Heidrick & Struggles Posts 2017 Revenues amid Departures and New Hires

One of the nation's top executive search firms delivers its annual revenue report to Wall Street. Let’s dig into the numbers and review some of the comings and goings at the firm in recent months.
Heidrick & Struggles 2017 Revenues amid Departures and New Hires

February 27, 2018 – Executive search, leadership consulting and culture shaping services provider Heidrick & Struggles International / (NASDAQ:HSII) posted global revenues of $621.4 million in 2017, a 6.7 percent increase from revenues of $582.4 million the year before. The Chicago-headquartered recruiter – the third largest in the Americas as ranked by Hunt Scanlon Media – reported a loss of $48.6 million, or $2.60 per share, on the year.

“Our record net revenue in 2017 was driven by the growth of executive search in all three regions and by leadership consulting,” said Krishnan Rajagopalan, president and CEO. “We also made significant strides in lowering the run rate of our general and administrative and business support expenses. These actions allow us to shift the focus of our capital to investments that support the growth of our businesses, including technology, while helping the firm achieve improved operating margins on a more sustained basis,” he said.

For the fourth quarter, the firm recorded revenues of $169.4 million, a gain of six percent from revenues of $159.8 million a year ago. Executive search net revenue increased 10.6 percent year over year, or $14.2 million, to $148.9 million from $134.7 million in the 2016 fourth quarter. All three regions contributed to growth in executive search. Net revenue increased 10.3 percent in the Americas region, 16.1 percent in Europe (7.8 percent on a constant currency basis), and 3.9 percent in Asia Pacific (2.5 percent on a constant currency basis). The four largest industry practices – financial services, industrial, global technology & services, and consumer markets – all contributed to growth in the fourth quarter.

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But leadership consulting net revenue declined 27.9 percent, or $4.3 million, to $11.3 million from $15.6 million last year. Culture shaping net revenue also dipped 3.5 percent, or $0.3 million, to $9.2 million from $9.5 million during the same period last year.

Hedge Fund Investing Activity

Several hedge funds and other institutional investors have modified their holdings of Heidrick stock over the last several quarters. Assenagon Asset Management acquired a new position in shares of the firm during the fourth quarter. It acquired 59,682 shares of Heidrick’s stock, valued at approximately $1,465,000. Assenagon owned about 0.32 percent of the search firm as of its most recent filing with the Securities & Exchange Commission. Royce & Associates recently rose its position in Heidrick by four percent and now owns 1,612,356 shares of the firm’s stock valued at $34,101,000 after purchasing an additional 62,556 shares during the period. Dimensional Fund Advisors also raised its position in shares of Heidrick by 3.5 percent and now owns 1,427,277 shares of the firm’s stock worth $30,187,000 after purchasing an additional 48,761 shares.

Renaissance Technologies recently raised its position in shares of Heidrick by 1.3 percent and now owns 1,175,200 shares of the search firm’s stock worth $25,561,000 after purchasing an additional 15,298 shares. Vanguard Group raised its position in shares of Heidrick by 1.9 percent and currently owns 1,012,574 shares of the firm’s stock worth $22,024,000 after purchasing an additional 19,260 shares. And Paradice Investment Management raised its position in shares of Heidrick by 5.7 percent and now owns 946,828 shares of the recruiter’s stock worth $20,025,000 after purchasing an additional 51,138 shares. 83.19 percent of the stock is currently owned by institutional investors.

Zacks Investment Research recently raised shares of Heidrick from a “hold” rating to a “strong-buy” rating and set a $28 target price for the company. One investment analyst has rated the stock with a sell rating, four have issued a hold rating and one has given a strong buy rating to the stock. The stock presently has an average rating of “hold” and a consensus target price of $25.33.

During the quarter, Heidrick recorded restructuring charges of $15.7 million related to strategic actions taken to reduce overall costs and improve operational efficiencies. The charges consist of employee-related costs, including severance, associated with a global workforce reduction of approximately 14 percent, professional services fees, and expenses associated with consolidating or closing three of its offices, one in each region.

Heidrick is forecasting first quarter 2018 consolidated net revenue of between $150 million and $160 million. “Market demand for executive search and leadership advisory services remains strong and we intend to improve on the record revenue we achieved in 2017,” said Mr. Rajagopalan. “The strategic actions that we have taken position us to execute our plan to drive profitable growth and operating excellence.”

Heidrick shares have increased almost four percent since the beginning of the year. In the final minutes of trading yesterday, shares hit $25.45, an increase of 18 percent in the last 12 months.


In January, a restructuring plan was revealed by Heidrick to reduce overall costs and improve efficiencies in its operations. The expected annual cost savings from the restructuring is expected to range from $11 million to $13 million. According to sources, the restructuring included Heidrick cutting its workforce of 1,600 employees by 60-70 people and closing two offices, one in the U.S. and one in Europe, and merging those operations into other offices.

The firm recently announced a series of changes to its leadership team. Mark R. Harris, joins Heidrick as CFO, succeeding Richard W. Pehlke who retires in March. Mr. Harris had been CFO at Hercules Capital, a publicly traded business development company, with responsibility for the finance, accounting, operations, treasury, legal and investor relations.

Stephen Beard, Heidrick’s executive vice president, general counsel and chief administrative officer, has also chosen to leave the firm to pursue other opportunities. The chief administrative officer role will be eliminated. Kamau A. Coar, vice president, associate general counsel, has been promoted to general counsel. In this role, Mr. Coar will be responsible for the firm’s legal and regulatory matters globally.

Heidrick & Struggles Launches Consulting Division
Just recently, Heidrick & Struggles launched its Heidrick Consulting business in the market globally. The new business combines the firm’s Leadership Consulting and Culture Shaping businesses into a single integrated line of advisory services.

As previously reported, Randy Thorne left Heidrick as its chief marketing officer. Mr. Thorne departed the firm last month. A replacement has yet to be named and the position itself might be eliminated. Mr. Thorne had served with the Chicago-based leadership advisory firm since 2013. His duties included setting the firm’s marketing agenda, growing its brand, and developing client-centric marketing strategies.

New Practice Leaders

Heidrick appointed Amy Goldfinger and Mike Theilmann as co-leaders of its global human resources officers (CHRO) practice, based in New York City and Dallas. This follows the departure of Dan Kaplan who left the firm to lead Korn Ferry’s CHRO practice.

Ms. Goldfinger has been with the firm for 11 years advising clients in HR transformation, accelerated leadership, talent management strategy and execution, leadership assessment and development, and onboarding. She leads senior level HR searches including CHRO, heads of talent management, heads of organizational development, chief learning officers, heads of rewards and heads of recruiting for companies in every industry.

Mr. Theilmann joined the firm last June with more than 25 years of global experience across retail, hospitality, consumer goods, and venture capital. He had served as CHRO of J.C. Penney where he partnered with the CEO to accelerate growth through talent and a customer-centric focus.

In addition, Ron Lumbra becomes managing partner for the firm’s centers of excellence, responsible for the functional practices and the private equity practice within executive search, the firm’s strategic accounts, and H Labs, the enterprise-wide product development function delivering validated diagnostics for the firm’s client teams. Previously, Mr. Lumbra had been regional leader, Americas.

Rebecca Foreman Janjic has been appointed global managing partner for the firm’s global technology & services practice, succeeding Mr. Cullen. Based in the San Francisco office, she also co-leads Heidrick’s big data & analytics specialty practice. Her own executive search work focuses on recruitment of C-suite and VP-level executives within software, internet, and technology services companies.


During the quarter, Heidirck also announced promotions leading to 21 new partners and 22 new principals globally. “These consultants share a track record of delivering exemplary client service, contributing to the firm’s strategic growth agenda and demonstrating the firm’s values in all that they do,” said Mr. Rajagopalan. The promoted consultants are based in 21 cities across 13 countries on six continents:

New Partners

  • Bill Bryan, partner – financial services practice (New York)
  • Emma Burrows, partner – CEO & Board of Directors (Paris)
  • Fabiana Cotrim, partner – consumer markets practice (Sao Paulo)
  • Florian Delegue, partner – industrial practice (Paris)
  • Jaimee Eddington, partner – financial officers practice (Dallas)
  • Shadi El Farr, partner – financial services practice (Dubai)
  • Matt Herzberg, partner – Heidrick Consulting (Huntington Beach)
  • Mark Jackson, partner – financial services practice (London)
  • Sam John, partner – financial officers practice (New York)
  • David Joseph, partner – industrial practice (London)
  • Lauren Keefe, partner – consumer markets practice (New York)
  • Brian Klapper, partner – Heidrick Consulting (Huntington Beach)
  • Carsten Kroehl, partner – financial services practice (Frankfurt)
  • Lindsay Leach, partner – global technology & services practice (Boston)
  • Kristin Mehta, partner – consumer markets practice (Chicago)
  • Amy Turner, partner – Heidrick Consulting (London)
  • Elmer Velasquez, partner – global technology & services practice (New York)
  • Mark Watt, partner – Heidrick Consulting (Johannesburg)
  • Amanda Worthington, partner – consumer markets practice (Chicago)
  • Beau Yorke, partner – industrial practice (Perth)
  • Adam Zellner, partner – information and technology officers practice (Chicago)

New Principals

  • Dennis Alimena, principal – Heidrick Consulting (Huntington Beach)
  • Duygu Altuntas, principal – healthcare & life sciences, Consumer (Istanbul)
  • Charlie Anderson, principal – financial services practice (New York)
  • Anna Aster, principal – financial services practice (New York)
  • Courtney Disston, principal – education, non-profit & social enterprise practice (Philadelphia)
  • Priya Dixit Vyas, principal – Heidrick Consulting (London)
  • Sarah Driscoll, principal – global technology & services practice (London)
  • Julia Goodman, principal – consumer markets practice (Johannesburg)
  • Marianne Hill, principal – financial services practice (Johannesburg)
  • Nao Ichikawa, principal – financial services practice (Hong Kong)
  • Youri Lavoine, principal – industrial practice (Tokyo)
  • Brian Lowenthal, principal – Heidrick Consulting (Huntington Beach)
  • Adrienne Martasin, principal – financial officers practice (Los Angeles)
  • Holly McLeod, principal – Heidrick Consulting (New York)
  • Christine Morse, principal – global technology & services practice (San Francisco)
  • Scott Robbin, principal – information & technology officers practice (New York)
  • John Rubinetti, principal – private equity practice (New York)
  • Ina Sood, principal – healthcare & life sciences practice (Washington, D.C.)
  • Scott Tempel, principal – Heidrick Consulting (Huntington Beach)
  • Karthik Vedagiri, principal – global technology & services practice (Bangalore)
  • Sebastian Walter, principal – financial services practice (Dusseldorf)
  • Tracy Zhang, principal – industrial practice (Hong Kong)

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media

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