Heidrick & Struggles International, Inc.

Good morning, everyone, and thank you for participating in our third quarter conference call today. Joining me on the call are Kevin Kelly, our Chief Executive Officer; and Rich Pehlke, our Chief Financial Officer.

As a reminder, we'll be referring to supporting slides that are available on our website at www.heidrick.com, and we encourage you to follow along or print them.

As always, we again advise you that this call may not be reproduced or retransmitted without our consent. In today's call, we'll be using the terms operating income and operating margin, excluding impairment charges.

These are non-GAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and non-GAAP financial measures can be found on Slide 29 in our supporting slides.

Also, we'll be making forward-looking statements on our call today and ask that you please refer to the Safe Harbor language contained in our news release and on Slide 1 of our presentation. Our slide numbers refer to the slide numbers in the bottom right-hand corner of each slide.

And now I'll turn the call over to you, Kevin. Please start on Slide 2.

Thank you, Julie. Good morning, everyone, and thank you for joining today's call.

Before I begin, I do want to take a minute to acknowledge all of those who are dealing with the devastation caused earlier this week by Hurricane Sandy. As you know, Heidrick & Struggles has offices in Boston, New York, Philadelphia and Washington D.C., so many of our employees and their families were directly impacted by the storm.

We also have many clients who are in the storm's path as well. We know it will take a while before life returns to normal, but we're glad everyone is safe, and our thoughts and prayers are with those of you who are dealing with the cleanup process.

As you'll see in our press release, many of the same trends we saw in the second quarter continued into the third quarter. We reported revenue of $117.3 million, slightly better than the second quarter, but down approximately 18% over the same period a year ago.

Our challenge throughout 2012 has been lower revenue due to fewer confirmations.

As you can see on Slide 3, search confirmations in the third quarter were down 20% compared to last year's third quarter and about 5% sequentially.

Despite fewer confirmations, moving on to Slide 4, you'll see that our average revenue per search has continued to increase. In fact, on a trailing 12-month basis, the average revenue per search has been flat or has improved every quarter since the second quarter of 2010.

We attribute this to our historical strength of working at the top of clients' organizations and the strong relationships our consultants have cultivated at the C-suite and Board levels.

We truly believe this is a competitive advantage that differentiates Heidrick & Struggles in the marketplace and one that will provide a competitive advantage as we continue to build out our Leadership Advisory platform. Importantly, we continue to improve our profitability, largely as a result of initiatives we undertook last year about this time to adjust our cost structure for the current environment.

Compared to last year's third quarter, salary and employee benefits declined 20%, and general and administrative expenses were down about 5%. Despite significantly lower year-over-year revenue, we generated $10.2 million of operating income and an operating margin of 8.7%.

The lower revenue trend was consistent across all of our regions.

As shown on Slide 5, Americas revenue in the third quarter declined 15% year-over-year but increased 11% compared to the second quarter. The Industrial and Consumer Markets practices drove the sequential improvement, partially as a result of a number of high-level and noteworthy assignments during the quarter, including the placement of Chiquita Brands' new CEO; Board and Interim COO services at Navistar; and CEO placements at both Visteon Corporation and Federal-Mogul's Aftermarket division.

Moving to Slide 6, our European operations were down in the quarter a bit more than we'd expected. Revenue declined 43% year-over-year or 38% on a constant currency basis.

The quarterly and year-to-date revenue declines were both driven by continued economic crisis and consultant turnover, especially in the Consumer Markets and Industrial practices.

Summer vacations typically impact the region's third quarter performance, but the Summer Olympics in London seemed to compound the effect. We are, however, pleased that our European operations are more profitable even at the lower revenue level due to the actions we took last year to improve our cost structure.

Now on Slide 7, Asia Pacific's revenue was down 15% year-over-year or about 12% on a constant currency basis and is essentially flat compared to the second quarter. The third quarter and year-to-date declines were primarily driven by weakness in the Consumer Markets and Financial Services practice.

In recent years, Financial Services has represented 30% or more of the region's revenue. Year-to-date, it represents approximately 20%, and this has put pressure on the margins especially in Hong Kong and Sydney.

There are some positives worth mentioning though. Our Tokyo office is performing very well.

Revenue is up 64% year-to-date and margins are much improved as well. And smaller offices, Bangkok and Seoul, are also having great years.

Our newly expanded Dubai office is ramping up as expected, and I'm looking forward to a trip out there next month. And finally, it's worth mentioning that Heidrick & Struggles will be celebrating its 10th anniversary in mainland China with a celebration in mid-November.

Looking at Slides 8 and 9, you'll see that our practice performance in the third quarter also looks like -- a lot like it did in the second quarter. All practice groups, except Education and Social Enterprise, experienced year-over-year revenue declines.

We did see some sequential revenue improvement where growth in the Consumer Markets, Financial Services and Industrial practices offset declines in the Education and Social Enterprise and Life Sciences practices.

Turning now to Slide 11. Revenue in the third quarter from Leadership Consulting was $8.9 million, down 31% compared to last year's third quarter and 8% compared to the second quarter.

The $4 million decline came about equally from both America and Europe. Year-to-date, the Leadership Consultant practice is down $5.2 million or 50%, primarily as a result of the loss of a few consultants globally.

The revenue impact we've seen underscores the need to continue to invest in and properly scale this business. We continue to better define our service offerings with the goal of building a much larger, more sustainable consulting platform from which to serve our clients' leadership needs.

As you see on Slide 12, we ended the quarter with 332 consultants compared to 340 at the end of June. Since the end of September, we have hired 8 consultants, with others in the pipeline.

As in the past, we become more active on our hiring plan in the fourth quarter with our goal to bring new hires on in the beginning of the year.

Productivity on Slide 13, as measured by annualized net revenue per consultant, increased to $1.4 million in the third quarter from $1.3 million in the second quarter. Productivity was lower than in last year's third quarter due to lower revenue.

Increasing the productivity of our consultants continues to be a priority in the course of both our performance management processes and our recruiting efforts.

As we begin to wind down the year and look forward to the start of 2013, our view is that the current environment will likely persist for the foreseeable future. This has made it more important than ever for us to stick to our core strategic initiatives.

Our focus remains on providing our clients with unparalleled excellence in search as we continue to invest and strengthen our Leadership Advisory platform with the goal of seeking sustainable, profitable growth.

expand our share of premium work at the top; grow our Leadership Consulting business by increasing consulting skills and cross-selling capabilities, and continuing to evaluate tuck-in acquisitions to increase scale; and to build our brand through investment in talent, thought leadership and client satisfaction while maintaining our rigor around cost discipline.

It is these priorities that drive our daily decisions as we continuously look to innovate where we believe there is benefit to our clients and shareholders. For example, earlier this month, we launched a big data and analytics practice.

This sub-practice is dedicated to helping our clients identify and attract leaders who understand how the application of technology can move their business. It's the first among the major firms in our industry and puts us front and center in this new war for talent.

Heidrick & Struggles holds extremely valuable relationships at the top of many of the world's leading organizations. Our vision is to leverage these relationships and our search capabilities to serve our clients with a broad array of Leadership Advisory services.

We have the expertise and the global network to not only identify the top leaders but to help develop and retain them.

With that overview, I'll turn the call over to Rich.

Thanks, Kevin. Good morning, everyone.

I'll start with a review of some of our other key operating metrics, and then talk a bit more on our operating expenses. As Kevin mentioned, the changes that we've made over the last year to improve our cost structure has helped us weather the challenging revenue environment.

For the first 9 months of 2012 compared to 2011, revenue declined by 15%, but our operating income was slightly higher than 2011 when you exclude the impairment charges that were recorded last year. We're pleased with this accomplishment, and we look forward to leveraging this cost structure as revenue begins to expand.

We also have more work to do as well.

Now looking at operating expenses, please turn to Slides 14 and 15. Salaries and employee benefits expense declined $20.1 million or 20% year-over-year.

Variable compensation accounted for $11 million of the decline, reflecting lower bonus accruals related to the lower net revenue levels. Fixed compensation expense accounted for the other $9.1 million of the year-over-year decline, mostly reflecting the reduction in the worldwide employee headcount of approximately 9% compared to last year's third quarter.

Turning to Slide 16. General and administrative expenses declined year-over-year by $1.3 million or 4.5%, reflecting the expense reductions in a number of areas, but the 2 largest were declines in travel and entertainment expense and premise-related costs.

G&A would have been down about another $2.5 million if not for the nonrecurring cost of our global partners' meeting that we held in July. The cost of this meeting is reflected in Global Operations Support, not in the regions, which is the primary reason you see an increase in the segment presentation.

Looking at Slides 17 and 18, operating income was $10.2 million in the third quarter, and operating margin was 8.7%. These are slight declines compared to last year's third quarter operating income and margin excluding the impairment charge.

But again, showcase that the improvements we've made in our cost structure have yielded positive results to our operating margin despite the decline in revenue.

Moving to Slides 19 and 20, net income in the third quarter was $4.1 million, and diluted earnings per share were $0.23. The effective tax rate in the quarter was 59%, which was based on the full year projected tax rate of approximately 67%.

The full year rate is up from where we expected it to be after the second quarter, at that time approximately 57%, and the increase is primarily due to refinements and shifts in the projection and mix of income that we expect to earn worldwide in 2012.

Please turn to Slide 21. Our cash position remains strong with $127.1 million in cash and cash equivalents, well above our global cash needs that we usually expect to keep at about $40 million to $60 million.

Net cash provided by our operating activities was $33.8 million in the third quarter compared to $51 million in last year's third quarter.

Slide 22 shows our backlog, and Slide 23 shows our monthly search and Leadership Consulting confirmations. As you'll see on Slide 23, October confirmations are trending higher than September with improvement in every region.

Based on our current backlog, confirmation trends, average retainers and upticks, we are forecasting fourth quarter net revenue of between $105 million and $115 million. Our forecast is also based on the typical seasonal trends that we see between the third and fourth quarter, as well as historical confirmation trends we experienced in the fourth quarter.

And with that, I'll turn it back over to Kevin.

Thank you, Rich. 2012 has been one of the most difficult years during my 15-year tenure with the firm.

The uncertainty we've seen throughout our regions and practices have made it sometimes even difficult to predict what's going to happen from one month to the next. But as we navigate through the current cycle, our focus continues to be on serving our clients while forging ahead with our Leadership Advisory strategy.

We firmly believe remaining committed to providing service excellence while building a fully integrated leadership platform will position us for long-term sustainable opportunity in the future. Next year marks the 60th anniversary of Heidrick & Struggles.

We have a long, great history which we are very proud of, but rather than resting on our laurels, we have been very much focused on what the future of the leadership industry looks like.

Thanks, again, for your time today and joining us this morning. And at this time, Rich and I would be happy to take any of your questions.

I just have a couple of questions. I think you mentioned in your comments some turnover in Consumer and Industrial.

Could you just kind of clarify that's what you're implying, because you also were talking about general weakness? So I just want to make sure that was a turnover-specific comment for those industries.

And then kind of maybe a little more detail on what's going on with that turnover. And then I have a follow-up.

Kelly, I think -- sorry, the turnover I was referring to is -- it was more of a decrease in revenue in those practices. The turnover for the quarter was 10 people -- excuse me, 13 people, 3 involuntary, 10 voluntary, of which 6 went to competitors.

Okay, great. And then can you just elaborate on Life Sciences and Consumer kind of what -- I could see the large declines in the slide presentation year-over-year.

We all know what's happening in Financial Services, but maybe a little more color in terms of what's driving that for those practices.

Well, obviously, Life Sciences for us as an organization provides a tremendous opportunity to help us scale and grow that business, and it's one of the key focal points right now when it comes to both recruiting for the search side of the business and the Leadership Consulting side. As you can see, what's happening with some of the big pharma companies globally, there's been a shift in terms of not recruiting as much as they historically have, so that's impacted the business.

However, we do see other opportunities in that area such as biotech, et cetera, coming back. With consumer goods, it's just right now, it's the market.

So we have seen over the last 3 to 4 weeks an increase in our consumer confirmations. So we saw that as a trend.

It hit us in September, where the confirmations were lower than expected, but they've definitely bounced back in October.

In your press release, you made the comment that you believe you're winning a strong share of C-suite, Board level searches. I'm just wondering what gives you that belief and also why you think that might be occurring.

Well, we have a -- Kevin, it's Kevin Kelly. We have a very strong CEO and board practice.

It's a combination of leveraging our Leadership Consulting side of the business and using that to really work on succession planning with boards, on development of executives and on retention of key individuals as well. So if you take those 2 together, it's really helped us develop strong relationships with Board of Directors, CEOs, and we're very proud of, those that we've tracked, the number of wins we've had in the CEO and board suite.

Okay. And you also mentioned -- you brought up again tuck-in acquisitions as a possible growth avenue for you going forward.

I'm just wondering if you could get a -- give us your updated thoughts on what the acquisition environment feels like right now in the industry.

Sure. First and foremost, as you see from the Leadership Consulting revenue, it's great that we have roughly a $50 million business in Leadership Consulting, but when you lose 1 individual in that -- or 2 individuals in that practice, there's a significant impact on the revenue.

So it's key to us, not only are we going to continue to drive the organic growth of that business, but also the fact that we need to scale the business. And that's the second key focal point.

Recruiting, as I mentioned earlier, to drive revenue on the search side at the CEO and board level is a key focal point. Simultaneously scaling and growing the Leadership Consulting business is the other.

Yes, wanted to just ask a little bit more about Europe. You mentioned the Olympics probably exacerbated things, and then you faced -- well, some turnovers in the macro.

Can you help us try and understand how much each of those factors might have been? And just trying to get a sense for what to model or expect going forward for Europe at this point.

Tim, this is Rich. I think the combination of economic activity in Europe was -- has still been a major driver in the performance relative to the region.

When we look at continuing individual productivity of our consultant base -- so those who, obviously, were not affected by turnover, we've seen a slight decline in productivity, which I think is really driven by the fact that we've had a very troubled environment there. As you know, we serve a lot of multinationals, and what we've seen is just projects be either pulled back, not near the volume because of the uncertainty at both the sovereign and economic level at individual countries.

And so I'd say, probably when we look at it from a numeric standpoint, probably about -- it's pretty close to even relative to contribution of just overall economic impact combined with some consulting turnover. The good news is, is that as we factor that in, we're seeing a couple of positive trends.

Number one, increased profitability in the region because of the actions we've taken in restructuring the cost structure in Europe. Even when we had some of the individuals who we lost, we weren't running at optimal profitability and we had to address that.

And there was no certainty in any case that some of the consultants that departed in recent times would have been producing at historical levels just given the economic. In fact, we probably think it's exactly the case.

We saw this coming, and that's why we took the action. The good news is, is I think we're starting to see the trend turn around, we're seeing more activity pick up.

We think we'll have a better fourth quarter in Europe than we did in the third quarter for a variety of reasons. And we're pretty confident that we're going to continue on a very constructive path there.

Okay, great. And then, I guess, as we look at some of the segments, the U.S.

profit margin this quarter was far stronger than it normally is. I guess, how sustainable is that?

I know the revenue per consultant was very strong there as well. But are you hitting some sort of, I guess, kind of peak productivity levels in the U.S.

that make you concerned about sustaining that margin and make you think about having to add more people and so on?

Well, there's a lot of points you put in there. You always load a question, I'll compliment you on that.

You're tricky that way. Look, I think we're confident about the ability to sustain better profitability as an organization.

And as I indicated in my comments earlier, I think we still have more work to do in that front. That's been the key level of our focus.

In terms of the North American profitability and productivity, I think we've got to give credit to our colleagues. Kevin mentioned earlier that we have a very strong board CEO practice, and we're doing a tremendous amount of good work in that area, and that was a very key contributor to our third quarter.

We had some very strong results there with some very large assignments. This is a business that really is impacted by operating leverage, both on the upside and the downside.

So it's all about getting the right scale, the right productivity levels. I don't believe we're at peak productivity levels, but I also don't believe we're in an economy right now that drives peak productivity levels.

So I think we can still do better and that's our focus. But we have to give credit to our people.

We've got a lot of great consultants who are really having very strong years, who have been doing great client work and have also been running a business at a better expense level than we've seen in the last couple of years. So a combination of all those effects, particularly in North America, have driven those results.

Okay. And then Kevin, last quarter, you talked a little bit about seeing some clients starting to hire some of your people internally and use kind of Web 2.0 technologies.

Can you give us any updated thoughts on that? Has that -- are you still seeing that?

Has that -- or has that changed at all?

We lost one in the quarter, Tim, but what we're seeing also is you don't see the top producers in the organizations leave. Usually, it's the individuals that are at the senior associate principal level who end up moving to those organizations, and we haven't seen a large trend continue in that area.

They do try to leverage the Web 2.0 technologies, but as Rich and I just conveyed to you all, it's more at the junior level. It's not creeped into the senior level yet, and that's the area in which we operate at the CEO and Board level.

Okay. And then lastly, Kevin, your -- I'd be curious if you can just give an updated thought on the Financial Services sector.

It's still obviously somewhat weak as I think we all know. But it doesn't seem to be as weak as what you've seen in the last 2 years.

At least -- or it wasn't the standout area of weakness for you. I guess, updated thoughts just on where you see that sector at this point and where it's headed.

It's great. If you look back a few years ago, we rode the storm when we had a great $190 million Financial Services practice.

It's close to $110 million now. And it's going to be lumpy for a while.

Ironically, Tim, you saw September/August was the best month in Financial Services all year. So Financial Services is a little erratic.

There is still a lot of recruiting going on in places like the back office, technology, a lot of the smaller boutique investment banks continue to grow and expand and hire. So it is kind of bumpy, but we have a very entrepreneurial group of Financial Services consultants who are aggressively attacking the market and serving our clients.

And we've also seen Leadership Consulting move into Financial Services as well. So we keep an eye on Financial Services all the time given the strength of that practice.

However, as I mentioned earlier, we have a tremendous opportunity in all of our other practices, Life Science in particular, to really grow and invest and offset some of the falloff in Financial Services, and that's one of our goals. We're going to keep investing to have a broad array of practices to make sure that we're not living and dying by one individual practice.

Just talking to other people in the industry, I get the impression that they see customers poised to react kind of on a polarized basis to the elections next week. One of the quotes that I got was they expected the hiring to move fast if a Republican is in -- suddenly in the White House, but that there would be further squeezing if Obama were reelected.

And I was wondering if that was consistent with what you have been hearing from employers, or if this is just a kind of a wild hair anecdote?

What I would say is that I think uncertainty is the key. And what we're hearing from -- that's the one word we hear over and over.

And there's a lot of pent-up demand within organizations who are waiting to see. You have the macroeconomic environment as we know in Europe that's impacting some of it.

But quite frankly, the uncertainty here. And what we're hearing from clients is that after the uncertainty of the election is over despite who may win, there'll probably be a ramp-up.

Now, to what extent, we don't know yet, but at least filling in some of that pent-up demand going forward into the fourth quarter and then starting next year.

Yes. I guess the key variable that I hear from the industry is the view that let's say, an impasse over the fiscal cliff would be more likely to occur with a divided Congress and White House as opposed to a Republican in charge, but I'm not sure that's definitely of merit either.

Just in terms of regional performance and expectations, it seems like the different markets of the Asia Pacific region are moving in different directions. Is that accurate?

I'd say it's fairly accurate. We saw a little bumpiness in China.

We saw bumpiness at the beginning of the year, first 6 months in Australia, New Zealand; a lot of it due to the regulatory environment when it came to the metals and mining industry. So Industrials were off a little bit, Financial Services were off.

What we have seen over the course of the last 3 months is both, I think, sequentially Australia and New Zealand has really come back much stronger than it started the year. We've seen somewhat of a bounce back in Financial Services.

And again, our goal is to invest and grow the other practices in that region to offset our risk when it comes to Financial Services.

Finally, my -- just overarching observation about the world is that a lot of the issues that agencies such as yours have had involve the lack of penalty for customers -- because of the lack of economic growth, there's much less penalty for under-hiring, much less penalty for taking more time to do hiring, not moving forward on projects and so on. And I was wondering if you had a feeling on how much growth it would take to create a multiplier effect through the whole employment supply-demand chain?

Well, I think it's pretty difficult from our seat to make a statement about the overall supply chain of growth and the hiring environment. But I'll just give you a couple of thoughts, and this is pretty easy math to understand the leverage in our business.

If you take our base of consultants and they were able to average an additional search, that's about a $40 million swing in our business, which creates a lot of positive operating leverage, and we'd like to see that go up by a couple of searches a year. And as Kevin indicated, because of a lot of uncertainty that's been driven by everything from political, economic, tax, currency, risk and uncertainties, our business is driven a lot more by overall confidence in investing capital.

And when we get to an environment where people feel more confident about investing that surplus of capital or that pent-up demand in capital and either expanding their operations or growing in other regions, et cetera, it certainly could have a very positive move for our industry and for our company by just generating a small amount of activity, if you really think about it. Predicting that is very hard.

The visibility in this business -- I don't think anyone is thinking that it's going to be the good old days again. It just seems to be a more of the new normal, where it's very choppy, and companies and clients especially on the multinational level are proceeding with a bit more caution about how they do -- how they invest growth capital.

And that's why we have to be as well positioned as possible to both serve that need as it presents itself, as well as react to it if it doesn't present itself. And that's how we're positioning the company.

Have you seen any direct impact from clients bracing for the fiscal cliff in their expectations over the next 6 months?

I think we've already seen some of that impact over the course of this year, as we've indicated. And there has been choppiness relative to -- we've probably seen an unprecedented level of things, projects that have either extended in time or been on-again, off-again, and decisions taking a lot longer and execution taking a lot longer.

Very difficult to call whether or not that will sustain, lengthen or whatever. But I think we've been kind of living in that environment for some time.

I was wondering did you give us the bonus accrual for the quarter?

No, the bonus expense is in the -- is in one of the slides, Mark, which we provide every quarter.

I just missed it. Can you repeat what is it?

Sure. Salaries and employee benefits -- it is on...

Yes, it's on page -- it's on Slide 14, and it's $79.6 million, 67.9%. Is that what...

But -- the $79.6 million was salaries and employee benefits, but the variable bonus expense in the quarter was $21.5 million. It's Slide 15.

Yes, the next slide.

Great. And then, can you talk a little bit about what percentage of the searches now are C-suite and Board level?

It's between 50% and 60%, probably hovering in the neighborhood of mid-level of that range.

My recollection is that it used to be more like 30%. Is that -- I'm talking about going back over, say, 12 years or so.

No. Actually, it's been 50% for several years.

Yes, I'm talking about way back.

I have it back -- no, I have it back to '04 and it's been between 49% and 51%.

And now it's 50% to 60%? Okay.

And what percentage of the searches would you say are coming from larger enterprises versus -- you mentioned in some of the commentary looking at new markets, new type of -- new clients. I'm wondering how much of those searches are coming from mid-market clients as opposed to...

We talked about new markets, new clients. It's places like the Middle East, where we just made that acquisition.

So we're entering a lot of the local markets versus the multinationals that Rich referred to before. We're also starting to see more work from local companies, be they Asian, Russian, Middle Eastern who are looking to expand into other parts of the world.

So those are the new markets, new clients we're referring to. Historically, it had been mostly multinational companies looking to expand.

So that's the fundamental shift, Mark, we've seen in the last 12 to 18 months.

Okay. And within the U.S., how are you viewing larger enterprises relative to smaller or medium-sized enterprises?

I'd say that hasn't really changed much. Again, the thing -- the only thing we're seeing different is some of these other companies entering into the U.S.

markets were largely large foreign companies looking to expand here.

Okay. And going back to Kelly's question.

Any color in terms of the consultants who left to go to other competitors? Was it basically because they ended up getting some big guarantees?

Is that the primary driver?

I think that's been a driver in quarters past. I don't think that was a huge driver relative to any of the turnover we saw in third quarter in a material way.

It is not uncommon that we experience some turnover just because it's the nature of the business. And in some cases, particularly in years where there's a lot of volatility, some people run to higher ground where they might have a guarantee and we need time to sort things out.

We've been a lot -- a little more aggressive about our performance management over our recent quarters as evidenced by the actions we've taken over the last 12 months, and things like that contribute to it as well.

And Mark, it's also a timing issue. With a couple other people who left in the third quarter, they actually resigned in the second quarter, but because of garney [ph] leave, et cetera, in Europe, it pushes us off into the next quarter.

I was wondering if you could give us some color on your market share gain commentary, if you can tell who you might be taking share from and perhaps in what industry you think you're advancing.

I think from the standpoint of where we commented about market share was that we're certainly getting our fair share relative to the C-suite and Board level assignments. We don't talk too publicly or track -- it's difficult to track hard market share data relative to our industry.

I think clearly, we've held our own in the space of the C-suite, which has been a primary driver of what we saw in the quarter. I think if you look at areas where we've been a little bit more challenged on revenue because of turnover like we commented on Europe earlier, there might be some slight shifts because of either number of consultants or economic activity.

But I don't think there's been any measurable moves that we're aware of.

Okay. What's the year-to-date variable in bonus-related compensation?

I [indiscernible] Mark, on a 9 months year-to-date or you could take each quarter and add it up.

But yes; do you happen to have that figure handy?

I don't, that's what I'm saying. I could call you back with what the year-to-date is or you could take the last 3 quarter slides and add them.

But I can call you back on that.

Perfect. I could track that down.

Kevin, your comment on Leadership Consulting and that being down year-to-date, I think you mentioned some key consultants leaving. Could you describe that business?

I didn't think it was quite as kind of rainmaker-centric as the executive search business. I thought it was a little bit more diffuse.

Wondering if you could just provide some more color on that.

Sure. We took -- we went down a path to grow the business organically and we have done that.

We need to scale and grow the business in terms of compensation, intellectual property, leverage model, et cetera, that are different in the consulting business. But to answer your question, absolutely, there are rainmakers in that space.

In fact, the one gentleman who left was 1 of the top producers -- top 2 producers in the organization. So -- and it proves even more that -- and he went off and started his own business.

So it proves that to us, Rich, myself and the executive committee, that growing and scaling that business and looking at acquisitions in that space is one of the key focal -- key priorities for us as a management team going forward.

And was -- were those individuals dedicated leadership consultants, or were they executive search consultants who happened to be able to bring a lot of revenue to bear in Leadership Consulting as well?

Pure 100% leadership consultants.

Okay. And then I know you ran through it with Kelly at the beginning, but my pen didn't quite write fast enough.

Could you give that breakdown of turnover that you gave earlier in the call?

Yes. 3 involuntary, 10 voluntary, 6 went to a competitor, 2 to a boutique and 2, we're not -- 1 we don't know and 1 went to a client.

There was a drag on a couple of those from the third -- second quarter in Europe.

Well, thank you. I'd like to thank all of our colleagues across the globe for continuing to serve clients on a daily basis.

Appreciate all of the support from our investors and shareholders, and I hope you all have a great Halloween. Thank you very much.