Frank O’Keeffe, currently at the helm of EY Ireland, is rumoured to be a potential candidate for the role of the next senior partner to head EY’s operations in the UK. The search for a replacement for Hywel Ball, who confirmed his plans to step down in June, puts O’Keeffe in the spotlight alongside others such as Anna Anthony, UK’s financial services managing partner, and Stuart Gregory, managing partner for finance and transformation.
Simultaneously, EY is handling the effects of market slowdown, prompting a pay cut and job losses in its tax division. EY’s workforce of 4,400 in its tax advisory sector was informed about an annual salary hike of 2.2 per cent – a drop from 6 per cent in 2023 and 10 per cent in 2022. It is also anticipated that bonuses for the fiscal year ending in June will be scaled back, and a few tax partners will be let go.
This pay scale restriction is seen as a response to a challenging period in the sector, with other industry giants such as PwC offering a 3 per cent rise to the majority of its UK staff in July, down from previous years. Internal sources revealed that salary and bonus payments are adjusted according to the performance of distinct service sectors and the market landscape.
Facing a similar decline in service demand due to tough economic circumstances, EY followed the lines of the Big Four, namely Deloitte, KPMG and PwC, and initiated a cost reduction programme last year. This programme was in the wake of Project Everest’s failure, a scheme aimed at dividing its audit and consultancy branches globally, which led to significant job cuts in the UK.
The decision to provide smaller salary increases and bonus payments will have an effect on the workforce. The company’s owners and managers, known as partners, receive their compensation from the business’s profits. The typical payout for a partner was £761,000 (€903,000) in the prior year.
Warnings were given to some partners of the company in April that the challenging economic climate could lead to a decline in the profit per partner by up to 15 percent for the recent fiscal year. The UK operation of EY typically discloses its annual financial results in October.
The approach used to calculate bonuses for EY’s workforce is known as a “variable performance share price” mechanism where each member of staff is allocated a certain number of “shares” based on their rank, according to insiders. The aggregate worth of one’s bonus is determined by multiplying the allocated number of shares by the price of a single share, which is determined annually by the business’s leadership.
The interpretation of this mechanism has meant that for the current year in EY’s tax department, bonus payments varied from £500 for entry-level staff to £4,000 for people at the directorial level, as reported by a source. Additional bonuses are given to employees acknowledged as high-achieving performers, the source further revealed.
EY acknowledged that its tax arm is “progressing in its expansion”, stating: “Salary increases and bonus amounts also fluctuate according to the performance of both the individual and their respective business section” – The Financial Times Limited 2024 holds the copyright.