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ICAEW defends payout for outgoing CEO

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The Institute of Chartered Accountants in England and Wales is embroiled in another row about money, this time concerning the alleged golden handshake paid to outgoing boss, Michael Izza.

13th Jun 2023
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The Institute of Chartered Accountants in England and Wales (ICAEW) has denied claims it will hand its retiring chief executive a golden handshake of double his annual salary when he stands down later this year.

Michael Izza (above) is leaving after 21 years at the accounting body, but questions about the terms of his exit have clouded his retirement announcement.

Sky News cited sources indicating his goodbye payout could be twice his annual base salary of £492,000 – but an alternative source puts the figure closer to £250,000.

Industry figures also told the broadcaster that Izza’s final wage packet could include other benefits not in the top line figure. 

A spokesperson for the ICAEW told AccountingWEB it “categorically refutes” claims that Izza will receive twice his annual salary when he retires from the 143-year-old institution.

“In March, Michael Izza announced his decision to retire from ICAEW by the end of this year,” a spokesperson told AccountingWEB. “The terms of his departure are in compliance with his contract of employment.”

The chief executive was awarded £630,000 last year. His base salary of £492,000 was topped up with deferred variable pay of £138,000, according to the ICAEW’s annual report

The ICAEW said the total remuneration of the CEO would be published in its next annual report, due in April 2024.

Public record

When questioned over the transparency of its finances, the ICAEW said its reserves are a matter of public record “and we have always been transparent about them”. 

“They exist to sustain ICAEW over the long term in its commitment to serve the public interest,” the spokesperson said. “A strong balance sheet makes ICAEW a resilient and enduring force for good in the economy and enables us to fund initiatives that support our strategy and are consistent with the obligations set out in our Royal Charter.”

The body invests in various non-profit initiatives, it said, including a programme that gives students from disadvantaged socio-economic backgrounds the opportunity to gain workplace skills.

ICAEW’s “hoarding” of fines in recent years, rather than dispersing to stakeholders or using the income to reduce membership charges, has irked many in the sector, however. 

In February 2022, the association was forced to defend its decision not to donate the £13.5m it received in sanctions from a major insolvency to the bankrupt firm Silentnight’s pension fund following a barrage of criticism.

Political and media pressure to compensate the pension holders with the award from the Financial Reporting Council (FRC) prompted the institute to respond that it had earned a “windfall” and that the costs of its investigations are rarely reclaimed.

KPMG was fined in August 2021 for its conduct in the sale of Silentnight, which became insolvent as the business’s pension scheme ended up in the Pension Protection Fund.

Profit centre

Industry figures such as accounting and tax campaigner Richard Murphy have recently questioned the “extraordinary impact” of the fines levied by the ICAEW on its members which are paid to the regulator, the Financial Reporting Council (FRC).

“The FRC Conduct Committee of the ICAEW has become a profit centre for the ICAEW since 2015, as have fines received,” Murphy said. “Income from these combined sources reached £29.8m in 2020. Reserves have grown dramatically. And nowhere is there any sign that the ICAEW has any plan to put these funds to public use, which is the obligation imposed on it by its Royal Charter.”

A spokesperson for the ICAEW said until recently, many audit-related investigations undertaken by the FRC were funded by the mechanism set out in the Accountancy Scheme established by the regulator in 2004. 

“Under the scheme, accountancy professional bodies paid for these FRC investigations in advance and in return, they received any fines imposed by the FRC,” the spokesperson told AccountingWEB. “All audit investigations by the FRC are now being conducted under its Audit Enforcement Procedure, introduced in 2016, by which all fines in those cases pass to HM Treasury.”

The ICAEW “would welcome the closure of the Accountancy Scheme” for non-audit investigations as well, with the money from all fines in all cases in future going to HM Treasury, the spokesperson added.

“We expect that the proposed Corporate Governance and Audit Reform Bill will enable the regulator to do this, and we continue to urge the government to bring this legislation forward at the earliest opportunity,” they said.

Sector clean-up

The ICAEW also praised the impact Izza has had on the profession during his time in charge of the institution. It said he has led calls for the government to overhaul audit and corporate governance “and continues to urge the UK Government to bring this legislation forward at the earliest opportunity”.  

In January, Izza criticised the government for stalling on its promise to clean up a sector that had become mired in sleaze and scandal, noting that the intended changes had been “kicked into the long grass” five years on from the low of the Carillon debacle.

“Michael has successfully led the transformation of the organisation to the world leader that it is today,” added Julia Penny, ICAEW’s outgoing chair. “He will be greatly missed by us all and we are very grateful for his dedication to the organisation and his many achievements during the past 21 years.”

A search for Izza’s successor is ongoing.

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Replies (15)

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By Justin Bryant
13th Jun 2023 13:54

I'm sure there were all kinds of funny handshakes going on here.

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Replying to Justin Bryant:
paddle steamer
By DJKL
13th Jun 2023 14:40

Surely they also needed some Bake Off outfits to make things square.

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By Hugo Fair
13th Jun 2023 17:18

Forget the (extraordinary) numbers ...
... when someone "announces a decision to retire" (presumably volunteering to do so), why is there *any* 'golden handshake' on the table?

This is usually, despite whatever clever words the lawyers use to wrap around it, compensation of some sort (with the inference that the termination was instigated at the behest of the employer) ... so what's the missing story here?

And, “Michael has successfully led the transformation of the organisation to the world leader that it is today” raises a few questions:
1. So it wasn't a 'world leader' (whatever that is) back in 2006?
2. What are the transformations and how has he personally led them?
3. Why is he leaving now (with no replacement identified)?

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Replying to Hugo Fair:
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By Arcadia
14th Jun 2023 10:15

The report says that any payments will be in accordance with Izza's contract, so if it says he gets a termination payment, then that's what he should get. Sounds like a fishing expedition to obtain a story based on speculation, hearsay any maybe a leak of a rumour to me.

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Replying to Arcadia:
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By Hugo Fair
14th Jun 2023 10:27

Actually it was a spokesperson who told AccountingWEB: “The terms of his departure are in compliance with his contract of employment.”

And you're correct in inferring that I place less reliance on the words of anonymous spokespeople (paid to put a positive spin on matters troubling their employer) than I do on official statements - especially when they just repeat tried & trusted phrases that have been trotted out on countless previous occasions.

I never suggested that he was being paid 'outside' of contractual terms ... but will continue to question (a) why there are such generous terms available to him (but not to all other staff)?, and (b) what has triggered resignation and payment?

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John Toon
By John Toon
13th Jun 2023 22:09

Don't worry everybody I'll throw my hat in the ring. I'm both an accountant and like money (golden or otherwise) so eminently qualified.

Surprising that the only positive change to have happened at ICAEW over the last 20 years hasn't once been mentioned in any of the press so far - the removal of paywalls for the majority of special interest groups and faculties. It's always been a nonsense to restrict knowledge from those unwilling/unable to pay and then we wonder why the quality (perceived or otherwise) of the sector has diminished.

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Replying to johnt27:
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By Justin Bryant
14th Jun 2023 11:06

Possibly I'm in a minority, but 99% of ICAEW's website content (paywalled or otherwise) is of little or no use/interest to me. It seems to be mostly the usual boring bumpf you can easily get elsewhere for nothing if you're so inclined.

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Replying to Justin Bryant:
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By marlin
15th Jun 2023 10:56

Totally agree, not to mention the many emails I get every week from ICAEW

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By ralan
14th Jun 2023 10:09

He was employed to do a job and is now retiring so why is he getting an additional pay off unless someone wrote it into his contract and now we are left with paying him who knows what for what?
Some transparency needed here.

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Replying to ralan:
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By tom123
14th Jun 2023 10:18

Football management rules, no doubt.

As / when I retire, I will simply give in my notice, work to my last day and hopefully leave with a modest send off.

This sounds like a compromise agreement in all but name.

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Replying to tom123:
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By Hugo Fair
14th Jun 2023 10:33

That's the 'contractual terms' argument.
But at least in the case of football managers those terms are on based on the twin pillars of fixed-term contracts and expected short shelf-life ... oh and payment is triggered when your employment is terminated (not by you choosing to resign).

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Replying to ralan:
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By tedbuck
14th Jun 2023 14:00

Obviously as a subscriber to the ICAEW I have no say in how they spend my money.... but what has got better over the years in which he has been IC? HMRC have been allowed to decline without any comment, we have HMG's AML policies which are making us profitless - no real comment from ICAEW except 'you gotta do it people or we'll fine you.'
No real progress on making audits sensible and do-able - more and more paperwork.
Lots of Standards to make accounts even more unreadable than they are now and so on.
In my view he shouldn't get a golden handshake at all but just leave and pass the message on to Jim Harra as he goes.

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By Ben Alligin
14th Jun 2023 10:16

In line with ICAEW fines to the Big 4, would his payout be reduced by 25% if he went early?

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By marlin
15th Jun 2023 10:55

It seems an excessively high payment considering how many members are struggling

Its alright for the boys at the high table

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By STONEFIELD
15th Jun 2023 12:24

I'm so glad that I've resigned my membership. I got very little out of it when I was in practice.

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