PracticeAccounting FirmsOtty outlines partner profit pool plans

Otty outlines partner profit pool plans

Profits look set to be divided up according to living standards in different countries

Ernst & Young has given its strongest indication yet of how partner
profits will be split under its planned merger of 86 practices.

In an
interview
with the Sunday Times
, Mark Otty, the head of the new firm indicates that
the firm will publish its numbers in a consolidated form. Payouts will depend
upon a ‘common approach to partner evaluation and compensation’ and then be
quantified according to different countries’ standards of living.

Otty told the paper that the national practices will remain separate legal
entities and that E&Y will not be ‘moving money between legal entities
without economic substance.’

The comments are the most explicit outline of what will happen to partners’
profit pools once the merger has been pushed through, and are likely to be the
most delicate issue in partner votes on the plans.

In the interview, Otty also indicates that the move will not necessarily
reduce fees for clients. ‘This is not about reducing costs, it’s about more
consistent and better quality service for clients — and the reality is it costs
to move people around the world.’

Further Reading:

Read
The Sunday Times interview

Backgrounder

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