After winning a power struggle with the world’s top four accounting firms that derailed plans to spin off their consulting divisions, EY US chairman Julie Borland reorganized the company’s leadership and backed its supporters. was promoted.
The personnel changes involve a broad rethinking of the governance of the US business, which is the largest of EY’s member companies and accounts for approximately 40% of the group’s $50 billion in revenues, and which the partner has been forced to avoid in the event of a spin-off failure. This is in response to an angry response. .
Codenamed “Project Everest,” the plan would have windfall distributions of cash or equity to EY’s 13,000 global partners through an initial public offering of its consulting arm. But Borland canceled the plan last month, just before it was scheduled to be put to a partner vote, after nearly a year of effort failed to dispel the doubts of the U.S. Executive Committee.
The debacle calls into question the leadership of Borland and EY Global Chairman Carmine Di Sibio, the designer of Everest and the driving force behind the partner vote. The US company’s actions also sparked outrage among other EY member companies, particularly in Europe, where support for Everest was stronger.
John King, EY’s head of the U.S. audit business and one of the main opponents of the spin-off, will step down from the U.S. management committee following a shake-up of the U.S. firm’s management team, Borland said earlier this week. told to Instead, he will serve as a “strategic adviser” to the leadership, according to an internal memo obtained by the Financial Times.
Borland appointed Marcelo Bartolo, who will lead EY’s Eastern US region, as vice president, handing over King’s duties to Dante Dezidio, head of the audit business for the region.
Risk management vice chair Jay Pelso, who has backed Project Everest, is leaving the committee. The personnel changes will take effect on July 1.
The changes are partly aimed at easing tensions after months of infighting and restructuring the leadership to suit Borland’s image as a consensus maker, but they call for a bigger shake-up. unlikely to satisfy its US partners. While many are angry that votes for Everest were denied, they want to hold executives accountable for the chaos caused by this doomed project that cost the world over $600 million. Some people
Mr. Borland has already promised reforms that would separate management from corporate governance in U.S. companies, opening up the possibility of a new body to oversee executive leadership. However, the timeline for implementation is unclear.
“Most partners want meaningful changes to the governance of U.S. companies,” said one senior U.S. partner. ‘ said.
EY US declined to comment for this memo.
EY’s second-largest UK business after the US has also begun a management review following an abandoned spin-off plan.
Separately, Di Sibio sent a note this week to EY’s 390,000 employees around the world thanking them for their “perseverance and commitment” in dealing with the fallout of Everest.
He said the company’s revenue for the fiscal year ending June 30 is expected to exceed $50 billion, up from $45.4 billion a year earlier.
“We are on track to start 2024 on a high note, and the health and performance of EY’s global organization continues to be strong,” he said.
#reshuffles #management #failed #spinoff #plan
Credit
