TERMS OF EMPLOYMENT

Exhibit 10.2

 

EXECUTION COPY

 

HEIDRICK & STRUGGLES

 

Thomas J. Friel

Chief Executive Officer

(312) 496-1352 Direct

(312) 496-1283 Facsimile

tfriel@heidrick.com

 

September 15, 2005

 

Mr. Jeff Scherb

945 Oak Hill Drive

Elmira, NY 14905-1435

 

Dear Jeff:

 

On behalf of Heidrick & Struggles International, Inc. (the “Company”), I am pleased to confirm the terms of your employment arrangement in this letter agreement (the “Agreement”).

 

1.

Term. Your employment under this Agreement shall have the effective commencement date of July 28, 2005 (the “Effective Date”) and shall continue for twenty-four (24) months, expiring on July 27, 2007 (the “Initial Term”), unless further extended or sooner terminated as provided in this Agreement. The term of this Agreement will be extended automatically for successive one (1) year periods after the expiration of the Initial Term, on the same terms and conditions set forth in this Agreement, or on such terms and conditions to which parties hereto may agree in writing, unless either party notifies the other in writing not less than one month prior to the end of the Initial Term, or of any extension thereof, of its or his desire to terminate this Agreement upon the conclusion of the Initial Term or extension thereof of this Agreement. The Initial Term together with any extensions shall be defined as the “Term” of this Agreement.

 

2.

Title and Duties. During the Initial Term of this Agreement or until you complete the Europe, Middle East and Africa (“EMEA”) restructuring project, whichever is earlier, you will serve as Chief Technology and Operating Officer of Heidrick & Struggles International, Inc., reporting to the Chief Executive Officer of the Company, with such duties and responsibilities as are customarily assigned to such position, and such other duties and responsibilities not inconsistent therewith as may from time to time be assigned to you by the Chief Executive Officer. After the Initial Term or the completion of the EMEA restructuring project, whichever is earlier, your title and duties may change, as set forth in this Agreement. You agree that you will devote your full time, energy, and skill to the business of the Company and to the promotion of the Company’s best interest, and shall not work or perform services for any other employer as an employee, consultant or otherwise during the Term.

 

 

Sears Tower – Suite 4200    233 South Wacker Drive    Chicago, IL 60606-6303    Phone: 312/496-1200    Fax: 312/496-1290

 

Heidrick & Struggles International, Inc.    Offices in Principal Cities of the World    www.heidrick.com

Mr. Jeff Scherb

September 15, 2005

Page 2

 

3.	Compensation.

 

(a) Base Salary. You will receive a monthly Base Salary of $33,333.00, which is $400,000.00 annually, inclusive of an annual cash car allowance of $14,520.00. Your base salary is subject to review after 24 months.

 

(b) Target Bonus. You will be eligible for an annual bonus of $262,500.00. Except as explicitly set forth herein, all bonuses are discretionary and are not earned until approved by the Compensation Committee and/or Board of Directors of the Company. Bonuses will be payable only if you are in the Company’s employ and not on notice on the regular bonus payment date.

 

(c) Incentive Compensation and Other Plans. You will be entitled to participate in other management compensation plans, including the Management Stock Option Plan, the Change in Control Severance Plan at Tier I and the Severance Pay Plan as a Top Employee, as such plans may be amended from time to time.

 

4.

Benefits. You will be eligible to participate in the Company’s benefit programs at the same level as other Company employees of your level on your effective date. Our benefits program includes group health, dental, vision, life/AD&D, long-term disability, short-term disability salary continuation, paid holidays, Flexible Spending Account, and the Heidrick & Struggles, Inc. 401(k) Profit-Sharing and Retirement Plan. You will also be eligible to participate in the Company’s Physical Examination and Financial Planning Program. Your eligibility for all such programs and plans is determined under the terms of those programs/plans. Any discrepancy between this summary and the company’s plan documents will be resolved in favor of the plan documents. Our benefits program, compensation programs, and policies are reviewed from time to time by Company management and may be modified, amended, or terminated at any time.

 

5.	Expenses. The Company will reimburse you for your business expenses in accordance with its policies.

 

6.

Secondment. You will be assigned to work in the Company’s office in London, England, though the Company reserves the right to require you to work from another location on a temporary basis or to transfer you to another office or to an affiliated company. Your assignment is expected to continue for a maximum of two years unless we otherwise mutually agree. In addition to your regular compensation, as set forth in Section 3 of this Agreement, during the time you are assigned to the Company’s London office you will be eligible for the following expatriate benefits:

 

(a) Contingent Allowance. The Company will provide you with a Contingent Allowance of £27,548 per year, paid in equal monthly installments, in recognition of the higher cost of living in London.

Mr. Jeff Scherb

September 15, 2005

Page 3

 

(b) Relocation Expenses. The Company will reimburse you for the following expenses related to your relocation:

 

•

Reasonable moving expenses for normal household goods from Elmira, New York to London.

 

•

Reasonable necessary additional fit-out costs for your accommodation.

 

•

Business class flights for you and those family members who will be relocating with you.

 

It is anticipated that the total cost will be no more than £26,000 and will be reimbursed to you subject to the provision of actual expenses invoiced.

 

(c) Housing Expenses. The Company will rent or lease on your behalf accommodation of your choice within commuting distance of London and will contribute up to a maximum value of £7,346 per calendar month towards your housing costs (covering rent, management fees, government rates and utilities). The Company will recover from you on a monthly basis any amount that it spends on your behalf over and above this figure. The Company will also cover any realtor brokerage costs and deposit requirements related to your housing.

 

During the period before you locate permanent housing, the Company will provide appropriate transitional accommodation in either a hotel or serviced apartment for a period estimated to be one month. Other than as set forth herein, the costs associated with providing you housing will not be deducted from your compensation.

 

(d) Education Expenses. The Company will reimburse you for incremental school fees for your children, over and above those fees you would otherwise have incurred in the United States had you not moved to London, estimated to be a maximum of £52,000 per year for all of your children.

 

(e) Home Leave/Emergency Leave. For every 12-month period during the term of your assignment the Company will provide you with one round trip business class airline ticket for each member of your immediate family that relocated with you for the purposes of home leave to the United States.

Mr. Jeff Scherb

September 15, 2005

Page 4

 

You will be allowed reasonable time off to attend to personal emergencies, such as death or critical illness of a family member.

 

The Company will cover the cost of transportation in certain situations of personal emergencies, including individual medical crises that require US treatment.

 

(f) Tax Equalization. It is the Company’s intention to eliminate any difference in tax and social charge liability to which you are subject while on overseas assignment. To accomplish this you will be “tax equalized” which is specifically designed to:

 

•

Provide that you do not suffer an additional tax/social charge liability or benefit as a result of your being assigned to the London office.

 

•

Provide assistance to you to ensure compliance with United States expatriate tax and social charge laws as well as the tax and social charge laws of the United Kingdom.

 

All UK income taxes will be reimbursed to you or paid by the Company on your behalf. There should be no UK social charges (National Insurance) payable. Your base salary and any incentive bonus will be reduced by United States hypothetical withholding. This is an estimated tax and social charge liability computed by our tax advisor which includes United States income tax, FICA and Medicare. This approximates the total income tax and social charges you would pay as a United States resident.

 

The Contingent Allowance and Car Allowance will be included in the tax equalization calculation. Any other differentials, allowances, premiums or similar payments given to you as part of the assignment are not included in the hypothetical tax computation and are provided tax-free to you, unless elsewhere in this letter, there is a specific statement that the tax liability is your responsibility.