Business

EY chief executive to retire after failure of split plan

Work on doomed Everest project cost more than $600 million and triggered bitter infighting

Carmine Di Sibio, chief executive of EY, is to step down. Photograph: Patrick T Fallon/AFP via Getty Images

Tue Jun 13 2023 - 19:44

EY’s global chief executive Carmine Di Sibio has told partners he plans to retire next year, sparking a race to lead the accounting and consulting firm after the collapse of his plan to split it in two.

Di Sibio masterminded Project Everest, the once-in-a-generation break-up plan, but called off the deal in April after opposition from leaders of the firm’s US business.

His future has been in doubt since the collapse of Everest, which would have involved spinning off EY’s consulting arm and listing it on the stock market.

The break-up promised to deliver multimillion-dollar windfalls to the firm’s partners and would have been the biggest shake-up of the global accounting industry since the collapse of Enron auditor Arthur Andersen two decades earlier.

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Although Di Sibio has continued to say the deal was necessary to free consultants from conflict-of-interest rules that restrict them from advising audit clients, work on the doomed project cost more than $600 million (€544 million) and triggered bitter infighting.

On Tuesday, Di Sibio made it clear he did not intend to step down immediately, but would instead oversee the organisation through a long transition lasting until the end of the next financial year in June 2024.

In a partner webcast, he said he planned to leave “having reached the EY mandatory retirement age”.

His initial four-year term had been due to expire this month but EY extended his tenure for two years, allowing him to continue beyond the firm’s retirement age of 60 so he could oversee the split, which he had argued would become a blueprint for other Big Four firms.

“I am proud of the bold vision we set out in Project Everest,” he said. “The courage that we displayed set the entire sector on a new course that will only become apparent in the years to come. We challenged the status quo, we asked tough questions and we were bold in our ambitions. Actions such as these will make us a better organisation in the long term. Now it is time to usher in a new generation of leaders.”

A succession process will begin in the next few months and a new leader is expected to be named around November, partners were told.

Di Sibio took over as global chair and chief executive in 2019, having risen through the ranks of EY’s US business serving financial services clients, including Goldman Sachs.

If Everest had gone ahead, he would have led the new publicly traded consulting business. The audit-focused firm would have remained a private partnership under the EY brand, and its partners would have received cash windfalls worth up to four times their pay.

However, Di Sibio misjudged the strength of opposition to the split in some quarters of the firm, notably among high-ranking partners in the US audit business, who objected to large parts of EY’s tax advice business being hived off into the new consulting company.

Market conditions also worsened while the firm thrashed out the details of how the split would work, meaning the consulting business would have been likely to struggle to reach the valuation originally envisaged.

The deal was called off before if could be put to country-by-country votes among EY’s 13,000 partners.

Its collapse pitched the firm into chaos, with some partners calling for the removal of Di Sibio and other leaders in both its global headquarters and in its US business.

During his tenure, Di Sibio also had to lead EY’s response to the collapse of audit client Wirecard in a fraud scandal. Its German arm has been barred from winning new public company audits for two years.

The firm expects to report global revenues of more than $50 billion for the 12 months to the end of June 2023, up from $36.4 billion when Di Sibio took over in 2019. – Copyright The Financial Times Limited 2023

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