Category: Deloitte

(UPDATE) Compensation Watch ’10: More Deloitte Results Lag E&Y, PwC

From the mailbag:

Managers in the Northeast for Deloitte had their compensation call today, raises for [audit] senior promotes (2nd year to 3rd year) are confirmed at 5 to 9 percent, depending upon rating. 1st year to 2nd year are 2 to 5 percent, depending upon rating. Experienced seniors are 4.5 to 6.5 percent with bonuses from $3k to $7k depending upon rating.

This is materially flat year over year for Deloitte. Although they are giving bonuses and raises to experienced seniors which did not happen last year.


So this is similar to the news from the Midwest we reported on Friday which doesn’t bode well for the rest of the country who may have been hanging on to a sliver of hope for PwC/E&Y-esque numbers.

Discuss and keep us updated.

UPDATE, August 18th: This just in:

Confirmed on audit senior compensation webcast this morning:

Base salary increase for New Managers by Rating:

1 – 24%
2 – 23%
3 -18%

Base salary increase for Experienced Seniors by Rating:

1 – 9%
2 – 6.5%
3 -4.5%
4 – 0%

Bonus for Experienced Seniors by Rating:

1 – 7k
2 – 5k
3 – 3k

Base salary increase for 1st to 2nd year staff:

1 – 5%
2 – 3.5%
3 – 2%
4 – 0%

Base salary for new hires will not change from prior year.

Annnnd discuss.

Compensation Watch ’10: Early Returns from Deloitte Are In

The first reports of Deloitte raises for audit professionals have come in from the Mid-America Region:

I’m surprised to see absolutely nothing posted about Deloitte raises. We have had the raise discussions in my office for staff and seniors, no double digit raises in sight. AIP (bonus) for Seniors and above. Managers- TBA.

Mid America Region- it’s looking like 2-9% for staff/seniors. AIP is supposed to be in the range of 2-12%, but that is the range for both seniors and managers. I spoke with a friend in another office in my region and their raises are looking pretty consistent, if not lower. Starting salaries are frozen- start classes from fall 09, 10, 11 will all at the same rate.

This is the earliest word we’ve received and comments have suggested that more news would come early next week. The tax practice still has their town halls next Tuesday but that could be to explain the numbers if in fact they are similar to audit’s.

So this could be a John Kerry-esque exit polls effect or maybe this is a sign of things to come. Either way, if you’ve gotten word, discuss below and keep us updated with any developments.

All This Talk of Deloitte’s “Double Digit Growth” Has People Wondering

On Monday we learned that Deloitte Tax had a STD and now there’s more chatter about the firm’s performance that could maybe, possibly affect comp for this year:

A new set of video blogs came out from the northeast regional managing partner. He announced double digit growth in perdiods [sic] 9-13 of FY10 and a plan for “continued double digit growth through FY11”. I know everyone is getting antsy over compensation (discussions are supposed to take place beginning next week, with raises hitting on the 9/3/10 payroll), and they keep dropping comments about “substantial raises” and “double digit growth.”


So while some people remain skeptical, it appears that Deloitte is warming you up the troops for a nice surprise next week. Deride if you must but can Dr. Phil & Co. really afford to come in with lower raises than PwC and E&Y?

For a firm that talks like they’ll be numero uno in a few short years, it would be pretty embarrassing to bring in some paltry raises while the firm they’re chasing managed to make it up to at least a few of their people. Discuss the latest and keep us informed.

Compensation Watch: Deloitte Tax Sets a Date

Rejoice Deloitte Tax Troops. Your wait is nearly at an end, although from the sounds of it, you might be disappointed:

Word from our office tax managing partner has been that the compensation pool for raises is about 4-5%, which I think is going to make a lot of people pretty unhappy. But I guess with all the rumors out there and with Deloitte being the last of the Big 4 to release comp numbers, they decided to hold this forum. I’m expecting the same song and dance (weak revenue, highlighting all the other benefits besides comp) to try to stem the tide of people leaving. Since January, we’ve lost about 15 people (at all levels) out of about 110 in our office tax practice, and I doubt the news regarding comp will keep others from jumping ship.

Who: All US Employees

What: Overview of FY11 US employee compensation, including:

• Review the objectives and strategy of our compensation program
• Review the components of compensation
• Review the FY10 annual incentive plan
• Review the Tax compensation process and next steps
• Answer your questions

When: Tuesday, August 17, 2010

Time: 8 am to 8:30 am –regional compensation town hall
8:30 to 9:00 am -optional local office debrief with practice lead

Depending on how the town hall goes, the “optional” debrief could be an extremely interesting discussion. If audit or advisory have receive similar communiques, send them our way and we’ll continue to keep you updated on the countdown.

Ex-Deloitte Partner, Son To Shell Out $1.1 Million to Settle SEC Insider Trading Charges

Last we had heard of Thomas Flanagan, Deloitte had just taken him to the woodshed, successfully suing him for breach of fiduciary duty, fraud, and breach of contract related to Tom’s insider trading activities of Deloitte clients.

Now it’s the SEC’s turn to get in on this sweet action. The Commission charged Flanagan and his son, Patrick Flanagan for insider trading of Deloitte clients including Best Buy, Sears, Walgreens and Motorola.

Why Flanagan, the 38-year veteran of Deloitte and Vice Chairman of Clients and Markets, who thought that in the twilight of his career, the best move would be to engage in some insider trading is still a mystery. Since he was presumably pushing 60, one couldn’t help but wonder if perhaps his memory was going and he just totally spaced the independence thing.

But actually, no. Turns out, Tom Flanagan is just a liar:

According to the SEC’s complaint, Thomas Flanagan concealed his trades in the securities of Deloitte’s clients and circumvented Deloitte’s independence controls. He failed to report the prohibited trades to Deloitte, lied to Deloitte about his compliance with its independence policies, and provided false information to Deloitte’s personal income tax preparers about the identity of the companies whose securities he traded.

Flanagan & Son will be paying over $1.1 million in disgorgement and fines for their little stunt. And Robert Khuzhami had a little reminder for anyone else out there that thinks they can get cute, “Flanagan’s insider trading violated one of the most fundamental rules of public accounting. All audit firms should learn from this unfortunate episode and employ vigorous controls designed to ensure compliance with the SEC’s auditor independence rules.”

SEC Charges Former Deloitte Partner and Son With Insider Trading [SEC Press Release]
SEC Complaint Against Thomas Flanagan and Patrick Flanagan [SEC Complaint]

Compensation Watch ’10: The Teasing Continues as News from Deloitte Inches Closer

By now everyone is borderline freaking out due to Deloitte partners’ ability to remain coy throughout this process, using words like “substantial” and “better than last year” which, considering the love shown last year, is ironically accurate.

Annnnnnddd it continues. A source dropped us part of an email from Nick Tommasino, Deloitte’s Chairman and CEO of audit and enterprise risk services:

Understand your compensation package
• Deloitte provides a comprehensive Total Rewards package, which is designed to:
· Attract, retain, motivate, recognize, & reward high-performing talent
· Demonstrate the value of individual contributions as it relates to business performance
• When your individual compensation discussions occur in mid-Aug, keep in mind these main financial components of the Total Rewards package:
· Base salary
· AIP*, aimed at eligible high-performing seniors, managers, & senior managers (Reminder: AIP payouts will be subject to taxation & 401k deductions)
· Rewards & Recognition program, which includes Applause Awards, Outstanding Performance Awards, Promotion Awards, & Service Anniversary Awards
• Key compensation dates include:
· Mid-Aug: Compensation discussions begin
· Sun, Aug 22: New salaries effective
· Thu, Sep 2: Updated compensation statements available on DeloitteNet
· Fri, Sep 3: New base salary & AIP award amounts reflected in pay statements available on DeloitteNet

The motivation behind such a message is subject to interpretation. Some may think this is a friendly reminder (one of several, no doubt) of the upcoming discussions OR it’s a friendly reminder that doubles as a reality check that this isn’t 2005-2006.

Meanwhile, in the consulting part of the house, one commenter is claiming that news is going to be extra good, courtesy of some Punit Renjen prognostication:

Punit said “Compensation will be highest in history” via video for Consulting…

So who knows! The good news is that you will know soon enough but numbers remain a mystery. Unless someone finally coughed up a range. In that case, we strongly encourage that you share.

What if Deloitte Moved Out of New York City?

What happens when you’re the Prized Catch of the New York City real estate market? You threaten to move your operations to New Jersey or Connecticut, of course!

Per a report on GlobeSt.com: “According to IDA documents, Deloitte notes that it is ‘currently assessing options’ for its metro area real estate strategy, ‘including the evaluation of existing in New York, New Jersey and Connecticut.’”

One could assume that this is just a ploy by Deloitte to frighten the IDA into approving $21 million in tax benefits, but Deloitte – currently in four different buildings around the city – bit back with teeth:

In New Jersey, Deloitte US firms “have significant operations, including recently expanded, underutilized class A office space.” Similarly, Deloitte has more than 30,000 square feet of “underutilized” office space in Connecticut, and adds that “various other jurisdictions are being considered” for future growth.

Now before you East Village wannabe socialites and Park Slope stroller pushers freak, let’s break this down.

Deloitte isn’t going anywhere. Corporate Tax breaks are nothing new, right baseball fans?

Even if it were to move across the Hudson to New Jersey, it is doubtful the firm would go farther than Jersey City. Sure, there are comrades in Parsippany; but it would be very difficult to maintain a city presence from exit 45 off of Rte 80. But from a staffing perspective, this would be corporate suicide. What University of Texas (“at Austin” – sure, sure) graduate wants to move to New York City and Not. Actually. Be. In. New York. City?

Recruitment – shot.

Talent retention – HAHAHA.

A handful of current employees thankful their NJ Transit days are over – okay, I’ll give you that one.

Listen – in reality, this is a rather simple case. Manhattan is bleeding vacant office space; Deloitte is promising 2,100 new jobs; no one really wants to take the PATH train to work every morning. This should be a rather slam dunk case.

Unless, of course, Connecticut governor Jodi Rell catches wind that the Green Dot is looking for a new home.

Deloitte Resigns as American Apparel Auditor; Hotness of Engagement Team Presumably Not an Issue

So for those of you that aren’t too fashion conscious, you probably don’t the name Dov Charney. He’s the Chairman and CEO of American Apparel and you’d be hard pressed to find something in one of his stores that qualify under your firm’s dress code.

Nevertheless! AA is a publicly traded company and is subjeities laws as everyone else. Last year they opted to drop Marcum as their auditor for Deloitte. One year later, the firm has apparently had all they can stand of AA because they resigned today, citing possibly unreliable financial statements for 2009, sending the company’s stock reeling.


The 8-K has the usual language that you would expect from a typical auditor/client break-up but here are the gory details for those you that enjoy that sort of thing (citations omitted and extra fun stuff is bolded):

During the period from April 3, 2009 through July 22, 2010, there were no “reportable events” except that (i) in Deloitte’s report dated March 31, 2010 (which was included in the 2009 Form 10-K) on the Company’s internal control over financial reporting as of December 31, 2009, Deloitte identified material weaknesses in internal control over financial reporting related to the control environment and to the financial closing and reporting process, which are further described under Item 9A in the Company’s 2009 Form 10-K, and advised that the Company has not maintained effective internal control over financial reporting as of December 31, 2009; and (ii) Deloitte advised the Company that certain information has come to Deloitte’s attention, that if further investigated may materially impact the reliability of either its previously issued audit report or the underlying consolidated financial statements for the year ended December 31, 2009 included in the Company’s 2009 Form 10-K. Deloitte has requested that the Company provide Deloitte with the additional information Deloitte believes is necessary to review before the Company and Deloitte can reach any conclusions as to the reliability of the previously issued consolidated financial statements for the year ended December 31, 2009 and auditors’ report thereon.

As we mentioned, this has spooked plenty of people, including Ed Yruma an analyst at KeyBanc quoted by Bloomberg in a letter to investors, “The company has struggled since its IPO with both its internal controls and its ability to file SEC filings on a timely basis. An ability to file SEC filings on a timely basis has been an ongoing issue.”

Back to the superficial. Dov Charney is, what you might call, a character. Here’s a brief chat we had with Nick, Breaking Media web developer and occasional contributor to our sister site Fashionista:

me: When i say the name
Dov Charney
your response is…
Nick: LECH
PERV

You only need to snoop around the web briefly (e.g. here, here, here) to pick up what Nick is referring to.

Deloitte’s letter to the SEC is brief and makes no mention about the plethora of models not wearing pants or Dov judging the young auditors’ hot or not-ness, so that likely wasn’t part of the problem. Anyhow, AA ran straight back to Marcum who might be more comfortable with, what we imagine to be, an interesting work environment.

8-K [SEC]
American Apparel Falls After Deloitte Resigns as Accountant [Bloomberg BusinessWeek]

Compensation Watch: Deloitte Advisory Can Expect ‘Substantial’ Salary Increases

From the mailbag:

Just got off an “All Hands” call for Deloitte Advisory (not Audit). TPTB said to expect “substantial” base salary bumps for staff and seniors, but that they are moving toward a “base+bonus” structure for managers and up. As such, the bulk of the increase in salary pool will be to staff/seniors.

I dont know what that means – it would sure be nice to see 12-15% percent, but I dont think that is being too realistic. Whatever the case, I doubt there will be bonuses for staff/seniors like you saw at PwC. They bandied about a “$36MM” number a couple times, but that is really irrevelant without a discussion of the distribution.

People are sure giving a lot of credit to PwC. Maybe firing out of the gate was a way to put pressure on everyone else but don’t forget, not everyone at PwC is thrilled with their compensation season.

We aren’t expecting official word out of Deloitte for awhile but in the meantime, feel free to speculate on ‘substantial’ and keep us updated.

Deloitte Survey: Once this Ship Turns Around, People Are Going to Start Jumping

Deloitte’s 2010 Ethics & Workplace Survey tells us what most of you have been thinking since 2007 (if you haven’t been laid off that is), that you are GTFO of your current job. Everyone is just sitting tight until the economy to turns around.

While that might not exactly be a newsflash, the reasons for the anxious ship jumpers is primarily due to lack of trust and communication from their companies. Deloitte knows a little bit about this since the firm admitted to handling its own communication regarding layoffs “poorly.”

According to Deloitte LLP’s fourth annual Ethics & Workplace Survey, one-third of employed Americans plan to look for a new job when the economy gets better. Of this group of respondents, 48 percent cite a loss of trust in their employer and 46 percent say that a lack of transparent communication from their company’s leadership are their reasons for looking for new employment at the end of the recession. Additionally, 65 percent of Fortune 1000 executives who are concerned employees will be job hunting in the coming months believe trust will be a factor in a potential increase in voluntary turnover.

So. The question of the day is, are you leaving your firm or company as soon as this economy takes off? You have to admit, you could waiting awhile. Of course since it’s compensation season for the major accounting firms, it may not even come to that.

Compensation Watch: Anxiety Continues at Deloitte

Why? Because the partners seem to be pretty good at keeping a lid on things:

[N]o word on raises or communication of raises- all I’ve heard from some partners is “they will be better than last year, but not as good as they have been in the past”, I know most people around here are starting to get anxious.


As we mentioned on Friday, PwC and E&Y have been having a pissing match of sorts but only P Dubs has dropped actual numbers. E&Y will be coughing up official word in a couple weeks-ish or so, but Deloitte? Our understanding is that D’s comp news won’t be known for another month.

Some vets of the firm are used to it. Like GuestDT:

This is really just the blueball conversation for most people – there are a handful who will get unexpected drop in rating or not promoted, but most of that stuff is hinted at as we plan for the next audit year. This is the time of year to go to lunch and hear your counselor say, “Noone’s really said what compensation will be…” But you do get a free lunch.

But the NKOTB are more anxious. D&T 1st Year:

We’re all sitting on our hands as we see managers coming out of counselor meetings crying because they didn’t get promoted to SM. Worse yet, being a 2nd year next year will be rough as we are all going to be senioring our jobs as there are no seniors left. Look out 5th years, you might be senioring again next year too.

So what to do (besides console your emotionally unstable manager)? Start tickling partners until they cough up some ballpark figures, pull out a dartboard or just drop your best guess below.

Deloitte Tax Sells Deloitte Investment Advisors to Aspiriant

Don’t panic! DIA only has 40 professionals serving 450 clients so the band isn’t breaking up. Although, maybe this is a segue into Barry Salzberg’s shopping spree. Who’s to say?

Whatever it means, both c happy with how the deal turned out.


Deloitte’s Chet Wood: “We determined that divesting Deloitte Investment Advisors is in the best interest of DIA, our professionals and our clients. As part of the Aspiriant organization, the business will have greater latitude for growth through offering additional services and pursuing its own marketplace interests.”

Aspiriant’s Rob Francais: “This acquisition is another step in our long-term growth strategy to ensure that Aspiriant remains a leading independent wealth management firm that is well-positioned to serve the needs of wealthy families for generations to come. The employees at Aspiriant and DIA share the same high standards and values; we are truly cut from the same cloth, and we welcome this exceptionally skilled team to Aspiriant.”

So. D Tax is happy to free up some cash; Aspirirant is happy to get some exceptionally skilled cloth. Carry on.

BPR:

NEW YORK, July 19 /PRNewswire/ — Deloitte and Aspiriant today announced they have entered into a definitive agreement under which Aspiriant Investment Advisors, a subsidiary of Aspiriant, a leading independent wealth management firm, will acquire Deloitte Investment Advisors LLC (DIA), a fee-only registered investment advisory group owned by Deloitte Tax LLP. The transaction is expected to close in September 2010, subject to customary approvals and closing conditions. Terms of the agreement were not disclosed.

DIA commenced operations in 1998 and is comprised of approximately 40 professionals. The group provides investment advisory services to individual and institutional investors and currently has approximately $2.9 billion in assets under advisement for more than 450 clients.

After a review of strategic opportunities for the business and an analysis of regulatory considerations, Deloitte Tax concluded that divesting DIA provided the best opportunity for the group’s future growth.

“We determined that divesting Deloitte Investment Advisors is in the best interest of DIA, our professionals and our clients,” said Chet Wood, chairman and chief executive officer of Deloitte Tax LLP. “As part of the Aspiriant organization, the business will have greater latitude for growth through offering additional services and pursuing its own marketplace interests.”

“This acquisition is another step in our long-term growth strategy to ensure that Aspiriant remains a leading independent wealth management firm that is well-positioned to serve the needs of wealthy families for generations to come,” said Rob Francais, chief executive officer of Aspiriant. “The employees at Aspiriant and DIA share the same high standards and values; we are truly cut from the same cloth, and we welcome this exceptionally skilled team to Aspiriant.”

Once the transaction is completed, Aspiriant will serve approximately 800 clients through eight offices in the U.S., and have more than $7 billion in assets under management and advisement.

“We are confident that our expanded team and geography will enable us to deliver additional benefits to clients through a broader range of investment and financial planning services, as well as increased depth of management and investment talent,” Francais added.