LETTER TO STOCKHOLDERS

April 16, 2021

Dear Fellow Stockholders,

In 2020, nearly every aspect of our lives was transformed as we contended with the COVID-19 crisis and its ensuing impact on our families, communities and economies around the globe. In addition, in the United States and many other parts of the world, we confronted long-standing issues of systemic racism and social injustice. Amidst all these challenges, we saw leaders and organizations globally gain a renewed sense of purpose and willingness to come together to drive positive change.

Notably, in 2020 Heidrick & Struggles never stopped innovating, demonstrating our agility, resilience and unfailing commitment to support our teams and advise our clients in new and different ways. I am so proud of our firm’s ability to meet the moment and all that we accomplished last year. Key highlights include:

With the rollout of vaccines across the world, I am optimistic that 2021 will be a year of accomplishments for our firm as we plan to emerge even stronger, profitably grow our business, and continue to invest in innovative, tech-enabled solutions that help our clients address their most pressing leadership and culture issues. Consistent with our strategic plan, we are committed to growing our business by going to market as one firm with a robust, integrated value proposition. To achieve our objectives, we will focus on three Growth Initiatives, which include:

More specifically, this involves deepening and growing the client relationships we have built at the top of the organizations we work with, and continuing to advise them on their current and future talent development needs, as well as their top leadership and organization priorities. At the same time, we are actively moving forward with strategic long-term initiatives that will maximize our core brand and premium positioning in the marketplace, and allow us to move into adjacent and complementary areas, while maintaining a strong balance sheet, paying our dividend and creating long-term shareholder value. We are excited about 2021 and look forward to advancing the opportunities we have ahead of us to accelerate our performance and transformation.

I would like to thank Clare M. Chapman for her extraordinary service as a member of our Board of Directors. I also want to announce that Ms. Chapman will not stand for reelection this year. Since joining our Board in 2016, Clare has played a critical role as the Human Resources and Compensation Committee Chair, in addition to serving on the Nominating and Board Governance Committee. I would like to thank Clare for the strong leadership and counsel she has provided to our Board and the firm’s leadership and employees, and for her many important contributions in helping us continue to build and develop an engaging and thriving culture and organization. We wish Ms. Chapman much success with regard to her other professional commitments.

Similar to last year, we will conduct our 2021 Annual Meeting in a virtual format with no physical in-person meeting. As we continue to navigate through the pandemic, hosting this meeting virtually will help ensure the health and safety of our employees, stockholders, Management and Board. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You can attend the 2021 Annual Meeting by visiting www.virtualshareholdermeeting.com/HSII2021 where you will be able to listen to the meeting live, submit questions and vote. Information about attending the 2021 Annual Meeting and voting your shares may be found in the Notice of 2021 Annual Meeting of Stockholders and Proxy Statement. The Notice of the 2021 Annual Meeting of Stockholders and Proxy Statement contain details of the business to be conducted at the upcoming Annual Meeting.

Your vote is very important to us. Whether or not you plan to attend the 2021 Annual Meeting online, we encourage you to vote promptly. You can vote via the internet, by telephone, by mail or by attending and voting online during the Annual Meeting. We hope that you vote your shares, which in turn helps us ensure that our corporate governance practices, decisions and strategy all remain aligned with the priorities of our stockholders and other stakeholders. Regular, transparent interaction with our stockholders is a cornerstone of our corporate governance practices.

On behalf of our Board, we thank you for your continued support and investment in our firm.				Sincerely,   Krishnan Rajagopalan President and Chief Executive Officer

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS OF HEIDRICK & STRUGGLES INTERNATIONAL, INC.

TABLE OF CONTENTS

PROXY STATEMENT

We are providing the enclosed proxy materials to you in connection with the solicitation by the board of directors (together the “Board”) of Heidrick & Struggles International, Inc. (“Heidrick & Struggles,” “Heidrick,” the “firm” or the “Company”) of proxies to be voted at the Annual Meeting of Stockholders to be held on May 27, 2021 (the “Annual Meeting”). The Annual Meeting will be held entirely online at www.virtualshareholdermeeting.com/HSII2021. We began distributing these proxy materials to our stockholders on or about April 23, 2021.

PROXY STATEMENT SUMMARY

This summary highlights information contained in the Proxy Statement. This summary data does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the Company’s 2020 performance, please review the Company’s Form 10-K for the year ended December 31, 2020.

2020 BUSINESS HIGHLIGHTS

2020 was an unprecedented year given the pandemic and challenging macro-economic headwinds. Despite extremely difficult market conditions, Heidrick ended the year with:

2020 ENVIRONMENTAL STEWARDSHIP, SOCIAL RESPONSIBILITY AND GOVERNANCE (ESG) HIGHLIGHTS

For all of us, 2020 was a year like no other, but its lessons gave us a greater sense of urgency and sharpened our focus on driving positive change, in our own firm and with our clients. As trusted advisors in boardrooms around the globe, one of the most consequential conversations we hear taking place and have the privilege of helping to shape is the conversation about sustainability and ESG issues.

At Heidrick & Struggles, we hold ourselves to the highest standards, and with the global pandemic and ongoing calls for racial equality and social justice, we have renewed our commitment to drive positive changes for our own employees.

Some highlights from our 2020 ESG efforts include:

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2020 COMPENSATION HIGHLIGHTS

PROPOSALS SUBMITTED TO VOTE AT THE ANNUAL MEETING AND VOTING RECOMMENDATIONS

We will also act upon any other business as may properly come before the Annual Meeting and any adjournments or postponements of that meeting. The Board or proxy holders will use their discretion on other matters that may arise at the Annual Meeting.

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WHO WE ARE

				Heidrick is a leadership advisory firm, providing executive search and consulting services to businesses and business leaders worldwide by helping them to improve the effectiveness of their leadership teams. More specifically, the Company provides executive search and leadership consulting services through the expertise of over 425 consultants located in major cities around the world. We are a publicly traded company with shares listed on the Nasdaq Stock Market.   At our core, we help boards and leadership teams to be successful. We place importance on building strong partnerships with our clients in order to ensure their satisfaction. The aim of these services is to create leaders, teams and companies that thrive. Our service offerings include:

EXECUTIVE SEARCH

We partner with our clients—respected organizations across the globe—to help them build and sustain the best leadership teams in the world, with a special focus on placing top-level senior executives. Through our unique relationship-based, data-driven approach, we help our clients find the right leaders, set them up for success, and accelerate their performance and their team’s.

We form cross-sector consultant search teams for each client to offer geographical knowledge, industry insights or expertise based on the particular role the client is looking to fill. By taking advantage of our global presence in this way, we are able provide our clients with best-in-class market intelligence and service.

Our Executive Search consultants also specialize in searches for specific “C-level” functional officers, such as Chief Executive Officer & Board Directors; Human Resources Officers; Financial Officers; Information and Technology Officers; and others.

HEIDRICK CONSULTING

As a complement and extension of our search services, we partner with organizations through Heidrick Consulting to unlock the power of their people. Our tools and experts use data and technology to bring science to the art of human capital development and organizational design. Our services allow our clients to accelerate their strategies and the effectiveness of individual leaders, teams and organizations as a whole.

Heidrick Consulting offers our clients groundbreaking approaches to human capital development through a myriad of solutions, ranging from leadership assessment and development, team and organization acceleration, digital acceleration and innovation, diversity and inclusion advisory services, and culture shaping.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)

				At Heidrick, we help our clients change the world, one leadership team at a time. Heidrick recognizes the importance of ESG issues to stockholders and formed a global cross-functional team, including members of our Legal Department, Human Resources Department and our Sustainability practice, among others, to monitor our ESG efforts. Our ESG priorities are centered around six foundational pillars which have both internal and client-facing significance, as outlined further below:

SERVING CLIENTS: FINDING LEADERSHIP SOLUTIONS

To meet the challenges of 2020 we quickly pivoted to serving clients virtually, continuing to provide our clients with leaders and leadership advice in a year when they needed it most. Despite the COVID-19 pandemic, we helped our clients find and place thousands of top senior executives and board members in 2020, and we expanded our offerings in Heidrick Consulting to continue to meet our client’s most pressing challenges.

DIVERSITY & INCLUSION: DRIVING CHANGE IN OUR FIRM AND YOURS

In August 2020, we announced our new Diversity & Inclusion Principles, and our public stance against racism and discrimination:

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PEOPLE: WINNING TEAMS COME FROM AN EXTRAORDINARY CULTURE, AND A PROGRESSIVE CULTURE STARTS AT THE TOP

As leaders in helping clients attract, develop, and retain great talent, we are constantly learning and promoting management best practices, which we also seek to incorporate into our own firm. We therefore strive to create an open, inclusive, and committed culture where our employees find fulfillment through their jobs and can deliver their best because they feel safe bringing their whole selves to work. This work begins by implementing policies and programs that support our employees’ success by creating a welcoming environment that is free from harassment, providing growth opportunities, and providing care through health and wellness benefits.

Our organization is governed according to our values and ethics by our Board of Directors and Management Team. Through its committee meetings and regular interactions with senior leadership, our Board of Directors provides strategic direction to our Executive Search and Heidrick Consulting operations while encouraging the development of new initiatives to ensure we continuously meet stakeholder needs and set industry standards.

COMMUNITY: LENDING A HAND TO OUR NEIGHBORS

We strongly believe that the benefits of our success and scale should enrich all of our stakeholders, especially the communities in which we operate. We are committed to being responsible global and corporate citizens by positively contributing to the communities in which we work and live. In 2020:

ENVIRONMENTAL SUSTAINABILITY: SHRINKING OUR CARBON FOOTPRINT

As one of the world’s largest executive recruiting and leadership advisory firms, we recognize the impact our offices and operations have on the planet and we acknowledge our responsibility to reduce our environmental impact where possible. We care about our communities—local and global—and we are committed to measuring our impact on the world, creating transparency around our activities and pursuing environmental sustainability initiatives.

In 2019, we began studying our carbon footprint with the goal of measuring, reducing and developing plans to neutralize it. In our business, much of our carbon relates to air travel and real estate, both of which were significantly impacted by circumstances surrounding COVID-19.

In 2020, our use of air travel dropped precipitously, while our use of virtual meetings and interviews increased significantly, something we are likely to retain to some degree going forward. In the same vein, most of our employees began working strictly from home, which inspired us to reassess our total real estate footprint.

Heidrick serves clients through a network of 50 offices in 25 countries. We lease space in over 20 green buildings across the globe, including many LEED buildings in the U.S. We pursue environmental sustainability initiatives when building and maintaining our offices globally. In 2020 we initiated a review and reduction of our real estate footprint, and managed to reduce our office space by 8.4%.

STAKEHOLDER ENGAGEMENT: REACHING BEYOND OUR FOUR WALLS

We aspire to create deeper partnerships with organizations to drive and advance our purpose and our values throughout the world. As a result, we engage with the following stakeholders:

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We additionally have relationships with a broad array of respected global organizations that guide us in our journey including: The Economist Intelligence Unit, Fortune Magazine, The Executive Leadership Council, the National Association of Corporate Directors, the Hispanic Association on Corporate Responsibility, the World Economic Forum, Stanford University, the Latino Corporate Directors Association, the World Bank, INSEAD, the New World Alliance, the University of Oxford, Paradigm for Parity, ION, and Catalyst.

For our complete ESG story, we are proud to announce the Company’s first ever 2020 ESG Report, which can be found here: https://app.insight.heidrick.com/2020ESGReport¹.

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Governance

Heidrick understands that corporate governance is not static, and as a result, we regularly monitor and evaluate best practices and new developments in corporate governance against our current practices. The value proposition of good governance extends beyond our own internal practices, as we serve as a trusted advisor to boards and C-Suites on myriad issues. Heidrick offers its clients an integrated suite of services and advisory expertise at the CEO and board level, ranging from the acquisition of talent to longer-term Succession Planning, Board Dynamics, and Culture Shaping.

Heidrick has built its reputation over the course of several decades on its core value of always acting with integrity. Our commitment to the highest levels of integrity and transparency in our business allows our investors to better assess risk and the value of our Company.

Internally, Heidrick’s governance requires oversight at all levels. Heidrick invests in its people who are responsible for keeping careful watch over the Company’s assets – whether they are monetary in value, confidential data assets or other assets entrusted to the Company.

Heidrick is committed to translating our values and strategy into measurable results, in order to improve our own performance on ESG issues that are material to our stockholders, the clients we serve, the candidates and participants with whom we interact and engage, and others with whom we work every day.

BOARD STRUCTURE

The current members of the Board of Directors are: Elizabeth L. Axelrod, Laszlo Bock, Clare M. Chapman, Lyle Logan, T. Willem Mesdag, Krishnan Rajagopalan, Stacey Rauch and Adam Warby. Ms. Chapman will not be standing for re-election to the Board at the Annual Meeting. As a result, following the Annual Meeting, our Board will have seven members.

The Board met six times during 2020. Each current member of our Board of Directors (individually, “Director”, and together, “Directors”) attended at least 75% of all of the meetings of the Board and committee on which they served.

Pursuant to our Director Attendance at Annual Meetings Policy contained in our Corporate Governance Guidelines, all Directors are expected to make every effort to attend the Company’s annual meeting of stockholders, and all of them did so in 2020. The Company believes that annual meetings provide an opportunity for stockholders to communicate with Directors.

BOARD LEADERSHIP

The Board does not have a fixed policy regarding the separation of the offices of Chairman of the Board (the “Chairman”) and CEO and believes that it should maintain the flexibility to select the Chairman and its Board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and our stockholders. In the event that circumstances facing the Company change, a different leadership structure may be in the best interests of the Company and our stockholders. For this reason, our Board evaluates issues that may be relevant to our leadership structure as part of our annual Board self-evaluation process.

Mr. Adam Warby has served as our independent Chairman since June 6, 2019. The Chairman’s duties include coordinating the activities of the independent directors, coordinating the agenda for and moderating sessions of the Board’s independent directors, and facilitating communications among the other members of the Board. This structure also allows the CEO to focus his energies on the management of the Company. We believe this structure provides strong independent leadership and oversight for our Company and our Board, while positioning our CEO as the leader of the Company for our investors, counterparties, employees and other stakeholders.

Every director on our Board other than our CEO is independent. We believe that the number of independent, experienced Directors that make up our Board benefits our Company and our stockholders.

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DIRECTOR INDEPENDENCE

We determine the independence of all non-employee directors in accordance with the independence requirements of our Corporate Governance Guidelines, our Director Independence Standards, our Related Party Transaction Policy and the rules of the Nasdaq stock market (“Nasdaq Rules”). Our Corporate Governance Guidelines, our Director Independence Standards and Related Party Transaction Policy can be found at www.heidrick.com/Who-We-Are/Our-Leadership.

Pursuant to the policies listed above, we affirmatively assess whether each Director has a relationship that would interfere with the exercise of independent judgment pursuant to these policies and corporate governance best practices.

In addition to the Nominating and Board Governance Committee’s review, the Board conducts an annual review of director independence, during which the Board also considers transactions, relationships and arrangements between each Director or an immediate family member of the Director and each of the Company and our executive officers.

The Board has determined that each of the following non-employee directors qualifies as “independent” in accordance with the above listed guidelines, standards and rules: Elizabeth L. Axelrod, Laszlo Bock, Clare M. Chapman, Lyle Logan, T. Willem Mesdag, Stacey Rauch, and Adam Warby. As Krishnan Rajagopalan is employed by Heidrick as our President and CEO, he does not qualify as independent.

BOARD COMMITTEES

The Board has three standing committees: the Audit & Finance Committee (“AFC”), the Human Resources and Compensation Committee (“HRCC”) and the Nominating and Board Governance Committee (“NGC”). We have reviewed and determined that each of the members of the standing committees is independent under the provisions of our Corporate Governance Guidelines, our Director Independence Standards, our Related Party Transaction Policy, and Nasdaq Rules. The Board has approved a written charter for each standing committee, which we review annually and revised as appropriate. The charters define each committee’s roles and responsibilities. The charters are available on our website at: https://heidrick.com/Who-We-Are/Our-Leadership.

The table below outlines membership and the frequency of meetings for each Board committee in 2020.

Name		AFC		HRCC		NGC
Elizabeth L. Axelrod						Chair
Laszlo Bock
Clare M. Chapman				Chair
Lyle Logan
T. Willem Mesdag		Chair
Krishnan Rajagopalan (CEO)
Stacey Rauch
Adam Warby (Chairman)		Ex Officio
Number of Meetings in 2020		6		4		4

The Chairman is an ex officio member of the respective committees but is excluded from discussions regarding Chairman compensation. Additionally, the CEO is permitted to attend committee meetings only at the invitation of the respective committee. Accordingly, the CEO is not permitted to attend committee meetings when the independent directors meet in executive session, such as when independent directors conduct performance evaluations or discuss the compensation of the CEO, or any other portion of any committee meeting that the independent directors deem appropriate to conduct outside of the CEO’s presence for any reason.

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		AUDIT & FINANCE COMMITTEE (AFC)   The AFC serves as an independent committee to assist in Board oversight of:

AFC
The integrity of the Company’s financial statements
The Company’s compliance with legal and regulatory requirements
The independent registered public accounting firm’s appointment, retention, qualifications and independence
The Company’s risk, compliance and Internal Audit functions
The review and recommendation to the Board concerning the payment of dividends
The review of all related party transactions reported to the AFC by the NGC

Each member of the AFC is able to read and understand fundamental financial statements (as required under Nasdaq Rules) and meets the heightened standards of independence for audit committee members pursuant to the rules and regulations of the SEC (the “SEC Rules”). Messrs. Mesdag and Logan each qualify as an “audit committee financial expert” within the meaning of the SEC Rules and are presumed to be financially sophisticated for purposes of the Nasdaq Rules.

		NOMINATING AND BOARD GOVERNANCE COMMITTEE (NGC)   The NGC serves as an independent committee to assist the Board in determining:

NGC
The criteria for directors and the selection of nominees for election to the Board
Committee membership recommendations
The independence of directors and committee members under applicable standards
The Company’s corporate governance policies, including the Corporate Governance Guidelines and Code of Ethics
The form and amount of director compensation
Oversight of other board memberships/limits of directorships
CEO Succession
The Company’s ESG programs and disclosures

In addition, the NGC coordinates and assists the Board and its Committees with their annual evaluations. The NGC also reviews and approves related party transactions. All of the members of the NGC are independent within the meaning of the listing standards of Nasdaq and the Company’s Corporate Governance Guidelines, Director Independence Standards, and Related Party Transaction Policy which can be found at www.heidrick.com/Who-We-Are/Our-Leadership.

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		HUMAN RESOURCES AND COMPENSATION COMMITTEE (HRCC)   The HRCC serves as an independent committee to assist in Board oversight of:

HRCC
Administering, recommending and approving all elements of compensation for the CEO and other Executive Officers
Adopting, administering and approving equity-related incentives and awards under the Company’s equity compensation plans
Reviewing and approving terms of employment, severance or other compensation-related agreements for any Executive Officer or key employee
Approving the peer group used for the executive compensation benchmarking purposes
Providing oversight in connection with Company-wide compensation programs
Providing guidance on strategically critical human capital matters
Review annually, in consultation with senior management, the Company’s diversity and inclusion practices, key metrics, and talent pipelines

Each member of the HRCC meets the qualifications for compensation committee members pursuant to the Nasdaq Rules and is a “non-employee director” within the meaning of SEC Rule 16b-3.

BOARD OVERSIGHT OF RISK

Management is responsible for the day-to-day management and assessment of risk at the Company, including communication of the most material risks to the Board and its Committees. The Board provides oversight over the risk management practices implemented by Management, except for the oversight of risks that have been specifically delegated to a committee of the Board. Even when the oversight of a specific area of risk has been delegated to a committee, the full Board maintains oversight over such risks through the receipt of reports from the respective committee chair to the full Board at each regularly-scheduled full Board meeting. In addition, if a particular risk is material or where otherwise appropriate, the full Board may assume oversight over a particular risk, even if the risk was initially overseen by a committee.

In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes and policies designed and implemented by Management are adequate and functioning as designed. The Board performs its risk oversight function primarily through its committees as well as reports the Board receives directly from Management.

ENTERPRISE RISK

Management undertakes a regular review of a broad set of risks across the Company’s business and operations to identify, assess, prioritize and manage potential issues. Specific emphasis is placed on identifying those risks that could have the highest impact to the Company and its operations, and the highest likelihood of risk occurrence. Management’s risk assessment also takes into account input from the internal audit function which reports regularly to the AFC, and the Board receives ongoing updates from risk professionals on trends in risk management and in new risks facing the business. The Directors have direct access to risk professionals. As part of Management’s risk identification and mitigation efforts, along with the annual plans for managing and, where appropriate, mitigating significant Company risks that the Board receives, Management has created an Incident Response Plan (“IRP”) framework for review and discussion with the Board. The IRP framework articulates the reporting obligations for Management to inform the Board of significant incidents, and, where appropriate and possible, describe and delineate the Board and/or committee obligations with respect to such incidents, including identifying incidents requiring immediate Board oversight and input.

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COMPENSATION RISK

The Company periodically completes an inventory of its executive and non-executive compensation programs globally, with particular emphasis on incentive compensation plans and programs. Based on this inventory, the Company evaluates the primary components of its compensation plans and practices to identify whether those components, either alone or in combination, properly balance compensation opportunities and risk. Based on the Company’s periodic assessments, the Company has determined that none of its compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Company believes that its overall cash versus equity pay mix, variable versus fixed pay elements, balance of shorter-term versus longer-term performance-focused and revenue-focused versus profit-focused performance measures, stock ownership guidelines, and use of compensation “claw-backs” work together to provide its employees and executives with incentives to deliver outstanding performance to build long-term stockholder value, while taking only necessary and prudent risks.

CODE OF ETHICS

The Board has adopted a Code of Ethics (the “Code”) that applies to all of the Company’s employees, officers and directors, as well as independent contractors working on behalf of the Company. Through our Code, we establish clear ethical and professional guidelines, and work though several mechanisms to hold the Company collectively to the highest professional ethical standards.

The Code meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K, and also meets the requirements of a “code of business conduct and ethics” under Nasdaq Rules. All employees generally are required to certify that they have reviewed and are familiar with the Code annually. The Code can be located in its entirety on the Company’s website at https://www.heidrick.com/Who-We-Are/Our-Leadership.

ETHICSLINE

The Board also has established the Heidrick & Struggles EthicsLine (the “EthicsLine”), a service that provides a mechanism for reporting to the Company alleged breaches of any legal or regulatory obligations, financial fraud, including accounting, internal controls and auditing, or any alleged violation of the Code or corporate policies. The EthicsLine is a web-based and telephonic reporting hotline (toll free in the U.S.) available to all Company employees, contractors, vendors, stockholders, clients or other interested parties. The EthicsLine is administered by an independent third party that is separate from Heidrick and specializes in running whistleblower hotline programs for companies throughout the U.S. Calls are not recorded and callers may remain anonymous. The EthicsLine is operational 24 hours a day, seven days a week. To contact the EthicsLine, you may dial 800-735-0589 toll-free in the U.S. or 704-731-7242 outside the U.S. or by visiting www.Heidrick.ethicspoint.com.

DATA PRIVACY

Data is critical to our business. Trust in how we handle that data is essential. Over the course of 2020, we accelerated our ability to deliver remotely and digitally, while still ensuring the security of the data entrusted to us. We continue to build awareness and expertise around data ethics as we develop new and innovative ways of working with data and focus on a privacy by design approach globally.

Heidrick is privileged to interact with hundreds of thousands of individuals as they go on a professional journey of assessment, development and potentially new roles. This is something we do not take for granted. As an international business we are focused on local developments and introduced a Do Not Sell My Data option on our website in response to new data laws in California. We recognize the need to continue our efforts to make all our dealings in relation to personal data transparent, empowering individuals to make informed choices in the process.

Additionally, we maintain a Data Subject Rights Hotline designed to enable our data subjects to easily submit a Data Subject Rights request. The Data Subject Rights Hotline is a telephonic reporting hotline (toll free in the U.S.) administered by a third party that is separate and independent of Heidrick and specializes in running compliance hotline programs for companies throughout the U.S. The Data Subject Rights Hotline is operational 24 hours a day, seven days a week. Data subject rights requests may be submitted by visiting www.heidrickdsr.ethicspoint.com, or by calling our toll-free number: 1-844-916-1329.

Heidrick acknowledges that our clients, candidates and participants have growing expectations and interest in how data is handled and we have responded by equipping our staff with the knowledge, resources and subject matter experts to ensure we can meet those needs and demonstrate our practices. We continue to integrate data ethics training and awareness across the business, in addition to mandatory annual security training for all staff. It is important that all our staff understand and take responsibility for their actions when handling data. As a proud leader in our industry, we strive to set an example of best data practices.

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INFORMATION SECURITY AND CYBERSECURITY

Confidentiality and information security are core to our corporate vision and values. It takes a combination of people, technical safeguards and processes to protect information for which we are responsible. Our security program, policies, standards, processes, tools and talent are aligned with the purpose of preventing and mitigating any potential data leakage. We also continually evaluate operating effectiveness of our security measures. Some key safeguards we have undertaken include, but are not limited to:

The AFC, comprised entirely of independent Directors, assists the Board in its responsibilities of overseeing that the Company has established, documented, maintained and periodically reevaluates its processes with respect to cybersecurity. Management briefs the AFC on cybersecurity matters no less than once per year, and in 2020 Management provided cybersecurity updates to the AFC twice during the course of the year. Further, the Company’s enterprise level IT general controls are audited annually by the Company’s internal audit function and the Company’s independent registered public accounting firm, RSM US LLP.

The Company maintains a cyber enterprise risk management insurance policy, which would potentially defray the costs associated with a breach. In the last three years, the Company has not experienced an information security breach, and as a result, the Company’s net expenses associated with information security breaches have not impacted total revenue.

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PROPOSAL 1

Election of Directors

The Board recommends a vote “FOR” each of the director nominees named below. We have refreshed our Board over the past five years, as eight highly-qualified directors have been added since 2016. We believe that the Board possesses the appropriate mix of diversity in terms of gender, age, race, national origin, skills, experience, viewpoints and service on our Board and the boards of other organizations.

DIRECTOR NOMINEES

There are seven nominees to be considered for election to our Board of Directors: Elizabeth L. Axelrod, Laszlo Bock, Lyle Logan, T. Willem Mesdag, Krishnan Rajagopalan, Stacey Rauch and Adam Warby. All of the nominees currently serve as directors on the Board and were elected to the Board by the stockholders at the 2020 Annual Meeting of Stockholders. Each director nominee has agreed to be named in this Proxy Statement. As discussed above, Ms. Chapman has decided not to stand for reelection at the Annual Meeting. The Company acknowledges and appreciates Ms. Chapman’s five years of service and contributions to Heidrick & Struggles.

The Board Matrix below under “Criteria for Considering Director Nominees” summarizes the key qualifications, skills and attributes most relevant to the decision to nominate each candidate for service on the Board.

The nominees’ biographies below describe each candidate’s background and relevant experience in more detail. The nominees are identified and discussed in the paragraphs below for election at this year’s Annual Meeting and to each serve a one-year term expiring at the 2022 annual meeting. If any of them becomes unavailable to serve as a Director before the 2022 annual meeting of stockholders, the Board may select another candidate to stand for election.

CRITERIA FOR CONSIDERING DIRECTOR NOMINEES

In considering potential candidates for election to the Board, including with respect to incumbent Directors and stockholder recommended candidates, the NGC shall consider, among other qualifications that it deems appropriate, the following:

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Consistent with our company-wide priorities of diversity and inclusion, one of the criteria the NGC takes into account when considering potential candidates for election to the Board is the potential candidate’s ability to bring diversity to the Board. The NGC considers the self-identified diversity characteristics of each director or potential director candidate, including gender, age, ethnicity, skills, experience, viewpoints and service on our Board. Additional information about each nominee can be found below in the Board Matrix and in each of the Director Biographies below.

Stockholders who would like the NGC to consider their recommendations for director nominees should submit their recommendations to the Secretary of the Company at: Heidrick & Struggles International, Inc., Attn: Corporate Secretary, 233 S. Wacker Drive, Suite 4900, Chicago, Illinois 60606. Director nominee recommendations by stockholders that are made in accordance with these procedures will receive the same consideration by the NGC as other suggested nominees.

DIRECTOR QUALIFICATIONS

The Board, acting through the NGC, considers its members, including those Directors being nominated for reelection to the Board at the Annual Meeting, to be highly qualified for service on the Board. Generally, the Board seeks individuals with broad-based experience and the background, judgment, independence, and integrity to represent the stockholders in overseeing the Company’s Management in their operation of the business.

The NGC reviewed, updated and evaluated the Board’s skill and experience matrix and evaluated each of the Directors’ qualifications against the Company’s long-term strategic plans. Within this framework, specific items relevant to the Board’s determination for each Director are listed in each Director’s biographical information beginning on page 16. The Directors’ ages are shown as of April 15, 2021. There are no family relationships among our Directors or named executive officers (“NEOs,” which term is the same as and used interchangeably with “Executive Officers”).

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BOARD MATRIX

Listed below are the skills and experience that we consider important for our Director nominees in light of our current business strategy and structure. The Directors’ biographies note each Director’s relevant experience, qualifications, and skills relative to this list.

SKILLS & EXPERIENCE

Experience

Axelrod

Bock

Logan

Mesdag

Rajagopalan

Rauch

Warby

Senior Leadership

Industry Experience

Ethics and Integrity

Financial Literacy

Independence

Operations

International Business Experience

Technology

Risk Management

Business Development and M&A

Government, Legal and Regulatory

Public Company Board

Information Security Expertise

    _|    GOVERNANCE       15

DIRECTOR BIOGRAPHIES

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The Board recommends a vote “FOR” each of the foregoing nominees.

    _|    GOVERNANCE       19

DIRECTOR COMPENSATION

The NGC annually reviews the level and form of compensation paid to independent Directors, including our Director compensation program’s underlying principles. Mr. Rajagopalan, who is a Director, is also our President and CEO, is not independent under the Company’s Director Independence Standards and therefore does not receive any additional compensation for his service on our Board.

Directors may elect to defer up to one hundred percent of their cash compensation per year pursuant to our Voluntary Deferred Compensation Plan (the “VDC Plan”). All directors are reimbursed for their out-of-pocket expenses incurred in connection with their duties as directors.

Each non-employee director receives an annual equity award of either restricted stock units or common stock with a value of approximately $115,000, awarded on the date of each annual meeting of stockholders. The restricted stock units remain unvested until the Director retires from the Board. Additionally, non-employee directors receive a cash retainer of $75,000 each per year, payable quarterly in arrears. In addition, Board and committee chairpersons and members receive compensation for their Committee service as outlined below.

The compensation of our non-employee directors, including all restricted stock units (“RSUs”) or stock, for the 2020 fiscal year is set forth in the table below and described in the accompanying footnotes.

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The Company’s stock ownership guidelines for directors require each director to own three times their annual cash retainer in Company stock within three years of joining the Board. As of March 31, 2021, each of the Directors has either satisfied the stock ownership guidelines or is on track to do so in compliance with the guidelines.

    _|    GOVERNANCE       21

EXECUTIVE OFFICERS

All of the Executive Officers have been appointed by and serve at the pleasure of the Board of Directors. Below is the name, age, present title, principal occupation and certain biographical information for each of the Company’s Executive Officers as of April 1, 2021.

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Each of our Executive Officers has entered into an employment agreement with the Company, which contain customary restrictive covenants in favor of the Company. Each Executive Officer also participates in the Company’s MIP, CIC Plan, Severance Plan, equity programs and vacation and benefit plans at the same level as other senior executives, as outlined below in further detail.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Various Company policies and procedures and annual questionnaires completed by all Company Directors and Executive Officers require disclosure of transactions or relationships that may constitute conflict of interest or otherwise require disclosure under applicable SEC and Nasdaq Rules. Pursuant to its charter, the NGC—in consultation with the AFC—reviews and approves related party transactions.

The process for reviewing certain relationships and related party transactions are outlined in the Company’s Related Party Transaction Policy, Director Independence Standards and Policy on Resolution of Conflicts of Interest for Directors and Executive Officers. Depending on the particular transaction or relationship, the Company’s review processes vary. When such a transaction or relationship is identified at the Chief Executive Officer or Board level, the NGC and/or its Chair, or in the instance of a potential conflict with the Chair of the NGC, the Board as whole, evaluates the transaction or relationship and approves or ratifies it (without the vote of any interested person) only if it is judged to be fair and in the best interests of the Company. The Company’s Related Party Transaction Policy, Director Independence Standards and Policy on Resolution of Conflicts of Interest for Directors and Executive Officers can be found at: https://www.heidrick.com/Who-We-Are/Our-Leadership. In addition, it is the practice of the NGC, although not part of a written policy, to review each transaction specifically disclosed as a potential related party transaction in connection with its review of the proxy statement for the annual meetings of stockholders, to the extent any such transaction has not previously been reviewed, applying the same standard.

Pursuant to our Related Party Transaction Policy, on a semi-annual basis, as requested by the NGC or the Company’s General Counsel, each director and executive officer is required to disclose in writing to the Company all pertinent information regarding their related parties and each charitable or non-profit organization for which such director or executive officer (or any of his or her related parties) is actively involved in fundraising or otherwise serves as a director, trustee or in a similar capacity.

There were no related party transactions since January 1, 2020 that required approval under the Company’s policies and procedures or the rules and regulations of the SEC.

    _|    GOVERNANCE       23

ADDITIONAL GOVERNANCE MATTERS

COMMUNICATION WITH THE BOARD

Stockholders may communicate directly with the Board. All communications should be directed to:

Corporate Secretary

Heidrick & Struggles International, Inc.

233 South Wacker Drive, Suite 4900

Chicago, Illinois 60606

Any such communication should prominently indicate on the outside of the envelope that it is intended for the Board or a particular director. All appropriate communication intended for the Board or a particular director and received by the Corporate Secretary will be forwarded to the specified party following its clearance through normal security procedures.

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Executive Compensation

PROPOSAL 2

Advisory Vote to Approve Named Executive Officer Compensation

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Compensation Discussion & Analysis

INTRODUCTION

Heidrick is a leadership advisory firm, assisting a broad range of clients across the globe in achieving their long-term business objectives by helping them to improve the effectiveness of their leadership teams. More specifically, the Company provides executive search and leadership consulting services through the expertise of its experienced consultants located in major cities around the world. The Human Resources and Compensation Committee (“HRCC”) seeks to ensure that the Company’s executive compensation program attracts, retains and rewards the best talent, while at the same time maintaining a strong link between pay and performance and aligning the interests of the Company’s executives and stockholders. Heidrick’s executive compensation philosophy emphasizes and rewards both Company and individual performance, which the Company believes promotes sustained long-term performance by rewarding not only the achievement of financial and operational goals, but also the accomplishment of individual strategic objectives that enable profitable growth.

Through its HRCC, the Company has implemented strong governance practices for considering and making decisions with respect to the compensation of the Company’s Named Executive Officers. Management, the HRCC and the full Board all play active roles in executive compensation decisions.

THE CD&A IS ORGANIZED INTO FOUR SECTIONS:

The CD&A is followed by the Compensation Tables and Narrative Disclosures, which report and describe the compensation and benefit amounts paid to the NEOs in 2020.

All of our Executive Officers are NEOs, so these terms are used interchangeably in this Proxy Statement.

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2020 YEAR IN REVIEW

2020 was an unprecedented year due to the pandemic. However, the Company demonstrated unprecedented resilience while adapting its business to rapidly shifting market conditions:

Adjusted Operating Income and Adjusted Earnings Per Diluted Share are Non-GAAP financial measures and include adjustments in 2017 to exclude expense associated with the settlement with Her Majesty’s Revenue and Customs related to the taxation of a legacy U.K. benefit trust obligation in Q1 2017, impairment charges, and restructuring charges. 2016 and 2019 also included restructuring-related adjustments. 2016 and 2019 also included restructuring-related adjustments. The adjustments in 2020 excluded expense associated with goodwill impairment charges and restructuring charges. Adjusted Operating Margin refers to Adjusted Operating Income as a percentage of Net Revenue.

Total Shareholder Return is the value of $100 invested on December 31, 2015, assuming the reinvestment of dividends during the following five-year period.

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The equivalent GAAP measures above, without the adjustments are represented in the following charts:

EXECUTIVE COMPENSATION PHILOSOPHY

The HRCC strives to establish compensation programs for the Company’s executives and employees that are competitive with firms in the executive search, leadership consulting and management consulting space, both public and private, with which the Company competes for executive talent.

Pay-for-performance guides executive compensation for Heidrick. The Company expects its Executive Officers to initiate and carry out sustainable growth strategies and to create long-term value for both the Company and its stockholders. Company performance is the primary factor in our executive incentive compensation program design. When measuring Company performance, the HRCC considers both qualitative and quantitative factors relating to the Company’s business strategies and objectives. In assessing the individual performance of the Executive Officers, the HRCC considers, among other things, the Executive Officer’s achievement of performance objectives, contributions to the Company’s strategic initiatives and demonstrated leadership qualities.

The HRCC regularly reviews the compensation program for the Company’s executives and employees to ensure that the programs continue to meet the needs of the business and align the long-term interests of the Company’s executives with those of the Company’s stockholders. The Company’s executive compensation program may change from time to time based on the review and input of the HRCC.

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Compensation Best Practices

Strong Governance Practices Utilized in Determining Executive Compensation

Role of the HRCC. With respect to the Company’s Executive Officers, the HRCC engages in a rigorous process in determining total compensation. This process involves setting Company performance and strategic and operational goals for the NEOs at the beginning of each year and evaluating the performance of the NEOs against those pre-established goals. The HRCC considers additional factors in making its decisions regarding each Executive Officer’s target total compensation opportunity. The specific factors include:

The HRCC determines and approves the compensation of the NEOs based on this evaluation. In making its decisions, the HRCC does not apply formulaic weighting to any of the above factors.

To assist in evaluating the NEOs’ compensation, the HRCC has retained the services of an independent compensation consultant, Pay Governance LLC, and considers recommendations from the CEO. The CEO does not provide such input as to his own compensation. The HRCC assesses the information it receives in accordance with its business judgment. The HRCC is also guided by its independent compensation consultant with respect to compensation decisions.

Role of the Board. The HRCC, with input from the full Board, independently reviews the CEO’s performance and recommends the CEO’s compensation to the Board. Based upon the recommendation of the HRCC, the full Board considers and determines the compensation of the CEO.

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Role of the CEO. The CEO annually reviews the performance of each of the NEOs other than himself. Following these performance reviews, the CEO presents compensation recommendations to the HRCC for consideration. The HRCC has full discretion to approve, modify or reject any such recommendations.

Role of the Independent Consultant. The HRCC has retained an independent compensation consultant which reports directly to the HRCC and does no other work for Management. During 2020, the independent compensation consultant’s representatives participated in the HRCC meetings and provided guidance to the HRCC with respect to executive compensation, comparative peer group data, director compensation, annual incentive compensation and consultant pay programs. In supporting the HRCC, the independent compensation consultant provides the HRCC with an independent assessment of Management’s recommendations for compensation, reviews and confirms the peer group used by the Company to prepare market compensation data, and provides ad hoc support to the HRCC, including discussing executive compensation and related corporate governance trends. The HRCC has determined that its compensation consulting firm was independent and without conflicts of interest. This determination was reached after reviewing the independence factors set out in the Nasdaq Rules.

Use of a Peer Group. The HRCC evaluates the Company’s executive compensation programs in comparison to those of a selected peer group, which in 2020 consisted of twelve similarly-sized public professional services companies. The HRCC reviews and approves peer group composition each year. Hudson Global was removed from the 2020 peer group due to its lower revenue size, following the divestiture of several of its entities. Cross Country Healthcare, Inc. was added to the peer group in 2020, as a comparable company in the staffing and recruiting industry. The HRCC uses the peer group to compare total direct compensation and each of the compensation elements for each NEO against positions at peer group companies with similar responsibilities. The HRCC also uses the peer group to review executive pay programs and practices at those companies.

For 2020, the peer group consisted of the following companies:

In setting compensation, the HRCC considers the peer group companies with which the Company directly competes for executive talent and stockholder investment. However, most of the Company’s executive search and leadership advisory competitors, from which executive talent is often recruited, are privately held and are not included in the above list of the public peer group. The HRCC therefore also relies on its general knowledge of executive compensation levels and practices in the executive search and leadership consulting industry.

The Company does not set a specific, relative percentile positioning for total direct compensation, or the elements of total direct compensation, as a target for NEO pay levels. Rather, the Company reviews the total direct compensation range for each position and the mix of elements to ensure that compensation is adequate to attract and retain key executive talent. To ensure that compensation is linked to performance, the NEO compensation program is designed to deliver at least 65% of total target compensation through variable pay. The NEO compensation program is also designed to ensure that a significant proportion of NEO compensation is delivered in the form of equity and thus aligned with the interests of the Company’s stockholders.

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Stockholder Vote and Engagement on Executive Compensation

The Company held its annual non-binding stockholder advisory vote to approve executive compensation (“say-on-pay”) at the 2020 Annual Meeting of Stockholders. The stockholders indicated their strong support for our 2019 executive compensation, with approximately 97% of voting stockholders casting their vote in favor of the say-on-pay resolution.

The Company had regular and active discussions with its major stockholders on various topics throughout 2020 and, during those conversations, stockholders did not raise any specific issues relating to the design of the Company’s executive compensation program. The Company did not make any changes to the executive compensation program as a result of the 2020 say-on-pay vote or its stockholder outreach efforts during 2020. The HRCC is dedicated to continuous improvement of the executive compensation program to reflect an appropriate alignment of pay and performance, and will continue to seek and review stockholder perspectives when designing and implementing the Company’s executive compensation program.

2020 COMPENSATION PROGRAM

2020 Executive Total Target Direct Compensation Mix

The majority of total target direct compensation for the NEOs was variable compensation.

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Consistent with the firm’s pay-for-performance philosophy, the majority of direct compensation for the NEOs is variable. Our NEO compensation mix is generally split into three principal components:

Component		Average % Mix		Objective		What it Rewards
Base Salary				Pay competitive salaries to attract and retain executive talent necessary to develop, implement and execute Heidrick’s business strategy, and reflect responsibilities of the position, experience of the executive and the marketplace in which Heidrick competes for talent.		Accomplishment of day-to-day job responsibilities, taking into account individual performance and retention considerations.
Annual Incentives (Cash Compensation)				Motivate executives to generate outstanding performance and achieve or exceed the operating plan over a one-year period and align annual compensation with annual performance and financial results.		Achievement of specific pre-set performance thresholds related to safety, financial, operational and strategic objectives.
Long-Term Incentive Equity Compensation				Encourage achievement of long-term performance goals, align executive rewards with the interest of Heidrick’s stockholders through long-term stock price appreciation, and facilitate the accumulation of Heidrick shares by executives, thereby enhancing ownership and promoting retention.		Share price growth and attainment of long-term financial goals.

As discussed in greater detail below, total target direct compensation for each NEO in 2020 was as follows:

Base Salary

Base salaries are reviewed annually by the HRCC against levels for positions with similar responsibilities at peer companies, using the comparative data prepared by the HRCC’s independent compensation consultant. The HRCC then considers individual performance, internal pay equity, functional expertise, experience and scope of responsibilities. In 2020, there were no changes to any NEO base salaries.

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Annual Incentives

The Management Incentive Plan (“MIP”) is the vehicle through which NEOs are rewarded with an annual cash bonus for achieving specific short-term performance goals over a one-year period. The MIP rewards our NEOs for achieving key annual non-GAAP financial metrics and personal objectives.

The HRCC sets Company and individual performance goals for the NEOs during the first quarter. These goals consist of both quantitative and qualitative performance objectives. The HRCC considers the reviews conducted by the CEO of the other NEOs and conducts its own review of the CEO’s performance against those pre-established performance objectives, as well as Company performance milestones achieved during the year. With respect to the CFO, the HRCC also considers input from the AFC Chair.

15% of the NEOs’ earned annual bonus amounts are deferred each year. The deferred amount is then paid out equally over the following three years. If an NEO leaves prior to payment of any deferred bonus amount, such amounts are forfeited.

2020 MIP Metrics

The metrics and targets that the HRCC selected for 2020 tie directly to our operational and strategic goals. Under the MIP, determination of the payout level (if any) for each NEO award is based upon the achievement of a combination of Company performance metrics (weighted at 70%) and non-financial, strategic performance factors (weighted at 30%). For the latter, there is a combination of shared and individual objectives. The objectives and rationale for selecting the MIP performance metrics for the year ended December 31, 2020 and the relative weight of each metric were as follows:

Payout amounts under the MIP were set for each metric based on “Minimum,” “Target” and “Maximum” performance levels and corresponding award levels based on the Company’s business plan and other operational and environmental factors, specifically: Adjusted Operating Income, Search Net Revenues and Non-Search Net Revenues. “Target” performance is the level at which a participant will earn 100% of his or her target award. Depending upon the relationship of the Company’s actual financial performance and the individual’s annual evaluation, final payouts under the MIP may be as little as zero (at or below “Minimum” performance) and as high as 150% of Target (at “Maximum” performance). The HRCC has discretion to modify any payouts (upwards or downwards) under the MIP as appropriate to ensure plan objectives are met, taking into consideration a variety of Company specific or environmental factors. These financial metrics were set taking into account the Company’s strategic initiatives, historical financial performance, internal budgeting for the relevant year, external guidance and expected market conditions.

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Each NEO also had non-financial strategic goals that were reviewed and approved by the HRCC in early 2020, and were aimed at focusing each NEO’s attention in areas where he or she has the most potential for impacting the Company’s performance. Minimum, Target and Maximum Performance Levels for 2020, as well as the actual performance results for both Company performance metrics and non-financial strategic metrics, are set forth below:

Adjusted Operating Income

Search Net Revenue

Non-Search Revenues

Non-Financial Strategic Goals

Total

Performance Minimum Target Maximum

$57.5 million $63.9 million $73.5 million

$584.7 million $649.7 million $682.2 million

$64.9 million $72.0 million $79.2 million

Target Weighting: % of Total Bonus

Actual Performance

$64.7 million1

$565.2 million

$56.4 million

See below

Bonus Result

106.2% of Target; 104.33% x 40%:

Threshold not met; 0% x 20%:

Threshold not met; 0% x 10%:

150% of Target; 150% x 30%:

Results: All NEOs

As discussed above, for 2020, 30% of MIP performance was contingent on achieving non-financial strategic goals specific to each NEO. These strategic goals, both shared and individual, were reviewed and approved by the HRCC in early 2020 and were aimed at focusing each NEO’s attention in areas where he or she has the most potential for impacting the Company’s performance.

As the Company adapted and reacted to the challenges, some objectives were affected and de-prioritized, while new priorities and objectives were created. Management reviewed the effectiveness of its actions with the Committee in a variety of categories to highlight the resiliency and actions that the Company implemented to navigate in 2020 and to rebound in the near future.

In 2021, the HRCC reviewed each NEO’s achievements relative to their non-financial strategic goals. The Company began the year with a strong first quarter, and then faced the global pandemic. While a number of non-financial objectives were able to be kept on track and accomplished, there was also a need and urgency to refocus on strategic goals supporting the operations of the Company and the health and safety of its employees., The NEOs stabilized the operations of the Company, with a focus on gaining market share, continuing the firm’s data and digital transformation, and continued work to establish a long-term enterprise strategy with the Board. A summary of originally established non-financial objectives and achievement against these objectives for each NEO is detailed in the following paragraphs. In summary, given the effort and results in mobilizing as one team during the pandemic in order to emerge stronger in the future, performance of 150% of target was recommended and approved for each of the NEOs. A separate resiliency grid was established to review the activities and performance against key new activities and objectives that emerged as a result of the events in 2020. A summary follows, together with commentary on achievement, together with original NEO objectives.

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Resiliency Grid: Established to assess performance in 2020 in light of global pandemic and market conditions:

As a team, the NEOs stabilized the operations of the Company and the employees in the following ways:

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KRISHNAN RAJAGOPALAN’S INDIVIDUAL PERFORMANCE

MICHAEL CULLEN’S INDIVIDUAL PERFORMANCE

MARK HARRIS’ INDIVIDUAL PERFORMANCE

SARAH PAYNE’S INDIVIDUAL PERFORMANCE

KAMAU COAR’S INDIVIDUAL PERFORMANCE

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Finally, the table below details the resulting payout under the MIP compared to target for each of our NEOs:

Long-Term Incentives

Long-term incentives (“LTIs”) are the vehicle through which NEOs are awarded the Company’s common stock for continued service and for achieving specific performance goals over a three-year period. These awards vest three years from the grant date. LTIs are designed to focus the NEOs and the Company on the strategic goals necessary to increase stockholder value and further position the Company to succeed in a changing environment.

The 2020-2022 LTI award targets are based on the HRCC’s review of publicly disclosed data for the Company’s applicable peer group for each NEO position and internal pay equity considerations, as well as the CEO’s recommendations and a review of individual performance and potential.

LTI awards issued to the NEOs in 2020 consist of:

When issuing LTI awards, the Company calculates the number of RSUs and PSUs awarded to the NEOs by dividing the total dollar value of the LTI award by the closing price of the Company’s Common Stock on the grant date (usually in March of the grant year). All outstanding RSUs and PSUs are credited with dividend equivalents that are payable in cash when and if the related units vest. The primary purpose of crediting dividend equivalents on LTI awards is to align the participant with the value of being a stockholder over the course of the vesting period, but only to the extent the award vests.

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In March 2020, LTI awards were issued to Messrs. Rajagopalan, Cullen, Harris, Coar and Ms. Payne, with 50% of the value issued as PSUs and 50% of the value issued as RSUs. Messrs. Rajagopalan’s, Cullen’s and Harris’s LTI awards were granted above the target amounts at the HRCC’s discretion to reflect the strong results of the Company in 2019, their individual performance and their relative market position. See the 2020 Grants of Plan-Based Awards Table on page 42 for more details on the equity grants that the HRCC approved. The following is a summary of the LTI awards issued in 2020:

2019 and 2020 PSU Awards. The 2019 PSU awards for the performance period 2019 – 2021 and the 2020 PSU awards for the performance period 2020 – 2022 were issued to Messrs. Rajagopalan, Cullen, Harris, and Coar and Ms. Payne. The awards are subject to target goals for the Company’s three-year Adjusted Operating Margin, as established by the HRCC at the beginning of the three-year PSU performance period, and three-year Relative Total Shareholder Return (“R-TSR”) for the 2019 – 2021 and 2020 – 2022 performance periods, respectively. The peer group for the new R-TSR metric is the constituents of the S&P Human Resources and Employment Services Index. The HRCC will review the performance for the 2019 and 2020 PSU awards, and the vesting of the awards will be determined in early 2022 and 2023, respectively.

2018 PSU Awards. For the 2018-2020 PSUs, the HRCC established operating income goals each year as the objective for the PSU award. After the end of the three-year period, the target number of PSUs is adjusted based on the average operating income (expressed as a percentage of the Company’s target operating income goals) for each annual performance period as follows:

Utilizing the average percentage of operating income performance, the PSU vesting percentage was determined:

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The PSUs issued to Messrs. Rajagopalan, Cullen, Harris and Coar in 2018 vested in 2021 at 137.58% of target as follows. In 2018 Ms. Payne was not an NEO and also was not awarded PSUs.

Mr. Rajagopalan’s Performance-Vesting Restricted Stock Units. The Company granted Mr. Rajagopalan a target number of 48,193 performance-vesting restricted stock units (“PRSUs”) with a grant date fair value of $1 million in connection with his appointment as CEO in 2017. The PRSUs are eligible to time-vest ratably over three years, subject to the achievement of transformational performance objectives and metrics determined by the HRCC. The goals set for Mr. Rajagopalan by the Board for the performance year 2020 included strategic growth, operating efficiency and organization development. Within each of these goals are objectives utilized to assess the achievement. Strategic growth included (i) achieving scale in Non-Search Revenue; (ii) maintaining Search profitability; and (iii) improving cross portfolio business development. Operating efficiency included (i) improving G&A efficiencies; (ii) maintaining average Partner productivity in each of Search and Consulting; and (iii) maintaining operating margin. Within organization development are (i) maintaining gender diversity in operational and executive management; and (ii) consultant retention. In February 2021, the HRCC determined that Mr. Rajagopalan had met these goals, and on March 26, 2021 16,065 PRSUs vested, which represented the last of three tranches of his award.

OTHER COMPENSATION POLICIES AND INFORMATION

Stock Ownership Guidelines

To enhance the alignment of NEOs’ interests with those of stockholders, the Company maintains stock ownership guidelines. Each new NEO has five years from the date he or she first becomes subject to the guidelines to achieve a stock ownership level equal to a multiple of base salary. The CEO is required to own five times his or her annual base salary in Company common stock within five years of appointment to the role, and all other NEOs are required to own two times their annual base salary in Company common stock within five years of appointment to their roles. As of December 31, 2020, the NEOs all were on target to meet their ownership guidelines within 5 years of appointment to their roles.

Hedging and Pledging Policy

Since 2013, the Company has had policies prohibiting hedging or pledging of stock. Pursuant to our Insider Trading Policy, our officers, directors, and employees shall not hold Heidrick securities in a margin account, pledge Heidrick securities as collateral for a loan, purchase financial instruments or otherwise engage in transactions that either hedge or offset any decrease in value of Heidrick securities. The full text of our Insider Trading Policy, which includes details on our restrictions on hedging and pledging of Heidrick securities can be located on our website at: https://heidrick.com/Who-We-Are/Our-Leadership.

Clawback Policy

In 2018, the Company adopted its Clawback Policy whereby the Company will seek the recoupment of any annual incentive payment or long-term incentive payment or equity award given to any incentive plan participant awarded by the Company during the three-year period preceding in the event of a restatement or correction of our financial statements or where the Board determines that an incentive plan participant engaged in intentional misconduct that caused or contributed to the need for restatement or correction of our financial statements. Our Clawback Policy requires reimbursement to the extent permitted by governing law and any employment arrangements entered into prior to the adoption of the Clawback Policy, among other requirements. The full text of our Clawback Policy can be found at www.heidrick.com/Who-We-Are/Our-Leadership.

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Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) limits the federal income tax deduction for annual individual compensation to $1 million for the current or former covered employees. In the past, Section 162(m)’s deduction limit included an exception for “performance-based” compensation. This exception for “performance-based” compensation was eliminated in 2018. Although tax deductibility is one of many factors the Company considers when determining executive compensation, the Company believes that the tax deduction limitation should not compromise its ability to design and maintain executive compensation arrangements that will attract and retain executive talent to compete successfully.

Perquisites and Other Personal Benefits

Heidrick provides its NEOs with the same benefits that are provided to all employees generally, including medical, dental and vision benefits, group term life insurance and participation in a 401(k) plan. The NEOs are also reimbursed for expenses incurred for an annual physical examination, for financial planning services (maximum reimbursement for financial planning is $1,080 per year, or $3,150 if expenses are incurred for the first time), and approved business club memberships.

Other Executive Compensation Arrangements

The Company has adopted other executive compensation arrangements, including employment agreements, a Change in Control Severance Plan designed to retain executives in a period of uncertainty and a Management Severance Pay Plan designed to provide financial assistance to executives following termination of employment. The material terms and conditions of these plans are described in the “Potential Payments Upon Termination or a Change in Control” section below.

Employment Agreements

Each of our NEOs have entered into an employment agreement with the Company, which contains general employment terms (including base salary and eligibility to participate in various incentive and benefit plans) and customary restrictive covenants in favor of the Company. These restrictive covenants contain non-competition and non-solicitation restrictions for a period of 12 months after certain terminations of employment. Severance protection for our Executive Officers is generally covered by our Management Severance Pay Plan and our Change in Control Severance Plan (described below) instead of by their employment agreements. However, our Chief Executive Officer’s employment agreement does provide for the following enhanced benefits: (i) if he is entitled to receive severance payments under the Management Severance Pay Plan, he will also be entitled to a pro-rata bonus for the year of termination and (ii) he will receive the benefits described in the Management Severance Pay Plan upon his resignation of employment for Good Reason (as defined in his employment agreement) instead of only upon a termination by the Company without Cause.

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COMPENSATION TABLES AND NARRATIVE DISCLOSURES

SUMMARY COMPENSATION TABLE

The table below summarizes the total direct compensation paid or earned by each of the NEOs for the last three fiscal years, and only reflects information for those years in which the NEO was determined to be an NEO of the Company. The amounts in the Stock Awards column indicate the fair value on the grant date associated with all grants awarded in the corresponding year and may not correspond with the amounts that the NEO will eventually realize with respect to these awards. The benefit, if any, actually received from these awards will depend upon the future value of our common stock.

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2020 GRANTS OF PLAN-BASED AWARDS TABLE

The table below sets forth certain information with respect to awards that were granted during the fiscal year ended December 31, 2020 for each NEO.