What’s this? Not Financial Times reporting that EY partners will have about two percent of their annual compensation “taken to help the firm manage cash flow” after the firm’s wallet took a hit for FY24! *distant sound of small violins begins to crescendo*
US partners at EY have been told the firm will hold back some of their pay for 2024 after a tough financial year that has left the accounting firm’s leaders facing criticism from their rank and file.
The decision to defer around 2 per cent of partners’ annual compensation was taken to help the firm manage cash flow, according to people familiar with internal communications, and has compounded disappointment over relatively modest pay increases for the financial year that ended in June.
…
EY has also cut the proportion of expected profits for the current year that it pays partners in advance in monthly installments, deferring more than usual to be paid after the end of the fiscal year.
So we can safely assume those accounting tricks they were going to use to plug the giant hole left by Project Everest didn’t work out eh? Managing Partner Julie Boland apparently got an earful from partners on a recent webcast, partners being annoyed that they didn’t get the million-dollar payouts Everest cheerleaders promised and wanting someone to pay for this whole mess. Remember when Carmine said the firm was missing out on $10 billion in consulting cash due to conflicts of interest Project Everest would have liberated it from? Maybe they shouldn’t have named it after a mountain known for hosting hundreds of dead bodies belonging to brave and adventurous people who attempted to climb it.
Let’s update that old slide EY created to sell the Project Everest audit/consulting split to staff.
Related:
Anyone at EY who got boned on a promotion and/or bonus this year — and there were many — should at least feel somewhat better knowing partners got screwed a little too. Maybe.
Will the deferred pay make its way back into partners’ pockets when consulting warms up again? Nope. FT says they’ll have to wait until they retire or leave “since it will be added to the capital they are required to keep in the firm.”
EY revenue isn’t out yet, it’s either them or PwC due to report next after Deloitte. Our guess was PwC due to their recent layoffs which often accompany crunching of the final numbers for the year but who knows at this point. EY’s revenue results usually show up mid-to-late September and PwC in October. Clearly EY is deferring the matter.
What we do know is it’s safe to assume Deloitte has won the revenue race for FY24.
EY to hold back some pay from US partners after tough year [Financial Times]
The problem with accounting firms is that they’re run by accountants. Accountants don’t know how to run a business any more than a marketing moron knows how to draft a balance sheet or a sales prick knows how to prepare a tax return. The accounting firms should hire real business leaders to run their business, but they are too stubborn and greedy to do so. So they constantly make stupid business decisions that cost them a shit ton of money over the long run.
It has always amazed me that companies pay millions of dollars to these accounting firms for advice and help with running their business, while at the same time the accounting firms can’t manage their own business.
B4V, who would you describe as being good at running a business? If accountants are so bad at this, would private equity actually be an improvement?
The Fortune 500 is littered with high level executives who know how to run a large organization.
I mean, isn’t this what every company is normally roasted for NOT doing? I’m quite surprised to see executives cutting compensation while also still giving raises to the worker bees. Especially as one of the worker-bees, I’m thankful to see the executive layer taking a comp cut while I still got my raise.
What a bummer, now that partner with 2 beach vacation homes and a hot air balloon won’t be able to afford a new accessory for their hot air balloon.
I was really looking forward to hearing the latest hot air balloon accessory that partner purchased on our next all hands call 🙁
Please tell me you’re being facetious and that didn’t actually happen.
The only thing that may not be true is that this information was shared during an all hands call with the ENTIRE firm.
I can’t remember if it was an industry/service line/other group specific all hands but it indeed was mentioned…it might’ve been hard to pick up in between all the dialogue saturated with buzzwords.