Accenture Managing Director Compensation

Accenture Managing Director compensation can add up over time, but you might feel like you got a pay cut in the beginning thanks to the VEIP.

If you’ve recently been promoted to Managing Director, or you’re currently an MD who wants some direction on managing your compensation, you’ve come to the right place.

Let’s review the various compensation elements and get into a five-year example of how the various grants unfold.

What are the Accenture Managing Director Levels?

Most people on the outside think once you’re an MD, you’ve reached the pinnacle, without realizing the multiple levels of MD.

New Managing Directors start at level 4 and work their way down the scale composed of letters (4.A, 4.B, 4.C). Logically, the next MD tier is level 3, with the same letter progression to level 2.

The highest level you can reach is 1, which has various levels, including Accenture’s CEO.

You can jump a full number level and skip letters, but most promotions are a letter at a time.

How much do Accenture Managing Directors Make?

There are five main categories for Accenture Managing Director compensation:

1. Salary
2. Annual cash bonus
3. Annual equity bonus
4. VEIP equity
5. MD grant

Let’s go through each category before adding it all back together for total compensation.

1. Accenture MD Salary

As with most large companies, Managing Director salaries fit within pay bands based on level and geographical locations.

You’re going to make more in NYC or San Francisco than you are in Omaha or Indianapolis. There are only a couple of these higher costs of living cities.

Salaries fall within set pay bands based on level and practice. Pay bands aren’t broken out separately in public salary information, but the averages still give you a good idea.

A LinkedIn survey puts the average base salary at $270,000 but ranges from $225,000 to $386,000.

These ranges are pretty accurate for levels three and four, but L2 and L1 go much higher.

PayScale has a similar overview of Accenture Managing Director compensation but also includes estimates for profit sharing.

Additionally, Accenture did a mid-year salary increase for Managing Directors in 2021 to stay competitive. Around 25% of MDs received a raise, anywhere from 5% – 35%!

2023 Note: the last two years definitely haven’t experienced the same upside as 2021!

Because of this, the average salary base ranges increased an estimated 5%-10%.

2. Accenture MD Annual Cash Bonus

You can expect an annual cash bonus on top of your salary as an MD, which typically pays out in December.

Cash bonuses for Accenture MDs are targeted by MD level; the top targets are usually reserved for promotion years.

You can do the math, but GlassDoor shows the average cash bonus at $50,000, which includes the GAB and IPB.

A separate FishBowl survey of 16 MDs showed the average bonus just over $42,000 in 2019.

These bonuses can add up, but they feel much smaller after paying taxes and contributing to the VEIP.

3. Accenture Managing Director Equity Bonus

Accenture knows how to put out carrots to keep MD’s around with RSU grants, and one of these is the annual equity bonus.

Equity awards are awarded during the promotion process, and a standard “new MD grant” is awarded upon the initial promotion to L4.

GlassDoor shows an average equity bonus of $55,000 and the fishbowl average for non-promotions was just over $60,000 for 2019.

Just as with cash bonuses, these increase substantially with promotions.

The equity bonus is given as an RSU (restricted share unit) grant with the dollar amount awarded converted to shares based on the conversion date price.

To keep you around, these equity awards RSU’s vests on a three-year schedule, with 1/3rd of the value vesting each successive year on January 1st, with an acceleration after age 50.

If you’re making $300k and receive a 30% equity grant for a total of $90k, your $90k grant is converted into shares.

If your shares increase 10% the first year, your first equity grant is now worth $33k. You can see how this adds up once you start stacking multiple years of equity on top of each other.

For tax purposes, each time a new award vests, it will be counted as income and taxed accordingly.

4. Voluntary Equity Investment Program (VEIP)

Accenture’s Voluntary Equity Investment Program (VEIP) allows Managing Directors to purchase stock each paycheck which receives a 50% matching RSU grant at the end of the program year.

Once you reach MD, you’ll no longer have access to the Employee Share Purchase Plan (ESPP) or a 401k match, but maxing out the VEIP more than makes up for it.

The ESPP program allows Accenture employees under the level of MD to contribute 10% of their salary to stock purchases and receive a 15% discount.

The VEIP is much more powerful than the ESPP.

MDs can contribute 30% of their total gross cash compensation to the program, which includes cash bonuses.

The VEIP program is riskier than the ESPP because you lose the “bonus” RSU grant if you don’t meet all qualifications.

There are two major qualifiers:

1. You have to keep all purchased shares in Accenture stock throughout the program year until the VEIP RSU’s are granted on Jan 5th
2. VEIP RSU’s vest in two years; if you leave before this time, you lose the shares

VEIP Example

If your total cash compensation includes a $300k salary and a $30k bonus, your $330k total compensation will allow you to purchase $99,000 in Accenture shares throughout the year.

After you qualify for the VEIP RSU grant, you’ll receive one share for every two shares you purchased throughout the year.

The stock price fluctuates, so even though your share purchases will be the same dollar amount, the number of shares could differ each month.

Let’s say the above VEIP purchased 400 shares. Your VEIP RSU grant will be for 50% of the share total or 200 shares.

The 200 shares will vest in two years from the grant date, and the full amount is taxed as income.

The biggest challenge with the VEIP program is the major hit to your cash flow in the first two years as MD until your VEIP shares “unlock” each year and until your VEIP RSU grants start vesting.

You can read about strategies for solving the cash flow issues for MDs.

5. Accenture new Managing Director equity grant

Promotion to Managing Director comes with one of the biggest Accenture carrots, a large equity grant that vests in five years.

This is an all or nothing grant, and if you leave before five years, you don’t get any of it!

The equity grant is “converted” into shares as soon as the grant is awarded, so there’s a possibility the stock price could double in five years, meaning your grant value will also double.

Outside hires into the MD level can receive substantially more, and vesting timeframes can vary.

The only downside is the entire “updated” grant amount counts as income when it vests after the five year period, so you’ll pay huge taxes and should plan accordingly.

Accenture Managing Director Total Compensation Package

As you can see above, there are multiple compensation pieces to factor in when calculating the total compensation for Accenture MDs.

You lose some opportunities from lower management levels such as the ESPP, 401k matching, and profit-sharing, but the equity grants and VEIP more than makeup for it.

The Glass Door survey places the average total compensation at $355,000 and ranges from $245,000 to $521,000. However, total compensation for Level two and level one can double that.

This amount only includes salary and cash/equity bonuses, so VEIP and MD grants are additional.

Accenture MD equity ownership rules

Another thing to think about with MD compensation is the requirement to hold a certain amount of Accenture eqiuty.

L4 Managing Directors are required to hold 50% of their base salary in Accenture stock, and L3’s are required to hold 100% of their salary in Accenture stock.

There’s a five-year window of when these numbers need to be hit, so luckily, they factor in the lack of cash flow and equity for the first few years as an MD.

Accenture MD salaries are often lower than other consulting firms. However, when you look at total compensation and the amount of equity you can build, things can even out.

While Accenture shares averaged a 17% return from 2012 to 2021, the last two years have been much more challenging. In fact, many of the purchases made in 2021 and 2022 were made at a higher price than where the stock sits today. This highlights the big risk of equity-based compensation.

If you’re a Managing Director and want more compensation information, be sure to check out my Accenture Managing Director Playbook with 30 pages of compensation information and strategy.