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EXHIBIT 99.1
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SEPARATION AGREEMENT AND GENERAL RELEASE
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This Separation Agreement and General Release (this
"Agreement")
is made as of this 12th day of December 2006 (the "Effective
Date"),
by and between Jeff Scherb (the "Employee") and Heidrick &
Struggles
International, Inc. and its affiliates (collectively, the
"Company"),
concerning the termination of Employee's employment with the
Company.
WHEREAS, the Company and the Employee entered into a Letter
Agreement dated September 15, 2005 (the "Letter Agreement");
WHEREAS, the Employee's employment as Chief Information
Officer,
Chief Operating Officer of the European Region, and Head of
Knowledge
Management Center in India, will be terminated by the Company
effective on December 31, 2006 (the "Termination Date"); and
WHEREAS, the Company and the Employee intend that this
Agreement
shall be in complete settlement of all rights of the Employee
under
the Letter Agreement or otherwise relating to his employment by
the
Company.
NOW THEREFORE, in consideration of the mutual promises and
agreements set forth below, the Company and the Employee agree
as
follows:
1. TERMINATION. The Employee's employment as Chief Information
Officer, Chief Operating Officer of the European Region, and Head
of
Knowledge Management Center in India and all other officer,
director
and other positions held by the Employee with the Company shall
terminate as of the close of business on the Termination Date.
Through the Termination Date, the Employee will continue to: (a)
serve
as an employee of the Company with the same duties and
responsibilities as before and under the same terms and conditions
set
forth in his Letter Agreement, (b) be paid his currently
monthly
salary ($33,333.33 per month), and (c) be eligible to participate
in
all benefit plans and programs available to employees of Heidrick
&
Struggles, Inc. generally, in accordance with the terms of such
plans
and programs. Any business expenses properly incurred by the
Employee
prior to the Termination Date will be reimbursed in accordance
with
the Company's expense reimbursement policy.
2. 2006 BONUS PAYMENTS. The Employee shall receive a 2006
bonus payment of $210,000 from the Company ("Bonus Payment"),
which
will be paid at the same time as bonus payments are made to
other
employees in early 2007. Such payment is contingent, however,
upon
Employee's delivery to the Company of an executed General Release
and
Waiver, which is attached as EXHIBIT A to this Agreement (the
"Release"), during the 21-day period following the Termination
Date
with such delivery pursuant to Section 16(d) below.
3. OTHER PAYMENTS.
(a) SEVERANCE. The Employee shall receive a severance
payment (the "Severance Payment") of: (i) 12 months of Base
Salary equal to $400,000, and (ii) 12 months of Target Bonus
equal to $262,500, for a total a lump-sum severance payment of
$662,500. To avoid subjecting the Employee to the payment of
any
interest or additional tax imposed under Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code"), the
Severance Payment will be paid to the Employee six months after
the Termination Date. The Company's obligation to pay the
Severance Payment is conditioned upon the Employee's execution
of
this Agreement and the Release, and the continued compliance by
the Employee with all of the terms and conditions of this
Agreement.
(b) SCHOOL FEES. The Company has already paid for the
Employee's children's school fees through July 2007 in the
amount
of $105,770. The Company will not request a refund for these
fees already paid. The Company will not, however, be liable or
pay for any further school fees.
(c) HOUSING (EXISTING LEASE). The Company has already made
certain payments toward the Employee's housing lease through
July
23, 2007. The Company will not request a refund for the amount
already paid nor cancel the lease, and the Company further will
make such additional payments toward the Employee's housing
lease
as may be required under such lease; provided, however, that
the
Company's total additional obligation hereunder will not exceed
$105,760. The Company will not be liable for nor pay for any
other housing expenses.
(d) RELOCATION FEES. In accordance with the Company's
applicable policies on expense reimbursement, the Company will
reimburse the Employee for the following expenses incurred in
connection with the Employee's relocation back to the United
States from London, England: (i) reasonable moving expenses for
normal household goods, not to exceed $8,000, and (ii) one way
business class flights from London, England for the Employee
and
his family members who will be relocating back with the
Employee.
Such Relocation Fees will be reimbursed to the Employee subject
to the provision of actual expenses invoiced. Such relocation
must occur no later than 15 August 2007 to be eligible for this
reimbursement.
(e) TAX PREPARATION FEES. In accordance with the Company's
applicable policies on the payment and/or reimbursement of fees
for professional tax preparation for EX PATRIATED employees,
the
Company will pay and/or reimburse the Employee for fees
incurred
in the preparation of the Employee's personal income tax
returns
for the years in which the Employee was employed by the Company
in London, United Kingdom; and/or received income from the
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Company for his service on behalf of the Company in London,
United Kingdom, regardless of when that income was earned.
4. EQUITY AWARDS.
(a) Subject to Sections 4(b) and (c) below and effective as
of the Termination Date, the Employee shall forfeit and/or
relinquish any and all interests and rights in and under all
unvested equity awards granted under any plan or program
maintained by the Company, and all option awards which are
vested
as of the Termination Date shall continue to be exercisable for
a
period of sixty (60) days following the Termination Date. Other
than the awards set forth on EXHIBIT B hereto, the Employee
acknowledges and agrees that he does not possess, nor is he
entitled to, any other equity awards under any plan or program
of
the Company.
(b) Six months after the Termination Date, the Employee
shall be paid an amount equal to the product of (i) the result
of
(A) the number of options which would have vested to the
Employee
on the Termination Date had his option awards provided for pro-
rata daily vesting less (B) the number of options that were
vested to the Employee on the Termination Date, MULTIPLIED BY
(ii) the result of (A) the December 29, 2006 closing price of
Heidrick & Struggles International, Inc. common stock as
recorded
on the New York Stock Exchange and as reported in THE WALL
STREET
JOURNAL (the "Closing Price") less (B) the exercise price for
such option.
(c) Six months after the Termination Date, the Employee
shall be paid an amount equal to the product of (i) the result
of
(A) the number of shares restricted stock that would have
vested
to the Employee on the Termination Date had his restricted
stock
award provided for pro-rata daily vesting less (B) the number
of
shares of restricted stock per such award that were vested to
the
Employee on the Termination Date, MULTIPLIED BY (ii) the
Closing
Price.
5. TERMINATION OF BENEFITS. Except as specifically provided in
this Agreement with respect to plans or arrangements
specifically
identified in this Agreement, the Employee's continued
participation
in all employee benefit plans (pension and welfare) and
compensation
plans will cease as of the Termination Date. Any payments made to
the
Employee pursuant to this Agreement, other than with respect to
the
continued payment of salary to the Termination Date, shall be
disregarded for purposes of determining the amount of benefits to
be
accrued on behalf of the Employee under any pension or other
benefit
plan maintained by the Company. Nothing contained herein shall
limit
or otherwise impair the Employee's right to receive pension or
similar
benefit payments which are vested as of the Termination Date under
any
applicable tax qualified pension or other tax qualified benefit
plan.
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6. MEDICAL BENEFITS. The Employee's entitlement to continue
family medical coverage, which shall include vision and dental
coverage, under the benefit plans of the Company operated in
the
United States will be determined in accordance with the provisions
of
COBRA.
7. NO OTHER PAYMENTS. The Employee agrees and acknowledges
that, other than as specifically provided for in this Agreement,
no
additional payments are due from the Company on any basis
whatsoever.
8. RELEASE. As part of this Agreement, and in consideration of
the additional payments provided to the Employee in accordance
with
this Agreement, the sufficiency of which is hereby acknowledged,
the
Employee is required to execute the Release within the 21-day
period
following the Termination Date, deliver the executed Release to
the
Company per Section 16(d) below, and not revoke the Release.
9. ASSISTANCE WITH CLAIMS. The Employee agrees to cooperate
with the Company or any affiliate in the defense, prosecution
or
evaluation of any pending or potential claims or proceedings
involving
or affecting the Company or any affiliate arising during the period
of
Employee's employment with the Company (the "Employment Period")
or
relating to any decisions in which the Employee participated or
any
matter of which the Employee had knowledge. The Employee
agrees,
unless precluded by law, to promptly inform the Company if he is
asked
to participate (or otherwise become involved) in any claims that
may
be filed against the Company or any affiliate relating to the
Employment Period. The Employee also agrees, unless precluded by
law,
to promptly inform the Company if he is asked to assist in any
investigation (whether governmental or private) of the Company or
any
affiliate (or their actions) relating to any matter, regardless
of
whether a lawsuit has then been filed against the Company or
any
affiliate with respect to such investigation. Specifically and
without limitation, the Employee will attend and participate in
meetings and interviews conducted by Company personnel, and/or
attorneys appointed by the Company and may be represented by
counsel
who may attend such meetings and interviews, and execute
written
affidavits confirming the Employee's statements in such meetings
in
respect of any such matters; provided such meetings do not
unreasonably interfere with the Employee's employment or self-
employment entered into after the Termination Date. The Employee
will
make himself available for the foregoing at mutually convenient
times
during business hours from time to time as reasonably requested by
the
Company. Promptly upon the receipt of the Employee's written
request,
the Company agrees to reimburse the Employee for all reasonable
out-
of-pocket expenses associated with such cooperation, including,
without limitation, meals, lodging, travel, and ground
transportation
expenses; provided, however, subject to Section 16(k) of this
Agreement, that such reimbursement shall specifically exclude any
fees
for legal representation engaged by the Employee, that is not
otherwise reimbursable pursuant to the Company's policies in effect
at
such time or the Company's By-Laws. This Paragraph 9 shall not
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preclude the Employee from responding to an inquiry in an
honest
manner.
10. NON-DISPARAGEMENT. (a) The Employee agrees that on and
after
the Effective Date, he will not make any disparaging, critical
or
derogatory statement about the Company or any af
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