Abstract
Partner compensation is one of the most controversial and least understood topics among accounting professionals. Accounting professors do not discuss partner compensation with students, nor do firm partners explain the system to new hires and senior staff. One reason for this silence is that many different partner-compensation models exist, each with its own advantages and disadvantages. In the authors' discussions with partners, the themes of fairness, retirement, and rewarding top performers continually emerged. While each firm and partner are different, the following basic tenets should be considered when adopting a partnership compensation model: 1. The model must be perceived as fair by both junior and senior partners. 2.The model must not bankrupt the firm upon the retirement of senior partners. 3. The model must reward top performers. 4. The model may have to be changed as the firm evolves.