E&Y's Privacy Falls Prey to Divorce Court's Discretion
Ernst & Young fought to preserve the privacy of information related to the firm's valuation and its chief executive's compensation. But more details were exposed in a divorce court ruling than any accounting firm would want its competitors to know.
Robert MacGill of Barnes & Thornburg, the law firm that represented CEO Richard Bobrow's wife, told the New York Times that two of the other Big Four firms have already started inquiring into the disclosures in the unusually detailed 45-page opinion written by the divorce court judge.
In addition to being a potential source of previously proprietary information for other firms, the court opinion is expected to be of interest to attorneys representing spouses of other accounting firm partners. It explains the technique used by the court to value the CEO's stakes in EY and its former consulting arm, now a part of Cap Gemini.
Elements of executive compensation of particular interest to other firms and spouses include Mr. Bobrow's earnings, which were estimated to be in the neighborhood of $3 million in 2000 and 2002, and his use of a corporate jet owned by the firm and an apartment in New York, as well as a pension that allows him to retire at age 58.
The appraisals in the case were provided by an accountant at Arthur Andersen. The court awarded Mrs. Bobrow 60% of the couple’s net worth, plus $100,000 in part to compensate her for the cost of investigating the firm's financial information. An EY spokesman said Mr. Bobrow is appealing the decision.