EY considers giving retired partners payout in upcoming spinoff

EY has told retired US partners it is considering giving them a cut of the proceeds from a spinoff of its consulting arm, the Financial Times reported.

An email sent on Thursday to retired partners said the Big Four firm’s US executives are mulling a request to boost pension payouts or give retirees shares in the proposed new consulting business.

In several weeks, EY’s 13,000 current partners will receive details of their individual financial packages. Audit partners are expected to receive a cash windfall that is a multiple of their annual pay, while consulting partners will receive shares in the spun-off public consulting company.

A partner vote on the EY split is expected to begin in April. Retired partners do not have a stake in the firm and are not allowed to vote on the split. They do, however, form one of its largest creditor groups – with EY US having an unfunded $7.5 billion pension liability.

EY plans to use some of the proceeds from the consulting company IPO and debt sale to cover a substantial part of the pension obligation.

A group of 150 US partner retirees in November sent EY leadership a memo expressing concern over a proposed split of the business.

The retired partners are worried the remaining lower-growth audit firm, which would retain the bulk of pension obligations, could have more trouble paying out pensions. To insulate themselves from risk, the retirees in the memo asked for the pension obligation to be 100% funded.

EY has so far named Carmine Di Sibio as CEO and Jamie Miller as CFO of the new consulting firm, while Julie Boland has been appointed head of the audit company.