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EY break-up plan could pay partners $8m in shares

Partners in the audit business are reportedly set to receive a cash payout from the initial public offering worth about two to four times their annual pay under the plan

EY’s plan to split its audit and advisory operations is set to hand partners shares worth up to $8m (£6.5m) each, according to the Financial Times.

The Big Four firm is preparing to break up its global business, and it reportedly hopes to sell 15% of the firm’s consulting business in a $10bn (£8.1m) public listing, leaving 70% in the hands of EY’s partners.

The Financial Times said that partners joining the new consulting business are expected to receive shares worth between seven to nine times their annual remuneration, potentially reaching a value of $8m (£6.5m).  

Partners in the audit business are set to receive a cash payout from the initial public offering worth about two to four times their annual pay under the plan, which the Financial Times said would be about $2m (£1.6m) based on average salaries of $850k (£692k) to $900k (£733k) a year.

The company reportedly intends to borrow about $17bn (£13.8m), with some of the money needed to pay the audit partners, and 15% of the new business would be reserved for equity incentives for staff, although the plans are a work in progress and could change or be abandoned altogether.

EY’s member firms will vote on the proposals in the autumn, and it remains unclear how some departments, such as tax, would be split and whether they would be considered part of audit or consulting. 

EY told Accountancy Today: “We are in the process of evaluating strategic options that will drive value for all our stakeholders – EY people, clients, and partners – and serve the public interest. We undertake this evaluation from a position of strength across all aspects of our business and all regions across the EY Global network. 

“No decision has been made. Any option we choose would build on that position of strength and provide the whole EY organisation with a compelling future with opportunities for EY people, one that sustains high audit quality, and advances our purpose of building a better working world.”

It added: “Any significant changes would happen in consultation with regulators and after a vote of approval by EY partners.”

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