Jefferies Chief Executive Richard Handler and Brian Friedman, who is chairman of the executive committee, will each be eligible to earn up to $13 million a year from 2013 to 2015, with bonuses dependent on performance and subject to claw-back provisions, the company said in a regulatory filing on Friday.

Jefferies shares reversed a decline to close 1 percent higher on news of the compensation plans.

Each executive will get a $1 million salary and up to $12 million in bonus awards each year.

Bonuses will be based upon reaching targets for earnings per share, return on equity and pre-tax profit margin. Friedman will also have his bonus reduced by any annual compensation he receives from Jefferies Capital Partners LLC, a private-equity firm associated with the bank. Friedman is president of that entity.

A subcommittee of the board of directors will decide whether to award the bonuses in cash, restricted stock or restricted stock units.

Handler's pay package for fiscal 2011 amounted to $1 million in salary and a $13 million bonus in the form of restricted stock that vests from 2010 to 2012, according to a proxy filing.

Friedman earned a $750,000 base salary and a $9.75 million bonus in restricted stock that vests from 2010 to 2012.

Both executives turned down additional pay-for-performance bonuses last year.

Jefferies disclosed its plan for future executive pay a day after analysts peppered executives with compensation questions on an earnings conference call.

Jefferies paid employees 59.6 percent of net revenue, in line with the previous quarter, but above the 50 percent ratio that industry peers generally target. Three analysts asked management about the figure and how they expect it to change in the future.

Jefferies shares fell 7.3 percent on Thursday, closing at $14.52, and fell as much as 3 percent further on Friday before the investment bank disclosed the pay plans. The stock closed up 1 percent at $14.66 on Friday.

(Reporting by Lauren Tara LaCapra; Editing by Gary Hill and Dan Grebler)

By Lauren Tara LaCapra