Employment Agreement - Heidrick & Struggles Inc. and Stephanie W. Abramson
[LETTERHEAD OF HEIDRICK & STRUGGLES]
December 28, 2000
PERSONAL & CONFIDENTIAL
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Ms. Stephanie W. Abramson
101 Central Park West
New York, NY 10023
Dear Stephanie:
On behalf of Heidrick & Struggles, Inc., I am pleased to confirm our offer of
employment to you as Chief Legal and Corporate Development Officer and Corporate
Secretary reporting to the Chief Executive Officer of Heidrick & Struggles
International, Inc (the "Company"). You will also have the internal title of
Senior Partner. You will serve as Secretary of the Board of Directors of the
Company, and as such, will be expected to attend all Board meetings. You will
also be a member of the "Office of the CEO" and will be asked to participate in
our Heidrick Ventures division. Initially and until otherwise specified within
mid-town Manhattan, you will be located in our 245 Park Avenue, New York office.
Attached to this letter, for reference purposes, is a copy of my November 30,
2000, memorandum to you which outlines my view of your initial responsibilities.
I look forward to seeing you on February 12, 2001, your first day of employment.
Your monthly base salary is $45,833.34, which equals $550,000.00 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 of which $300,000 is
guaranteed 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.
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
within 30 days of your employment start date. 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 of 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>
Ms. Stephanie W. Abramson
December 28, 2000
Page Two
In addition, within 30 days following your employment start date, the Company
will loan you $925,000.00 to be evidenced by a non-interest bearing Promissory
Note ("Note") payable on December 31, 2004, 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 you have resigned for Good
Reason) on the following forgiveness dates: $462,500.00 on December 31, 2002;
$231,250.00 on December 31, 2003; and $231,250.00 on December 31, 2004. 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 is authorized to deduct the amounts required to be withheld from your
cash bonus(es), or, if the bonus amount is less than the withholding, you will,
immediately within 10 days, reimburse the Company for withholding payments made
to the extent not covered by your bonus. The Company will reimburse you on a
grossed-up basis for any income tax arising out of the interest-free nature of
the loan.
In the event the Company terminates your employment without Cause or you resign
for Good Reason prior to March 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 corporate management.
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.
<PAGE>
Ms. Stephanie W. Abramson
December 28, 2000
Page Three
. 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.
. 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 Company, 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 Company in substantially the same proportions
as their ownership of stock of the Company), becomes the
Beneficial Owner, directly or indirectly, or securities of the
Company 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
your employment start date), individuals who, at the beginning of
such period, constitute the Board, and any new direction (other
than (A) a director nominated by a Person who has entered into an
agreement with the Company to effect a transaction described in
Sections a, c, or d herein, (B) a director nominated by any
Person (including the Company) 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 Company representing
10 percent or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for
election by the Company'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;
<PAGE>
Ms. Stephanie W. Abramson
December 28, 2000
Page Four
c) The stockholders of the Company approve any transaction or series
of transactions under which the Company is merged or consolidated
with any other company, other than a merger or consolidation (A)
which would result in the voting securities of the Company
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 Company 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 Company or such surviving entity or
its parent corporation; or
d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
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
policies are reviewed from time to time by Company management and may be
modified, amended, or terminated at any time.
The Company will pay the cost of maintaining your membership in good standing as
a lawyer admitted to practice in New York including without limitation your dues
and the expenses of continuing legal education and it shall pay the cost of your
membership in the American Bar Association and The Association of the Bar of The
City of New York. In addition, the Company will pay or reimburse you for dues
for two business club memberships that you use in connection with business.
The Company shall reimburse you for all of your business expenses in accordance
with its policies. You shall be entitled to first-class of air travel when you
determine there is a business need for it. The Company's Physical Examinations
Policy shall apply to you effective immediately upon your employment start date.
The Financial Planning Program for Senior Partners will also apply to you.
<PAGE>
Ms. Stephanie W. Abramson
December 28, 2000
Page Five
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 give both of us maximum
flexibility and permits 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.
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
Enclosures
I hereby accept the terms and conditions of employment as outlined above:
/s/ Stephanie W. Abramson December 28, 2000
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Stephanie W. Abramson Date