How much of partner/MD salary is variable at big4? I’ve heard the first year $400k-ish number from big4.. but is that base comp or variable based on meeting sales targets?

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There is some variability across firms. I am with Deloitte and for us, the way it works is I buy into the partnership “units” of ownership. A young partner might “buy in” at 400 units. We control the distribution of units to peg the annual unit value at $1000. So distribution of new units is dependent on retiring partners putting their units back into the pool and growth. As a firm, we are pretty good about getting to at least the $1000/unit Mark - in the past 10 years, 2008 was the only time we came in under value (and even then it was in the high $900s. But most years we do a little better and unit value comes in between $1050 and $1150. So if you have those 400 units you would make a bit more (in the case of that 400 unit partner at $1050 they would make $420K and at $1050 they would make $460K). Most partners when they cite their income will give you the #of units x $1000. But in a good year we can make more (and in a bad or poorly planned year we can even make less).

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The cost per unit is one of the more variable parts by firm and it has changed 3 times while I have been a partner. Foe us, required capital per unit is currently $775. Most of us take loans to cover the cost of our units.

This is actually where things start to get more complicated. You earn interest on your invested capital that helps offset the loan interest but builds up a deferred tax liability. When you cash in your units in retirement, you also pay these taxes.

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P1 - this is the first cogent explanation I’ve seen/heard of how this works. Not sure why this stuff gets shrouded in so much mystery. Thank you!

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P1 is it accurate that you then automatically buy more units each subsequent year in order to increase your income, and how is it determined how many you can buy? How much does it cost to buy each unit (presumably much less than $1000)? Thanks!

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P1 - How much does a unit cost? Just trying to understand when a young partner tries to buy 50 additional units in their second year, how much do they need to put down? I guess it depends on a few factors but just trying to get a ball park figure!

Anybody know how a non equity partner or MD comp works?

Thanks P1, very helpful !

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