(Bloomberg) -- Jefferies Group Inc. and Goldman Sachs Group Inc. led Wall Street’s largest securities firms in average compensation per employee at midyear, widening a lead over JPMorgan Chase & Co.

Jefferies set aside $870 million in the first six months of its fiscal year, enough to pay its 3,809 employees an average of $228,407. Goldman Sachs set aside $225,789 for each of its 32,300 workers. Average pay for the 26,553 people in JPMorgan’s investment bank was $184,989, or at least 18% less than Jefferies’s and Goldman Sachs’s reported figures. It was 10% less than both in fiscal 2011.

Wall Street firms are grappling with how much to pay staff as a slump in trading and mergers pressures revenue and expenditures. Jefferies and Goldman Sachs, both based in New York, have been positioning themselves for a rebound in securities businesses while JPMorgan, which is 64 times larger than Jefferies, absorbs a $5.8 billion trading loss this year in its chief investment office.

“If you’re extremely large in today’s economy, chances are you’re trying to scale down or cut costs,” said Jeanne Branthover, a managing director at Boyden Global Executive Search Ltd. “By staying nimble, flexible and smaller, you can keep your costs down, you can hire the best because you can give them the incentives needed to be the best and stay there,” she said of Jefferies.

Slow Start

Goldman Sachs, run by Chief Executive Officer Lloyd C. Blankfein, 57, includes consultants and temporary staff when reporting headcount. Jefferies, which has been luring talent from larger rivals to expand in the wake of 2008’s credit crisis, tallies only full-time workers in its disclosures.

Jefferies’s reported headcount would expand by 10% to 15% if the firm included temporary workers, said a person with direct knowledge of the figures who requested anonymity because the information isn’t public. While that would place the firm’s average pay per employee below Goldman Sachs’s, it still exceeds JPMorgan’s and Morgan Stanley’s.

Wall Street’s five biggest U.S. banks -- Bank of America Corp., Citigroup Inc., JPMorgan, Morgan Stanley and Goldman Sachs -- reported the worst start to a year since 2008. Combined first-half revenue at those firms fell to $161 billion, the lowest since $135 billion four years ago. Net revenue at Jefferies, which has less assets than Paramus, New Jersey-based Hudson City Bancorp Inc., was little changed in the first half of the fiscal year, which ends Nov. 30, from a year earlier.

Morgan Stanley

JPMorgan, led by CEO Jamie Dimon, 56, said this month it accepted an offer from former Chief Investment Officer Ina Drew, 55, to return about two years of compensation. Other London- based managers involved in the CIO’s synthetic-credit bets left without severance and will be required to forfeit as much as two years of pay, New York-based JPMorgan said.

Goldman Sachs Chief Financial Officer David Viniar, 57, said this month that the firm is targeting an additional $500 million in expense reductions that will mostly come from compensation. The bank plans to add junior employees to try to strike a balance to avoid losing talent.

Morgan Stanley set aside $8.06 billion for compensation in the first half of 2012 for the entire firm, a 9.5% decrease from a year earlier. Average compensation for the company’s 58,627 workers was $137,548. Pay at JPMorgan’s investment bank declined 16% to $4.91 billion and Goldman Sachs set aside $7.29 billion, a 14% drop. Jefferies’s first-half compensation fell less than 1%.

Hiring Strategy

Employees at Jefferies, which has $35.7 billion in assets compared with Goldman Sachs’s $949 billion and JPMorgan’s $2.29 trillion, are often producers “on their own basis and relationships,” while bankers and traders at the other two banks are more tied to their companies’ brands, said Paul Sorbera, president of executive search firm Alliance Consulting.

“If you produce you are more proportionately paid by the numbers than at JPMorgan or Goldman Sachs,” Sorbera said.

Richard Khaleel, a Jefferies spokesman, declined to comment, as did Goldman Sachs’s David Wells and Jennifer Kim at JPMorgan.

Jefferies’s compensation-per-employee numbers reflect the firm’s hiring strategy in the wake of the financial crisis, Branthover said. The company, run by CEO Richard Handler, 51, added bankers and traders as its biggest rivals contracted. Jefferies’s headcount has increased 68% from 2,270 in the fourth quarter of 2008. Brian Friedman, chairman of the firm’s executive committee, said in June that Jefferies’s goal is to grow deeper in the products and geographies it occupies.

‘Wisely Built’

It’s an “example of how smart Jefferies is and how they really built very wisely,” Branthover said. “But also, they’re not too big.”

Key hires include Benjamin Lorello, who joined from Zurich- based UBS AG in 2009 to be global head of investment banking and capital markets. Lorello, 59, was joined at Jefferies by 36 of UBS’s health-care bankers.

Wall Street firms typically reserve a portion of revenue throughout the year for employees, awarding much of the money as year-end bonuses. Average pay per worker doesn’t reflect the amount of money employees actually receive and could be driven by the amount of deferred cash or restricted stock awarded. Top executives and revenue producers sometimes receive multimillion- dollar awards, while clerical workers get smaller salaries.

Securities firms often report their compensation numbers differently. For example, JPMorgan divides its quarterly reports and compensation figures into business lines, including the investment bank, commercial banking and asset management, while Jefferies doesn’t.

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