‘Completely unsatisfactory’: EY’s disclosure worse than PwC’s
Greens senator Barbara Pocock has slammed EY for its lack of disclosure to the Senate inquiry examining consultants.
EY, like KPMG and Deloitte, did not provide its partnership deed or details about partner pay as requested by the committee. In contrast, PwC provided its deed (which it requested be kept private) and a breakdown of partner pay at the firm.
A frustrated Senator Pocock asked EY leader David Larocca first asked why the firm had not provided its partnership deed.
EY Oceania boss David Larocca. Martin Ollman
“You distinguish yourself from PwC and you’re telling us you’re different and that you are better. … I go to the deed of how you have responded to the questions on notice that we have given you,” she said during a Tuesday public hearing of the inquiry.
“Those questions went to the partnership deed, which you have not supplied to us. We asked for earnings data for partners. You have decided not to supply that to us.”
Mr Larocca defended the decision.
“Our partnership agreement contains things like arrangements for partners leaving the firm, for example, when they choose to join a competitor, restraint arrangements and other things that I’m just not prepared for our competitors to see,” he said.
When Senator Pocock suggested the firm provide the deed in a redacted format, Mr Larocca said that the firm had been “responding to the question: that was to provide the partnership deed”.
Mr Larocca then added he would take the request on notice but noted supplying the deed would put the firm “in a position that is anti-competitive”.
He also provided some data about the firm’s partner pay, including his own pay.
“So our average partner income is around $950,000 … The second thing I’m disclosing today is my income. So in financial year 2022, my income was $2.8 million,” he said.
Yesterday, Deloitte CEO Adam Powick also disclosed his salary ($3.5 million a year) and that Deloitte partner pay begins at about $300,000 a year and averages between $500,000 and $600,000. PwC has disclosed that former CEO Tom Seymour made $4.6 million in 2021-22 and that more than a third of its partners earned more than $1 million.
Mr Larocca was again defiant about making a more detailed disclosure about the pay of the firm’s 703 partners.
“Now I’d like to explain why we’ve not disclosed our partner income in the detail that you’ve requested,” he said. “It’s the fact that we operate in an intensely competitive talent market, which includes partners that we hire directly… some from our competitors, we lose some of our partners, to our competitors.”
At this point, Senator Pocock interrupted him: “I understand how that works…so you’re giving us the average [partner pay]... I just want to make it clear to you that the people [PwC] you are critiquing as worse than you are in their … transparency are willing to give million dollar category distribution of their earnings. You’re not willing to do that.”
Mr Larocca again distinguished EY from PwC after Senator Pocock pointed out the rival firm’s higher level of transparency to the committee.
“I’ve spent the last five months talking to our partners and our staff and our clients about why we are not PwC,” he said.
Senator Pocock interrupted again him at this point: “I’m not asking me for a general speech about PWC, Mr Larocca. I’m asking a specific question, and you have failed to provide the information which the Senate has sought you …. A completely unsatisfactory answer from Mr Larocca. Very disappointing. It’s pretty basic.”
