Employment Agreement - Heidrick & Struggles Inc. and Knox Millar
[LETTERHEAD OF HEIDRICK & STRUGGLES]
June 4, 2001
PERSONAL & CONFIDENTIAL
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Mr. Knox Millar
575 Park Avenue
Apartment 909
New York, New York 10021
Dear Knox:
On behalf of Heidrick & Struggles, Inc., I am pleased to confirm our offer of
employment to you as Chief Human Resources Officer reporting to the Chief
Executive Officer of Heidrick & Struggles International, Inc. (the "Parent").
You will also have the internal title of Senior Partner. You will be a member
of the Office of the CEO ("OOCEO") or its equivalent. Initially and until
otherwise specified within mid-town Manhattan, you will be located at our 245
Park Avenue, New York office.
I look forward to seeing you on June 25, 2001, your first day of employment.
Your monthly base salary is $41,666.67, which equals $500,000 annually.
Currently, salaries are reviewed annually in November/December, so you can
expect your first salary review in November/December 2001.
Your annual bonus target for 2001 is 100% of base salary to be paid when bonuses
are paid in December of 2001 and March of 2002. Following 2001, you will
participate in the regular bonus program then in effect for employees at your
level. Bonuses are discretionary and are not earned until approved by the
Compensation Committee and/or the Board of Directors of the Company and, subject
to the paragraph below relating to Termination Without Cause including
Resignation for Good Reason and Change in Control, will be payable only if you
are in the Company's employ on the regular bonus payment dates. Your total cash
compensation will be subject to the Heidrick & Struggles GlobalShare Program.
As such, any bonus you receive may be partially paid in equity in accordance
with the GlobalShare Program and in the same proportion as other members of the
OOCEO.
You will receive a stock option grant to purchase 25,000 shares of Heidrick &
Struggles International, Inc. common stock. The options will be granted to you
on the first trading day of the calendar quarter next succeeding the date on
which your employment commences. The options will be issued at Fair Market
Value on the date of grant, will vest in increments of 25% on the first, second,
third and fourth anniversaries on the date of grant, and will have a five-year
term, except to the extent that vesting will be accelerated pursuant to the
terms of the plan under which they are granted or in connection with a change
in control.
<PAGE>
Mr. Knox Millar
June 4, 2001
Page 2
In addition, within 30 days following your employment start date, the Company
will loan you $700,000 to be evidenced by a non-interest bearing Promissory Note
("Note") payable on June 30, 2005, except that, unless your employment is
terminated by the Company without cause or you have resigned for Good Reason, if
you cease to be in the Company's employ, then the entire principal balance of
the Note then remaining due shall, without demand or notice of any kind, be and
become immediately due and payable within 30 days.
The Note will be forgiven if you are in the Company's employ (unless the Company
has terminated your employment without cause or if you have resigned for Good
Reason) on the following forgiveness dates: $125,000 on June 30, 2002, $225,000
on June 30, 2003; $175,000 on June 30, 2004 and the balance on June 30, 2005.
The income arising from the loan principal forgiveness will be subject to
personal income tax withholding attributable to the forgiveness income when due.
The Company will reimburse you on a grossed-up basis for any income tax arising
out of the interest-free nature of the loan. The Company is authorized to
deduct the amounts required to be withheld from your cash bonus, or, if the
bonus amount is less than the withholding, you will, within 10 days, reimburse
the Company for withholding payments made to the extent not covered by your
bonus.
In the event the Company terminates your employment without Cause or you resign
for Good Reason prior to August 31, 2002, you shall be entitled to receive as
severance pay, in a lump sum as soon as administratively feasible after the date
of termination or resignation for Good Reason, an amount equal to twelve months
of base salary plus the full amount of your target bonus for the year in which
the termination occurs. Thereafter, except in connection with a Change in
Control as set forth below, in the event the Company terminates your employment
without Cause, you shall be entitled to receive as severance pay an amount
consistent with the Company's then existing policy for members of the OOCEO.
In the event the Company terminates your employment without Cause or you resign
for Good Reason within one year following a Change in Control, you shall be
entitled to receive as severance pay, in a lump sum as soon as administratively
feasible after the date of termination or resignation for Good Reason, an amount
equal to (i) twelve months of base salary plus twelve months of target bonus and
(ii) the prorated portion of your target bonus for the year in which the
termination occurs based on the number of months worked in such year. You shall
also be entitled to either continuing participation in disability coverage or
the reimbursement on a gross-up basis for the premium costs for disability
coverage, until the first anniversary of termination of employment or
resignation for Good Reason or such time as you are covered by comparable
programs of a subsequent employer. The Company shall also reimburse you for
costs attributable to your participation in COBRA. In addition, all outstanding
options or other equity instruments may become immediately exercisable in
accordance with the terms of the 1998 Heidrick & Struggles GlobalShare Program
I, as amended from time-to-time, and the terms of any successor equity programs.
In the event that a Change of Control payment to you is required, the Company
agrees to reimburse you for the excise tax, if any, incurred by you under
Internal Revenue Code (S)280G.
The term "Good Reason" shall mean (i) a diminution of the amount of your base
salary or target bonus or benefits or level of eligibility for stock options or
other incentive programs unless such diminution is consistent with other
employees at your level; (ii) the elimination of your position or a diminution
of responsibilities associated with your position; or (iii) a change in the
location of your principal place of employment more than 50 miles in radius from
its initial location without your approval.
<PAGE>
Mr. Knox Millar
June 4, 2001
Page 3
The term "Cause" shall mean:
(a) Fraud, or the embezzlement or misappropriation of funds or property of the
Company or any of its affiliates by you, the conviction of, or the entrance
of a plea of guilty or nolo contendre by you, to a felony, or a crime
involving moral turpitude;
(b) Neglect, misconduct or willful malfeasance which is materially injurious to
the Company or any of its affiliates;
(c) Willful failure or refusal to perform your duties, or a willful, material
breach of contract.
The term "Change in Control" shall mean the occurrence of any of the following
events:
(a) Any person (other than the Parent, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company
owned, directly or indirectly, by the stockholders of the Parent in
substantially the same proportions as their ownership of stock of the
Parent), becomes the beneficial owner, directly or indirectly, of
securities of the Parent representing 20 percent or more of the combined
voting power of the Company's then-outstanding securities;
(b) During any period of 24 months (not including any period prior to the
effective date), individuals who, at the beginning of such period,
constitute the Board, and any new directors (other than (A) a director
nominated by a person who has entered into an agreement with the Parent to
effect a transaction described in clauses (a), (c) or (d) under this
caption, (B) a director nominated by any Person (including the Parent) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which, if consummated, would constitute a Change in Control, or (C) a
director nominated by any person who is the beneficial owner, directly or
indirectly, of securities of the Parent representing 10 percent or more of
the combined voting power of the Parent's securities) whose election by the
Board or nomination for election by the Parent's stockholders was approved
in advance by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(c) The stockholders of the Parent approve any transaction or series of
transactions under which the Parent is merged or consolidated with any
other company, other than a merger or consolidation (A) which would result
in the voting securities of the Parent outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its
parent corporation) more than 66-2/3 percent of the combined voting power
of the voting securities of the Parent or such surviving entity or its
parent corporation outstanding immediately after such merger or
consolidation, and (B) after which no person holds 20 percent or more of
the combined voting power of the then-outstanding securities of the Parent
or such surviving entity or its parent corporation; or
(d) The stockholders of the Parent approve a plan of complete liquidation of
the Parent or an agreement for the sale or disposition by the Parent of all
or substantially all of the Parent's assets.
<PAGE>
Mr. Knox Millar
June 4, 2001
Page 4
You will be entitled to participate in the Heidrick & Struggles International,
Inc. GlobalShare equity programs based upon your performance and attainment of
your goals and objectives in the manner consistent with other employees at your
level. Grants under these programs are subject to approval by the Board of
Directors or Compensation Committee of Heidrick & Struggles International, Inc.
You will be eligible to participate in our benefits program and will receive a
detailed guide on your starting date. Our benefits program includes group
health and life/AD&D insurance, long-term disability, short-term disability
salary continuation, time-off benefits (vacation, paid holidays, paid sick
time), the Flexible Spending Account, and the Heidrick & Struggles, Inc. 401(k)
Profit-Sharing and Retirement Plan. Our benefits program, bonus programs, and
polices are reviewed from time to time by Company management and may be
modified, amended, or terminated at any time.
The Company will pay or reimburse you for dues for a health club.
The Company will provide you on a grossed-up basis with two round-trip tickets
per year between New York and London (or the equivalent location) in accordance
with the Company's travel policy in effect at the time.
The Company will reimburse you for all of your business expenses in accordance
with its policies. You will be entitled to first-class of air travel when you
determine there is a business need for it. The Company's Physical Examinations
Policy will apply to you effective immediately upon your employment start date.
The Financial Planning Program for Senior Partners will also apply to you.
Before I conclude, let me highlight a few legal matters:
. You will be an "employee at will" unless or until we otherwise agree in
writing. The purpose of this arrangement is to permit either of us to
terminate employment and compensation at any time with or without cause or
notice, except for such period of notice as may be expressly provided in
writing under written company employment policies in effect at the time of
such termination.
. Your initial and continuing employment will be subject to your having the
ability to work legally in the United States.
. You have advised us that you have not signed any agreements that will, in any
way, prohibit your joining our firm or performing your work with us.
. This letter agreement and enclosures contain our entire understanding and can
be amended only in writing and signed by you and the Chairman, President and
Chief Executive Officer. You specifically acknowledge that no promises or
commitments have been made to you that are not set forth in this letter.
<PAGE>
Mr. Knox Millar
June 4, 2001
Page 5
To help clarify the programs and policies discussed above, I have included
several enclosures. There are also some documents for you to sign. Please
contact me directly if you have any questions. To acknowledge your acceptance
of our offer of employment, please sign and return to me the enclosed copy of
this letter along with the Confidentiality Agreement (relating to trade secrets,
confidential information, clients, etc.), which we ask all employees to sign.
Again, I am pleased that you have chosen to join the Heidrick & Struggles global
family. Please accept my best wishes for a most successful and prosperous
career with us.
Yours sincerely,
/s/ Patrick S. Pittard
Patrick S. Pittard
Chairman, President and Chief Executive Officer
I hereby accept the terms and conditions of employment as outlined above:
/s/ Knox Millar June 12, 2001
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Knox Millar Date