Employment Agreement - Heidrick & Struggles Inc. and Patrick S. Pittard
Heidrick & Struggles
Consultants in Executive Search
Richard D. Nelson
Partner February 26, 1999
Chief Administrative Officer
Counsel
Mr. Patrick S. Pittard
6390 River Chase Circle
Atlanta, Georgia 30328
Dear Pat:
The purpose of this letter is to amend and restate in its entirety your
September 18, 1997, employment agreement with Heidrick & Struggles, Inc., as
follows:
1. Your monthly base salary is $58,333.34 (which is $700,000.00 annually).
Currently, salaries are reviewed annually in December, so that your next
annual salary review will be in December 1999.
2. You will continue to be eligible for a discretionary bonus. During your
tenure as CEO, your bonus range will be 50% to 200% of your base
compensation. You understand that all bonuses are discretionary and not
earned until declared by the Board of Directors. Currently, all bonuses are
paid in December, and all bonuses are payable only if you are in the employ
on the bonus payment date(s).
You will continue to be eligible to participate in the company's car
program, and if the current program is discontinued or benefits reduced, an
appropriate CEO car program will be established for you during your tenure
as CEO. An appropriate expense and travel policy will be developed for you,
and will be periodically reviewed by the Compensation Committee. You will
also continue to be reimbursed for club dues.
3. If our planned IPO is completed, we will discuss with you the subject of
establishing an appropriate stock option program for the senior management
team, including the CEO. This program will be subject to approval by our
Board of Directors.
4. You may, at your option, have a paid leave of absence of up to 12 months
following the end of your current term as CEO, provided that the firm is
doing well and there is no pressing business reason to postpone or shorten
this leave of absence. You will receive during your leave of absence your
then current monthly base salary for each month of your leave.
<PAGE>
Mr. Patrick S. Pittard
February 26, 1999
Page Two
If you do not return to the firm following your leave of absence, you have
agreed to immediately repay to the firm one-half of the monthly base
compensation payments that you received during your leave of absence, which
will be subtracted from the appropriate severance package(s) mentioned
below, if applicable. In addition, if you should leave the firm (other than
due to death, disability, or termination by the company for any reason)
during the 24 month period following your leave of absence you will, on
your effective date of termination repay to the firm an amount equal to the
total of one-half of all of the monthly base compensation payments you
received during your leave of absence multiplied by a fraction the
denominator of which is 24 and the numerator of which is the number of full
or fractional calendar months remaining between the effective date of your
leaving the firm and the end of the 24 month period following the end of
your leave of absence.
5. During your leave of absence it is the firm's expectation and desire that
you will continue to maintain your business development related activities
so that when you return to the firm to continue your executive search
practice your business contacts and relationships will have been retained.
The firm will reimburse you (upon receipt of the customary expense report)
for your reasonable business development related expenses consistent with
your past activities, and will also continue to reimburse you during this
period for any company car and clubs that were paid by the company prior to
your leave of absence.
6. For the 24 month period following your return to the firm from your leave
of absence, your total compensation (base and bonus) shall be guaranteed to
be not less than $1,000,000.00 for the first 12 months and $750,000.00 for
the second 12 months, and thereafter your base salary shall not be less
than $562,500.00 per year during your employment with the company.
7. If, during your tenure with the firm as President-CEO, the firm decides to
terminate your employment for any reason other than Cause, you will be
given at least 30 months' notice of termination or 30 months' "cash
compensation" in lieu of notice. "Cash compensation" shall mean the average
of the total cash base and bonus compensation paid to you for the three
fiscal years prior to the fiscal year of termination for services rendered
in those three years. In addition, all stock options and other equity
instruments shall immediately vest and become exercisable for a period
equal to the greater of one year after termination or the period permitted
by the applicable plan, and, to the extent permitted by our contracts, your
group health, etc. benefits shall be continued for 30 months (two and one-
half years) unless you are employed, or if such benefits cannot be
continued by our plans, we will reimburse you for obtaining similar
coverage.
<PAGE>
Mr. Patrick S. Pittard
February 26, 1999
Page Three
"Cause" for purposes of this Section 7 shall mean conviction of a felony
(or a guilty or nolo contendere plea in connection therewith), fraud,
embezzlement, willful failure or refusal to perform duties, breach of
contract, or malfeasance.
8. If your employment with the company is "constructively terminated" or
"adversely changed" (i.e. your job position/duties are materially,
negatively changed, or required to relocate, and you do not accept the
changes or another assignment within the firm, if offered to you), then you
would receive the same payments and benefits referred to in Section 7
above, except that you will receive 24 months' notice of termination or 24
months' "cash compensation" in lieu of notice (instead of 30 months).
9. You will continue to be eligible to participate in our fringe benefit
programs in accordance with the programs' terms.
10. Our fringe benefit programs, bonus programs, and policies are reviewed from
time to time by the company's management. Therefore, our programs and
policies may be modified, amended, or terminated at any time.
11. You will continue to be an "employee at will," provided however that if,
during your term as CEO of our firm, your employment with the firm is
terminated by the firm for any reason other than Cause as defined in
Section 7 above or as provided in Section 8 above, you will receive the
notice of termination or cash compensation in lieu of notice in accordance
with Section 7 or 8 above, as appropriate.
12. The agreement you signed with the company relating to trade secrets,
confidential information, clients, etc., remains in full force and effect.
13. The Board of Directors has approved this agreement and has authorized the
Chief Financial Officer and the Chief Administrative Officer, or their
designees, to execute this agreement and to carry out the administrative
details of the above.
14. This letter of agreement, which contains our understanding, can be amended
only in a writing that is signed by you and the Chief Administrative
Officer of the company.
<PAGE>
Mr. Patrick S. Pittard
February 26, 1999
Page Four
To acknowledge your approval, please sign and return to me one copy of this
letter.
Very truly yours,
/s/ Richard D. Nelson
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Richard D. Nelson
RDN:ec
ACCEPTED:
/s/ Patrick S. Pittard March 18, 1999
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Patrick S. Pittard Date