More
than
ANNUAL
REPORT
2022
Dear
Shareholders
We felt like we could reach out and touch the stars.
A few years ago, my family and I went stargazing in a
remote location. Without city lights to obscure our view,
every tiny dot of brilliance shone crystal clear. As we
looked through the telescope, we were awestruck by the
countless stars and swirls of the Milky Way. In that moment,
we felt connected to something bigger than ourselves.
No doubt we can all relate to that cosmic shift in
perspective. Angel Martinez, one of our board members,
recently shared this analogy with me. When we look
through the eyepiece of a telescope, what is distant
suddenly zooms closer. But if we look through the wrong
end of the telescope, things shrink away from us.
We need to ask ourselves, as Angel observed:
“Which end of the telescope are we looking through?”
Today, that question is more important than ever. No doubt,
Korn Ferry’s past performance has been extraordinary
— and fiscal year 2022 was no different, as we reached all–
time highs in almost every financial performance metric.
Our vision, to become the preeminent organizational consultancy,
is clearly working. I am incredibly proud of our company, our
colleagues and our accomplishments. For FY’22, our total
year fee revenue was $2.63 billion, up 45% year over year.
Moreover, our overall performance over the years
has been impressive. For example, our 10–year
CAGR has been 13%, while our 20–year CAGR has
been 10%. The clients we work with and the impact
we are making have never been more profound.
Over the last two decades, we have seen our topline grow
by more than sevenfold, as a result of, among other factors:
•
A major account strategy that now
represents 36% of our portfolio
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KORN FERRY | ANNUAL REPORT 2022
•
•
•
•
Consulting and Digital capabilities that
We’re truly changing people’s lives — with our clients and
represent 38% of our fee revenue
within our firm. An important area is our firm’s focus on
An integrated go–to–market strategy — One Korn
than ever to helping people exceed their potential with
Ferry — that has resulted in almost 30% of our fee
an abundance of opportunity. This belief is reflected in
revenue coming from cross line–of–business referrals
our firm’s recognition as a Best Place to Work for LGBTQ+
ESG, which is breaking barriers. We’re more committed
A new Korn Ferry that trains and develops
more than 1 million professionals a year
A compensation and rewards advisory and
digital offering with compensation data
on more than 23 million executives
•
A new interim, transition management and
staffing capability with more than $110 million
of annual fee revenue on a run rate basis
•
All while deploying a balanced, disciplined
approach to capital allocation
As laudable as all this is, the past is just that —
the past — and doesn’t guarantee future success.
As we look ahead, we do so through a different prism.
The world and our clients have entered a new reality —
•
a Covid transitory era in which there will be a contest
for not only growth, but also relevancy and profitability.
Companies will have to reassess all aspects of their strategy,
including their organizational, leadership and talent
imperatives. We are also in a cycle in which, regardless of
economic activity, shortages of skilled labor are projected
to persist. Today, Boomers are retiring and career nomads
are looking for change — early and often. And our moves,
approach and offerings reflect this overall dynamic.
This time of change is an opportunity for us continue to
reimagine our business. We’re focused on transforming
ourselves and our clients. Korn Ferry is now a company
with a more durable business, with greater and growing
relevance, and a new sustainable level of opportunity.
We continue to replicate and scale our solutions and lead
innovation at the intersection of talent and strategy in
the digitally enabled new world of work. Today, our firm
has a view into an organization’s entire talent ecosystem,
enabling us to create positive client outcomes. The depth
and breadth of our offerings span the talent lifecycle
— from recruitment to assessment to development,
organizational strategy, and rewards — positioning us for
success in this highly fragmented, competitive landscape.
Equality, Best Companies for Parents and Top Companies
for Executive Women, among other achievements.
We will also continue to invest heavily in areas of
growth, including the expansion of our suite of
digital capabilities, helping to transform the way our
clients succeed in this new world. This also includes
broadening the scope of our offerings. In professional
search and interim services, for example, we’ve made
two acquisitions during this fiscal year alone.
To fulfill our vision and further position our company
for long–term success we will remain relentlessly
focused on meeting the evolving needs of our clients.
• We will continue to drive an integrated go–to–market
strategy through our Marquee and Regional
Accounts. This not only facilitates growth, but also is
the key to more scalable and durable fee revenues.
Our approximately 350 Marquee and Regional
Global Accounts continue to demonstrate the
power and value of these relationships, generating
more than $950 million in fee revenue last year...
thereby reflecting our global capabilities
even during differing economic periods.
I’d like to thank our colleagues around the globe
for their resilience. I am also grateful to our
leadership team and board of directors for their
unwavering commitment to Korn Ferry.
While it’s natural to look back, we cannot stay
there. Just as with the telescope, we need to
look through a different lens. Most important is
to focus on what’s ahead in this new world.
For the new fiscal year, I truly feel we have the right
strategy, with the right people at the right time to help our
clients drive superior performance. Korn Ferry is indeed
poised for even greater things to come as we look up, look
out and look forward … to help others become More Than.
3
KORN FERRY | ANNUAL REPORT 2022
Performance
highlights FY 22
We made tremendous progress in the recently
completed fiscal year, driving record breaking results:
Fee revenue
Adjusted EBITDA
1
$2.63
Billion
$539
Million
Diverse Mix
of Revenue ($ Millions)
Consulting
$650
Digital
$349
4
KORN FERRY | ANNUAL REPORT 2022
RPO &
Professionsal
Search
$692
Executive
Search
$936
Fiscal Year
Fee Revenue Trend
($ Billions)
3
9
.
1
$
1
8
.
1
$
3
6
2
$
.
FY 20 FY 21 FY 22
Adjusted
1
EBITDA
($ Millions)
1
0
3
$
6
8
2
$
9
3
5
$
FY 20 FY 21 FY 22
Adjusted
EBITDA Margin
1
%
6
5
1
.
%
8
5
1
.
%
5
0
2
.
FY 20 FY 21 FY 22
5
KORN FERRY | ANNUAL REPORT 2022
[1] Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted to exclude, when applicable, acquisition / integration costs, impairment of fixed assets (leasehold improvements), the impairment of right-of-use asset, restructuring charges and separation costs. See page 34 of the accompanying Form 10—K for the fiscal year ended April 30, 2022 for a presentation of the most directly comparable GAAP measure for Adjusted EBITDA (Net income attributable to Korn Ferry) and a reconciliation to that measure. Page 34 of the accompanying Form 10—K also presents a reconciliation to Operating Income, the numerator used when calculating the most directly comparable GAAP measure for Adjusted EBITDA Margin (Operating Margin), which for the fiscal year ended April 30, 2022 was 17.9%.This document may contain certain statements that we believe are, or may be considered to be, “forward—looking statements” — that is, statements regarding future events, objectives, or plans that by their nature are uncertain. For details on the uncertainties that may cause our actual future results to materially differ from those expressed in our forward—looking statements, see our accompanying Form 10—K for the fiscal year ended April 30, 2022 and quarterly reports on Form 10—Q. We do not undertake to update our forward—looking statements. This document also includes certain forward—looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. We are all
6
KORN FERRY | ANNUAL REPORT 2022
morethanmorethan Our purpose is to
inspire and excite
people, teams, and
entire organizations.
To unite boardrooms
and workforces.
To unlock potential,
realize ambitions,
and change lives.
7
KORN FERRY | ANNUAL REPORT 2022
morethanmorethan UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
Form 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended April 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ____to _____
Commission File Number 001-14505
KORN FERRY
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
95-2623879
(I.R.S. Employer Identification No.)
1900 Avenue of the Stars, Suite 1500, Los Angeles, California
(Address of Principal Executive Offices)
90067
(Zip Code)
(310) 552-1834
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.01 per share
Trading Symbol(s)
KFY
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☑
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its managementʼs assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the registrantʼs voting and non-voting common stock held by non-affiliates of the registrant on October 29,
2021, the last business day of the registrantʼs most recently completed second fiscal quarter (assuming that the registrantʼs only affiliates are
its officers, directors and 10% or greater stockholders) was approximately $3,237,768,536 based upon the closing market price of $77.21 on
that date of a share of common stock as reported on the New York Stock Exchange.
The number of shares outstanding of our common stock as of June 22, 2022 was 53,019,359 shares.
Documents incorporated by reference
Portions of the registrantʼs definitive Proxy Statement for its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III
of this Form 10-K.
KORN FERRY
Index to Annual Report on Form 10-K for the Fiscal Year Ended April 30, 2022
Item #
Description
Part I.
Page
Business
Item 1
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Item 3
Item 4
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers
Part II.
Item 5
Market for Registrantʼs Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Reserved
Managementʼs Discussion and Analysis of Financial Condition and Results of Operations
Item 6
Item 7
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
Item 9C Disclosures Regarding Foreign Jurisdictions that Prevent Inspections
Part III.
Item 10 Directors, Executive Officers and Corporate Governance
Item 11
Item 12
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accountant Fees and Services
Item 15
Item 16
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
Financial Statements and Financial Statement Schedules
Part IV.
1
10
24
24
24
24
24
26
27
28
43
44
44
44
44
44
45
45
45
45
45
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49
F-1
Item 1. Business
Company Overview
PART I.
Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global
organizational consulting firm.
Korn Ferry is a different firm today than when we were founded. We are a Company with a more diverse service and
solution offering that is aligned with our clientsʼ desire to synchronize their strategy, operations, and talent to drive
superior performance. Today, we believe we are the organizational consultancy that is uniquely positioned to help
companies look at talent and strategy together, ensuring that they have the right people in the right places and are
providing them with the right rewards. We bring their strategies to life by designing their organizational structure and
helping them hire, motivate and hold on to the best people. And we help professionals navigate and advance their
career.
For fiscal 2022, our exceptional performance reflects the relevance of our strategy, the top-line synergies created by
our end-to-end human capital solutions, the resilience of our colleagues, and increasing connection with our Korn
Ferry brand. The past year has presented many challenges. However, with the commitment of our colleagues, we
have concluded the year with strong, record results.
During fiscal 2022, we partnered with almost 15,000 organizations. Our clients include the worldʼs largest and most
prestigious public and private companies, middle-market and emerging growth companies, and government and non-
profit organizations. We have built strong client loyalty, with nearly 90% of our engagements in fiscal 2022 completed
on behalf of clients for whom we had conducted engagements in the previous three fiscal years. We work with:
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97% of the S&P 100, and 85% of the S&P 500
92% of the Euronext 100
85% of the FTSE 100
89% of the S&P Europe 350
68% of the S&P Asia 50
73% of the S&P Latin America 40
In addition, we work with:
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2 in every 3 best companies to work for (Fortune Magazine)
1 in every 2 of the fastest growing companies in the world (Fortune Magazine)
80% of the top companies changing the world (Fortune Magazine)
80% of the worldʼs top performing companies (Drucker Institute)
96% of the top 50 world's most admired companies (Fortune Magazine)
We also continued to make significant investments—in strategic acquisitions and the innovation and development of
our assets, platforms, core capabilities, and solutions, all while we sought to attract, retain, and develop our people.
These investments are intended to help us further differentiate our competitiveness in the marketplace. Today, as a
result of our investments, innovation and growth, we believe we are uniquely positioned to address the most pressing
human capital issues faced by organizations worldwide. We continue to transform ourselves and our clients. We are
now a company with a more durable business, with greater and growing relevance, and a new sustainable level of
business and profitability that is poised for further growth.
We continue to replicate and scale our solutions and to lead innovation at the intersection of talent and strategy in the
digitally enabled new world of work. The depth and breadth of our offerings across the talent lifecycle—from attraction
to assessment to recruitment to development, management, and reward—place us in a distinctive position. We offer
end-to-end solutions—a view into an organizationʼs entire talent ecosystem—to create positive client outcomes. Our
deeply embedded intellectual property (“IP”), data, and content within our solutions are designed to help clients solve
new and evolving issues within todayʼs dynamic work landscape. We continue to align to the most pressing issues for
organizations: workforce transformation, diversity equity & inclusion ("DE&I”) initiatives, environmental, social &
governance (“ESG”) matters, accelerating revenue growth (“ARG”) in a post-COVID-19 world, and new career trends
like career nomads who are more frequently changing jobs. We think we are uniquely positioned to help clients and
their people exceed their potential in this environment.
We now place an even greater focus on driving a One Korn Ferry story. Partnering with internal and external
stakeholders, this singular vision engages our employees, resonates in the broader market, and is a platform for
1
differentiation and sustainable growth.
We develop and train nearly one million professionals a year and place on average a candidate every three minutes,
each business hour.
A critical driver of our success has been the evolution and maturation of our go-to-market (“GTM”) activities. We lead
with our Marquee and Regional Accounts, approximately 350 accounts or 2% of our total clients which represent 36%
of our total fee revenue. We continue to invest in Global Account Leaders (“GALs”), exiting the year with more than
60 colleagues in this role. Leveraging our acquisition of the Miller Heiman Group, we use our own sales effectiveness
methodologies and discipline in our Marquee and Regional account programs to drive rates of top line growth in
excess of the rest of our portfolio.
We continue to capitalize on the top-line synergies created by our end-to-end core and integrated solutions that
address every aspect of an employeeʼs engagement with their employer. This manifests itself in our ability to continue
to increase fee revenues referred from one line of business to another, almost 30% for fiscal 2022.
Fiscal 2022 Performance Highlights
Our results reflect the dedication and hard work of our more than 10,770 talented colleagues. They focus on creating
value that matters for all our stakeholders, the clients, shareholders, and the communities in which we operate.
Our strategic growth reflects a more balanced and sustainable organization with solid revenue and earnings streams
in fiscal 2022:
(cid:129) Our performance drove record-breaking results, generating $2,626.7 million in fee revenue, up 45.1%
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compared to fiscal 2021.
Diluted Earnings Per Share was $5.98 in fiscal 2022, a new high.
Net Income Attributable to Korn Ferry was $ 326.4 million (margin 12.4%), an increase of $211.9 million
compared to fiscal 2021. Operating income and Adjusted EBITDA* were $470.1 million (margin of 17.9%)
and $538.9 million (margin of 20.5%), respectively, an increase of $314.3 million and $252.6 million,
respectively, compared to fiscal 2021.
* Consolidated Adjusted EBITDA are non-GAAP financial measures and have limitations as analytical tools.
See Item 7. Managementʼs Discussion and Analysis of Financial Condition and Results of Operations for a
discussion of why management believes the presentation of these non-GAAP financial measures provide
meaningful supplemental information regarding Korn Ferryʼs performance.
During fiscal 2022, we continued with our balanced approach to capital allocation. We repurchased approximately
1,471,000 shares of stock for $98.8 million and paid dividends of $26.8 million. Recognizing the opportunities of a
large addressable market and the shift from career employee to career nomad, we acquired The Lucas Group, which
brings substantial professional search and interim expertise to Korn Ferry. We also recently completed the acquisition
of Patina Solutions Group, an interim executive solutions firm that provides access to a network of C-suite, top-tier,
and professional interim talent. Both additions are expected to enhance our industry-leading search portfolio. These
two acquisitions were completed with $133.8 million of our capital. We reinvested $45.6 million of capital into the
development of technology-enabled products and solutions.
The Korn Ferry Story
Our Strategy
As the preeminent organizational consulting firm, we act as business advisors in talent and strategy and bring
together solutions for our clients. Our approach is focused on the following priorities to increase our client and
commercial impact:
1. Drive a One Korn Ferry go-to-market strategy through our Marquee and Regional Accounts and integration
across solutions and geographies.
2. Create the Top-of-Mind Brand in Organizational Consulting - Lead innovation through relevant market
offerings and evolve our thought leadership around talent strategy.
3. Deliver Client Excellence and Innovation and diversify our offerings into fully integrated, scalable and
sustainable client engagements.
4. Advance Korn Ferry as a Premier Career Destination - Attract and retain top talent through continued
investment in building a world-class organization through a capable, motivated, and agile workforce.
5. Pursue Transformational M&A Opportunities at the Intersection of Talent and Strategy.
Our Core Capabilities
We offer a unique set of capabilities tailored to the new world of work. These offerings cover the entirety of the talent
2
journey, strengthening our work and thinking in the next. Our five core capabilities include:
(cid:129) Organization Strategy: We map talent strategy to business strategy, designing operating models and
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organization structures that help companies put plans into action.
Assessment and Succession: We identify the talent organizations need, compare that to the talent they
have, and help close the gaps.
Talent Acquisition: From executive search to recruitment process outsourcing ("RPO"), we help
organizations attract and retain the right people across functions and levels.
Leadership and Professional Development: We develop leaders along every stage of their career journey
with a spectrum of intensive high-touch and scalable high-tech development experiences.
Total Rewards: We help organizations pay their people fairly for doing the right things with rewards they
value at a cost that the organization can afford.
Our Integrated Solutions
We deliver differentiated and integrated solutions, bringing together our best thinking from across our core
capabilities to target specific client challenges:
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Cost Optimization: Thereʼs increased pressure to optimize costs and drive efficiency in this disruptive
world. We work with leaders to manage cost drivers: organization, people and rewards. We put in place
strategies designed to ensure they achieve cost reductions while maintaining performance and growth,
making client organizations fit for the future.
(cid:129) Workforce Transformation: Our workforce transformation offers practical and pragmatic solutions to
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support organizations in re-shaping workforces for the future.
Accelerating Revenue Growth: Today's selling environment is more complex than ever, with sales teams
challenged to deliver value. Sellers need the right tools, training, and approach to be successful. Korn Ferry
combines our technology and methodology to help organizations achieve their top-line growth objectives.
ESG - Our people-focused approach for clients: ESG factors are high on the agenda for most of our
partners. We have a unique set of capabilities to help organizations manage the issues transforming how we
work and live. Our support can help accelerate their transition by taking a people-focused approach to ESG
matters.
DE&I: We help clients build diverse and inclusive organizations to deliver superior organizational
performance. We achieve this through a systematic approach, unlocking the power and potential of their
people.
Learning Development (“LDO”): We believe businesses need to prepare for the future by creating a
culture of learning that helps them quickly adapt to new trends and demands. Our LDO solution, leveraging
our Korn Ferry Advance platform, takes our expertise in leadership coaching and combines it with
technology to provide quality coaching at scale across organizations.
Our Businesses
We have seven reportable segments that operate through the following four lines of business, supported by a
corporate center. This structure allows us to focus on our clients and partner with them to solve the challenges they
face in their businesses.
1. Consulting aligns organization structure, culture, performance, and people to drive sustainable growth by
addressing four fundamental talent needs: Organization Strategy, Assessment and Succession, Leadership
and Professional Development, and Total Rewards. We support this work with a comprehensive range of
best-in-class lP and data. The Consulting teams employ an integrated approach across our core capabilities
and integrated solutions described above, each one intended to strengthen our work and thinking in the
next, to help clients execute their strategy in a digitally enabled world.
Summary of financial fiscal 2022 highlights:
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Fee revenue was $650.2 million, an increase of 26.1% compared to fiscal 2021, representing 25%
of total fee revenue.
Adjusted EBITDA and Adjusted EBITDA margin were $116.1 million and 17.9%, respectively.
The number of consulting and execution staff at year-end was 1,841, an increase of 276 compared
to fiscal 2021 with an increase in the average bill rate (fee revenue divided by the number of hours
worked by consultants and execution staff) of $38 per hour or 12% compared to fiscal 2021.
Client Base—During fiscal 2022, the Consulting segment partnered with over 4,900 clients across the globe,
and 28% of Consultingʼs fiscal 2022 fee revenue was referred from Korn Ferryʼs other lines of business. Our
3
clients come from the private, public, and not-for-profit sectors, across every major industry and represent
diverse business challenges.
Competition—The people and organizational consulting market is fragmented, with different company offers
for our core solutions. Our competitors include consulting organizations affiliated with accounting, insurance,
information systems, and strategy consulting firms such as McKinsey, Willis Towers Watson and Deloitte.
We also compete with smaller boutique firms specializing in specific regional, industry, or functional
leadership and HR consulting aspects.
2. Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities
and behaviors to drive businesses forward. Our digital products give clients direct access to our proprietary
data, client data and analytics to deliver clear insights with the training and tools needed to align
organizational structure with business strategy.
Summary of financial fiscal 2022 highlights:
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Fee revenue was $349.0 million, an increase of 21.5% compared to fiscal 2021, representing 13%
of total fee revenue.
Subscription and License fee revenue was $108.7 million, an increase of 21% compared to fiscal
2021.
Adjusted EBITDA and Adjusted EBITDA margin were $110.1 million and 31.5%, respectively.
Client Base—During fiscal 2022, the Digital segment partnered with over 8,300 clients across the globe, and
34% of Digitalʼs fiscal 2022 fee revenue was referred from Korn Ferryʼs other lines of business, primarily
Consulting. Our clients come from the private, public and not-for-profit sectors, across every major industry
and represent diverse business challenges.
Competition—Again, there is fragmentation in this sector. We compete with specialist suppliers, and
boutique and large consulting companies in each solution area such as AON, Mercer, Willis Towers Watson,
SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textlio. One of our advantages is linking
our data, IP, and our technology platform across our solutions. This allows us to give organizations an end-
to-end view of talent.
3. Executive Search helps organizations recruit board-level, chief executive, and other senior executive and
general management talent to deliver lasting impact. Our approach to placing talent brings together our
research-based IP, proprietary assessments and behavioral interviewing with our practical experience to
determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for
compensation and retention. This business is managed and reported on a geographic basis and represents
four of the Companyʼs reportable segments (Executive Search North America, Executive Search EMEA,
Executive Search Asia Pacific and Executive Search Latin America).
Summary of financial fiscal 2022 highlights:
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Fee revenue was $935.6 million, an increase of 47% compared to fiscal 2021, representing 36% of
total fee revenue.
Adjusted EBITDA and Adjusted EBITDA margin were $257.6 million and 27.5%, respectively.
In fiscal 2022, we opened more than 7,200 new engagements with an average of 555 consultants.
4
Consultants are organized in six broad industry groups and bring an in-depth understanding of the market
conditions and strategic management issues clients face within their industries and geographies. In addition,
we regularly look to expand our specialized expertise through internal development and strategic hiring in
targeted growth areas.
Functional Expertise — We also have organized executive search centers of functional expertise. Members
of functional groups are located throughout our regions and across our industry groups. These consultants
have extensive backgrounds in placing executives in particular functions, such as board directors, CEOs,
and other senior executive officers. Most assignments for fiscal 2022 were for our Board & CEO Services
group, which focuses exclusively on placing CEOs and board directors in organizations worldwide. They are
a dedicated team from the most senior ranks of the Company. Their work is with CEOs and the boardroom,
and their expertise is in organizational leadership and governance. They conduct hundreds of engagements
every year, tapping talent from every corner of the globe. This work spans across ranges of corporate scale
and purpose.
Percentage of Fiscal 2022 Assignments Opened by Functional Expertise
Board Level/CEO/CFO/Senior Executive and General Management
Finance and Control
Information Systems
Marketing and Sales
Manufacturing/Engineering/Research and Development/Technology
Human Resources and Administration
76%
7%
6%
4%
4%
3%
Client Base—Our more than 4,300 Executive Search engagement clients in fiscal 2022 include many of the
worldʼs largest and most prestigious public and private companies.
Competition—Our Executive Search line of business competes with specialist global executive search firms,
such as Egon Zehnder, Heidrick & Struggles International, Inc., Russell Reynolds Associates and Spencer
Stuart. We also compete with smaller boutique firms specializing in regional, industry, or functional
searches. We believe our brand name, differentiated business model, systematic approach to client service,
innovative technology, unique IP, global network, prestigious clientele, strong specialty practices and high-
caliber colleagues are recognized worldwide. We also believe our long-term incentive compensation
arrangements and other executive benefits distinguish us from most of our competitors and are essential in
attracting and retaining our top consultants.
4. RPO and Professional Search focuses on delivering enterprise talent acquisition solutions to our clients, at
the professional level. We leverage the power of people, process expertise, IP-enabled technology and
compensation information to do this. Transaction sizes range from single professional searches to team,
department, line of business projects and global outsource recruiting solutions. During fiscal 2022, we
acquired The Lucas Group, which brings substantial professional search and interim placement expertise to
Korn Ferry and has enhanced our industry-leading search portfolio. We also acquired the Patina Solutions
Group, an interim executive search firm that is expected to bring access to a vast network of C-suite, top-tier
and professional interim talent.
Summary of financial fiscal 2022 highlights:
(cid:129)
(cid:129)
Fee revenue was $691.9 million, an increase of 87% compared to fiscal 2021, representing 26% of
total fee revenue.
Adjusted EBITDA and Adjusted EBITDA margin were $165.1 million and 23.9%, respectively.
Client Base—During fiscal 2022, the RPO & Professional Search segment partnered with more than 3,500
clients across the globe, and 50% of RPO & Professional Searchʼs fiscal 2022 fee revenue was referred
from Korn Ferryʼs other lines of business.
Competition—We primarily compete for RPO business with other global RPO providers such as Cielo,
Alexander Mann Solutions, IBM, Allegis, Kelly Services and Randstad and professional search assignments
with regional contingency and large national retained recruitment firms such as Robert Half, Michael Page,
Harvey Nash, Robert Walters and BTG. We believe our competitive advantage is distinct. We are strategic,
collaborating with clients to hire best-fit candidates using our assessment IP, proprietary technology and
professional recruiters. Our Talent Delivery Centers provide our teams with increased scalability, multilingual
capabilities, global reach and functional specialization. We also work under the One Korn Ferry umbrella to
help clients plan for their broader talent acquisition needs as part of their business strategy planning.
Finally, our corporate center manages finance, legal, technology/IT, human resources, marketing, and our research
arm, the Korn Ferry Institute.
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We help clients in four geographic markets: North America, Latin America, EMEA, and APAC. Our geographic
markets bring together capabilities from across the organization—infusing industry and functional expertise and
skills—to deliver value to our partners.
We operate in 105 offices in 53 countries, helping us deliver our solutions globally, wherever our clients do business.
We continue our commitment to diversity and inclusion, hiring, promoting, and extending opportunities to women and
underrepresented groups. As of April 30, 2022, 72% of our workforce in the U.S. is female or from an
underrepresented group. Broken down further, 64% of our workforce in the U.S. is female, and 65% of our global
workforce is female. Our global age demographic is 62% Millennials (ages 26-41), Gen Z/Centennials (ages 25 and
below). As of April 30, 2022, we had 10,779 full-time employees:
Executive Search
Consulting
Digital
RPO & Professional Search
Corporate
Total
Consultants and execution staff1
587
1,841
305
738
—
3,471
Support staff2
Total employees
1,174
396
985
4,544
209
7,308
1,761
2,237
1,290
5,282
209
10,779
1 consultants and execution staff, primarily responsible for originating client services
2 Support staff includes associates, researchers, administrative, and support staff
Business challenges we solve
Our judgment and expertise are built from decades of experience and insight into the business challenges companies
are grappling with across industries. We work to understand the relevant macro trends impacting society and the
future of work. As the world/workforce emerges from COVID-19, we believe it is even more evident that the world of
work has permanently changed. We support our clients amid a time of enormous transition and change, with these
specific business challenges:
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(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Transforming businesses while delivering robust performance.
Solving leadership challenges arising from the new landscape of hybrid and remote working.
Delivering for people, planet, and profit, and assisting with ESG and other corporate strategic
initiatives.
Finding the right talent in a dynamic and dislocated labor market.
Engaging and motivating employees so companies can retain and reward their talent.
Supporting the work-scape transition from a place of work to collaboration spaces.
Building work environments that are inclusive and free from bias.
Korn Ferry Intelligence Cloud
Korn Ferry Intelligence Cloud powers our capabilities, integrated solutions and products. With four billion data points,
Intelligence Cloud blends our proprietary insight and consultancy with market data and AI-technology to accurately
provide insights and actions. Intelligence Cloud is the digital platform that underpins our solutions; helping global
organizations advance a talent strategy that results in reduced time to hire, cheaper cost per acquisition, improved
mobility and retention and better sales performance.
Organizations can access the data and insight within the platform—which focuses on talent mobility, talent
management, talent acquisition and sales effectiveness—via a suite of specialist enterprise applications or via
tailored tech-enabled consultancy:
Talent mobility: using our Success Profiles™, organizations can benchmark people—leaders, teams and
individuals—and create career paths to build a future-ready workforce.
Talent management: Intelligence Cloud is designed to pinpoint the skillsets and mindsets needed to deliver against
future goals and identify gaps, while robust talent assessment and development tools upskill and reskill existing
employees.
Talent acquisition & strategy: using AI, Intelligence Cloud helps make sense of external talent market data to
identify candidates for critical roles to solve talent shortages and skills gaps.
Sales effectiveness: we bring together the Miller Heiman™ sales methodology, AI-powered technology and
seamless integration with Salesforce and Microsoft CRMs, to improve sales performance and predictability through
actionable insights for sellers.
Our Knowledge in Data
Our vast wealth of data, IP, and insights include the following:
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(cid:129) More than five billion data points collected
(cid:129) Over 86 million assessments taken
(cid:129)
Almost six million employee engagement survey responses over recent 3 years period.
And we hold:
Rewards data for over 23 million people
(cid:129)
(cid:129) Organizational benchmark data on 12,000 entities
(cid:129) More than 5,000 individual success profiles covering more than 30,000 job titles
(cid:129) Management data on more than 150 countries.
Innovation & Intellectual Property
Korn Ferry is dedicated to developing leading-edge services and leveraging innovation. We are transforming how
clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted
consultancy, giving our consultants more opportunities to engage with clients. The expansion of our business into
larger markets offers higher growth potential and more durable and visible revenue streams. In addition, we have
made investments in technology, learning platforms, virtual coaching, individual learning journeys, data insights, and
intellectual property that permeates all our solutions.
The Korn Ferry Institute
The Korn Ferry Institute is our research and analytics arm. The Korn Ferry Institute develops robust research,
innovative IP, and advanced analytics to enable Korn Ferry employees to partner with people and organizations to
activate their potential and succeed.
We have built the Korn Ferry Institute on three core pillars:
1. Robust Research and Thought Leadership to anticipate and innovate: We explore trends and define
leadership and human and organizational performance for a fast-changing economy. Some project
examples from fiscal 2022 include:
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(cid:129)
(cid:129)
(cid:129)
(cid:129)
Board and investor ESG research
CEO of the future
Enterprise Leader research
Climate change thought leadership series
Neuroscience and work thought leadership series
ESG field guide and analysis of ESG regulations and reporting practices.
2. Science-Based IP to enable growth: We develop and measure what is required for success at work in the
new economy. Examples from fiscal 2022 include:
(cid:129)
Personal purpose inventory and coaching guide
Persona report and talent grid
(cid:129)
(cid:129) Mobile-friendly assessment enhancement design
(cid:129)
Continued expansion of Korn Ferry's robust success profiles.
3. Client Advanced Analytics and Data Management to generate insights: We integrate and build upon
our datasets and external data using advanced modeling and artificial intelligence. This allows us to produce
predictive insights and deliver demonstrable client impact. During fiscal 2022, we:
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(cid:129)
(cid:129)
(cid:129)
Supported over 190 advanced analytic client projects to generate insights
Enabled over 45 analytics ambassadors globally to support client analytics projects
Expanded on internal AI/ML capabilities to analyze text
Developed data management, architecture, storage, mining, and compliance best practices.
In the fiscal year ahead, we intend to continue innovating to drive even greater business and societal impact by:
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Focusing on the changing society and technology-led landscape so that our science, research and IP
remain innovative and relevant.
Revamping and 'technologizing' our internal processes to improve how we enable and engage with our
business partners and provide increasingly agile, responsive, and collaborative services.
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(cid:129)
Driving a step-change in value through effective collecting, organizing, structuring, and delivering our rich
data, IP, and analytics. We are achieving this in collaboration with IT, Digital, and solutions for faster, easier
access to insights, outcomes, and benchmarks.
Global Delivery Capability
We believe a key differentiator for us is our global delivery capability. This allows us to support all parts of our
business to give clients value-added services and solutions across the globe. We can bring the right people from
anywhere in the world to our clients at the right time both in physical and virtual working environments, which is a
capability that is particularly crucial as business needs and conditions continue to change rapidly.
Competition
Korn Ferry operates in a rapidly changing global marketplace with a diverse range of organizations that offer services
and solutions like those we offer. However, we believe no other company provides the same full range of services,
uniquely positioning us for success in this highly fragmented, competitive landscape. And we believe we are poised
for even more sustainable growth over the next fiscal year.
Our Market and Approach
Industry Recognition
Our company culture and excellent work within the industry are widely recognized. Some highlights from fiscal 2022
include global industry awards and accolades in recognition of performance and achievements:
(cid:129) Recognized by Seramount (formerly Working Mother Media) as the No. 1 company for female hires and
promotions and one of the 100 Best Companies for Parents 2021
(cid:129) Best Places to Work for LGBTQ Equality from the Human Rights Campaign in 2021
(cid:129) Leader in 2022 Gartner Magic Quadrant for Sales Training Providers
(cid:129) Pacesetter in ALM Intelligenceʼs Workforce Management Services Research Report for 2021
(cid:129) Pacesetter in ALM Intelligenceʼs Employee Well-being Research Report for 2022
(cid:129) Leader & Star Performer in Recruitment Process Outsourcing, 2021 Everest Group
(cid:129) Listed in INC.ʼs Best-Led companies of 2021 in America
Our Go-To-Market Approach
Our go-to-market strategy brings together Korn Ferryʼs core solutions to drive more integrated, scalable client
relationships. Our goal is to drive topline synergies by increasing growth in crossline business referrals. This has
been successful as during fiscal 2022, approximately 70% of revenue came from clients using multiple lines of our
business, consistent with fiscal 2021.
We intend to continue evolving integrated solutions along industry lines to drive cross-geography and cross-solution
referrals. Our Marquee and Regional Accounts program is a pillar of our growth strategy, which now comprises more
than one-third of our revenue, yet only 2% of our clients. Its success has been realized by using our own IP and by
following a disciplined approach to account planning and management with the addition of Global Account Leaders,
resulting in more enduring relationships with clients. Building long-term client relationships of scale delivers less
cyclical, more resilient revenue and new business through structured, programmatic account planning and strategic
investments in account management talent.
Elevating our Voice
Collaboration with sales and marketing teams has enabled a deeper connection with our customers through our
thought leadership and best practices. We evolved our brand and value proposition to focus on enabling people and
organizations to exceed their potential. We have helped them solve their biggest people challenges around
performance, leadership, recruitment, culture, team, future of work, and talent management trends. We continue to
focus on timely, news-driven issues pertinent to our clients that help them set their talent agenda. We publish
whitepapers, research, trend analysis, and insights around relevant talent and people topics.
Our People
Culture and Workforce
Our culture has evolved tremendously over the years with a team spirit of working together across different offices,
regions, and practices. We strive to foster a supportive, respectful culture where everyone feels valued for their
contribution, can do their best work and exceed their potential. Our approach to talent acquisition, development,
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recognition, engagement and benefits are designed to support this approach. Our priority is to hire without bias and
provide under-represented talent with equal opportunity across the firm. We work hard to build an environment of
recognition by acknowledging others and appreciating their contributions and achievements. Our global talent
promotion process recognizes colleagues for exceptional dedication and service to clients, embracing our firm's
purpose and values, outstanding collaboration and stretching to meet expectations. We believe diversity drives
innovation and connects us to our customers and communities. We are committed to building strong teams of people
with diverse experiences, backgrounds, and perspectives.
Our Beliefs and Behaviors
Our culture starts with our values of Inclusion, Honesty, Knowledge, and Performance. Our values set the standard
for what we expect of all our people. They also reflect the experience we want our clients to have when they work
with us. We seek to embrace people with different points of view. We actively help our colleagues grow and develop
with mentoring and support. We strive to learn, grow, to be better today than we were yesterday, and always do our
best for our clients, colleagues, and shareholders.
As a global corporation, our commitment is to act ethically, which begins with each of us. This thinking is embedded
in our core values and guides how we work together and with others. We strongly believe in a radically human
approach, striving for empathy, honesty and authenticity across our interactions.
Developing and Rewarding Our People
We focus on making Korn Ferry a firm that energizes, develops, rewards and empowers people to pursue their
passions and help our business succeed. Our global talent promotion process recognizes colleagues for exceptional
dedication and service to clients. We run promotion cycles twice a year to allow us to appreciate the contribution of
colleagues more frequently. In fiscal 2022, we promoted almost 2,000 people in our four lines of business and
Corporate.
We offer competitive benefits across the globe customized to each country we operate in based on market
prevalence and cultural relevance. The Korn Ferry Cares benefits strategy focuses on keeping our colleagues and
their families healthy – physically, emotionally, financially, and socially. Our progressive benefit offerings in the U.S.
helped us earn top recognitions by Seramount (formerly Working Mother Media) as the No. 1 company for female
hires and promotions in 2021, one of the 100 Best Companies for Parents 2021, and as one of the Human Rights
Campaignʼs Best Places to Work for LGBTQ Equality 2021.
We believe in teaching and mentoring to support our colleaguesʼ career growth and success. These efforts have
fostered stability and expertise in our workforce. Development happens broadly throughout the organization, from our
formal mentoring program to direct training on our learning management platform, iAcademy. We also champion a
range of career and leadership programs, such as our Mosaic program for diverse high-potentials, Leadership U for
Korn Ferry, and Leadership U PLUS for Korn Ferry colleagues, an internal leadership development program. We also
extended the use of our Korn Ferry Advance platform, used externally by clients for career coaching and career
development, into an internal development program platform.
We run a global colleague advisory council that offers feedback to senior leadership on the colleague experience
within Korn Ferry. Also, our internal employee engagement program, the Korn Ferry Founder Awards, recognizes and
celebrates exceptional performance.
Employee Well-being
The well-being of our employees is a significant focus, particularly given the last few years of unprecedented change
due to COVID-19 and the need to support our people in different ways. We run a series of initiatives to support
employee well-being and instill an organizational culture of health, including an Employee Assistance program,
mental health awareness campaigns, well-being webinars, flexible work schedules and parental support for distance
learning.
Our employee safety
We are committed to creating a place where people can be successful professionally and personally. In response to
the pandemic, we developed and implemented new practices designed to prioritize the health and safety of our
employees and clients.
Available Information
We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and
Exchange Commission (the "SEC"), according to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Our reports, proxy statements, and other documents filed electronically with the SEC are available at the
website maintained by the SEC at https://www.sec.gov.
9
We also make available, free of charge on the Investor Relations portion of our website at http://ir.kornferry.com,
those annual, quarterly, and current reports, and, if applicable, amendments to those reports, filed or furnished under
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such reports
with, or furnish them to, the SEC at www.sec.gov.
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of the Audit
Committee, Compensation and Personnel Committee, and Nominating and Corporate Governance Committee of our
Board of Directors are also posted on the Investor Relations portion of our website at http://ir.kornferry.com.
Stockholders may request copies of these documents by writing to our Corporate Secretary at 1900 Avenue of the
Stars, Suite 1500, Los Angeles, California 90067.
In addition, we make available on the Investor Relations portion of our website at http://ir.kornferry.com press
releases and related earnings presentations and other essential information, which we encourage you to review.
Item 1A. Risk Factors
The discussion below describes the material factors, events, and uncertainties that make an investment in our
securities risky, and these risk factors should be considered carefully together with all other information in this Annual
Report, including the financial statements and notes thereto. It does not address all of the risks that we face, and
additional risks not presently known to us or that we currently deem immaterial may also arise and impair our
business operations. Our business, financial condition or results of operations could be materially adversely affected
by the occurrence of any of these risks.
Risks Related to Our Business
We face various risks related to health epidemics, pandemics, and similar outbreaks that negatively impact
the operations and financial performance of many of the clients we serve. The ultimate magnitude of any
future pandemics or similar outbreaks depends on a variety of factors, including its duration, related
restrictions and operational requirements that apply to our business and the businesses of our clients, and
the state of the global economy, the full extent of which we may not be capable of prediction.
Our business and financial results have been, and could be in the future, adversely affected by health epidemics,
pandemics, and similar outbreaks. Pandemics can cause a global slowdown in economic activity, a decrease in
demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and
disruption of financial markets. Because the severity, magnitude and duration of a pandemic and its economic
consequences are uncertain and vary by region, its full impact on our operations and financial performance, is
uncertain and difficult to predict. Further, a pandemicʼs ultimate impact depends in part on many factors not within our
control, including (1) restrictive governmental and business actions (including travel restrictions, vaccine mandates,
testing requirements, and other workforce limitations), (2) economic stimulus, funding and relief programs and other
governmental economic responses, (3) the effectiveness of governmental actions, (4) economic uncertainty in key
global markets and financial market volatility, (5) levels of economic contraction or growth, (6) the impact of the
pandemic on health and safety and (7) the availability and effectiveness of vaccines and booster shots.
Further, pandemics can subject our operations and financial performance to a number of risks, including those
discussed below:
(cid:3) Operations-related risks: Across all of our businesses, we can face operational challenges including a
heightened need to protect employee health and safety, office shutdowns, workplace disruptions,
cybersecurity risks, and restrictions on the movement of people, both at our own offices and at those of our
clients and our suppliers.
(cid:3)
(cid:3)
Client-related risks: Our clients will be disrupted by quarantines, fluctuations in their financial condition, and
restrictions on employeesʼ ability to work and office closures. Such disruptions may restrict our ability to
provide products and services to our clients (or for clients to pay for such products and services) and may
reduce demand for our products and services.
Employee-related risks: We will experience disruptions to our operations resulting from quarantines, self-
isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may
impact our ability to deliver our products and services in a timely manner or meet milestones or customer
commitments.
10
Our inability to successfully recover should we experience a disaster or other business continuity problem
could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal
liability.
Should we experience a disaster or other business continuity problem, such as an earthquake, hurricane, terrorist
attack, security breach, power loss, telecommunications failure or other natural or man-made disaster, our continued
success will depend, in part, on the availability of our personnel, our office facilities, and the proper functioning of our
computer, telecommunication and other related systems and operations. In such an event, we could experience near-
term operational challenges with regard to particular areas of our operations. In particular, our ability to recover from
any disaster or other business continuity problem will depend on our ability to protect our technology infrastructure
against damage from business continuity events that could have a significant disruptive effect on our operations. For
example, much of our corporate staff are based in California, which has a high level of risk from wildfires and
earthquakes. The impacts of climate change present notable risks, including damage to assets and technology
caused by extreme weather events linked to climate change and may otherwise heighten or exacerbate the
occurrence of such weather events. We could potentially lose client data or experience material adverse interruptions
to our operations or delivery of services to our clients in a disaster. A disaster on a significant scale or affecting
certain of our key operating areas within or across regions, or our inability to successfully recover should we
experience a disaster, pandemic or other business continuity problem, could materially interrupt our business
operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged
client relationships or legal liability.
We are limited in our ability to recruit candidates from certain of our clients due to off-limit agreements with
those clients and for client relation and marketing purposes; such limitations could harm our business.
Either by agreement with clients, or for client relations or marketing purposes, we are required to or elect to refrain
from, for a specified period of time, recruiting candidates from a client when conducting searches on behalf of other
clients. These off-limit agreements can cause us to lose search opportunities to our competition. The duration and
scope of the off-limit agreement, including whether it covers all operations of the client and its affiliates or only certain
divisions of a client, generally are subject to negotiation or internal policies and may depend on factors such as the
scope, size and complexity of the clientʼs business, the length of the client relationship and the frequency with which
we have been engaged to perform executive and professional searches for the client. We cannot ensure that off-limit
agreements will not impede our growth or our ability to attract and serve new clients, or otherwise harm our business.
We face significant competition: competition in our industries could result in lost market share, reduced
demand for our services, and/or require us to charge lower prices for our services, which could adversely
affect our operating results and future growth.
We continue to face significant competition to each of our services and product offerings. The human resource
consulting market has been traditionally fragmented and a number of large consulting firms, such as McKinsey, Willis
Towers Watson and Deloitte have built businesses in human resource consulting to serve these needs. Our
consulting business line has and continues to face competition from human resource consulting businesses. Many of
these competitors are significantly larger than Korn Ferry and have considerable resources at their disposal, allowing
for potentially significant investment to grow their human resource consulting business. Digital products in the human
resource market have been traditionally fragmented and a number of firms such as AON, Mercer, Willis Towers
Watson, SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textio offer competitive products.
Competitors in the digital marketplace are a combination of large, well-capitalized firms and niche players who have
received multiple rounds of private financing. Increased competition, whether as a result of professional and social
networking website providers, traditional executive search firms, sole proprietors and in-house human resource
professionals (as noted above) or larger consulting firms building human resources consulting businesses, may lead
to pricing pressures that could negatively impact our business. For example, increased competition could require us
to charge lower prices, and/or cause us to lose market share, each of which could reduce our fee revenue.
Our executive search services face competition from both traditional and non-traditional competitors that provide job
placement services, including other large global executive search firms, smaller specialty firms and web-based firms.
We also face increased competition from sole proprietors and in-house human resource professionals whose ability
to provide job placement services has been enhanced by professional profiles made available on the internet and
enhanced social media-based search tools. The continued growth of the shared economy and related freelancing
platform sites may also negatively impact demand for our services by allowing employers seeking services to connect
with employees in real time and without any significant cost. Traditional executive search competitors include Egon
Zehnder, Heidrick & Struggles International, Inc., Russell Reynolds Associates and Spencer Stuart. In each of our
markets, one or more of our competitors may possess greater resources, greater name recognition, lower overhead
or other costs and longer operating histories than we do, which may give them an advantage in obtaining future
clients, capitalizing on new technology and attracting qualified professionals in these markets. Additionally, specialty
firms can focus on regional or functional markets or on particular industries and executive search firms that have a
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smaller client base are subject to fewer off-limits arrangements. There are no extensive barriers to entry into the
executive search industry and new recruiting firms continue to enter the market.
We believe the continuing development and increased availability of information technology will continue to attract
new competitors, especially web-enabled professional and social networking website providers, and these providers
may be facilitating a companyʼs ability to insource their recruiting capabilities. Competitors in these fields include
SmashFly, iCIMS, Yello, Indeed, Google for Jobs and Jobvite. As these providers continue to evolve, they may
develop offerings similar to or more expansive than ours, thereby increasing competition for our services or more
broadly causing disruption in the executive search industry. Further, as technology continues to develop and the
shared economy continues to grow, we expect that the use of freelancing platform sites will become more prevalent.
As a result, companies may turn to such sites for their talent needs, which could negatively impact demand for the
services we offer.
Our RPO & Professional Search services primarily compete for business with other RPO providers such as Cielo,
Alexander Mann Solutions, IBM, Allegis, Kelly Services, Randstad and compete for mid-level professional search
assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert
Half, Michael Page, Harvey Nash, Robert Walters and BTG. In addition, some organizations have developed or may
develop internal solutions to address talent acquisition that may be competitive with our solutions. This is a highly
competitive and developing industry with numerous specialists. To compete successfully and achieve our growth
targets for our talent acquisition business, we must continue to support and develop assessment and analytics
solutions, maintain and grow our proprietary database, deliver demonstrable return on investment to clients, support
our products and services globally, and continue to provide consulting and training to support our assessment
products. Our failure to compete effectively could adversely affect our operating results and future growth.
Failure to attract and retain qualified and experienced consultants could result in a loss of clients which in turn
could cause a decline in our revenue and harm to our business.
We compete with other executive and professional search and consulting firms for qualified and experienced
consultants. These other firms may be able to offer greater compensation and benefits or more attractive lifestyle
choices, career paths or geographic locations than we do. Attracting and retaining consultants in our industry is
particularly important because, generally, a small number of consultants have primary responsibility for a client
relationship. Because client responsibility is so concentrated, the loss of key consultants may lead to the loss of client
relationships. In fiscal 2022, our top three consultants in Executive Search (including all four reportable regional
segments) and in our Consulting segment had generated business equal to approximately 1% and 2% of our total fee
revenues, respectively. Furthermore, our top ten consultants in Executive Search (including all four reportable
regional segments) and in our Consulting segment had generated business equal to approximately 3% and 4% of our
total fee revenues, respectively. This risk is heightened due to the general portability of a consultantʼs business:
consultants have in the past, and will in the future, terminate their employment with our Company. Any decrease in
the quality of our reputation, reduction in our compensation levels relative to our peers or restructuring of our
compensation program, whether as a result of insufficient revenue, a decline in the market price of our common stock
or for any other reason, could impair our ability to retain existing consultants or attract additional qualified consultants
with the requisite experience, skills and established client relationships. Our failure to retain our most productive
consultants, whether in Executive Search, Consulting, Digital or RPO & Professional Search, or maintain the quality
of service to which our clients are accustomed, as well as the ability of a departing consultant to move business to his
or her new employer, could result in a loss of clients, which could in turn cause our fee revenue to decline and our
business to be harmed. We may also lose clients if the departing Executive Search, Consulting, Digital or RPO &
Professional Search consultant has widespread name recognition or a reputation as a specialist in his or her line of
business in a specific industry or management function. We could also lose additional consultants if they choose to
join the departing Executive Search, Consulting, Digital or RPO & Professional Search consultant at another
executive search or consulting firm. Failing to limit departing consultants from moving business or recruiting our
consultants to a competitor could adversely affect our business, financial condition and results of operations.
We are working to advance culture change through the continued implementation of diversity, equity and inclusion
initiatives throughout our organization. If we do not successfully implement these initiatives, our ability to recruit,
attract and retain talent may be adversely impacted.
We are highly dependent on the continued services of our small team of executives
We are dependent upon the efforts and services of our small executive team. While we have a preliminary plan for
succession of certain key executives, the loss of any one of our key executives could have an adverse effect on our
operations.
Failing to maintain our professional reputation and the goodwill associated with our brand name could
seriously harm our business.
We depend on our overall reputation and brand name recognition to secure new engagements and to hire qualified
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professionals. Our success also depends on the individual reputations of our professionals. We obtain a majority of
our new engagements from existing clients or from referrals by those clients. Any client who is dissatisfied with our
services can adversely affect our ability to secure new engagements. If any factor, including poor performance or
negative publicity, whether or not true, hurts our reputation, we may experience difficulties in competing successfully
for both new engagements and qualified consultants, which could seriously harm our business.
As we develop new services, clients and practices, enter new lines of business, and focus more of our
business on providing a full range of client solutions, the demands on our business and our operating and legal
risks may increase.
As part of our corporate strategy, we are attempting to leverage our research and consulting services to sell a full
range of services across the life cycle of a policy, program, project or initiative, and we are regularly searching for
ways to provide new services to clients. This strategy, even if effectively executed, may prove insufficient in light of
changes in market conditions, technology, competitive pressures or other external factors. In addition, we plan to
extend our services to new clients and into new lines of business and geographic locations. As we focus on
developing new services, clients, practice areas and lines of business; open new offices; and engage in business in
new geographic locations, our operations are exposed to additional as well as enhanced risks.
In particular, our growth efforts place substantial additional demands on our management and staff, as well as on our
information, financial, administrative and operational systems. We may not be able to manage these demands
successfully. Growth may require increased recruiting efforts, opening new offices, increased business development,
selling, marketing and other actions that are expensive and entail increased risk. We may need to invest more in our
people and systems, controls, compliance efforts, policies and procedures than we anticipate. Therefore, even if we
do grow, the demands on our people and systems, controls, compliance efforts, policies and procedures may exceed
the benefits of such growth, and our operating results may suffer, at least in the short-term, and perhaps in the long-
term.
Efforts involving a different focus and/or new services, clients, practice areas, lines of business, offices and
geographic locations entail inherent risks associated with our inexperience and competition from mature participants
in those areas. Our inexperience may result in costly decisions that could harm our profit and operating results. In
particular, new or improved services often relate to the development, implementation and improvement of critical
infrastructure or operating systems that our clients may view as “mission critical,” and if we fail to satisfy the needs of
our clients in providing these services, our clients could incur significant costs and losses for which they could seek
compensation from us. As our business continues to evolve and we provide a wider range of services, we will
become increasingly dependent upon our employees, particularly those operating in business environments less
familiar to us. Failure to identify, hire, train and retain talented employees who share our values could have a
negative effect on our reputation and our business.
We are subject to potential legal liability from clients, employees, candidates for employment, stockholders and
others. Insurance coverage may not be available to cover all of our potential liability and available coverage
may not be sufficient to cover all claims that we may incur.
We are exposed to potential claims with respect to the executive search process and our consulting services, among
numerous other matters. For example, a client could assert a claim for matters such as breach of an off-limit
agreement or recommending a candidate who subsequently proves to be unsuitable for the position filled. Further,
the current employer of a candidate whom we placed could file a claim against us alleging interference with an
employment contract; a candidate could assert an action against us for failure to maintain the confidentiality of the
candidateʼs employment search; and a candidate or employee could assert an action against us for alleged
discrimination, violations of labor and employment law or other matters. Also, in various countries, we are subject to
data protection, employment and other laws impacting the processing of candidate information and other regulatory
requirements that could give rise to liabilities/claims. Client dissatisfaction with the consulting services provided by
our consultants may also lead to claims against us.
Additionally, as part of our consulting services, we often send a team of leadership consultants to our clientsʼ
workplaces. Such consultants generally have access to client information systems and confidential information. An
inherent risk of such activity includes possible claims of misuse or misappropriation of client IP, confidential
information, funds or other property, as well as harassment, criminal activity, torts, or other claims. Such claims may
result in negative publicity, injunctive relief, criminal investigations and/or charges, payment by us of monetary
damages or fines, or other material adverse effects on our business.
From time to time, we may also be subject to legal actions or claims brought by our stockholders, including securities,
derivative and class actions, for a variety of matters related to our operations, such as significant business
transactions, cybersecurity incidents, volatility in our stock, and our responses to stockholder activism, among others.
Such actions or claims and their resolution may result in defense costs, as well as settlements, fines or judgments
against us, some of which are not, or cannot be, covered by insurance. The payment of any such costs, settlements,
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fines or judgments that are not insured could have a material adverse effect on our business. In addition, such
matters may affect the availability or cost of some of our insurance coverage, which could adversely impact our
results of operations and expose us to increased risks that would be uninsured.
We cannot ensure that our insurance will cover all claims or that insurance coverage will be available at economically
acceptable rates. Our ability to obtain insurance, its coverage levels, deductibles and premiums, are all dependent on
market factors, our loss history and insurersʼ perception of our overall risk profile. Our insurance may also require us
to meet a deductible. Significant uninsured liabilities could have a material adverse effect on our business, financial
condition and results of operations.
We are subject to numerous and varied government regulations across the jurisdictions in which we operate.
Our business is subject to various federal, state, local, and foreign laws and regulations that are complex, change
frequently and may become more stringent over time. Future legislation, regulatory changes or policy shifts under the
new U.S. administration or other governments could impact our business. Our failure to comply with applicable laws
and regulations could restrict our ability to provide certain services or result in the imposition of fines and penalties,
substantial regulatory and compliance costs, litigation expense, adverse publicity, and loss of revenue. We incur, and
expect to continue to incur, significant expenses in our attempt to comply with these laws, and our businesses are
also subject to an increasing degree of compliance oversight by regulators and by our clients. In addition, our Digital
services and increasing use of technology in our business expose us to data privacy and cybersecurity laws and
regulations that vary and are evolving across jurisdictions. These and other laws and regulations, as well as laws and
regulations in the various states or in other countries, could limit our ability to pursue business opportunities we might
otherwise consider engaging in, impose additional costs or restrictions on us, result in significant loss of revenue,
impact the value of assets we hold, or otherwise significantly adversely affect our business. Any failure by us to
comply with applicable laws or regulations could also result in significant liability to us from private legal actions, or
may result in the cessation of our operations or portions of our operations or impositions of fines and restrictions on
our ability to carry on or expand our operations. Our operations could also be negatively affected by changes to laws
and regulations and enhanced regulatory oversight of our clients and us. These changes may compel us to change
our prices, may restrict our ability to implement price increases, and may limit the manner in which we conduct our
business or otherwise may have a negative impact on our ability to generate revenues, earnings, and cash flows. If
we are unable to adapt our products and services to conform to the new laws and regulations, or if these laws and
regulations have a negative impact on our clients, we may experience client losses or increased operating costs, and
our business and results of operations could be negatively affected.
Our business and operations are impacted by developing laws and regulations, as well as evolving investor
and customer expectations with regard to environmental matters, including the impacts and actions needed to
address climate change.
We are subject to evolving local, state, federal and/or international laws, regulations, and expectations regarding the
environment and climate change. These requirements and expectations may increase the time and cost of our efforts to
monitor and comply with those obligations; limit the extent, frequency, and modality with which our consultants travel;
impact our business opportunities; and expose us to liability. Within our own operations, we face additional costs from
rising energy costs which make it more expensive to power our corporate offices; efforts to mitigate or reduce our
operationsʼ impacts from or on the environment, such as a shift to cloud technology or a leasing preference for buildings
that are LEED-certified.
Risks Related to Our Profitability
We may not be able to align our cost structure with our revenue level, which in turn may require additional
financing in the future that may not be available at all or may be available only on unfavorable terms.
Our efforts to align our cost structure with the current realities of our markets may not be successful. When actual or
projected fee revenues are negatively impacted by weakening customer demand, we have and may again find it
necessary to take cost cutting measures so that we can minimize the impact on our profitability. Failing to maintain a
balance between our cost structure and our revenue could adversely affect our business, financial condition, and
results of operations and lead to negative cash flows, which in turn might require us to obtain additional financing to
meet our capital needs. If we are unable to secure such additional financing on favorable terms, or at all, our ability to
fund our operations could be impaired, which could have a material adverse effect on our results of operations.
Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable billing
rates for our consultants.
Our profitability depends, to a large extent, on the utilization and billing rates of our professionals. Utilization of our
professionals is affected by a number of factors, including: the number and size of client engagements; the timing of
the commencement, completion and termination of engagements (for example, the commencement or termination of
multiple RPO engagements could have a significant impact on our business, including significant fluctuations in our
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fee revenue, since these types of engagements are generally larger, in terms of both staffing and fee revenue
generated, than our other engagements); our ability to transition our consultants efficiently from completed
engagements to new engagements; the hiring of additional consultants because there is generally a transition period
for new consultants that results in a temporary drop in our utilization rate; unanticipated changes in the scope of client
engagements; our ability to forecast demand for our services and thereby maintain an appropriate level of
consultants; and conditions affecting the industries in which we practice, as well as general economic conditions.
The billing rates of our consultants that we are able to charge are also affected by a number of factors, including: our
clientsʼ perception of our ability to add value through our services; the market demand for the services we provide,
which may vary globally or within particular industries that we serve; an increase in the number of clients in the
government sector in the industries we serve; the introduction of new services by us or our competitors; our
competition and the pricing policies of our competitors; and current economic conditions.
If we are unable to achieve and maintain adequate overall utilization, as well as maintain or increase the billing rates
for our consultants, our financial results could materially suffer. In addition, our consultants oftentimes perform
services at the physical locations of our clients. Natural disasters, pandemics, disruptions to travel and transportation
or problems with communications systems negatively impact our ability to perform services for, and interact with, our
clients at their physical locations, which could have an adverse effect on our business and results of operations.
The profitability of our fixed-fee engagements with clients may not meet our expectations if we underestimate
the cost of these engagements when pricing them.
When making proposals for fixed-fee engagements, we estimate the costs and timing for completing the
engagements and these estimates may not be accurate. Any increased or unexpected costs or unanticipated delays
in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control,
could make these contracts less profitable or unprofitable, which would have an adverse effect on our profit margin.
For the years ended 2022, 2021, and 2020, fixed-fee engagements represented 22%, 26%, and 25% of our
revenues, respectively.
Inflationary pressure could adversely impact our profitability.
Demand for our services is affected by global economic conditions and the general level of economic activity in the
geographic regions in which we operate. During periods of slowed economic activity many companies hire fewer
permanent employees, and our business, financial condition and results of operations may be adversely affected. If
unfavorable changes in economic conditions occur, our business, financial condition and results of operations could
suffer. Accelerated and pronounced economic pressures, such as the recent inflationary cost pressures, may
negatively impact our expense base by increasing our operating costs including labor costs. Continued inflationary
pressures may result in increases in operating costs that we may not be able to fully offset by raising prices for our
services because if we do our clients may choose to reduce their business with us, which may reduce our operating
margin.
Risks Related to Accounting and Taxation
Foreign currency exchange rate risks affect our results of operations.
A material portion of our revenue and expenses are generated by our operations in foreign countries, and we expect
that our foreign operations will account for a material portion of our revenue and expenses in the future. Most of our
international expenses and revenue are denominated in foreign currencies. As a result, our financial results are
affected by changes in foreign currency exchange rates or weak economic conditions in foreign markets in which we
have operations, among other factors. Fluctuations in the value of those currencies in relation to the U.S. dollar have
caused and will continue to cause dollar-translated amounts to vary from one period to another. Such variations
expose us to both adverse as well as beneficial movements in currency exchange rates. Given the volatility of
exchange rates, we are not always able to manage effectively our currency translation or transaction risks, which has
and may continue to adversely affect our financial condition and results of operations.
We have deferred tax assets that we may not be able to use under certain circumstances.
If we are unable to generate sufficient future taxable income in certain jurisdictions, or if there is a significant change
in the time period within which the underlying temporary differences become taxable or deductible, we could be
required to increase our valuation allowances against our deferred tax assets. This would result in an increase in our
effective tax rate, and an adverse effect on our future operating results. In addition, changes in statutory tax rates
may also change our deferred tax assets or liability balances, with either a favorable or unfavorable impact on our
effective tax rate. Our deferred tax assets may also be impacted by new legislation or regulation.
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Risks Related to Our Financing/Indebtedness
Our indebtedness could adversely affect our financial condition, our ability to operate our business, react to
changes in the economy or our industry, prevent us from fulfilling our obligations under our indebtedness and
could divert our cash flow from operations for debt payments.
As of June 24, 2022, we had approximately $400.0 million in total indebtedness outstanding, $645.3 million of
availability under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) and $500 million
of availability under our $500.0 million five-year senior secured delayed draw term loan facility (“Delayed Draw
Facility”), both provided for under our Credit Agreement, as amended on June 24, 2022 (the “Amended Credit
Agreement”) that we entered into with a syndicate of banks and Bank of America, National Association as
administrative agent. Subject to the limits contained in the Amended Credit Agreement that govern our Revolver and
Delayed Draw Facility and the indenture governing our $400.0 million principal amount of the 4.625% Senior
Unsecured Notes due 2027 (the “Notes”), we may be able to incur substantial additional debt from time to time to
finance working capital, capital expenditures, investments or acquisition, or for other purposes. If we do so, the risks
related to our debt could increase.
Specifically, our level of debt could have important consequences to us, including the following: it may be difficult for
us to satisfy our obligations, including debt service requirements under our outstanding debt; our ability to obtain
additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general
corporate purposes may be impaired; requiring a substantial portion of cash flow from operations to be dedicated to
the payment of principal and interest on our indebtedness, including the Notes, therefore reducing our ability to use
our cash flow to fund our operations, capital expenditures, future business opportunities and other purposes; we are
more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to,
changes in our business or industry is more limited; our ability to capitalize on business opportunities and to react to
competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and the
restrictive covenants in the Amended Credit Agreement and the indenture governing our Notes; our ability to borrow
additional funds or to refinance debt may be limited; and it may cause potential or existing customers to not contract
with us due to concerns over our ability to meet our financial obligations, such as insuring against our professional
liability risks, under such contracts.
Furthermore, our debt under our Revolver bears interest at variable rates.
Despite our indebtedness levels, we and our subsidiaries may still incur substantially more debt, which
could further exacerbate the risks associated with our substantial leverage.
We and our subsidiaries may incur substantial additional indebtedness in the future. The Amended Credit Agreement
and the indenture governing our Notes contain restrictions on the incurrence of additional indebtedness, but these
restrictions are subject to several qualifications and exceptions, and the indebtedness that may be incurred in
compliance with these restrictions could be substantial. If we incur additional debt, the risks associated with our
leverage, including those described above, would increase. Further, the restrictions in the indenture governing the
Notes and the Amended Credit Agreement will not prevent us from incurring obligations, such as trade payables, that
do not constitute indebtedness as defined in such debt instruments. As of June 24, 2022, we had $645.3 million of
availability to incur additional secured indebtedness under our Revolver and $500 million of availability to incur
additional secured indebtedness under our Delayed Draw Facility.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service
obligations to increase significantly.
Interest rates fluctuate. As a result, interest rates on the Revolver or other variable rate debt offerings could be higher
or lower than current levels. When interest rates increase, our debt service obligations on our variable rate
indebtedness, if any, would increase even though the amount borrowed remained the same, and our net income and
cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
We may be unable to service our indebtedness.
Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our
financial and operating performance, which in turn is affected by general and regional economic, financial,
competitive, business and other factors, all of which are beyond our control, including the availability of financing in
the international banking and capital markets. Lower total revenue generally will reduce our cash flow. We cannot
assure you that our business will generate sufficient cash flow from operations or that future borrowings will be
available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other
liquidity needs.
If we are unable to meet our debt service obligations or to fund our other liquidity needs, we will need to restructure or
refinance all or a portion of our debt, which could cause us to default on our debt obligations and impair our liquidity.
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Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial
condition at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to
comply with more onerous covenants that could further restrict our business operations.
Moreover, in the event of a default, the holders of our indebtedness, including the Notes, could elect to declare all the
funds borrowed to be due and payable, together with accrued and unpaid interest, if any. The lenders under the
Revolver could also elect to terminate their commitments thereunder, cease making further loans, and institute
foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation. If we breach
our covenants under the Revolver, we would be in default thereunder. The lenders could exercise their rights, as
described above, and we could be forced into bankruptcy or liquidation.
The agreements governing our debt impose significant operating and financial restrictions on us and our
subsidiaries, which may prevent us from capitalizing on business opportunities.
The Amended Credit Agreement and the indenture governing the Notes impose significant operating and financial
restrictions on us. These restrictions limit our ability and the ability of our subsidiaries to, among other things: incur or
guarantee additional debt or issue capital stock; pay dividends and make other distributions on, or redeem or
repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; merge
or consolidate; enter into agreements that restrict the ability of subsidiaries to make dividends, distributions or other
payments to us or the guarantors; in the case of the indenture governing our Notes, designate restricted subsidiaries
as unrestricted subsidiaries; and transfer or sell assets.
We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver,
including financial covenants as defined in the Amended Credit Agreement. See “Note 18 –Subsequent Events –
Credit Facility” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.
As a result of these restrictions, we are limited as to how we conduct our business, and we may be unable to raise
additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The
terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that
we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able
to obtain waivers from the lenders and/or amend the covenants.
Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from
time to time could result in an event of default, which, if not cured or waived, could result in our being required to
repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms
or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.
A decline in our operating results or available cash could cause us to experience difficulties in complying
with covenants contained in more than one agreement, which could result in our bankruptcy or liquidation.
If we sustain a decline in our operating results or available cash, we could experience difficulties in complying with the
financial covenants contained in the Amended Credit Agreement. The failure to comply with such covenants could
result in an event of default under the Revolver and by reason of cross-acceleration or cross-default provisions, other
indebtedness may then become immediately due and payable. In addition, should an event of default occur, the
lenders under our Revolver could elect to terminate their commitments thereunder, cease making loans and institute
foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating
performance declines, we may in the future need to obtain waivers from the lenders under our Revolver to avoid
being in default. If we breach our covenants under our Revolver and seek a waiver, we may not be able to obtain a
waiver from the lenders thereunder. If this occurs, we would be in default under our Revolver, the lenders could
exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.
Risks Related to Technology, Cybersecurity and Intellectual Property
Social media platforms present risks and challenges that can cause damage to our brand and reputation.
The inappropriate and/or unauthorized use of social media platforms, including blogs, social media websites and
other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and
other interested persons by our clients or employees could increase our costs, cause damage to our brand, lead to
litigation or result in information leakage, including the improper collection and/or dissemination of personally
identifiable information of candidates and clients. In addition, negative or inaccurate posts or comments about us on
any social networking platforms could damage our reputation, brand image and goodwill.
Technological advances may significantly disrupt the labor market and weaken demand for human capital at a
rapid rate.
Our success is directly dependent on our customersʼ demands for talent. As technology continues to evolve, more
tasks currently performed by people have been and may continue to be replaced by automation, robotics, machine
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learning, artificial intelligence and other technological advances outside of our control. The human resource industry
has been and continues to be impacted by significant technological changes, enabling companies to offer services
competitive with ours. Many of those technological changes may (i) reduce demand for our services, (ii) enable the
development of competitive products or services, or (iii) enable our current customers to reduce or bypass the use of
our services, particularly in lower-skill job categories. Additionally, rapid changes in artificial intelligence and block
chain-based technology are increasing the competitiveness landscape. We may not be successful in anticipating or
responding to these changes and demand for our services could be further reduced by advanced technologies being
deployed by our competitors. The effort to gain technological expertise and develop new technologies in our business
may require us to incur significant expenses. In some cases, we depend on key vendors and partners to provide
technology and other support. If these third parties fail to perform their obligations or cease to work with us, our ability
to execute on our strategic initiatives could be adversely affected.
We have invested in specialized technology and other IP for which we may fail to fully recover our investment,
or which may become obsolete.
We have invested in developing specialized technology and IP, including proprietary systems, processes and
methodologies, such as Korn Ferry Advance and Talent Hub, that we believe provide us a competitive advantage in
serving our current clients and winning new engagements. Many of our service and product offerings rely on
specialized technology or IP that is subject to rapid change, and to the extent that this technology and IP is rendered
obsolete and of no further use to us or our clients, our ability to continue offering these services, and grow our
revenues, has been and may continue to be adversely affected. There is no assurance that we will be able to develop
new, innovative or improved technology or IP or that our technology and IP will effectively compete with the IP
developed by our competitors. If we are unable to develop new technology and IP or if our competitors develop better
technology or IP, our revenues and results of operations could be adversely affected.
We rely heavily on our information systems, and if we lose that technology, or fail to further develop our
technology, our business could be harmed.
Our success depends in large part upon our ability to store, retrieve, process, manage and protect substantial
amounts of information. To achieve our strategic objectives and to remain competitive, we must continue to develop
and enhance our information systems. This may require the acquisition of equipment and software and the
development of new proprietary software, either internally or through independent consultants. If we are unable to
design, develop, implement and utilize, in a cost-effective manner, information systems that provide the capabilities
necessary for us to compete effectively, or for any reason any interruption or loss of our information processing
capabilities occurs, this could harm our business, results of operations and financial condition. We cannot be sure
that our current insurance against the effects of a disaster regarding our information technology or our disaster
recovery procedures will continue to be available at reasonable prices, cover all our losses or compensate us for the
possible loss of clients occurring during any period that we are unable to provide business services.
We are subject to risk as it relates to software that we license from third parties.
We license software from third parties, much of which is integral to our systems and our business. The licenses are
generally terminable if we breach our obligations under the license agreements. If any of these relationships were
terminated or if any of these parties were to cease doing business or cease to support the applications we currently
utilize, we may be forced to spend significant time and money to replace the licensed software. However, we cannot
assure you that the necessary replacements will be available on reasonable terms, if at all.
We are dependent on third parties for the execution of certain critical functions.
We do not maintain all of our technology infrastructure, and we have outsourced certain other critical applications or
business processes to external providers, including cloud-based services. The failure or inability to perform on the
part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs. We
are also dependent on security measures that some of our third-party vendors and customers are taking to protect
their own systems and infrastructures. If our third-party vendors do not maintain adequate security measures, do not
require their sub-contractors to maintain adequate security measures, do not perform as anticipated and in
accordance with contractual requirements, or become targets of cyber-attacks, we may experience operational
difficulties and increased costs, which could materially and adversely affect our business.
Cyber security vulnerabilities and incidents have and may again lead to the improper disclosure of information
obtained from our clients, candidates and employees, which could result in liability and harm to our reputation.
We use information technology and other computer resources to carry out operational and marketing activities and to
maintain our business records. We rely on information technology systems to process, transmit, and store electronic
information and to communicate among our locations around the world and with our clients, partners, and employees.
The breadth and complexity of this infrastructure increases the risk of security breaches which could lead to potential
unauthorized disclosure of confidential information. Reliance on trained professionals to configure and operate this
infrastructure creates the potential for human error, leading to potential exposure of sensitive or confidential
information.
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Our systems and networks are vulnerable to computer viruses, malware, worms, hackers and other security issues,
including physical and electronic break-ins, router disruption, sabotage or espionage, disruptions from unauthorized
access and tampering (including through social engineering such as phishing attacks), impersonation of authorized
users and coordinated denial-of-service attacks. For example, in the past we have experienced cyber security
incidents resulting from unauthorized access to our systems, which to date have not had a material impact on our
business or results of operations; however, there is no assurance that such impacts will not be material in the future.
The continued occurrence of high-profile data breaches against various entities and organizations provides evidence
of an external environment that is increasingly hostile to information security. This environment demands that we
continuously improve our design and coordination of security controls across our business groups and geographies in
order to protect information that we develop or that is obtained from our clients, candidates and employees. Despite
these efforts, given the ongoing and increasingly sophisticated attempts to access the information of entities, our
security controls over this information, our training of employees, and other practices we follow have not and may not
prevent the improper disclosure of such information. Our efforts and the costs incurred to bolster our security against
attacks cannot provide absolute assurance that future data breaches will not occur. We depend on our overall
reputation and brand name recognition to secure new engagements. Perceptions that we do not adequately protect
the privacy of information could inhibit attaining new engagements, qualified consultants and could potentially
damage currently existing client relationships.
Data security, data privacy and data protection laws, such as the European Union General Data Protection
Regulation (“GDPR”), and other evolving regulations and cross-border data transfer restrictions, may limit the
use of our services, increase our costs and adversely affect our business.
We are subject to numerous U.S. and foreign jurisdiction laws and regulations designed to protect client, colleague,
supplier and company data, such as the GDPR, which became effective in May 2018, and requires companies to
meet stringent requirements regarding the handling of personal data, including its use, protection and transfer and the
ability of persons whose data is stored to correct or delete such data about themselves. Complying with the enhanced
obligations imposed by the GDPR has resulted and may continue to result in additional costs to our business and has
required and may further require us to amend certain of our business practices. Failure to meet the GDPR
requirements could result in significant penalties, including fines up to 4% of annual worldwide revenue. The GDPR
also confers a private right of action on certain individuals and associations.
Laws and regulations in this area are evolving and generally becoming more stringent. For example, the New York
State Department of Financial Services has issued cybersecurity regulations that outline a variety of required security
measures for protection of data. Some U.S. states, including California, have also enacted cybersecurity laws
requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, such as the
California Consumer Privacy Act and California Privacy Rights Act. New privacy laws in Colorado and Virginia will
take effect in 2023, and we expect that other states will continue to adopt legislation in this area. As these laws
continue to evolve, we may be required to make changes to our services, solutions and/or products so as to enable
the Company and/or our clients to meet the new legal requirements, including by taking on more onerous obligations
in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or
solution offerings in certain locations. Changes in these laws, or the interpretation and application thereof, may also
increase our potential exposure through significantly higher potential penalties for non-compliance. The costs of
compliance with, and other burdens imposed by, such laws and regulations and client demand in this area may limit
the use of, or demand for, our services, solutions and/or products, make it more difficult and costly to meet client
expectations, or lead to significant fines, penalties or liabilities for noncompliance, any of which could adversely affect
our business, financial condition, and results of operations.
In addition, due to the uncertainty and potentially conflicting interpretations of these laws, it is possible that such laws
and regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and
may conflict with other rules or our practices. Any failure or perceived failure by us to comply with applicable laws or
satisfactorily protect personal information could result in governmental enforcement actions, litigation, or negative
publicity, any of which could inhibit sales of our services, solutions and/or products.
Further, enforcement actions and investigations by regulatory authorities related to data security incidents and
privacy violations continue to increase. It is possible that future enactment of more restrictive laws, rules or
regulations and/or future enforcement actions or investigations could have an adverse impact on us through
increased costs or restrictions on our businesses and noncompliance could result in regulatory penalties and
significant legal liability.
Risks Related to Acquisitions
Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business.
We have completed several strategic acquisitions of businesses in the last several years, including our acquisition of
Miller Heiman Group, AchieveForum and Strategy Execution in fiscal 2020 and The Lucas Group and Patina
Solutions Group, Inc. in fiscal 2022. Targeted acquisitions have been and continue to be part of our growth strategy,
and we may in the future selectively acquire businesses that are complementary to our existing service offerings.
However, we cannot be certain that we will be able to continue to identify appropriate acquisition candidates or
acquire them on satisfactory terms. Our ability to consummate such acquisitions on satisfactory terms will depend on
19
the extent to which acquisition opportunities become available; our success in bidding for the opportunities that do
become available; negotiating terms that we believe are reasonable; and regulatory approval, if required.
Our ability to make strategic acquisitions may also be conditioned on our ability to fund such acquisitions through the
incurrence of debt or the issuance of equity. Our Amended Credit Agreement limits us from consummating
acquisitions unless we are in pro forma compliance with our financial covenants, and certain other conditions are met.
If we are required to incur substantial indebtedness in connection with an acquisition, and the results of the
acquisition are not favorable, the increased indebtedness could decrease the value of our equity. In addition, if we
need to issue additional equity to consummate an acquisition, doing so would cause dilution to existing stockholders.
If we are unable to make strategic acquisitions, or the acquisitions we do make are not on terms favorable to us or
not effected in a timely manner, it may impede the growth of our business, which could adversely impact our
profitability and our stock price.
As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and changes in
business conditions could cause these assets to become impaired, requiring write-downs that would adversely
affect our operating results.
All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of tangible
asset values, resulting in the creation of a significant amount of goodwill and other intangible assets. As of April 30,
2022, goodwill and purchased intangibles accounted for approximately 21% and 3%, respectively, of our total assets.
We review goodwill and intangible assets annually (or more frequently, if impairment indicators arise) for impairment.
Future events or changes in circumstances that result in an impairment of goodwill or other intangible assets would
have a negative impact on our profitability and operating results.
An impairment in the carrying value of goodwill and other intangible assets could negatively impact our
consolidated results of operations and net worth.
Goodwill is initially recorded as the excess of amounts paid over the fair value of net assets acquired. While goodwill
is not amortized, it is reviewed for impairment at least annually or more frequently, if impairment indicators are
present. In assessing the carrying value of goodwill, we make qualitative and quantitative assumptions and estimates
about revenues, operating margins, growth rates and discount rates based on our business plans, economic
projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these
factors and managementʼs judgment in applying these factors. Goodwill valuations have been calculated using an
income approach based on the present value of future cash flows of each reporting unit and a market approach. We
could be required to evaluate the carrying value of goodwill prior to the annual assessment if we experience
unexpected, significant declines in operating results or sustained market capitalization declines. These types of
events and the resulting analyses could result in goodwill impairment charges in the future.
Risks Related to Global Operations
We are a cyclical company whose performance is tied to local and global economic conditions.
Demand for our services is affected by global economic conditions and the general level of economic activity in the
geographic regions and industries in which we operate. When conditions in the global economy, including the credit
markets deteriorate, or economic activity slows, many companies hire fewer permanent employees and some
companies, as a cost-saving measure, choose to rely on their own human resources departments rather than third-
party search firms to find talent, and under these conditions, companies have cut back on human resource initiatives,
all of which negatively affects our financial condition and results of operations. We also experience more competitive
pricing pressure during periods of economic decline. If the geopolitical uncertainties result in a reduction in business
confidence, when the national or global economy or credit market conditions in general deteriorate, the
unemployment rate increases or any changes occur in U.S. trade policy (including any increases in tariffs that result in a
trade war), such uncertainty or changes put negative pressure on demand for our services and our pricing, resulting
in lower cash flows and a negative effect on our business, financial condition and results of operations. In addition,
some of our clients experience reduced access to credit and lower revenues, resulting in their inability to meet their
payment obligations to us.
We face risks associated with social and political instability, legal requirements and economic conditions in our
international operations.
We operate in 53 countries and, during the year ended April 30, 2022, generated 49% of our fee revenue from
operations outside of the U.S. We are exposed to the risk of changes in social, political, legal and economic
conditions inherent in international operations. Examples of risks inherent in transacting business worldwide that we
are exposed to include:
20
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changes in and compliance with applicable laws and regulatory requirements, including U.S. laws affecting
the activities of U.S. companies abroad, including the Foreign Corrupt Practices Act of 1977 and sanctions
programs administered by the U.S. Department of the Treasury Office of Foreign Assets Control, and similar
foreign laws such as the U.K. Bribery Act, as well as the fact that many countries have legal systems, local
laws and trade practices that are unsettled and evolving, and/or commercial laws that are vague and/or
inconsistently applied;
difficulties in staffing and managing global operations, which could impact our ability to maintain an effective
system of internal control;
difficulties in building and maintaining a competitive presence in existing and new markets;
social, economic and political instability, including the repercussions of Russiaʼs attack on Ukraine;
differences in cultures and business practices;
statutory equity requirements;
differences in accounting and reporting requirements;
repatriation controls;
differences in labor and market conditions;
potential adverse tax consequences;
(cid:3) multiple regulations concerning immigration, pay rates, benefits, vacation, statutory holiday pay, workersʼ
compensation, union membership, termination pay, the termination of employment, and other employment
laws; and
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the introduction of greater uncertainty with respect to trade policies, tariffs, disputes or disruptions, the
termination or suspension of treaties, boycotts and government regulation affecting trade between the U.S.
and other countries.
One or more of these factors has and may in the future harm our business, financial condition or results of
operations.
Risks Related to Our Dividend Policy
You may not receive the level of dividends provided for in the dividend policy our Board of Directors has
adopted or any dividends at all.
We are not obligated to pay dividends on our common stock. Despite our history of paying dividends, the declaration
and payment of all future dividends to holders of our common stock are subject to the discretion of our Board of
Directors, which may amend, revoke or suspend our dividend policy at any time and for any reason, including
earnings, capital requirements, financial conditions and other factors our Board of Directors may deem relevant. The
terms of our indebtedness may also restrict us from paying cash dividends on our common stock under certain
circumstances. See below “—Our ability to pay dividends is restricted by agreements governing our debt, including
our Amended Credit Agreement and indenture governing our Notes, and by Delaware law.”
Over time, our capital and other cash needs may change significantly from our current needs, which could affect
whether we pay dividends and the level of any dividends we may pay in the future. If we were to use borrowings
under our Revolver to fund our payment of dividends, we would have less cash and/or borrowing capacity available
for future dividends and other purposes, which could negatively affect our financial condition, our results of
operations, our liquidity and our ability to maintain and expand our business. Accordingly, you may not receive
dividends in the intended amounts, or at all. Any reduction or elimination of dividends may negatively affect the
market price of our common stock.
21
Our ability to pay dividends is restricted by agreements governing our debt, including our Amended Credit
Agreement and indenture governing our Notes, and by Delaware law.
Both our Amended Credit Agreement and the indenture governing our Notes restrict our ability to pay dividends. See
“Managementʼs Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources,” where we describe the terms of our indebtedness, including provisions limiting our ability to declare and
pay dividends. As a result of such restrictions, we may be limited in our ability to pay dividends unless we redeem our
Notes and amend our Amended Credit Agreement or otherwise obtain a waiver from our lenders. In addition, as a
result of general economic conditions, conditions in the lending markets, the results of our business or for any other
reason, we may elect or be required to amend or refinance our Revolver, at or prior to maturity, or enter into
additional agreements for indebtedness. Any such amendment, refinancing or additional agreement may contain
covenants that could limit in a significant manner or entirely our ability to pay dividends to you. Additionally, under the
Delaware General Corporation Law (“DGCL”), our Board of Directors may not authorize payment of a dividend unless
it is either paid out of surplus, as calculated in accordance with the DGCL, or if we do not have a surplus, out of net
profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, as a result of these
restrictions, we are required to reduce or eliminate the payment of dividends, a decline in the market price or liquidity,
or both, of our common stock could result. This may in turn result in losses by you.
Our dividend policy may limit our ability to pursue growth opportunities.
If we pay dividends at the level currently anticipated under our dividend policy, we may not retain a sufficient amount
of cash to finance growth opportunities, meet any large unanticipated liquidity requirements or fund our operations in
the event of a significant business downturn. In addition, because a portion of cash available will be distributed to
holders of our common stock under our dividend policy, our ability to pursue any material expansion of our business,
including through acquisitions, increased capital spending or other increases of our expenditures, will depend more
than it otherwise would on our ability to obtain third party financing. We cannot assure you that such financing will be
available to us at all, or at an acceptable cost. If we are unable to take timely advantage of growth opportunities, our
future financial condition and competitive position may be harmed, which in turn may adversely affect the market
price of our common stock.
Risks Related to Our Stockholders
We have provisions that make an acquisition of us more difficult and expensive.
Anti-takeover provisions in our Certificate of Incorporation, our Bylaws and under Delaware law make it more difficult
and expensive for us to be acquired in a transaction that is not approved by our Board of Directors. Some of the
provisions in our Certificate of Incorporation and Bylaws include: limitations on stockholder actions; advance
notification requirements for director nominations and actions to be taken at stockholder meetings; and the ability to
issue one or more series of preferred stock by action of our Board of Directors.
These provisions could discourage an acquisition attempt or other transaction in which stockholders could receive a
premium over the current market price for the common stock.
General Risk Factors
Failing to retain our executive officers and key personnel or integrate new members of our senior management
who are critical to our business may prevent us from successfully managing our business in the future.
Our future success depends upon the continued service of our executive officers and other key management
personnel. Competition for qualified personnel is intense, and we may compete with other companies that have
greater financial and other resources than we do. If we lose the services of one or more of our executives or key
employees, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with us,
or if we are unable to integrate new members of our senior management who are critical to our business, we may not
be able to successfully manage our business or achieve our business objectives.
Changes in our accounting estimates and assumptions and other financial and nonfinancial reporting standard
could negatively affect our financial position and results of operations.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles
require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of our financial statements. We are also required to make
certain judgments that affect the reported amounts of revenues and expenses during each reporting period. We
periodically evaluate our estimates and assumptions, including those relating to revenue recognition, restructuring,
deferred compensation, goodwill and other intangible assets, contingent consideration, annual performance-related
bonuses, allowance for doubtful accounts, share-based payments and deferred income taxes. Actual results could
differ from the estimates we make based on historical experience and various assumptions believed to be reasonable
based on specific circumstances, and changes in accounting standards could have an adverse impact on our future
financial position and results of operations.
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As we endeavor to align with the recommendations of the Sustainability Accounting Standards Board and other
standards or materiality assessments related to ESG matters, we have expanded, and may in the future continue to
expand, our disclosures in these areas. A failure to accurately report or achieve progress on metrics, targets, or goals
on a timely basis or at all could also have an adverse impact on our financial position, reputation, business, and
growth.
Unfavorable tax laws, tax law changes and tax authority rulings may adversely affect results.
We are subject to income taxes in the U.S. and in various foreign jurisdictions. Domestic and international tax
liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be
adversely affected by changes in the mix of earnings among countries with differing statutory tax rates or changes in
tax laws. The amount of our income taxes and other taxes are subject to ongoing audits by U.S. federal, state and
local tax authorities and by non-U.S. authorities. If these audits result in assessments different from estimated
amounts recorded, future financial results may include unfavorable tax adjustments.
Future changes in tax laws, treaties or regulations, and their interpretations or enforcement, may be unpredictable,
particularly as taxing jurisdictions face an increasing number of political, budgetary and other fiscal challenges. Tax
rates in the jurisdictions in which we operate may change as a result of macroeconomic and other factors outside of
our control, making it increasingly difficult for multinational corporations like ourselves to operate with certainty about
taxation in many jurisdictions. Recently, the Biden Administration has proposed changes to federal tax policies that
could significantly change how corporations are taxed on U.S. as well as on foreign earnings. While the proposed
changes are still under debate, they could adversely affect our business and our results of operations.
As a result, we have been and may again be materially adversely affected by future changes in tax law or policy (or in
their interpretation or enforcement) in the jurisdictions where we operate, including the U.S., which could have a
material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective
income tax rate.
Limited protection of our IP could harm our business, and we face the risk that our services or products may
infringe upon the IP rights of others.
We cannot guarantee that trade secrets, trademark and copyright law protections are adequate to deter
misappropriation of our IP (which has become an important part of our business). Existing laws of some countries in
which we provide services or products may offer only limited protection of our IP rights. Redressing infringements
may consume significant management time and financial resources. Also, we cannot detect all unauthorized use of
our IP and take the necessary steps to enforce our rights, which may have a material adverse impact on our
business, financial condition or results of operations. We cannot be sure that our services and products, or the
products of others that we offer to our clients, do not infringe on the IP rights of third parties, and we may have
infringement claims asserted against us or our clients. These claims may harm our reputation, result in financial
liability and prevent us from offering some services or products.
We may not be able to successfully integrate or realize the expected benefits from our acquisitions.
Our future success depends in part on our ability to complete the integration of acquisition targets successfully into
our operations. The process of integrating an acquired business subjects us to a number of risks, including:
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diversion of management attention;
amortization of intangible assets, adversely affecting our reported results of operations;
inability to retain and/or integrate the management, key personnel and other employees of the acquired
business;
inability to properly integrate businesses resulting in operating inefficiencies;
inability to establish uniform standards, disclosure controls and procedures, internal control over financial
reporting and other systems, procedures and policies in a timely manner;
inability to retain the acquired companyʼs clients;
exposure to legal claims for activities of the acquired business prior to acquisition; and
incurrence of additional expenses in connection with the integration process.
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If our acquisitions are not successfully integrated, our business, financial condition and results of operations, as well
as our professional reputation, could be materially adversely affected.
Further, we cannot assure you that acquisitions will result in the financial, operational or other benefits that we
anticipate. Some acquisitions may not be immediately accretive to earnings and some expansion may result in
significant expenditures.
Businesses we acquire may have liabilities or adverse operating issues that could harm our operating results.
Businesses we acquire may have liabilities or adverse operating issues, or both, that we either fail to discover
through due diligence or underestimate prior to the consummation of the acquisition. These liabilities and/or issues
may include the acquired businessʼ failure to comply with, or other violations of, applicable laws, rules or regulations
or contractual or other obligations or liabilities. As the successor owner, we may be financially responsible for, and
may suffer harm to our reputation or otherwise be adversely affected by, such liabilities and/or issues. An acquired
business also may have problems with internal controls over financial reporting, which could in turn cause us to have
significant deficiencies or material weaknesses in our own internal controls over financial reporting. These and any
other costs, liabilities, issues, and/or disruptions associated with any past or future acquisitions, and the related
integration, could harm our operating results.
We may be subject to the actions of activist stockholders, which could disrupt our business.
We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy
and performance. Activist stockholders who disagree with the composition of the Board of Directors, our strategy or
the way the Company is managed may seek to effect change through various strategies and channels, such as
through commencing a proxy contest, making public statements critical of our performance or business or engaging
in other similar activities. Responding to stockholder activism can be costly and time-consuming, disrupt our
operations, and divert the attention of management and our employees from our strategic initiatives. Activist
campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the
loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and
cause our stock price to experience periods of volatility or stagnation.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
Our corporate office is in Los Angeles, California. We lease our corporate office as well as an additional 104 offices
through which we conduct business that are located in North America, EMEA, Asia Pacific and Latin America, all of
which are used by all of our business segments. As of April 30, 2022, we leased an aggregate of approximately 1.2
million square feet of office space. The leases generally have remaining terms of 1 to 10 years and contain
customary terms and conditions. We believe that our facilities are adequate for our current needs, and we do not
anticipate any significant difficulty replacing such facilities or locating additional facilities to accommodate any future
growth.
Item 3. Legal Proceedings
From time to time, we are involved in litigation both as a plaintiff and a defendant, relating to claims arising out of our
operations. As of the date of this report, we are not engaged in any legal proceedings that are expected, individually
or in the aggregate, to have a material adverse effect on our business, financial condition or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
Information about our Executive Officers
Name
Gary D. Burnison
Robert P. Rozek
Mark Arian
Byrne Mulrooney
Michael Distefano (1)
Age as of
April 30,
2022
61
61
61
61
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Position
President and Chief Executive Officer
Executive Vice President, Chief Financial Officer and Chief Corporate Officer
Chief Executive Officer, Consulting
Chief Executive Officer, RPO Professional Search & Digital
Chief Executive Officer, Professional Search
(1) Appointed as an executive officer on June 15, 2022 under Rule 3b-7.
24
Our executive officers serve at the discretion of our Board of Directors. There is no family relationship between any
executive officer or director. The following information sets forth the business experience for at least the past five
years for each of our executive officers.
Gary D. Burnison has been President and Chief Executive Officer of the Company since July 2007. He was the
Executive Vice President and Chief Financial Officer of the Company from March 2002 until June 30, 2007, and Chief
Operating Officer from November 2003 until June 30, 2007. Prior to joining Korn Ferry, Mr. Burnison was Principal
and Chief Financial Officer of Guidance Solutions, a privately held consulting firm, from 1999 to 2001. Prior to that, he
served as an executive officer and a member of the board of directors of Jefferies and Company, Inc., the principal
operating subsidiary of Jefferies Group, Inc. from 1995 to 1999. Earlier, Mr. Burnison was a Partner at KPMG Peat
Marwick. Mr. Burnison earned a bachelorʼs degree in business administration from the University of Southern
California.
Robert P. Rozek joined the Company in February 2012 as our Executive Vice President and Chief Financial Officer
and, in December 2015, also became our Chief Corporate Officer. Prior to joining Korn Ferry, he served as Executive
Vice President and Chief Financial Officer of Cushman & Wakefield, Inc., a privately held commercial real estate
services firm, from June 2008 to February 2012. Prior to joining Cushman & Wakefield, Inc., Mr. Rozek served as
Senior Vice President and Chief Financial Officer of Las Vegas Sands Corp., a leading global developer of
destination properties (integrated resorts) that feature premium accommodations, world-class gaming and
entertainment, convention and exhibition facilities and many other amenities, from 2006 to 2008. Prior to that, Mr.
Rozek held senior leadership positions at Eastman Kodak, and spent five years as a Partner with
PricewaterhouseCoopers LLP. Mr. Rozek is a graduate of Canisius College in New York with a bachelorʼs degree in
accounting.
Mark Arian joined the Company as Chief Executive Officer of Korn Ferryʼs Advisory segment in April 2017 and is now
the Chief Executive Officer of Consulting. Prior to Korn Ferry, Mr. Arian served as a Managing Principal at Ernst &
Young LLP, a multinational professional services firm that provides audit, tax, business risk, technology and security
risk services, and human capital services worldwide, from March 2014 until March of 2017. In that capacity, he led
the People Advisory Services—Financial Services Sector, and his responsibilities included commercial, people and
key account leadership. Between 2008 and 2014, Mr. Arian held various leadership positions at AON and AON
Hewitt, a provider of insurance, reinsurance, human capital and management consulting services, serving as an
Executive Vice President and leading its strategic Mergers and Acquisitions (“M&A”) and business transformation
offering globally. Mr. Arian has also held various leadership positions at Towers Perrin (now Wills Towers Watson)
including serving as the Global M&A and Global Change Management leader, and Hewitt Associates, where Mr.
Arian built and led the Corporate Restructuring and Change Practice. Mr. Arian is a graduate of Duke University and
holds a juris doctorate from Columbia University.
Byrne Mulrooney joined the Company in April 2010 as Chief Executive Officer of RPO & Professional Search and in
March 2017 also became the Chief Executive Officer of Digital. Prior to joining Korn Ferry, he was President and
Chief Operating Officer of Flynn Transportation Services, a third-party logistics company, from 2007 to 2010. Prior to
that, he led Spherionʼs workforce solutions business in North America, which provides workforce solutions in
professional services and general staffing, including recruitment process outsourcing and managed services, from
2003 to 2007. Mr. Mulrooney held executive positions for almost 20 years at EDS and IBM in client services, sales,
marketing and operations. Mr. Mulrooney is a graduate of Villanova University in Pennsylvania. He holds a masterʼs
degree in management from Northwestern Universityʼs J.L. Kellogg Graduate School of Management.
Michael Distefano has been the Chief Executive Officer, Professional Search and President of Search Innovation and
Delivery Team since December 2020. Mr. Distefano joined the Company over 20 years ago in March of 2001 and
served in various capacities since that time, including President of Korn Ferry Asia Pacific from May 2018 until April
2021 and prior to that as the Chief Marketing Officer from 2007 to 2021 and President of the Korn Ferry Institute.
Prior to Korn Ferry, Mr. Distefano held leadership positions at GetSmart.com and Benefits Consulting, Inc. Mr.
Distefano is a graduate of Bloomsburg University of Pennsylvania.
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PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock
Our common stock is listed on the New York Stock Exchange under the symbol KFY. On June 21, 2022, there were
approximately 46,937 stockholders of record of the Companyʼs common stock.
Performance Graph
We have presented below a graph comparing the cumulative total stockholder return of the Companyʼs shares with
the cumulative total stockholder return on (1) the Standard & Poorʼs 500 Stock Index and (2) the company-
established peer groups for both 2022 and 2021. Cumulative total return for each of the periods shown in the
performance graph is measured assuming an initial investment of $100 on April 30, 2017 and the reinvestment of any
dividends paid by the Company and any company in the peer group on the date the dividends were paid.
In fiscal 2022, we established a new peer group comprised of a broad number of publicly traded companies, which
are principally or in significant part involved in either professional staffing or consulting. The peer group is comprised
of the following 11 companies: ASGN Inc. (ASGN), Cushman & Wakefield Plc. (CWK), FTI Consulting Inc. (FCN),
Heidrick & Struggles International Inc. (HSII), Huron Consulting Group Inc. (HURN), ICF International Inc. (ICFI),
Insperity Inc. (NSP), Jones Lang Lasalle Inc. (JLL), ManpowerGroup Inc. (MAN), PageGroup Plc. (MPGPF) and
Robert Half International Inc. (RHI). We believe this group of professional services firms is reflective of similar sized
companies in terms of our market capitalization, with significant global exposure that mirrors our global footprint and
therefore provides a more meaningful comparison of stock performance. The returns of each company have been
weighted according to their respective stock market capitalization at the beginning of each measurement period for
purposes of arriving at a peer group average.
The 2021 peer group, presented for comparative purposes, consisted of Heidrick & Struggles International Inc. (HSII),
Robert Half International Inc, (RHI), Willis Towers Watson Plc, (WLTW), Kforce Inc. (KFRC), Kelly Services Inc.
(KELYA), TrueBlue Inc. (TBI), Insperity Inc. (NSP), FTI Consulting Inc. (FCN), CBIZ Inc. (CBZ), ICF International Inc.
(ICFI), Huron Consulting Group Inc, (HURN) and Resources Connection Inc. (RGP).
The stock price performance depicted in this graph is not necessarily indicative of future price performance. This
graph will not be deemed to be incorporated by reference by any general statement incorporating this Annual Report
on Form 10-K into any filing by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to
the extent we specifically incorporate this information by reference and shall not otherwise be deemed soliciting
material or deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (*)
Among Korn Ferry, the S&P 500 Index, 2021 Peer Group and 2022 Peer Group
$300
$250
$200
$150
$100
$50
$0
4/17
7/17
10/17
1/18
4/18
7/18
10/18
1/19
4/19
7/19
10/19
1/20
4/20
7/20
10/20
1/21
4/21
7/21
10/21
1/22
4/22
Korn Ferry
S&P 500
2021 Peer Group
2022 Peer Group
Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
(*)
$100 invested on April 30, 2017 in stock or index, including reinvestment of dividends. Fiscal year ended April 30, 2022.
26
Capital Allocation Approach
The Company and its Board of Directors endorse a balanced approach to capital allocation that contemplates debt
service cost. The Companyʼs first priority is to invest in growth initiatives, such as the hiring of consultants, the
continued development of IP and derivative products and services, and the investment in synergistic, accretive M&A
transactions that earn a return superior to the Company's cost of capital. Next, the Companyʼs capital allocation
approach contemplates the planned return of a portion of excess capital to stockholders, in the form of a regular
quarterly dividend, subject to the factors discussed below under “Dividends” and in more detail in the “Risk Factors”
section of this Annual Report on Form 10-K. Additionally, the Company considers share repurchases on an
opportunistic basis and subject to the terms of our indebtedness. See Note 11— Long Term Debt for a description of
the Credit Agreement and indenture governing the Notes and Note 18 —Subsequent Events – Credit Facility for a
description of the Amended Credit Agreement.
Dividends
On December 8, 2014, the Board of Directors adopted a dividend policy, reflecting an intention to distribute to our
stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend
policy, the Company has declared a quarterly dividend. On June 21, 2021, the Board of Directors increased the
quarterly dividends to $0.12 per share for fiscal 2021. On June 21, 2022, the Board of Directors approved a 25%
increase to our quarterly dividends to $0.15 per share.
The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the
Board of Directors and will depend upon many factors, including the Companyʼs earnings, capital requirements,
financial conditions, the terms of the Companyʼs indebtedness and other factors that the Board of Directors may
deem to be relevant. The Board of Directors may amend, revoke or suspend the dividend policy at any time and for
any reason.
Stock Repurchase Program
On June 21, 2022, the Board of Directors approved an increase in the Companyʼs stock repurchase program of
approximately $300 million, which brought our available capacity to repurchase shares in the open market or privately
negotiated transactions to $318 million. Common stock may be repurchased from time to time in open market or
privately negotiated transactions at the Companyʼs discretion subject to market conditions and other factors. The
Company repurchased approximately $98.8 million, $30.4 million and $92.4 million of the Companyʼs common stock
during fiscal 2022, 2021 and 2020, respectively. Any decision to execute on our stock repurchase program will
depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board
of Directors. The Amended Credit Agreement permits us to pay dividends to our stockholders and make share
repurchases so long as there is no default under the Amended Credit Agreement, the Companyʼs total funded debt to
adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) is no
greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant. Furthermore, our Notes
allow the Company to pay $25.0 million of dividends per fiscal year with no restrictions plus an unlimited amount of
dividends so long as the Companyʼs consolidated total leverage ratio is not greater than 3.50 to 1.00 and the
Company is not in default under the indenture governing the Notes.
Issuer Purchases of Equity Securities
The following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2022:
February 1, 2022 — February 28, 2022
March 1, 2022 — March 31, 2022
April 1, 2022 — April 30, 2022
Total
Total Number of
Shares
Purchased (1)
Average
Price Paid
Per Share
240,000
453,182
346,698
1,039,880
$
$
$
$
66.68
64.10
64.82
64.94
Total Number of
Shares
Purchased
as Part of
Publicly-
Announced
Programs
240,000
450,000
345,402
1,035,402
Approximate
Dollar Value of
Shares that
May Yet be
Purchased
under the
Programs (2)
$80.4 Million
$51.5 Million
$29.1 Million
(1) Represents withholding of 4,478 of restricted shares to cover taxes on vested restricted shares.
(2) On June 21, 2022, our Board of Directors approved an increase to the share repurchase program to an aggregate of $318
million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Companyʼs
discretion. The share repurchase program has no expiration date.
Item 6. Reserved
27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Annual Report on Form 10-K may contain certain statements that we believe are, or may be considered to be,
“forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking
statements generally can be identified by use of statements that include phrases such as “believe,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words
or phrases. Similarly, statements that describe our objectives, plans or goals, as well as the magnitude and duration
of the impact of the global (“COVID-19”) pandemic on our business, employees, customers and our ability to provide
services in affected regions constitute forward-looking statements. These forward-looking statements are subject to
risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant
forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ
materially from the forward-looking statements include, but are not limited to, those relating to the ultimate magnitude
and duration of COVID-19 and of any future pandemics or similar outbreaks, and related restrictions and operational
requirements that apply to our business and the businesses of our clients, and any related negative impacts on our
business, employees, customers and our ability to provide services in affected regions, global and local political and
or economic developments in or affecting countries where we have operations, competition, changes in demand for
our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced
consultants, inflationary pressures maintaining our relationships with customers and suppliers and retaining key
employees, maintaining our brand name and professional reputation, potential legal liability and regulatory
developments, portability of client relationships, consolidation of or within the industries we serve, changes and
developments in governmental laws and regulations, evolving investor and customer expectations with regard to
environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our
cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber
security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on
third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to
enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity
problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets,
treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our
ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization
and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect
acquisitions, our indebtedness, the phase-out of LIBOR, and the matters disclosed under the heading “Risk Factors”
in the Companyʼs Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K. Readers are
urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking
statements included in this Annual Report on Form 10-K are made only as of the date of this Annual Report on Form
10-K and we undertake no obligation to publicly update these forward-looking statements to reflect subsequent
events or circumstances.
The following presentation of managementʼs discussion and analysis of our financial condition and results of
operations should be read together with our consolidated financial statements and related notes included in this
Annual Report on Form 10-K. We also make available on the Investor Relations portion of our website earnings
slides and other important information, which we encourage you to review.
Executive Summary
Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global
organizational consulting firm. We help clients synchronize strategy, operations and talent to drive superior business
performance. We work with organizations to design their structures, roles and responsibilities. We help them hire the
right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people.
We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the
organization. This approach builds on the best of our past and gives us a clear path to the future with focused
initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent
management needs. We have evolved from a mono-line business to a multi-faceted consultancy business, giving our
consultants more frequent and expanded opportunities to engage with clients.
Our seven reportable segments operate through the following four lines of business:
1. Consulting aligns organization structure, culture, performance and people to drive sustainable growth by
addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and
Professional Development, and Total Rewards. We support this work with a comprehensive range of some of
the worldʼs leading lP and data. The Consulting teams employ an integrated approach across core solutions,
28
each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a
digitally enabled world.
2. Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities and
behaviors to drive businesses forward. Our digital products give clients direct access to our proprietary data,
client data and analytics to deliver clear insights with the training tools needed to align organizational structure
with business strategy.
3. Executive Search helps organizations recruit board level, chief executive and other senior executive and
general management talent to deliver lasting impact. Our approach to placing talent that brings together our
research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to
determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for
compensation and retention. This business is managed and reported on a geographic basis and represents
four of the Companyʼs reportable segments (Executive Search North America, Executive Search EMEA,
Executive Search Asia Pacific, and Executive Search Latin America).
4. RPO and Professional Search focuses on delivering enterprise talent acquisition solutions to our clients, at
the professional level. We leverage the power of people, process expertise, IP-enabled technology, and
compensation information to do this. Transaction sizes range from single professional searches to team,
department, line of business projects, and global outsource recruiting solutions.
The Company has seven reportable segments: Consulting, Digital, Executive Search North America, Executive
Search EMEA, Executive Search Asia Pacific, Executive Search Latin America and RPO & Professional Search.
Highlights of our performance in fiscal 2022 include:
(cid:3)
Approximately 76% of the executive searches we performed in fiscal 2022 were for board level, chief executive
and other senior executive and general management positions. Our more than 4,300 search engagement clients
in fiscal 2022 included many of the worldʼs largest and most prestigious public and private companies.
(cid:3) We have built strong client loyalty, with nearly 90% of the assignments performed during fiscal 2022 having been
on behalf of clients for whom we had conducted assignments in the previous three fiscal years.
(cid:3)
(cid:3)
Approximately 70% of our revenues were generated from clients that have utilized multiple lines of our business.
In fiscal 2022, we acquired The Lucas Group, which brings substantial professional search and interim
placement expertise to Korn Ferry and has enhanced our industry-leading search portfolio. We also recently
acquired Patina Solutions Group, an interim executive search firm that is expected to bring access to a vast
network of C-suite, top-tier, and professional interim talent.
Performance Highlights
On November 1, 2021, we completed the acquisition of The Lucas Group for $90.9 million, net of cash acquired. The
Lucas Group contributes a substantial professional search and interim expertise that has enhance our search
portfolio. The Lucas Group is a professional search and interim staffing firm, targeting middle market businesses. The
addition of The Lucas Group to Korn Ferryʼs broader talent acquisition portfolio – spanning Executive Search and
RPO & Professional Search – is expected to accelerate our ability to capture additional share of this significant
market. The Lucas Group is included in the RPO & Professional Search segment.
On April 1, 2022, we completed the acquisition of Patina Solutions Group for $42.9 million, net of cash acquired.
Patina contributes a substantial interim executive solutions expertise across multiple industry verticals. Patinaʼs vast
network of C-suite, top-tier, and professional interim talent spans functional area of expertise such as finance,
operations, legal, human resources, IT and more. We believe this combination presents real, tangible opportunity for
Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to
help them drive superior performance, including on an interim basis. Patina offers solutions for todayʼs nomadic labor
market. Patina Solutions Group is included in the RPO & Professional Search segment.
The Company evaluates performance and allocates resources based on the chief operating decision makerʼs review
of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted
EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges,
integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and
other impairment charges). For fiscal 2022, Adjusted EBITDA excluded $7.9 million of integration/acquisition costs, a
$7.4 million impairment of right-of-use assets and a $1.9 million impairment of fixed assets. For fiscal 2021, Adjusted
EBITDA excluded $30.7 million of restructuring charges and $0.7 million of integration/acquisition costs. For fiscal
2020, Adjusted EBITDA excluded $58.6 million of restructuring charges, $12.2 million of integration/acquisition costs
and $1.8 million of separation costs.
29
Consolidated and the subtotals of Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures and have limitations as analytical tools. They should not be viewed as a substitute for financial
information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”)
and should not be considered in isolation or as a substitute for analysis of the Companyʼs results as reported under
GAAP. In addition, they may not necessarily be comparable to non-GAAP performance measures that may be
presented by other companies.
Management believes the presentation of these non-GAAP financial measures provides meaningful supplemental
information regarding Korn Ferryʼs performance by excluding certain charges, items of income and other items that
may not be indicative of Korn Ferryʼs ongoing operating results. The use of these non-GAAP financial measures
facilitates comparisons to Korn Ferryʼs historical performance and the identification of operating trends that may
otherwise be distorted by the factors discussed above. Korn Ferry includes these non-GAAP financial measures
because management believes it is useful to investors in allowing for greater transparency with respect to
supplemental information used by management in its evaluation of Korn Ferryʼs ongoing operations and financial and
operational decision-making. The accounting policies for the reportable segments are the same as those described in
the summary of significant accounting policies in the accompanying consolidated financial statements, except that the
above noted items are excluded to arrive at Adjusted EBITDA. Management further believes that Adjusted EBITDA is
useful to investors because it is frequently used by investors and other interested parties to measure operating
performance among companies with different capital structures, effective tax rates and tax attributes and capitalized
asset values, all of which can vary substantially from company to company.
Fee revenue was $2,626.7 million during fiscal 2022, an increase of $816.7 million, or 45.1%, compared to $1,810.0
million in fiscal 2021, with increases in fee revenue across all lines of business primarily due to the increasing
relevance of the Companyʼs solutions and the acquisition of companies in the RPO and Professional Search
Segment. Exchange rates unfavorably impacted fee revenue by $2.8 million during fiscal 2022 compared to fiscal
2021. Net income attributable to Korn Ferry increased by $211.9 million during fiscal 2022 to $326.4 million from
$114.5 million in fiscal 2021. Adjusted EBITDA was $538.9 million, an increase of $252.6 million during fiscal 2022,
from Adjusted EBITDA of $286.3 million in fiscal 2021. During fiscal 2022, the Executive Search, RPO &
Professional, Consulting, and Digital lines of business contributed $257.6 million, $165.1 million, $116.1 million, and
$110.1 million, respectively, offset by Corporate expenses net of other income of $110.0 million.
Our cash, cash equivalents and marketable securities increased by $114.0 million to $1,211.1 million at April 30,
2022, compared to $1,097.1 million at April 30, 2021. This increase was mainly due to cash flows from operations as
a result of cost savings initiatives that were put in place in fiscal 2021, partially offset by cash paid for the acquisitions
of The Lucas Group and Patina Solutions net of cash acquired, repurchases of our common stock in the open
market, the negative effect of exchange rate changes on cash and cash equivalents, purchases of property and
equipment, interest payments on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) and dividends paid to
stockholders during fiscal 2022. As of April 30, 2022, we held marketable securities to settle obligations under our
Executive Capital Accumulation Plan (“ECAP”) with a cost value of $164.2 million and a fair value of $168.7 million.
Our vested obligations for which these assets were held in trust totaled $160.8 million as of April 30, 2022 and our
unvested obligations totaled $24.0 million.
Our working capital increased by $38.6 million to $775.7 million in fiscal 2022. We believe that cash on hand and
funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital
expenditures, general corporate requirements, repayment of our debt obligations and dividend payments under our
dividend policy in the next twelve months. We had $645.3 million and $646.0 million available for borrowing under our
Revolver (as defined herein) at April 30, 2022 and 2021, respectively. As of April 30, 2022 and 2021, there was $4.7
million and $4.0 million of standby letters of credit issued, respectively, under our long-term debt arrangements. We
had a total of $10.0 million and $11.0 million of standby letters of credits with other financial institutions as of April 30,
2022 and 2021, respectively.
Our Annual Report on Form 10-K for the year ended April 30,2021 includes a discussion and analysis of our financial
condition and results of operations for the year ended April 30, 2021 in Item 7 of Part II, “Managementʼs Discussion
and Analysis of Financial Condition and Results of Operations.”
Critical Accounting Policies
The following discussion and analysis of our financial condition and results of operations are based on our
consolidated financial statements. Preparation of our periodic filings requires us to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of
our financial statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions and changes in the estimates are reported in current
operations as new information is learned or upon the amounts becoming fixed and determinable. In preparing our
consolidated financial statements and accounting for the underlying transactions and balances, we apply our
accounting policies as disclosed in the notes to our consolidated financial statements. We consider the policies
discussed below as critical to an understanding of our consolidated financial statements because their application
places the most significant demands on managementʼs judgment and estimates. Specific risks for these critical
30
accounting policies are described in the following paragraphs. Senior management has discussed the development,
selection and key assumptions of the critical accounting estimates with the Audit Committee of the Board of Directors.
Revenue Recognition. Substantially all fee revenue is derived from talent and organizational consulting services and
digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional
recruitment performed on a retained basis and RPO, either stand-alone or as part of a solution.
Revenue is recognized when control of the goods and services is transferred to the customer, in an amount that
reflects the consideration that we expect to be entitled to in exchange for those goods and services. Revenue
contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification
606 (“ASC 606”), Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the
performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the
separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.
Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred as a
percentage of total estimated hours at completion. It is possible that updated estimates for consulting engagements
may vary from initial estimates with such updates being recognized in the period of determination. Depending on the
timing of billings and services rendered, we accrue or defer revenue as appropriate.
Digital revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent
development, engagement, and assessment and is consumed directly by an end user or indirectly through a
consulting engagement. Revenue is recognized as services are delivered and we have a legally enforceable right to
payment. Revenue also comes from the sale of our proprietary IP subscriptions, which are considered symbolic IP
due to the dynamic nature of the content. As a result, revenue is recognized over the term of the contract. Functional
IP licenses grant customers the right to use IP content via the delivery of a flat file. Because the IP content license
has significant stand-alone functionality, revenue is recognized upon delivery and when an enforceable right to
payment exists. Revenue for tangible and digital products sold by the Company, such as books and digital files, is
recognized when these products are shipped.
Fee revenue from Executive Search and Professional Search activities is generally one-third of the estimated first
year compensation of the placed candidate plus a percentage of the fee to cover indirect engagement related
expenses. In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the
client for a placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively
consistent percentage of the original estimated fee; therefore, we estimate upticks using the expected value method
based on historical data on a portfolio basis. In a standard search engagement, there is one performance obligation
which is the promise to undertake a search. We generally recognize such revenue over the course of a search and
when it is legally entitled to payment as outlined in the billing terms of the contract. Any revenues associated with
services that are provided on a contingent basis are recognized once the contingency is resolved as this is when
control is transferred to the customer. These assumptions determine the timing of revenue recognition for the
reported period.
RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-
implementation recruitment phase. The fees associated with the implementation phase are recognized over the
period that the related implementation services are provided. The post-implementation recruitment phase represents
end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over
the period that the related recruiting services are performed.
Annual Performance-Related Bonuses. Each quarter, management makes its best estimate of its annual
performance-related bonuses, which requires management to, among other things, project annual consultant
productivity (as measured by engagement fees billed and collected by executive search consultants and revenue and
other performance/profitability metrics for Consulting, Digital and RPO & Professional Search consultants), the level
of engagements referred by a consultant in one line of business to a different line of business, our performance
including profitability, competitive forces and future economic conditions and their impact on our results. At the end of
each fiscal year, annual performance-related bonuses take into account final individual consultant productivity
(including referred work), Company/line of business results including profitability, the achievement of strategic
objectives, the results of individual performance appraisals, and the current economic landscape. Accordingly, each
quarter we reevaluate the assumptions used to estimate annual performance-related bonus liability and adjust the
carrying amount of the liability recorded on the consolidated balance sheets and report any changes in the estimate
in current operations. Because annual performance-based bonuses are communicated and paid only after we report
our full fiscal year results, actual performance-based bonus payments may differ from the prior yearʼs estimate. Such
changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period
in which they are determined.
Deferred Compensation. Estimating deferred compensation requires assumptions regarding the timing and
probability of payments of benefits to participants and the discount rate. Changes in these assumptions could
31
significantly impact the liability and related cost on our consolidated balance sheets and statements of income,
respectively. For certain deferred compensation plans, management engages an independent actuary to periodically
review these assumptions in order to confirm that they reflect the population and economics of our deferred
compensation plans in all material respects and to assist us in estimating our deferred compensation liability and the
related cost. The actuarial assumptions we use may differ from actual results due to changing market conditions or
changes in the participant population. These differences could have a significant impact on our deferred
compensation liability and the related cost.
Carrying Values. Valuations are required under GAAP to determine the carrying value of various assets. Our most
significant assets for which management is required to prepare valuations are carrying value of receivables, goodwill,
other intangible assets, share-based payments, leases and recoverability of deferred income taxes. Management
must identify whether events have occurred that may impact the carrying value of these assets and make
assumptions regarding future events, such as cash flows and profitability. Differences between the assumptions used
to prepare these valuations and actual results could materially impact the carrying amount of these assets and our
operating results.
Of the assets mentioned above, goodwill is the largest asset requiring a valuation. Fair value of goodwill for purposes
of the goodwill impairment test when performing the quantitative test is determined utilizing (1) a discounted cash flow
analysis based on forecasted cash flows (including estimated underlying revenue and operating income growth rates)
discounted using an estimated weighted-average cost of capital for market participants and (2) a market approach,
utilizing observable market data such as comparable companies in similar lines of business that are publicly traded or
which are part of a public or private transaction (to the extent available). We also reconcile the results of these
analyses to its market capitalization. If the carrying amount of a reporting unit exceeds its estimated fair value,
goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment loss,
if any.
We perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise.
The qualitative test performed as of January 31, 2022 did not indicate any impairment, and therefore there was no
need to perform a quantitative test. While historical performance and current expectations have resulted in fair values
of goodwill in excess of carrying values, if our assumptions are not realized, it is possible that in the future an
impairment charge may need to be recorded. However, it is not possible at this time to determine if an impairment
charge would result or if such a charge would be material. Fair value determinations require considerable judgment
and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the
estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate
predictions of the future. As of our testing date, the fair value of each reporting unit exceeded its carrying amount and
as a result, no impairment charge was recognized. There was no indication of potential impairment through April 30,
2022 that would have required further testing.
Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key
assumptions and ultimately impact the estimated fair value of the reporting units may include such items as follows:
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
A prolonged downturn in the business environment in which the reporting units operate including a longer
than anticipated public health crisis;
An economic climate that significantly differs from our future profitability assumptions in timing or degree;
The deterioration of the labor markets;
Volatility in equity and debt markets; and
Competition and disruption in our core business.
32
Results of Operations
The following table summarizes the results of our operations as a percentage of fee revenue:
(Numbers may not total exactly due to rounding)
Fee revenue
Reimbursed out-of-pocket engagement expenses
Total revenue
Compensation and benefits
General and administrative expenses
Reimbursed expenses
Cost of services
Depreciation and amortization
Restructuring charges, net
Operating income
Net income
Net income attributable to Korn Ferry
The following tables summarize the results of our operations:
(Numbers may not total exactly due to rounding)
2022
Year Ended April 30,
2021
2020
100.0%
0.6
100.6
66.3
9.0
0.6
4.4
2.4
-
17.9
12.6%
12.4%
100.0%
0.5
100.5
71.7
10.6
0.5
4.0
3.4
1.7
8.6
6.4%
6.3%
100.0%
2.3
102.3
67.2
13.4
2.3
4.4
2.9
3.0
9.1
5.5%
5.4%
Fee revenue
Consulting
Digital
Executive Search:
North America
EMEA
Asia Pacific
Latin America
Total Executive Search
RPO & Professional Search
Total fee revenue
Reimbursed out-of-pocket engagement
expense
Total revenue
2022
Dollars
%
Year Ended April 30,
2021
Dollars
%
(dollars in thousands)
2020
Dollars
%
$ 650,204
349,025
24.8% $ 515,844
287,306
13.3
28.5%
15.9
543,095
292,366
605,704
182,192
118,596
29,069
935,561
691,928
2,626,718
16,737
$2,643,455
23.1
6.9
4.5
1.1
35.6
26.3
397,275
138,954
83,306
17,500
637,035
369,862
100.0% 1,810,047
21.9
7.7
4.6
1.0
35.2
20.4
434,624
170,314
98,132
29,400
732,470
364,801
100.0% 1,932,732
9,899
$1,819,946
44,598
$1,977,330
28.1%
15.1
22.5
8.8
5.1
1.5
37.9
18.9
100.0%
In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single
percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual
Executive Search Regions. These figures are non-GAAP financial measures and are presented as they are
consistent with the Companyʼs lines of business and are financial metrics used by the Companyʼs investor base.
33
Consulting
Digital
North
America
EMEA
Fee revenue
Total revenue
$ 650,204
$ 654,199
$ 349,025
$ 349,437
$ 605,704
$ 609,258
$ 182,192
$ 182,866
Asia
Pacific
Latin
America
(in thousands)
$ 29,069
$ 29,079
$ 118,596
$ 118,705
Year Ended April 30, 2022
Executive Search
RPO &
Professional
Search
Subtotal
Corporate Consolidated
$ 935,561
$ 939,908
$
$
691,928
699,911
$
$
— $
— $
2,626,718
2,643,455
$
326,360
Net income attributable to
Korn Ferry
Net income attributable to
noncontrolling interest
Other loss, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other loss, net
Integration/acquisition costs
Impairment of fixed assets
Impairment of right of use
assets
Adjusted EBITDA
Net income attributable to
Korn Ferry
Net income attributable to
noncontrolling interest
Other income, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other income, net
Integration/acquisition costs
Restructuring charges, net
Adjusted EBITDA
Net income attributable to
Korn Ferry
Net income attributable to
noncontrolling interest
Other loss, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other loss, net
Integration/acquisition costs
Restructuring charges, net
Separation costs
Adjusted EBITDA
$ 116,108
$ 110,050
$ 181,615
$ 31,804
$ 35,105
$ 9,089
$ 257,613
$
165,141
$ (109,984 ) $
$
4,485
11,880
25,293
102,056
470,074
63,521
(11,880 )
7,906
1,915
7,392
538,928
Adjusted EBITDA margin
17.9 %
31.5 %
30.0 %
17.5 %
29.6 %
31.3 %
27.5 %
23.9 %
20.5 %
Year Ended April 30, 2021
Executive Search
Consulting
Digital
North
America
EMEA
Fee revenue
Total revenue
$ 515,844
$ 517,046
$ 287,306
$ 287,780
$ 397,275
$ 399,104
$ 138,954
$ 139,213
Asia
Pacific
Latin
America
(in thousands)
$ 17,500
$ 17,500
$ 83,306
$ 83,463
RPO &
Professional
Search
Subtotal
Corporate Consolidated
$ 637,035
$ 639,280
$
$
369,862
375,840
$
$
— $
— $
1,810,047
1,819,946
$
114,454
$
81,522
$ 86,095
$ 98,099
$ 11,742
$ 16,676
$ 1,289
$ 127,806
$
69,411
$ (78,542 ) $
$
1,108
(37,194 )
29,278
48,138
155,784
61,845
37,194
737
30,732
286,292
Adjusted EBITDA margin
15.8 %
30.0 %
24.7 %
8.5 %
20.0 %
7.4 %
20.1 %
18.8 %
15.8 %
Year Ended April 30, 2020
Executive Search
Consulting
Digital
North
America
EMEA
Fee revenue
Total revenue
$ 543,095
$ 557,255
$ 292,366
$ 294,261
$ 434,624
$ 447,528
$ 170,314
$ 172,978
Asia
Pacific
Latin
America
(in thousands)
$ 29,400
$ 29,493
$ 98,132
$ 99,209
RPO &
Professional
Search
Subtotal
Corporate Consolidated
$ 732,470
$ 749,208
$
$
364,801
376,606
$
$
— $
— $
1,932,732
1,977,330
$
104,946
$
61,092
$ 83,073
$ 120,725
$ 31,067
$ 22,885
$ 6,402
$ 181,079
$
60,168
$ (84,461 ) $
$
2,071
2,879
22,184
43,945
176,025
55,311
(2,879 )
12,152
58,559
1,783
300,951
Adjusted EBITDA margin
11.2 %
28.4 %
27.8 %
18.2 %
23.3 %
21.8 %
24.7 %
16.5 %
15.6 %
34
Fiscal 2022 Compared to Fiscal 2021
Fee Revenue
Fee Revenue. Fee revenue increased by $816.7 million, or 45.1%, to $2,626.7 million in fiscal 2022 compared to
$1,810.0 million in fiscal 2021. Exchange rates unfavorably impacted fee revenue by $2.8 million, in fiscal 2022
compared to fiscal 2021. The higher fee revenue was attributable to increases in all lines of business primarily due to
an increase in new business driven by the increased relevance of the Companyʼs solutions and the acquisition of
companies in the RPO & Professional Search. Further, COVID-19 had adversely impacted demand for the
Companyʼs services on a worldwide basis in fiscal 2021.
Consulting. Consulting reported fee revenue of $650.2 million in fiscal 2022, an increase of $134.4 million, or 26%,
compared to $515.8 million in fiscal 2021. The increase in fee revenue was partially driven by our Organizational
Strategy work in organization and job redesign, people strategy and culture transformation. In addition, our diversity,
equity & inclusion (“DE&I”) business remained strong in fiscal 2022 as we helped clients move the needle on their
diversity efforts. Also, greater expectations for organizations to be a force for good in society more broadly has been
increasing demand for our environmental and social governance (“ESG”) and sustainability offerings. Leadership
Development continues to focus on the importance of increasing employee engagement through coaching and
structured leadership workshops. Assessment and Succession increased as clients rely on Korn Ferryʼs robust data,
science and IP to fuel leadership and scaled workforce transformations. Finally, growth in Total Rewards was fueled
by global compensation and retention challenges associated with labor market dislocation; merger & acquisition and
IPO activity; and increased focus on executive pay and governance issues, all of which increased pressure to offer
higher and more competitive compensation. Exchange rates unfavorably impacted fee revenue by $2.8 million, or
1%, compared to fiscal 2021.
Digital. Digital reported fee revenue of $349.0 million in fiscal 2022, an increase of $61.7 million, or 21%, compared to
$287.3 million in fiscal 2021. The increase in fee revenue was primarily due to Professional Development where we
targeted new offerings and partnerships in fiscal 2022 to meet the growing need of companies focusing on sales
effectiveness. We had double digit increases in fee revenue across our other solutions focusing on assessment, total
rewards and organizational strategy as companies focused on retaining and rewarding key talent to reduce levels of
attrition from dislocation in the labor markets. Exchange rates unfavorably impacted fee revenue by $1.8 million, or
1%, compared to fiscal 2021.
Executive Search North America. Executive Search North America reported fee revenue of $605.7 million in fiscal
2022, an increase of $208.4 million, or 52%, compared to $397.3 million in fiscal 2021. Exchange rates favorably
impacted fee revenue by $1.3 million in fiscal 2022 compared to fiscal 2021. North Americaʼs fee revenue was higher
due to a 35% increase in the number of engagements billed and a 12% increase in the weighted-average fees billed
per engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021.
Executive Search EMEA. Executive Search EMEA reported fee revenue of $182.2 million in fiscal 2022, an increase
of $43.2 million, or 31%, compared to $139.0 million in fiscal 2021. Exchange rates unfavorably impacted fee revenue
by $0.5 million in fiscal 2022 compared to fiscal 2021. The increase in fee revenue was due to a 15% increase in the
number of engagements billed and a 14% increase in the weighted-average fees billed per engagement (calculated
using local currency) in fiscal 2022 compared to fiscal 2021. The performance in the United Kingdom, France, the
United Arab Emirates and Belgium were the primary contributors to the increase in fee revenue in fiscal 2022
compared to fiscal 2021, driving $31.0 million of increased revenue.
Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $118.6 million in fiscal 2022, an
increase of $35.3 million, or 42%, compared to $83.3 million in fiscal 2021. Exchange rates favorably impacted fee
revenue by $0.6 million, or 1%, in fiscal 2022 compared to fiscal 2021. The increase in fee revenue was due to a 27%
increase in the number of engagements billed and an 11% increase in the weighted-average fees billed per
engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021. The performance in Australia,
India, China and Singapore were the primary contributors to the increase in fee revenue in fiscal 2022 compared to
fiscal 2021, contributing $28.8 million of increased fee revenue.
Executive Search Latin America. Executive Search Latin America reported fee revenue of $29.1 million in fiscal 2022,
an increase of $11.6 million, or 66%, compared to $17.5 million in fiscal 2021. Exchange rates favorably impacted fee
revenue by $0.2 million, or 1%, in fiscal 2022 compared to fiscal 2021. The increase in fee revenue was due to a 34%
increase in the number of engagements billed and a 22% increase in the weighted-average fees billed per
engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021. The performance in Mexico,
Brazil and Chile were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021,
driving $9.4 million of increased revenue.
RPO & Professional Search. RPO & Professional Search reported fee revenue of $691.9 million in fiscal 2022, an
increase of $322.0 million, or 87%, compared to $369.9 million in fiscal 2021. Exchange rates favorably impacted fee
revenue by $0.2 million compared to fiscal 2021. The increase in fee revenue was due to higher fee revenue in
35
Professional Search of $166.2 million and RPO of $155.8 million due to wider adoption of RPO services in the
market. The increase in Professional Search is due to an 86% increase in engagements billed and a 21% increase in
the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021. The increase in
Professional Search was also due to the acquisition of The Lucas Group and Patina Solutions Group (“Acquisitions”),
which contributed $69.3 million and $4.1 million of fee revenue, respectively.
Compensation and Benefits
Compensation and benefits expense increased $443.6 million, or 34% to $1,741.5 million in fiscal 2022 from $1,297.9
million in fiscal 2021. Exchange rates favorably impacted compensation and benefits by $0.3 million in fiscal 2022
compared to fiscal 2021. The increase in compensation and benefits expense was primarily due to increases in
salaries and related payroll taxes of $230.4 million, performance-related bonus expense of $160.3 million,
amortization of long-term incentive awards of $16.4 million, employer insurance of $13.8 million and the use of
outside contractors of $9.3 million. These increases were due to the increase in fee revenue combined with increases
in overall profitability and average headcount. Also contributing to higher compensation and benefit expense was an
increase in commission expense of $28.5 million due to the Acquisitions, partially offset by a decrease in deferred
compensation expenses of $30.7 million as a result of decreases in the fair value of participantsʼ accounts in fiscal
2022 compared to fiscal 2021. Compensation and benefits expense, as a percentage of fee revenue, decreased to
66% in fiscal 2022 from 72% in fiscal 2021.
Consulting compensation and benefits expense increased by $90.5 million, or 25%, to $450.9 million in fiscal 2022
from $360.4 million in fiscal 2021. Exchange rates favorably impacted compensation and benefits by $1.2 million in
fiscal 2022 compared to fiscal 2021. The increase in compensation and benefits expense was primarily due to
increases in salaries and related payroll taxes of $48.9 million, performance-related bonus expense of $24.5 million,
amortization of long-term incentive awards of $5.0 million and employer insurance of $2.7 million due to an increase
in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to
fiscal 2021. Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in
fiscal 2022 from 70% in fiscal 2021.
Digital compensation and benefits expense increased by $31.1 million, or 21%, to $177.8 million in fiscal 2022 from
$146.7 million in fiscal 2021. The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021.
The increase in compensation and benefits expense was primarily due to increases in performance-related bonus
expense of $11.4 million, salaries and related payroll taxes of $7.9 million and commission expenses of $5.8 million in
fiscal 2022 compared to fiscal 2021 as a result of an increase in fee revenue combined with increases in overall
profitability and average headcount. Digital compensation and benefits expense, as a percentage of fee revenue, was
51% in both fiscal 2022 and fiscal 2021.
Executive Search North America compensation and benefits expense increased by $77.6 million, or 26%, to $377.1
million in fiscal 2022 compared to $299.5 million in fiscal 2021. Exchange rates unfavorably impacted compensation
and benefits by $0.7 million in fiscal 2022 compared to fiscal 2021. The increase was primarily due to increases in
performance-related bonus expense of $82.6 million and salaries and related payroll taxes of $24.6 million due to the
increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022
compared to fiscal 2021. The increases in compensation and benefit expense was partially offset by a decrease in
the amounts owed under certain deferred compensation and retirement plans $35.4 million due to a decrease in the
fair market value of the participantsʼ accounts in fiscal 2022 compared to fiscal 2021. Executive Search North
America compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in fiscal 2022 from
75% in fiscal 2021.
Executive Search EMEA compensation and benefits expense increased by $22.0 million, or 20%, to $133.1 million in
fiscal 2022 compared to $111.1 million in fiscal 2021. Exchange rates favorably impacted compensation and benefits
by $0.5 million in fiscal 2022 compared to fiscal 2021. The increase was primarily due to higher salaries and related
payroll taxes of $12.6 million and performance-related bonus expense of $8.2 million in fiscal 2022 compared to fiscal
2021 due to the increase in fee revenue combined with an increase in overall profitability. Executive Search EMEA
compensation and benefits expense, as a percentage of fee revenue, decreased to 73% in fiscal 2022 from 80% in
fiscal 2021.
Executive Search Asia Pacific compensation and benefits expense increased by $14.0 million, or 24%, to $72.3
million in fiscal 2022 compared to $58.3 million in fiscal 2021. Exchange rates unfavorably impacted compensation
and benefits by $0.4 million, or 1%, in fiscal 2022 compared to fiscal 2021. The increase was primarily due to
increases in performance-related bonus expense of $10.2 million and salaries and related payroll taxes of $6.2 million
in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase overall
profitability. Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue,
decreased to 61% in fiscal 2022 from 70% in fiscal 2021.
36
Executive Search Latin America compensation and benefits expense increased by $4.3 million, or 30%, to $18.4
million in fiscal 2022 compared to $14.1 million in fiscal 2021. Exchange rates unfavorably impacted compensation
and benefits by $0.3 million, or 2%, in fiscal 2022 compared to fiscal 2021. The increase was primarily due to higher
salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022
compared to fiscal 2021 due to an increase in fee revenue combined with an increase in overall profitability.
Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to
63% in fiscal 2022 from 80% in fiscal 2021.
RPO & Professional Search compensation and benefits expense increased by $187.4 million, or 71%, to $452.0
million in fiscal 2022 from $264.6 million in fiscal 2021. The impact of exchange rates was essentially flat in fiscal
2022 compared to fiscal 2021. The increase was due to higher salaries and related payroll taxes of $122.1 million,
performance-related bonus expense of $17.6 million, employer insurance of $8.4 million and the use of outside
contractors of $5.0 million due to the increase in fee revenue combined with increases in overall profitability and
average headcount in fiscal 2022 compared to fiscal 2021. Also contributing to the increase in compensation and
benefit was an increase in commission expenses of $22.7 million and integration and acquisition costs of $1.9 million
driven by the Acquisitions. RPO & Professional Search compensation and benefits expense, as a percentage of fee
revenue, decreased to 65% in fiscal 2022 from 72% in fiscal 2021.
Corporate compensation and benefits expense increased by $16.5 million, or 38%, to $59.7 million in fiscal 2022 from
$43.2 million in fiscal 2021. The increase of $7.2 million was due to the changes in cash surrender value (“CSV”) of
the company-owned life insurance (“COLI”) contracts due to lower death benefits recognized in fiscal 2022 compared
to fiscal 2021. Also contributing to the increase was higher salaries and related payroll taxes of $6.0 million and
performance-related bonus expense of $4.2 million due to an increase in consolidated fee revenue, combined with
increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.
General and Administrative Expenses
General and administrative expenses increased $45.5 million, or 24%, to $237.3 million in fiscal 2022 compared to
$191.8 million in fiscal 2021. Exchange rates favorably impacted general and administrative expenses by $0.9 million
in fiscal 2022 compared to fiscal 2021. The increase in general and administrative expenses was primarily due to
higher marketing and business development expenses of $14.0 million, which contributed to the increase in fee
revenue and new business in fiscal 2022, as well as an increase in premise and office expense of $6.9 million, bad
debt expense of $5.8 million and legal and other professional fees of $5.3 million. In addition the Company recorded
impairment charges associated with the reduction of the Companyʼs real estate footprint of $9.3 million and
integration and acquisition costs of $6.0 million incurred with the acquisition of The Lucas Group that closed on
November 1, 2021 and Patina Solutions Group that closed on April 1, 2022. General and administrative expenses, as
a percentage of fee revenue, decreased to 9% in fiscal 2022 from 11% in fiscal 2021.
Consulting general and administrative expenses increased by $2.9 million, or 6%, to $51.5 million in fiscal 2022
compared to $48.6 million in fiscal 2021. The increase in general and administrative expenses was primarily due to
impairment charges associated with the reduction of the Companyʼs real estate footprint of $2.8 million in fiscal 2022.
Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2022
from 9% in fiscal 2021.
Digital general and administrative expenses increased by $1.9 million, or 7%, to $31.0 million in fiscal 2022 compared
to $29.1 million in fiscal 2021. The increase in general and administrative expenses was primarily due to impairment
charges associated with the reduction of the Companyʼs real estate footprint of $1.5 million in fiscal 2022. Digital
general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 10% in
fiscal 2021.
Executive Search North America general and administrative expenses increased by $3.9 million, or 14%, to $30.8
million in fiscal 2022 from $26.9 million in fiscal 2021. The increase in general and administrative expenses was
primarily due to increases in business development expenses of $2.4 million and bad debt expense of $0.7 million.
Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 5% in
fiscal 2022 compared to 7% in fiscal 2021.
Executive Search EMEA general and administrative expenses increased by $2.0 million, or 13%, to $18.0 million in
fiscal 2022 from $16.0 million in fiscal 2021. The increase in general and administrative expenses was primarily due
to impairment charges associated with the reduction of the Companyʼs real estate footprint of $1.1 million and the
impact of foreign currency with foreign exchange losses of $0.7 million in fiscal 2022 compared to foreign currency
gains of $0.3 million in fiscal 2021. Executive Search EMEA general and administrative expenses, as a percentage of
fee revenue was 10% in fiscal 2022 compared to 12% in fiscal 2021.
Executive Search Asia Pacific general and administrative expenses increased by $2.4 million, or 28%, to $11.0
million in fiscal 2022 from $8.6 million in fiscal 2021. The increase in general and administrative expenses was
primarily due to higher bad debt expense of $1.0 million in fiscal 2022 compared to fiscal 2021. Executive Search
37
Asia Pacific general and administrative expenses, as a percentage of fee revenue, was 9% in fiscal 2022 compared
to 10% in fiscal 2021.
Executive Search Latin America general and administrative expenses decreased by $1.3 million, or 59%, to $0.9
million in fiscal 2022 from $2.2 million in fiscal 2021. The decrease in general and administrative expenses was
primarily due to lower premise and office expenses of $1.4 million in fiscal 2022 compared to fiscal 2021. Executive
Search Latin America general and administrative expenses, as a percentage of fee revenue, was 3% in fiscal 2022
compared to 12% in fiscal 2021.
RPO & Professional Search general and administrative expenses increased by $15.8 million, or 64%, to $40.6 million
in fiscal 2022 from $24.8 million in fiscal 2021. The increase in general and administrative expenses was primarily
due to an increase in premise and office expense $5.3 million, higher bad debt expense of $3.7 million, impairment
charges associated with the reduction of the Companyʼs real estate footprint of $3.9 million and integration and
acquisition costs associated with the Acquisitions of $1.8 million. RPO & Professional Search general and
administrative expenses, as a percentage of fee revenue, was 6% in fiscal 2022 compared to 7% in fiscal 2021.
Corporate general and administrative expenses increased by $18.0 million, or 51%, to $53.5 million in fiscal 2022
compared to $35.5 million in fiscal 2021. The increase in general and administrative expenses was primarily due to
higher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million incurred with the
Acquisitions in fiscal 2022, legal and other professional fees of $3.8 million and an increase of $1.5 million in
charitable contributions in fiscal 2022 compared to fiscal 2021.
Cost of Services Expense
Cost of services expense consists primarily of contractor and product costs related to the delivery of various services
and products, primarily in RPO & Professional Search, Consulting and Digital. Cost of services expense was $114.4
million in fiscal 2022 compared to $72.0 million in fiscal 2021. The increase was due to an increase in fee revenue
and the Acquisitions. Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 2022 and fiscal
2021.
Depreciation and Amortization Expenses
Depreciation and amortization expenses were $63.5 million in fiscal 2022, an increase of $1.7 million, or 3%,
compared to $61.8 million in fiscal 2021. The increase was primarily due to the technology investments made in the
current and prior year in software for our Digital business and the Acquisitions.
Restructuring Charges, Net
There were no restructuring charges, net during fiscal 2022. In April 2020, we implemented a restructuring plan in
response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of
fiscal 2020. We continued the implementation of this plan in fiscal 2021 and as a result recorded restructuring
charges, net of $30.7 million of severance costs in fiscal 2021.
Net Income Attributable to Korn Ferry
Net income attributable to Korn Ferry increased by $211.9 million to $326.4 million in fiscal 2022 compared to $114.5
million in fiscal 2021. The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue
of $816.7 million, which was driven by the factors discussed above, and restructuring charges, net of $30.7 million
incurred in fiscal 2021. This was partially offset by increases in compensation and benefits expense of $443.6 million,
cost of services expense of $42.4 million associated with the higher levels of business demand, a higher income tax
provision of $54.0 million and general and an increase in administrative expenses of $45.5 million. The rest of the
change is due to other loss, net of $11.9 million in fiscal 2022 compared to other income, net of $37.2 million in fiscal
2021. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 12% in fiscal 2022 as compared to
6% in fiscal 2021.
Adjusted EBITDA
Adjusted EBITDA increased by $252.6 million to $538.9 million in fiscal 2022 compared to $286.3 million in fiscal
2021. The increase in Adjusted EBITDA was driven by the increase in fee revenue, partially offset by increases in
compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general
and administrative expenses (excluding integration/acquisition costs and impairment charges). Adjusted EBITDA, as
a percentage of fee revenue, was 21% and 16% in fiscal 2022 and 2021.
Consulting Adjusted EBITDA was $116.1 million in fiscal 2022, an increase of $34.6 million, or 42%, compared to
$81.5 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, as
well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in
compensation and benefits expense and cost of services expense. Consulting Adjusted EBITDA, as a percentage of
fee revenue, was 18% in fiscal 2022 compared to 16% in fiscal 2021.
38
Digital Adjusted EBITDA was $110.1 million in fiscal 2022, an increase of $24.0 million, or 28%, compared to $86.1
million in fiscal 2021. The increase in Adjusted EBITDA was mainly driven by the increase in fee revenue in the
segment, as well as cost savings realized from work being conducted virtually. These changes were partially offset by
increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services
expense in fiscal 2022 compared to fiscal 2021. Digital Adjusted EBITDA, as a percentage of fee revenue, was 32%
in fiscal 2022 as compared to 30% in fiscal 2021.
Executive Search North America Adjusted EBITDA increased by $83.5 million, or 85%, to $181.6 million in fiscal
2022 compared to $98.1 million in fiscal 2021. The increase was driven by higher fee revenue in the segment,
partially offset by an increase in compensation and benefits expense and general and administrative expenses.
Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2022
compared to 25% in fiscal 2021.
Executive Search EMEA Adjusted EBITDA increased by $20.1 million, or 172%, to $31.8 million in fiscal 2022
compared to $11.7 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the
segment, partially offset by increases in compensation and benefits expense and general and administrative
expenses (excluding impairment charges). Executive Search EMEA Adjusted EBITDA, as a percentage of fee
revenue, was 17% in fiscal 2022 compared to 8% in fiscal 2021.
Executive Search Asia Pacific Adjusted EBITDA increased by $18.4 million, or 110%, to $35.1 million in fiscal 2022
compared to $16.7 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the
segment, partially offset by increases in the compensation and benefits expense and general and administrative
expenses. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2022
compared to 20% in fiscal 2021.
Executive Search Latin America Adjusted EBITDA increased by $7.8 million to $9.1 million in fiscal 2022 compared to
$1.3 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment,
partially offset by an increase in compensation and benefit expense. Executive Search Latin America Adjusted
EBITDA, as a percentage of fee revenue, was 31% in fiscal 2022 compared to 7% in fiscal 2021.
RPO & Professional Search Adjusted EBITDA was $165.1 million in fiscal 2022, an increase of $95.7 million, or
138%, compared to $69.4 million in fiscal 2021. The increase in Adjusted EBITDA was mainly driven by higher fee
revenue in the segment, partially offset by increases in compensation and benefits expense (excluding
integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding
impairment charges and integration and acquisition costs). RPO & Professional Search Adjusted EBITDA, as a
percentage of fee revenue, was 24% in fiscal 2022 compared to 19% in fiscal 2021.
Other (Loss) Income Net,
Other loss, net was $11.9 million in fiscal 2022 compared to other income, net of $37.2 million in fiscal 2021. The
difference was primarily due to losses from the fair value of our marketable securities in fiscal 2022 compared to
gains in fiscal 2021.
Interest Expense, Net
Interest expense, net primarily relates to our Notes issued in December 2019 and borrowings under our COLI
policies, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net
was $25.3 million in fiscal 2022 compared to $29.3 million in fiscal 2021. Interest expense, net decreased due to
interest income earned on the death benefits received from our COLI policies in fiscal 2022 and lower interest
expense on borrowings under our COLI policies in fiscal 2022 compared to fiscal 2021 due to the lower amount of
borrowings outstanding.
Income Tax Provision
The provision for income tax was $102.1 million in fiscal 2022 compared to $48.1 million in fiscal 2021. This reflects a
24% effective tax rate for fiscal 2022 compared to a 29% effective tax rate for fiscal 2021. In addition to the impact of
U.S. state income taxes and jurisdictional mix of earnings, which generally create variability in our effective tax rate
over time, the lower effective tax rate in fiscal 2022 was partially attributable to a tax benefit recorded in connection
with tax credits claimed in the current year for eligible research and development expenditures. The fiscal 2021
effective tax rate was higher due to a tax expense recorded for withholding taxes on intercompany dividends that are
not eligible for credit and a shortfall recorded in connection with stock-based awards that vested in fiscal 2021. The
shortfall is the amount by which the Companyʼs tax deduction for these awards, based on the fair market value of the
awards on the date of vesting, is less than the expense recorded in the Companyʼs financial statements over the
awardsʼ vesting period. Conversely, the Company recorded a tax benefit for a windfall in connection with stock-based
awards that vested in fiscal 2022.
39
Net Income Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest represents the portion of a subsidiaryʼs net earnings that are
attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of
income. Net income attributable to noncontrolling interest was $4.5 million and $1.1 million in fiscal 2022 and fiscal
2021, respectively.
Liquidity and Capital Resources
The Company and its Board of Directors endorse a balanced approach to capital allocation. The Companyʼs long-
term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and
derivative products and services, and the investment in synergistic, accretive merger and acquisition transactions that
earn a return that is superior to the Company's cost of capital. Next, the Companyʼs capital allocation approach
contemplates the return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend,
subject to the factors discussed below and in the “Risk Factors” section of this Annual Report on Form 10-K.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our
Amended Credit Agreement (defined below) as well as using excess cash to repay the Notes.
On April 1, 2022, we completed the acquisition of Patina Solutions Group for $42.9 million, net of cash acquired. We
believe Patina Solutions Group contributes a substantial interim executive solutions expertise across multiple industry
verticals as well as offers ideal solutions for todayʼs nomadic labor market. Patina Solutions Groupʼs vast network of
C-suite, top-tier, and professional interim talent spans functional areas of expertise such as finance, operations, legal,
human resources, IT and more. This combination presents real, tangible opportunity for Korn Ferry and our clients
looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior
performance, including on an interim basis. Patina Solutions Group offers.
On November 1, 2021, we completed the acquisition of The Lucas Group for $90.9 million, net of cash acquired. The
Lucas Group contributes a substantial professional search and interim expertise that is expected to enhance our
search portfolio. The Lucas Group is a professional search and interim staffing firm, targeting middle market
businesses. The addition of The Lucas Group to Korn Ferryʼs broader talent acquisition portfolio – spanning
Executive Search, RPO & Professional Search – is expected to accelerate our ability to capture additional share of
this significant market.
On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount
pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with
a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15
and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured
obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may
redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the
Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent
such subsidiaries guarantee our obligations under the Credit Agreement (defined below). The indenture governing
the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in
the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued
and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under
our prior revolving credit facility (the “Prior Credit Agreement”) and to pay expenses and fees in connection therewith.
As of April 30, 2022, the fair value of the Notes was $379.5 million, which is based on borrowing rates currently
required of notes with similar terms, maturity and credit risk.
40
On December 16, 2019, we also entered into a senior secured $650.0 million credit agreement (the “Credit
Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among
other things, provide for enhanced financial flexibility. See Note 11—Long-Term Debt for a description of the Credit
Agreement. We had a total of $645.3 million and $646.0 million available under our $650.0 million five-year senior
secured revolving credit facility (the “Revolver”) after $4.7 million and $4.0 million of standby letters of credit had been
issued as of April 30, 2022 and 2021, respectively. We had a total of $10.0 million and $11.0 million of standby letters
of credits with other financial institutions as of April 30, 2022 and 2021, respectively. The standby letters of credits
were generally issued as a result of entering into office premise leases.
One June 24, 2022, we entered into an Amendment to the Credit Agreement (as amended by the Amendment, the
“Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as
administrative agent, to, among other things, extend the existing maturity date and provide for a new delayed draw
term loan facility. The Amended Credit Agreement provides for five-year senior secured credit facilities in an
aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility and a $500 million delayed
draw term loan facility. The Amended Credit Agreement also provides that, under certain circumstances, the
Company may incur term loans or increase the aggregate principal amount of revolving commitments by an
aggregate amount of up to $250 million. See Note 18—Subsequent Events – Credit Facility for a further description of
the Amended Credit Agreement.
On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular
quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has
declared a quarterly dividend. On June 21, 2021, the Board of Directors increased the quarterly dividend to $0.12 per
share. On June 21, 2022, the Board of Directors approved a 25% increase in the quarterly dividend, which increased
the quarterly dividend to $0.15 per share. The Amended Credit Agreement permits us to pay dividends to our
stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, our
total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net
leverage ratio”) is no greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant.
Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited
amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no
default under the indenture governing the Notes. The declaration and payment of future dividends under the quarterly
dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our
earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of
Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend
policy at any time and for any reason.
On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately
$300 million, which at the time brought our available capacity to repurchase shares in the open market or privately
negotiated transactions to $318 million. The Company repurchased approximately $98.8 million and $30.4 million of
the Companyʼs stock during fiscal 2022 and 2021, respectively. Any decision to continue to execute our currently
outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and
other factors considered relevant by our Board of Directors.
Our performance is subject to the general level of economic activity in the geographic regions and the industries we
service. We believe, based on current economic conditions, that our cash on hand and funds from operations and the
Amended Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general
corporate requirements, debt repayments, share repurchases and dividend payments under our dividend policy
during the next 12 months. However, if the national or global economy, credit market conditions and/or labor markets
were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our
operating cash flows. If these conditions were to persist over an extended period of time, we may incur negative cash
flows and it might require us to access additional borrowings under the Amended Credit Agreement to meet our
capital needs and/or discontinue our share repurchases and dividend policy.
Cash and cash equivalents and marketable securities were $1,211.1 million and $1,097.1 million as of April 30, 2022
and 2021, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and
cash equivalents and marketable securities were $605.4 million and $642.1 million at April 30, 2022 and 2021,
respectively. As of April 30, 2022 and 2021, we held $416.7 million and $382.8 million, respectively of cash and cash
equivalents and marketable securities in foreign locations, net of amounts held in trust for deferred compensation
plans and to pay accrued bonuses. Cash and cash equivalents consist of cash and highly liquid investments
purchased with original maturities of three months or less. Marketable securities consist of mutual funds and
investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary
objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation
plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for
general corporate purposes.
41
As of April 30, 2022 and 2021, marketable securities of $233.0 million and $246.4 million, respectively, included
equity securities of $168.7 million (net of gross unrealized gains of $10.7 million and gross unrealized losses of $6.1
million) and $175.6 million (net of gross unrealized gains of $30.0 million and gross unrealized losses of $0.1 million),
respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of
which $158.7 million and $166.5 million, respectively, are classified as non-current. These marketable securities were
held to satisfy vested obligations totaling $160.8 million and $157.3 million as of April 30, 2022 and 2021,
respectively. Unvested obligations under the deferred compensation plans totaled $24.0 million and $26.5 million as
of April 30, 2022 and 2021, respectively.
The net increase in our working capital of $38.6 million as of April 30, 2022 compared to April 30, 2021 is primarily
attributable to increases in cash and cash equivalents and accounts receivables, partially offset by increases in
compensation and benefits payable and other accrued liabilities. Cash and cash equivalents increased primarily due
to cash from operations, partially offset by the Acquisitions, purchase of property and equipment, repurchase of
common stock and dividends issued to shareholders. The increase in accounts receivable was due to higher revenue
in the fourth quarter of fiscal 2022 compared to fiscal 2021. Compensation and benefits payable increased due to
higher performance-related bonus liability as a result of higher fee revenue while the increase in other accrued
liabilities was due to higher levels of new business. Cash provided by operating activities was $501.7 million in fiscal
2022, an increase of $250.3 million, compared to $251.4 million in fiscal 2021.
Cash used in investing activities was $184.3 million in fiscal 2022 compared to $61.4 million in fiscal 2021. An
increase in cash used in investing activities was primarily due to $133.8 million in cash paid for the Acquisitions, an
increase in the purchase of property and equipment of $18.3 million and a decrease in proceeds received from life
insurance policies of $15.3 million. This was partially offset by an increase of proceeds received from sales of
marketable securities for $22.8 million and a decrease in purchase of marketable securities for $21.5 million in fiscal
2022 compared to fiscal 2021.
Cash used in financing activities was $137.4 million in fiscal 2022 compared to cash used in financing activities of
$66.9 million in fiscal 2021. The increase in cash used in financing activities was primarily due to an increase in
repurchases of shares of the Companyʼs common stock of $65.9 million in fiscal 2022 compared to fiscal 2021,
higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of
restricted stock of $18.5 million in fiscal 2022 compared to $5.0 million in fiscal 2021 and an increase of $4.3 million
in dividends paid to our shareholders. This was partially offset by less payments made on life insurance policy loans
of $12.1 million in fiscal 2022 compared to fiscal 2021.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated,
special purpose entities.
Contractual Obligations
Contractual obligations represent future cash commitments and liabilities under agreements with third parties and
exclude contingent liabilities for which we cannot reasonably predict future payment. The following table represents
our contractual obligations as of April 30, 2022:
Note (1)
Total
Less Than
1 Year
1-3 Years
(in thousands)
3-5 Years
Payments Due in:
Operating lease commitments
Finance lease commitments
Accrued restructuring charges
Interest payments on COLI loans (2)
Long-term debt
Estimated interest on long-term debt (3)
Total
15
15
13
11
11
11
$ 222,862
2,835
1,502
35,855
400,000
111,000
$ 774,054
$
$
55,890
1,115
1,001
4,421
—
18,500
80,927
$
87,643
1,299
—
8,832
—
37,000
$ 134,774
$
55,345
421
—
8,621
—
37,000
$ 101,387
More Than
5 Years
$
$
23,984
—
501
13,981
400,000
18,500
456,966
(1) See the corresponding Note in the accompanying consolidated financial statements in Item 15.
(2) Assumes COLI loans remain outstanding until receipt of death benefits on COLI policies and applies current interest rates on
COLI loans ranging from 4.76% to 8.00% with total death benefits payable, net of loans under COLI contracts of $449.3 million
at April 30, 2022.
Interest on the Notes payable semi-annually in arrears on June 15 and December 15 of each year, commenced on June 15,
2020.
(3)
In addition to the contractual obligations above, we have liabilities related to certain employee benefit plans. These
liabilities are recorded in our consolidated balance sheets. The obligations related to these employee benefit plans
42
are described in Note 6—Deferred Compensation and Retirement Plans, in the Notes to our Consolidated Financial
Statements in this Annual Report on Form 10-K.
Lastly, we have contingent commitments under certain employment agreements that are payable upon involuntary
termination without cause, as described in Note 17—Commitments and Contingencies, in the Notes to our
Consolidated Financial Statements in this Annual Report on Form 10-K.
Cash Surrender Value of Company Owned Life Insurance Policies, Net of Loans
We purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in the deferred
compensation and pension plans as a means of funding benefits under such plans. As of April 30, 2022 and 2021, we
held contracts with gross cash surrender value (“CSV”) of $263.2 million and $241.3 million, respectively. Total
outstanding borrowings against the CSV of COLI contracts were $79.8 million and $80.0 million as of April 30, 2022
and 2021, respectively. Such borrowings do not require annual principal repayments, bear interest primarily at
variable rates and are secured by the CSV of COLI contracts. At April 30, 2022 and 2021, the net cash value of these
policies was $183.3 million and $161.3 million, respectively. Total death benefits payable, net of loans under COLI
contracts, were $449.3 million and $443.9 million at April 30, 2022 and 2021, respectively.
Other than the factors discussed in this section, we are not aware of any other trends, demands or commitments that
would materially affect liquidity or those that relate to our resources as of April 30, 2022.
Accounting Developments
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued guidance on Facilitation of the Effects
of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions to the
guidance on contract modifications and hedge accounting related to the expected market transition from the London
Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative rates. Entities can elect to adopt this
guidance as of any date within an interim period that includes or is subsequent to March 12, 2020 and can adopt it for
new contracts and contract modifications entered into through December 31, 2022. We adopted this guidance in our
fiscal year beginning May 1, 2021 and we elected to apply the amendments prospectively through December 12,
2022. The adoption of this guidance did not have a material impact on the consolidated financial statements.
Recently Proposed Accounting Standards - Not Yet Adopted
In October 2021, the FASB issued an amendment in accounting for contract assets and contract liabilities from
contracts with customers, which clarifies that an acquirer of a business should recognize and measure contract
assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with
Customers. The amendment of this standard becomes effective in fiscal years beginning after December 15, 2022.
The amendment should be applied prospectively to business combinations that occur after the effective date. We will
adopt this guidance in our fiscal year beginning May 1, 2023. We are currently evaluating the impact of this
accounting guidance but do not anticipate that it will have a material impact on the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a result of our global operating activities, we are exposed to certain market risks, including foreign currency
exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal course
of our business as described below.
Foreign Currency Risk
Substantially all our foreign subsidiariesʼ operations are measured in their local currencies. Assets and liabilities are
translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue and
expenses are translated at daily rates of exchange during the reporting period. Resulting translation adjustments are
reported as a component of accumulated other comprehensive loss, net on our consolidated balance sheets.
Transactions denominated in a currency other than the reporting entityʼs functional currency may give rise to foreign
currency gains or losses that impact our results of operations. Historically, we have not realized significant foreign
currency gains or losses on such transactions. During fiscal 2022, 2021 and 2020, we recorded foreign currency
losses of $1.2 million, $2.7 million and $4.1 million, respectively, in general and administrative expenses in the
consolidated statements of income.
Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following currencies
— U.S. Dollar, Pound Sterling, Euro, Canadian Dollar, Singapore Dollar, Brazilian Real, Mexican Peso, Danish
Krone, Swiss Franc, Korean Won and South African Rand. Based on balances exposed to fluctuation in exchange
rates between these currencies as of April 30, 2022, a 10% increase or decrease in the value of these currencies
could result in a foreign exchange gain or loss of $13.0 million. We have a program that primarily utilizes foreign
currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. These
foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging
43
instruments pursuant to Accounting Standards Codification 815, Derivatives and Hedging.
Interest Rate Risk
Our exposure to interest rate risk is limited to our Revolver, borrowings against the CSV of COLI contracts and to a
lesser extent our fixed income debt securities. As of April 30, 2022 and 2021, there were no amounts outstanding
under the Revolver. At our option, loans issued under the Credit Agreement bear interest at either LIBOR or an
alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans
outstanding under the Amended Credit Agreement may fluctuate between Term Secured Overnight Financing Rate
(“SOFR”) plus a SOFR adjustment of 0.10%, plus 1.125% per annum to 2.00% per annum, in the case of SOFR
borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base rate plus 1.00% per
annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Amended
Credit Agreement, the “consolidated net leverage ratio”) at such time. In addition, we are required to pay the lenders
a quarterly commitment fee ranging from 0.175% to 0.300% per annum on the average daily unused amount of the
Revolver, based upon our consolidated net leverage ratio at such time, a ticking fee of 0.20% per annum on the
actual daily unused portion of the Delayed Draw Facility during the availability period of the Delayed Draw Facility,
and fees relating to the issuance of letters of credit. During fiscal 2020, the average interest rate on current and
previous term loans was 3.34%.
We had $79.8 million and $80.0 million of borrowings against the CSV of COLI contracts as of April 30, 2022 and
2021, respectively, bearing interest primarily at variable rates. The risk of fluctuations in these variable rates is
minimized by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate which has the
effect of increasing the CSV on our COLI contracts.
Item 8. Financial Statements and Supplementary Data
See Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this Annual Report on Form 10-K, management, our Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure
controls and procedures and internal controls over financial reporting. Based on their evaluation of our disclosure
controls and procedures conducted as of the end of the period covered by this Annual Report on Form 10-K, our
Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the “Exchange Act”)) were
effective as of April 30, 2022.
b) Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting during the fourth fiscal quarter that have
materially affected or are reasonably likely to materially affect our internal control over financial reporting. See
Managementʼs Report on Internal Control Over Financial Reporting and Report of Independent Registered Public
Accounting Firm on Internal Control Over Financial Reporting on pages F-2 and F-3, respectively.
Item 9B. Other Information
None.
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
44
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item will be included under the captions “The Board of Directors” and, when
applicable, “Delinquent Section 16(a) Reports” and elsewhere in our 2022 Proxy Statement and is incorporated
herein by reference. The information under the heading “Information about our Executive Officers” in Part I of this
Annual Report on Form 10-K is also incorporated by reference in this section.
We have adopted a “Code of Business Conduct and Ethics” that applies to all of our directors, officers and
employees, including our principal executive officer (who is our Chief Executive Officer), principal financial officer, and
principal accounting officer (who is our Chief Financial Officer) and senior financial officers, or persons performing
similar functions. The Code of Business Conduct and Ethics is available on the Investor Relations portion of our
website at http://ir.kornferry.com. If, or when, applicable we will disclose amendments to certain provisions of the
Code of Business Conduct and Ethics and waivers of the Code of Business Conduct and Ethics granted to executive
officers and directors on our website within four business days following the date of the amendment or waiver.
Item 11. Executive Compensation
The information required by this Item will be included under the captions “Compensation Discussion and Analysis”
and “Compensation of Executive Officers and Directors” and elsewhere in our 2022 Proxy Statement and is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item will be included under the caption “Security Ownership of Certain Beneficial
Owners and Management” and elsewhere in our 2022 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item will be included under the caption “Certain Relationships and Related
Transactions” and elsewhere in our 2022 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item will be included under the captions “Fees Paid to Ernst & Young LLP” and
“Audit Committee Pre-Approval Policies and Procedures,” and elsewhere in our 2022 Proxy Statement, and is
incorporated herein by reference.
45
PART IV.
Item 15. Exhibits and Financial Statement Schedules
Financial Statements.
a) The following documents are filed as part of this report:
1.
2.
3.
Index to Financial Statements:
See Consolidated Financial Statements included as part of this Annual Report on Form 10-K.
Index to Financial Statement Schedules:
All schedules have been omitted because the required information is included in the financial statements or notes
thereto, or because it is not required.
Index to Exhibits:
See exhibits listed under Part (b) below.
Page
F-1
_
46
b) Exhibits:
Exhibit
Number
2.1+
2.2+
2.3+
3.1+
3.2+
4.1+
4.2+
4.3+
10.1*+
10.2*+
10.3*+
10.4*+
10.5*+
10.6*+
10.7*+
10.8*+
Description
Stock Purchase Agreement by and between HG (Bermuda) Limited and Korn/Ferry International,
dated as of September 23, 2015, filed as Exhibit 2.1 to the Companyʼs Form 8-K, filed September
24, 2015.
Letter Agreement dated November 30, 2015, by and between Korn/Ferry International and HG
(Bermuda) Limited, filed as Exhibit 2.1 to the Companyʼs Form 8-K, filed December 2, 2015.
Letter Agreement dated April 19, 2018, by and between Korn/Ferry International and HG (Bermuda)
Limited.
Restated Certificate of Incorporation of the Company, dated January 7, 2019, filed as Exhibit 3.3 to
the Companyʼs Quarterly Report on Form 10-Q, filed March 11, 2019.
Seventh Amended and Restated Bylaws, effective January 1, 2019, filed as Exhibit 3.2 to the
Companyʼs Report on Form 8-K, filed December 13, 2018.
Form of Common Stock Certificate of the Company, filed as Exhibit 4.1 to the Company's Annual
Report on Form 10-K, filed June 28, 2019.
Description of Securities, filed as Exhibit 4.2 to the Company's Annual Report on Form 10-K, filed
June 28, 2019.
Indenture, dated as of December 16, 2019, by and among Korn Ferry, an issuer, certain
subsidiaries of Korn Ferry, as guarantors thereto, and Wells Fargo Bank, National Association, as
trustee, filed as Exhibit 4.1 to the Companyʼs Form 8-K, filed December 16, 2019.
Form of Indemnification Agreement between the Company and some of its executive officers and
directors, filed as Exhibit 10.1 to the Companyʼs Registration Statement on Form S-1/A (No. 333-
61697), filed December 24, 1998.
Form of U.S. and International Worldwide Executive Benefit Retirement Plan, filed as Exhibit 10.3 to
the Companyʼs Registration Statement on Form S-1/A (No. 333-61697), filed September 4, 1998.
Form of U.S. and International Worldwide Executive Benefit Life Insurance Plan, filed as Exhibit
10.4 to the Companyʼs Registration Statement on Form S-1 (No. 333-61697), filed September 4,
1998.
Worldwide Executive Benefit Disability Plan (in the form of Long-Term Disability Insurance Policy),
filed as Exhibit 10.5 to the Companyʼs Registration Statement on Form S-1 (No. 333-61697), filed
September 4, 1998.
Form of U.S. and International Enhanced Executive Benefit and Wealth Accumulation Plan, filed as
Exhibit 10.6 to the Companyʼs Registration Statement on Form S-1 (No. 333-61697), filed
September 4, 1998.
Form of U.S. and International Senior Executive Incentive Plan, filed as Exhibit 10.7 to the
Companyʼs Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998.
Executive Salary Continuation Plan, filed as Exhibit 10.8 to the Companyʼs Registration Statement
on Form S-1 (No. 333-61697), filed September 4, 1998.
Form of Amended and Restated Stock Repurchase Agreement, filed as Exhibit 10.10 to the
Companyʼs Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998.
46
10.9*+
10.10*+
10.11*+
10.12*+
10.13*+
10.14*+
10.15*+
10.16*+
10.17*+
10.18*+
10.19*+
10.20*+
10.21*+
10.22*+
10.23*+
10.24*+
10.25*+
10.26*+
10.27*+
10.28*+
10.29*+
10.30*+
10.31*+
10.32*+
10.33+
Form of Standard Employment Agreement, filed as Exhibit 10.11 to the Companyʼs Registration
Statement on Form S-1 (No. 333-61697), filed September 4, 1998.
Form of U.S. and Foreign Executive Participation Program, filed as Exhibit 10.27 to the Companyʼs
Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998.
Korn/Ferry International Second Amended and Restated Performance Award Plan, filed as
Appendix A to the Companyʼs Definitive Proxy Statement, filed August 12, 2004.
Form of Indemnification Agreement between the Company and some of its executive officers and
directors, filed as Exhibit 10.4 to the Companyʼs Quarterly Report on Form 10-Q, filed March 12,
2004.
Form of Restricted Stock Unit Award Agreement to Directors Under the Performance Award Plan,
filed as Exhibit 10.2 to the Companyʼs Quarterly Report on Form 10-Q, filed December 10, 2007.
Form of Stock Option Agreement to Employees and Non-Employee Directors Under the Korn/Ferry
International 2008 Stock Incentive Plan, filed as Exhibit 10.3 to the Companyʼs Form 8-K, filed June
12, 2009.
Korn/Ferry International Executive Capital Accumulation Plan, filed as Exhibit 4.1 to the Companyʼs
Registration Statement on Form S-8 (No. 333-111038), filed December 10, 2003.
Korn Ferry Amended and Restated Employee Stock Purchase Plan, filed as Exhibit 10.17 to the
Companyʼs Annual Report on Form 10-K, filed June 28, 2019.
Second Amended and Restated Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit
10.1 to the Companyʼs Form 8-K, filed October 2, 2012.
Form of Restricted Stock Unit Award Agreement to Non-Employee Directors Under the 2008 Stock
Incentive Plan, filed as Exhibit 10.38 to the Companyʼs Annual Report on Form 10-K, filed June 25,
2013.
Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive
Plan, filed as Exhibit 10.39 to the Companyʼs Annual Report on Form 10-K, filed June 25, 2013.
Amended and Restated Korn Ferry Executive Capital Accumulation Plan, as of January 1, 2019,
filed as Exhibit 10.23 to the Companyʼs Annual Report on Form 10-K, filed June 28, 2019.
Amended and Restated Korn Ferry Executive Capital Accumulation Plan, as of December 4, 2019,
filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed March 11, 2020.
Form of Indemnification Agreement between the Company and some of its directors and executive
officers, filed as Exhibit 10.1 to the Companyʼs Form 8-K, filed June 15, 2015.
Korn Ferry Long Term Performance Unit Plan, filed as Exhibit 10.26 to the Company's Annual
Report on Form 10-K, filed June 28, 2019.
Korn Ferry Long Term Performance Unit Plan Form of Unit Award Agreement, filed as Exhibit 10.27
to the Company's Annual Report on Form 10-K, filed June 28,2019.
Amended and Restated Korn Ferry Long Term Performance Unit Plan, as of December 4, 2019,
filed as Exhibit 10.2 to the Companyʼs Quarterly Report on Form 10-Q, filed March 11, 2020.
Third Amendment and Restated Korn Ferry 2008 Stock Incentive Plan, filed as Exhibit 10.28 to the
Companyʼs Annual Report on Form 10-K, filed June 28, 2019.
Fourth Amended and Restated Korn Ferry 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the
Company's Form 8-K, filed October 7, 2019.
Summary of Non-Employee Director Compensation Program Effective December 7, 2016, filed as
Exhibit 10.1 to the Companyʼs 10-Q, filed March 10, 2017.
Form of Restricted Stock Unit Award Agreement to Non-Employee Directors under the 2008 Stock
Incentive Plan, filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K, filed June 28,
2019.
Form of Performance Restricted Stock Unit Award Agreement Under the 2008 Stock Incentive Plan,
filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K, filed June 28, 2019.
Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive
Plan, filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K, filed June 28, 2019.
Form of Restricted Stock Award Agreement to Employees Under the 2008 Stock Incentive Plan,
filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K, filed June 28, 2019.
Credit Agreement, dated December 16, 2019, by and among Korn Ferry, Bank of America, N.A., as
administrative agent, and other lender parties thereto, filed as Exhibit 10.1 to the Companyʼs Form
8-K, filed December 16, 2019.
47
10.34*+
10.35*+
10.36*+
10.37*+
10.38*+
10.39*+
10.40*+
10.41*+
10.42*+
10.43
21.1
23.1
24.1
31.1
31.2
32.1
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Amended and Restated Korn Ferry Long Term Performance Unit Plan, effective June 1, 2020, filed
as Exhibit 10.44 to the Companyʼs Annual Report on Form 10-K, filed July 15, 2020.
Korn Ferry Amended and Restated Employee Stock Purchase Plan, effective July 1, 2020, filed as
Exhibit 10.45 to the Companyʼs Annual Report on Form 10-K, filed July 15, 2020.
Amended and Restated Korn Ferry Executive Capital Accumulation Plan, effective July 1, 2021,
filed as Exhibit 10.50 to the Companyʼs Annual Report on Form 10-K, filed June 28, 2021.
Amended and Restated Korn Ferry Long Term Performance Unit Plan, effective July 1, 2021, filed
as Exhibit 10.51 to the Companyʼs Annual Report on Form 10-K, filed June 28, 2021.
Form of Unit Award Agreement under Amended and Restated Korn Ferry Long Term Performance
Unit Plan, filed as Exhibit 10.52 to the Companyʼs Annual Report on Form 10-K.
Amended and Restated Employment Agreement dated June 28, 2021 between the Company and
Gary Burnison, filed as Exhibit 10.53 to the Companyʼs Annual Report on Form 10-K.
Amended and Restated Employment Agreement dated June 28, 2021 between the Company and
Robert Rozek, filed as Exhibit 10.54 to the Companyʼs Annual Report on Form 10-K.
Employment Agreement dated June 28, 2021 between the Company and Byrne Mulrooney, filed as
Exhibit 10.55 to the Companyʼs Annual Report on Form 10-K.
Employment Agreement dated June 28, 2021 between the Company and Mark Arian, filed as
Exhibit 10.56 to the Companyʼs Annual Report on Form 10-K.
First Amendment to Credit Agreement, dated June 24, 2022, by and among Korn Ferry, Bank of
America, N.A., as administrative agent, and other lender parties thereto.
Subsidiaries of Korn Ferry.
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
Power of Attorney (contained on signature page).
Chief Executive Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.
Chief Financial Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.
Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350.
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data
File because XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
This cover page from the Companyʼs Annual Report on Form 10-K for the year ended April 30,
2022, had been formatted in Inline XBRL and included as Exhibit 101.
*
+
Management contract, compensatory plan or arrangement.
Incorporated herein by reference.
Item 16. Form 10-K Summary
None
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
By: /s/ Robert P. Rozek
Robert P. Rozek
Executive Vice President, Chief Financial Officer and Chief Corporate Officer
Korn Ferry
Date: June 28, 2022
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of the registrant hereby
constitutes and appoints Jonathan M. Kuai and Gary D. Burnison, and each of them, as lawful attorney-in-fact and
agent for each of the undersigned (with full power of substitution and resubstitution, for and in the name, place and
stead of each of the undersigned officers and directors), to sign and file with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, any and all amendments, supplements and
exhibits to this report and any and all other documents in connection therewith, hereby granting unto said attorneys-
in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or
desirable to be done in order to effectuate the same as fully and to all intents and purposes as each of the
undersigned might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or any of their substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ CHRISTINA A. GOLD
Christina A. Gold
/s/ GARY D. BURNISON
Gary D. Burnison
/s/ ROBERT P. ROZEK
Robert P. Rozek
/s/ DOYLE N. BENEBY
Doyle N. Beneby
/s/ LAURA BISHOP
Laura Bishop
/s/ JERRY LEAMON
Jerry Leamon
/s/ ANGEL MARTINEZ
Angel Martinez
/s/ DEBRA J. PERRY
Debra J. Perry
/s/ LORI ROBINSON
Lori Robinson
/s/ GEORGE T. SHAHEEN
George T. Shaheen
Chairman of the Board and Director
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
June 28, 2022
President & Chief Executive Officer
(Principal Executive Officer) and Director
Executive Vice President, Chief Financial Officer and
Chief Corporate Officer
(Principal Financial Officer and Principal Accounting
Officer)
Director
Director
Director
Director
Director
Director
Director
49
KORN FERRY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
Managementʼs Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting (PCAOB ID: 42)
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Balance Sheets as of April 30, 2022 and 2021
Consolidated Statements of Income for the years ended April 30, 2022, 2021, and 2020
Consolidated Statements of Comprehensive Income for the years ended April 30, 2022, 2021, and 2020
Consolidated Statements of Stockholdersʼ Equity for the years ended April 30, 2022, 2021, and 2020
Consolidated Statements of Cash Flows for the years ended April 30, 2022, 2021, and 2020
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-6
F-7
F-8
F-9
F-10
F-11
F-1
MANAGEMENTʼS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Korn Ferry (the “Company”) is responsible for establishing and maintaining adequate internal control
over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As
defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed
by, or supervised by, the issuerʼs principal executive and principal financial officers, and effected by the issuerʼs
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally
accepted accounting principles.
The Companyʼs internal control over financial reporting is supported by written policies and procedures, that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Companyʼs assets; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of the Companyʼs
management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companyʼs assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In connection with the preparation of the Companyʼs annual financial statements, management of the Company has
undertaken an assessment of the effectiveness of the Companyʼs internal control over financial reporting as of April
30, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Managementʼs assessment included an evaluation of the
design of the Companyʼs internal control over financial reporting and testing of the operational effectiveness of the
Companyʼs internal control over financial reporting.
Based on this assessment, management did not identify any material weakness in the Companyʼs internal control
over financial reporting, and management has concluded that the Companyʼs internal control over financial reporting
was effective as of April 30, 2022.
Ernst & Young LLP, the independent registered public accounting firm that audited the Companyʼs financial
statements for the year ended April 30, 2022 included in this Annual Report on Form 10-K, has issued an audit report
on the effectiveness of the Companyʼs internal control over financial reporting as of April 30, 2022, a copy of which is
included in this Annual Report on Form 10-K.
June 28, 2022
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
To the Stockholders and Board of Directors of Korn Ferry:
Opinion on Internal Control over Financial Reporting
We have audited Korn Ferry and subsidiariesʼ internal control over financial reporting as of April 30, 2022, based on
criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Korn Ferry and subsidiaries (the
Company) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2022,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of April 30, 2022 and 2021, the related
consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three
years in the period ended April 30, 2022 and the related notes and our report dated June 28, 2022 expressed an
unqualified opinion thereon.
Basis for Opinion
The Companyʼs management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Managementʼs Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Companyʼs internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A companyʼs internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A companyʼs internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyʼs
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Los Angeles, California
June 28, 2022
F-3
To the Stockholders and Board of Directors of Korn Ferry
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Korn Ferry and subsidiaries (the “Company”) as
of April 30, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders'
equity and cash flows for each of the three years in the period ended April 30, 2022 and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company at April 30, 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended April 30, 2022, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2022, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), and our report dated June 28, 2022 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Companyʼs financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition
Description of the
Matter
As described in Note 1 to the consolidated financial statements, the Company recognizes
revenue when control of the goods and services are transferred to the customer. Revenue
recognition includes management estimates of uptick fee variable consideration for Search
engagements and estimates of the total hours at completion used to recognize revenue as
services are rendered under Consulting contracts.
Auditing revenue recognition was complex due to the volume of transactions within the various
revenue streams with each revenue stream representing a different pattern of revenue
recognition. Auditing revenue recognition also incorporates testing the underlying data
supporting management estimates mentioned above that are used in recognizing revenues
under Search and Consulting contracts.
F-4
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
the Companyʼs processes and controls related to the recognition of each revenue stream,
including, among others, controls over management review of contractual terms, managementʼs
determination of when control of goods and services are transferred to customers as well as
managementʼs review of the accuracy and completeness of underlying data used in the
estimates mentioned above.
Our audit procedures included, among others, testing a sample of contracts to determine
whether terms that may affect revenue recognition were identified and properly considered,
performance obligations were appropriately identified in the Companyʼs evaluation of the
accounting for the contracts and revenue was recognized when control of the goods or services
is transferred to the customer. In addition, we tested management estimates mentioned above.
For Search contracts, we compared the estimates of uptick fee revenues to historical actual
data for a portfolio of similar contracts. For Consulting contracts, we compared the data used in
the estimate of the total hours at completion to time reports for work completed to date,
recalculated the percentage of completion and assessed the reasonableness of managementʼs
estimates to complete based on an understanding of the current status of the contracts. We
also performed analysis over contracts completed during the year to determine whether there
are significant changes in the estimate from initiation to completion of contracts.
We have served as the Companyʼs auditor since 2002.
Los Angeles, California
June 28, 2022
/s/ Ernst & Young LLP
F-5
KORN FERRY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30,
2022
2021
(in thousands,
except per share data)
ASSETS
Cash and cash equivalents
Marketable securities
Receivables due from clients, net of allowance for doubtful accounts of
$36,384 and $29,324 at April 30, 2022 and 2021, respectively
Income taxes and other receivables
Unearned compensation
Prepaid expenses and other assets
Total current assets
Marketable securities, non-current
Property and equipment, net
Operating lease right-of-use assets, net
Cash surrender value of company-owned life insurance policies, net of loans
Deferred income taxes
Goodwill
Intangible assets, net
Unearned compensation, non-current
Investments and other assets
Total assets
LIABILITIES AND STOCKHOLDERSʼ EQUITY
Accounts payable
Income taxes payable
Compensation and benefits payable
Operating lease liability, current
Other accrued liabilities
Total current liabilities
Deferred compensation and other retirement plans
Operating lease liability, non-current
Long-term debt
Deferred tax liabilities
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 75,409 and
74,915 shares issued and 53,190 and 54,008 shares outstanding at April 30,
2022 and 2021, respectively
Retained earnings
Accumulated other comprehensive loss, net
Total Korn Ferry stockholders' equity
Noncontrolling interest
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
$
$
978,070
57,244
$
590,260
31,884
60,749
41,763
1,759,970
175,783
138,172
167,734
183,308
84,712
725,592
89,770
118,238
21,267
3,464,546
50,932
34,450
547,826
48,609
302,408
984,225
357,175
151,212
395,477
2,715
24,153
1,914,957
$
$
850,778
63,667
448,733
40,024
53,206
30,724
1,487,132
182,692
131,778
174,121
161,295
73,106
626,669
92,949
102,356
24,428
3,056,526
44,993
23,041
394,606
47,986
239,444
750,070
346,455
155,998
394,794
3,832
36,602
1,687,751
502,008
1,134,523
(92,185)
1,544,346
5,243
1,549,589
3,464,546
$
583,260
834,949
(51,820)
1,366,389
2,386
1,368,775
3,056,526
The accompanying notes are an integral part of these consolidated financial statements.
F-6
KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Fee revenue
Reimbursed out-of-pocket engagement expenses
Total revenue
Compensation and benefits
General and administrative expenses
Reimbursed expenses
Cost of services
Depreciation and amortization
Restructuring charges, net
Total operating expenses
Operating income
Other (loss) income, net
Interest expense, net
Income before provision for income taxes
Income tax provision
Net income
Net income attributable to noncontrolling interest
Net income attributable to Korn Ferry
Earnings per common share attributable to Korn Ferry:
Basic
Diluted
Weighted-average common shares outstanding:
Basic
Diluted
Cash dividends declared per share:
2022
Year Ended April 30,
2021
(in thousands, except per share data)
2020
$
$
$
$
2,626,718
16,737
2,643,455
1,741,452
237,272
16,737
114,399
63,521
—
2,173,381
470,074
(11,880)
(25,293)
432,901
102,056
330,845
(4,485)
326,360
6.04
5.98
52,807
53,401
$
$
$
$
1,810,047
9,899
1,819,946
1,297,880
191,776
9,899
72,030
61,845
30,732
1,664,162
155,784
37,194
(29,278)
163,700
48,138
115,562
(1,108)
114,454
2.11
2.09
52,928
53,405
1,932,732
44,598
1,977,330
1,297,994
258,957
44,598
85,886
55,311
58,559
1,801,305
176,025
(2,879)
(22,184)
150,962
43,945
107,017
(2,071)
104,946
1.91
1.90
54,342
54,767
0.48
$
0.40
$
0.40
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-7
KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2022
Year Ended April 30,
2021
(in thousands)
2020
Net income
$
330,845
$
115,562
$
107,017
Other comprehensive (loss) income:
Foreign currency translation adjustments
Deferred compensation and pension plan adjustments, net of tax
Net unrealized (loss) gain on marketable securities, net of tax
Net unrealized loss on interest rate swap, net of tax
Comprehensive income
Less: comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to Korn Ferry
$
(59,227)
19,096
(410)
—
290,304
(4,309)
285,995
$
50,069
5,419
(53)
—
170,997
(1,191)
169,806
$
(23,764)
(6,716)
34
(456)
76,115
(1,689)
74,426
The accompanying notes are an integral part of these consolidated financial statements.
F-8
KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERSʼ EQUITY
Accumulated
Other
Total
Korn Ferry
Total
Common Stock
Shares Amount
Retained Comprehensive Stockholders' Noncontrolling Stockholders'
Earnings
Loss, Net
Interest
Equity
Equity
56,431 $ 656,463 $ 660,845 $
—
—
104,946
—
—
—
(in thousands)
(76,652) $
—
(30,520)
1,240,656 $
104,946
(30,520)
2,731 $
2,071
(382)
1,243,387
107,017
(30,902)
—
—
(22,798)
—
(22,798)
—
(22,798)
Balance at May 1, 2019
Net income
Other comprehensive loss
Dividends paid to
shareholders
Dividends paid to
noncontrolling interest
Purchase of stock
Issuance of stock
Stock-based compensation
Balance at April 30, 2020
Net income
Other comprehensive
income
Dividends paid to
shareholders
Dividends paid to
noncontrolling interest
Purchase of stock
Issuance of stock
Stock-based compensation
Balance at April 30, 2021
Net income
Other comprehensive loss
Dividends paid to
shareholders
Dividends paid to
noncontrolling interest
Purchase of stock
Issuance of stock
Stock-based compensation
Balance at April 30, 2022
—
(2,839)
858
—
54,450
—
—
(101,439)
9,041
21,495
585,560
—
—
—
—
—
742,993
114,454
—
—
—
—
(107,172)
—
—
(101,439)
9,041
21,495
1,221,381
114,454
—
—
—
—
—
55,352
55,352
(22,498)
—
(22,498)
—
—
—
—
(51,820)
—
(40,365 )
—
(35,376)
6,560
26,516
1,366,389
326,360
(40,365 )
—
(1,146)
704
—
54,008
—
—
—
(35,376)
6,560
26,516
583,260
—
—
—
—
—
—
834,949
326,360
—
—
—
(26,786 )
—
(1,743 )
925
—
—
(117,301 )
7,688
28,361
—
—
—
—
—
—
—
—
—
(26,786 )
—
(26,786 )
—
(117,301 )
7,688
28,361
1,544,346 $
(1,452 )
—
—
—
5,243 $
(1,452 )
(117,301 )
7,688
28,361
1,549,589
53,190 $ 502,008 $1,134,523 $
(92,185) $
(2,110)
—
—
—
2,310
1,108
83
—
(1,115)
—
—
—
2,386
4,485
(176 )
(2,110)
(101,439)
9,041
21,495
1,223,691
115,562
55,435
(22,498)
(1,115)
(35,376)
6,560
26,516
1,368,775
330,845
(40,541 )
The accompanying notes are an integral part of these consolidated financial statements.
F-9
KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
330,845
$
115,562
$
107,017
2022
Year Ended April 30,
2021
(in thousands)
2020
Depreciation and amortization
Stock-based compensation expense
Impairment of right to use assets
Impairment of fixed assets
Provision for doubtful accounts
Gain on cash surrender value of life insurance policies
Loss (gain) on marketable securities
Deferred income taxes
Change in other assets and liabilities:
Deferred compensation
Receivables due from clients
Income taxes and other receivables
Prepaid expenses and other assets
Unearned compensation
Income taxes payable
Accounts payable and accrued liabilities
Other
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment
Purchase of marketable securities
Proceeds from sales/maturities of marketable securities
Cash paid for acquisitions, net of cash acquired
Premium on company-owned life insurance policies
Proceeds from life insurance policies
Dividends received from unconsolidated subsidiaries
Net cash used in investing activities
Cash flows from financing activities:
Repurchases of common stock
Payments of tax withholdings on restricted stock
Proceeds from issuance of common stock upon exercise of employee stock
options and in connection with an employee stock purchase plan
Payments on life insurance policy loans
Principal payments on finance leases
Dividends paid to shareholders
Dividends paid to noncontrolling interest
Proceeds from long term debt
Principal payments on long term debt
Payment of debt issuance costs
Payment of contingent consideration from acquisitions
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the period
Supplemental cash flow information:
Cash used to pay interest
Cash used to pay income taxes, net of refunds
$
$
$
63,521
29,210
7,392
1,915
21,552
(5,819)
11,978
(16,963)
27,197
(138,627)
3,969
(9,534)
(23,425)
12,751
191,447
(5,751)
501,658
(49,406)
(82,015)
92,472
(133,802)
(15,218)
3,382
255
(184,332)
(96,258)
(18,532)
6,919
(178)
(1,157)
(26,786)
(1,452)
—
—
—
—
(137,444)
(52,590)
127,292
850,778
978,070
24,607
107,602
$
$
$
61,845
27,157
—
—
15,763
(13,017)
(38,529)
(14,140)
64,005
(67,331)
5,798
(3,902)
(32,935)
(1,824)
122,687
10,294
251,433
(31,122)
(103,499)
69,683
—
(15,353)
18,707
205
(61,379)
(30,387)
(4,989)
5,706
(12,279)
(1,324)
(22,498)
(1,115)
—
—
—
—
(66,886)
38,366
161,534
689,244
850,778
25,207
55,317
55,311
22,818
2,282
372
14,644
(6,551)
2,066
(9,330)
23,496
34,152
(6,421)
(956)
300
1,246
(6,011)
1,914
236,349
(41,460)
(83,563)
47,936
(108,602)
(15,699)
2,280
346
(198,762)
(92,446)
(8,993)
7,684
(943)
(1,833)
(22,798)
(2,110)
1,045,500
(876,875)
(3,050)
(455)
43,681
(18,384)
62,884
626,360
689,244
12,526
54,914
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-10
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022
1. Organization and Summary of Significant Accounting Policies
Nature of Business
Korn Ferry, a Delaware corporation, and its subsidiaries (the “Company”) is a global organizational consulting firm.
The Company helps clients synchronize strategy and talent to drive superior performance. The Company works with
organizations to design their structures, roles, and responsibilities. The Company helps organizations hire the right
people to bring their strategy to life and advise them on how to reward, develop, and motivate their people.
The Company is pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across
the organization. This approach builds on the best of the Companyʼs past and gives the Company a clear path to the
future with focused initiatives to increase its client and commercial impact. Korn Ferry is transforming how clients
address their talent management needs. The Company has evolved from a mono-line to a diversified business, giving
its consultants more frequent and expanded opportunities to engage with clients.
The Company has seven reportable segments that operate through the following four lines of business:
1. Consulting aligns organization structure, culture, performance and people to drive sustainable growth by
addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and
Professional Development and Total Rewards. This work is supported by a comprehensive range of some of the
worldʼs leading intellectual property (“lP”) and data. The Consulting teams employ an integrated approach across
core solutions each one strengthening our work and thinking in the next, to help clients execute their strategy in a
digitally enabled world.
2. Digital delivers scalable tech-enabled solutions that identify the best structures, roles, capabilities and behaviors
to drive businesses forward. Powered by the Korn Ferry Intelligence Cloud, the end-to-end system combines
Korn Ferry proprietary data, client data and external market data to deliver clear insights with the training tools
needed to align organizational structure with business strategy.
3. Executive Search helps organizations recruit board level, chief executive and other senior executive and
general management talent to deliver lasting impact. Korn Ferryʼs approach to placing talent brings together our
research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to
determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation
and retention. This business is managed and reported on a geographic basis and represents four of the
Companyʼs reportable segments (Executive Search North America, Executive Search EMEA, Executive Search
Asia Pacific and Executive Search Latin America).
4. Recruitment Process Outsourcing (“RPO”) & Professional Search focuses on delivering enterprise talent
acquisition solutions to our clients, at the professional level. The Company leverages the power of people,
process expertise, IP-enabled technology, and compensation information to do this. Transaction sizes range
from single professional searches to team, department, line of business projects, and global outsource recruiting
solutions.
Basis of Consolidation and Presentation
The consolidated financial statements include the accounts of the Company and its wholly and majority
owned/controlled domestic and international subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation. The preparation of the consolidated financial statements conform with United States
(“U.S.”) generally accepted accounting principles (“GAAP”) and prevailing practice within our different industries. The
consolidated financial statements include all adjustments, consisting of normal recurring accruals and any other
adjustments that management considers necessary for a fair presentation of the results for these periods.
The Company has control of a Mexican subsidiary and consolidates the operations of this subsidiary. Noncontrolling
interest, which represents the Mexican partnersʼ 51% interest in the Mexican subsidiary, is reflected on the
Companyʼs consolidated financial statements.
F-11
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The Company considers events or transactions that occur after the balance sheet date but before the consolidated
financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that
require additional disclosures.
Use of Estimates and Uncertainties
The preparation of the consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these estimates, and changes in estimates are
reported in current operations as new information is learned or upon the amounts becoming fixed or determinable.
The most significant areas that require managementʼs judgment are revenue recognition, deferred compensation,
annual performance-related bonuses, evaluation of the carrying value of receivables, goodwill and other intangible
assets, share-based payments, leases and the recoverability of deferred income taxes.
Revenue Recognition
Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-
alone or as part of a solution, fees for professional services related to executive and professional recruitment
performed on a retained basis and RPO, either stand-alone or as part of a solution.
Revenue is recognized when control of the goods and services are transferred to the customer in an amount that
reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue
contracts with customers are evaluated based on the five-step model outlined in Accounting Standards Codification
(“ASC”) 606 (“ASC 606”), Revenue from Contracts with Customers: 1) identify the contract with a customer; 2)
identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction
price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation
is satisfied.
Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred as a
percentage of the total estimated hours at completion. It is possible that updated estimates for consulting
engagements may vary from initial estimates with such updates being recognized in the period of determination.
Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate.
Digital fee revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay,
talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a
consulting engagement. Revenue is recognized as services are delivered and the Company has a legally enforceable
right to payment. Revenue also comes from the sale of the Companyʼs proprietary IP subscriptions, which are
considered symbolic IP due to the dynamic nature of the content. As a result, revenue is recognized over the term of
the contract. Functional IP licenses grant customers the right to use IP content via the delivery of a flat file. Because
the IP content license has significant stand-alone functionality, revenue is recognized upon delivery and when an
enforceable right to payment exists. Revenue for tangible and digital products sold by the Company, such as books
and digital files, is recognized when these products are shipped.
Fee revenue from executive and professional search activities is generally one-third of the estimated first-year cash
compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement-related expenses.
In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a
placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively consistent
percentage of the original estimated fee; therefore, the Company estimates upticks using the expected value method
based on historical data on a portfolio basis. In a standard search engagement, there is one performance obligation,
which is the promise to undertake a search. The Company generally recognizes such revenue over the course of a
search and when it is legally entitled to payment as outlined in the billing terms of the contract. Any revenues
associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as
this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for
the reported period.
RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-
implementation recruitment phase. The fees associated with the implementation phase are recognized over the
period that the related implementation services are provided. The post-implementation recruitment phase represents
end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over
the period that the related recruiting services are performed.
F-12
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Reimbursements
The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as
revenue in the consolidated statements of income.
Allowance for Doubtful Accounts
An allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The
Companyʼs expected credit loss allowance methodology for accounts receivable is developed using historical
collection experience, current and future economic and market conditions and a review of the current status of
customersʼ trade accounts receivable. Due to the short-term nature of such receivables, the estimate of amount of
accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required,
the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable
expectations of future economic and market conditions. The Company generally assesses future economic condition
for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. After the
Company exhausts all collection efforts, the amount of the allowance is reduced for balances written off as
uncollectible.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less from the date of
purchase to be cash equivalents. As of April 30, 2022 and 2021, the Companyʼs investments in cash equivalents
consisted of money market funds and commercial paper with initial maturity of less than 90 days for which market
prices are readily available.
Marketable Securities
The Company currently has investments in marketable securities and mutual funds that are classified as either equity
securities or available-for-sale debt securities. The classification of the investments in these marketable securities
and mutual funds is assessed upon purchase and reassessed at each reporting period. These investments are
recorded at fair value and are classified as marketable securities in the accompanying consolidated balance sheets.
The investments that the Company may sell within the next 12 months are carried as current assets.
The Company invests in mutual funds (for which market prices are readily available) that are held in trust to satisfy
obligations under the Companyʼs deferred compensation plans. Such investments are classified as equity securities
and mirror the employeesʼ investment elections in their deemed accounts in the Executive Capital Accumulation Plan
and similar plans in Asia Pacific and Canada (“ECAP”) from a pre-determined set of securities. Realized gains
(losses) on marketable securities are determined by specific identification. Interest is recognized on an accrual basis;
dividends are recorded as earned on the ex-dividend date. Interest, dividend income and the changes in fair value in
marketable securities are recorded in the accompanying consolidated statements of income in other (loss) income,
net.
The Company also invests cash in excess of its daily operating requirements and capital needs primarily in
marketable fixed income (debt) securities in accordance with the Companyʼs investment policy, which restricts the
type of investments that can be made. The Companyʼs investment portfolio includes commercial paper, corporate
notes/bonds and US Treasury and Agency securities as of April 30, 2022 and 2021. These marketable fixed income
(debt) securities are classified as available-for-sale securities based on managementʼs decision, at the date such
securities are acquired, not to hold these securities to maturity or actively trade them. The Company carries these
marketable debt securities at fair value based on the market prices for these marketable debt securities or similar
debt securities whose prices are readily available. The changes in fair values, net of applicable taxes, are recorded
as unrealized gains or losses as a component of comprehensive income unless the change is due to credit loss. A
credit loss is recorded in the statements of income in other (loss) income, net; any amount in excess of the credit loss
is recorded as unrealized gains or losses as a component of comprehensive income. Generally, the amount of the
loss is the difference between the cost or amortized cost and its then current fair value; a credit loss is the difference
between the discounted expected future cash flows to be collected from the debt security and the cost or amortized
cost of the debt security. During fiscal 2022, 2021 and 2020, no amount was recognized as a credit loss for the
Companyʼs available for sales debt securities.
F-13
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Fair Value of Financial Instruments
Fair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly
transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the
Company determines the fair value based upon the quoted market price, if available. If a quoted market price is not
available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair values
are assigned a level within the fair value hierarchy as defined below:
(cid:3)
(cid:3)
(cid:3)
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or
indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for
identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the reporting entityʼs own assumptions.
As of April 30, 2022 and 2021, the Company held certain assets that are required to be measured at fair value on a
recurring basis. These included cash, cash equivalents, accounts receivable, marketable securities and foreign
currency forward contracts. The carrying amount of cash, cash equivalents and accounts receivable approximates
fair value due to the short-term maturity of these instruments. The fair values of marketable securities classified as
equity securities are obtained from quoted market prices, and the fair values of marketable securities classified as
available-for-sale and foreign currency forward contracts are obtained from a third party, which are based on quoted
prices or market prices for similar assets and financial instruments.
Foreign Currency Forward Contracts Not Designated as Hedges
The Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks
associated with the effects of certain foreign currency exposures primarily originating from intercompany balances
due to cross border work performed in the ordinary course of business. These foreign currency forward contracts are
neither used for trading purposes nor are they designated as hedging instruments pursuant to ASC 815, Derivatives
and Hedging. Accordingly, the fair value of these contracts is recorded as of the end of the reporting period in the
accompanying consolidated balance sheets, while the change in fair value is recorded to the accompanying
consolidated statements of income.
Business Acquisitions
Business acquisitions are accounted for under the acquisition method. The acquisition method requires the reporting
entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable assets acquired,
the liabilities assumed and any noncontrolling interest in the acquired entity, and recognize and measure goodwill or
a gain from the purchase. The acquireeʼs results are included in the Companyʼs consolidated financial statements
from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess
of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of the assets acquired
exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value
assessments are generally recorded to goodwill over the measurement period (not longer than 12 months). The
acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be
charged to expense as committed and requires the Company to recognize and measure certain assets and liabilities
including those arising from contingencies and contingent consideration in a business combination. During fiscal
2021, the Company recorded an adjustment of $2.6 million to increase goodwill as a result of additional tax liabilities
from the Miller Heiman Group, Achieve Forum and Strategy Execution (the “Acquired Companies”) acquisition
completed on November 1, 2019.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease
right-of-use (“ROU”) assets and current and non-current operating lease liability, in the consolidated balance sheets.
Finance leases are included in property and equipment, net, other accrued liabilities and other liabilities in the
consolidated balance sheets.
F-14
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
ROU assets represent the Company's right to use an underlying asset for the lease term, and the lease liabilities
represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and
operating lease liabilities are recognized based on the present value of the future minimum lease payments over the
lease term on the commencement date. As most of the Companyʼs leases do not provide an implicit rate, the
Company uses its estimated incremental borrowing rate based on the information available at commencement date in
determining the present value of future payments. The operating lease ROU asset also includes any lease payments
made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or
terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for
minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease payments
recognized in the periods in which they are incurred.
The Company has lease agreements with lease and non-lease components. For all leases with non-lease
components the Company accounts for the lease and non-lease components as a single lease component.
Property and Equipment, Net
Property and equipment is carried at cost less accumulated depreciation. Leasehold improvements are amortized on
a straight-line basis over the estimated useful life of the asset, or the lease term, whichever is shorter. Software
development costs incurred for internal use projects are capitalized and once placed in service, amortized using the
straight-line method over the estimated useful life, generally three to ten years. All other property and equipment is
depreciated or amortized on a straight-line basis over the estimated useful lives of three to ten years.
Impairment of Long-Lived Assets
Long-lived assets include property, equipment, ROU assets and software developed or obtained for internal use. In
accordance with ASC 360, Property, Plant and Equipment, management reviews the Companyʼs recorded long-lived
assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be fully recoverable. Events relating to recoverability may include significant unfavorable changes in
business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an
extended period. The Company determines the extent to which an asset may be impaired based upon its expectation
of the assetʼs future usability, as well as on a reasonable assurance that the future cash flows associated with the
asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than
the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of
the asset. During fiscal 2022, the Company reduced its real estate footprint and as a result, the Company took an
impairment charge of ROU assets of $7.4 million and an impairment of leasehold improvements and furniture and
fixtures of $1.9 million, both recorded in the consolidated statements of income in general and administrative
expenses. During fiscal 2020, the Company decided that it would exit 16 office leases as part of the integration of the
Acquired Companies. This resulted in an impairment charge of the ROU asset of $2.3 million and impairment of
leasehold improvements and furniture and fixtures of $0.4 million, both recorded in the consolidated statements of
income in general and administrative expenses in the Digital reportable segment. During fiscal 2021, there were no
impairment charges recorded.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of assets acquired. Goodwill is tested for
impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not
that the asset is impaired. Results of the annual qualitative impairment test performed as of January 31, 2022,
indicated that the fair value of each of the reporting units exceeded its carrying amount and no reporting units were at
risk of failing the impairment test. As a result, no impairment charge was recognized. There was also no indication of
potential impairment during the fourth quarter of fiscal 2022 that would require further testing.
Intangible assets primarily consist of customer lists, non-compete agreements, proprietary databases and IP.
Intangible assets are recorded at their estimated fair value at the date of acquisition and are amortized in a pattern in
which the asset is consumed if that pattern can be reliably determined, or using the straight-line method over their
estimated useful lives, which range from one to 24 years. For intangible assets subject to amortization, an impairment
loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value. The
carrying amount of the intangible assets is considered not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from use of the asset. The Company reviewed its intangible assets and noted no impairment
as of April 30, 2022, 2021 and 2020.
Compensation and Benefits Expense
Compensation and benefits expense in the accompanying consolidated statements of income consist of
compensation and benefits paid to consultants (employees who originate business), executive officers and
F-15
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
administrative and support personnel. The most significant portions of this expense are salaries and the amounts
paid under the annual performance-related bonus plan to employees. The portion of the expense applicable to
salaries is comprised of amounts earned by employees during a reporting period. The portion of the expenses
applicable to annual performance-related bonuses refers to the Companyʼs annual employee performance-related
bonus with respect to a fiscal year, the amount of which is communicated and paid to each eligible employee
following the completion of the fiscal year.
Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires
management to, among other things, project annual consultant productivity (as measured by engagement fees billed
and collected by Executive Search consultants and revenue and other performance/profitability metrics for
Consulting, Digital and RPO & Professional Search consultants), the level of engagements referred by a consultant in
one line of business to a different line of business, and Company performance, including profitability, competitive
forces and future economic conditions and their impact on the Companyʼs results. At the end of each fiscal year,
annual performance-related bonuses take into account final individual consultant productivity (including referred
work), Company/line of business results including profitability, the achievement of strategic objectives, the results of
individual performance appraisals, and the current economic landscape. Accordingly, each quarter the Company
reevaluates the assumptions used to estimate annual performance-related bonus liability and adjusts the carrying
amount of the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current
operations.
Because annual performance-based bonuses are communicated and paid only after the Company reports its full
fiscal year results, actual performance-based bonus payments may differ from the prior yearʼs estimate. Such
changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period
in which they are determined. The performance-related bonus expense was $447.6 million, $287.3 million and $197.1
million for the years ended April 30, 2022, 2021 and 2020, respectively, included in compensation and benefits
expense in the consolidated statements of income.
Other expenses included in compensation and benefits expense are due to changes in deferred compensation and
pension plan liabilities, changes in cash surrender value (“CSV”) of company-owned life insurance (“COLI”) contracts,
amortization of stock-based compensation awards, payroll taxes and employee insurance benefits. Unearned
compensation on the consolidated balance sheets includes long-term retention awards that are generally amortized
over four-to-five years.
Deferred Compensation and Pension Plans
For financial accounting purposes, the Company estimates the present value of the future benefits payable under the
deferred compensation and pension plans as of the estimated payment commencement date. The Company also
estimates the remaining number of years a participant will be employed by the Company. Then, each year during the
period of estimated employment, the Company accrues a liability and recognizes expense for a portion of the future
benefit using the unit credit cost method for the Senior Executive Incentive Plan (“SEIP”), Wealth Accumulation Plan
(“WAP”), Enhanced Wealth Accumulation Plan (“EWAP”) and Worldwide Executive Benefit Plan (“WEB”) and the
pension plan acquired under Hay Group, while the medical and life insurance plan and Long Term Performance Unit
Plan (“LTPU Plan”) uses the projected unit credit cost method. The amounts charged to operations are made up of
service and interest costs and the expected return on plan assets. Actuarial gains and losses are initially recorded in
accumulated other comprehensive loss. The actuarial gains/losses included in accumulated other comprehensive
loss are amortized to the consolidated statements of income, if at the beginning of the year, the amount exceeds 10%
of the greater of the projected benefit obligation and market-related plan assets. The amortization included in periodic
benefit cost is divided by the average remaining service of inactive plan participants, or the period for which benefits
will be paid, if shorter. The expected return on plan assets takes into account the current fair value of plan assets and
reflects the Companyʼs estimate for trust asset returns given the current asset allocation and any expected changes
to the asset allocation and current and future market conditions.
In calculating the accrual for future benefit payments, management has made assumptions regarding employee
turnover, participant vesting, violation of non-competition provisions and the discount rate. Management periodically
reevaluates all assumptions. If assumptions change in future reporting periods, the changes may impact the
measurement and recognition of benefit liabilities and related compensation expense.
Executive Capital Accumulation Plan
The Company, under the ECAP, makes discretionary contributions and such contributions may be granted to key
employees annually based on the employeeʼs performance. Certain key management may also receive Company
contributions upon commencement of employment. The Company amortizes these contributions on a straight-line
basis as they vest, generally over a five-year period. The amounts that are expected to be paid to employees over the
F-16
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
next 12 months are classified as a current liability included in compensation and benefits payable in the
accompanying consolidated balance sheets.
The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are
adjusted with a corresponding charge (or credit) to compensation and benefits costs.
Cash Surrender Value of Life Insurance
The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in
certain of the deferred compensation and pension plans as a means of funding benefits under such plans. The
Company purchased both fixed and variable life insurance contracts and does not purchase “split-dollar” life
insurance policy contracts. The Company only holds contracts or policies that provide for a fixed or guaranteed rate
of return. The CSV of these COLI contracts are carried at the amounts that would be realized if the contract were
surrendered at the balance sheet date, net of the outstanding loans from the insurer. The Company has the intention
and ability to continue to hold these COLI policies and contracts. Additionally, the loans secured by the policies do not
have any scheduled payment terms and the Company also does not intend to repay the loans outstanding on these
policies until death benefits under the policy have been realized. Accordingly, the investment in COLI is classified as
long-term in the accompanying consolidated balance sheets.
The change in the CSV of COLI contracts, net of insurance premiums paid and gains realized, is reported net in
compensation and benefits expense. As of April 30, 2022 and 2021, the Company held contracts with net CSV of
$183.3 million and $161.3 million, respectively. If the issuing insurance companies were to become insolvent, the
Company would be considered a general creditor; therefore, these assets are subject to credit risk. Management,
together with its outside advisors, routinely monitors the claims paying abilities of these insurance companies.
Restructuring Charges, Net
The Company accounts for its restructuring charges as a liability when the obligations are incurred and records such
charges at fair value. Changes in the estimates of the restructuring charges are recorded in the period the change is
determined.
Stock-Based Compensation
The Company has employee compensation plans under which various types of stock-based instruments are granted.
These instruments principally include restricted stock units, restricted stock and an Employee Stock Purchase Plan
(“ESPP”). The Company recognizes compensation expense related to restricted stock units, restricted stock and the
estimated fair value of stock purchases under the ESPP on a straight-line basis over the service period for the entire
award.
Translation of Foreign Currencies
Generally, financial results of the Companyʼs foreign subsidiaries are measured in their local currencies. Assets and
liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenue and
expenses are translated at weighted-average exchange rates during the fiscal year. Resulting translation adjustments
are recorded as a component of accumulated comprehensive loss. Gains and losses from foreign currency
transactions of the Companyʼs foreign subsidiaries and the translation of the financial results of subsidiaries operating
in highly inflationary economies are included in general and administrative expense in the period incurred. During
fiscal 2022, 2021 and 2020, the Company recorded foreign currency losses of $1.2 million, $2.7 million and $4.1
million respectively, in general and administrative expenses in the consolidated statements of income.
Income Taxes
There are two components of income tax expense: current and deferred. Current income tax expense (benefit)
approximates taxes to be paid or refunded for the current period. Deferred income tax expense (benefit) results from
changes in deferred tax assets and liabilities between periods. These gross deferred tax assets and liabilities
represent decreases or increases in taxes expected to be paid in the future because of future reversals of temporary
differences in the basis of assets and liabilities as measured by tax laws and their basis as reported in the
consolidated financial statements. Deferred tax assets are also recognized for tax attributes such as net operating
loss carryforwards and tax credit carryforwards. Deferred tax assets and deferred tax liabilities are presented net on
the consolidated balance sheets by tax jurisdiction. Valuation allowances are then recorded to reduce deferred tax
assets to the amounts management concludes are more likely than not to be realized.
F-17
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Income tax benefits are recognized and measured based upon a two-step model: (1) a tax position must be more-
likely-than-not to be sustained based solely on its technical merits in order to be recognized and (2) the benefit is
measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement.
The difference between the benefit recognized for a position and the tax benefit claimed on a tax return is referred to
as an unrecognized tax benefit. The Company records income tax-related interest and penalties within income tax
expense.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash,
cash equivalents, investments, foreign currency forward contracts, receivables due from clients and net CSV due
from insurance companies, which are discussed above. Cash equivalents include investments in money market
securities and commercial papers while investments include mutual funds, commercial papers, corporate
notes/bonds and US Treasury and Agency securities. Investments are diversified throughout many industries and
geographic regions. The Company conducts periodic reviews of its customersʼ financial condition and customer
payment practices to minimize collection risk on accounts receivable. At April 30, 2022 and 2021, the Company had
no other significant credit concentrations.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued guidance on Facilitation of the Effects
of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions to the
guidance on contract modifications and hedge accounting related to the expected market transition from the London
Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative rates. Entities can elect to adopt this
guidance as of any date within an interim period that includes or is subsequent to March 12, 2020 and can adopt it for
new contracts and contract modifications entered into through December 31, 2022. The Company adopted this
guidance in its fiscal year beginning May 1, 2021 and the Company elected to apply the amendments prospectively
through December 12, 2022. The adoption of this guidance did not have a material impact on the consolidated
financial statements.
Recently Proposed Accounting Standards - Not Yet Adopted
In October 2021, the FASB issued an amendment in accounting for contract assets and contract liabilities from
contracts with customers, which clarifies that an acquirer of a business should recognize and measure contract
assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with
Customers. The amendment of this standard becomes effective in fiscal years beginning after December 15, 2022.
The amendment should be applied prospectively to business combinations that occur after the effective date. The
Company will adopt this guidance in its fiscal year beginning May 1, 2023. The Company is currently evaluating the
impact of this accounting guidance but does not anticipate that it will have a material impact on the consolidated
financial statements.
2. Basic and Diluted Earnings Per Share
ASC 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-
forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. The
Company has granted and expects to continue to grant to certain employees under its restricted stock agreements,
grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore,
the Company is required to apply the two-class method in calculating earnings per share. The two-class method of
computing earnings per share is an earnings allocation formula that determines earnings per share for each class of
common stock and participating security according to dividends declared (or accumulated) and participation rights in
undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the
treasury method or the two-class method.
F-18
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Basic earnings per common share was computed using the two-class method by dividing basic net earnings
attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted
earnings per common share was computed using the two-class method by dividing diluted net earnings attributable to
common stockholders by the weighted-average number of common shares outstanding plus dilutive common
equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts
to issue common stock as if they were exercised or converted. Financial instruments that are not in the form of
common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not
included in the computation of diluted earnings per share.
During fiscal 2022, 2021 and 2020, restricted stock awards of 1.2 million shares, 1.3 million shares and 0.7 million
shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they
were anti-dilutive.
The following table summarizes basic and diluted earnings per common share attributable to common stockholders:
Net income attributable to Korn Ferry
Less: distributed and undistributed earnings to nonvested restricted
stockholders
Basic net earnings attributable to common stockholders
Add: undistributed earnings to nonvested restricted stockholders
Less: reallocation of undistributed earnings to nonvested restricted
stockholders
Diluted net earnings attributable to common stockholders
Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding
Effect of dilutive securities:
Restricted stock
ESPP
Diluted weighted-average number of common shares outstanding
Net earnings per common share:
Basic earnings per share
Diluted earnings per share
3. Comprehensive Income
$
$
$
$
2022
Year Ended April 30,
2021
(in thousands, except per share data)
326,360
114,454
$
$
2020
104,946
7,343
319,017
6,750
2,763
111,691
2,185
6,676
319,091
$
2,165
111,711
$
52,807
580
14
53,401
52,928
476
1
53,405
1,140
103,806
901
894
103,813
54,342
367
58
54,767
6.04
5.98
$
$
2.11
2.09
$
$
1.91
1.90
Comprehensive income is comprised of net income and all changes to stockholdersʼ equity, except those changes
resulting from investments by stockholders (changes in paid-in capital) and distributions to stockholders (dividends)
and is reported in the accompanying consolidated statements of comprehensive income. Accumulated other
comprehensive loss, net of taxes, is recorded as a component of stockholdersʼ equity.
The components of accumulated other comprehensive loss, net were as follows:
Foreign currency translation adjustments
Deferred compensation and pension plan adjustments, net of taxes
Marketable securities unrealized loss, net of tax
Accumulated other comprehensive loss, net
April 30,
2022
2021
(in thousands)
$
$
(92,717)
961
(429)
(92,185)
$
$
(33,666)
(18,135)
(19)
(51,820)
F-19
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The following table summarizes the changes in each component of accumulated other comprehensive loss, net:
Unrealized
Gains
(Losses)
on
Marketable
Securities
(2)
(in thousands)
Deferred
Compensation
and Pension
Plan (1)
Foreign
Currency
Translation
Unrealized
Gains on
Interest Rate
Swap (3)
Accumulated
Other
Comprehensive
Loss
Balance as of May 1, 2019
Unrealized (losses) gains arising during the period
Reclassification of realized net losses (gains) to net
income
Balance as of April 30, 2020
Unrealized gains (losses) arising during the period
Reclassification of realized net losses to net income
Balance as of April 30, 2021
Unrealized (losses) gains arising during the period
Reclassification of realized net losses to net income
Balance as of April 30, 2022
$
(60,270) $
(23,382)
(16,838) $
(8,883)
—
(83,652)
49,986
—
(33,666)
(59,051)
—
2,167
(23,554)
2,660
2,759
(18,135)
17,747
1,349
$
(92,717) $
961 $
— $
37
(3)
34
(53)
—
(19)
(411)
1
(429) $
456 $
(678)
222
—
—
—
—
—
—
— $
(76,652)
(32,906)
2,386
(107,172)
52,593
2,759
(51,820)
(41,715)
1,350
(92,185)
(1) The tax effects on unrealized gains (losses) were $6.0 million, $1.1 million and $(3.1) million as of April 30, 2022, 2021 and
2020, respectively. The tax effects on reclassifications of realized net losses were $0.5 million, $1.0 million and $0.8 million as
of April 30, 2022, 2021 and 2020, respectively.
(2) The tax effects on unrealized (losses) were $(0.1) million as of April 30, 2022.
(3) The tax effects on unrealized (losses) were $(0.2) million as of April 30, 2020. The tax effects on the reclassification of realized
net losses to net income was $0.1 million as of April 30, 2020.
4. Employee Stock Plans
Stock-Based Compensation
The following table summarizes the components of stock-based compensation expense recognized in the Companyʼs
consolidated statements of income for the periods indicated:
Restricted stock
ESPP
Total stock-based compensation expense
Stock Incentive Plan
2022
$
$
28,361
849
29,210
Year Ended April 30,
2021
(in thousands)
26,516
$
641
27,157
$
$
$
2020
21,495
1,323
22,818
At the Companyʼs 2019 Annual Meeting of Stockholders, held on October 3, 2019, the Companyʼs stockholders
approved an amendment and restatement to the Korn Ferry Amended and Restated 2008 Stock Incentive Plan (the
2019 amendment and restatement being the “Fourth A&R 2008 Plan”), which, among other things, eliminated the
fungible share counting provision and decreased the total number of shares of the Companyʼs common stock
available for stock-based awards by 2,141,807 shares, leaving 3,600,000 shares available for issuance, subject to
certain changes in the Companyʼs capital structure and other extraordinary events. The Fourth A&R 2008 Plan was
also amended to generally require a minimum one-year vesting for all future awards and provides for the grant of
awards to eligible participants, designated as either nonqualified or incentive stock options, restricted stock and
restricted stock units, any of which are market-based, and incentive bonuses, which may be paid in cash or stock or a
combination thereof.
F-20
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Restricted Stock
The Company grants time-based restricted stock awards to executive officers and other senior employees generally
vesting over a four-year period. In addition, certain key management members typically receive time-based restricted
stock awards upon commencement of employment and may receive them annually in conjunction with the
Companyʼs performance review. Time-based restricted stock awards are granted at a price equal to fair value, which
is determined based on the closing price of the Companyʼs common stock on the grant date. The Company
recognizes compensation expense for time-based restricted stock awards on a straight-line basis over the vesting
period.
The Company also grants market-based restricted stock units to executive officers and other senior employees. The
market-based units vest after three years depending upon the Companyʼs total stockholder return over the three-year
performance period relative to other companies in its selected peer group. The fair value of these market-based
restricted stock units are determined by using extensive market data that is based on historical Company and peer
group information. The Company recognizes compensation expense for market-based restricted stock units on a
straight-line basis over the vesting period.
Restricted stock activity is summarized below:
2022
Weighted-
Average
Grant Date
Fair Value
Shares
April 30,
2021
Weighted-
Average
Grant Date
Fair Value
Shares
2020
Weighted-
Average
Grant Date
Fair Value
Shares
(in thousands, except per share data)
Non-vested, beginning of year
Granted
Vested
Forfeited
Non-vested, end of year
$
2,370
$
483
(821) $
(52) $
$
1,980
34.34
65.05
43.76
34.30
40.32
1,365
1,606
$
$
(516) $
(85) $
$
2,370
44.59
27.63
39.78
22.35
34.34
$
1,460
$
608
(638) $
(65) $
$
1,365
38.42
38.38
25.42
33.48
44.59
As of April 30, 2022, there were 0.4 million shares outstanding relating to market-based restricted stock units with
total unrecognized compensation totaling $9.3 million.
As of April 30, 2022, there was $51.9 million of total unrecognized compensation cost related to all non-vested
awards of restricted stock, which is expected to be recognized over a weighted-average period of 2.4 years. During
fiscal 2022 and 2021, 271,794 shares of restricted stock for $18.5 million and 172,749 shares for $5.0 million,
respectively, were repurchased by the Company, at the option of the employee, to pay for taxes related to the vesting
of restricted stock.
Employee Stock Purchase Plan
The Company has an ESPP that, in accordance with Section 423 of the Internal Revenue Code, allows eligible
employees to authorize payroll deductions of up to 15% of their salary to purchase shares of the Companyʼs common
stock. On June 3, 2020, the Company amended the plan so that the purchase price of the shares purchased could
not be less than 85%, or more than 100% of the fair market price of the common stock on the last day of the
enrollment period. This amendment became effective July 1, 2020. Employees may not purchase more than $25,000
in stock during any calendar year. The maximum number of shares that may be issued under the ESPP is 3.0 million
shares. During fiscal 2022, 2021, and 2020, employees purchased 103,826 shares at an average price of $66.64 per
share, 188,608 shares at an average price of $30.25 per share and 220,161 shares at an average price of $34.90 per
share, respectively. As of April 30, 2022, the ESPP had approximately 0.4 million shares remaining available for
future issuance.
Common Stock
During fiscal 2022, 2021 and 2020, the Company repurchased (on the open market or privately negotiated
transactions) 1,470,983 shares of the Companyʼs common stock for $98.8 million, 973,451 shares for $30.4 million
and 2,606,861 shares for $92.4 million, respectively.
F-21
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
5. Financial Instruments
The following tables show the Companyʼs financial instruments and balance sheet classification as of April 30, 2022
and 2021:
Fair Value Measurement
Balance Sheet Classification
April 30, 2022
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cash and
Cash
Equivalents
Marketable
Securities,
Current
Marketable
Securities,
Non-
current
Other
Accrued
Liabilities
(in thousands)
Changes in Fair Value Recorded in
Other Comprehensive Loss
Level 2:
Commercial paper
Corporate notes/bonds
U.S. Treasury and
Agency Securities
$ 41,627 $
37,736
995
Total debt investments
$ 80,358 $
— $
—
—
— $
(126) $
(450)
41,501 $
37,286
15,489 $
—
26,012 $
20,242
— $
17,044
(8)
(584) $
987
79,774 $
—
15,489 $
987
47,241 $
—
17,044 $
Changes in Fair Value Recorded in
Net Income
Level 1:
Mutual funds (1)
Total equity investments
Cash
Money market funds
Level 2:
Foreign currency forward
contracts
Total
$ 168,742 $
$ 168,742 $
$ 874,490 $
88,091
— $
— $
874,490 $
88,091
10,003 $ 158,739 $
10,003 $ 158,739 $
— $
—
— $
—
(204)
—
—
—
$1,210,893 $
978,070 $
57,244 $ 175,783 $
(204)
(204)
Fair Value Measurement
Balance Sheet Classification
April 30, 2021
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cash and
Cash
Equivalents
Marketable
Securities,
Current
Marketable
Securities,
Non-
current
Other
Accrued
Liabilities
(in thousands)
Changes in Fair Value Recorded in
Other Comprehensive Income
Level 2:
Commercial paper
Corporate notes/bonds
U.S. Treasury and
Agency Securities
Total debt investments
$ 51,979 $
26,371
1,975
$ 80,325 $
1 $
—
—
1 $
(7) $
(20)
51,973 $
26,351
9,499 $
—
42,474 $
10,134
— $
16,217
—
(27) $
1,975
80,299 $
—
9,499 $
1,975
54,583 $
—
16,217 $
Changes in Fair Value Recorded in
Net Income
Level 1:
Mutual funds (1)
Total equity investments
Cash
Money market funds
Level 2:
Foreign currency forward
contracts
Total
$ 175,559 $
$ 175,559 $
$ 752,737 $
88,542
— $
— $
752,737 $
88,542
9,084 $ 166,475 $
9,084 $ 166,475 $
— $
—
— $
—
(12)
—
—
—
$1,097,125 $
850,778 $
63,667 $ 182,692 $
(12)
(12)
F-22
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
(1) These investments are held in trust for settlement of the Companyʼs vested obligations of $160.8 million and $157.3 million as
of April 30, 2022 and 2021, respectively, under the ECAP (see Note 6 — Deferred Compensation and Retirement Plans).
Unvested obligations under the deferred compensation plans totaled $24.0 million and $26.5 million as of April 30, 2022 and
2021, respectively. During fiscal 2022 and 2020, the fair value of the investments decreased; therefore, the Company
recognized a loss of $12.0 million and $1.8 million, respectively, which was recorded in other (loss) income, net. During fiscal
2021, the fair value of the investments increased; therefore, the Company recognized income of $38.5 million which was
recorded in other (loss) income, net.
Investments in marketable securities classified as available-for-sale securities are made based on the Companyʼs
investment policy, which restricts the types of investments that can be made. As of April 30, 2022 and 2021,
marketable securities classified as available-for-sale consisted of commercial paper, corporate notes/bonds and US
Treasury and Agency securities, for which market prices for similar assets are readily available. Investments that
have an original maturity of 90 days or less and are considered highly liquid investments are classified as cash
equivalents. As of April 30, 2022, available-for-sale marketable securities had remaining maturities ranging from one
to twenty-one months. During fiscal 2022, 2021 and 2020, there were $79.3 million, $60.6 million and $4.8 million in
sales/maturities of available-for-sale marketable securities, respectively. Investments in marketable securities that are
held in trust for settlement of the Companyʼs vested obligations under the ECAP are equity securities and are based
upon the investment selections the employee elects from a pre-determined set of securities in the ECAP and the
Company invests in equity securities to mirror these elections. As of April 30, 2022 and 2021, the Companyʼs
investments in equity securities consisted of mutual funds for which market prices are readily available. Unrealized
losses that relate to equity securities still held as of April 30, 2022 and 2020, was $27.3 million and $8.2 million while
unrealized gains that relate to equity securities held as of April 30, 2021, was $32.7 million.
Foreign Currency Forward Contracts Not Designated as Hedges
The fair value of derivatives not designated as hedge instruments are as follows:
Derivative assets:
Foreign currency forward contracts
Derivative liabilities:
Foreign currency forward contracts
April 30,
2022
2021
(in thousands)
$
$
1,639
1,843
$
$
822
834
As of April 30, 2022, the total notional amounts of the forward contracts purchased and sold were $89.7 million and
$35.8 million, respectively. As of April 30, 2021, the total notional amounts of the forward contracts purchased and
sold were $69.4 million and $44.9 million, respectively. The Company recognizes forward contracts as a net asset or
net liability on the consolidated balance sheets as such contracts are covered by master netting agreements. During
fiscal 2022 and 2020, the Company incurred losses of $0.2 million and $0.3 million, respectively, related to forward
contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of
income. These foreign currency losses offset foreign currency gains that result from transactions denominated in a
currency other than the Companyʼs functional currency. During fiscal 2021, the Company incurred gains of $2.7
million related to forward contracts which is recorded in general and administrative expenses in the accompanying
consolidated statements of income. These foreign currency gains offset foreign currency losses that result from
transactions denominated in a currency other than the Companyʼs functional currency. The cash flows related to
foreign currency forward contracts are included in cash flows from operating activities.
6. Deferred Compensation and Retirement Plans
The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents that
provide defined benefits to participants based on the deferral of current compensation or contributions made by the
Company subject to vesting and retirement or termination provisions.
F-23
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The total benefit obligations for these plans were as follows:
Deferred compensation and pension plans
Medical and Life Insurance plan
International retirement plans
Executive Capital Accumulation Plan
Total benefit obligation
Less: current portion of benefit obligation(1)
Non-current benefit obligation
Year Ended April 30,
2022
2021
(in thousands)
$
$
189,608
5,365
14,395
166,723
376,091
(18,916)
357,175
$
$
178,994
6,584
15,633
163,582
364,793
(18,338)
346,455
(1) Current portion of benefit obligation is included in Compensation and benefits payable in the consolidated balance sheet.
Deferred Compensation and Pension Plans
The EWAP was established in fiscal 1994, which replaced the WAP. Certain vice presidents elected to participate in
a “deferral unit” that required the participant to contribute a portion of their compensation for an eight year period, or
in some cases, make an after-tax contribution, in return for defined benefit payments from the Company over a fifteen
year period at retirement age of 65 or later. Participants were able to acquire additional “deferral units” every five
years. Vice presidents who did not choose to roll over their WAP units into the EWAP continue to be covered under
the earlier version in which participants generally vest and commence receipt of benefit payments at retirement age
of 65. In June 2003, the Company amended the EWAP and WAP, so as not to allow new participants or the purchase
of additional deferral units by existing participants.
In conjunction with the acquisition of Hay Group, the Company acquired multiple pension and savings plans covering
certain of its employees worldwide. Among these plans is a defined benefit pension plan for certain employees in the
U.S. The assets of this plan are held separately from the assets of the sponsors in self-administered funds.
On July 8, 2016, the Company established the LTPU Plan in order to promote the success of the Company by
providing a select group of management and highly compensated employees with nonqualified supplemental
retirement benefits as an additional means to attract, motivate and retain such employees. A unit award has a base
value of either $25,000 or $50,000 for the purpose of determining the payment that would be made upon early
termination for a partially vested unit award. The units vest 25% on each anniversary date with the unit becoming fully
vested on the fourth anniversary of the grant date, subject to the participantʼs continued service as of each
anniversary date. Each vested unit award will pay out an annual benefit of either $12,500 or $25,000 for each of five
years commencing on the seventh anniversary of the grant date.
F-24
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Deferred Compensation and Pension Plans
The following tables reconcile the benefit obligation for the deferred compensation and pension plans:
Change in benefit obligation:
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial gain
Administrative expenses paid
Benefits paid from plan assets
Benefits paid from cash
Benefit obligation, end of year
Change in fair value of plan assets:
Fair value of plan assets, beginning of year
Actual return on plan assets
Benefits paid from plan assets
Administrative expenses paid
Employer contributions
Fair value of plan assets, end of year
Funded status and balance, end of year (1)
Current liability
Non-current liability
Total liability
Plan Assets - weighted-average asset allocation:
Debt securities
Equity securities
Other
Total
Year Ended April 30,
2022
2021
(in thousands)
$
$
$
$
$
205,740
37,952
4,028
(25,757)
(196)
(2,543)
(7,626)
211,598
26,746
(2,113)
(2,543)
(196)
96
21,990
(189,608)
8,833
180,775
189,608
$
$
$
180,821
31,947
4,035
(590)
(265)
(2,327)
(7,881)
205,740
24,235
4,523
(2,327)
(265)
580
26,746
(178,994)
9,074
169,920
178,994
42%
55%
3%
100%
36%
62%
2%
100%
(1) The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred
compensation and pension plans as a means of funding benefits under such plans. As the COLI contracts are held in trust and
are not separated from our general corporate assets, they are not included in the funded status. As of April 30, 2022 and 2021,
the Company held contracts with gross CSV of $263.2 million and $241.3 million, offset by outstanding policy loans of $79.8
million and $80.0 million, respectively.
F-25
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The pension obligation in fiscal 2022 increased compared to fiscal 2021 due to the ongoing accruals for the LTPU
Plan for additional awards issued in fiscal 2022. Additionally, the change in mortality assumption from the MP-2020 to
the MP-2021 mortality projection scale, and the actual return on plan assets being lower than the assumed return
caused our funded position to deteriorate. The increase in pension benefit obligations was partially offset by the
actuarial gain which was primarily due to an increase in discount rates. The fair value measurements of the defined
benefit plan assets fall within the following levels of the fair value hierarchy as of April 30, 2022 and 2021:
April 30, 2022:
Mutual funds
Money market funds
Total
April 30, 2021:
Mutual funds
Money market funds
Total
Level 1
Level 2
Level 3
Total
(in thousands)
$
$
$
$
— $
637
637
$
21,353
—
21,353
— $
606
606
$
26,140
—
26,140
$
$
$
$
— $
—
— $
21,353
637
21,990
— $
—
— $
26,140
606
26,746
Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and
investment return over the long term. The investment goal is a return on assets that is at least equal to the assumed
actuarial rate of return over the long term within reasonable and prudent levels of risk. Investment policies reflect the
unique circumstances of the respective plans and include requirements designed to mitigate risk including quality and
diversification standards. Asset allocation targets are reviewed periodically with investment advisors to determine the
appropriate investment strategies for acceptable risk levels. Our target allocation ranges are as follows: equity
securities 40% to 60% and debt securities 40% to 60%. We establish our estimated long-term return on plan assets
considering various factors, including the targeted asset allocation percentages, historic returns and expected future
returns.
The components of net periodic benefits costs are as follows:
Service cost
Interest cost
Amortization of actuarial loss
Net prior service credit amortization
Expected return on plan assets
Net periodic benefit cost (1)
$
$
2022
Year Ended April 30,
2021
(in thousands)
31,947
$
4,035
4,117
(97)
(1,404)
38,598
$
37,952
4,028
2,170
(97)
(1,554)
42,499
2020
24,939
5,433
3,261
(24)
(1,452)
32,157
$
$
(1) The service cost, interest cost and other components of net periodic benefit costs are included in compensation and benefits
expense, interest expense, net and other (loss) income, net, respectively, on the consolidated statements of income.
The weighted-average assumptions used in calculating the benefit obligations were as follows:
Discount rate, beginning of year
Discount rate, end of year
Rate of compensation increase
Expected long-term rates of return on plan assets
2022
Year Ended April 30,
2021
2020
2.17%
4.08%
0.00%
5.50%
2.29%
2.17%
0.00%
6.00%
3.57%
2.29%
0.00%
6.00%
Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten
years as follows:
Year Ending April 30,
2023
2024
Deferred Retirement Plans
(in thousands)
$
11,078
16,216
F-26
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
2025
2026
2027
2028-2032
Medical and Life Insurance Plan
25,772
34,109
43,923
222,200
In conjunction with the acquisition of Hay Group, the Company inherited a benefit plan which offers medical and life
insurance coverage to 111 participants. The medical and life insurance benefit plan is closed to new entrants and is
unfunded.
The following table reconciles the benefit obligation for the medical and life insurance plan:
Change in benefit obligation:
Benefit obligation, beginning of year
Interest cost
Actuarial gain
Benefits paid
Benefit obligation, end of year
Current liability
Non-current liability
Total liability
The components of net periodic benefits costs are as follows:
Service cost
Interest cost
Net periodic service credit amortization
Amortization of actuarial gain
Net periodic benefit cost (1)
Year End April 30,
2022
2021
(in thousands)
$
$
$
$
6,584
110
(857)
(472)
5,365
585
4,780
5,365
$
$
$
$
7,527
140
(549)
(534)
6,584
601
5,983
6,584
2022
Year Ended April 30,
2021
(in thousands)
— $
— $
2020
110
(308)
—
140
(308)
—
(198) $
(168) $
—
227
(308)
—
(81)
$
$
(1) The service cost, interest cost and the other components of net periodic benefit costs are included in compensation and
benefits expense, interest expense, net and other (loss) income, net, respectively, on the consolidated statements of income.
The weighted-average assumptions used in calculating the medical and life insurance plan were as follows:
Discount rate, beginning of year
Discount rate, end of year
Healthcare care cost trend rate
2022
Year Ended April 30,
2021
2020
2.54%
4.25%
6.00%
2.45%
2.54%
6.25%
3.67%
2.45%
6.50%
F-27
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten
years as follows:
Year Ending April 30,
2023
2024
2025
2026
2027
2028-2032
International Retirement Plans
$
Medical and Life Insurance
(in thousands)
592
571
545
519
481
1,980
The Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements
in 25 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 2022 and 2021 is
$14.4 million for 3,568 participants and $15.6 million for 2,557 participants, respectively. The Companyʼs contribution
to these plans was $14.8 million and $12.7 million in fiscal 2022 and 2021, respectively.
Executive Capital Accumulation Plan
The Companyʼs ECAP is intended to provide certain employees an opportunity to defer their salary and/or bonus on a
pre-tax basis. In addition, the Company, as part of its compensation philosophy, makes discretionary contributions
into the ECAP and such contributions may be granted to key employees annually based on the employeeʼs
performance. Certain key management may also receive Company ECAP contributions upon commencement of
employment. The Company amortizes these contributions on a straight-line basis over the service period, generally a
five year period. Participants have the ability to allocate their deferrals among a number of investment options and
may receive their benefits at termination, retirement or ʻin serviceʼ either in a lump sum or in quarterly installments
over one-to-15 years. The ECAP amounts that are expected to be paid to employees over the next 12 months are
classified as a current liability included in compensation and benefits payable on the accompanying consolidated
balance sheets.
The Company issued ECAP awards during fiscal 2022, 2021 and 2020 of $7.5 million, $8.2 million and $9.0 million,
respectively.
The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are
adjusted with a corresponding charge (or credit) to compensation and benefits costs. During both fiscal 2022 and
2020, the deferred compensation liability decreased; therefore, the Company recognized a reduction in compensation
expense of $10.6 million and $0.8 million, respectively. Offsetting the decreases in compensation and benefits
expense in fiscal 2022 and 2020 was decreases in the fair value of marketable securities (held in trust to satisfy
obligations of the ECAP liabilities) of $12.0 million and $1.8 million in fiscal 2022 and 2020, respectively, recorded in
other (loss) income, net on the consolidated statements of income. During fiscal 2021, deferred compensation liability
increased; therefore, the Company recognized a compensation expense of $37.3 million. Offsetting the increase in
compensation and benefits expense in fiscal 2021 was an increase in the fair value of marketable securities (held in
trust to satisfy obligations of the ECAP liabilities) of $38.5 million in fiscal 2021, recorded in other (loss) income, net
on the consolidated statement of income.
Changes in ECAP liability were as follows:
Balance, beginning of year
Employee contributions
Amortization of employer contributions
(Loss) gain on investment
Employee distributions
Acquisition of Lucas Group
Exchange rate fluctuations
Balance, end of year
Less: current portion
Non-current portion
F-28
Year Ended April 30,
2022
2021
(in thousands)
$
$
163,582
8,541
7,060
(10,602)
(10,880)
9,620
(598)
166,723
(9,498)
157,225
$
$
129,315
4,935
6,287
37,323
(15,652)
—
1,374
163,582
(8,663)
154,919
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
As of April 30, 2022 and 2021, the unamortized portion of the Company contributions to the ECAP was $18.2 million
and $20.2 million, respectively.
Defined Contribution Plan
The Company has a defined contribution plan (“401(k) plan”) for eligible employees. Participants may contribute up to
50% of their base compensation as defined in the plan agreement. In addition, the Company has the option to make
matching contributions. Beginning in fiscal 2022, the Company began to match a portion of the employee
contributions each pay period and made $2.1 million matching contributions during fiscal 2022. In addition the
Company intends to make an additional matching contribution relating to fiscal 2022 of $3.2 million in fiscal 2023,
which are accrued in compensation and benefits payable on the consolidated balance sheet. The Company made a
$3.0 million matching contribution in fiscal 2022 related to contributions made by employees in fiscal 2021. Due to the
impact of COVID-19, the Company did not make a matching contribution related to fiscal 2020.
Company Owned Life Insurance
The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred
compensation and pension plans as a means of funding benefits under such plans. The gross CSV of these contracts
of $263.2 million and $241.3 million as of April 30, 2022 and 2021, respectively, is offset by outstanding policy loans
of $79.8 million and $80.0 million in the accompanying consolidated balance sheets as of April 30, 2022 and 2021,
respectively. Total death benefits payable, net of loans under COLI contracts, were $449.3 million and $443.9 million
at April 30, 2022 and 2021, respectively. Management intends to use the future death benefits from these insurance
contracts to fund the deferred compensation and pension arrangements; however, there may not be a direct
correlation between the timing of the future cash receipts and disbursements under these arrangements. The CSV of
the underlying COLI investments increased by $5.8 million, $13.0 million and $6.6 million during fiscal 2022, 2021
and 2020, respectively, recorded as a decrease in compensation and benefits expense. In addition, certain policies
are held in trusts to provide additional benefit security for the deferred compensation and pension plans. As of April
30, 2022, COLI contracts with a net CSV of $162.8 million and death benefits, net of loans, of $400.6 million were
held in trust for these purposes.
7. Fee Revenue
Contract Balances
A contract asset (unbilled receivables) is recorded when the Company transfers control of products or services before
there is an unconditional right to payment. A contract liability (deferred revenue) is recorded when cash is received in
advance of performance of the obligation. Deferred revenue represents the future performance obligations to transfer
control of products or services for which we have already received consideration. Deferred revenue is presented in
other accrued liabilities on the consolidated balance sheets.
The following table outlines the Companyʼs contract asset and liability balances as of April 30, 2022 and 2021:
Contract assets-unbilled receivables
Contract liabilities-deferred revenue
April 30,
2022
2021
(in thousands)
$
$
100,652
244,149
$
$
82,842
184,610
During fiscal 2022, 2021, and 2020 we recognized revenue of $131.3 million, $92.4 million and $94.1 million,
respectively, that were included in the contract liabilities balance at the beginning of the period.
Performance Obligations
The Company has elected to apply the practical expedient to exclude the value of unsatisfied performance
obligations for contracts with a duration of one year or less, which applies to all executive search and professional
search fee revenue. As of April 30, 2022, the aggregate transaction price allocated to the performance obligations
that are unsatisfied for contracts with an expected duration of greater than one year at inception was $1,034.9 million.
Of the $1,034.9 million of remaining performance obligations, the Company expects to recognize approximately
$541.2 million in fiscal 2023, $295.6 million in fiscal 2024, $128.1 million in fiscal 2025 and the remaining $70.0
million in fiscal 2026 and thereafter. However, this amount should not be considered an indication of the Companyʼs
F-29
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
future revenue as contracts with an initial term of one year or less are not included. Further, our contract terms and
conditions allow for clients to increase or decrease the scope of services and such changes do not increase or
decrease a performance obligation until the Company has an enforceable right to payment.
Disaggregation of Revenue
The Company disaggregates its revenue by line of business and further by region for Executive Search. This information
is presented in Note 12—Segments.
The following table provides further disaggregation of fee revenue by industry:
2022
Dollars
%
Year Ended April 30,
2021
Dollars
(dollars in thousands)
%
2020
Dollars
%
$ 688,902
501,463
475,326
372,720
456,498
131,809
$ 2,626,718
26.2% $ 490,863
355,668
19.1
331,976
18.1
239,457
14.2
275,510
17.4
116,573
5.0
100.0% $ 1,810,047
27.1% $ 556,189
343,955
19.7
334,433
18.3
285,927
13.2
285,562
15.2
126,666
6.5
100.0% $ 1,932,732
28.8%
17.8
17.3
14.8
14.8
6.5
100.0%
Industrial
Life Sciences/Healthcare
Financial Services
Consumer Goods
Technology
Education/Non–Profit/General
Fee Revenue
8. Credit Losses
The Company is exposed to credit losses primarily through the provision of its Executive Search, Consulting, Digital
and RPO & Professional Search services. The Companyʼs expected credit loss allowance methodology for accounts
receivable is developed using historical collection experience, current and future economic and market conditions and
a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such
receivables, the estimate of the amount of accounts receivable that may not be collected is primarily based on
historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current
conditions and reasonable and supportable expectations of future economic and market conditions. The Company
generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the
contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the
appropriate provision for customers that have a higher probability of default. The Companyʼs monitoring activities
include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial
condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.
The activity in the allowance for credit losses on the Company's trade receivables is as follows:
(in thousands)
Balance at May 1, 2019
Provision for credit losses
Write-offs
Recoveries of amounts previously written off
Foreign currency translation
Balance at April 30, 2020
Provision for credit losses
Write-offs
Recoveries of amounts previously written off
Foreign currency translation
Balance at April 30, 2021
Provision for credit losses
Write-offs
Recoveries of amounts previously written off
Foreign currency translation
Balance at April 30, 2022
F-30
$
$
21,582
14,644
(12,518)
398
(311)
23,795
15,763
(12,073)
311
1,528
29,324
21,552
(14,052)
702
(1,142)
36,384
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The fair value and unrealized losses on available for sale debt securities, aggregated by investment category and the
length of time the security has been in an unrealized loss position as of April 30, 2022 and 2021, are as follows:
Less Than 12 Months
12 Months or longer
Balance Sheet Classification
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Cash and
Cash
Equivalents
Marketable
Securities,
Current
Marketable
Securities, Non-
Current
(in thousands)
$ 36,378
$ 26,351
$ 37,002
$ 32,186
$
987
$
$
$
$
$
7
20
125
446
$
$
— $
— $
— $
— $
5,749
—
$ 4,499
$ 3,800
$
$
1
4
$
$
15,489
—
8
$
— $
— $
—
$
$
$
$
$
30,629
10,134
26,012
18,942
987
$
$
$
$
$
—
16,217
—
17,044
—
Balance at April 30, 2021
Commercial paper
Corporate notes/bonds
Balance at April 30, 2022
Commercial paper
Corporate notes/bonds
U.S. Treasury and Agency
Securities
The unrealized losses on 27 and 18 investments in commercial paper securities, 23 and 15 investments in corporate
notes/bonds, and 1 investment and no investments in U.S treasury and agency securities on April 30, 2022 and 2021,
respectively, were caused by fluctuations in market interest rates. The Company only purchases high grade bonds
that have a maturity from the date of purchase of no more than two years. The Company monitors the credit
worthiness of its investments on a quarterly basis. The Company does not intend to sell the investments and does not
believe it will be required to sell the investments before the investments mature and therefore recover the amortized
cost basis.
9. Income Taxes
Income from continuing operations before provision for income taxes was as follows:
Domestic
Foreign
Income before provision for income taxes
The provision for domestic and foreign income taxes was as follows:
Current income taxes:
Federal
State
Foreign
Current provision for income taxes
Deferred income taxes:
Federal
State
Foreign
Deferred benefit for income taxes
Total provision for income taxes
2022
184,877
248,024
432,901
Year Ended April 30,
2021
(in thousands)
34,661
$
129,039
163,700
$
$
$
2020
40,736
110,226
150,962
2022
Year Ended April 30,
2021
(in thousands)
2020
43,993
15,962
59,064
119,019
(13,858)
(3,936)
831
(16,963)
102,056
$
$
16,913
4,719
40,646
62,278
(5,809)
(5,025)
(3,306)
(14,140)
48,138
$
$
14,336
4,974
33,965
53,275
(6,862)
(784)
(1,684)
(9,330)
43,945
$
$
$
$
F-31
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:
U.S. federal statutory income tax rate
State tax, net of federal effect
Foreign tax rates differential
Non-deductible officers compensation
Excess tax (benefit) expense on stock-based compensation
Change in valuation allowance
COLI increase, net
Change in uncertain tax positions
R&D tax credit
Other
Effective income tax rate
Components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
Deferred compensation
Operating lease liability
Loss carryforwards
Reserves and accruals
Allowance for doubtful accounts
Deferred revenue
Gross deferred tax assets
Deferred tax liabilities:
Operating lease, right-of-use, assets
Intangibles and goodwill
Property and equipment
Prepaid expenses
Marketable securities
Other
Gross deferred tax liabilities
Valuation allowances
Net deferred tax asset
2022
Year Ended April 30,
2021
2020
21.0%
2.5
2.5
0.7
(0.6)
(0.7)
(0.3)
0.3
(1.3)
(0.5)
23.6%
21.0%
1.0
4.5
2.3
0.8
0.3
(1.7)
1.1
(0.9)
1.0
29.4%
21.0%
2.2
4.5
0.5
(1.0)
—
(0.9)
0.2
—
2.6
29.1%
April 30,
2022
2021
(in thousands)
$
$
111,133
35,158
33,360
20,887
5,645
6,207
212,390
(27,513)
(28,388)
(24,063)
(24,453)
(1,260)
(691)
(106,368)
(24,025)
81,997
$
$
107,834
34,183
39,704
16,393
4,885
—
202,999
(27,777)
(26,570)
(20,590)
(23,928)
(7,003)
(2,684)
(108,552)
(25,173)
69,274
Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that some portion or all of the
deferred tax assets will not be realized. Management believes uncertainty exists regarding the realizability of certain
deferred tax assets and has, therefore, established a valuation allowance offsetting deferred tax assets that are not
more-likely-than-not to be realized. Realization of the deferred tax asset is dependent on the Company generating
enough taxable income of the appropriate nature in future years. Although realization is not assured, management
believes that it is more likely than-not that the net deferred tax assets will be realized. In fiscal 2022, the Companyʼs
valuation allowance decreased by $1.1 million primarily due to the reversal of valuation allowance previously
recorded against deferred tax assets, including net operating losses, of certain foreign subsidiaries that had returned
to profitability and were now more-likely-than-not to realize those deferred tax assets. In fiscal 2021 and 2020, the
Companyʼs valuation allowance increased by $7.3 million and $3.8 million, respectively, primarily due to increases in
net operating losses in certain foreign jurisdictions that were not more-likely-than-not to be realized. Deferred tax
assets and deferred tax liabilities are presented net on the consolidated balance sheets by tax jurisdiction.
As of April 30, 2022, the Company had U.S. federal net operating loss carryforwards of $14.6 million, which if
unutilized, will begin to expire in fiscal 2030. The Company has state net operating loss carryforwards of $34.2
million, which, if unutilized, will begin to expire in fiscal 2023. The Company also has foreign net operating loss
carryforwards of $112.5 million, which, if unutilized, will begin to expire in fiscal 2023.
We continue to consider approximately $662.1 million of undistributed earnings of our foreign subsidiaries to be
indefinitely reinvested, and, accordingly, have provided no state, local or foreign withholding income taxes on such
F-32
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
earnings. While we do not anticipate a need to repatriate funds to the U.S. to satisfy domestic liquidity needs, we
review our cash positions regularly and, to the extent we determine that all or a portion of our foreign earnings are not
indefinitely reinvested, we provide additional state, local and foreign withholding income taxes. Under current U.S.
federal tax law, we do not expect to incur a U.S. federal income tax liability on the undistributed earnings in the event
they are repatriated to the United States.
The Company elected to treat taxes due on future U.S. inclusions in taxable income related to Global Intangible Low-
Taxed Income as an expense when incurred (the “period cost method”) as opposed to factoring such amounts in the
Companyʼs measurement of its deferred taxes (the “deferred method”).
The Company and its subsidiaries file federal and state income tax returns in the U.S. as well as in foreign
jurisdictions. These income tax returns are subject to audit by the Internal Revenue Service (the “IRS”) and various
state and foreign tax authorities. Currently, income tax returns of the Companyʼs subsidiaries are under audit in
Brazil, Germany, Switzerland, Japan, and India. The Companyʼs income tax returns are not otherwise under
examination in any material jurisdictions. The statute of limitations varies by jurisdiction in which the Company
operates. With few exceptions, however, the Companyʼs tax returns for years prior to fiscal 2016 are no longer open
to examination by tax authorities (including U.S. federal, state and foreign).
Unrecognized tax benefits are the differences between the amount of benefits of tax positions taken, or expected to
be taken, on a tax return and the amount of benefits recognized for financial reporting purposes. As of April 30, 2022,
the Company had a liability of $10.7 million for unrecognized tax benefits. A reconciliation of the beginning and
ending balances of the unrecognized tax benefits is as follows:
Unrecognized tax benefits, beginning of year
Settlement with tax authority
Additions based on tax positions related to the current year
Additions based on tax positions related to prior years
Unrecognized tax benefits, end of year
2022
9,954
—
456
272
10,682
Year Ended April 30,
2021
(in thousands)
6,037
$
—
1,716
2,201
9,954
$
$
$
$
$
2020
7,794
(1,767)
10
—
6,037
The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next 12 months,
it is reasonably possible that the Companyʼs unrecognized tax benefits could change due to the resolution of certain
tax matters either because the tax positions are sustained on audit or the Company agrees to their disallowance.
These resolutions could reduce the Companyʼs liability for unrecognized tax benefits by approximately $2.9 million.
The Company classifies interest and penalties related to unrecognized tax benefits as a component of the provision
for income taxes. The Company had accruals of $1.4 million, $0.9 million, and $0.6 million for interest related to
unrecognized tax benefits as of April 30, 2022, 2021, and 2020 respectively. The Company had an accrual of $0.5
million and $0.5 million as of April 30, 2022 and 2021, respectively, for penalties related to unrecognized tax benefits.
The Company recognized tax expense of $0.4 million, $0.8 million, and $0.2 million for interest and penalties related
to unrecognized tax benefits during fiscal 2022, 2021, and 2020, respectively.
10. Property and Equipment, Net
Property and equipment include the following:
Computer equipment and software (1)
Leasehold improvements
Furniture and fixtures
Automobiles
Less: accumulated depreciation and amortization
Property and equipment, net
April 30,
2022
2021
(in thousands)
$
$
331,371
81,743
41,999
3,460
458,573
(320,401)
138,172
$
$
290,417
89,276
44,033
3,356
427,082
(295,304)
131,778
(1) Depreciation expense for capitalized software was $28.0 million, $25.4 million and $18.8 million during fiscal 2022, 2021 and
F-33
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
2020, respectively. The net book value of the Companyʼs computer software costs included in property and equipment, net was
$94.7 million and $85.6 million as of April 30, 2022 and 2021, respectively.
Depreciation expense for property and equipment was $43.2 million, $42.6 million and $39.0 million during fiscal
2022, 2021 and 2020, respectively.
11. Long-Term Debt
4.625% Senior Unsecured Notes due 2027
On December 16, 2019, the Company completed a private placement of 4.625% Senior Unsecured Notes due 2027
(the “Notes”) with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of
1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with
interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.
The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future
senior unsecured indebtedness. The Company may redeem the Notes prior to maturity, subject to certain limitations
and premiums defined in the indenture governing the Notes. At any time prior to December 15, 2022, the Company
may redeem the Notes at a redemption price equal to 100% of the principal plus the Applicable Premium (as defined
in the indenture governing the Notes), and accrued and unpaid interest. At any time prior to December 15, 2022, the
Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of
the Notes, including any permitted additional notes, at a redemption price equal to 104.625% of the principal amount
and accrued and unpaid interest. At any time and from time to time on or after December 15, 2022, the Company
may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid
interest, if redeemed during the 12-month period beginning on December 15 of each of the years indicated:
Year
2022
2023
2024 and thereafter
Percentage
102.313%
101.156%
100.000%
The Notes allow the Company to pay $25 million of dividends per fiscal year with no restrictions, plus an unlimited
amount of dividends so long as the Companyʼs consolidated total leverage ratio is not greater than 3.50 to 1.00, and
the Company is not in default under the indenture governing the Notes. The Notes are guaranteed by each of the
Company's existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee the
Company's revolving credit facility. The indenture governing the Notes requires that, upon the occurrence of both a
Change of Control and a Rating Decline (each as defined in the indenture), the Company shall make an offer to
purchase all of the Notes at 101% of their principal amount and accrued and unpaid interest. The Company used the
proceeds from the offering of the Notes to repay $276.9 million outstanding under the Companyʼs prior revolving
credit facility and to pay expenses and fees in connection therewith. The remainder of the proceeds were used for
general corporate requirements. The effective interest rate on the Notes is 4.86% as of April 30, 2022. As of April 30,
2022 and 2021, the fair value of the Notes was $379.5 million and $416.5 million, respectively, based on borrowing
rates then required of notes with similar terms, maturity and credit risk. The fair value of the Notes was classified as a
Level 2 measurement in the fair value hierarchy.
Long-term debt, at amortized cost, consisted of the following:
In thousands
Senior Unsecured Notes
Less: Unamortized discount and issuance costs
Long-term borrowings, net of unamortized discount and debt issuance costs
April 30, 2022
April 30, 2021
$
$
400,000
(4,523)
395,477
$
$
400,000
(5,206)
394,794
Credit Facility
On December 16, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of
banks and Bank of America, National Association as administrative agent to among other things, provide for
enhanced financial flexibility. The Credit Agreement provides for a $650.0 million five-year senior secured revolving
credit facility (the “Revolver”), and contains certain customary affirmative and negative covenants, including a
maximum consolidated net leverage ratio, a maximum consolidated secured net leverage ratio and a minimum
interest coverage ratio. The Credit Agreement permits the payment of dividends to stockholders and Company share
repurchases so long as there is no default under the Credit Agreement, the total funded debt to adjusted EBITDA
ratio (as set forth in the credit agreement, the “consolidated net leverage ratio”), is no greater than 4.25 to 1.00, and
F-34
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
the pro forma liquidity is at least $50.0 million.
The principal balance of the Revolver, if any, is due on the date of its termination. The Revolver matures on
December 16, 2024 and any unpaid principal balance is payable on this date. The Revolver may also be prepaid and
terminated early by the Company at any time without premium or penalty (subject to customary LIBOR breakage
fees).
At the Companyʼs option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate
base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding
under the Credit Agreement may fluctuate between LIBOR plus 1.125% per annum to LIBOR plus 2.00% per annum,
in the case of LIBOR borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base
rate plus 1.00% per annum, in the alternative), based upon the Companyʼs consolidated net leverage ratio at such
time. In addition, the Company will be required to pay to the lenders a quarterly commitment fee ranging from 0.175%
to 0.35% per annum on the average daily unused amount of the Revolver, based upon the Companyʼs consolidated
net leverage ratio at such time, and fees relating to the issuance of letters of credit. The average interest rate on our
current and previous term loan for fiscal 2020 was 3.34%.
As of April 30, 2022 and 2021, there was no outstanding liability under the Revolver. The unamortized debt issuance
costs associated with the Credit Agreement was $2.4 million and $3.3 million as of April 30, 2022 and 2021,
respectively. The debt issuance costs were included in other current assets and other non-current assets on the
consolidated balance sheets. As of April 30, 2022, the Company was in compliance with its debt covenants.
The Company had a total of $645.3 million and $646.0 million available under the Revolver after $4.7 million and $4.0
million of standby letters of credit have been issued as of April 30, 2022 and 2021, respectively. The Company had a
total of $10.0 million and $11.0 million of standby letters with other financial institutions as of April 30, 2022 and 2021,
respectively. The standby letters of credit were generally issued as a result of entering into office premise leases.
The Company has outstanding borrowings against the CSV of COLI contracts of $79.8 million and $80.0 million at
April 30, 2022 and 2021, respectively. CSV reflected in the accompanying consolidated balance sheets is net of the
outstanding borrowings, which are secured by the CSV of the life insurance policies. Principal payments are not
scheduled and interest is payable at least annually at various fixed and variable rates ranging from 4.76% to 8.00%.
12. Segments
The Company has seven reportable segments: Consulting, Digital, Executive Search North America, Executive
Search EMEA, Executive Search Asia Pacific, Executive Search Latin America and RPO & Professional Search.
Revenues are directly attributed to a reportable segment and expenses not directly associated with a specific
segment are allocated based on the most relevant measures applicable, including revenues, headcount and other
factors.
The Companyʼs seven reportable segments operate through the following four lines of business:
1. Consulting aligns organization structure, culture, performance and people to drive sustainable growth by
addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and
Professional Development and Total Rewards. This work is supported by a comprehensive range of some of
the worldʼs leading lP and data. The Consulting teams employ an integrated approach across our core
capabilities and integrated solutions, each one intended to strengthen our work and thinking in the next, to
help clients execute their strategy in a digitally enabled world.
2. Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities
and behaviors to drive businesses forward. Our digital products give clients direct access to our proprietary
data, client data and analytics to deliver clear insights with the training and tools needed to align
organizational structure with business strategy.
3. Executive Search helps organizations recruit board level, chief executive and other senior executive and
general management talent to deliver lasting impact. The Companyʼs approach to placing talent that brings
together research-based IP, proprietary assessments, and behavioral interviewing with practical experience
to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for
compensation and retention. This business is managed and reported on a geographic basis and represents
F-35
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
four of the Companyʼs reportable segments (Executive Search North America, Executive Search EMEA,
Executive Search Asia Pacific, and Executive Search Latin America).
4. RPO & Professional Search focuses on delivering enterprise talent acquisition solutions to clients, at the
professional level. The Company leverages the power of people, process expertise, IP-enabled technology,
and compensation information to do this. Transaction sizes range from single professional searches to team,
department, line of business projects, and global outsource recruiting solutions.
Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, and RPO
& Professional Search are managed by their Chief Executive Officers. The Executive Search geographic regional
leaders and the Chief Executive Officers of Consulting, Digital, and RPO & Professional Search report directly to the
Chief Executive Officer of the Company. The Company also operates Corporate to record global expenses.
The Company evaluates performance and allocates resources based on the Companyʼs chief operating decision
maker (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes
restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill,
intangible asset and other impairment charges). The CODM is not provided asset information by reportable segment.
Financial highlights by reportable segments are as follows:
Year Ended April 30, 2022
Executive Search
Consulting
Digital
North
America
EMEA
Asia
Pacific
(in thousands)
Latin
America
RPO &
Professional
Search
Corporate Consolidated
Fee revenue
Total revenue
$ 650,204
$ 654,199
$ 349,025 $ 605,704 $ 182,192 $ 118,596 $ 29,069
$ 349,437 $ 609,258 $ 182,866 $ 118,705 $ 29,079
$
$
691,928
699,911
$
$
— $
— $
2,626,718
2,643,455
Net income attributable to Korn Ferry
Net income attributable to noncontrolling
interest
Other loss, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other loss, net
Integration/acquisition costs
Impairment of fixed assets
Impairment of right of use assets
Adjusted EBITDA(1)
$
326,360
$ 116,108
$ 110,050 $ 181,615 $ 31,804 $ 35,105 $ 9,089
$
165,141
$ (109,984 ) $
$
4,485
11,880
25,293
102,056
470,074
63,521
(11,880 )
7,906
1,915
7,392
538,928
(1)
Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition costs and impairment
charges.
Year Ended April 30, 2021
Executive Search
Consulting
Digital
North
America
EMEA
Asia
Pacific
(in thousands)
Latin
America
RPO &
Professional
Search
Corporate Consolidated
Fee revenue
Total revenue
$ 515,844
$ 517,046
$ 287,306 $ 397,275 $ 138,954 $ 83,306 $ 17,500
$ 287,780 $ 399,104 $ 139,213 $ 83,463 $ 17,500
$
$
369,862
375,840
$
$
— $
— $
1,810,047
1,819,946
Net income attributable to Korn Ferry
Net income attributable to noncontrolling
interest
Other income, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other income, net
Integration/acquisition costs
Restructuring charges, net
Adjusted EBITDA(1)
$
114,454
$
$
81,522
$ 86,095 $ 98,099 $ 11,742 $ 16,676 $ 1,289
$
69,411
$ (78,542 ) $
F-36
1,108
(37,194 )
29,278
48,138
155,784
61,845
37,194
737
30,732
286,292
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
(1)
Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition costs and net restructuring
charges.
Year Ended April 30, 2020
Executive Search
Consulting
Digital
North
America
EMEA
Asia
Pacific
(in thousands)
Latin
America
RPO &
Professional
Search
Corporate Consolidated
Fee revenue
Total revenue
$ 543,095
$ 557,255
$ 292,366 $ 434,624 $ 170,314 $ 98,132
$ 294,261 $ 447,528 $ 172,978 $ 99,209
$ 29,400
$ 29,493
$
$
364,801
376,606
$
$
— $
— $
1,932,732
1,977,330
Net income attributable to Korn Ferry
Net income attributable to noncontrolling
interest
Other loss, net
Interest expense, net
Income tax provision
Operating income
Depreciation and amortization
Other loss, net
Integration/acquisition costs
Restructuring charges, net
Separation costs
Adjusted EBITDA(1)
$
104,946
$
$
61,092
$ 83,073 $ 120,725 $ 31,067 $ 22,885
$ 6,402
$
60,168
$ (84,461 ) $
2,071
2,879
22,184
43,945
176,025
55,311
(2,879 )
12,152
58,559
1,783
300,951
(1)
Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes, integration/acquisition costs, net restructuring
charges and separation costs.
Fee revenue attributed to an individual customer or country, other than the U.S. in fiscal year 2022 and the U.S and
United Kingdom in fiscal year 2021 and 2020, did not account for more than 10% of the total revenue in those fiscal
years. Fee revenue classified by country in which the Company derives revenues are as follows:
U.S.
United Kingdom
Other countries
Total fee revenue
2022
1,348,377
247,617
1,030,724
2,626,718
Year Ended April 30,
2021
(in thousands)
837,682
$
189,893
782,472
1,810,047
$
$
$
$
$
2020
875,605
204,271
852,856
1,932,732
Other than the U.S. in fiscal 2022 and the U.S. and United Kingdom in fiscal 2021 and 2020, no single country had
over 10% of the total long-lived assets, excluding financial instruments and tax assets. Long-lived assets, excluding
financial instruments and tax assets, classified by location of the controlling statutory country are as follows:
U.S. (1)
United Kingdom
Other countries
Total long-lived assets
(1)
Includes Corporate long-lived assets
13. Restructuring Charges, Net
2022
185,228
26,711
93,967
305,906
Year Ended April 30,
2021
(in thousands)
182,218
$
34,081
89,600
305,899
$
$
$
$
$
2020
199,436
35,739
102,630
337,805
There were no restructuring charges in fiscal 2022. In the fourth quarter of fiscal 2020, in light of the uncertainty in
worldwide economic conditions caused by COVID-19 and, as part of a broader program aimed at further enhancing
Korn Ferryʼs strong balance sheet and liquidity position, the Company adopted a restructuring plan intended to adjust
its cost base to the then-current economic environment and to position the Company to invest in its recovery. The
Company continued the implementation of this plan in the first quarter of fiscal 2021 and this resulted in restructuring
charges, net of $30.7 million and $40.5 million during fiscal 2021 and 2020, respectively, across all lines of business
relating to severance for positions that were eliminated.
F-37
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
In the third quarter of fiscal 2020, the Company adopted a restructuring plan to rationalize its cost structure to realize
the efficiencies and operational improvement that the investments in the Digital business have enabled us to realize.
This plan impacted the Consulting and Digital segments which resulted in restructuring charges, net of $18.1 million
in fiscal 2020, relating to severance for redundant positions that were eliminated.
Changes in the restructuring liability were as follows:
Restructuring Liability
(in thousands)
As of May 1, 2019
Restructuring charges, net
Reductions for cash payments
Non-cash payments
Exchange rate fluctuations
As of April 30, 2020
Restructuring charges, net
Reductions for cash payments
Non-cash payments
Exchange rate fluctuations
As of April 30, 2021
Reductions for cash payments
Exchange rate fluctuations
As of April 30, 2022
$
$
531
58,559
(16,737)
(8,053)
(147)
34,153
30,732
(56,387)
(3,968)
2,455
6,985
(4,829)
(654)
1,502
As of April 30, 2022 and 2021, the restructuring liability is included in the current portion of other accrued liabilities on
the consolidated balance sheets, except for $0.5 million and $0.6 million, respectively, which are included in other
long-term liabilities.
14. Goodwill and Intangible Assets
Changes in the carrying value of goodwill by reportable segment were as follows:
Executive Search
Consulting Digital
America EMEA
North
Asia
Pacific
RPO &
Professional
Search
Consolidated
(in thousands)
Balance as of May 1, 2020
$
173,014 $ 322,727 $ 45,721 $44,494 $
Adjustments
Exchange rate fluctuations
Balance as of April 30, 2021
Additions (1)
Exchange rate fluctuations
—
396
173,410
—
(440)
2,643
1,258
326,628
—
(1,274)
—
2,777
48,498
—
(934)
—
2,955
47,449
—
(877)
Balance as of April 30, 2022
$
172,970 $ 325,354 $ 47,564 $46,572 $
972 $
—
—
972
—
—
972 $
27,015 $
—
2,697
29,712
104,962
(2,514)
132,160 $
613,943
2,643
10,083
626,669
104,962
(6,039)
725,592
(1)
Additions to goodwill in fiscal 2022 was due to $76.8 million and $28.2 million from the acquisition of the Lucas Group and Patina Solutions Group, respectively.
Tax deductible goodwill from the Miller Heiman acquisition was $22.7 million and $24.5 million as of April 30, 2022
and 2021, respectively. Tax deductible goodwill from the PIVOT Leadership acquisition was $5.9 million and $6.6
million as of April 30, 2022 and 2021, respectively.
F-38
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Intangible assets include the following:
Amortized intangible assets:
Customer lists
Intellectual property
Proprietary databases
Non-compete agreements
Trademarks
Total (1)
Exchange rate fluctuations
Total Intangible assets
Gross
$146,799
69,100
4,256
910
8,986
$230,051
April 30, 2022
April 30, 2021
Accumulated
Amortization
$
(89,024) $
(40,720)
(4,256)
(910)
(5,261)
(140,171)
$
$
(in thousands)
Gross
$131,299
69,100
4,256
910
7,186
$212,751
Net
57,775
28,380
—
—
3,725
89,880
(110)
89,770
Accumulated
Amortization
$
Net
(76,489) $ 54,810
35,477
(33,623)
22
(4,234)
—
(910)
2,550
(4,636)
92,859
(119,892)
$
90
$ 92,949
(1)
In fiscal 2022 there were intangible assets additions of $11.6 million and $5.7 million from the acquisition of the Lucas Group and Patina Solutions Group,
respectively.
Acquisition-related intangible assets acquired in fiscal 2022 consists of customer relationships and tradenames of
$15.5 million and $1.8 million, respectively, with weighted-average useful lives from the date of purchase of seven
years and two years, respectively.
Amortization expense for amortized intangible assets was $20.3 million, $19.2 million and $16.3 million during fiscal
2022, 2021 and 2020, respectively. Estimated annual amortization expense related to amortizing intangible assets is
as follows:
Year Ending April 30,
2023
2024
2025
2026
2027
Thereafter
Estimated
Annual
Amortization
Expense
(in thousands)
20,384
17,583
16,889
16,388
10,635
7,891
89,770
$
$
All amortizable intangible assets will be fully amortized by the end of fiscal 2032.
15. Leases
The Companyʼs lease portfolio is comprised of operating leases for office space and equipment and finance leases
for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Companyʼs
leases include both lease and non-lease components. Non-lease components primarily include maintenance,
insurance, taxes and other utilities. The Company combines fixed payments for non-lease components with its lease
payments and accounts for them as a single lease component, which increases its ROU assets and lease liabilities.
Some of the leases include one or more options to renew or terminate the lease at the Companyʼs discretion.
Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are
not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for
leases with an initial term of 12 months or less.
As most of the Companyʼs leases do not provide an implicit rate, the Company uses its incremental borrowing rate
based on the information available at commencement date in determining the present value of the future minimum
lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since
it has a centrally managed treasury function. The Companyʼs incremental borrowing rate is estimated to approximate
the interest rate on a collateralized basis with similar terms and payments in a similar economic environment.
Operating leases contain both office and equipment leases and have remaining terms that range from less than one
year to 10 years, some of which also include options to extend or terminate the lease. Finance leases are comprised
F-39
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
of equipment leases and have remaining terms that range from less than one year to five years. Finance lease assets
are included in property and equipment, net while finance lease liabilities are included in other accrued liabilities and
other liabilities.
During fiscal 2022, the Company reduced its real estate footprint and as a result recorded an impairment charge of
the ROU assets of $7.4 million recorded in the consolidated statements of income. On November 1, 2021, the
Company acquired Lucas Group and as a result recognized ROU assets of $3.8 million with a corresponding liability
of $9.4 million. On April 1, 2022, the Company acquired Patina Solutions Group and as a result recognized ROU
asset of $0.2 million with a corresponding liability of $0.7 million. In both acquisitions, the ROU asset was adjusted to
reflect unfavorable lease terms when compared with current market rates.
As a result of the acquisition of the Acquired Companies in fiscal 2020, the Company recognized ROU assets of $3.2
million with a corresponding liability of $6.7 million. The ROU asset balance was adjusted by reclassification of pre-
existing prepaid expenses, restructuring liabilities and deferred rent totaling $3.5 million. As part of the plan for
integrating the Acquired Companies, the Company decided to exit 16 office leases and as a result, recorded an
impairment charge of the ROU assets of $2.3 million in fiscal 2020 recorded in the consolidated statement of income.
The components of lease expense were as follows:
Finance lease cost
Amortization of ROU assets
Interest on lease liabilities
Operating lease cost
Short-term lease cost
Variable lease cost
Lease impairment cost
Sublease income
Total lease cost
2022
Year Ended April 30,
2021
(in thousands)
2020
$
$
1,065
84
1,149
53,092
966
10,986
7,392
(1,119)
72,466
$
$
1,221
114
1,335
56,166
474
11,592
—
(657)
68,910
$
$
1,820
149
1,969
57,683
1,111
13,562
2,282
(447)
76,160
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Financing cash flows from finance leases
ROU assets obtained in exchange for lease obligations:
Operating leases
Finance leases
2022
Year Ended April 30,
2021
(in thousands)
2020
$
$
$
$
62,996
1,157
49,235
1,586
$
$
$
$
66,991
1,324
13,638
516
$
$
$
$
59,631
1,833
15,246
1,333
Supplemental balance sheet information related to leases was as follows:
F-40
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
Finance Leases:
Property and equipment, at cost
Accumulated depreciation
Property and equipment, net
Other accrued liabilities
Other liabilities
Total finance lease liabilities
Weighted average remaining lease terms:
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
Maturities of lease liabilities are as follows:
Year Ending April 30,
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: imputed interest
Total
Year Ended April 30,
2022
2021
(in thousands)
$
$
$
$
5,770
(3,085)
2,685
1,049
1,657
2,706
$
$
$
$
4,801
(2,590)
2,211
1,010
1,301
2,311
5.1 years
3.3 years
5.0 years
2.7 years
4.3%
3.2%
4.8%
4.2%
Operating
Financing
(in thousands)
$
$
55,890
47,290
40,353
37,427
17,918
23,984
222,862
23,041
199,821
$
$
1,115
776
523
293
128
—
2,835
129
2,706
F-41
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
16. Acquisition
The following table provides a summary of the net assets acquired in the periods indicated (no acquisitions were
completed in fiscal 2021):
Current assets (1)
Long-term assets
Intangibles assets
Current liabilities
Long-term liabilities
Net assets acquired
Purchase price
Goodwill
Year Ended
April 30
2022 (2), (3)
2020 (4)
(in thousands)
$
$
36,071
9,351
17,300
17,672
16,210
28,840
133,802
104,962
$
$
44,475
15,024
45,400
29,503
5,720
69,676
108,602
38,926
(1)
Included in current assets is acquired receivables in the amount of $24.5 million and $41.1 million for acquisitions
completed in fiscal 2022 and 2020, respectively.
(2) On April 1, 2022, the Company completed its acquisition of Patina Solutions Group for $42.9 million, net of cash acquired.
We believe Patina Solutions Group brings to the Company substantial interim executive solutions expertise across
multiple industry verticals as well as offers ideal solutions for todayʼs nomadic labor market. Patinaʼs vast network of C-
suite, top-tier, and professional interim talent spans functional area of expertise such as finance, operations, legal, human
resources, IT and more. This combination presents real, tangible opportunity for Korn Ferry and our clients looking for the
right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including
on an interim basis. Actual results of operation of Patina Solution Group are included in the Companyʼs consolidated
financial statement from April 1, 2022, the effective date of the acquisition.
(3) On November 1, 2021, the Company completed its acquisition of Lucas Group for $90.9 million, net of cash acquired.
Lucas Group has contributed a substantial professional search and interim expertise that has enhanced the Companyʼs
search portfolio. The addition of Lucas Group to Korn Ferryʼs broader talent acquisition portfolio – spanning Executive
Search, RPO, and Professional Search – has accelerated Korn Ferryʼs ability to capture additional share of this significant
market. Lucas Group is included in the RPO & Professional Search segment. Actual results of operations of Lucas Group
are included in the Companyʼs consolidated financial statements from November 1, 2021, the effective date of the
acquisition.
(4) On November 1, 2019, the Company completed its acquisition of the Acquired Companies for $108.6 million, net of cash
acquired. The Acquired Companies contributed a world-class portfolio of learning, development and performance
improvement offerings and expertise to Korn Ferry and bolster the Companyʼs substantial leadership development
capabilities. These companies are included in the Digital segment. The addition of the Acquired Companies further
expanded Korn Ferryʼs vast IP and content and leveraged the firmʼs digital delivery platforms. Actual results of operations
of the Acquired Companies are included in the Companyʼs consolidated financial statements from November 1, 2019, the
effective date of the acquisition. During fiscal 2021, the Company finalized the purchase price allocation by recording an
increase in goodwill of $2.6 million as a result of additional tax liabilities.
For each acquisition, the aggregate purchase price was allocated on a preliminary basis to the assets acquired and
liabilities assumed on their estimated fair values at the date of acquisition. As of April 30, 2022, the aggregate
purchase price allocations for Lucas Group and Patina Solutions remain preliminary with regard to income taxes. The
measurement period for purchase price allocation ends as soon as information on the facts and circumstances
become available, not to exceed 12 months.
F-42
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
17. Commitments and Contingencies
Employment Agreements
The Company has a policy of entering into offer letters of employment or letters of promotion with vice presidents,
which provide for an annual base salary and discretionary and incentive bonus payments. Certain key vice presidents
who typically have been employed by the Company for several years may also have a standard form employment
agreement. Upon termination without cause, the Company is required to pay the amount of severance due under the
employment agreement, if any. The Company also requires its vice presidents to agree in their employment letters
and their employment agreement, if applicable, not to compete with the Company during the term of their
employment and for a certain period after their employment ends.
Litigation
From time to time, the Company has been and is involved in litigation incidental to its business. The Company is
currently not a party to any litigation which, if resolved adversely against the Company, would, in the opinion of
management, after consultation with legal counsel, have a material adverse effect on the Companyʼs business,
financial position or results of operations.
18. Subsequent Event
Quarterly Dividend Declaration
On June 21, 2022, the Board of Directors of the Company approved an increase of 25% in the Companyʼs quarterly
dividend policy to $0.15 per share and declared a cash dividend of $0.15 per share with a payment date of July 29,
2022 to holders of the Companyʼs common stock of record at the close of business on July 6, 2022. The declaration
and payment of future dividends under the quarterly dividend policy will be at the discretion of the Board of Directors
and will depend upon many factors, including the Companyʼs earnings, capital requirements, financial condition, the
terms of the Companyʼs indebtedness and other factors that the Board of Directors may deem to be relevant. The
Board may amend, revoke or suspend the dividend policy at any time and for any reason.
On June 21, 2022, the Board of Directors approved an increase in the Companyʼs stock repurchase program of
approximately $300 million, which brought our available capacity to repurchase shares in the open market or privately
negotiated transactions to $318 million.
Credit Facility
On June 24, 2022, the Company entered into an amendment (the “Amendment”) to its December 16, 2019 Credit
Agreement (as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and
Bank of America, National Association as administrative agent, to, among other things, extend the existing maturity
date and provide for a new delayed draw term loan facility. The Amended Credit Agreement provides for five-year
senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit
facility (the “Revolver”) and a $500 million delayed draw term loan facility (the “Delayed Draw Facility”, and together
with the Revolver, the “Credit Facilities”). The Amended Credit Agreement also provides that, under certain
circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving
commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated
secured net leverage ratio of 3.25 to 1.00.
Extensions of credit under the Delayed Draw Facility are available to the Company in up to two advances through
June 24, 2023. Any amounts undrawn under the Delayed Draw Facility as of June 24, 2023 will no longer be
available to the Company. The Amended Credit Agreement contains certain customary affirmative and negative
covenants that, among other things, restrict the Companyʼs ability to incur additional indebtedness, grant liens and
make certain acquisitions, investments, asset dispositions and restricted payments. In addition, the Amended Credit
Agreement contains a covenant that requires the Company to maintain a maximum consolidated secured leverage
ratio of 3.50 to 1.00 (which may be temporarily increased to 4.00 following certain material acquisitions under certain
circumstances) (the “Financial Covenant”).
The principal balance of the Delayed Draw Facility, if any, is subject to annual term loan amortization of 2.5% for the
fiscal quarters ending September 30, 2022 through June 30, 2024, and 5.0% for the fiscal quarters ending September
30, 2024 through June 30, 2027, with the remaining principal due at maturity. The principal balance of the Revolver, if
any, is due at maturity. The Credit Facilities mature on June 24, 2027 and any unpaid principal balance is payable on
F-43
KORN FERRY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022 (continued)
this date. The Credit Facilities may also be prepaid and terminated early by the Company at any time without
premium or penalty (subject to customary breakage fees).
Amounts outstanding under the Amended Credit Agreement will bear interest at a rate equal to, at the Companyʼs
election, either Term Secured Financing Overnight Rate (“SOFR”) plus a SOFR adjustment of 0.10%, plus an interest
rate margin between 1.125% per annum and 2.00% per annum, depending on the Companyʼs consolidated net
leverage ratio, or base rate plus an interest rate margin between 0.125% per annum and 1.00% per annum,
depending on the Companyʼs consolidated net leverage ratio. In addition, the Company will be required to pay to the
lenders ticking fee of 0.20% per annum on the actual daily unused portion of the Delayed Draw facility, and a
quarterly commitment fee ranging from 0.175% to 0.300% per annum on the actual daily unused amount of the
Revolver, based upon the Companyʼs consolidated net leverage ratio at such time, and fees relating to the issuance
of letters of credit.
F-44
8
KORN FERRY | ANNUAL REPORT 2022
Annual meeting
Date: September 22, 2022
Time: 8:00 a.m. Pacific Time
Virtual Meeting Site:
www.virtualshareholdermeeting.com/KFY2022
Registrar &
transfer agent
For address changes, account
consolidation, registration changes,
stock holdings, and lost stock
certificates, please contact:
Computershare
150 Royall Street
Canton, Massachusetts 02021
USA
+1 877 889 7584
www.computershare.com/investor
Contacts
For investors:
Gregg Kvochak
+1 310 556 8550
For media:
Dan Gugler
+1 310 226 2645
Board of
directors
Gary Burnison
Chief Executive Officer
Christina Gold
Non—Executive Chair
Doyle Beneby
President and Chief Executive Officer,
Midland Cogeneration Venture
Laura Bishop
Former Executive Vice President
and Chief Financial Officer at USAA
Jerry Leamon
Former Global Managing Director,
Deloitte
Angel Martinez
Former Chairman and Chief Executive
Officer, Deckers Brands
Debra Perry
Former Senior Managing Director,
Moody’s Investors Service, Inc.
Lori Robinson
Retired General for the US Air Force
George Shaheen
Retired, Former Non—Executive Chair
Stock listing
Common stock is traded on
the New York Stock Exchange
under the symbol KFY.
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Korn Ferry is a global organizational
consulting firm. We work with our clients
to design optimal organization structures,
roles, and responsibilities. We help them
hire the right people and advise them on
how to reward and motivate their workforce
while developing professionals as they
navigate and advance their careers.
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