Executive Pay And Bond Ratings

So what determines a bond's credit rating? There are a lot of factors including the debt-equity ratio, liquidity ratios, industry forecasts, etc. The Jeffries Group recently paid its top executives a total of $78 million, including $19 million to chief executive Richard B. Handler. In general, bond ratings are not directly affected by executive compensation. However, in this case, Moody's warned that the Jeffries Group bond rating was "credit negative," meaning that the pay could result in a downgrade on the company's bonds. Moody's felt that the pay could result in excessive risks at the company.