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Bonus Watch ’13 and Beyond: Ernst & Young Rolls Out Performance Based Bonus Program

As the Black and Yellow comp conversations continue this week, we have some news to share with regards to the firm's bonus structure. 

Here's a tip that came in late on Friday: 

Advisory across all of the Americas had their "Super Friday" today (which is why no Advisory people have written in with their comp). A new bonus structure was released for FY13…seniors/managers/sr managers will be eligible to receive performance bonuses if they received a 3 or greater in all of their ratings. Srs can expect up to 9%, managers can expect up to 10% & sr managers can expect up to 12% of their base salaries.  This new system is supposed to be more "inclusive", since prior to this, only 5-rated (a few select 4-rated) people received bonuses.

These will be known as "Performance-Based Bonuses" (aka "PBB") and another tipster sent us a document that outlines some of the details. According to the document, the reason E&Y is shifting to the PBB is that "it is consistent with the outside market," and "studies show us that the vast majority of professional service companies have evolved their compensation programs to shift a greater percentage of compensation from base pay to variable pay."

All righty then. Sounds like the typical monkey-see-monkey-do behavior E&Y is known for. How about some details? Here are the eligibility requirements and measurement criteria:

And just in case you missed it above, the new structure will be going into effect for fiscal year 2013 for the advisory group only. It won't be applied to the audit, tax, and TAS until fiscal year 2014. Why, exactly, is advisory getting a jump-start on the program? The firm has an explanation for that:

So the upside for the advisory is that they are extra special and get to experience PBB first. The downside is the possibility of the firm shitting the bed in 2013. That seems unlikely, but stranger things have happened.

A little extra bonus for those of you that are more visual types, here's a graph that is very similar to those that we've seen out of PwC and Deloitte. It illustrates your progression through the firm, noting the milestones and the increase in base salary along the way.

So there you have it, the future of bonuses at E&Y. Discuss as you see fit. 

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