EY US reshuffles leadership following failure of spin-off plan

EY’s US chair Julie Boland has reshuffled the firm’s leadership, elevating loyalists after winning a power struggle with the Big Four accounting firm’s global bosses that scuppered a plan to spin off its consulting arm.

The personnel changes come alongside a wider rethink of governance at the US business, the largest of EY’s member firms and responsible for about 40 per cent of the group’s $50bn of revenue, after its partners reacted with anger to the collapse of the spin-off.

Codenamed Project Everest, the plan would have handed cash or equity windfalls to EY’s 13,000 global partners via an initial public offering of the consulting arm. But Boland called it off last month after almost a year of work and shortly before it was expected to be put to a partner vote, having failed to overcome doubts on the US executive committee.

The debacle has raised questions over the leadership of both Boland and Carmine Di Sibio, EY’s global chair, who had been the architect of Everest and had pushed for a partner vote to go ahead. The actions of the US firm also angered EY’s other member firms, particularly in Europe, where support for Everest was stronger.

Under the revamp of the US firm’s leadership, John King, the head of EY’s US audit business and one of the major opponents of the spin-off, will be leaving the US executive committee, Boland told partners earlier this week. He will instead be a “strategic adviser” to the leadership, according to an internal memo seen by the Financial Times.

Boland has appointed Marcelo Bartholo, who heads EY’s eastern region in the US, to be her deputy, and gave King’s job to Dante D’Egidio, chief of the audit business in the same region.

Jay Persaud, vice-chair for risk management who has backed Project Everest, will leave the committee. The reshuffle goes into effect on July 1.

While the changes are in part designed to ease tensions after months of infighting — and reshape the leadership more in Boland’s image as a consensus builder — they are not likely to satisfy US partners pushing for a bigger shake-up. Many are angry at being denied a vote on Everest, while others want to hold executives accountable for the disruption caused by the doomed project, whose costs topped $600mn globally.

Boland has already promised reforms that would separate the management from the governance of the US firm, opening up the possibility of a new body to oversee the executive leadership. The timeline for implementation is not clear, however.

“Most partners want meaningful changes to the governance of the US firm,” said one senior US partner, “so that there is accountability to the partners and where the partners have a real voice.”

EY US declined to comment on the memo.

EY’s UK business, the firm’s second largest after the US, has also begun an overhaul of its executive team following the abandoned break-up plan.

Separately, Di Sibio this week sent EY’s 390,000 global workforce a memo thanking them for their “patience and engagement” as they worked through the fallout from the collapse of Everest.

The firm would top $50bn in revenue for the fiscal year ending June 30, he said, up from $45.4bn the previous year.

“We will start fiscal year 2024 in a position of strength, and the health and performance of our global EY organisation remains positive,” he said.