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 (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)
| Payment of Filing Fee (Check | |
| No fee |
 | |
| Fee paid previously with preliminary |
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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
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,” “firm,” “we,” “its,” and “our”) and all, it is my pleasure to invite you to our 2023 Annual Meeting of Stockholders on September 21, 2023, at 8:00 a.m. Pacific Time (the “Annual Meeting”).
The Board is proud of the 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 colleagues, Ihas 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 future, 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 being a Korn Ferry stockholderyour support and for your continued support of the Company. In May 2020, as the Company entered its fiscal year 2021, the world faced considerable uncertainty with the broad challenges of the coronavirus pandemic (“COVID-19”) and its attendant social and economic instability across the globe. Our Board and management team worked tirelessly to navigate the Company through the pandemic and remained fiercely committed to devising ways to preserve and deliver value toinvestment in our stockholders, while simultaneously pursuing Korn Ferry’s long-term strategy.
Thanks to the agility and resilience of Korn Ferry’s employees and their effective execution of our strategy, Korn Ferry emerged through the crisis with a record breaking fourth quarter. As our 2021 Annual Meeting of Stockholders approaches, we are pleased to share our reflections on how we worked to deliver strong results for Korn Ferry’s stockholders during such an unprecedented year.
As the pandemic has persisted, we have remained focused and dedicated to pursuing Korn Ferry’s objective to expand its position as the preeminent organizational consulting firm. With the support of our workforce during fiscal year 2021, we continued to diversify our offerings, develop deeper relationships with our clients, and capitalize on our leadership in various solutions. The relevance of our wide array of offerings have helped our clients address their opportunities and achieve their goals. In turn, it has helped us accelerate out of the turn and deliver strong financial results.
From a tough first quarter in fiscal year 2021, Korn Ferry achieved all-time highs for quarterly fee revenues and profitability by the fourth quarter. We are proud of our people and their leaders, who so productively managed to continue to serve our clients despite shifting work locations, technological and personal demands, and related lockdowns and limitations. Their achievements are all the more significant due to the speed with which these disruptions arose and the demand for a rapid response. With their help, we were able to quickly and effectively adapt to delivering our services in a virtual world.
On behalf of the Board, I am pleased to inviteencourage you to attend our 2021the Annual Meeting. Our Annual Meeting of Stockholders on Wednesday, September 29, 2021 at 8:00 a.m. Pacific Time. In light of the continued public health impact of COVID-19, the 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. We intend to hold our virtual meeting in a manner that affords stockholders the same general rights and opportunities to participate, to the extent possible, as they would have at an in-person meeting. We look forwardWhether or not you plan to your participation at the 2021 Annual Meeting of Stockholders.attend, we encourage you to vote promptly.
Sincerely,
Christina A. Gold,
Jerry P. Leamon,
Chair of the Board
August 13, 202110, 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
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 | Notice of 2023 Annual Meeting |
Meeting Information
Date: September 29, 2021
Time: 8:00 a.m. Pacific Time
Virtual Meeting Site: www.virtualshareholdermeeting.com/KFY2021
Record Date: August 2, 2021
Meeting Agenda
To the Stockholders:
In light of the public health and travel safety concerns relating to the coronavirus pandemic (“COVID-19”), on September 29, 2021, Korn Ferry (the “Company,” “we,” “its,” and “our”) will hold its 2021 Annual Meeting of Stockholders (the “Annual Meeting”) online this year at www.virtualshareholdermeeting.com/KFY2021. The Annual Meeting will begin at 8:00 a.m. Pacific Time.
The purposes of the Annual Meeting are to:
 | 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 nine directors nominated by our Board of Directors (the “Board”) and named in the Proxy Statement | |||
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 August 2, 2021July 31, 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/KFY2021KFY2023 and log in using their 16-digit control number included on their proxy card or Notice of Internet Availability of Proxy Materials (the “Notice’“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 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 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 75 – 77 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 13, 2021
10, 2023
Los Angeles, California
By Order of the Board of Directors,
Jonathan Kuai
General Counsel, Managing Director of Business Affairs and
&
ESG, and Corporate Secretary
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on September 29, 2021:21, 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:
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| Location: | www.virtualshareholdermeeting.com/KFY2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, the Notice or voting instruction form, or, if they hold their shares in street name, contact their bank, broker, or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote
Voting Roadmap (page 79)
Who We Are*
Highlights for Fiscal Year 2023
Against a tough macroeconomic and geopolitical environment, we delivered strong financial results and executed on our strategy.
Corporate Governance (page 22)
Governance Insights (pages 13, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |  |  Board Tenure* and Diversity I As of Filing | |||
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| More than 10 years: 29% | ||||
including 1 Military Veteran*** I If All Nominees Are Elected | |||||
 | 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:
Experience: • Former President and CEO, Midland Cogeneration Venture • Former CEO, New Generation Power International • Former President and | |
| Independent Age: Director Since:
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 |
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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:
• Former Chairman of the Board of Directors and Former President and CEO of Deckers Brands (formerly known as Deckers Outdoor Corporation) • | |||
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Debra J. | Independent
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Age: Director Since: 2008
Committee Memberships:
• 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:
• 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 |
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Significant Public Company Board, Committee,
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 | Innovative Thinking |
 | High Ethical Standards |
 | Appreciation of
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 | Experience Overseeing Large and |
 | Information Security Expertise |
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2021
| 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 | 796,250 | 5,700,025 | 4,815,720 | 15,862 | 19,670 | 11,347,527 | ||||||
| Robert P. Rozek, Executive Vice President, Chief Financial Officer and Chief Corporate Officer | 503,125 | 2,300,063 | 2,535,750 | — | 18,347 | 5,357,285 | ||||||
| Byrne Mulrooney, Chief Executive Officer of RPO, Professional Search and Digital | 393,750 | 2,500,045 | 3,087,000 | — | 235,688 | 6,216,483 | ||||||
| Mark Arian, Chief Executive Officer of Consulting | 393,750 | 1,600,128 | 2,646,000 | — | 262,633 | 4,902,511 |
| Gary D. Burnison(1) | Robert P. Rozek(2) | Byrne Mulrooney(3) | Mark Arian(4) | Michael Distefano(5) | |||||
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| 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 |
2021
| * | 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 our named executive officers relative to our 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 people and organizational consulting firm. |
As evidenced by our stock price, our Company was severely affected by the impacts of the COVID-19 pandemic and the social and political environment in the months when the Compensation and Personnel Committee was tasked with making compensation decisions. In June 2020, for the first time since our fiscal year 2009 during the Great Recession, we suspended providing financial guidance. Due to the uncertainty, the Compensation and Personnel Committee set up an annual bonus plan that allowed us to monitor the evolving economic conditions and make adjustments as needed, resulting in significantly increased performance targets for the third and fourth quarters. Additionally, as described in more detail on page 48, given that we were unable to project performance over the course of the year, the Compensation and Personnel Committee felt it was not responsible to grant long-term performance-based equity awards that would require making projections over a longer period and thus
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Elements of Compensation (pages 4544 – 50)
| 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 performance goals over a one-year period. | Determined by the Compensation and Personnel Committee based upon performance | ||
| Long-Term Incentives | Align the named executive officers’ interests with those of stockholders and motivate and retain top talent. | 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 historical grants. |
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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 the following nine nominees for election to our Board to serve for a one-year term until the 20222024 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 20202022 Annual Meeting of Stockholders, except for Laura M. Bishop. Laura M. BishopMatthew J. Espe. Mr. Espe was identified as part of a thorough search process conducted by Korn Ferry’s internal board search consultants. As further described on page 30, in light of Ms. Gold’s and 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 Ms. Gold and Mr. Shaheen to additional terms after their 74th birthdays.
The names of the nine nominees for director and their current positions, if any, with the Company are set forth in the table to the right. Detailed biographical information regarding each of these nominees is provided in this Proxy Statement under the heading “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. 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, directors are elected by a plurality of the votes cast.
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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; followingeffective immediately upon the election of directors at the Annual Meeting, the size of the Board will be comprised ofincreased 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 20222024 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 11four meetings during fiscal year 2021.2023. 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 2021.2023. Directors are expected to attend each annual meeting of stockholders. The eightnine directors then-serving attended the 20212022 Annual Meeting of Stockholders 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?
The Nominating Committee is responsible for recommending changes to the size, structure, composition, and functioning of the Board and its committees, and 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 efforts 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 our oversight of management and execution of the Company’s strategy.
Question: In 2020, the NominatingWhat recent progress and Corporate Governance Committee was given formal responsibility for overseeingother milestones has the Company’s ESG Program. How has this informedProgram achieved under the Nominating and Corporate Governance Committee’s activities, and what does the ESG Program encompass?oversight?
The Nominating and Corporate Governance Committee has continued to increase its oversight and involvement withis responsible for overseeing the Company’s ESG Program, including overseeing the expansion of ESG disclosures and practices in the past year. Our ESG Programwhich includes initiatives that seek to improve the way we work and live, empower Diversity, Equity,diversity, equity, and Inclusion (“DE&I”),inclusion, and give back to the communities in which we operate.
The Proxy Statement Summary on page 3 highlights4 and the graphics on the next page highlight several recent ESG awards and recognitions of which we are proud, including for our efforts to recruit and below areretain 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 accomplishments:
Reporting
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Reporting
| • | The Company published its fifth ESG Report in 2023, covering 2022 activities and achievements. The 2022 ESG Report received Platinum honors from the Hermes Creative Awards. The Company’s 2021 ESG Report (published in 2022) covering 2021 activities and achievements also received Platinum honors from the Hermes Creative Awards and Platinum honors from MarCom Awards. |
| • | In 2023, the Company also published its inaugural report in alignment with the standards of the Task Force for Climate-Related Disclosures and its third report in general alignment with the reporting recommendations for its industry by the Sustainability Accounting Standards Board. |
| • | Korn Ferry was awarded the |
| • | For the |
Human Capital Management and DE&I
Philanthropy
Question: Inclusion is one of the Company’s four core values. As the Company continues to focus on DE&I and human capital management, how has the Board’s engagement on these topics changed over the past year?
The Board’s engagement regarding DE&I and human capital management matters has been an ongoing focus. As described above, Korn Ferry continues to invest in, develop, and champion internal programs and benefits intended to support global colleagues, and we discuss Korn Ferry’s current and potential workforce initiatives regularly with management. At the Board level, we are committed to active Board refreshment and to aligning Board composition and experience with the Company’s evolving needs. As part of the search process for each new director, the Nominating and Corporate Governance Committee seeks to include people from diverse backgrounds in the pool from which Board nominees are chosen. As a reflection of these efforts, our Board is currently more than 50% diverse and led by Board Chair Christina Gold, with 75% of Board leadership roles held by women or ethnically diverse directors. If elected at the Annual Meeting, Ms. Bishop will increase our Board’s diversity to include four women. We are proud of the Board’s diversity and representation.
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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
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| 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 | The results are discussed at both the Board and Nominating |
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The Board and Company are focused on creating a Board that reflects a wide range of backgrounds, experiences, and cultures. The following skills are possessed by one or more of our nominees:
 | ||||
 | Extensive Senior |   | Significant Public Company Board, Committee, and Corporate Governance Experience | |
  | Risk |   | Innovative Thinking | |
  | Broad International |   | High Ethical Standards | |
  |   | Appreciation of Diverse Cultures and Backgrounds | ||
 |  | |||
  | Significant Strategic Oversight and Execution Experience |   | ||
  | 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 |
| *** | Not included in |
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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
Former Executive Vice President and Chief Financial Officer, USAA
Age: 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
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From 2001 to 2020, Ms. Bishop held a number of roles at USAA, a Fortune 100 integrated financial services company that provides financial products and services for the military and their families. Most recently, she served as the Executive Vice President and Chief Financial Officer of USAA from June 2014 until her retirement in December 2020, and in that role, 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 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. Prior to joining USAA in 2001, Ms. Bishop spent nine years with Luby’s Inc., a publicly traded restaurant company, where she served as Senior Vice President and Chief Financial Officer, among other leadership roles. Prior to that, Ms. Bishop served as a Senior Manager at Ernst & Young LLP, where she directed audits of publicly traded and privately held companies in a variety of industries.
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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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:
Age: 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:
Significant
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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 and 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 also served a term on the Board of Governors of Carleton University in Ottawa Canada.
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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 M&A practice for more than 10 years.
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.
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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. He has served as a member of the board of Genesco Inc. since May 2021. 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, which she chairs) (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, as well as its Audit Committee and Nominating Committee). 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.
Corporate Governance
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
Board Leadership Structure
Board 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,
Director Independence
Board Determinations. The Board has determined that as of the date hereof,
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:
Executive Sessions. The independent directors of the Board meet regularly in executive sessions outside the presence of management.
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 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 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
Cybersecurity and Data Privacy Risk OversightCybersecurity 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.
Assessment of Risk Related to Compensation Programs
During fiscal year
Board Committees
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
Audit CommitteeFiscal
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
Compensation and Personnel CommitteeFiscal
The Compensation Committee also reviews and
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.
Nominating and Corporate Governance CommitteeFiscal 2023 Meetings Held: 4
In evaluating potential nominees, the Nominating Committee considers a variety of criteria, including business experience and skills, independence, judgment, integrity, the ability and willingness to commit adequate time and attention to Board activities, and the absence of potential conflicts with the Company’s interests. While the Nominating 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 Committee. Stockholders may recommend director nominees by mailing submissions to Korn Ferry, 1900 Avenue of the Stars, Suite 1500, Los Angeles, California 90067, Attention: Corporate Secretary. Board Education and RefreshmentThe 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. In 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 directors, including background material on the Company, its business plan and its risk profile, and meetings 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 Company, its business plan, and risk profile. The Company also offers to reimburse directors for attending continuing board education programs. The Board has also adopted or updated refreshment mechanisms in the Corporate Governance Guidelines to balance the desire for Board refreshment with the flexibility to prioritize a director’s contributions to the Board as the most important factor for determining continued service, and allow the Board to retain significantly contributing directors for additional time where warranted. Ten-Term Service Limit.
Retirement Age Policy.
I Director Refreshment
Culture of Integrity and Code of Business Conduct and EthicsKorn Ferry is committed to having and maintaining a strong and effective global Ethics and Compliance Program. Consistent with that commitment, the The Code of Business Conduct and Ethics provides a set of shared values to
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.
Korn Ferry asks all directors, officers, and 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:
Commitment to Good Governance PracticesThe Nominating Committee and the Board
The Board has also adopted Corporate Governance Guidelines, which among other things:
In addition, the Corporate Governance Guidelines require that, when a director’s
This page intentionally left blank Proposal No. 2Advisory Resolution to Approve Executive Compensation
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:
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 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
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.
Proposal No. 3Advisory Resolution on the Frequency of Future Advisory Votes to Approve Executive Compensation
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.
RECOMMENDATION The Board unanimously recommends that you vote “ONE YEAR” for the
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Pay-for-Performance
In consultation with the Compensation Committee’s independent compensation advisor Pearl Meyer & Partners, LLC (“Pearl Meyer”), the annual bonus plan for fiscal year 2021 was revised by approving one-time target opportunities in excess of the normal annual targets set forth in the NEOs’ employment agreements. This was done (1) to provide the NEOs with additional incentive to focus on performance goals that the Compensation Committee determined were essential to weather the impacts of the pandemic and (2) in recognition of the fact that the Compensation Committee had eliminated the fiscal year 2020 annual cash bonuses.
Maintaining Flexibility via our Annual Bonus Plan Design
For the fiscal year 2021 annual bonus plan, the Compensation Committee, in consultation with Pearl Meyer, established a flexible design and challenging performance targets that they believed were crucial for the Company to prioritize in the face of significant uncertainty and instability from both the economic environment created by the COVID-19 pandemic as well as overall global political and social tensions at the time. Initially, the annual bonus plan for fiscal 2021 was established with two six-month performance periods and one overall one-year performance period (with reductions for any amounts earned during the separate six-month performance periods). The performance goals for each six-month period were initially the same. The Compensation Committee resolved to review the performance targets after six months and revise them as needed to reflect updated conditions. Accordingly, later in the year, because of the rapidly changing business environment and the Company’s performance in the first half of the year, the Compensation Committee, in consultation with Pearl Meyer, further divided the second six-month performance period into two three-month performance periods with significantly higher performance targets and eliminated the overall one-year performance period. This structure allowed the Compensation Committee to assess performance mid-year and evaluate the appropriateness of the performance targets for the third quarter and then again for the fourth quarter of the fiscal year with a greater understanding of the ongoing economic impacts of the pandemic and the Company’s response to those challenges. The structure also enabled the Compensation Committee to establish targets that were challenging so as to motivate the senior executives, including the NEOs, to achieve our short-term goals given the uncertainty of demand for our services. This was done with the best interests of our stockholders in mind to provide agility should the economic conditions improve or deteriorate.
The Board, Compensation Committee, and the Company believe, given the economic uncertainty prevailing at the time, that the performance goals for fiscal year 2021 were set with appropriate rigor. The Committee was able to increase the third quarter goals (from a maximum target of $575 million in fee revenue and 3% in Adjusted EBITDA margin for the combined third and fourth quarters together under the initial annual bonus plan design to a maximum target of $435 million in fee revenue and 10% in Adjusted EBITDA margin for the third quarter alone) and subsequently set the fourth quarter maximum target for fee revenue at $515 million, near the highest quarterly fee revenue ever and the Adjusted EBITDA margin maximum target at 21%, the highest quarterly profitability in the Company’s history. It should be noted that the fee revenue targets aligned to the Company’s internal forecast at the beginning of the third quarter and to the internal forecast as well as external guidance for the fourth quarter.
A Focus on Retention via Annual Equity Awards
In the first quarter of fiscal year 2021, at the time when the Compensation Committee was tasked with making its compensation decisions for the year, the Compensation Committee, in consultation with Pearl Meyer, determined that it was in the Company’s best interests to make a one-time decision to grant the equity component of fiscal 2021 compensation solely in the form of time-based restricted stock awards. This decision was based in part on the difficulty of setting meaningful performance goals given the Company had suspended providing financial guidance for the first time since the Great Recession in fiscal year 2009 due to the tremendous unpredictability in the outlook for demand of the Company’s services, as evidenced by the substantial decrease experienced in the last quarter of fiscal 2020 and the first quarter of fiscal 2021. Also, given that the Compensation Committee had eliminated the fiscal 2020 cash bonuses for NEOs and senior executives, it was based on the Company’s overriding need to retain and incentivize the NEOs and other senior executives to work through the challenging economic environment created by COVID-19 and the prevailing social and political climate, and continue the ongoing transformation of the Company to a diversified organizational consulting firm. The current executive team is in the midst of building a more resilient Company with more durable fee revenues so as to remove some of the cyclicality that erodes stockholder value.
Retaining the current executive team, who built and have been executing the strategy, to navigate the economic downturn was a high priority and a key determinant in the Compensation Committee’s decision-making process. As a result, our Compensation Committee, in consultation with Pearl Meyer, made a one-time decision in early July 2020 that the equity component of compensation for fiscal year 2021 would be comprised solely of time-based equity awards in the form of restricted stock that would vest over a period of four years following grant. In July 2020, the Compensation Committee concluded that the Company and its stockholders would ultimately benefit from this compensation design, given the strong incentive for our NEOs to remain actively engaged in their important roles with the Company and to maximize stockholder value in the face of economic challenges beyond their control. The Compensation Committee concluded that supporting the continuity and commitment of the Company’s leadership team to lead through the entire course of the impact of the COVID-19 pandemic on the Company’s business and continuing to implement the Company’s multi-year strategic transformation initiatives were essential during those uncertain and challenging times, and that losing key executives at such time would be highly detrimental to the Company’s short-term and long-term success.
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A Return to Normalcy
The Board believes that the Company was able to weather the decline in demand in the early months of fiscal 2021 due in large part to the Company’s cost-saving measures, the efforts of all of the Company’s employees, and our NEOs’ strong leadership. As shown in the Selected Performance Highlights below, we were positioned to capitalize on the opportunity to achieve increasingly strong financial and operating performance during the last two quarters of fiscal year 2021 as demand rebounded. At the end of fiscal 2021, our stock price was up 135% compared to the end of fiscal 2020, and up 208% compared to our lowest stock price at the onset of the COVID-19 pandemic in March 2020. We believe the compensation decisions described above provided the right mix of incentives to our NEOs and other senior executives and significantly contributed to the Company’s outstanding financial and operating results in the last two quarters of fiscal 2021. Given the current strong demand for the Company’s services, the Compensation Committee has returned to our historical compensation practices for fiscal year 2022, with 60% of the equity-based awards to the NEOs being in the form of performance awards.
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 20212023 named executive officers (“NEOs”):
| 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
| Michael Distefano | |
| * |
|
|
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 |
| 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 | ||
| | | ||
| RECENT ESG ACCOMPLISHMENTS | ||
PUBLISHED 2022 ESG Report | $3M+ Donated Financially | ISO Certified Global Privacy |
| 37 | 2023 Proxy Statement |
Our compensation program is intended to focus on aligning executive pay with stockholder interests. A key element used to achieve this goal is providing annual incentive compensation opportunities that result in payouts based solely on the extent of achievement of pre-established performance criteria. As described in more detail below, our Compensation and Personnel Committee 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 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 charts below show Mr. Burnison’s annual cash incentive award compensation for fiscal years 2021, 2022, and 2023 and our corresponding achievement of the applicable financial metrics and 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 annual incentive plan were rigorous and, as described in more detail on page 45, set at levels that our Compensation and Personnel Committee deemed could be difficult to achieve as the world was emerging from the global pandemic at the beginning of fiscal year 2023 and facing a number of macro uncertainties, including increasing talk of a potentially looming recession. Meeting threshold goals for fiscal year 2023 would only result in the payout 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 2023, our overall achievement of the applicable metrics and KPIs 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 72.5% of target. The Compensation and Personnel Committee will continue to set rigorous performance goals in the future to incentivize superior performance year over year and align the Company’s pay for performance with its 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 2020beginning of fiscal year 2022, even before the negative say-on-pay vote at our 2021 Annual Meeting, of Stockholders, approximately 97%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. As a result, we determined that no changes were needed to our compensation program. The Company did not make any changesvalues stockholders’ input and feedback and will continue to ourconsider it in making executive compensation programsdecisions.
| 38 | 2023 Proxy Statement |
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 2021 directly2023 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 advisory vote.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 this Compensation Discussionmore detail beginning on page 45 below, given the factors considered and Analysis, however,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 2021 the Company made substantial one-time changes to our compensation program that were designed to incentivize and retain our NEOs2023 was, in the facecase of economic uncertaintyalmost every performance goal, below actual performance for fiscal year 2022 as a result ofwell as below the COVID-19 pandemic. The Company values the viewsfiscal year 2023 target performance goals, resulting in below target payouts for all of our stockholders and will continue to considerNEOs. The resulting below-target payouts under our stockholders’ input in all facetsannual incentive plan are reflective of our business, including executive compensation.pay for performance philosophy.
Best Practice Highlights
 | 39 | 2023 Proxy Statement |
 | Committee Uses Independent Compensation Consultant. |
| Modest |
| Adopted Clawback |
| No Single Trigger Equity |
| Focus on Rigorous Performance-Based Equity Awards for Majority of NEOs’ Annual Equity Grants. |
| Stock Ownership |
| Peer Group |
| No |
| No Excise Tax |
The Company is a global organizational consulting firm. The Company helps its clients design their 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, 2021,2023, the Company provides its services to a broad range of clients through the expertise of approximately 2,6693,480 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 by incentivizing executives to focus on both short-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 AOP.
For fiscal year 2021, as a result of the impacts of the COVID-19 pandemic, the Company’s compensation philosophy was primarily focused on balancing incentives to maximize stockholder value with creating a strong incentive for our NEOs to remain with the Company in the face of economic challenges beyond their control, as described in more detail above under the heading Pandemic-Related Compensation Decisions to Preserve Continuity in Leadership.
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The Committee remainedremains guided by the following principles in establishing and assessing the fiscal year 2021 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 |
| • | 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. |
| 40 | 2023 Proxy Statement |
Typically, theThe 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. In fiscal year 2021, however, as a resultThat 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 COVID-19 pandemic, the Committee focused on an approach defined by Safety, Caution and Agility, and implemented a cost reduction plan including:Company’s Strategic Plan:
| • | |
| • | |
| • | |
| • | |
| • |
In addition tosetting the foregoing cost-saving measures,financial goals that underlie the Strategic Plan, the Company implemented an executive compensation program that would focus executives on the following Company financial measures that the Committee believed were key to assisting the Company through the volatile economic environment created by the pandemic:considers a number of internal and external factors such as:
| • | |
| • | |
| • | |
| • | 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 and Interim, Digital, and Consulting collaboration efforts, and |
| • | 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 formedand strategic execution KPIs form the basis for each NEO’s annual cash incentive opportunityincentives and wereare tracked and measured during the course of the year with the quarterly and year-end results audited by Internal Audit and reported to the Committee for determining year-end annual cash bonus awards. In fiscal year 2021, the Committee initially decided to measure performance over two six-month periods and one overall one-year period (with reductions for any amounts earned during the separate six-month periods), and subsequently determined to divide the second six-month performance period into two three-month performance periods and to eliminate the overall one-year period to better allow the Committee to take into consideration the evolving impact of the COVID-19 pandemic over the course of the fiscal year. This flexibility in design resulted in the Committee significantly increasing the performance targets for the third and fourth quarters of the fiscal year compared to those established at the beginning of the year.
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The Committee retains compensation consultants to assist it in assessing the competitiveness of the NEOs’ compensation. In fiscal year 2021,2023, the Committee retained Pearl Meyer. Pearl Meyer assisted the Company in establishing an appropriate executive compensation program for fiscal 2021 in the face of the ongoing pandemic, including the establishment of the annual bonus plan, with increased target opportunities for the NEOs and a focus on measuring the Company’s ability to manage cash flow and profitability and revenue metrics effectively and the grant of time-based equity awards to focus on the retention of our executives, who were crucial to helping the Company navigate an unprecedented operating environment. 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 direct 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 2021,2023, the Committee used the following companies as a peer group:
| ASGN, Inc. | Insperity, Inc. |
| Jones Lang LaSalle Incorporated | |
| Manpower Group, Inc. | |
| Heidrick & Struggles International, Inc. | |
| Huron Consulting Group Inc. | |
| ICF International, Inc. | Robert Half International Inc. |
This peer group was refreshed for fiscal year 2021 compared toremained consistent with the peer group used for fiscal year 2022 except that CoreLogic, Inc. was removed due to its acquisition in prior yearsJune of 2021. In addition, while Nielsen Holdings Plc was included in consultation with the Committee’s independent compensation consultant.
Our growth and the evolution of our strategy and business caused us to reevaluate our peer group. In considering our revised peer group our selection criteria focused on the following key factors:
During this process, we evaluated our prior eleven peers and retained sixfor purposes of them and eliminated five (CBIZ, Inc., Kelly Services, Inc., Kforce Inc., Resources Connection, Inc., Willis Towers Watson, and TrueBlue, Inc.) and added seven new companies (ASGN, Inc., CoreLogic, Inc., Cushman & Wakefield Plc, Jones Lang LaSalle Incorporated, Manpower Group, Inc., Nielson Holdings Plc, and PageGroup Plc). The five that were eliminated were eliminated on the basis of size, business model, and strategic misalignment.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. AsReal estate companies have very similar business models to professional services firms real estate companiesand face very similar business model, colleague,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 intoto clients through those relationships.
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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.
| 42 | 2023 Proxy Statement |
We added the seven companies noted above to the six peers retained from the prior group based on the selection criteria described above. We believe this new peer group better reflects the 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. | | | |
The Committee also evaluated each company on the basis of market capitalization and 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 12, 2021) | Revenues* | |||||||
| Fiscal 2021 Peer Group 75th Percentile (excluding Korn Ferry)** | $ | 6,947,000,000 | $ | 6,701,000,000 | ||||
| Fiscal 2021 Peer Group Median (excluding Korn Ferry)** | $ | 4,215,000,000 | $ | 4,165,000,000 | ||||
| Fiscal 2021 Peer Group 25th Percentile (excluding Korn Ferry)** | $ | 1,848,000,000 | $ | 1,472,000,000 | ||||
| Korn Ferry*** | $ | 3,728,000,000 | $ | 1,819,946,000 | ||||
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 20212023 generally fell within thisthe range and are generally intended to be withinof the 25th to 75th percentile of the range.compensation provided to similarly situated executives by members of the peer group.
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Compensation & Impact of COVID-19
As evidenced by our stock price, our Company was severely affected by the impacts of the COVID-19 pandemic and the social and political environment in the months when the Compensation and Personnel Committee was tasked with making compensation decisions. In June 2020, for the first time since our fiscal year 2009 during the Great Recession, we suspended providing financial guidance. Due to the uncertainty, the Compensation and Personnel Committee set up an annual bonus plan that allowed us to monitor the evolving economic conditions and make adjustments as needed, resulting in significantly increased performance targets for the third and fourth quarters. Additionally, as described in more detail on page 48, given that we were unable to project performance over the course of the year, we felt it was not responsible to grant long-term performance-based equity awards that would require making projections over a longer period and thus made a one-time decision to provide long-term compensation solely in the form of time-based equity awards. Nevertheless, as a result of our teams’ extraordinary efforts during these challenging times, our performance improved, with our fiscal 2021 year-end stock price up 135% compared to the end of fiscal 2020, and up 208% compared to our lowest stock price at the onset of the COVID-19 pandemic in March 2020. Beginning with fiscal year 2022, we have returned to our usual practice of granting performance-based equity awards.
Q & A with Jerry Leamon, Chair of the Compensation and Personnel Committee
Question: What was the environment like at the time that the Committee was making compensation decisions for fiscal year 2021?
Like all other companies throughout the world, we experienced significant disruption as a result of the economic environment created by the COVID-19 pandemic and the social and political events of 2020. Because our fiscal year ends April 30th, we were tasked with making compensation decisions for fiscal year 2021 when the uncertainties surrounding the pandemic and our business were at their height. We were coming off of a fourth quarter where performance had declined across the Company, with fee revenue down 14.5%, net income negative, down 104%, and operating income down 30% compared to the prior quarter. The world was still in the very early stages of understanding COVID-19, such as how transmission occurs and how best to protect ourselves. A widely-available vaccine was not yet on the horizon. Businesses were figuring out how to operate, navigating how to shift entire workforces to a work from home environment. Our Company felt the effects, with fee revenues for the first three months of fiscal 2021 dropping by 29% compared to the prior year—from $484 million to only $344 million. The $60 million of operating income for the first quarter of fiscal 2020 had reversed to an operating loss of $43.8 million in the first quarter of fiscal 2021. We did not know when or if we would rebound. While nearly all businesses were affected by the downturn, our stock price, which had dropped by 35% from a recent high of over $43 per share in January 2020 to less than $28 per share in July 2020, fell more sharply than that of the S&P 500. We analyzed how we had responded economically in previous downturns, including the 2008 recession, and projected a long path to recovery.
In response to the various uncertainties prevailing at the time and the actual and projected impact of the pandemic and those uncertainties on our business, management acted swiftly during the early months of the pandemic to implement a cost-reduction plan to help us weather the decline in demand for our business and simultaneously minimize the number of
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job losses through pay cuts and furloughs. As described in last year’s proxy statement, our named executive officers and non-employee directors agreed to substantial 50% reductions in base salary and cash retainer fees, respectively, and the Committee decided to eliminate any payouts from the Company’s short-term incentive bonus plan for fiscal year 2020 for our named executive officers as cash flow and cost-saving measures in the face of economic uncertainty. We took these actions even though the NEOs had earned 130% of target through the end of the third quarter of fiscal year 2020 and would have been entitled to bonuses based on full year performance and achievement of the pre-established performance goals (estimated at 107% of target), and even though bonuses were paid in the ordinary course to the rest of the organization below the senior leadership team. In formulating our executive compensation program for fiscal year 2021, we knew that it would be difficult to establish meaningful performance goals at the beginning of the fiscal year given the uncertainty as to when and how economic recovery would come. We wanted to maintain flexibility to monitor the impacts of the pandemic throughout the year. We also knew it was crucial to retain our tenured management team to lead us through the pandemic and continue to lead our company through its multi-year transformation into a diversified consulting firm.
Question: How did you maintain flexibility in your executive compensation program and how did that lead to establishing rigorous performance targets?
In designing the Company’s short-term incentive bonus plan for fiscal year 2021 for our NEOs in the first quarter of the fiscal year, at a time when Company performance had dramatically declined for two consecutive quarters, and our Company had suspended providing financial guidance for the first time since our fiscal year 2009 during the Great Recession, the Committee, in consultation with Pearl Meyer, approved one-time target opportunities in excess of the targets set forth in the NEOs’ employment agreements to further incentivize the NEOs to focus on performance goals that the Committee determined were essential to weather the impacts of the pandemic. We initially decided to measure such performance over two six-month periods and one overall one-year period (with reductions for any amounts earned during the separate six-month periods), and subsequently chose to divide the second six-month performance period into two three-month performance periods with significantly higher performance targets and to eliminate the overall one-year period to allow the Committee to consider the evolving impact of the COVID-19 pandemic over the course of the fiscal year. This structure enabled the Committee to assess performance mid-year and evaluate the appropriateness of the performance targets for the third quarter and then again for the fourth quarter of the fiscal year with a greater understanding of the ongoing economic impacts of the pandemic so as to establish targets that were challenging for properly motivating the NEOs to achieve our short-term goals. This was done with the best interests of our stockholders in mind to provide agility should the economic conditions improve or deteriorate given the extreme economic uncertainty when these decisions were made. As a result of this flexible design, we were able to significantly increase the third quarter goals mid-year and set the fourth quarter maximum target for fee revenue near the highest quarterly fee revenue ever and for Adjusted EBITDA margin at the highest quarterly profitability in the Company’s history. The Board, Compensation Committee, and the Company believe, given the economic uncertainty prevailing in the first quarter as well as throughout our 2021 fiscal year, targets for fiscal year 2021 were set with appropriate rigor.
Question: Why was it important for the Committee to prioritize the retention of the NEOs?
Given the uncertainty as to when and how our business would rebound, we were certain that our best chance at completing our transformation into a diversified organizational consulting firm and emerging intact from the impacts of the COVID-19 pandemic and the uncertainties resulting from the social and political events of 2020 would be continuity in leadership. As described above, our NEOs agreed to substantial reductions in salary and did not receive any payouts under our annual bonus plan for fiscal year 2020. Retaining the current executive team to navigate the economic downturn was a high priority and a key determinant in the Compensation Committee’s decision-making process.
The Committee determined it was not in the Company’s best interests to grant performance-based equity awards in Summer of 2020 because the Committee was very uncertain as how best to measure long-term performance in the face of the tremendous uncertainty in the outlook for the demand for the Company’s services resulting from the unprecedented COVID-19 pandemic and the Company’s dramatic decline in performance at the time. As described above, we were unable to project performance under our annual bonus plan over the course of the year, and thus did not believe it was responsible to grant long-term performance-based equity awards that would require making projections over a longer period. Because of the Committee’s confidence in the Company’s leadership team, the Committee determined that the Company and stockholders would be best served at that time to provide our NEOs with an incentive to remain with the Company and focus their efforts on guiding the Company through the impact of the pandemic on the Company’s business in the face of economic challenges beyond their control. Therefore, for the July 2020 equity grants only, the Committee, in consultation with and based on benchmarking data provided by Pearl Meyer, made a one-time decision to grant time-based restricted stock that vests over four years to encourage both retention and an incentive to increase the Company’s stock price and accordingly, stockholder value. As a result of our cost-saving measures and due to our NEOs’ leadership—despite the disruption and associated challenges resulting from the global pandemic—the Company had increasingly strong financial and operating performance during the last three quarters of fiscal year 2021. At the end of fiscal 2021, our stock price was up 135% compared to the end of fiscal 2020, and up 208% compared to our lowest stock price at the onset of the COVID-19 pandemic in March 2020. The Committee has returned to the Company’s standard mix of 60% performance-based awards and 40% time-based awards in fiscal year 2022.
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Elements of Compensation & Compensation Decisions and Actions
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. Although thereMr. 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 initially no changes to the base salaries of our other NEOs for fiscal year 2021, 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 December 31, 2020. Reducing the NEOs’ base salaries from May 1, 2020 through December 31, 2020 allowed the Company to conserve cash flow during the height of the challenges to our operations as a result of the global pandemic while we re-imagined our business and positioned the Company to succeed. During the Company’s third and fourth quarters of our 2021 fiscal year, the Company’s business rebounded dramatically from the fourth quarter of our 2020 fiscal year and the first quarter of our 2021 fiscal year, experiencing sharp improvements in earnings and profitability. As a result of our financial performance and the NEOs’ efforts in leading us through the challenges of the pandemic, the Committee determined it was appropriate to restore base salaries for all employees whose base salaries had been reduced, including our NEOs, and repay the NEOs the portions of their salaries not paid earlier with respect to the second and third quarters of the fiscal year.2023.
Annual cash incentives are intended to motivate and reward NEOs for achieving performancefinancial and strategy execution goals over a one-year period. For fiscal year 2021, theThe Committee determineddetermines annual cash incentive amounts based upon a number of factors including financial goals, given the importance of motivating our executives to focus their efforts on Company sustainability,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.incentives.
For fiscal year 2021, in consultation with Pearl Meyer, the Committee determined it was appropriate to approve an approximately 50% increase in each NEO’s target bonus opportunity. This was done to further incentivize the NEOs to focus on performance goals the Committee determined were essential to weather the impacts of the pandemic and in recognition of the fact that the Committee had eliminated the fiscal year 2020 annual cash bonuses.
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 and in light of the impact of the COVID-19 pandemic, we believe the most important metricmetrics for our stockholders for fiscal year 2021 was the Company’s ability to manage cash flow during a time of great economic uncertainty that forced substantial changes in the way the Company was able to conduct its business as a result of the COVID-19 pandemic.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, which provides capital that is necessary to support the Company’s transformational strategy; and |
| • | 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. For fiscal year 2021, given the fact that the Company had suspended providing financial guidance for the first time since our fiscal year 2009, we did a number of internal projections and looked at how we had responded in previous economic downturns, including the 2008 recession, and analyzed what recovery might look like. Given that we were greatly affected by the pandemic in the early months, such that our stock price declined more sharply than that of the S&P 500, we were projecting a long path to recovery. As a result of the uncertainty, the Committee decided to evaluate performance based on achievement of financial metrics initially over two six-month periods and one overall one-year period (with reductions for any amounts earned during the separate six-month periods). The performance goals for each six-month period were initially the same. The Committee subsequently divided the second six-month performance period into two three-month performance periods with significantly higher performance targets and eliminated the overall one-year performance period. For each measurement period, no award was earned in the event the Company’s cash flow was not positive. Utilizing a six-month measurement period followed by two three-month measurement periods allowed the Committee to assess performance mid-year. With this ability, the Committee could evaluate the appropriateness of the performance targets for the third quarter and again for the fourth quarter of the fiscal year with a greater understanding
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of the ongoing economic impacts of the pandemic and set performance targets that were challenging in order to properly motivate the NEOs to achieve our short-term goals. This was done with the best interests of our stockholders in mind to provide agility should the economic conditions improve or deteriorate. As a result of this flexible design, we were able to significantly increase the third quarter goals mid-year and set the fourth quarter maximum target for Fee Revenue near the highest quarterly Fee Revenue ever and for Adjusted EBITDA Margin at the highest quarterly profitability in the Company’s history. The Committee believes, given the economic uncertainty prevailing at the time, they set the performance goals for fiscal year 2021 with appropriate rigor.
For fiscal year 2021,2023, the Committee selected the following financial performance metrics:
Financial Metric
Adjusted Fee Revenue
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 Form 10-K, 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.
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 Form 10-K, adjusted 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 (all on an after-tax basis), 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.
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 Form 10-K, adjusted 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 (all on an after tax basis), 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 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 does have identified metrics and measurements assigned to it; some of which tie back to specific financial metrics.
| Purpose | How the Target Was Established | |||
| (measured by Fee Revenue | Linked to the Company’s integrated solutions thatdrive its “go-to market” strategy of | Target set based upontargeted revenues from an agreed-upon list of | ||
| Linked to the Company’s strategic goal of being apremier career destination | Target set by Committeederived from the SEF and |
| * | As described above, adjusted to | |
InThe Board, Committee, and Company believe they have set targets with appropriate rigor. When setting fiscal year 2023 targets, and determining fiscal year 2023 actual results, adjustments were made to eliminate the event thateffect of currency fluctuations, including by translating actual results at a foreign currency rate comparable to the rate used in the Company’s Cash Flow was not positive2023 AOP. Typically, the threshold levels of performance each fiscal year—the respective minimum levels of performance required for payout under the initial six-month measurement periodannual incentive plan with respect to each 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 each subsequent three-month measurement period, then no award could be paid for such period. If the Cash Flow threshold was achieved, then each NEO was eligible to earn a percentageMarquee & Regional Accounts Strategy Execution KPI were set at levels that were greater than fiscal year 2022 actual results, except in the case of his target bonus based onConsulting Adjusted EBITDA Margin and Fee Revenue, for each measurement periodwhich 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 shown below:a result of the following:
| 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 |
I Increasing Difficulty of Quarterly Performance Goals(1)
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| 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 timeCompany was projecting lower profitability in fiscal year 2023 compared to fiscal year 2022, the Committee was tasked with setting the initial goals under our bonus plan for fiscal year 2021, we had just come off of a fourth quarter where performance had declined across the Company. Our fourth quarter of 2020 (which spanned February, March, and April 2020) reflected only a little over one month of the impact of the COVID-19 pandemic and yet our performance was already greatly affected. In particular, Fee Revenue had decreased significantly in the fourth quarter of 2020: by 14.5% compared to the third quarter of fiscal 2020—from $515.3 million (a previous record level) to $440.5 million.
Given the massive uncertainty at the time, we were anticipating a downward trajectory for fiscal year 2021. So severe was the uncertainty that the Company suspended providing financial guidance. As a result, when initially establishing the goals under our annual bonus plan at the beginning of the year, we set the goals for each six-month performance period, when taken on a quarterly basis, below the fiscal year 2020 actual achievement levels for the fourth quarter of fiscal year 2020.
As described above, due to the ongoing uncertainty regarding economic conditions globally, the Committee built flexibility into the bonus program by allowing the opportunity to revisit the goals for the second half of the year, which were initially the same as the goals for the first half of the year, to provide agility should conditions improve or further deteriorate. As described above, this allowed the Committee to increase the third quarter goals (from a maximum target of $575 million in Fee Revenue and 3% in Adjusted EBITDA Margin for the full second six-month period under the initial annual bonus plan design to a maximum target of $435 million in Fee Revenue and 10% in Adjusted EBITDA Margin for the third quarter alone) and set the fourth quarter maximum target for Fee Revenue near the highest quarterly Fee Revenue ever and the Adjusted EBITDA Margin maximum target atgoal (both Company-wide and the highest quarterly profitability in the Company's history ($515 millionsegment specific goals), Adjusted Diluted EPS goal, and 21%, respectively). It should be noted that the Fee Revenue targets alignedAdjusted ROIC goal below fiscal year 2022 actual results. Similarly, with respect to the Company's internal forecast atTop Rated Performers Retention Strategy Execution KPI, the beginning of the third quarter andgoals were also set below fiscal year 2022 actual results due to the internal forecast as well as external guidance for the fourth quarter.tight labor market and anticipated aggressive actions by our competition to recruit our top consultants.
UnderThe Committee took the revised annual bonus plan design, performance for the third and fourth quarters combined required achieving Adjusted EBITDA Margin of at least 3% and Fee Revenue of at least $850 million to earn any payout and, in order to receive the maximum payout, Adjusted EBITDA Margin of 21% and Fee Revenue of $950 million was required. In contrast, for the first and second quarters ofpreviously described factors into consideration when setting the fiscal year 2023 performance goals. Even the full achievement of the threshold goals for fiscal year 2023 would only result in orderpayout of 50% of the target opportunity for such goal and, given the factors considered and the targets established, the Committee eliminated the NEOs’ ability to earn any payoutabove target (typically up to 200%) by capping annual cash incentive payouts attributable to each metric at 100% of the Company had to achieve Adjusted EBITDA Margin of greater than 0%target opportunity for the metric. The table below discusses actual results for fiscal year 2022 and Fee Revenue of at least $500 million,threshold, target, and to earn a maximum payout, Adjusted EBITDA Margin of 3%goals and Fee Revenue of $575 million had to be achieved.actual results for fiscal year 2023.
| Financial Metric / KPI | FY’22 Actual | * | FY’23 Threshold | FY’23 Target | FY’23 Maximum | FY’23 Actual | ** | |||||||||||||
| Adjusted Fee Revenue ($) (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 each measurement period,the fiscal year, 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, herein, the Committee retains negative discretion in determining actual annual cash incentive awards.
For fiscal year 2021, Cash Flow was positive in all three measurement periods. The below table shows2023, the weightings and results for our actual achievement of Fee Revenue and Adjusted EBITDA Margin for each measurement period, resulting in performance of 294% of target for the entire fiscal year:NEOs were as follows:
| Financial Metrics | FY’ 21 Q1 and Q2 | FY’ 21 Q3 | FY’ 21 Q4 | |||||||||
| Fee Revenue ($M) | $ | 780 | $ | 475 | $ | 555 | ||||||
| Adjusted EBITDA Margin | 9.8 | % | 20.3 | % | 20.3 | % | ||||||
| Percentage of Annual Target Achieved | 150 | % | 75 | % | 69 | % | ||||||
| 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 reflect stockholder feedback, the table above incorporates detailed disclosure with either actual results andor relative results to target. We believeFor competitive advantage and confidentiality reasons, we do not disclose the threshold, target, and maximum goals and actual results for our exceptionaltop-rated performance inretention strategy execution KPI. However, when the thirdgoals 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 fourth quarters100% of annual base salary for Messrs. Mulrooney, Arian, and Distefano. For fiscal year 2023, there was no maximum opportunity, and performance above target was capped at 100% of the year, which ultimately led to achievement of 294% under the bonus plan, was in large part due to the diversity and relevance of our offerings focused on people and our ability to adapt to delivering our digital and consulting services in a virtual world. Additionally, our offerings and capabilities across ESG topics, and in particular Diversity, Equity & Inclusion, have provided a competitive edge to support companies in their implementation of best-practices as organizations are shifting how they engage with their people, customers, and communities.target opportunity.
As described above, solely for fiscal year 2021, in consultation with Pearl Meyer, theThe Committee approved an approximately 50% increase in each NEO’s target bonus opportunity. As a result, the fiscal year 2021 target bonus opportunities were equal to $1,638,000, $862,500, $1,050,000, and $900,000 for each of Messrs. Burnison, Rozek, Mulrooney, and Arian, respectively.
Given the Company’s achievement of 294% of target as described above, each NEO earned the followingawarded annual cash incentive amounts:amounts as follows: Mr. Burnison—$4,815,720,1,087,478, Mr. Rozek—$2,535,750,543,739, Mr. Mulrooney—$3,087,000,275,856, Mr. Arian—$385,000, and Mr. Arian—Distefano—$2,646,000332,292 (which amounts represent 294%72.5% of Messrs. Burnison’s and Rozek’s target bonuses for the year, 50.2% of 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 target opportunity for fiscal year 2021).
The Committee has returned toperformance against the Company’s standard annual bonus program for fiscal year 2022 consisting of a mix of financial metrics and strategic metrics measured overexecution KPI targets established at the coursebeginning of the fiscal year, with payouts based on the target and maximum opportunities set forth in each NEO’s new employment agreement entered into after the end of the fiscal year, as described in more detail below.year.
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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 2021, as a result of the uncertain economic environment and the cost reduction measures implemented Company-wide, the Committee, in consultation with Pearl Meyer, determined it was in the Company’s best interest to award2023, our NEOs long-termreceived annual equity incentives solelygrants comprised of 60% performance-based restricted stock units (discussed in the form offurther detail below) and 40% time-based restricted stock. The Committee wanted bothstock except for Mr. Distefano, who was not an NEO at the time of grant but has moved to create incentives for our NEOs to remain dedicated to stock price appreciation in the midst of economic uncertainty and retain our NEOs so as to align the NEOs’ interests60%/40% split beginning with the Company’s long-term goals and stockholders’ interests.
In June 2020, when the Committee was determining annual equity awards for the year, the Company had suspended providing financial guidance for the first time since our fiscal year 2009 during the Great Recession, and was projecting a long path to recovery. As described above, we were unable to project performance under our annual bonus plan over the course of the year, and thus the Committee believed it was not responsible to grant long-term performance-based equity awards that would require making projections over a longer period. Also, given that the Compensation Committee had eliminated the fiscal 2020 cash bonuses for NEOs and senior executives, it was based on the Company’s overriding need to retain and incentivize the NEOs and other senior executives to work through the challenging COVID-19 environment and continue the ongoing transformation of the Company to a diversified organizational consulting firm. The current executive team is in the midst of building a more resilient Company with more durable fee revenues so as to remove some of the cyclicality that erodes stockholder value. Retaining the current executive team to navigate the economic downturn was a high priority and a key determinant in the Compensation Committee’s decision-making process.2024. At the time of grant, in consultation with and based on benchmarking data provided by itsthe compensation consultant, the Committee determined that the grant date value of the NEOs’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 20212023 to Messrs. Burnison, Rozek, Mulrooney, and Arian, and the payout of the performance awards granted in fiscal year 2019 for which the three-year performance period ended in fiscal year 2021.Distefano.
In fiscal year 2021, each2023, 60% (based on the number of Messrs. Burnison, Rozek, Mulrooney,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”), except for Mr. Distefano, who was not an NEO at the time of grant and Arian received a50% of his annual equity award in the form of Relative TSR Units. The NEOs received the remaining portion of their equity awards in the form of time-based restricted stock award. awards. Beginning with fiscal year 2024, Mr. Distefano has moved to the standard NEO 60%/40% split.
Mr. Burnison received 207,500 shares, Mr. Rozek received 83,730 shares, Mr. Mulrooney received 91,010 shares,was awarded Relative TSR Units with a target amount of 86,130 units, a maximum amount of 172,260 units, and Mr. Arian received 58,250 shares. The Committee considers thisa 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 2023 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 one-time adjustment in the designpercentage of the Company’s equity awards in responding to the significant challenges created for the Company’s business as a result of the COVID-19 pandemic. The Committee has returned to the Company’s standard mix of 60% performance-based awards and 40% time-based awards in fiscal year 2022.target.
Relative TSR Units for the Three-Year Performance Cycle Ending April 30, 2021
April 30, 2021 marked the end of the three-year performance cycle for the performance-based restricted stock unitswere also granted to Mr. Rozek, with a target amount of 30,400 units (maximum of 60,800 units and minimum of zero); Messrs. Burnison, Rozek, Mulrooney and Arian, each with a target amount of 23,310 units (maximum of 46,620 units and minimum of zero); and Mr. Distefano, with a target amount of 5,070 units (maximum of 10,140 units and minimum of zero).
The table below outlines the potential vesting of the percentages of the Relative TSR Units granted in fiscal year 2019 (and discussed in further detail in2023 resulting from the Company’s proxy statement for fiscal year 2019). The Company’s relative total stockholder returnTSR over the three-year performance period resulted inrelative to the Company ranking 4th out of a 13 company peer group (including the Company). This 4th place ranking translates into approximately 150%TSR of the award (i.e., 47,960, 19,910, 14,570, and 5,840 shares, respectively) vesting.fiscal year 2023 peer group.
| Payout as a % Target | ||||
| Relative TSR Percentile Ranking | Absolute TSR > 0% | Absolute TSR < 0% | ||
| >90P | 200% | 100% | ||
| 90P | 200% | 100% | ||
| 85P | 183% | 100% | ||
| 80P | 167% | 100% | ||
| 75P | 150% | 100% | ||
| 70P | 133% | 100% | ||
| 65P | 117% | 100% | ||
| 60P | 100% | 100% | ||
| 55P | 92% | 88% | ||
| 50P | 83% | 75% | ||
| 45P | 75% | 63% | ||
| 40P | 67% | 50% | ||
| 35P | 58% | 38% | ||
| 30P | 50% | 25% | ||
| <30P | 0% | 0% | ||
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Each of Messrs. Burnison, Rozek, Mulrooney, Arian, and Distefano received a time-based restricted stock award that vests in four equal annual installments beginning on July 11, 2023. Mr. Burnison received 57,420 shares, Mr. Rozek received 20,270 shares, Messrs. Mulrooney and Arian each received 15,540 shares, and Mr. Distefano received 5,070 shares.
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. Beginning in October 2021, in order to provide the NEOs and certain other employees with market competitive benefits and for 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.
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 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 2021,2023, 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 2021,2023, 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), $10,000 (for an award granted on or after June 1, 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), $50,000 (for an award granted on or after June 1, 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.
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Employment Agreements
During fiscal year 2021, eachEach of the Company’s NEOs wasis covered by an employment contract or letter agreement providing 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 the ("Retention 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. During fiscal year 2021, the NEOs executed amendments to their then-existing employment contracts and letter agreements, as applicable, formalizing the 50% base salary reductions described above and acknowledging that such reductions will not trigger any good reason or other constructive termination rights.
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Please refer to the sections entitled “Employment Agreements” and “Potential Payments Upon Termination or Change of Control” below for further discussion of these agreements.
On June 28, 2021, following the end of the fiscal year, the Company and each NEO entered into new employment agreements that supersede the prior agreements or letters, as applicable. This was done in connection with the periodic review of our executive employment arrangements both (1) in recognition of the importance of retaining our NEOs, an experienced and seasoned management team in the middle of leading Korn Ferry through a successful multi-year transformation from an Executive Search firm to a diversified organizational consulting firm; and (2) to provide greater protection to the Company in the event of an NEO departure in the form of an expanded list of competitor companies in each NEO's noncompetition covenant. Based on a competitive review conducted by Pearl Meyer, the Committee’s independent advisor,compensation consultant, the newemployment agreements provide for the following annual compensation: (1) an annual base salary effective July 1, 2021, of $1,000,000 for Mr. Burnison, $625,000 for Mr. Rozek, and $550,000 for each of Messrs. Mulrooney, Arian, and Arian;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 Arian,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 continue to beare 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.
In addition, the agreement with Mr. Burnison continues to provideprovides the ability to earn the Retention Award (which was originally granted under his previous employment agreement with the Company dated March 30, 2018,2018) in the amount of $5 million, which cliff vestsvested 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 Retention Awarddeferral from March 30, 2022, until Mr. Burnison’s termination of employment at 120% of the long-term Applicable Federal Rate as in effect from time to time (currently 2.27%4.85% for August 2021)2023). Because the required employment period for the Retention Award was more than three-quarters completed at the time the new employment agreement was entered into (the Retention Award is scheduled to vest on March 30, 2022), the Committee believed it was appropriate to provide for full vesting of the Retention Award in the event that, following a change in control, Mr. Burnison's employment is terminated by the Company without “cause” or by Mr. Burnison for “good reason” (as those terms are defined in the new employment agreement). Because this highly contingent accelerated vesting right will cease to exist on March 30, 2022, when the Retention Award otherwise vests, the Committee does not believe that it is appropriate to consider it to be part of Mr. Burnison's ongoing change in control severance benefits.
For all NEOs, the new agreements provide for enhanced 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 newRozek’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,"“retirement,” as defined in his new agreement, provided he gives the Company at least six months'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, nonsolicitation,non-solicitation, and noncompetition. The new agreements are described in more detail innon-competition. Please refer to the Company’s Annual Report on Form 10-Ksections entitled “Employment Agreements” and “Potential Payments Upon Termination or Change of Control” below for the fiscal year ended April 30, 2021.further discussion of these agreements.
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 and Corporate Governance Committee has determined that in order to further align the long-term interests of the Company’s stockholders and its 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 in the Company’s common stock. Therefore, it and the Board have adopted the Company’s Stock Ownership Policy, which provides that all NEOs are required to own three times their annual base salary infor ownership of the following amount of Company common stock. In addition, the policy requires 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, unvested restricted stock units, unvested performance-based stock units, or unvested stock 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)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.
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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
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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 paid to the Chief Financial Officer. The US Tax Act eliminated the performance-based compensation exception and applied the limit to the Chief Financial Officer and certain former executive officers. With the elimination“covered employees,” including all of the exemption for performance-based compensation, we expect that we will be unable to deduct 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, and our other named executive officers covered by Section 162(m). Notwithstanding the repealNEOs in excess of the exemption for “performance-based compensation,”such limit. While the Committee intends to maintain itsconsiders the impact of this tax treatment, the primary factors influencing program design are the support of our business objectives and the Committee’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.
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The Compensation and Personnel Committee has reviewed and discussed the Compensation Discussion and Analysis (the “CD&A”) for the fiscal year ended April 30, 2021,2023, 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
During fiscal year 2021,2023, 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.
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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 2021, 2020,2023, 2022, and 2019.2021.
| 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 | 2021 | 796,250 | (3) | — | 5,700,025 | 4,815,720 | 15,862 | (4) | 19,670 | (5) | 11,347,527 | |||||
| 2020 | 910,000 | — | 3,448,284 | — | 71,951 | (4) | 12,750 | 4,442,985 | ||||||||
| 2019 | 910,000 | — | 6,091,669 | 2,184,000 | 21,151 | (4) | 16,363 | 9,223,183 | ||||||||
| Robert P. Rozek, Executive Vice President, Chief Financial Officer and Chief Corporate Officer | 2021 | 503,125 | (3) | — | 2,300,063 | 2,535,750 | — | 18,347 | (6) | 5,357,285 | ||||||
| 2020 | 575,000 | — | 1,432,509 | — | — | 12,750 | 2,020,259 | |||||||||
| 2019 | 575,000 | — | 2,699,017 | 1,150,000 | — | 16,034 | 4,440,051 | |||||||||
| Byrne Mulrooney, Chief Executive Officer, of RPO, Professional Search and Digital | 2021 | 393,750 | (3) | — | 2,500,045 | 3,087,000 | — | 235,688 | (7) | 6,216,483 | ||||||
| 2020 | 450,000 | — | 1,047,610 | — | — | 235,320 | 1,732,930 | |||||||||
| 2019 | 450,000 | — | 1,742,400 | 1,000,000 | — | 234,669 | 3,427,069 | |||||||||
| Mark Arian, Chief Executive Officer, of Consulting | 2021 | 393,750 | (3) | — | 1,600,128 | 2,646,000 | — | 262,633 | (8) | 4,902,511 | ||||||
| 2020 | 450,000 | — | 518,818 | — | — | 262,084 | 1,230,902 | |||||||||
| 2019 | 450,000 | — | 748,572 | 850,000 | — | 511,582 | 2,560,154 |
| 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 |
| (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 | |
| (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 $11,400. |
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| (5) | These values have been updated to reflect additional amounts in respect of executive medical insurance premiums that were inadvertently omitted from the Summary Compensation Table in the Company’s fiscal year 2022 proxy statement. |
| (6) | Represents 401(k) company contribution of |
| Represents 401(k) company contribution of | |
| Represents 401(k) company contribution of | |
| Represents |
The following table sets forth information with respect to non-equity incentive plan compensation and equity awards granted in fiscal year 20212023 to the named executive officers, under the Company’s Fourth Amended and Restated 2008 Stock Incentive Plan.
| Estimated Future Payments Under Non-Equity Incentive Plan Awards | Estimated Future Payments Under Equity Incentive Plan Awards | All Other Stock Awards: | Grant | Estimated Future Payments Under Non-Equity Incentive Plan Awards | Estimated Future Payments Under Equity Incentive Plan Awards | All Other Stock Awards: | Grant | ||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares of Stock (#) | Date Fair Value of Stock Awards | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares of Stock (#) | Date Fair Value of Stock Awards | |||||||||||||||||||
| Gary D. Burnison | 7/9/2020 | — | — | — | — | — | — | 207,500 | 5,700,025 | 7/11/2022 | — | — | — | — | — | — | 57,420 | 3,399,838 | |||||||||||||||||||
| — | — | 1,638,000 | 4,914,000 | — | — | — | — | — | 7/11/2022 | — | — | — | 21,533 | 86,130 | 172,260 | — | 5,936,080 | ||||||||||||||||||||
| — | — | 1,500,000 | 1,500,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Robert P. Rozek | 7/9/2020 | — | — | — | — | — | — | 83,730 | 2,300,063 | 7/11/2022 | — | — | — | — | — | — | 20,270 | 1,200,187 | |||||||||||||||||||
| 7/11/2022 | — | — | — | 7,600 | 30,400 | 60,800 | — | 2,095,168 | |||||||||||||||||||||||||||||
| — | — | 862,500 | 2,587,500 | — | — | — | — | — | — | — | 750,000 | 750,000 | — | — | — | — | — | ||||||||||||||||||||
| Byrne Mulrooney | 7/9/2020 | — | — | — | — | — | — | 91,010 | 2,500,045 | 7/11/2022 | — | — | — | — | — | — | 15,540 | 920,123 | |||||||||||||||||||
| — | — | 1,050,000 | 3,150,000 | — | — | — | — | — | 7/11/2022 | — | — | — | 5,828 | 23,310 | 46,620 | — | 1,606,525 | ||||||||||||||||||||
| — | — | 550,000 | 550,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Mark Arian | 7/9/2020 | — | — | — | — | — | — | 58,250 | 1,600,128 | 7/11/2022 | — | — | — | — | — | — | 15,540 | 920,123 | |||||||||||||||||||
| — | 900,000 | 2,700,000 | — | — | — | — | — | 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 the “Fiscal Year 2021, 2020,2023, 2022, and 20192021 Summary Compensation Table” and “Fiscal Year 20212023 Grants of Plan-Based Awards Table” reflect the terms of employment or letter agreements entered into between the Company and each of the named executive officers that were in effect during fiscal year 2021.2023.
Gary D. Burnison. During fiscal year 2021, we were party toWe entered into an amended and restated employment agreement with Mr. Burnison dated March 30, 2018June 28, 2021 (the “Burnison Employment Agreement”) pursuant to which Mr. Burnison servedserves as Chief Executive Officer. Pursuant to the Burnison Employment Agreement, we agreed to provide Mr. Burnison with the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $910,000;$1,000,000; (2) participation in the 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 March 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 240%200% of annual base salary, provided,the target award, however, that for fiscal year 2021, the Committee approved a bonus2023, there was no maximum opportunity, in excessand performance above target was capped at 100% of the foregoing as described in more detail in the Compensation Discussion and Analysis;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 BurnisonMulrooney Employment Agreement, we agreed to provide Mr. BurnisonMulrooney 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. On April 14, 2020 and July 9, 2020, the Burnison Employment Agreement was amended to formalize a 50% base salary reduction through December 31, 2020, and to acknowledge that such reduction would not trigger any good reason or other constructive termination rights. As described in more detail in the Compensation Discussion and Analysis, the Committee determined it was appropriate to restore base salaries for all employees whose base salaries had been reduced, including Mr. Burnison, and repay Mr. Burnison the portion of his salary not paid earlier in respect of the second and third quarters of the fiscal year. As described in more detail in the Compensation Discussion and Analysis and the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, following the end of the fiscal year, the Company
Mark Arian. We entered into an amended and restated employment agreement with Mr. BurnisonArian dated June 28, 2021.
|
Robert P. Rozek. During fiscal year 2021 we were party to an employment agreement with Robert Rozek dated February 6, 2012 and an amendment thereto dated December 28, 2015 (collectively, the “Rozek(the “Arian Employment Agreement”) pursuant to which Mr. Rozek servedArian serves as Chief Executive Vice President, Chief Financial Officer, and Chief Corporate Officer of the Company. The Rozek Employment Agreement provided for an initial term ending on April 30, 2015 that was automatically renewed for successive terms of one year unless sooner terminated.Consulting. Pursuant to the terms of the RozekArian Employment Agreement, we agreed to provide Mr. Rozek’sArian with the following annual compensation: (1) an annual base salary, for fiscal yeareffective July 1, 2021, was $575,000 and Mr. Rozek was eligible forof $550,000; (2) participation in the Company’s annual cash incentive plan with an annual target cash incentive award equal toof 100% of his annual base salary withand the ability to earn additional amounts up to a maximum cash award equal toof 200% of his annual base salary, provided,the target award, however, that for fiscal year 2021, the Committee approved a bonus2023, there was no maximum opportunity, in excessand performance above target was capped at 100% of the foregoing as described in more detailtarget opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Compensation Discussion and Analysis. In addition, pursuant to the Rozek Employment Agreement,Company’s equity incentive program. Mr. Rozek wasArian 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. On April 14, 2020 and July 8, 2020, the Rozek Employment Agreement was amended to formalize a 50% base salary reduction through December 31, 2020, and to acknowledge that such reduction would not trigger any good reason or other constructive termination rights. As described in more detail in the Compensation Discussion and Analysis, the Committee determined it was appropriate to restore base salaries for all employees whose base salaries had been reduced, including Mr. Rozek, and repay Mr. Rozek the portion of his salary not paid earlier in respect of the second and third quarters of the fiscal year. As described in more detail in the Compensation Discussion and Analysis and the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, following the end of the fiscal year, the Company
Michael Distefano. We entered into an amended and restated employment agreement with Mr. RozekDistefano dated June 28, 2021.
Byrne Mulrooney. During fiscal year 2021, we were party to a letter agreement with Byrne Mulrooney dated June 26, 2014,July 1, 2022 (the “Mulrooney Letter“Distefano Employment Agreement”) pursuant to which Mr. Mulrooney servedDistefano serves as the Chief Executive Officer, of Recruitment Process Outsourcing, Professional Search and Digital. For fiscal year 2021,Interim. Pursuant to the Mulrooney LetterDistefano Employment Agreement, as amended, provided forwe agreed to provide Mr. Distefano with the following annual compensation: (1) an annual base salary, effective May 1, 2022, of $450,000; and$550,000; (2) participation in the Company’s annual cash incentive plan with an annual target incentive award (cashof 100% of annual base salary and long-term equity) withthe ability to earn additional amounts up to a valuemaximum cash award of $1,150,000, provided,200% of the target award, however, that for fiscal year 2021, the Committee approved an2023, there was no maximum opportunity, in excessand performance above target was capped at 100% of the foregoing as described in more detailtarget opportunity; and (3) subject to approval of the Compensation and Personnel Committee of the Board, participation in the Compensation Discussion and Analysis. In addition, pursuant to the Mulrooney Letter Agreement,Company’s equity incentive program. Mr. Mulrooney wasDistefano 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. On April 14, 2020 and July 9, 2020, the Mulrooney Letter Agreement was amended to formalize a 50% base salary reduction through December 31, 2020, and to acknowledge that such reduction would not trigger any good reason or other constructive termination rights. As described in more detail in the Compensation Discussion and Analysis, the Committee determined it was appropriate to restore base salaries for all employees whose base salaries had been reduced, including Mr. Mulrooney, and repay Mr. Mulrooney the portion of his salary not paid earlier in respect of the second and third quarters of the fiscal year. As described in more detail in the Compensation Discussion and Analysis and the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, following the end of the fiscal year, the Company entered into an employment agreement with Mr. Mulrooney dated June 28, 2021 that supersedes the Mulrooney Letter Agreement.
Mark Arian. During fiscal year 2021, we were party to a letter agreement with Mark Arian dated March 17, 2017 (the “Arian Letter Agreement”) pursuant to which Mr. Arian served as the Chief Executive Officer of Consulting. For fiscal year 2021, the Arian Letter Agreement provided for (1) an annual base salary of $450,000; and (2) an annual target incentive award (cash and long-term equity) with a target value of $1,000,000 and a maximum of $1,550,000, provided, however, that for fiscal year 2021, the Committee approved an opportunity in excess of the foregoing as described in more detail in the Compensation Discussion and Analysis. The Arian Letter Agreement also provided for a one-time award of eight long-term performance units under the Company’s LTPU plan and a sign-on award of restricted stock units with a grant date fair value of $400,000 (the “Sign On Award”) that vest in five equal annual installments on each of the first five anniversaries of the grant date. In addition, pursuant to the Arian Letter Agreement, Mr. Arian was eligible to participate in employee benefit plans, arrangements, and programs maintained from time to time by the Company for the benefit of senior executives. On April 14, 2020 and July 8, 2020, the Arian Letter Agreement was amended to formalize a 50% base salary reduction through December 31, 2020, and to acknowledge that such reduction would not trigger any good reason or other constructive termination rights. As described in more detail in the Compensation Discussion and Analysis, the Committee determined it was appropriate to restore base salaries for all employees whose base salaries had been reduced, including Mr. Arian, and repay Mr. Arian the portion of his salary not paid earlier in respect of the second and third quarters of the fiscal year. As described in more detail in the Compensation Discussion and Analysis and the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, following the end of the fiscal year, the Company entered into an employment agreement with Mr. Arian dated June 28, 2021 that supersedes the Arian Letter Agreement.
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The following table sets forth information with respect to options to purchase shares of the Company’s common stock, restricted stock, and restricted stock unit grants to the named executive officers outstanding as of April 30, 2021.2023.
| Option Awards | Stock Awards | |||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Not Exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 | — | — | — | — | — | 8,758 | (1) | 594,581 | — | — | ||||||||
| — | — | — | — | — | 10,655 | (2) | 723,368 | — | — | |||||||||
| — | — | — | — | — | 10,150 | (3) | 689,084 | — | — | |||||||||
| — | — | — | — | — | 26,955 | (4) | 1,829,975 | — | — | |||||||||
| — | — | — | — | — | 207,500 | (5) | 14,087,175 | — | — | |||||||||
| — | — | — | — | — | — | — | 47,960 | (6) | 3,256,004 | |||||||||
| — | — | — | — | — | — | — | 107,840 | (7) | 7,321,258 | |||||||||
| Robert P. Rozek | — | — | — | — | — | 4,248 | (1) | 288,397 | — | — | ||||||||
| — | — | — | — | — | 4,430 | (2) | 300,753 | — | — | |||||||||
| — | — | — | — | — | 5,073 | (3) | 344,406 | — | — | |||||||||
| — | — | — | — | — | 11,205 | (4) | 760,707 | — | — | |||||||||
| — | — | — | — | — | 83,730 | (5) | 5,684,430 | — | — | |||||||||
| — | — | — | — | — | — | — | 19,910 | (8) | 1,351,690 | |||||||||
| — | — | — | — | — | — | — | 44,780 | (9) | 3,040,114 | |||||||||
| Byrne Mulrooney | — | — | — | — | — | 7,512 | (10) | 509,990 | — | — | ||||||||
| — | — | — | — | — | 2,920 | (1) | 198,239 | — | — | |||||||||
| — | — | — | — | — | 3,235 | (2) | 219,624 | — | — | |||||||||
| — | — | — | — | — | 2,537 | (3) | 172,237 | — | — | |||||||||
| — | — | — | — | — | 8,190 | (4) | 556,019 | — | — | |||||||||
| — | — | — | — | — | 91,010 | (5) | 6,178,669 | — | — | |||||||||
| — | — | — | — | — | — | — | 14,570 | (11) | 989,157 | |||||||||
| — | — | — | — | — | — | — | 32,760 | (12) | 2,224,076 | |||||||||
| Mark Arian | — | — | — | — | — | 1,300 | (2) | 88,257 | — | — | ||||||||
| — | — | — | — | — | 1,270 | (3) | 86,220 | — | — | |||||||||
| — | — | — | — | — | 4,058 | (4) | 275,498 | — | — | |||||||||
| — | — | — | — | — | 58,250 | (5) | 3,954,593 | — | — | |||||||||
| — | — | — | — | — | 2,640 | (13) | 179,230 | — | — | |||||||||
| — | — | — | — | — | — | — | 5,840 | (14) | 396,448 | |||||||||
| — | — | — | — | — | — | — | 16,220 | (15) | 1,101,176 | |||||||||
| 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. | |
| The time-based restricted stock grant was made on July 8, 2020, and vests in four equal annual installments beginning on July 8, 2021. |
|
| 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, |
| This grant of Relative TSR Units was made on July | |
| 56 | 2023 Proxy Statement |
| This grant of Relative TSR Units was made on July 9, | |
| This grant of Relative TSR Units was made on July | |
| (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 |
| (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, 2021.2023.
| Option Awards | Stock Awards | |||||||
| Number of | ||||||||
| Number of | Value | Shares | Value | |||||
| Shares | Realized on | Acquired on | Realized on | |||||
| Acquired | Exercise | Vesting | Vesting | |||||
| Name | (#) | ($) | (#) | ($) | ||||
| Gary D. Burnison | — | — | 88,098 | 2,428,091 | ||||
| Robert P. Rozek | — | — | 41,790 | 1,152,709 | ||||
| Byrne Mulrooney | — | — | 31,446 | 867,541 | ||||
| Mark Arian | — | — | 5,912 | 252,996 | ||||
| Option Awards | Stock Awards | ||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||
| Gary D. Burnison | — | — | 180,548 | 10,791,403 | |||||
| Robert P. Rozek | — | — | 74,380 | 4,444,859 | |||||
| Byrne Mulrooney | — | — | 61,816 | 3,704,494 | |||||
| Mark Arian | — | — | 34,740 | 2,085,353 | |||||
| Michael Distefano | — | — | 28,350 | 1,692,800 | |||||
The following table sets forth the pension benefits of the named executive officers as of April 30, 2021.2023.
| Number of | |||||||||||||||||
| Years Credited | |||||||||||||||||
| Service or | Present Value | Payments | |||||||||||||||
| Number of | of Accumulated | During Last | |||||||||||||||
| Units Earned | Benefit | Fiscal Year | |||||||||||||||
| Name | Plan Name | (#) | (1) | ($) | ($) | Plan Name | Number of Years Credited Service or Number of Units Earned (#) | (1) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||||||
| Gary D. Burnison | Executive Wealth Accumulation Plan (“EWAP”) | 15 | 406,913 | — | Executive Wealth Accumulation Plan (“EWAP”) | 15 | 325,541 | — | |||||||||
| Michael Distefano | EWAP | 15 | 223,666 | — | |||||||||||||
| (1) | Upon attaining 15 years of service, |
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The EWAP was established in fiscal year 1994. Certain vice presidents elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight-year period, or in some cases, make an after-tax contribution, in return for defined benefit payments from the Company over a 15-year period generally at retirement age of 65 or later. Participants were able to acquire additional “deferral units” every five years.
In June 2003, the Company amended the EWAP so as not to allow new participants or the purchase of additional deferral units by existing participants. The assumptions used to calculate the present value of the accumulated benefit under the EWAP are set forth in Note 6 to the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended April 30, 2021.10-K.
| 57 | 2023 Proxy Statement |
The nonqualified deferred compensation plan earnings and withdrawals of the named executive officers as of April 30, 2021,2023, are set forth in the table below.
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings/(loss) in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
| Gary D. Burnison | 1,061,922 | (1) | — | 211,944 | — | 4,511,938 | (2) | |||||||||||||
| Robert P. Rozek | — | — | — | — | — | |||||||||||||||
| Byrne Mulrooney | — | — | — | — | 875,000 | (3) | ||||||||||||||
| Mark Arian | — | — | — | — | 1,000,000 | (3) | ||||||||||||||
| Michael Distefano | — | — | 24,167 | — | 3,615,914 | (2)(3) | ||||||||||||||
| (1) | This amount is included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table for fiscal year 2023. | |||||||||||||||||||
| (2) | ||||||||||||||||||||
| The | |
| On July 8, 2016, the Company established the LTPU Plan in order 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. A unit award has a base value of $50,000 for the purpose of determining the payment that would be made upon early termination for a partially vested unit award. The units vest 25% on each anniversary date, with the unit becoming fully vested on the fourth anniversary of the grant date, subject to the participant’s continued service as of each anniversary date. Each vested unit award will pay out an annual benefit of $25,000 for each of five years commencing on the seventh anniversary of the grant date. On July |
Please see the “Other Compensation Elements” section beginning on page 49 for further discussion of the Company’s nonqualified deferred compensation plan.
The tables below reflect the amount of compensation that would become payable to each of the named executive officers under existing plans and arrangements if that named executive officer’s employment had terminated on April 30, 20212023 (pursuant to his employment agreement then in effect), given the named executive officer’s compensation and service levels as of such date (not taking into effect, however, the temporary reductions in base salary agreed to by the named executive officers, as provided in the applicable amendments to their employment agreements or letters) and, if applicable, based on the Company’s closing stock price on that date. These benefits are in addition to benefits available prior to the occurrence of any termination of employment, including benefits generally available to salaried employees, such as distributions under the Company’s 401(k) plan and EWAP, and previously accrued and vested benefits under the Company’s LTPU Plan and nonqualified deferred compensation plan, as described in the tables above. The actual amounts that would be paid upon a named executive officer’s termination of employment can be determined only at the time of such named executive officer’s separation from the Company. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such event, the Company’s stock price and the named executive officer’s age. In addition,Further, in connection with any actual termination of employment, the Company may determine to enter into an agreement or to establish an arrangement
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providing additional benefits or amounts, or altering the terms of benefits described below, as the Committee determines appropriate. Further, the Company entered into a revised employment agreement with each of the NEOs as described in more detail in the Compensation Discussion and Analysis and the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021, which in certain circumstances provide for benefits greater than those that would have been provided under the employment agreements in effect as of April 30, 2021. References to “performance shares” mean any outstanding Relative TSR Units.
Gary D. Burnison.Under the Burnison Employment Agreement, because Mr. Burnison remained employed through the Retention Vesting Date, subject to his execution and delivery of a general release of claims and his compliance with restrictive covenants relating to non-competition, non-solicitation, and confidentiality, (i) his deferred Retention Award, in the amount of $5,000,000, together with interest accrued during the mandatory deferral period, will be paid in equal monthly installments in cash (without further interest) over 12 months following Mr. Burnison’s termination of employment for any reason (other than termination by the Company for cause) and (ii) upon any termination of Mr. Burnison’s employment (other than by the Company for cause or due to death or disability), all unvested equity awards granted on or after March 30, 2018 (and at least
| 58 | 2023 Proxy Statement |
90 days prior to such termination, other than with respect to a termination by the Company without cause or a termination by Mr. Burnison for good reason (an “Involuntary Termination”) during such 90-day period, in which case, there shall be no such 90-day requirement) will continue to vest in accordance with their terms, disregarding such termination. As an exception, the post-change in control double trigger equity severance vesting rules described below would continue to apply in the event of an Involuntary Termination that occurs within 24 months after a change in control.
Under the Burnison Employment Agreement, if Mr. Burnison’s employment is terminated due to death or disability, then he, or his legal representatives, would receive: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the Executive Capital Accumulation Plan (“ECAP”); (3) a pro rata portion of his target annual cash incentive award for the fiscal year in which his employment terminated; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage was available under COBRA.
If we terminated Mr. Burnison’s employment for cause or he voluntarily terminated his employment without good reason, then we would pay him accrued compensation through the date of termination.
Under the Burnison Employment Agreement, if Mr. Burnison’s employment is terminated due to an Involuntary Termination prior to a change in control or more than 24 months after a change in control, then we would provide him with the following: (1) his accrued compensation; (2) a pro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; and (3) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents.
The Burnison Employment Agreement provides that if there was a change of control and within 24 months, Mr. Burnison’s employment is terminated due to an Involuntary Termination, then we would provide him with the following: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award; (3) cash payments equal to three times his current annual base salary, three times his target annual cash incentive award and the amount of his deferred Retention Award (to the extent not yet paid); (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents and for 6 months thereafter, if COBRA coverage is no longer available, reimbursement of a portion of the cost of healthcare coverage for him and his dependents; (5) vesting on the date of termination of all outstanding stock options, other equity-type incentives, other long term awards and all benefits held under the ECAP (excluding performance awards) (collectively, the “Time Vested Awards”); and (6) a number of performance awards equal to the greater of (i) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been the Company’s actual performance through the date of the change in control and at the target level for the period subsequent to the change in control and (ii) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period.
Under the Burnison Employment Agreement, the severance benefits described above are conditioned on Mr. Burnison’s execution and delivery of a general release and compliance with covenants relating to confidentiality, non-solicitation, and non-competition.
| Gary D. Burnison(1) | Retirement | Prior to a Change in Control or More than 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Death or Disability | ||||||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 9,110,114 | $ | 9,110,114 | $ | 9,110,114 | $ | 9,110,114 | ||||||||
| Performance-Based Shares(2) | 6,014,505 | 6,014,505 | 6,014,505 | 6,014,505 | ||||||||||||
| Base Salary | — | — | 3,000,000 | — | ||||||||||||
| Bonus | — | 1,087,478 | 6,000,000 | 1,500,000 | ||||||||||||
| Health Benefits | — | 108,838 | 145,117 | 217,675 | (3) | |||||||||||
| Retention Award | 5,221,852 | 5,221,852 | 5,221,852 | 5,221,852 | ||||||||||||
| TOTAL | $ | 20,346,471 | $ | 21,542,787 | $ | 29,491,588 | $ | 22,064,146 | ||||||||
| (1) | Under all termination scenarios other than a termination by the Company for cause, Mr. Burnison would receive payment of his deferred Retention Award of $5,000,000, which fully vested as of March 30, 2022, plus the amount of interest accrued during the mandatory deferral period, as described above. |
| (2) | For the calculations above, if performance shares would vest based on actual Company performance, to the extent the applicable vesting period was still ongoing as of the end of fiscal 2023, it was assumed that the Company achieved target performance. |
| (3) | Where Mr. Burnison or his dependents are entitled to COBRA for as long as COBRA is available, we have assumed entitlement to 36 months of COBRA as that is the maximum length of time for which such benefits may be available. |
| 59 | 2023 Proxy Statement |
Robert P. Rozek. Under the Rozek Employment Agreement, if Mr. Rozek’s employment terminates due to death or disability, then he, or his legal representatives, would receive: (1) all accrued compensation as of April 30, 2021,the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the ECAP; (3) a pro rata portion of his target annual cash incentive award for the fiscal year in which his employment terminated; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage was available under COBRA.
If the Company terminates Mr. Rozek’s employment for cause at any time or he voluntarily terminates his employment without good reason, then the Company would pay him accrued compensation through the date of termination.
If Mr. Rozek’s employment is Involuntarily Terminated prior to a change in control or more than 24 months after a change in control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) cash payments equal to one and one-half times his then current annual base salary and one and one-quarter times his target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents; (5) all outstanding Time Vested Awards will continue to vest in accordance with their terms (disregarding such termination); and (6) the performance awards will vest based on actual performance through the entire performance period.
If Mr. Rozek’s employment is Involuntarily Terminated within 24 months following a change in control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award; (3) cash payments equal to two and one-half times his current annual base salary and two and one-half times his target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents and for 6 months thereafter, if COBRA coverage is no longer available, reimbursement of a portion of the cost of healthcare coverage for him and his dependents; (5) vesting on the date of termination of all outstanding Time Vested Awards; and (6) a number of performance awards equal to the greater of (i) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been the Company’s actual performance through the date of the change in control and at the target level for the period subsequent to the change in control and (ii) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period.
If Mr. Rozek terminates his employment due to retirement, he will be entitled to the following: (1) his accrued compensation; (2) Time Vested Awards that have been outstanding for more than 90 days will continue to vest in accordance with their terms (disregarding such termination); and (3) performance awards that have been outstanding for more than 90 days will vest based on actual performance through the entire performance period. Mr. Rozek is required to provide 6 months’ notice prior to terminating his employment due to retirement.
The severance benefits described above are conditioned on Mr. Rozek’s execution and delivery of a general release and compliance with covenants relating to confidentiality, non-solicitation, and non-competition.
| Robert P. Rozek | Retirement | Prior to a Change in Control or More than 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Death or Disability | ||||||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 3,554,584 | $ | 3,554,584 | $ | 3,554,584 | $ | 3,554,584 | ||||||||
| Performance-Based Shares(1) | 2,242,534 | 2,242,534 | 2,242,534 | 2,242,534 | ||||||||||||
| Base Salary | — | 937,500 | 1,562,500 | — | ||||||||||||
| Bonus | — | 1,481,239 | 2,625,000 | 750,000 | ||||||||||||
| Health Benefits | — | 75,999 | 101,332 | 151,998 | (2) | |||||||||||
| TOTAL | $ | 5,797,118 | $ | 8,291,856 | $ | 10,085,950 | $ | 6,699,116 | ||||||||
| (1) | For the calculations above, if performance shares would vest based on actual Company performance, to the extent the applicable vesting period was still ongoing as of the end of fiscal 2023, it was assumed that the Company achieved target performance. |
| (2) | Where Mr. Rozek or his dependents are entitled to COBRA for as long as COBRA is available, we have assumed entitlement to 36 months of COBRA as that is the maximum length of time for which such benefits may be available. |
| 60 | 2023 Proxy Statement |
Byrne Mulrooney. Under the Mulrooney Employment Agreement, if Mr. Mulrooney’s employment had terminated due to death or disability, then he, or his legal representatives, would have received: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the ECAP; (3) a pro rata portion of his target annual cash incentive award for fiscal year 2021 based on the target opportunity set forth in the Burnison Employment Agreement; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for Mr. Burnison and his dependents for as long as such coverage was available under COBRA. In addition, any unvested amount of the Retention Award would have vested.
If we terminated Mr. Burnison’s employment for cause or he voluntarily terminated his employment without good reason as of April 30, 2021, then we would have paid him accrued compensation through the date of termination.
Under the Burnison Employment Agreement, if Mr. Burnison’s employment was terminated by us without cause or by Mr. Burnison for good reason (an “Involuntary Termination”) as of April 30, 2021, and such termination had occurred prior to a change in control or more than 12 months after a change in control (and in any event prior to March 30, 2022 (the “Retention Vesting Date”)), then we would have provided him with the following: (1) his accrued compensation; (2) a pro rata portion of his annual cash incentive award, based on actual Company performance, for thefiscal year in which his employment terminated; (3) cash payments equal to the greater of (i) the sum of one and one-half times his then current annual base salary and one and one-half times his target bonus opportunity as set forth in the Burnison Employment Agreement, or (ii) the prorated amount of the Retention Award based on days worked during the four-year vesting period; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage was available under COBRA; (5) continued vesting of all outstanding stock options, other equity-type incentives, other long-term awards and all benefits held under the ECAP (excluding performance shares) (collectively, the “Time Vested Awards”) disregarding such termination; and (6) continued vesting for performance shares disregarding such termination. As an exception, the post-change of control double trigger equity severance vesting rules described below would continue to apply in the event of an Involuntary Termination within 12 months after a change of control.
The Burnison Employment Agreement provides that if there was a change of control and within 12 months, Mr. Burnison’s employment was terminated by us without cause or by Mr. Burnison for good reason (and in any event prior to the Retention Vesting Date), then we would have provided him with the following: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award based on the target opportunity as set forth in the Burnison Employment Agreement; (3) cash payments equal to the greater of (i) the sum of two times his annual base salary and two times his target bonus opportunity as set forth in the Burnison Employment Agreement, or (ii) the Retention Award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents for so long as such coverage is available under COBRA and for six months thereafter, reimbursement of a portion of the cost of healthcare coverage for him and his dependents; (5) vesting on the date of termination of all outstanding Time Vested Awards; (6) a pro rata award of performance shares based on the greater of the Company’s actual performance and target performance and the number of days in the performance period prior to the change in control; and (7) a pro rata award of performance shares based on target performance and the number of days remaining in the performance period after a change in control.
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Under the Burnison Employment Agreement, the severance benefits described above are conditioned on Mr. Burnison’s execution and delivery of a general release and compliance with covenants relating to confidentiality, non-solicitation, and non-competition.
| Prior to a Change | ||||||||||||
| in Control or More | Within 12 Months | |||||||||||
| than 12 Months after | after a Change | |||||||||||
| a Change in Control | in Control and | |||||||||||
| and Termination | Termination | |||||||||||
| Without Cause or | Without Cause or | Death or | ||||||||||
| Gary D. Burnison | With Good Reason | With Good Reason | Disability | |||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 17,924,182 | $ | 17,924,182 | $ | 17,924,182 | ||||||
| Performance-Based Shares(1) | 6,916,633 | 6,916,633 | 6,916,633 | |||||||||
| Base Salary | — | — | — | |||||||||
| Bonus | 4,815,720 | 1,092,000 | 1,092,000 | |||||||||
| Retention Award | 3,856,947 | 5,000,000 | 5,000,000 | |||||||||
| Health Benefits | 48,467 | 64,623 | 96,934 | (2) | ||||||||
| TOTAL | $ | 33,561,949 | $ | 30,997,438 | $ | 31,029,749 | ||||||
Robert P. Rozek.Under the Rozek Employment Agreement, if Mr. Rozek’s employment had been terminated due to death or disability as of April 30, 2021, then he, or his legal representatives, would have received: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options and other equity-type incentives (excluding performance shares and benefits under the ECAP, if any); (3) a pro rata portion of his target annual cash incentive award for fiscal year 2021 based on the target opportunity set forth in the Rozek Employment Agreement; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage iswas available under COBRA.
If wethe Company had terminated Mr. Rozek’sMulrooney’s employment for cause, or he had voluntarily terminated his employment without good reason as of April 30, 2021, then wethe Company would have paidbeen required to pay him accrued compensation through the date of termination. Similarly, in connection with Mr. Mulrooney’s voluntary termination of employment, the Company was only required to pay him accrued compensation through the date of termination.
In the event thatIf Mr. Rozek’sMulrooney’s employment had been terminated by the Company without cause or by Mr. Rozek for good reason as of April 30, 2021, and such termination had occurredInvoluntarily Terminated prior to a change in control or more than 1224 months after a change in control, the Companythen he would have paid Mr. Rozekbeen entitled to the following severance payments:following: (1) his accrued compensation; (2) a pro-ratapro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) a cash paymentpayments equal to one timeand one-half times his then current annual base salary and one and one-quarter times his target annual cash incentive award; (4) for up to be paid over 12 months; (4)18 months after termination, reimbursement of COBRA coverage premiums for Mr. Rozekhim and his covered dependents for up to 18 months;dependents; (5) all outstanding equity incentive awards (other than any performance shares) held by Mr. Rozek and benefits under the Company’s ECAP (if any) at the time of terminationTime Vested Awards that would have vested in thewithin 12 months following the date of termination would have become fully vested as of the date of such termination; and (6) a pro rata awardportion of the performance sharesawards would have been eligible to become vested based on actual performance during the entire performance period and the number of days Mr. Rozekhe was employed during the performance period plus an additional year (provided this number of days does not exceed the number of days in the performance period).
In the event thatIf Mr. Rozek’sMulrooney’s employment had been terminated by the Company without cause or by Mr. Rozek for good reasonInvoluntarily Terminated within 1224 months following a change in control, the Companythen he would have paid Mr. Rozekbeen entitled to the following severance payments:following: (1) his accrued compensation; (2) a pro-ratapro rata portion of his target annual cash incentive award for fiscal year 2021 based on the target opportunity set forth in the Rozek Employment Agreement;award; (3) a cash paymentpayments equal to the sum of one timetwo and one-half times his current annual base salary and one timetwo and one-half times his target bonusannual cash incentive award; (4) for fiscal year 2021 based on the target opportunity set forth in the Rozek Employment Agreementup to be paid over 12 months; (4)18 months after termination, reimbursement of COBRA coverage premiums for Mr. Rozekhim and his covered dependents and for up to 186 months plus an additional six monthsthereafter, if COBRA coverage is no longer available, reimbursement of health plan premium reimbursement; (5) all outstanding stock options and other equity type incentives held by Mr. Rozek and benefits under the ECAP (if any) at the time of termination, except for performance shares, would have become fully vested asa portion of the datecost of termination; (6) a pro-rata number of performance shares and/or a payout under any long-term performance-based cash incentive program based on actual performance and the number of days in the performance period prior to the change in control; and (7) a pro-rata number of performance shares and/or a payout under any long-term performance-based cash incentive program based on target performance and the number of days remaining in the performance period after the change in control.
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In the event Mr. Rozek’s employment had been terminated by the Company without cause upon the expiration of any one-year term of the Rozek Employment Agreement, the Company would have paid Mr. Rozek his accrued compensation and, subject to Mr. Rozek’s provision of transition services to the Companyhealthcare coverage for a period of three months (during which time Mr. Rozek would be entitled to continued pay at his then current annual base salary rate and participation in the Company’s welfare benefit plans, but no additional bonus or equity compensation), (1) a cash payment equal to one time his then current annual base salary to be paid in equal monthly installments over 12 months, (2) reimbursement of COBRA coverage premiums for Mr. Rozekhim and his covered dependents for up to 18 months following termination, (3) the equity awards initially granted to Mr. Rozek in connection with the Rozek Employment Agreement would have become fully vested (assuming the target performance), (4) all outstanding equity incentive awards (other than the equity awards initially granted to Mr. Rozek in connection with the Rozek Employment Agreement and any other performance shares) held by Mr. Rozek and benefits under the ECAP (if any) at the time of termination that would have vested in the 12 months followingdependents; (5) vesting on the date of termination of all outstanding Time Vesting Awards; and (6) a number of performance awards equal to the greater of (i) the performance awards that would have become fully vested as of the date of termination, and (5) a pro rata award of performance shares based on actual performance and the number of days Mr. Rozek was employed during the performance period plus an additional year (provided this number of days does not exceed the number of days in the performance period).
The severance benefits described above are conditioned on Mr. Rozek’s execution and delivery of a general release and compliance with covenants relating to confidentiality, non-solicitation, and non-competition.
| Prior to a Change | ||||||||||||
| in Control or More | Within 12 Months | |||||||||||
| than 12 Months after | after a Change | |||||||||||
| a Change in Control | in Control and | |||||||||||
| and Termination | Termination | |||||||||||
| Without Cause or | Without Cause or | Death or | ||||||||||
| Robert P. Rozek | With Good Reason | With Good Reason | Disability | |||||||||
| Equity (excluding performance-based shares) | $ | 2,457,844 | $ | 7,378,693 | $ | 7,378,693 | ||||||
| Performance-Based Shares(1) | 2,871,747 | 2,871,747 | 2,871,747 | |||||||||
| Base Salary | 575,000 | 575,000 | — | |||||||||
| Bonus | 2,535,750 | 1,150,000 | 575,000 | |||||||||
| Health Benefits | 30,608 | 40,809 | 61,214 | (2) | ||||||||
| TOTAL | $ | 8,470,949 | $ | 12,016,249 | $ | 10,886,654 | ||||||
Byrne Mulrooney.Under the Mulrooney Letter Agreement, in the event that Mr. Mulrooney’s employmentbeen earned if he had been terminated byserved the Company for the entirety of any reason other than cause or due to Mr. Mulrooney’s death or disability or by Mr. Mulrooney for good reason as of April 30, 2021,open performance period and such termination had occurred prior to or more than 12 months following the occurrence of a change in control, the Company would have paid Mr. Mulrooney the following severance payments subject to his execution and delivery of a general release and compliance with the restrictive covenants set forth in the Mulrooney Letter Agreement: (1) his accrued compensation; (2) a pro-rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) a cash payment equal to one time his then current annual base salary to be paid in equal monthly installments over 12 months; (4) reimbursement of COBRA coverage premiums for Mr. Mulrooney and his covered dependents for up to 18 months following termination; (5) all outstanding equity incentive awards (other than any performance shares) held by Mr. Mulrooney and benefits under the Company’s ECAP (if any) at the time of termination that would have vested in the 12 months following the date of termination would have become fully vested as of the date of termination; and (6) a pro rata award of performance shares based on actual performance and the number of days Mr. Mulrooney was employed during the performancesuch period plus an additional year (provided this number of days does not exceed the number of days in the performance period).
In the event that Mr. Mulrooney’s employment had been terminated by the Company for any reason other than cause or due to Mr. Mulrooney’s death or disability or by Mr. Mulrooney for good reason and such termination had occurred within 12 months following the occurrence of a change in control, then Mr. Mulrooney would have been entitled to receive the same severance benefits as described above (subject to the execution and delivery of a general release and compliance with the restrictive covenants in the Mulrooney Letter Agreement) except that the cash payment described in (3) above would equal one time Mr. Mulrooney’s then current annual base salary plus his then current target annual incentive award (as set forth in the Mulrooney Letter Agreement) and Mr. Mulrooney would be entitled to full vesting of his outstanding equity awards and benefits under the ECAP (if any); provided, however, that with respect to performance shares, such vesting would have been based onCompany’s actual performance through the date of the change in control.control and at the target level for the period subsequent to the change in control and (ii) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period.
|
In addition, pursuant to the terms of the LTPU Plan and Mr. Mulrooney’s LTPU award, his unvested LTPU award would becomewhich fully vested upon the occurrence of his death or disability or in the event of a change in control and,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 or would be payable as a single lump sum in the year in which a disability occurs. Each unit awarded under the LTPU Plan has a total value of $125,000 and a base value of $50,000, which is relevant for purposes of determining the value of payout of a partially-vested LTPU award.$125,000. Mr. Mulrooney was awarded seven units under the LTPU Plan and thus the total value of his vested award is $875,000 and$875,000. If the total base value of his award is $350,000. IfLTPUP Administrator determines Mr. Mulrooney terminates employment prior to his death or disability and not for cause, he is entitled to a lump sum payment of a portion of the base value of his 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. Becausehas engaged in Detrimental Activity, then Mr. Mulrooney’s vested award under the LTPU award was made on July 8, 2016, such a termination occurring on April 30, 2021, would entitle him to 100% of the base value of his award.Plan will be forfeited.
| Prior to a Change | ||||||||||||||||||||||||||||
| in Control or More | Within 12 Months | |||||||||||||||||||||||||||
| than 12 Months after | after a Change | |||||||||||||||||||||||||||
| a Change in Control | in Control and | |||||||||||||||||||||||||||
| and Termination | Termination | |||||||||||||||||||||||||||
| Without Cause or | Without Cause or | Change of | Death or | |||||||||||||||||||||||||
| Byrne Mulrooney | With Good Reason | With Good Reason | Control | Disability | ||||||||||||||||||||||||
| Equity (excluding performance-based shares) | $ | 2,720,262 | $ | 7,834,778 | $ | — | $ | — | ||||||||||||||||||||
| Performance-Based Shares(1) | 2,101,196 | 2,101,196 | — | — | ||||||||||||||||||||||||
| Byrne Mulrooney(1) | Prior to a Change in Control or More than 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Death or Disability | |||||||||||||||||||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 1,504,106 | $ | 3,344,113 | $ | 3,344,113 | ||||||||||||||||||||||
| Performance-Based Shares(2) | 1,309,305 | 1,683,101 | 1,683,101 | |||||||||||||||||||||||||
| Base Salary | 450,000 | 450,000 | — | — | 825,000 | 1,375,000 | — | |||||||||||||||||||||
| Bonus | 3,087,000 | 4,237,000 | — | — | 963,356 | 1,925,000 | 550,000 | |||||||||||||||||||||
| Health Benefits | 40,032 | 40,032 | — | — | 108,838 | 145,117 | 217,675 | (3) | ||||||||||||||||||||
| LTPU Award(2) | 350,000 | — | 875,000 | 875,000 | ||||||||||||||||||||||||
| LTPU Award(4) | 875,000 | 875,000 | 875,000 | |||||||||||||||||||||||||
| TOTAL | $ | 8,748,490 | $ | 14,663,006 | $ | 875,000 | $ | 875,000 | $ | 5,585,605 | $ | 9,347,331 | $ | 6,669,889 | ||||||||||||||
| (1) | Mr. Mulrooney notified the Company of his voluntary resignation on July 13, 2023, and terminated employment effective August 1, 2023. As a result, he will not receive any of the amounts described in this table other than his vested LTPU award, unless the LTPUP Administrator determines Mr. Mulrooney engaged in Detrimental Activity, in which case he would also forfeit the LTPU award. |
| (2) | For the calculations above, if performance shares would vest based on actual Company performance, to the extent the applicable vesting period was still ongoing as of the end of fiscal |
| (3) | Where Mr. Mulrooney or his dependents are entitled to |
| 61 | 2023 Proxy Statement |
Mark Arian.Under the Arian LetterEmployment Agreement, if Mr.Arian’s employment terminates due to death or disability, then he, or his legal representatives, would receive: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the ECAP; (3) a pro rata portion of his target annual cash incentive award for the fiscal year in which his employment terminated; (4) the eventnumber of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage was available under COBRA.
If the Company terminates Mr. Arian’s employment had been terminated byfor cause at any time or he voluntarily terminates his employment without good reason, then the Company for any reason other than cause (and not due towould pay him accrued compensation through the date of termination.
If Mr. Arian’s death or disability) or by Mr. Arian for good reason, and such termination had occurredemployment is Involuntarily Terminated prior to or more than 12 months following the occurrence of a change in control Mr. Arian would have becomeor more than 24 months after a change in control, then he will be entitled to the following payments and benefits subject to his execution and delivery of a general release and compliance with the restrictive covenants set forth in the Arian Letter Agreement:following: (1) his accrued compensation; (2) a pro-ratapro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) a cash paymentpayments equal to one timeand one-half times his then current annual base salary and one and one-quarter times his target annual cash incentive award; (4) for up to be paid in equal monthly installments over 12 months; (4)18 months after termination, reimbursement of COBRA coverage premiums for Mr. Arianhim and his covered dependents for up to 18 months following termination;dependents; (5) full vesting of the Sign On Equity Award (as defined in the Arian Letter Agreement) to the extent then outstanding and unvested; (6) all outstanding equity incentive awards (other than the Sign On Equity Award and any performance shares) held by Mr. Arian and benefits under the Company’s ECAP (if any) at the time of terminationTime Vested Awards that would have vested in thewithin 12 months following the date of termination would havewill become fully vested as of the date of such termination; (7) outstanding LTPU awards will be treated in accordance with the LTPU Plan (as described in more detail below); and (8)(6) a pro rata awardportion of the performance shares and/or long-term performance-based cash incentivesawards will vest based on actual performance during the entire performance period and the number of days Mr. Arianhe was employed during the performance period plus an additional year (provided this number of days does not exceed the number of days in the performance period).
In addition, in the event thatIf Mr. Arian’s employment had been terminated by the Company for any reason other than cause (and not due to death or disability) or by Mr. Arian for good reason and such termination had occurredis Involuntarily Terminated within 1224 months following the occurrence of a change in control, then Mr. Arian would have beenhe will be entitled to receive the same severance benefits as described infollowing: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award; (3) through (8) above (subjectcash payments equal to the executiontwo and delivery of a general release and compliance with the restrictive covenants in the Arian Letter Agreement) except that the cash payment described in (3) above would equal one time Mr. Arian’s thenone-half times his current annual base salary plusand two and one-half times his then current target annual cash incentive award (as set forth inaward; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents and for 6 months thereafter, if COBRA coverage is no longer available, reimbursement of a portion of the Arian Letter Agreement)cost of healthcare coverage for him and Mr. Arianhis dependents; (5) vesting on the date of termination of all outstanding Time Vesting Awards; and (6) a number of performance awards equal to the greater of (i) the performance awards that would have been entitled to full vestingearned if he had served the Company for the entirety of his outstanding equity awardsany open performance period and benefits under the ECAP (if any); provided, however, that with respect toCompany’s performance shares,during such vesting would haveperiod had been based onthe Company’s actual performance through the date of the change in control.control and at the target level for the period subsequent to the change in control and (ii) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period.
|
PursuantIn addition, pursuant to the terms of the LTPU Plan and Mr. Arian’s LTPU award, his unvested LTPU award would becomewhich fully vested uponin 2021, in the occurrencecase of his death or disability, or in the event of a change in control and 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 or would be payable as a single lump sum in the year in which a disability occurs. Each unit awarded under the LTPU Plan has a total value of $125,000 and a base value of $50,000.$125,000. Mr. Arian was awarded eight units under the LTPU Plan and thus the total value of his vested award is $1,000,000 and$1,000,000. Notwithstanding the total base value of his awardforegoing, if the LTPUP Administrator determines that Mr. Arian’s termination is $400,000. If Mr. Arian terminates employment prior to his death or disability and not for cause or that he is entitled to a lump sum payment of a portion of the base value of his 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. Becausehas engaged in Detrimental Activity, then Mr. Arian’s vested award under the LTPU award was made in April 2017, such a termination occurring on April 30, 2021,Plan would entitle him to 100% of the base value of his award.be forfeited.
| Mark Arian | Prior to a Change in Control or More than 12 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 12 Months | Change of Control | Death or Disability | Prior to a Change in Control or More than 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Death or Disability | |||||||||||||||||||||
| Equity (excluding performance-based shares) | $ | 1,390,048 | $ | 4,583,797 | $ | — | $ | — | ||||||||||||||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 1,044,627 | $ | 2,491,422 | $ | 2,491,422 | ||||||||||||||||||||||
| Performance-Based Shares(1) | 947,066 | 947,066 | — | — | 1,309,305 | 1,683,101 | 1,683,101 | |||||||||||||||||||||
| Base Salary | 450,000 | 450,000 | — | — | 825,000 | 1,375,000 | — | |||||||||||||||||||||
| Bonus | 2,646,000 | 3,646,000 | — | — | 1,072,500 | 1,925,000 | 550,000 | |||||||||||||||||||||
| Health Benefits | 48,466 | 48,466 | — | — | 108,838 | 145,117 | 217,675 | (2) | ||||||||||||||||||||
| LTPU Award(2) | 400,000 | — | 1,000,000 | 1,000,000 | ||||||||||||||||||||||||
| LTPU Award(3) | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||||||||||||||||||
| TOTAL | $ | 5,881,580 | $ | 9,675,329 | $ | 1,000,000 | $ | 1,000,000 | $ | 5,360,270 | $ | 8,619,640 | $ | 5,942,198 | ||||||||||||||
| (1) | For the calculations above, if performance shares would vest based on actual Company performance, to the extent the applicable vesting period was still ongoing as of the end of fiscal |
| (2) | Where Mr. Arian or his dependents are entitled to |
| 62 | 2023 Proxy Statement |
Michael Distefano. Under the Distefano Employment Agreement, if Mr. Distefano’s employment terminates due to death or disability, then he, or his legal representatives, would receive: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the ECAP; (3) a pro rata portion of his target annual cash incentive award for the fiscal year in which his employment terminated; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for him and his dependents for as long as such coverage was available under COBRA.
If the Company terminates Mr. Distefano’s employment for cause at any time or he voluntarily terminates his employment without good reason, then the Company would pay him accrued compensation through the date of termination.
If Mr. Distefano’s employment is Involuntarily Terminated prior to a change in control or more than 24 months after a change in control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) cash payments equal to one and one-half times his then current annual base salary and one and one-quarter times his target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents; (5) the Time Vested Awards that would have vested within 12 months of termination will become fully vested as of the date of such termination; and (6) a pro rata portion of the performance awards will vest based on actual performance during the entire performance period and the number of days he was employed during the performance period plus an additional year (provided this number of days does not exceed the number of days in the performance period).
If Mr. Distefano’s employment is Involuntarily Terminated within 24 months following a change in control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award; (3) cash payments equal to two and one-half times his current annual base salary and two and one-half times his target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents and for 6 months thereafter, if COBRA coverage is no longer available, reimbursement of a portion of the cost of healthcare coverage for him and his dependents; (5) vesting on the date of termination of all outstanding Time Vesting Awards; and (6) a number of performance awards equal to the greater of (i) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been the Company’s actual performance through the date of the change in control and at the target level for the period subsequent to the change in control and (ii) the performance awards that would have been earned if he had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period.
In addition, pursuant to the terms of the LTPU Plan and Mr. Distefano’s LTPU awards, which fully vested in fiscal year 2022, 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 or would be payable as a single lump sum in the year in which a disability occurs. Each unit awarded under the LTPU Plan has a total value of $125,000. Mr. Distefano was awarded six units under the LTPU Plan and thus the total value of his vested award is $750,000. Notwithstanding the foregoing, if the LTPUP Administrator determines that Mr. Distefano’s termination is for cause or that he has engaged in Detrimental Activity, then Mr. Distefano’s vested award under the LTPU Plan would be forfeited.
| Michael Distefano | Prior to a Change in Control or More than 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Within 24 Months after a Change in Control and Termination Without Cause or With Good Reason | Death or Disability | |||||||||
| Equity/ECAP (excluding performance-based shares) | $ | 522,290 | $ | 1,124,148 | $ | 1,124,148 | ||||||
| Performance-Based Shares(1) | 301,418 | 382,719 | 382,719 | |||||||||
| Base Salary | 825,000 | 1,375,000 | — | |||||||||
| Bonus | 1,019,792 | 1,925,000 | 550,000 | |||||||||
| Health Benefits | 75,999 | 101,332 | 151,998 | (2) | ||||||||
| LTPU Award(3) | 750,000 | 750,000 | 750,000 | |||||||||
| TOTAL | $ | 3,494,499 | $ | 5,658,199 | $ | 2,958,865 | ||||||
| (1) | For the calculations above, if performance shares would vest based on actual Company performance, to the extent the applicable vesting period was still ongoing as of the end of fiscal 2023, it was assumed that the Company achieved target performance. |
| (2) | Where Mr. Distefano or his dependents are entitled to COBRA for as long as COBRA is available, we have assumed entitlement to 36 months of COBRA as that is the maximum length of time for which such benefits may be available. |
| (3) | Mr. Distefano’s LTPU award was already fully vested as of the last day of the fiscal year. The full value of the award is payable following any termination of employment subject to the terms of the LTPU Plan and as described in more detail above. |
| 63 | 2023 Proxy Statement |
For purposes of the foregoing employment agreements, (as in effect on April 30, 2021), “cause,” “change in control,” “and “good reason,” generally mean the following:
| • | “Cause” means: | |
| – | conviction of any felony or other crime involving fraud, dishonesty or acts of moral turpitude, or pleading guilty or nolo contendere to such charges; or | |
| – | reckless or intentional behavior or conduct that causes or is reasonably likely to cause the Company material harm or injury or exposes or is reasonably likely to expose the Company to any material civil, criminal, or administrative liability; or | |
| – | any material misrepresentation or false statement made by the executive in any application for employment, employment history, resume, or other document submitted to the Company, either before, during, or after employment; or | |
| – | for Messrs. Mulrooney, Arian, and | |
| • | |||
| “Change in Control” means: | |||
| – | an acquisition by any person of beneficial ownership or a pecuniary interest in more than | ||
| – | the consummation of a merger, consolidation, or reorganization of the Company or of a sale or other disposition of all or substantially all of the Company’s consolidated assets as an entirety (collectively, a “Business Combination”), other than a Business Combination (a) in which all or substantially all of the holders of Voting Stock of the Company hold or receive directly or indirectly | ||
|
| before the Business Combination, and (iv) in the aggregate own more than | ||
| – |
| • | during any period of two consecutive years, individuals who at the beginning of such period constituted the Board and any new directors whose appointment, election, or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose appointment, election or nomination for election was previously so approved (all such directors, “Incumbent Directors”), cease for any reason to constitute a majority of the Board. Notwithstanding the above provisions, no “Change in Control” shall be deemed to have occurred if a Business Combination, as described above, is effected and a majority of the Incumbent Directors, through the adoption of a Board resolution, determine that, in substance, no Change in Control has occurred. |
| • | “Good Reason” for purposes of Mr. Burnison means, if without Mr. Burnison’s prior written consent: | |
| – | the Company materially reduces Mr. Burnison’s duties or responsibilities as Chief Executive Officer or assigns him duties which are materially inconsistent with his duties or which materially impair his ability to function as Chief Executive Officer; | |
| – | the Company reduces Mr. Burnison’s base salary or target annual incentive award under the Company’s annual cash incentive bonus plan (in each case, other than as part of an across-the-board reduction applicable to all executive officers of the Company); | |
| – | the Company fails to perform or breaches its obligations under any other material provision of the Burnison Employment Agreement and fails to cure such failure or breach within the period required by the Burnison Employment Agreement; | |
| – | Mr. Burnison’s primary location of business is moved by more than 50 miles, subject to certain exceptions set forth in the Burnison Employment Agreement; | |
| – | the Company reduces Mr. | |
| – | the Company fails to obtain the assumption in writing of its obligation to perform the Burnison Employment Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale, or similar transaction. | |
| • | “Good Reason” for purposes of Mr. Rozek means, if without Mr. Rozek’s prior written consent: | |
| – | the Company materially reduces Mr. Rozek’s title, duties, or responsibilities as Chief Financial Officer and Chief Corporate Officer, or removes him; | |
| – | the Company reduces Mr. Rozek’s then current base salary or target award opportunity under the Company’s annual | |
| – | Mr. Rozek’s primary location of business is moved by more than 50 miles (other than in connection with a move of the Company’s corporate headquarters). | |
| • | “Good Reason” for purposes of Messrs. Mulrooney, Arian, and | |
| – | The Company materially reduces his duties or | |
| – | The Company materially reduces his then current base salary or target annual incentive award (other than as part of an across-the-board reduction applicable to all “named executive officers” of the Company); or | |
| – | for |
| 64 | 2023 Proxy Statement |
The 20212023 annual total compensation of the median compensated of all our employees, other than our CEO Gary Burnison, was $78,048;$148,917; Mr. Burnison’s 20212023 annual total compensation was $11,347,527,$11,517,445, and the ratio of these amounts was 1-to-145.1-to-77.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
As permitted under the SEC rules, we used the same median employee as last year because we believe we did not experience any changes in our employee population or employee compensation arrangements that would significantly impact the pay ratio disclosure. In making this determination, however, we excluded approximately 651 employees of Infinity Consulting Solutions, which we acquired on August 1, 2022, and approximately 890 employees of Salo, LLC, which we acquired on February 1, 2023. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. For these purposes, we identified a median compensated employee using base salary paid in fiscal year 2021.2022, annualized to the extent permitted by SEC rules for those employees that were employed for less than the full fiscal year or on an unpaid leave. As permitted by SEC rules, we used a valid statistical sampling methodology applied to all of our employees who were employed as of April 30, 2021,2022, to identify the global median employee.
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Compensation Discussion and Analysis” section of this Proxy Statement.
| Value of Initial Fixed $100 Investment Based On: | |||||||||||||||||||||||||||||||||
| Year (a) | Summary Compensation Table Total for PEO(1) (b) | Compensation Actually Paid to PEO(2) (c) | Average Summary Compensation Table Total for Non-PEO NEOs(1) (d) | Average Compensation Actually Paid to Non-PEO NEOs(2) (e) | Total Shareholder Return(3) (f) | Peer Group Total Shareholder Return(4) (g) | Net Income (in thousands)(5) (h) | Adjusted Fee Revenue (in millions)(6) (i) | |||||||||||||||||||||||||
| 2023 | $ 11,517,445 | $ 4,752,895 | $ 3,283,352 | $ 1,500,999 | $ 172 | $ 144 | $ 213,054 | $ 2,876 | |||||||||||||||||||||||||
| 2022 | 9,547,534 | 6,792,260 | 3,677,007 | 2,726,928 | 217 | 174 | 330,845 | 2,596 | |||||||||||||||||||||||||
| 2021 | 11,347,527 | 30,500,006 | 5,492,093 | 11,884,612 | 238 | 150 | 115,562 | 1,810 | |||||||||||||||||||||||||
| (1) | The dollar amounts reported in column (b) are the amounts reported for Gary Burnison (the Company’s Chief Executive Officer) for each of the corresponding years in the “Total” column in our Summary Compensation Table. The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Burnison) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for these purposes in each applicable year are as follows: (i) for fiscal year 2023, Messrs. Rozek, Mulrooney, Arian, and Distefano; and (ii) for fiscal years 2022 and 2021, Messrs. Rozek, Mulrooney, and Arian. |
| (2) | The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Burnison, and the dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to our other NEOs as a group, each as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Mr. Burnison or the other NEOs on average, as applicable. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
|
|
| 2023 | 2022 | 2021 | |||||||||||||||||||||||
| Compensation Actually Paid | PEO | Other NEOs* | PEO | Other NEOs* | PEO | Other NEOs* | |||||||||||||||||||
| Summary Compensation Table Total | $ | 11,517,445 | $ | 3,283,352 | $ | 9,547,534 | $ | 3,677,007 | $ | 11,347,527 | $ | 5,492,093 | |||||||||||||
| Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table | (9,335,918 | ) | (2,249,568 | ) | (5,052,479 | ) | (1,712,343 | ) | (5,700,025 | ) | (2,133,412 | ) | |||||||||||||
| Less, Change in Pension Value reported in Summary Compensation Table | — | — | — | — | — | — | |||||||||||||||||||
| Plus, year-end fair value of outstanding and unvested equity awards granted in the year | 5,708,984 | 1,380,628 | 3,718,747 | 1,260,291 | 14,087,175 | 5,272,564 | |||||||||||||||||||
| Plus, fair value as of vesting date of equity awards granted and vested in the year | — | — | — | — | — | — | |||||||||||||||||||
| Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | (3,095,699 | ) | (905,421 | ) | (1,627,471 | ) | (556,155 | ) | 10,723,526 | 3,204,072 | |||||||||||||||
| Plus (less), change in fair value from last day of prior fiscal year to vesting date for equity awards granted in prior years that vested in the year | (301,466 | ) | (79,156 | ) | 41,935 | 3,185 | (111,775 | ) | (2,863 | ) | |||||||||||||||
| Less, prior year-end fair value for any equity awards forfeited in the year | — | — | — | — | — | — | |||||||||||||||||||
| Plus, dividends or other earnings paid on awards in the covered fiscal year prior to vesting if not otherwise included in the SCT Total for the covered fiscal year | 259,549 | 71,164 | 163,994 | 54,943 | 153,578 | 52,158 | |||||||||||||||||||
| Plus, pension service cost for services rendered during the year | — | — | — | — | — | — | |||||||||||||||||||
| Compensation Actually Paid | $ | 4,752,895 | $ | 1,500,999 | $ | 6,792,260 | $ | 2,726,928 | $ | 30,500,006 | $ | 11,884,612 | |||||||||||||
| * | Amounts presented are averages for the entire group of Other NEOs in each respective year. |
| (3) | Total Shareholder Return (TSR) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the Company’s share price at the end of each fiscal year shown and the beginning of the measurement period, and the beginning of the measurement period, by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is April 30, 2020. |
| (4) | The peer group used for this purpose for fiscal years 2022 and 2023 is the following Company-established peer group, as used in the Form 10-K for purposes of Item 201(e)(1)(ii) of Regulation S-K for such years: ASGN Inc. (ASGN), Cushman & Wakefield Plc. (CWK), FTI Consulting Inc. (FCN), Heidrick & Struggles International Inc. (HSII), Huron Consulting Group Inc. (HURN), ICF International Inc. (ICFI), Insperity Inc. (NSP), Jones Lang Lasalle Inc. (JLL), ManpowerGroup Inc. (MAN), PageGroup Plc. (MPGPF), and Robert Half International Inc. (RHI). The peer group used for this purpose for fiscal year 2021 is the following Company-established peer group, as used in the Form 10-K for purposes of Item 201(e)(1)(ii) of Regulation S-K for such years: CBIZ Inc. (CBZ), FTI Consulting Inc. (FCN), Heidrick & Struggles International Inc. (HSII), Huron Consulting Group Inc. (HURN), ICF International Inc. (ICFI), Insperity Inc. (NSP), Kelly Services Inc. (KELYA), Kforce Inc. (KFRC), Resources Connection Inc. (RGP), Robert Half International Inc. (RHI), Willis Towers Watson Plc (WLTW), and TrueBlue Inc. (TBI). |
| (5) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable fiscal year. |
| (6) | Adjusted Fee Revenue is defined as Fee Revenue of the Company, as reported in the Form 10-K for the applicable fiscal year, adjusted as necessary to eliminate the effect of currency fluctuations, including by translating the applicable fiscal year’s actual results at a currency rate comparable to the rate used in the Company’s AOP for such fiscal year. |
Description of Certain Relationships between Information Presented in the Pay versus Performance Table
As described in more detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
| 66 | 2023 Proxy Statement |
I CAP vs Company TSR and Peer Group TSR
Compensation Actually Paid and Net Income
I CAP vs. Net Income
| 67 | 2023 Proxy Statement |
Compensation Actually Paid and Adjusted Fee Revenue
I CAP vs. Adjusted Fee Revenue
Financial Performance Measures
As described in greater detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
1. Adjusted Fee Revenue;
2. Adjusted EBITDA Margin;
3. Adjusted Diluted EPS; and
4. Adjusted ROIC.
The compensation of directors, including all restricted stock unit awards, for fiscal year 20212023 is set forth in the table below.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | (1) | Other Compensation | (2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | (1) | All Other Compensation ($) | (2) | Total ($) | |||||||||||||||||||
| Doyle N. Beneby | 86,788 | (3) | 150,110 | 9,016 | 245,914 | 107,500 | (3) | 185,108 | 17,279 | 309,887 | |||||||||||||||||||||
| Laura M. Bishop | 105,000 | (4) | 185,108 | 2,040 | 292,148 | ||||||||||||||||||||||||||
| Christina A. Gold | 204,288 | (4) | 150,110 | 2,004 | 356,402 | — | (5) | — | 308 | 308 | |||||||||||||||||||||
| Charles L. Harrington | 10,000 | (6) | 280,306 | 2,624 | 292,930 | ||||||||||||||||||||||||||
| Jerry P. Leamon | 101,788 | (5) | 150,110 | 2,004 | 253,902 | 250,000 | (7) | 185,108 | 2,040 | 437,148 | |||||||||||||||||||||
| Angel R. Martinez | 81,788 | (6) | 150,110 | 2,004 | 233,902 | 105,000 | (8) | 185,108 | 2,040 | 292,148 | |||||||||||||||||||||
| Debra J. Perry | 99,288 | (7) | 150,110 | 2,004 | 251,402 | 120,000 | (9) | 185,108 | 2,040 | 307,148 | |||||||||||||||||||||
| Lori Robinson | 74,288 | (8) | 150,110 | 2,004 | 226,402 | ||||||||||||||||||||||||||
| Lori J. Robinson | 95,000 | (10) | 185,108 | 2,040 | 282,148 | ||||||||||||||||||||||||||
| George T. Shaheen | 116,788 | (9) | 150,110 | 2,764 | 269,662 | — | (11) | — | 1,542 | 1,542 | |||||||||||||||||||||
| (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. The assumptions used to calculate the valuation of the awards are set forth in Note 4 to the notes to consolidated financial statements in our |
| (2) | Represents dividends on unvested restricted stock units. |
| (3) | Mr. Beneby received a director fee of |
| (4) | Ms. |
| 68 | 2023 Proxy Statement |
| (5) | Ms. Gold retired from the Board effective September 22, 2022, and she did not receive any reportable compensation in fiscal year |
| (6) | Mr. |
| (7) | Mr. Leamon received an annual fee of $130,000 as chair of the Board, a director fee of $95,000, and an annual fee of $25,000 for service as Compensation Committee Chair during fiscal 2023. |
| (8) | Mr. Martinez received a director fee of $95,000 and an annual fee of $10,000 for service as an Audit Committee Member during fiscal 2023. |
| (9) | Ms. Perry received a director fee of |
| Ms. Robinson received a director fee of | |
| Mr. Shaheen retired from the Board effective |
Directors who are also employees or officers do not receive any additional compensation for their service on the Board. The Committee, in consultation with Pearl Meyer, its independent compensation consultant, periodically reviews non-employee director compensation and recommends changes based on competitive market data. Most recently, increases in director compensation that became effective for fiscal year 2020 were implemented in order to better align director compensation with that of our peer group. Except forOn June 14, 2022, the temporary reductiondirector fees were increased as follows: the annual director fee was increased from $85,000 to $95,000; the value of the annual equity award of restricted stock units granted to non-employee directors was increased from $150,000 to $185,000; the fee paid to members of the Audit Committee was increased from $7,500 to $10,000; the fee paid to the Compensation and Personnel Committee Chair was increased from $20,000 to $25,000; and the fee paid to the Chair of the Board was increased from $120,000 to $130,000. Such changes in retainer fees described below, no changes were made tocompensation remain aligned with director compensation for fiscal year 2021.of our peer group companies.
The non-employee director compensation program provides for an annual equity award of restricted stock units with a value of approximately $150,000$185,000 to be awarded on the date of each annual meeting of stockholders. The number of units subject to such award is determined by dividing $150,000$185,000 by the closing price of the Company’s common stock on the date of such annual meeting of stockholders (rounded to the nearest ten units). Non-employee directors are permitted to defer settlement of their restricted stock units; during fiscal year 2021,2023, Messrs. ShaheenBeneby and BenebyHarrington elected to defer their restricted stock units. The restricted stock unit awards vest on the day before the following annual meeting of stockholders.stockholders and, beginning with awards granted in calendar year 2023 and thereafter, the date of a director’s earlier death. Additionally, non-employee directors receive each year, $85,000$95,000 either in cash or in restricted stock units, at their election, on the date of each annual meeting of stockholders. During fiscal year 2023, Mr. Harrington elected to receive his director fee in restricted stock units and to defer settlement of such restricted stock units. The non-employee director compensation program is intended to compensate the non-employee directors for their services through the next annual meeting of stockholders. In addition, each member of the Audit Committee receives $7,500$10,000 in cash or restricted stock units annually, the Audit Committee Chair receives $25,000 in cash or restricted stock units annually, the Compensation and Personnel Committee Chair receives $20,000$25,000 in cash or restricted stock units annually, and the Nominating and Corporate Governance Committee Chair receives $12,500 in cash or restricted stock units annually. The Chair of the Board receives $120,000$130,000 in cash or restricted stock units annually. All directors are reimbursed for their out-of-pocket expenses incurred in connection with their duties as directors.
In order to assist the Company’s efforts in weathering the current economic environment created by COVID-19, the non-employee members of the Board agreed to a pro-rata reduction by 50% of the $85,000 retainer payable for the period from May 1, 2020 through December 31, 2020. In light of the Company’s financial performance for the second and third quarters of the Company’s 2021 fiscal year, however,
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the Committee reversed the reduction and approved the payment to the non-employee members of the Board of an amount equal to the reduced cash retainer not paid to such Board members for the second and third quarters of the Company’s 2021 fiscal year, subject to such director’s continued service as a director with the Company until the date of such payments, which occurred on December 11, 2020 and March 15, 2021. The non-employee members of the Board were not, and will not be, reimbursed for the reduced cash retainer in respect of the first quarter of the Company’s 2021 fiscal year.
The Company’s stock ownership policy for directors requires each non-employee director to own three times their annual cash retainer in Company stock.
| Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan (Excluding Securities Reflected in Column (a)) | |||||||||
| Equity compensation plans approved by security holders | 995,123 | $ | — | 2,611,317 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| TOTAL | 995,123 | $ | — | 2,611,317(1) | ||||||||
| Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
| Equity compensation plans approved by security holders | 929,051 | $ | — | 4,033,037 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| TOTAL | 929,051 | $ | — | 4,033,037 | (1) | |||||||
The values in this table are as of April 30, 2021.
2023.
| (1) | This includes |
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 | 2021 Proxy Statement |
The Audit Committee has approved the appointment of Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm for fiscal year 2022.2024. Ernst & Young LLP has served as the Company’s independent registered public accounting firm since March 2002. Ernst & Young LLP has unrestricted access to the Audit Committee to discuss audit findings and other financial matters. Neither the Company’s Restated Certificate of Incorporation nor its Bylaws require that the stockholders ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm. However, we are requesting ratification because we believe it is a matter of good corporate practice.
If the Company’s stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young, LLP, but may nonetheless retain Ernst & Young LLP as the Company’s independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may change the appointment at any time if it determines that such change would be in the best interests of the Company and its stockholders. Representatives of Ernst & Young LLP will attend the Annual Meeting to answer appropriate questions and may also make a statement if they so desire.
Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm requires the affirmative vote of a majority of those shares present, either online or by proxy, and entitled to vote at the Annual Meeting.
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The following table summarizes the fees that Ernst & Young, LLP, our independent registered public accounting firm, billed to us for each of the last two fiscal years. All services provided by Ernst & Young LLP were approved by the Audit Committee in conformity with the Audit Committee’s pre-approval process (as discussed below).
| 2021 | 2020 | 2023 | 2022 | |||||||||
| Audit fees(1) | $ | 4,011,579 | $ | 4,451,431 | $ | 4,730,531 | $ | 3,906,044 | ||||
| Audit-related fees | 38,000 | 168,000 | — | — | ||||||||
| Tax fees | 1,552,806 | 1,613,619 | 1,466,105 | 1,360,948 | ||||||||
| All other fees | — | — | — | — | ||||||||
| TOTAL | $ | 5,602,385 | $ | 6,233,050 | $ | 6,196,636 | $ | 5,266,992 | ||||
| (1) | Represents fees for audit services, including fees associated with the annual audit, the reviews of the Company’s quarterly financial statements, attestation services related to compliance with Section 404 of the Sarbanes-Oxley Act, and statutory audits required by governmental agencies for regulatory, legislative, and financial reporting requirements. |
| (2) | |
| Represents fees for tax compliance, planning, and |
Fees paid to Ernst & Young LLP in fiscal year 20212023 were lowerhigher than in fiscal year 20202022 primarily due to non-recurring servicesan increase in fiscal year 2020 related tofees associated with the annual audit (including the audit fees for the Company’s senior notes offeringacquisitions) and lease implementation work, and a reduction in statutory audits performed by Ernst & Young LLP in fiscal year 2021.the reviews of the Company’s quarterly financial statements.
As with previous years, the Audit Committee undertook a review of Ernst & Young LLP in determining whether to select Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 20222024 and to recommend ratification of its selection to the Company’s stockholders. In that review, the Audit Committee utilized a tailored external auditor assessment questionnaire and considered a number of factors, including:
| • | continued independence of Ernst & Young, |
| • | length of time Ernst & Young |
| • | senior management’s assessment of Ernst & |
| • | audit and non-audit fees, |
| • | capacity to staff the audit appropriately, |
| • | geographic and subject matter coverage, |
| • | lead Audit Engagement Partner performance, |
| • | overall performance, |
| • | |
| • | whether retaining Ernst & Young |
Based upon this review, the Audit Committee believes that Ernst & Young LLP is independent and that it is in the best interests of the Company and our stockholders to retain Ernst & Young LLP to serve as our independent registered public accounting firm for fiscal year 2022.2024.
In accordance with the Sarbanes-Oxley Act and related SEC rules, the Audit Committee limits the number of consecutive years an individual partner may serve as the lead audit engagement partner to the Company. The maximum number of consecutive years of service in that capacity is five years. A new lead audit engagement partner took the position in July 2020June 2023 and accordingly became the new lead engagement partner commencing with the fiscal year 20212024 audit.
| 73 | 2023 Proxy Statement |
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the work of the independent registered public accounting firm. Further, the Audit Committee is afforded the funding and resources it determines appropriate for compensating the independent registered public accounting firm and any advisers it may employ. As part of this responsibility, the Audit Committee is required to pre-approve the audit and
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non-audit services performed by the independent registered public accounting firm to help assure that they do not impair the registered public accounting firm’s independence from the Company. Services provided by the independent registered public accounting firm must be approved by the Audit Committee on a case-by-case basis, unless such services fall within a detailed list of services as documented in the Company’s pre-approval policy whereby the Audit Committee has provided pre-approval for specific types of audit, audit-related, and permissible tax compliance services within certain fee limitations. The Audit Committee believes the combination of these two approaches results in an effective and efficient procedure to manage the approval of services performed by the independent registered public accounting firm. The Audit Committee will also consider whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Company’s business, people, culture, accounting systems, risk profile, and other factors, and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor is determinative.
All requests or applications for Ernst & Young LLP’sYoung’s services are submitted to the Senior Vice President, Finance and include a detailed description of services to be rendered. The detailed descriptions are then reviewed against a list of approved services and if the services are on the approved list of services, they are reported to the Audit Committee at regularly scheduled meetings. If the services do not meet the specific list of approved services, they are presented to the Audit Committee for review and approval. All requests or applications for Ernst & Young LLP’sYoung’s services receive approval from the Senior Vice President, Finance, prior to the Audit Committee’s review and approval.
Adapting to Evolving Role Q&A with Debra Perry, Chair of the Audit Committee Question: As public companies face an evolving risk and regulatory landscape, oversight for such matters is often added to the demands on, and responsibilities of, the Audit Committee. What is the Audit Committee doing to remain educated about and responsive to these matters as its oversight role also evolves? |  |
The Audit Committee draws from multiple sources in its efforts to maintain a knowledgeable and experienced membership prepared to oversee the expectations for, and priorities of, Korn Ferry as a global organization. For example, information sessions on evolving regulatory and legal requirements are provided periodically by management, other Board committees, and Ernst & Young to supplement or expand on standing agenda items. Such discussions in the last few years have included targeted presentations focused on the Board’s role in cybersecurity oversight and the overall threat environment, evolving investor expectations and corporate practices, business continuity planning, and changing accounting standards. The Audit Committee has also received updates on financial and operational risks, organizational priorities, and trends in technology uses and the economy. To supplement these sessions, the Audit Committee has expanded its own expertise. Last year, its membership increased from three to four members. Audit Committee refreshment has recently emphasized insights into business and technology transformation for complex organizations, as well as financial expertise and experience in executive management. By combining internal and external sources with an informed bench of directors, the Audit Committee seeks to understand the expanding matters within its purview from a range of perspectives. | |
Q & A with Debra Perry, Chair of the Audit Committee
Question: How did Korn Ferry respond to operating during the pandemic, including providing for continuity of operations and the safety of its employees?
Korn Ferry employs over 7,800 people across more than 50 offices and 100 countries. The operational and human impacts of the COVID-19 pandemic presented an immense challenge for the Company and a serious test of its business continuity planning. With the benefit of our prior preparation and business continuity planning, however, Korn Ferry was able to respond swiftly and carry through on its commitment to protect the health and safety of our employees and their families under the guiding principles of Safety, Caution, and Agility.
Global operations shifted almost entirely to remote work as we entered the first quarter of fiscal 2021. Korn Ferry’s existing mobile and collaborative technology capabilities facilitated this transition and the virtual delivery of services to clients. The Company also imposed a range of safety measures, mobilized local, regional, and global teams to address the pandemic’s impact, and formed a COVID-19 Task Force of cross-functional and operational executives. Additionally, colleagues have led numerous client conversations, including having meaningful discussions around navigating COVID-19 impacts and sharing insights into how some clients approached the path to recovery through their organizations, people, and leadership.
The Board and Audit Committee have actively participated in overseeing the Company’s COVID-19 response, including by monitoring the impact of COVID-19 on the Company’s financial position and results of operations, understanding how management is assessing the impact, and considering the nature and adequacy of management’s responses, including health safeguards, business continuity, internal communications, and infrastructure. Now, more than a year into the pandemic, Korn Ferry continues to evolve its operations and business continuity planning, remaining focused on Safety, Caution, and Agility.
Question: The COVID-19 pandemic has necessitated a virtual format for many aspects of the Company’s business that historically have been performed on-site. How did this impact the services performed by the Company’s external auditor and the Audit Committee’s oversight of the annual audit plan?
Due to the COVID-19 pandemic and related stay-at-home orders, the Company’s fiscal year end 2021 audit was performed virtually. As part of its oversight responsibilities for the Company’s financial statements and audit plans, prior to the preparation of the audit, the Audit Committee met frequently with Ernst & Young LLP and Korn Ferry management to review and discuss the overall plans for the audit and the adjustments that would be undertaken in light of the virtual preparation of the audit. During the audit process, the Audit Committee continued to communicate regularly with Ernst & Young LLP on matters relating to the remote delivery of the audit and status of the audit process. These discussions included updates on certain adjustments to Ernst & Young LLP’s procedures and timing of work to address the increased risks that were inherent in performing its audit procedures remotely and the process of adapting its audit approach to a more digital-based process, as well as a review of digital tools/platforms utilized in the audit to help advance this virtual work.
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The Audit Committee is comprised of threefour non-employee directors, all of whom are “independent” under the applicable listing standards of the NYSE and the applicable rules of the SEC. The Audit Committee is governed by a written charter, as amended and restated, which has been adopted by the Board.
Management of the Company is responsible for the preparation, presentation, and integrity of the consolidated financial statements, maintaining a system of internal controls, and having appropriate accounting and financial reporting principles and policies. The independent registered public accounting firm is responsible for planning and carrying out an audit of the consolidated financial statements and an audit of internal control over financial reporting in accordance with the rules of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and expressing an opinion as to the consolidated financial statements’ conformity with U.S. generally accepted accounting principles (“GAAP”) and as to internal control over financial reporting. The Audit Committee monitors and oversees these processes and is responsible for selecting and overseeing the Company’s independent registered public accounting firm.
As part of the oversight process, the Audit Committee met 11eight times during fiscal year 2021.2023. Throughout the year, the Audit Committee met with the Company’s independent registered public accounting firm, management, and internal auditor, both together and separately in closed sessions. In the course of fulfilling its responsibilities, the Audit Committee did, among other things, the following:
| • | reviewed and discussed with management and the independent registered public accounting firm the Company’s consolidated financial statements for the fiscal year ended April 30, |
| • | oversaw and discussed with management the Company’s review of internal control over financial reporting; |
| • | reviewed management’s representations that the Company’s consolidated financial statements were prepared in accordance with GAAP and present fairly the results of operations and financial position of the Company; |
| • | discussed with the independent registered public accounting firm the matters required to be discussed with audit committees under applicable standards of the PCAOB and SEC; |
| • | received the written disclosures and letter from the independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm its independence; |
| • | |
| monitored the Alertline reporting system implemented to provide an anonymous complaint reporting procedure; | |
| • | reviewed the scope of and overall plans for the annual audit and the internal audit program; |
| • | |
| consulted with management and Ernst & Young | |
| • | reviewed the Board agenda and materials regarding the Company’s cybersecurity and data privacy risks, |
| • | reviewed the implementation and effectiveness of the Company’s Ethics and Compliance Program, including processes for monitoring compliance with the law, Company policies, and the Code of Business Conduct and Ethics; and |
| • | reviewed and discussed with management its assessment and report on the effectiveness of the Company’s internal control over financial reporting as of April 30, |
The Audit Committee has reviewed and discussed with the Company’s independent registered public accounting firm its review and report on the Company’s internal control over financial reporting as of April 30, 2021.2023. Based on the foregoing review and discussions described in this report, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2021,2023, for filing with the SEC.
Audit Committee
Debra J. Perry, (Chair)
Jerry P. Leamon
Chair
Laura M. Bishop
Charles L. Harrington
Angel R. Martinez
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The following table sets forth as of August 2, 2021,July 31, 2023, the beneficial ownership of common stock of the Company of each director and each nominee for director, each named executive officer, and the holdings of all directors and executive officers as a group. The following table also sets forth the names of those persons known to us to be beneficial owners of more than 5% of the Company’s common stock. Unless otherwise indicated, the mailing address for each person named is c/o Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067.
| * | Designated ownership of less than 1% of the Company’s outstanding common stock. |
| (1) | Applicable percentage of ownership is based upon |
| (2) | |
| (3) | Includes |
| (4) | |
| (5) | Includes |
| (6) | Includes |
| (7) | Includes |
| Includes | |
| (9) | Includes 28,930 shares of unvested restricted stock units which vest on September |
| (10) | The information regarding the number of shares beneficially owned was obtained from a Schedule 13G/A filed by Blackrock, Inc. (“Blackrock”) with the SEC on January 26, |
| (11) | The information regarding the number of shares beneficially owned was obtained from a Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC on February |
| (12) | The information regarding the number of shares beneficially owned was obtained from a Schedule 13G/A filed by Dimensional Fund Advisors LP (“Dimensional”) with the SEC on February |
| (13) | The information regarding the number of shares beneficially owned was obtained from a Schedule 13G filed by American Century Investment Management, Inc. (“ACIM”), American Century Companies, Inc. (“ACC”), and Stowers Institute for Medical Research (“SIMR,” and collectively, the “ACIM Group”) with the SEC on February 8, 2023, which indicates that the ACIM Group has sole voting power with respect to 2,831,078 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 2,883,529 shares, and shared dispositive power with respect to 0 shares. ACC is controlled by SIMR, which is the beneficial owner of the reported securities. ACIM is a wholly-owned subsidiary of ACC and a registered investment adviser. |
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  | Why is the Company holding a Virtual Annual Meeting this year? | |
  | In | |
| What proposals will be voted on at the Annual Meeting? | |
| (1) | The election of the nine directors nominated by our Board and named in this Proxy Statement to serve on the Board until the |
| (2) | A non-binding advisory resolution to approve the Company’s executive compensation; | |
| (3) | A non-binding advisory resolution on the frequency of future advisory votes to approve the Company’s executive compensation; and | |
| The ratification of the appointment of Ernst & Young |
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| How does the Board recommend I vote on each of the proposals? | |
| The Board unanimously recommends that you vote your shares: | |
| • | “FOR”the election of the nine directors nominated by the Board and named in this Proxy Statement to serve on the Board until the | |
| • | “FOR”the approval, on an advisory basis, of the Company’s executive compensation; | |
| • | “ONE YEAR”, on an advisory basis, for the frequency of future advisory votes to approve the Company’s executive compensation; and | |
| • | “FOR”the ratification of the appointment of Ernst & Young |
| 79 | 2023 Proxy Statement |
| Can stockholders ask questions at the Virtual Annual Meeting? | |
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| How many votes is each share of common stock entitled to? | |
| Each share of Company common stock outstanding as of the Record Date is entitled to one vote. As of the Record Date, there were | |
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| How do I vote? |
| If you are a stockholder of record, you can vote using the following the methods: |
| (1) | By Telephone—If you received your proxy materials by mail, you can vote by telephone by calling 1-800-690-6903 and following the instructions on the proxy card; | |
| (2) | By Internet—You can vote over the Internet: | |
Before the Annual Meeting by visiting www.proxyvote.com; | ||
During the Annual Meeting by visiting www.virtualshareholdermeeting.com/ | ||
| (3) | By Mail—If you received your proxy materials by mail, you can vote by mail by completing, signing, dating, and mailing the enclosed proxy card. |
| If you are a beneficial owner of shares held in street name, you should check your voting instruction form or Notice for how to vote in advance of, and how to participate in, the Annual Meeting. | |
| If you vote by proxy, the individuals named on the proxy card (your “proxies”) will vote your shares in the manner you indicate. You may specify whether your shares should be voted for or against each of the nominees for director, the frequency for which future advisory votes to approve the Company’s executive compensation should occur, and whether your shares should be voted for or against each of the other proposals. You may also specify you would like to abstain from voting for or against a proposal or nominee. | |
| If you submit a proxy without indicating your instructions, your shares will be voted as follows: |
| • | “FOR” the election of the nine directors nominated by the Board and named in this Proxy Statement to serve on the Board until the | |
| • | “FOR” the approval, on an advisory basis, of the Company’s executive compensation; | |
| • | “ONE YEAR”, on an advisory basis, for the frequency of future advisory votes to approve the Company’s executive compensation; and | |
| • | “FOR” the ratification of the appointment of Ernst & Young |
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| Can I revoke my proxy after I have submitted it? | |
| Yes, once you have submitted your proxy, you have the right to revoke your proxy at any time before the taking of the vote at the Annual Meeting by: | |
| (1) | Sending a written revocation to the Corporate Secretary; | |
| (2) | Submitting a later dated proxy; or | |
| (3) | Participating in and voting at the virtual Annual Meeting (although participating in the virtual Annual Meeting will not in and of itself revoke a proxy). |
| ||
| Who will count the votes? | |
| Christel Pauli with American Election Services, LLC will count the votes and act as the inspector of election at the Annual Meeting. | |
| Why did I receive a notice in the mail regarding the Internet availability of proxy material instead of a full set of printed proxy materials? | |
| Pursuant to rules adopted by the SEC, we are making this Proxy Statement available to our stockholders electronically via the Internet. On or about August | |
| 80 | 2023 Proxy Statement |
| Can I vote my shares by filling out and returning the Notice of Internet Availability of Proxy Materials? | |
| No. The Notice only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice and returning it. The Notice provides instructions on how to cast your vote. | |
| What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or more than one set of printed proxy materials? | |
| If you hold your shares in more than one account, you may receive a separate Notice or a separate set of printed proxy materials, including a separate proxy card or voting instruction card, for each account. To ensure that all of your shares are voted, please vote by telephone or by the Internet or sign, date, and return a proxy card or voting card for each account. | |
| What if I own shares through the Company’s 401(k) plan? | |
| If you own shares that are held in our 401(k) plan, the trustees of the 401(k) plan will vote those shares. | |
| What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”? | |
| You are a “beneficial owner” if your shares are held in a brokerage account, including an Individual Retirement Account, by a bank, or other nominee. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote your shares. | |
You are a “stockholder of record” if your shares are registered directly in your name with the Company’s transfer agent. | ||
| What if a beneficial owner does not provide the stockholder of record with voting instructions for a particular proposal? | |
| If you are a beneficial owner and you do not provide the stockholder of record with voting instructions for a particular | |
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| proposal, your shares may constitute “broker non-votes” with respect to that proposal. “Broker non-votes” are shares held by a broker, bank, or other nominee with respect to which the holder of record does not have discretionary power to vote on a particular proposal and with respect to which instructions were never received from the beneficial owner. Shares that constitute broker non-votes with respect to a particular proposal will not be considered present and entitled to vote on that proposal at the Annual Meeting even though the same shares will be considered present for purposes of establishing a quorum and may be entitled to vote on other proposals. | |
| | What is the requirement to conduct business at the Annual Meeting? |
| | In order to conduct business at the Annual Meeting, a “quorum” must be established. A “quorum” is a majority in voting power of the outstanding shares of common stock entitled to vote at the Annual Meeting. A quorum must be present online or represented by proxy at the Annual Meeting for business to be conducted. As discussed below, abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum. |
| How are votes counted? |
| | Shares of common stock that reflect abstentions are treated as present and entitled to vote for the purposes of establishing a quorum. Abstentions will have no effect on director elections, but will have the effect of a vote against all other proposals. Shares of common stock that reflect broker non-votes are treated as present and entitled to vote for the purposes of establishing a quorum. However, for the purposes of determining the outcome of any matter as to which the broker or nominee has indicated on the proxy that it does not have discretionary authority to vote, those shares will be treated as not present and not entitled to vote with respect to that matter, even though those shares are considered present and entitled to vote for the purposes of establishing a quorum and may be entitled to vote on other matters. |
| What is the voting requirement to approve each proposal? |
| | For Proposal No. 1, in uncontested elections, directors are elected by a majority of the votes cast, meaning that each 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 |
| 81 | 2023 Proxy Statement |
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From time to time, stockholders that beneficially own more than 5% of the Company’s common stock may engage the Company and its subsidiaries, in the ordinary course of business, to provide certain services and products. These transactions are negotiated on an arm’s-length basis and are subject to review and approval under the Company’s Related Person Transaction Policy (defined below) described below or, in the case of any such transactions that do not (together with any prior such transactions withinwith a given stockholder) involve an aggregate amount in excess of $5,000,000 per year, are pre-approved under the Company’s Related Person Transaction Policy, as described below.Policy. During fiscal year 2021,2023, in the ordinary course of business, the Company and its subsidiaries provided The Vanguard, Group (“Vanguard”),Blackrock, and ACIM each a greater than five percent beneficial owner of the Company’s common stock, with certain services and products. The aggregate fees and expenses payable by Vanguard, Blackrock, and ACIM in fiscal year 20212023 for such services and products was $2,342,601.$2,607,763, $222,475, and $747,333, respectively. The transactions with Vanguard, Blackrock, and ACIM were each entered into on an arm’s-length basis, contain customary terms and conditions and were approved or pre-approved under the Company’s Related Person Transaction Policy.Policy, and were reviewed by the Audit Committee. In the future, the Company and its subsidiaries may provide, in the ordinary course of business, additional services and products to Vanguard.Vanguard, Blackrock, and/or ACIM.
Except as described above, to our knowledge, since the beginning of fiscal year 2021,2023, the Company has not entered into or proposed to enter into any transaction with any executive officer, director, or director nominee, beneficial owner of more than five percent of the Company’s common stock, or any immediate family member of any of the foregoing.foregoing in which the amount involved exceeds $120,000.
In August 2021, theThe Audit Committee has adopted a written amended and restated policy for the review and approval of all transactions with related persons (the “Related Person Transaction Policy”). Pursuant to such policy, the Audit Committee must review the material facts of, and either approve or disapprove the Company’s entry into, any transaction, arrangement or relationship in which:
| • | (i) the Company or any of its subsidiaries is a participant; and |
| • | (ii) any related person has or will have a direct or indirect interest (other than solely as a result of being a director or less than ten percent beneficial owner of another entity, or both). |
Under the Related Person Transaction Policy, the Audit Committee will prohibit any related person transaction (including those deemed pre-approved under the policy) if it determines the transaction is inconsistent with the interests of the Company and its stockholders.
For purposes of the Related Person Transaction Policy, a “related person” is any person who is or was, since the beginning of the Company’s most recently completed fiscal year, an executive officer, director, or director nominee, of the Company, any beneficial owner of more than five percent of the Company’s common stock, or any immediate family member of any of the foregoing.
As provided for in the Related Person Transaction Policy, the Audit Committee has reviewed and pre-approved the entry into certain types of related person transactions, including without limitation:
| • | (i) the employment of executive officers; |
| • | (ii) director compensation; |
| • | (iii) subject to compliance with the Company’s Investment Guidelines Policy, certain investments managed by a greater than 5% beneficial owner of the Company’s common stock; |
| • | (iv) subject to a $5,000,000 per fiscal year cap, certain ordinary course, arms-length transactions with persons who are a related person solely on account of being a greater than 5% beneficial owner of the Company’s common stock; |
| • | (v) any transaction with a related person where the aggregate amounts involved (including any periodic payments or installments due on or after the beginning of the Company’s last completed fiscal year and, in the case of indebtedness, the largest amount expected to be outstanding and the amount of annual interest thereon) do not exceed $100,000, provided, that such transaction is entered into in the ordinary course of the Company’s business, on an arm’s length basis; and |
| • | (vi) any transaction with a related person (whether or not covered by any of the pre-approved transactions set forth above) in which the amount involved or the amount of the related person’s interest does not exceed $60,000. |
In addition, the Board has delegated to the chair of the Audit Committee the authority to pre-approve any transaction with a related person in which the aggregate amount involved is expected to be less than $1,000,000.
The Related Person Transaction Policy requires the Audit Committee to regularly review any related person transactions approved by the Audit Committee Chair as well as certain pre-approved transactions, including the ordinary course business and de minimis transactions discussed above.
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The Company’s Annual Report to Stockholders for fiscal year 2021,2023, which includes the Company’s Annual Report on Form 10-K for the year ended April 30, 20212023 (excluding the exhibits thereto) will be made available to stockholders at the same time as this Proxy Statement. Our 20212023 Annual Report and Proxy Statement are posted on our website at www.kornferry.com. If any person who was a beneficial owner of the common stock of the Company on August 2, 2021,July 31, 2023, desires a complete copy of the Company’s Form 10-K, including the exhibits thereto, they will be provided with such materials without charge upon written request.The request should identify the requesting person as a beneficial owner of the Company’s stock as of August 2, 2021,July 31, 2023, and should be directed to Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary. The Company’s Form 10-K, including the exhibits thereto, is also available through the SEC’s web sitewebsite at http://www.sec.gov.www.sec.gov.
Any stockholder or other party interested in communicating with members of the Board, any of its committees, the independent directors as a group, or any of the independent directors, may send written communications to Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary or to corporatesecretary@kornferry.com. Communications received in writing are forwarded to the Board, committee, or to any individual director or directors to whom the communication is directed, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to the Company or its business, or is similarly inappropriate. The Corporate Secretary has the authority to discard or disregard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications. The Board will endeavor to promptly respond to all appropriate communications and encourages all stockholders and interested persons to use the aforementioned email and mailing address to send communications relating to the Company’s business to the Board and its members.
If a stockholder wishes to submit a proposal for consideration at the 20222024 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act, and wants that proposal to appear in the Company’s Proxy Statement and form of proxy for that meeting, the proposal must be submitted in writing and received at Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary, no later than April 15, 2022.12, 2024. Each stockholder proposal must comply with the Exchange Act, the rules and regulations thereunder, and the Company’s bylawsBylaws as in effect at the time of such notice. The submission of a stockholder proposal does not guarantee that it will be included in the Company’s Proxy Statement and form of proxy.
The Company’s bylawsBylaws also establish an advance notice procedure with regard to nominating persons for election to the Board and proposals of other business that are not submitted for inclusion in the Proxy Statement and form of proxy but that a stockholder instead wishesother than pursuant to present directly at an annual meeting of stockholders.Rule 14a-8. If a stockholder wishes to submit such a nominee or other business for consideration at the 20222024 Annual Meeting of Stockholders, without including that nominee or proposal in the Company’s Proxy Statement and form of proxy, the Company’s bylawsBylaws (which includes information required under Rule 14a-19) require, among other things, that the stockholder submission contain certain information concerning the nominee or other business, as the case may be, and other information specified in the Company’s bylaws,Bylaws, and that the stockholder provide the Company with written notice of such nominee or business no later than the close of business on July 1, 2022,June 23, 2024, nor earlier than the close of business on June 1, 2022;May 24, 2024; provided, however, that in the event that the date of the 20222024 Annual Meeting of Stockholders is more than 30 days before or more than 70 days after the anniversary date of the 20212023 Annual Meeting of Stockholders, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to the 20222024 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. If the number of directors to be elected to the Board is increased and there is no public announcement by the Company naming the nominees for the additional directorships at least 10 days before the last day a stockholder must deliver his or her written notice under the Company’s bylaws,Bylaws, a stockholder’s notice will be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary of the Company at the principal executive
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offices of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company.
| 84 | 2023 Proxy Statement |
A stockholder notice should be sent to Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary. Proposals or nominations not meeting the advance notice requirements in the Company’s bylawsBylaws will not be entertained at the 20222024 Annual Meeting of Stockholders. A copy of the full text of the relevant bylaw provisions may be obtained from the Company’s filings with the SEC or by writing our Corporate Secretary at the address identified above.
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding Company stock but who share the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one copy of our Notice and, as applicable, any additional proxy materials that are delivered until such time as one or more of these stockholders notify us that they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of our Notice, Annual Report, or Proxy Statement mailed to you, please submit a request, either in writing or by phone, by contacting the Company at Korn Ferry, 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067, Attention: Corporate Secretary or at (310) 552-1834, and we will promptly send you the materials you have requested. However, please note that if you want to receive a paper proxy or voting instruction form or other proxy materials for the purposes of this year’s Annual Meeting, you will need to follow the instructions included in the Notice that was sent to you. You can also contact our Corporate Secretary at the telephone number noted previously if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future, or if you would like to opt out of householding for future mailings.
By Order of the Board of Directors,
Jonathan Kuai
General Counsel, Managing Director of
Business Affairs and& ESG, and Corporate Secretary
August 13, 202110, 2023
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This Proxy Statement contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”). In particular, it includes:
| • | Adjusted |
| • | Adjusted |
| • | Adjusted EBITDA |
This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Management believes the presentation of non-GAAP financial measures in this Proxy Statement provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of Korn Ferry’s ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry.
These excluded charges, which are described in the footnotes in the below reconciliation, representrepresent: 1) costs we incurred to acquire and integrate a portion of our DigitalProfessional Search and Interim business, 2) impairment of fixed assets associated with the decision to terminate and sublease some of our offices, 3) impairment of right of use assets due to the decision to terminate and sublease some of our offices and 4) charges we incurred to restructure the Company to realign its workforce with business needs and objectives due to shifts in global trade lanes and persistent inflationary pressures and as a result of COVID-19 and due to acquisition of Miller Heiman Group, Achieve Forum, and Strategy Execution on November 1, 2019, 3) separation costs, and 4) debt refinancing costs.COVID-19. The use of non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. Adjusted Net Income Attributable to Korn Ferry, Adjusted Diluted Earnings Per Share and Adjusted EBITDA exclude certain charges that management does not consider ongoing in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company’s operating results. Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.
This Proxy Statement also refers to constant currency and Adjusted Fee Revenue. Constant currency (calculated using a quarterly average) percentages represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period. Adjusted Fee Revenue is the Company’s fee revenue adjusted to eliminate the effect of currency fluctuations, including by translating the fiscal year actual results at a currency rate comparable to the rate used in the Company’s AOP for that year. Management believes the presentation of such information provides useful supplemental information regarding Korn Ferry’s performance as excluding the impact of exchange rate changes on Korn Ferry’s financial performance allows investors to make more meaningful period-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making.
| A-1
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(dollars in thousands, except per share amounts)
| Three Months Ended January 31, | Three Months Ended April 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (unaudited) | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO KORN FERRY | $ | 51,319 | $ | 19,993 | $ | 66,190 | $ | (802 | ) | |||||||
| Net income attributable to non-controlling interest | 269 | 963 | 561 | 181 | ||||||||||||
| NET INCOME (LOSS) | 51,588 | 20,956 | 66,751 | (621 | ) | |||||||||||
| Income tax provision | 21,204 | 8,775 | 22,729 | 4,957 | ||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 72,792 | 29,731 | 89,480 | 4,336 | ||||||||||||
| Other (income) loss, net | (14,935 | ) | (5,055 | ) | (10,820 | ) | 10,893 | |||||||||
| Interest expense, net | 7,298 | 6,919 | 7,592 | 6,998 | ||||||||||||
| OPERATING INCOME | 65,155 | 31,595 | 86,252 | 22,227 | ||||||||||||
| Depreciation and amortization | 15,735 | 14,863 | 15,777 | 14,956 | ||||||||||||
| Other income (loss), net | 14,935 | 5,055 | 10,820 | (10,893 | ) | |||||||||||
| Integration/acquisition costs(1) | — | 6,704 | — | 2,833 | ||||||||||||
| Restructuring charges, net(2) | 838 | 18,093 | — | 40,466 | ||||||||||||
| Separation costs(3) | — | 1,783 | — | — | ||||||||||||
| ADJUSTED EBITDA | $ | 96,663 | $ | 78,093 | $ | 112,849 | $ | 69,589 | ||||||||
| OPERATING MARGIN | 13.7 | % | 6.1 | % | 15.5 | % | 5.0 | % | ||||||||
| Depreciation and amortization | 3.3 | % | 2.9 | % | 2.8 | % | 3.4 | % | ||||||||
| Other income (loss), net | 3.2 | % | 1.0 | % | 2.0 | % | (2.4 | %) | ||||||||
| Integration/acquisition costs(1) | — | 1.3 | % | — | 0.6 | % | ||||||||||
| Restructuring charges, net(2) | 0.1 | % | 3.5 | % | — | 9.2 | % | |||||||||
| Separation costs(3) | — | 0.4 | % | — | — | |||||||||||
| ADJUSTED EBITDA MARGIN | 20.3 | % | 15.2 | % | 20.3 | % | 15.8 | % | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO KORN FERRY | $ | 51,319 | $ | 19,993 | $ | 66,190 | $ | (802 | ) | |||||||
| Integration/acquisition costs(1) | — | 6,704 | — | 2,833 | ||||||||||||
| Restructuring charges, net(2) | 838 | 18,093 | — | 40,466 | ||||||||||||
| Separation costs(3) | — | 1,783 | — | — | ||||||||||||
| Debt refinancing costs(4) | — | 828 | — | — | ||||||||||||
| Tax effect on the adjusted items(5) | (276 | ) | (6,451 | ) | — | (9,819 | ) | |||||||||
| ADJUSTED NET INCOME ATTRIBUTABLE TO KORN FERRY | $ | 51,881 | $ | 40,950 | $ | 66,190 | $ | 32,678 | ||||||||
| BASIC EARNINGS (LOSS) PER COMMON SHARE | $ | 0.95 | $ | 0.37 | $ | 1.22 | $ | (0.02 | ) | |||||||
| Integration/acquisition costs(1) | — | 0.12 | — | 0.05 | ||||||||||||
| Restructuring charges, net(2) | 0.02 | 0.34 | — | 0.75 | ||||||||||||
| Separation costs(3) | — | 0.03 | — | — | ||||||||||||
| Debt refinancing costs(4) | — | 0.02 | — | — | ||||||||||||
| Tax effect on the adjusted items(5) | (0.01 | ) | (0.13 | ) | — | (0.18 | ) | |||||||||
| ADJUSTED BASIC EARNINGS PER SHARE | $ | 0.96 | $ | 0.75 | $ | 1.22 | $ | 0.60 | ||||||||
| Year Ended April 30, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (unaudited) | ||||||||||||
| NET INCOME ATTRIBUTABLE TO KORN FERRY | $ | 209,529 | $ | 326,360 | $ | 114,454 | ||||||
| Net income attributable to non-controlling interest | 3,525 | 4,485 | 1,108 | |||||||||
| NET INCOME | 213,054 | 330,845 | 115,562 | |||||||||
| Income tax provision | 82,683 | 102,056 | 48,138 | |||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 295,737 | 432,901 | 163,700 | |||||||||
| Other (income) loss, net | (5,261 | ) | 11,880 | (37,194 | ) | |||||||
| Interest expense, net | 25,864 | 25,293 | 29,278 | |||||||||
| OPERATING INCOME | 316,340 | 470,074 | 155,784 | |||||||||
| Depreciation and amortization | 68,335 | 63,521 | 61,845 | |||||||||
| Other income (loss), net | 5,261 | (11,880 | ) | 37,194 | ||||||||
| Integration/acquisition costs(1) | 14,922 | 7,906 | 737 | |||||||||
| Impairment of fixed assets(2) | 4,375 | 1,915 | — | |||||||||
| Impairment of right of use assets(3) | 5,471 | 7,392 | — | |||||||||
| Restructuring charges, net(4) | 42,573 | — | 30,732 | |||||||||
| ADJUSTED EBITDA | $ | 457,277 | $ | 538,928 | $ | 286,292 | ||||||
| OPERATING MARGIN | 11.2 | % | 17.9 | % | 8.6 | % | ||||||
| Depreciation and amortization | 2.4 | % | 2.4 | % | 3.4 | % | ||||||
| Other income (loss), net | 0.2 | % | (0.5 | %) | 2.1 | % | ||||||
| Integration/acquisition costs(1) | 0.5 | % | 0.3 | % | — | |||||||
| Impairment of fixed assets(2) | 0.1 | % | 0.1 | % | — | |||||||
| Impairment of right of use assets(3) | 0.2 | % | 0.3 | % | — | |||||||
| Restructuring charges, net(4) | 1.5 | % | — | 1.7 | % | |||||||
| ADJUSTED EBITDA MARGIN | 16.1 | % | 20.5 | % | 15.8 | % | ||||||
| A-2
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| Three Months Ended January 31, | Three Months Ended April 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (unaudited) | ||||||||||||||||
| DILUTED EARNINGS (LOSS) PER COMMON SHARE | $ | 0.94 | $ | 0.36 | $ | 1.21 | $ | (0.02 | ) | |||||||
| Integration/acquisition costs(1) | — | 0.12 | — | 0.05 | ||||||||||||
| Restructuring charges, net(2) | 0.02 | 0.34 | — | 0.75 | ||||||||||||
| Separation costs(3) | — | 0.03 | — | — | ||||||||||||
| Debt refinancing costs(4) | — | 0.02 | — | — | ||||||||||||
| Tax effect on the adjusted items(5) | (0.01 | ) | (0.12 | ) | — | (0.18 | ) | |||||||||
| ADJUSTED DILUTED EARNINGS PER SHARE | $ | 0.95 | $ | 0.75 | $ | 1.21 | $ | 0.60 | ||||||||
| Year Ended April 30, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (unaudited) | ||||||||||||
| DILUTED EARNINGS PER COMMON SHARE | $ | 3.95 | $ | 5.98 | $ | 2.09 | ||||||
| Integration/acquisition costs(1) | 0.28 | 0.15 | 0.01 | |||||||||
| Impairment of fixed assets(2) | 0.08 | 0.03 | — | |||||||||
| Impairment of right of use assets(3) | 0.10 | 0.14 | — | |||||||||
| Restructuring charges, net(4) | 0.82 | — | 0.57 | |||||||||
| Tax effect on the adjusted items(5) | (0.29 | ) | (0.07 | ) | (0.16 | ) | ||||||
| ADJUSTED DILUTED EARNINGS PER SHARE | $ | 4.94 | $ | 6.23 | $ | 2.51 | ||||||
Explanation of Non-GAAP Adjustments
| (1) | Costs associated with current and previous acquisitions, such as legal and professional fees, retention awards, and the |
| (2) | Costs associated with impairment of fixed assets (i.e., leasehold improvements) due to terminating and deciding to sublease some of our office leases. |
| (3) | Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases. |
| (4) | Restructuring charges we incurred in fiscal year 2023 to realign our workforce with business needs and objectives due to shifts in global trade lanes and persistent inflationary pressures, and in fiscal year 2021 to rationalize our cost structure by eliminating redundant positions because of |
| (5) | Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, |
| A-3
|
