| Image Credits: EY HQ in New York City “One Manhattan West July 2024” by Kidfly182
US partners at EY will see part of their 2024 compensation deferred after a tough financial year, intensifying internal dissatisfaction and raising concerns about leadership accountability, the Financial Times reported.
The decision to hold back approximately 2% of partners’ annual pay comes after a year marked by modest increases in compensation and growing criticism of leadership, particularly following the failure of the firm’s Project Everest initiative, a plan to spin off its global consulting and tax advisory business into a new public company. EY called off the plan last year after hundreds of millions of dollars had already been invested.
EY’s leadership has decided to defer a portion of partners’ annual earnings to help manage the firm’s cash flow. The deferral is attributed to a gap between accrual and cash income, as some invoices have remained unpaid.
Adding to the internal challenges, US regulators have scrutinized EY’s US operations for poor audit quality scores. This has prompted a review of the firm’s internal processes and contributed to a decline in its share of the US audit market.
EY has yet to release its global revenue figures. However, it is understood that the firm, which traditionally derives 40% of its global business from the US, has been affected by a slowdown in consulting activity across the Big Four firms. Consulting revenues across the industry have slowed post-pandemic, further hindering the firm’s financial performance.
As the firm navigates these challenges, it remains to be seen whether recent measures will be enough to address the concerns of its partners and restore confidence in the leadership.
