While Accenture salaries may lag behind some of the other big consulting firms, Managing Directors at Accenture have an incredible opportunity to build a lot of equity.
Equity-building is encouraged early at Accenture, with the offer of the employee share purchase plan (ESPP) to nearly all employees.
It continues with Managing Directors who lose their access to the ESPP but can invest in the Voluntary Equity Investment Program (VEIP).
However, the biggest chunk of equity is awarded with the promotion to Managing Director.
How does the Accenture new MD grant work?
Upon promotion to Managing Director, MDs receive an equity grant that vests in five years.
The equity grant is “converted” into shares as soon as the grant is awarded, typically January 1st following the year of the promotion.
For example, if Jamie was promoted to L4 in November 2022, her grant will be awarded on Jan 1, 2023, and it would vest in five years, or Jan 1, 2028.
The L4 new MD grant is the only “set” award of its kind.
When MDs are promoted to L3 or higher, there isn’t a set grant amount, but instead, the promotion grants are awarded based on the individual.
The new Managing Director grant serves dual purposes:
- Incentivize MDs to stick around for five years and boost pay
- Help MDs build up the equity they’re required to hold
It’s an all or nothing grant, so if you leave before five years, you don’t get any of it!
New MD Grant Strategy
While this grant may seem like a great opportunity to buy a second home or that dream boat, in reality, most Accenture MDs will need to continue to hold the stock after it vests to satisfy their MD equity requirements.
L4 MDs are required to hold the value of 50% of their base salary in Accenture stock, and L3s need to hold 100% of their base salary!
Unvested equity counts, and you have five years after promotion to hit this ownership milestone.
Tax Implications
The only downside is the entire grant amount counts as income when it vests after the five year period, so you’ll pay huge taxes.
It’s a great problem to have, but depending on your state taxes, there’s a good you’ll lose half of the grant to taxes. This is just one reason cash flow can be an issue for MDs.
The new MD equity grant is just one piece of the Managing Director’s total compensation, but it’s a valuable one.