Partner compensation--always an important topic.

With all the changes taking place within the profession, ranging from Sarbanes-Oxley to succession planning, the one topic that continues to remain hot is the area of partner compensation.

Oftentimes in multi-partner firms, it is not so much about how much one makes but, more importantly, their relative income to other partners within the firm. Larger firms have the luxury of changing to "closed" compensation, whereby only the managing partner and/or compensation committee know what everyone makes. Smaller firms, however, continue to sit around the table and either create a formula to determine compensation or allow themselves to be ruled by "the king."

One thing is certain about partner compensation--it needs to change and reflect the overall goals of what the firm and its partners are trying to achieve. Too many firms have kept the same partner compensation process or formula for many years, simply because they want to avoid any type of debate or negative conversation that might accompany potential changes. Great firms understand that partner compensation is a moving equation and adjust it annually so that it is consistent with firm vision, goals and direction.

Recently, more firms have created a two-tiered partner compensation structure in which they have created equity and income partners, much like many of the nation's largest law firms have used for many years. This, too, comes with many challenges. While on one hand, it can group partners more on a risk-reward basis, it also can create a second-class feeling among the income partners if not presented properly.

The AICPA is sponsoring a conference for CPA firms on the topic of partner compensation. It will be moderated by Allan D. Koltin, CPA, President & CEO of PDI Global, Inc. "Without a doubt, partner compensation remains a topic of great debate within CPA firms. Recently I came across the perfect partner compensation formula. It came from a sole practitioner who told me he had never had a compensation problem with any other partner!" The conference is scheduled for June 23-24 at the Bellagio in Las Vegas and will include many of the industry's top managing partners and consultants. For additional information, call 866/265-1975 or visit www.northstarconferences.com/web3.