KORN FERRY 10-K

Item 1. Business ABOUT KORN FERRY Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global organizational consulting firm, synchronizing our clients’ strategy, operations and talent to drive superior business performance. During fiscal 2021, we partnered with 13,038 organizations. Our clients include many of the world’s largest and most prestigious public and private companies, middle-market and emerging growth companies, as well as government and nonprofit organizations. We serve approximately 94% of the Fortune 100 and 86% of the Financial Times Stock Exchange 100. We have built strong client loyalty, with 90% of our engagements in fiscal 2021 being completed on behalf of clients for whom we had conducted engagements in the previous three fiscal years. 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: Organization Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is supported by a comprehensive range of some of the world’s leading intellectual property (“lP”) and data. 2. Digital leverages an artificial intelligence (“AI”) powered, machine-learning platform to identify the best structures, roles, capabilities and behaviors needed to drive business forward. The end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action. 3. Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organization fit, and salary benchmarking builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific and Executive Search Latin America). 4. RPO and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions. In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas worldwide, and in the fourth quarter of our fiscal 2020, the World Health Organization declared it a pandemic. The negative business impact of the coronavirus outbreak was initially most pronounced in the Asia Pacific region. During fiscal 2021, the impact was felt throughout all the geographical areas in which we do business. Governments and companies implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments . Such restrictions initially impacted our ability to provide our products and services to our clients with such impact lessening in the second, third and fourth quarters of fiscal 2021 as the world learned to operate in different ways. Further, the outbreak has restricted the level of economic activity in the areas in which we operate and had an adverse impact on demand for and sales of our products and services throughout the pandemic. All of our reportable segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter of fiscal 2020 and further decreased in the first quarter of fiscal 2021 due to a decrease in demand as clients responded to the pandemic. As a result of this and, as part of a broader program aimed at taking advantage of our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan that was intended to adjust our cost base to the current economic environment and to position us to invest in the recovery. This plan included (i) a reduction in workforce, which was completed by the end of the first quarter of fiscal 2021 and resulted in restructuring charges of $40.5 million and $30.7 million associated with severance during fiscal 2020 and 2021, respectively, (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization through December 31, 2020, and (iv) other cost saving measures relating to general and administrative expenses. In the third and fourth quarter of fiscal 2021, the Company saw business conditions improve substantially from where they were in the first and second quarters with fee revenues increasing 27% in the second quarter of fiscal 2021 1 compared to the first quarter, 9% in the third quarter from the second quarter of fiscal 2021 , and 17 % in the fourth quarter from the third quarter of fiscal 2021 to $ 555 . 2 million , and all lines of business contributing to the improvement of fee revenue. As such, no further restructuring actions were taken. With the sequential improvement in fee revenue and leveraging of the restructured cost base, the Company experienced better profitability each quarter sequentially during fiscal 2021 . In the first quarter of fiscal 2021, the Company’s results were better than anticipated , and the Company decided to pay all colleagues and Directors approximately 50% of the amount they gave up. I n the second and third quarter of the Company’s 2021 fiscal year , the Company made a decision to pay all colleagues their full salary and non-executive directors their full retainers . In the fourth quarter of f iscal 2021, the Company made a decision to repay all colleagues the remaining 50% of the first quarter salary reductions, with the exception of the Senior Leadership team and the Directors . Beginning on January 1, 2021 salaries of our employees were fully reinstated. Throughout this fiscal year, we continued to innovate to support our clients’ business needs to adapt and reconfigure strategy and talent to accelerate growth during a post-COVID-19. And, we have continued to make significant investments in our business that have strengthened our IP, enhanced our geographical presence, added complementary offerings to deepen client relationships, and broadened our capabilities. Our service delivery organizes around the Korn Ferry Potential Gap™, a model for helping clients understand how to identify and close gaps in workforce shaping, talent practices, organization design and culture to allow organizations to reach their full potential. We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (the “SEC”), pursuant 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 www.sec.gov . We also make available, free of charge on the Investor Relations portion of our website at http://ir.kornferry.com , our annual, quarterly, and current reports, and, if applicable, amendments to those reports, filed or furnished pursuant to 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 . 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 important information, which we encourage you to review. 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 2600, Los Angeles, California 90067. THE KORN FERRY OPPORTUNITY With long overdue calls for social change, the pandemic, and a workforce that has been upended, it is clear that we will continue to experience more change over the next couple of years than we’ve seen in the past decade. Different work will need to get done—and work will need to get done differently. In this kind of environment in which ambiguity abounds, leaders will need to adjust, and companies will need to be agile, decisive, act and scale fast. Aligned around our vision to be the preeminent organizational consulting firm, Korn Ferry has continued to innovate to support our clients’ business needs to adapt to this new and evolving environment. We are pursuing an ambitious strategy that will help us focus relentlessly on clients and collaborate intensively across our 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, giving our consultants more frequent and expanded opportunities to engage with clients. The expansion of our business into larger addressable markets offers higher growth potential and more durable and visible revenue streams. While most organizations can develop a sound strategy, they often struggle with how to make it stick. We help companies design their organization—the structure, roles and responsibilities—to seize these opportunities. In addition, we help organizations select and hire the talent they need to execute their strategy—and show them the best way to compensate, develop and motivate their people. 2 We do this through our five core capabilities : Core Capabilities Organization Strategy We map talent strategy to business strategy, designing operating models and organization structures that help companies put their plans into action. Assessment and Succession We identify the talent you need, compare that to the talent you have, and then help close those gaps. Talent Acquisition From executive search to recruitment process outsourcing (“RPO”), we help organizations attract and retain the right people across all functions, at every level. 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 the organization can afford. Integrated Market Offerings Additionally, we deliver differentiated approaches for our clients through our integrated market offerings, which bring together our best thinking from across our core capabilities. These offerings, guided by an ever-changing business environment, target specific client needs and demonstrate Korn Ferry’s competitive advantage and durability. • Workforce Transformation - Post COVID-19, we anticipate that organizations will operate more virtually, communicate with workforces differently, consider deploying less contingent labor and will retrain and reskill workers to meet changing needs. Korn Ferry delivers successful workforce transformation by assessing the current organization – structure, culture, leadership, people performance – and benchmarking against the organization needed to meet the changes to drive real workforce transformation. • Diversity, Equity & Inclusion - We help organizations build diverse and inclusive organizations, unlocking the power and potential of all their people, through a systematic approach to building inclusive organizations to deliver superior organization performance. • Accelerating Revenue Growth – Today’s selling environment is more complex with sales teams being challenged to deliver value. In order to do this, sellers need the right tools, training and approach to deliver success. Korn Ferry combines our technology and methodology to help organizations accelerate their revenue growth. • People Cost Optimization - In this disruptive world, there can be increased pressure to cut costs and drive efficiency. We work with leaders to manage the key drivers of cost – organization, people, and rewards. We put in place strategies to help cost reductions stick, performance is maintained, and growth is achieved – making client organizations fit for the future. From core through integrated, across our solution portfolio, we have the advantage of best-in-class solutions, products and talent, coupled with deep market expertise, to deliver a seamless approach to organization, talent and reward strategies. Our change management capabilities further support our clients, through the successful execution of their transformational strategies and the effective implementation of their people and culture programs. OUR INTELLECTUAL PROPERTY AND TECHNOLOGY We work across five capabilities all of which are fueled by robust IP, data and our digital suite of platforms and technology. Our capabilities are intended to cover the whole talent journey, each one thereby strengthening our work and thinking in the next. By bringing together our industry knowledge, methodology, measurements, and data insights, we can not only benchmark clients against the best but also help them make the changes necessary to achieve their optimal performance. We seek to offer a complete view of the talent they need and the talent they have. We endeavor to know if their rewards are fair and effective and we strive to align their structures, role profiles, and 3 people to support the strategy so that clients know where to focus their efforts to create lasting change in the organization. The Korn Ferry Intelligence Cloud At the core of our approach is deep IP, rich data, and research that informs smarter, more data-driven outcomes for our clients. The Korn Ferry Intelligence Cloud uses descriptive and predicative analytics to provide insights and recommend actions, helping organizations enable business strategies through their talent. With more than five billion total data points, including approximately 87 million assessment results, seven million employee engagement survey responses, and reward data for 25 million employees across over 26,000 organizations and more than 150 countries, our Intelligence Cloud fuels our services, solutions and products, bringing clients a research-based foundation to support their decision-making process. The result is data-driven decisions to help clients speed up their business transformation — whether that is assessing and optimizing the talent they have, identifying the talent they want, or hiring the talent they need. The Korn Ferry Institute The Korn Ferry Institute, our research and analytics arm, develops robust research, innovative IP, and advanced analytics that enable Korn Ferry colleagues to engage clients and partner with people and organizations to activate their potential and be successful. At the highest level, the Korn Ferry Institute is built on three core pillars: 1. Robust Research and Thought Leadership to anticipate and innovate: We explore trends and define leadership, human and organizational performance for a fast-changing economy. For example, our researchers recently identified the underlying drivers for organizational transformation highlighted in our high-impact Radically Human Transformation solution. 2. Science-Based IP to enable growth: We develop and measure what is required for success at work in the new economy. During the pandemic, we identified eight distinctive Personas to link assessment insights to scalable development journeys and optimize learning and resiliency. 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 to produce predictive insights and deliver demonstrable client impact. Recent client projects include identifying levers for behavioral and structural inclusion (DE&I), predicting performance using KF assessment, engagement and pay data, and identifying capabilities that correlate most highly with organizational effectiveness and performance. In the fiscal year ahead, we will continue to innovate, with the goal of driving even greater business and societal impact as we focus on leveraging neuroscience, bolstering climate change resiliency, leading in a network economy, building a diverse pipeline of inclusive, equitable organizations, and defining the future of leadership. INDUSTRY TRENDS The emergence of COVID-19 is an event of historic magnitude, with repercussions that will undoubtedly be felt for years. There is virtually no company or industry that has not been impacted by the crisis, forcing them to evolve their talent processes and find new ways to deliver customer value as they lead employees through this uncertainty and change. And, while the world battles this pandemic and the resulting adverse economic and humanitarian consequences, we are seeing an equally charged uprising in the United States over racial injustice driving an agenda for social equality. It’s a challenging business environment, and organizations are increasingly turning to partners like Korn Ferry to synchronize their strategy with their talent as an answer to these pressing business challenges, specifically: ▪ Creating cultures of inclusion where diversity is intrinsically valued; where every individual can contribute fully. ▪ Pivoting from in-person/classroom delivery and training to a model where services and solutions are consumed virtually. ▪ Developing employee experience (EX) and communications programs to improve declining morale, leading employees through change to maintain employee engagement and purpose in post COVID-19 working environments. 4 ▪ Managing the increased demand for career transition, outplacement and leadership coaching services as part of talent strategy and organizational change. ▪ Managing potential market volatility by optimizing cost in reward structures and workforce mix to sustain productivity. ▪ Achieving growth and cost synergies from M&A transactions without destroying employee engagement. ▪ Having the right people, mindsets and structures to achieve successful digital transformations. ▪ Accelerating revenue in the post COVID-19 economy through sales team transformation, sales force effectiveness training and an enhanced customer experience. ▪ Transitioning to the workforce of the future to address changes in work such as the need for greater agility and new roles being created by technology, plus changes to worker preferences such as remote working. ▪ Changing ingrained ways of thinking and building strategies that energize employees and drive performance in the face of disruptive change. Developing leaders, with unique needs, at all levels and delivering superior results, at scale. In addition, we believe the following factors will have a long-term positive impact on our industry: ▪ Companies are actively in search of trusted advisors that can offer a full suite of organizational consulting products and solutions, to manage the multiple needs of their business on a global scale using a common language and technology platform. ▪ Over the next decade, demand for skilled workers will outstrip supply, resulting in a global talent shortage. Organizations must make talent strategy a key priority and take steps now to educate, train and upskill their existing workforces to attract and develop next generation talent, including adopting Gen Z into the workforce, embracing AI to increase hiring efficiencies and focusing on the need to recruit hard-to-find skill sets . ▪ Companies are increasingly leveraging big data and predictive analytics to measure the influence of activities across all aspects of their business, including their people. They expect their partners to deliver superior metrics and better ways of driving results. ▪ There is an increasing demand for professionals with not just the right experience, but also the right leadership competencies, traits and drivers to meet the requirements of the position and organizational culture today and prepare it for tomorrow. ▪ Executive management tenure continues to hover at historically low levels. ▪ The balance of power is shifting from the employer to the employee, as more people take charge of their own careers and the gig economy continues to grow in popularity. ▪ Companies are increasingly operating in an environment in which they are answerable not just to investors but also to the perceptions and expectations of employees and society and the subsequent need to align company culture around societal and purpose driven goals – Environmental, Social and Governance (ESG). ▪ Talent mobility is being recognized as a critical driver in the recruitment, development and retention of an organization’s people, particularly their early career professionals. ▪ Succession planning remains under heightened scrutiny amidst pressure to generate growth, shorter C suites tenures and the emphasis being placed on making succession planning a systemic governance process within global organizations. ▪ Executive pay is under a perpetual spotlight, making it imperative that organizations get this right to ensure the public trust and establish a functional compensation strategy that starts right at the top and helps to drive retention and close the diversity pay gap. 5 ▪ More companies are maintaining strategic focus by choosing to outsource non-core functions like talent acquisition to RPO providers who can offer efficient, high-quality services. GROWTH STRATEGY Our objective is to expand our position as the preeminent organizational consulting firm. In order to meet this objective, we will continue to pursue our multi-pronged strategy: Drive a One Korn Ferry Go-to-Market Strategy Our synergistic go-to-market strategy, bringing together our core solutions, is driving more integrated, scalable client relationships. This is evidenced by the fact that approximately 70% of our revenue comes from clients that have utilized multiple lines of our business. To better compete in the market, we will continue to evolve from our traditional line of business segmentation to integrated solutions along industry lines. A pillar of our growth strategy is our Marquee and Regional Accounts program. This program drives significant global and regional strategic account development and provides a framework for all our client development activities as we successfully deepen client relationships. Our Marquee and Regional Accounts program now comprises approximately one-third of our global fee revenue. In the year ahead, we will continue to expand our account management activities. This includes driving consistent account selection, assignment, planning and execution; implementing account-based marketing; optimizing the pipeline and opportunity process; integrating our best thinking across solutions; and hiring additional dedicated account leaders. The success of this approach has now been extended to include a broader set of Regional Accounts to be serviced with this same attention and care. Deliver Client Excellence and Innovation Technology is positioned to reshape the future of work and with it, the workforce as we know it today. Market innovations contribute to more accurate, faster, cost-effective, and impactful business and human decisions. Our firm is uniquely positioned here. We have a set of assets that are critical to such decisions: deep science on organization and human motivation, data on talent, work and rewards, and proven products and solutions. The scientists in our Korn Ferry Institute in partnership with the technologists in our Digital business are focusing on this future, developing new software-as-a-service (“SaaS”) -based HR tech solutions. At the heart of this, is the new Korn Ferry Intelligence Cloud™, an integrated digital platform that brings together proprietary internal and external market data. This platform, powered by artificial intelligence, is trained by our more than 50 years of empirical data and feeds a suite of applications for recruiting, assessing, and advancing talent. These applications allow us to create meaningful impact across our clients’ business, from organizational development and job profiling to selection, training, individual and team development, succession planning, M&A, DE&I, digital transformation and more. This SaaS model creates revenue durability and helps us generate wider and more long-term relationships with our clients through large scale and technology-based solutions. Digital, with its discrete capabilities, also enables us to engage businesses we might not have previously worked with when a comprehensive consulting solution was not required or cost was a barrier. We continue to seek ways to further scale these profitable products to our global clients. Beyond our core business-to-business (“B2B”) business, we continue our expansion into the consumer market. More than 120,000 consumers have registered and are using Korn Ferry Advance, our business-to-consumer offering, since it launched in the United States (the “U.S.”) in July 2017. Korn Ferry Advance will continue to leverage cutting-edge technology as well as the greatest asset we have—our consultants. Korn Ferry Advance is also being used to deliver our Consulting business, primarily in leadership and professional development. Create the Top-of-Mind Brand in Organizational Consulting Along with our people and IP, the Korn Ferry brand is the strongest asset of the Company. Positioning Korn Ferry as the preeminent global organizational consultancy and demonstrating our ability to drive business performance through people remains the goal of our global marketing program. We evolved our brand and value proposition post-COVID-19 to focus messaging on enabling people and organizations to exceed their potential by solving their biggest people challenges around performance, leadership, recruitment, culture, team, and development. The Korn Ferry Potential Gap is our One Korn Ferry story to help clients close the gap between where they are now and where they need to be – having the right talent, in the right roles, with the proper structure, to achieve sustainable growth. The Korn Ferry brand is brought to market via two distinct channels: primarily through B2B and in the early stage of business-to-consumer (“B2C”). In both instances, we communicate key core values about what we do, expressing that we are ‘more than’ as well as inspiring action in the way our customers run their businesses and in the way that individuals approach their careers. We are executing against our strategy with these priorities in mind: 6 ▪ One Korn Ferry—We will partner with internal and external stakeholders to advance a differentiated one Korn Ferry story and brand that minimizes operational risks, engages our employees, resonates in the broader market , and becomes a platform for differentiation and sustainable growth. ▪ Generate Demand—We will assess market trends, liaise with clients, and partner with internal stakeholders to develop a steady cadence of thought leadership-based campaigns, public relations and demand generation activities that engage clients and prospects in meaningful conversations. Pursue Transformational Opportunities at the Intersection of Talent and Strategy We have developed a core competency in identifying, acquiring and integrating M&A targets that have the potential to further our strategic objectives and enhance shareholder value. Our disciplined approach to M&A considers strategic alignment and cultural fit along with economics that deliver a return in excess of our cost of capital. M&A will continue to play a critical role in the ongoing evolution of Korn Ferry into an industry specialized, business outcomes-oriented solution provider at the intersection of talent and strategy. While we will continue to execute on our targeted organic growth pathways, M&A will be a vital component of our future growth and capital deployment strategies. OUR ORGANIZATION The Company’s seven reportable segments operate through four lines of business: Consulting, Digital, Executive Search, and RPO & Professional Search. Consulting, Digital, and RPO & Professional Search are managed on a global basis with operations in North America, Europe, the Middle East and Africa (“EMEA”), Asia Pacific and Latin America. Our Executive Search business is managed and reported on a geographic basis across four regions and represents four of the Company’s reportable segments: Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific and Executive Search Latin America. While our segments stand as separate operating units, they are united as we work in the service of our clients. Notably, the close alignment of our Consulting and Digital practices has enabled us to create integrated solutions that continue to drive larger projects with greater sustainability and more durable revenues. Consulting Overview —Korn Ferry helps clients design their organization—the structure, roles and responsibilities—and shows them the best way to develop, motivate and compensate their people. Our focus is on making change happen and helping people and organizations exceed their potential. Through our talented colleagues, robust solutions and IP, our consultants can help solve the most disruptive and challenging organizational and talent problems facing clients. Our Consulting team is comprised of top leadership and organizational consultants and thought leaders, working in 82 cities in 49 countries. Our consultants are predominately recruited from local markets, so they are sensitive to local issues, but work together in global teams , resulting in larger opportunities with greater client and commercial impact. Within Consulting, we offer the following core capabilities: Organizational Strategy : We map talent strategy to business strategy, designing operating models and organization structures that help companies put their plans into action. Assessment and Succession: We identify the talent clients need, compare that to the talent they have, and then help close those gaps. 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 the organization can afford. These solutions are bundled into integrated market offerings ( Workforce Transformation, DE&I, Accelerating Revenue Growth, People Cost Optimization ) that include our IP and data and reflect our best thinking across our solutions, enabling us to develop innovative and differentiated approaches to our clients’ most pressing business challenges. We partner with some of the world’s most admired organizations in the creation and execution of talent strategy. We accomplish this through consulting solutions that address how people work and show how to nurture them so that their strategies succeed. We capitalize on the breadth of our IP, service offerings and expertise to do what is right for the client—transforming ideas into actionable insights. Clients can depend on our solutions to be data backed, market tested and agile. Client Base —During fiscal 2021, the Consulting segment partnered with approximately 4,500 clients across the globe and 27% of Consulting’s fiscal 2021 fee revenue was referred from Korn Ferry’s other lines of business. Our clients 7 come from the private, public , and not-for-profit s ectors, across every major industry and represent diverse business challenges . Competition —The people and organizational consulting market is fragmented with different competitor sets for each of our core solutions. It is also extremely competitive, as companies are increasingly seeking ways to synchronize their strategy and talent to drive superior business performance. Our competitors include consulting organizations affiliated with accounting, insurance, information systems and strategy consulting firms. Although such firms are our largest competitors, we also compete with smaller boutique firms that specialize in specific regional, industry or functional aspects of leadership and HR consulting. Digital Overview —As the world changes, organizations need to be agile, decisive, and to act and scale fast. Korn Ferry Digital empowers leaders to reach their goals by optimizing the potential of their people. The subscription-based platform that powers our Digital business combines our bank of employee data and Korn Ferry methodology to benchmark where individuals and teams are now, and then identifies the best structure, roles, capabilities and behaviors and rewards needed to drive organizational effectiveness. Digital delivers clear insight with the training and tools needed to align organizational structure with business strategy. Our Digital solutions cover the talent journey: ▪ Korn Ferry Assess: our assessment solution helps clients understand, develop and leverage talent ▪ Korn Ferry Listen: customized employee engagement programs ▪ Korn Ferry Pay: market-leading compensation data and tools for employee rewards programs ▪ Korn Ferry Recruit: AI-enabled talent acquisition tools that streamline hiring ▪ Korn Ferry Select: our pre-hire assessment to help clients find and hire the best talent Our Digital team is comprised of top leadership, organizational consultants and thought leaders, located in 67 cities in 47 countries. Our experts are predominately recruited from local markets, so they are sensitive to local issues, but work together in global teams , resulting in larger opportunities with greater client and commercial impact. Client Base —During fiscal 2021, the Digital segment partnered with approximately 7,900 clients across the globe and 35% of Digital’s fiscal 2021 fee revenue was referred from Korn Ferry’s other lines of business. Our clients come from the private, public and not-for-profit sectors, across every major industry and represent diverse business challenges. Competition — The competitor landscape is fragmented. We compete with specialist suppliers, boutique and large consulting companies in each solution area. One of our advantages is the way we have linked our data, IP, and our technology platform. This allows us to provide an end-to-end view of talent. We are able to show what success looks like across more than 4,000 roles, and our Success Profile model provides a holistic way to look at a job from multiple angles, providing connectivity from people to strategy. Executive Search Overview —Korn Ferry helps clients attract and hire leaders who fit with their organization and make it stand out. Our services are typically used to fill executive-level positions, such as board directors, chief executive officers, chief financial officers, chief operating officers, chief information officers, chief human resource officers and other senior executive officers. All our reportable segments within the Executive Search business line provide services that concentrate on searches for positions with average annual cash compensation of $360,000 or more, or comparable compensation in foreign locations. The industry is comprised of retained and contingency recruitment firms. Retained firms, such as Korn Ferry, typically charge a fee for their services equal to approximately one-third of the first-year annual cash compensation for the position being filled regardless of whether the position is filled. Contingency firms generally work on a non-exclusive basis and are compensated only upon successfully placing a recommended candidate. As part of this retainment, we assemble a team of consultants with appropriate geographic, industry and functional expertise. We utilize a standardized and differentiated approach to placing talent that integrates our research-based IP with our practical experience. Our search consultants serve as management advisors who work closely with the client in identifying, assessing and placing qualified candidates. In fiscal 2021, we executed more than 5,400 new executive search assignments. Industry Specialization —Consultants organized in six broad industry groups bring an in-depth understanding of the market conditions and strategic management issues faced by clients within their specific industries and geographies. 8 We are continually looking to expand our specialized expertise through internal development and strategic hiring in targeted growth areas. Percentage of Fiscal 2021 Assignments Opened by Industry Specialization Global Industries: Industrial 29 % Financial Services 21 % Life Sciences/Healthcare Provider 19 % Consumer 13 % Technology 13 % Regional Specialties (U.S.): Education/Not-for-Profit 5 % Functional Expertise —We also have organized executive search centers of functional expertise, composed of consultants who have extensive backgrounds in placing executives in certain functions, such as board directors, CEOs and other senior executive officers. Our Board & CEO Services group, for example, focuses exclusively on placing CEOs and board directors in organizations around the world. This is a dedicated team from the most senior ranks of the firm. Their work is with CEOs and in 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 all ranges of organizational scale and purpose. Members of functional groups are located throughout our regions and across our industry groups. Percentage of Fiscal 2021 Assignments Opened by Functional Expertise Board Level/CEO/CFO/Senior Executive and General Management 75 % Finance and Control 7 % Marketing and Sales 6 % Information Systems 5 % Manufacturing/Engineering/Research and Development/Technology 4 % Human Resources and Administration 3 % Regions North America —In fiscal 2021, the region opened more than 2,500 new engagements with an average of almost 250 consultants. EMEA —In fiscal 2021, the region opened more than 1,500 new engagements with an average of nearly 170 consultants. Asia Pacific —In fiscal 2021, the region opened almost 1,000 new engagements with an average of almost 90 consultants. Latin America —In fiscal 2021, the region opened more than 400 new engagements with an average of more than 35 consultants. Client Base —Our more than 3,600 Search engagement clients in fiscal 2021 include many of the world’s largest and most prestigious public and private companies . Competition— In Executive Search, we compete with other global executive search firms (i.e. Egon Zehnder, Heidrick & Struggles International, Inc., Russell Reynolds Associates and Spencer Stuart). Although these firms are our largest competitors, we also compete with smaller boutique firms that specialize in specific regional, industry or functional searches. We believe our brand name, differentiated business model, systematic approach to client service, cutting-edge 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, as well as other executive benefits, distinguish us from most of our competitors and are important in attracting and retaining our key consultants. RPO & Professional Search Overview —Korn Ferry combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to our clients. Our recruiting solutions have breadth, including all functional talent segments—IT, Marketing, R&D, Commercial Sales, HR, Healthcare, Supply Chain, Finance and Legal. We also have depth, with the ability to deliver transaction sizes ranging from single professional searches to team, department and line of business projects, and enterprise global professional recruiting solutions. Our global capabilities deliver 1-10,000 or more new hires to address our clients’ employment needs. 9 RPO: In fiscal 202 1 , Korn Ferry was recognized as one of the top RPO provider s in the Baker’s Dozen list, marking our 1 4 th consecutive year on the list . We were also named a leader on the Everest PEAK Matrix for four years running and achieved star performer status in 202 1, with an improved leader position from 2020 . Through decades of experience, we have enhanced our RPO solution to deliver quality candidates that drive our clients’ business strategies. We leverage proprietary IP and data sets to guide clients on the critical skills and competencies to look for, compensation i nformation to align with market demand, and assessment tools to ensure candidate fit. In fiscal 2021 we introduced Nimble, a new, fully integrated recruitment technology solution incorporating Candidate Relationship Management, AI Assistance & Screening and Korn Ferry Assessments. We combine traditional recruitment expertise with a multi-tiered portfolio of talent acquisition solutions. Consultants, based in 33 countries, have access to our databases of pre-screened, mid-level professionals. Our global candidate pool complements our international presence and multi-channel sourcing strategy to provide speed, efficiency and quality service for clients worldwide. Project Recruitment : We can deliver the same talent acquisition services as we would in an end-to-end RPO solution, but within a defined project start and end date. Our Project Recruitment solution is seamless and aligned with the client’s broader talent acquisition strategy. Clients enjoy the same benefits around reduced time to hire, reduced cost per hire and improved candidate quality that they would with a full RPO solution, but via an on-demand model to manage short-term or specialized needs. Professional Search: We are positioned to help organizations identify and attract professionals at the middle to upper levels of management in single-search engagements. We focus on: INDUSTRIES : ▪ Consumer FUNCTIONAL EXPERTISE : ▪ Finance & Accounting ▪ Financial Services ▪ Human Resources ▪ Industrial ▪ Information Technology ▪ Life Sciences/Healthcare ▪ Sales, Marketing & Digital ▪ Technology ▪ Supply Chain Management ▪ Education/Not-for-Profit/Government Our innovative search process mirrors our Executive Search solution, offering access to active and passive candidate pools, the industry’s richest data on salaries and employee engagement, and proprietary tools in Korn Ferry Digital. A wealth of assessment data defines the traits needed for success in each role we recruit and matches candidates against best-in-class profiles while also gauging cultural fit. Our newest offering, Korn Ferry Recruit, a nimble solution, provides a fully integrated end-to-end technology solution for high-volume hiring of repeatable roles. Client Base —During fiscal 2021, the RPO & Professional Search segment partnered with more than 2,000 clients across the globe and 50% of RPO & Professional Search’s fiscal 2021 fee revenue was referred from Korn Ferry’s Consulting and Digital and all four reportable segments in the Executive Search line of business. Competition —We primarily compete for RPO business with other global RPO providers and compete for search assignments with regional contingency recruitment firms and large national retained recruitment firms. We believe our competitive advantage is distinct. We are strategic, working 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. HUMAN CAPITAL At Korn Ferry, talent truly matters. We believe it is how organizations succeed, opportunities arise and greatness happens. When people are in the right roles and engaged, ideas come to life, businesses grow and the leaders who will shape tomorrow emerge. We aim to continue making Korn Ferry a place that energizes, develops, rewards, and empowers people to pursue their passions and help our business succeed. We operate in 101 offices in 53 countries, enabling us to deliver our solutions on a global basis, wherever our clients do business. As of April 30, 2021, we had 7,889 full-time employees, including 2,669 consultants and execution staff who are primarily responsible for originating client services. Of this, 1,527 were Executive Search employees consisting of 524 consultants and 1,003 associates, researchers, administrative and support staff. Our Consulting segment had 1,923 employees as of April 30, 2021, consisting of 1,565 consultants and execution staff and 358 associates, researchers, administrative and support staff. Our Digital segment had 1,200 employees as of April 30, 2021, consisting of 295 consultants and 905 associates, researchers, administrative and support staff. Our RPO & Professional Search segment had 3,071 employees as of April 30, 2021, consisting of 285 consultants and 2,786 administrative and support staff. Corporate had 168 professionals as of April 30, 2021. We are not party to a 10 collective bargaining agreement and consider our relations with our employees to be good. Korn Ferry is an equal opportunity em ployer. We have assembled a wealth of talent that is rewarded based on performance. Our Company brings together a wide range of disciplines and professions—everything from academic research and technology development to executive recruiting, consulting, and business leadership. We are also a culturally diverse organization. Our people come from all over the world and speak a multitude of languages. For us, this diversity is a key source of strength. It means we have people who are able to challenge convention, offer unique perspectives, and generate innovative ideas. We are recognized by our clients and within the industry for our company culture and excellent work. Some highlights from fiscal 2021 include: ▪ Leader, Sales Training Service Providers (Gartner Magic Quadrant) ▪ Leader and Star Performer on the 2021 PEAK matrix (Everest) ▪ Pacesetter, Workforce Management Services (ALM Intelligence) ▪ Leader, Recruitment Process Outsourcing (RPO) (NelsonHall’s Vendor Evaluation and Assessment (NEAT)) ▪ America’s Best Executive Recruiting Firm (Forbes Magazine) ▪ 2021 Perfect score 100 on Human Rights Campaign Foundation’s Corporate Equality Index which measures equality for LGBTQ colleagues ▪ 2020 100 Best Companies for Moms (Working Mother) ▪ 2020 Best Companies for Dads (Working Mother) ▪ 2020+ Top Companies for Executive Women (Working Mother) ▪ Best Companies for Women (Women’s Choice Award) Our People We continue to invest in building a world-class organization that is aligned to our strategy and is staffed by a skilled, motivated and agile workforce. We know our people are key to our business success. Key initiatives in this area include: Safety and Well-Being In response to the pandemic, we developed and implemented new practices designed to prioritize the health and safety of our employees and clients. In March of 2020, we halted travel, closed all offices and shifted to a work-from-home approach, reopening offices only when local governments deemed it safe and even then, required adherence to social distancing protocols, offered access to personal protective equipment, established occupancy limits, enhanced cleaning procedures and increased visibility and access to mental health and other wellness offerings. Workplace and Culture We work to foster a supportive, respectful culture where everyone feels valued for their contribution. It starts with our values of Inclusion, Honesty, Knowledge and Performance. Under these values, we seek to embrace people with different points of view. We say what we mean and do what we say. We hold ourselves to the highest standards and make it safe for people to speak out when they see something wrong. We actively help our colleagues grow, develop with mentoring and support and we never settle for the status quo. We always strive to be better today than we were yesterday and do our best for our clients, colleagues, and shareholders. Diversity, Equity and Inclusion Inclusion is intentionally the first of our four core values and a pillar of our firm. Our people come from all over the world and speak a multitude of languages. For us, this diversity is a key source of strength. It means we have people who are able to challenge convention, offer unique perspectives and generate innovative ideas. Equally important, it means we can think and act globally—just like our clients. In fiscal 2021, hundreds of our leaders worldwide participated in our Conscious Inclusion training program. This training is a part of a series of other firm-wide inclusion culture efforts to increase individual and team engagement and contribution. 11 Mentorship, Training and Career Development We are focused on teaching and mentoring to support the career growth and success of our colleagues and believe these efforts have fostered stability and expertise in our workforce. Development happens broadly throughout the organization from formal mentoring using KF Advance, and direct training on our learning management platform, iAcademy, to a range of career and leadership programs such as our Mosaic program for diverse high-potentials, Leadership U PLUS for all Korn Ferry colleagues, a leadership development program for all interested colleagues, and Leadership U for Korn Ferry Plus, which supplements our core learning program with individual and group coaching. In fiscal 2021, we promoted more than 1,000 colleagues across our four lines of business and Corporate. Benefits We offer competitive benefits across the globe that are customized within 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 as a best employer by Working Mother Magazine and the Human Rights Campaign. Our Community Its not just about our people, its about all people. Korn Ferry supports philanthropic organizations and is actively engaged and dedicated to have a positive impact in the communities where we work and live. Our offices and colleges worldwide take part in community services through a variety of organizations and programs. Not only do we proudly contribute financially to many organizations but we provide a work environment that is supportive of employees opportunities to volunteer in their local communities. In addition in 2020, we created the Korn Ferry Charitable Foundation, a 501(c)(3) non-profit organization. The Foundation’s mission is have real impact by helping people exceed their potential; whether that is in the boardroom, the classroom or their living room. The first major initiative of the Foundation is Leadership U for Humanity. This initiative seeks to help underrepresented populations strength their leadership skills and enhance their careers through personalized one-on-one coaching, leadership development training and leveraging other Korn Ferry intellectual property Volunteering in our Communities We are committed to making a difference in our communities and the world. We proudly contribute financially to organizations and causes that we believe will significantly impact the greater good. We believe that donating our time, talent and resources is equally as important. So, we provide a work environment that gives our employees opportunities to volunteer in local communities. Our offices and colleagues worldwide take part in community service through a variety of organizations and programs.