“Market slowdown”
On Saturday, Financial Times reported that due to a “market slowdown,” EY UK has gotten rid of a small number of partners and given out annual salary increases of 2.2% to its 4,400-person tax advisory business. It was six percent in 2023 and 10 percent in 2022. FT said bonuses would be smaller as well (£500 for junior staff — that’s $655 USD — to £4,000 for directors) and explained the math thusly:
Bonuses for EY employees are calculated using a “variable performance share price” system where each employee has a specified number of “shares” according to their rank, people familiar with the matter said. The number of shares is multiplied by the value of one share — a figure set by management each year — to determine what bonuses are paid out.
High performers would, as always, receive more though no number was given. EY brazenly told FT that its tax practice “continues to grow” and said that raises and bonuses “vary based on individual and business unit performance.”
FT said tax advisory usually does OK during market turbulence, or at least shouldn’t be suffering as hard as deals and consulting in this market.
The firm gave the same spiel about difficult market conditions last year, saying that due to rising costs and a difficult economic outlook, just about everyone would get a smaller bonus as it cut the raise and bonus pool by about 30%. The firm wouldn’t tell FT what raises and bonuses were for other service lines this year, hopefully some birdies with big flapping mouths are in reporters’ inboxes right now spilling those specifics.
After peaking at 11.1% in October 2022, consumer price inflation in the UK was down to 2% in the 12 months to June 2024 with services inflation at 5.7%. Taylor Swift was partially blamed for the higher-than-expected 2% increase (we’re not joking). Core CPI was at 3.5% as of June, officially making these raises a pay cut assuming EY UKers use energy and pay rent.
Chart source: Trading Economics
EY UK partner pay took a hit last year, dipping from £803,000 ($1.1 million USD) in 2022 to £761,000 ($997k USD) for the year ended June 30, 2023.
We’ve seen similar disappointment here on our side of the pond with some EYers reporting NO raise or bonus this compensation season. Y’all, they want you to quit. How many times do we have to say this.
EY cuts pay rises and bonuses for UK tax staff after slower year [FT]