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Elected or Appointed? A Choice for Your Compensation Committee

Marc Rosenberg, CPA / November 2, 2020

Compensation committees are the best of several common partner compensation systems for achieving a balance between recognizing traditional production accomplishments and rewarding intangibles. The compensation committee (CC) approach aligns the firm’s strategic plan and vision with how partners are evaluated and how they are compensated. It motivates partners to produce what the firm needs them…

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Transparency and Partner Compensation

Marc Rosenberg, CPA / May 31, 2016

If you ask 10 different people to define one of today’s buzzwords – transparency – you will get 10 different answers.  This post addresses “transparency” as it relates to a CPA firm compensation committee. Transparency defined Expectations of transparency applicable to compensation committees are: (1) making it easy for others to see how the process…

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How Comp Committees Assess Partner Performance

Marc Rosenberg, CPA / April 4, 2016

Firms use several methods to allocate income among the partners. At firms with 8 or more partners the compensation committee system is by far the most common. With this approach a small number of partners are elected to allocate income using their best judgment, formed after a thorough review and analysis of performance data. This…

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Partner Comp: one-tier vs. two-tier system?

Marc Rosenberg, CPA / November 2, 2015

Some partner compensation systems provide for both a base and bonus that are mutually exclusive. At other firms partners receive a salary or draw during the year and a year-end distribution that adjusts the salary or draw to one final income number, based on each partner’s performance for the year. What’s better, a one-tier or…

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The Importance of Ownership Percentage

Marc Rosenberg, CPA / June 1, 2015

Firms over-emphasize the importance of ownership percentage. We have repeatedly stated this opinion in our blogs and monographs. Taken to extremes, ownership percentage can be used to drive all of the “big 4” partner issues: partner income allocation, partner buy-in, partner buyout and voting.  At many firms, ownership percentage may not be the sole driver…

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Should a Partner Be Compensated for Bringing in a Merger?

Marc Rosenberg, CPA / April 6, 2015

This question has been posed to me by several partners over the years. As you might guess, the partners raising the question all had a hand in identifying firms that were either merged in or came close. Note: This question applies only to line, client service partners, not to partners whose specific job it is…

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Should Your Firm Allocate Partner Income by Comp Committee? Top 10 Reasons Why

Marc Rosenberg, CPA / September 2, 2014

The correlation between size of firm and use of a compensation committee to allocate partner income is no surprise to CPA industry observers – the trend seems to gather steam every year, according to The Rosenberg Survey. Now 61% of firms with 8 partners or more report the CC as their method of choice, and…

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How NOT to Run a Compensation Committee

Marc Rosenberg, CPA / March 31, 2014

Multi-partner firms use 4 systems to allocate partner income: (1) Compensation Committee, (2) Formula (aka “eat what you kill”), (3) Paper and Pencil and (4) MP decides. This missive focuses on the Compensation Committee, which is a group of elected partners entrusted to fairly and impartially allocate partner income based on performance.  For comp committees…

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