EXHIBIT 10.04
EMPLOYMENT AGREEMENT
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by and between
Xxxxxx & Partner GmbH & Co. KG, represented by its general partner Xxxxxx
Beteiligungsverwaltung GmbH, here represented by its newly appointed managing
director with power to represent alone Xx. Xxxxxx Xxxxx-Xxxxx, Kurfuerstendamm
102, D-10711 Berlin,
- the following referred to as "Company"-
joined by
Xxxxxxxx & Struggles International Inc., Sears Tower, 000 X. Xxxxxx Xxxxx,
Xxxxxxx Xxxxxxxx 00000-0000, XXX, here represented by its President and Chief
Executive Officer with power to represent alone Xx. Xxxxxx Xxxxx-Xxxxx,
for the limited purpose to fulfil item I. 3 hereof and to guarantee the
fulfillment of this agreement by Company,
- the following referred to as "HSI"-
and
Xx. Xxxxxx X. Xxxxxx. Xxxxxxxxxxxxxxx 0, 00000 Xxxxxxxxx
- the following referred to as "the Partner"-
I. DATE, DUTIES, TITLE
(1) This Agreement enters into force as of October 1, 1997 and shall be of
indefinite duration.
(2) The Partner shall work as a consultant in executive search. He shall
acquire executive search orders and successfully implement them
according to the high quality level and the current version of the
Xxxxxxxx & Struggles directives and standards.
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(3) the Partner shall have the title of "Partner" of HSI and shall
work in the office of Frankfurt. The Partner shall be elected to
Directorship of HSI (Member of the Board) at the next HSI
shareholders meeting. The Partner shall have access to the
shareholding of HSI in accordance with the stock programm (the
programm currently applicable is attached as Exhibit 1) as
Director and shall enjoy all rights of a Director of HSI as of
the entering into force of this Agreement. For the application of
the stock programm the shares to be issued to the Partner
pursuant to the Purchase Agreement concerning the Partner's share
interest in the Company shall be taken into consideration.
II. Compensation
(1) The Partner's compensation follows the compensation policy of the
Company as in force from time to time. The present version is attached
to this contract as Exhibit 2. The Company uses the total cost to the
firm ("TCF") concept which includes in the total compensation the cost
components listed in Exhibit 3. The total compensation of the Partner
includes:
. a fixed base compensation consisting of the base salary and the
TCF cost components listed in Exhibit 3, and
. a bonus (including pension contribution according to II 4).
The total compensation shall be at minimum the fixed base
compensation. In case that the total compensation determined by the
HSI compensation system is less than the fixed base compensation
("negative bonus") the Partner shall not be required to pay back the
negative balance.
(2) Base Salary.
The gross salary of the partner is DM 875,000.00 per annum payable in
twelve equal monthly installments at the end of each month. This
salary covers overtime and week-end work. Revision of the base salary
shall be considered by the parties once a year and shall need the
mutual agreement of either party to become effective.
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(3) Fringe Benefits.
The Company shall pay the employer's contribution to the social security
institutions. Accident insurance, health insurance, life insurance and
luggage insurance shall be provided by the Company either by continuing the
contracts existing at the time this contract becomes effective or through
new and/or revised contracts. The amounts covered shall remain unchanged
unless agreed otherwise by the parties. The cost of the fringe benefits,
including the insurance coverage, are part of the base compensation of the
Partner (base TCF).
(4) Pension.
The Partner is entitled to a pension according to the terms of the pension
scheme existing at the Company on the date this contract entered into
force. The parties are aware that the Company and Victoria
Lebensversicherung AG have agreed on a group insurance contract of December
1, 1978, which covers the claims of the Partner. The Company shall provide
for the payment of the premiums which become due in the future under this
insurance contract being continued. Any assignment or pledge of the claims
arising out of this insurance contract by the Company to a third party are
excluded and ineffective with respect to the Partner: the existing pledges
in the favour of the Partner shall remain in force. A Partner shall be
entitled to the payment of the pension even if the employment with the
Company has not yet been terminated. Such payments shall not be calculated
against the Partner's compensation.
The premiums which become due under this insurance contract shall be
deducted from the Partner's bonus. The pension shall be increased yearly by
the amount by which expected insurance payments out of the group insurance
contract of the Victoria Lebensversicherung AG to the respective Partner
are increased according to the calculation of the actuary of the Company.
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In case that the employment of the Partner ends before having acquired
a vested interest in the pension, the claims out of the group
insurance attributable to the Partner shall be assigned to the
Partner.
(5) Bonus.
The bonus shall be determined according to the Company cash
compensation policy as in force from time to time.
(6) Integration Period.
The parties agree that the following exceptions will apply to the
above described compensation arrangements in order to facilitate the
transition between the compensation system existing until effective
date at the Company and the newly to be introduced HSI compensation
system.
(a) Year 1997:
For the period starting on effective date until December 31, 1997,
the Partner shall be compensated in accordance with the Company's
compensation system in force as of effective date, which will be
applied consistently with its application prior to the entering
into force of this contract.
(b) Advance against Bonus:
Exceptionally in the year 1998, advances against 1998 bonus shall
be paid to the Partner as follows:
- in June 1998, an amount of DM 520,000.00 gross and
- in October 1998, an amount of DM 520,000.00 gross.
From these gross amounts, the compulsory withholding will be
deducted, in conformity with legislation.
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These advances will be deducted from the 1998 bonus. If for any reason
it appears that the advances exceed the final bonus, the excess shall
be promptly repaid by the Partner to the Company. The partner agrees
that the Company has the right to deduct the excess from any payment
of any kind due to the Partner by the Company of by HSI.
(c) Years 1998, 1999, 2000:
For the integration period (years 1998, 1999, 2000), an equalisation
mechanism shall apply as described in (S) 5 of the Purchase Agreement
between the Partner and a subsidiary of HSI concerning the sale of the
limited partnership interest in the Company to a subsidiary of HSI.
During the integration period as an exception the level in the range
of the guideline compensation formula which will be used for
determining the Partner's total compensation shall not be influenced
by the quality and partnership evaluation of the Partner but shall be
the average level used for all the Partners of HSI. As of January 1,
2001, the Partner's compensation shall follow strictly the then
Company compensation policy without any exception.
III. VACATION.
1. Per calendar year the right for vacation comprises thirty work days
unless agreed otherwise. Saturdays, Sundays and legal holidays are not
to be considered as work days. There shall be no carry forward of
holidays for work done for the Company prior to effective date.
2. The date of holidays shall take into account the requirements of the
Company's business and be discussed with the managing director. The
preferred holiday date of the Partner shall adequately be considered.
3. If holidays can not be taken in the calendar year in which they come
into existence due to important business considerations, it can be
taken until March 31 of the following year. Thereafter the claim for
holidays ends without any compensation due therefore.
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IV. BUSINESS EXPENSES AND COMPANY CAR.
1. Necessary travel expenses and other expenses of the Partner within his
work for the Company shall be reimbursed against proof as far as
adequate and tax deductable.
2. The Partner is entitled to a Company car of the upper class (e.g. S-
class Mercedes Benz, BMW 7 or a car of the same price level). All cost
of the company car such as maintenance, car tax, car insurance and gas
shall be paid by the Company and are not part of TCF. The Partner may
use the company car for private purposes. Taxes on the private use
as payment in kind shall be paid by the Partner according to the
salary tax provisions applicable from time to time. If the Partner
does not use a company car he shall be entitled to an allowance per
kilometer for use of his own car in such an amount as permitted by tax
law.
3. The Partner is entitled to a second telephone connection in his home
which shall be used exclusively for business purpose, a mobile phone
and a car phone. The cost for the purchase and the installation of
such telephone connections as well as the basic and current telephone
charges shall be borne by the Company and are not part of the TCF.
V. SICKNESS AND DEATH
1. Each case of incapacity (Arbeitsunfahigkeit) due to sickness shall be
made known to the Company without undue delay.
2. At the latest after three days of incapacity a medical confirmation
shall be presented which confirms the incapacity and its potential
duration.
3. In case of a sickness which the Partner can not be made responsible
for the contractual total compensation shall be paid for further six
months.
4. In case of death bonus earned shall be paid to the Partners' heirs.
VI. EXCLUSIVITY, CONFIDENTIALITY
(1) The Partner shall make all his work capacity available to the Company.
He shall not during the duration of this contract do any work for
which he gets paid or for which normally a compensation is paid with
the exception of speeches and seminars which are made for business
promotion purposes. In that case the payment belongs to the Company.
(2) The Partner shall not disclose to third parties any confidential
information or any other information on the Company and its business
during or after the duration of this employment agreement.
(3) In case this employment agreement ends the Partner shall return to the
Company all Company documents and other items. This comprises also
notes and copies of documents made by the Partner. There shall be no
retention right in these documents and items.
VII. TERM AND TERMINATION.
1. The contract is entered into for an indefinite period of time. It
shall end when the Partner turns 68 years of age, but not before
December 31, 2002. It may be further extended by mutual agreement of
the Company and the Partner.
2. The Company is entitled to terminate the contract with 6 months
written notice to the end of a quarter, the Partner is entitled to
terminate with 3 months written notice to the end of a quarter
(ordentliche Kundigung).
3. The right for termination for cause (ausserordentliche Kundigung) of
both Parties shall remain unaffected.
4. The Parties agree that in any case of termination for cause or not for
cause, whether by the Company or by the Partner, the Company shall be
entitled to free the Partner from his obligation to work. In such case
the right of the Partner to the Company car ends.
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VIII. FINAL PROVISIONS.
1. The prior employment contract of the Partner with the Company is
herewith repealed. For labor law purposes the Partner shall be
considered as being employed since his first employment with the
Company or its legal predecessor started.
2. This contract comprises all agreements between the Partner and the
Company in relation to the employment relationship. Changes of this
contract shall required written form.
3. HSI herewith guarantees the fulfillment of the obligations of Company
under this Employment Agreement.
4. The English version of the contract is exclusively binding even if
translations into the German language are prepared.
5. If any provision of this contract shall be or become invalid or are
unenforceable the validity and enforceability of the other provisions
of this contract shall remain unaffected. The parties shall agree on a
valid provision which as closely as possible achieves the economic
effect of the unvalid or unenforceable provision. The same shall apply
in case of incompleteness of the contract.
Berlin, September 25, 1997
Xxxxxx Xxxxx-Xxxxx
/s/ Xxxxxx Xxxxx-Xxxxx
__________________________________________
Xxxxxx & Partner KG
/s/ Xxxxxx X. Xxxxxx
________________________________________
Partner
Xxxxxx Xxxxx-Xxxxx
/s/ Xxxxxx Xxxxx-Xxxxx
__________________________________________
Xxxxxxxx & Struggles International Inc.
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LIST OF EXHIBITS TO EMPLOYMENT AGREEMENT
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1. HSI Stock Programm
2. HSI Compensation Policy
3. Cost components to be deducted from Bonus
EXHIBIT 1
XXXXXXXX & STRUGGLES INTERNATIONAL
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REVISED STOCK PROGRAM
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OVERALL OBJECTIVES:
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Our Partner/Director - Stockholders are the foundation of our corporate
partnership. They represent our assets as well as contribute to and share the
Firm's equity.
The stock program is the "vehicle" by which we all participate in building the
Firm and passing the "baton" of ownership as we move from one generation to
another. We all have the same expectations that our collective contributions to
the Firm (both financial and professional) will yield a fair "return" when we
retire. At the same time, we want to feel that we are all "together" and being
treated equally.
The stock program, therefore, must achieve general basic goals: provide
sufficient equity, enable the Firm's ownership to easily pass from one
generation to another, be equally administered among the Partners, and generate
an average return of 20 to 25%.
SUFFICIENT EQUITY RATIO:
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Our Firm's equity (common stock plus retained earnings) should be in the range
of 20 - 25% of net fee revenue. While this may vary from year to year, over the
long term, this ratio is needed to provide adequate capital. One of the stock
program's goals is to maintain this ratio.
STOCK PROGRAM - IN GENERAL:
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To achieve the goals of the Stock Program, the following principles have been
and need to be followed:
1. The amount of stock to be purchased annually per Partner/Director is
reviewed by the Executive Committee and presented to the Board.
2. The standard amount of stock to be owned by any one Partner/Director is
reviewed regularly by the Executive Committee and presented to the Board.
Anyone over the standard is given the opportunity to sell back to "overage"
over a period of time as approved by the Executive Committee.
3. All Directors will purchase their total amount of stock (up to the standard
number) within seven years or less, on a regular annual basis.
4. All stock will be purchased between January and March 31st of each year.
The payment details will be arranged with each Partner/Director.
Note: The Firm will approve the pledging of shares with a bank to help a
Partner obtain financing.
All shares are purchased at the December 31 book value of the year immediately
preceding the purchase. (If the final book value is not known at the sale date,
an estimated value will be used and an adjustment will be made when the final
book value is known.)
STOCK PROGRAM
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The Stock program is as follows:
1. Partners may purchase up to $10,000 worth of shares after their appointment
and in each subsequent year.
2. New Directors must purchase shares up to a level of $50,000 upon their
election.
3. Directors who own less than the standard amount of shares must purchase a
minimum of $25,000 worth of shares each year until they reach the standard
amount.
4. The standard amount of stock to be owned by each Director is $200,000.
5. Directors may purchase additional shares until they reach 5,000 shares.
This is subject to the Executive Committee verifying that this does not
create unreasonable dilution.
EXHIBIT 2
EUROPEAN PARTNER CASH COMPENSATION POLICY
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1. CASH COMPENSATION DETERMINATION PROCEDURE
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Annually, in February-March, the level of total cash compensation is
reviewed by each Partner's Manager. The Manager's recommendations are
brought to the President and the Compensation Committee for discussion,
review and further authorization. All bonuses are discretionary, and are
not earned in whole or in part unless and until authorized by the
Compensation Committee and the Board of Directors or the Executive
Committee of the Board. In particular, no bonus is payable to a Partner who
has left the Firm or is under notice for whatever reason at the time of the
Compensation review. Also the Firm's profitability is always an important
consideration in the bonus determination process.
2. PARTNER CASH COMPENSATION GUIDELINES - GERMANY
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In general, TCF total compensation (Total Cost to the Firm) guidelines will
fall within the following ranges:
10-15% of XXXXXXXX up to 150,000 DEM
15-20% of XXXXXXXX between 150,000 and 700,000 DEM
20-25% of XXXXXXXX over 700,000 DEM
10-15% of SOB up to 150,000 DEM
15-20% of SOB between 150,00 and 700,000 DEM
20-25% of SOB between 700,000 and 1,000,000 DEM
25-30% of SOB over 1,000,000 DEM
Note that the above mentioned ranges are subject to potential revisions
from time to time by the Executive Committee.
Within the ranges, two critical factors evaluated by Management - Quality
and Partnership - will determine where in the five percent spread
individual Partners may be paid. (See the next page for some of the
criteria to be evaluated for each of these two factors.) The average
Partner will be at the midpoint of the range. Consideration of the two
factors is not limited to a single year's performance - weight also may be
given to prior years' factors.
NOTE 1:
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Principals are paid an agreed-upon level of cash compensation which is not
tied to the Partner cash compensation guidelines. Fee and SOB numbers will
be recorded for all Principals and will be reviewed when Principals are
reviewed. While Fee and SOB numbers generally are viewed as a measure of a
Principal's progress, special, discretionary bonus consideration may be
given if the numbers and performance justify additional compensation in the
opinion of the Compensation Committee and is approved by the Executive
Committee of the Board of Directors or the Board of Directors.
NOTE 2:
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The above policy, procedure and guidelines are subject to
amendment/modification, at any time, by the Board of Directors or the
Executive Committee of the Board.
QUALITY
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. Completion ratio (one year and three years)
. Time to complete
. Confirmation level
. Searches open over 6 months
. Observance of quality standards
. Quality of client portfolio
. Search administration
. Client survey
PARTNERSHIP
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. Pass-offs
. Assistance to others on searches and potential searches
. Attitude towards staff and support staff
. Mentoring of new staff
. Notable non-billable activities
. Partners/Principals opinion survey
EXHIBIT 3
Total Cost to the Firm ("TCF") to be deducted from the bonus:
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- Base salary
- Social costs
- Benefits such as: life insurance, accident insurance etc.
- Pension contribution (insurance premium)
- Club dues
