2021 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS WE CONNECT PEOPLE TO WORK IN WAYS THAT ENRICH THEIR LIVES. KELLY
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Kelly Services, Inc.
(Name of Registrant as Specified In Its Charter)
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2021 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS WE CONNECT PEOPLE TO WORK IN WAYS THAT ENRICH THEIR LIVES. KELLY
April 9, 201819, 2021
To Our
Dear Stockholders:
You2020 was a year of extraordinary change and challenge for the world at large and for Kelly, our employees, and the talent and businesses we connect. We entered the year on track to accelerate our transformation into a growth-driven specialty talent company and were quickly faced with the COVID-19 pandemic – one of the most intense and protracted global crises in modern history. Kelly’s response was swift and decisive. Our actions not only protected our people, they also positioned our business to emerge from the pandemic poised for growth. Indeed, our journey through the many unexpected turns of 2020 both challenged and strengthened Kelly’s ability to adapt, innovate, and execute on our strategic promise. We’re proud of our people and what we collectively accomplished during a year of unparalleled disruption.
A People-First Response
When the pandemic struck, our first instinct and our immediate priority was to protect the safety of our full-time and temporary employees. We activated Kelly’s Emergency Management Team to identify operational priorities, contain risks, activate pandemic policies, and communicate openly with all stakeholders. We expanded our Kelly Anywhere platform to enable more than 90% of our full-time employees to immediately transition to remote work, ensuring business continuity and the health and safety of our employees throughout the crisis. We partnered with healthcare providers to offer special medical plans and benefits to temporary workers and launched the Kelly Cares Hotline to stay connected with talent.
We also advanced our long-term commitment to talent in 2020. We appointed the industry’s first Chief Talent Officer, dedicated to the temporary employee experience, and launched Kelly’s five-point Talent Promise to confirm the safety, value, well-being, investment, and opportunity that every temporary worker deserves – not just during a crisis, but each day of every year.
Financial Resilience
Kelly entered the pandemic with a healthy balance sheet, and we acted quickly and decisively to protect it. We made difficult decisions with discernment and speed, implementing temporary measures such as employee, executive, and board compensation cuts; furloughs; hiring freezes; suspension of the quarterly dividend; and reduced capital expenditures.
Our defensive short-term actions proved successful and paved the way for positive momentum. Kelly produced positive adjusted earnings each quarter of 2020; ended the year with all five of our specialty business units showing sequential growth; and maintained ample cash and available capacity to pursue strategic opportunities. In the fourth quarter, encouraged by gradual improvements in economic and business conditions, we carefully began lifting some of our temporary expense mitigation measures. We will continue to evaluate the remaining measures as the economic recovery and demand for talent stabilize in 2021.
2021 Kelly Proxy Statement 1
Letter to our Stockholders
A Two-Pronged Approach to Growth
Even as we navigated economic and labor market turmoil, Kelly remained steadfast in executing our growth strategy. In July 2020, we implemented a new operating model designed to drive increased specialization, launching five new operating segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. This approach to organizing our business leverages Kelly’s existing strengths and the significant market opportunities that lie ahead, focusing our efforts where we are cordially invitedbest able to attend the Annual Meeting of Stockholders of Kelly Services, Inc., which will be held at 11:00 a.m., Eastern Daylight Time, on Wednesday, May 9, 2018,win. We began seeing benefits from this new structure in the Auditorium located on the first floor of our headquarters building at 999 West Big Beaver Road, Troy, Michigan 48084-4716.
As explained in the enclosed Proxy Statement, at this year’s meeting you will be asked to vote on the election of Directors, a non-binding advisory vote on executive compensation, the amendmentthird and restatementfourth quarters, and we attribute much of the Company’s Certificatemomentum we’ve brought into 2021 to our newly structured specialty focus.
At the same time, we are committed to seizing inorganic growth opportunities that align with our strategy. During 2020, we completed two strategic acquisitions in our Education segment: Insight, a K-12 education staffing company, and Greenwood/Asher & Associates, a higher education executive search firm. We continue to monitor the market for acquisition targets to bolster our aggressive inorganic growth aspirations within specialties that offer the most promise for growth.
Governance Practices
Kelly’s governance practices played an invaluable role in 2020. Our highly engaged board of Incorporation, an amendmentdirectors provided keen insight from diverse viewpoints throughout the crisis, helping to the Company’s amendedguide Kelly’s successful response. Women and restated Bylaws, and the ratificationethnically diverse members make up 44% of the appointmentboard, which also spans a wide variety of PricewaterhouseCoopers LLP asindustries, backgrounds, and tenures. Additionally, in 2020, the Company’s independent registered public accounting firm for 2018.membership of each of the Board’s three committees—Audit, Compensation and Talent Management, and Corporate Governance and Nominating—became fully independent.
Whether you planIn keeping with our commitment to attend or not, please date, signformally communicate our non-financial and return the proxy cardsustainability performance to all stakeholders, we adopted an integrated Environmental, Social, and Governance (“ESG”) reporting framework and published our Sustainability Report in the accompanying envelope, or vote by telephone or via the Internet as soon as possible so that your shares can be voted at the meetingMay 2020. The report, prepared in accordance with your instructions.Your votethe Global Reporting Initiative Standards: Coreoption, the Communication on Progressaccording to theUnited Nations Global Compact Guidelines, formalizes and discloses Kelly’s Corporate Sustainability Strategy aligned to the ESG framework.
Inclusion, Equity, and Diversity
The widespread social unrest of 2020 shone a light on systemic injustice and the ongoing need for equity, inclusion, and diversity in all facets of modern life. We believe Kelly can play a powerful role in championing those who are not given a fair opportunity to secure meaningful work. In addition to joining the CEO Action for Diversity and Inclusion, in late 2020 we launched Equity@Work, a forward-looking initiative designed to remove systemic barriers to employment and make the labor market more equitable and accessible. We also looked within and began re-designing our own hiring practices, as well as bolstering
2 2021 Kelly Proxy Statement
Letter to our Stockholders
the voices of diverse talent by launching five new affinity groups and an internal Inclusion Council. Guided by our noble purpose of connecting people to meaningful work, we remain committed to making Kelly – and all workplaces – more inclusive and equitable.
Looking Ahead
There’s no question the COVID-19 crisis has reshaped the world of work, but Kelly is importantready to us. You may,lead our talent and customers into what’s next. We enter our 75th year with gratitude and optimism. We are guided by a seasoned executive team and an engaged board of course, withdraw your proxydirectors committed to Kelly’s success. Our noble purpose is brought to life by talented employees, temporary workers, and change your vote priorsuppliers around the globe. We continue to or at the Annual Meeting by following the steps described in the Proxy Statement.make their health and safety a top priority as we actively monitor and respond to evolving COVID-19 protocols.
We appreciateare thankful to the strong support ofcustomers who partnered with us to keep their businesses going amid the crisis. And we are grateful to you, the stockholders whose confidence enabled us to protect our stockholders over the yearsresources and look forward to seeing you at the meeting.position Kelly for brighter days ahead.
With sincere appreciation,
 |
DONALD PARFET Chairman of the Board | |||||||||
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PETER QUIGLEY President & CEO | |||||||||
Important Notice Regarding the Availability of
2021 Kelly Proxy Materials for the Annual Meeting of Stockholders to be held May 9, 2018.Statement 3
The following materials, also included with the
Notice of Annual Meeting of Stockholders are available for view on the Internet:
To view the Proxy Statement or Annual Report visit: www.envisionreports.com/kelyb.
Please refer to the enclosed Proxy Card and Proxy Statement for information on voting options:
Internet – Scan QR Code – Telephone – Mail
 | ||||
| Date and Time: | Record Date: | |||
KELLY SERVICES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Kelly Services, Inc.:
We are pleased to invite you to join our Board, senior leadership and other associates of Kelly Services, Inc., a Delaware corporation (the “Company”), for the Annual Meeting of Stockholders, to be held at the offices of the Company, 999 West Big Beaver Road, Troy, Michigan 48084-4716, on Wednesday, May 9, 2018 at 11:00 a.m., Eastern Daylight Time. The purposes of the Annual Meeting are:
Wednesday, May 19, 2021 at
11:00 a.m., Eastern Daylight Time
Virtual Meeting:
kellyservices.com
Close of Business, Eastern Daylight
Time, March 29, 2021
| Voting Matters | How to Vote | |||||
At the Annual Meeting, you Proposal 1. Election of nine Board-recommended director nominees Proposal 2. Advisory approval of the Company’s executive | ||||||
Proposal 3.
Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the |
Proposal 4. Transaction of any other business as may properly come before the Meeting |
Internet - www.envisionreports.com/kelyb |
QR code - Scan and vote with your mobile device | ||||||
Calling -1-800-652-VOTE (8683) Within the U.S., U.S. territories & Canada on a touch tone telephone |
Mail - Return the signed proxy card | |||||||
Proxies submitted by the Internet or Beneficial owners, who own shares through a bank, brokerage firm, or If you are a stockholder of record or a beneficial owner who has a legal proxy to vote the shares, you may choose to vote online by attending the Annual Meeting by webcast. | ||||||||
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFOR EACH DIRECTOR NOMINEE AS SET FORTH IN PROPOSAL 1,FOR THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION AS SET FORTH IN PROPOSAL 2,FOR THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION AS SET FORTH IN PROPOSAL 3,FOR THE APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED BYLAWS AS SET FORTH IN PROPOSAL 4, ANDFOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS SET FORTH IN PROPOSAL 5.
Only holdersIf you were a holder of record of the Company’s Class B common stockCommon Stock at the close of business on the Record Date, March 19, 2018,29, 2021, you are entitled to notice of and to vote at the Annual Meeting.
Please promptly submit your vote your shares by Internet,internet, telephone, or by mail usingsigning, dating and returning the enclosed proxy card or voting instructions form in the postage-paid envelope which requires no postage. We encourageprovided so that your shares will be represented and voted at the meeting.
Thank you to vote promptly.for your interest in Kelly.
Order of the Board of Directors
JAMES M. POLEHNA
Corporate Secretary
4 2021 Kelly Proxy Statement
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| Governance of Executive Compensation Programs | ||||
Potential Payments Upon Termination | ||||
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2021 Kelly Proxy Statement 5
Proxy Summary
We provide belowThis summary highlights of certain information contained elsewhere in this Proxy Statement. As it is only a summary, pleasePlease refer to the complete Proxy Statement and Kelly’s 20172020 Annual Report before you vote.
2018 ANNUAL MEETING OF STOCKHOLDERS
Date and Time: | Wednesday, May | |||
| 19, 2021 at 11:00 a.m., Eastern Daylight Time | ||||
Place: | ||||
Record Date: | Close of Business, Eastern Daylight Time, March | |||
Voting: | Class B Stockholders as of the Record Date are entitled to vote. Each share of Class B | |||
Admission: | All holders of the Company’s Class A and Class B | |||
VOTING MATTERS
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| Election of nine directors | Advisory vote to approve the Company’s executive compensation | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the 2021 fiscal year
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BOARD RECOMMENDATIONS
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✓ FOR Each Nominee
| ✓ FOR | ✓ FOR | ||
PAGE REFERENCE FOR MORE DETAILS
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| 14 | 39 | 69 | ||
6 2021 Kelly Proxy Statement
Proxy Summary
The following table provides summary information about each director nominee. Each director is elected annually by a plurality vote.
Name | Age | Director Since | Principal Occupation | Independent | Other Public Company Boards | |||||||||
Donald R. Parfet | 68 | 2004 | Managing Director, Apjohn Group, LLC; General Partner, Apjohn Ventures Fund; General Partner, Apjohn Ventures Annex Fund | ✓ | 2 | |||||||||
Peter W. Quigley | 59 | 2019 | President and Chief Executive Officer, Kelly Services, Inc. | |||||||||||
Carol M. Adderley | 61 | 2010 | Writer and Researcher in the Humanities | |||||||||||
Gerald S. Adolph | 67 | 2018 | Retired Senior Partner, Booz & Co. | ✓ | 1 | |||||||||
George S. Corona | 62 | 2017 | Retired President and Chief Executive Officer, Kelly Services, Inc. | |||||||||||
Robert S. Cubbin | 63 | 2014 | Retired President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. | ✓ | 1 | |||||||||
Jane E. Dutton | 68 | 2004 | Robert L. Kahn Distinguished University Professor Emeritus of Business Administration and Psychology, The University of Michigan Business School | ✓ | ||||||||||
Terrence B. Larkin | 66 | 2010 | Retired Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation | ✓ | ||||||||||
Leslie A. Murphy | 69 | 2008 | President and CEO, Murphy Consulting, Inc.; Former Chair, American Institute of Certified Public Accountants | ✓ | 1 | |||||||||
2021 Kelly Proxy Statement 7
Proxy Summary
Corporate Governance Highlights
Kelly is committed to sound corporate governance as means of enhancing long-term stockholder value. The following table summarizes certain of our governance practices and processes.
| Independence | Accountability | Best Practices | ||
• Majority independent Board | • Annual election of | • Robust director selection process resulting in diverse Board relative to gender, race, ethnicity, experience, and skills | ||
• Independent Chairman of the | • Annual election of the | • Average Board attendance of 90% during 2020 | ||
• 100% Independent Board Committees | • Annual evaluation of the CEO (including compensation) by independent directors | • Strong oversight of strategy, financial performance, Enterprise Risk Management (“ERM”), and Environmental, Social, and Governance (“ESG”) standards by the Board and Audit Committee | ||
• Regular executive sessions where independent directors meet without management and non-independent directors | • Annual Board and Committee self-evaluations, and peer review | • CEO and executive leadership succession planning by the Board and Compensation and Talent Management Committee | ||
• Committees may hire independent advisors | • Annual review of governance documents | • Policies prohibiting short-sales, hedging, pledging and, margin accounts | ||
• Clawback policy that applies to | ||||
• Stock ownership requirements for directors and senior management | ||||
HOW TO CAST YOUR VOTE74 Years of Industry Leadership
| Largest | Top 5 | Leading | Delivering | |||||||||
provider of K-12 educational staffing in U.S. | science, engineering, and office talent provider in the U.S. | managed services provider with $8.3 billion spend under management. | staffing, outsourcing and consulting across Americas, EMEA, and APAC. | |||||||||
| Supported | 75% | Top 3 | Recognized | |||||||||
by 4,600+ supplier partners globally. | of Fortune 100 companies use our services. | on Forbes’ 2020 list of America’s Best Professional Recruiting Firms. | as National Minority Supplier Development Council Class 1 Company of the Year. | |||||||||
8 2021 Kelly Proxy Statement
Proxy Summary
Full Year 2020 Financial Summary
Actual Results
| Change
| Constant Currency Change(1) | ||||||||||
Revenue | $4.5B | (15.7%) | (15.5%) | |||||||||
Gross Profit % | 18.3% | 20 bps | ||||||||||
Earnings from Operations | ($93.6M) | NM | NM | |||||||||
Earnings Per Share | ($1.83) | ($4.67) | ||||||||||
Revenue declined in all segments from decrease in demand related to the COVID-19 pandemic. Temporary staffing declined 20%, which was partially offset by a 9% increase in outcome-based services. Permanent placement revenue also declined 34%.
GP rate includes 20 bps favorable impact from COVID-related wage subsidies. GP rate also impacted by lower employee-related costs and structural improvement in product mix which offset the impact of lower permanent placement revenue and unfavorable customer mix as the recovery of demand from large accounts with lower margins outpaced the recovery of small and medium-sized customers.
Loss from operations is a result of the effect of weakening revenues and gross profit, partially offset by reduced expenses from efforts to align costs with GP trends. 2020 results also included a $147.7 million goodwill impairment charge, $12.8 million of restructuring charges, and a $9.5 million charge related to a customer dispute in Mexico that resulted in additional uncollectible accounts receivable charges, partially offset by a $32.1 million gain on sale of assets.
2020 EPS reflects lower earnings and includes $3.17 goodwill impairment charge, net of tax, $0.29 non-cash loss from the investment in Persol Holdings common stock, net of tax, $0.24 of restructuring charges, net of tax, a $0.17 non-cash charge related to a customer dispute in Mexico, net of tax, partially offset by $0.61 gain on sale of assets, net of tax. 2019 EPS includes an after-tax gain of $0.63 from the investment in Persol Holdings common stock and $0.23 gain on sale of assets, net of tax, partially offset by $0.30 of asset impairment charges, net of tax, and $0.10 of restructuring charges, net of tax.
| (1) | Constant Currency represents year-over-year changes resulting from translating 2020 financial data into USD using 2019 exchange rates. |
2021 Kelly Proxy Statement 9
Proxy Summary
Full Year 2020 Financial Summary
(Excluding Goodwill Impairment, Gain/Loss on Investment in Persol Holdings, Gain on Sale of Assets, Customer Dispute Charge, Restructuring and Asset Impairment Charge)
Your vote is important. Please cast your vote
Adjusted Results(1)
| Change
| Constant Currency Change(4) | ||||||||||
Revenue | $4.5B | (15.7%) | (15.5%) | |||||||||
Gross Profit % | 18.3% | 20 bps | ||||||||||
Earnings from Operations(2) | $44.3M | (51.2%) | (49.6%) | |||||||||
Earnings Per Share(2),(3) | $1.44 | ($0.94) | ||||||||||
Revenue declined in all segments from decrease in demand related to the COVID-19 pandemic. Temporary staffing declined 20%, which was partially offset by a 9% increase in outcome-based services. Permanent placement revenue also declined 34%.
GP rate includes 20 bps favorable impact from COVID-related wage subsidies. GP rate also impacted by lower employee-related costs and structural improvement in product mix which offset the impact of lower permanent placement revenue and unfavorable customer mix as earlythe recovery of demand from large accounts with lower margins outpaced the recovery of small and medium-sized customers.
Adjusted earnings from operations declined as possible.the effect of weakening revenues and gross profit was only partially offset by reduced expenses from efforts to align costs with GP trends.
EPS declined on lower earnings.
| (1) | Adjusted earnings from operations and adjusted earnings per share are non-GAAP measures. Non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, the Company considers these measures, along with reported results, when it reviews and evaluates the its financial performance and believes that these measures provide greater transparency to investors and provide insight into how the Company is evaluating the its financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. |
| (2) | Change excludes: |
| - | Goodwill impairment charge of $147.7 million, $124.7 million net of tax or $3.17 per share in Q1 2020. |
| - | Gain on sale of assets of $32.1 million, $23.9 million net of tax or $0.61 per share in Q1 2020. |
| - | Customer dispute charge related to Mexico of $9.5 million, $6.7 million net of tax or $0.17 per share in Q3 2020. |
| - | Restructuring charges of $12.8 million, $9.6 million net of tax or $0.24 per share in 2020. |
| - | Gain on sale of assets of $12.3 million, $9.0 million net of tax or $0.23 per share in 2019. |
| - | Restructuring charges of $5.5 million, $4.1 million net of tax or $0.10 per share in 2019. |
| - | Asset impairment charge of $15.8 million, $11.8 million net of tax or $0.30 per share in Q4 2019. |
| (3) | Change excludes: |
| - | Loss on investment in Persol Holdings of $16.6 million, $11.5 million net of tax or $0.29 per share in 2020 and gain on investment in Persol Holdings of $35.8 million, $24.8 million net of tax or $0.63 per share in 2019. |
| (4) | Constant Currency represents year-over-year changes resulting from translating 2020 financial data into USD using 2019 exchange rates. |
10 2021 Kelly Proxy Statement
Proxy Summary
A Model for Growth
Stockholders of record,(As Reported, by Business Unit) who hold shares registered
We have redesigned our operating model to drive profitable growth in their names, can vote by:our chosen specialties.
| ➊ | ➋ | ➌ | ➍ | ➎ | ||||||||||||||||||||||||||
Professional & Industrial (P&I) | Science, Engineering & Technology (SET) | Education | Outsourcing & Consulting (OCG) | International | ||||||||||||||||||||||||||
| Revenue | $1.9B | $1.0B | $0.3B(1) | $0.4B | $1.0B | |||||||||||||||||||||||||
| GP Rate | 17.8% | 20.5% | 14.7% | 33.0% | 12.7% | |||||||||||||||||||||||||
| Geographic Span | North America | North America | U.S. | Global | EMEA & Mexico | |||||||||||||||||||||||||
| Specialties | – Industrial – Contact Center – Office – Professional | – Engineering – Science & Clinical – IT – Telecom | – K-12 – Early Childhood – Higher Ed – Special Needs | – MSP(2) – RPO(2) – PPO(2) – Consulting | – EMEA Regional Life Sciences – Local Niches | |||||||||||||||||||||||||
Kelly size and margin profiles are based on 2020 full year results.
| (1) | Kelly Education revenue was $0.5B prior to COVID-19 pandemic disruption in 2019, including the results of Insight on a proforma basis. |
| (2) | Managed Service Provider (“MSP”); Recruitment Process Outsourcing (“RPO”); Professional Payroll Outsourcing (“PPO”) |
Portfolio Progress
We are using M&A activity to increase our focus on specialization.
2021 Kelly Proxy Statement 11
Proxy Summary
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Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Central Daylight Time, on May 8, 2018. If you vote by mail, your proxy card must be received before the Annual Meeting.
Beneficial owners, who own shares through a bank, brokerage firm, or other financial institution, can vote by returning the voting instruction form, or by following the instructions for voting via telephone or the Internet, provided by the bank, broker, or other organization. If you own shares in different accounts or in more than one name, you may receive different voting instructions for each type of ownership. Please vote all your shares.
If you are astockholder of record or a beneficial owner who has alegal proxy to vote the shares, you may choose to vote in person at the Annual Meeting.Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible.
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Proxy Summary
MEETING AGENDA AND VOTING RECOMMENDATIONS
• Recognized as a Silver Supplier for third consecutive year. • Increased our score by 20 points since 2017. • Ranked top 6% and 91st percentile of companies assessed on environment, labor and human rights, ethics, and sustainable procurement. • Placed in top 8% for ethics and top 5% for sustainable procurement categories. | ||||||||||
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Development Council (NMSDC) – Class 1 honors – 2020 Corporation of the Year | Michigan Minority Supplier Diversity Council (MMSDC) – 2020 ACE Award – Corporation of Services & Staffing | Kelly was awarded the 2021 Military Friendly Employer designation and 2021 Military Friendly Spouse Employer by VIQTORY | For the 10th consecutive year, Kelly was recognized as one of America’s Top Corporations for Women- Owned Businesses by WBENC | |||||||
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year, Kelly received a top score on the Human Rights Corporate Equality Index 2021. Best Place to Work for LGBTQ Equality | Kelly earned Silver Supplier status in business sustainability from EcoVadis | Kelly was named to FlexJobs® Top 100 Companies for Remote Jobs in each of the years the award has been in | For the second year in a row, Kelly earned No. 3 spot on the global diversity award by WEConnect International | |||||||
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KellyOCG outsourcing excellence by the International Association of Outsourcing Professionals (IAOP) 2020 Global Outsourcing 100 List | HR Vendor of the Year by Human Resources Online 2020 – Gold Award for Best Recruitment Process Outsourcing Partner – KellyOCG Singapore | Forbes named Kelly as one of America’s top recruiting firms for 2020 | KellyOCG – Leader for Services Procurement by Everest Group | |||||||
Great Place to Work – KellyOCG India | Best Use of | Online Recruitment by a Recruitment Agency, OnRec | ||||||||
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12 2021 Kelly Proxy Statement
Proxy Summary
The following table provides summary information about each Director nominee. Each Director is elected annually by a plurality vote.
Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships | Other Public Company Boards | ||||||||
Terence E. Adderley | 84 | 1962 | Chairman of the Board of Directors, Kelly Services, Inc. (1998 – present). | No | Governance | — | ||||||||
Carol M. Adderley | 58 | 2010 | Writer and Researcher in the Humanities. | No | Governance (Vice Chair) | — | ||||||||
Gerald S. Adolph | 64 | 2018 | Director, NAACP Legal Defense and Education Fund (1998 –present); Director, Cintas Corporation (2006 – present); Director, Cardinal Spellman High School Board (2010 – present); Senior Partner and other executive positions, Booz & Co. (1981 – 2016). | Yes | — | 1 | ||||||||
George S. Corona | 59 | 2017 | President and Chief Executive Officer, Kelly Services, Inc. (2017 – present); Executive Vice President and Chief Operating Officer, Kelly Services, Inc. (2009 – 2017). | No | — | — | ||||||||
Robert S. Cubbin | 60 | 2014 | Director, Huntington Bancshares Incorporated (2017 – present); Director, First Merit Corporation (2013 – 2017); President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. (2002 – 2016). | Yes | Audit; Compensation (Chair); Governance | 1 | ||||||||
Jane E. Dutton | 65 | 2004 | Robert L. Kahn Distinguished University Professor Emeritus of Business Administration and Psychology, The University of Michigan Business School (2017 – present); Robert L. Kahn Distinguished University Professor of Business Administration and Psychology, The University of Michigan Business School (2007 – 2017). | Yes | Compensation; Governance (Chair) | — | ||||||||
Terrence B. Larkin | 63 | 2010 | Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation (2008 – present). | Yes | Audit (Vice Chair); Compensation | — | ||||||||
Leslie A. Murphy | 66 | 2008 | President and CEO, Murphy Consulting, Inc. (2008 – present); Certified Public Accountant; Member of AICPA’s Governing Council (2008 – present); Member of NACD Advisory Councils on Audit Committee Issues and Risk Oversight (2012 – present); Director, Detroit Legal News Company (2012 – present); Director, Loop Industries, Inc. (2017 - present). | Yes | Audit (Chair); Compensation (Vice Chair) | 2 | ||||||||
Donald R. Parfet | 65 | 2004 | Managing Director, Apjohn Group, LLC (2001 – present); General Partner, Apjohn Ventures Fund (2003 –present); Director, Rockwell Automation, Inc. (2008 – present); Director, MASCO Corporation (2012 – present); Director, Sierra Oncology, Inc. (2015 – present). | Yes | (Lead Director since 2012); Audit; Compensation; Governance | 3 | ||||||||
Hirotoshi Takahashi | 48 | 2015 | Director, Deputy Vice President and COO, Persol Holdings Co., LTD. (2013 - present); Representative Member, Godo Kaisha Yamashiroya, (2010 - present); Vice President, Japan Association of HR Services Industry (2012 - 2016) | No | — | 1 | ||||||||
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Proxy Summary
CORPORATE GOVERNANCE HIGHLIGHTS
The Company is committed to good corporate governance, which we believe is important to the success of our business and in advancing stockholder interests. Our corporate governance practices are described in greater detail in the Corporate Governance section.Executive Compensation Highlights include:
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Proxy Summary
FINANCIAL AND OPERATING HIGHLIGHTS
2017 was a good year for Kelly that featured strategic focus and acceleration. The company created and carried solid momentum throughout all four quarters that resulted in an improved gross profit rate, year over year growth in earnings from operations, and an improved conversion rate(1). Kelly’s solid performance throughout 2017 demonstrates our commitment to focus and growth in the solutions that can make the biggest difference now and in the future.
2017 TOTAL COMPANY
2017 OPERATING EARNINGS BY SEGMENT
Effective January 2, 2017, Kelly realigned its business into three segments to reflect customer buying behavior and the Company’s operational structure.
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FINANCIAL MEASURES
The constant currency (“CC”) change amounts refer to the year-over-year percentage changes resulting from translating 2017 financial data into U.S. dollars using the same foreign currency exchange rates used to translate financial data for 2016. We believe that CC measurements are a useful measure, indicating the actual trends of our operations without distortion due to currency fluctuations. We use CC results when analyzing the performance of our segments and measuring our results against those of our competitors. Additionally, substantially all of our foreign subsidiaries derive revenues and incur cost of services and selling, general and administrative expenses within a single country and currency which, as a result, provides a natural hedge against currency risks in connection with their normal business operations.
CC measures are non-GAAP (Generally Accepted Accounting Principles) measures and are used to supplement measures in accordance with GAAP. Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Return on sales (earnings from operations divided by revenue from services) and conversion rate (earnings from operations divided by gross profit) are ratios used to measure the Company’s operating efficiency.
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Proxy Summary
EXECUTIVE COMPENSATION HIGHLIGHTS
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• Align pay with performance
• Align executive compensation with stockholder returns through performance-based equity incentive awards • In 2020, renamed Compensation Committee to “Compensation and Talent Management Committee” to reflect focus on the employee lifecycle – recruitment, retention, performance management, compensation, etc.
• Annual review of performance measures and goals for our annual and long-term incentive plans by the independent Compensation and Talent Management Committee to ensure we use diversified measures with challenging, but attainable targets
• Require the achievement of a minimum acceptable level of financial performance
• Include caps on individual incentive payouts in incentive plans
• Require stock ownership and retention of a portion of equity-based awards by
• Hold an annual
• Retain an independent executive compensation consultant to the Compensation and Talent Management Committee
• Regular review of executive compensation governance market practices, particularly when considering the adoption of new practices or changes in existing programs or policies
• Conduct annual assessments of any potential risks in our incentive compensation programs and policies and related internal controls
• Annually review with the Compensation and Talent Management Committee share utilization, burn rate and dilution levels resulting from our compensation practices
• Maintain an insider trading policy that requires
• Maintain a double-trigger for the accelerated vesting provisions under the Equity Incentive Plan
• Condition severance benefits for | • Provide employment agreements for
• Guarantee bonus arrangements with our
• Allow
• Allow the repricing or backdating of equity awards
•
• Pay dividends on performance share awards
• Provide excise tax gross-ups upon change-in-control
• Grant incentive awards to
• Accrue additional retirement benefits under any supplemental executive retirement plans (“SERPs”)
• Provide excessive perquisites | ||
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2021 Kelly Proxy Statement 13
Proposal 1: Election of Directors
PROPOSALProposal 1 - ELECTION OF DIRECTORS
Under our Restated Certificate of Incorporation, the Board– Election of Directors is to consist of no fewer than five and no more than eleven members, the exact number of Directors to be determined from time to time by the Board. As of the date of the mailing of this Proxy Statement, the number of Directors constituting the whole
The Board has been fixed at ten. Directors are elected annuallynominated nine individuals for one-year terms. Each of the current Directors is a nominee for election as directors at the Annual Meeting.Meeting, each to serve for one year and until his or her successor is elected and qualified. All of these individuals are currently serving on the Board.
Directors will be elected by a plurality of the votes cast by holders of Class B Common Stock who are present in person, or represented by proxy, and entitled to vote at the Annual Meeting. Our controlling stockholder has indicated its support and intention to vote for each of the director nominees.
We do not contemplate that any of the nominees will be unavailable to serve at the time of the Annual Meeting; in that event, however, the persons named in the enclosed form of proxy may vote for the election of a substitute selected by the Board or the Board may reduce its size.
Director Independence and Tenure
Our Board of Directors is responsible for overseeing the management of the business of the Company.
On March 7, 2018,February 17, 2021, our Board affirmatively determined that Directors G.S.directors Gerald S. Adolph, R.S.Robert S. Cubbin, J.E.Jane E. Dutton, T.B.Terrence B. Larkin, L.A.Leslie A. Murphy, and D.R.Donald R. Parfet, representing a majority of the Board, are independent pursuantindependent. The Board’s guidelines for director independence conform to the listing standards of the Nasdaq Global Market listing standards, and that none of them had a material relationship with(“Nasdaq”) on which the Company.Company’s common stock is listed.
The following table illustrates the tenure of our Director nominees. Director tenure is distributed fairly evenly, resulting in a Board that provides us with both new perspectives and long-standing experience with the Company.
Director Tenure
Years as Director
Director Qualifications, Background, and DiversityNominees
The Corporate Governance and Nominating Committee makes recommendationsregularly reviews the mix of individual directors on the Board to assess overall Board composition and is responsible for identifying and recommending to the Board of Directors regarding the Board’s size and composition.qualified candidates for Board membership. The Committee annually reviews with the Board the composition of the Board as a whole and proposes nominees for electiongoal is to the Board, with a view towards achievingbuild a Board that has a rangeis effective, collegial, diverse, responsive to the current and anticipated needs of relevant qualifications,the Company, and effectively represents the long-term interests of stockholders. The Committee considers the following criteria: (i) ethics, character, and judgment; (ii) business and other experience, expertise, skills, and experience, outstanding personal attributes and diversity of thought. Recommendations made by the Committee of candidates for consideration as director nominees are based upon specific criteria as well as other considerations that the Committee may from timeknowledge relevant to time deem appropriate, including the Company’s strategic objectives and Board composition factors such as the balance of independent and non-independent directors or the need for financial experts on the Audit Committee. The Committee may engage third parties to assist in the search for director candidates or to assist in gathering information regarding a candidate’s background and experience.
Director candidates should possess the following competencies and attributes: the highest personal and professional ethics, integrity and values; a reputation, both personal and professional, for maturity, strength of character, and sound judgment; the ability to comply with the Company’s Code of Business Conduct and Ethics; a high level of accomplishment in his or her respective field; an understanding of the complexities of business organizations and demonstrated leadership skills; and flexibility and independence of thought, with the ability to offer independent opinions in a constructive manner. Director candidates should be leaders with relevant expertise and experience with complex organizations of similar size and global scope –- in the past, the Board has sought active and former chief executive officers, chief operating officers, or substantially equivalent level executive officers of a complex organization such as a corporation, university, or major unit of government, or a professional who regularly advises such organizations. In recognition of the nature of the Company’s business, the Board has also sought to have some directors with experience in the business services industry or human resources and workforce solutions field.
Director candidates must also have financial acumen and the ability to read and understand fundamental financial statements; a willingness to devote sufficient time to become knowledgeable about the Company’s business and to carry outstrategy; (iii) objectivity and independence of thought; (iv) diversity of viewpoints and perspectives, personal and professional experience, background, and personal characteristics such as gender, race, ethnicity, sexual orientation, and age; and (v) the duties and responsibilitiesbalance of the office; and an intention to serve a sufficient periodcandidate’s qualities with those of time to make a meaningful contribution to the Board and the Company. Independent director candidates must meet the independence requirements established by Nasdaq and the SEC, and all director candidates must review with the Corporate Governance and Nominating Committee any relationships that might be construed as a conflict of interest. The resulting Board is a diverse body in terms of gender, age, race, ethnic background, and professional experience; and in lightother members of the Company’s status as a controlled company, the Board has given consideration to the representation of the controlling shareholder.
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Proposal 1: Election of Directors
In 2017, the Corporate Governance and Nominating Committee of the Board initiated a search for an additional independent Director. This search, which was conducted with the assistance of an independent search firm, resulted in the Board’s selection and appointment of Mr. Gerald S. Adolph to the Company’s Board of Directors, effective March 7, 2018.
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Board. The Corporate Governance and Nominating Committee works with the Board of Directors to determine the appropriate mix of experience, qualifications, skills, and attributes that enable a Director to make significant contributions to the Company. We do not have a formal policy with regard to diversity. However, the Board values diversity highly and takes it into consideration including diversity in gender, ethnicity, race, and age, as we strive to maintain a Board that is strong collectively in its backgrounds, knowledge, and experience. Director candidates must also have a willingness to devote sufficient time to discharge their duties, taking into consideration principal occupation, memberships on other boards, attendance at Board and committee meetings, and other responsibilities. The following table highlightsCommittee may engage third parties to assist in the breadthsearch for director candidates. In determining whether to recommend a director for re-nomination, the Committee also considers the director’s recent contributions and potential for continuing contributions to the work of experience that is represented on the Board. A particular Director may possess other skills, knowledge, or experience that is in addition to those noted below.
Director Experience
Listed on the following pages are the names of the persons nominated for election as Directors of the Company, all of whom are currently Directors of the Company, their ages, principal occupations, other public companies at which they are Directors, occupations held during the past five years (unless otherwise stated, the occupations listed have been held during the entire past five years), and the year in which they first became a Director of the Company.
If a nominee is unavailable for election for any reason on the date of the election of the Director (which event is not anticipated), the persons named in the enclosed form of proxy may vote for the election of a person designated by the Board of Directors or the Board may reduce the number of Directors constituting the whole Board.
Directors will be elected by a plurality of the votes cast by holders of Class B common stock who are present in person, or represented by proxy, and entitled to vote at the Annual Meeting. Withheld votes and broker non-votes will not count towards a nominees’ achievement of plurality.
The Board of Directors is responsible for approving Director nominees based on the recommendation of the Corporate Governance and Nominating Committee.
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Proposal 1: Election of Directors
The Board has not adopted a policy whereby stockholders may recommend nominees to the Board because of the Company’s status as a controlled company.
After a review of the individual qualifications and experience of eachEach of our Directordirector nominees has been recommended for election by our Corporate Governance and their contributionsNominating Committee and nominated by our Board. They are seasoned leaders who have held an array of diverse leadership positions in public and private companies, academia, nonprofit organizations, and other businesses. They represent diverse backgrounds and viewpoints. Together, they bring to our Board broad diversity in terms of experience, skills, and personal attributes. The Board believes that this diversity strengthens the Board’s ability to carry out its oversight role on behalf of stockholders. While we do not have a formal diversity policy, the Board will seek to build upon its diversity in connection with future Board membership.
The following graphics highlight the personal diversity and breadth of skills, knowledge, and experience that are represented on the Board. A particular director may possess other skills, knowledge, or experience in addition to those noted below.
14 2021 Kelly Proxy Statement
Proposal 1: Election of allDirectors
Biographical Information About Director nominees to serve for the one-year term ending at the Annual Meeting of Stockholders held after the close of the fiscal year ending December 30, 2018.Nominees
Set forth below are the nominees for election at the 2018 Annual Meeting of Stockholders.
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Age: Director since: 2004
Chairman of the Board Independent |  | PETER W. QUIGLEY Age: 59 Director since: 2019 Chief Executive Officer | |||||||
Board Committees:
• | Board Committees:
• None | |||||||||
Principal Occupation and Directorships:
• • General Partner, Apjohn Ventures Fund (2003 - present) • General Partner, Apjohn Ventures Annex Fund (2010 - present) • Director, Rockwell Automation, Inc. (2008 - present) • Director, MASCO Corporation (2012 - present) • Director, Sierra Oncology Inc. (2015 - 2019) | Principal Occupation and Directorships: • President and Chief Executive Officer, Kelly Services, Inc.
• Executive Vice President, President of Global Staffing and General Manager of IT, Global Service, and Global Business Services, Kelly Services, Inc. (2017 - 2019) • Senior Vice President, General Counsel, Chief Administrative Officer and Assistant Secretary, Kelly Services, Inc. (2015 - 2017) | |||||||||
Education:
• University of Michigan, • University of Arizona, BA, Economics | Education: • National Law Center at George Washington University, JD
• University of Michigan, BA | |||||||||
Mr. Parfet was appointed Chairman of the Board in 2018. Prior to being appointed to the Chairman role, he had | Mr. Quigley was appointed President and Chief Executive Officer of Kelly in October 2019. He has 18 years of experience in a | |||||||||
16 2021 Kelly Proxy Statement
Proposal 1: Election of Directors
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Age: Director since: 2010 |  | GERALD S. ADOLPH Age: 67 Director since: 2018 Independent | |||||||
Board Committees: • None | Board Committees: • Audit • Compensation and Talent Management
• Governance and Nominating | |||||||||
Principal Occupation and Directorships:
• Writer and Researcher in the Humanities | Principal Occupation and Directorships:
• Director and Co-Chair, NAACP Legal Defense and Education Fund (1998 - present) • Director, Cintas Corporation (2006 - present) • Trustee, Cardinal Spellman High School Board (2010 - present) • Senior Partner and other executive positions, Booz & Co. (1981 - 2016) | |||||||||
Education:
• University of Iowa, MA, English Literature
• University of Chicago, AM, General Studies in Humanities, Literature and Social Change
• University of Western Ontario, BA (Honors), English and Philosophy | ||||||||||
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Proposal 1: Election of Directors
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Education:
• Harvard Business School,
• Massachusetts Institute of Technology, MS, Chemical Engineering
• Massachusetts Institute of Technology, BS, Management Science (Concentration in Organizational Psychology)
• Massachusetts Institute of Technology, BS, Chemical Engineering | ||||||||
Mr. Adolph, | ||||||||||
2021 Kelly Proxy Statement 17
Proposal 1: Election of Directors
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Age: Director since: 2017 |  | ROBERT S. CUBBIN Age: 63 Director since: 2014 Independent | |||||||
Board Committees:
• None | Board Committees:
• Audit • Compensation and Talent Management (Chair) • Governance and Nominating | |||||||||
Principal Occupation and Directorships:
• President and Chief Executive Officer, Kelly Services, Inc. (2017
• Executive Vice President and Chief Operating Officer, Kelly Services, Inc. (2009 | Principal Occupation and Directorships: • Director, Huntington Bancshares Incorporated (2017 - present) • Director, First Merit Corporation (2013 - 2017)
• President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. (2002 - 2016) | |||||||||
Education:
• Oakland University, MBA
• Wayne State University, BSBA | Education: • Detroit College of Law, JD • Wayne State University, BA, Psychology | |||||||||
Mr. Corona | ||||||||||
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18 2021 Kelly Proxy Statement
Proposal 1: Election of Directors
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Age: Director since: 2004 |
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 | TERRENCE B. LARKIN Age: 66 Director since: 2010 Independent | |||||||||
Board Committees: • Compensation and Talent Management • Governance and Nominating | Board Committees: • Audit • Governance and Nominating (Chair) | |||||||||
Principal Occupation and Directorships:
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• | Robert L. Kahn Distinguished University Professor Emeritus of Business Administration and Psychology, The University of Michigan Business School (2017 | |||||||||
• | Robert L. Kahn Distinguished University Professor of Business Administration and Psychology, The University of Michigan Business School (2007 | |||||||||
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Principal Occupation and Directorships: • Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation (2008 - 2020) | ||||||||||
Education: • Northwestern University, Ph.D. and | ||||||||||
• Colby College, BA Sociology | ||||||||||
Education: • Wayne State University Law School, JD cum laude • Michigan State University, BA (High Honors), Finance | ||||||||||
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Leslie A. Murphy
Age: 66
Director since:
2008
Board Committees:
2021 Kelly Proxy Statement 19
Proposal 1: Election of Directors
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Age: 69 Director since: 2008 Independent | |||||||||||||
Board Committees: • Audit (Chair) • Compensation and Talent Management |
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Principal Occupation and Directorships:
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• | President and CEO, Murphy Consulting, Inc. (2008
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• | Certified Public Accountant
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• | Member of AICPA’s Governing Council
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• | Member of NACD Advisory Councils on Audit Committee Issues and Risk Oversight (2012
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• | Director, Detroit Legal News Company (2012 | |||||||||||||
Education: • University of Michigan, BBA, Accounting | ||||||||||||||
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20 2021 Kelly Proxy Statement
Corporate Governance
CORPORATE GOVERNANCECorporate Governance
UnderCompliance with Nasdaq Independence Standards for Non-Controlled Companies
Nasdaq, on which the listing standardsCompany’s common stock is listed, has established exemptions from its governance requirements for “controlled companies,” defined as companies in which a single person, entity, or group holds more than 50% of the Nasdaq Global Market, we are deemedvoting power for the election of its directors. The Company is a “controlled company” becauseby virtue of the fact that the Terence E. Adderley Revocable Trust K (“Trust K”), discussed below, has the power to vote approximately 93.5% of the Company’s outstanding shares of Class B Common Stock.
In keeping with the Company’s historic recognition of the importance of having a majority of independent directors, the Company has elected to comply voluntarily with all the Nasdaq listing standards that otherwise do not apply to controlled companies. Thus, a majority of the Board are independent directors and all members of the three Board Committees, Compensation and Talent Management, Audit, and Corporate Governance and Nominating, are independent (which is a Nasdaq requirement for all listed companies and fully satisfies the Nasdaq independence standards for boards and board committees of non-controlled companies).
Prior to his death in October 2018, Terence E. Adderley, our former Chairman, was the trustee of Trust K. Upon his death, Trust K became irrevocable and, in accordance with the provisions of the trust, Andrew H. Curoe, David M. Hempstead, and William U. Parfet were appointed as successor trustees (the “co-trustees”). The co-trustees are required to act by a majority vote in voting and making investment decisions with respect to the Class B Common Stock held by Trust K. The co-trustees, acting as a majority, have sole voting and investment authority over Trust K and cannot be removed or replaced by the beneficiary(ies) of Trust K.
William U. Parfet, a co-trustee, is the brother of Donald R. Parfet, Chairman of the Board. In determining that Donald R. Parfet is an independent director, the Board considered, among other things, that Donald R. Parfet and William U. Parfet are financially independent of one another, that the co-trustees are required to act by majority vote and that none of the co-trustees serves as an officer or director of the Company or has any personal financial interest in Trust K that could benefit from actions taken by the Board.
Board Leadership and Governance Structure
The Board is responsible for establishing and maintaining the most effective leadership structure for the Company. At the present time, the Board has determined that the roles of the Chairman of the Board of Directors, and certain trusts of which he acts as trustee or co-trustee, have voting power with respect to more than fifty percent of our outstanding voting stock. As such, the Company may avail itself of exemptions relating to the independence of the Board, the Compensation Committee, and the nominating process.
Although we are a controlled company, the Company’s approach to leadership is intended to serve the interests of all stockholders, and the Company has historically recognized the importance of having a Board composed of a majority of independent Directors. Despite the availability of controlled company exemptions, a majority of our Board is independent and we maintain an independent Audit Committee and Compensation Committee. In addition, our Corporate Governance and Nominating Committee is majority independent.
In the fall of 2017, the Board formed a special committee consisting of the independent Directors to review and make recommendations to the Board about governance matters, including the responsibilities of the independent Directors, Board leadership, and governance best practices. In March 2018, upon recommendation of the special committee, and with the support of Mr. Adderley, the Board adopted amendments to the Company’s Corporate Governance Principles to, among other things, reallocate certain leadership responsibilities from the Executive Chairman and Chairman of the Board (a position held by Mr. Adderley, the Company’s controlling stockholder) to the Lead Director and the Chief Executive Officer. Commensurate changes were made to the title and compensation of that position. Upon recommendation of the special committee, the Board also adopted Amended and Restated Bylaws effective March 7, 2018 (as disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2018), and, subject to stockholder approval, an Amended and Restated Certificate of Incorporation (Proposal 3) and a further amendment to the Bylaws to designate the Delaware Chancery Court as the exclusive forum for certain legal actions involving the Company in the event they were to arise (Proposal 4).
Board Leadership and Governance Structure
The Company’s leadership is now vested in a Chairman of the Board of Directors (a position held by Mr. Adderley, the Company’s controlling stockholder), a Lead Director to provide independent leadership, and the Chief Executive Officer subjectshould be separate, with the Chairman an independent director, because that structure affords independent Board leadership and allows the Chief Executive Officer to the overall authority of the Board.
Our Chairman of the Board is a member ofconcentrate on the Company’s founding family and has given, to date, 60 years of dedicated service to the Company, including many years as its Chief Executive Officer. In his rolebusiness. Donald R. Parfet serves as Chairman of the Board Mr. Adderley contributes his deep knowledge of the Company and the staffing industry, and champions the values that have been integral to the Company’s culture since its founding: a commitment to the people of the Company – both our employees and the workers we place throughout the world; ethical business practices; and strong corporate governance.Peter W. Quigley serves as Chief Executive Officer.
The Chairman of the Board’s duties include consulting with our Chief Executive Officer, reviewing the agendas for Board meetings, presiding over meetings of the Board and, together with our Chief Executive Officer, presiding over meetings of stockholders. As longThe Chairman of the Board’s duties also include serving as liaison among the Chief Executive Officer and the independent directors, establishing the schedule for Board meetings (in consultation with the Chief Executive Officer), developing and approving agendas for Board meetings, approving the information sent to the Board for meetings, establishing the schedule and agendas for and presiding over meetings of the independent directors in executive session, providing feedback to the Chief Executive Officer on those executive sessions, and facilitating discussions among independent directors on key issues outside of Board meetings.
In the event that the Chairman of the Board is not an independent Director, as is currentlydirector, the case, the independent Directors are required under ourCompany’s Corporate Governance Principles toprovide that the independent directors will elect one of the independent Directors as Lead Director.
The Lead Director’s principal duties are to ensure the Board functions independent of management,their number to serve as liaison among the Chairman of the Board, the Chief Executive OfficerLead Director and the independent Directors, to establish the schedule for Board meetings (in consultation with our Chairman of the Board and Chief Executive Officer), to assist in the development of and to approve the agendas for Board meetings, to approve the information sent to the Board for meetings, to preside at meetings of the Board of Directors in the absencefulfill many of the Chairman of the Board, to establish the schedule and agendas for and to preside over meetings of the independent Directors in executive session and to provide feedback to the Chairman of the Board and the Chief Executive Officer on those executive sessions, to facilitate discussions among independent Directors on key issues outside Board meetings, and to be available for consultation with the Chairman of the Board and Chief Executive Officer.Board’s current responsibilities.
The Chief Executive Officer is responsible for managing the business and affairs of the Company, subject to the oversight of the Board. The Chief Executive Officer’s duties include leading the management team, representing the Company externally, consulting with the Chairman of the Board about developments in the Company, and communicating with all Directorsdirectors about key issues outside of Board meetings.
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2021 Kelly Proxy Statement 21
Corporate Governance
Board of Directors Majority Independent Independent Chairman of the
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| Audit Committee | Compensation and Talent Management Committee | Governance and Nominating Committee | ||
| All Independent | All Independent |
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The full text of our Board’s Corporate Governance Principles and the charters of the Board’sBoard established three standing committees, which are thecommittees: Audit Committee, Compensation and Talent Management Committee, and Corporate Governance and Nominating Committee, areCommittee. Each committee functions under a written charter adopted by the Board, which is available on the Company’s website atkellyservices.com.kellyservices.com or to any stockholder who requests a copy. The following table sets forth the Board committeescurrent members, responsibilities, and the current members of each.
| Audit | Compensation | Governance and Nominating | ||||
Terence E. Adderley | ✓ | |||||
Carol M. Adderley | Vice Chair | |||||
Gerald S. Adolph * | ||||||
George S. Corona | ||||||
Robert S. Cubbin * | ✓ | Chair | ✓ | |||
Jane E. Dutton * | ✓ | Chair | ||||
Terrence B. Larkin * | Vice Chair | ✓ | ||||
Leslie A. Murphy * | Chair | Vice Chair | ||||
Donald R. Parfet * (Lead Director) | ✓ | ✓ | ✓ | |||
Hirotoshi Takahashi | ||||||
Number of Meetings Held in Fiscal Year 2017 | 5 | 6 | 6 |
Directors are expected to attend the Annual Meeting of the Stockholders, all Board meetings, and all meetings of the committees on which they individually serve. The Board held nine meetings during 2017. Seven of the nine Directors then in office attended the 2017 Annual Meeting of Stockholders. Director attendance averaged ninety-two percent of the aggregate number of meetings each of the Board of Directors and thethese committees on which they served during 2017. Only Mr. Takahashi, who residesheld in Japan, attended fewer than seventy-five percent of the aggregate number of meetings of the Board of Directors. He does not serve on any committee. The independent Directors met in executive sessions at which only they were present at least eight times during 2017 as well as met as part of the special committee at least four times during 2017.
The Audit Committee is composed of R.S. Cubbin, T.B. Larkin (Vice Chair), L.A. Murphy (Chair), and D.R. Parfet, all of whom2020 are independent Directors. The Audit Committee held five meetings in 2017. The Audit Committee’s purpose is to oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company. The Audit Committee’s responsibilities are detailed in its charter and include: monitoring the integrity of the Company’s financial statements, accounting and financial reporting processes, and financial statement audits; the qualifications, independence, and performance of the Company’s independent registered public accounting firm; the qualifications and performance of the Company’s Internal Audit group; the Company’s compliance with legal and regulatory requirements; and the Company’s Enterprise Risk Management program that includes systems of disclosure controls and procedures, internal controls over financial reporting, and compliance with ethical standards adopted by the Company.shown below.
| Audit Committee | ||
Members: All Independent Leslie A. Murphy (Chair) Gerald S. Adolph Robert S. Cubbin Terrence B. Larkin Meetings in 2020: 6 The Board unanimously determined that each member of the Audit Committee meets Nasdaq’s “financial sophistication” requirements and that Mr. Cubbin, Mr. Larkin, and Ms. Murphy each has the financial education and experience to qualify as an “Audit Committee financial expert” within the meaning of SEC regulations. | Key Responsibilities: • Oversees and reports to the Board with respect to the quality and integrity of the Company’s financial statements, accounting, and financial reporting processes, and audits of the financial statements and internal controls over financial reporting • Appoints, approves compensation, and evaluates the qualifications, independence, and performance of the independent auditor • Oversees the performance of the internal audit function • Oversees the Company’s Enterprise Risk Management Program • Monitors the Company’s compliance with legal and regulatory requirements • Reviews and approves related party transactions • Serves as the Company’s Qualified Legal Compliance Committee | |
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Members: All Independent Robert S. Cubbin (Chair) Gerald S. Adolph Jane E. Dutton Leslie A. Murphy Meetings in 2020: 7 | Key Responsibilities: • Develops the Company’s compensation philosophy • Designs and administers the Company’s executive compensation programs and policies that are aligned with business and compensation objectives • Determines and approves the annual compensation of the CEO, senior officers, and Section 16 officers • Reviews stock ownership requirements for senior officers and Board members and compliance with the requirements • Reviews and makes recommendations to the Board concerning director compensation • Reviews and advises the Board concerning CEO and senior officer succession planning and developmental opportunities | |||
22 2021 Kelly Proxy Statement
Corporate Governance
The Audit Committee approves (or ratifies fee adjustments on pre-approved services approved under authority delegated to the Chief Financial Officer (“CFO”)) all audit, audit related, internal control related, tax,Compensation and permitted non-audit services of the independent registered public accounting firm prior to engagement. The Audit Committee also serves as the Company’s Qualified Legal Compliance Committee.
The Board has unanimously determined that R.S. Cubbin, T.B. Larkin, L.A. Murphy and D.R. Parfet each have the financial education and experience to qualify as an “Audit Committee financial expert” within the meaning of SEC regulations and as such meet the “financial sophistication” requirements under current Nasdaq Global Market listing standards.
The Compensation Committee’s current members are R.S. Cubbin (Chair), J.E. Dutton, T.B. Larkin, L.A. Murphy (Vice Chair), and D.R. Parfet, all of whom are independent Directors. The Compensation Committee is charged with developing the Company’s compensation philosophy and establishing and monitoring compensation programs for all employees. The Compensation Committee held six meetings in 2017.
The Compensation Committee determines the compensation of the CEO and, taking into account the CEO’s recommendations, determines the compensation for all Senior Officers, which includes all officers as defined in Section 16a-1(f) of the Securities Exchange Act of 1934 (the “Exchange Act”). The Compensation Committee is responsible for the administration of base salaries, short-term incentive awards under the Company’s Short-Term Incentive Plan (“STIP”), and long-term incentive awards under the Company’s Equity Incentive Plan (“EIP”) for Senior Officers. Our thirteen current Senior Officers are listed under Kelly Leadership on the Company’s website atkellyservices.com. The authority of the Compensation Committee is detailed in its charter.
To assist the Compensation Committee in making compensation recommendations for Senior Officers, the Company’s Executive Compensation group provides the Compensation Committee with historical, survey, and benchmark compensation data. The Compensation Committee also relies on the CEO and the other Named Executive Officers to provide performance evaluations and compensation recommendations to assist in its decisions regarding the total compensation of Senior Officers. The Compensation Committee has delegated to the CEO the authority to approve salary recommendations and incentive awards to the Company’s Officers below the Senior Officer group who are not subject to Section 16 of the Exchange Act.
The Compensation Committee has the authority to retain independent consultants. Retained consultants report directly to the Compensation Committee, which determines the consultants’ scope of work and fees. In 2017, the Compensation Committee retained Pay Governance LLC (“Pay Governance”) to provide assistance with the review of Executive and Director compensation. The Compensation Committee conducted an assessment of Pay Governance’s independence using factors established by the SEC and Nasdaq Global Market, and affirmed the independence of Pay Governance.
CompensationTalent Management Committee Interlocks and Insider Participation
During 2017,2020, none of the Company’s Executive Officersexecutive officers served on the Board of Directors of any entities whose Directorsdirectors or Officersofficers served on the Company’s Compensation and Talent Management Committee. No current or past Executive Officersexecutive officers of the Company or its subsidiaries serve on the Compensation and Talent Management Committee.
| Corporate Governance and Nominating Committee | ||
Members: All Independent Terrence B. Larkin (Chair) Gerald S. Adolph Robert S. Cubbin Jane E. Dutton Meetings in 2020: 4 | Key Responsibilities: • Identifies and recommends to the Board, nominees to serve on the Board • Monitors the independence of directors of the Board and Board Committees • Oversees the Board and Board Committees annual evaluation process, as well as the director peer review • Develops and oversees compliance with the Company’s Corporate Governance Principles • Reviews and makes recommendations to the Board with respect to corporate governance matters generally • Oversees and reports to the Board concerning the Company’s Corporate ESG Strategy | |
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Corporate Governance
CorporateRisk Governance and Nominating CommitteeOversight
The Corporate Governance and Nominating Committee, whose current members are C.M. Adderley (Vice Chair), T.E. Adderley, R.S. Cubbin, J.E. Dutton (Chair), and D.R. Parfet, held six meetings during 2017. The Corporate Governance and Nominating Committee’s responsibilities include: assistingWhile management is responsible for managing risk, one of the Board of Directors in identifying individuals qualified to become Directors; recommending to the Board the nominees for the next Annual Meeting of Stockholders or to otherwise fill vacancies and newly created directorships; overseeing the composition, organization, and governanceimportant functions of the Board and its committees; overseeing an annual evaluationcommittees is oversight of Board and committee effectiveness; developing and overseeing compliance with the Board’s Corporate Governance Principles; and advising and making recommendations to the Board with respect to corporate governance matters.
The Board’s oversight responsibilities includerisk management. This includes consideration of strategic issues and risks to the Company as well as management’s actions to address and mitigate those risks. Through its charter,Risk is inherent in business, and the Audit Committee is charged byBoard’s oversight, assessment, and decisions regarding risks occur in conjunction with the other activities of the Board with overseeing the Company’s risk assessment and enterprise risk management processes. The Audit Committeeits committees.
Risk Governance and Board focus on risk management strategy and risks of greatest significance, and seek to ensure that risks assumed by the Company are consistent with the Company’s risk tolerance and risk appetite.Oversight Responsibilities
| Board of Directors | ||||||
Oversees consideration of strategic issues and risks to the Company as well as management’s actions to address and mitigate those risks. The Board is kept apprised of its committees’ risk oversight activities through reports from the committee chairs presented at regular Board meetings. These reports and Board attention focus on risk management strategy and risks of greatest significance, and seek to ensure that risks assumed by the Company are consistent with the Company’s risk tolerance and risk appetite. Risk oversight is also addressed as part of the full Board’s regular oversight of strategic planning. | ||||||
| Management Committee | Corporate Governance and Nominating Committee | ||
• Plays a key role in the Board’s risk oversight process, particularly with respect to risks that could have a financial impact, such as financial reporting and disclosure, accounting practices, internal controls, conflicts of interest, and compliance with legal and regulatory requirements • Oversees the Company’s risk assessment and enterprise risk management processes • Reviews all quarterly and annual reports, including any disclosure of risk factors affecting the business • Reviews quarterly updates on the Company’s proactive approach to cyber security from the Information Technology and Internal Audit groups • Oversees the performance of the Company’s Internal Audit function • Monitors the qualifications, performance, and independence of the Company’s independent auditors | • Oversees our compensation plans, policies, and practices to ensure alignment with our Executive Compensation Risk Assessment Framework • Reviews the Company’s compensation program risk assessment for employee compensation programs and reports to the Board any compensation program that is reasonably likely to have a material adverse effect on the Company • Together with the Committee’s independent consultant, provides input to management regarding their annual assessment of potential risks created by our compensation plans, policies, and practices • Sets performance goals under our annual and long-term incentive plans that provide an appropriate balance between the achievement of short- and long-term performance objectives, with emphasis on managing the sustainability of the business and mitigation of risk • Manages risk associated with CEO and senior officer succession planning | • Manages risk associated with governance issues, such as the independence of the Board and its Committees, Board and Committee effectiveness and organization, corporate governance, and director succession planning • Maintains Corporate Governance Principles and procedures designed to assure compliance with all applicable legal and regulatory requirements and governance standards and the Company’s Code of Conduct and Insider Trading Policy • Annually reviews the Company’s ESG Strategy • Reviews the skills and experience of the Board and its committees on a regular basis, and as needed for potential candidates to serve on the Board, to ensure the diversity and relevant experience necessary for an effective Board • Evaluates annually the independence of each director under the independence requirements of Nasdaq and applicable SEC regulations • Oversees the orientation and education of directors to ensure clear understanding of their Board responsibilities and the Corporate Governance Principles, Code of Business Conduct and Ethics, and the Insider Trading Policy | ||
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| Management | ||
Management assesses and manages critical risks, including the execution of the Company’s Enterprise Risk Management (“ERM”) program. The Company’s risk-related departments and functions in collaboration with the Vice President and Chief Risk, Compliance, and Privacy Officer (“Chief Risk Officer”), are responsible for risk assessment and mitigation. With respect to the risk assessment of the Company’s compensation programs, management is responsible for the framework and approach as outlined below under, Risk Assessment of Employee Compensation Programs. | ||
While the Audit Committee has responsibility for the oversight of the Company’s risk assessment and risk management processes, it is the duty of the Company’s management to assess and manage critical risks, including the execution of its Enterprise Risk Management program (“ERM”). The Company’s risk-related departments and functions are under the direction of the Vice President and Chief Risk, Compliance, and Privacy Officer (“Chief Risk Officer”) who reports directly to the CEO.Program
The Company’s ERM program serves as the primary means of identifying and managing the Company’s key risks. The Company’s ERM team, has, among other activities, performedperforms assessments of risks to the Company, participatedparticipates in the development and execution of mitigation programs for critical risks, facilitated the establishment of a corporate risk appetite and tolerance statement, inclusive of an oversight and monitoring mechanism, established aoversees the privacy governance function, and assistedassists in the integration of risk concepts within the Company’s strategic planning process.process and in alignment with the functional and business risk owners.
The ERM team reports its findings to the Audit Committee on a quarterly basis, providing both written reports and periodic in-person presentations. Its current activities remain focused on mitigation and oversight of specific risk exposures, analysis of the breadth and effectiveness of existing risk management practices, and maturation of measurement and monitoring practices concerning high-priority strategic and operational risks. Current areas of particular emphasis include pandemic response, third-party risk management, integration of risk assessment practices into the Company’s new structure, cyber security, data privacy, wage-hour risk management, and improvements to the Company’s compliance governance practices.
The Company’s Information Technology and Internal Audit groups provide regular quarterly updates to the Audit Committee with respect to the Company’s proactive approach to cyber security.security and other compliance controls. Controls are reviewed for operational effectiveness and to provide reasonable assurance that: business risk is managedmanaged; data, corporate information, and other assets are safeguarded; security of information,business processing infrastructure and applications are maintained; and all risks are mitigated to the extent practicable.
In addition to the reports submitted quarterly by the Company’s Chief Risk Officer, the Vice President of Internal Audit independently assesses the Company’s risk management process and separately reports to the Audit Committeeon the effectiveness of the Company’s risk identification, prioritization, and mitigation processes.processes to the Audit Committee.
During 2020, the ERM team played a key role in the Company’s response to the COVID-19 pandemic, leading the core team charged with prioritizing the health and safety of our employees and temporary workers, conducting daily meetings to examine the impact of the pandemic on our business, suppliers and customers, and development of plans for safely continuing operations during the pandemic including remote work and other health and safety measures. The Chief Risk Officer and other senior officers stayed in constant contact with the Board, providing updates on the COVID-19 situation and its impact on the Company at special and regularly planned meetings on at least ten occasions during 2020. During these discussions, the Board provided guidance and support for the Company’s key initiatives to preserve its liquidity and financial flexibility, and mitigate the risks presented by the pandemic and its impact on global markets.
Risk Assessment of Employee Compensation Programs
As set forth inAnnually, at its charter, the Compensation Committee is charged with reviewing the Company’s compensation program risk assessment for all employee compensation programs and reporting to the Board any compensation program that is reasonably likely to have a material adverse effect on the Company.
At its February 2018 meeting, the Compensation and Talent Management Committee reviewedreviews management’s Compensation Program Risk Assessment Report. The report wasis prepared by the Company’s Executive Compensation and Human Resources groups in collaboration withand reviewed by the Company’s Internal Audit Department.Chief Risk Officer. The Company’sreview and update of the Executive Compensation Program Risk Assessment Framework is reviewed and updatedoccurs, as needed, to ensure a robust and comprehensive assessment process. In addition, the ConsultantBoard’s independent compensation consultant reviewed the assessment prepared for the executive compensation section of the report.
The Company’s Executive Compensation Program Risk Assessment
Framework takes into consideration the following guiding factors:2021 Kelly Proxy Statement 25
The Company’s Executive Compensation Program Risk Assessment Framework takes into consideration the following guiding factors: | ||
| • Short- and long-term incentive performance measures and equity award types do not encourage excessive risk-taking | |
• A balanced compensation structure that includes an appropriate mix of fixed and variable cash and equity; with a balance of short- and long-term incentive opportunities | ||
• Performance criteria and corresponding objectives include a balance of performance and the quality of such performance; include the appropriate use of top-line vs. bottom-line metrics; and use annual and long-term measures that complement each other | ||
• Well-designed plans that do not include steep payout curves, uncapped incentive payouts, or misaligned payout timing | ||
• Incentive plans tested for multiple scenarios under realistic assumptions to ensure that potential payouts are reasonable relative to results | ||
• Conduct a thorough and qualitative assessment of the achievement, quality, and sustainability of results | ||
• Benchmarked incentive plan payouts relative to performance, to ensure competitive practices in comparison with a representative peer group and general industry | ||
• Implementation of risk-mitigating features such as a clawback policy that applies in certain circumstances (e.g., the restatement of financial results) and a policy that requires a portion of the shares received from incentive award payouts to be retained by the participants through ownership/retention requirements | ||
• Incentive plan governance includes involvement at a variety of levels from the Compensation and Talent Management Committee to various corporate functions including Corporate Governance, Executive Compensation, Finance, HR, Legal, and the Committee’s outside Compensation consultant | ||
• Potential risk discussed with the Compensation and Talent Management Committee, recorded in Committee minutes, and discussed in the Compensation Discussion and Analysis section of the Company’s Annual Proxy Statement | ||
Corporate Governance
To assess the risk of employee compensation programs below the executive level, the Company’s Human Resources group implemented a Governance Committee to review and approve plan design and address any significant issues that arise. The Governance Committee utilizes its Global Incentive Plan Design and Risk Mitigation Framework to consider linksalignment to the Company’s strategy and any risks associated with the design of each incentive plan. The risks associated with each of the following elements of the design and implementation of aneach incentive plan are considered, as well as the steps in place to mitigate risk and ensure alignment with the Company’s strategic plan:
Linkage of incentive measures with business objectives, analysis of total compensation market data, determination of design elements/payout threshold levels, potential range of payouts, and timely and accurate tracking of performance data;data
After due consideration of management’s 20182020 Compensation Program Risk Assessment Report, the Compensation and Talent Management Committee concluded that the Company’s compensation programs do not create a reasonable likelihood of a material adverse effect on the Company.
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Corporate Governance
The challenges of 2020 due to the pandemic resulted in strategic alignment for many companies to remain competitive. However, Kelly’s business continuity processes and Committee Evaluationstrategic sustainability approach facilitated an increase in business opportunities in such a volatile global environment. In 2018, Kelly conducted a materiality assessment that helped define the policies and guidelines used to develop our sustainability agenda. This process helped us identify the main concerns and actions needed to focus on supporting the Triple Bottom Line(1). Our materiality assessment analyzed an exhaustive list of sustainability issues that cover all aspects of our business, considering Environmental, Social, and Governance (“ESG”) issues related to external standards(2). Through this process, we identified stakeholders’ expectations and prioritized the most relevant topics upon which we developed our Corporate Sustainability Strategy.
Annually,
| (1) | The Triple Bottom Line (“TBL”) is a concept that includes social and environmental considerations to the business model, in addition to the financial ones. It measures a company’s degree of social responsibility, its economic value, and its environmental impact. |
| (2) | The Global Reporting Initiative (“GRI”), EcoVadis Assessment, CDP (formerly Carbon Disclosure Project), Sustainable Development Goals, UN Guiding Principles of Human Rights, UN Global Compact, and the World Employment Confederation. |
Based on six key pillars, our Sustainability Strategy focuses on an ESG structure that is aligned with our critical business values:
Environmental: Occupational Health and Safety; Environment
Social: Employees and People; Supply Chain and Customer Relations; Engagement
Governance: Ethics and Business Conduct; Communication and Reporting
As we continue developing and monitoring our Sustainability Strategy, we work closely with cross-functional areas to assess our outreach and impact, considering an interdisciplinary perspective. We also formalized the oversight of our ESG efforts through a sustainability governance committee represented by executive leaders and overseen by the Corporate Governance and Nominating Committee overseesof the Board. Kelly’s governance team met multiple times in 2020 to drive strategy and provide decision-making guidance to the ESG team. The ESG leader represents the team in meetings with the Corporate Governance and Nominating Committee and the full Board to review the ESG framework and the Company’s progress toward achieving goals. The Corporate Governance and Nominating Committee supports and encourages Kelly’s commitment to ESG matters through discussions and recommendations for continued improvements in these important areas.
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Corporate Governance
In 2020, we continued to engage with our customers and suppliers worldwide, and formalized ESG requirements on the supplier risk assessment methodology in order to evaluate their commitment to these issues and opportunities. We conducted a third-party risk analysis gap assessment to identify supplier performances and capabilities to assess risk considering ESG. As a result of the assessment, we redesigned our responsible supply chain management approach to better align to sustainable management standards.
During 2020, we continued our focus to improve Kelly’s ESG performance. Listed below are key outcomes in each area for the year. These results may have been impacted by COVID-19.
Environmental
2020 Goal
Reduce carbon emissions 3% in comparison to 2017 baseline by December 2020.
| – | Partially achieved: Our scope 2 and 3 emissions were reduced 3%+ in comparison to our 2017 baseline. However, scope 1 emissions have varied over the past 3 years. |
| • | Scope 1 direct emissions from natural gas accounted for 762 metric tons of CO2e, remaining consistent with last year’s emissions (applies to U.S. Headquarters(1) location). |
Scope 2 indirect emissions from the purchase of electricity in our operations accounted for 4,149 metric tons of CO2e, reduced by 17% from emissions last year (applies to U.S. Headquarters location).
Scope 3 emissions from employee business travel were 682 metric tons of CO2e. This represented a 75% reduction from last year (applies to U.S., Canada, and Switzerland Headquarters locations).
| (1) | U.S. Headquarters location includes: the Headquarters, Annex, Lindsey, and Kirts buildings. |
Additional achievements for 2020
Over the last seven years, we have reduced our corporate campus building’s carbon footprint by 26%.
Energy consumption in our offices has decreased 19% between 2013 to 2020.
We held our first virtual carbon neutral event, where we avoided an estimated 28 tons of CO2 emissions to the environment and engaged our suppliers and internal network to plant 3,200+ trees in Sydney, supporting local reforestation initiatives from Australia wildfires.
70.13 tons of waste was recycled in our corporate campus.
Our Kelly Anywhere platform allowed employees to transition to remote working rapidly and effectively, ensuring business continuity and the health and safety of our employees during the COVID-19 response.
We deployed our Emergency Management Team to rapidly respond to the COVID-19 pandemic.
Our Absolute Zero program recorded the lowest recordable incident rate in our history.
Social
2020 Goal
Engage: 4,000 hours of volunteer work and 20% of participation by December 2020.
| – | Achieved: Exceeded our service day volunteer hours goal with 605 employees contributing over 4,700 volunteer hours in social impact. |
Define an overall strategy and roadmap (2021-2023) on Inclusion and Diversity (“I&D”) by December 2020.
| – | Achieved: Kelly begins 2021 with an overall strategy for I&D. |
Additional achievements for 2020
Kelly’s CEO, Peter Quigley signed the CEO Action for Diversity and Inclusion pledge, the largest CEO-driven business commitment to advance diversity and inclusion within the workplace, standing with almost 2,000 other CEOs.
We launched Equity@Work, a bold initiative aimed at breaking down barriers to access meaningful work.
Our new program Kelly Discover serves as an engagement platform solution for Equity@Work that strives to create a more equitable and accessible labor market from underrepresented talent. It will reduce the gap by creating opportunities for neurodiverse and opportunity talent (e.g., persons with autism and other disabilities, Veterans, formerly incarcerated individuals, and other individuals from traditionally untapped talent pools).
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Corporate Governance
Approximately $59,000 USD contributed to social development initiatives.
The Kelly Relief Fund provided financial support to 41 of our employees affected by natural or human-made disasters, contributing more than $26,000 USD through grants.
We formalized five Affinity Groups in 2020, and a sixth group was established in early 2021. The Affinity Groups promote a culture of inclusion by celebrating differences, creating an environment where everyone feels encouraged to be their authentic selves, and supporting the professional development of employees.
We established an Inclusion Council, a cross-functional group to support the development of our I&D strategy.
Our Diverse Global Supplier Network connected approximately 450 certified small and diverse suppliers to our Kelly network in 2020.
COVID-19 response:
| – | Protecting the health and safety of employees during the COVID-19 crisis was our top priority, and in response we implemented significant operating environment changes that we determined were in the best interest of our employees and talent, as well as the communities in which we operate, and which comply with government regulations. This includes having the vast majority of our internal employees work from home, while implementing additional safety measures for employees and talent continuing critical on-site work. |
| – | Provided immediate and frequent communications to all employees using multiple channels that included: emails, text messages, social media, periodic webcasts, and leadership messages. Developed a specific page on our web site and launched the Kelly Cares Hotlines to facilitate and stay connected through updated information and active communications. |
| – | We partnered with health care providers to offer special medical plans and benefits to our employees during the outbreak; some benefits included: waiving COVID-19 treatment cost, provided testing at no cost, and facilitated access to medications. |
| – | The Kelly Learning Center extended well-being training on topics such as stress, anxiety management, remote work readiness, among others. |
| – | Created portal for employees to share stories of success and best practices with talent, customers, and suppliers to help others navigate through similar situations during pandemic conditions. |
| – | Established and communicated detailed plans for the return of employees to the workplace, to ensure employee confidence in a safe workplace. |
Governance
2020 Goal
Actively and formally communicate our non-financial and sustainability performance to all stakeholders (employees, investors, community, authorities, customers, etc.) by December 2020.
| – | Achieved: In May 2020 we published our 2019 Sustainability Report, prepared in accordance with the GRI Standards: Core Option, the Communication on Progress according to the United Nations Global Compact Guidelines. The report formalizes and discloses our Corporate Sustainability Strategy aligned to ESG framework. |
Additional achievements for 2020
All committees of the Board of Directors: Audit, Compensation, and Governance and Nominating, became fully independent (which is a Nasdaq requirement for all listed companies and fully satisfies the Nasdaq independence standards for boards and board committees of non-controlled companies).
44% of the Board’s Directors are diverse, representing women or ethnically diverse members.
97% of employees signed the Code of Business Conduct and Committees’ evaluation processesEthics.
96% of our suppliers signed the supplier Code of Business Conduct.
We adopted an integrated ESG reporting framework to disclose our sustainability performance, in which we aligned to GRI, SASB, and reports resultsUNGC standards.
External assessments
External assessments, like EcoVadis and CDP, help Kelly align its corporate sustainability initiatives to the Board. expectations of our customers, as well as to accurately report results. Since 2018, we have adopted international sustainability standards such as GRI, UNGC, SASB to ensure consistency, accountability, and transparency on our annual goals and impact. We also participate in external assessments such as EcoVadis, CDP, Human Right Campaign Foundation’s Corporate Equality Index (“CEI”), Responsible Business Alliance (“RBA”), and the ISS Corporate Solutions (“ICS”), which measures our sustainability performance and provides recommendations on our strategy implementation.
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Corporate Governance
EcoVadis achievements:
| – | Recognized as a Silver Supplier for third consecutive year. |
| – | Increased our score by 20 points since 2017. |
| – | Ranked top 6% and 91st percentile of companies assessed on environment, labor and human rights, ethics, and sustainable procurement. |
| – | Placed in top 8% for ethics and top 5% for sustainable procurement categories. |
The Company’s current Sustainability Report is available for viewing in its entirety on kellyservices.com. We plan to publish our 2021 report in early May 2021.
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Corporate Governance
Kelly is a talent solutions company dedicated to connecting people to work in ways that enrich their lives and our employees are critical to achieving this noble purpose. In order to compete and succeed in a highly competitive and rapidly evolving market, it is crucial that the Company attracts and retains experienced internal employees, as well as talent to work for our customers. As part of these efforts, we strive to offer competitive total rewards programs, foster an equitable, inclusive, and diverse environment, and give employees the opportunity to give back to their communities and make a social impact.
First and foremost, is the Company’s commitment to the health, safety, and wellness of our employees and talent. The success of our business is fundamentally connected to the well-being of our people. Accordingly, in response to the COVID-19 pandemic, the Company implemented significant operating environment changes determined to be in the best interests of our employees and talent, as well as the communities in which we operate, and compliant with government regulations. This includes having most of the Company’s internal employees work from home, while implementing additional safety measures for employees and temporary employees continuing critical on-site work.
| As of January 3, 2021, we employed approximately 1,000 staff members at our corporate headquarters in Troy, Michigan, approximately 3,300 staff members in other locations in the United States, and an additional 2,800 in our international locations. While the Company’s retention of employees improved year-over-year, it still lags our comparable external benchmarks. Retention rates for employees identified as high performing and high potential align with our comparable external benchmark. | |||
 | In addition to our internal employees, the Company recruits talent on behalf of customers on a global basis. In 2020, we placed nearly 370,000 individuals in positions with our customers. In all of these instances, Kelly remains the employer of record for all talent working at customer locations. The Company retains responsibility for all assignments, wages, benefits, workers’ compensation insurance, as well as the employers’ share of applicable payroll taxes, and the administration of the employees’ share of these taxes. We also offer our talent access to competitive health and benefit programs while working with us. |
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Corporate Governance
 | The Company is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees. Compensation programs are designed to attract, retain, and reward talented individuals who possess the skills necessary to achieve our strategic goals and create long-term value for our stockholders. We provide employees with competitive compensation opportunities, with strong pay-for-performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards. We believe that our programs provide fair and competitive opportunities that align employee and stockholder interests. In addition to cash and equity compensation, we also offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits, and defined contribution retirement plans. Pay and benefits programs provided to our international employees are in line with competitive local practice. |
 | Since 1947, our founder fought to increase access to work for women and advocated for the value temporary and independent workers bring to the workplace. Today, we continue a commitment to fostering an inclusive and diverse workforce. A significant majority of Kelly’s U.S. workforce are women, including a majority of director and above roles. We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services and presents Kelly as a workplace leader, aiding our ability to attract and retain key talent. We focus on cultivating a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together. |
 | We consider sustainability to be a guiding principle in strengthening the relationship with our global workforce, suppliers, and customers. Through our programs and initiatives, we seek to contribute to improving the quality of life of our employees, their families, as well as the communities in which they live and work. Designed on the concept of social investment, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy. Through our Equity@Work platform, we are living our commitment to ensure equitable access to work and growth for all by creating alliances with like-minded companies, policy groups and institutions to positively impact the way companies hire, advance, and help more people thrive. |
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Corporate Governance
We expect directors to attend the Annual Meeting of the Stockholders, all Board meetings, and each Committee conduct an evaluation of their respective performance, the purpose of which is to increase the effectivenessall meetings of the committees on which they individually serve. The Board held ten meetings during 2020. All directors then in office attended the 2020 Annual Meeting of Stockholders. In response to COVID-19and to ensure a safe meeting environment, the BoardCompany conducted its 2020 Annual Meeting of Stockholders as a whole. The process includes an assessmentfully virtual meeting. In addition, all remaining 2020 Board and committee meetings were held virtually. Director attendance averaged 90% of the aggregate number of meetings of the Board of Directors and each Committee’s effectivenessthe committees on which they served during 2020. The majority of directors attended 100% of all Board and independence, accesscommittee meetings on which they individually served in 2020. Mr. Wada completed his service as a director as of the date of the 2020 Annual Meeting. The independent directors met in executive sessions at which only they were present at least six times during 2020.
Under the Company’s Amended and Restated Bylaws (the “Bylaws”), the number of directors constituting the Board may be fixed by the Board within the range of five to eleven directors. The size of the Board should not exceed a number that, as determined by the Board, will permit it to function efficiently in discharging its duties. There are currently nine members of the Board. Election of all director nominees will result in a nine-member Board immediately following the Annual Meeting.
The Board does not have term or age limits. The Board believes that the contributions and insight of tenured directors into the Company’s operations and strategy outweigh the perceived value of such limits and facilitate Board effectiveness.
Director Service on Outside Public Company Boards
While there is no specified limit on the number of other public company boards on which a director may serve, the number of board memberships is a consideration, along with any other time commitments a director or nominee may have, in determining his or her ability to serve effectively. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and have an intention to serve an appropriate length of time in order to make a meaningful contribution to the Board and the Company. A director should engage in discussion with the Chair of the Corporate Governance and Nominating Committee prior to accepting an invitation to serve on an additional public company board or accepting an invitation to chair a committee of a public company board on which he or she currently serves.
Director Orientation and Continuing Education
Management, working with the Corporate Governance and Nominating Committee, provides an orientation program for new directors. The program includes a review of information fromthe Company’s business, history, vision, Noble Purpose, strategic direction, competitive landscape, core values, ethics, corporate governance practices, financial matters, key policies, and senior leadership. The program consists of, as appropriate, review of written materials, briefings by the senior management, responsivenessand visits to stockholder concerns, maintenanceCompany facilities. Directors are also encouraged to participate in continuing director education programs that include formal education sessions with management subject matter experts and participation in industry forums on business, financial, accounting, legal, and other subjects relevant to the Company’s business. The Company reimburses reasonable costs and expenses incurred by directors for continuing education.
Board, Committee, and Peer Evaluation
The Board recognizes that a robust and constructive evaluation process is essential to good governance and effectiveness. The Corporate Governance and Nominating Committee organizes and oversees an annual evaluation by the Board and its committees of standards of business conduct and ethics, and relationship with management.their performance. The evaluation is intended to facilitatefacilitates an examination and discussion by the
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Corporate Governance
entire Board and each Committeecommittee of its effectiveness as a group in fulfilling its charter requirements and other responsibilities. Someresponsibilities, its performance as measured against the Company’s Corporate Governance Principles, and areas for improvement. From time to time the evaluation may also include individual director assessments.
In 2020, the Corporate Governance and Nominating Committee engaged an independent external advisor to conduct Board and committee evaluations, and a director peer review. The process included the completion of an online self-evaluation with both rated and open-ended questions, followed by confidential individual interviews with each director to elicit views on Board and committee effectiveness. During the one-on-one interviews, the independent advisor also asked each director to provide feedback on peer contributions to the Board’s effectiveness. This process was to encourage candid feedback from directors regarding the actions of the areas reviewed as partBoard and its standing committees. All of the Board’s nine directors participated in the process. Prior to being presented to the Board, the external advisor aggregated results of the evaluation include: Director obligations, roles and responsibilities,interviews, anonymizing and randomizing responses, to promote healthy Board member qualifications, Committee member qualifications,dynamics and best practices in corporate governance. The external advisor then presented a summary to the full Board structure, Committee structure, corporate governance, organization performance, culture and ethics,identified themes and educational opportunities. Past evaluations have resultedissues that emerged from the evaluation or individual interviews. The Board and each committee discussed evaluation outcomes in the Committee revisingexecutive session to determine what actions could further enhance its criteria for Director candidates, extending the length of various meetings to ensure sufficient discussion time, discussion of potential future Committee participation, establishment of the roles of Committee Vice Chairs, and Committee Chair succession.operations.
Code of Business Conduct and Ethics
The Board hasis committed to the highest legal and ethical standards and adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all Directors, Officers,directors, officers, and employees to help thememployees. The Code of Conduct forms the foundation for compliance with corporate policies and procedures and helps individuals recognize and deal with ethical issues, deter wrongdoing, provide mechanisms to report dishonest or unethicalany concerns, promote honest and ethical conduct, provide full, fair, and timely disclosure, comply with applicable law and regulations, and help foster a culture of honesty and accountability. The Code of Conduct was updated in 2017 and addresses conflicts of interest,interest; anti-bribery/anti-corruption,anti-corruption; insider trading,trading; corporate opportunities,opportunities; confidentiality and privacy,privacy; external communications; protection and proper use of assets,assets; fair dealing,dealing; contract management; acceptable behavior in the workplace,workplace; corporate sustainability; compliance with laws, rules and regulations, Company policies,regulations; risk tolerance,tolerance; anti-human trafficking and slavery; seeking advice and reporting dishonest or unethical behavior andconcerns; outside activities; political contributions; public company reporting requirements.requirements; and other policies. The Code of Conduct includes an enforcement mechanism.
The full text of the Code of Conduct is posted on the Company’s website atkellyservices.com.kellyservices.com. This information is available in print to any stockholder who requests it from the Company’s Investor Relations Department.department. The Company will disclose future amendments to the Code of Conduct for its Directorsdirectors and Executive Officersexecutive officers on its website or by filing a current report on Form 8-K within four business days following the date of amendment, or such earlier period as may be prescribed by Nasdaq or the SEC.
Related Person Transactions and Certain Relationships
Pursuant to the Company’s Code of Conduct, any situation that involves, or may reasonably be expected to involve, a conflict of interest with the Company must be disclosed immediately to the Vice President of Internal Audit or to the General Counsel. In addition, Directorsdirectors and Executive Officers are required toexecutive officers must complete an annuala quarterly questionnaire that solicits information regarding any transactions or relationships between themselves or their immediate family members and the Company of the types described in Item 404(a) of SEC Regulation S-K (“Related Party Transactions”). Directors and Executive Officersexecutive officers must seek a determination and obtain prior authorization or approval of any potential conflict of interest (including any Related Party Transaction) from the independent Audit Committee. The Audit Committee, pursuant to its charter, is tasked, among other things, with the responsibility to review Related Party Transactions and other potential conflicts of interest involving Directorsdirectors and Executive Officers.executive and senior officers. The Company does not havemaintains a formal written policy regarding such reviews.
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Corporate Governance
Mr. Adderley, the Chairman of the Board and34 2021 Kelly Proxy Statement
Director Compensation
Our approach to director compensation is to appropriately compensate our controlling stockholder, receives compensation from the Company, as described below under “Director Compensation,” which is approved by the independent Compensation Committee. Mr. Takahashi, a Director of the Company, serves as the designated representative of Persol Holdings Co., LTD., which owns 4.5% of the Company’s Class A Common Stock, and with which the Company has a strategic alliance, as described in the Company’s Annual Report on Form 10-Knon-employee directors for the period ended December 31, 2017. Mr. Takahashi receives no compensation for his servicetime, expertise, and effort required to serve as a Director.director of a large, complex company and to align the interests of directors with those of stockholders. Compensation levels for our non-employee directors are periodically reviewed for market competitiveness. Non-employee directors receive compensation payments after election by stockholders at the Annual Meeting. Non-employee directors who begin their Board or committee chair service other than at the Annual Meeting receive a prorated amount of annual compensation.
Corporate SocialResponsibilityDirector Compensation Design
The Company believes that corporate social responsibility (“CSR”) is a cornerstone of the organization. The Company focuses its CSR effortsCompensation and Talent Management Committee typically reviews non-employee director compensation in four crucial areas: employees and people, ethics, engagement, and the environment. The Company’s CSR report is posted on the Company’s website atkellyservices.com.
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Director Compensation
alternating years. In 2017,2018, the Compensation and Talent Management Committee most recently engaged its independent compensation consultant, Pay Governance, to evaluate its non-employee Director director compensation. Pay Governance conducted a comprehensive review of the most recent proxy filings of the Company’s peer group and general industry to assess the competitiveness of the Company’s non-employee director compensation. Based on the results of the review, the Committee approved an increase in the value of the equity portion of the annual retainer in 2018. No changes were made to non-employee director compensation which was last increased in 2009.2019. At its May 6, 2020 meeting, the Board elected to voluntarily reduce, by 33.3%, the cash portion of its Annual Base Retainer and Committee Chair Fees for 2020 in consideration of recent expense mitigation actions taken by management during COVID-19. The compensation of our non-employee directors will next be reviewed in 2021, with the assistance of Pay Governance. The following table illustrates our 2020 non-employee director compensation, including the 2017 Annual Meeting of Stockholders, the Compensation Committee approved increases in the retainers paidtemporary reduction to the non-employee Directors, effective beginning May 11, 2017. The base retainer for non-employee Directors (other than Mr. Takahashi, who receives no compensation for his service as a Director) was increased from $150,000 to $180,000. The additional retainers associated with Board leadership positions were also increased: for the Lead Director, from $20,000 to $40,000; for the Chair of the Audit Committee, from $12,500 to $20,000; for the Chair of the Compensation Committee, from $7,500 to $15,000; and for the Chair of the Corporate Governance and Nominating Committee, from $7,500 to $10,000.cash portion:
| Annual Base Retainer | Board Leadership Positions – Additional Retainer (Committee Chairs) | |||||||||||||||||||
Non- Employee | Chairman of the Board | Audit Committee | Compensation & Talent Management Committee | Corporate Governance & Nominating Committee | ||||||||||||||||
Cash | $ | 66,667 | $ | 100,000 | $ | 13,333 | $ | 10,000 | $ | 6,667 | ||||||||||
Equity (Kelly Class A Stock - $ Value) | $ | 110,000 | $ | 165,000 | — | — | — | |||||||||||||
TOTAL | $ | 176,667 | $ | 265,000 | $ | 13,333 | $ | 10,000 | $ | 6,667 | ||||||||||
Under the Company’s amended and restated Equity Incentive Plan (“EIP”), which was approved at the 2017 Annual Meeting of Stockholders, the Board of Directors is required tomust periodically determine from time to time the percentage of the base retainer that will be issued to non-employee Directors directors in shares of Class A common stock. AtCommon Stock. The Compensation and Talent Management Committee and Board of Directors approved fixing the meetingportion of the Board followingannual base retainer that is paid in cash at $100,000, and the 2017 Annual Meetingportion paid in equity at $110,000 (cash portion of Stockholders,$150,000 and equity portion of $165,000 for the Board determined that $80,000Chairman of the base retainer would be issued in shares. DirectorsBoard). However, as stated above, for 2020 the cash portion of $100,000 was reduced by 33.3% to $66,667 (cash portion of $150,000 was reduced by 33.3% to $100,000 for the Chairman of the Board).
Non-employee directors are subject to a stock ownership requirement that is a minimum fair market value of twofour times the value of the cash portion of the annual retainer (which currently equates to $360,000)$400,000). At their August 2017 meeting,The requirement was not reduced for 2020, even with the Compensation Committee and Board of Directors approved fixingtemporary reduction in the cash portion of the annual retainer that is paid in cash at $100,000, and the portion paid in equity at $80,000.
The Chairman of the Board is a non-officer employee position. In 2018, in connectiondirector compensation. All directors are compliant with the review of governance matters described above, and with the advice of Pay Governance LLC, the special committee of independentCompany’s stock ownership requirements.
Non-Employee Directors recommended, and the Board approved, effective May 1, 2018, annual compensation for the redesigned role of Chairman of the Board equal to 150% of the annual base retainer payable to non-employee directors, inclusive of the cost of benefits-in-kind disclosed in footnote (3) below, with the remaining amount payable in cash. The Company will continue to furnish administrative staff support to Mr. Adderley related to his duties as Chairman of the Board.Deferred Compensation Plan
During 2017, theThe Company established the Non-Employee Directors Deferred Compensation Plan (“DDCP”), which provides non-employee Directors directors with the opportunity to defer all or a portion of all fees payable to them, pursuant to a valid deferral election. The DDCP is a non-qualified plan that allows for the deferral of all or a portion of annual cash
2021 Kelly Proxy Statement 35
Director Compensation
payments to a notional account with investment fund choices that mirror those provided to participants in the Company’s Management Retirement Plan (“MRP”); in. In addition to those fund choices, the Plan also includes the option to defer annual cash payments into Company common stock units. Non-employee Directors directors may also elect to defer all or a portion of their annual stock retainer into Company common stock units. Participants may elect to receive distributions from their DDCP account at the time they cease to be a Directordirector of the Company or at a future date that is between one and ten years following the date they cease to be a Directordirector of the Company. Non-employee Directors directors can elect to have distributions from the DDCP made in either a lump sum or in annual installment payments made over a two to ten yeartwo-to-ten-year period.
The following table sets forth the compensation paid during 20172020 to the Directors other thanCompany’s non-employee directors. Mr. Corona, ourQuigley received no compensation for his services as a director in 2020. Mr. Quigley’s compensation as President and Chief Executive Officer whose compensation is disclosed in the Compensation Discussion & Analysis section of this Proxy Statement.
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
T.E. Adderley | — | — | — | — | — | 1,007,544 | $ | 1,007,544 | (3) | |||||||||||||||||||
C.M. Adderley | $ | 100,010 | $ | 79,990 | — | — | — | — | $ | 180,000 | ||||||||||||||||||
G.S. Adolph | $ | 16,667 | $ | 13,333 | — | — | — | — | $ | 30,000 | ||||||||||||||||||
R.S. Cubbin | $ | 115,010 | $ | 79,990 | — | — | $ | 15,752 | — | $ | 210,752 | |||||||||||||||||
J.E. Dutton | $ | 110,010 | $ | 79,990 | — | — | $ | 30,354 | — | $ | 220,354 | |||||||||||||||||
T.B. Larkin | $ | 100,010 | $ | 79,990 | — | — | — | — | $ | 180,000 | ||||||||||||||||||
L.A. Murphy | $ | 120,010 | $ | 79,990 | — | — | — | — | $ | 200,000 | ||||||||||||||||||
D.R. Parfet | $ | 140,010 | $ | 79,990 | — | — | — | — | $ | 220,000 | ||||||||||||||||||
H. Takahashi(4) | — | — | — | — | — | — | — | |||||||||||||||||||||
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Director Compensation
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
Carol M. Adderley | $ | 66,667 | $ | 110,000 | — | — | $ | 12,808 | — | $ | 189,475 | |||||||||||||||||
Gerald S. Adolph | $ | 66,667 | $ | 110,000 | — | — | $ | 58,202 | — | $ | 234,868 | |||||||||||||||||
George S. Corona(3) | $ | 55,556 | $ | 91,667 | — | — | $ | 36,027 | — | $ | 183,250 | |||||||||||||||||
Robert S. Cubbin | $ | 76,667 | $ | 110,000 | — | — | $ | 37,232 | — | $ | 223,899 | |||||||||||||||||
Jane E. Dutton | $ | 66,667 | $ | 110,000 | — | — | $ | 124,776 | — | $ | 301,443 | |||||||||||||||||
Terrence B. Larkin | $ | 73,333 | $ | 110,000 | — | — | — | — | $ | 183,333 | ||||||||||||||||||
Leslie A. Murphy | $ | 80,000 | $ | 110,000 | — | — | $ | 51,232 | — | $ | 231,232 | |||||||||||||||||
Donald R. Parfet | $ | 100,000 | $ | 165,000 | — | — | — | — | $ | 265,000 | ||||||||||||||||||
| (1) | One of our directors deferred the following amounts from |
| (2) | Represents the aggregate fair market value of grants awarded on May |
| (3) | ||||
| Mr. Corona became eligible to receive compensation as a director effective July 1, 2020 and received prorated director compensation for 2020. Prior to that date, he received compensation as a non-executive employee for the first six months of 2020. |
36 2021 Kelly Proxy Statement
Beneficial Ownership of Shares
BENEFICIAL OWNERSHIP OF SHARESBeneficial Ownership of Shares
Under regulationsThe following table sets forth, as of March 29, 2021, (i) the beneficial ownership of the Securities and Exchange Commission, persons who have powerCompany’s Class B Common Stock by each person known by the Company to vote or dispose of common stockown beneficially more than 5% of the Company, either alone or jointly with others, are deemed to be beneficial owners of the common stock.
Set forth in the following table isClass B Common Stock, and (ii) the beneficial ownership of the Company’s Class A and Class B common stock on March 19, 2018 of (i)Common Stock by (a) each person known by the Company to own beneficially more than five percent of the Class B Common stock, (ii) each Directordirector (each of whom is a nominee for election as a Directordirector at the Annual Meeting of Stockholders)Meeting), (iii)(b) each of the Named Executive Officers,named executive officers, and (iv)(c) all Directorsdirectors and Executive Officersexecutive officers as a group.
| Class A Common Stock | Class B Common Stock | |||||||||||||||
Directors and Named Executive Officers(1) | Number of Shares and Nature of Beneficial Ownership | Percent of Class | Number of Shares and Nature of Beneficial Ownership | Percent of Class | ||||||||||||
T. E. Adderley, Chairman of the Board | 1,514,686 | (2) | 4.2 | 3,213,265 | (3) | 93.6 | ||||||||||
C. M. Adderley, Director | 340,398 | (4) | 1.0 | 425 | (4) | * | ||||||||||
G. S. Adolph, Director(5) | 450 | * | — | * | ||||||||||||
C. T. Camden, Former Director and Executive Officer | 252,751 | * | 100 | * | ||||||||||||
G. S. Corona, Director and Executive Officer | 211,767 | * | 100 | * | ||||||||||||
R. S. Cubbin, Director | 14,276 | (6) | * | 100 | * | |||||||||||
J. E. Dutton, Director | 27,714 | (6) | * | 100 | * | |||||||||||
T. B. Larkin, Director | 23,249 | * | 100 | * | ||||||||||||
L. A. Murphy, Director | 22,695 | * | 100 | * | ||||||||||||
D. R. Parfet, Lead Director | 23,520 | * | 100 | * | ||||||||||||
H. Takahashi, Director | 1,576,169 | (7) | 4.4 | 1,475 | * | |||||||||||
S. S. Armstrong, Executive Officer | 40,900 | * | — | * | ||||||||||||
T. S. Carroll, Executive Officer | 102,957 | * | 100 | * | ||||||||||||
P. W. Quigley, Executive Officer | 100,577 | * | 100 | * | ||||||||||||
O. G. Thirot, Executive Officer | 61,569 | * | 10 | * | ||||||||||||
All Directors and Executive Officers as a Group (16 persons) | 4,320,478 | 12.1 | 3,216,075 | 93.7 | ||||||||||||
Greater than Five Percent Class B Stockholders
| Class B Common Stock | |||||
| Number of Shares and Nature of Beneficial Ownership(1) | Percent of Class | |||||
| Terence E. Adderley Revocable Trust K | 3,139,940 | 93.5% | ||||
| Directors and Named Executive Officers | Class A Common Stock | Class B Common Stock | ||||||||||||||
| Number of Shares and Nature of Beneficial Ownership | Percent of Class | Number of Shares and Nature of Beneficial Ownership | Percent of Class | |||||||||||||
Directors: | ||||||||||||||||
Carol M. Adderley | 326,835 | (2)(3) | 0.9 | 425 | (2) | * | ||||||||||
Gerald S. Adolph | 17,065 | (3) | * | 100 | * | |||||||||||
George S. Corona | 109,820 | (3) | * | 100 | * | |||||||||||
Robert S. Cubbin | 34,935 | (3) | * | 100 | * | |||||||||||
Jane E. Dutton | 36,950 | (3) | * | 100 | * | |||||||||||
Terrence B. Larkin | 31,836 | * | 100 | * | ||||||||||||
Leslie A. Murphy | 39,411 | (3) | * | 100 | * | |||||||||||
Donald R. Parfet | 46,555 | * | 100 | * | ||||||||||||
Named Executive Officers:
Peter W. Quigley (also a director) | 150,612 | * | 100 | * | ||||||||||||
Olivier G. Thirot | 88,536 | * | 10 | * | ||||||||||||
Daniel H. Malan | 43,280 | * | - | * | ||||||||||||
Dinette Koolhaas | 8,010 | * | - | * | ||||||||||||
Tammy L. Browning | 8,064 | * | - | * | ||||||||||||
All directors and executive officers as a Group (20 persons) | 1,040,652 | 2.9 | 1,235 | 0.0 | ||||||||||||
| * | Less than 1% |
| (1) | This information is based on the Schedule 13D (the “13D”) filed with the SEC on October 19, 2018 on behalf of |
Includes |
Includes 4,179 shares for Ms. Adderley, 13,038 shares for Mr. Adolph, |
2021 Kelly Proxy Statement 37
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Beneficial Ownership of Shares
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Under the securities lawsSection 16(a) of the United States,Exchange Act requires the Company’s Directors, Executive Officers,directors and any personcertain officers, as well as persons who beneficially ownsown more than 10% of the outstanding shares of common stock, (collectively, the “Reporting Persons”), are required to reportfile reports regarding their initial stock ownership and subsequent changes to their ownership of the common stock and any changes in that ownership towith the SEC. Specific due dates
Based solely upon a review of filings for these reports have been established and pursuant to applicable rules, the Company is required to report in its Proxy Statement any failure to file by these due dates. Based on certifications received from the Reporting Persons, and on copies of the reports that such persons have filedfiscal year 2020 with the SEC and related written representations that no other reports were required, we believe that all requiredSection 16(a) reports of Reporting Persons were filed on a timely with the SEC for 2017.basis.
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38 2021 Kelly Proxy Statement
Proposal 2:2 – Advisory Vote to Approve the Company’s Executive Compensation
PROPOSALProposal 2 - ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION– Advisory Vote to Approve the Company’s Executive Compensation
As described in the following Compensation Discussion and Analysis, our executive compensation programs are designed to align the interests of our Executive Officersexecutive officers with those of our shareholdersstockholders by tying a significant portion of the compensation they receive to Company performance, and by providing a competitive level of compensation in order to attract, retain, and reward Executive Officers,executive officers, who are critical to the long-term success of our business. Under these programs, our Named Executive Officersnamed executive officers are rewarded for the Company’s financial performance, individual performance, and long-term potential,value creation, as well as to facilitate retention, and reflect market realities. Please read the Compensation Discussion and Analysis for additional details about our executive compensation programs, including information about the fiscal year 20172020 compensation of our Named Executive Officers.named executive officers.
As required by Section 14A of the Exchange Act, this proposal, commonly referred to as a “say on pay”“say-on-pay” proposal, seeks a stockholder advisory vote on our Named Executive Officers’named executive officers’ compensation, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K and in the Compensation Discussion and Analysis, through the following resolution:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers,named executive officers, as disclosed in the Company’s Proxy Statement for the 20182021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 20172020 Summary Compensation Table, and the other related tables and disclosure.”
The say-on-pay vote is advisory;advisory and, therefore, not binding on the Company. Our Board of Directors and our Compensation and Talent Management Committee value the opinions of our stockholders and considersconsider the result of the advisory vote in designing and evaluating our executive compensation programs.
The Board of Directors recommends a vote “FOR” the approval of the compensation of our Named Executive Officers,
The Board of Directors recommends a vote “FOR” the approval of the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. |
2021 Kelly Proxy Statement pursuant to the compensation disclosure rules of the SEC.39
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Compensation Discussion and Analysis
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
The Compensation Discussion and Analysis section of this Proxy Statement provides an overview of our executive compensation philosophy and objectives, andobjectives. This section describes the material elements of our executive compensation programs, the compensation decisions the Compensation and Talent Management Committee (the “Committee”) has made under those programs, key factors that were considered, and provides details of the compensation paid to our Named Executive Officers.named executive officers.
The Compensation Discussion and Analysis is organized in the following sections:
1. 2017
| 1. | 2020 Named Executive Officers |
| 2. | Executive Summary |
| 3. | Executive Compensation Philosophy, Objectives, and Design |
| 4. | Process for Determining Executive Compensation |
| 5. | Compensation Programs: Decisions and Actions in 2020 |
| 6. | Governance of Executive Compensation Programs |
| 7. | Compensation and Talent Management Committee Report |
2. Executive Summary
3. Executive Compensation Philosophy, Objectives and Design
4. Process for Determining Executive Compensation
5. Compensation Programs: Decisions and Actions in 2017
6. Governance of Executive Compensation Programs
7. Tax and Accounting Considerations
Our Named Executive Officersnamed executive officers for 2017,2020, as defined by the SEC, were as follows:
Name | Title | ||
| Peter W. Quigley | President and Chief Executive Officer | ||
| Olivier G. Thirot | |||
| Senior Vice President and | |||
| Dinette Koolhaas | |||
| Tammy L. Browning | Senior Vice President and President Outsourcing and Consulting (“OCG”) | |
We areKelly’s philosophy as a leadertalent company is rooted in providing workforce solutions. Wethe conviction that our business makes a difference on a daily basis – in the lives of our employees and talent networks, for our customers, in the local communities we serve, and in the broader economy. The COVID-19 pandemic and related containment measures resulted in significant shifts in most aspects of the economy and the way people work and live. While the pace of change was unprecedented and the resulting impacts to be determined, our Noble Purpose, “We connect people withto work in ways that enrich their lives,” continues to guide our strategy and enable companiesactions. Kelly remains committed to access skilledbeing a leading talent that can move theirsolutions provider among the talent in our specialty areas and in the global markets where we compete. As we navigate the continued uncertainty, we will continue to demonstrate our expected behaviors and actions:
Employ a talent-first mentality
Relentlessly deliver for customers
Grow through discipline and focus
Deliver efficiency and effectiveness in everything we do
The COVID-19 pandemic had a global impact on industries, businesses, forward.communities, families, and individuals. As work has evolved, so has our rangeimplications of solutions, growing over the yearspandemic became evident in the first quarter of 2020, we took immediate action to reflectprotect the changing needshealth and safety of our customersmost important asset, our full-time and temporary employees. We also took proactive steps in response to the changing naturecrisis to reduce spending, minimize layoffs, and bolster the strength and flexibility of work itself. As workforce management has become more complex, we have developed Kelly’s finances. These actions included:
a talent supply chain management approach to help many of the world’s largest companies plan10% temporary pay cut for and manage their workforces. Innovative solutions supporting this approach span outsourcing, consulting, recruitment, talent advisory, career transition, and vendor management services.
In early 2017, we restructured components of our previous Americas Commercial, Americas PT, and OCG segments under a single delivery organization, triggering a change in our operating structure. We now provide staffing through our branch networks in our Americas and International operations, with commercial and specialized professional/technical staffing businessesfull-time salaried employees in the AmericasU.S., Puerto Rico, and Canada, in addition to certain actions in Europe respectively. In July 2016, we moved our APAC staffing operations into our expanded joint venture with Persol Holdings (formerly Temp Holdings), Persol Kellyand Asia Pacific (the “JV”), enabling us to more efficiently provide staffing solutions to customers throughout the APAC region via the JV. We also provide a suite of innovative talent fulfillment and outcome-based solutions through our Global Talent Solutions (“GTS”) segment, which delivers integrated talent management solutions to meet customer needs across the entire spectrum of talent categories. Using talent supply chain strategies, GTS helps customers plan for, manage and execute their acquisition of contingent labor, full-time labor and free agents, and gain access to service providers and quality talent at competitive rates with minimized risk.Pacific;
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40 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
Our long-term strategic objective issubstantially reduced CEO compensation and reduced compensation of 10% or more for senior leaders;
temporary furloughing and/or redeployment of some employees until business conditions improved;
suspension of the Company match to create stockholder valuecertain retirement accounts in the U.S. and Puerto Rico;
reduction of discretionary expenses and projects, including capital expenditures; and
a hiring freeze with the exception of critical revenue-generating positions.
As noted earlier in this Proxy Statement, Kelly’s Board voluntarily reduced the cash portion of their 2020 Annual Retainer and Committee Chair Fees by delivering a competitive profit33.3% to show support and alignment with the actions of management.
The above-described actions generated substantial cost savings and allowed us the time necessary to assess the variety of impacts the crisis had on our business. These initial actions were intentionally broad in scope and as we moved forward, our actions targeted the areas of business where demand declines are more significant and persistent. Actions such as the 10% pay cut, compensation adjustments for senior leaders, and temporary furloughs ended early in the fourth quarter of 2020. The suspension of the Company match to retirement accounts ended in January 2021 and other steps, such as reductions in discretionary spending, capital expenditures, and carefully managing staffing levels in non-revenue generating positions, will continue. In addition, we benefited from CARES Act provisions allowing deferral of employer social security tax payments. In the fourth quarter of 2020, management reduced staffing levels to align with expected revenue levels.
Given the level of uncertainty surrounding the duration of the COVID-19 pandemic, the Board also voted to suspend the quarterly dividend effective May 2020 until conditions improve and continues to assess future actions with respect to our dividend policy.
The impact of the current economic slow-down resulting from the best workforce solutionsCOVID-19 crisis began in March 2020 and continued through the end of 2020 as the effect of the pandemic response slowed global economic activity. We expect a continued impact on revenues through the first quarter of 2021 as demand for our services gradually recovers from the economic slowdown and the effects of customer and talent concerns related to operating safely during a pandemic.
While the severity of the economic impacts and their duration cannot be precisely predicted, we believe that the mid-term impacts on how people view, find, and conduct work will continue to align with our strategic path. As a result, we continued to move forward with our specialization strategy, reinventing our operating model and reorganizing our business into five distinct reporting segments. These specialties represent areas where we see the most robust demand, the most promising growth opportunities, and where we believe we excel in attracting and placing talent. Our new segments also reflect our desire to shift our portfolio toward high-margin, higher-value specialties.
Kelly’s business included these specialties for many years, but our new operating model represents a new approach – one that brings together both staffing and outcome-based pieces of a specialty under a single specialty leader and aggregates assets to accelerate specialty growth and profitability. We believe this new specialty structure gives us greater advantages in the industry. To achieve this,market, and we are focused onexpect our disciplined focus to deliver profitable growth coming out of the following areas:
2017 was a year of strategic and operational progress that demonstrated our commitment to profitable growth. We delivered solid top-line growth and increased earnings, even as we invested in our future. Early in the year, we reorganized our operating segments and restructured to create a more efficient and focused delivery organization. We invested in our Americas Staffing and International Staffing operations by adding additional sales and recruiting talent. In GTS, we are exercising price discipline and are continuingintend to invest in higher margin outcome-basedstrategic, targeted M&A opportunities in our specialties, while optimizing our portfolio, as demonstrated by the acquisition of Greenwood/Asher & Associates in the fourth quarter and outsourcing solutions that alignthe sale of our operations in Brazil during the third quarter.
Faced with market demands. In September 2017, we completedconditions that may temporarily delay our acquisition of Teachers On Call, which exemplifies our commitment to focus and grow in solutions where we see outsized market potential. And finally, we are accelerating investment in initiatives to enhance technology and process automation.
Key performance highlights for 2017 include:
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growth efforts, Kelly continues to focus on accelerating the execution of our strategystrategic plan and making the necessary investments and adjustments to advance that strategy.
We have setare advancing our sightsdigital transformation journey, building a technology foundation to sustain growth.
We are capturing a larger share of voice in the marketplace, using television spots and targeted social media campaigns to re-introduce Kelly to companies, highlight our specialty skills sets, and showcase our refreshed brand.
We affirmed our commitment to better understand and support our talent, introducing our five-point Talent Promise and reallocating resources to be solely focused on becoming an even more competitive, consultativethe temporary worker experience.
Using our unique position in the middle of the supply and profitable company, anddemand equation, we are reshapingbreaking down long-standing, systemic barriers that make it difficult for people to secure enriching work. Our new platform, called Equity@Work, is a powerful extension of our businessNoble Purpose and will help more people flow into Kelly’s talent pools, while also helping families, communities, and economies thrive.
2021 Kelly Proxy Statement 41
Compensation Discussion and Analysis
While the COVID-19 pandemic has resulted in uncertainty in the economy and the labor markets that will affect our near-term financial performance, we identified long-term measures to make that vision a reality. We will measuregauge our progress, against both revenueincluding:
Revenue growth (both organic and grossinorganic)
Earnings from Operations
Gross profit growth, as well as earningsrate improvement
Conversion rate and conversion rate. The goals we have established are based on the current economic and business environment, and may change as conditions warrant.EBITDA margin improvement
Key Executive Compensation Program Highlights for Fiscal 20172020
We believe compensation should align with and enhance long-term shareholder value. Our pay-for-performance philosophy ensures that a significant portion of compensation for our senior officers is “at risk” and reflects our business performance. Our named executive officers experienced the following outcomes for 2020 as a result of Company performance and management’s decisions and actions in response to the pandemic:
Majority of named executive officers voluntarily took base salary reductions that were greater than the 10% reduction for salaried employees, of up to 20%, and a 33.3% reduction taken by our CEO
Temporary base salary reductions were in place for just over half of 2020 and were not reimbursed
Named executive officers did not receive base salary increases during 2020
The 2020 STIP was not implemented and as a result, no payouts were made to named executive officers
No Performance Shares were earned under the 2018-2020 LTI Awards
The 2020 LTI Award was granted at a reduced award opportunity (50% of typical levels)
Company match to the Management Retirement Plan (“MRP”) was suspended for eight months during 2020
The Committee believes the actions taken in response to the global crisis and our continued transformation to a specialty talent solutions company will help ensure alignment of executive and shareholder interests. We continue to evaluate our executive compensation program and make changes to further align it with our strategic priorities and to reward both shortshort- and long-term business success. We believe we have designed a program that aligns with stockholder interests, incentivizes growth and operational excellence, and demonstrates a clear linkage between compensation and performance. The program continues to seek to minimize incentives for management to take excessive risks. The Committee worked with management and its independent compensation consultant, as described later in this document, to review current compensation programs, including the incentive plans, and taking into consideration the impact of COVID-19 on our business made the decisions described below in 2017.2020.
Reflecting the Company’s commitment to driving a high-performance culture, our executive compensation program emphasizes at-risk incentive awards that can be earned over one and three-yearmulti-year periods. As our business evolves and we strive for performance that is better than the prior year, the design of our incentive plans has changed to ensure continued alignment to our business strategy for driving long-term stockholder value. The executive compensation program, particularly the annual and long-term incentive plans, are designed to directly support the Company’s strategic transformationintent to become a more efficient, profitable, growth-focused, and performance-driven organization. Incentive payouts earned for performance cycles ending in 2017 are commensurate with the earnings, gross profit, expense management, and total stockholder return results that were achieved. AnnualIn large part due to the impact of COVID-19 on our business in 2020, no annual incentive awards for corporate performance were earned at approximately target, commensurate with our performance on earnings, gross profit and expense goals. Long-termpaid. In addition, no long-term incentive
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Compensation Discussion and Analysis
awards for the performance share periods ending in 2017period 2018-2020 were earned at 115% of target for gross profit results and 200% of target for our total shareholder return relative to the market. The 2018 incentive designs, which are briefly summarized below and will be discussed in further detail in next year’s proxy filing, are similar to the 2017 incentive designs discussed below, with the requirement for performance set meaningfully above 2017 actual results to earn the target award.earned.
The Board has adopted two plans that provide the framework for incentive compensation opportunities for our Executive Officers.senior officers, a group that includes our named executive officers.
The Short TermShort-Term Incentive Plan (“STIP”) provides for annual cash-based incentive opportunities that are based upon the achievement of one or more performance measures, as established by the Committee.
20172020 STIP Design and Results
As COVID-19 began disrupting markets in early 2020, management decided to not communicate to participants the planned design, performance measures, for the corporate componentand goals of the 2017 STIP. 2017 target2020 STIP as it seemed unlikely those goals for each measure were set at budgeted numbers, which were substantially higher than 2016 actual results:could be
42 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
| achieved. Management and the Committee continued to monitor the situation through the second and third quarters, but ultimately determined it was not feasible to implement the STIP in 2020. |
As a result, named executive officers did not receive STIP payouts for 2020.
2020 LTI Design
met.
2017-2019LTI Design2018-2020 LTI Results
Neither of the following equity vehicles:
NOTE: TheSales” or “Earnings Before Taxes plus Joint Venture (“JV”) Income” measure includesachieved a “bottom-line” earnings measure to capture Joint Venture earnings and in supportthreshold level of our business strategy.
The Company’s investment strategy and efforts to reduce costs.
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Compensation Discussion and Analysis
As a result of target and shares vested on February 14, 2018.
2017 Base SalaryDecisions2020 Individual Compensation Decisions
In light of other compensation actions taken in 2020, management decided there would be no base salary increases as a result of their promotions effective May 10, 2017. In addition, as a result of Mr. Thirot’s move from Swiss payroll and benefits to U.S. payroll and benefits effective January 1, 2017, a portion of his Swiss allowances were added to his U.S. salary. Senior Officers,for senior officers, including the Named Executive Officers, did not receive regular base salary increasesour named executive officers in 2017 as part of the total compensation review process. This was in light of management’s and the Board’s views that corporate financial results for 2016 were not at desired levels and reflected a continued conservative approach in support of the Company’s investment strategy. 2020.
Further explanation can be found under “Base Salary.”Compensation Programs: Decisions and Actions in 2020.
The Committee believes these actions supportsupported the strategic direction of the Company, taking into consideration the impact of the global pandemic, and helphelped position it for long-term success in achieving its goals. These compensation decisions and actions are discussed in more detail below.
Executive Compensation Philosophy, Objectives, and Design
Our executive compensation philosophy is to provide market-based pay opportunities with incentive payouts aligned with the achievement of the Company’s overall shortshort- and long-term business strategies.strategy, performance goals, and results. The design of our executive compensation programs allocates total compensation to fixed and variable pay elements resulting in a mix of short-term and long-term pay elements. The Committee continually evaluates our executive compensation programs to ensure that the Company provides market-competitive opportunities that enable us to attract and retain highly qualified individuals to lead the organization and drive business success in the competitive and ever-changing business environment in which we operate.success. Our executive compensation programs are designed to achieve the following objectives:
Align a significant portion of compensation with the achievement of multiple performance goals that motivate and reward executives based on Company, business unit, and individual performance results;results
Pay for PerformancePay-for-Performance Framework
The Committee believes that a majority of an Executive Officer’sa senior officer’s compensation should be “at risk” and based upon the achievement of corporate and business unit results, the Company’s share price performance, as well as individualan individual’s performance. As a result, Executive Officerssenior officers participate in incentive programs that provide them with the opportunity to
2021 Kelly Proxy Statement 43
Compensation Discussion and Analysis
earn awards that are directly tied to the Company’s performance and that drive sustainable long-term stockholder value. The Company’s compensation programs provide an incentive for Executive Officerssenior officers to meet and exceed performance goals. Executives are held accountable for results and rewarded with above target payout amounts for performance that exceeds target goals. When target goals are not met, award payouts are designed to deliver below target payouts or no payouts. We believe the combination of our annual short-term incentive awards and long-term equity incentive awards align the interests of our Executive Officerssenior officers with the interests of our stockholders.
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Compensation Discussion and Analysis
CEO and Other Named Executive Officers Pay Mix
While we believe that a majority of an Executive Officer’sexecutive officer’s target compensation opportunity should be performance-based, we do not have a specified formula that defines the overall weighting of each element. We believe that the higher a role is positioned within the organizational structure, the greater the emphasis on performance-based compensation should be. As such, the CEOChief Executive Officer (“CEO”) has a greater percentage of his compensation opportunity that is performance-based through higher target opportunities for STIP and LTI, as compared to the compensation opportunities of the other Named Executive Officers. At risknamed executive officers (“NEOs”). At-risk compensation consists of annual cash incentive awards and long-term equity awards (restricted shares and performance shares) that are contingent upon the achievement of pre-established performance goals. The following charts illustrate the 2017typical Target Total Direct Compensation mix for our President and CEO and the other Named Executive Officersnamed executive officers combined (as of December 31, 2020) and includes the pay elements of base salary, STIP (at target), restricted shares, and performance shares (at target):. Pay mixes shown below are based on target amounts under typical plan designs and do not reflect the reduction in base salaries, no STIP payout, or reduced LTI Awards for our named executive officers in fiscal year 2020.
CEO Typical Target Compensation Mix
| Other NEO | |
Typical Target Compensation Mix | ||
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Compensation Discussion and Analysis
Elements of Compensation for Named Executive Officers
The Committee determines the elements of total direct compensation that we provide to our Executive Officers.senior officers, a group that includes the named executive officers. The elements of our fiscal 2017 executive compensation program and the objectives for each are as follows:
COMPENSATION ELEMENT | TYPE | FORM | CONSIDERATIONS | OBJECTIVES | ||||||
| Base Salary | Fixed Compensation | Cash | • Reviewed annually and adjusted when appropriate • Determined based on role and scope of responsibilities, skills, experience, sustained individual contribution, and comparison to market-comparable jobs • No base salary increases provided in 2020 | • Provide competitive compensation for day-to-day responsibilities • Attract and retain qualified • Balance risk-taking | ||||||
Incentive Plan (STIP) | Variable
Compensation | • Annual performance period • Target payout opportunity established as percentage of earnings for each • Performance measures selected to align with our business strategy • Multiple performance measures that reflect key operational and financial measures of success • Payout based on achievement of predetermined goals • “Gatekeeper” goal must be achieved for any award to be earned • No STIP implemented in 2020 | • Motivate and reward | |||||||
Long Term Incentives (LTI) | Variable At-Risk Compensation | Stock-Settled | Restricted Stock | |||||||
• • Shares vest ratably over four years • • 2020 LTI RSUs become earned and vest ratably over four years following achievement of a 2021 performance hurdle, Company Earnings from Operations (“EFO”) | • Align interests of • Support retention • Support meaningful stock ownership | |||||||||
Variable At-Risk Performance- Based Compensation | Performance Shares | |||||||||
• • Provides opportunity to earn shares based on achievement of multiple specific performance goals • Relative TSR measure is for a • Financial measures • Financial measures for 2019-2021 LTI awards are for a three-year period with three-year goals set in early 2019 • No performance shares were granted in 2020 | • Drive long-term value creation for stockholders • Motivate and reward • Align the interests of | |||||||||
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2021 Kelly Proxy Statement 45
Compensation Discussion and Analysis
20182021 Executive Incentive Plans – Overview
For the 20182021 incentive plan designs, the Company continues to focus on pay-for-performance alignment by using multiple financial measures and Relative TSR to strongly drive our key business objectives and stockholder value. In support of this strategy, the Committee has approved the following:
DetailsAdditional details regarding the 20182021 incentive plan designs will be presented in our 2019 proxy filing.2022 Proxy Statement.
Process for Determining Executive Compensation
Role of the Compensation and Talent Management Committee
The Committee designs and administers the Company’s executive compensation programs and policies, and regularly reviews these programsthe program and policies relative to itspolicy objectives, applicable new legal and regulatory practices, evolving best practices, and corporate governance trends. The Committee and members of the Board of Directors determine the compensation of the CEO. The CEO’s total compensation is comprisedconsists of base salary, STIP, and LTI award opportunities, and is the same design as the other Named Executive Officers.named executive officers. The CEO does not participate in recommendations or discussions related to his own compensation.compensation levels. As part of its responsibility for executive compensation, the Committee annually reviews and determines the compensation of each of our Senior Officers,senior officers, including the Named Executive Officersnamed executive officers listed in the Summary Compensation Table of this Proxy Statement, based on each individual’s performance including consideration of ethical behavior, achievement of planned goals, relevant market comparisons, and the recommendations of the CEO.CEO, and other factors. The Committee reviews the costs and short- and long-term benefits of the compensation arrangements it considers and approves for Senior Officers.senior officers.
AllThe responsibilities of the Committee responsibilities are defined in its charter, which can be found on the Company’s website at kellyservices.com.kellyservices.com.
Role of the Independent Compensation Consultant
Since October 2014, the Committee has engaged Pay Governance LLC as itsis the Committee’s independent compensation consultant (the “Consultant”). The Committee considers analysis and guidance from the Consultant when making compensation decisions on plan design; the merits of various incentive plan performance measures; Executive Officersenior officer pay levels, including that of the CEO and our other executive officers, relative to peer group and other market data; composition of peer group companies; stock ownership requirements; and other pay practices. In addition, the Consultant updates the Committee on market trends and best practices in executive compensation and as requested, provides data and guidance on other items such as Director compensation. The Committee uses its own independent judgment to make all decisions related to the compensation of the Company’s Executive Officers.senior officers.
During 2017,2020, the Consultant regularly attended Committee meetings and communicated with the Chairman of the Board, the Committee Chairman, and the Committee Vice Chairman outside of Committee meetings. The Committee regularly meets with the Consultant in private session (without members of management). As directed by the Compensation and Talent Management Committee, the Consultant also met with the Senior Vice President and Corporate Secretary and Chief Investor Relations, Executive Compensation and Communications Officer (“Corporate Secretary”) and members of the Executive Compensation, Finance, and Corporate Governance teams of the Company. The Consultant maintains a direct reporting relationship to the Committee on all compensation matters.
The Committee conducts an annual assessment of the Consultant’s independence, using factors established by Nasdaq Global Market.Nasdaq. The Consultant provided no services to the Company in 20172020 other than services to the Committee. The Committee reviewed and affirmed the independence of the Consultant as the Compensation Consultant to the Committee and concluded the work performed by the Consultant did not raise a conflict of interest.
The Committee consults with the CEO and the Corporate Secretary to obtain feedback with respect to the strategic direction of our executive compensation programs.
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Compensation Discussion and Analysis
The CEO makes recommendations for each of the Executive Officers with regard toexecutive officers about elements of their total compensation. He bases his recommendations on the assessment of each Executive Officer’sexecutive officer’s performance, as well as the performance of their respective business or function.function and other factors. The Committee takes into consideration the recommendations of the CEO when determining the compensation of the other Executive Officers.executive officers.
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Compensation Discussion and Analysis
In addition, the CFO provides periodic financial updates and information to the Committee to aid in establishing incentive plan goals and determining payout amounts.
The Committee uses third-party survey data for comparably sized general industry companies and available data from a select group of peer companies, in determining the competitive positioning of our compensation programs, andprograms. Comparator data is also used to establish the individual compensation opportunities of each of our Named Executive Officers.senior officers, including the named executive officers.
Each Executive Officer’ssenior officer’s performance is reviewed (see ExecutiveSenior Officer Performance Reviews and Succession Planning below) and compensation decisions are made on an annual basis (or as an Executive Officer’sa senior officer’s duties and responsibilities change). Base salaries, target STIP, and target long-term incentive opportunities are benchmarked against a group of comparable executive positions in general industry companies of similar revenue size as reflected in multiple third-party surveys. We seek to establish target total direct compensation opportunities (defined as base salary, target STIP, and target long-term incentive) for our Named Executive Officersnamed executive officers that are withinnear a competitive range of the median of the competitive market data. Compensation ultimately earned from these opportunities can vary from the’ medianthe targeted levels based on the company, business unit, and individual performance. Various other factors are taken into consideration and in certain circumstances, we may target pay above or below the competitive median. Individual target total direct compensation may be above or below the median depending on Company performance, cost considerations, the role’s scope of responsibilities, individual experience and performance, and any succession, retention, or internal equity considerations. Prior to 2015, theThe Company hadhas taken a conservative approach to target long-term incentive opportunities for Senior Officers that were generally well below market median. The 2015 LTI design brought target total direct compensation opportunities, on average, closer to market median levels for our Senior Officers. Insenior officers. This approach is in support of the Company’s efforts to reduce costs in connection with its investment strategy management voluntarily requested and the Committee agreed, that the 2016 and 2017 LTI levels for Senior Officers would be reduced from the 2015 levels, as explained further in the Long-Term Incentive section of this Proxy Statement.its goal to become more profitable.
In 2017,setting 2020 target compensation, a competitive executive compensation analysis was performed which included both an analysis of third-party survey data prepared internally by the Company’s Executive Compensation group, and a peer group review of CEO pay prepared by the Consultant. Third-party general industry survey data from Aon, Hewitt,Equilar, Mercer, and Willis Towers Watson was used to prepare the survey analysis. Specific companies that participated in the third-party surveys were unknown and not a factor in the Committee’s deliberations. The Consultant reviewed the survey analysis was reviewed by the Consultant for the Committee.
The Company considersConsultant worked with the officerCommittee and management in 2018 to develop an updated group of peer companies to be used for market comparison purposes in terms of CEO pay practiceslevels and executive pay practices. We do not believe many companies compete directly with us in all areas of our business or are of similar size. However, in order to have a comparator peerreference group prepared byof publicly traded comparators, the Consultant which was selected using the following criteria: industry,identified a group of relevant companies that compare to Kelly in at least some areas of our business. The resulting group of twelve comparator companies consists solely of staffing and HR-focused companies with generally similar annual revenues and non-staffing companies considered by shareholder advisory groups as peers.recent market cap. The majority are multi-national/global companies headquartered in U.S. The resultingfollowing group of fifteen comparator companies includes direct peers supplemented by other people-intensive businesses with similar margins. This groupand a balanced mix of companies includes nine companies used by Institutional Shareholder Services (“ISS”) in their 2017 report, which means 60% ofsome significantly smaller and larger companies in our peer group are shared with ISS. The Company’s 2016 revenue of $5.28 billion was on par with the median peer group revenue of $5.25 billion for the same period. The following comparator group of fifteen companiessimilar industries and was unchanged from last year andyear. The peer group was used by the Committee and management as another reference point when reviewing 2017 officerassessing 2020 executive pay practices and CEO pay levels:
2017 Peer Group
| 2020 Peer Group | ||||
• ABM Industries Incorporated | • | • ManpowerGroup Inc. | ||
• Adecco Group AG | • Heidrick & Struggles International, Inc. | • Randstad NV | ||
• AMN Healthcare Services, Inc. | • Insperity, Inc. | • Robert Half International Inc. | ||
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The Committee considers peer group and general industry survey data as a point of reference, not the sole factor in determining executivesenior officers’ compensation. The third-party survey data and peer group analysis represent “Market Data” when referenced throughout this Compensation Discussion and Analysis. The Committee considers all of the resources provided as part of a holistic process that also includes officer performance and the recommendations of the Company’s CEO regarding total compensation for Senior Officers.senior officers.
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2021 Kelly Proxy Statement 47
Compensation Discussion and Analysis
In addition to Market Data and for use as background information, the Executive Compensation group provides the Committee with comprehensive tally sheets for each Executive Officer,executive officer, summarizing up to four years of historical target and actual total compensation data and long-term incentive grant detail that includes grant date fair value as well as the intrinsic value of outstanding shares.award opportunities. The Committee reviews tally sheets for all of the Executive Officersexecutive officers and believes they are a useful multi-year reference tool, along with other perspectives, when considering whether compensation decisions reflect the Company’s executive compensation philosophy and performance. Tally sheets are not a determining factor for the Committee when making compensation decisions.
ExecutiveSenior Officer Performance Reviews and Succession Planning
Annually, the Committee conducts a comprehensive Executive Officersenior officer performance review that includes succession planning and identification of officer developmental opportunities. DetailedThe Chief Human Resources Officer (“CHRO”) prepares detailed executive performance review information for each of the Senior Officers,senior officers, including named executive officers (other than the Named Executive Officers, isCEO). Methodology implemented in 2018 was used in 2020 to identify, evaluate, and develop the Company’s talent, including a framework to assess future leadership needs, and a succession planning and talent development system. Periodic sessions are held to discuss talent and development among multiple levels of the organization, increasing transparency and understanding of key talent across leadership teams and business units. Individual development plans continue to be prepared by the Chief Human Resources Officer (“CHRO”). to identify future opportunities for emerging leaders, including increased development through experiential learning opportunities and formal coaching.
The performance review information for each of the Executive Officerssenior officers other than the CEO, includes key annual initiatives, performance results, strengths, and development opportunities. The CEO reviews the performance of the other Executive Officersexecutive officers and presents their individual performance assessments, development plans, and succession strategies to the Committee. During the individual performance assessments, the Committee asks questions, renders advice, and makes recommendations on matters that include individual development needs, succession planning, and retention.
In third quarter 2020, the Committee engaged an outside consultant to conduct a performance evaluation of the Company’s CEO. Participants in the review included: the CEO, members of the Board, and members of management who are direct reports to the CEO. The evaluation process included the completion of a detailed questionnaire by each participant, as well as individual interviews held with the independent consultant. The CEO performance evaluation included a review of: strategy and vision, leadership, ethics and accountability, culture, personal development and interpersonal skills, financial acumen and results, Board relations, talent management, external relations: customers, investors, and stakeholders. Responses and comments from the evaluation were anonymized and randomized to promote healthy Board and management dynamics. The consultant presented a summary of the results to the Committee in executive session. The Company’s Chairman of the Board and the Committee Chair presentshared the results of the performance review forwith the CEO tofollowing the other Committee members. Nonemeeting, as the purpose of the Executive Officersevaluation was to provide the CEO with a greater understanding of his areas of strength and areas of opportunity that could help increase his effectiveness and overall performance.
Senior officers are not present whenduring the discussion of their performance is being discussed by the Committee. Each Executive’sThe Committee uses each executive’s individual performance assessment, is used by the Committee, together with the compensation analysis discussed in the previous section, and the recommendations of the CEO, to determine compensation for the Executive Officers.senior officers.
The Board approves the Company’s succession plan is updated annually, including updates, and in connection with the performance assessments and is approved by the Board.assessments. The plan documentation includes all executives at the Senior Officersenior officer level, as well as their potential successors from within the Company in case of an unexpected disability or departure of a Senior Officer.senior officer. Documentation includes detailed executive performance review information as discussed above, readiness assessments, and at least one potential successor for each role. Any changes to the plan during the year also require the approval of the Board. The CHRO is leading the implementation of a new succession planning approach
48 2021 Kelly Proxy Statement
Compensation Discussion and process for 2018, details of which will be disclosed in the Company’s 2019 Proxy Statement.Analysis
Compensation Programs: Decisions and Actions in 20172020
George S. Corona - Promotion
Following notification by Mr. Camden in April 2017 of his intent to retire as an Executive Officer and Director of the Company effective with the annual meeting in May, the Company’s Board of Directors, at a meeting held on April 13, 2017, appointed Mr. Corona to the role of President and Chief Executive Officer, effective May 10, 2017. As a result of this promotion, Mr. Corona received an increase to his base salary, and prorated STIP target and LTI opportunity for 2017, pursuant to the terms of the STIP and EIP as they pertain to Named Executive Officers. These changes were in recognition of his appointment and took into account market competitive compensation opportunities for the role as summarized below:
Teresa S. Carroll and Peter W. Quigley - Promotions
On May 10, 2017, and upon the recommendation of the Committee, the Company’s Board of Directors elected Teresa Carroll to the role of Executive Vice President and President, Global Talent Solutions and General Manager, Sales, Marketing and Human Resources, and Peter Quigley to the role of Executive Vice President and President, Global Staffing
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Compensation Discussion and Analysis
and General Manager, Global Information Technology, Global Business Services and Global Services. As a result of their promotions, Ms. Carroll and Mr. Quigley each received base salary increases, and prorated STIP targets and LTI opportunities for 2017 pursuant to the terms of the STIP and EIP as they pertain to Named Executive Officers. These changes were in recognition of their appointments and to more closely reflect market competitive compensation opportunities for their new roles as summarized below:
Base salaries for senior officers, including the Named Executive Officersnamed executive officers are intended to be competitive with Market Data to ensure that the Company can attract and retain the executives necessary to successfully lead and manage the organization. Base salaries generally fall within a range (+/- 15%) around the median of salaries in the Market Data, as individual base salaries will vary based upon the factors described below. Based on Market Data available at the time of the review in December 2016,November 2019, we determined that the base salaries of our Named Executive Officersnamed executive officers were within this competitive range of the 2017 market medians for comparable roles. Base salary is only one component of target total direct compensation and may be affected by other components to ensure that target total direct compensation meets compensation objectives.
The Committee reviews the base salaries of Executive Officers,senior officers, including the Named Executive Officers,named executive officers, on an annual basis (or as an Executive Officer’sa senior officer’s duties and responsibilities change). Base salaries are determined by the Committee for each of the Executive Officerssenior officers based on various factors, including the scope and responsibilities of the role, an individual’s experience and performance in the role, their current level of pay compared to Market Data, internal pay equity, the recommendations of the CEO, and consideration of the Company’s salary adjustment budget.
Management elected to move the timing of theThe Company’s annual total compensation review process for all employees, including the Executive Officers, from October 2016 to March 2017 in ordersenior officers, typically occurs during the first quarter to coincide with the timing of any potential incentive award payouts. The timing alignment of compensation elements wasis intended to reinforce the Company’s pay for performancepay-for-performance philosophy and provide each employee with their “total compensation” overview. In December 2016,November 2019, the Committee conducted its annual review of base salaries of the Senior Officers,senior officers, including Named Executive Officers,named executive officers.
In February 2020, we delayed decisions on changes to base salary levels for executive officers until implementation of the Company’s new operating model and considereddetermination of new leadership roles, expected to be effective July 2020. A review of executive officer compensation was conducted in July 2020, however as noted above, it was decided that in light of the recommendation of management that the Senior Officersbroad-based compensation reductions implemented, it was not receive regularan appropriate time to provide base salary increases in March 2017. The Committee supported this recommendation and did not provide the Senior Officers with salary increases during the annual total compensation review process in early 2017. This decision reflected a conservative approach that both management and the Committee believed was in support of the Company’s investment strategy.to executive officers.
In consideration of the factors noted above, the followingno base salariessalary increases for the Named Executive Officersnamed executive officers were approved by the Committee in 2017:2020:
Named Executive Officer | 2016 Base Salary | 2017 Base Salary | Adjustment % | |||||||||
George S. Corona | $ | 655,000 | $ | 1,000,000 | 52.7 | % | ||||||
Olivier G. Thirot | $ | 515,000 | $ | 533,500 | 3.6 | % | ||||||
Teresa S. Carroll | $ | 500,000 | $ | 575,000 | 15.0 | % | ||||||
Peter W. Quigley | $ | 500,000 | $ | 575,000 | 15.0 | % | ||||||
Steven S. Armstrong | $ | 332,000 | $ | 332,000 | 0.0 | % | ||||||
| Named Executive Officer | 2019 Base Salary | 2020 Base Salary | Adjustment % | ||||||||||||
Peter W . Quigley | $ | 840,000 | $ | 840,000 | 0.0 | % | |||||||||
Olivier G. Thirot | $ | 588,000 | $ | 588,000 | 0.0 | % | |||||||||
Daniel H . Malan | $ | — | $ | 430,000 | — | ||||||||||
Dinette Koolhaas | $ | 521,033 | $ | 521,033 | 0.0 | % | |||||||||
Tammy L. Browning | $ | 325,000 | $ | 325,000 | 0.0 | % | |||||||||
Notes:
Mr. Malan began his employment with the Company in March 2020.
Amounts reported for Ms. Koolhaas are converted from Swiss Francs to U.S. Dollars at an exchange rate of 1 CHF = 1.06496273 USD.
2021 Kelly Proxy Statement 49
Compensation Discussion and Analysis
The Committee believes that the Named Executive Officersnamed executive officers should have a meaningful percentage of their total compensation earned through annual “at risk” performance-based incentives. The percentage of target total compensation at risk under the terms of the STIP increases significantly as the individual executive’s responsibilities and influence on overall corporate performance results increase. The STIP is designed to encouragedesign encourages executives to meet and exceed the Company’s short-term goals that align with overall corporate strategy and improve stockholder value.
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Compensation Discussion and Analysis
The STIP target opportunity is established as a percentage of each individual’s actual base salary earnings and is targeted near the median Market Data, but may vary based upon individual factors, internal equity, and other considerations. STIP payments for all participants are capped at 200% of the target incentive award opportunity. In December 2016,November 2019, the Committee reviewed the target incentive opportunity for each of the Named Executive Officersnamed executive officers and found that all were appropriately positioned relative to the Market Data. In July 2020, the STIP targets for several senior officers who had moved into new roles were reviewed, including two of our named executive officers, resulting in higher target STIP opportunities for Mss. Browning and Koolhaas.
The following table shows the 20162019 and 20172020 STIP target opportunities, as a percent of base salary, for our Named Executive Officers:named executive officers:
| 2016 STIP | 2017 STIP | |||||||
Named Executive Officer | Target % | Target % | ||||||
George S. Corona | 90 | % | 130 | % | ||||
Olivier G. Thirot | 75 | % | 75 | % | ||||
Teresa S. Carroll | 70 | % | 85 | % | ||||
Peter W. Quigley | 70 | % | 85 | % | ||||
Steven S. Armstrong | 60 | % | 60 | % | ||||
| Named Executive Officer | 2019 STIP Target% | 2020 STIP Target% | ||||||||
Peter W . Quigley | 110 | % | 110 | % | ||||||
Olivier G. Thirot | 80 | % | 80 | % | ||||||
Daniel H . Malan | — | 55 | % | |||||||
Dinette Koolhaas | 50 | % | 55 | % | ||||||
Tammy L. Browning | 45 | % | 55 | % | ||||||
Note:Notes:
Mr. Malan began his employment with their promotionsthe Company in May 2017.March 2020.
In the months leading up to year end, the Committee reviews and determines the objectives, performance measures, and other terms and conditions of the STIP for the following plan year. For 2017, similar to the prior year’s incentive plan redesign,2020, the Committee approved the use of the same multiple performance measures used in 2019 to comprise the corporate component of the STIP. The Committee selected these multiple financial measures inagain for the STIP thatbecause they aligned to thewith business objectives and value creation, provided balance, ensured a strong pay-performance linkage, and improved line of sight for Senior Officers,senior officers, including the Named Executive Officers. Measures selected for 2017 STIP were:named executive officers.
Payout for threshold performance under the corporate component of STIP is 25%50% of an Executive Officer’sa named executive officer’s target payout opportunity, with zero payout earned for performance below threshold. An intermediate performance level that is halfway between threshold and target performance levels was added in 2017. Achievement of intermediate level of performance results in payouts that are 75% of target. Achievement of target performance results in target payouts for the Executive Officers.named executive officers. Performance above target earns incentive payouts above target and up to the maximum of 200% of target. As in prior years, the 2017The STIP design includes a ‘gatekeeper’ goal which must be achieved in order to earn a payout under any measure. The gatekeeper goal is earnings from operations with a required level of achievement of at least 60% of target.
Performance measures used for purposes of STIP are the same as defined in the Company’s GAAP financial statements, excluding consideration of special items such as: changes in accounting principles, gains or losses on acquisitions or divestitures, changes in budget due to acquisitions or divestitures, restructuring expenses, and other unusual items, which are defined as such and quantified in the financial statements and/or footnotes to the Company’s Annual Report on Form 10-K. Adjustments would apply only to unbudgeted items. For the total gross profit measure, constant currency (using the Company’s 2017 budgeted currency exchange rate) was used to determine values in establishing achievement of the incentive plan goals for 2017.
In February 2017,2020, the Committee determined and approved threshold, intermediate, target, and maximum performance goal levels for the 20172020 STIP. The threshold goals were set at levels for which the Committee believed it was appropriate to start earning incentives; intermediate goals were set halfway between threshold and target amounts; targetincentives. Target goals were set at the budgeted levels, which the Committee considered were “challenging
50 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
but achievable”; maximum. Maximum goals were set at significant stretch levels, for which the Committee believed warranted the earning of two times target payouts was warranted.payouts. For the 2020 STIP, payouts for all senior officers were to be based 100% on Corporate measures to simplify the plan at a time when the Company was reorganizing into its new operating model and business segments. For Corporate measures, straight line interpolation occurs for achievement of performance between threshold and intermediate, intermediate and target, and between target and maximum. For
In March 2020, as COVID-19 became a major global health emergency with uncertainty around its duration, management made the business unit measures, there is no straight line interpolation between payout levelsdecision to not communicate the planned 2020 STIP design to participants. Given the potential impact of the payout schedule. The goals at threshold, target, intermediate and maximumcrisis on the Company’s financial outlook for the 2017 STIP, as well as resulting performanceremainder 2020, it was thought there was no longer a reasonable possibility of attaining the goals. Management continued to hold discussions with the Committee in the second and third quarters to discuss the potential for each measureimplementing some form of the corporate componentSTIP for a shorter performance period in 2020 if the environment improved. It was finally determined that it was not feasible for the Company to implement STIP in 2020. As a result, there were as follows:no payouts made for STIP in 2020, including to the named executive officers.
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Compensation Discussion and Analysis
| 2017 Performance Goals | Weighted | |||||||||||||||||||||||||||
Corporate Component Performance Measures | Weighting | Threshold | Intermediate | Target | Maximum | 2017 Actual Results | 2017 Payout (% of Target) | |||||||||||||||||||||
Earnings from Operations | 50.0 | % | $ | 68.800 | $ | 77.400 | $ | 86.000 | $ | 111.800 | $ | 85.529 | 49.32 | % | ||||||||||||||
Return on Gross Profit | 25.0 | % | 7.100 | % | 8.107 | % | 9.114 | % | 10.614 | % | 8.994 | % | 24.25 | % | ||||||||||||||
Total Gross Profit | 25.0 | % | $ | 876.000 | $ | 909.800 | $ | 943.600 | $ | 1,037.960 | $ | 948.945 | 26.42 | % | ||||||||||||||
| 100 | % | 99.98 | % | |||||||||||||||||||||||||
$ in millions
Messrs. Corona and Thirot’s STIP opportunities were based 100% uponThe Committee approved a special payment of $90,000 for Ms. Browning for the performance measuresperiod of time prior to her assuming the role of President of the corporate component, as shown above.
Ms. Carroll’s STIP opportunity was based 30% onnew OCG business segment in the corporate component measures and 70% onthird quarter. This approximated the business unit measures for whichamount of incentive payment she is accountablewould have received under the Company’s Field Incentive Plan for the first four months of the year prior to her promotion in May 2017. At that time, the Committee determined to increase the weighting of the corporate measure to 50% to better reflect her new responsibilities for several functional areas of the organization: Sales, Marketing and Human Resources. Her STIP business unit measures were changed to be weighted 50%. Payout results for the business unit measures for Ms. Carroll were positively impacted by revenue and Gross Profit growth in the Contingent Workforce Outsourcing (“CWO”), KellyConnect and Business Process Outsourcing (“BPO”) businesses, and were negatively impacted by shifting customer demands in the centrally delivered staffing and payroll business, as well as increased SG&A expenses due to the costs associated with the headcount added for new and expanding programs. The measure, “Contribution” that appears below for Ms. Carroll and Messrs. Quigley and Armstrong is defined as income from operations.
Performance results for each of Ms. Carroll’s business unit measures are as follows:
Teresa Carroll: In effect January 1, 2017 - April 30, 2017
| 2017 Performance Goals | ||||||||||||||||||||||||
Corporate Component and Business Unit Performance Measures | Weighting | Threshold | Target | Maximum | 2017 Actual Results | Weighted 2017 Payout (% of Target) | ||||||||||||||||||
Corporate Component Performance Measures | 30.0 | % | see details above | 29.99 | % | |||||||||||||||||||
Americas SAO Gross Profit | 17.5 | % | $ | 144.419 | $ | 160.465 | $ | 200.581 | $ | 163.702 | 17.50 | % | ||||||||||||
Global OCG Gross Profit | 17.5 | % | $ | 197.628 | $ | 219.587 | $ | 263.504 | $ | 210.055 | 13.13 | % | ||||||||||||
Global Talent Solutions (GTS) Contribution | 35.0 | % | $ | 58.463 | $ | 73.079 | $ | 109.619 | $ | 79.910 | 38.50 | % | ||||||||||||
| 100 | % | 99.12 | % | |||||||||||||||||||||
$ in millions
Teresa Carroll: In effect May 1, 2017 - December 31, 2017
| 2017 Performance Goals | ||||||||||||||||||||||||
Corporate Component and Business Unit Performance Measures | Weighting | Threshold | Target | Maximum | 2017 Actual Results | Weighted 2017 Payout (% of Target) | ||||||||||||||||||
Corporate Component Performance Measures | 50.0 | % | see details above | 49.99 | % | |||||||||||||||||||
Americas SAO Gross Profit | 12.5 | % | $ | 144.419 | $ | 160.465 | $ | 200.581 | $ | 163.702 | 12.50 | % | ||||||||||||
Global OCG Gross Profit | 12.5 | % | $ | 197.628 | $ | 219.587 | $ | 263.504 | $ | 210.055 | 9.38 | % | ||||||||||||
Global Talent Solutions (GTS) Contribution | 25.0 | % | $ | 58.463 | $ | 73.079 | $ | 109.619 | $ | 79.910 | 27.50 | % | ||||||||||||
| 100 | % | 99.37 | % | |||||||||||||||||||||
$ in millions
Mr. Quigley’s STIP opportunity was based 100% on corporate measures for the first four months of the year until his promotion in May 2017 at which time his STIP opportunity was changed to be based 50% on the corporate component measures and 50% on the Global Staffing business unit measures for which he became accountable. Payout results for the business unit measures for Mr. Quigley were positively impacted by the reduction of worker’s compensation expenses in 2017 and increased hours volume in the EMEA region, and were negatively impacted by increased SG&A expenses linked to additional employee investments in the EMEA branch network and the sales and recruiting resources in the Americas that were added in the last half of the year to capture growing demand.
Performance results for each of Mr. Quigley’s business unit measures are as follows:
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Compensation Discussion and Analysis
Peter Quigley: In effect May 1, 2017 - December 31, 2017
| 2017 Performance Goals | ||||||||||||||||||||||||
Corporate Component and Business Unit Performance Measures | Weighting | Threshold | Target | Maximum | 2017 Actual Results | Weighted 2017 Payout (% of Target) | ||||||||||||||||||
Corporate Component Performance Measures | 50.0 | % | see details above | 49.99 | % | |||||||||||||||||||
Americas Staffing Gross Profit | 20.0 | % | $ | 377.782 | $ | 419.758 | $ | 524.697 | $ | 425.985 | 20.00 | % | ||||||||||||
Americas Staffing Contribution | 20.0 | % | $ | 69.518 | $ | 86.897 | $ | 130.346 | $ | 81.706 | 10.00 | % | ||||||||||||
EMEA Staffing Gross Profit | 5.0 | % | $ | 132.712 | $ | 147.458 | $ | 184.322 | $ | 151.379 | 5.50 | % | ||||||||||||
EMEA Staffiing Contribution | 5.0 | % | $ | 14.324 | $ | 17.906 | $ | 26.858 | $ | 21.538 | 7.00 | % | ||||||||||||
| 100 | % | 92.49 | % | |||||||||||||||||||||
$2020, had she remained a participant in millionsthat plan.
Mr. Armstrong’s STIP opportunity was based 30% on the corporate component measures and 70% on the business unit measures for which he is accountable. Although the result for U.S. Operations PT Gross Profit measure was above threshold, the design requires achievement of threshold level of performance for the U.S. Operations PT Contribution measure before payout can be earned on the corresponding Gross Profit measure. Threshold performance was not achieved for the U.S. Operations PT Contribution measure, so no payout was earned for the U.S. Operations PT Gross Profit measure. Payout results for the business unit measures for Mr. Armstrong were positively impacted by the reduction of worker’s compensation expenses in 2017 and were negatively impacted by the increased SG&A expenses linked to higher performance based compensation and additional sales and recruiting resources added to capture growing demand in the last half of the year.
Performance results for each of Mr. Armstrong’s business unit measures are as follows:
Steven Armstrong: In effect January 1, 2017 - December 31, 2017
| 2017 Performance Goals | ||||||||||||||||||||||||
Corporate Component and Business Unit Performance Measures | Weighting | Threshold | Target | Maximum | 2017 Actual Results | Weighted 2017 Payout (% of Target) | ||||||||||||||||||
Corporate Component Performance Measures | 30.0 | % | see details above | 29.99 | % | |||||||||||||||||||
US Operations Gross Profit | 17.5 | % | $ | 282.205 | $ | 313.561 | $ | 391.951 | $ | 320.225 | 17.50 | % | ||||||||||||
US Operations PT Gross Profit | 17.5 | % | $ | 64.855 | $ | 72.061 | $ | 86.473 | $ | 70.068 | 0.00 | % | ||||||||||||
US Operations Contribution | 35.0 | % | $ | 65.429 | $ | 81.786 | $ | 122.679 | $ | 75.546 | 17.50 | % | ||||||||||||
| 100 | % | 64.99 | % | |||||||||||||||||||||
$ in millions
Under the terms of the STIP, the Committee retains the right in its discretion to reduce a STIP award based on Company, business unit, or individual performance. The Committee has no discretion to increase a STIP award for Named Executive Officers (though the Committee may approve a special bonus for Named Executives Officers on a discretionary basis to recognize exceptional performance or actions not related to objectives set forth in the STIP; in 2017, no discretionary bonus awards were made to Named Executive Officers). STIP awards made in 2017 were designed to comply with the requirements of Section 162(m) of the Code and any awards made under the STIP are subject to the Company’s Clawback Policy.
Based on these performance results, at its February 14, 2018 meeting, the Committee reviewed and approved payments to the Named Executive Officers in accordance with the STIP provisions as follows:
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Compensation Discussion and Analysis
| 2017 | 2017 STIP | 2017 Payout | ||||||||||||||||||
| Base | Target as | 2017 STIP | as a | |||||||||||||||||
| Salary | % of | Payout at | Percentage | 2017 STIP | ||||||||||||||||
Named Executive Officer | Earnings | Salary | Target | of Target | Payout | |||||||||||||||
George S. Corona(1/1 - 04/30) | $ | 218,333 | 90 | % | $ | 196,500 | 99.98 | % | $ | 196,461 | ||||||||||
George S. Corona(5/1 - 12/31) | $ | 657,519 | 130 | % | $ | 854,775 | 99.98 | % | $ | 854,604 | ||||||||||
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| $ | 1,051,275 | $ | 1,051,064 | |||||||||||||||||
Olivier G. Thirot | $ | 533,500 | 75 | % | $ | 400,125 | 99.98 | % | $ | 400,045 | ||||||||||
Teresa S. Carroll(1/1 - 04/30) | $ | 166,667 | 70 | % | $ | 116,667 | 99.12 | % | $ | 115,639 | ||||||||||
Teresa S. Carroll(5/1 - 12/31) | $ | 381,345 | 85 | % | $ | 324,143 | 99.37 | % | $ | 322,085 | ||||||||||
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| |||||||||||||||||
| $ | 440,810 | $ | 437,723 | |||||||||||||||||
Peter W. Quigley(1/1 - 04/30) | $ | 166,667 | 70 | % | $ | 116,667 | 99.98 | % | $ | 116,643 | ||||||||||
Peter W. Quigley(5/1 - 12/31) | $ | 381,345 | 85 | % | $ | 324,143 | 92.49 | % | $ | 299,800 | ||||||||||
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| $ | 440,810 | $ | 416,443 | |||||||||||||||||
Steven S. Armstrong | $ | 332,000 | 60 | % | $ | 199,200 | 64.99 | % | $ | 129,468 | ||||||||||
The EIP provides for long-term incentives that reward executives for achieving the Company’s long-term growth and profitability goals. Long-term incentive compensation is also intended to help the Company retain key employees, and provide those employees shared financial interests with the Company’s stockholders and positively influence their job performance and longer-term strategic focus. The EIP allows for grants of equity and non-equity awards to key employees. The Committee approved a redesign of the Company’s long-term incentives in 2015 that included updated performance measures, a greater portion of variable at-risk performance-based compensation, and target opportunities for the Named Executive Officers that were set, on average, to be near market competitive levels.
The Committee believes that compensation programs for the Company’s Senior Officerssenior officers should include strong alignment between pay and performance, with a significant portion of “at risk” pay. As a result, since 2015 the design of the 2017Committee provides long-term incentives for Senior Officers,senior officers, including the Named Executive Officers, mirrored the 2016 grants,named executive officers with grant levels based 75% on performance shares (at target) and 25% on restricted stock in order to create award opportunities that heavily emphasize performance. The currenttypical incentive mix emphasizes performance-contingent awards that are delivered through performance shares and places a reducedlower weighting on restricted shares.
Typical Long-Term Incentive Mix
In 2015 we implemented a significant design change from the Company’s pre-2015 long-term incentive awards. Prior
2021 Kelly Proxy Statement 51
Compensation Discussion and Analysis
On average, target LTI awards granted to 2015, target long-term incentive opportunities for Senior Officers were generallysenior officers have historically been and currently remain below market median and provided primarily in time vesting restricted stock. The overall target number of shares granted to Senior Officers under the 2015 long-term incentive awards brought target total direct compensation opportunities, on average, to be near market median levels.median. The target number of shares granted toLTI award amounts for each Senior Officer in 2015,senior officer, including the Named Executive Officers, werenamed executive officers, are based on an established value for each officer level. Target LTI grant levels, in terms of the number of shares, for nearly all Senior Officers were reduced for the 2016 grant by approximately 15% from the 2015 target share grant levels. This change was made at the request of management and with the approval of the Committee, as both believed it was an approach that supported the Company’s investment strategy and efforts to reduce cost. This reduced grant value was maintained for the 2017 LTI grants, with grant values approximately the same in 2017 as they were in 2016 (for those executives in the same position each year). The number of target shares granted to each Named Executive Officernamed executive officer is based on the grant value and closing stock price on the date of grant and can be found in the “Grants of
Plan-Based Awards” table, later in this document. The actual value realized for the grant will be based upon achievement of the performance measures of the performance share awards and the price of the Company’s stock.
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Compensation Discussion and Analysis
Under the terms of the EIP, the Committee retains the right in its discretion to reduce an LTI award based on individual performance. The Committee has no discretion to increase an LTI award for Named Executive Officers.named executive officers. LTI grants made in 2017 and prior years were designed to comply with the requirements of Section 162(m) of the Code and any performance-based awards made under the EIP are subject to the Company’s Clawback Policy.
Similar to the approach described above for STIP, in early 2020 management elected to wait to communicate a design for the 2020 LTI awards. This was due to a combination of factors related to COVID-19 and also interest in having leadership roles defined for the new operating model. The Committee had originally planned to have the 2020 LTI Awards be a similar design to the 2019 LTI Awards, however, concerns about an uncertain environment caused management and the Committee to delay the grant until further into the year. In fourth quarter 2020, the Committee approved the LTI Awards at a reduced award opportunity value that approximated 50% of standard LTI Awards for senior officers, due to the timing of the grant and continued uncertainty of the pandemic. The grants were made in restricted stock units that are conditioned upon achievement of an earnings from operations performance hurdle for 2021. If the Committee certifies that the performance hurdle has been achieved at their meeting on February 15, 2022, the first tranche of the grant will vest immediately. The remaining three equal tranches will vest on the February 15th anniversary date in 2023, 2024, and 2025. No performance shares were awarded as part of the 2020 LTI Awards.
Performance shares provide Senior Officerssenior officers with the opportunity to earn shares, from zero to 200% of their target opportunity, based on achievement of pre-established measures and goals. For 2017, the Committee selected the following equally weighted performance measures for the performance shares: return on sales, in order to maximize margins from revenues; earnings before taxes plus joint venture (JV) Income, to include an operating earnings measure that also captures JV earnings; and TSR relative to the S&P SmallCap 600 Index, to reward relative TSR performance. The Committee believed that these performance measures were aligned with the business strategy and stockholder interests, and also provided balance with STIP measures across the strategic business objectives of the Company.
For the 2017 grant of performance shares, the two financial measures, return on sales and earnings before taxes plus JV Income, were established to have three-year goals, which would be developed by aggregating one-year performance goals for each of the years in the performance period 2017 - 2019. This design was selected due to the desire to have multi-year accountability for performance results, while recognizing the challenges, at this time, of establishing traditional three-year goals in an uncertain environment. In February 2017, the Committee approved goals at threshold, intermediate, target, and maximum levels of performance for each of the measures for 2017. Goals for the measures in subsequent years of the performance period will be established within the first ninety days of each of the years, 2018 and 2019. At the end of the performance period 2017-2019 (i.e., in early 2020), goals and results will be aggregated and/or averaged as appropriate, for each of the two financial measures, to determine achievement and earning, if any, of shares. The Relative TSR measure of the performance shares is a three-year goal with vesting at the end of the 2017-2019 performance period, provided that a threshold level of performance for this measure is achieved. The following table illustrates performance periods for each of the measures for the 2017-2019 performance shares:
Measures | 2017 | 2018 | 2019 | |||
• Return on Sales (ROS) | Three-year performance is assessed based on the | |||||
• Earnings Before Taxes plus Joint Venture (JV) | average (for the ROS measure) or sum (for the | |||||
| earnings measure) of the annual goals set at the | ||||||
| start of each year, relative to three years’ of results | ||||||
• Relative TSR | Three-calendar year Performance Period | |||||
The following target number of performance shares were awarded for each performance measure to the Named Executive Officers in 2017:
Target Number of 2017-2019 Performance Shares Awarded
| Financial Measures | Total Number | |||||||||||||||
| Earnings | of | |||||||||||||||
| Before Taxes | Relative | Performance | ||||||||||||||
| Return on | plus JV | TSR | Shares @ | |||||||||||||
Name | Sales | Income | Measure | Target | ||||||||||||
George S. Corona | 23,297 | 23,297 | 23,297 | 69,891 | ||||||||||||
Olivier G. Thirot | 8,325 | 8,325 | 8,325 | 24,975 | ||||||||||||
Teresa S. Carroll | 9,317 | 9,317 | 9,316 | 27,950 | ||||||||||||
Peter W. Quigley | 9,317 | 9,317 | 9,316 | 27,950 | ||||||||||||
Steven S. Armstrong | 3,100 | 3,100 | 3,100 | 9,300 | ||||||||||||
For achievement of threshold performance, 25% of target performance shares would be earned; for achievement of intermediate performance, 75%50% of target performance shares would be earned; for achievement of target performance, 100% of target performance shares would be earned; and for achievement of maximum performance or higher, 200% of target performance shares would be earned under the 2017typical long-term incentive design. The thresholdThreshold goals wereare typically set at levels for which the Committee believed it wasbelieves appropriate to start earning incentives; Intermediateincentives. Target goals were set halfway between threshold and target levels of performance; target goals wereare set at budgeted levels, which the Committeeare considered were “challenging but achievable”; maximum. Maximum goals wereare set at significant stretch levels for which the Committee believedbelieves warrant the earning of two times target payout was warranted.payout. Straight line interpolation occurs for achievement of performance between threshold and intermediate, intermediate and target, and between target and maximum.
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Compensation Discussion and Analysis
Shares that are subject to the Relative TSR measure have a three-year performance period, 2017–2019. TSR combines share price appreciation plus the value of reinvested ex-date dividends and is expressed as a percentage. For the 2017 performance shares, TSR will be calculated based on the average adjusted closing stock price for the twenty consecutive trading days immediately prior to the beginning and end of the three-year measurement period, January 1, 2017 to December 31, 2019. Shares are earned based on the Company’s TSR at the end of the three-year performance period relative to that of the S&P SmallCap 600 Index. In order to encourage appreciation of the Company’s share price, the calculated award will be reduced by 50% if at the end of the performance period the Company’s TSR is negative, indicating it has declined over the three-year period.
Performance awards are granted in the form of Performance Share Units. Performance shares are not eligible for dividends or dividend equivalents. Any performance shares earned under any measure will vest in early 2020, following approval by the Committee.
In the event of a Senior Officer’ssenior officer’s termination of employment due to death, disability, normal retirement, or termination not for cause, theythe officer will receive a prorated award of performance shares based on actual results achieved, if any. Normal retirement is defined as age 62 with at least five years of service.service, or a combination of age plus years of service equal to 70, with a minimum age of 60. In order to be eligible for a prorated award due to termination by the Company not for cause, a Senior Officersenior officer must have been employed for at least one year after the date the grants were approved by the Committee. The prorated amount is based on the number of whole months in the performance period that were worked by the Senior Officersenior officer prior to termination divided by 36. In the case of termination not for cause in connection with a change in control, performance shares vest immediately at target amounts.
As noted above, there were no performance shares granted in 2020 to named executive officers.
RestrictedThe Committee considers restricted stock is considered by the Committee to be an effective vehicle to support the Company’s long-term compensation objectives:
Alignment with stockholder interests;interests
Facilitate retention through an extended pro rata vesting structure; andstructure
Support meaningful stock ownership.ownership
At
52 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
As explained above, at its February 15, 2017December 7, 2020 meeting, the Committee approved performance-contingent restricted stock grants for Senior Officers,senior officers, including the Named Executive Officers,named executive officers, which vest ratably over four years, as detailed in the Summary Compensation Table and the Grants of Plan Based Awards Table. This grant of restricted shares represents 25% of each Senior Officer’s target long-term incentive grant. For 2017 grantsGrants of restricted stock made to our Executive Officers, asenior officers have an EFO performance hurdle that must be achieved for 2021 in order for shares to become earned and eligible for vesting. The EFO measure was selected as management and the Committee view it as the best measure of “Positive Net Income” was added to qualify awards for tax deductibility.the Company’s profitability and bottom-line performance. Dividend equivalents are not paid to Executive Officersexecutive officers until the performance hurdle is achieved and each tranche of shares vest. The Company believes that restricted stock is an important component of total compensation for our Named Executive Officersnamed executive officers and the four-year, pro rata vesting feature supports the Company’s retention objective. RestrictedAny remaining unvested portion of restricted stock awards are forfeited upon voluntary termination, normal retirement, and involuntary termination for cause or not for cause, unless termination not for cause is in connection with a change in control. In the case of termination not for cause in connection with a change in control, all restricted stock shares or units vest immediately. Restricted stock is prorated in the event of termination due to death or disability.
All of the Senior Officers’ 2017senior officers’ 2020 long-term incentive awards were granted in a mix of 75% performance shares and 25%performance-contingent restricted stock and thereunits. There were no other special grants.grants made to named executive officers in 2020 other than the sign-on grant made to Mr. Malan as part of his new hire offer. Mr. Malan was hired in March 2020 to lead our Science, Engineering, and Technology business unit. As part of his new hire offer, the Committee approved a grant of restricted stock valued at approximately $500,000 as noted in the Grants of Plan-Based Awards table in order to induce him to join the Company. These shares vest ratably over four years on the anniversary date of the grant, March 16, 2020.
2018-2020 Long-Term Incentive for 2015-2017 Performance Results
The first grant of performance shares under the redesigned long-term incentives was awarded in 2015. As outlined in the Company’s 20162019 Proxy Statement, 2018-2020 performance shares become earned based on two financial measures and a Relative TSR measure. As part of the transition to the new plan design, theThe two financial performance measures for the 20152018-2020 award, return on gross profitsales, and gross profit for the OCG and PT businesses,earnings before taxes plus JV income, were established with to have three-year goals, which would be developed by aggregating one-year performance goals for 2015.each of the years in the performance period 2018-2020. The Committee established and approved goals for the performance measures within the first ninety days of each of the years 2018, 2019 and 2020. At the end of the performance period 2018-2020 (i.e., in early 2021), goals and results were aggregated and averaged as appropriate, for each of the two financial measures, to determine achievement and earning, if any, of shares. The relative TSR measure of the performance shares is a three-year goal with vesting at the end of the 2018-2020 performance period, provided that a threshold level of performance for this measure is achieved. Upon achievement of at least a threshold level of performance for eithereach measure, shares would be contingently earned but would require an additional two years of continued employment before vestingsubject to approval by the Committee in early 2018.2021. Performance results achieved for the awards that were based on 20152018-2020 financial measures were 169.27% of targetdid not reach the threshold level for either the return on gross profitsales measure and 61.04% of target foror the gross profit for the OCG and PT businesses. The additional two years of vesting for the performance awards thatearnings before taxes plus JV income measure, therefore no shares were earned based on the two 2015for either financial measures have now been satisfied.measure. For performance awards based on the Relative TSR performance measure for the period 2015-2017,2018-2020, results were based on the Company’s stock price appreciation and dividend reinvestment over the three-year period as compared to the performance of the S&P SmallCap 600 Index for the same period. The beginning stock price was the average dividend-adjusted closing stock price for the twenty consecutive trading days ending December 31, 2014.2017. The ending stock price was the average dividend-adjusted closing stock price for the twenty consecutive trading days ending December 29, 2017.31, 2020. The Company’s
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Compensation Discussion and Analysis
2015-2017 2018-2020 TSR of 79% is 36.4% higher-22.3% was 45.9% lower than the 2015-20172018-2020 TSR for the S&P SmallCap 600 Index, which was 42.6%23.6%, resulting in ano payout of 200% of target.shares for this measure. Award amounts earned are based on the level of achievement for each of the performance measures. These levels andAggregate funding for all performance measures of the 2018-2020 LTI performance awards was 0% of target. The final performance results for the 2015-20172018-2020 performance period are provided in the following chart:
| Performance Goals | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Performance Measures | Threshold 50% | Target 100% | Maximum 200% | Actual Results | Payout as % of Target | 2018-2020 Performance Goals | 2018-2020
| Payout
| |||||||||||||||||||||||||||||||||||||||||||||||
Return on Gross Profit | 6.033 | % | 6.733 | % | 8.133 | % | 7.703 | % | 169.27 | % | |||||||||||||||||||||||||||||||||||||||||||||
Gross Profit $: OCG + PT | $ | 363.799 | $ | 404.221 | $ | 485.066 | $ | 372.728 | 61.04 | % | |||||||||||||||||||||||||||||||||||||||||||||
Financial Performance Measures
| Weighting | Threshold 50% | Intermediate 75% | Target 100% | Maximum 200% | 2018-2020
| Payout
| ||||||||||||||||||||||||||||||||||||||||||||||||
Return on Sales | 33.3% | 1.568% | 1.664% | 1.761% | 2.061% | 1.363% | 0.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Before Taxes plus JV Income | 33.3% | $ | 254.307 | $ | 277.621 | $ | 300.956 | $ | 391.242 | $ | 216.316 | 0.00% | |||||||||||||||||||||||||||||||||||||||||||
Relative TSR | -15 | % | 0 | % | +30 | % | +36.4 | % | 200.00 | % | 33.4% | - 15% | - 7.5% | 0% | +30% | - 45.9% | 0.00% | ||||||||||||||||||||||||||||||||||||||
$ in millions | Weighted Payout: | 0.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
$ in millions
2021 Kelly Proxy Statement 53
Compensation Discussion and Analysis
As a result of the above level of achievement for each of the performance measures of the 2015-20172018-2020 LTI the Committee approved the vesting of the following number of earnedaward, no performance shares were approved for each Named Executive Officer:
| Financial Measure: | Financial Measure: | |||||||||||||||||||||||||||
| Return on Gross Profit | Gross Profit $: OCG + PT | Relative TSR | ||||||||||||||||||||||||||
| Payout as | 169.27% | Payout as | 61.04% | Payout as | 200.00% | |||||||||||||||||||||||
| % of Target: |
| % of Target: |
| % of Target: |
| Total # of | ||||||||||||||||||||||
| Target # of | # of Shares | Target # of | # of Shares | Target # of | # of Shares | Shares | ||||||||||||||||||||||
Name | Shares | Earned | Shares | Earned | Shares | Earned | Earned | |||||||||||||||||||||
George Corona | 17,500 | 29,622 | 17,500 | 10,683 | 17,500 | 35,000 | 75,305 | |||||||||||||||||||||
Olivier Thirot | 5,000 | 8,464 | 5,000 | 3,052 | 5,000 | 10,000 | 21,516 | |||||||||||||||||||||
Teresa Carroll | 10,000 | 16,927 | 10,000 | 6,105 | 10,000 | 20,000 | 43,032 | |||||||||||||||||||||
Peter Quigley | 10,000 | 16,927 | 10,000 | 6,105 | 10,000 | 20,000 | 43,032 | |||||||||||||||||||||
Steven Armstrong | 5,000 | 8,464 | 5,000 | 3,052 | 5,000 | 10,000 | 21,516 | |||||||||||||||||||||
Carl Camden | 32,222 | 54,543 | 32,222 | 19,670 | 32,222 | 64,444 | 138,657 | |||||||||||||||||||||
Note:
Highly compensated employees in the U.S. are not eligible to participate in the Company’s qualified 401(k) plan. In order to provide a competitive total compensation package, the Company has established the Management Retirement Plan (the “MRP”). The MRP is a U.S. nonqualified defined contribution/deferred compensation plan available to all highly compensated employees, including the Named Executive Officers,named executive officers, as outlined by Section 414(q)(1)(B)(i) of the Code. Employees who are working in the U.S. while on an international assignment are not eligible to participate in the MRP. All participants in the MRP can elect to defer from 2% to 25% of their annual base earnings and 2% to 50% of their annual cash incentive earnings. Matching contributions by the Company equal 50% of the first 10% of base salary and annual cash incentives deferred by a participant. As noted in the Executive Summary, matching contributions were suspended for all participants, including the named executive officers, from May through December during 2020. Other than the MRP, there are no other retirement income plans available to the Company’s highly compensated employees in the U.S. The MRP provides all participants, including the Named Executive Officers,named executive officers, with a tax gross-up of Medicare taxes incurred on contributions to the plan. The Medicare tax gross-up provides for parity with other employees who are eligible to participate in the Company’s tax-qualified 401(k) plan and therefore do not pay Medicare tax on Company contributions.
Mr. Thirot’s Retirement Benefits
As a result of his move from Swiss payroll and benefits to U.S. payroll and benefits effective January 1, 2017, Mr. Thirot is now a participant in the MRP. He retains a Swiss retirement benefit from his employment in Switzerland that includes contributions that he made to the fund, as well as company contributions that were made to the fund on his behalf. Company contributions to Mr. Thirot’s Swiss retirement account stopped at the end of 2016 and no company contributions were made to his Swiss retirement account in 2017.2017, 2018, 2019, or 2020.
Ms. Koolhaas’ Retirement Benefits
|
Compensation DiscussionAs a resident of Switzerland, Ms. Koolhaas participates in the Swiss Social Insurance System (“Swiss System”) that provides retirement, disability, and Analysis
death benefits. Her retirement benefit includes contributions that she makes to the fund, as well as company contributions that are made to the fund on her behalf. Ms. Koolhaas does not participate in any U.S.-based retirement plans.
The health and welfare plans, including Company-provided life insurance, provided to the Named Executive Officersnamed executive officers are the same plans available to all regular staff employees.
Mr. Thirot’sMs. Koolhaas’ Health and Welfare Benefits
Mr. Thirot pays employee premiums forMs. Koolhaas receives a health care allowance as part of her Swiss compensation that is intended to help defray the cost of obtaining health care coverage for himselfherself and his dependents under an international plan establishedher family in Switzerland. Residents in Switzerland are required to carry health care coverage, however it is not common for employees who are onSwiss companies to provide this benefit to their employees. The Company’s Swiss entity does not provide health care coverage to its employees. Under the Swiss System, Ms. Koolhaas’ spouse is eligible to receive benefits in the event of her death from sickness or have recently been on international assignments. Mr. Thirot and his dependents are no longer eligible for Swissaccident. She is not a participant in any U.S. health and welfare benefits. He became a participant in the U.S. life insurance program for 2017.benefit programs.
54 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
A modest level of perquisites is available to Named Executive Officers:named executive officers:
| Perquisite | Benefit | Usage in | ||
| Company Aircraft | To facilitate conducting the Company’s business and provide a competitive advantage, a private aircraft service is available. Senior | No personal use of private aircraft by | ||
Executive Physical | To ensure | |||
Vacation Facility | Two Company-owned condominiums are available on a limited basis to employees at the Vice President level and above. | Two | ||
The aggregate amount of perquisites provided in 20172020 for each of the Named Executive Officers,named executive officers, with the exception of Mr. Thirot and Ms. Koolhaas, was less than $10,000 and therefore only the perquisites for Mr. Thirot’s usage isThirot and Ms. Koolhaas are reported in the Summary Compensation Table.
Mr. Thirot’s International Assignment
In light of his transition to being a U.S.-based employee, the initial international assignment benefits provided to Mr. Thirot were reduced for 2016, and then were eliminated when he moved to U.S. payroll and benefits at the beginning of 2017. The Company continues to provide tax support to Mr. Thirot as it relates to carryover costs related to his assignment and these amounts are included in the “All Other Compensation” column of the Summary Compensation Table and are explained in detail in the footnotes of that table.
Senior Executive Severance Plan
To encourage the retention of certain key executives of the Company and thereby promote the stability and continuity of management, the Senior Executive Severance Plan (“Severance Plan”) was established by the Company and approved by the Committee effective March 31, 2017. Participation in the planSeverance Plan is limited to certain Executive Officers,named executive officers, namely Messrs. Corona, Thirot and Quigley and Ms. Carroll.Thirot during 2020. The Severance Plan provides severance benefits in the event a participant’s employment is terminated under certain circumstances as explained and illustrated in Potential Payments Upon Termination. Termination or Change In Control (below). The Plan does not provide excise tax gross-ups to participants under Section 280G of the Code.
The Company’s EIP provides for the immediate vesting of restricted stock and performance awards upon a qualified termination in connection with a change in control, andwhich is also explained in Potential Payments Upon Termination.Termination or Change In Control.
Under the terms of the Severance Plan covering the eligible Named Executive Officers,named executive officers, each would be entitled to severance payments and benefits in the event that he or she experiences a “qualifying termination” (i.e., any termination of the participant by the Company other than for cause, disability or death:death, or for good reason by a participant in connection with a change in control as is defined in the Severance Plan). A change in control will not automatically entitle an eligible Named Executive Officernamed executive officer to severance benefits or equity acceleration; instead, the executive must also lose his or her job, or suffer a significant adverse change to employment terms or conditions in order to be eligible for benefits under the Severance Plan. In the event of a termination for any reason, eligible Named Executive Officersnamed executive officers would be entitled to any earned compensation owed but not yet paid as of the date of termination. Eligible Named Executive Officersnamed executive officers would also be entitled to payment of vested benefits, if any. Details of the Severance Plan are provided in the Potential Payments Upon Termination or Change In Control section of this Proxy Statement.
|
Compensation Discussion and Analysis
The General Severance Plan was amended and restated effective March 27, 2017 to include the Senior Officerssenior officers, other than Ms. Koolhaas, not covered by the Senior Executive Severance Plan. The General Severance Plan is designed to provide severance benefits in the event of an involuntary termination of employment as a result of general separation of employment or general reduction in force, as provided for under the plan.Plan. During 2020, Ms. Browning and Mr. Armstrong isMalan were covered by the General Severance Plan and benefits under this plan are explained and illustrated in Potential Payments Upon Termination.Termination or Change in Control.
2021 Kelly Proxy Statement 55
Compensation Discussion and Analysis
Effective March 23, 2021, the Committee approved the inclusion of all U.S.-based senior officers in the Company’s Senior Executive Severance Plan.
Ms. Koolhaas’ Severance Benefit
Under the terms of Ms. Koolhaas’ Swiss employment agreement, if she is terminated by the Company, other than for willful misconduct, she will be provided with either twelve months’ notice or twelve months of salary in lieu of notice, at the Company’s discretion.
Governance of Executive Compensation Programs
The frequency of the Company’s Say on Pay vote is annual and, as such, the Committee considers the shareholder advisory vote on executive compensation as disclosed in the Company’s proxy statementProxy Statement each year. In 2017, 98.7%2020, 99.66% of the shares represented at the meeting approved the Say on Pay proposal. The Committee considered this result as a factor in its decision to maintain the general design of the Company’s compensation programs.
Executive Stock Ownership and Retention Requirements
The Committee seeksimplemented minimum stock ownership and retention requirements to encourage meaningful stock ownership by the Company’s executives so as to alignthat aligns their interests more closely with stockholders’ interests. The Committee periodically reviews the Executive Stock Ownership Requirements to ensure the design is consistent with market practice. In consideration of the Company’s LTI design that provides Senior Officers with the opportunity to earn a greater number of shares through the addition of performance share awards and to ensure guidelines are in line with current market practice and those of our peers, as determined by research performed by the Committee approved the current executive stock ownership and retention requirements.Consultant. The requirements are expressed as a multiple of base salary for each level of Senior Officer and more closely reflect current market practices,senior officer, as determined by research performed byshown in the Consultant.table below.
| ||||
| Multiple of Base Salary | ||||
CEO 6x | EVP 3x | Other Senior Officers | ||
1x-2x | ||||
Under the ownership requirements, Senior Officerssenior officers are required to hold all (100%) of the after-tax shares acquired upon equity award vesting until compliance with the requirements is achieved. Shares counted toward achievement of ownership requirements include: directly owned shares (including those held in retirement plans), shares held by family or trusts, and 60% of unvested restricted stock awards, restricted stock units, and earned unvested performance shares. Although there is not a fixed compliance period, it is expected that new Senior Officerssenior officers will likely reach the guidelines within five years from their start date. The Committee reviews each executive’s progress towards and compliance with the share ownership requirements on an annual basis. If the required level of ownership is not achieved within a reasonable period of time or an executive falls out of compliance with the requirements, the Committee can eliminate or adjust the amount of any future equity awards. Stock ownership levels must be maintained as long as the executive is employed by the Company as a Senior Officersenior officer and is subject to the terms of the Executive Stock Ownership Requirements.
As of March 19, 2018,29, 2020, all Named Executive Officersnamed executive officers were in compliance with their stock ownership requirement, other than twoor if they have not yet achieved their current stock ownership requirement, the stock retention requirement. Four officers are on-track to achieve their stock ownership guideline as they retain after-tax shares to increase their stock holdings to move closer to their ownership guideline. This includes one officer who had been in compliance until their requirementshis ownership requirement substantially increased as a result of being promoted during 2017.2019 and three officers due to the length of time they had served in their current roles. Stock ownership requirements for executive officers were not lowered for 2020 or 2021, despite the compensation reductions taken during a portion of 2020.
Incentive Compensation Recovery (“Clawback”) Policy
The Company’s Clawback policy applies to awards granted under the STIP and EIP on or after January 1, 2011 to officers of the Company who are subject to Section 16 of the Securities Exchange Act of 1934. In early 2019, the application of the “Clawback” Policy was broadened to include all senior officers. These officers are required to repay or forfeit, to the fullest extent permitted by law and as directed by the Committee, any performance-based annual or long-term
56 2021 Kelly Proxy Statement
Compensation Discussion and Analysis
incentive compensation, based on the achievement of financial results that were subsequently restated due to the Company’s material non-compliance with the financial disclosure requirements of the federal securities laws, provided the amount of incentive compensation that would have been received or earned would have been lower had the financial results been properly reported. If necessary, we plan to modify our policy to comply with the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, when the SEC or Nasdaq implements rules and regulations. The Clawback policy wasPolicy is included as part of the Company’s updated Insider Trading Policy and Section 16 Compliance Procedures in 2017.
|
Compensation Discussion and Analysis
Procedures.
Hedging and Pledging of Shares
The Company’s Insider Trading Policy and Section 16 Compliance Procedures strictly prohibit the Company’s Directorsdirectors and all employees, including the Executive Officers,named executive officers, from engaging in hedging, monetization or other derivativesderivative or speculative transactions in securities of the Company. This includes short sales, failing to deliver Company securities sold, put or call options, equity swaps, collars, forward sale contracts, exchange funds, holding Company securities in a margin account, or pledging Company securities as collateral for a loan. The EIP does not allow the pledging, sale, assignment, or transfer of shares in any manner, except if the Committee determines that a transfer will not violate any requirements of the SEC or IRS. The Committee may permit an inter vivos transfer by gift to, or for the benefit of, a family member of the grantee.
Tax and Accounting Considerations
Considerations: Deductibility of Executive Compensation
Prior to 2018, Section 162(m) of the Code placed a limit of $1 million on the amount of nonperformance-based compensation that could be deducted for tax purposes for the CEO and the other three highest paid executives (excluding the CFO) listed in the Summary Compensation Table. The Company’s incentive compensation programs were generally designed to qualify for the performance-based exception to this limit. Beginning in 2018, effective with the Tax Cuts and Jobs Act (‘(“the Act”) that was enacted in December 2017, the corporate tax deduction previously available for performance-based compensation above $1 million for Named Executive Officersnamed executive officers has been eliminated. This means that pay to each Named Executive Officernamed executive officer in excess of $1 million will no longer be tax deductible. Transitional relief is available under the new tax rules where a written, binding contract was in effect on November 2, 2017 and is not materially modified after that date. We will continue to comply with the requirements of Section 162(m) to the extent to which our outstanding LTI awards are determined to be tax deductible under the transitional relief. Now that the performance-based exception is no longer available, the Company will no longer include reference to Section 162(m) related limitations or provisions or stockholder approval for this purpose. However, management and the Committee have decidedcurrently intend to retain as good governance, certain practices that had been in place previously for Section 162(m) purposes. These practices include: specification of guidelines for the adjustment of special items, establishing performance goals within the first ninety days of a performance period, and requiring the Committee’s certification of results prior to the payout of any award.
Compensation and Talent Management Committee Report
Prior to and at the Board of DirectorsCompensation and Talent Management Committee meeting held on March 20, 2018,23, 2021, the Compensation Committee members reviewed and discussed the Compensation Discussion and Analysis presented in this Proxy Statement. Based on its review and subsequent discussions with management, the Committee and Board approved the Compensation Discussion and Analysis and directed management to include it in this Proxy Statement.
This report is submitted by the Compensation and Talent Management Committee of the Board of Directors.
THE COMPENSATION AND TALENT MANAGEMENT COMMITTEE ROBERT S. |
LESLIE A. MURPHY GERALD S. ADOLPH JANE E. |
|
2021 Kelly Proxy Statement 57
20172020 Executive Compensation Tables
2020 Executive Compensation Tables
Summary Compensation Table 20172020
Name and Principal Position | Year | Salary(1) ($) | Bonus ($) | Stock Awards (2)(3)(4) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(5) ($) | Total ($) | |||||||||||||||||||||||||||
George S. Corona | | 2017 2016 2015 |
| | 875,852 655,000 655,000 |
| | — — — |
| | 1,893,664 995,138 1,159,900 |
| | — — — |
| | 1,051,064 — 697,968 |
| | — — — |
| | 38,438 58,260 55,697 |
| | 3,859,019 1,708,397 2,568,565 |
| |||||||||
Olivier G. Thirot | | 2017 2016 2015 |
| | 533,500 515,000 481,032 |
| | — — | | | 701,381 568,650 331,400 |
| | — — |
| | 400,045 — 342,722 |
| | — — |
| | 45,867 729,947 291,355 |
| | 1,680,793 1,813,597 1,446,509 |
| |||||||||
Teresa S. Carroll | | 2017 2016 2015 |
| | 548,011 500,000 482,227 |
| | — — |
| | 784,666 568,650 662,800 |
| | — — |
| | 437,723 104,125 228,220 |
| | — — |
| | 35,542 39,439 35,174 |
| | 1,805,942 1,212,214 1,408,421 — |
| |||||||||
Peter W. Quigley | | 2017 2016 2015 | | | 548,011 500,000 482,227 | | | — — | | | 784,666 568,650 662,800 | | | — — | | | 416,443 — 392,921 | | | — — | | | 30,077 48,032 41,672 | | | 1,779,197 1,116,682 1,579,621 | | |||||||||
Steven S. Armstrong | 2017 | 332,000 | — | 261,175 | 129,468 | — | 18,309 | 740,952 | ||||||||||||||||||||||||||||
Carl T. Camden | | 2017 2016 2015 | | | 398,252 1,000,000 1,000,000 | | | — — — | | | 2,093,613 2,274,600 2,651,200 | | | — — — | | | — — | | | — — — | | | 22,949 102,614 98,112 | | | 2,514,813 3,377,214 5,288,512 | | |||||||||
| Name and Principal Position | Year | Salary(1) ($) | Bonus(2)(3) ($) | Stock Awards(4) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(5)(6) ($) | Total ($) | |||||||||||||||||||||||||||
Peter W . Quigley President and Chief Executive Officer | 2020 | 689,232 | — | 839,987 | — | — | — | 21,474 | 1,550,693 | |||||||||||||||||||||||||||
| 2019 | 640,231 | — | 1,053,933 | — | 187,720 | — | 44,112 | 1,925,996 | ||||||||||||||||||||||||||||
| 2018 | 575,000 | — | 807,586 | — | 214,561 | — | 53,173 | 1,650,321 | ||||||||||||||||||||||||||||
Olivier G. Thirot Executive Vice President and Chief Financial Officer | 2020 | 524,677 | — | 424,963 | — | — | — | 45,195 | 994,835 | |||||||||||||||||||||||||||
| 2019 | 565,200 | — | 828,740 | — | 206,185 | — | 39,744 | 1,639,869 | ||||||||||||||||||||||||||||
| 2018 | 547,271 | — | 807,586 | — | 204,898 | — | 73,482 | 1,633,238 | ||||||||||||||||||||||||||||
Daniel H . Malan Senior Vice President and President Science, Engineering, & Technology | 2020 | 315,885 | 25,000 | 639,780 | — | — | — | — | 980,665 | |||||||||||||||||||||||||||
Dinette Koolhaas(7) Senior Vice President and President International | 2020 | 499,323 | — | 134,275 | — | — | — | 33,872 | 667,470 | |||||||||||||||||||||||||||
Tammy L. Browning Senior Vice President and President Outsourcing & Consulting Group | 2020 | 304,000 | 90,000 | 105,631 | — | — | — | 4,550 | 504,181 | |||||||||||||||||||||||||||
| (1) | Represents |
| (2) | Represents a cash payment made to Mr. Malan as part of his new hire offer in March 2020. |
| (3) | Represents a cash payment made to Ms. Browning in early 2021 as noted in the Annual Cash Incentive section of this Proxy Statement. |
| (4) | The amounts reported for 2020 are determined by multiplying the number of restricted shares granted by the Market Value |
|
2017 Executive Compensation Tables
Name | Maximum Number of Performance Shares | Maximum Value of Performance Shares | ||||||
George S. Corona | 139,782 | $ | 2,901,316 | |||||
Olivier G. Thirot | 49,950 | $ | 1,037,295 | |||||
Teresa S. Carroll | 55,900 | $ | 1,160,484 | |||||
Peter W. Quigley | 55,900 | $ | 1,160,484 | |||||
Steven S. Armstrong | 18,600 | $ | 386,260 | |||||
Carl T. Camden | 149,100 | $ | 3,096,310 | |||||
Name | Group Term Life Premiums | Company Matching MRP Contributions | MRP Medicare Gross-ups | Use of Vacation Property | International Assignment Carryover Cost | Total All Other Compensation | ||||||||||||||||||
George S. Corona | $ | 1,808 | $ | 35,034 | $ | 1,596 | — | — | $ | 38,438 | ||||||||||||||
Olivier G. Thirot | $ | 1,472 | $ | 26,675 | $ | 1,259 | $ | 506 | $ | 15,955 | $ | 45,867 | ||||||||||||
Teresa S. Carroll | $ | 1,380 | $ | 32,607 | $ | 1,555 | — | — | $ | 35,542 | ||||||||||||||
Peter W. Quigley | $ | 1,380 | $ | 27,401 | $ | 1,296 | — | — | $ | 30,077 | ||||||||||||||
Steven S. Armstrong | $ | 916 | $ | 16,600 | $ | 793 | — | — | $ | 18,309 | ||||||||||||||
Carl T. Camden | $ | 2,070 | $ | 19,913 | $ | 966 | — | — | $ | 22,949 | ||||||||||||||
| (5) | Amounts for named executive officers include |
Name | Company Matching MRP Contributions | MRP Medicare Gross-ups | Use of Vacation Property | Executive Physical | International Assignment Carryover Cost | Total All Other Compensation | ||||||||||||||||||
Peter W . Quigley | $20,694 | $780 | — | — | — | $21,474 | ||||||||||||||||||
Olivier G. Thirot | $18,225 | $659 | $1,289 | $1,100 | $23,923 | $45,195 | ||||||||||||||||||
Daniel H . Malan | — | — | — | — | — | $ 0 | ||||||||||||||||||
Tammy L. Browning | $ 4,375 | $175 | — | — | — | $ 4,550 | ||||||||||||||||||
| (6) | ||||
| The amount reported for Ms. Koolhaas includes her representation allowance, supplemental health care allowance, supplemental contribution to the government-mandated occupational pension benefit program paid through Swiss payroll; and the cost of her executive physical. |
58 2021 Kelly Proxy Statement
20172020 Executive Compensation Tables
Name | Representation Allowance | Supplemental Health Care | Supplemental Pension Contributions | Executive Physical | Total All Other Compensation | |||||||||||||||
Dinette Koolhaas | $19,169 | $5,751 | $8,301 | $651 | $33,872 | |||||||||||||||
| (7) | Amounts reported for Ms. Koolhaas are converted from Swiss Francs to U.S. Dollars at an exchange rate of 1 CHF = 1.06496273 USD. This is calculated using the IRS Yearly Average Currency Exchange Rate for Switzerland for 2020 of 0.939 (1 CHF ÷ 0.939 = $1.065). |
Grants of Plan-Based Awards 20172020(1)
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | All Other Stock Awards: Number of Shares of Stock | Grant Date Fair and Option | |||||||||||||||||||||||||||||||
Name | Grant Date(2) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units (5) (#) | Awards(6) ($) | |||||||||||||||||||||||||
George S. Corona | STIP | 262,819 |
| 1,051,275 |
| 2,102,549 | ||||||||||||||||||||||||||||
| 2/15/2017 | 8,156 | 32,625 | 65,250 | 677,513 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 10,875 | 238,706 | ||||||||||||||||||||||||||||||||
| 5/10/2017 | 9,317 | 37,266 | 74,532 | 773,145 | ||||||||||||||||||||||||||||||
| 5/10/2017 | 9,316 | 204,300 | ||||||||||||||||||||||||||||||||
Olivier G. Thirot | STIP | 100,031 | 400,125 | 800,250 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 6,244 | 24,975 | 49,950 | 518,648 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 8,325 | 182,734 | ||||||||||||||||||||||||||||||||
Teresa S. Carroll | STIP | 116,296 | 440,810 | 881,619 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 4,650 | 18,600 | 37,200 | 386,260 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 6,200 | 136,090 | ||||||||||||||||||||||||||||||||
| 5/10/2017 | 2,338 | 9,350 | 18,700 | 193,982 | ||||||||||||||||||||||||||||||
| 5/10/2017 | 3,116 | 68,334 | ||||||||||||||||||||||||||||||||
Peter W. Quigley | STIP | 102,099 | 440,810 | 881,619 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 4,650 | 18,600 | 37,200 | 386,260 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 6,200 | 136,090 | ||||||||||||||||||||||||||||||||
| 5/10/2017 | 2,338 | 9,350 | 18,700 | 193,982 | ||||||||||||||||||||||||||||||
| 5/10/2017 | 3,116 | 68,334 | ||||||||||||||||||||||||||||||||
Steven S. Armstrong | STIP | 42,828 | 199,200 | 398,400 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 2,325 | 9,300 | 18,600 | 193,130 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 3,100 | 68,045 | ||||||||||||||||||||||||||||||||
Carl T. Camden | STIP | 325,000 | 1,300,000 | 2,600,000 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 18,638 | 74,550 | 149,100 | 1,548,155 | ||||||||||||||||||||||||||||||
| 2/15/2017 | 24,850 | 545,458 | ||||||||||||||||||||||||||||||||
| Name | Grant | Approval |
Estimated Future Payouts | Estimated Future Payouts Under Equity Incentive Plan Awards(5) | All Other Units(6) (#) | Grant Awards(7) | ||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||
Peter W . Quigley | 12/7/2020 | 37,184 | 839,987 | |||||||||||||||||||||||||||||||||||||
Olivier G. Thirot | 12/7/2020 | 18,812 | 424,963 | |||||||||||||||||||||||||||||||||||||
Daniel H . Malan | 3/16/2020 | 2/28/2020 | 43,252 | 499,993 | ||||||||||||||||||||||||||||||||||||
| 12/7/2020 | 6,188 | 139,787 | ||||||||||||||||||||||||||||||||||||||
Dinette Koolhaas | 12/7/2020 | 5,944 | 134,275 | |||||||||||||||||||||||||||||||||||||
Tammy L. Browning | 12/7/2020 | 4,676 | 105,631 | |||||||||||||||||||||||||||||||||||||
| (1) | The Company has not granted stock options since 2004, including |
| (2) | Long-term incentive grants to named executive officers, consisting of Restricted |
| (3) | On February 28, 2020, the |
| (4) | STIP awards were not implemented in 2020. Please see explanation in Annual Cash Incentives section of this document. |
| (5) | Performance Shares were not granted |
| (6) | Restricted Stock Award granted March 16, 2020 vests ratably on each of the first four anniversaries of the date of grant (25% per year). |
| (7) | ||||
|
2017 Executive Compensation Tables
| Grant date fair value is determined by multiplying the target number of shares granted by the MV on the grant date. For restricted stock, MV is determined by the closing price on the date of grant. The MV for |
2021 Kelly Proxy Statement 59
2020 Executive Compensation Tables
Outstanding Equity Awards at Fiscal Year End 20172020(1)
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Name | Grant Year | Stock Awards | ||||||||||||||||||
| Number of Shares or Units of Stock That Have Not Vested(2)(3) (# ) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) ($) | |||||||||||||||||
Peter W . Quigley | 2020 | — | — | 37,184 | 764,875 | |||||||||||||||
| 2019 | 7,875 | 161,989 | 15,751 | 323,998 | ||||||||||||||||
| 2018 | 3,438 | 70,720 | — | — | ||||||||||||||||
| 2017 | 2,329 | 47,908 | — | — | ||||||||||||||||
Olivier G. Thirot | 2020 | — | — | 18,812 | 386,963 | |||||||||||||||
| 2019 | 6,132 | 126,135 | 12,266 | 252,312 | ||||||||||||||||
| 2018 | 3,438 | 70,720 | — | — | ||||||||||||||||
| 2017 | 2,082 | 42,827 | — | — | ||||||||||||||||
Daniel H . Malan | 2020 | 43,252 | 889,694 | 6,188 | 127,287 | |||||||||||||||
Dinette Koolhaas | 2020 | — | — | 5,944 | 122,268 | |||||||||||||||
| 2019 | 2,286 | 47,023 | — | — | ||||||||||||||||
| 2018 | 1,282 | 26,371 | — | — | ||||||||||||||||
| 2017 | 1,250 | 25,713 | — | — | ||||||||||||||||
Tammy L. Browning | 2020 | — | — | 4,676 | 96,185 | |||||||||||||||
| 2019 | 2,454 | 50,479 | — | — | ||||||||||||||||
| 2018 | 652 | 13,412 | — | — | ||||||||||||||||
| 2017 | 500 | 10,285 | — | — | ||||||||||||||||
| (1) | The Company did not grant stock options during the |
| (2) | All outstanding |
|
2017 Executive Compensation Tables
| (3) | No Performance Shares were earned based upon the |
| (4) | The market value is determined based on the closing market price of our common shares on the last trading day of the |
| (5) | Restricted Stock Units granted in |
60 2021 Kelly Proxy Statement
2020 Executive Compensation Tables
Option Exercises and Stock Vested 20172020
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting (1) ($) | ||||||||||||
George S. Corona | — | — | 33,093 | 804,034 | ||||||||||||
Olivier G. Thirot | — | — | 7,950 | 185,166 | ||||||||||||
Teresa S. Carroll | — | — | 12,125 | 289,204 | ||||||||||||
Peter W. Quigley | — | — | 13,375 | 318,454 | ||||||||||||
Steven S. Armstrong | — | — | 8,312 | 201,043 | ||||||||||||
Carl T. Camden | — | — | 18,500 | 404,115 | ||||||||||||
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) ($) | ||||||||||||
Peter W . Quigley | — | — | 19,045 | 356,442 | ||||||||||||
Olivier G. Thirot | — | — | 17,125 | 324,953 | ||||||||||||
Daniel H . Malan | — | — | 0 | 0 | ||||||||||||
Dinette Koolhaas | — | — | 2,653 | 51,393 | ||||||||||||
Tammy L. Browning | — | — | 1,644 | 29,312 | ||||||||||||
| (1) | Value Realized on Vesting is calculated by multiplying the shares vested times the stock closing price on the day of vesting. |
Nonqualified Deferred Compensation 20172020
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year(2) ($) | Aggregate Earnings in Last Fiscal Year(3) ($) | Aggregate Withdrawals/ Distributions(4) ($) | Aggregate Balance at Last Fiscal Year End(5) ($) | |||||||||||||||
George S. Corona | 70,068 | 35,034 | 31,266 | — | 1,910,972 | |||||||||||||||
Olivier G. Thirot | 53,350 | 26,675 | 5,124 | — | 85,089 | |||||||||||||||
Teresa S. Carroll | 65,213 | 32,607 | 225,678 | (20,673 | ) | 1,685,411 | ||||||||||||||
Peter W. Quigley | 54,801 | 27,401 | 167,487 | — | 1,288,107 | |||||||||||||||
Steven S. Armstrong | 36,520 | 16,600 | 367,349 | — | 2,306,242 | |||||||||||||||
Carl T. Camden | 39,825 | 19,913 | 387,233 | (5,158,289 | ) | — | ||||||||||||||
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year(2) ($) | Aggregate Earnings in Last Fiscal Year(3) ($) | Aggregate Withdrawals/ Distributions(4) ($) | Aggregate Balance at Last Fiscal Year End(5) ($) | |||||||||||||||
Peter W . Quigley | 87,695 | 20,694 | 296,783 | — | 2,226,730 | |||||||||||||||
Olivier G. Thirot | 155,560 | 18,225 | 14,369 | — | 779,005 | |||||||||||||||
Daniel H . Malan | — | — | — | — | — | |||||||||||||||
Tammy L. Browning | 30,400 | 4,375 | 22,641 | — | 193,538 | |||||||||||||||
| (1) | Executives may defer a percentage of their base salary (up to 25%) and |
| (2) | Registrant Contributions in Last Fiscal Year above represent Company matching contributions (50% of the first 10% of salary and annual incentive deferrals), and they are also reported as All Other Compensation in the Summary Compensation Table. The Company matching contributions on MRP deferrals were suspended beginning in April 2020 and throughout the remainder of the year. Matching contributions were reinstated at the beginning of 2021. All |
| (3) | Represents actual earnings (or loss) from the investment of the prior year aggregate balance plus the earnings on current year executive and Company contributions. The aggregate earnings are based on investment options that are also offered to employees who participate in the Company’s tax-qualified 401(k) plan. As these earnings are not “above market” interest payments or preferential earnings, they are not included in the Summary Compensation Table. |
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2017 Executive Compensation Tables
| (4) | Participants may elect to receive distributions after separation from service, the later of a specified age and separation of service or a scheduled in-service distribution. Amounts may be paid as a lump sum, monthly installments for up to 20 years, or a combination of the two as elected by the participant. |
| (5) | Amounts reported in this column include the following amounts that have been reported in the Summary Compensation Table for fiscal years |
Potential Payments Upon Termination 2017or Change In Control 2020
This section describes the potential additional payments and benefits under our compensation and benefit plans and arrangements to which the Named Executive Officersnamed executive officers would be entitled upon termination of employment under certain circumstances. Named Executive Officersexecutive officers would also be entitled to vested benefits and generally available benefits under our various plans and arrangements, as discussed after the Potential Payments Upon Termination or Change in Control table. The Company does not maintain employment agreements with our Named Executive Officers.named executive officers, other than where it is customary outside of the U.S. The table following the narrative discussion summarizes the amounts payable upon termination under certain circumstances to our Named Executive Officers,named executive officers, assuming that the executive’s employment terminated on December 31, 2017,January 3, 2021 the last day of our fiscal year.
2021 Kelly Proxy Statement 61
2020 Executive Compensation Tables
Senior Executive Severance Plan
The Company implemented the Senior Executive Severance Plan (“Severance Plan”) for a limited number of Executive Officersexecutive officers in March 2017. Messrs. Corona, Thirot and Quigley, and Ms. Carroll are the only participants in the plan. Described below and illustrated in the table, Potential PayoutsPayments Upon Termination or Change in Control, are the different elements payable under the Severance Plan if a Named Executive Officernamed executive officer who iswas a party to the Severance Plan would experience a qualifying termination. All continuation amounts would be paid over the salary continuation period in compliance with Section 409A of the Code. Messrs. Thirot and Quigley are the only named executive officers in the Severance Plan. Ms. Browning and Mr. Armstrong participatesMalan were covered in the General Severance Plan in 2020 as outlined in the next section. Ms. Koolhaas is covered by the terms of her employment agreement as summarized below.
If one of the eligible Named Executive Officersnamed executive officers were to have experienced a qualifying termination under the Severance Plan in 2017,2020, the Named Executive Officernamed executive officer would have been entitled to severance benefits based on the type of qualified termination and whether they were a Tier 1 or a Tier 2 participant. Mr. Corona isQuigley was the only Tier 1 participant in the Severance Plan. Messrs.Mr. Thirot and Quigley, and Ms. Carroll arewas a Tier 2 participantsparticipant in the Severance Plan. A “qualified termination” is any termination of a participant’s employment: by the Company other than for cause, disability or death; or for “good reason” by a participant in connection with a change in control.
For a qualified termination that occurs not in connection with a change in control, a Tier 1 participant would receive severance payments in the form of base salary continuation for a period of twenty-four months, and a Tier 2 participant would receive severance payments in the form of base salary continuation for a period of eighteen months. In addition, Tier 1 and Tier 2 participants would receive a prorated portion of their annual incentive compensation for the fiscal year in which the termination occurred, based on the actual performance results for the year. The pro rata annual incentive payout will be determined based on the number of calendar days in the fiscal year the eligible Named Executive Officernamed executive officer was actually employed during such plan year.year divided by 365. Prorated annual incentive awards are paid at the same time that incentive compensation for the same year areis paid to the other Senior Officerssenior officers of the Company, following certification by the Committee that applicable performance goals have been attained. Salary continuation amounts would be paid by the Company in installments over the severance period and in accordance with the Company’s standard payroll practice, subject to the requirements of Section 409A.
For a qualified termination that occurs in connection with a change in control, a Tier 1 participant would receive a single lump sum severance payment equal to two (2) times the sum of the participant’s annual base salary and target annual incentive compensation. A Tier 2 participant would receive a single lump sum severance payment equal to one and one-half (1.5) times the sum of the participant’s annual base salary and target annual incentive compensation. In addition, Tier 1 and Tier 2 participants would receive a prorated portion of their annual incentive compensation. If the qualifying termination occurred in the same year as the change in control, a prorated portion of the participant’s annual incentive compensation is paid based on achievement of a target level of performance. If the qualifying termination occurred in the two years following a change in control, a prorated portion of the participant’s annual incentive compensation is paid based on the actual performance results achieved for the year. Any pro rata annual incentive payout will be determined based on the number of calendar days in the fiscal year the eligible Named Executive Officernamed executive officer was actually employed during such plan year.year divided by 365. Prorated annual incentive awards are paid in a lump sum at the same time that incentive compensation for the same year areis paid to the other Senior Officerssenior officers of the Company, following certification by the Committee that applicable performance goals have been attained.
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2017 Executive Compensation Tables
Participants are subject to a best-net cutback for 280G excise tax calculations with no excise tax gross-ups provided under the Severance Plan.
Subject to the participant’s timely election of continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company would provide comparable medical (including prescription drug), dental, vision, and hospitalization benefits to the eligible Named Executive Officernamed executive officer and his or her eligible dependents for the severance period, provided the Named Executive Officernamed executive officer continues to pay the applicable employee rate for such coverage and the Named Executive Officernamed executive officer remains eligible for COBRA coverage. The severance period for a Tier 1 participant is 24 months and for a Tier 2 participant is 18 months.
The eligible Named Executive Officernamed executive officer will be entitled to receive reimbursement for professional outplacement services actually incurred during the initial 12-month period following termination, not to exceed $10,000.
62 2021 Kelly Proxy Statement
2020 Executive Compensation Tables
The eligible Named Executive Officers,named executive officers, as a condition to receiving payments under the Severance Plan, are required to sign a general release of claims relating to their employment. In addition, they are required to agree not to directly or indirectly, individually or in any capacity or relationship, engage in any business or employment, or aid or endeavor to assist any business or legal entity, that is in direct competition with the business of the Company for the 12 months following termination.
During the 12 months following termination, the eligible Named Executive Officersnamed executive officers must also agree to not induce any employee of the Company to terminate employment with the Company, nor knowingly offer employment to any person who is or who was employed by the Company unless such person has ceased to be employed by the Company for a period of at least six months.
Named Executive Officersexecutive officers covered under the Severance Plan may not disparage, slander, or injure the business reputation or goodwill of the Company.
Named Executive Officersexecutive officers must maintain as secret and confidential all protected information such as trade secrets, confidential and proprietary business information of the Company, and any other information of the Company, including but not limited to customer lists, sources of supply, processes, plans, materials, pricing information, internal memoranda, marketing plans, internal policies, and products and services which may be developed from time to time by the Company and its agents or employees, including the Named Executive Officer.named executive officer.
Noncompliance with any of the above may result in the loss of severance benefits.
The General Severance Plan was amended and restated effective March 27, 2017 to include the Senior Officerssenior officers who are not covered by the Senior Executive Severance Plan. Ms. Browning and Mr. Armstrong isMalan were the only Named Executive Officernamed executive officers in 20172020 who participatesparticipated in this plan.Plan. Described below and illustrated in the table, Potential PayoutsPayments Upon Termination or Change In Control, are the different elements payable under the General Severance Plan if Ms. Browning and Mr. Armstrong would experienceMalan had experienced an involuntary termination of employment. All continuation amounts would be paid over the salary continuation period in compliance with Section 409A.
If Ms. Browning or Mr. ArmstrongMalan were to have experienced an “involuntary termination of employment” under the General Severance Plan in 2017, he2020, they would have been entitled to severance benefits. “Involuntary termination of employment” is defined in the General Severance Plan as the termination of employment of an eligible employee by the employer, other than: for cause; as a result of his or hertheir failure to accept such additional or revised responsibilities as communicated by the employer; by reason of the sale of histhe employer or any portion of the employer’s assets or divisions (whether by asset or stock sale), provided he or she continuesthe employee is offered employment with the purchaser thereof; or a voluntary termination of employment of any kind.
For an involuntary termination, an eligible employee would receive severance payments in the form of base salary continuation for a period of weeks that is determined based on his or her job title/level and years of service. Ms. Browning and Mr. ArmstrongMalan would have been eligible for 4826 weeks of severance as of December 31, 2017.January 3, 2021. Salary continuation amounts would be paid by the Company in installments and in accordance with the Company’s standard payroll practice, subject to the requirements of Section 409A.
Subject to the eligible employee’s timely election of continued coverage under COBRA and the Company’s receipt of the signed severance agreement, the Company would provide comparable medical (including prescription drug), dental, vision, and hospitalization benefits to the eligible Named Executive Officernamed executive officer and his or her eligible dependents for a period of time that is determined based on the number of weeks of severance that the employee is eligible for. The Company pays the full cost of COBRA during the severance period. Following completion of the severance period, the employee is responsible for the full cost of maintaining COBRA benefits. Based on the number of weeks of severance that Mr. Armstrongthey would have been eligible for, heMs. Browning and Mr. Malan would have received 12six months of company-paid COBRA premiums.
The eligible Named Executive Officernamed executive officer will be entitled to receive reimbursement for professional outplacement services actually incurred during the initial 6-month period following termination, not to exceed $7,500.
|
2021 Kelly Proxy Statement 63
20172020 Executive Compensation Tables
Severance benefits under the General Severance Plan are conditioned upon the terms of the severance agreement that require the employee to sign a general release of claims relating to their employment and also include: non-competition; non-solicitation of employees or customers; maintaining confidentiality of information and trade secrets of the Company and all affiliates; and non-disparagement of the Company and all officers and employees. The Benefit Plans Committee has the authority to make any determinations with respect to benefits payable under the Plan and the amount and duration of such benefits.
Ms. Koolhaas’ Severance Benefit
Under the terms of Ms. Koolhaas’ Swiss employment agreement, if she is terminated by the Company, other than for willful misconduct, she will be provided with either twelve months’ notice or twelve months of salary in lieu of notice (including continuation of supplemental health care and pension contribution), at the Company’s discretion.
Treatment of Long-Term Incentive Awards
Each equity-based award is conditioned upon the grantee’s acceptance of the terms of the EIP and the grant agreement, which includes restrictive covenants such as post-employment conditions not to solicit the Company’s employees or customers and not to compete against the Company for twelve months following any termination of employment, and indefinite covenants covering non-disparagement and confidentiality terms. Each of our Named Executive Officer’snamed executive officer’s performance-based equity awards is subject to the Company’s Clawback Policy, which was described earlier in this document. Provisions for the treatment of long-term incentive awards upon various termination scenarios are outlined in the table below.
Termination | Restricted Stock/Units (Time Vesting) |
| Performance Shares (Performance and Time Vesting) | |||
| Termination not for Cause in connection with a | Immediate Vesting | Immediate Vesting at Target | ||||
| Other Termination not for Cause | Forfeit | Prorated based on actual results (as determined at the end of the cycle), subject to employment for at least one year after the date grant was approved | ||||
| Termination for Good Reason in connection with a | Forfeit | Forfeit | ||||
| Termination for Cause | Forfeit | Forfeit | ||||
| Voluntarily Quit | Forfeit | Forfeit | ||||
| Retirement | Forfeit | Prorated based on actual results (as determined at the end of the cycle) for “Normal Retirement” defined as age 62 with 5 years of service or as a combination of age plus years of service equal to 70, with a minimum age of 60 | ||||
| Death or Disability | Prorated | Prorated based on actual results | ||||
64 2021 Kelly Proxy Statement
2020 Executive Compensation Tables
Based on the terms of the severance plans and treatment of LTI awards for each upon termination of employment as outlined above, the table below illustrates the amounts that each Named Executive Officernamed executive officer would receive in each of the potential termination scenarios.
|
| Event and Amounts | Peter W. Quigley ($) | Olivier G. Thirot ($) | Daniel H. Malan ($) | Dinette Koolhaas ($) | Tammy L. Browning ($) | |||||||||||||||
Involuntary Termination (For Cause) | ||||||||||||||||||||
No other payments due | ||||||||||||||||||||
Voluntary Termination | ||||||||||||||||||||
No other payments due | ||||||||||||||||||||
Death or Disability | ||||||||||||||||||||
Performance Shares (Equity-Based)(1) | — | — | — | — | — | |||||||||||||||
Restricted Shares(2) | 123,894 | 113,320 | 180,666 | 49,923 | 30,341 | |||||||||||||||
Total | 123,894 | 113,320 | 180,666 | 49,923 | 30,341 | |||||||||||||||
Normal Retirement (Age 62 and 5 Years of Service or any Combination of Age + Service ³ 70 with Minimum Age of 60) |
| |||||||||||||||||||
Performance Shares (Equity-Based)(1) | n/a | n/a | n/a | n/a | n/a | |||||||||||||||
Involuntary Termination (Not For Cause) |
| |||||||||||||||||||
Cash Severance(3) | 1,680,000 | 882,000 | 215,000 | 521,033 | 162,500 | |||||||||||||||
Pro-Rated Annual Incentive(4) | — | — | — | — | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | — | — | — | — | — | |||||||||||||||
Restricted Shares(2) | — | — | — | — | — | |||||||||||||||
Benefits Continuation(5) | 17,665 | 19,046 | 10,782 | 14,052 | — | |||||||||||||||
Outplacement Services(6) | 10,000 | 10,000 | 7,500 | — | 7,500 | |||||||||||||||
Total | 1,707,665 | 911,046 | 233,282 | 535,085 | 170,000 | |||||||||||||||
Termination in Connection with a Change In Control - For Good Reason | ||||||||||||||||||||
Cash Severance(3) | 3,528,000 | 1,587,600 | — | — | — | |||||||||||||||
Pro-Rated Annual Incentive(4) | 924,000 | 470,400 | — | — | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | — | — | — | — | — | |||||||||||||||
Restricted Shares(2) | — | — | — | — | — | |||||||||||||||
Benefits Continuation(5) | 17,665 | 19,046 | — | — | — | |||||||||||||||
Outplacement Services(6) | 10,000 | 10,000 | — | — | — | |||||||||||||||
Total | 4,479,665 | 2,087,046 | — | — | — | |||||||||||||||
Termination in Connection with a Change In Control - Not For Cause | ||||||||||||||||||||
Cash Severance(3) | 3,528,000 | 1,587,600 | 215,000 | 521,033 | 162,500 | |||||||||||||||
Pro-Rated Annual Incentive(4) | 924,000 | 470,400 | — | — | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | 647,996 | 504,623 | — | — | — | |||||||||||||||
Restricted Shares(2) | 1,045,492 | 626,645 | 1,016,981 | 221,375 | 170,361 | |||||||||||||||
Benefits Continuation(5) | 17,665 | 19,046 | 10,782 | 14,052 | — | |||||||||||||||
Outplacement Services(6) | 10,000 | 10,000 | 7,500 | — | 7,500 | |||||||||||||||
Total | 6,173,153 | 3,218,315 | 1,250,263 | 756,460 | 340,361 | |||||||||||||||
2021 Kelly Proxy Statement 65
20172020 Executive Compensation Tables
Event and Amounts | George S. Corona ($) | Olivier G. Thirot ($) | Teresa S. Carroll ($) | Peter W. Quigley ($) | Steven S. Armstrong ($) | |||||||||||||||
Involuntary Termination (For Cause) | ||||||||||||||||||||
No other payments due | ||||||||||||||||||||
Voluntary Termination | ||||||||||||||||||||
No other payments due | ||||||||||||||||||||
Death or Disability | ||||||||||||||||||||
Performance Shares (Equity-Based)(1) | 3,500,171 | 1,277,350 | 1,891,129 | 1,891,129 | 903,069 | |||||||||||||||
Restricted Shares(2) | 380,880 | 159,148 | 185,326 | 185,326 | 93,400 | |||||||||||||||
Total | 3,881,051 | 1,436,498 | 2,076,455 | 2,076,455 | 996,469 | |||||||||||||||
Normal Retirement (Age 62 and 5 Years of Service)(3) | ||||||||||||||||||||
No other payments due | n/a | n/a | n/a | n/a | n/a | |||||||||||||||
Involuntary Termination (Not For Cause) | ||||||||||||||||||||
Cash Severance(4) | 2,000,000 | 800,250 | 862,500 | 862,500 | 306,462 | |||||||||||||||
Pro-Rated Annual Incentive(5) | 1,051,064 | 400,045 | 437,723 | 416,443 | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | 2,864,862 | 1,050,327 | 1,637,064 | 1,637,064 | 818,532 | |||||||||||||||
Restricted Shares(2) | — | — | — | — | — | |||||||||||||||
Benefits Continuation(6) | 24,772 | 21,743 | 21,539 | 18,284 | 23,244 | |||||||||||||||
Outplacement Services(7) | 10,000 | 10,000 | 10,000 | 10,000 | 7,500 | |||||||||||||||
Total | 5,950,698 | 2,282,365 | 2,968,826 | 2,944,291 | 1,155,737 | |||||||||||||||
Termination in Connection with a Change-in-Control - For Good Reason | ||||||||||||||||||||
Cash Severance(4) | 4,600,000 | 1,400,438 | 1,595,625 | 1,595,625 | — | |||||||||||||||
Pro-Rated Annual Incentive(5) | 1,300,000 | 400,125 | 488,750 | 488,750 | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | — | — | — | — | — | |||||||||||||||
Restricted Shares(2) | — | — | — | — | — | |||||||||||||||
Benefits Continuation(6) | 24,772 | 21,743 | 21,539 | 18,284 | — | |||||||||||||||
Outplacement Services(7) | 10,000 | 10,000 | 10,000 | 10,000 | — | |||||||||||||||
Total | 5,934,772 | 1,832,306 | 2,115,914 | 2,112,659 | — | |||||||||||||||
Termination in Connection with a Change-in-Control - Not For Cause | ||||||||||||||||||||
Cash Severance(4) | 4,600,000 | 1,400,438 | 1,595,625 | 1,595,625 | 306,462 | |||||||||||||||
Pro-Rated Annual Incentive(5) | 1,300,000 | 400,125 | 488,750 | 488,750 | — | |||||||||||||||
Performance Shares (Equity-Based)(1) | 5,176,430 | 1,963,190 | 2,631,055 | 2,631,055 | 1,188,040 | |||||||||||||||
Restricted Shares(2) | 1,434,347 | 584,942 | 666,506 | 666,506 | 321,459 | |||||||||||||||
Benefits Continuation(6) | 24,772 | 21,743 | 21,539 | 18,284 | 23,244 | |||||||||||||||
Outplacement Services(7) | 10,000 | 10,000 | 10,000 | 10,000 | 7,500 | |||||||||||||||
Total | 12,545,549 | 4,380,438 | 5,413,475 | 5,410,220 | 1,846,705 | |||||||||||||||
| (1) | In the event of a |
|
2017 Executive Compensation Tables
| performance shares. |
| (2) | In the event of a |
| (3) |
Per the Kelly Services Inc. Senior Executive Severance Plan, for involuntary termination by the Company without cause, |
In the event of an involuntary termination by the Company without cause and not in connection with a change in control, Messrs. Quigley and Thirot were eligible to receive a pro rata portion of their annual Incentive Compensation for such fiscal year, based on the actual performance results for such year. In the event of an involuntary termination by the Company without cause or termination by the |
The value of the health care benefit provided is calculated as the Company-paid portion of the medical plan cost, times the number of months eligible according to the applicable severance plan. Coverage can include medical, dental, and vision (assumes no change in Health Plan or coverage type) and assumes a 10% health care coverage cost increase in second year (as applicable). |
Represents the maximum allowed benefit for reimbursement of outplacement services for participants in the applicable Severance Plan. The severance plan that covers Ms. Browning and Mr. |
The Named Executive Officersnamed executive officers would also be entitled to the vested benefits included in the Outstanding Equity Awards at Fiscal Year-End table and the Nonqualified Deferred Compensation table. In addition, the amounts shown in the table above do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment or certain types of termination of employment. These include accrued salary and vacation pay, and life insurance benefits.
|
66 2021 Kelly Proxy Statement
CEO Pay Ratio
As required by Section 953(b) of Dodd-Frank and Item 402(u) of Regulation S-K, we are providing the required information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Corona,Quigley, our President and Chief Executive Officer (the “CEO”), as follows:
For fiscal 2017,2020, our last completed fiscal year:
The median of the annual total compensation of all employees of our company (other than Mr. Corona,Quigley, our President and CEO), was $7,198;$7,748
The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for determining the employee population and identifying the median employee provide companies with flexibility surrounding the elements of compensation to be included and various methodologies for gathering the employee population for inclusion in the analysis. The pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices, and may utilize different methodologies, exclusions, estimates, samplings, and assumptions in calculating their own pay ratios.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, the methodology that we used and the material assumptions and adjustments that we used to identify the median and determine annual total compensation are outlined below:
Our workforce consists of regular employees (employees who provide services to the Company) and those employees for whom we find employment as temporary workers. While services may be provided inside the facilities of our customers, we remain the employer of record for our temporary employees. We retain responsibility for employee assignments, the employer’s share of all applicable payroll taxes and the administration of the employee’s share of these taxes. In most cases, we determine the compensation for our temporary employees.
Our median employee in 2019 was a temporary employee, and as such we determined to not use that same employee in determining our 2020 CEO pay ratio. Due to the variance in assignment lengths, the number of assignments worked in a year, and potentially the compensation rate for each assignment, it is unlikely that the median employee in 2019 would be the median employee again in 2020. As a result, we conducted a similar compensation data gathering exercise for 2020 as we had for 2019 to determine the median employee.
We selected December 31, 2017,2020, which is a date within the last three months of fiscal 2017,2020, as the date we would use to both gather compensation for the year and identify our median employee. We did this to ensure we had a full year of earnings for our temporary employees as we are not able to estimate what earnings for that group would be under a partial year scenario.
Category | U.S. | Non U.S. | Total | U.S. | Non U.S. | Total | ||||||||||||||||||
Regular | 4,722 | 3,006 | 7,728 | 4,133 | 2,941 | 7,074 | ||||||||||||||||||
Temporary | 74,294 | 59,459 | 133,753 | 55,834 | 51,242 | 107,076 | ||||||||||||||||||
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| 79,016 | 62,465 | 141,481 | ||||||||||||||||||||||
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TOTAL | 59,967 | 54,183 | 114,150 | |||||||||||||||||||||
| – | The vast majority of our employees, about 94%, are temporary employees who work anywhere from one week to fifty-two weeks in a calendar year. |
| – | Approximately 47.5% of our employee population is located in twenty-three countries outside of the U.S. |
2021 Kelly Proxy Statement 67
CEO Pay Ratio
| In making this determination, the compensation for all regular employees hired after January 1, 2020 was annualized. |
| – | Compensation for temporary workers, pursuant to SEC rules, was not annualized, but all earnings for the 12-month period were collected and included all assignments that a temporary employee would have been paid for throughout the year. |
| – | We did not utilize either the Data Privacy Exemption or the De Minimis Exemption. |
| – | We did not make any cost-of-living adjustments in identifying the median employee. |
| – | For purposes of making the determination, employee compensation from locations outside the U.S. was converted to U.S. dollars using the Company’s exchange rates in effect on January 1, 2019, consistent with our current financial reporting. |
CEO Pay Ratio
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Proposal 3: Amendment and Restatement of the Company’s Certificate of Incorporation
PROPOSAL 3 - AMENDMENT AND RESTATEMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION TO ELIMINATE CERTAIN OBSOLETE PROVISIONS, TO ELIMINATE A “STAKEHOLDER PROVISION” THAT COULD CONFLICT WITH DELAWARE LAW, AND TO MAKE ADDITIONAL REVISIONS IN THE INTERESTS OF MODERNIZATION
As described in the “Corporate Governance” section of this68 2021 Kelly Proxy Statement the Board recently formed a special committee consisting of the independent Directors to review and make recommendations to the Board about governance matters. Upon recommendation of the special committee, the Board approved and adopted, and recommends for stockholder approval, amendments to the Company’s Restated Certificate of Incorporation. These amendments eliminate certain obsolete provisions, eliminate a “stakeholder provision” that could conflict with Delaware law, and make additional revisions in the interests of modernization. The amendments are as follows:
Article TENTH currently requires that the Board, when evaluating any offer of another party to make a tender or exchange offer for any equity security of the Company, to merge or consolidate the Company with another corporation or to acquire all or substantially all of the properties and assets of the Company, give “due consideration to such factors as the Board of Directors determines to be relevant, including without limitation, the social, legal and economic effects of the proposed transaction upon employees, customers, suppliers, and other affected persons, firms and corporations and on the communities in which this corporation and its subsidiaries operate or are located.” Article TENTH addresses circumstances in which the Board’s obligation under Delaware law is to act, in the exercise of its business judgment, in the best interests of the Company and its stockholders. The Board is proposing the elimination of Article TENTH because, in mandating consideration of certain effects upon constituencies other than stockholders, Article TENTH purports to require the Board to consider interests that may conflict with or detract from the best interests of the Company and its stockholders.
The full text of the Amended and Restated Certificate of Incorporation as proposed is set forth in Annex A, with additions indicated by underlining and deletions indicated by strikeout.
If this proposal is approved, the Company will file the Amended and Restated Certificate of Incorporation with the Delaware Secretary of State promptly after the Annual Meeting of Stockholders. The Amended and Restated Certificate of Incorporation will take effect upon filing.
This proposal must be approved by the affirmative vote of holders of a majority of the voting power of the Company’s outstanding Class B Common Stock. For purposes of this stockholder vote, abstentions and broker non-votes will have the effect of votes against the proposal.
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Proposal 4: Amendment to the Company’s Amended and Restated Bylaws
PROPOSAL 4 - AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED BYLAWS TO DESIGNATE THE DELAWARE CHANCERY COURT AS THE EXCLUSIVE FORUM FOR CERTAIN LEGAL ACTIONS
As described in the “Corporate Governance” section of this Proxy Statement, the Board recently formed a special committee consisting of the independent Directors to review and make recommendations to the Board about governance matters. Upon recommendation of the special committee, the Board approved and adopted Amended and Restated Bylaws effective March 7, 2018 (as disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2018). Also upon recommendation of the special committee, the Board approved and adopted, and recommends for stockholder approval, an amendment to the Company’s Amended and Restated Bylaws (the “Bylaw Amendment”) that, if adopted, would result in the Delaware Court of Chancery serving as the exclusive forum for certain legal actions involving the Company. Specifically, if this proposal is approved by our stockholders, the Company’s Amended and Restated Bylaws will be amended to insert a new Article XI as follows:
Unless the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the corporation to the corporation or the corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Company’s certificate of incorporation or the Bylaws or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of the State of Delaware, or (4) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Article XI.
The Board believes that the Bylaw Amendment is in the best interests of the Company and its stockholders for the following reasons:
The Bylaw Amendment is not being proposed by our Board in anticipation of or in reaction to any specific litigation or transaction; rather, it is being proposed to prevent potential harm to the Company and its stockholders. Although some plaintiffs might prefer to litigate the intra-corporate disputes described above in a forum outside of Delaware because they perceive another court as more convenient or more favorable to their claims, the Board believes that the substantial benefits to the Company and to our stockholders as a whole from designating the Delaware Chancery Court as the exclusive forum for these specific matters outweighs such concerns. Furthermore, the Board retains the discretion to permit litigation to proceed in an alternative forum. In keeping with the views of certain proxy advisors, the Board is seeking the approval of stockholders prior to adopting the Bylaw Amendment. If the proposal is not approved, the Board will reconsider whether the Bylaw Amendment is in the best interests of the Company.
If this proposal is approved, the Bylaw Amendment will become effective immediately.
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This proposal must be approved by the affirmative vote of holders of a majority of the voting power the Company’s outstanding Class B Common Stock. For purposes of this stockholder vote, abstentions and broker non-votes will have the effect of votes against the proposal.
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Proposal 5:3: Ratification of the Appointment of PricewaterhouseCoopers LLP
PROPOSAL 5 - RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERSProposal 3 – Ratification of The Appointment of PricewaterhouseCoopers LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2018 FISCAL YEARas the Company’s Independent Registered Public Accounting Firm for the 2021 Fiscal Year
On an annual basis, the Audit Committee approves and appoints the independent registered public accounting firm. During its February 14, 201816, 2021 meeting, PricewaterhouseCoopers LLP (“PwC”) was appointed to audit the consolidated financial statements of the Company for the year ending December 30, 2018.January 2, 2022. This firm has served as the Company’s independent registered public accounting firm for many yearssince 1960 and is considered to be well qualified. The reappointment process for the independent registered public accounting firm includes an annual assessment that takes into consideration, but is not limited to, a review of the following:
| 1. | Quality of services and sufficiency of resources provided by the auditor |
• Knowledge and skills to meet the Company’s audit requirements | |
• Partner rotation (every 5 years) | |
• Appropriate audit engagement partner | |
• Engagement letter compliance | |
• Industry experience | |
• Results of consultations | |
• Audit cost (fee negotiations included) | |
• Long tenure and familiarity with the Company’s accounting policies | |
| 2. | Communication and interaction during the engagements |
• Professional and open dialog | |
• Accessibility | |
• Current accounting developments conversations | |
| 3. | Independence, objectivity, and professional skepticism |
• Assessment of audit evidence | |
• Internal Audit reliance |
The Board of Directors seeks ratification of the appointment of PwC. The representatives of the firm are expected to be present at the Annual Meeting and will be available to respond to all appropriate questions.
The Audit Committee is responsible for the compensation (including negotiations) of the independent registered public accounting firm and requires pre-approval of all audit and non-audit services prior to engagement by the Company. In conjunction with the pre-approval, the Committee considers whether non-audit services are consistent with the rules and regulations of the SEC on auditor independence. The authority of the Audit Committee is detailed in its charter, which is posted on the Company’s website atkellyservices.com.
2021 Kelly Proxy Statement 69
Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP
The table below displays the fees incurred from the audit and non-audit services provided by PwC.
| 2019 ($) | 2020 ($) | |||||||||||||||
| 2016 ($) | 2017 ($) | |||||||||||||||
Audit Fees | 3,904,889 | 4,118,778 | 3,968,500 | 3,921,900 | ||||||||||||
Audit Related Fees | 29,147 | 56,800 | 0 | 19,000 | ||||||||||||
Tax Fees | 140,200 | 101,300 | 159,000 | 111,300 | ||||||||||||
All Other Fees | 1,800 | 1,800 | 2,800 | 17,300 | ||||||||||||
Total | 4,076,036 | 4,278,678 | 4,130,300 | 4,069,500 | ||||||||||||
Audit Fees: Audits and quarterly reviews of our consolidated financial statements, statutory audits, attestation of controls, issuance of consent, and assistance with review of documents filed with the SEC.
Audit Related Fees:Technical assistance with new accounting standards and servicesServices associated with international regulatory reporting.
Tax Fees:Tax and transfer pricing consulting.
All Other Fees: Accounting research.research and human resources benchmarking.
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Proposal 5: Ratification of the Appointment of PricewaterhouseCoopers LLP
In connection withManagement is responsible for the preparation, presentation and integrity of Kelly’s financial statements, for its accounting and financial reporting principles, and for the fiscal year ended December 31, 2017,establishment and effectiveness of internal controls and procedures designed to ensure compliance with generally accepted accounting principles and applicable laws and regulations. The independent registered public accounting firm is responsible for performing an independent audit of Kelly’s financial statements and of its internal control over financial reporting in accordance with the Auditstandards of the Public Company Accounting Oversight Board (the “PCAOB”) and expressing an opinion as to the conformity of Kelly’s financial statements with generally accepted accounting principles and the effectiveness of its internal control over financial reporting. The independent registered public accounting firm has free access to the Committee has:to discuss any matters it deems appropriate.
(1) reviewedIn performing its oversight role, the Committee has considered and discussed the audited financial statements of Kelly for the fiscal year ended January 3, 2021 with management;
(2)each of management and PwC, the independent registered public accounting firm. The Committee has also discussed with PwC the matters required to be discussed by applicable requirements of the statement on Public Company Accounting Oversight Board AU Section 380 Communication With Audit Committees; and
(3)PCAOB. The Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding PwC’s communications with the Audit Committee concerningauditors’ independence and has discussed with PwC its independence.
Based upon these reviewson the reports and discussions described in this Report, the Audit Committee recommended to the Board at its February 14, 2018 meeting that the Company’s audited financial statements of Kelly for 2020 be included in the 2020 Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC. The Board approved this inclusion.10-K.
THE AUDIT COMMITTEE LESLIE A. |
GERALD S. |
ROBERT S. CUBBIN TERRENCE B. |
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70 2021 Kelly Proxy Statement
Questions and Answers About the Proxy Statement and the Annual Meeting
KELLY SERVICES, INC.
999 West Big Beaver Road
Troy, Michigan 48084-4716
April 9, 201819, 2021
QUESTIONS AND ANSWERS ABOUT THE PROXY STATEMENT AND THE ANNUAL MEETING
| Q) | WHERE ARE WE HOLDING THE ANNUAL MEETING? |
| A) | The 2021 Annual Meeting of Stockholders will be held virtually. To access the live audio webcast of the meeting, stockholders of record will need to visit kellyservices.com for instructions and use their 16-digit Control Number provided in the Notice to log in to this website. If your shares are held beneficially in the name of a bank, broker, or other holder of record (sometimes referred to as holding share “in street name”), you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Beneficial holders will need to obtain a “legal proxy” from their broker, bank, or other holder of record that holds your shares if they want to vote during the virtual meeting. Beneficial holders will need to send our transfer agent, Computershare, the legal proxy before the meeting and they will then issue via email, an authorized control number. |
| Q) | WHO IS MAKING THE SOLICITATION IN THIS PROXY STATEMENT? |
| A) | This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors |
| Q) | WHO WILL BEAR THE COST OF THE PROXY SOLICITATION? |
| A) | The cost of soliciting proxies will be borne by the Company. The solicitation of proxies will be made primarily by mail. The Company may also make arrangements with brokerage houses, custodians, banks, nominees, and fiduciaries to forward solicitation material to beneficial owners of Class B stock held of record by them and to obtain authorization to execute proxies. The Company may reimburse such institutional holders for reasonable expenses incurred by them in connection therewith. |
A copy of the Company’s Annual Report and Annual Report on Form 10-K as of December 31, 2017, the close of the Company’s latest fiscal year, has been mailed or otherwise made available to each stockholder of record. The expense of preparing, printing, assembling, and mailing the accompanying form of proxy and the material used in the solicitation of proxies will be paid by the Company. In addition, the Company may reimburse brokers or nominees for their expenses in transmitting proxies and proxy material to principals.
A copy of the Company’s Annual Report and Annual Report on Form 10-K as of January 3, 2021, the close of the Company’s latest fiscal year, has been mailed or otherwise made available to each stockholder of record. The expense of preparing, printing, assembling, and mailing the accompanying form of proxy and the material used in the solicitation of proxies will be paid by the Company. In addition, the Company may reimburse brokers or nominees for their expenses in transmitting proxies and proxy material to principals. |
| Q) | WHO IS ENTITLED TO VOTE? |
| A) | Only stockholders of record of our Class B |
At the close of business on March 19, 2018, the number of issued and outstanding voting securities (exclusive of treasury shares) was 3,431,972 shares of the Class B common stock.
At the close of business on March 29, 2021, the number of issued and outstanding voting securities (exclusive of treasury shares) was 3,358,521 shares of the Class B Common Stock. Class B stockholders on the record date will be entitled to one vote for each share held of record. |
2021 Kelly Proxy Statement 71
Questions and Answers
| Q) | HOW DO I VOTE? |
| A) | We encourage Class B stockholders to return their proxies promptly via the enclosed form of proxy in the enclosed postage prepaid envelope or vote via the |
| Q) | HOW IS MY VOTE COUNTED? |
| A) | If a proxy in the accompanying form is properly executed, returned to the Company and not revoked, the shares represented by the proxy will be voted in accordance with the instructions set forth thereon. If no instructions are given with respect to the matters to be acted upon, the shares represented by the proxy will be voted in accordance with the recommendation of the Company’s Board of Directors on each of the proposals set forth in the accompanying Notice of Annual Meeting of Stockholders and on any other matters that properly come before the Annual Meeting in such manner as may be determined by the individuals named as proxies. |
| Q) | CAN I REVOKE MY PROXY AFTER I HAVE SUBMITTED IT? |
| A) | If the enclosed form of proxy is executed and returned by the stockholder, it may nevertheless be revoked by the person giving it by written notice of revocation to the Corporate Secretary of the Company or by submitting a later dated proxy, provided such notice or later dated proxy is received by 11:59 p.m., Central Time, on May |
| Q) | WHAT CONSTITUTES A QUORUM? |
| A) | Pursuant to the Company’s |
| Q) | ||||
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Questions and Answers About the Proxy Statement and the Annual Meeting
WHAT IS A BROKER NON-VOTE? |
| A) | A “broker non-vote” occurs if a broker or other nominee indicates on the enclosed proxy that it does not have discretionary authority as to certain shares to vote on a particular proposal, but otherwise has authority to vote at the Annual Meeting. Abstentions and shares subject to broker non-votes will be considered as present for purposes of determining the presence or absence of a quorum at the Annual Meeting. |
| Q) | HOW IS IT DETERMINED IF A MATTER HAS BEEN APPROVED? |
| A) | Under |
For Proposal 2 and Proposal 5, the affirmative vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote on such proposal will be required to approve each of the other proposals to be considered at the Annual Meeting. Abstentions will have the effect of negative votes with respect to these proposals. Broker non-votes will not be taken into account for purposes of these proposals.
For Proposal 3 and Proposal 4, the affirmative vote of the outstanding shares entitled to vote on such proposal will be required to approve each of the other proposals to be considered at the Annual Meeting. Abstentions and broker non-votes will have the effect of votes against these proposals.
The affirmative vote of a majority of the Class B shares present in person (provided meeting is held in Michigan) or by proxy at the Annual Meeting and entitled to vote on such proposal will be required to approve Proposal 2 and Proposal 3. Abstentions will have the effect of negative votes with respect to these proposals. Broker non-votes will not be taken into account for purposes of these proposals. |
| Q) | WHAT HAPPENS IF ADDITIONAL MATTERS (OTHER THAN THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT) ARE PRESENTED AT THE ANNUAL MEETING? |
| A) | If any other matters do properly come before the Annual Meeting, all proxies signed and returned by holders of the Class B |
72 2021 Kelly Proxy Statement
Questions and Answers
| Q) | HOW CAN I COMMUNICATE WITH THE BOARD? |
| A) | Stockholders may communicate with the Board in writing, addressed to the Board of Directors and mailed to the Corporate Secretary, Kelly Services, Inc., 999 West Big Beaver Road, Troy, Michigan 48084-4716. All written stockholder communications will be summarized and reported to the Board at its regularly scheduled meetings. |
| Q) | WHAT IS THE DEADLINE TO SUBMIT STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE COMPANY’S |
| A) | If a Class B stockholder intends to present a proposal for |
Our Bylaws contain an advance notice of stockholder business and nominations requirement, which generally prescribes the procedures that a stockholder of the Company must follow if the stockholder intends at an annual meeting of stockholders to nominate a person for the election to the Board or to propose other business to be considered by stockholders. These procedures include, among other things, that the stockholder give timely notice to the Corporate Secretary of the nomination or other proposed business, that the notice contain specified information, and that the stockholder comply with certain other requirements. If a stockholder’s nomination or proposal is not in compliance with the procedures set forth in our Bylaws, the Company may disregard such nomination or proposal. Generally, in the case of an annual meeting of stockholders, a stockholder’s notice in order to be timely must be delivered in writing to the Corporate Secretary, at its principal executive office, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the date of the proceeding year’s annual meeting. To be timely for the 2022 Annual Meeting of Stockholders, the notice must be received by the Corporate Secretary no earlier than January 19, 2022 and no later than February 18, 2022. In addition, if a stockholder submits a proposal outside of Rule 14a-8 for the Company’s 2022 Annual Meeting of Stockholders and |
In each case, proposals made under Rule 14a-8 |
The Company’s Amended and Restated Bylaws provide advance notice procedures with regard to certain matters, including stockholder proposals and nominations of individuals for election to the Board of Directors, outside the process of Rule 14a-8, beginning in connection with the 2019 Annual Meeting of Stockholders. In general, notice of a stockholder proposal or director nomination must be received by the Company not less than 90 nor more than 120 days prior to the first anniversary of the previous year’s annual meeting, and must contain specified information to conform to the requirements set forth in the bylaws. To be timely for the 2019 Annual Meeting of Stockholders, the notice must be received by the Company no earlier than January 9, 2019 and no later than February 8, 2019. If the chair of the meeting of stockholders determines that a stockholder proposal or director nomination was not made in accordance with the bylaws, the Company may disregard such proposal or nomination. In addition, if a stockholder submits a proposal outside of Rule 14a-8 for the 2019 Annual Meeting of Stockholders and the proposal fails to comply with the advance notice procedures under the Amended and Restated Bylaws, then the Company’s proxy may confer discretionary authority on the persons being appointed as proxies on behalf of the Board to vote on the proposal.48084-4716.
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Annex A
ANNEX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
KELLY SERVICES, INC.
* * * * *
Kelly Services, Inc., a corporation organized and existing under the laws of Delaware, certifies as follows:
1. The name of the Corporation is KELLY SERVICES, INC.
2. The original certificate of incorporation was filed with the Secretary of State of Delaware on August 27, 1952 under the name of PERSONNEL SERVICE, INC.
3. ThisAmended and Restated Certificate of Incorporation amends and, restatesand integrates the certificate of incorporation of the corporation heretofore in effect. ThisAmended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware by the directors and stockholders of the corporation.
4. TheAmended and Restated Certificate of Incorporation so adopted reads in full as follows:
FIRST: The name of this corporation is Kelly Services, Inc.
SECOND:Its principalThe address of the corporation’s registered office in the State of Delaware islocated at 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of its resident agent at such address is The Corporation Trust Company.
THIRD: Thenature of the business, or objects or purposes to be transacted, promoted or carried on are:purpose of the corporation is to engage in any lawful act or activity for which corporations may be organizedunder the General Corporation Law of the State of Delaware.
To furnish office, clerical, supervisory and consultant services.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trade-marks and trade names, relating to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation and, from time to time, without limit as to amount to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes.
To loan to any person, firm or corporation any of its surplus funds, either with or without security.
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Annex A
To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly.
To operate a private trade school and business school in the State of Michigan after obtaining the necessary license for such operation for the instruction of students in various office skills, including, but not by way of limitation, instruction in the use of various office equipment and machines.
To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and personal property of every class and description in any of the States, Districts, Territories or Colonies of the United States, and in any and all foreign countries, subject to the laws of such State, District, Territory, Colony or Country.
In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formedunder the General Corporation Law of the State of Delaware, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes.
FOURTH:
Division A
The total number of shares of stock which the corporation shall have authority to issue is 110,000,000 shares, the par value of each of the shares is $1.00,amounting in the aggregate to $110,000,000, and the shares are divided into two classes consisting of 100,000,000 shares of Class A Common Stock and 10,000,000 shares of Class B Common Stock.
Division B
The designations, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions in respect of the shares of each class are as follows:
(a)Dividends. Holders of the Class A Common Stock and the Class B Common Stock shall be entitled to receive dividends, out of funds legally available therefor, when and as declared by the Board of Directors, subject only to the limitations that (1) no cash dividend payable on the shares of the Class B Common Stock shall be declared unless the Board of Directors shall concurrently declare a cash dividend on the shares of the Class A Common Stock at a rate which is not less than the rate of the cash dividend payable on the shares of the Class B Common Stock (but a cash dividend may be declared on the Class A Common Stock without declaring a cash dividend on the Class B Common Stock), and (2) no dividend payable in shares of the Class B Common Stock shall be declared on the Class A Common Stock (but a dividend payable in shares of Class A Common Stock may be declared on the Class A Common Stock or the Class B Common Stock and a dividend payable in shares of Class B Common Stock may be declared on the Class B Common Stock).
(b)Voting Rights. Except on matters where their vote is required by Delaware law, the holders of the Class A Common Stock shall not be entitled to vote on any matter coming before any meeting of stockholders. The holders of the Class B Common Stock shall be entitled to one vote per share upon each matter coming before any meeting of stockholders.
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Annex A
(c)Conversion of Class B Common Stock.
1. Shares of Class B Common Stock shall be convertible, at the option of the respective holders thereof, at any time, into fully paid and non-assessable shares of Class A Common Stock on the basis of one share of Class A Common Stock for each share of Class B Common Stock.
2. No payment or adjustment with respect to dividends on shares of the Class A Common Stock or on the Class B Common Stock shall be made in connection with any conversion of shares of Class B Common Stock into shares of Class A Common Stock.
3. The holders of a certificate or certificates for Class B Common Stock, in order to effect the conversion of shares represented thereby, shall surrender the certificate or certificates to the corporation or to the Transfer Agent for the shares of the Class B Common Stock, with request for conversion. If the shares of the Class A Common Stock issuable upon conversion are to be issued in a name other than that in which the shares of the Class B Common Stock to be converted are registered, the certificate or certificates shall be duly endorsed for transfer or accompanied by a duly executed stock transfer power, and shall also be accompanied by the necessary stock transfer stamps or equivalent funds.
Upon surrender of the certificate or certificates, the corporation shall issue and deliver or cause to be issued and delivered to the person entitled thereto a certificate or certificates for the number of full shares of the Class A Common Stock issuable upon conversion. The corporation shall pay all original issue taxes, if any, payable upon the issue of shares of the Class A Common Stock issued upon any conversion.
The conversion shall be deemed to have been effected on the date of the surrender of the certificate or certificates of shares of the Class B Common Stock, and the person in whose name the certificate or certificates of the shares of the Class A Common Stock issuable upon conversion are to be issued shall be deemed to be the holder of record of the shares as of that date.
4. If there should be any capital reorganization or any reclassification of the Class A Common Stock, the shares of the Class B Common Stock shall thereafter have the right to be converted into the number of shares of stock or other securities or property of the corporation to which outstanding shares of the Class A Common Stock would have been entitled upon the effective date of the reorganization or reclassification. The Board of Directors shall make an appropriate adjustment in the application of the provisions of this paragraph (c) with respect to the conversion rights of the holders of the shares of the Class B Common Stock after the reorganization or reclassification, to the end that the provisions shall be applicable, as nearly as reasonably may be, in respect to any shares or other securities or property thereafter issuable or deliverable upon the conversion of shares of the Class B Common Stock. The provisions of this sub-paragraph shall not apply to a reorganization or reclassification involving merely a subdivision or combination of outstanding shares of the Class A Common Stock.
5. In case the corporation shall be consolidated with or merged into any other corporation or shall sell or transfer its property and business as or substantially as an entirety, then the stock or other securities or other property, including cash, issuable or deliverable in connection with such consolidation, merger or sale in respect of each share of the Class A Common Stock then outstanding, shall thereafter, for the purposes of the conversion rights of the Class B Common Stock, be deemed the equivalent of one share of Class A Common Stock. Upon the exercise of conversion rights, holders of Class B Common Stock shall be entitled to receive on an equivalent basis and at the same rate and on the other terms and conditions set forth in this paragraph (c), the stock or other securities or property, including cash, deemed to be the equivalent of Class A Common Stock. Lawful provisions to this effect shall be made a part of and condition to the consolidation, merger or sale.
6. In case the corporation shall propose (i) to effect any reclassification of the Class A Common Stock or any capital reorganization involving a change in the Class A Common Stock, other than a reclassification or reorganization involving merely a subdivision or combination of outstanding shares of the Class A Common Stock, or (ii) to consolidate with or merge into another corporation, or to sell or transfer its property and business as or substantially as an entirety, then, in each such case, the corporation shall file with each Transfer Agent for the shares of the Class B Common Stock and shall mail to the holders of record of the shares at their respective addresses then appearing on the records of the corporation a statement, signed by an officer of the corporation, with respect to the proposed action, the statement to be so filed and mailed at least 30 days prior to the record date for holders of the Class A Common Stock for the purposes thereof. The statement shall set forth such facts with respect to the proposed action as shall be reasonably necessary to inform each Transfer Agent for the shares of the Class B Common Stock and the holders of those shares as to the effect of the action upon the conversion rights of the holders.
7. The corporation shall at all times have authorized but unissued, or in its treasury, a number of shares of the Class A Common Stock sufficient for the conversion of all shares of the Class B Common Stock from time to time outstanding.
8. In case the shares of the Class A Common Stock or the Class B Common Stock at any time outstanding shall, by reclassification or otherwise, be subdivided into a greater number of shares or combined into a lesser number of shares, the shares of Class B Common Stock or Class A Common Stock, respectively, then outstanding shall, at the same time, be subdivided or combined, as the case may be, on the same basis.
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Annex A
(d)Preemptive Rights. Holders of the Class A Common Stock shall have no preemptive right to subscribe to any securities issued by the corporation. Holders of the Class B Common Stock shall have the preemptive right to subscribe to additional shares of Class B Common Stock, or any other voting stock or any security convertible into Class B Common Stock or other voting stock, hereafter issued by the corporation.
(e)Liquidation Preferences.
1. In the event of dissolution, liquidation or winding up of the corporation, whether voluntary or involuntary, holders of the Class A Common Stock and of the Class B Common Stock shall be entitled to payment out of the assets of the corporation ratably in accordance with the number of shares held by them respectively.
2. Neither a consolidation nor a merger of the corporation with or into any other corporation, nor a merger of any other corporation into the corporation, nor the purchase or other acquisition by the corporation of all or a part of the outstanding shares of any class or classes of its stock, nor the sale or transfer of the property and business of the corporation, as or substantially as an entirety, shall be considered a dissolution, liquidation or winding up of the corporation within the meaning of the foregoing provisions.
FIFTH: The business, property and affairs of this corporation shall be managed by a Board of Directors consisting of no fewer than five (5) and no more than eleven (11) members, the exact number to be determined from time to time by resolution of the Board of Directors.Effective atAt each annual meeting of the stockholders of the corporation from and after the annual meeting to be held in 2010, all director nominees shall stand for election to terms expiring at the next succeeding annual meeting, with each director to hold office until his successor is duly elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Theterm of each director serving as of and immediately prior to the annual meeting of the stockholders of the corporation to be held in 2010 shall expire as of the date of such annual meeting, notwithstanding that such director may have been elected for a term that extended beyond the date of such annual meeting. TheBoard of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by theCcertificate ofIincorporation or by the by-lawsof the corporation (the “Bylaws”) directed or required to be exercised or done by the stockholders.
Newly created directorships resulting from any increase in the authorized number of directors and vacancies in the Board of Directors from death, resignation, retirement, disqualification, removal from office or othercause, shallreason, may only be filled by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the next annual meeting of the stockholders of the corporation and until their successors are duly elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Any director, or the entire Board of Directors, may be removed at any time, with or without cause. The affirmative vote of the holders of a majority of the voting power of all of the stock of this corporation entitled to vote in elections of directors shall be required to remove a director from office. The stockholders of the corporation are expressly prohibited from cumulating their votes in any election of directors of the corporation.
SIXTH: The names and places of residence of the incorporators were as follows:
SIXTH: Unless and except to the extent that the Bylaws shall so require, the election of directors of the corporation need not be by written ballot.
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Annex A
SEVENTH: By-laws of the corporation may be adopted, amended or repealed by the affirmative vote of a majority of the total number of directors or by the affirmative vote of the holders of a majority of the voting power of all of the stock of this corporation entitled to vote in elections of directors. Theby-lawsBylaws may contain any provision for the regulation and management of the affairs of the corporation and the rights or powers of its stockholders, directors, officers, or employees not inconsistent with the laws of the State of Delaware or this certificate of incorporation.
EIGHTH:
In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:
To fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and cause to be executed mortgages and liens upon the real and personal property of this corporation.
From time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of this corporation (other than the stock ledger), or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right of inspecting any account, book or document of this corporation except as conferred by statute, unless authorized by a resolution of the stockholders or directors.
By resolution or resolutions, passed by a majority of the whole board to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions, or in the by-laws of this corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of this corporation, and may have power to authorize the seal of this corporation to be affixed to all papers which may require it. The committee or committees shall have the name or names as may be stated in the by-laws of this corporation or as may be determined from time to time by resolution adopted by the Board of Directors.
This corporation may in its by-laws confer powers upon its directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon them by the statute.
Both stockholders and directors shall have power, if the by-laws so provide, to hold their meetings, and to have one or more offices within or without the State of Delaware, and to keep the books of this corporation (subject to the provisions of the statutes), outside of the State of Delaware at such places as may be from time to time designated by the Board of Directors.
NINTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said Court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the Court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.
TENTH: The Board of Directors of this corporation, when evaluating any offer of another party to (a) make a tender or exchangeoffer for any equity security of this corporation; (b) merge or consolidate this corporation with another corporation; or (c) purchase or otherwise acquire all or substantially all of the properties and assets of this corporation, shall, in connection with the exercise of its judgment in determining what is in the best interest of this corporation and its stockholders, give due consideration to such factors as the Board of Directors determines to be relevant, including without limitation, the social, legal and economic effects of the proposed transaction upon employees, customers, suppliers, and other affected persons, firms and corporations and on the communities in which this corporation and its subsidiaries operate or are located.
ELEVENTHEIGHTH: No action required or permitted to be taken at any annual or special meeting of the stockholders of this corporation may be taken without a meeting and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.
TWELFTHNINTH: No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty by such director as a director; provided, however, that this ArticleTWELFTHNINTH shall not eliminate or limit liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment or repeal of this ArticleTWELFTHNINTH shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
THIRTEENTHTENTH: Special meetings of the stockholders of this corporation for any purpose or purposes may be called at any time by the Board of Directors or by a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in theby-laws of this corporationBylaws, include the power to call such meetings, but such special meetings may not be called by any other person or persons.
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Annex A
FOURTEENTHELEVENTH:This corporation reserves the right to amend, alter, change or repeal any provision contained in this Ccertificate of Iincorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
[Signature Page Follows]
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IN WITNESS WHEREOF, Kelly Services, Inc. has caused thisAmended and Restated Certificate of Incorporation to be signed byDaniel T. Lis, its Senior Vice President and Corporate Secretary this 5th , its this day of May, 20092018.
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q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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| Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. | ||||||||||||||||
 | Online Go to www.envisionreports.com/kelyb or scan the QR code – login details are located in the shaded bar below. | |||||||||||||||
 | Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada | |||||||||||||||
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. |  |  | Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/kelyb | |||||||||||||
Annual Meeting Proxy Card |
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q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
| A | Proposals – The Board of Directors | |||||||||||||||||||||
| 1. Election of Directors: | ||||||||||||||||||||||
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| For | Withhold | For | Withhold | For | Withhold | |||||||||||||||||||||||
| 01 - | ☐ | ☐ | 02 - | ☐ | ☐ | 03 - | ☐ | ☐ | ||||||||||||||||||||
| 04 - G.S. Adolph | ☐ | ☐ | 05 - G.S. Corona | ☐ | ☐ | 06 - R.S. Cubbin | ☐ | ☐ | ||||||||||||||||||||
| 07 - J.E. Dutton | ☐ | ☐ | 08 - T.B. Larkin | ☐ | ☐ | 09 - L.A. Murphy | ☐ | ☐ |
2. Non-binding advisory vote on executive compensation. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
3. Ratification of PricewaterhouseCoopers LLP as independent accountants for the 2021 fiscal year. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
4. Transacting any other business as may properly come before the Meeting or any postponement or adjournments thereof. | ||||||||||||||||||||||||||||
| For | Against | Abstain | For | Against | Abstain | |||||||||||||||
| 2. | Non-binding advisory vote on executive compensation. | ☐ | ☐ | ☐ | 4. | Amending the Company’s Amended and Restated Bylaws to designate the Delaware Chancery Court as the exclusive forum for certain legal actions.
| ☐ | ☐ | ☐ | |||||||||||
| 3. | Amendment and restatement of the Company’s Restated Certificate of Incorporation to eliminate certain obsolete provisions, to eliminate a “Stakeholder provision” that could conflict with Delaware law, and to make additional revisions in the interest of modernization.
| ☐ | ☐ | ☐ | 5. | Ratification of PricewaterhouseCoopers LLP as independent accountants for the 2018 fiscal year. | ☐ | ☐ | ☐ | |||||||||||
| 6. | Transacting any other business as may properly come before the Meeting or any postponement or adjournments thereof. | |||||||||||||||||||
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
| B | Authorized Signatures – This section must be completed for your vote to be counted. - Date and Sign Below | ||||||||||||||||||
Please | |||||||||||||||||||
| Date (mm/dd/yyyy) – Please print date below. | Signature 1 – Please keep signature within the box. | Signature 2 – Please keep signature within the box. | |||||||||
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IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
located on the reverse side of this form.
The password for this meeting is – KELY2021.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the 2017 Annual Report to stockholders arematerial is available at:
www.envisionreports.com/kelyb
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
| Small steps make an impact.
Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/kelyb |  |
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
 Proxy - Kelly Services, Inc. | + |
Proxy — Kelly Services, Inc.
999 West Big Beaver Road
Notice of Annual Meeting of Stockholders -
Proxy Solicited by Board of Directors for Annual Meeting – May 9, 2018
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY19, 2021
The undersigned hereby names, constitutes and appoints Peter W. Quigley and Olivier G. Thirot and James M. Polehna, and each of them, with power to act without the other and with power of substitution, as proxies andattorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Kelly Services, Inc. Class B Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held May 9, 201819, 2021 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE PROPOSALS.
(Continued to be marked, dated and signed, on the other side.)
| C | Non-Voting Items | ||||||||||
Change of Address |
Comments | |||||||
| IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS | + |
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | | |||||||||||||
Annual Meeting Proxy Card |
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
| A | Proposals – The Board of Directors recommend a vote FOR all the nominees listed and FOR Proposals 2 and 3. | |||||||||||||||||||||
| 1. Election of Directors: | + | |||||||||||||||||||||
| For | Withhold | For | Withhold | For | Withhold | |||||||||||||||||
| 01 - D.R. Parfet | ☐ | ☐ | 02 - P.W. Quigley | ☐ | ☐ | 03 - C.M. Adderley | ☐ | ☐ | ||||||||||||||
| 04 - G.S. Adolph | ☐ | ☐ | 05 - G.S. Corona | ☐ | ☐ | 06 - R.S. Cubbin | ☐ | ☐ | ||||||||||||||
| 07 - J.E. Dutton | ☐ | ☐ | 08 - T.B. Larkin | ☐ | ☐ | 09 - L.A. Murphy | ☐ | ☐ | ||||||||||||||
2. Non-binding advisory vote on executive compensation. | For ☐ | Against ☐ | Abstain ☐ | 3. Ratification of PricewaterhouseCoopers LLP as independent accountants for the 2021 fiscal year. | For ☐ | Against ☐ | Abstain ☐ | |||||||
4. Transacting any other business as may properly come before the Meeting or any postponement or adjournments thereof. |
| B | Authorized Signatures – This section must be completed for your vote to be counted. - Date and Sign Below | |||||||||||
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | ||||||||||||
Date (mm/dd/yyyy) – Please print date below. | Signature 1 – Please keep signature within the box. | Signature 2 – Please keep signature within the box. | ||||||||||
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| ⬛ | 1 U P X | 498727 | + | |||
| 03EO1B |
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The material is available at: www.edocumentview.com/kelyb
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
Proxy - Kelly Services, Inc. |
Notice of Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting – May 19, 2021
The undersigned hereby names, constitutes and appoints Olivier G. Thirot and James M. Polehna, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Kelly Services, Inc. Class B Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held May 19, 2021 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE PROPOSALS.
(Continued to be marked, dated and signed, on the other side.)
