UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant | 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 | |
Definitive Proxy Statement | |
Definitive Additional Materials | |
Soliciting Material under |
Korn Ferry
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee | |
Fee paid previously with preliminary | |
What We Stand For: Our Values
Inclusion
We embrace people with different points of view, from all backgrounds. And we think and work as one team.
Honesty
We say what we mean and we do what we say. We hold ourselves to the highest standards. And we make it safe for people to speak out when they see something wrong.
Knowledge
We are insatiably curious, always learning new things. And we actively help our colleagues grow and develop, too, with mentoring and support.
Performance NOTICE OF 2020 ANNUAL STOCKHOLDERS’ MEETING AND PROXY STATEMENT
We never settle for the status quo. We always strive to be better today than we were yesterday and do our best for our clients, colleagues, and stockholders.
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Dear FellowStockholders,
On behalf of the Board of Directors (the “Board”), senior management and more than 10,000 colleagues of Korn Ferry (the “Company”“Company,” “firm,” “we,” “its,” and “our”) Board of Directors, I am pleased, it is my pleasure to invite you to attend our 20202023 Annual Meeting of Stockholders on Wednesday, September 23, 202021, 2023, at 8:00 a.m. Pacific Time. In lightTime (the “Annual Meeting”).
The Board is proud of the coronavirus pandemic (“COVID-19”)results Korn Ferry continues to deliver on behalf of our stockholders. These accomplishments include:
• | an all-time high of fee revenue totaling $2.835 billion, | ||
• | annual fee growth of 8% (12% on a constant currency* basis), | ||
• | the acquisition and integration of Infinity Consulting Solutions and Salo LLC, enhancing our Interim business to $400 million of annual revenue on a run rate basis, | ||
• | $127 million returned to stockholders in the form of share repurchases and dividends paid, | ||
• | third-party recognition as a leading provider of executive search, professional search, management consulting, sales training and enablement services, and recruitment process outsourcing services, and | ||
• | third-party recognition of our environmental, social, and governance (“ESG”) reporting and ESG practices related to human capital, climate, and sustainability. |
These accomplishments were achieved against a challenging environment of economic slowdowns, recession fears, sharp inflation increases followed by global central bank tightening, and continued geopolitical tensions and conflict. While each year carries its own set of challenges, opportunities, and uncertainties, Korn Ferry has remained steadfast and resilient in progressing forward. We believe our firm and Board will continue to exhibit agile leadership—focusing on strategic priorities to best position Korn Ferry for the annual meetingfuture, creating lasting impact for our clients, achieving strong financial results for our stockholders, and contributing to the betterment of our communities and colleagues.
We want to thank you for your support and investment in our firm. We encourage you to attend the Annual Meeting. Our Annual Meeting will be conducted online this year through a live audiocast, which is often referred to as a “virtual meeting” of stockholders. Our digital format allowsis meant to allow stockholders to participate safely, conveniently, and effectively ateffectively. We intend to hold our virtual meeting in a time of increasing limitations on public gatheringsmanner that affords stockholders the same general rights and travel.
As we issue this 2020 Proxy Statement, our world has and continuesopportunities to change rapidly, driven in large measure by COVID-19 and its economic, social, and personal impacts. Our thoughts and hearts are with everyone affected.
In additionparticipate, to protecting our employees, clients, and others with whom we interact, we have challenged ourselves to remain leaders during this time. As a global enterprise, we have been agile in responding to local conditions, emphasized our adaptability across the Company, and pushed ourselves to keep moving forward. We have enacted detailed business continuity plans that allow us to continue to serve our clients while protecting the well-being of our people.
Korn Ferry colleagues have demonstrated time and again the resiliency of the firm’s cultureextent possible, as they workwould have at an in-person meeting. Whether or not you plan to maintain minimal operational disruption or reduction of service levels. Through this challenging time, they have powered numerous client conversations with guidance about navigating the impacts of COVID-19, including sharing insights about how some of our clients are approaching the pathattend, we encourage you to recovery through their organizations, people, and leadership.
Alongside COVID-19, we have raised our voice on diversity, equity, and inclusion — both within Korn Ferry and in the services provided to our clients. Amid the long-overdue calls for racial equality, we quickly mobilized our expertise and offerings to answer the call not just for our clients, but also to reflect and improve ourselves.
While so much has happened in calendar year 2020, this Proxy Statement provides a moment to reflect on accomplishments throughout the fiscal year, such as in November 2019 when Korn Ferry acquired three companies in the leadership development area: Miller Heiman Group, AchieveForum, and Strategy Execution. This combination brought to us a world-class portfolio of learning, development, and performance improvement offerings that bolstered our firm’s substantial leadership development capabilities.
We believe that our long-term strategy is sound, and that our focus on clients, performance, knowledge, and operating discipline will best position us to navigate the future, just as it has throughout our firm’s history. The speed of change in global markets, and demand for coherent institutional responses will accelerate as we move forward. With this, we will continue to find better ways to do our work, to develop new capabilities, and to create strategies for success in these transformative times as we build an even stronger and more innovative company that delivers value to its employees, clients, stockholders, and communities.
I also want to take a moment to acknowledge Len Lauer, a member of our Board who passed in April 2020. The Company has lost a gifted and experienced advisor as Len continually sought to deepen his contribution to Korn Ferry’s strategic plans and execution. In turn, we also want to thank George Shaheen for rejoining the Board after Len’s passing, following many years of outstanding service to Korn Ferry.
I am honored to serve as Chair of this great company and to work alongside such an engaged, inclusive, and collaborative Board, dedicated management team, and outstanding workforce.
On behalf of our Board and all of our Korn Ferry colleagues, thank you for being a Korn Ferry stockholder and for your continued support of Korn Ferry.vote promptly.
Sincerely,
Christina A. Gold,
Jerry P. Leamon,
Chair of the Board
August 12, 202010, 2023
Korn Ferry
1900 Avenue of the Stars, Suite 2600
1500
Los Angeles, CA 90067
(310) 552-1834
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| 2023 Proxy Statement
Notice of
2020 Annual MeetingThis page intentionally left blank
Meeting Information
Date: September 23, 2020
Time: 8:00 a.m. Pacific Time
Virtual Meeting Site:
www.virtualshareholdermeeting.com/KFY2020
Record Date: July 29, 2020
Notice of 2023 Annual Meeting |
Meeting Agenda
To the Stockholders:
In light of the public health and travel safety concerns relating to the coronavirus pandemic (“COVID-19”), on September 23, 2020, Korn Ferry (the “Company,” “we,” “its” and “our”) will hold its 2020 Annual Meeting of Stockholders (the “Annual Meeting”) online this year at www.virtualshareholdermeeting.com/KFY2020. The Annual Meeting will begin at 8:00 a.m. Pacific Time.
The purposes of the Annual Meeting are to:Information
Time and Date 8:00 a.m. Pacific Time September 21, 2023 | Location Live Audiocast at www.virtualshareholdermeeting.com/KFY2023 | Record Date July 31, 2023 | |||||
Meeting Agenda | ||||
1. | Elect the | |||
FOR each Director Nominee | ||||
2. | Vote on a non-binding advisory resolution to approve the Company’s executive | |||
FOR | ||||
3. | Vote on a non-binding advisory resolution on the frequency of future advisory votes to approve the Company’s executive compensation. | |||
FOR | ||||
4. | Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the Company’s | |||
FOR | ||||
5. | Transact any other business that may be properly presented at the Annual Meeting. |
Only stockholdersVirtual Meeting: Korn Ferry (the “Company,” “we,” “its,” and “our”) will hold its 2023 Annual Meeting of Stockholders (the “Annual Meeting”) online.
Who Can Vote: Stockholders who owned our common stock as of the close of business on July 29, 202031, 2023 (the “Record Date”) can vote online at the Annual Meeting or any adjournments or postponements thereof.
How to Attend: To attend the Annual Meeting online, vote or submit questions during the Annual Meeting, or view the stockholder list, stockholders of record will need to go to www.virtualshareholdermeeting.com/KFY2020.KFY2023 and log in using their 16-digit control number included on their proxy card or Notice of Internet Availability of Proxy Materials (the “Notice”). Beneficial owners should review these proxy materials and their voting instruction form or the Notice for how to vote in advance of, and how to participate in, the Annual Meeting.
How You Can Vote | |||
Via telephone | 1-800-690-6903 | ||
Via Internet | Before the Annual Meeting by visitingwww.proxyvote.com
During the Annual Meeting by visitingwww.virtualshareholdermeeting.com/KFY2023 | ||
Via mail | Sign, date, and mail the enclosed proxy card (if you received one) | ||
Please read the proxy materials carefully before voting. Your vote is important, and we appreciate your cooperation in considering and acting on the matters presented. For more information, see pages 79 – 82. |
Meeting Disruption: In the event of a technical malfunction or situation that the chair of the Annual Meeting determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of stockholders to be held by means of remote
RECOMMENDATIONOF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE YOUR SHARES “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THE PROXY STATEMENT AND “FOR” EACH OF THE OTHER PROPOSALS.
communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the Annual Meeting, the chair of the Annual Meeting will convene the meeting at 9:00 a.m. Pacific Time on the date specified above and at the Company’s address at 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, CA 90067, solely for the purpose of adjourning the Annual Meeting to reconvene at a date, time, and physical or virtual location announced by the chair of the Annual Meeting. Under either of the foregoing circumstances, we will post information regarding the announcement on the Investors page of the Company’s website at ir.kornferry.com/investor-relations.https://ir.kornferry.com.
Please read the proxy materials carefully before voting.
Your vote is important,and we appreciate your cooperation in considering and acting on the matters presented. See pages 61 - 63 in the accompanying Proxy Statement for a description of the ways by which you may cast your vote on the matters being considered at the Annual Meeting.
August 12, 2020
10, 2023
Los Angeles, California
By Order of the Board of Directors,
Jonathan Kuai
General Counsel, Managing Director of Business Affairs &
ESG, and
Corporate Secretary
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on September 23, 2020:21, 2023:
The Proxy Statement and accompanying Annual Report to Stockholders are available at
www.proxyvote.com.
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Proxy Summary
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.
Date and Time: 79)September 23, 2020 at 8:00 a.m. Pacific Time
Virtual Meeting Site: www.virtualshareholdermeeting.com/KFY2020
Admission: To participate in the Annual Meeting online, including to vote during the Annual Meeting, stockholders will need the 16-digit control number included on their proxy card or voting instruction form.
Eligibility to Vote: You can vote if you were a holder of Korn Ferry’s common stock at the close of business on July 29, 2020.
Voting Matters (page 61)
Location: | www.virtualshareholdermeeting.com/KFY2023 | |
Who Can Vote and How: | ||
How to Cast Your Vote (pages 61 - 63)
On or about August 12, 2020, we will mail a Notice of Internet Availability of Proxy Materials to stockholders of our common stock as of July 29, 2020, other than those stockholders who previously requested electronic or paper delivery of communications from us. Stockholders can vote by any of the following methods:
Proposal | Board Recommendation | Page Reference | |
1 | Election of Directors • 8 of 9 nominees (89%) are independent • Diverse slate, including 56% of nominees and 2 committee chairs from underrepresented groups (by gender or race/ethnicity) • Active Board refreshment, with four new directors in last five years and one new director nominated for election at the Annual Meeting • Robust Board oversight of Company strategy and risks • Responsive and evolving corporate governance practices | FOR each Director Nominee | 12 |
2 | Advisory Resolution to Approve Executive Compensation • Program intended to offer competitive total direct compensation opportunities aligned with stockholder interests • Executives incentivized to focus on short-and long-term Company performance • Program continues to emphasize pay-for-performance via the Company’s standard mix of 60% performance-based awards and 40% time-based awards | FOR | 33 |
3 | Advisory Resolution on the Frequency of Future Advisory Votes to Approve Executive Compensation • Annual say-on-pay vote provides stockholders timely and frequent input on executive compensation for Compensation and Personnel Committee’s consideration • Company has held annual say-on-pay votes since 2011 | ONE YEAR | 34 |
4 | Ratification of Independent Registered Public Accounting Firm • Independent firm with reasonable fees and strong geographic and subject matter coverage • Performance annually assessed by the Audit Committee • Served as independent registered public accounting firm since 2002 • Lead audit partner rotated regularly, with most recent lead audit partner rotated in June 2023 | FOR | 72 |
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Highlights for Fiscal Year 2020
Korn Ferry is a leading global organizational consulting firm. | 10.5K+ colleagues | 100+ global offices | 50+ countries |
GovernanceWith our core and integrated solutions, data, intellectual property, and content enabled by our technological platforms, including artificial intelligence (“AI”), we believe we are an industry of one, uniquely positioned to be the Company (page 17)partner that helps people and organizations exceed their potential.
Search | I Consulting | I Professional Search & Interim | I Recruitment Process Outsourcing | I Digital |
| $677M |
| $424M | $355M |
I Organization Strategy | I Assessment & Succession | I Talent Acquisition | I Leadership & Professional Development | I Total Rewards |
OUR STRATEGIC PRIORITIES | 1 | Drive a One Korn Ferry Go-To-Market Strategy |
2 | Create the Top-of-Mind Brand in Organizational Consulting | |
3 | Deliver Client Excellence and Innovation | |
4 | Advance Korn Ferry as a Premier Career Destination | |
5 | Pursue Transformational M&A Opportunities |
PRESTIGIOUS AND LOYAL CLIENT BASE | |||||
96% | 94% | 91% | 85% | 85% | 80% |
S&P 100 | Euronext 100 | S&P Europe 350 | FTSE 100 | S&P 500 | S&P Latin America 40 |
ALMOST 15K organizations served | NEARLY 80% engagements with clients for whom we had conducted engagements in past 3 fiscal years |
* | Highlights presented are for fiscal year 2023, unless otherwise indicated. For the five lines of business, figures represent fee revenue for fiscal year 2023. |
2 | 2023 Proxy Statement |
Against a tough macroeconomic and geopolitical environment, we delivered strong financial results and executed on our strategy.
FINANCIAL HIGHLIGHTS | |||
I Fee Revenue | I Operating Margin | I Diluted Earnings Per Share | I Net Income Attributable to Korn Ferry |
$2.835B | 11.2% | $3.95 | $209.5M |
I Adjusted EBITDA* | I Adjusted EBITDA Margin* | I Adjusted Diluted Earnings Per Share* | I Returned to Shareholders |
$457.3M | 16.1% | $4.94 | $127M |
* | Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Diluted Earnings Per Share are non-GAAP financial measures. For a discussion of these measures and for their reconciliation to the most directly comparable GAAP measures, see Appendix A to this Proxy Statement. |
BALANCED APPROACH TO CAPITAL ALLOCATION | ||||
$254.8M | $61M | $18.5M | $93.9M | $33M |
I Invested in Acquisitions | I Invested in Capital Expenditures | I Spent on Debt Service Costs | I Repurchased Shares | I Paid in Dividends |
** | Excludes Nielsen Holdings Plc due to its acquisition in October 2022. |
OTHER HIGHLIGHTS*** | |
20% | SUCCESSFULLY ACQUIRED |
Dividend Increase (to $0.18 per Share) | Two Interim Businesses (Infinity Consulting Solutions and Salo LLC) |
*** | The dividend increase was announced in the first quarter of fiscal 2024. |
3 | 2023 Proxy Statement |
RECENT BUSINESS AWARDS AND RECOGNITIONS | ||||
America’s IForbes Magazine | #1 Executive I Hunt Scanlon | A Leader in I Everest Group | #1 Global I HRO Today |
I Forbes Magazine | One of America’s Best I Forbes Magazine | A 2023 Top Sales Training & I Training Industries |
RECENT ESG AWARDS AND RECOGNITIONS | ||
100 BEST COMPANIES FOR | BEST COMPANIES | TOP COMPANIES FOR |
BEST PLACES TO WORK | LEADERSHIP CDP RATING | TOP ECOVADIS |
AMERICA’S CLIMATE USA TODAY | PLATINUM MARCOM AWARDS | PLATINUM HERMES CREATIVE AWARDS |
RECENT ESG ACCOMPLISHMENTS | ||||
PUBLISHED 2022 ESG Report | $3M+ Donated Financially | ISO Certified Global Privacy |
4 | 2023 Proxy Statement |
Strong Governance Practices |
Annual Director Elections for All Directors. |
Majority Voting in Uncontested Elections. |
Committee Oversight of ESG Program. |
No Supermajority Voting Standards. |
Stockholder Right (at 25% Threshold) to Call Special Stockholder Meetings. |
Board Structure | Committees, Attendance, and Commitments | Stockholder Engagement | ||
Independent
7 of the 8 Directors (88%) on the Board and 8 of the 9 Nominees (89%) are Independent.
100% Independent Committees. Independent Directors Meet in Regular Executive Sessions.
Annual Board and Committee Self-Evaluations. 10-Term Service Limit for Non-Executive Directors Joining the Board after October 1, 2020. |
All Directors Attended at Least 75% of Board and Their Respective Committee Meetings.
No Director Serves on More Than 2 Committees Led by Directors from Underrepresented Groups (by Gender or Race/Ethnicity). |
Regular Stockholder Engagement Throughout the Year. Regular Attendance at Industry Conferences. Quarterly Earnings Calls to Discuss Results and Investor Questions. Met with >70% of Top 25 Active (Non-Index) Stockholders in Fiscal 2023. |
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Governance Insights (pages 9, 28,13, 39, and 56)
Each of the Company’s three standing Board committees is committed to staying abreast of the latest issues impacting good corporate governance. The Company has included three sets of Questions & Answers (“Q&As”), one with the chair of each of the Company’s standing committees.
These Q&As are meant to provide stockholders with insight into committee-level prioritiesdirector succession planning and perspectives on environmental, socialESG matters, annual cash incentive plan design, and governance matters,how the impact of COVID-19 on compensation, and actions andAudit Committee adapts to its evolving oversight with regard to COVID-19 risks.role.
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Board Nominees (pages 12 - 16)
Board Tenure* and Diversity I As of Filing | |||||||
|
| More than 10 years: 29% | |||||
including 1 Military Veteran***
| |||||||
5 years and less: 50% 6 to 10 years: 25% More than 10 years: 25% | |||||||
including 1 Military Veteran*** |
Director Refreshment (Additions) | ||
2023 | Matthew J. Espe (Nominee) | |
2022 | Charles L. Harrington | |
2021 | Laura M. Bishop | |
2019 | Lori J. Robinson Len J. Lauer |
* | Tenure is provided for non-executive directors only. Figures may not total 100% due to rounding. |
** | This graphic represents directors who are members of underrepresented groups (by gender or race/ethnicity). |
*** | Not included in percentages of directors from underrepresented groups. |
Board Nominees (pages 17 – 21)
Doyle N. | Independent Age: Director Since: 2015
Nominating
•
• | Former CEO, New Generation Power International
• Former President and CEO, | ||
Laura M. | Independent Age: Director Since:
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2021 Committee Memberships:
Compensation & Personnel Experience: • Former EVP and CFO, USAA • Former SVP and CFO, Luby’s Inc. • Former Senior Manager, Ernst & Young LLP • Certified Public Accountant | ||
Gary D. | President/CEO Age: 62 Director Since: 2007 Committee Memberships: None Experience: • 20+ years of service with Korn Ferry • Former Principal and CFO, Guidance Solutions | |||
Matthew J. | Independent Age: 64 Director Nominee Experience: • Operating Partner, Advent International • 21+ years of public and private company board experience | |||
Charles L. | Independent Age: 64 Director Since: 2022 Committee Memberships: Audit Compensation & Personnel Experience: • Former Chairman, CEO and President, Parsons Corporation • 14+ years of public board experience |
6 | 2023 Proxy Statement |
Jerry P. | Independent Age: 72 Director Since: 2012 Committees Memberships: Compensation & Personnel (Chair)
• Former Global Managing Director, Deloitte • Almost 40 years at Deloitte with responsibility for services to many of • |
Angel R. | ||||||
| Independent Age: Director Since: 2017
Committee Memberships:
Experience:
• Former Chairman of the Board of Directors and Former President and CEO of Deckers Brands (formerly known as Deckers Outdoor Corporation) • | |||||
Debra J. | Independent Age: Director Since: 2008
Committee Memberships:
Experience:
• Former senior managing director in the Global Ratings and Research Unit of Moody’s Investors Service, Inc. • | |||||
Lori J. | Independent Age: Director Since: 2019
Committee Memberships:
Experience:
• Former Commander, U.S. Northern Command and • • Four Star General and |
Board Skills & Competencies | |
Extensive Senior Leadership/Executive Officer Experience (including as a public company Chief Executive Officer) | |
Risk Management/Oversight Experience | |
Broad International Experience | |
Accounting Expertise (including two Certified Public Accountants) | |
Significant Strategic Oversight and | |
Broad Product and | |
Climate and Energy Experience | |
Significant Public Company Board, Committee,
| |
Innovative Thinking | |
High Ethical Standards | |
Appreciation of
| |
Experience Overseeing Large and | |
Information Security Expertise |
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2020
Name and Principal Position | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||
Gary D. Burnison, President and Chief Executive Officer | 910,000 | 3,448,284 | — | 71,951 | 12,750 | 4,442,985 | ||||||
Robert P. Rozek, Executive Vice President, Chief Financial Officer and Chief Corporate Officer | 575,000 | 1,432,509 | — | — | 12,750 | 2,020,259 | ||||||
Byrne Mulrooney, Chief Executive Officer of RPO, Professional Search and Digital | 450,000 | 1,047,610 | — | — | 235,320 | 1,732,930 | ||||||
Mark Arian, Chief Executive Officer of Consulting | 450,000 | 518,818 | — | — | 262,084 | 1,230,902 |
Gary D. Burnison(1) | Robert P. Rozek(2) | Byrne Mulrooney(3) | Mark Arian(4) | Michael Distefano(5) | |||||
Base Salary | $1,000,000 | $625,000 | $550,000 | $550,000 | $550,000 | ||||
Stock Awards | $9,335,918 | $3,295,355 | $2,526,648 | $2,526,648 | $649,619 | ||||
Non-Equity Incentive Plan Compensation | $1,087,478 | $543,739 | $275,856 | $385,000 | $332,292 | ||||
Change in Pension Value and Nonqualified Deferred Compensation Earnings | – | – | – | – | – | ||||
All Other Compensation | $94,049 | $71,434 | $93,063 | $92,187 | $66,568 | ||||
Total | $11,517,445 | $4,535,528 | $3,445,567 | $3,553,835 | $1,598,479 |
(1) | President and Chief Executive Officer |
(2) | Executive Vice President, Chief Financial Officer and Chief Corporate Officer |
(3) | Former Chief Executive Officer, RPO and Digital |
(4) | Chief Executive Officer, Consulting |
(5) | Chief Executive Officer, Professional Search and Interim |
2020
* | Equity awards based upon grant date value. |
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• | Our Compensation and Personnel Committee receives advice from its independent compensation consultant. |
• | |
We review total direct compensation and the mix of the compensation components for | |
Element | Purpose | Determination | ||
Base Salary | Compensate for services rendered during the fiscal year and provide sufficient fixed cash income for retention and recruiting purposes. | Reviewed on an annual basis by the Compensation and Personnel Committee taking into account competitive data from our peer group, input from our compensation consultant, and the executive’s individual performance. | ||
Annual Cash Incentives | Motivate and reward named executive officers for achieving | Determined by the Compensation and Personnel Committee based upon performance goals, strategic objectives, and competitive | ||
Long-Term Incentives | Align the named executive officers’ interests with those of stockholders | Determined by the Compensation and Personnel Committee based upon a number of factors including competitive data, total overall compensation provided to each named executive officer, and |
This Proxy Statement contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include, but are not limited to, statements regarding the Company’s plans, objectives, expectations, and intentions. Suchintentions, including regarding the Company’s goals or expectations with respect to future financial results, corporate responsibility, including the Company’s ESG Program, sustainability, employees, environmental matters, policy, procurement, philanthropy, data privacy and cybersecurity, and business risks and opportunities, as well as statements from third parties about our ESG performance and risk profile. These statements are based on current expectations and are subject to numerous risks and uncertainties, many of which are outside of the control of Korn Ferry. Forward-looking statements are not guarantees or promises that goals or targets will be met. The Company undertakes no obligation to update any forward-looking or other statements, whether as a result of new information, future events, or otherwise, and notwithstanding any historical practice of doing so. In addition, historical, current, and forward-looking sustainability-related statements may be based on current or historical goals, targets, aspirations, commitments, or estimates; standards for measuring progress that are still developing; diligence, internal controls, and processes that continue to evolve; data, certifications, or representations provided or reviewed by third parties, including information from acquired entities that is incomplete or subject to ongoing review or has not yet been integrated into the Company’s reporting processes; and assumptions that are subject to change in the future. Actual results may differ materially from those indicated by such forward-looking statements as a result of risks and uncertainties, including legislative and regulatory developments, technological innovations and advances, and those factors discussed or referenced in our most recent annual report on Form 10-K filed with the SEC for the fiscal year ended April 30, 2023 (the “Form 10-K”), under the heading “Risk Factors,” a copy of which is being made available with this Proxy Statement, and subsequent quarterly reports on Form 10-Q.
Website references and hyperlinks throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this Proxy Statement, nor does it constitute a part of this Proxy Statement.
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Our stockholders will be asked to consider eightthe following nine nominees for election to our Board of Directors to serve for a one-year term until the 20212024 Annual Meeting of Stockholders and until their successors have been duly elected and qualified, subject to their earlier death, resignation, or removal. removal:
Name | Position with Korn Ferry |
Doyle N. Beneby | Director |
Laura M. Bishop | Director |
Gary D. Burnison | Director and Chief Executive Officer |
Matthew J. Espe | Nominee |
Charles L. Harrington | Director |
Jerry P. Leamon | Director |
Angel R. Martinez | Director |
Debra J. Perry | Director |
Lori J. Robinson | Director |
Each of the nominees was previously elected by stockholders at the 20192022 Annual Meeting of Stockholders, with the exceptionexcept for Matthew J. Espe. Mr. Espe was identified as part of George Shaheen, who retired from our Board of Directors at the 2019 Annual Meeting of Stockholders and rejoined our Board of Directors in April 2020 after the unexpected passing of Len Lauer. In light of Mr. Shaheen’s continued and significant contributions as a director, the Board, at the recommendation of the Nominating and Corporate Governance Committee, exercised its right under the Corporate Governance Guidelines to nominate Mr. Shaheen to a second additional term after his 74th birthday.
The names of the eight nominees for director and their current positions with the Company are set forth in the table to the right.thorough search process conducted by Korn Ferry’s internal board search consultants. Detailed biographical information regarding each of these nominees is provided in this Proxy Statement under the heading “The Board of Directors.“Background Information Regarding Director Nominees.”
Our Nominating and Corporate Governance Committee (the “Nominating Committee”) has reviewed the qualifications of each of the nominees and has recommended to the Board that each nominee be submitted to a vote at the Annual Meeting.
All of the nominees have indicated their willingness to serve, if elected, but if any should be unable or unwilling to serve, proxies may be voted for a substitute nominee designated by the Board. The Company did not receive any stockholder nominations for director. Mr. Shaheen was identified by the Nominating and Corporate Governance Committee. Proxies cannot be voted for more than the number of nominees named in this Proxy Statement.
In uncontested elections, directors are elected by a majority of the votes cast, meaning that each director nominee must receive a greater number of shares voted “for” such nominee than the shares voted “against” such nominee. If an incumbent director does not receive a greater number of shares voted “for” such director than shares voted “against” such director, then such director must tender his or her resignation to the Board. In that situation, the Company’s Nominating and Corporate Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. Within 90 days from the date the election results were certified, the Board would act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and rationale behind it.
In a contested election, — a circumstance we do not anticipate at the Annual Meeting — directors are elected by a plurality of the votes cast.
The Board unanimously recommends that you vote “FOR”each of the nominees named above for election as a director.
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The Company’s Restated Certificate of Incorporation provides that the number of directors shall not be fewer than eight nor more than fifteen, with the exact number of directors within such limits to be determined by the Board. Currently, the Board is comprised of eight directors; effective immediately upon the election of directors at the Annual Meeting, the size of the Board will be increased to nine directors. Upon the recommendation of the Company’s Nominating and Corporate Governance Committee, the Board has nominated the following persons to serve as directors until the 20212024 Annual Meeting of Stockholders or their earlier death, resignation, or removal:
Doyle N. Beneby | Jerry P. Leamon | |
Laura M. Bishop | Angel R. Martinez | |
Gary D. Burnison | Debra J. Perry | |
Matthew J. Espe | Lori J. Robinson | |
Each of the named nominees is independent under the NYSE rules, except for Mr. Burnison. If reelected, Ms. Goldre-elected, Mr. Leamon will continue to serve as the Company’s independent Non-Executivenon-executive Chair of the Board.
The Board held sevenfour meetings during fiscal year 2020.2023. Each of the incumbent directors attended at least 75% of the Board meetings and the meetings of committees of which they were members in fiscal year 2020.2023. Directors are expected to attend each annual meeting of stockholders. Seven of theThe nine directors then-serving attended the 20192022 Annual Meeting of Stockholders in person. William Floyd, who was not standing for re-election, did not attend.online.
Question: The Board has added a number of new directors over the past several years. How does the Committee approach succession planning for the Board?
Question: How has Korn Ferry aligned ESG principles withThe Nominating Committee is responsible for recommending changes to the size, structure, composition, and functioning of the Board and its purposecommittees, and values?we discuss the need for such changes on an annual basis (or periodically, if an unexpected change to the Board occurs). We seek candidates who can bring new perspectives and particular skills to support the Company’s strategy on a going-forward basis. In 2021, this effort resulted in the addition of Laura M. Bishop to increase the Board’s financial expertise and experience in executive management and corporate governance. In 2022, Charles L. Harrington’s addition expanded the breadth of the Board’s experience in business and technology transformation for complex organizations, as well as leadership and financial/audit expertise. And in 2023, the Board nominated Matthew J. Espe to expand the Board’s management experience and knowledge in the areas of finance, accounting, international business operations, risk oversight, and corporate governance.
Our commitmentefforts in this area are driven by the Board’s desire for a composition that represents a range of tenures, areas of expertise, industry experience, and backgrounds. We believe the newer members of our Board are balanced by our more tenured members, who contribute meaningful context and experience to act ethicallyour oversight of management and with social awareness begins with eachexecution of usthe Company’s strategy.
Question: What recent progress and other milestones has the Company’s ESG Program achieved under the Committee’s oversight?
The Nominating and Corporate Governance Committee is embedded in our core values,responsible for overseeing the Company’s ESG Program, which guide the way we work together and with others. We sponsorincludes initiatives that seek to improve the way we work and live, empower diversity, equity, and inclusion, and give back to the communities in which we operate,operate.
The Proxy Statement Summary on page 4 and that empower diversity and inclusivity. Korn Ferry’s 2018 / 2019 Corporate Responsibility Report highlights how the Company aligns ESG issues to our purpose and values. Somegraphics on the next page highlight several recent ESG awards and recognitions of which we are proud, including for our efforts to recruit and retain veterans and support women, parents, and LGBTQ+ colleagues. We believe these awards reflect our ongoing efforts to create an inclusive culture and workplace. In addition, the following section describes some of our ESG Program’s recent initiatives and recognitions include:accomplishments. More information about our ESG Program, our reporting, and other achievements is available on the Korn Ferry website.
13 | 2023 Proxy Statement |
Reporting
• | The Company published its fifth ESG Report in |
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• | Korn Ferry was awarded the |
• | For the |
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The Board believes that the Board, as a whole, should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee the Company’s business. In addition, the Board believes there are certain attributes every director should possess, as reflected in the Board’s membership criteria discussed below. Accordingly, the Board and the Nominating and Corporate Governance Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.
Our Approach | The Board believes that the Board, as a whole, should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee the Company’s business. In addition, the Board believes there are certain attributes every director should possess, as reflected in the Board’s membership criteria discussed below. Accordingly, the Board and the Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MinimumCriteria | The Nominating
Annual Board and |
Solicit Feedback | Review By Outside Counsel | Internal Review | Discussion & Updates |
Directors receive via a secure website a detailed questionnaire designed to elicit feedback regarding the functioning and leadership of the Board and each of the committees as a whole. | Outside counsel reviews the responses to the questionnaire and consolidates the feedback into a summary presentation. | A summary of results are provided by outside counsel, with the anonymized responses, to the Chair of the Board and the Chair of the Nominating Committee for review. | The results are discussed at both the Board and Nominating Committee levels, along with a determination of what, if any, changes should be made in light of the responses. |
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All director nominees possess:
The Board and Company are focused on creating a Board that reflects a wide range of backgrounds, experiences, and cultures. 62.5%The following skills are possessed by one or more of our current Board members and director nominees are women or ethnically diverse individuals.nominees:
The Company believes that a variety of tenures on our Board helps to provide an effective mix of deep knowledge and new perspectives. The current tenure of our Board is as follows:
Extensive Senior Leadership/Executive Officer Experience (including as a public company Chief Executive Officer) | Significant Public Company Board, Committee, and Corporate Governance Experience | |||
Risk Management/Oversight Experience | Innovative Thinking | |||
Broad International Experience | High Ethical Standards | |||
Accounting Expertise (including two Certified Public Accountants) | Appreciation of Diverse Cultures and Backgrounds | |||
Significant Strategic Oversight and Execution Experience | Experience Overseeing Large and Diverse Workforces | |||
Broad Product and Marketing Experience | Breadth of Experience Across Industries | |||
Climate and Energy Expertise | Information Security Expertise | |||
Beneby | Bishop | Burnison | Espe | Harrington | Leamon | Martinez | Perry | Robinson | |
Gender | M | F | M | M | M | M | M | F | F |
Racially/Ethnically Diverse | ● | ● |
* | Tenure is provided for non-executive directors only. Figures may not total 100% due to rounding. |
** | These graphics represent directors who are members of underrepresented groups (by gender or race/ethnicity). |
*** | Not included in percentages of directors from underrepresented groups. |
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The biographies below set forth information about each of the director nominees, including each such person’s specific experience, qualifications, attributes, and skills that led our Board to conclude that such director nominee should serve on our Board in light of the Company’s current business, structure, and strategic plans. The process undertaken by the Nominating and Corporate Governance Committee in recommending qualified director candidates is described above under “Director Qualifications” and below under “Corporate Governance—Board Committees—Nominating and Corporate Governance Committee.”
Doyle N. BENEBY
Director Since: 2015
Former President and Chief Executive Officer, Midland Cogeneration Venture
Age:
Other Directorships: • Quanta Services • Capital Power Corporation • West Fraser Timber Co. Ltd. Other Companies: • N/A | Professional Experience: President and Chief Executive Officer (Nov. 2018 – Sept. 2022) Midland Cogeneration Venture, a natural gas fired combined electrical energy and steam energy generating plant Chief Executive Officer (Nov. 2015 – May 2016) New Generation Power International, a start-up international renewable energy company President and Chief Executive Officer (July 2010 – Nov. 2015) CPS Energy, the largest public power, natural gas, and electric company in the nation President, Exelon Power, and Senior Vice President, Exelon Generation (2009 – 2010) Exelon Corporation, a nuclear electric power generation company Board Qualifications and Skills:
Extensive Senior Leadership/Executive Officer Experience:
Broad Energy Industry Experience: Over
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Mr. Beneby has been the President and Chief Executive Officer of Midland Cogeneration Venture, a natural gas fired combined electrical energy and steam energy generating plant, since November 2018, and is also currently an independent consultant and professional director. Mr. Beneby previously served as Chief Executive Officer of New Generation Power International, a start-up international renewable energy company, based in Chicago, Illinois, from November 2015 until May 2016. Prior to that, Mr. Beneby served as President and Chief Executive Officer of CPS Energy, the largest municipal electric and gas utility in the nation, from July 2010 to November 2015. Prior to joining CPS Energy, Mr. Beneby served at Exelon Corporation from 2003 to 2010 in various roles, most recently, as President of Exelon Power and Senior Vice President of Exelon Generation from 2009 to 2010. From 2008 to 2009, Mr. Beneby served as Vice President, Generation Operations for Exelon Power. From 2005 to 2008, Mr. Beneby served as Vice President, Electric Operations for PECO Energy, a subsidiary of Exelon Corporation. Mr. Beneby also serves on the boards of Capital Power Corporation and Quanta Services, in addition to being a member of the board of the Midland Business Alliance.
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Laura M. BISHOP Director Since: 2021 Former Executive Vice President and Chief Financial Officer, USAA Age: 61 Other Directorships: • N/A Other Companies: • Pie Group Holdings, Inc. • Fidelity Mutual Funds | Professional Experience: Executive Vice President and Chief Financial Officer (June 2014 – Dec. 2020) USAA, a Fortune 100 integrated financial services company that provides financial products and services for the military and their families Various Roles, including Senior Vice President and Chief Financial Officer (1992 – 2000) Luby’s Inc., a publicly traded restaurant company Various Roles, including Senior Manager (1983 – 1992) Ernst & Young LLP, a multinational professional services network Board Qualifications and Skills: Senior Leadership/Executive Officer Experience: Held senior leadership positions over a nearly 20-year career with USAA, including as Executive Vice President and Chief Financial Officer, and in her near decade of work with Luby’s Inc., including as Senior Vice President and Chief Financial Officer. As a member of USAA’s Executive Council, Ms. Bishop was also responsible for developing and executing strategy while directing activities across enterprise-wide financial management and reporting, including treasury, capital management, controller, tax, planning and forecasting, and strategic cost management. She was also responsible for governance and oversight for investment strategy and management of all institutional and benefit plan portfolios, as well as all capital markets activities, including commercial paper and long-term debt programs, credit facilities, asset-backed securitizations, and reinsurance programs. Financial Experience and Investment Expertise: In September 2022, Ms. Bishop joined the Board of Trustees of the Fixed Income & Asset Allocation Funds of Fidelity Mutual Funds as an Advisory Trustee. At USAA, she served as the enterprise Chief Financial Officer for all of USAA’s operating companies spanning the Property and Casualty companies, USAA Federal Savings Bank, and USAA Life Insurance Company. As a Senior Manager at Ernst & Young LLP, she directed audits of publicly traded and privately held companies in a variety of industries. Ms. Bishop also holds a Bachelor of Business Administration in Accounting and is on the Audit Committee of private company Pie Group Holdings, Inc. Ms. Bishop is a certified public accountant. |
Gary D. BURNISON
Director Since: 2007
President and Chief Executive Officer
Age:
Other Directorships: • N/A Other Companies: • N/A | Professional Experience: President and Chief Executive Officer (July 2007 – Present) Executive Vice President and Chief Financial Officer (March 2002 – June 2007) Chief Operating Officer (Oct. 2003 – June 2007) Korn Ferry Principal and Chief Financial Officer (1999 – 2001) Guidance Solutions, a website development company Executive Officer and Director (1995 – 1999) Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc., a diversified financial services company Partner KPMG Peat Marwick, a multinational professional services network Board Qualifications and Skills:
High Level of Financial Experience: Substantial financial experience gained in roles as President, Chief Executive Officer, and as former Chief Financial Officer and Chief Operating Officer of the Company, as Chief Financial Officer of Guidance Solutions, as an executive officer of Jefferies & Company, Inc., and as a partner at KPMG Peat Marwick.
Senior Leadership/Executive Officer Experience: In addition to serving as the Company’s President and Chief Executive Officer, served as Chief Financial Officer of Guidance Solutions.
Extensive Knowledge of the Company’s Business and Industry: Over
Thought Leader: Author of
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Mr. Burnison has served as President and Chief Executive Officer of the Company since July 2007. He was the Executive Vice President and Chief Financial Officer of the Company from March 2002 until June 30, 2007. He also served as Chief Operating Officer of the Company from October 2003 until June 30, 2007. From 1999 to 2001, Mr. Burnison was Principal and Chief Financial Officer of Guidance Solutions and from 1995 to 1999 he served as an executive officer and member of the board of directors of Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. Prior to that, Mr. Burnison was a partner at KPMG Peat Marwick.
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From September 2006 until her retirement in September 2010, Ms. Gold was Chief Executive Officer, President and a director of The Western Union Company, a leading company in global money transfer. Ms. Gold was President of Western Union Financial Services, Inc. and Senior Executive Vice President of First Data Corporation, former parent company of The Western Union Company and provider of electronic commerce and payment solutions, from May 2002 to September 2006. Prior to that, Ms. Gold served as Vice Chairman and Chief Executive Officer of Excel Communications, Inc., a former telecommunications and e-commerce services provider, from October 1999 to May 2002. From 1998 to 1999, Ms. Gold served as President and Chief Executive Officer of Beaconsfield Group, Inc., a direct selling advisory firm that she founded. Prior to founding Beaconsfield Group, Ms. Gold spent 28 years (from 1970 to 1998) with Avon Products, Inc., in a variety of positions, including as Executive Vice President, Global Direct Selling Development, Senior Vice President and President of Avon North America, and Senior Vice President & Chief Executive Officer of Avon Canada. Ms. Gold is currently a director of International Flavors & Fragrances, Inc. She also sits on the board of Safe Water Network, a non-profit organization working to develop locally owned, sustainable solutions to provide safe drinking water. From 1997 to 2020, Ms. Gold was a director of ITT Inc. (formerly ITT Corporation); from 2001 to 2020, she was a director of New York Life Insurance; and from October 2011 to May 2013, she was a director of Exelis, Inc. Ms. Gold is also on the Board of Governors of Carleton University in Ottawa Canada.
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Matthew J. ESPE Nominee Age: 64 Other Directorships: • Anywhere Real Estate Inc. • WESCO International, Inc. Other Companies: • N/A | Professional Experience: Operating Partner (November 2017 – Present) Advent International, a Boston-based private equity investment firm Chief Executive Officer (February 2017 – November 2017) Radial Inc., an ecommerce services business Operating Advisor (2016 – 2017) Berkshire Partners, LLC, a private equity firm President and Chief Executive Officer (2010 – March 2016) Armstrong World Industries, Inc., a global producer of flooring products and ceiling systems Chairman and Chief Executive Officer (2008 – 2010) Ricoh Americas Corporation, an information management and digital services company Chairman, President and Chief Executive Officer (2003 – 2008) President and Chief Executive Officer (2002 – 2003) IKON Office Solutions, Inc., a document management services company Various Roles, including President and Chief Executive Officer, GE Lighting (1980 - 2002) General Electric Company, a multinational conglomerate Board Qualifications and Skills: Senior Leadership/Executive Officer Experience: Over 22-year career at General Electric Company, held increasing roles of responsibility, followed by leadership positions as Chief Executive Officer of multiple private companies across industries. He has deep experience in strategy development and execution, operational management, business development, and technology development. Significant Business Transformation Experience: In his work for private equity firms, served as chairman for two privately held portfolio companies and led the transformation of Radial Inc. as Chief Executive Officer, resulting in the successful sale of the business. As Chief Executive Officer of IKON Office Solutions, transformed the company’s business model and increased shareholder value following its merger with Ricoh Japan. Extensive Advisory and Board Experience: More than 21 years of public and private company board experience, including as Chairman at Klöckner Pentaplast Europe GmbH & Co. (from 2018 to 2023) and as a director at Foundation Building Materials Inc. (from 2018 to 2021), Veritiv Corporation (from 2016 to 2017), Armstrong World Industries, Inc. (from 2010 to 2016), and KG Unisys Corporation (from 2004 to 2014). |
Charles L. HARRINGTON Director Since: 2022 Age: 64 Other Directorships: • J.G. Boswell Company • John Bean Technologies • Constellation Energy Other Companies: • Cal Poly Foundation • Institute of Digital Engineering USA | Professional Experience: Executive Chairman (2021 - 2022) Various Roles, including Group President, PARCOM, Biotechnology, Semiconductors and Telecommunications (1982 – 2006) Parsons Corporation, a technology-focused defense, intelligence, security, and infrastructure engineering firm Board Qualifications and Skills: Senior Leadership/Executive Officer Experience: Over his nearly 40-year career at Parsons Corporation, held increasing roles of responsibility, including 13 years as Chief Executive Officer, 12 years as President, and two years as Chief Financial Officer, Executive Vice President, and Treasurer. He has deep experience in strategy development and execution, business transformation, operational management, business development, and technology development. Significant Advisory and Board Experience: More than 15 years of public company board experience, including at Parsons Corporation (as Chairman from 2008 to 2021 and Executive Chairman from 2021 to 2022) and AES Corporation (from 2013 to 2020) where he chaired the Audit Committee. Serves as director of the Cal Poly Foundation since 2010 and as Vice Chair since 2019. Also serves as the director and chairman of the non-profit Institute for Digital Engineering USA, and as an advisor to Glasswing Ventures, and The Holdsworth Group, LLC. |
19 | 2023 Proxy Statement |
Jerry P. LEAMON
Director Since: 2012
Former Global Managing Director, Deloitte
Age:
Other Directorships: • N/A Other Companies: • Credit Suisse USA, a subsidiary of Credit Suisse Group AG • Geller & Company • Jackson Hewitt Tax Services • Business Advisory Council of the Carl H. Lindner School of Business | Professional Experience: Various Roles, including Global Managing Director and Partner (1972 – 2012) Deloitte, a multinational professional services company Board Qualifications and Skills:
High Level of Financial Experience: Substantial financial experience gained from an almost 40-year career with Deloitte, including as leader of the tax practice in the U.S. and globally, and as leader of the
Accounting Expertise: In addition to an almost 40-year career with Deloitte, Mr. Leamon is a certified public accountant.
Broad International Experience: Served as leader of Deloitte’s tax practice, both in the U.S. and globally, and was Global Managing Director for all client
Service Industry Experience: Deep understanding of operational and leadership responsibilities within the professional services industry, having held senior leadership positions at Deloitte while serving some of their largest clients.
Significant Board Experience: Mr. Leamon serves on a number of boards and non-profit organizations, including Credit Suisse USA,
where he chairs the Audit Committee, Geller & Company, |
Mr. Leamon served as Global Managing Director for Deloitte until his retirement in 2012, having responsibility for all of Deloitte’s businesses at a global level. In a career of almost 40 years at Deloitte, 31 of which as a partner, he held numerous roles of increasing responsibility. Previously, Mr. Leamon served as the leader of the tax practice, both in the U.S. and globally, and had responsibility as Global Managing Director for all client programs including industry programs, marketing communication and business development. In addition, Mr. Leamon was leader of the M&A practice for more than 10 years. Throughout his career, Mr. Leamon served some of Deloitte’s largest clients. Mr. Leamon serves on a number of boards of public, privately held and non-profit organizations, including Credit Suisse USA, where he chairs the Audit Committee, Geller & Company, and Jackson Hewitt Tax Services, and he is Chairman of the Americares Foundation. Mr. Leamon is also a Limited Partner of Lead Edge Capital. He is also Trustee Emeritus of the University of Cincinnati Foundation and Board and serves as a member of the Business Advisory Council of the Carl H. Lindner School of Business. Mr. Leamon is a certified public accountant.
Angel R. MARTINEZ
Director Since: 2017
Former Chairman of the Board of Directors and former Chief Executive Officer and President, of Deckers Brands
Age:
Other Directorships: • Genesco Inc. Other Companies: • N/A | Professional Experience: Chief Executive Officer and President (April 2005 – June 2016) Deckers Brands (formerly known as Deckers Outdoor Corporation), a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high performance activities President, Chief Executive Officer and Vice Chairman (April 2003 – March 2005) Keen LLC, an outdoor footwear manufacturer Executive Vice President and Chief Marketing Officer (1999 – 2001) Reebok International Ltd., an American fitness footwear and clothing manufacturer Board Qualifications and Skills:
Extensive Senior Leadership/Executive Officer Experience: Served in numerous senior leadership positions, including as Chief Executive Officer and President of Deckers Brands, Executive Vice President and Chief Marketing Officer of Reebok International Ltd., President of The Rockport Company, and President and Chief Executive Officer of Keen, LLC.
Broad Product and Marketing Experience: Almost 40 years of experience in management, product, and marketing from senior positions with, among other companies, Deckers Brands, Reebok International, and The Rockport Company.
Significant Public Company Board and Corporate Governance Experience: Over
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Mr. Martinez is the former President, Chief Executive Officer and Chairman of the Board of Directors of Deckers Brands (formerly known as Deckers Outdoor Corporation) (“Deckers”). Deckers is a global leader in designing, marketing and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high performance activities. He served as Chief Executive Officer and President of Deckers from April 2005 until his retirement in June 2016, as Executive Chairman of the Board from 2008 until June 2016, and as non-executive Chairman from June 2016 until September 2017. Prior to joining Deckers, he was President, Chief Executive Officer and Vice Chairman of Keen LLC, an outdoor footwear manufacturer, from April 2003 to March 2005. Prior thereto, he served as Executive Vice President and Chief Marketing Officer of Reebok International Ltd. (Reebok) and as Chief Executive Officer and President of The Rockport Company, a subsidiary of Reebok. Mr. Martinez graduated from the University of California, Davis, in 1977.
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Debra J. PERRY
Director Since: 2008
Former senior managing director in the Global Ratings and Research Unit of Moody’s Investors Service, Inc.
Age:
Other Directorships: • Assurant, Inc. Other Companies: • The Bernstein Funds, Inc., a mutual fund complex | Professional Experience: Senior Managing Director, Global Ratings and Research Unit, Moody’s Investors Service, Inc. (2001 – 2004) Moody’s Corporation, a business and financial services company Board Qualifications and Skills:
High Level of Financial Experience: Substantial financial experience gained from
Significant Audit Committee Experience: Over
Significant Public Company Board and Corporate Governance Experience: Currently serves as a director of Assurant, Inc. (since August 2017), including as Finance & Risk Committee Chair and Nominating and Governance member, and as a director of The Bernstein Funds, Inc. (since July 2011), including as a member of the Audit Committee and Nominating Committee, and former Chair (from July 2018 to June 2023). Previously served as a director of Genworth Financial (Dec. 2016 to May 2022), as a director of PartnerRe (June 2013 to March 2016)
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Ms. Perry currently serves on the boards of directors of Assurant (as well as its Finance & Risk Committee, which she chairs, and its Nominating and Governance Committee) (elected August 2017), Genworth Financial Inc. (as well as its Audit Committee and Risk Committee) (elected December 2016), and The Bernstein Funds, Inc. (a mutual fund complex that includes the Sanford C. Bernstein Fund, Inc., Bernstein Fund and A/B Multi-Manager Alternative Fund) (elected July 2011 and Chair since July 2018). She was a member of the Board (from June 2013) and Chair of the Audit Committee (from January 2015) of PartnerRe, a Bermuda-based reinsurance company, until the sale of the company to a European investment holding company in March 2016. She was also a trustee of the Bank of America Funds from June 2011 until April 2016, where she served as Chair of the Board’s Governance Committee. Ms. Perry served on the Board of Directors and Chair of the Human Resources and Compensation Committee of CNO Financial Group, Inc., from 2004 to 2011.
In 2014, Ms. Perry was named to NACD’s Directorship 100, which recognizes the most influential people in the boardroom and corporate governance community. From September 2012 to December 2014, Ms. Perry served as a trustee of the Executive Committee of the Committee for Economic Development (“CED”) in Washington, D.C., a non-partisan, business-led public policy organization, until its merger with the Conference Board, and she continues as a trustee of CED. She worked at Moody’s Corporation from 1992 to 2004, when she retired. From 2001 to 2004, Ms. Perry was a senior managing director in the Global Ratings and Research Unit of Moody’s Investors Service, Inc. where she oversaw the Americas Corporate Finance, Leverage Finance, Public Finance and Financial Institutions departments. From 1999 to 2001, Ms. Perry served as Chief Administrative Officer and Chief Credit Officer, and from 1996 to 1999, she was a group managing director for the Finance, Securities and Insurance Rating Groups of Moody’s Corporation.
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Lori J. ROBINSON General (ret.)
Director Since: 2019
Commander, U.S. Northern Command and North American Aerospace Defense Command, Department of the Air Force (Ret.)
Age:
Other Directorships: • Nacco Industries • Centene Corp. Other Companies: • The Robinson Group, LLC | Professional Experience: Non-Resident Senior Fellow (2018 – Present) Harvard Kennedy School, Belfer Center for Science and International Affairs Founder, Director (2018 – Present) The Robinson Group, LLC Commander (2016 – 2018) U.S. Northern Command and North American Aerospace Defense Command, Department of Defense Commander (2014 – 2016) Pacific Air Forces, U.S. Air Force Vice Commander (2013 – 2014) Air Combat Command, U.S. Air Force Board Qualifications and Skills:
High Level of Leadership Experience: Four Star General and first female U.S. Combatant Commander,
Significant Strategic Oversight and Execution Experience: Over three decades of experience with the U.S. Air Force overseeing, among other things, homeland defense, civil support, and security cooperation.
Extensive International Experience: Interacted with counterparts in the Indo-Pacific (including China) and the Middle East, reported directly to the U.S. Secretary of Defense and Chief of the Canadian Defence Staff, served four combat tours, and oversaw U.S. Air Force operations in the Middle East.
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Gen. (ret.) Robinson brings to the Board over three decades of experience with the U.S. Air Force, having most recently served as the Commander of the U.S. Northern Command (“USNORTHCOM”) and North American Aerospace Defense Command (“NORAD”) of the Department of Defense from 2016 to 2018, when she retired. USNORTHCOM partners to connect homeland defense, civil support and security cooperation to defend and secure the United States and its interests, while NORAD conducts aerospace warning, aerospace control and maritime warning in the defense of North America. Gen. (ret.) Robinson previously served as Commander, Pacific Air Forces and Air Component Commander for U.S. Pacific Command, from 2014 to 2016, and as Vice Commander, Air Combat Command, from 2013 to 2014. The Pacific Air Forces delivers space, air and cyberspace capabilities to support the U.S. Indo-Pacific Command’s objectives, and the U.S. Pacific Command is responsible for defending and promoting U.S. interests in the Pacific and Asia. Gen. (ret.) Robinson has also commanded an air control wing, an operations group, and a training wing; served as Director of the Secretary of the Air Force and Chief of Staff of the Air Force Executive Action Group at the Pentagon; and Director, Legislative Liaison, Office of the Secretary of the Air Force with the Pentagon, among a number of other leadership positions. Gen. (ret.) Robinson is a Four Star General and was the first female Combatant Commander for the United States. She was also an Air Force Fellow at The Brookings Institution in Washington, D.C. in 2002. Since retiring, Gen. (ret.) Robinson joined the Harvard Kennedy School, Belfer Center for Science and International Affairs in 2018, as a non-resident Senior Fellow where she shares her insights on leadership, public service, and international security issues with faculty, staff, and students. Gen. (ret.) Robinson is also an active speaker, which she pursues through The Robinson Group, LLC, an organization she founded for such purposes and of which she is also a director. Gen. (ret.) Robinson has been a member of the board of directors of Nacco Industries since September 2019, and of Centene Corp. since October 2019.
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Mr. Shaheen, who served as non-executive Chair of our Board from 2012 to 2019, was Chief Executive Officer of Siebel Systems, Inc., a CRM software company, which was purchased by Oracle in January 2006, from April 2005 to January 2006, when he retired. He was Chief Executive Officer and Global Managing Partner of Andersen Consulting, which later became Accenture, from 1989 to 1999. He then became Chief Executive Officer and Chairman of the Board of Webvan Group, Inc. from 1999 to 2001. Mr. Shaheen serves on the boards of NetApp, [24]7.ai Customer, Marcus & Millichap, and Green Dot Corporation. He also served on the Strategic Advisory Board of Genstar Capital. He has served as IT Governor of the World Economic Forum, and was a member of the Board of Advisors for the Northwestern University Kellogg Graduate School of Management. He has also served on the Board of Trustees of Bradley University. Mr. Shaheen received a BS degree and an MBA from Bradley University.
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The Board oversees the business and affairs of the Company and believes good corporate governance is a critical factor in our continued success and also aligns management and stockholder interests. Through our website, at www.kornferry.com, our stockholders have access to key governing documents such as our Code of Business Conduct and Ethics, Corporate Governance Guidelines, and charters of each committee of the Board, as well as information regarding our Corporate Responsibilityinternal ESG Program. The highlights of our corporate governance program are included below:
Board Structure | Stockholder Rights | Other Highlights | ||
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• Committee Oversight of ESG Program • Board Oversight of Political Contributions and Risk • Annual Evaluation of Corporate Governance Guidelines and Committee Charters • Annual Board and Compensation Committee Review of Succession Planning • Board Access to |
Director IndependenceBoard Discretion. The Company’s Corporate Governance Guidelines provide that the Board is free to select its Chair and Chief Executive Officer in the manner it considers to be in the best interests of the Company and that the role of Chair and Chief Executive Officer may be filled by a single individual or two different persons. This provides the Board with flexibility to decide what leadership structure is in the best interests of the Company at any point in time.
Separate Chair and CEO. Currently, the Board is led by an independent, non-executive Chair, Mr. Leamon. Following the Annual Meeting, Mr. Leamon will serve as Chair of the Board, subject to his re-election as a director at the Annual Meeting. The Board has determined that having an independent director serve as Chair of the Board is in the best interests of the Company at this time because it allows the Chair to focus on the effectiveness and independence of the Board while the Chief Executive Officer focuses on executing the Company’s strategy and managing the Company’s business. In the future, the Board may determine that it is in the best interests of the Company to combine the role of Chair and Chief Executive Officer.
22 | 2023 Proxy Statement |
Board Determinations. The Board has determined that as of the date hereof, a majority88% of the Board is “independent” under the independence standards of The New York Stock Exchange (the “NYSE”). The Board has determined that the following directors and nominees are “independent” under the independence standards of the NYSE: Doyle N. Beneby, Christina A. Gold,Laura M. Bishop, Matthew J. Espe, Charles L. Harrington, Jerry P. Leamon, Angel R. Martinez, Debra J. Perry, and Lori J. RobinsonRobinson. The Board also determined that George Shaheen and George T. Shaheen. William R. Floyd and Len J. LauerChristina Gold qualified as independent during the period they servedtheir service on the Board.Board in fiscal 2022.
Independence Standards. For a director to be “independent,” the Board must affirmatively determine that such director does not have any material relationship with the Company. To assist the Board in its determination, the Board reviews director independence in light of the categorical standards set forth in the NYSE’s Listed Company Manual. Under these standards, a director cannot be deemed “independent” if, among other things:
• | the director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer of the Company; |
• | the director has received, or has an immediate family member who received, during any 12-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
• | (1) the director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor, (2) the director is a current employee of such a firm, (3) the director has an immediate family member who is a current employee of such a firm and personally works on the Company’s audit, or (4) the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the Company’s audit within that time; |
• | the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serve or served on that company’s compensation committee; or |
• | the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of the other company’s consolidated gross revenues. |
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Executive Sessions. The independent directors of the Board meet regularly in executive sessions outside the presence of management. Ms. Christina Gold,Mr. Leamon, as Chair of the Board, currently presides at all executive sessions of the independent directors.
I Director Independence
23 | 2023 Proxy Statement |
The Company’s Corporate Governance Guidelines provide that the Board is free to select its Chair and Chief Executive Officer in the manner it considers to be in the best interests of the Company and that the role of Chair and Chief Executive Officer may be filled by a single individual or two different persons. This provides the Board with flexibility to decide what leadership structure is in the best interests of the Company at any point in time. Currently, the Board is led by an independent, non-executive Chair, Ms. Gold. Ms. Gold will continue to serve as Chair of the Board, subject to her reelection as a director at the Annual Meeting. The Board has determined that having an independent director serve as Chair of the Board is in the best interests of the Company at this time as it allows the Chair to focus on the effectiveness and independence of the Board while the Chief Executive Officer focuses on executing the Company’s strategy and managing the Company’s business. In the future, the Board may determine that it is in the best interests of the Company to combine the role of Chair and Chief Executive Officer.
Board’s Oversight of Enterprise Risk and Risk Management
The Board plays an active role, both as a whole and also at the committee level, in overseeing the Company’s management of risks. Management is responsible for the Company’s day-to-day risk management activities. The Company has established an enterprise risk framework for identifying, aggregating and evaluating risk across the enterprise. The risk framework is integrated with the Company’s annual planning, audit scoping, and control evaluation management by its internal auditor. The review of risk management is a dedicated periodic agenda item for the Audit Committee, and the Company’s other Board committees also consider and address risk during the course of their performance of their committee responsibilities, as summarized in the following graphic.
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The Board | ||
Oversees Company process for assessing and managing risk | ||
Monitors risks through regular reports from each | ||
Apprised of particular risk management matters in connection with its general oversight and approval of corporate matters, including, but not limited to, cybersecurity |
Audit Committee | Nominating and Corporate Governance Committee | Compensation and Personnel Committee | ||||
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Oversees risks associated with ESG matters |
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Management | ||||||
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Various members of senior management periodically report to the Board on risk mitigation measures related to business continuity, | ||||||
The Company has established an enterprise risk assessment framework for identifying, aggregating, and evaluating risk across the enterprise. This framework is integrated with the Company’s annual planning, audit scoping, and control evaluation management by its internal auditor and the Company’s Enterprise Risk Council, composed of leaders of key functions. While the Board reviews risk management more broadly as a dedicated periodic agenda item, the review of the results of the enterprise risk assessment is a dedicated annual agenda item for the Audit Committee. The Company’s other Board committees also consider and address risk during the course of their performance of their committee responsibilities, as summarized in the above graphic.
We believe the division of risk management responsibilities described above provides an effectiveappropriate framework for evaluating and addressing the risks facing the Company, and that our Board leadership structure supports this approach because it allows our independent directors, through the independent committees and non-executive Chair, to exercise effective oversight of the actions of management. To address emerging risks, the Company will from time to time form working groups to monitor or focus on such risks, such as the AI & Emerging Technology Working Group, whose responsibilities, membership, and goals have evolved over time.
Throughout the year, the Board receives regular training and updates on governance topics ranging from the increasing focus on ESG, diversity, and human capital matters by investors and regulators, legal developments related to corporate governing documents, and evolving SEC disclosure and stockholder proposal requirements, among others.
24 | 2023 Proxy Statement |
Cybersecurity and data privacy are risk categories surveyed as part of the Company’s annual enterprise risk assessment. We also engage industry-leading third-party cybersecurity companies to conduct testing and assessments of our systems and processes and independently evaluate our policies and programs. This is complemented by a third-party risk management program designed to identify and mitigate third-party cyber risks. In addition, employees are required to complete annual training related to information security and privacy matters, augmented by dynamic training through an industry-leading security training platform that provides real-time feedback through tailored phishing simulations. Korn Ferry regularly evolves its information security and data privacy programs and practices to promote the compliant handling, security, and responsible use of the information and data entrusted to us.
Board Oversight | In connection with the Board’s risk management oversight responsibility, Board members receive a full cybersecurity and data privacy program briefing annually as well as periodic briefings based on specific requests or current events. | |
Management’s Role | Our Senior Vice President, Chief Information Officer oversees the Vice President of Security and the global security organization, which are responsible for managing and enforcing Korn Ferry’s information security policies and programs. Korn Ferry’s global Security team is responsible for managing Korn Ferry’s Information Security Management System, which includes policies like our Information Technology (“IT”) Security Policy (“IT Security Policy”). The IT Security Policy is designed and administered to follow the guidelines outlined in ISO standards 27001 and 27018. Our Senior Vice President, Chief Information Officer and Associate General Counsel (Privacy) are Co-Chief Privacy Officers. They lead our global Privacy team, which is responsible for overseeing the compliant processing of personal data. The global Privacy team is also charged with the maintenance and enhancement of the Company’s data privacy program. Korn Ferry’s privacy and security functions are governed by the Privacy Executive Committee/Security Executive Committee, which meets on a regular basis to discuss matters pertaining to data privacy and cybersecurity. The committee includes senior representatives from Korn Ferry’s IT, Security, Privacy, Legal, Finance, Digital, and Human Resources teams. Our executive management, Security, and Privacy teams are responsible for reviewing our security and privacy programs and policies. Korn Ferry’s Cloud Infrastructure Board sets governance guidelines for cloud infrastructure across the enterprise, including priorities for cloud security and operational excellence, targeted security and privacy training for developers, and direction of cloud investments, such as disaster recovery for digital applications. The Cloud Infrastructure Board meets regularly and includes representatives from Korn Ferry’s IT, Security, Privacy, Cloud Operations, and Digital teams. | |
GovernanceHighlights | Korn Ferry has been certified by the British Standards Institute (“BSI”) to ISO/IEC 27001 and ISO/IEC 27018 under certificate numbers IS 700177 and PII 707431, respectively, for our key technology platforms and processes across global operations. Korn Ferry maintains a formal Security Incident Response Plan designed to enable incidents to be promptly discovered, contained, remediated, and escalated as needed to clients or other parties. Korn Ferry has maintained cyber insurance for more than a decade. |
During fiscal year 2020,2023, the Company conducted its annual review of executive and non-executive compensation programs globally, with particular emphasis on incentive compensation plans and programs. Based on this review, the Company evaluated the primary components of its compensation plans and practices to identify whether those components, either alone or in combination, properly balanced compensation opportunities and risk. As part of this inventory, several factors were noted that reduce the likelihood of excessive risk taking. These factors include: balancing performance focus between near-term objectives and strategic initiatives; issuing annual equity awards that vest over multiyear time horizons (and, in the case of named executive officers, also subjecting a majority of their equity awards to the achievement of performance goals);horizons; and maintaining a stock ownership guidelinespolicy and a clawback policy applicable to our executive officers. Furthermore, the Compensation and Personnel Committee retains its own independent compensation consultant to provide input on executive pay matters, meets regularly, and approves all performance goals, award vehicles, and pay opportunity levels for named executive officers. As a result of this evaluation, the Company concluded that risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse impact on the Company.
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Although the full Board considers all major decisions, the Company’s Bylaws permit the Board to have the following standing committees to more fully address certain areas of importance: (1) an Audit Committee, (2) a Compensation and Personnel Committee, and (3) a Nominating and Corporate Governance Committee. The members of the standing committees as of the date hereof are set forth in the tables below.below and reflect fully independent committees led by well-qualified chairs. Following the Annual Meeting, the Board will review the Nominating and Corporate Governance Committee intends to evaluateCommittee’s recommendations, if any, regarding the composition of the standing committees and make recommendations to the Board regarding any appropriate changes to the Committees.committees.
Fiscal 2023 Meetings Held: 8
Debra J. PERRY | Angel R. MARTINEZ | Charles L. HARRINGTON | |||||||||
CHAIR | |||||||||||
Independence: | All Audit Committee members are “independent directors” under the applicable listing standards of the NYSE and the applicable rules of the |
Financial Literacy: | The Board, in its business judgment, has determined that |
Audit Committee | |
Financial Experts: | The Board determined that Ms. Perry qualifies as an “audit committee financial expert” from her many years of experience in the financial services industry and service on other public company Audit |
Committee Report: | The Audit Committee report may be found on page 75. |
Among other things, the Audit Committee:
Key Responsibilities: | |
• | Is directly responsible for the appointment, compensation, retention, evaluation, and oversight of the independent registered public accounting firm, including annual assessments that consider, among other topics, the level of open and professional communication with the Audit Committee; |
• | Reviews the independent registered public accounting firm’s qualifications and independence and has processes in place for the timely communication of corporate changes or other events that could impact the firm’s independence; |
• | Reviews the plans and results of the audit engagement with the independent registered public accounting firm; |
• | Oversees financial reporting principles and policies; |
• | Considers the range of audit and non-audit fees; |
• | Reviews the adequacy of the Company’s internal accounting controls, including through regular discussions at committee meetings; |
• | Oversees the Company’s internal audit function, including annually reviewing and discussing the performance and effectiveness of the Internal Audit Department; |
• | Oversees the Company’s Ethics and Compliance Program, including annually reviewing and discussing the implementation and effectiveness of the program; and |
• | Works to |
The Audit Committee also reviews new accounting standards applicable to the Company with the independent registered public accounting firm, Internal Audit Department, General Counsel, and the Chief Financial Officer, and is also available to receive reports, suggestions, questions, and recommendations from the Company’s independent registered public accounting firm, Internalthem. The Audit Department, the Chief Financial Officer, and the General Counsel. ItCommittee also confers with these parties in order to help assure the sufficiency and effectiveness of the programs being followed by corporate officers in the areas of compliance with legal and regulatory requirements, business conduct, and conflicts of interest.
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Fiscal 2023 Meetings Held: 7
Jerry P. LEAMON | Doyle N. BENEBY | Lori J. ROBINSON | Laura M. BISHOP | ||||||||||
CHAIR | |||||||||||||
Independence: | The Board has determined that all members of the Compensation and Personnel Committee are “independent directors” under the applicable listing standards of the NYSE. |
Committee Report: | The Compensation and Personnel Committee report may be found on page 52. |
Among other things, the Compensation and Personnel Committee:
Key Responsibilities: | |
• | Approves and oversees the Company’s compensation programs, including cash, deferred compensation, and equity-based incentive programs provided to members of the Company’s senior management group, including the Company’s Chief Executive Officer, Chief Financial Officer, and other named executive officers, as well as equity-based compensation and deferred compensation programs provided to any Company employee; |
• | Reviews the compensation of directors for service on the Board and its committees; and |
• | Approves |
The Compensation Committee also reviews and develops, in conjunction with the CEO, a CEO succession plan, both for use in an emergency situation and in the ordinary course of business, which the committee reports at least annually to the full Board. The Compensation Committee also oversees succession planning for positions held by senior management (other than the CEO) and reviews such plans at least annually with the Board, including recommendations and evaluations of potential successors to fulfill such positions.
The Compensation and Personnel Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee consisting solely of members of the Compensation and Personnel Committee who are non-employee directors and outside directors.
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Fiscal 2023 Meetings Held: 4
Doyle N. BENEBY | Debra J. PERRY | Lori J. ROBINSON | ||||||||
Independence: | The Board has determined that all members of the Nominating |
Among other things, the Nominating and Corporate Governance Committee:
Key Responsibilities: | |
• | Recommends criteria to the Board for the selection of nominees to the Board; |
• | Evaluates all proposed nominees; |
• | Prior to each annual meeting of stockholders, recommends to the Board a slate of nominees for election to the Board by the stockholders at the annual meeting; |
• | Makes recommendations to the Board from time to time as to changes the Committee believes to be desirable to the size, structure, composition, and functioning of the Board or any committee thereof; |
• | Oversees and monitors the Company’s ESG Program; and |
• | Oversees risks associated with operations of the Board and its governance structure. |
In evaluating nominations,potential nominees, the Nominating and Corporate Governance Committee considers a variety of criteria, including business experience and skills, independence, judgment, integrity, the ability and willingesswillingness to commit adequate time and attention to Board activities, and the absence of potential conflicts with the Company’s interests. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, it also takes into account the diversity of the Board when considering director nominees.
Stockholder Recommendations. Any stockholder recommendations for director are evaluated in the same manner as all other candidates considered by the Nominating and Corporate Governance Committee. Stockholders may recommend director nominees by mailing submissions to Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary.
The Board seeks to bring together a diverse mix of directors that the Board and senior management can leverage to make well considered strategic decisions in the best interests of the Company and its stockholders. To garnerIn support of this effort, management and the Board endeavor to provide directors with the information and updates needed to support their effective and active oversight of the Company.
Onboarding. Management, working with the Board and the Nominating Committee, is responsible for providing an orientation process for new ideasdirectors, including background material on the Company, its business plan and perspectives,its risk profile, and to respondmeetings with senior management.
Strategic Off-Site. The Board reviews the Company’s long-term strategic plan at least annually and monitors implementation of the strategic plan throughout the year. The Board also holds an annual off-site meeting that focuses on the Company’s strategy and the major areas of the Company’s business.
Continuing Education. Under our policies, management is responsible for preparing additional educational sessions for directors on matters relevant to the ever-changing needs of our clientsCompany, its business plan, and other stakeholders, therisk profile. The Company also offers to reimburse directors for attending continuing board education programs.
The Board actively seeks candidates representing a range of tenures, areas of expertise, industry experience and backgrounds. In 2017, the Board added Angel R. Martinez to, among other items, increase its knowledge of products and marketing. In 2019, the Board added Len J. Lauer (who unexpectedly passed awayhas also adopted or updated refreshment mechanisms in April 2020) and Lori J. Robinson, each of whom brought a number of valuable perspectives and experiences to the Board, including, in the case of Gen. (ret.) Robinson, extensive leadership, strategic oversight and international experience. And in 2020, the Board modified the Corporate Governance Guidelines (as described below) to adoptbalance the desire for Board refreshment with the flexibility to prioritize a 10-termdirector’s contributions to the Board as the most important factor for determining continued service, limitand allow the Board to retain significantly contributing directors for additional time where warranted.
Ten-Term Service Limit. To encourage Board refreshment.refreshment, new non-executive directors are not eligible to stand for re-election after serving as a director for ten full terms on the Board.
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Retirement Age Policy. A director is generally not eligible to stand for election after his or her 74th birthday. The Corporate Governance Guidelines, however, reserve the Board’s right, after a formal review of a director’s contributions, to allow a director to stand for election for up to three additional terms of service after reaching his or her 74th birthday. Any such formal review will be conducted prior to nominating a director for any such additional term. The Board and the Nominating Committee believe that this policy appropriately enables the Board to retain the experienced insights of current directors while retaining a retirement age limit as a succession mechanism.
Responsive Governance PracticesI Director Refreshment
(Additions)
In response to the views or input of the Company’s stockholders, and as a result of the Board’s ongoing review of its governance practices, the Company has made the following changes to its governance practices:
2023 | 2022 | 2021 | 2019 | |||
Matthew J. Espe | Charles L. Harrington | Laura M. Bishop | Lori J. Robinson | |||
(Nominee) | Len J. Lauer** |
* |
| total 100% due to rounding. | ||
** | ||||
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| Mr. Lauer unexpectedly passed away in April 2020. |
In addition to practices raised by stockholders, the Nominating and Corporate Governance Committee and the Board benchmarks its practices against its peers and other companies to review and consider “best practices” in corporate governance. The Nominating and Corporate Governance Committee and the Board value stockholder input and will continue to seek and consider their views in its assessment of governance practices for the benefit of the Company and its stockholders.
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Korn Ferry is committed to having and maintaining a strong and effective global Ethics and Compliance Program. Consistent with that commitment, the Board has promoted and continues to promote the Company’s culture of ethics and integrity. The Board has adopted a Code of Business Conduct and Ethics that is applicable to all directors, employees, and officers (including the Company’s Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer). Korn Ferry colleagues know that qualityQuality and professional responsibility starts with them andour Korn Ferry colleagues, which the Board has emphasized that withemphasizes through the “tone at the top.”
The Code of Business Conduct and Ethics provides a set of shared values to guide our actions and business conduct, including: loyalty, honesty, accountability, observance of ethical standards, and adherence to the law. Among other things, the Code of Business Conduct and Ethics requires directors, employees, and officers to maintain the confidentiality of all information entrusted to them (except when disclosure is authorized or legally mandated); to deal fairly with the Company’s clients, service providers, suppliers, competitors, and employees; to protect Company assets; and for those who have a role in the preparation and/or review of information included in the Company’s public filings, to report such information accurately and honestly. to:
• | maintain the confidentiality of all information entrusted to them (except when disclosure is authorized or legally mandated); |
• | deal fairly with the Company’s clients, service providers, suppliers, competitors, and employees; |
• | protect Company assets; and for those who have a role in the preparation and/or review of information included in the Company’s public filings, to report such information accurately and honestly. |
It also prohibits directors, employees, and officers from using or attempting to use their position at the Company to obtain an improper personal benefit. We intend to post on the Company’s website amendments or waivers, if any, to the Code of Business Conduct and Ethics, with respect to our officers and directors within four business days following the amendment or waiver.
29 | 2023 Proxy Statement |
Korn Ferry asks all directors, officers, and personnel,employees, no matter where they are in the world, to make a commitment to abide by the Code, and the Company’s values and ethical business conduct practices.
Our ethical business conduct practices and oversight include the following:
• | the Nominating |
• | the Audit Committee is responsible for overseeing the implementation and effectiveness of the Company’s Ethics and Compliance Program, including compliance with the |
• | the Company has a General Counsel and Deputy Compliance Officer with a direct reporting channel to the Audit Committee; and |
• | the Company conducts compliance-related internal audits, investigations, and monitoring. |
The Nominating Committee and the Board benchmark its practices against its peers and other companies to review and consider “best practices” in corporate governance. The Nominating Committee and the Board also value stockholder input. Over the past several years, the Board has implemented various governance changes as a result of the Board’s ongoing review of its governance practices, including in response to the views or input of the Company’s stockholders, such as:
Adding oversight of the Company’s ESG Program to the responsibilities of the Nominating and Corporate Governance Committee | |
Adopting a special stockholder meeting right for stockholders owning 25% of outstanding shares of Company stock | |
Removing supermajority voting requirements and replacing them with majority voting standards | |
Declassifying the Board and moving to annual director elections for all directors | |
Engaging in outreach with investors related to executive compensation and ESG matters |
The Board has also adopted Corporate Governance Guidelines, which among other things, impose limits onthings:
• | limits outside board service to one additional public company board for the Company’s Chief Executive Officer and three additional public company boards for other directors; |
• | specifies director candidate criteria; |
• | establishes the adoption of a stock ownership policy; |
• | assigns the Board oversight of the Company’s political contributions, as well as related policies and procedures; |
• | vests responsibility with the Board for annually reviewing and monitoring the implementation of the Company’s long-term strategic plan; and |
• | requires non-management directors to meet periodically without management. |
In addition, the number of directorships each member of the Board may hold (the Chief Executive Officer of the Company may not sit on more than two boards of directors of public companies (including the Company), while all other directors may not sit on more than five boards of directors of public companies (including the Company); specifies the criteria to be considered for director candidates; and requires non-management directors to meet periodically without management. Additionally, the guidelinesCorporate Governance Guidelines require that, when a director’s principal occupation or business association changes substantially during his or her tenure as a director, that director is required to provide written notice of such change to the chair of the Nominating and Corporate Governance Committee, and agree to resign from the Board if the Board determines to accept such resignation. The Nominating and Corporate Governance Committee must then review and assess the circumstances surrounding such change, and recommend to the Board any appropriate action to be taken.
In August 2020, the Board, at the recommendation of the Nominating and Corporate Governance Committee, amended the Corporate Governance Guidelines as follows:
Ten-Term Service Limit. The Board adopted a term limit provision to encourage Board refreshment. Non-executive directors who first join the Board after October 1, 2020 will not be eligible to stand for re-election after serving as a director for ten full terms on the Board.
Retirement Age Policy. The retirement age policy now reserves the Board’s right, after a formal review of a director’s contributions, to allow such director to stand for election for up to two additional terms of service after reaching his or her 74th birthday. The formal review will be conducted prior to nominating a director for any such additional term. This is an increase from the one additional term of service under the prior guidelines. The Board and the Nominating and Corporate Governance Committee determined that this change appropriately balances the Board succession mechanism of a retirement age limit with the flexibility to prioritize a director’s contributions to the Board as the most important factor for determining continued service, and allows the Board to retain significantly contributing directors for additional time where warranted.
In light of Mr. Shaheen’s continued and significant contributions as a director, the Board, at the recommendation of the Nominating and Corporate Governance Committee, exercised its right under the amended Corporate Governance Guidelines to nominate Mr. Shaheen to a second additional term after his 74th birthday.
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Compensation
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In accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and more specifically, Section 14A of the Exchange Act, which was added under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are asking stockholders to vote on an advisory resolution to approve the Company’s executive compensation as reported in this Proxy Statement. Our executive compensation program is designed to support the Company’s long-term success. As described below in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation and Personnel Committee has structured our executive compensation program to achieve the following key objectives:
• | provide compensation packages to our executives that are competitive with other major employment services firms, a broader group of human capital companies, and similarly-sized publicly traded companies; |
• | closely tie individual annual cash incentive |
• | align the interests of senior management with those of our stockholders through direct ownership of Company common stock and by providing a substantial portion of each named executive officer’s direct total compensation in the form of equity-based incentives. |
We urge stockholders to read the “Compensation Discussion and Analysis” section below, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative below which provide detailed information on the compensation of our named executive officers. The Compensation and Personnel Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” section are effective in achieving our goals and that the compensation of our named executive officers reported in this Proxy Statement has supported and contributed to the Company’s success.
We are asking stockholders to approve the following advisory resolution at the 20202023 Annual Meeting of Stockholders:
RESOLVED, that the stockholders of Korn Ferry (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers set forth in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables and narrative in the Proxy Statement for the Company’s 20202023 Annual Meeting of Stockholders.
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation and Personnel Committee will carefully review and consider the voting results when evaluating our executive compensation program. Taking into account the advisory vote of stockholders regarding the frequency of future “say-on-pay” votes at our 2017 Annual Meeting of Stockholders, theThe Board’s current policy is to include an advisory resolution to approve the compensation of our named executive officers annually. Accordingly, unless the Board modifies its policy on the frequency of future “say-on-pay” votes, including after taking into account the outcome of the advisory vote of stockholders regarding the frequency of future “say-on-pay” votes pursuant to Proposal No. 3, the next advisory vote to approve our executive compensation will occur at the 20212024 Annual Meeting of Stockholders.
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In accordance with Section 14A of the Exchange Act, we are asking stockholders to vote on whether future advisory votes to approve executive compensation of the nature reflected in Proposal No. 2 should occur every year, every two years or every three years.
After careful consideration, the Board has determined that continuing to hold future advisory votes to approve executive compensation every year is the most appropriate policy for the Company at this time, and recommends that stockholders vote for future advisory votes to approve executive compensation to occur every year. An annual advisory vote to approve executive compensation allows our stockholders to provide us with their direct input on our compensation philosophy, policies, and practices as disclosed in the proxy statement every year and is most useful to the Board and the Compensation and Personnel Committee.
Stockholders will be able to specify one of four choices for this proposal on the proxy card: three years, two years, one year or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes to approve executive compensation is non-binding on the Board. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes to approve executive compensation on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs. The next advisory vote on the frequency of future advisory votes to approve our executive compensation will occur at the 2029 Annual Meeting of Stockholders.
RECOMMENDATION
OF THE BOARD
The Board unanimously recommends that you vote “ONE YEAR” for the frequency of future advisory votes to approve executive compensation.
34 | 2023 Proxy Statement |
This Compensation Discussion and Analysis (“CD&A”) section provides a detailed description of our compensation philosophy, practices, and the factors and process used in making compensation decisions with respect to our fiscal year 20202023 named executive officers (“NEOs”), namely::
Name | Title |
Gary D. Burnison | President and Chief Executive Officer |
Robert P. Rozek | Executive Vice President, Chief Financial Officer and Chief Corporate Officer |
Byrne | Former Chief Executive Officer, |
Mark Arian | Chief Executive Officer, |
Selected Performance Highlights
The Company had strong financial and operating performance during fiscal year 2020. Below are some performance highlights:
Michael Distefano | |
The following chart graphically displays the Company’s Fee Revenue performance for three fiscal years:
* |
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Against a tough macroeconomic and geopolitical environment, we delivered strong financial results and executed on our strategy.
FINANCIAL HIGHLIGHTS | |||
I Fee Revenue | I Operating Margin | I Diluted Earnings Per Share | I Net Income Attributable to Korn Ferry |
$2.835B | 11.2% | $3.95 | $209.5M |
I Adjusted EBITDA* | I Adjusted EBITDA Margin* | I Adjusted Diluted Earnings Per Share* | I Returned to Shareholders |
$457.3M | 16.1% | $4.94 | $127M |
* | Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Diluted Earnings Per Share are non-GAAP financial measures. For a discussion of these measures and for their reconciliation to the most directly comparable GAAP measures, see Appendix A to this Proxy Statement. |
BALANCED APPROACH TO CAPITAL ALLOCATION | ||||
$254.8M | $61M | $18.5M | $93.9M | $33M |
I Invested in Acquisitions | I Invested in Capital Expenditures | I Spent on Debt Service Costs | I Repurchased Shares | I Paid in Dividends |
** | Excludes Nielsen Holdings Plc due to its acquisition in October 2022. |
OTHER HIGHLIGHTS*** | |
20% | SUCCESSFULLY ACQUIRED |
Dividend Increase (to $0.18 per Share) | Two Interim Businesses (Infinity Consulting Solutions and Salo LLC) |
*** | The dividend increase was announced in the first quarter of fiscal 2024. |
36 | 2023 Proxy Statement |
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RECENT BUSINESS AWARDS AND RECOGNITIONS | ||||
America’s I Forbes Magazine | #1 Executive I Hunt Scanlon | A Leader in I Everest Group | #1 Global I HRO Today |
One of America’s Best I Forbes Magazine | One of America’s Best I Forbes Magazine | A 2023 Top Sales Training & I Training Industries |
RECENT ESG AWARDS AND RECOGNITIONS | ||||
100 BEST COMPANIES FOR | BEST COMPANIES | TOP COMPANIES FOR | ||
BEST PLACES TO WORK | LEADERSHIP CDP RATING | TOP ECOVADIS | ||
AMERICA’S CLIMATE USA TODAY | PLATINUM MARCOM AWARDS | PLATINUM HERMES CREATIVE AWARDS | ||
Compensation & Impact of COVID-19
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37 | 2023 Proxy Statement |
Our compensation program is intended to focus on aligning executive pay with stockholder interests. A with Jerry Leamon, Chairkey element used to achieve this goal is providing annual incentive compensation opportunities that result in payouts based solely on the extent of theachievement of pre-established performance criteria. As described in more detail below, our Compensation and Personnel Committee
Question: How did the Committee respond sets performance metrics (and associated targets) consisting of financial goals and strategic execution key performance indicators (“KPIs”), other than with respect to fiscal year 2021 due to the challenges posed by COVID-19?unprecedented impact and uncertainty imposed on the Company’s business due to the COVID-19 pandemic. Executives are not guaranteed payouts under the annual cash incentive plan and payouts from year to year will vary based on achievement of the applicable financial metrics and strategic execution KPIs.
The Committee decided to eliminate any payouts fromcharts below show Mr. Burnison’s annual cash incentive award compensation for fiscal years 2021, 2022, and 2023 and our corresponding achievement of the Company’s short-term incentive bonus plan for our named executive officers. Consistent with prior years, the Committee initially selected performance metrics grounded in the Company’s strategic plan and separated into two categories:applicable financial metrics and strategy execution Key Performance Indicators (“KPIs”).
KPIs under the annual cash incentive plan for each year, as well as our overall Fee Revenue and Adjusted EBITDA in each year. The performance goals under the short-termannual incentive bonus plan were challengingrigorous and, as described in more detail on page 45, set at a levellevels that our Compensation and Personnel Committee deemed could be difficult to achieve as the world was higher thanemerging from the previous year’s performance goals. The Company’s achievementglobal pandemic at the beginning of such pre-established performance goals during fiscal year 2020 was strong through January 31, 2020,2023 and at that time our named executive officers were projected to receive approximately 1.3 times their target amounts for the full year. However, the Committee decided, based in part on the recommendationfacing a number of the Chief Executive Officer, to reduce our named executive officers’ bonus payouts to $0macro uncertainties, including increasing talk of a potentially looming recession. Meeting threshold goals for fiscal year 2020. The Committee determined that this was the proper action to take given the impact of COVID-19 on the Company2023 would only result in the fourth quarterpayout of 50% of the target opportunity for each goal while performance below the threshold level would not result in any payout for the associated performance goal. In fiscal year 2020,2023, our overall achievement of the currentapplicable metrics and projected impactKPIs under the plan for our CEO was above threshold but below target, which resulted in a below target payout under the annual incentive plan for Mr. Burnison of COVID-19,72.5% of target. The Compensation and Personnel Committee will continue to set rigorous performance goals in the other cost reduction actions taken byfuture to incentivize superior performance year over year and align the Company in response to COVID-19. Based upon full yearCompany’s pay for performance the Company estimates thatwith its NEOs may have otherwise achieved approximately 1.07 times their target amounts. In addition, the Committee and the named executive officers agreed to a 50% reduction in each named executive officer’s base salary, effective May 1, 2020 through August 31, 2020. The Committee and the named executive officers subsequently agreed to extend the reduction through December 31, 2020.stockholders’ interests.
* | Adjusted EBITDA is a non-GAAP financial measure. For a discussion of this measure and for reconciliation to the most directly comparable GAAP measure, see Appendix A to this Proxy Statement. |
Korn Ferry interacts with its stockholders to obtain stockholdertheir views on various topics from our Company strategy to capital allocation and executive compensation. These interactions are typically led by our Chief Financial Officer and the head of ourcolleagues from Investor Relations. During these interactions, our stockholders have expressed many viewpoints on a variety of topics generally focused on financial performance.
In fiscal 2023, these efforts included regular earnings calls, attendance at industry conferences, and several non-deal roadshows, through which we ultimately met with more than 70% of Korn Ferry’s top 25 active (non-index) stockholders.
Our stockholders have expressedtraditionally voted favorably to support for the Company’s compensation philosophy in that they wantis designed to establish a strong alignment between performance and pay. At the 2021 Annual Meeting of Stockholders, however, as described in more detail in last year’s proxy statement, our stockholders expressed disapproval of our fiscal year 2021 NEO compensation program as a result of one-time modifications made to our traditional compensation program in response to the unprecedented uncertainty thrust upon the Company’s business as a result of the sudden outbreak of the global pandemic.
At the 2019beginning of fiscal year 2022, even before the negative say-on-pay vote at our 2021 Annual Meeting, of Stockholders, approximately 94%we had already returned to our traditional compensation program, including a return to our traditional 60-40 split between performance- and time-based long-term incentives and our traditional short-term annual cash incentive plan design, which we continued for fiscal year 2023. Through our stockholder outreach efforts following the 2021 Annual Meeting, our stockholders expressed overwhelming support for our return to the same pay for performance program that has received strong approval over the years, and for which stockholders confirmed their continued support during our outreach efforts. At the 2022 Annual Meeting, we were pleased that stockholders had the opportunity to express that approval with almost 98% of the votes cast were in favor of the advisory vote to approve executive compensation. In consideration of the stockholder vote at the 2019 Annual Meeting of Stockholders, as well as the Company’s performance, the Committee decidedAs a result, we determined that no changes were needed to maintain our executive compensation programs for fiscal year 2020.program. The Company values stockholders’ input and feedback and will continue to consider our stockholders’ inputit in all facets of our business, includingmaking executive compensation.
Best Practice Highlightscompensation decisions.
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Annual Cash Incentive Plan DesignQ&A with Jerry Leamon, Chair of the Compensation and Personnel Committee Question: How does the Committee traditionally set the performance goals under the annual cash incentive plan each year? |
As described in more detail below, the Company interacts with investors each year on a number of topics, including the financial metrics that investors view as most important. Using input from investors, the Company’s strategic plan, the Strategy Execution Framework, and the Company’s Annual Operating Plan (“AOP”) as a basis, the Committee selects and sets performance metrics and associated targets. Typically, the threshold levels of performance each fiscal year—the respective minimum levels of performance required for payout under the annual incentive plan with respect to each metric—are set at levels equal to or greater than the prior fiscal year’s actual results. For example, the Adjusted Fee Revenue threshold level as used in the annual incentive plan for our CEO and CFO and described in more detail beginning on page 45 below, was set $23 million higher in fiscal year 2023 compared to the fiscal year 2022 actual result. Meeting the threshold goal for fiscal year 2023 would only result in the payout of 50% of the target opportunity for such goal while performance below the threshold level would not result in any payout for the associated performance goal. The target level of performance required to earn a payout equal to 100% under the Adjusted Fee Revenue metric for our CEO and CFO was set $259 million higher in fiscal year 2023 compared to the fiscal year 2022 actual result (an increase of 9.9%).
Question: Why did the Committee set some of the performance goals under the annual cash incentive plan for fiscal year 2023 below actual results for fiscal year 2022?
The Committee set a number of goals below or equal to prior year actual results, including Adjusted EBITDA Margin goals, because the Company was projecting lower profitability in fiscal year 2023 compared to fiscal year 2022 as a result of the following:
1. | Emerging from the pandemic recovery, the way the world conducted work changed in a dramatic and permanent nature. Out of necessity, most work was being conducted virtually. Leveraging this, the habits and desires of employees changed. People no longer wanted to be tethered to a single company for their career and they were seeking multiple experiences—giving rise to the gig economy. Looking to capitalize on this, the Company made a strategic decision to enter the Interim business, trading off lower Adjusted EBIDITA Margin for a very large market opportunity with more durable revenues. |
2. | Also during the pandemic recovery, companies experienced an extremely tight labor market compounded by the great resignation, which increased the Company’s compensation and benefits costs, putting further downward pressure on profitability as we entered fiscal year 2023. |
3. | At the beginning of fiscal year 2023, there were a number of macro uncertainties—the Russia/Ukraine war, unprecedented inflation followed by central banks raising interest rates, rising geo-political tensions, and the increasing talk of a potentially looming recession. These negative factors influenced the thinking around performance goal setting. |
4. | Finally, given the business the Company had built, the slope of our pandemic recovery curve was steep requiring the Company to find and attract incremental resources in a tight labor market. As such, during much of fiscal year 2022, the Company’s Adjusted EBITDA Margin was elevated. The Company planned to continue incremental hiring to meet customer needs as part of the fiscal year 2023 AOP, which would put downward pressure on the fiscal year 2023 planned Adjusted EBITDA Margin. |
Although a number of the metrics under the annual cash incentive plan were set below fiscal year 2022 actual results, the Committee deemed such goals to be rigorous and achievement not certain at the time that they were set. Further, as described in more detail beginning on page 45 below, given the factors considered and the targets established, the Committee capped payouts for each metric at 100% of target for the metric, such that achievement above the target goal would not increase the corresponding bonus payout. Following the end of the fiscal year, the Committee determined that actual performance for fiscal year 2023 was, in the case of almost every performance goal, below actual performance for fiscal year 2022 as well as below the fiscal year 2023 target performance goals, resulting in below target payouts for all of our NEOs. The resulting below-target payouts under our annual incentive plan are reflective of our pay for performance philosophy.
39 | 2023 Proxy Statement |
Committee Uses Independent Compensation Consultant. | |
Modest Perquisites for NEOs. | |
Adopted Clawback Policy for Executive Officer Incentive Payments and Performance-Based Equity. | |
No Single Trigger Equity Payments for NEOs with Change in Control. | |
Focus on Rigorous Performance-Based Equity Awards for Majority of NEOs’ Annual Equity Grants. |
Stock Ownership Policy (3x Base Salary for NEOs). | |
Peer Group Analysis to Determine Compensation. | |
No Hedging, No Speculative Trading, and No Pledging under Company Policies. | |
No Excise Tax Gross-Ups for Our NEOs. |
The Company is a global organizational consulting firm. The Company helps its clients design their organization — organization—the structure, the roles, and the responsibilities, as well as how they compensate, develop, and motivate their people. As importantly, the Company helps organizations select and hire the talent they need to execute their strategy. The Company’s unique global positioning allows it to maintain enhanced brand visibility and to attract and retain high-caliber consultants. As of April 30, 2020,2023, the Company provides its services to a broad range of clients through the expertise of approximately 2,9793,480 consultants and execution staff who are primarily responsible for originating client services and who are located in 53 countries throughout the world. Accordingly, the Company’s executive officers must have the skills and experience to manage and motivate an organization spread over a large number of countries with varying business and regulatory environments. The market for these talented individuals is highly competitive. The Company’s compensation philosophy focuses on attracting, retaining, and properly rewarding the right candidates for their contributions.
The Committee is diligent about establishing an executive compensation program offering competitive total direct compensation opportunities. These opportunities which are aligned to stockholder return through establishedby incentivizing executives to focus on both short-term and long-term Company performance via participation in our annual bonus plan, where payouts require achieving pre-established goals related to Company performance, and the grant of long-term equity incentive awards, where the value realized by executives will proportionately increase in connection with a corresponding increase in our stock price. The performance criteria utilized in our executive compensation program are grounded in the Company’s Strategic Plan and Annual Operating Plan (“AOP”).AOP.
The Committee isremains guided by the following principles in establishing and assessing compensation programs and policies for the NEOs:
• | Individual annual cash incentive and equity-based awards should be closely tied to the performance of the Company as a whole or one or more of its divisions or business units, as well as to the team and individual performance of the NEO; |
• | The interests of senior management and the Company’s stockholders should be aligned through direct ownership of Company common stock and by providing a sizable portion of each NEO’s total direct compensation in the form of equity-based incentives; and |
• | Total direct compensation must be competitive with our peer group, a broader group of human capital companies, and similarly sized publicly traded companies. |
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The process for setting annual compensation-related metrics begins at an annual off-site meeting where the Company reviews with the Board its Strategic Plan (including goals and objectives). As part of the Strategic Plan, the Company establishes a Strategy Execution Framework (“SEF”) to drive performance and achievement of its strategic goals. That framework is represented by the five pillars below; each of which is comprised of detailed activities which, when executed, are designed to drive financial performance goals set within the Company’s Strategic Plan:
• | integrated, solutions-based go-to-market strategy, |
• | deliver client excellence and innovation, |
• | create the top-of-mind brand in organizational consulting, |
• | premier career destination, and |
• | pursue transformational opportunities at the intersection of talent and strategy. |
In setting the financial goals that underlie the Strategic Plan, the Company considers a number of internal and external factors including:such as:
• | revenue growth in excess of GDP expectations, |
• | projected macro-economic data |
• | forecasted GDP in the countries where the Company has significant operations, |
• | internal investment activities, |
• | market expectations for revenue and earnings growth for recruiting, staffing and human capital industry public companies, |
• | recent and expected levels of new business activity, |
• | increased productivity of fee earners, |
• | focus on increasing Executive Search, RPO, Professional Search |
• | leveraging the Executive Search relationships to drive cross line-of-business revenue growth. |
Then, the Board approves an AOP for the upcoming fiscal year. For the NEOs, the Committee establishes annual bonus plan targets with financial and strategic execution KPIs that are derived from the SEF and AOP.
Such financial targets and strategic execution KPIs form the basis for each NEO’s annual cash incentives and are tracked and measured during the course of the year with the year-end results audited by Internal Audit and reported to the Committee for determining year-end annual cash bonus awards.
41 | 2023 Proxy Statement |
The Committee retains compensation consultants to assist it in assessing the competitiveness of the NEOs’ compensation. In fiscal year 2020,2023, the Committee retained Pearl Meyer & Partners, LLC (“Pearl Meyer”).Meyer. Pursuant to the factors set forth in Item 407 of Regulation S-K of the Exchange Act, the Committee has reviewed the independence of Pearl Meyer and conducted a conflictsconflict of interest assessment (taking into consideration factors specified in the NYSE listing standards) and has concluded that Pearl Meyer is independent and its work for the Committee has not raised any conflicts of interest. No other fees were paid to Pearl Meyer except fees related to its services to the Committee.
The Company does not target or position NEO pay levels at a specific percentile level relative to a peer group. Rather, the Company reviews total direct compensation and the mix of the compensation components relative to the peer group as one of the factors in determining if compensation is adequate to attract and retain executive officers with the unique set of skills necessary to manage and motivate our global human capital management firm.
Because a number of the Company’s peer organizationsdirect competitors for talent are privately-held, precise information regarding executive officer compensation practices among the Company’s competitor group is difficult to obtain. In addition, even when such data is available, meaningful differences in size, complexity, and organizational structure among the Company’s peer group make direct comparisons of compensation practices challenging and require exercise of judgment. In assessing the competitiveness of the Company’s NEO compensation, the Committee relies on information obtained from the proxy statements of publicly-traded competitors, information derived from data obtained from other public sources with respect to competitor organizations, and the general knowledge of the Committee and its compensation consultant with regard to the market for senior management positions.
For fiscal year 2023, the Committee used the following companies as a peer group:
ASGN, Inc. | Insperity, Inc. |
Cushman & Wakefield Plc | Jones Lang LaSalle Incorporated |
FTI Consulting, Inc. | Manpower Group, Inc. |
Heidrick & Struggles International, Inc. | Nielsen Holdings Plc |
Huron Consulting Group Inc. | PageGroup Plc |
ICF International, Inc. | Robert Half International Inc. |
This peer group remained consistent with the peer group used for fiscal year 2022 except that CoreLogic, Inc. was removed due to its acquisition in June of 2021. In addition, while Nielsen Holdings Plc was included in the peer group for purposes of making initial fiscal year 2023 compensation decisions, it was later removed due to its acquisition in October 2022.
The selection of commercial real estate companies was predicated on business model and strategy alignment. Real estate companies have very similar business models to professional services firms and face similar personnel and go-to-market issues. We consider the business strategy of such companies as similar to our business strategy because commercial real estate brokers are analogous to our Executive Search partners: they have strong client relationships which the firms are leveraging by building a business with a number of closely related adjacent services that can be sold to clients through those relationships.
The selection of staffing industry peers was determined using comparisons of net revenues and global reach. We believe net revenues or gross margins are a better indicator of comparability for staffing industry peers. Staffing industry companies have a very large percentage of pass-through costs for amounts payable to temporary workers which are reported within their gross revenues. We believe that net revenue or gross margin excluding these pass-through costs are more comparable to the net fee revenues we report.
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For fiscal year 2020,We believe this peer group reflects the Committee used the following companies as a peer group:size and strategy of our company.
Employment Services | Significant International Exposure | Business Model / Strategy Alignment | ||||
ASGN, Inc. | ||||||
Cushman & Wakefield Plc | ||||||
FTI Consulting, Inc. | ||||||
Heidrick & Struggles International, Inc. | ||||||
Huron Consulting Group Inc. | ||||||
ICF International, Inc. | ||||||
Jones Lang LaSalle Incorporated | ||||||
Manpower Group, Inc. | ||||||
Insperity, Inc. | ||||||
PageGroup Plc | ||||||
Robert Half International Inc. | ||||||
This peer group was primarily selected based upon criteria such as business lines, operating model, customer base, revenue,The Committee also evaluated each company on the basis of market capitalization and entities with which the Company competes for stockholder investment.net revenue. The Committee reviews the peer group on an annual basis.
Revenue and market capitalization data for this peer group and the Company are as follows:
Market capitalization (as of July 9, 2020) | Revenues* | |||||||
Fiscal 2020 Peer Group Median (including Korn Ferry) | $ | 1,131,000,000 | $ | 1,705,612,500 | ||||
Korn Ferry** | $ | 1,440,000,000 | $ | 1,932,700,000 |
I Market capitalization (as of July 6, 2023)
I Revenues***
* | |
** | As of the Company’s fiscal year ended April 30, |
*** | Peer company total revenues computed for the peer company’s most recently completed fiscal year. |
While the Committee does not target a particular position relative to its peer group in determining the salary, annual cash incentive, and long-term incentive levels for each NEO, the Committee does consider the range of salary, annual cash incentive, and long-term incentive levels that the members of the peer group providesprovide to similarly situated executives and intendsgenerally makes decisions that the levelsresult in compensation provided to each NEO fallfalling within that range.a range selected by the Committee. The compensation levels for fiscal year 20202023 generally fell within thisthe range and are generally intendedof the 25th to be within the 25th to 75th 75th percentile of the range.compensation provided to similarly situated executives by members of the peer group.
43 | 2023 Proxy Statement |
Base salary is intended to compensate NEOs for services rendered during the fiscal year and to provide sufficient fixed cash income for retention and recruiting purposes. NEO base salary levels are reviewed on an annual basis by the Committee. In addition to competitive data from the peer group, data is also obtained from other sources with respect to non-public competitor organizations. The Committee also incorporates its perspective and the market knowledge of its compensation consultant related to senior management positions in assessing base salary levels. Further, the Committee takes into consideration individual performance of each NEO and, with respect to the NEOs other than the Chief Executive Officer, input from the Chief Executive Officer. Mr. Distefano first became an executive officer of the Company in fiscal year 2023, and after consideration of the foregoing factors, the Committee set his base salary at $550,000, consistent with the base salaries of Messrs. Mulrooney and Arian. There were no changes to the base salaries of our other NEOs for fiscal year 2020.2023.
In order to assist the Company’s efforts in weathering the economic environment created by COVID-19, the Company and each of the named executive officers agreed to a reduction in each named executive officer’s base salary by 50%, effective May 1, 2020 through August 31, 2020, and it was subsequently agreed that the reductions would be extended through December 31, 2020.
Annual cash incentives are intended to motivate and reward NEOs for achieving financial and strategy execution goals over a one-year period. The Committee determines annual cash incentive amounts based upon a number of factors including financial goals, strategy execution objectives, competitive data, and individual performance, as described in more detail below.
While the Committee primarily bases annual cash incentive awards on performance against these objectives for the year, it retains negative discretion in determining actual bonus payouts. Annual cash incentives are typically paid in cash, but the Committee may choose to pay a portion of the annual cash incentive in equity or other long-term incentives.
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During the course of our fiscal year, the Company interacts with investors discussing a number of topics, including the financial metrics that investors view as most important. While investors have varied points of view, based upon our interactions we believe the most important metrics for our stockholders are:
• | The Company’s ability to generate revenue growth in excess of its competitors’ revenue growth and market expectations; |
• | The Company’s ability to grow EBITDA and EPS at a rate that is greater than its revenue growth, |
• | The Company’s ability to allocate and deploy capital effectively so that its return on invested capital exceeds the Company’s cost of capital. |
The Committee, using the input from investors and the Company’s strategic plan, SEF and AOP as a basis, selects and sets performance metrics and associated targets for our NEOs. These performance metrics typically are separated into two categories: financial metrics and strategy execution KPIs.
44 | 2023 Proxy Statement |
For fiscal year 2020,2023, the Committee selected the following financial performance metrics:
Financial Metric
Adjusted Fee Revenue
Adjusted Fee Revenue (as approved for purposes of setting KPIs for the bonus plan) is defined as Fee Revenue of the Company, as reported in the Company’s Annual Report on Form 10-K, for the fiscal year ended April 30, 2020 (“Form 10-K”) adjusted to eliminate the effect of currency fluctuations, including by translating fiscal year 20202023 actual results at a currency rate comparable to the rate used in the Company’s Annual Operating PlanAOP for fiscal year 2020.2023.
Adjusted EBITDA Margin
Adjusted EBITDA Margin (as approved for purposes of setting KPIs for the bonus plan) is defined as GAAP Net Income, as reported in the Form 10-K, plus interest expense, income tax provision, depreciation and amortization expenses adjusted as applicable to exclude integration and acquisition costs, costs associated with the impairment of fixed assets (i.e., leasehold improvements) and right-of-use assets due to terminating and subleasing some of our office space, restructuring charges incurred to realign our workforce, and further adjusted to eliminate the effect of currency fluctuations, including by translating fiscal year 2023 actual results at a currency rate comparable to the rate used in the Company’s AOP for fiscal year 2023, divided by Adjusted Fee Revenue.
Adjusted Diluted EPS
Adjusted Diluted EPS (as approved for purposes of setting KPIs for the bonus plan) is defined as Diluted Earnings per Share, as reported in the Company’s Form 10-K, adjusted to exclude integration/integration and acquisition costs, management separation costs associated with the impairment of fixed assets (i.e., leasehold improvements) and right-of-use assets due to terminating and subleasing some of our office space, restructuring charges and debt refinancing costsincurred to realign our workforce (all on an after-tax basis), and further adjusted to eliminate the effect of currency fluctuations, including by translating fiscal year 20202023 actual results at a currency rate comparable to the rate used in the Company’s Annual Operating PlanAOP for fiscal year 2020.2023.
Adjusted EBITDA Margin
Adjusted EBITDA Margin (as approved for purposes of setting KPIs for the bonus plan) is defined as GAAP Net Income plus interest expense, income tax provision, depreciation and amortization expenses adjusted to exclude integration/acquisition costs, management separation costs, restructuring charges, and further adjusted to eliminate the effect of currency fluctuations by translating fiscal year 2020 actual results at a currency rate comparable to the rate used in the Company’s Annual Operating Plan for fiscal year 2020, divided by Adjusted Fee Revenue.
Adjusted Return on Invested Capital
Adjusted Return on Invested Capital (“Adjusted ROIC”) (as approved for purposes of setting KPIs for the bonus plan) is defined as GAAP Net Income, as reported in the Company’s Form 10-K, adjusted to exclude integration/integration and acquisition costs, management separation costs associated with the impairment of fixed assets (i.e., leasehold improvements) and right-of-use assets due to terminating and subleasing some of our office space, restructuring charges and debt refinancing costsincurred to realign our workforce (all on an after tax basis), and further adjusted to eliminate the effect of currency fluctuations, including by translating fiscal year 20202023 actual results at a currency rate comparable to the rate used in the Company’s Annual Operating PlanAOP for fiscal year 2020,2023, divided by average stockholders’ equity plus average outstanding debt.
Strategy execution KPIs constitute the other group of performance metrics. Grounded in the Company’s Strategic Plan, SEF, and AOP, the inclusion and use of these KPIs are designed with the intent of aligning compensation with the achievement of the Company’s strategic long-term goals, namely efforts to expand its service offerings. While these KPIs are strategic in nature, each KPI hasdoes have identified metrics and measurements assigned to it; some of which tie back to specific financial metrics.
Strategy Execution KPIs | Purpose | How the Target Was Established | ||
Marquee | ||||
(measured by Fee Revenue from clients designatedas Marquee | Linked to the Company’s integrated solutions thatdrive its “go-to market” strategy of building deeper, multi-service line relationships with clients | Target set based upontargeted revenues from an agreed-upon list of clients | ||
Top Rated Performers Retention | ||||
(based upon the percentage of highly-rated | Linked to the Company’s strategic goal of being apremier career destination | Target set by Committeederived from the SEF and AOP |
* | As described above, adjusted to eliminate the effect of currency fluctuations, including by translating fiscal year |
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The Board, Committee, and Company believe they have set the targets for fiscal year 2020 with appropriate rigor. When setting fiscal year 20202023 targets, and determining fiscal year 2020 actuals,2023 actual results, adjustments were made to eliminate the effect of currency fluctuations, including by translating actual results at a foreign currency rate comparable to the rate used in the Company’s 2020 Annual Operating Plan. In each case,2023 AOP. Typically, the fiscal year 2020 threshold levels — of performance each fiscal year—the respective minimum levels of performance required for payout under the annual incentive plan with respect to each metric —metric—are set at levels equal to or greater than the prior fiscal year’s actual results.
The fiscal year 2023 threshold levels for Adjusted Fee Revenue, segment-specific Marquee & Regional Accounts Fee Revenue, and the Marquee & Regional Accounts Strategy Execution KPI were set at levels that were equal to or greater than fiscal year 20192022 actual results, except in the case of Consulting Adjusted Fee Revenue, for which the threshold goal was equal to the fiscal year 2022 actual result. In the case of the remaining financial metrics and Strategy Execution KPIs, the respective threshold goals were set below fiscal year 2022 actual results.
Some of the performance goals under the annual cash incentive plan for fiscal year 2023 were set below actual results for fiscal year 2022 because the Company was projecting lower profitability in fiscal year 2023 compared to fiscal year 2022 as a result of the following:
1. | Emerging from the pandemic recovery, the way the world conducted work changed in a dramatic and permanent nature. Out of necessity, most work was being |
45 | 2023 Proxy Statement |
conducted virtually. Leveraging this, the habits and desires of employees changed. People no longer wanted to be tethered to a single company for their career and they were seeking multiple experiences—giving rise to the gig economy. Looking to capitalize on this, the Company made a strategic decision to enter the Interim business, trading off lower Adjusted EBIDITA Margin for a very large market opportunity with more durable revenues. |
2. | Also during the pandemic recovery, companies experienced an extremely tight labor market compounded by the great resignation, which increased the Company’s compensation and benefits costs, putting further downward pressure on profitability as we entered fiscal year 2023. |
3. | At the beginning of fiscal year 2023, there were a number of macro uncertainties—the Russia/Ukraine war, unprecedented inflation followed by central banks raising interest rates, rising geo-political tensions, and the increasing talk of a potentially looming recession. These negative factors influenced the thinking around performance goal setting. |
4. | Finally, given the business the Company had built, the slope of our pandemic recovery curve was steep requiring the Company to find and attract incremental resources in a tight labor market. As such, during much of fiscal year 2022, the Company’s Adjusted EBITDA Margin was elevated. The Company planned to continue incremental hiring to meet customer needs as part of the fiscal year 2023 AOP, which would put downward pressure on the fiscal year 2023 planned Adjusted EBITDA Margin. |
Because the Company was projecting lower profitability in fiscal year 2023 compared to fiscal year 2022, the Committee set the Adjusted EBITDA Margin goal (both Company-wide and the segment specific goals), Adjusted Diluted EPS goal, and Adjusted ROIC goal below fiscal year 2022 actual results. AchievementSimilarly, with respect to the Top Rated Performers Retention Strategy Execution KPI, the goals were also set below fiscal year 2022 actual results due to the tight labor market and anticipated aggressive actions by our competition to recruit our top consultants.
The Committee took the previously described factors into consideration when setting the fiscal year 2023 performance goals. Even the full achievement of thesethe threshold goals for fiscal year 2020 could2023 would only have resultedresult in payout of 50% of the target opportunity for such goal. Further,goal and, given the factors considered and the targets established, the Committee eliminated the NEOs’ ability to earn above target (typically up to 200%) by capping annual cash incentive payouts attributable to each metric at 100% of the target opportunity for the metric. The table below discusses actual results for fiscal year 2022 and threshold, target, and maximum goals and actual results for fiscal year 2023.
Financial Metric / KPI | FY’22 Actual | * | FY’23 Threshold | FY’23 Target | FY’23 Maximum | FY’23 Actual | ** | |||||||||||||
Adjusted Fee Revenue ($) (M) | $ | 2,627 | $ | 2,650 | $ | 2,886 | $ | 2,886 | $ | 2,876 | ||||||||||
Adjusted EBITDA Margin | 20.5 | % | 15.0 | % | 17.0 | % | 17.0 | % | 16.1 | % | ||||||||||
Adjusted Diluted EPS ($) | $ | 6.23 | $ | 4.06 | $ | 5.32 | $ | 5.32 | $ | 5.03 | ||||||||||
Adjusted ROIC | 18.3 | % | 10.7 | % | 14.1 | % | 14.1 | % | 13.3 | % | ||||||||||
Marquee & Regional Accounts | 36.3 | % | 37.0 | % | 38.0 | % | 38.0 | % | 35.5 | % | ||||||||||
Top Rated Performers Retention | 101.2 of Target | % | *** 97.9 of Target | % | *** | *** | 101.1 of Target | % | ||||||||||||
RPO Adjusted Fee Revenue ($) (M) | $ | 395 | $ | 420 | $ | 450 | $ | 450 | $ | 432 | ||||||||||
Digital Adjusted Fee Revenue ($) (M) | $ | 349 | $ | 355 | $ | 370 | $ | 370 | $ | 363 | ||||||||||
RPO Adjusted EBITDA Margin | 15.0 | % | 13.0 | % | 15.0 | % | 15.0 | % | 12.4 | % | ||||||||||
Digital Adjusted EBITDA Margin | 31.5 | % | 27.5 | % | 28.4 | % | 28.4 | % | 27.9 | % | ||||||||||
Marquee & Regional Accounts RPO & Digital Adjusted Fee Revenue ($) (M) | $ | 435 | $ | 450 | $ | 500 | $ | 500 | $ | 468 | ||||||||||
Consulting Adjusted Fee Revenue ($) (M) | $ | 650 | $ | 650 | $ | 680 | $ | 680 | $ | 689 | ||||||||||
Consulting Adjusted EBITDA Margin | 17.9 | % | 16.0 | % | 16.5 | % | 16.5 | % | 16.5 | % | ||||||||||
Marquee & Regional Accounts Consulting Adjusted Fee Revenue ($) (M) | $ | 271 | $ | 275 | $ | 295 | $ | 295 | $ | 275 | ||||||||||
Pro Search & Interim Adjusted Fee Revenue ($) (M) | $ | 297 | $ | 490 | $ | 520 | $ | 520 | $ | 506 | ||||||||||
Pro Search & Interim Adjusted EBITDA Margin | 35.7 | % | 22.0 | % | 23.0 | % | 23.0 | % | 22.1 | % | ||||||||||
Marquee & Regional Accounts Pro Search & Interim Adjusted Fee Revenue ($) (M) | $ | 45 | $ | 75 | $ | 105 | $ | 105 | $ | 98 |
* | The fiscal year 2022 actual results reported here were used when determining fiscal year 2023 performance goals for purposes of the annual cash incentive plan and do not reflect the adjustments for currency fluctuations as reported in the Company’s fiscal year 2022 proxy statement. |
** | Adjusted as described above, including to eliminate the effect of currency fluctuations, including by translating actual results at a foreign currency rate comparable to the rate used in the Company’s AOP. |
*** | Threshold, target, and maximum goals not disclosed due to potential competitive harm, but the Committee believes that achievement of the target goal was challenging and would have required substantial performance. |
46 | 2023 Proxy Statement |
After the end of the fiscal year, 2020 targets were set higher than the Committee evaluated each NEO’s achievements against the financial and strategic execution targets. Notwithstanding the structure outlined above, while the Committee primarily bases its determination of annual cash incentives on the metrics previously discussed, the Committee retains negative discretion in determining actual annual cash incentive awards.
For fiscal year 2019 targets2023, the weightings and actuals in all cases. For example, the fiscal year 2020 Adjusted Fee Revenue target was set at $1,955 million (which is above the fiscal year 2019 actual) and the fiscal year 2020 Adjusted Diluted EPS target was set at $3.40 (which is higher than the fiscal year 2019 actual).
Determinations and Results
Based on the Company’s performance through January 31, 2020, at that timeresults for our NEOs were projectedas follows:
Weighting | ||||||||||||||||||||||||
Target | Actual* | Burnison/ Rozek | Mulrooney | Arian | Distefano | |||||||||||||||||||
Adjusted Fee Revenue ($) (M) | $ | 2,886 | $ | 2,876 | 30 | % | — | — | — | |||||||||||||||
Adjusted EBITDA Margin | 17.0 | % | 16.1 | % | 15 | % | — | — | — | |||||||||||||||
Adjusted Diluted EPS ($) | $ | 5.32 | $ | 5.03 | 15 | % | — | — | — | |||||||||||||||
Adjusted ROIC | 14.1 | % | 13.3 | % | 15 | % | — | — | — | |||||||||||||||
RPO Adjusted Fee Revenue ($) (M) | $ | 450 | $ | 432 | — | 20 | % | — | — | |||||||||||||||
Digital Adjusted Fee Revenue ($) (M) | $ | 370 | $ | 363 | — | 20 | % | — | — | |||||||||||||||
RPO Adjusted EBITDA Margin | 15.0 | % | 12.4 | % | — | 10 | % | — | — | |||||||||||||||
Digital Adjusted EBITDA Margin | 28.4 | % | 27.9 | % | — | 10 | % | — | — | |||||||||||||||
Marquee & Regional Accounts RPO & Digital Adjusted Fee Revenue ($) (M) | $ | 500 | $ | 468 | — | 20 | % | — | — | |||||||||||||||
Consulting Adjusted Fee Revenue ($) (M) | $ | 680 | $ | 689 | — | — | 40 | % | — | |||||||||||||||
Consulting Adjusted EBITDA Margin | 16.5 | % | 16.5 | % | — | — | 20 | % | — | |||||||||||||||
Marquee & Regional Accounts Consulting Adjusted Fee Revenue ($) (M) | $ | 295 | $ | 275 | — | — | 20 | % | — | |||||||||||||||
Pro Search & Interim Adjusted Fee Revenue ($) (M) | $ | 520 | $ | 506 | — | — | — | 45 | % | |||||||||||||||
Pro Search & Interim Adjusted EBITDA Margin | 23.0 | % | 22.1 | % | — | — | — | 15 | % | |||||||||||||||
Marquee & Regional Accounts Pro Search & Interim Adjusted Fee Revenue ($) (M) | $ | 105 | $ | 98 | — | — | — | 20 | % | |||||||||||||||
Marquee & Regional Accounts | 38.0 | % | 35.5 | % | 20 | % | 20 | % | 20 | % | 20 | % | ||||||||||||
Top Rated Performers Retention | ** | 101.1 of Target | % | 5 | % | — | — | — |
* | Adjusted as described above, including to eliminate the effect of currency fluctuations, including by translating fiscal year 2023 actual results at a currency rate comparable to the rate used in the Company’s AOP for 2023. |
** | Target not disclosed due to potential competitive harm, but the Committee believes that achievement of the target goal was challenging and would have required substantial performance. |
In keeping with our efforts to receive approximately 1.3 times theirreflect stockholder feedback, the table above incorporates detailed disclosure with either actual results or relative results to target. For competitive advantage and confidentiality reasons, we do not disclose the threshold, target, amountsand maximum goals and actual results for our top-rated performance retention strategy execution KPI. However, when the full year. Based upon fullgoals were established, they were considered challenging to achieve given the continuing uncertain economic environment.
The fiscal year 2023 target bonus was equal to 150% of annual base salary for Mr. Burnison, 120% of annual base salary for Mr. Rozek, and 100% of annual base salary for Messrs. Mulrooney, Arian, and Distefano. For fiscal year 2023, there was no maximum opportunity, and performance the Company estimates that its NEOs may have otherwise achieved approximately 1.07 times theirabove target amounts. In lightwas capped at 100% of the ongoing challenges posed by COVID-19 and based in part on the recommendation by the Chief Executive Officer, thetarget opportunity.
The Committee exercised its negative discretion to reduce theawarded annual cash incentive payout to $0amounts as follows: Mr. Burnison—$1,087,478, Mr. Rozek—$543,739, Mr. Mulrooney—$275,856, Mr. Arian—$385,000, and Mr. Distefano—$332,292 (which amounts represent 72.5% of Messrs. Burnison’s and Rozek’s target bonuses for eachthe year, 50.2% of our named executive officers.Mr. Mulrooney’s target bonus for the year, 70% of Mr. Arian’s target bonus for the year, and 60.4% of Mr. Distefano’s target bonus for the year). These amounts reflect their performance against the financial metrics and strategic execution KPI targets established at the beginning of the fiscal year.
47 | 2023 Proxy Statement |
Long-term equity incentives are intended to align the NEOs’ interests with those of stockholders and encourage the achievement of the long-term goals of the Company. Long-term incentives are also designed to motivate and help retain top talent. To accomplish these objectives the Committee has discretion to make grants of stock options, time-based restricted stock, restricted stock units, and/or performance-based awards.
The Committee determines long-term incentive award amounts based upon a number of factors including competitive data, total overall compensation provided to each NEO, Company performance during the fiscal year preceding the year of grant, and historic grants. The various factors are not given specific weights; the Committee retains discretion to consider items as it deems appropriate.
In fiscal year 2020,2023, our Chief Executive Officer and Chief Financial OfficerNEOs received annual equity grants comprised of 60% performance-based restricted stock units (discussed in further detail below) and 40% time-based restricted stock. Atstock except for Mr. Distefano, who was not an NEO at the time of grant in consultationbut has moved to the 60%/40% split beginning with and based on benchmarking data provided by the compensation consultant, the Committee determined that the grant date value of their awards fell within the range of long-term incentives provided by the peer group companies and that this was an appropriate level of equity grant and equity mix to properly align their interests with the Company’s long-term goals, taking into account individual performance and market compensation levels.
In fiscal year 2020, Mr. Mulrooney had an aggregate target of $1,150,000 for his target annual cash and long-term incentives and Mr. Arian had an aggregate target of $1,000,000 for his target annual cash and long-term incentives. When determining the allocation between cash and long-term equity incentives with respect to Messrs. Mulrooney and Arian, the Committee primarily reviewed historical pay practices, internal equity and what it considered to be an appropriate balance between short-term and long-term pay elements. Each NEO received annual equity grants comprised of 60% performance restricted stock units (discussed in further detail below) and 40% time-based restricted stock.2024. At the time of grant, in consultation with and based on benchmarking data provided by the compensation consultant, the Committee determined that the grant date value of their awards fell within the range of long-term incentives provided by the peer group companies and that this was an appropriate level of equity grant and equity mix to properly align their interests with the Company’s long-term goals, taking into account individual performance and market compensation levels.
Below we discuss equity grants made during fiscal year 20202023 to Messrs. Burnison, Rozek, Mulrooney, and Arian, and the payout of the performance awards granted in fiscal year 2018 for which the three-year performance period ended in fiscal year 2020.Distefano.
In fiscal year 2020,2023, 60% (based on the number of units/shares granted at target) of the annual equity awards granted to the NEOs were comprised of performance-based awards tied to three-year relative TSR (“Relative TSR Units”). As, except for Mr. Distefano, who was not an NEO at the time of grant and received 50% of his annual equity award in recent years, the form of Relative TSR Units. The NEOs received 40%the remaining portion of their equity awards in the form of time-based restricted stock awards. Beginning with fiscal year 2024, Mr. Distefano has moved to the standard NEO 60%/40% split.
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Mr. Burnison was awarded Relative TSR Units with a target amount of 53,92086,130 units, a maximum amount of 107,840172,260 units, and a minimum amount of zero. These Relative TSR Units have a three-year performance period after which the number of units that vest will depend upon the Company’s TSR over the three-year performance period relative to the fiscal year 20202023 peer group of companies listed above. If the Company’s TSR is less than zero, the payouts will be modified to reduce the payout as a percentage of the target.
Relative TSR Units were also granted to Mr. Rozek, with a target amount of 22,39030,400 units (maximum of 44,78060,800 units and minimum of zero); Mr.Messrs. Mulrooney and Arian, each with a target amount of 16,38023,310 units (maximum of 32,76046,620 units and minimum of zero); and Mr. Arian,Distefano, with a target amount of 8,1105,070 units (maximum of 16,22010,140 units and minimum of zero).
The table below outlines the potential vesting of the percentages of the Relative TSR Units granted in fiscal year 20202023 resulting from the Company’s TSR over the three-year performance period relative to the TSR of the fiscal year 20202023 peer group.
Payout as a % Target | Payout as a % Target | |||||||||||
Relative TSR Percentile Ranking | Absolute TSR >= 0% | Absolute TSR < 0% | Absolute TSR > 0% | Absolute TSR < 0% | ||||||||
>90P | 200 | % | 100 | % | 200% | 100% | ||||||
90P | 200 | % | 100 | % | 200% | 100% | ||||||
85P | 183 | % | 100 | % | 183% | 100% | ||||||
80P | 167 | % | 100 | % | 167% | 100% | ||||||
75P | 150 | % | 100 | % | 150% | 100% | ||||||
70P | 133 | % | 100 | % | 133% | 100% | ||||||
65P | 117 | % | 100 | % | 117% | 100% | ||||||
60P | 100 | % | 100 | % | 100% | 100% | ||||||
55P | 92 | % | 88 | % | 92% | 88% | ||||||
50P | 83 | % | 75 | % | 83% | 75% | ||||||
45P | 75 | % | 63 | % | 75% | 63% | ||||||
40P | 67 | % | 50 | % | 67% | 50% | ||||||
35P | 58 | % | 38 | % | 58% | 38% | ||||||
30P | 50 | % | 25 | % | 50% | 25% | ||||||
<30P | 0 | % | 0 | % | 0% | 0% |
48 | 2023 Proxy Statement |
Each of Messrs. Burnison, Rozek, Mulrooney, Arian, and ArianDistefano received a time-based restricted stock award that vests in four equal annual installments beginning on July 9, 2020.11, 2023. Mr. Burnison received 35,94057,420 shares, Mr. Rozek received 14,94020,270 shares, Mr.Messrs. Mulrooney and Arian each received 10,92015,540 shares, and Mr. ArianDistefano received 5,4105,070 shares.
Relative TSR Units for the Three-Year Performance Cycle Ending April 30, 2020
April 30, 2020 marked the end of the three-year performance cycle for the performance-based restricted stock units granted to Messrs. Burnison, Rozek, and Mulrooney in fiscal year 2018 (and discussed in further detail in the Company’s proxy statement for fiscal year 2018). The Company’s relative total stockholder return over the three-year performance period resulted in the Company ranking 7 out of a 13 company peer group (including the Company). This 7th place ranking translates into approximately 83% of the award (i.e., 43,610, 21,120, and 14,130 shares, respectively) vesting.
The Company generally provides NEOs the same benefits that are provided to all employees, including medical, dental, and vision benefits and participation in the Company’s 401(k) plan,plan. Beginning in October 2021, in order to provide the NEOs and eligibilitycertain other employees with market competitive benefits and for tuition reimbursement.retention purposes, the Company implemented a fully insured medical plan. The Company pays the full cost of premiums for this plan. In addition, the NEOs receive the same benefits provided to all employees at the level of vice president and above, including participation in the Company’s nonqualified deferred compensation plan (described below) and executive life insurance.
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The Company maintains a nonqualified deferred compensation plan, known as the Korn Ferry Executive Capital Accumulation Plan (“ECAP”). Pursuant to the ECAP, the NEOs, along with all other U.S.-based vice presidents, may defer up to 80% of their salary and/or up to 100% of their annual cash incentive award into the ECAP. Participants in the ECAP make elections on how they would like their deemed account “invested”notionally invested from a set line upgroup of 15 predeterminedselected mutual funds. At its discretion, the Company may make contributions to the ECAP on behalf of a participant. All Company matching and performance contributions to the ECAP are approved by the Committee. During fiscal year 2020,2023, no Company contributions were made to the ECAP on behalf of the NEOs. Participants in the ECAP may elect to receive distributions (in lump sum) while employed by the Company (and after such amounts have become vested) or upon termination of their employment with the Company.
In fiscal year 2017, the Committee approved the Korn Ferry Long Term Performance Unit Plan and subsequently approved amendments and restatements of such plan during fiscal year 2020, fiscal year 2021, and fiscal year 20212022 (the “LTPU Plan”). The NEOs are eligible to participate in the LTPU Plan. The purpose of the LTPU Plan is to promote the success of the Company by providing a select group of management and highly-compensated employees with nonqualified supplemental retirement benefits as an additional means to attract, motivate, and retain such employees. Pursuant to the LTPU Plan, the Committee may grant cash-based unit awards (the “Unit Awards”). No Unit Awards were granted to the NEOs in fiscal year 2020,2023, and the last awards made to a named executive officer occurred in fiscal year 2017.2018. Unless a participant dies or makes an election in accordance with the LTPU Plan, each vested Unit Award will pay out an annual benefit of either $25,000 (for an award granted prior to June 1, 2020) or, $10,000 (for an award granted on or after June 1, 2020)2020 and prior to July 1, 2021), or $12,500 (for an award granted on or after July 1, 2021), in either caseall cases subject to a potential performance adjustment, for each of five years commencing on the seventh anniversary of the grant date. Subject to the terms of the LTPU Plan, participants may elect to have their annual benefits start on a later date and/or pay out in a lower annual amount over a greater number of years. Unit Awards vest upon the following circumstances: (i) the fourth anniversary of the grant date, subject to continued service as of such date; (ii) the later of the grantee’s 65th birthday and the second anniversary of the grant date, subject to continued services as of each such date; (iii) death or disability; or (iv) a change of control event (as defined in the LTPU Plan). Each Unit Award made under the LTPU Plan has a total value of either $125,000 (for an award granted prior to June 1, 2020) or, $50,000 (for an award granted on or after June 1, 2020)2020 and prior to July 1, 2021), or $62,500 (for an award granted on or after July 1, 2021) and a base value of either $50,000 (for an award granted prior to June 1, 2020) or $25,000 (for an award granted on or after June 1, 2020). The base value of an LTPU award represents the maximum amount payable upon the partial vesting of such award. If a participant terminates employment prior to death or disability and not for cause, the participant will be entitled to receive a lump sum payment of a portion of the base value of the Unit Award based on the years of service completed since the grant date to the extent that the termination occurs at least 13 months following the grant date. If the administrator of the LTPU Plan (the “LTPUP Administrator”) determines that a participant’s employment has been terminated for cause or that a participant has engaged in “Detrimental Activity” (as defined in the LTPU Plan), Unit Awards, whether vested or unvested, will be forfeited. Please refer to the section entitled “Potential Payments Upon Termination or Change of Control” below for further discussion of the LTPU Plan.
49 | 2023 Proxy Statement |
Each of the Company’s NEOs is covered by an employment contract or letter agreement that providesproviding for a minimum annual level of salary, target incentives, eligibility for long-term incentives and benefit eligibility and, in the case of Mr. Burnison, a retention award.award (the “Retention Award”). The agreements also provide for a severance benefit in the event of a termination of employment without “cause” or for “good reason,” as such terms are defined in the agreements. The NEOs have executed amendments to their existing
Based on a competitive review conducted by Pearl Meyer, the Committee’s independent compensation consultant, the employment contracts and letter agreements as applicable, formalizingprovide for the 50%following annual compensation: (1) an annual base salary reductions described aboveof $1,000,000 for Mr. Burnison, $625,000 for Mr. Rozek, and acknowledging that such reductions will not trigger any good reason or other constructive termination rights.$550,000 for each of Messrs. Mulrooney, Arian, and Distefano; (2) participation in the Company’s annual cash incentive plan with an annual target award of 150% of annual base salary for Mr. Burnison, 120% of annual base salary for Mr. Rozek, and 100% of annual base salary for Messrs. Mulrooney, Arian, and Distefano, and the ability to earn additional amounts up to a maximum cash award of 200% of the applicable target bonus opportunity for each executive; and (3) subject to approval of the Committee, the NEOs are eligible to participate in the Company’s equity incentive program and in the employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
ItIn addition, the agreement with Mr. Burnison provides the ability to earn the Retention Award (which was originally granted under his previous employment agreement with the Company dated March 30, 2018) in the amount of $5 million, which vested on March 30, 2022. After vesting, payment of this award will be deferred until Mr. Burnison’s termination of employment (except that Mr. Burnison will forfeit this award if his employment is terminated for “cause” or he violates his restrictive covenants). Interest will accrue on the Committee’s belief that thedeferral from March 30, 2022, until Mr. Burnison’s termination of employment and letter agreements are necessary from a competitive perspective and also contribute to the stabilityat 120% of the management team.long-term Applicable Federal Rate as in effect from time to time (currently 4.85% for August 2023).
For all NEOs, the agreements provide for severance benefits in the event of a termination of employment without “cause” or for “good reason,” as such terms are defined in the agreements. Mr. Rozek’s agreement also provides for continued vesting of his equity awards (based on actual Company performance in the case of performance awards) in the event of a termination due to his “retirement,” as defined in his agreement, provided he gives the Company at least six months’ prior notice. All of the foregoing benefits are conditioned on the executive’s execution and delivery of a general release and compliance with covenants relating to confidentiality, non-solicitation, and non-competition. Please refer to the sections entitled “Employment Agreements” and “Potential Payments Upon Termination or Change of Control” below for further discussion of these agreements.
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It is the Committee’s belief that the employment agreements are necessary from a competitive perspective and contribute to the stability of the management team.
The Nominating Committee has determined that in order to further align the long-term interests of the Company’s amendedstockholders and restated stockits non-employee directors and executive officers, it is in the best interests of the Company to require such directors and officers to have direct ownership guidelines provide that all NEOs are required to own three times their annual base salary in the Company’s common stock. Therefore, it and the Board have adopted the Company’s Stock Ownership Policy, which provides for ownership of the following amount of Company common stock. In addition, such guidelines require non-employee directors to hold three times their annual cash retainer in Company common stock. stock:
3x annual base salary | 3x annual cash retainer |
Named Executive Officers | Non-Employee Directors |
Stock ownership includes direct stock ownership, but does not include unvested restricted stock awards. Pursuant to theawards, unvested restricted stock ownership guidelines, theunits, unvested performance-based stock ownership level will be calculated annually on the day of the Company’s annual meeting of stockholders based on the prior 30-day average closingunits, or unvested stock price as reported by the NYSE. options.
Until the stock ownership level is met, each executive officer and non-employee director must retain at least 75% of the net shares (the shares remaining after payment of transaction costs and applicable taxes owed as a result of vesting and payout of the restricted stock, restricted stock units, and performance-based stock units) received upon vesting and payout of restricted stock, restricted stock unit, and performance-based stock unit awards and 50% of the net shares (the shares remaining after payment of transaction costs, the option exercise price, and applicable taxes owed as a result of the exercise of the option) received upon exercise of stock options. When an executive officer’s stock ownership requirement increases as a result of an increase in the officer’s annual salary, the officer will become subject to such higher stock ownership level over a five-year proportional phase-in period.
Pursuant to the Company’s clawback policy, in the event that the Board determines there has been an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, the Board will review all applicable incentive payments and if such payments would have been lower had they been
50 | 2023 Proxy Statement |
calculated based on such restated results, the Board may, to the extent permitted by governing law, seek to recoup for the benefit of the Company such payments to and/or equity awards held by executive officers or the principal accounting officer who are found personally responsible for the material restatement, as determined by the Board. We plan to amend our clawback policy as necessary to comply with Section 303A.14 of the NYSE Listed Company Manual.
The Company has adopted policies prohibiting officers, directors, and employees from engaging in speculative transactions (such as puts, calls, and short sales) or in any type of hedging transaction (such as zero cost collars, equity swaps, exchange funds, and forward sale contracts) in Company securities. Further, directors and officers, including all of the NEOs, are expressly prohibited from margining Company securities or pledging Company securities as collateral for a loan.
As one of the factors in the review of compensation matters, the Committee considers the anticipated tax treatment to the Company. The deductibility of some types of compensation for NEOs depends upon the timing of a named executive officer’s vesting or exercise of previously granted rights. Prior to the US Tax Cuts and Jobs Act enacted in December of 2017 (the “US Tax Act”), which became effective for the Company at the beginning of fiscal year 2019, compensation that satisfied conditions set forth underUnder Section 162(m) of the Internal Revenue Code, to qualify as “performance-based compensation” was not subject to a $1 million limitlimitation exists on the deductibility and the limit did not apply toof compensation
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paid to the Chief Financial Officer. The US Tax Act eliminates the performance-based compensation exception and applies the limit to the Chief Financial Officer and certain former executive officers. However, it provides a transition rule with respect to remuneration which is provided pursuant to a written binding contract which was in effect on November 2, 2017 and which was not materially modified after that date. With the elimination“covered employees,” including all of the exemption for performance-based compensation, we expect that we will be unable to deduct all compensationour NEOs, in excess of $1 million paidper year and thus, we are unable to deduct compensation payable to our Chief Executive Officer, Chief Financial Officer andNEOs in excess of such limit. While the Committee considers the impact of this tax treatment, the primary factors influencing program design are the support of our other named executive officers covered by the new tax law, other than previously granted awards that comply with the transition rules. We monitor the application of Section 162(m)business objectives and the associated Treasury regulations on an ongoing basis and the advisability of qualifying executive compensation for deductibility. Notwithstanding the repeal of the exemption for “performance-based compensation,” the Committee intends to maintain itsCommittee’s commitment to structuring the Company’s executive compensation programs in a manner designed to align pay with performance.
Accordingly, the Committee retains flexibility to structure our compensation programs in a manner that is not tax-deductible in order to achieve a strategic result that the Committee determines to be more appropriate.
The Compensation and Personnel Committee has reviewed and discussed the Compensation Discussion and Analysis (the “CD&A”) for the fiscal year ended April 30, 2023, with management. In reliance on the reviews and discussions with management relating to the CD&A, the Compensation and Personnel Committee has recommended to the Board, and the Board has approved, that the CD&A be included in this Proxy Statement.
Compensation and Personnel Committee
Jerry P. Leamon, Chair
Doyle N. Beneby
Laura M. Bishop
Lori J. RobinsonGeorge T. Shaheen
Charles L. Harrington
Compensation Committee Interlocks and Insider Participation
During fiscal year 2020,
During fiscal year 2023, at all times, all members of the Compensation and Personnel Committee were “independent”: none were employees or former employees of the Company and none had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. None of our executive officers served on the compensation committee or board of directors of another entity whose executive officer(s) served on our Compensation and Personnel Committee or Board.
Compensation of Executive Officers and DirectorsFiscal Year 2023, 2022, and 2021 Summary Compensation Table
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Compensation of Executive Officers and Directors
Fiscal Year 2020, 2019, and 2018 Summary Compensation Table
The following table sets forth information with respect to the total compensation paid to or earned by each of the named executive officers in fiscal year 2020, 2019, and 2018.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | (1) | Non-Equity Incentive Plan Compensation ($) | (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||
Gary D. Burnison, | 2020 | 910,000 | — | 3,448,284 | — | 71,951 | (4) | 12,750 | (5) | 4,442,985 | ||||||||||||||||||||
President and Chief Executive Officer | 2019 | 910,000 | — | 6,091,669 | 2,184,000 | 21,151 | (4) | 16,363 | 9,223,183 | |||||||||||||||||||||
2018 | 910,000 | 2,000,000 | (3) | 3,513,464 | 2,184,000 | 2,676 | (4) | 33,153 | 8,643,293 | |||||||||||||||||||||
Robert P. Rozek, | 2020 | 575,000 | — | 1,432,509 | — | — | 12,750 | (6) | 2,020,259 | |||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Chief Corporate Officer | 2019 | 575,000 | — | 2,699,017 | 1,150,000 | — | 16,034 | 4,440,051 | ||||||||||||||||||||||
2018 | 575,000 | 1,000,000 | (3) | 1,702,641 | 1,150,000 | — | 21,106 | 4,448,747 | ||||||||||||||||||||||
Byrne Mulrooney, | 2020 | 450,000 | — | 1,047,610 | — | — | 235,320 | (7) | 1,732,930 | |||||||||||||||||||||
Chief Executive Officer of RPO, Professional Search and Digital | 2019 | 450,000 | — | 1,742,400 | 1,000,000 | — | 234,669 | 3,427,069 | ||||||||||||||||||||||
2018 | 450,000 | 500,000 | (3) | 1,149,548 | 1,000,000 | — | 239,657 | 3,339,205 | ||||||||||||||||||||||
Mark Arian, | 2020 | 450,000 | — | 518,818 | — | — | 262,084 | (8) | 1,230,902 | |||||||||||||||||||||
Chief Executive Officer of Consulting | 2019 | 450,000 | — | 748,572 | 850,000 | — | 511,582 | 2,560,154 | ||||||||||||||||||||||
2018 | 450,000 | 1,200,000 | (9) | — | — | — | 11,139 | 1,661,139 |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | (1) | Non-Equity Incentive Plan Compensation ($) | (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||
Gary D. Burnison, President and Chief Executive Officer | 2023 | 1,000,000 | — | 9,335,918 | 1,087,478 | — | (3) | 94,049 | (4) | 11,517,445 | |||||||
2022 | 985,000 | — | 5,052,479 | 3,450,000 | — | (3) | 60,055 | (5) | 9,547,534 | (5) | |||||||
2021 | 796,250 | — | 5,700,025 | 4,815,720 | 15,862 | (3) | 19,670 | 11,347,527 | |||||||||
Robert P. Rozek, Executive Vice President, Chief Financial Officer and Chief Corporate Officer | 2023 | 625,000 | — | 3,295,355 | 543,739 | — | 71,434 | (6) | 4,535,528 | ||||||||
2022 | 616,667 | — | 2,105,429 | 1,725,000 | — | 45,771 | (5) | 4,492,867 | (5) | ||||||||
2021 | 503,125 | — | 2,300,063 | 2,535,750 | — | 18,347 | 5,357,285 | ||||||||||
Byrne Mulrooney, Former Chief Executive Officer, RPO and Digital | 2023 | 550,000 | — | 2,526,648 | 275,856 | — | 93,063 | (7) | 3,445,567 | ||||||||
2022 | 533,333 | — | 1,515,800 | 1,170,125 | — | 54,848 | (5) | 3,274,106 | (5) | ||||||||
2021 | 393,750 | — | 2,500,045 | 3,087,000 | — | 235,688 | 6,216,483 | ||||||||||
Mark Arian, Chief Executive Officer, Consulting | 2023 | 550,000 | — | 2,526,648 | 385,000 | — | 92,187 | (8) | 3,553,835 | ||||||||
2022 | 533,333 | — | 1,515,800 | 1,158,108 | — | 56,808 | (5) | 3,264,049 | (5) | ||||||||
2021 | 393,750 | — | 1,600,128 | 2,646,000 | — | 262,633 | 4,902,511 | ||||||||||
Michael Distefano, Chief Executive Officer, Professional Search and Interim | 2023 | 550,000 | — | 649,619 | 332,292 | — | (3) | 66,568 | (9) | 1,598,479 |
(1) | Represents the aggregate grant date fair value of awards granted during the fiscal year, calculated in accordance with Accounting Standards Codification, 718, Compensation-Stock Compensation. Certain assumptions used to calculate the valuation of the awards are set forth in Note 4 to the notes to consolidated financial statements in Form 10-K. For the Relative TSR Units, the grant date fair value is measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free rate is assumed to equal the yield on a three-year Treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. For each of the NEOs, the assumed per-share value of Relative TSR Units for the July 11, 2022 annual grant was $68.92 and for the July 9, 2021 annual grant was $83.14. Our Compensation Committee made a one-time decision in early July of 2020 to grant time-based equity awards that provided a stronger incentive to retain our NEOs in the face of economic challenges beyond their control as the Board concluded that supporting the continuity and commitment of the Company’s leadership team to lead the Company through the entire course of the pandemic’s impact on the Company’s business would be essential during such uncertain and challenging times. Accordingly, no performance-based shares were granted in fiscal 2021. |
(2) | Reflects cash incentive compensation earned under the Company’s annual cash incentive plan in the applicable fiscal year and paid in the following fiscal year. |
(3) | The values in the table represent, for each applicable fiscal year, the aggregate change in the actuarial present value of Messrs. Burnison’s and Distefano’s accumulated benefit under the Enhanced Wealth Accumulation Plan (the “EWAP”) from the pension plan measurement date used for financial statement reporting purposes with respect to the Company’s audited financial statements for the prior completed fiscal year to the pension plan measurement date used for financial reporting purposes with respect to the Company’s audited financial statements for the covered fiscal year. For fiscal year 2023, for Messrs. Burnison and Distefano, the change in value was negative in the amount of ($10,164) and ($19,195), respectively, and is reported as $0 in accordance with applicable SEC rules. As discussed under “Fiscal 2023 Pension Benefits,” participants in the EWAP elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight-year period, or in some cases, make an after-tax contribution, in return for defined benefit payments from the Company over a fifteen-year period generally at retirement age of 65 or later. Messrs. Burnison and Distefano are the only named executive officers that participate in the EWAP. To date, Messrs. Burnison and Distefano have contributed $55,200 and $18,700, respectively, to the EWAP. In June 2003, the Company amended the EWAP plan, so as not to allow new participants or the purchase of additional deferral units by existing participants. |
(4) | Represents 401(k) company contribution of $4,100, an auto allowance of $5,400, executive medical insurance premium of $72,591, executive long-term disability insurance premium and/or imputed income of $558, and executive short-term life insurance premium and/or imputed income of $11,400. |
53 | 2023 Proxy Statement |
(5) | These values have been updated to reflect additional amounts in respect of executive medical insurance premiums that were inadvertently omitted from the Summary Compensation Table in the Company’s fiscal year 2022 proxy statement. |
(6) | Represents 401(k) company contribution of $4,100, an auto allowance of $5,400, executive medical insurance premium of $50,688, executive long-term disability insurance premium and/or imputed income of $558, and executive short-term life insurance premium and/or imputed income of $10,688. |
(7) | Represents 401(k) company contribution of $4,100, an auto allowance of $5,400, executive medical insurance premium of $72,591, executive long-term disability insurance premium and/or imputed income of $558, and executive short-term life insurance premium and/or imputed income of $10,414. |
(8) | Represents 401(k) company contribution of $4,233, an auto allowance of $5,400, executive medical insurance premium of $72,591, executive long-term disability insurance premium and/or imputed income of $558, and executive short-term life insurance premium and/or imputed income of $9,405. |
(9) | Represents 401(k) company contribution of $4,150, executive medical insurance premium of $50,688, executive long-term disability insurance premium and/or imputed income of $558, executive short-term life insurance premium and/or imputed income of $3,780, and tax preparation fee of $7,392. |
The following table sets forth information with respect to non-equity incentive plan compensation and equity awards granted in fiscal 2023 to the named executive officers, under the Company’s Fourth Amended and Restated 2008 Stock Incentive Plan.
Estimated Future Payments Under Non-Equity Incentive Plan Awards | Estimated Future Payments Under Equity Incentive Plan Awards | All Other Stock Awards: | Grant | ||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares of Stock (#) | Date Fair Value of Stock Awards | ||||||||||
Gary D. Burnison | 7/11/2022 | — | — | — | — | — | — | 57,420 | 3,399,838 | ||||||||||
7/11/2022 | — | — | — | 21,533 | 86,130 | 172,260 | — | 5,936,080 | |||||||||||
— | — | 1,500,000 | 1,500,000 | — | — | — | — | — | |||||||||||
Robert P. Rozek | 7/11/2022 | — | — | — | — | — | — | 20,270 | 1,200,187 | ||||||||||
7/11/2022 | — | — | — | 7,600 | 30,400 | 60,800 | — | 2,095,168 | |||||||||||
— | — | 750,000 | 750,000 | — | — | — | — | — | |||||||||||
Byrne Mulrooney | 7/11/2022 | — | — | — | — | — | — | 15,540 | 920,123 | ||||||||||
7/11/2022 | — | — | — | 5,828 | 23,310 | 46,620 | — | 1,606,525 | |||||||||||
— | — | 550,000 | 550,000 | — | — | — | — | — | |||||||||||
Mark Arian | 7/11/2022 | — | — | — | — | — | — | 15,540 | 920,123 | ||||||||||
7/11/2022 | — | — | — | 5,828 | 23,310 | 46,620 | — | 1,606,525 | |||||||||||
— | — | 550,000 | 550,000 | — | — | — | — | — | |||||||||||
Michael Distefano | 7/11/2022 | — | — | — | — | — | — | 5,070 | 300,195 | ||||||||||
7/11/2022 | — | — | — | 1,268 | 5,070 | 10,140 | — | 349,424 | |||||||||||
— | — | 550,000 | 550,000 | — | — | — | — | — |
Certain elements of compensation set forth in Note 4the “Fiscal Year 2023, 2022, and 2021 Summary Compensation Table” and “Fiscal Year 2023 Grants of Plan-Based Awards Table” reflect the terms of employment agreements entered into between the Company and each of the named executive officers that were in effect during fiscal year 2023.
Gary D. Burnison. We entered into an amended and restated employment agreement with Mr. Burnison dated June 28, 2021 (the “Burnison Employment Agreement”) pursuant to which Mr. Burnison serves as Chief Executive Officer. Pursuant to the notesBurnison Employment Agreement, we agreed to consolidated financial statementsprovide Mr. Burnison with the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $1,000,000; (2) participation in our Annual Reportthe Company’s annual cash incentive plan with an annual target award of 150% of annual base salary and the ability to earn additional amounts up to a maximum cash award of 200% of the target award, however, for fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the target opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Company’s equity incentive program. In addition, the Burnison Employment Agreement continues to provide for a retention award in the amount of $5 million (the “Retention Award”) that vested on Form 10-KMarch 30, 2022 (the “Retention Vesting Date”). After vesting, payment of this award will be deferred until Mr. Burnison’s termination of employment (except that Mr. Burnison will forfeit this award
54 | 2023 Proxy Statement |
if his employment is terminated for “cause” or he violates his restrictive covenants). After vesting, interest will accrue on the deferral until Mr. Burnison’s termination of employment at 120% of the long-term Applicable Federal Rate as in effect from time to time (currently 4.85% for August 2023). This deferred award, together with accrued interest, will be paid in equal monthly installments in cash (without further interest) over twelve months following Mr. Burnison’s termination of employment for any reason (other than termination by the Company for “cause”) on or after the Retention Vesting Date provided he provides the Company with an effective release of claims and continues to be in compliance with applicable covenants relating to non-competition, non-solicitation, and confidentiality. Mr. Burnison is also eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
Robert P. Rozek. We entered into an amended and restated employment agreement with Mr. Rozek dated June 28, 2021 (the “Rozek Employment Agreement”) pursuant to which Mr. Rozek serves as Executive Vice President, Chief Financial Officer, and Chief Corporate Officer. Pursuant to the Rozek Employment Agreement, we agreed to provide Mr. Rozek with the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $625,000; (2) participation in the Company’s annual cash incentive plan with an annual target award of 120% of annual base salary and the ability to earn additional amounts up to a maximum cash award of 200% of the target award, however, for fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the target opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Company’s equity incentive program. Mr. Rozek is also eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
Byrne Mulrooney. We entered into an employment agreement with Mr. Mulrooney dated June 28, 2021 (the “Mulrooney Employment Agreement”) pursuant to which Mr. Mulrooney served as Chief Executive Officer, RPO and Digital. Pursuant to the Mulrooney Employment Agreement, we agreed to provide Mr. Mulrooney with the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $550,000; (2) participation in the Company’s annual cash incentive plan with an annual target award of 100% of annual base salary and the ability to earn additional amounts up to a maximum cash award of 200% of the target award, however, for fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the target opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Company’s equity incentive program. Mr. Mulrooney was also eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
Mark Arian. We entered into an employment agreement with Mr. Arian dated June 28, 2021 (the “Arian Employment Agreement”) pursuant to which Mr. Arian serves as Chief Executive Officer, Consulting. Pursuant to the Arian Employment Agreement, we agreed to provide Mr. Arian with the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $550,000; (2) participation in the Company’s annual cash incentive plan with an annual target award of 100% of annual base salary and the ability to earn additional amounts up to a maximum cash award of 200% of the target award, however, for fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the target opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Company’s equity incentive program. Mr. Arian is also eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
Michael Distefano. We entered into an employment agreement with Mr. Distefano dated July 1, 2022 (the “Distefano Employment Agreement”) pursuant to which Mr. Distefano serves as Chief Executive Officer, Professional Search and Interim. Pursuant to the Distefano Employment Agreement, we agreed to provide Mr. Distefano with the following annual compensation: (1) an annual base salary, effective May 1, 2022, of $550,000; (2) participation in the Company’s annual cash incentive plan with an annual target award of 100% of annual base salary and the ability to earn additional amounts up to a maximum cash award of 200% of the target award, however, for fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the target opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Company’s equity incentive program. Mr. Distefano is also eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives.
55 | 2023 Proxy Statement |
The following table sets forth information with respect to options to purchase shares of the Company’s common stock, restricted stock, and restricted stock unit grants to the named executive officers outstanding as of April 30, 2023.
Option Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Not Exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights that Have Not Vested ($) | ||||||||||
Gary D. Burnison | — | — | — | — | — | 8,985 | (1) | 431,460 | — | — | |||||||||
— | — | — | — | — | 103,750 | (2) | 4,982,075 | — | — | ||||||||||
— | — | — | — | — | 19,560 | (3) | 939,271 | — | — | ||||||||||
— | — | — | — | — | 57,420 | (4) | 2,757,308 | — | — | ||||||||||
— | — | — | — | — | — | — | 39,120 | (5) | 1,878,542 | ||||||||||
— | — | — | — | — | — | — | 86,130 | (6) | 4,135,963 | ||||||||||
Robert P. Rozek | — | — | — | — | — | 3,735 | (1) | 179,355 | — | — | |||||||||
— | — | — | — | — | 41,865 | (2) | 2,010,357 | — | — | ||||||||||
— | — | — | — | — | 8,153 | (3) | 391,507 | — | — | ||||||||||
— | — | — | — | — | 20,270 | (4) | 973,365 | — | — | ||||||||||
— | — | — | — | — | — | — | 16,300 | (7) | 782,726 | ||||||||||
— | — | — | — | — | — | — | 30,400 | (8) | 1,459,808 | ||||||||||
Byrne Mulrooney(9) | — | — | — | — | — | 2,730 | (1) | 131,095 | — | — | |||||||||
— | — | — | — | — | 45,505 | (2) | 2,185,150 | — | — | ||||||||||
— | — | — | — | — | 5,865 | (3) | 281,637 | — | — | ||||||||||
— | — | — | — | — | 15,540 | (4) | 746,231 | — | — | ||||||||||
— | — | — | — | — | — | — | 11,740 | (10) | 563,755 | ||||||||||
— | — | — | — | — | — | — | 23,310 | (11) | 1,119,346 | ||||||||||
Mark Arian | — | — | — | — | — | 1,353 | (1) | 64,971 | — | — | |||||||||
— | — | — | — | — | 29,125 | (2) | 1,398,583 | — | — | ||||||||||
— | — | — | — | — | 5,865 | (3) | 281,637 | — | — | ||||||||||
— | — | — | — | — | 15,540 | (4) | 746,231 | — | — | ||||||||||
— | — | — | — | — | — | — | 11,740 | (10) | 563,755 | ||||||||||
— | — | — | — | — | — | — | 23,310 | (11) | 1,119,346 | ||||||||||
Michael Distefano | — | — | — | — | — | 1,605 | (1) | 77,072 | — | — | |||||||||
— | — | — | — | — | 14,560 | (2) | 699,171 | — | — | ||||||||||
— | — | — | — | — | 2,175 | (3) | 104,444 | — | — | ||||||||||
— | — | — | — | — | 5,070 | (4) | 243,461 | — | — | ||||||||||
— | — | — | — | — | — | — | 2,900 | (12) | 139,258 | ||||||||||
— | — | — | — | — | — | — | 5,070 | (13) | 243,461 |
(1) | The time-based restricted stock grant was made on July 9, 2019, and vests in four equal annual installments beginning on July 9, 2020. |
(2) | The time-based restricted stock grant was made on July 8, 2020, and vests in four equal annual installments beginning on July 8, 2021. |
(3) | The time-based restricted stock grant was made on July 9, 2021, and vests in four equal annual installments beginning on July 9, 2022. |
(4) | The time-based restricted stock grant was made on July 11, 2022, and vests in four equal annual installments beginning on July 11, 2023. |
(5) | This grant of Relative TSR Units was made on July 9, 2021. The award has a three-year vesting period after which between 0 and 78,240 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(6) | This grant of Relative TSR Units was made on July 11, 2022. The award has a three-year vesting period after which between 0 and 172,260 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
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(7) | This grant of Relative TSR Units was made on July 9, 2021. The award has a three-year vesting period after which between 0 and 32,600 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(8) | This grant of Relative TSR Units was made on July 11, 2022. The award has a three-year vesting period after which between 0 and 60,800 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(9) | Upon Mr. Mulrooney’s termination of employment, he forfeited all of his unvested equity awards. |
(10) | This grant of Relative TSR Units was made on July 9, 2021. The award has a three-year vesting period after which between 0 and 23,480 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(11) | This grant of Relative TSR Units was made on July 11, 2022. The award has a three-year vesting period after which between 0 and 46,620 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(12) | This grant of Relative TSR Units was made on July 9, 2021. The award has a three-year vesting period after which between 0 and 5,800 shares may vest depending upon the Company’s total stockholder return over the three-year period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
(13) | This grant of Relative TSR Units was made on July 11, 2022. The award has a three-year vesting period after which between 0 and 10,140 shares may vest depending upon the Company’s total stockholder return over the three-year vesting period relative to a peer group of companies. Calculated based on achievement of target based on performance to date. |
The following table sets forth information with respect to the exercise of options and the vesting of stock awards for each of the named executive officers during the fiscal year ended April 30, 2020. For2023.
Option Awards | Stock Awards | ||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||
Gary D. Burnison | — | — | 180,548 | 10,791,403 | |||||
Robert P. Rozek | — | — | 74,380 | 4,444,859 | |||||
Byrne Mulrooney | — | — | 61,816 | 3,704,494 | |||||
Mark Arian | — | — | 34,740 | 2,085,353 | |||||
Michael Distefano | — | — | 28,350 | 1,692,800 |
The following table sets forth the 2020 performance-based grants, the valuepension benefits of the maximum number of shares that could be earned as Relative TSR Units granted to each named executive officer isofficers as follows: Mr. Burnison, $4,096,842, Mr. Rozek, $1,701,192, Mr. Mulrooney, $1,244,552, and Mr. Arian, $616,198.For the Relative TSR Units, the grant date fair value is measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free rate is assumed to equal the yield on a three-year Treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. For each of the NEOs, the assumed per-share value of Relative TSR Units for the July 9, 2019 annual grant was $37.99 and for the July 9, 2018 annual grant was $84.19, and for Mr. Burnison, Mr. Rozek, and Mr. Mulrooney, the assumed per-share value of the Relative TSR Units for the July 12, 2017 annual grant was $44.03.
Name | Plan Name | Number of Years Credited Service or Number of Units Earned (#) | (1) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||
Gary D. Burnison | Executive Wealth Accumulation Plan (“EWAP”) | 15 | 325,541 | — | |||||
Michael Distefano | EWAP | 15 | 223,666 | — |
(1) | Upon attaining 15 years of service, Messrs. Burnison and Distefano qualified for an “early retirement benefit” under the EWAP. Because Messrs. Burnison and Distefano have made the mandatory contributions for the eight-year period as required under the EWAP, they are now entitled to an unreduced benefit. |
The EWAP was established in fiscal year to the pension plan measurement date used for financial reporting purposes with respect to the Company’s audited financial statements for the covered fiscal year. As discussed under “Fiscal 2020 Pension Benefits,” participants in the EWAP1994. Certain vice presidents elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight-year period, or in some cases, make an after-tax contribution, in return for defined benefit payments from the Company over a fifteen-year15-year period generally at retirement age of 65 or later. Mr. Burnison is the only named executive officer that participates in the EWAP. To date, Mr. Burnison has contributed $55,200Participants were able to the EWAP. acquire additional “deferral units” every five years.
In June 2003, the Company amended the EWAP plan, so as not to allow new participants or the purchase of additional deferral units by existing participants.
57
In addition, pursuant to the terms of the LTPU Plan and Mr. Mulrooney’s LTPU award, which fully vested in 2020, in the case of death or disability, payout of the award, which generally occurs in five equal annual installments commencing in the calendar year including the seventh anniversary of the grant date and over four years thereafter (unless elected otherwise), would commence on the 60th day following a termination due to death
|