides that terminated employees, other than employees terminated for cause, are generally entitled to one-half month’s salary for each year of service, up to a maximum of six months (a maximum of twelve12 months for employees with age plus years of service of at least sixty)60). More information is provided under Potential Payments upon Termination of Employment or Change in Control.Change-in-Control.

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Retirement and Deferral Plans

 

WeFor Leucadia employees hired before January 2014, we maintain a Savings and Retirement Plan that allows participants to make contributions, portions of which are matched by us. The plan also provides a contribution for eligible participants determined on the basis of age and service with potential contributions ranging from 2% of eligible compensation up to 16% of eligible compensation.

 

Our deferred compensation retirement plan allows employees with compensation in excess of $130,000 the opportunity to receive an employer contribution ranging from 2% of eligible compensation up to 16% of eligible compensation. The plan does not provide for employee contributions. We also have a deferred compensation plan that permits the deferral of compensation and provides a means for our employees to invest in our shares on a tax deferred basis. These plans are designed as non-qualified deferred compensation plans and are intended to meet the requirements of Section 409A.

 

Employees of Jefferies who began service prior to April 1, 1997, which includes Mr. Handler but none of the other named executive officers, are entitled to benefits under the Jefferies’ pension plan.

 

Executive PerquisitesCompensation Governance Practices

 

Messrs. Handler, FriedmanIn addition to a robust program that ties executive compensation directly to objective financial metrics and Steinberg may usegoals that drive long-term value creation, our business aircraftcompensation program includes other best practices:

		Utilize an independent compensation consultant
		Clear link between pay and performance
		100% of incentive compensation at-risk
		No acceleration of vesting in the event of a change-in-control for equity or other awards held by executives
		No tax gross-ups on change-in-control payments
		No hedging of company stock
		No repricing of stock options
		Robust claw-back policy
		No golden parachute payments

2018 Compensation Program

Although 2018’s executive compensation plan is not up for non-business purposes, subjecta say-on-pay vote until a year from now in May 2019, in our continuing effort to provide as much transparency as possible, we want to preview the approved plan for you here.

As we noted in last year’s proxy, based on our extensive engagement with shareholders, as our Compensation Committee prepared to formulate an annual $350,000 limitationexecutive compensation plan for each executive, above which reimbursement2018 and beyond, it wanted to be sure to incorporate our shareholders’ feedback in the plan. What the Compensation Committee heard from shareholders was that most expected to see cash bonuses as a standard part of overall compensation plans – accordingly, and as we discussed with them, we have incorporated a short-term incentive in the Company is required. Certainnew plan; and there was an understanding of our executive officers receive the use of cars paid for by us, drivers for personal and business use, parking expenses and/or certain other related benefits. These benefits are provided in ordera multi-year grant to enhance our executives’ productivity and asincentivize consistent long-term growth – accordingly, we have adopted a benefitgrant that allows Leucadia to be competitive in the talent market. These perquisites are reported as All Other Compensation in our Summary Compensation Table.applies over a three-year period.

 

InDespite those two changes, as it pertains to each compensation year in question, our new executive compensation plan for our CEO and President is very similar to the aggregate, we believe our other benefits including perquisites are in-line with or more moderate than general business practices for companies of comparable size2016 and character.2017 plans:

 

	■	Our Compensation Committee continues to pursue an annualized target incentive compensation level that is at our peer group median (bearing in mind that, because of the unique nature of Leucadia, there is no peer group that provides a perfect comparison) and has targeted $25 million per year for our CEO and President based on long-term measures of growth in ROTDE and TSR.
	■	As noted above, that $25 million target has now been split between cash ($9 million), the payment of which will be based on ROTDE performance, and equity ($16 million), the payment of which will be based upon TSR performance.
	■	Our plan, though – and in particular its performance-measurement period – continues to be long term in nature, so our executives cannot achieve targeted compensation unless they generate compounded 8% growth over a three-year period in both ROTDE and TSR.

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	■	The cash portion of the plan has a short-term element to it in that, based on meeting annual performance targets, up to one-third of the cash award can be received in each of the three annual measurement periods, though it is long-term in nature because our executives have to generate three full years’ worth of 8% ROTDE in order to receive targeted compensation levels. Even after receiving such cash compensation, it remains subject to a four-year claw-back if our executives are terminated for cause or leave Leucadia and move to a competitor.
	■	The long-term equity portion of the plan continues to require three years’ worth of compounded performance, but relies solely on TSR.
	■	And while performance targets remain at 8%, our Compensation Committee raised the performance thresholds from 4% to 5%, which means that, if performance in TSR and ROTDE are below 5%, our executives will receive no long-term equity or cash compensation.

The table below outlines the plan that is in place for 2018. Because the new executive compensation plan applies to three years (2018, 2019 and 2020), the table would apply as well to 2019 and 2020. As noted, compensation granted under this plan will be up for a vote next year.

Compensation Component		Targeted Amount	Performance Metrics
Annual Base Salary		$1 million	--
Short-Term Incentive		None	--
Long-Term Incentive ($25 million per year)	Cash	Target compensation of $9 million, but paid over three-year period (at $3 million per year) if there is sustained growth in ROTDE	-    3-year performance cycle measured at the end of year one and on a compound basis for the respective two- and three-year periods -     ROTDE (5%, 8%, 12%) -    Targeted 8% growth; ROTDE < 5%, not eligible to receive award for the year -     Multi-year vesting period; cash awards remain subject to clawbacks for four years on pro rata basis from date of payment, with final clawback period ending in January 2025
	Equity	Target compensation of $16 million, but each compensation year’s award is not vested until the end of the three-year measurement period, with ability to bank up to one third of ($5.33 million per year) if there is sustained growth in TSR	-     Matches existing plan -     3-year performance cycle measured at the end of year one and on a compound basis for the respective two- and three-year periods absolute TSR (5%, 8%, 12%) -    Targeted 8% growth; compounded TSR < 5%, not eligible to receive award -     3-year vesting period; award vests first quarter 2021 -     Portions of the overall RSU award may be banked based on annual performance, unbanked RSUs remain available to vest based on sustained TSR growth over remaining performance period

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Plan Design and the Compensation Process

 

Committee’s Process

 

Our executive compensation program is generally structured and administered by our Compensation Committee. The Compensation Committee, in consultation with Messrs. Handler Friedman and Steinberg,Friedman, determines the compensation of our other executive officers. The Compensation Committee considers the views of Messrs. Handler Friedman and Steinberg,Friedman, including their assessments of our executives’ individual performance, and the range of market inputs available, in setting their compensation.

 

The Compensation Committee meets in the firstfourth quarter of each year to determine the compensation levels for the upcoming year, including the target bonus and metrics, and to review prior year results versus plan objectives and determine whether to exercise any negative discretion in approving awards. Additionally, the Compensation Committee reviews shareholder feedback in order to decide if any changes to the compensation program and governance should be implemented.

 

Role of the Compensation Consultant

 

Our Compensation Committee retained Mercer (US) Inc. as an independent compensation consultant to assist the Compensation Committee with conducting a thorough review of our executive compensation practices, including a review of our historical compensation and related practices, an examination of relevant peer and industry practices and recommendations on how best to address compensation matters going forward. For our 2017 compensation program, Mercer was tasked with:

 

§■

Defining the appropriate market comparator group for our executives

	§
	■	Defining a comprehensive compensation philosophy and pay strategy for our future

	§
	■	Defining 2017 incentive program alignment and performance metrics
	■	Evaluating our executive officer compensation against the market, including 20142017 incentive payouts

 

§

Defining 2015 incentive program alignment and performance metrics

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The Compensation Committee also discussed with Mercer the producer roles of Messrs. Handler and Friedman, and assessed comparable potential compensation both as production and revenue-generating senior producers at Jefferies and other top investment banks and as CEO and comparable positions at publicly traded private-equity and hedge-fund firms. An

Benchmarking & Peer Groups

Our Compensation Committee conducts an analysis of the comparable peer compensation was used as a general frame of reference for considering the appropriateness of our compensation. We do not target a specific pay positioning level versus market for any of the range of market fence posts considered, but rather consider the contributionsexecutive compensation programs and roles played by the respective individualsto ensure our CEO, President and the variety of market references.other executive officers’ compensation is aligned with peers.

 

Benchmarking & Peer Groups

In January 2014,With the Committee asked our compensation consultant to conduct an extensive review of executive compensation relative toLeucadia business profile and strategy as a set of industry peers. Various guidelines were considered, including:

§

For all of our executive officers, Mercer reviewed comparable roles at 235 general industry S&P 500 firms with revenues between $4.5 billion and $20 billion

§

For Messrs. Handler and Friedman, Mercer also reviewed CEO roles at the following large U.S.-based investment banks and smaller investment banking/asset management firms: Goldman Sachs Group, Morgan Stanley, Evercore Partners, Greenhill & Co., Stifel Financial Corp. and Lazard

Later in 2014, in response to shareholder feedbackfinancial services and changing market conditions, we also revised and refined our peer group to better reflect Leucadia’s market position. The revised peer group:

§

More accurately represents outside role alternatives for Leucadia’s top leaders

§

Includes firms with significant merchant banking and asset management operations, which aligns with Leucadia’s business model of being a holding company manager that delivers value by enhancing portfolio company operations and maximizing values

§

Continues to include several investment banks, as well as publicly traded private equity firms and holding companies

As a result,merchant banking firm, the peer group has changed substantially from the original group considered. Evercore and Greenhill & Co. were removed due to their size and business alignment, while nine new companies were added.

The following thirteen13 companies were used as compensation peers for our 20142016 and 2017 compensation program:programs:

 

Peer Companies

Goldman Sachs Group, Inc.

Morgan Stanley

ONEX Corp.Corporation

Brookfield Asset Management

Loew’s Corp.Loews Corporation

Blackrock Inc.

Blackstone Group LP

Carlyle Group LP

Lazard Ltd.

Stifel Financial Corp.

Fortress Investment Group LLC

KKR & Co. LP

American Capital Ltd.

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The Compensation Committee believes the peer group provided an appropriate benchmark given the size and scope of our firm. At the beginning of fiscal 2017, Leucadia was in the 62nd percentile of peers when measured on a revenue basis, 54th59th percentile when measured by assets and 46th47th percentile when measured by market capitalization.

 

 

 

Target compensation should be sufficiently competitive with industry peers to attract and retain executives with similar levels of experience, skills and responsibilities. Peer group data serves as only one reference point in evaluating our executive compensation program. Our Compensation Committee compared the components of our 2017 compensation program as well as total compensation to the peer group data and determined that our 2017 compensation program was appropriate and competitive, with 2017 compensation of our CEO and President falling at approximately the 63rd percentile of our peer group for total targeted compensation and the 53rd percentile of our peer group for actual total compensation.

2017 CEO Compensation Aligned with Peers

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Other Considerations

 

Employment Agreements

 

We do not have any continuing employment agreements with our named executive officers other than Mr. Steinberg (which was in place for many years prior to our combination with Jefferies and expires June 2015) and Ms. Gendron (which expires at the end of 2015).officers.

 

Steinberg:Our employment agreement with Mr. Steinberg was not changed upon the combination with Jefferies, and provides for Mr. Steinberg’s employment through June 30, 2015 at an adjusted annual salary of $810,693 (as of July 1, 2014) plus any approved discretionary compensation. No further bonus payments are contractually obligated to be paid as a result of this agreement. We agreed to carry at our expense term life insurance on his life in the amount of $1,000,000, payable to his chosen beneficiary. Additionally, the employment agreement entitles Mr. Steinberg to his personal use of our aircraft, provided that the incremental cost to us does not exceed $1,500,000 per year, which in 2013 Mr. Steinberg voluntarily agreed to reduce to $350,000.

Gendron:Ms. Gendron’s employment agreement with us covers the period through December 31, 2015 and provides for an annual salary of $500,000, a bonus of $500,000 for calendar year 2014 and a bonus of $750,000 for calendar year 2015. Ms. Gendron also received $600,000 as a restricted cash signing bonus, $750,000 worth of restricted stock and a relocation package.

Change-in-Control Agreements

 

We do not have any change-in-control agreements with any named executive officers. No equity held by our executive officers except Mr. Steinberg. Mr. Steinberg is entitledsubject to certain payments under the terms of the employment agreementaccelerated vesting upon a change in control. See Termination Payments upon Termination of Employment or Change in Control below.change-in-control.

 

Newly Established Stock Ownership Guidelines

 

While we do not have formalWe recently adopted stock ownership guidelines for our executivesCEO and employees ownPresident. The guideline is set at 10-times salary, resulting in a large percentagerequirement that each executive hold $10 million worth of our shares. During their tenure as executives of Jefferies, Messrs. Handler and Friedman have historically acquired and held large positions of Jefferies’ stock, which subsequently converted intoin our shares upon our combination with Jefferies.shares. Including 1,950,201 restricted stock units held by each ofall earned and unearned deferred shares, Messrs. Handler and Friedman which vest following our 2015 fiscal year, Messrs. Handler and Friedman beneficially own a combined 16,483,04623,776,329 shares, representing approximately 4.4%6.3% of our outstanding shares. In addition, Mr. Steinberg beneficially owns 24,994,79321,470,733 shares, representing 6.8% of our outstanding shares. As a group, our current executive officers and directors beneficially own 10.1%6% of our outstanding shares. This ownership encourages our executives and directors to act in our best long-term interests and those of our shareholders.

By utilizing long-term equity incentives as part of our compensation policy, we encourage long-term stock ownership that aligns our executives’ interests with our shareholders’ interests and minimizes short-term risk taking at the expense of long-term performance. We seek to enhance this alignment of interests through our use of performance-linked awards, and granting equity awards and cash bonuses with multi-year vesting requirements.

 

Claw-back Policy

 

We have adopted a policy allowing our Compensation Committee to claw-backclaw back performance-based and discretionary awards if the underlying performance metric, or a performance metric considered by the Compensation Committee in approving an award, is corrected, adjusted or deemed to be false. This policy applies to all of our executive officers.

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Anti-Hedging Policies

 

Directors, executive officers and other employees are expressly prohibited from hedging transactions that involve our securities and those of our subsidiaries under our amended Insider Trading and Anti-Tipping Policy. None of our executives have ever hedged our shares. Our anti-hedging policy also prohibits direct and indirect short selling, option transactions of any kind and derivative transactions that involve our securities. The policy does not apply to the exercise of options, warrants or other rights issued by us or any transaction approved in advance by the Compensation Committee.

 

Compensation Risk Management

 

Our Compensation Committee has considered whether our compensation policies and practices reward employees for imprudent risk taking and has determined that our compensation policies and practices, including those of Jefferies, are not reasonably likely to have a material adverse effect on us.

The Compensation Committee’s assessment is conducted annually. Management reviews with our Compensation Committee our compensation programs, focusing on incentive programs, risks and mitigation factors. Based on the totality of this information, the Compensation Committee determines whether any portion of such compensation encourages excessive risk taking and concludes whether or not our compensation programs are reasonably likely to have a material adverse effect on us.

 

In assessing risks, our Compensation Committee considers mitigating factors such as (i) the multiple elements of our compensation packages, including base salary and bonuses, either in the form of restricted cash or equity awards, both of which vest over a number of years; (ii) the structure of senior executives’ incentive program, which is based on a number of different performance measures to avoid placing undue emphasis on any particular performance metric; (iii) the ability to exercise negative discretion as a means to adjust compensation downward to reflect performance or other factors; (iv) oversight of our programs by our Board and Compensation Committee; (v) our claw-back policypolicy; (vi) our anti-hedging policy; (vii) limited change-in-control benefits and (vi)(viii) the lack of highly leveraged payout curves.

 

Tax Considerations

 

Section 162(m) of the Internal Revenue Code generally disallows a public company’s tax deduction for the namedcertain executive officerscompensation in excess of $1 million per executive in any tax year. Under Section 162(m), compensation that qualifies as “performance-based compensation” is excluded from the $1 million deductibility cap, and therefore remains fully deductible even though the executive’s total direct compensation may exceed $1 million in a given year. To qualify as “performance-based compensation,” compensation generally must be based on achieving certain pre-established objective performance criteria or standards that precludes the exercise of discretion to increase the amount of compensation payable upon the attainment of the performance goal.

We believe that ordinarily it is in our best interest to retain maximum flexibility in our compensation programs to enable us to appropriately reward, retain and attract the executive talent necessary to our success. If

In addition, although the Tax Cuts and Jobs Act removed the tax incentive for qualified performance-based compensation beginning in 2018, our goals can be met with compensation that is deductible under Section 162(m), then generally we shall do so. However, our Board of Directors and Compensation Committee recognize that in appropriate circumstancesretained the use of performance-based compensation that is not deductible under Section 162(m) may be paid in the Compensation Committee’s discretion, weighing factors such as the benefit to us in giving compensation deserved byfor our executives and the loss of any potential tax deductions. Additionally, given our available net operating loss carryforwards, we believe that any loss of deductions as a result of suchfor compensation may not be material.

The cost of all share-based payments to employees, including grants of restricted stock, restricted stock units, deferred shares, options and warrants is recognized in the financial statements based on their fair values. The cost is recognizedyear 2018 as an expense overappropriate and valuable tool to continue to align our executives’ interests with the service-based vesting periodlong-term interests of the award.our shareholders.

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Compensation Committee Report

 

The function of the Compensation Committee is to advise senior management on the administration of our compensation programs and plans, review and approve corporate goals and objectives relevant to CEO compensation, review and approve corporate goals and objectives relevant to the compensation of our other executive officers, evaluate the performance of the executive officers in light of those goals and objectives, and set the executive officers’ compensation levellevels based on this evaluation and assist our principal executive officers in formulating compensation programs applicable to our senior management.

 

Our Compensation Committee has reviewed and discussed with our management the above Compensation Discussion and Analysis section of our 20152018 Proxy Statement. Based upon the reviews and discussions, we have recommended to theour Board of Directors that the Compensation Discussion and Analysis be included in the 20152018 Proxy Statement.

 

Submitted by the Compensation Committee of the Board of Directors

 

Robert D. Beyer, Chairman

Robert E. Joyal

Michael T. O’Kane

-------------------

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Summary Compensation Table

 

																										Change
																										in Pension
																										Value and
																					Non-Equity					Non-Qualified
																					Incentive					Deferred
Name and												Stock				Option					Plan					Compensation					All Other
Principal Position(1)		Year		Salary				Bonus				Awards(2)				Awards					Compensation					Earnings					Compensation(3)					Total
Name and Principal Position																																										Year			Salary				Bonus				Stock Awards(1)				Option Awards				Non-Equity Incentive Plan Compensation				Change in Pension Value and Non-Qualified Deferred Compensation Earnings				All Other Compensation(2)				Total
Richard B. Handler		2014		$	1,000,000				—				—					—					—					—				$	474,991	(4)			$	1,474,991				2017			$	1,000,000				—			$	20,430,092				—				—			$	30,795			$	326,398	(3)		$	21,787,285
Chief Executive Officer		2013		$	1,000,000				—				—					—				$	1,823,335					—				$	303,668				$	3,127,003				2016			$	1,000,000				—			$	16,310,967				—				—			$	14,685			$	257,722			$	17,583,374
																																										2015			$	1,000,000				—				—				—			$	6,000,000			$	24,908			$	439,904			$	7,464,812
Brian P. Friedman		2014		$	1,000,000				—				—					—					—					—				$	500,410	(5)			$	1,500,410				2017			$	1,000,000				—			$	20,430,092				—				—				—			$	299,906	(4)		$	21,729,998
President		2013		$	1,000,000				—				—					—				$	1,523,335					—				$	212,295				$	2,735,630				2016			$	1,000,000				—			$	16,310,967				—				—				—			$	404,131			$	17,715,098
																																										2015			$	1,000,000				—				—				—			$	6,000,000				—			$	435,220			$	7,435,220
Joseph S. Steinberg		2014		$	810,693			$	4,936,000				—					—					—					—				$	352,245	(6)			$	6,098,938				2017			$	810,693			$	596,942	(5)			—				—				—				—			$	510,223	(6)		$	1,917,858
Chairman of the Board		2013		$	823,532			$	8,827,656				—					—					—					—				$	377,424				$	10,028,612				2016			$	810,693			$	1,223,955				—				—				—				—			$	480,054			$	2,514,702
		2012		$	783,222			$	23,723,187				—					—					—					—				$	908,711				$	25,415,120				2015			$	810,693			$	859,402				—				—				—				—			$	635,282			$	2,305,377
Teresa S. Gendron		2014		$	166,667			$	1,100,000	(7)		$	750,000					—					—					—				$	418,546	(8)			$	2,435,213				2017			$	500,000			$	1,150,000				—				—				—				—			$	4,500			$	1,654,500
Chief Financial Officer																																										2016			$	500,000			$	1,000,000				—				—				—				—			$	4,500			$	1,504,500
Joseph A. Orlando		2014		$	500,000			$	500,000				—					—					—					—				$	203,770	(9)			$	1,203,770
Former Vice President and		2013		$	512,820			$	1,600,000				—					—					—				$	30,732				$	2,819,043				$	4,962,595
Chief Financial Officer		2012		$	346,000			$	5,010,380				—					$594,813					—					—				$	69,608				$	6,020,801
																																										2015			$	500,000			$	850,000				—				—				—				—			$	4,500			$	1,354,500
Michael J. Sharp		2014		$	1,000,000			$	806,926				—					—				$	693,074					—				$	4,375	(10)			$	2,504,375				2017			$	1,000,000				—				—				—			$	4,000,000				—			$	4,500			$	5,004,500
Executive Vice President		2013		$	1,000,000			$	446,111				—					—				$	1,553,889					—				$	4,377				$	3,004,377				2016			$	1,000,000				—			$	1,000,000				—			$	2,500,000				—			$	4,500			$	4,504,500
and General Counsel																																										2015			$	1,000,000			$	500,000			$	1,000,000				—			$	750,000				—			$	4,500			$	3,254,500
Justin R. Wheeler		2014		$	500,000			$	1,500,000				—					—					—					—				$	177,942	(11)			$	2,177,942
Former Vice President and		2013		$	512,820			$	1,600,000			$	2,722,000					—					—				$	27,938				$	2,709,698				$	7,572,456
Chief Operating Officer		2012		$	314,000			$	4,009,420				—					$594,813					—					—				$	134,621				$	5,052,854

 

 

 

(1)	Ms. Gendron becameGrant date fair value of restricted awards under our Chief Financial OfficerIncentive Plan in accordance with GAAP. Stock Awards for Messrs. Handler and Friedman during 2017 were in the form of Performance-based Restricted Stock Units. These Performance-based Restricted Stock Units are earnable based on September 1, 2014.our performance over the three-year period from 2017 - 2019. The performance goals for these Performance-based Restricted Stock Units are based 50% on our return on tangible deployable equity (ROTDE) and 50% on absolute total shareholder return (TSR). Depending on the level of achievement of performance goals during the three-year performance period, the actual number of shares earned and vested for each executive may range from zero shares to a maximum of 1,612,902 shares.
	The fair value of the 2017 awards to Messrs. Handler and Friedman was determined in accordance with FASB ASC Topic 718. Under FASB ASC Topic 718, the fair value of the awards were determined in a different way for the portion of the awards based on ROTDE as compared to the portion of the awards based on TSR. The fair value of the ROTDE portion of the awards (weighted 50%) is equal to the fair market value (based on the closing price per share of our common stock on the grant date) of 50% of the target number of RSUs granted, based on our determination that, at the grant date, the probable outcome of the ROTDE performance goal would be achievement of the target ROTDE, discounted by 8.6% to reflect the additional three-year holding period following the vesting date. The fair value of the TSR portion of the award (weighted 50%) is determined based on a Monte-Carlo simulation model estimating the probability of future market prices of our common stock with the same 8.6% discount to reflect the three-year holding period following the vesting date. The fair value of the TSR portion of the award is not based on an estimate that the probable outcome will be at the target level, as in the case of the ROTDE portion of the award.
	Further information on the valuation assumptions relating to the stock awards in 2017 can be found in Note 17 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
(2)	This column represents the grant date fair value of time-vested restricted shares granted under the Incentive Plan in accordance with GAAP.
(3)	Some of the items are taxable to the named executive officer.officers. The amount of taxable income is determined pursuant to IRS rules which may differ from the amounts reflected.reflected in the table and in these notes.
	The calculation of the disclosed incremental costCost to us for personal use of our aircraft consists of the incremental costs incurred as a result of personal flight activity, including fuel, expense, repairs, maintenance and maintenance, flight crew meals and lodging. Incremental costs do not include depreciation, hanger rent, insurance, flight crew salaries and benefits and any other expensefixed expenses that would have been incurred regardless of whether there was any personal use of our aircraft. Messrs. Handler, Friedman and Steinberg receive the use of cars and drivers for business purposes as well as personal use. Disclosed amounts for personal use of cars and drivers for each executive are derived based on a 30% allocation of the total cost of driver compensation (including bonus and benefits) and vehicle depreciation and operating costs.
(4)(3)	Includes $322,699$251,911 in personal use of our aircraft, $147,917 related to a driver provided to facilitate transportation to and from meetings, between our offices and for$69,988 in personal use of a car and drivers and $4,500 in contributions to the Profit Sharing Plan (PSP).
(5)(4)	Includes $349,869$217,348 in personal use of our aircraft, $130,828 related to$78,058 in personal use of a company car and driver provided to facilitate transportation to and from meetings, between our offices and for personal use, $15,338$4,500 in options issued as director compensation from HomeFed Corporation and contributions to the PSP.

36

(5)	Represents cash bonus approved by the Compensation Committee but not paid. Bonus amount equals the amount of cash and securities paid to Mr. Steinberg by investee companies for Mr. Steinberg’s service as a director of such investee companies. Amounts paid directly to Mr. Steinberg by the investee companies include $91,000 in cash and $79,987 in equity from HRG, $187,500 in cash from Fidelity & Guaranty Life, $11,542 in equity from HomeFed and $226,913 in equity from Spectrum Brands Holdings.
(6)	Includes $267,663$349,999 in personal use of our aircraft $41,600after considering $102,930 reimbursed to us by Mr. Steinberg for personal use of our aircraft, $104,628 in personal use of cars and drivers, $43,200 in contributions to our Deferred Compensation Plan, $12,178$9,370 in life insurance premiums $27,338and $3,027 in cash and options issued as director compensation from HomeFed Corporation and certain contributions to the Savings and Retirement Plan (SRP). Mr. Steinberg was also provided a company car and drivers to facilitate transportation to and from meetings, between our offices and for personal use for which he reimbursed us $27,122 representing the incremental cost for his personal use.
(7)	Includes a one-time signing bonus of $600,000.
(8)	Consists of $418,546 in relocation related moving expenses, including moving allowance, temporary housing, storage and closing costs incurred in connection with house sale. Taxable amounts of $198,664 were grossed-up to $408,217 and are included in the reported number.
(9)	Includes $31,200 in contributions to our Deferred Compensation Plan, $18,644 related to personal use of a company car, $146,993 in interest on his retention agreement and certain contributions to the SRP.
(10)	Consist of contributions to the PSP.
(11)	Includes $13,000 in contributions to the Deferred Compensation Plan, $24,966 related to personal use of a company car, $133,630 in interest on his retention agreement and certain contributions to the SRP.Plan.

37

2017 Compensation Plan Outcomes

Grants of Plan-Based Awards in 20142017

 

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards												All Other Stock Awards:				Grant Date Fair Value
Name		Grant Date		Threshold  ($)				Target ($)				Maximum ($)				Number of Shares of  Stock (#)(2)				of Stock and Option Awards ($)(3)
Richard B. Handler		2/27/2014	(1)		0				6,000,000				12,000,000				—				—
Brian P. Friedman		2/27/2014	(1)		0				6,000,000				12,000,000				—				—
Joseph S. Steinberg		—			—				—				—				—				—
Teresa S. Gendron		9/1/2014			—				—				—				30,084				750,000
Michael J. Sharp		2/27/2014	(1)		0				2,000,000				3,000,000				—				—
Justin R. Wheeler		—			—				—				—				—				—
Joseph A. Orlando		—			—				—				—				—				—

Incentive Plan Awards to Our CEO and President

				Estimated Future Payouts Under Equity Incentive Plan Awards						Grant Date Fair Value
Name		Grant Date		Threshold (# shares)		Target (# shares)		Maximum (# shares)		of Awards ($)(3)
Richard B. Handler		1/1/2017(1)		537,634(2)		1,075,268		1,612,902		$20,430,092
Brian P. Friedman		1/1/2017(1)		537,634(2)		1,075,268		1,612,902		$20,430,092

 

 

	(1)	Grant date of non-equity incentive compensation awards made bylong-term performance-based RSUs to each executive as discussed in the Jefferies’ Compensation CommitteeCD&A under 2017 Long-term Equity Incentives. RSUs are also subject to service-based forfeitures until first quarter of 2020.
(2)	Threshold assumes meeting 4% compound annual growth rate for the three-year period ending December 31, 2019 for both TSR and ROTDE.
(3)	This column includes the fair value of equity granted to the executives. The fair value was determined in 2012 and ratified and approved by our Board and Compensation Committeeaccordance with GAAP on March 1, 2013, the effective date of our transaction with Jefferies, and again on February 27, 2014.grant date.

Incentive Plan Awards to Other Named Executive Officers

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards						All Other Stock Awards: Number of		Grant Date Fair Value of Stock
Name		Grant Date		Threshold ($)		Target ($)		Maximum ($)		Shares of Stock (#)		and Option Awards ($)(1)
Michael J. Sharp		1/24/2017(2)		—		—		—		42,771		$1,000,000
Michael J. Sharp		1/24/2017(3)		$1,250,000		$2,500,000		$4,000,000		—		—

 

(1)	This column includes the fair value of equity granted to the executives. The fair value was determined in accordance with GAAP on the grant date.
(2)	RepresentsGranted in January 2017 representing part of Mr. Sharp’s 2016 compensation and reported in the number ofSummary Compensation Table as 2016 compensation. The restricted shares issued under our Incentive Plan. The restricted sharesare expected to vest at a rate of 33.33%25% on each anniversary of the date of grant, subject to service-based forfeiture.

(3)	This column includesGrant of performance-based award to Mr. Sharp as discussed in the fair value of restricted shares granted to Ms. Gendron. The fair value was determined in accordance with GAAP on the grant date, and is being recognized as an expense over the vesting period.CD&A under Annual Bonuses – General Counsel.

 

Outstanding Equity Awards at Fiscal Year-End 20142017

 

This table provides information on the holdings of options, restricted stock, RSUs and warrants by our named executive officers at December 31, 2014.2017. No executives held options or warrants at December 31, 2017.

 

				Option Awards									Stock Awards
																									Equity
																									Incentive
																									Plan Awards:
																					Equity				Market
																					Incentive				Payout
																					Plan Awards:				Value of
																					Number of				Unearned
													Number of				Market				Unearned				Shares,
													Shares or				Value of				Shares, Units				Units
				Number of Securities									Units of				Units of				or Other				or Other
				Underlying Unexercised									Stock That				Stock or				Rights That				Rights That
				Options (#)				Option		Option			Have Not				Stock That				Have Not				Have Not
								Exercise		Expiration			Vested				Have Not				Vested				Vested						Stock Awards
Name		Grant Date		Exercisable		Unexercisable		Price		Date			(#)				Vested ($)(6)				(#)				($)				Grant Date		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)(1)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Richard B. Handler		9/19/2012		—		—		—		—				—				—				2013 Related:				2013 Related:			2/19/2016			—				—				1,738,805			$	46,060,944	(2)
																						672,413				15,075,499
																						2014 Related				2014 Related
																						605,373				13,572,463
																						2015 Related				2015 Related
																						672,415				15,075,544
																						1,950,201	(7)			43,723,506	(6)(7)
Joseph A. Orlando		12/13/2012	(1)	101,532		—		$ 22.87		3/31/2015	(10)			—				—				—				—
		12/6/2010	(2)	101,532		—		$ 27.13		3/31/2015	(10)			—				—				—				—
Brian P. Friedman		9/19/2012		—		—		—		—				—				—				2013 Related:				2013 Related:			2/19/2016			—				—				1,738,805			$	46,060,944	(2)
																						672,413				15,075,499
																						2014 Related				2014 Related
																						605,373				13,572,463
																						2015 Related				2015 Related
																						672,415				15,075,544
																						1,950,201	(7)			43,723,506	(6)(7)
Joseph S. Steinberg		3/7/2011	(8)	1,600,000		400,000		$ 33.33		3/7/2016				—				—				—				—
Richard B. Handler																													1/1/2017			—				—				1,088,811			$	28,842,603	(3)
Brian P. Friedman																													1/1/2017			—				—				1,088,811			$	28,842,603	(3)
Michael J. Sharp		—		—		—		—		—				—				—				—				—			1/20/2016			46,069	(4)		$	1,220,368				—				—
Teresa S. Gendron		9/1/2014		—		—		—		—				30,084	(3)			674,483				—				—
Justin R. Wheeler		12/13/2012	(1)	20,306		81,226		$ 22.87		1/2/2019	(9)			—				—				—				—
		12/6/2010	(2)	60,919		40,613		$ 27.13		1/3/2017				—				—				—				—
		3/1/2010	(4)	81,225		20,307		$ 24.01		3/1/2016	(9)			—				—				—				—
		7/25/2013		—		—		—		—				75,000	(5)			1,681,500				—				—
Michael J. Sharp																													1/24/2017			42,771	(4)		$	1,133,004				—				—

(1)	Based on $26.49 per share, the NYSE closing price on December 29, 2017.
(2)	Represents 2016 performance-based compensation that is subject to compound annual growth rates of TSR and ROTDE during the three-year period ending December 31, 2018. 100% of the shares are also subject to service-based forfeiture until first quarter 2019. Includes non-preferential dividend equivalents that are also subject to performance and service-based forfeiture.

38

(3)	(1)Represents 2017 performance-based compensation that is subject to compound annual growth rates of TSR and ROTDE during the three-year period ending December 31, 2019. 100% of the shares are also subject to service-based forfeiture until first quarter 2020. Includes non-preferential dividend equivalents that are also subject to performance and service-based forfeiture.
	Vesting began on January 2, 2014 and become exercisable 20% a year beginning one year from the anniversary date.

(4)

(2)

Vesting began on January 3, 2012 and become exercisable 20% a year beginning one year from the anniversary date.

(3)

Vest at a rate of 33.33% beginning one year from the grant date.

(4)

Vest and become exercisable 20% a year beginning one year from the grant date.

(5)

VestThe restricted shares are expected to vest at a rate of 25% beginning one year from the grant date.

(6)

Based on $22.42 per share, the NYSE closing price on December 31, 2014.

(7)

Represents numbereach anniversary of shares and value of three-year equity incentive award of restricted stock units as part of the compensation program for each of 2013, 2014 and 2015, which do not vest until December 23, 2015 (the day after the Board of Directors or Compensation Committee certifies financial performance of Jefferies for fiscal year 2015) and gives effect to the forfeiture of 67,040 shares described below. 100% of the award is subject to forfeiture and at December 31, 2014, 66.6% of the award remained subject to claw-back based on financial performance of Jefferies. On January 30, 2015, because net earnings attributable to Jefferies Group LLC fell short of performance targets, the Compensation Committee certified that 2014 long-term equity awards to Messrs. Handler and Friedman would be reduced by 67,040 shares each (forfeited value of $1,503,037 by each executive).

(8)

The warrants vest in five equal installments which commenced on May 16, 2011, the date of shareholder approval, and thereafter on March 7th of each subsequent year. The remaining warrants vested on March 7, 2015.

(9)

All unexercised options vested on January 31, 2015 and expire on May 1, 2015 following 90 days from the end of his employment.

(10)

All unexercised options vested on December 31, 2014 and expire on March 31, 2015 following 90 days from his retirement date.grant, subject to service-based forfeiture.

 

Option Exercises and Stock Vested in Fiscal 20142017

 

The table below reflects the options, warrants, restricted stock or RSUs which became non-forfeitable (vested)and RSU vesting during fiscal 20142017 for each of our named executive officers. Shares are valued on the day they vested. None of our named executive officers exercised options or warrants during 2017.

 

		Option Awards								Stock Awards
		Number of								Number of
		Shares								Shares
		Acquired on				Value Realized				Acquired on				Value Realized
Name		Exercise (#)				on Exercise ($)				Vesting (#)				on Vesting ($)
Richard B. Handler			—				—				—				—
Joseph A. Orlando			—				—				—				—
Brian P. Friedman			—				—				—				—
Joseph S. Steinberg			—				—				—				—
Justin R. Wheeler			—				—				25,000				$ 627,000
Michael J. Sharp			—				—				4,323				$ 113,949
Teresa S. Gendron			—				—				—				—

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Michael J. Sharp		15,356		$355,184
Teresa S. Gendron		10,028		$240,171

 

Pension Benefits in 20142017

 

Number

Present

Payments

of Years

Value of

During

Plan

Credited Service

Accumulated Benefit

Last Fiscal Year

Name

Name

(#)

($)

($)

Plan Name

Number of Years Credited Service (#)

Present Value of Accumulated Benefit ($)

Payments During Last Fiscal Year ($)

Jefferies Group

Richard B. Handler

Employees’ Pension Plan

16

219,739

0

Jefferies Group Employees’ Pension Plan

16 (frozen)

290,127

0

 

 

To calculate the value above, we assumed that benefit commencement is at age sixty-five65 (our pension plan’s normal retirement age). We also assumed that 85% of his benefit is paid as a lump sum and the present value of this portion of his benefit was calculated using a lump suman interest rate of 5.50%4.7% and the 2015 post-retirement mortality assumption required under Revenue Ruling 2007-67 and that 15% of his benefit is assumed to be paid as a single life annuity and the present value of this portion of his benefit was calculated using the 4.30%a 3.9% discount rate and RP-2014.RP-2014 annuitant mortality. In addition, the figure provided is based on the discount rate of 4.3% (for more information referage 65 present values discounted back to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014).current age. We also assumed no pre-retirement decrements.mortality.

39

Jefferies first adopted its pension plan in 1964 and stopped admitting new participants into the plan on April 1, 1997. Effective December 31, 2005, benefits under the plan were frozen. All persons who were Jefferies’ employees prior to April 1, 1997, who are citizens or residents of the United States, who are twenty-one21 years of age and who have completed one year of service are covered by ourthe pension plan. The plan is a defined benefit plan, and is funded through our ongoing contributions and through earnings on existing plan assets. The amount an employee will receive as a plan benefit depends on the person’s covered compensation during specific plan years. An employee retiring at age sixty-five65 will receive 1% of the employee’s covered compensation from January 1, 1987, until termination of employment plus 20% of the first $4,800 and 50% of amounts exceeding $4,800 of annual average covered compensation for 1985 and 1986. Benefits under the plan are payable for the remaining life of the participant, and are not subject to deduction for Social Security benefits or other offsets.

 

Since 2004, the amount of covered compensation has been capped at $210,000 per year. An employee who retires upon normal retirement at age sixty-five65 with at least four years of service will receive a full vested benefit. An employee who retires at age fifty-five55 with at least four years of service will receive the normal retirement benefit reduced by ½%1/2% for each month benefit payments commence before age sixty-five.65. Employees who terminate employment for reasons other than death or retirement will be entitled to the vested portion of their benefits at their normal or early retirement age. Benefits vest at the rate of 0% for the first year of service, 33% for each of the next two years of service and 34% for the fourth year of service. The retirement benefits payable at age sixty-five65 for those employees with service prior to January 1, 1987, will be composed of two items: (1) a benefit for service up to December 31, 1986, in accordance with the original plan formula recognizing pay up to $100,000 and (2) a benefit for service commencing on January 1, 1987, equal to 1% of covered compensation through the date of termination.

39

Non-Qualified Deferred Compensation

 

The following table shows the benefits that the named executive officers are entitled to receive under our Non-Qualified Deferred Compensation Retirement Plan established January 1, 2009, our Incentive Plan established on March 1, 2013 and Mr. Handler’s self-directed deferred compensation account which was in place before he became CEO of Jefferies in 2001.

 

Name																		Executive Contributions in Last Fiscal Year ($)(1)		Registrant Contributions in Last Fiscal Year ($)(2)		Aggregate Earnings (Losses) in Last Fiscal Year ($)(3)				Aggregate Withdrawals/ Distributions ($)				Aggregate Balance at Last Fiscal Year End ($)(4)
		Registrant				Aggregate								Aggregate
Richard B. Handler																		—		—		$	41,293,001	(5)			—			$	243,103,101	(6)
		Contributions in				Earnings (Losses)				Aggregate				Balance at
Brian P. Friedman																		—		—		$	5,304,460	(7)			—			$	43,368,872	(8)
		Last Fiscal				in Last Fiscal				Withdrawals/				Last Fiscal
Name		Year ($)(1)				Year ($)(2)				Distributions ($)				Year End ($)(2)
Richard B. Handler			—				(49,447,411	)(3)			—				201,130,237	(4)
Joseph A. Orlando			31,200				23				—				229,988
Brian P. Friedman			—				(15,444,603	)(5)			1,310,937				59,155,686	(6)
Joseph S. Steinberg			41,600				14,301				—				319,297			—		$43,200		$	60,108				—			$	534,861
Justin R. Wheeler			13,000				2,938				—				73,518
Michael J. Sharp			—				(77,506	)(7)			439,841				—
Teresa S. Gendron			—				—				—				—

 

	(1)	Value of shares vesting during the year.
(2)	All amounts are included in the Summary Compensation Table in All Other Compensation.

(2)(3)	Earnings and losses are based upon the investment direction of the named executive officer, the change in value of RSUs and value of dividend equivalents credited as additional RSUs.

(3)(4)	Amounts in the table do not reflect compensation granted in any single year but include reported compensation that has been deferred and market returns on investments that deferred amounts were deemed invested in which have accrued over time. Specifically, amounts in the table consist of (i) contributions resulting from compensation which has been disclosed in previous proxy statements (to the extent the executive was a named executive officer in the year of deferral and the amount was otherwise required to be disclosed under SEC rules then in effect), plus (ii) earnings on deferred amounts, less (iii) distributions. For purposes of this table, earnings include gains and losses in value of the investments into which deferred amounts are deemed invested, including the value of vested RSUs.
(5)	Includes $46,696,127 in decreased$27,911,340 increased value of vested RSUs and dividend reinvestments on RSUs, $2,619,771 in decreased$13,381,661 increased value of Mr. Handler’s self-directed deferred compensation account and $131,513account. The change in decreased value of deferred compensation through our Incentive Plan.RSUs represents the difference in the value of vested RSUs held at the beginning of the fiscal year and the end of the fiscal year and includes the value of vested RSUs acquired during the year as dividend equivalents.

(4)(6)

Includes $183,438,759 attributable to8,042,862 of vested RSUs originally awarded from 2001 through 2012 and dividend reinvestments on those RSUs. The value of RSUs represents the sum of compensation originally earned plus increased value. Includes $17,380,835$30,047,687 in deferred compensation and gains and losses on investments in Mr. Handler’s self-directed deferred compensation account. Also includes $310,643 ofThe deferred compensation through our Incentive Plan on terms that are the same as other Jefferies’ employees who participate. This amount reflects the result of deferring compensationwas earned while heMr. Handler was head of Jefferies’ high yield division, before Jefferies implemented its generally applicable deferred compensation plan and prior to his becoming an executive officer of Jefferies. The last deferral into Mr. Handler’s self-directed deferred compensation account was in 2000.

	(5)	Includes $15,444,603
(7)	Represents the increase in decreasedthe value of RSUs held at the beginning of the fiscal year and dividend reinvestments on RSUsthe end of the fiscal year and $0 change inincludes the value of investmentsvested RSUs acquired during the year as dividend reinvestments.
(8)	Includes 1,637,179 of deferred compensation through our Incentive Plan.vested RSUs originally awarded during 2012.

 

(6)

Includes $59,155,686 attributable to RSUs and $0 of deferred compensation through our Incentive Plan.

(7)

Reflects decreased value of RSUs and dividend reinvestments on RSUs through November 9, 2014 (the date of distribution).

40

Potential Payments upon Termination of Employment or Change in ControlChange-in-Control

 

The following information describes and quantifies (where possible) certain compensation that would become payable under then-existing agreements and plans if the named executive officer’s employment had terminated on December 31, 20142017 other than voluntary resignations or termination for cause.

 

Named Executive Officer Termination Payments

Severance Payments for Messrs. Handler, Friedman and Sharp

 

Messrs. Handler, Friedman and Sharp are subject to the same severance policy as all other Jefferies employees:

 

§■

One-half month’s salary of severance for each year of service, up to a maximum of six months’ pay

	§
	■	If retirement eligible (age plus years of service is greater thanat least 60), severance maximum is capped atincreased to 12 months’ pay

40

Mr. Steinberg and Ms. Gendron are subject to the same severance policy as all other Leucadia employees:

 

	■	One month’s pay for each year of service, up to a maximum of 24 months
	■	Pay is defined as salary plus average bonus (excluding one-time, tenure or holiday bonus)

Handler Deferred Compensation Plan

 

Amounts deferred under Mr. Handler’s individual deferred compensation plan are non-forfeitable, and the occurrence of a change in controlchange-in-control or a termination in connection with a change in controlchange-in-control would not cause a payment or enhancement in the value of his deferral account. Mr. Handler’s deferrals under this plan will be settled upon his termination of employment (subject to Section 409A of the Internal Revenue Code).

Steinberg Termination Payments

Our employment agreement with Mr. Steinberg terminates on June 30, 2015. Under this agreement, if there is a change in control and we terminate Mr. Steinberg or Mr. Steinberg terminates his employment within one year of certain occurrences, Mr. Steinberg would be entitled to a severance allowance of approximately $400,000, which is equal to his salary for the remainder of the employment agreement. We would also be obligated to make $45,000 in retirement contributions on his behalf and pay approximately $12,178 in premiums for life insurance payable to his beneficiaries.

 

Under our Shareholders Agreement with Mr. Steinberg, should the death of Mr. Steinberg have occurred on December 31, 2014,2017, we would have been obligated to repurchase shares from his estate in an amount equal to the life insurance proceeds received by us upon his death, not to exceed $125,000,000. We currently carry a $123,500,000 policy for such purposes.

 

On December 31, 2014, under the 2011 Warrant Plan, the 400,000 unvested warrants for Mr. Steinberg would have vested upon his death. The warrants would have had no aggregate intrinsic value because the exercise price of the warrants exceeded the closing price of our shares at that date. The 2011 Warrant Plan does not provide for any other circumstances for acceleration of vesting upon termination of employment.

Under the terms of the Option Plan, the time within which to exercise vested options will be extended in accordance with the Option Plan, but not beyond the expiration date of the option, for a period of either three months or one year, depending on the triggering event; these triggering events do not result in any acceleration of any unvested options. Upon the occurrence of a change in control, all then-outstanding stock options that have not vested or become exercisable will immediately become exercisable.

Summary of Payments upon Termination or Change in ControlChange-in-Control

 

The table below shows the estimated value of payments to which a named executive officer would have been entitled if the executive’s employment had been terminated on December 31, 2014.2017. For purposes of valuing these amounts, we made the following assumptions:

 

§■

Awards which immediately vest if the named executive officer is terminated following a change in controlupon death or disability are valued at $22.42$26.49 per share, the closing price of our shares on December 31, 201429, 2017

§

Equity awards that remain unvested and do not accelerate are not included in the totals below but will continue to vest according to their terms

§■

Amounts a named executive officer has deferred through our deferred compensation plans are non-forfeitable, so whether theythese amounts continue to be deferred or are paid out following the change in controlchange-in-control or termination of employment does not represent a payment or enhancement to benefits resulting from the change in controlchange-in-control or termination of employment

	§
	■	No payment to a named executive officer would need to be reduced to avoid adverse tax consequences under Code Sections 4999 and 280G. We have no obligation to anyNo named executive officer is eligible to payreceive a “gross-up” payment to offset golden parachute excise taxes under Code Section 4999 or to reimburse the executive for related taxes

	§
	■	Except as otherwise indicated, all amounts reflected in the table would be paid on a lump sum basis

41

		Involuntary
		Termination
		following a				Following a
		Change in				Change in				Involuntary				Retirement				Death or
Name		Control ($)				Control ($)				Termination ($)				($)(7)				Disability ($)
Richard B. Handler			1,000,000	(1)			—				1,000,000	(1)			—				45,226,543	(5)
Joseph A. Orlando			—				—				—				—				—
Brian P. Friedman			569,444	(1)			—				569,444	(1)			—				45,226,543	(5)
Joseph S. Steinberg			462,525	(3)			—				—				—				1,000,000	(6)
Justin R. Wheeler			2,741,044	(2)			—	(4)			2,741,044	(2)			2,741,044	(2)			2,741,044	(2)
Michael J. Sharp			190,972	(1)			—				190,972	(1)			—				—
Teresa S. Gendron			—				—				—				—				750,000	(8)

Name		Involuntary termination following a Change-in- Control				Following a Change-in- Control				Involuntary termination				Retirement(1)				Death or disability
Richard B. Handler		$	1,000,000	(2)			—			$	1,000,000	(2)			—			$	74,903,547	(3)
Brian P. Friedman		$	684,035	(2)			—			$	684,035	(2)			—			$	74,903,547	(3)
Joseph S. Steinberg		$	3,037,321	(4)			—			$	3,037,321	(4)			—			$	1,000,000	(5)
Michael J. Sharp		$	304,843	(2)			—			$	304,843	(2)			—			$	2,353,372	(3)
Teresa S. Gendron		$	356,250	(4)			—			$	356,250	(4)			—			$	—

 

 

(1)

Consists of severance policy payments of $1,000,000 for Mr. Handler (based on almost 25 years of service), $569,444 for Mr. Friedman (based on more than 13 years of service) and $190,972 for Mr. Sharp (based on 4.5 years of service), pursuant to Jefferies’ firm-wide severance policy.

 

(2)(1)

Consists of the accrued payment, including interest, pursuant to the retention agreement.

(3)

Consists of amounts payable under Mr. Steinberg’s employment agreement discussed above.

(4)

Represents the value of unvested options that would have vested upon the occurrence of an Extraordinary Event under the Option Plan. The unvested options would have had no aggregate intrinsic value because the exercise price of the options exceeded the closing price of our shares at that date.

(5)

Represents the value of unvested long-term RSU grants. The aggregate grants are subject to three-year cliff vesting and vest automatically upon death or disability. At December 31, 2014, the aggregate value remains subject to forfeiture, including performance-linked conditions for each of Jefferies’ 2014 and 2015 fiscal years. Amounts do not reflect golden parachute payments or other enhancements to the executives.

(6)

Consists of insurance proceeds payable to Mr. Steinberg’s beneficiaries. Warrants to purchase 400,000 shares of our common stock would have also accelerated upon Mr. Steinberg’s death; however, no value was included above because the exercise price of the warrants exceeded the closing price of our shares on December 31, 2014.

(7)

Does not include certain pension benefits for Mr. Handler under the Jefferies Group Employees’ Pension Plan, as reflected in the Pension Benefits in 2014 table above.2017 table.

(8)(2)	Consists of severance policy payments pursuant to Jefferies’ firm-wide severance policy.
(3)	Represents the value of unvested RSUs and restricted stock that vestwould have vested automatically upon death or disability. No golden parachute payments or other enhancements to the executives would have been made.
(4)	Consists of severance policy payments pursuant to Leucadia’s firm-wide severance policy.
(5)	Consists of insurance proceeds payable to Mr. Steinberg’s beneficiaries.

4241

Proposal 2III - Approval of Executive Officer Compensation

 

We provide our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’sSEC rules. The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our executive officers. Although required pursuant to section 14A of the Securities Exchange Act of 1934, we value this vote as important feedback from our shareholders. Our next compensation advisory vote will occur in 20162018 as our practice is to present this vote to our shareholders annually.

 

We believe that there should be a strong link between executive compensation and our performance and the performance of our named executive officers. This proxy statement contains a detailed description of 20142017 compensation of our named executive officers. The Compensation Committee and theour Board of Directors believe that the policies and procedures articulated are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement will contribute to our long-term success.

 

Accordingly, we ask our shareholders to vote on the following resolution:

 

RESOLVED, that the compensation paid to the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure is approved.

 

TheOur Board of Directors recommends a vote FOR this proposal.

 

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4342

Audit Committee Report

 

Management is responsible for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles and the establishment and effectiveness of internal controls and procedures designed to assure compliance with generally accepted accounting principles and applicable laws and regulations. Our independent auditors PricewaterhouseCoopers, areduring 2017, Deloitte & Touche LLP, were responsible for performing an independent audit of our financial statements and internal controlcontrols over financial reporting in accordance with the standards of the United States Public Company Accounting Oversight Board (PCAOB) and expressing an opinion as to the conformity of our financial statements with generally accepted accounting principles and the effectiveness of our internal control over financial reporting. Our independent auditors havehad free access to the Audit Committee to discuss any matters they deemdeemed appropriate.

 

In performing our oversight role, the Audit Committee reviewed and discussed our audited financial statements with each of management and our independent auditors and discussed with our independent auditors the matters required to be discussed by Auditing Standards No. 16, Communications with Audit Committees, as required by the PCAOB. The Audit Committee has received the written disclosures and letters from our independent auditors in accordance with the applicable requirements of the PCAOB regarding auditor independence and has discussed with the auditors the auditors’ independence. Based on the reports and discussions described in this Report, the Committee recommended to theour Board that our audited financial statements for 20142017 be included in our Annual Report on Form 10-K for the year ended December 31, 20142017 for filing with the SEC.

 

Submitted by the Audit Committee of the Board of Directors

 

W. Patrick Campbell, Chairman

Linda L. Adamany

Robert D. Beyer
Francisco L. Borges

Jeffrey C. Keil

Michael T. O’Kane

Stuart H. Reese

 

-------------------

4443

Selection of Deloitte & Touche LLP as our Independent Accountant Firm FeesAuditors

 

ThePrior to 2017, PricewaterhouseCoopers had served as our independent auditors for over 50 years. During 2017, our Audit Committee has adopted policies and procedures for pre-approving all audit and non-audit work performed byconducted a competitive selection process to determine our independent auditor PricewaterhouseCoopers. Specifically, the Committee has pre-approved certain specific categories of work and an initially authorized annual amount for each category. For additional services or services in an amount above the initially authorized annual amount, additional authorization from the2017. On April 11, 2017, our Audit Committee is required. Theapproved the engagement of Deloitte & Touche LLP as our new independent auditors.

In connection with its selection of Deloitte, on April 11, 2017, our Audit Committee has delegateddetermined that our engagement of PricewaterhouseCoopers would cease effective upon the filing of our Form 10-Q for the quarterly period ended March 31, 2017 with the Securities and Exchange Commission. The reports of PricewaterhouseCoopers on our consolidated financial statements for the fiscal years ended December 31, 2015 and 2016 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ending December 31, 2015 and 2016 and the subsequent interim period through April 11, 2017, there were (1) no disagreements with PricewaterhouseCoopers on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to PricewaterhouseCoopers’ satisfaction, would have caused PricewaterhouseCoopers to make reference thereto in their reports on the financial statements for such years and (2) no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K.

We did not consult with Deloitte during our fiscal years ending December 31, 2015 or 2016 or through the date of their engagement regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and neither a written report was provided to us or oral advice was provided that Deloitte concluded was an important factor considered by us in reaching a decision as to the Audit Committee chairaccounting, auditing or financial reporting issue or (2) any matter that was either the abilitysubject of a disagreement or reportable event as defined in Item 304(a)(1)(iv) and (v) of Regulation S-K.

Fees Paid to pre-approve both general pre-approvals (where no specific, case-by-case approval is necessary) and specific pre-approvals. Any pre-approval decisions made by the Committee chair under this delegated authority will be reported to the full Audit Committee. All requests for services to be provided by PricewaterhouseCoopers that do not require specific approval by the Audit Committee must be submitted to our Chief Financial Officer who determines that such services are in fact within the scope of those services that have been pre-approved by the Audit Committee. The Chief Financial Officer reports to the Audit Committee periodically.Our Independent Auditors

 

The following table sets forth the aggregate fees incurred by us for the following periods2017 relating to our independent accounting firm,services performed by Deloitte & Touche LLP and 2016 relating to services performed by PricewaterhouseCoopers:

 

		Fiscal Year Ended
		December 31,
		2014				2013
Audit Fees		$	8,646,725			$	8,178,000
Audit Related Fees			220,000				456,700
Tax Fees			747,910				1,214,300
All Other Fees			55,600				15,000
		$	9,670,235	(1)		$	9,864,000	(1)

		Fiscal Year Ended December 31,
		2017				2016
Audit Fees		$	8,846,123			$	9,345,179
Audit Related Fees			686,400				837,250
Tax Fees			1,073,447				966,043
All Other Fees			46,190				60,080
		$	10,652,160	(1)		$	11,208,552	(1)

 

(1)

Fees for 20142017 and 20132016 include fees incurred by Jefferies aggregating $7,446,675$8,048,098 and $6,350,000,$7,610,048, respectively. Excluded from 2014 amounts are audit, audit related and tax fees totaling approximately $235,000 paid to PricewaterhouseCoopers by private equity funds, commingled trust funds, and special purpose vehicles that are managed or advised by subsidiaries of Leucadia but are not consolidated with the Company. In the table above, in accordance with the SEC’s definitions and rules, Audit Fees are fees paid to PricewaterhouseCoopers for professional services for the audit of our consolidated financial statements included in our Form 10-K and review of financial statements included in our Form 10-Qs, and for services that are normally provided by the accountants in connection with regulatory filings or engagements. Audit Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. Tax Fees are fees for tax compliance, tax advice and tax planning. All Other Fees are fees for services not included in the first three categories. All services were approved by the Audit Committee.

 

The Audit Committee has adopted policies and procedures for pre-approving all audit and non-audit work performed by our independent auditor. Specifically, the Committee has pre-approved certain specific categories of work and initially authorized annual amounts for each category. For additional services or services in an amount above the initially authorized annual amount, additional authorization from the Audit Committee is required. The Audit Committee delegated to the Audit Committee chair the ability to provide both general pre-approvals (where no specific, case-by-case approval is necessary) and specific pre-approvals. Any pre-approval decisions made by the Committee chair under this delegated authority are reported to the full Audit Committee. All requests for services provided by our independent auditor that do not require specific approval by the Audit Committee are required to be submitted to our Chief Financial Officer to ensure that such services are within the scope of those services that have been pre-approved by the Audit Committee. The Chief Financial Officer reports to the Audit Committee periodically.

We have been advised that representatives of PricewaterhouseCoopers,Deloitte & Touche LLP, our independent auditors for 2014,2017, will attend the Annual Meeting, will have an opportunity to make a statement and will be available to respond to appropriate questions.

44

Proposal 3IV - Ratification of PricewaterhouseCoopersDeloitte & Touche LLP as our Independent Auditors

 

The Audit Committee selected PricewaterhouseCoopersDeloitte & Touche LLP as our independent auditorauditors for 2015,2018, and we are requesting our shareholders to ratify this selection. This proposal is being submitted to shareholders because we believe that this action follows sound corporate practice and is in the best interests of the shareholders. If the shareholders do not ratify the selection, such a vote will not be binding, but the Audit Committee will reconsider the selection of independent auditors. If the shareholders ratify the selection, the Audit Committee, in its discretion, may still direct the appointment of new independent auditors at any time during the year if they believe that this change would be in our and our shareholders’ best interests.

 

TheOur Board of Directors recommends a vote FOR this proposal.

 

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45

Other Corporate Information

 

Biographies of Other Executive Officers

Michael J. Sharp Executive Vice President General Counsel Age: 62	Mr. Sharp has been our Executive Vice President and General Counsel since March 1, 2013. Mr. Sharp is also Jefferies’ Executive Vice President, General Counsel and Secretary, positions he has held since November 2010. Prior to joining Jefferies in September 2010, Mr. Sharp had been a partner with the law firm of Wilmer Cutler Pickering Hale & Dorr LLP. Previously, Mr. Sharp was Deputy General Counsel of Citigroup and General Counsel of Citigroup’s Global Wealth Management, Global Consumer Bank and Global Credit Card business units. Before his twelve years at Citigroup, Mr. Sharp was a litigation associate at Cravath, Swaine & Moore, which he joined in 1992. Mr. Sharp began his legal career as a judicial clerk on the U.S. Court of Appeals for the Eleventh Circuit. Before embarking on a legal career, Mr. Sharp traded U.S. Treasury Bonds from 1981 to 1988. Mr. Sharp received a J.D. from the University of Georgia School of Law (where he was editor-in-chief of the Law Review), an M.B.A. from Cornell University and a B.A. from Fordham University. Mr. Sharp continues to strongly support Georgia Law School, where he serves on the School’s Board of Visitors. In addition, Mr. Sharp is on the President’s Council for Sanctuary for Families, a non-profit dedicated to protecting the victims of domestic violence. Before serving on the President’s Council, Mr. Sharp was on the Board of Directors of Sanctuary for Families for six years.
Teresa S. Gendron Vice President Chief Financial Officer Age: 48	Ms. Gendron, has been our Vice President and Chief Financial Officer since September 1, 2014. From 2011 until her employment with us, Ms. Gendron was the Vice President and Controller of Gannett Co., Inc., an NYSE listed international media and marketing solutions company, and performed the duties of Chief Accounting Officer. Previously, Ms. Gendron was Vice President and Controller at NII Holdings, Inc., a mobile communication services company, which she joined as its Finance Director in 1998. Ms. Gendron began her career in accounting at KPMG LLC in 1991 and is a C.P.A. Ms. Gendron received an M.B.A. from Georgetown University, a Global Executive M.B.A. from ESADE Business School of Ramon Llull University in Barcelona, Spain and a B.S. in Commerce with a concentration in Accounting from the University of Virginia.
John M. Dalton Vice President Controller Chief Accounting Officer Age: 36	Mr. Dalton has been our Vice President, Controller and Chief Accounting Officer since September 14, 2015. Mr. Dalton was the Assistant Controller from 2014 to 2015 and Director of Consolidations and Financial Reporting from 2013 to 2014 of TEGNA Inc./Gannett Co., Inc. Mr. Dalton has held other accounting and audit positions at TEGNA/Gannett since 2004. Mr. Dalton is a C.P.A and received a B.B.A. from James Madison University.
Rocco J. Nittoli Vice President Treasurer Chief Compliance Officer Age: 59	Mr. Nittoli is our Vice President, Treasurer and Chief Compliance Officer. Mr. Nittoli joined us in September 1997 and has served us and our subsidiaries in a variety of capacities, including as our Treasurer since May 2007 and as our Vice President since September 2007. Mr. Nittoli is a C.P.A. and received a M.S. in Taxation from Seton Hall University and a B.A. in Accounting from Rutgers University.

46

Ownership of Our Common Shares

Beneficial Owner(1)		Number of Shares and Nature of Beneficial Ownership(2)				Percent of Class(3)
The Vanguard Group			32,663,871	(4)			9.2	%
BlackRock, Inc.			21,188,997	(5)			5.9	%
First Pacific Advisors, LLC			19,288,883	(6)			5.4	%
Linda L. Adamany			21,075	(7)			*
Robert D. Beyer			88,075	(8)			*
Francisco L. Borges			31,075	(7)			*
W. Patrick Campbell			78,243	(9)			*
Brian P. Friedman			3,477,059	(10)			1.0	%
Teresa S. Gendron			30,084				*
Richard B. Handler			11,020,031	(11)			3.0	%
Robert E. Joyal			23,548	(12)			*
Jeffrey C. Keil			27,001	(13)			*
Michael T. O’Kane			11,757	(14)			*
Stuart H. Reese			27,238	(8)			*
Michael J. Sharp			95,350	(15)			*
Joseph S. Steinberg			21,470,733	(16)			6.0	%
All directors and executive officers as a group (15 persons)			36,459,035				10.0	%

*	Less than 0.1%.
(1)	Except for Vanguard, BlackRock and First Pacific, the business address of each person is c/o Leucadia National Corporation, 520 Madison Avenue, New York, NY 10022. The list of owners consists of our directors, named executive officers and, to our knowledge, all 5% shareholders.
(2)	Shares owned by directors and executive officers at March 1, 2018. Unless otherwise noted, voting and investment power are held solely by the reporting person. Ownership of restricted shares includes voting but no investment power. Ownership of vested options and vested restricted stock units (RSUs) includes the right to acquire voting and investment power within 60 days. Ownership of shares held under the Profit Sharing Plan (PSP) is held by the PSP trustee and include sole voting and limited investment power. Unless otherwise noted, all other ownership of shares reported includes voting and investment power. Ownership of shares reported below as excluded does not include voting or investment power.
(3)	Based on 356,210,074 shares outstanding as of March 1, 2018.
(4)	The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, reported sole voting power over 453,309 shares, shared voting power over 69,132 shares, sole dispositive power over 32,159,367 shares and shared dispositive power over 504,504 shares in its amended Schedule 13G filed on February 9, 2018.
(5)	BlackRock, Inc., 55 East 52nd Street, New York, NY 10055, reported sole voting power over 18,384,785 shares, sole dispositive power over 21,188,997 shares and no shared voting or dispositive power in its amended Schedule 13G filed on January 25, 2018.
(6)	First Pacific Advisors, LLC, 11601 Wilshire Blvd., Suite 1200, Los Angeles, CA 90025, reported shared voting power over 3,853,083 shares, shared dispositive power over 19,288,883 shares and no sole voting or dispositive power in its amended Schedule 13G filed on February 14, 2018.
(7)	Includes 10,931 restricted shares.
(8)	Includes 10,931 restricted shares and 2,000 shares underlying a vested option.
(9)	Includes 10,931 restricted shares and 2,000 shares underlying a vested option. Excludes 37,217 deferred RSUs.
(10)	Assuming Mr. Friedman’s continued employment with us through the expiration of all applicable vesting and deferral periods, he would beneficially own 8,116,679 shares (representing 2.2% of our outstanding shares). The number in the table includes 1,637,179 vested RSUs and 19,818 PSP shares.

47

(11)	Assuming Mr. Handler’s continued employment with us through the expiration of all applicable vesting and deferral periods, he would beneficially own 15,659,650 shares (representing 4.2% of our outstanding shares). The number in the table includes 8,045,392 vested RSUs, 449,337 shares held in a family trust with shared voting and investment power and 102,149 PSP shares.
(12)	Includes 2,000 shares underlying a vested option. Excludes 45,666 deferred RSUs.
(13)	Includes 2,000 shares underlying vested options. Excludes 13,424 deferred RSUs.
(14)	Includes 2,000 shares underlying a vested option. Excludes 58,004 deferred RSUs.
(15)	Includes 62,792 restricted shares and 4 PSP shares.
(16)	Includes 21,270,733 shares held by Mr. Steinberg, corporations wholly owned by Mr. Steinberg, family trusts or corporations wholly owned by family trusts as to which Mr. Steinberg has sole voting and investment power. Also includes 200,000 shares held by Mr. Steinberg’s spouse over which Mr. Steinberg may be deemed to have shared voting and investment power.

CEO Pay Ratio Information

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Richard Handler, our Chief Executive Officer.

To identify the median of the annual total compensation of our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows.

We determined that, as of October 1, 2017, our employee population (other than our CEO) consisted of approximately 12,605 individuals working at Leucadia National Corporation and our consolidated subsidiaries, including all U.S. employees and non-U.S. employees and all full-time, part-time, seasonal and temporary workers. We selected October 1, 2017, which is within the last three months of our 2017 fiscal year, to allow sufficient time to identify and collect the information necessary for this analysis given our large number of employees and the global scope of our operations.

To identify the “median employee” from our employee population, we conducted an analysis of our entire employee population. Given the variety of the jobs filled by our employees across multiple industries, we use a variety of pay elements to compensate our employees. For example, some employees are paid an hourly wage while others are paid a fixed salary. In addition, many of our employees have historically received cash bonuses. Consequently, for purposes of measuring the compensation of our employees, we used payroll data and selected all wages paid (including hourly, overtime and salary) and all bonuses paid as the most appropriate measure of compensation. We converted all foreign currency into U.S. dollars. We used all such compensation paid to our employees for the period January 1, 2017 through September 30, 2017. In making these calculations, we annualized (through September 30, 2017), as permitted, the compensation of those permanent employees who were hired after January 1, 2017.

In our analysis, we did not annualize or otherwise adjust compensation for temporary or seasonal employees and did not make any full-time adjustments for anyone. Additionally, we made no cost-of-living adjustments in our calculations.

With respect to the annual total compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for the entire 2017 fiscal year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.

With respect to the annual total compensation of our CEO, we used $21,787,285, the amount reported in the “Total” column of our 2017 Summary Compensation Table included in this Proxy Statement with no adjustments.

Using this methodology, we determined that the “median employee” among the approximately 12,605 employees working at Leucadia was a full-time, hourly, lead line worker employed at National Beef in Kansas making approximately $44,584 a year. National Beef employs approximately 8,103 of our 12,605 employees.

Based on this information, we estimate that, for 2017, our Chief Executive Officer’s annual total compensation was approximately 489 times that of the median of the annual total compensation of all other employees.

48

Related Person Policy and Transactions

 

TheOur Board has adopted a written policy for the review, approval and ratification of transactions that involve related persons and potential conflicts of interest. Our Related Person Transaction Policy applies to the following Related Persons: each of our directors and executive officers, any security holder who is known to own more than five percent of our shares, any immediate family member of any of the foregoing persons, any entity of which one of our directors is a director or officer (other than when serving at our request), and any entity of which one of our directors has a substantial financial interest (other than through us).

 

Under our Related Person Transaction Policy, a covered transaction includes a transaction or arrangement involving a Related Person in which we are a participant or that would require disclosure in our filings with the SEC as a transaction with a Related Person.

 

Under our Related Person Transaction Policy, Related Persons must disclose to the Audit Committee any potential covered transaction and must disclose all material facts with respect to such interest. All covered transactions will be reviewed by the Audit Committee and, in its discretion, approved or ratified. In determining whether to approve or ratify such a transaction, the Audit Committee will consider the relevant facts and circumstances which may include factors such as the relationship of the Related Person with us, the materiality or significance of the transaction to us and the Related Person, the business purpose and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to us on an arms-length basis and the impact of the transaction on our business and operation.

 

We are a party to a Services Agreement with Mr. Steinberg, dated as of January 1, 2004, pursuant to which we have agreed to provide certain services for Mr. Steinberg and/or his affiliated entities, if such services are requested. Such services include accounting and cash management services, tax services and transportation services. Mr. Steinberg paid us $38,000 for services rendered by us in 2014 under this agreement. Beginning in 2015, we have agreed to only provide Mr. Steinberg and/or his affiliated entities with transportation services, if such services are requested.

Mr. Steinberg’s brother, Morton M. Steinberg, is a senior counsel in the law firm DLA Piper LLP (US). Morton Steinberg does not have an ownership interest in DLA Piper. During 2014,2017, we paid approximately $762,450$207,400 to DLA Piper for legal services rendered to us. This amount represents less than .03%.001% of all fees received by DLA Piper in 2014.2017.

 

We carry term life insurance on Mr. Steinberg in the amount of $1,000,000 payable to his designated beneficiaries. We paid $12,178$9,370 for such policy in 2014.2017.

 

During MarchPrior to the combination of Leucadia and September 2014,Jefferies in two separate closings, we sold to HomeFed Corporation substantially all of our real estate properties and operations, our interest in Brooklyn Renaissance Plaza and cash of about $14.0 million in exchange for 7.5 million newly issued shares of HomeFed common stock. These transactions more than doubled the total assets of HomeFed. The transactions increased our ownership in HomeFed from 31.4% to 65%; however, we agreed to limit our voting rights such that we are not able to vote more than 45% of HomeFed’s total voting securities voting on any matter. We also entered into a registration rights agreement and stockholders agreement with HomeFed that limits our ability to increase or dispose of our interests. Our Chairman is Chairman of the Board of HomeFed and our President is also a director. Our Chairman owns approximately 4.8% of HomeFed primarily resulting from a 1998 distribution to all of our shareholders. At December 31, 2014, our investment in HomeFed had a net book value of $236.6 million and we report HomeFed as an equity investment in our financial statements.

2013, Jefferies has invested in three private equity funds managed by companies controlled by Mr. Friedman, and has acquired interests in the profit participation earned by two management companies that manage these three funds. These two management companies (Fund Managers) serve as the managers of the three private equity funds (Private Equity Funds) and have varying profit participations and other interests in those funds. Mr. Friedman founded the business of the Fund Managers before he became associated with Jefferies; and, the Board of Jefferies approved these arrangements years prior to consummation of our transaction with Jefferies.

 

As of December 31, 2014,2017, Jefferies had committed an aggregate of approximately $146.8 million to the Private Equity Funds and had funded approximately $120.9$127.8 million of these commitments and committed an aggregate of $9.8 million to a Fund Manager and had funded approximately $5.8 million of this commitment. As a result of those investments, commitments and profit participations, Jefferies received distributions from the Private Equity Funds and the Fund Managers in fiscal year 20142017 of approximately $0.3 million and $0.7 million, respectively. $3.5 million.

Included in the $1.24 billion

46

in total equity committed to funds over which Mr. Friedman has control are individual investments of certain of our named executive officers. As a result of their individual commitments, as of December 31, 2014,2017, Mr. Handler and one of our directors had an aggregate interest in the total committed capital in such funds of 0.1% and Mr. Friedman had an aggregate interest of 4.3%. In addition, Mr. Friedman has a substantial economic interest in the Fund Managers and, directly and indirectly, in the carried interest paid by the Private Equity Funds.

 

Through Jefferies’ subsidiaries, Jefferies has performed investment banking and other services for companies in which the Private Equity Funds have invested. In some cases, the Private Equity Funds control those companies in which they have invested. In fiscal 2013, Jefferies received no fee income for investment banking and other services performed for companies in which the Private Equity Funds and other funds overseen by Mr. Friedman have investments. During fiscal 2014, $346,311 was paid to Jefferies Finance, an entity in which Jefferies has a 50% ownership interest and shares control with an independent third party, with respect to loans to companies in which the Private Equity Funds and other funds overseen by Mr. Friedman have investments. As of December 31, 2014, Jefferies Finance did not hold any loans related to the Private Equity Funds.

We employ certain former employees of the Fund Managers who continue to partially work for the Fund Managers under an arrangement Jefferies originally entered into with Mr. Friedman and a Fund Manager in 2005 and a related agreement we entered into during 2014. In 2014,2017, the Fund Manager paid us approximately $3.7$1.7 million for the direct and indirect costs attributed to employees’ work performed for the Fund Managers.

 

We have employed Thomas E. Tarrant, the brother-in-law of our Chief Executive Officer, as ourJefferies’ Head of Marketing since 1997, three years before Mr. Handler was appointed CEO of Jefferies. For his services during 2014,2017, Mr. Tarrant was paid $287,000.$289,000.

We allow our executives and directors to invest in funds managed by us on the same terms offered to other investors. At December 31, 2017, Messrs. Friedman and Steinberg had interests equal to approximately $7.1 million and $583,000, respectively, in such funds.

 

The foregoing arrangements have been approved by our Board and applicable Committees in accordance with our related person transaction policy.

49

Indemnification

 

Pursuant to contracts of insurance dated October 1, 2014,30, 2017 - October 30, 2018, we maintain a combined $140,000,000 indemnification insurance policy covering all of our directors and officers. The annual12-month premium for the insurance is $2,934,971.$2,521,786. Contracted insurance include, Illinois National Insurance Company, 175 Water Street, New York, New York 10038, U.S. Specialty Insurance Company, 111 Town Square Place, Suite 1405 Jersey City, New Jersey 07310, XL Specialty Insurance Co., 100 Constitution Plaza, 17th Floor, Hartford, Connecticut 06103, Hartford Accident & Indemnity Company, 2 Park Avenue, 5th Floor, New York, New York 10016, Continental Casualty Company, 40 Wall Street, 8th Floor, New York, New York 10005, National Liability & Fire, 77 Water Street, 7th Floor, New York, New York 10005, Ironshore Indemnity, Inc., One State Street Plaza, 8th Floor, New York, New York 10004, Endurance American Insurance Co., 767 Third Avenue, 33rd Floor, New York, New York 10017, RSUI Indemnity Company, 945 E. Paces Ferry Rd. Suite 1800, Atlanta, Georgia 30326 and Alterra America Insurance Co., 9020 Stony Point Parkway, Suite 325, Richmond, Virginia 23235.insurers include:

 

	■	Illinois National Insurance Company, 175 Water Street, New York, New York 10038
	■	U.S. Specialty Insurance Company, 111 Town Square Place, Suite 1405 Jersey City, New Jersey 07310
	■	XL Specialty Insurance Co., 100 Constitution Plaza, 17th Floor, Hartford, Connecticut 06103
	■	Hartford Accident & Indemnity Company, 277 Park Avenue, 15th Floor, New York, New York 10172
	■	Berkshire Hathaway Specialty Insurance Company, 100 Federal St, Boston, Massachusetts, 02110
	■	Ironshore Indemnity, Inc., 28 Liberty Street, 5th Floor, New York, New York 10005
	■	Endurance American Insurance Co. 1221 Avenue of the Americas, New York, New York 10020
	■	RSUI Indemnity Company, 1411 Broadway, 34th Floor, NY, NY 10018
	■	Markel American Insurance Co., 1185 Avenue of the Americas, Suite 1600 New York, New York 10036

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who beneficially own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. To our knowledge all such persons filed the required reports on a timely basis during 2014.2017.

 

Forward Looking Statements

 

This document contains “forward looking“forward-looking statements” within the meaning of the safe harborsafe-harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward lookingForward-looking statements include statements about our future. Forward lookingForward-looking statements may contain expectations regarding revenues, earnings, operations, share price, compensation, expenses, tax deductions and other results, and may include statements of future performance, plans and objectives. Forward lookingForward-looking statements also include statements pertaining to our strategies for future development of our businesses and products. Forward lookingForward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward lookingforward-looking statements. Information regarding important factors that could cause actual results to differ from those in our forward lookingforward-looking statements is contained in our Annual Report and other documents we file with the SEC. Any forward lookingforward-looking statement speaks only as of the date on which that statement is made. We will not update any forward lookingforward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.

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Important Information for Our Shareholders

 

Requests for our Annual Report and Governance DocumentsOnline Access to Proxy Materials

 

You may request a written copy ofThis Notice and Proxy Statement and the following documents without charge by writing to our Corporate Secretary, Laura E. Ulbrandt,additional proxy materials are available online at 520 Madison Avenue, New York, New York 10022, or go toLeucadia.com for an electronic copy.astproxyportal.com/ast/08448/:

 

	§■	2014 Annual Report on Form 10-K, including the financial statements and the financial statement schedules as well as any requested exhibits2017 annual report
	§■	Audit, CompensationProxy card and Nominating and Corporate Governance Committee Charters
	§	Corporate Governance Guidelines
	§	Code of Business Practice
	§	Corporate Social Responsibility Principlesvoting instructions

Communicating with our Board

Shareholders and other parties interested in communicating directly with our Board, specific members of our Board, including our Lead Director, or non-management directors as a group may do so by writing to such intended recipients, c/o Corporate Secretary, Leucadia National Corporation, 520 Madison Avenue, New York, New York 10022. The Corporate Secretary will review all correspondence and regularly forward to the recipients a summary of all such correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or committees thereof or that the Corporate Secretary otherwise determines requires attention. All directors may at any time review a log of all such correspondence and request copies. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Chairman of the Audit Committee.

Attending our Annual Meeting

 

Holders of our shares at the close of business on March 23, 2015,29, 2018, the record date, or their representatives are permitted to attend our Annual Meeting. At the close of business on the record date there were 366,724,488357,215,901 shares outstanding and entitled to vote, each of which entitles the holder to one vote on each proposal. Please bring your ID and proof of your share ownership. For safety and security purposes, no cameras, recording devices, amplification devices, large packages or signs will be permitted to be brought into the meeting.

 

Broker Non-Votes

A “broker non-vote” occurs when your broker submits a proxy for the meeting with respect to the ratification of the appointment of independent registered public accounting firm but does not vote on non-discretionary matters because you did not provide voting instructions on these matters.

Abstentions and broker non-votes, if any, will not be counted as votes cast and therefore will have no effect for the purpose of determining whether any of the foregoing proposals have been approved.

Voting

 

Whether you hold shares directly as a shareholder of record or beneficially in street name, you may vote your shares without attending the Annual Meeting. Voting instructions, including instructions for both telephonic and Internetinternet voting, are outlined in the Notice of Internet Availability of Proxy Materials and on your proxy card.

 

		If you are a shareholder of record		If you hold your shares in street name
By Internet (24 hours a day):		astproxyportal.com/ast/08448		proxyvote.com
By Telephone (24 hours a day):		888-776-99621-888-776-9962		1-800-454-86831-800-690-6903
By Mail:		Return a properly executed and dated proxy card in the provided pre-paid envelope we have provided		Return a properly executed and dated voting instruction form by mail, depending upon the method(s) your bank, brokerage firm, broker-dealer or other similar organization makes available

 

The deadline for voting by telephone or using the Internetinternet is 11:59 p.m. EDT on Wednesday,Tuesday, May 20, 2015.22, 2018.

 

Shares represented by properly executed proxies, received by us or voted by telephone or via the Internet,internet, which are not revoked, will be voted at the Annual Meeting in accordance with the instructions contained therein. Subject to the broker non-vote rules discussed above, if instructions are not given, proxies will be votedfor the election of each nominee,for the approval of our executive officer compensation andfor the ratification of our independent auditors. Other than shares held in our PSP,Profit Sharing Plan, your shares will not be voted if you do not return a signed proxy card or vote.vote in person, by telephone or via the internet.

48

What is the difference between holding shares as a shareholder of record and holding in street name?

 

Shareholder of Record.If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, you are considered a “shareholder of record” of those shares.

 

Beneficial Owner of Shares Held in Street Name.If your shares are held in an account at a bank, brokerage firm broker-dealer or other similar organization, then you are a beneficial owner of shares held in street name. In that case, you will have received these proxy materials from the organization holding your account and, as a beneficial owner, you have the right to direct that organization as to how to vote the shares held in your account.

 

Information for PSPour Profit Sharing Plan Participants

 

For participants in our Profit Sharing Plan (PSP), your shares will be voted by Fidelity Management Trust Company, the plan administrator, as you instruct onby returning your signed proxy card. If you sign and return your proxy card but do not designate how your shares should be voted, your shares will be voted as recommended by theour Board of Directors. You may also vote your shares online at proxyvote.com or by telephone by calling 1-800-690-6903. You cannot vote your shares in the PSP in person at the meeting. To allow sufficient time for voting, your vote must be received by no later than 11:59 p.m. ESTEDT on Monday,Friday, May 18, 2015.2018. If you do not provide your vote by that time, your shares in the PSP will be voted pro rata based on the votes timely received by Fidelity.

51

Revocation of Proxies

 

Any proxy may be revoked at any time before it is exercised by giving written notice of revocation to our Corporate Secretary, at our address set forth herein, by executing and delivering a later-dated proxy, either in writing, by telephone or via the Internet,internet, or by voting in person at the Annual Meeting. Attendance at the Annual Meeting will not alone constitute revocation of a proxy. If your shares are held in a brokerage, bank, or other institutional account, you must obtain a proxy from that entity showing that you were the record holder as of the close of business on March 23, 201529, 2018 in order to vote your shares at the Annual Meeting.

 

Required Votes for Each Proposal

Approval of our name change to Jefferies Financial Group Inc. – The approval of our name change requires the affirmative vote of a majority of our outstanding shares.

Election of Directors – Our by-laws require that each director in an uncontested election be elected by the vote of the majority of the votes cast with respect to such director. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director.

Approval of Executive Officer Compensation – The approval of our named executive officer compensation requires the affirmative vote of the holders of a majority of our common shares voted on the matter. The vote is advisory and therefore is not binding on the Compensation Committee, our Board of Directors or us.

Ratification of Deloitte & Touche as Auditors – Ratification of the selection of Deloitte & Touche as our independent auditors requires the affirmative vote of the holders of a majority of the common shares voted on the matter.

Broker Non-Votes and Abstentions

A “broker non-vote” occurs when your broker submits a proxy for the meeting with respect to the ratification of our auditors but does not vote on non-discretionary matters because you did not provide voting instructions on these matters.

Abstentions and broker non-votes will have the effect of votes against Proposal I (Approval of Name Change) and will not be counted as votes cast for Proposals II, III and IV and therefore will have no effect for the purpose of determining whether any of those proposals have been approved.

Requests for our Annual Report and Governance Documents

You may request a written copy of the following documents without charge by writing to our Corporate Secretary, Laura Ulbrandt DiPierro, at 520 Madison Avenue, New York, New York 10022, or go to leucadia.com for an electronic copy.

	■	2017 Form 10-K, including the financial statements and the financial statement schedules as well as any requested exhibits
	■	Audit, Compensation and Nominating and Corporate Governance Committee Charters
	■	Corporate Governance Guidelines
	■	Code of Business Practice
	■	Corporate Social Responsibility Principles

Communicating with our Board

Shareholders and other parties interested in communicating directly with our Board, specific members of our Board, including our Lead Director, or non-management directors as a group may do so by writing to such intended recipients, c/o Corporate Secretary, Leucadia National Corporation, 520 Madison Avenue, New York, New York 10022. The Corporate Secretary will review all correspondence and regularly forward to the recipients a summary of all such correspondence that, in the opinion of the Corporate Secretary, deals with the functions of our Board or committees thereof or that the Corporate Secretary otherwise determines requires attention. All directors may at any time review a log of all such correspondence and request copies. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Chairman of the Audit Committee.

Delivery of Documents to Shareholders Sharing an Address

 

Shareholders sharing the same address may receive one copy of this proxy statement, our Annual Report and Notice of Internet Availability of Proxy Materials, unless a shareowner has asked for a separate copy. If you would like an additional copy of any of these documents, would like to receive a separate copy of these documents for future meetings

52

or would like to receive only one copy if you and another shareholder sharing your address are receiving multiple copies, you should submit this request by writing to our transfer agent, American Stock Transfer and Trust Company, LLC (in writing: 6201 15th Avenue, Brooklyn, New York 11219; by telephone: in the U.S., Puerto Rico and Canada, 1-800-937-5449; outside the U.S., Puerto Rico and Canada, 1-718-921-8200). We will promptly comply with your instructions.

 

Proxy Solicitation

 

We are first mailing this Notice of Annual Meeting, Proxy Statement and proxy card to shareholders on or about April 7, 2015.13, 2018. We bear the costs of our Board’s solicitation of your proxy for our 20152018 Annual Meeting. Our directors, officers and employees may also solicit proxies from shareholders, but will not receive additional compensation, although they may be reimbursed for out-of-pocket expenses. We have also engaged Innisfree M&A Incorporated, a proxy solicitation agent, to assist us with our solicitation and expect to pay no more than $15,000 for theirits efforts. We will also reimburse brokers, nominees, fiduciaries and other custodians for reasonable expenses incurred in forwarding our proxy materials to shareholders.

 

Use of Non-GAAP Financial Measures

The following table reconciles financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial measures presented in our proxy statement. We sometimes use non-GAAP financial information to aid investors in viewing our businesses and investments through the eyes of management while facilitating a comparison across historical periods. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, reported results prepared in accordance with GAAP.

EBITDA is a non-GAAP financial measure and represents pre-tax income exclusive of depreciation and amortization expenses, interest income and interest expense. EBITDA is a common metric used by many investors to evaluate and compare operating performance from period to period.

NATIONAL BEEF
Reconciliation of Pre-Tax Income to EBITDA

($ millions)

		Year ended December 31, 2017
Pre-tax income (loss) (GAAP)			$407
Adjustments:
Interest expense/(income), net			6
Depreciation & amortization			99
EBITDA (non-GAAP)			$512

Shareholder Proposals and Board Nominees for 20162019

 

Shareholders may submit proposals and director nominees for our 20162019 annual meeting which comply with the rules and regulations of the SEC and our By-Laws.by-laws. Proposals submitted pursuant to SEC’s Rule 14a-8 and board nominations for inclusion in our proxy materials and proposals and board nominees submitted pursuant to our By-Lawsby-laws for presentation at our annual meeting, but not included in our proxy materials, should be sent to Laura E. Ulbrandt DiPierro, Assistant Vice President and Secretary, 520 Madison Avenue, New York, New York 10022, and received by us no later than December 9, 2015. Shareholders did not submit any proposals or director nominees for our 2015 Annual Meeting.

Shareholders entitled to vote in the election of directors may present director nominees in accordance with our By-Laws. Generally, notice of director nominees for an annual meeting must be received by us not later than 120 days before the first anniversary of the prior years’ proxy statement, or December 9, 2015. The notice shall include the names and addresses of the shareholder and nominee, a representation that the shareholder is entitled to vote at the meeting and intends to nominate the person, a description of all arrangements between the shareholder and nominee, all information required to be disclosed in a proxy statement soliciting proxies for director elections and other information reasonably requested by us. No material changes to these procedures have been made since our last disclosure.14, 2018.

4953

	•	Annual Meeting Location: AXA Event & ProductionThe Paley Center 787 Seventh Avenue, Auditorium,for Media, Frank A. Bennack, Jr. Theater, 25 West 52nd Street, New York, NY 10019
	•	Directions:You may obtain directions to the Annual Meeting by contacting Laura E. Ulbrandt DiPierro, Corporate Secretary at 1-212-460-1900

 

0

 

PROXY

 

LEUCADIA NATIONAL CORPORATION

 

Proxy Solicited on Behalf of the Board of Directors for Annual Meeting of Shareholders
May 21, 201523, 2018 at 10:00 A.M.

 

The undersigned shareholder of Leucadia National Corporation (the “Company”) hereby appoints Richard B. Handler, Brian P. Friedman and Joseph S. Steinberg and each of them, as attorneys and proxies, each with power of substitution and revocation, to represent the undersigned at the Annual Meeting of Shareholders of Leucadia National Corporation to be held at AXA Event & ProductionThe Paley Center 787 Seventh Avenue, Auditorium,for Media, Frank A. Bennack, Jr. Theater, 25 West 52nd Street, New York, NY 10019 on May 21, 201523, 2018 at 10:00 a.m., and at any adjournment or postponement thereof, with authority to vote all shares held or owned by the undersigned in accordance with the directions indicated herein.

 

Receipt of the 2018 Notice of Annual Meeting of Shareholders, theand Proxy Statement dated April 7, 2015 furnished herewith, and a copy of the Annual Report to Shareholders for the year ended December 31, 20142017 is hereby acknowledged.

 

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTEDFOR ALL NOMINEES ANDFOR ITEMS 21, 3 AND 3.4.

 

(Continued and to be signed on the reverse side)

 

1.1

14475

ANNUAL MEETING OF SHAREHOLDERS OF

 

LEUCADIA NATIONAL CORPORATION

 

May 21, 201523, 2018

 

Important Notice Regarding Internet Availability
of Proxy Materials for the Annual Meeting:

The 20152018 Proxy Statement and the 20142017 Annual Report are available at
http://www.astproxyportal.com/ast/08448/

 

Please sign, date 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

 

0003333333333333000000033333333333333000

07

052115 052318

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW
BELOW AND FOR ITEMS 2PROPOSALS 1, 3 AND 3.4.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx

				Item			FOR	AGAINST	ABSTAIN
In their discretion, the proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment thereof.		1.	Approve our name change to Jefferies Financial Group Inc.			o	o	o
		2.	Election of Directors. Linda L. Adamany Robert D. Beyer Francisco L. Borges W. Patrick Campbell Brian P. Friedman Richard B. Handler Robert E. Joyal Jeffrey C. Keil Michael T. O’Kane Stuart H. Reese Joseph S. Steinberg Item 2. Approve named executive officer compensation on an advisory basis. Item 3. Ratify the selection of PricewaterhoouseCoopers LLP as independent auditors for the year-ended December 31, 2015.			FOR o o o o o o o o o o o o o	o	AGAINST o o o o o o o o o o o o o		ABSTAIN o o o o o o o o o o o o o
			Robert D. Beyer			o	o	o
			Francisco L. Borges			o	o	o
			W. Patrick Campbell			o	o	o
			Brian P. Friedman			o	o	o
			Richard B. Handler			o	o	o
			Robert E. Joyal			o	o	o
			Jeffrey C. Keil			o	o	o
			Michael T. O’Kane			o	o	o
			Stuart H. Reese			o	o	o
			Joseph S. Steinberg			o	o	o
		3.	Approve named executive officer compensation on an advisory basis.			o	o	o
		4.	Ratify Deloitte & Touche LLP as independent auditors for the year-ended December 31, 2018.			o	o	o
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	In their discretion, the proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment thereof.

 

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.

ANNUAL MEETING OF SHAREHOLDERS OF

 

LEUCADIA NATIONAL CORPORATION

 

May 21, 201523, 2018

 

PROXY VOTING INSTRUCTIONS

PROXY VOTING INSTRUCTIONS

 

INTERNET -Access ““www.voteproxy.com”www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page, and use the Company Number and Account Number shown on your proxy card.

 

TELEPHONE -Call toll-free1-800-PROXIES(1-800-776-9437) in the United States or1-718-921-8500from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call and use the Company Number and Account Number shown on your proxy card.

 

Vote online/phone until 11:59 PM ESTEDT the day before the meeting.

 

MAIL -Sign, date and mail your proxy card in the envelope provided as soon as possible.

 

GO GREEN -e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.comwww.astfinancial.com to enjoy online access.