EY US reshuffles management following failure of spin-off plan
EY’s US chairman Julie Boland has reshuffled the firm’s management, boosting loyalists after winning a power struggle with the global heads of the Big Four accountancy firms that thwarted plans to spin off the consulting division.
The personnel changes come as part of a broader rethink of the management of EY’s largest member firm, the US business, which accounts for about 40 percent of the group’s $50 billion in revenue, after its partners reacted angrily to the collapse of the spin-off. .
The plan, code-named Project Everest, would have provided cash or a capital windfall to EY’s 13,000 global partners through the consulting division’s initial public offering. But Boland called it quits last month, after almost a year on the job and shortly before he was expected to be put up for a peerage vote, as he struggled to overcome doubts on the US executive committee.
The failure raised questions about the leadership of Boland and Carmine Di Sibio, EY’s global chairman, who was formerly the architect of Everest, and called for a partner vote. The actions of the American company also angered other EY member companies, especially in Europe, where support for Everest was stronger.
John King, the head of EY’s American auditing business and one of the biggest opponents of the spin-off, will leave the American executive committee with the restructuring of the American company’s management, Boland told his partners at the beginning of the week. Instead, he will be a “strategic adviser” to management, according to an internal memo seen by the Financial Times.
Boland appointed Marcelo Bartholó, who heads EY’s Eastern US region, as his deputy, and handed over King’s job to Dante D’Egidio, head of the audit business in the same region.
Jay Persaud, vice president of risk management, which supports the Everest project, is leaving the committee. The renewal will take effect on July 1.
While the changes are partly aimed at easing tensions after months of infighting – and reshaping the leadership in Boland’s consensus-building image – they are unlikely to satisfy US partners seeking a bigger shake-up. Many are angry that they were denied a vote on Everest, while others want to hold leaders accountable for the disruption caused by the doomed project, which cost more than $600 million worldwide.
Boland has already promised reforms that would separate management from the management of the US company, opening up the possibility of creating a new board to oversee executive management. However, the timetable for implementation is unclear.
“Most partners want meaningful changes in the management of the US firm,” said one senior US partner, “to be accountable to partners and to give partners a real voice.
EY US declined to comment on the memo.
EY’s UK business, the firm’s second-biggest after the US, has also begun reshaping its management team following an abandoned separation plan.
Di Sibio sent a separate memo to EY’s 390,000 global workers this week thanking them for their “patience and commitment” as they dealt with the fallout from the Everest collapse.
The company would surpass $50 billion in revenue for the fiscal year ending June 30, up from $45.4 billion the previous year.
“We enter the 2024 financial year in a strong position and the health and performance of our global EY organization remains positive,” he said.