Extravagant Executive Pay at KPMG Amid High Unemployment Rates, Revenue Hike Cited As Cause
KPMG partners at UK receive higher average executive pay this year than in 2009 amid skyrocketing unemployment rates and claims from Accountancy and Actuarial Disciplinary Board that the firm failed to look into the accounts of BAE Systems which was charged by the Serious Fraud Office and the US Department of Justice with bribery and fraud.
Compared last year, average executive pay at KPMG has increased 10 percent to £763,000 in 2010. KPMG UK chairman John Griffith-Jones, whose earnings in 2009 amounted to £2.3 million, and other senior partners will receive higher executive pay than the average they received last year following KPMG’s profit rise, while those in lower post will get relatively lower salary.
However, the KPMG Europe’s revenue fell to £3.6bn due to divestiture of acquisitions and exchange rate behavior, though its global revenue has remained at US$20.63 billion for the fiscal year ended September 30, 2010 against US$20.11 billion in the previous financial year.
Chairman of KPMG International Timothy P. Flynn said the KPMG’s global revenue is a reflection of “positive and improving business performance.”
The rest of the accounting firms, on the other hand, are becoming insolvent in the first six months of 2010, with official figures stating 10,520 in the sector have suffered insolvency accounting for 17 percent overall.
One of the firms falling into insolvency is Begbies Traynor Group plc, a company established in 1989 that specializes in restructuring and has over 500 employees across 45 branches in UK. It has sustained a revenue decrease of £2.8m to £27m. Executive chairman Ric Traynor described the signs associated with high executive pay in other firms as good news, but only for them.
Traynor said this year’s Christmas will require moderation, adding that the sector must exercise restructuring as he predicted the number of companies falling into insolvency to be at 23,000 in the coming year, a 4.3 percent rise from 2010.