Exhibit 10.1

 

November 1, 2005

 

Mr. L. Kevin Kelly

Woodcote House

14a Fairmile Avenue

Cobham

Surrey

KT11 2JB

 

Dear Kevin:

 

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 1, 2005 (the “Effective Date”) and shall continue for
twenty-four (24) months, expiring on July 1, 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 term of this Agreement, you will serve as
President Europe, Middle East and Africa (“EMEA”) 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. 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.

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3. Compensation.

 

  (a) Base Salary. You will receive a monthly Base Salary (Fee/SOB salary) of
$25,000.00, which is $300,000.00 annually, inclusive of an annual cash car
allowance of $14,500.00. Your base salary is subject to review after 24 months.

 

  (b) Management Salary. In addition to your Base Salary, you will be entitled
to an annual Management Salary of $425,000.000, payable in twelve equal monthly
installments at the end of each month, minus deductions required by law. Your
management salary is distinct from your base salary and is not applied against
the relevant Fee/SOB tiers.

 

  (c) Target Management Bonus. You will be eligible for an annual Management
Bonus of $425,000.00. You will also participate in the Company’s Management
Incentive Plan (Tier I).

 

  (d) Target Fee/SOB Bonus. You will be eligible for an annual Fee/SOB Bonus of
$550,000.

 

  (e) Guaranteed Annual Compensation. For the financial year 2005, you are
guaranteed that your combined Base Salary (Fee/SOB salary), Management Salary,
Fee/SOB Bonus, and Management Bonus will be at least $1,750,000.00. For the
financial year 2006, you are guaranteed that your combined Base Salary (Fee/SOB
salary), Management Salary, Fee/SOB Bonus and Management Bonus will be at least
$1,500,000.00.

 

  (f) General Provisions Regarding Bonuses. Except as explicitly set forth
herein, all bonuses, including the Management Bonus and Fee/SOB Bonus, 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.

 

  (g) 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 senior executives of the Company 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

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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. At the conclusion of your assignment, the Company will make reasonable
efforts to assign you to a mutually agreeable position within the Company and
its related Companies. The Company will provide you with relocation benefits per
Company policy for whatever that next assignment might be should it be outside
the United Kingdom. If no mutually agreeable position is found, the Company will
provide you with severance pursuant to Company policy as then in effect, and pay
for you to relocate back to the United States according to the company
relocation policy in operation at that time. 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 expatriot benefits:

 

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

 

  •   Reasonable moving expenses for normal household goods from Tokyo to
London, including the cost of moving two vehicles.

 

  •   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 £20,000 and will be
reimbursed to you subject to the provision of actual expenses invoiced.

 

  (b) 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 £6,890 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.

 

  (c) 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, up to a maximum of
£50,000 per year for all of your children.

 

  (d) 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.

 

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.

 

  (e) Income and Ward Tax Reimbursement. The Company will reimburse you for any
tax or social charge liabilities that may arise in respect to the expatriot
benefits provided hereunder. In addition,

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the Company agrees to pay the 2004 Ward Tax that was required as a result of the
timing of your relocation from Tokyo. The Company will also pay for its tax
advisors to complete your annual income tax returns for the period of your
secondment.

 

  (f) During your secondment, you may elect to have some or all of your base
salary paid in Pounds Sterling, rather than in U.S. Dollars. For administrative
and financial purposes, an exchange rate of £1 = $1.815 will be fixed for the
Term and such payments will be based on this exchange rate. However, should the
average exchange rate for 2005 prove to differ from this rate by more than 10%
in either direction, the 2005 average exchange rate will be applied for 2006.

 

7. Compliance with Policies. Subject to the terms of this Agreement, during the
Term, you agree that you will comply in all material respects with all policies
and procedures applicable to similarly situated employees of the Company,
generally and specifically.

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8. Termination of Employment.

 

  (a) Employment At Will. You will be an “employee at will” of the Company,
meaning that either party may terminate the employment relationship at any time
for any reason (with or without cause or reason) upon written notice to the
other party. A period of notice shall only be required if it is expressly
provided in writing under written Company employment policies in effect at the
time of such termination.

 

  (b) No Notice Period in Case of Termination for Cause. Notwithstanding any
period of notice under written Company employment policies in effect at the time
of termination, the Company shall have the right to terminate your employment
for cause immediately upon written notice. For purposes of this Agreement,
“cause” shall mean any of the following: (i) your engagement, during the
performance of your duties hereunder, in acts or omissions constituting
dishonesty, fraud, intentional breach of fiduciary obligation or intentional
wrongdoing or malfeasance; (ii) your conviction for a felony; (iii) your
violation or breach of any provision of this Agreement; (iv) your unauthorized
use or disclosure of confidential information pertaining to the Company’s
business; (v) your engagement in conduct causing demonstrable injury to the
Company or its reputation; (vi) your unreasonable failure or refusal to perform
your duties as the Company reasonably requires, to meet goals reasonably
established by the Company, or to abide by the Company’s policies for the
operation of its business, and the continuation thereof after the receipt by you
of written notice from the Company; (vii) your illegal use of drugs or use of
alcohol or intoxication on work premises, during working time, or which
interferes with the performance of your duties and obligations on behalf of the
Company; or (viii) your death.

 

  (c) Compensation and Benefits Upon Termination. Upon the termination of your
employment, you will be paid your Base Salary and Management Salary up through
your last day of work (the “Termination Date”), and any other amounts required
by law. In the event that you terminate your employment or in the event that the
Company terminates your employment for cause as defined in this Agreement, you
will not be entitled to any of the benefits contemplated herein to extend beyond
your employment, unless otherwise provided by relevant plan documents. In
addition, if you terminate your employment or if the Company terminates your
employment for cause you will not be eligible for moving expenses for which you
might otherwise have been eligible, except that, in the case of your death, the
Company will pay moving expenses to return your immediate family to the United
States.

 

  (d) Return of Materials. Upon the termination of your employment, you agree to
return to the Company, all Company property, including all materials furnished
to you during your employment (including but not limited to keys, computers,
automobiles, electronic communication devices, files and identification cards)
and all materials created by you during your employment. In addition, you agree
that upon the termination of your employment you will provide the Company with
all passwords and similar information which will be necessary for the Company to
access materials on which you worked or to otherwise continue in its business.

 

9. Confidentiality. In the course of your employment with the Company you will
be given access to and otherwise obtain knowledge of certain trade secrets and
confidential and proprietary information pertaining to the business of the
Company and its affiliates. During the term of your employment with the Company
and thereafter, you will not, directly or indirectly, without the prior written
consent of the

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Company, disclose or use for the benefit of any person, corporation or other
entity, or for yourself, any trade secrets or other confidential or proprietary
information concerning the Company or its affiliates, including, but not limited
to, information pertaining to their clients, services, products, earnings,
finances, operations, marketing, methods or other activities; provided, however,
that the foregoing shall not apply to information which is of public record or
is generally known, disclosed or available to the general public or the industry
generally (other than as a result of your breach of this covenant or the breach
by another employee of his or her confidentiality obligations). Notwithstanding
the foregoing, you may disclose such information as is required by law during
any legal proceeding or to your personal representatives and professional
advisers as is required for purposes of rendering tax or legal advice, and, with
respect to such personal representatives and professional advisers, you shall
inform them of your obligations hereunder and take all reasonable steps to
ensure that such professional advisers do not disclose the existence or
substance thereof. Further, you shall not, directly or indirectly, remove or
retain, and upon termination of employment for any reason you shall return to
the Company, any records, computer disks or files, computer printouts, business
plans or any copies or reproductions thereof, or any information or instruments
derived therefrom, arising out of or relating to the business of the Company and
its affiliates or obtained as a result of your employment by the Company.

 

10. Non-Solicitation/Non-Competition. Without the prior written consent of the
Company, during the term of your employment with the Company and for a period of
six-months after the termination of your employment with the Company, you shall
not (i) become engaged in or otherwise become interested in, whether as an
owner, officer, employee, consultant, director, stockholder, or otherwise, any
company, enterprise or entity that provides or intends to provide services
similar to those provided by the Company in the geographical area which you
served during your employment with the Company; (ii) directly or indirectly
solicit or assist any other person in soliciting any client of the Company with
whom you had contact during your employment with the Company, about which you
learned confidential information during your employment with the Company, or
whose account you oversaw during your employment with the Company or
(iii) directly or indirectly solicit or hire, or assist any other person in
soliciting or hiring, any employee of the Company or its affiliates (as of your
termination of employment with the Company) or any person who, as of such date,
was in the process of being recruited by the Company or its affiliates, or
induce any such employee to terminate his or her employment with the Company or
its affiliates. The provisions of this Section 10 shall be in addition to any
restrictive covenants that are set forth in or otherwise required by Company
benefit plans, including but not limited to the Change in Control Severance Plan
and the Severance Pay Plan. In the case of a discrepancy between this Section
and any such restrictive covenant, the more restrictive language will apply.

 

11. Other Legal Matters.

 

  (a) No Other Agreements/Obligations. You have advised the Company that your
execution and performance of the terms of this Agreement do not and will not
violate any other agreement binding on you or the rights of any third parties
and you understand that in the event this advice is not accurate the Company
will not have any obligation to you under this Agreement.

 

  (b) United States Employment. You will be an employee of the Company’s United
States operations and agree that your employment with the Company shall be
governed by the laws of the United States of America and the State of Illinois.

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  (c) Arbitration. Any controversy or claim arising out of or relating to this
Agreement or for the breach thereof, or your employment, including without
limitation any statutory claims (for example, claims for discrimination
including but not limited to discrimination based on race, sex, sexual
orientation, religion, national origin, age, marital status, handicap or
disability; and claims relating to leaves of absence mandated by state or
federal law), breach of any contract or covenant (express or implied), tort
claims, violation of public policy or any other alleged violation of statutory,
contractual or common law rights (and including claims against the Company’s
officers, directors, employees or agents) if not otherwise settled between the
parties, shall be conclusively settled by arbitration to be held in Chicago,
Illinois, in accordance with the American Arbitration Association’s Employment
Dispute Resolution Rules (the “Rules”). Arbitration shall be the parties’
exclusive remedy for any such controversies, claims or breaches. The parties
also consent to personal jurisdiction in Chicago, Illinois with respect to such
arbitration. The award resulting from such arbitration shall be final and
binding upon both parties. This Agreement shall be governed by the laws of the
United States of America and the State of Illinois without regard to any
conflict of law provisions of any jurisdiction. You and the Company hereby waive
the right to pursue any claims, including but not limited to employment
termination—related claims, through civil litigation outside the arbitration
procedures of this provision, unless otherwise required by law. You and the
Company each have the right to be represented by counsel with respect to
arbitration of any dispute pursuant to this paragraph. The arbitrator shall be
selected by agreement between the parties, but if they do not agree on the
selection of an arbitrator within 30 days after the date of the request for
arbitration, the arbitrator shall be selected pursuant to the Rules. With
respect to any Claim brought to arbitration hereunder, both you and the Company
shall be entitled to recover whatever damages would otherwise be available to
you/it in any legal proceeding based upon the federal and/or state law
applicable to the Claim, except that parties agree they shall not seek any award
for punitive damages for any claims they may have under this Agreement. The
decision of the arbitrator may be entered and enforced in any court of competent
jurisdiction by either the Company or Employee. Each party shall pay the fees of
their respective attorneys (except as otherwise awarded by the arbitrator), the
expenses of their witnesses and any other expenses connected with presenting
their cases, other costs, including the fees of the mediator, the arbitrator,
the cost of any record or transcript of the arbitration, and administrative
fees, shall be borne equally by the parties, one-half by you, on the one hand,
and one-half by the Company, on the other hand. Should you pursue any dispute or
matter covered by this section by any method other than said arbitration, the
Company shall be entitled to recover from you all damages, costs, expenses, and
attorneys’ fees incurred as a result of such action. The provisions contained in
this Section shall survive the termination and/or expiration of this Agreement.

 

  (d) Notice. All notices and other communications under this Agreement shall be
in writing to you at the above-referenced address or to the Company at its
Chicago Headquarters, directed to the attention of the General Counsel.

 

  (e) Full and Complete Agreement. This letter Agreement contains our entire
understanding and can be amended only in writing and signed by the Chief
Executive Officer or General Counsel. This Agreement supercedes any and all
prior agreements, whether written or oral, between you and the Company, that are
not specifically incorporated by reference herein. You specifically acknowledge
that no promises or commitments have been made to you that are not set forth in
this letter.

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  (f) Severability. If any provision of this Agreement or the application
thereof is held invalid, such invalidity shall not affect other provisions or
applications of this Agreement that can be given effect without the invalid
provision or application and, to such end, the provisions of this Agreement are
declared to be severable.

 

  (g) Survival of Provisions. The provisions of Sections 8 (c) and (d) and 9
through 11 of this Agreement shall survive the termination of your employment
with the Company and the expiration or termination of this Agreement.

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We look forward to your continued employment with the Company.

 

Yours sincerely,

 

Thomas J. Friel

 

I hereby accept the terms and conditions of employment as outlined above:

 

/s/ L. Kevin Kelly

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November 1, 2005

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L. Kevin Kelly       Date

 

cc: K. Steven Blake