Tailoring Your Partner Compensation Plan

A partner compensation plan is one of your most effective management tools and yet many firms don’t maximize its usefulness. According to Esposito CEO2CEO advisory firm, your partner group can be visualized on a bell curve, falling into four quartiles. Understanding where they fall can help improve your compensation design to make it vital to your bottom line.

In the first quartile, you have the high performers who produce outstanding contributions to the firm on a consistent basis, your go getters. Their contributions might be in maintaining excellent client relationships, consistent new business development or mentoring younger staff and firm administration. These are the partners who receive large year-end bonuses and generally are the firm’s highest earners.

In the second quartile, you have the solid performers. They are reliable team players who do their best and are sincere in furthering the success of the firm. More than likely these partners are a combination of seasoned equity partners and up and coming non-equity partners. They are worth every penny that they get in compensation.

In the third quartile, you have the journey men. These partners give you a solid performance and do what they can to further the firm but may possess qualities of an employee rather than an owner of the business. They usually aren’t the lead partners on client relationships because they are not as effective, only occasionally bringing new business.

In the fourth quartile, you have partners who are poor performers for a host of different reasons. Perhaps they no longer possess the necessary drive, or never had it to begin with.

Esposito CEO2CEO believes that firms need more than 50% of its partners in the first and second quartile to realize your firm’s full potential and should make changes as necessary, especially if it has more than half of your partners in the third and fourth quartiles.

To continue this momentum, using your partner compensation plan to reward desired behaviors can move the firm’s bottom line. Esposito CEO2CEO suggests:

  • Rewarding partners who covet clients for their own rather than for the firm does nothing to encourage a cohesive atmosphere. Similarly, rewarding an “eat what you kill” environment, won’t build a firm that can remain independent in the long run.
  • Tolerating poor client billing and collecting habits not only tells the compliant partners that you aren’t serious about the firm’s stated policies, but you may risk losing other high performers who don’t respect leadership with inconsistent management.
  • Staff evaluations should be timely to cut down on unnecessary turnover. This should also include the ability to have upward partner evaluations to moderate potential staff abuses.
  • Make sure you are paying your top performers their market value, rather than sprinkling the bonus pool to fourth quartile partners.

Of course, there is no perfect partner compensation plan, but if your plan doesn’t address these success factors, you probably aren’t rewarding the necessary behaviors that will enable you to compete in the future.

LBMC Admits Hendrickson as Partner in Information Security Division

Drew Hendrickson

Drew Hendrickson

Brentwood, Tenn.-based LBMC (FY17 net revenue of $89.8 million) admitted Drew Hendrickson as a partner in the firm’s information security division.

Hendrickson has more than 12 years of experience as an information security professional and IT assurance expert helping clients manage their security program within the context of the business’ overall risk environment.

“Drew’s promotion to shareholder is well deserved and a tremendous asset to our clients and LBMC,” says Thomas Lewis, shareholder-in-charge of information security division. “Drew’s expertise in assurance services, along with his leadership with the AICPA IT assurance and information security specialty groups, is unmatched in our local marketplace.”

Hendrickson has contributed to the growth of the firm through his leadership in both service organization control and health information trust alliance practices. He has worked directly with the AICPA in the development of training materials for information security advisors with a CPA or financial accounting background. Additionally, Hendrickson led the information security team in the development of the new AICPA cybersecurity advisory course.

Scarborough Joins Whitley Penn as Tax Partner

Gary Scarborough

Gary Scarborough

Fort Worth, Texas-based Whitley Penn (FY16 net revenue of 83.6 million) announced that Gary Scarborough has joined the firm’s Austin, Texas, office as a tax partner.

Scarborough has more than 16 years of experience providing accounting, tax and financial planning services. His areas of practice include tax compliance, consulting and financial planning for closely held and family-owned businesses, high-net-worth individuals, and medical and professional services firms.

Prager Metis Admits Stark as New Partner

Lewis Stark

Lewis Stark

New York-based Prager Metis (FY16 net revenue of $60.8 million) admitted Lewis Stark as partner. Stark joins Prager Metis as a partner in the royalty audit and contract compliance services group. He will be based out of Prager Metis’ New York office.

“As a CPA and a certified fraud examiner with an extensive background in royalty audits and contract compliance services, litigation consulting and as a testifying expert, Lewis has a unique expertise that few possess. Moving his entire team and diversified base of clients to Prager Metis will bolster our global royalty audit and contract compliance practice and his knowledge and skills will expand and enhance our existing services,” says Glenn Friedman, co-MP.

Stark specializes in conducting royalty, distribution and profit participation audits; contract compliance investigations; and vendor, landlord and tenant examinations. He has recovered substantial funds for his clients over his 27 years of service. Additionally, the compliance services that Stark provides protect the integrity and value of intellectual properties including copyrights, trademarks, brands and patents. Other services he provides include financial due diligence, litigation consulting, expert witness testimony, forensic investigations, and film and television production tax incentive audits.

Desmond & Ahern Admits Three New Partners

Chicago-based Desmond & Ahern admitted three partners, Paul Betlinski, Adam Goyke and David Rambo.

Desmond & Ahern works with individuals, businesses, corporations, proprietorships, fiduciaries, credit unions and not-for-profit organizations. They offer financial statement preparation, quarterly payroll tax returns, annual reconciliations, W-2 preparation, tax planning and preparation, strategic and organizational planning, budgeting and forecasting, and board development and training.

Green Hasson Janks Welcomes Kawauchi as Principal

Mark Kawauchi

Mark Kawauchi

Green Hasson Janks (FY16 net revenue of $27.8 million) of Los Angeles welcomes Mark Kawauchi as a principal and a member of its nonprofit audit leadership team.

Kawauchi has nearly 30 years of public accounting experience and is dedicated to the firm’s nonprofit clients with a specialty in health care. In addition to performing audits and reviews, he enjoys being a business advisor to his clients and providing them with personalized service to help them meet their goals.

“Adding Mark to our team is a reflection of our commitment to, and investment in, developing the nonprofit practice as part of our strategic vision. Mark’s deep expertise in the industry, along with his specialized experience with health care clients, will allow Green Hasson Janks to continue our tradition of serving our clients at the highest levels and expanding our service offerings,” says Donella Wilson, nonprofit practice partner.

Citrin Cooperman Continues Expansion of Financial Services Practice

Alexander Reyes

Alexander Reyes

New York-based Citrin Cooperman (FY16 net revenue of $233 million) has named Alexander Reyes as leader of the firm’s financial services practice and Guy Miller as a financial services practice audit partner in the firm’s Livingston, N.J., office.

Reyes is based out of the firm’s New York office. He has extensive experience in the financial services space. He has advised broker dealer and asset management clients on accounting, regulatory and internal control matters. He has worked with large banking clients on emerging risk and control best practices. In addition, Reyes is knowledgeable of the valuation issues impacting private equity and venture capital clients.

“With a deep bench of talent and incredible firm resources, the opportunity is endless to capitalize on the opportunity in the marketplace, not only in New York City, but throughout the firm’s geographical footprint,” says Reyes.

Guy Miller

Guy Miller

Miller has 25 years of experience providing assurance services to financial services clients, with a particular emphasis on hedge funds, investment partnerships, offshore funds, funds of funds, commodity pools and private equity funds.

“We are focused on building a world-class team that will bring our financial services practice to the next level, including advising our clients on regulatory changes and the real-world implications of technological advances impacting the financial services industry. Guy’s focus in the hedge fund space and his impeccable relationships in this segment further enhances the firm’s hedge fund capabilities,” says Patricia Cummings, co-MP of the New York office and chair of the audit and test committee.

Grant Thornton Expands with Addition of 67 New Leaders

Chicago-based Grant Thornton (FY16 net revenue of $1.7 billion) has admitted 39 new partners and principals, and promoted 28 professionals to managing director. View the full list here.

There has been an increase from 21% in 2016 up to 23% of new partners, principals and managing directors that are women. This continues to be an upward trend for women who now encompass 20% of Grant Thornton’s partnership.

By service line, advisory accounted for the largest number of promotions (42%), followed by audit (34%), tax (21%) and internal client services (3%).

TBC Admits Cesternino and McEvoy as Partners

Michael Cesternino

Michael Cesternino

Teal Becker & Chiaramonte (FY16 net revenue of $13.2 million) of Albany, N.Y., admitted two audit managers to partners. Joining the ranks of partner are Michael Cesternino and Ryan McEvoy. Both partners will be directly responsible for client account management in their new roles. Cesternino joined the firm in 2006 and McEvoy has been with TBC since 2009.

Cesternino’s main responsibilities include managing and supervising a large client base, which includes commercial entities, including automotive dealerships, wholesalers as well as not-for-profit organizations and governmental units including colleges.

Ryan McEvoy

Ryan McEvoy

McEvoy joined TBC after working for a large international accounting firm, and works with clients in a wide range of commercial industries including manufacturing, distribution, construction, retail, health care and technology.

“When it comes to exemplifying the values of hard work, integrity and honesty, these two individuals are driven to meet the goals of our company and keep our clients’ best interests in mind at all times,” says James Drislane, MP of TBC.

BDO USA’s Garrett to Lead International Cybersecurity

Gregory Garrett

Gregory Garrett

Chicago-based BDO USA (FY17 net revenue of $1.4 billion) named Gregory Garrett as head of international cybersecurity in the firm’s technology and business transformation services practice.

With more than 30 years of compliance and operations experience in information technology and cybersecurity, Garrett advises organizations on governance, risk and compliance frameworks, as well as cyber threat assessment tools and cyber incident response plans. Through an integrated suite of cyber products and services, he helps clients identify their biggest cyber pain points with a focus on organization education and employee training, and conducting truly independent assessments of risk portfolios and governance.

“As organizations become more dependent on data-sharing capabilities, they face growing cyber and data privacy risks, particularly when it comes to cross-border interactions,” says Stephanie Giammarco, partner and national leader of BDO’s technology and business transformation services practice. “Often, whether intentional or not, the biggest threats to an organization originate from current or former employees. Gregg’s wide-ranging experience in cyber threat assessment and employee education will help our clients identify often overlooked cyber risks, respond to incidents in real time and keep ahead of emerging risks.”

“The biggest cybersecurity challenge facing organizations today is the education and training of company employees,” says Garrett. “A successful cyber risk management program needs to integrate top-down organization education with robust information governance, threat detection and monitoring, and an incident response plan that is ready not if, but when, an attack strikes. BDO understands this and integrates cybersecurity products, services and educational tools holistically, from both a proactive and reactive point of view.”