<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Heidrick & Struggles International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Stockholder fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[HEIDRICK & STRUGGLES INTERNAITONAL, INC. LOGO]
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
DATE: Friday, June 2, 2000
TIME: 9:30 a.m. Eastern Time
PLACE: St. Regis Hotel
2 East 55th Street
New York, New York 10022
<PAGE>
[LOGO]
April 21, 2000
To our Stockholders--Welcome. The year 1999 was one of many "firsts" for
Heidrick & Struggles International, Inc. as a public company. It is my
pleasure to invite you to attend our first Annual Meeting of Stockholders to
review those "firsts."
The meeting will be held on Friday, June 2, 2000 at 9:30 a.m. Eastern Time
at the St. Regis Hotel located at 2 East 55th Street, New York, New York.
The Notice of Annual Meeting of Stockholders accompanying this letter
describes the business we will be transacting at the meeting. After the
meeting, we will respond to any of your questions.
Whether or not you plan to attend the annual meeting in person, I urge you
to sign and date the enclosed Proxy Card and return it as soon as possible so
that your shares will be represented at the meeting. The vote of every
stockholder is important!
We appreciate your support of our endeavors over the past year.
Sincerely,
Patrick S. Pittard
President and Chief Executive
Officer
<PAGE>
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
DATE: Friday, June 2, 2000
TIME: 9:30 a.m. Eastern Time
PLACE: St. Regis Hotel
2 East 55th Street
New York, New York 10022
Dear Stockholders:
At our annual meeting, we will ask you to:
I. Elect four (4) directors;
II. Adopt a proposal to amend the 1998 Heidrick & Struggles GlobalShare
Program I and the 1998 Heidrick & Struggles GlobalShare Program II;
III. Adopt a proposal to approve the material terms of a CEO performance-
based incentive compensation plan;
IV. Ratify our appointment of Arthur Andersen LLP as our independent public
accountant for the year 2000; and
V. Transact any other business as may properly come before the annual
meeting, or any adjournment of the annual meeting.
If you were a stockholder of record at the close of business on April 19,
2000, you will be entitled to vote at the annual meeting or any adjournment of
the meeting. A stockholder list will be available at the offices of Simpson,
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017 beginning
May 23, 2000 during normal business hours, for examination by any stockholder
registered on our stock ledger as of April 19, 2000, for any purpose germane
to the annual meeting. Your attention is called to the accompanying Proxy Card
and Proxy Statement.
A copy of our Annual Report (including our Form 10-K) for the fiscal year
ended December 31, 1999 is enclosed.
Sincerely,
Richard D. Nelson
Secretary
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the annual
meeting in person, please sign and return the Proxy Card in the enclosed
postage prepaid envelope so your shares may be voted.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Voting Information........................................................ 1
Description of Our Capital Stock.......................................... 1
Voting Securities of Certain Beneficial Owners and Management............. 3
Proposal I--Election of Directors......................................... 3
Board Meetings and Committees........................................... 6
Director Compensation................................................... 7
Director Indemnification................................................ 7
Executive Compensation.................................................. 8
Summary Compensation Table.............................................. 8
Option Grant Table...................................................... 9
Aggregated Option Exercises and Year-End Option Values.................. 10
Employment Agreements................................................... 10
Compensation Committee Interlocks and Insider Participation............. 10
Report of the Compensation Committee of the Board of Directors on
Executive Compensation................................................. 11
Performance Graph....................................................... 14
Proposal II--Amendment to the 1998 Heidrick & Struggles GlobalShare
Program I and the 1998 Heidrick & Struggles GlobalShare Program II....... 16
Proposal III--Proposal to Approve the Material Terms of a CEO Performance-
Based Incentive Compensation Plan........................................ 17
Proposal IV--Appointment of Independent Public Accountant................. 19
Certain Relationships and Related Transactions............................ 19
Section 16(a) Beneficial Ownership Reporting Compliance................... 19
Stockholder Proposals for Next Year's Annual Meeting...................... 19
Incorporation of Certain Documents by Reference........................... 20
Other Matters............................................................. 20
</TABLE>
<PAGE>
VOTING INFORMATION
Proxy Solicitation. This Proxy Statement is furnished to you in connection
with the solicitation of proxies by Heidrick & Struggles International, Inc.
for its Annual Meeting of Stockholders to be held on June 2, 2000. This
solicitation is being made by mail. We may also use our officers and other
employees to solicit proxies from stockholders, personally or by telephone,
facsimile, letter or electronic mail. We will pay all costs associated with
our solicitation of proxies. If we request nominees and brokers to solicit
their principals and customers for their proxies, we will reimburse the
nominees and brokers for their reasonable out-of-pocket expenses.
Annual Meeting of Stockholders. Our Annual Meeting of Stockholders will be
held on June 2, 2000 at 9:30 a.m. Eastern Time at the St. Regis Hotel located
at 2 East 55th Street, New York, New York. This Proxy Statement was first
mailed on or about May 3, 2000 to our stockholders entitled to notice of, and
to vote at, the annual meeting.
Record Date. Each share of our common stock that you own as of April 19,
2000 entitles you to one vote. On April 19, 2000 there were 19,142,142 shares
of our common stock outstanding.
Quorum. A quorum of stockholders is necessary for us to hold a valid
meeting. If at least a majority of our issued and outstanding common stock is
present at the meeting either in person or by proxy, a quorum will exist.
Abstentions and broker non-votes are counted as present to establish a quorum.
A broker non-vote occurs when a broker votes on some matters on the proxy card
and not others because he or she does not have authority to do so.
Voting. You may vote on the proposals presented at the annual meeting in
one of two ways:
. By Proxy: You can vote your shares by signing, dating and returning the
enclosed Proxy Card. If you do this, the individuals named on the card
will vote your shares in the manner you indicate. You may specify on your
Proxy Card how you would like your shares voted. If you do not indicate
instructions on the card, your shares will be voted for the election of
the individuals nominated for directors, for the proposal to amend the
1998 Heidrick & Struggles GlobalShare Program I and the 1998 Heidrick &
Struggles GlobalShare Program II, for the proposal to approve the
material terms of a CEO performance-based incentive compensation plan and
for the appointment of Arthur Andersen LLP as our independent public
accountant; or
. In Person: You may come to the annual meeting and cast your vote.
If you grant us a proxy, you may nevertheless revoke your proxy at any time
before it is exercised by: (1) sending notice to our Secretary in writing; (2)
providing to us a later-dated proxy; or (3) attending the annual meeting in
person and voting your shares. Merely attending the annual meeting, without
further action, will not revoke your proxy.
DESCRIPTION OF OUR CAPITAL STOCK
Our Amended and Restated Certificate of Incorporation provides for our
authorized capital stock to consist of 100,000,000 shares of common stock,
$.01 par value per share, of which 19,142,142 shares were issued and
outstanding on April 19, 2000 and 10,000,000 shares of preferred stock, $.01
par value per share, none of which has been issued. Our common stock is
included for quotation on the Nasdaq National Stock Market under the symbol
"HSII."
Each stockholder is entitled to one vote per share on all matters to be
voted upon by the stockholders. The holders of common stock do not have
cumulative voting rights in the election of directors. Holders of common stock
are entitled to receive dividends if, as and when dividends are declared from
time to time by our Board of Directors out of funds legally available, after
payment of dividends required to be paid on outstanding preferred stock, if
any. In the event of our liquidation, dissolution or winding up, the holders
of common stock are entitled to share ratably in all assets remaining after
payment of liabilities and accrued but unpaid dividends and
<PAGE>
liquidation preferences on any outstanding preferred stock. The shares of
common stock have no preemptive or conversion rights and are not subject to
our further calls or assessment. There are no redemption or sinking fund
provisions applicable to the common stock.
Votes cast by proxy or in person at the annual meeting will be tabulated by
an inspector of election appointed for the annual meeting. The inspector will
determine whether or not a quorum is present. In order for a quorum to be
present and, consequently, for action to be taken at the annual meeting,
stockholders owning a majority of our issued and outstanding shares must be
present at the meeting either in person or by proxy. For purposes of
determining whether a quorum exists, abstentions and broker non-votes will be
counted as shares that are present at the meeting.
Although abstentions and broker non-votes will be counted as shares that
are present at the annual meeting for purposes of determining whether a quorum
exists, they will not impact the election of directors (Proposal I) since the
four individuals receiving the highest number of votes will be elected as
directors. They will be counted as votes against Proposals II and III. They
will not impact ratification of our appointment of Arthur Andersen LLP as our
independent public accountant (Proposal IV) since the vote to approve this
proposal requires approval of a majority of the votes actually cast on the
proposal.
2
<PAGE>
VOTING SECURITIES OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock by: (1) our directors; (2) each of our named
executive officers; (3) each person known to us to be the beneficial owner of
5% or more of our outstanding shares of common stock; and (4) all of our
directors and executive officers, as a group.
<TABLE>
<CAPTION>
Total
Common Preferred Voting
Shares(1) % Shares % Shares %
---------- --- --------- --- ---------- ---
<S> <C> <C> <C> <C> <C> <C>
Number of shares
outstanding on April 19,
2000 were:............... 19,142,142(2) 100% 0 0% 19,142,142(2) 100%
The following are the
directors, executive
officers, and any persons
known by us to own
beneficially more than 5%
of either class of voting
securities on April 19,
2000:(3)
Patrick S. Pittard(5)..... 226,179 1.2% 0 0 226,179 1.2%
Donald M. Kilinski........ 48,580 * 0 0 48,580 *
Richard D. Nelson(5)...... 218,056 1.1% 0 0 218,056 1.1%
Gerard R. Roche........... 411,399 2.1% 0 0 411,399 2.1%
David C. Anderson(5)...... 118,176 * 0 0 118,176 *
Thomas J. Friel(5)........ 259,404 1.4% 0 0 259,404 1.4%
David B. Kixmiller(5)..... 139,995 * 0 0 139,995 *
Bengt Lejsved............. 38,529 * 0 0 38,529 *
Dr. Jurgen B. Mulder...... 109,319 * 0 0 109,319 *
Dr. John C. Viney(6)...... 163,085 * 0 0 163,085 *
Robert Louis-Dreyfus...... 0 0 0 0 0 0
Robert W. Shaw............ 0 0 0 0 0 0
Carlene M. Ziegler........ 2,000(4) * 0 0 2,000(4) *
On April 19, 2000, the
shares beneficially owned
by all executive officers
and directors as a group
(13 persons) were:....... 1,734,722 9.1% 0 0% 1,734,722 9.1%
</TABLE>
- --------
* Represents holdings of less than one percent (1%).
(1) Unless otherwise indicated, we believe that each beneficial owner has the
sole voting and investment power of the number of shares listed adjacent
to his or her name.
(2) We do not hold any shares in treasury.
(3) The mailing address for each person is 233 South Wacker Drive, Suite 4200,
Chicago, Illinois 60606-6303.
(4) This amount includes 1,000 shares beneficially owned by Ms. Ziegler
through participation in her 401(k) plan and 1,000 shares beneficially
owned by her husband through his participation in his 401(k) plan. The
trustee has the sole voting and investment power of the shares held in the
401(k) plan. Ms. Ziegler disclaims beneficial ownership of the 1,000
shares owned by her husband.
(5) Includes shares held by the trustee of the Heidrick & Struggles, Inc.
401(k) Profit Sharing and Pension Plan for the benefit of the individual
listed. The trustee has the sole voting and investment power of the shares
held in the 401(k) plan.
(6) Includes 12,637 shares owned by Dr. Viney's wife. Dr. Viney disclaims
beneficial ownership of these shares.
PROPOSAL I
ELECTION OF DIRECTORS
Our Amended and Restated Certificate of Incorporation and our Amended and
Restated Bylaws provide that our Board of Directors will consist of not less
than eight and not more than fifteen directors, as determined by resolution of
the Board. Our Board of Directors has set the number of members at twelve. Our
Board of Directors currently has eleven members, eight of whom are our
employees, three of whom are non-employees, and there is one vacancy. We are
seeking a suitable non-employee candidate to fill the vacancy.
3
<PAGE>
Our Board of Directors is divided into three classes for purposes of
election. One class is elected at each annual meeting of stockholders to serve
for a three-year term. We propose that four directors be elected at the annual
meeting to hold office for a three-year term expiring in 2003. Our other
directors will continue in office for the remainder of their respective terms.
Our Board of Directors has recommended and nominated the following persons
to be elected to our Board of Directors, each for a three-year term: Messrs.
David B. Kixmiller, Bengt Lejsved, Robert W. Shaw, and Ms. Carlene M. Ziegler.
The enclosed Proxy will be voted FOR electing the four nominees unless a
specification is made to withhold the vote. Proxies cannot be voted for more
than four nominees.
The election of the four nominees for new terms will, in accordance with
our Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws, be decided by plurality vote of shares present at the annual meeting.
If any nominee ceases to be a candidate for election for any reason, the
Proxy will be voted for a substitute nominee designated by our Board of
Directors and for the other nominees. Our Board of Directors currently has no
reason to believe that any nominee will not remain a candidate for election as
a director or will be unwilling to serve as a director if elected.
Below is certain information about each director nominee and those
directors whose terms of office will continue after the annual meeting.
NOMINEES FOR DIRECTOR--CLASS 2000
(Directors Up For Election This Year For Terms Expiring in 2003)
<TABLE>
<CAPTION>
Principal Occupation and Director Common
Name(1) Age Five-Year Employment History Since Shares(2)
------- --- ---------------------------- -------- ---------
<C> <C> <S> <C> <C>
David B. Kixmiller. 50 Mr. Kixmiller has served as our 02/1999 139,995
Practice Managing Partner,
Technology since 1998. Mr.
Kixmiller was the Managing
Partner of the Menlo Park Office
of Heidrick & Struggles, Inc.
from 1991 to 1998 and was a
member of the Board of Directors
of Heidrick & Struggles, Inc.
from 1987 until the merger of
Heidrick & Struggles, Inc. with
and into us which occurred on
February 26, 1999 (the "Merger").
Bengt Lejsved...... 55 Mr. Lejsved has served as our 02/1999 38,529
Area Managing Partner, Northern
and Eastern Europe since the
Merger. He was a member of the
Board of Directors of Heidrick &
Struggles International, Inc.
from 1994 until the Merger.
Robert W. Shaw..... 52 Mr. Shaw most recently served as 09/1999 0
the Chief Executive Officer and a
member of the Board of Directors
of USWeb/CKS from November 1998
to February 2000. From February
1997 and prior to joining
USWeb/CKS, Mr. Shaw was the
Executive Vice President of
Worldwide Consulting Services and
Vertical Markets. Mr. Shaw was
Senior Vice President of
Worldwide Applications and
Services at Oracle Corporation
from August 1995 until January
1997. From June 1992 to July
1995, Mr. Shaw was Senior Vice
President of Global Services at
Oracle Corporation.
Carlene M. Ziegler. 43 Ms. Ziegler has served as the 12/1999 2,000
Managing Director of Artisan
Partners, L.P. since January
1995.
</TABLE>
4
<PAGE>
NOMINEES FOR DIRECTOR--CLASS 2001
(Directors with Terms Expiring in 2001)
<TABLE>
<CAPTION>
Principal Occupation and Director Common
Name(1) Age Five-Year Employment History Since Shares(2)
------- --- ---------------------------- -------- ---------
<C> <C> <S> <C> <C>
David C. Anderson.... 57 Mr. Anderson has served as our 02/1999 118,176
President-Americas since
September 1999. Mr. Anderson
served as our North American
Managing Partner from 1998
until September 1999 and
previously had been the Office
Managing Partner of the Dallas
office from 1992 until 1999. He
was a member of the Board of
Directors of Heidrick &
Struggles, Inc. from 1992 until
the Merger.
Thomas J. Friel...... 52 Mr. Friel has served as our 02/1999 259,404
President-Global Practices
since September 1999. Since
joining Heidrick & Struggles,
Inc. in 1979, Mr. Friel has
served as Office Managing
Partner of the Menlo Park
office, Worldwide Practice
Managing Partner for the
International Technology
Practice and Managing Partner
for Asia Pacific. He was a
member of the Board of
Directors of Heidrick &
Struggles, Inc. from 1983 until
the Merger.
Dr. John C. Viney.... 52 Dr. Viney has served as our 02/1999 163,085
Chairman-Europe since the
Merger. Dr. Viney joined
Heidrick & Struggles
International, Inc. in 1985 and
previously served as Office
Managing Partner for the London
office. He was a member of the
Board of Directors of Heidrick
& Struggles International, Inc.
from 1987 until the Merger.
Robert Louis-Dreyfus. 53 Mr. Louis-Dreyfus has served as 09/1999 0
the Chairman of the Board of
Directors and President of
adidas-Salomon AG since April
1993. He also serves on the
Board of Directors of EMCORE
Corporation.
NOMINEES FOR DIRECTOR--CLASS 2002
(Directors with Terms Expiring in 2002)
<CAPTION>
Principal Occupation and Director Common
Name(1) Age Five-Year Employment History Since Shares(2)
------- --- ---------------------------- -------- ---------
<C> <C> <S> <C> <C>
Patrick S. Pittard... 54 Mr. Pittard has served as our 02/1999 226,179
President and Chief Executive
Officer since the Merger. Prior
to the Merger, he had been
President and Chief Executive
Officer of Heidrick &
Struggles, Inc. since 1997 and
a member of the Board of
Directors of Heidrick &
Struggles, Inc. since 1986.
Since joining Heidrick &
Struggles, Inc. in 1983, Mr.
Pittard has held the positions
of Office Managing Partner for
the Atlanta and Jacksonville
offices and North America
Managing Partner. Mr. Pittard
also serves as a member of the
Board of Directors of Jefferson
Pilot Corporation.
Gerard R. Roche...... 68 Mr. Roche has been our Senior 02/1999 411,399
Chairman since the Merger. Mr.
Roche joined Heidrick &
Struggles, Inc. in 1964 and was
a member of the Board of
Directors of Heidrick &
Struggles, Inc. from 1970 until
the time of the Merger. He is
also a member of the Board of
Directors of Value America,
Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation and Director Common
Name(1) Age Five-Year Employment History Since Shares(2)
------- --- ---------------------------- -------- ---------
<C> <C> <S> <C> <C>
Dr. Jurgen B. Mulder. 62 Dr. Mulder has been our 02/1999 109,319
President-International since
September 1999. He was
President-Europe from the time
of the Merger until September
1999 and was President and
Chief Executive Officer of
Heidrick & Struggles
International, Inc. from
November 1998 until the time of
the Merger. He was Vice
Chairman of Heidrick &
Struggles International, Inc.
until November 1998. Prior to
joining Heidrick & Struggles
International, Inc. in 1997,
Dr. Mulder was a partner in
Mulder & Partner GmbH & Co.
KG., a firm he founded in 1978.
</TABLE>
- --------
(1) There are no family relations among any directors, executive officers, or
persons nominated to become a director.
(2) Number of shares of common stock owned beneficially on April 19, 2000. All
shares are held with sole voting and sole investment power unless
otherwise indicated in this Proxy. The individual holdings of each
director equal less than 1% of our issued and outstanding common stock,
except for the holdings of Messrs. Pittard, Roche and Friel which
represent approximately 1.2%, 2.1% and 1.4%, respectively, of our issued
and outstanding common stock. See "VOTING SECURITIES OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."
BOARD MEETINGS AND COMMITTEES
On February 26, 1999, Heidrick & Struggles, Inc. merged with and into us
(the "Merger"). Prior to the Merger and our initial public offering, we did
not have a standing audit, compensation or nominating committee. From January
1, 1999 until the Merger, our full Board of Directors did not meet.
After the Merger, in 1999, our full Board of Directors met three times. All
directors attended 75% or more of the meetings of the Board and the committees
of which they were members. Currently, our Board of Directors has two standing
committees:
Audit Committee. In September 1999, we established our Audit Committee. Our
Audit Committee consists of our three independent directors (Mr. Shaw, Mr.
Louis-Dreyfus and Ms. Ziegler). The duties of our Audit Committee are
generally to recommend to our Board of Directors the appointment of an
independent public accountant to audit annually our books and records, to
review the activities and reports of our independent public accountant and to
report the results of such review to our Board of Directors. Our Audit
Committee also periodically reviews the activities of our finance staff and
the adequacy of our internal controls. Since its formation in September 1999
and through December 31, 1999, our Audit Committee met one time.
Compensation Committee. In September 1999, we established our Compensation
Committee. Our Compensation Committee also consists of our three independent
directors. The duties of our Compensation Committee are generally to review
employment, development, reassignment and compensation matters involving
executive officers and key employees as may be appropriate, including without
limitation, issues relative to salary, bonus, stock options and other
incentive arrangements. Since its formation in September 1999 and through
December 31, 1999, our Compensation Committee met one time.
We do not currently have a standing nominating or other similar committee.
6
<PAGE>
DIRECTOR COMPENSATION
None of our directors who are also employees receive any compensation for
serving as directors. Our non-employee directors who receive compensation are
paid an annual retainer of $30,000 in cash, an additional annual cash payment
of $4,000 for acting as chairperson of a committee and up to $1,000 in cash
for each meeting attended. We reimburse out-of-pocket expenses incurred by all
directors in attending Board of Director and committee meetings. Additionally,
each non-employee director may participate in our 1998 Heidrick & Struggles
GlobalShare Program II. See "REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION" and "PROPOSAL II, AMENDMENT TO THE
1998 HEIDRICK & STRUGGLES GLOBALSHARE PROGRAM I AND THE 1998 HEIDRICK &
STRUGGLES GLOBALSHARE PROGRAM II."
DIRECTOR INDEMNIFICATION
Our Amended and Restated Certificate of Incorporation provides that a
director will not be personally liable for monetary damages to us or our
stockholders for breach of fiduciary duty as a director, except for:
. liability for any breach of the director's duty of loyalty to us or our
stockholders for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
. paying a dividend or approving a stock repurchase or redemption in
violation of Section 174 of the Delaware General Corporation Law; or
. a transaction from which the director derived an improper personal
benefit.
Our Amended and Restated Certificate of Incorporation also provides that
each of our current or former directors, officers, employees or agents, or
each such person who is or was serving or who had agreed to serve at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), will be indemnified by us
to the fullest extent permitted by the Delaware General Corporation Law, as
the same exists or may in the future be amended (but, in the case of any such
amendment, only to the extent that such amendment permits us to provide
broader indemnification rights than permitted us to provide prior to such
amendment). The Amended and Restated Certificate of Incorporation also
specifically authorizes us to enter into agreements with any person providing
for indemnification greater or different from that provided by the Amended and
Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTING DAVID B. KIXMILLER,
BENGT LEJSVED, ROBERT W. SHAW AND CARLENE M. ZIEGLER TO THE BOARD OF
DIRECTORS EACH FOR A TERM OF THREE (3) YEARS.
7
<PAGE>
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid to
our executive officers during the fiscal years ended December 31, 1999 and
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------ -----------------------------------
Awards Payouts
----------------------- ---------
Restricted Securities
Stock Underlying Long-Term All Other
Name and Salary Other Annual Award Options Incentive Compensation
Principal Position Year ($) Bonus ($) Compensation ($) (#) Payouts ($)
------------------ ---- ------- --------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patrick S. Pittard...... 1999 700,000 1,650,000 -- -- 149,086 -- 12,376(1)
President and Chief 1998 600,000 1,200,000 -- -- -- -- 13,655(1)
Executive Officer
Donald M. Kilinski...... 1999 300,000 660,000 -- -- 52,390(7) -- 12,076(2)
Chief Financial Officer 1998 200,000 200,000 -- -- -- -- 83,651(2)
and Treasurer
Richard D. Nelson....... 1999 450,000 450,000 -- -- 33,150(7) -- 12,376(3)
Chief Administrative 1998 450,000 525,000 -- -- -- -- 15,923(3)
Officer, Counsel and
Secretary
David C. Anderson....... 1999 400,000 1,060,000 -- -- 82,984(7) -- 12,376(4)
President--Americas 1998 275,000 799,000 -- -- -- -- 12,263(4)
Dr. Jurgen B. Mulder.... 1999 580,000 1,765,000 -- 125,270(6) 86,654(7) -- --
President-- 1998 512,000 1,518,000 -- -- -- -- --
International(5)
</TABLE>
- --------
(1) For the year ended December 31, 1999, this amount represents compensation
for expenses relating to group term life insurance ($2,880), employer
profit sharing contributions ($7,496), and employer 401(k) matching
contributions ($2,000). For the year ended December 31, 1998, this amount
represents compensation for expenses relating to group term life insurance
($4,032), employer profit sharing contributions ($7,623) and employer
401(k) matching contributions ($2,000).
(2) For the year ended December 31, 1999, this amount represents compensation
for expenses relating to group term life insurance ($2,580), employer
profit sharing contributions ($7,496) and employer 401(k) matching
contributions ($2,000). For the year ended December 31, 1998, this amount
represents compensation for expenses relating to group term life insurance
($726), relocation expenses ($73,302), employer profit sharing
contributions ($7,623) and employer 401(k) matching contributions
($2,000).
(3) For the year ended December 31, 1999, this amount represents compensation
for expenses relating to group term life insurance ($2,880), employer
profit sharing contributions ($7,496) and employer 401(k) matching
contributions ($2,000). For the year ended December 31, 1998, this amount
represents compensation for expenses relating to group term life insurance
($6,300) employer profit sharing contributions ($7,623) and employer
401(k) matching contributions ($2,000).
(4) For the year ended December 31, 1999, this amount represents compensation
for expenses relating to group term life insurance ($2,880), employer
profit sharing contributions ($7,496) and employer 401(k) matching
contributions ($2,000). For the year ended December 31, 1998, this amount
represents compensation for expenses relating to group term life insurance
($2,640), employer profit sharing contributions ($7,623) and employer
401(k) matching contributions ($2,000).
(5) Dr. Mulder was appointed President and Chief Executive Officer of Heidrick
& Struggles International, Inc. on November 16, 1998 and resigned from
these positions concurrent with the Merger. Dr. Mulder is presently our
President--International.
(6) This amount represents the dollar value of restricted stock units issued
to Dr. Mulder pursuant to our Restricted Stock Unit Plan. The restricted
stock units were earned by Dr. Mulder in 1999 but were issued on March 6,
2000. The dollar value reflected in the table is based on the fair market
value (as determined in accordance with the Restricted Stock Unit Plan) of
our common stock on March 6, 2000.
(7) This amount represents options issued to Messrs. Kilinski, Nelson,
Anderson and Mulder pursuant to our 1998 Heidrick & Struggles GlobalShare
Program I. A portion of the options were earned in 1999 but were issued on
March 6, 2000.
8
<PAGE>
OPTION GRANT TABLE
(options granted in fiscal year 1999)
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
% of Total
Number of Options
Securities Granted to Grant
Underlying Employees Exercise Date
Name and Principal Options in Fiscal Price Expiration Value
Position Granted Year ($/Sh) Date ($/Sh)
- ------------------ ---------- ---------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Patrick S. Pittard....... 17,586(1) 10.0% $14 4/26/2009 $ 8.56(3)
President and Chief
Executive Officer 131,500(2)
Donald M. Kilinski....... 6,510(1) 1.9% $14 4/26/2009 $ 8.56(3)
Chief Financial Officer
and Treasurer 21,500(2)
24,380(4) 4.9% $40.725 3/6/2010 $27.40(5)
Richard D. Nelson........ 6,900(1) 1.4% $14 4/26/2009 $ 8.56(3)
Chief Administrative
Officer, Counsel and
Secretary 14,500(2)
11,750(4) 2.3% $40.725 3/6/2010 $27.40(5)
David C. Anderson........ 12,084(1) 3.4% $14 4/26/2009 $ 8.56(3)
President--Americas 38,500(2)
32,400(4) 6.5% $40.725 3/6/2010 $27.40(5)
Dr. Jurgen B. Mulder..... 19,824(1) 3.9% $14 4/26/2009 $ 8.56(3)
President--International 38,500(2)
28,330(4) 5.6% $40.725 3/6/2010 $27.40(5)
</TABLE>
- --------
(1) These options will vest on April 26, 2008. Vesting may accelerate to as
early as April 26, 2004 if certain guidelines are met.
(2) Twenty percent of these options vest on each of the first five anniversary
dates from April 26, 2000.
(3) The present value of the option at the date of the grant was determined
using the Black-Scholes option pricing model. The present value of options
granted in 1999 is estimated using the following assumptions: average risk-
free interest rate of 5.3%, dividend rate of 0%, expected volatility of
54.3% and expected option life of seven years. The actual value, if any,
that the individual may realize will depend on the excess of the stock
price over the exercise price on the date the option is exercised, so that
there can be no assurance the value realized will be at or near the value
estimated based upon the Black-Scholes model.
(4) These options were earned by the individual in 1999 but were granted on
March 6, 2000. Twenty percent of these options vest on each of the first
five anniversary dates from March 6, 2000.
(5) The present value of the option at the date of grant was determined using
the Black-Scholes option pricing model. The present value of options
granted on March 6, 2000 is estimated using the following assumptions:
average risk-free interest rate of 6.65%, dividend rate of 0%, expected
volatility of 61.1% and expected option life of seven years. The actual
value, if any, that the individual may realize will depend on the excess of
the stock price over the exercise price on the date the option is
exercised, so that there can be no assurance the value realized will be at
or near the value estimated based upon the Black-Scholes model.
9
<PAGE>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Unexercised Value of unexercised
Options at Fiscal in-the-money options at
Shares Year-End Fiscal Year-End
Acquired on Realized Exercisable/ Exercisable/
Exercise Value Unexercisable Unexercisable
Name (#) ($) (#)(3) ($)(3)
- ---- ----------- -------- ----------------- -----------------------
<S> <C> <C> <C> <C>
Patrick S. Pittard...... 0 0 149,086 4,211,680(1)
President and Chief -- --
Executive Officer
Donald M. Kilinski...... 0 0 28,010 791,283(1)
Chief Financial Officer 24,380(2) 0(2)
and Treasurer
Richard D. Nelson....... 0 0 21,400 604,550(1)
Chief Administrative 11,750(2) 0(2)
Officer, Counsel and
Secretary
David C. Anderson....... 0 0 50,584 1,428,998(1)
President--Americas 32,400(2) 0(2)
Dr. Jurgen B. Mulder.... 0 0 58,324 1,647,653(1)
President-- 28,330(2) 0(2)
International
</TABLE>
- --------
(1) Computed based on the difference between the stock option exercise price
and $42.25, the closing price of our common stock on December 31, 1999.
The actual value, if any, that the individual may realize will depend on
the excess of the stock price over the exercise price on the date the
option is exercised, so that there can be no assurance the value realized
will be at or near the value estimated.
(2) These options were earned by each individual in 1999 but were issued on
March 6, 2000. The value of the option was computed based on the
difference between the stock option exercise price and $40.625, the
closing price of our common stock on March 6, 2000. The actual value, if
any, that the individual may realize will depend on the excess of the
stock price over the exercise price on the date the option is exercised,
so that there can be no assurance the value realized will be at or near
the value estimated.
(3) None of the listed options are exercisable.
EMPLOYMENT AGREEMENTS
Messrs. Pittard and Nelson have agreements with us providing for severance
benefits. Mr. Pittard's employment agreement entitles him to 30 months of his
average total cash base and bonus compensation calculated based on the three-
year period preceding the year of the termination of employment if his
employment is terminated without cause, and 24 months of such average cash
compensation if his employment is constructively terminated.
Mr. Nelson's employment agreement entitles him to six months of his monthly
base salary and the pro rata portion of his bonus if his employment is
terminated for any reason.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Merger, all matters related to executive compensation were
administered by our full Board of Directors which consisted of Peter R. Breen,
Romeo Crameri, Milena Djurdjevic, Bengt Lejsved, Jurgen Mulder, Christoph
Netta, Richard D. Nelson, Patrick S. Pittard, and Reinhold Thiele, of which
Messrs. Mulder, Nelson, and Pittard were executive officers. Immediately prior
to the Merger, we elected our current Board of Directors, with the exception
of our three non-employee directors, which administered our executive
compensation during 1999 until we established our Compensation Committee in
September 1999. See "PROPOSAL I, ELECTION OF DIRECTORS."
Our Compensation Committee consists of three independent directors: Mr.
Shaw (Chairman), Mr. Louis-Dreyfus and Ms. Ziegler. From time to time, our
Chief Executive Officer, certain other officers and outside consultants may
attend meetings of the Compensation Committee but none of our officers may be
present during discussions or deliberations regarding his or her own
compensation nor may they vote on any matters brought before the Compensation
Committee.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Compensation Policy. We believe that executive compensation should be
directly linked to increased stockholder value. To achieve that success, our
compensation program is designed to support us in achieving our key business
objectives, to ensure that the executive officers' equity interests are
aligned with those of our stockholders and to enable us to attract, retain and
reward key personnel. It has been and currently is our policy to position our
total compensation for our executive officers and other key employees at
levels competitive with those of other major executive recruiting firms.
Because many of these organizations are privately held, much of the
compensation data is derived from executives and search consultants recruited
by us and our in-depth understanding of pay practices and trends within the
industry.
Relationship of Company Performance to Executive Compensation. Our
executive compensation is comprised of two components, base salary and
incentives (cash and non-cash), each of which is intended to serve the overall
compensation program. Our salary levels are intended to be consistent with
competitive pay practices and level of responsibility, with salary increases
reflecting competitive trends, our overall financial performance, and general
economic conditions as well as a number of factors relating to the particular
individual, including the performance of the individual executive, and the
level of experience, ability and knowledge required for the job.
Our incentives consist of cash bonuses, stock options and other stock-based
awards, including restricted stock units. Selected employees (including
executive officers and members of our Board of Directors) and independent
consultants may earn bonuses under two plans. The first plan consists of the
1998 Heidrick & Struggles GlobalShare Program I and the 1998 Heidrick &
Struggles GlobalShare Program II (collectively, the "GlobalShare Plan"), which
allow grants to be made to selected employees and non-employee directors or
independent consultants, respectively. Awards under the GlobalShare Plan may
be in the form of options, which may be Incentive Stock Options ("ISOs") or
non-qualified stock options; stock appreciation rights ("SARs") granted as a
means to exercise options or designated portions thereof, or as independent
awards; or other awards, such as restricted stock units, that are valued in
whole or in part by reference to, or are otherwise based on, the fair market
value of shares (as defined by the Compensation Committee). Awards may be paid
in shares, cash or a combination thereof. (A copy of the 1998 Heidrick &
Struggles GlobalShare Program I and the 1998 Heidrick & Struggles GlobalShare
Program II was previously filed with the SEC as Exhibits 99.01 and 99.02,
respectively, to our Registration Statement on Form S-8 filed on March 5,
1999).
The GlobalShare Plan is administered by the Compensation Committee of the
Board of Directors. The Compensation Committee has the authority to select the
participants to be granted awards under the GlobalShare Plan, determine the
size and terms of an award, and determine the time when grants of awards will
be made. The Compensation Committee is authorized to interpret the Plan,
establish, amend and rescind any rules and regulations relating to the Plan,
and make any other determinations that it deems necessary or desirable for the
administration of the Plan.
An option may be granted as an ISO, as defined in the Internal Revenue Code
of 1986, as amended, or as a non-qualified stock option, as determined by the
Compensation Committee and as set forth in any applicable award agreement. The
option price per share of common stock is determined by the Compensation
Committee but cannot be less than 100% of the fair market value of the shares
(as determined by the Compensation Committee) on the date of grant. Options
granted under the GlobalShare Plan are exercisable at such time and upon such
terms and conditions as may be determined by the Compensation Committee, but
in no event will an option be exercisable more than ten years after the date
it is granted.
The Compensation Committee may grant an SAR independent of an option or in
conjunction with an option or designated portion thereof at the time the
related option is granted or at any time prior to the exercise or cancellation
of the related option. The exercise price shall be an amount determined by the
Compensation Committee, but in no event will such amount be less than the
greater of the fair market value of a share of common stock on the date the
SAR is granted or, in the case of an SAR granted in conjunction with an
option, or a portion thereof, the option price of the related option, and an
amount permitted by applicable laws, rules, by-laws, or policies of regulatory
authorities or stock exchanges.
11
<PAGE>
Upon the exercise of an SAR, the participant is entitled to receive, with
respect to each share of common stock to which such SAR relates, an amount in
cash and/or shares of common stock, as the case may be, equal to the excess of
(a) the fair market value of a share on the date of exercise over (b) the
exercise price of the SAR. The Compensation Committee may impose conditions
upon the exercisability of SARs.
The Compensation Committee may grant, in its sole discretion, other awards
of shares of common stock and awards that are valued in whole or in part by
reference to, or are otherwise based on the fair market value of, shares of
common stock ("Other Share-Based Awards"). Certain of such Other Share-Based
Awards ("Performance-Based Awards") may be granted on the basis of our
performance, stock price, market share, sales, earnings per share, return on
equity, costs or other performance goals approved by the Compensation
Committee. The maximum amount of a Performance-Based Award to any participant
with respect to a fiscal year shall be $2,000,000.
The second plan is the Heidrick & Struggles International, Inc. Restricted
Stock Unit Plan (the "RSU Plan"). The RSU Plan is designed to reward employees
who hold the internal title of "Director" and/or "Partner" (including certain
executive officers and members of our Board of Directors). Pursuant to the RSU
Plan, we may issue to "Directors" and/or "Partners" restricted stock units
("RSU") which, upon vesting, are convertible into shares of our common stock
at a ratio of 1:1. The number of RSUs granted to each participant is
determined by the Compensation Committee. Generally, participants will receive
a dollar value of RSUs equal to the lesser of: ten percent (10%) of the
participant's base salary and bonus compensation, or fifty percent (50%) of
the participant's bonus compensation. The maximum dollar value of RSUs
issuable to "Partners" who are not also "Directors" or "Director-Elects" is
$25,000. If the participant meets certain ownership goals, he or she may
obtain a ten percent (10%) discount on the market price of our common stock
when the RSUs are issued. These ownership goals are calculated by determining
the number of shares beneficially held by each participant multiplied by the
average stock price of our shares for a specific period and then divided by
the participant's three-year average annual compensation. (If a participant
has been employed by us for less than three years, an alternate standard to
the three-year test is set.) If the resultant number meets or exceeds pre-
established standards for various classifications of participants, then the
ten percent (10%) discount will be made available. (A copy of our RSU Plan was
previously filed with the SEC as Exhibit 4.03 of our Registration Statement on
Form S-8 filed on March 15, 2000).
CEO Compensation. During 1999 and prior to the Merger, Dr. Jurgen Mulder
served as our CEO. Concurrent with the Merger, Dr. Mulder resigned as our CEO
and was appointed as our President--International. During 1999, Dr. Mulder
received a base salary of $580,000 and bonus compensation of $1,176,500. A
portion of this compensation was for his services as our CEO and the remainder
was for his services as President--International. Additionally, Dr. Mulder was
granted stock options to purchase up to 86,654 shares of our common stock
pursuant to the 1998 Heidrick & Struggles GlobalShare Program I and was
granted RSU's totaling $125,270 pursuant to our RSU Plan.
Upon Dr. Mulder's resignation as CEO, Mr. Patrick S. Pittard was appointed
as our CEO. During 1999, Mr. Pittard received a base salary of $700,000 as
compensation for serving as our CEO. The Compensation Committee also awarded
bonus compensation to Mr. Pittard of $1,650,000 pursuant to an existing
compensation program. The Compensation Committee considered the following
factors when reviewing Mr. Pittard's salary and bonus: his job responsibility
and scope; his past salary and business generation; and individual
performance, including leadership, organization development, and stockholder
and investor relations. The Compensation Committee did not attach any specific
weighting to any one factor, and noted that some factors were more subjective
than others. Additionally, Mr. Pittard was granted stock options to purchase
up to 149,086 shares of our common stock pursuant to the 1998 Heidrick &
Struggles GlobalShare Program I.
12
<PAGE>
Mr. Pittard also has an employment agreement with us which provides to him
certain benefits. See also "EMPLOYMENT AGREEMENTS." In this Proxy Statement,
we are recommending that our stockholders approve a proposal to modify the
performance-based portion of Mr. Pittard's compensation. See "PROPOSAL III,
PROPOSAL TO APPROVE THE MATERIAL TERMS OF A CEO PERFORMANCE-BASED INCENTIVE
COMPENSATION PLAN." The Compensation Committee is also contemplating
modifications to Mr. Pittard's non-performance based compensation which have
not yet been determined and are not submitted for stockholder approval.
THE COMPENSATION COMMITTEE
Robert W. Shaw (Chairman)
Robert Louis-Dreyfus
Carlene M. Ziegler
13
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the monthly percentage change in
our cumulative total stockholder return with the cumulative total return of
two groups: the Nasdaq Composite Index and a Peer Group constructed by us.
Cumulative total return for each of the periods shown in the graph is measured
assuming an initial investment of $100 on April 27, 1999, the date public
trading of our common stock began, and assumes the reinvestment of any
dividends paid.
The Peer Group is comprised of five publicly traded companies that are
engaged principally, or in significant part, in executive search consulting
and/or Internet-based recruiting. They constitute the best approximation of a
peer group among companies that were publicly traded for the period being
evaluated. Many of our direct competitors, who specialize in senior level
executive search, are privately held firms.
The returns of each company have been weighted according to their
respective stock market capitalizations at the beginning of each measurement
period for purposes of arriving at a Peer Group average. The members of the
Peer Group are Caldwell Partners International, Inc., Hotjobs.com Ltd,
Korn/Ferry International, TMP Worldwide, Inc., and Whitehead Mann Group PLC.
The stock price performance depicted in this graph is not necessarily
indicative of future price performance. This graph will not be deemed to be
incorporated by reference by any general statement incorporating this Proxy
Statement into any of our filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent we specifically incorporate this information by reference, and shall
not otherwise be deemed soliciting material or deemed filed under those Acts.
Comparison of Cumulative Total Return
Among Heidrick & Struggles International, Nasdaq Composite Index and Peer
Group
[GRAPH CHART]
14
<PAGE>
<TABLE>
<CAPTION>
Peer
Measurement Period(1) HSII NASDAQ Group
--------------------- ------- ------- -------
<S> <C> <C> <C>
4/27/99........................................... $100.00 $100.00 $100.00
4/30/99........................................... 99.55 95.89 92.81
5/31/99........................................... 99.55 93.19 72.92
6/30/99........................................... 135.71 101.36 93.84
7/31/99........................................... 122.32 99.58 71.25
8/31/99........................................... 108.93 103.41 100.37
9/30/99........................................... 136.16 103.69 112.83
10/31/99.......................................... 164.29 112.03 111.57
11/30/99.......................................... 188.39 126.02 155.03
12/31/99.......................................... 301.79 153.75 229.74
</TABLE>
- --------
(1) Based on $100 invested on April 27, 1999 in our common stock, the Nasdaq
Composite Stock Index and the Peer Group Index. Total return assumes
reinvestment of dividends.
15
<PAGE>
PROPOSAL II
AMENDMENT TO THE 1998 HEIDRICK & STRUGGLES
GLOBALSHARE PROGRAM I AND THE 1998 HEIDRICK & STRUGGLES
GLOBALSHARE PROGRAM II
We have adopted the 1998 Heidrick & Struggles GlobalShare Program I (the
"GlobalShare Program I") which serves as a means to attract, reward and retain
selected employees ("Employee Participants"). Similarly, we have adopted the
1998 Heidrick & Struggles GlobalShare Program II (the "GlobalShare Program II"
and, together with the GlobalShare Program I, the "GlobalShare Plan") which
serves as a means to attract, reward and retain independent contractors
(together with the Employee Participants, the "Participants"). The terms of
each of the GlobalShare Program I and the GlobalShare Program II are
substantially the same in all material respects.
Awards made under the GlobalShare Plan may be in the form of options, which
may be Incentive Stock Options or non-qualified stock options; stock
appreciation rights granted as a means to exercise options or designated
portions thereof, or as independent awards; or other awards, such as
restricted stock units, that are valued in whole or in part by reference to,
or are otherwise based on, the fair market value of shares (as determined by
the Compensation Committee). Awards may be paid in shares, cash or a
combination thereof.
Our Board of Directors has adopted and recommends that you approve an
amendment to the GlobalShare Plan that would increase the aggregate number of
shares authorized for issuance under the GlobalShare Plan. Currently, the
aggregate number of shares which may be issued or delivered under the
GlobalShare Plan is 3,721,667, subject to adjustments upon certain events
described in Section II of the GlobalShare Plan. The maximum number of shares
of common stock for which awards may be granted during a calendar year to any
Participant is 275,000. The term of the GlobalShare Plan is ten years expiring
on June 8, 2008. At our initial public offering, we issued 666,566 shares of
common stock pursuant to a purchase opportunity under the GlobalShare Plan. As
of March 31, 2000, we granted, issued or delivered options, net of
forfeitures, representing approximately 1.9 million shares under the
GlobalShare Plan. Accordingly, there are approximately 1.2 million shares of
common stock available which may be subject to options, stock appreciation
rights, or other awards.
As a result of the small number of shares of common stock available for
issuance under the GlobalShare Plan and the need for us to remain competitive
in attracting and retaining employees, we are asking that you authorize an
additional number shares of common stock for issuance under the GlobalShare
Plan to cover awards anticipated to be granted by us in the future in
accordance with our normal compensation practices. We continue to believe that
awards under the GlobalShare Plan are an important component of compensation
and necessary to attract and retain outstanding employees and independent
contractors, as the case may be.
To enable us to continue utilizing the GlobalShare Plan to compensate our
executives, key employees and independent contractors, we propose to amend
paragraph 3 of the GlobalShare Plan to provide that the total number of shares
authorized or reserved for issuance upon the exercise of all options granted
under the GlobalShare Plan, subject to adjustments upon certain events
described in Section 11 of the GlobalShare Plan, shall not exceed an aggregate
amount equal to thirty percent (30%) of the highest number of shares of our
common stock which are issued and outstanding from time to time during the
term of the GlobalShare Plan, provided, however, that in no event will the sum
of the total number of shares authorized or reserved for issuance upon the
exercise of all options granted under the GlobalShare Plan plus the total
amount of our issued and outstanding shares exceed the number of shares
authorized for issuance under our Amended and Restated Certificate of
Incorporation.
Except as so amended by this Proposal II, the GlobalShare Program I and
GlobalShare Program II will continue unchanged and in full force and effect.
Adoption of these proposed amendments requires the affirmative vote of a
majority of the shares present or represented and entitled to vote at the
annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
1998 HEIDRICK & STRUGGLES GLOBALSHARE PROGRAM I AND THE 1998 HEIDRICK &
STRUGGLES GLOBALSHARE PROGRAM II.
16
<PAGE>
PROPOSAL III
PROPOSAL TO APPROVE THE MATERIAL TERMS OF A
CEO PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN
Internal Revenue Code Section 162(m) ("Section 162(m)") prevents a publicly
held corporation from deducting for tax purposes amounts of annual
compensation in excess of $1 million if that compensation is paid to the CEO
or any of the four highest compensated officers (other than the CEO) whose
compensation is reported in the proxy statement. However, compensation,
including stock options, which is paid pursuant to the terms of a plan or
structure that qualifies as performance-based compensation under Section
162(m) is not subject to the $1 million limitation.
We seek stockholder approval of the material terms of an incentive
compensation plan (the "Performance Plan") created for our CEO. The
Performance Plan includes a performance-based award with a maximum payout of
$2.4 million per fiscal year. This Performance Plan will eliminate an existing
compensation program which included payment to the CEO of a $1.65 million
minimum guaranty. This performance-based award may be earned based on one or
more of the following criteria: (1) corporate growth in revenue and earnings
per share on a fully diluted basis (including results from our wholly owned
subsidiary, LeadersOnline), and (2) growth of our total stockholder return on
equity compared to the average total stockholder return on equity of S&P Small
Cap companies and certain peer companies. Prior to the 90th day of each fiscal
year, the Compensation Committee will establish the formula, including targets
and goals, with respect to the performance-based award. Prior to the payment
of the performance-based award to the CEO, the Compensation Committee will
certify that the performance goals and any other material terms of the
performance-based award were in fact satisfied.
In addition to the performance-based award, the Performance Plan provides
for a discretionary award based on strategic considerations determined by the
Board of Directors. The discretionary award will be subject to the $1 million
deduction limit of Section 162(m).
The CEO may receive other compensation outside of the Performance Plan to
the extent determined by the Compensation Committee, including stock options.
The CEO is permitted to draw down up to $1 million of his potential
performance-based and discretionary awards to be earned under the Performance
Plan, and should he not meet the targets to earn the awards under the
Performance Plan, he is required to pay back any unearned amount drawn down.
The Performance Plan will be effective only upon approval by the stockholders.
Eligible Officer
The only individual participating in the Performance Plan is our CEO.
Business Criteria
The annual performance-based award paid under the Performance Plan is based
on a measurement of stockholder return on equity, growth of revenue and growth
of earnings per share, as described above. The Compensation Committee will
establish the formula, including targets and goals, prior to the 90th day of
the fiscal year with respect to the performance-based award.
The financial measurements used in performance goals shall exclude the
effects of changes in accounting standards and non-recurring extraordinary
events specified by the Compensation Committee, such as write-offs, capital
gains and losses, and acquisitions and dispositions of businesses. However,
the Compensation Committee retains the discretion to reduce performance-based
awards as a result of such events, and to interpret the Performance Plan or
any award in accordance with its terms.
The annual discretionary award is based on strategic considerations.
Maximums
The annual performance-based award payable in any year to the CEO will be a
maximum of $2.4 million.
17
<PAGE>
The table below shows the performance-based award our CEO could earn for
year 2000 if the targets and goals set by our Compensation Committee are
satisfied.
Performance-Based Award
Year 2000 Performance-Based CEO Incentive Plan
<TABLE>
<CAPTION>
2000 Annual Incentive
-------------------------------------------
Name, Position Threshold Target Maximum
- -------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick S. Pittard, President and
Chief Executive Officer........... $ 0 $1,200,000 $2,400,000
</TABLE>
Approval of these material terms requires the affirmative vote of a majority
of the shares present or represented and entitled to vote at the annual
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
MATERIAL TERMS OF A CEO PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN.
18
<PAGE>
PROPOSAL IV
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT
Our Board of Directors appoints our independent public accountant on an
annual basis and asks stockholders to ratify their appointment. We believe
that Arthur Andersen LLP is knowledgeable about our operations and accounting
practices and is well qualified to act in the capacity of our independent
public accountant. Therefore, we have appointed Arthur Andersen LLP to act as
our independent public accountant to audit our financial statements for 2000.
Although our appointment of an independent public accountant does not require
stockholder approval, we believe it is desirable to obtain your concurrence
with our appointment. Due to the difficulty and expense involved in retaining
another independent accounting firm on short notice, we do not contemplate
appointing another firm to act as our independent public accountant for 2000
if you do not concur with our appointment of Arthur Andersen LLP. Instead, we
will consider your vote as advice in making our appointment of our independent
public accountant next year.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting. They will have the opportunity to make a statement if they so
desire and will be available to respond to any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPOINTMENT OF ARTHUR
ANDERSEN LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANT.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year, none of our executive officers or directors was
indebted to us in an amount in excess of $60,000. Additionally, during fiscal
year 1999, we did not enter into any transactions or establish any business
relationships with related parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") requires that our officers and directors, and persons who own more than
ten percent (10%) of a registered class of our equity securities, file reports
of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC.
These officers, directors and individuals, entities or groups holding ten
percent (10%) or more of our outstanding shares of common stock are also
required by SEC rules to furnish us with copies of all forms they file.
Based solely on a review of the copies of the forms received by us or
written representations from certain reporting persons, we believe that,
during 1999, all Section 16(a) filing requirements applicable to our officers,
directors, and individuals, entities or groups holding ten percent (10%) or
more of our outstanding shares of common stock were met.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Advance Notice Procedures. Under our Amended and Restated Bylaws, no
business may be brought before an annual meeting unless it is specified in the
notice of the meeting or is otherwise brought before the meeting by or at the
direction of the Board or by a stockholder entitled to vote at the meeting who
has delivered advance notice to us. The advance notice must contain certain
information specified in our Amended and Restated Bylaws and be delivered to
our Secretary at our principal executive offices (233 South Wacker Drive,
Suite 4200, Chicago, Illinois 60606-6303) not less than sixty (60) days nor
more than ninety (90) days prior to the first anniversary of the preceding
year's annual meeting. These requirements are separate from and in addition to
the SEC's requirement that a stockholder must meet in order to have a
stockholder proposal included in our Proxy Statement for the 2001 Annual
Meeting of Stockholders pursuant to Rule 14a-18 under the Exchange Act ("SEC
Rule 14a-8").
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Stockholder Proposals to be Included in the Proxy Statement. Proposals of
our stockholders intended to be presented at the 2001 Annual Meeting of
Stockholders must be received by our Secretary at our principal executive
offices by January 4, 2001. Stockholders interested in submitting a proposal
for inclusion in our proxy materials for the 2001 Annual Meeting of
Stockholders may do so by following the procedures prescribed in SEC Rule 14a-
8. A proposal which does not comply with the applicable requirements of SEC
Rule 14a-8 will not be included in our proxy materials for the 2001 Annual
Meeting of Stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference herein our annual report on Form 10-K for the
fiscal year ended December 31, 1999. All reports and other documents we file
pursuant to Sections 13(a)(c),14 or 15(d) of the Exchange Act subsequent to
the date of this Proxy Statement also will be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing these reports
and documents. Any statement incorporated or deemed to be incorporated herein
will be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that any statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes this statement. Any statement so
modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement. We will not update
this Proxy Statement for events occurring subsequent to the date of this Proxy
Statement.
You may read and copy any materials we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains our reports, proxy and information statements, and other information
at http://www.sec.gov.
We will provide without charge a copy of any of the foregoing documents
incorporated herein by reference (other than exhibits to documents, unless
these exhibits are specifically incorporated by reference into the document).
Requests for these documents should be made to Richard D. Nelson at 233 South
Wacker Drive, Suite 4200, Chicago, Illinois 60606-6303.
OTHER MATTERS
As of the date of this Proxy Statement, the above is the only business we
are aware of that is to be acted upon at the annual meeting. If, however,
other matters should properly come before us at the annual meeting, the
persons appointed by your signed proxy will vote on those matters according to
their best judgment.
By the order of the Board of
Directors,
Richard D. Nelson,
Secretary
Chicago, Illinois
April 21, 2000
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF PROXIES WILL SAVE US THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES. PLEASE MARK, SIGN, DATE AND
RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU APPROVE EACH OF THE PROPOSALS LISTED
BELOW.
Please mark
your votes as
indicated in [X]
this example
I. ELECTION OF DIRECTORS (Mark only one box).
FOR WITHHOLD
all nominees AUTHORITY
listed below to vote for
(except as marked all nominees
to the contrary below) listed below
[_] [_]
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below.)
Nominees: David B. Kixmiller, Bengt Lejsved, Robert W. Shaw, and Carlene M.
Ziegler
II. PROPOSAL TO AMEND THE 1998 HEIDRICK & STRUGGLES GLOBALSHARE PROGRAM I AND
THE 1998 HEIDRICK & STRUGGLES GLOBALSHARE PROGRAM II. (MARK ONLY ONE BOX).
FOR AGAINST ABSTAIN
[_] [_] [_]
III. PROPOSAL TO APPROVE THE MATERIAL TERMS OF A CEO PERFORMANCE-BASED INCENTIVE
COMPENSATION PLAN. (MARK ONLY ONE BOX).
FOR AGAINST ABSTAIN
[_] [_] [_]
IV. PROPOSAL TO RATIFY OUR APPOINTMENT OF ARTHUR ANDERSEN LLP AS OUR
INDEPENDENT PUBLIC ACCOUNTANT FOR 2000. (MARK ONLY ONE BOX).
FOR AGAINST ABSTAIN
[_] [_] [_]
V. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OF THE
MEETING.
This Proxy when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR Proposals I, II, III and IV.
Please sign your name on this Proxy Card exactly as it appears to the left of
the signature line.
IF YOU HOLD SHARES AS JOINT TENANTS, BOTH YOU AND THE CO-OWNER MUST SIGN. If you
are signing as executor, trustee, guardian or in another representative
capacity, please provide your full title. If you are a corporation, please sign
in full corporate name by the president or other authorized officer. If you are
a partnership, please sign in partnership name by an authorized person.
Dated:_____________________________, 2000
_________________________________________
Your Signature
_________________________________________
Signature of co-owner, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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. FOLD AND DETACH HERE .
<PAGE>
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PROXY FOR ANNUAL MEETING
This Proxy is Solicited on Behalf of the Board of Directors of
Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303
I hereby appoint Richard D. Nelson and Donald M. Kilinski, or each of them as
Proxies, with full power of substitution to vote, as directed, all the shares of
common stock of Heidrick & Struggles International, Inc. held of record by me as
of April 19, 2000 at the Annual Meeting of Stockholders to be held on June 2,
2000 or any adjournment of the meeting. This Proxy authorizes each of them to
vote in their discretion on any matter that may properly come before the annual
meeting or any adjournment of the meeting.
(Continued and to be signed on other side)
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. FOLD AND DETACH HERE .
