EY executives clash over mandatory retirement age in leadership race

EY executives have clashed over whether age should be a factor in appointing a new global leader, as the Big Four firm’s mandatory retirement rules complicate the race to succeed Carmine Di Sibio.

One of the leading contenders, 57-year-old British partner Andy Baldwin, warned other executives that they risked breaching UK age discrimination laws as they sounded out senior partners on his candidacy, according to people familiar with the conversations.

Some members of EY’s global executive committee, which is due to choose Mr Di Sibio’s successor this month, argued against Mr Baldwin’s candidacy on the grounds that he is close to the retirement age of 60. He would not be able to serve a full four-year term unless he is given an exemption, these people said.

In the end, Mr Baldwin was selected to be on a shortlist of six candidates, but the issue was raised again in interviews with hundreds of partners during a “soundings” process in recent weeks.

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Mr Baldwin warned people involved in the selection process that UK discrimination laws bar taking age into consideration without a specific business reason, according to people familiar with the conversation. He was unhappy that age was considered so prominently in the process, they said.

“It’s not something that you can use in the UK,” said one person. “EY could suffer severe reputational damage if it was deemed it was all about his age.”

Although he works for EY’s global operation as managing partner for client service, Mr Baldwin is a partner in the UK member firm, where he was the highest paid person last year, receiving £4.7 million (€5.3 million).

Two-thirds of the partners interviewed during the soundings process said that someone within four years of mandatory retirement should still be considered, according to people familiar with the outcome.

“Andy is very much still in the process,” said one person. “There is no age-based criteria around this role.”

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The results of the soundings have now been presented to the global executive, an 18-member body led by Mr Di Sibio that picks the winning candidate. Members have signed non-disclosure agreements to prevent leaks about their deliberations, people familiar with the process said.

Mr Baldwin’s closest challengers are Jad Shimaly, another candidate from the consulting side of the business, who runs EY in Canada, and Janet Truncale, head of the firm’s financial services business in the Americas, according to people familiar with the discussions. Both are in their early 50s.

Mr Baldwin’s role with Mr Di Sibio in pushing for EY to spin off its consulting business is another point of contention over his candidacy. Supporters point to his operational experience and the need for stability, while opponents argue he must be held accountable for the global leadership’s failed strategy.

The spin-off, dubbed Project Everest, was called off in April despite more than a year of planning that cost $600 million (€562 million), after it failed to win support from leaders of EY’s US member firm.

Mr Di Sibio himself had been given an extra two years beyond mandatory retirement to see the project through, but he announced following its failure that he would step down next June, a year early.

UK boss Hywel Ball has also been granted an extension to the retirement age, which EY and its rivals impose partly to free up space to promote new partners into their top ranks.

“To avoid unlawful discrimination, a firm could only include age as a factor in eliminating someone from the senior partner race if that was a proportionate means of achieving a legitimate business aim,” said Corinne Staves, a London-based partnership lawyer at CM Murray.

“Firms therefore need to have identified their business aims – for example, ensuring a mix of generations across the workforce – and ensure that the age-related criteria are appropriate and reasonably necessary to achieve those aims.” – Copyright The Financial Times Limited 2023