Storied investment bank Lazard posted an unexpected loss in its fourth-quarter results yesterday. Employees may not mind, however, as the main explanation for the shortfall was a surge in compensation costs.

Even after excluding one-off charges, pay as a percentage of operating revenue at Lazard jumped from 56% in 2008 to 72% in 2009. A revamp of the firm’s pay policy has made rewards that were once deferred over several years vest more quickly, the bank explained. Chief executive Kenneth Jacobs described the new approach as “playing offense, not defence.” As larger rivals introduce more restrictions—if not outright cuts—to compensation, this strategy is likely to attract a wider pool of players for Lazard to pick for its team.

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