Connecting people to work for 75 years. 2022 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under§240.14a-12 | |
Kelly Services, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. | |||
| ☐ | Fee | |||
| ||||
| ||||
| ||||
| ||||
| ||||
| ☐ | ||||
Connecting people to work for 75 years. 2022 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 |
| |||
| ||||
| ||||
|
2021 was a year of challenges and hopeful progress as the world’s companies and talent learned to navigate an uneven recovery from the COVID-19 pandemic. Kelly entered our 75th year with solid momentum, bolstered by the swift actions and strategic decisions we implemented in the depths of the pandemic-driven crisis. Our new operating model was solidly in place, and with our business organized around our existing strengths and significant market opportunities, our specialty strategy began gaining traction. As the year unfolded and brought the Delta and Omicron variants, recurring global supply chain shortages, and new dynamics in a tight talent market, Kelly persevered and ended 2021 better than we began it. Through it all, our commitment to our specialty growth strategy never wavered. We not only rose to the challenges of 2021, but also laid the groundwork for unleashing significant growth in the years ahead. Our actions make clear that Kelly has no intention of returning to “normal.” We have our sights set on exceptional, and we will settle for nothing less.
Confirming Our Financial Resilience
Customer demand for our services increased throughout 2021, reaching or exceeding pre-pandemic levels at various speeds across specialties. Our Professional & Industrial and Education segments – the hardest-hit by the pandemic and its restrictions – put the worst of the pandemic behind them by year’s end and exited 2021 with new customer wins and strong sales pipelines. Our Science, Engineering, and Technology segment drove double-digit growth in outcome-based business and scientific solutions. Our International segment navigated the uneven recovery across EMEA, led by growth in key European countries. And, OCG, the most resilient of our business segments throughout the pandemic, continued to deliver double-digit growth every quarter in 2021.
Kelly entered the pandemic with a healthy balance sheet and we not only protected it, we put it to work for our specialty growth strategy. We made the Company’s largest ever acquisition with the purchase of Softworld, a leader in the fast-growing technology staffing and solutions space – and still ended the year with ample cash and available capacity to pursue other strategic opportunities. We made structural improvements in our businesses, driving growth in our gross profit rate; and we reinstated a dividend for our stockholders, which had been temporarily suspended during the worst of the pandemic.
Sustained fee momentum in 2021 points toward our customers’ investments in their future workforce, and increased demand in our staffing and outsourcing businesses reflects a market eager for the specialty solutions we provide. We move forward with our business firmly arranged around specialties that target these areas of robust demand, promising growth opportunities, and Kelly’s proven ability to win.
Strong Governance Practices
Our governance practices continue to inform Kelly’s ethical and disciplined approach to growth. Our board of directors is at the heart of these practices, and brings diverse insights gathered across varying industries, backgrounds, and tenures, with women and diverse members making up 44% of the board. Each of the board’s three committees – audit; compensation and talent management; and corporate governance and nominating – continue to be comprised exclusively of independent directors.
The board itself also continues to evolve. Board member Carol Adderley, who has served with distinction since 2010 and has provided an invaluable linkage to the Kelly family legacy, will not stand for reelection in 2022. And after more than 17 years of distinguished service – including a long tenure as chair of the corporate governance and nominating committee – board member Jane Dutton will be retiring in 2022. Both have our gratitude for the insights, integrity, and value they brought to Kelly throughout the years.
We are also pleased to welcome dynamic new members to our board of directors in 2022. In January, the board appointed Amala Duggirala, executive vice president and enterprise chief information officer at USAA, and InaMarie Johnson, former chief people and diversity officer at Zendesk. Our two new directors bring to the Board skills and experiences that will be invaluable additions to the attributes of the existing members of the Board.
LETTER FROM THE CHAIRMAN OF THE BOARD
April 6, 2020Letter to Stockholders
Dear Stockholders:
2019 saw a leadership transition forThe modern workforce increasingly weighs companies’ values and viewpoints on diversity, equity, and inclusion when making their career decisions. Guided by our Company and continued progress in corporate governance.
On October 1, 2019, Peter Quigley became our new President and CEO and joined our Board of Directors. George Corona stepped down as President and CEO for his planned retirement on June 30, 2020. Peter was selected following an extensive succession process conducted by the Board, involving internal and external candidates. Prior to becoming President and CEO, Peter spent 17 years in varied and demanding leadership roles at Kelly. With the support of the Board, Peter is leading the Company’s strategic transformation into a specialty talent company.
On behalf of the Board, I want to express our gratitude to George for his exceptional leadership. He has helped Kelly become a more focused company, make solid investments in technology and the future of work, and stay aligned with our Noble Purposenoble purpose of connecting people to work in ways that enrich their lives. lives, we remain committed to making Kelly – and all workplaces – more inclusive and equitable. In 2021, we continued to redesign our hiring practices to remove unnecessary barriers to employment, simultaneously unlocking new talent sources amidst historic U.S. labor shortages. We also launched new companywide training and amplified the voices of diverse talent through our employee affinity groups.
Externally, 2021 saw expansion of our Equity@Work initiative, which is designed to remove systemic barriers that make it difficult for many people to participate or realize their full potential in the labor market. Through innovative programs, media campaigns, community outreach, partnerships with like-minded associations, and one-on-one client education, Kelly is bringing the message of diversity, equity, and inclusion to the marketplace. Two new programs gained considerable traction in 2021. Our Kelly 33 program opens doors for former non-violent offenders and has led to significant reduction in employee turnover rates for key clients. Our Kelly Certification Institute is helping talent reskill and upskill in a fast-changing world and providing them an opportunity to gain alternative credentials that improve their ability to secure meaningful work. We’re proud of the recognition Kelly continues to receive for our intentional DEI focus, including accolades for our work with the LGBTQ+ community, minority-owned businesses, women, military families, and more.
DEI remains a vital component of Kelly’s integrated Environmental, Social, and Governance (“ESG”) reporting framework, which we formally communicate through our Corporate Sustainability and ESG Report 2021 titled Growing with Purpose. The report is prepared in alignment with the Global Reporting Initiative Standards set forth by the United Nations Global Compact Guidelines and discloses our corporate sustainability strategy as aligned to the ESG framework.
A Strategic Path Forward
We are moving forward in 2022 having fully shifted from recovery to the relentless pursuit of aggressive growth. As we execute our specialty strategy, we are remixing our portfolio toward higher-margin, higher-growth specialties that can deliver increased shareholder value.
In February 2022, we took a significant step in our growth strategy by unwinding our cross ownership with Persol and reducing our ownership interest in our APAC joint venture, PersolKelly. These actions unlocked an unprecedented amount of capital to invest in Kelly’s specialty growth strategy. Between monetizing our APAC investments and leveraging the strength of our balance sheet, we stand ready with nearly a half-billion dollars available to accelerate the speed and scope of change at Kelly. We are excited at the possibilities and well-positioned to make bold decisions that drive inorganic growth and deliver outsized value for our stakeholders.
We are wasting no time in moving forward. In March 2022, we announced the acquisition of RocketPower, a leading provider of Recruitment Process Outsourcing (“RPO”) and other outsourced talent solutions. RocketPower’s customers include rapidly scaling U.S. tech companies known for disrupting industries and changing the world. Talent acquisition trends are driving tremendous growth in the RPO market, and this addition to the KellyOCG segment expands our RPO capabilities across the globe while providing another entry point into the fast-growing world of high-tech companies.
As we pursue aggressive inorganic growth, we will also invest in key value drivers. We know that Kelly’s success is powered by our people, and we are investing in the talent experience of our full-time employees, strengthening our people leaders as coaches and leveraging performance management systems to help our employees thrive in their Kelly careers. At the same time, we have committed resources to focus on the temporary employee experience and ensure we are supporting their shifting needs as they navigate a post-pandemic labor market. To underpin our efforts and enable growth, we are mapping a digital transformation journey to optimize our business and deliver personalized, user-friendly experiences for talent and clients alike.
Looking Ahead
The past two years have reshaped lives, labor markets, and long-range plans of industries around the world, but Kelly faces the future with renewed energy and strength. Our executive leadership team and board of directors have been fully engaged and committed to Kelly’s success at every stage of this winding journey, protecting the Company while
| 2 |  |
Letter to Stockholders
charting a course for dynamic new growth. Our talented employees, temporary workers, and suppliers continue to bring our noble purpose to life around the world, inspiring us every day by connecting talented people to meaningful work.
We are grateful to our customers for his 25 yearstheir continued partnership as we move forward together into a brighter future. And we thank you, our stockholders, for your confidence that Kelly’s best days lie ahead. Together, we can usher in a new era of service to Kellygrowth and pleased that George will remain on our Board and will be contributing his experience to Peter’s transition.progress for all.
I would also like to take this opportunity to thank Takao Wada for his distinguished service on the Board. Mr. Wada served as the designated representative of Persol Holdings, LLC, Kelly’s strategic partner in the Asia-Pacific region, and is not standing forre-election.
The Board is committed to sound corporate governance as a means of enhancing long-term stockholder value. We have a majority independent Board and fully independent Audit and Compensation Committees. Following our Annual Meeting, when we will make new committee assignments, our Corporate Governance and Nominating Committee will be fully independent. That will bring us to the important milestone of satisfying all the Nasdaq independence requirements for board and board committees that are applicable tonon-controlled companies.
As of this writing, like most businesses throughout the world, we are confronting serious challenges raised by COVID – 19 (“Coronavirus”) for our Company, employees, and business partners. In response, Kelly implemented its emergency management procedures under which a cross-functional Emergency Management Team was assembled to coordinate crisis management for the organization, including containment measures, policies, communications, and resources. We have implemented measures designed to protect the health and safety of Kelly employees, including initiating travel restrictions, barringin-person attendance at conferences and large events, and restricting nonessential visitors from our buildings. Kelly’s adoption of information technology systems and policies that enable remote work are proving to be extremely beneficial during this time, and Kelly workers are able to perform nearly all essential functions remotely. When possible, Kelly is also working with its customers to implement remote work plans for temporary employees. Kelly will continue to adapt its approach in light of government actions, best practices, and the recommendations of public health officials. As we get closer to the date of the Annual Meeting, we will determine whether it is advisable to hold our Annual Meeting as a virtual meeting. Whatever format it ultimately takes, I hope you will be able to attend our Annual Meeting on May 6, 2020.With appreciation,
 | ||||||
Donald Parfet Chairman of the Board |  | Peter Quigley President and CEO |
| “I believe everyone deserves the right to meaningful work and I’ve seen firsthand how work can change lives. At Kelly, we have an incredible opportunity to knock down barriers to employment and create a more inclusive, equitable and prosperous future.” Peter Quigley President and CEO |
| | 3 |
Notice of Annual Meeting of Stockholders
2022 Annual Meeting of Stockholders
| Date and Time: |  | |||
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 2020
Dear fellow Stockholders:
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 6, 2020 at 11:00 a.m., Eastern Daylight Time.
As a precaution regarding the Coronavirus orCOVID-19, we may hold our annual meeting over the web in a virtual meeting format instead of holding the meeting in Michigan. If we take this step, we would publicly announce a determination to hold a Virtual Annual Meeting in a press release available at kellyservices.com as soon as practicable before the meeting. The press release would include instructions as well as a webcast link from which to access the 2020 Annual Meeting of Stockholders on the above date and time, via live audio webcast, but only if the meeting is not held in Michigan.
At the Annual Meeting, you will be asked to consider the following proposals:
Wednesday, May 18, 2022 at 11:00 a.m., Eastern Daylight Time |
kellyservices.com | Close of Time, March 28, 2022 | ||
| Voting Matters | How to Vote | |||||
Proposal 1. Election of nine Board-recommended director nominees Proposal 2. Advisory approval of the Company’s executive | ||||||
Proposal 3. |
|
Proposal 4. |
|
Online - 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 online or by telephone must be received by 11:59 p.m., Central Daylight Time, on May 17, 2022. 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 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. | ||||||||
If you were a holder of record of the Company’s Class B Common Stock at the close of business on the Record Date, March 16, 2020,28, 2022, you are entitled to vote at the Annual Meeting.
Please promptly submit your vote by internet, telephone, or by signing, dating, and returning the enclosed proxy card or voting instructioninstructions form in the postage-paid envelope provided so that your shares will be represented and voted at the meeting.
Thank you for your interest in Kelly.
| By Order of the Board of Directors |
|
The following materials, also included with the Notice of Annual Meeting of Stockholders, are available for view on the Internet:
Proxy Statement for the Annual Meeting of Stockholders
JAMES M. POLEHNA
Corporate Secretary
Annual Report to Stockholders, includingForm 10-K, for the year ended December 29, 2019
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
| 4 | |
|
Elements of Compensation for Named Executive | ||||
Tax | ||||
| 72 | ||||
| Nonqualified Deferred Compensation 2021 | 72 | |||
| Potential Payments Upon Termination or Change In Control 2021 | 72 | |||
| ||||
| ||||
| CEO Pay Ratio | ||||
| Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for the | ||||
| Questions and Answers About the Proxy Statement and the Annual Meeting | ||||
| | 5 | |
This summary highlights information contained elsewhere in this Proxy Statement. Please refer to the complete Proxy Statement and Kelly’s 20192021 Annual Report before you vote.
2022 Annual Meeting of Stockholders Details
Class B Stockholders as of the Record Date are entitled to vote. Each share of Class B Common Stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on.
Admission
All holders of the Company’s Class A and Class B Common Stock are invited to attend the Annual Meeting of Stockholders.
Meeting Agenda
| ||||||||
| ||||||||
PROPOSAL 1. | Election of nine directors |
| ||||||
| Advisory vote to approve the Company’s executive compensation | |||||||
PROPOSAL 3. | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the | |||||||
 |  |  |  | |||
|
|
| ✓ FOR | |||
| page 13 | page 46 | page 80 | |||
Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Central Daylight Time, on May 5, 2020. 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. If you plan to vote your shares at the meeting, please promptly request a legal proxy from your broker, as you will need to bring this with you to the meeting in order to vote your shares.Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible.
| 6 | |
Proxy Summary
DIRECTOR NOMINEESDirector Nominees
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 | 67 | 2004 | Managing Director, Apjohn Group, LLC | Yes | 2 | |||||||||||
Peter W. Quigley | 58 | 2019 | President and Chief Executive Officer, Kelly Services, Inc. | No | — | |||||||||||
Carol M. Adderley | 60 | 2010 | Writer and Researcher in the Humanities | No | — | |||||||||||
Gerald S. Adolph | 66 | 2018 | Retired Senior Partner, Booz & Co.;Co-Chair, NAACP Legal Defense and Education Fund | Yes | 1 | |||||||||||
George S. Corona | 61 | 2017 | Retired President and Chief Executive Officer, Kelly Services, Inc. | No | — | |||||||||||
Robert S. Cubbin | 62 | 2014 | Retired President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. | Yes | 1 | |||||||||||
Jane E. Dutton | 67 | 2004 | Robert L. Kahn Distinguished University Professor Emeritus of Business Administration and Psychology, The University of Michigan Business School | Yes | — | |||||||||||
Terrence B. Larkin | 65 | 2010 | Retired Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation | Yes | — | |||||||||||
Leslie A. Murphy | 68 | 2008 | President and CEO, Murphy Consulting, Inc.; Former Chair, American Institute of Certified Public Accountants | Yes | 1 | |||||||||||
Name | Age | Director Since | Principal Occupation | Independent | Other Public Company Boards | |||||||||||
 | Donald R. Parfet Chairman of the | 69 | 2004 | Managing Director, Apjohn Group, LLC; General Partner, Apjohn Ventures Fund; General Partner, Apjohn Ventures Annex Fund | ✓ | 2 | ||||||||||
 | Peter W. Quigley President and | 60 | 2019 | President and Chief Executive Officer, Kelly Services, Inc. | ||||||||||||
 | Gerald S. Adolph | 68 | 2018 | Retired Senior Partner, Booz & Co. | ✓ | 1 | ||||||||||
 | George S. Corona | 63 | 2017 | Retired President and Chief Executive Officer, Kelly Services, Inc. | ||||||||||||
 | Robert S. Cubbin | 64 | 2014 | Retired President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. | ✓ | 1 | ||||||||||
 | Amala Duggirala | 47 | 2022 | Executive Vice President, Enterprise Chief Information Officer, United Services Automobile Association (USAA) | ✓ | |||||||||||
 | InaMarie F. Johnson | 57 | 2022 | Former Chief People and Diversity Officer, Zendesk, Inc. | ✓ | |||||||||||
 | Terrence B. Larkin | 67 | 2010 | Retired Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation | ✓ | |||||||||||
 | Leslie A. Murphy | 70 | 2008 | President and CEO, Murphy Consulting, Inc.; Former Chair, American Institute of Certified Public Accountants | ✓ | 1 | ||||||||||
| | 7 | |
Proxy Summary
CORPORATE GOVERNANCE HIGHLIGHTSCorporate Governance Highlights
Kelly is committed to sound corporate governance as a means of enhancing long-term stockholder value. HighlightsThe following table summarizes certain of our governance practices are described below.and processes.
Independence | Accountability | Best Practices | ||
• Majority independent Board | • Annual election of all directors | • | ||
• Independent Chairman of the Board | • Annual election of | • | ||
• | • Annual evaluation of | • Strong oversight of strategic planning and objectives, financial performance, and Enterprise Risk Management (“ERM”) by the Board and Audit Committee | ||
• | • Annual Board and Committee self-evaluations and bi-annual peer review | • CEO and executive leadership succession planning by the Board and Compensation | ||
|
|
| ||
• Committees may hire independent advisors | • | • Policies prohibiting short-sales, hedging, pledging, and margin accounts | ||
• No related party transactions between the Company and members of the Board or senior management | • Clawback policy that applies to short-term and long-term incentive compensation plans for senior management | • Strong oversight of Environmental, Social and Governance (“ESG”) standards by the Board and Corporate Governance and Nominating Committee | ||
• Stock ownership | • Orientation program for new directors | |||
73 YEARS OF INDUSTRY LEADERSHIPMeet Today’s Kelly
We’re building on 75 years of industry leadership.
| Top 1 & 2 | Top 5 | |||||||||||
| Delivering | ||||||||||||
on Staffing Industry Analysts 2021 list of | science | managed services provider with $9.4 billion spend under management. | workforce solutions across Americas, EMEA, and APAC. | |||||||||
| Supported | ||||||||||||
| #2 out of 250 | #2 Globally | |||||||||||
by 4,600+ supplier partners globally. | the with workforce solutions. | on Forbes’ 2021 list of Professional Recruiting Firms. | on list of Top Ten Global Champions for Supplier Diversity & Inclusion. | |||||||||
| 8 | |
Proxy Summary
Corporate Sustainability StrategyA Year in Review
As we entered 2021, Kelly was positioned to take advantage of improving economic conditions and the beginning of a recovery in customer demand. While 2021 had its share of headwinds, most notably the emergence of the Delta and Omicron variants of the COVID-19 virus, continued global supply chain shortages, and a talent supply shortage, we ended the year better than we began it. We achieved revenue of $4.9 billion and earnings from operations of $48.6 million in a year of solid progress in Kelly’s overall growth journey. Kelly’s gross profit increased 11.1% from the prior year to $919 million. We made our largest ever acquisition in April 2021 with the purchase of Softworld, a leader in the fast-growing technology staffing and solutions space. We made structural improvements in our businesses, driving growth in our gross profit rate to 18.7%, an increase of 40 basis points.
Customer demand for our services increased throughout 2021, reaching our pre-pandemic levels at various rates across specialties. Our Professional & Industrial and Education segments, the hardest hit by COVID, put the worst of the pandemic behind them by year’s end. The 1.1% decrease in revenue from services for the Professional & Industrial segment resulting primarily from lower demand in our outcome-based call center specialty and lower hours volume in staffing services, was partially offset by higher average staffing bill rates, increased outcome-based revenue in other specialties, and higher permanent placement income. Revenue from services for our Education business segment increased 45.2%, reflecting the return to in-school instruction by many schools, resulting in increased demand for our services as compared to 2020. Our Science, Engineering & Technology business segment drove growth of 13.5% in revenue from services, including from the acquisition of Softworld. Organic growth was driven by increased hours in our staffing business, coupled with an increase in outcome-based revenue and permanent placement income. Our International business segment continued its recovery, with increased revenue from services of 8%, primarily due to higher hours volume, particularly in Switzerland, Portugal, Italy and France. And OCG, the most resilient of our business segments, delivered revenue from services growth of 18.9% in 2021 due primarily to increased hours revenue in our Payroll Process Outsourcing specialty, coupled with revenue growth in both Recruiting Process Outsourcing and Master Service Provider products. Across all segments and in an evolving industry, we were well prepared for meeting our clients’ changing talent needs.
Full Year 2021 Financial Summary
| Actual Results | Change Increase/(Decrease) | |||||||||||
| As Reported | As Adjusted(1) | |||||||||||
Revenue | $4.9B | 8.7% 7.8% CC(2) | 8.7% 7.8% CC(2) | |||||||||
Gross Profit % | 18.7% | 40 bps | 40 bps | |||||||||
Earnings from Operations | $48.6M | NM NM CC(2) | 18.7% 15.5% CC(2) | |||||||||
Adjusted EBITDA | $84.1M | 21.8% | ||||||||||
Adjusted EBITDA Margin | 1.7% | 20 bps | ||||||||||
| (1) | See reconciliation of Non-GAAP Measures included in Form 8-K dated February 14, 2022 |
| (2) | Constant Currency (“CC”) represents year-over-year changes resulting from translating 2021 financial data into USD using 2020 exchange rates. |
| | 9 |
Proxy Summary
(As Reported, by Business Unit)
We consider sustainabilityhave redesigned our operating model to be a guiding principledrive profitable growth in strengthening the relationship with our global workforce, suppliers,chosen specialties.
Kelly Professional & Industrial
| Kelly Science, Engineering, Technology & Telecom | Kelly Education | Kelly OCG | Kelly International | ||||||||||||||||||||||||||
| Revenue | $1.8B | $1.2B(1) | $0.4B | $0.4B | $1.1B | |||||||||||||||||||||||||
| GP Rate | 16.9% | 21.9%(1) | 15.6% | 32.7% | 13.9% | |||||||||||||||||||||||||
| Geographic Span | North America | North America | U.S. | Global | EMEA & Mexico | |||||||||||||||||||||||||
| Specialties | – Industrial – Contact Center – Office – Professional | – Engineering – Science & Clinical – Technology – 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 customers. As a leading provider of global workforce solutions, we connect people with employment opportunities and make a difference in the communities in which we live and work. 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 we operate. Given the worldwide span of our workers, clients, suppliers, and partners, we recognize the global reach of both our business practices and our public accountability.
Since 2017,we embarked on a transformation from Corporate Social Responsibility initiatives, toward a long-term Corporate Sustainability Strategy aligned to our business core which contributes to the Sustainable Development Goals.
This new sustainability approach, rather than being philanthropic, is strategic to our business values. It ismargin profiles are based on the concept of social investment, which, instead of aiding on isolated occasions, ensures the creation of future development capacities. We aim to guide all our subsidiaries and collaborators in the planning, management, and implementation of sustainable strategic approaches that create measured and impactful shared value to all our stakeholders.2021 full year results.
| (1) | Kelly SET revenue and GP rate was $1.2B and 22.3% respectively, including the results of Softworld on a proforma basis. |
| (2) | Managed Service Provider (“MSP”); Recruitment Process Outsourcing (“RPO”); Professional Payroll Outsourcing (“PPO”) |
Portfolio Progress
Our Corporate Sustainability Strategy is defined as an integrated decision-making strategy that provides comprehensive guidelines for implementing internal actions toward these ends. These guidelines provide proceduresM&A activities are shifting our portfolio.
| 10 | |
Proxy Summary
Awards and tools to ensure the applicability of the strategy on a worldwide basis–guaranteeing the same standards, metrics, and objectives for all our operations.
This strategy has been developed with consideration given to the perceptions of our stakeholders, as well as its impact on business operations.In early 2018,we conducted a material assessment that helped us define the policies and guidelines of our Corporate Sustainability Strategy.
Permanent monitoring of our sustainable performance is conducted on an annual basis by means of an interdisciplinary perspective assessment involving cross-functional areas within the company. Progress in our Corporate Sustainability Strategy are reported on an annual basis through the Global Reporting Initiative Standard (GRI), and Communications of Progress (following the UN Global Compact), which we support sinceFebruary 2019.
Sustainability is an integral part of our company’s strategy and operations. To learn more about our ESG program, please view our website athttps://www.kellyservices.com/global/about-us/corporate-sustainability/corporate-sustainability-program/.Recognitions
| ||||||
Proxy Summary
Assessments, Recognition & Awards
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
| ||
For the 11th consecutive year, Kelly was recognized as one of America’s Top Corporations for Women-Owned Businesses by WBENC | For the 5th consecutive year, Kelly received a top score on the Human Rights Foundation’s Corporate Equality Index for Best Places to Work for LGBTQ Equality | Kelly earned 2021 Silver Supplier status in business sustainability from EcoVadis, ranking among the top 6% of companies assessed in the temporary employment agency activities industry | ||
|
|
| ||
Kelly was named to FlexJobs® Top 100 Companies for Remote Jobs in each of the nine years the award has been in existence, 2014-2022 | For the third year in a row, Kelly earned a Top 10 spot on the global diversity award by WEConnect International | Kelly was recognized for its outsourcing excellence on the International Association of Outsourcing Professionals (IAOP) 2022 Global Outsourcing 100 List | ||
|
|
| ||
HR Vendor of the Year by Human Resources Online 2021 – Gold & Silvers Awards for Best Recruitment Process Outsourcing Partner – KellyOCG Malaysia & Singapore | Forbes named Kelly the No. 2 Professional Recruiting and Temporary Staffing Firm in America in 2021, as well as one of America’s Best Employers for Women and Diversity | Everest Group named Kelly a 2021 Leader for U.S. Contingent Workforce Staffing and Management, as well as Services Procurement | ||
|
|
| ||
In November 2021, Kelly Portugal was officially awarded the seal of Inclusive Employer Entity Brand 2022. The seal – an initiative of the Portuguese Employment and Vocational Training Institute (IEFP) – certifies Kelly as an inclusive organization, as having “inclusive management practices developed by employers in relation to people with disabilities”. | In February 2022, Kelly Services Italy was awarded the Top Employer 2022 certification for fourth consecutive year. The recognition confirms the quality of work that Kelly is carrying out and represents an additional incentive to achieve our aim of offering people an environment that can inspire them, involve them, make them collaborative, and help them to grow and be successful. | In February 2022, Computrabajo named Kelly as the Best HR Company to Work for in Mexico in their Best WorkPlaces 2022 ranking. Users of this job portal rated the companies and choose Kelly as No. 1. | ||
| | 11 | |
Proxy Summary
FULL YEAR 2019 FINANCIAL SUMMARY
(As Reported)
| Actual Results | Change | Constant Currency Change(1) | ||||||||||
Revenue | $ | 5.4B | (2.9 | %) | (1.9 | %) | ||||||
Gross Profit (“GP”)% | 18.1 | % | 50 bps | |||||||||
Earnings from Operations | $ | 81.8M | (6.5 | %) | (5.0 | %) | ||||||
Return on Sales (“ROS”)% | 1.5 | % | (10 | ) bps | ||||||||
Earnings per Share (“EPS”) | $ | 2.84 | $ | 2.26 | ||||||||
Revenue declined in Americas Staffing and International Staffing in the face of a weakening manufacturing sector in the U.S. and softening demand in Europe, respectively. Global Talent Solutions (“GTS”) revenue improved year-over-year
GP rate improved from the impact of higher margin acquisitions and structural improvement in product mix in GTS
Earnings from Operations declined compared to last year as a higher GP rate on lower revenue resulted in lower gross profit. The decline was partially offset by lower performance-based incentive expenses and expense control efforts. Asset impairment and restructuring charges were partially offset by gain on sale of assets
EPS favorably impacted by a $0.63 gain on equity investment in 2019 compared to a $1.69 loss in 2018
|
FULL YEAR 2019 FINANCIAL SUMMARY
(Excluding Gain/Loss on investment in Persol Holdings, Acquisitions, Asset Impairment Charge, Restructuring, and Gain on Sale of Assets)
| Actual Results | Change | Constant Currency Change(4) | ||||||||||
Revenue(1) | $ | 5.2B | (5.4 | %) | (4.4 | %) | ||||||
Gross Profit %(1) | 17.8 | % | 20 bps | |||||||||
Earnings from Operations(1),(2) | $ | 78.9M | (9.7 | %) | (8.1 | %) | ||||||
Return on Sales %(1),(2),(3) | 1.5 | % | (10 | ) bps | ||||||||
Earnings per Share(1),(2),(3) | $ | 2.16 | ($ | 0.11 | ) | |||||||
Revenue declined in Americas Staffing and International Staffing in the face of a weakening manufacturing sector in the U.S. and softening demand in Europe, respectively
GP rate improved due to structural improvement in product mix in GTS, partially offset by lower perm fees
Earnings from Operations declined as the effect of declining revenues was only partially offset by improving GP rate and reduced expenses from lower performance-based incentive expenses and efforts to align costs with revenue trends
EPS declined on lower earnings
|
|
2019 asset impairment charge of $15.8 million, $11.8 million net of tax or $0.30 per share;
2019 restructuring charges of $5.5 million, $4.1 million net of tax or $0.10 per share
|
2019 gain on investment in Persol Holdings of $35.8 million, $24.8 million net of tax or $0.63 per share;
2018 loss on investment in Persol Holdings of $96.2 million, $66.8 million net of tax or $1.69 per share
|
|
Proxy Summary
EXECUTIVE COMPENSATION HIGHLIGHTSExecutive Compensation Highlights
|
 | |||
• Align pay with performance
• Align executive compensation with stockholder returns through performance-based equity incentive awards
• 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 senior officers
• Hold an annual“say-on-pay” stockholder advisory vote on executive compensation
• 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 directors, senior officers, and other designated officers of the Company to contact our Corporate Secretary prior to sales or purchases of common stock
• Maintain a
• Condition severance benefits for senior officers on compliance with restrictive covenants | • Provide employment agreements for senior officers (except where standard local practice)
• Guarantee bonus arrangements with our senior officers
• Allow directors or senior officers to engage in hedging or pledging of Company securities
• Allow the repricing or backdating of equity awards
•
• Pay dividends on performance share awards
• Provide excise taxgross-ups uponchange-in-control
• Grant incentive awards to senior officers that are not subject to the Company’s Incentive Compensation Recovery (“Clawback”) Policy
• Accrue additional retirement benefits under any supplemental executive retirement plans (“SERPs”)
• Provide excessive perquisites | |
| 12 | |
Proposal 1:1 – Election of Directors
PROPOSAL 1 – ELECTION OF DIRECTORS
The Board of Directors has nominated nine individuals for election as directors at the Annual Meeting, each to serve for one year and until his or her successor is elected and qualified. AllEach of these individuals areour director nominees currently servingserves on the Board. The other currentBoard and was elected to a one-year term at the 2021 Annual Meeting of Stockholders, except for Amala Duggirala and InaMarie F. Johnson, who were appointed to the Board in January 2022. Carol M. Adderley who has served with distinction as a director Mr. Takao Wada, issince 2010, will not be standing for reelection for the designated representative2022-2023 term. Jane E. Dutton who has served with distinction as a director since 2004, will be retiring from the Board of our joint venture partner Persol Holdings Co., Ltd. (“Persol”). Mr. Wada is not standing forre-election and, followingDirectors effective as of the date of the Annual Meeting, Persol will not have a representative on the Board.Meeting.
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, the Terrence E. Adderley Revocable Trust K (“Trust K”), 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; inMeeting. 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.
On February 12, 2020,16, 2022, our Board affirmatively determined that directors Gerald S. Adolph, Robert S. Cubbin, Jane E. Dutton,Amala Duggirala, InaMarie F. Johnson, Terrence B. Larkin, Leslie A. Murphy, and Donald R. Parfet, representing a majority of the Board, are independent. The Board’s guidelines for director independence conform to the listing standards of the Nasdaq Global Market (“Nasdaq”) on which the Company’s common stock is listed.
Each of our director nominees has been recommended for election by our Corporate Governance and Nominating Committee and nominated by our Board. They are seasoned leaders who have held an array of diverse leadership positions in public and private companies, 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 and is proud of the Company’s long history of having at least three directors who are women on the Board for the past 13 years. While we do not have a formal diversity policy, the Board will continue to build upon its diversity in connection with future Board membership.
For each of the nine director nominees standing for election, the following pages set forth certain biographical information, including a description of their principal occupation, business experience, and the primary qualifications, experience, skills, and attributes that the Corporate Governance and Nominating Committee considered in recommending them as director nominees, as well as the Board committees on which each director nominee will serve as of the 2022 Annual Meeting. The charts on diversity, independence, age, tenure, skills, experience, and attributes assume that all director nominees are elected as directors at the Annual Meeting. Age and tenure for each director nominee is effective as of April 18, 2022.
The Corporate Governance and Nominating Committee is responsible for identifying and recommending to the Board qualified candidates for Board membershipmembership. The Committee regularly reviews the mix of individual qualifications, experience, skills, and attributes of incumbent directors to assess overall Board composition and define Board succession goals. This includes identifying areas of opportunity, specifically with respect to the need to add new members with particular expertise and experience that would enhance the overall strength of the current Board and the ability of the Company to execute its long-term strategic plan. The Committee’s goal of building ais to build an effective Board with diverse perspectives and viewpoints that is effective, collegial, diverse, and responsive to the current and anticipated needs of the Company. Company and long-term interests of stockholders.
The Committee considers the following criteria: (i) ethics, character, and judgment; (ii) business and other experience, expertise,core qualifications for Board composition:
demonstrated leadership skills and knowledge relevant tounderstanding of the Company’scomplexities of business organizations;
the highest personal and strategy; (iii) professional ethics, integrity, and values;
objectivity and independence of thought; (iv) diversitythought and leadership;
strength of background, experience,character, and personal characteristics suchsound judgment;
strong interpersonal and communication skills; and
highly accomplished in his or her respective field.
| | 13 |
Proposal 1: Election of Directors
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. In addition, director candidates must have an intention to serve an appropriate length of time in order to make a meaningful contribution to the Company and the Board. Each of our director nominees demonstrates the core qualifications listed here.
The Committee also considers specific criteria as gender, race, ethnicity, sexual orientation,provided below, that varies from time to time based on the Company’s current and age;future priorities and (v)needs, and the interplaybalance of the candidate’s qualitiesexperiences, skills, and attributes with those of other members of the Board.
The Committee considers the following specific experience and skills for Board composition, as illustrated in our Board Composition Matrix on the next page:
Executive Leadership, including experience as a Chairman of the Board, Chief Executive Officer, Chief Operating Officer, or substantially equivalent level executive officer of a complex organization such as a corporation, university, or major unit of government or a professional who regularly advises such organizations.
Complex Organizations, including demonstrated leadership and other relevant experience with complex organizations of similar size and scope.
Transformation, successful leadership of large-scale transformations, including cultural evolutions, restructuring and enhancing organizational design to improve effectiveness, leveraging change management principles and tools to architect the culture needed to drive profitable growth.
Innovation, experience as innovative leader with proven experience turning new ideas and technologies into assets that transform businesses; embraces the idea of doing things differently; empowers employees to be creative and challenge the status quo; views collaboration across all levels of the organization as an opportunity to tap diverse viewpoints; stays competitive by creating a culture of continuous improvement.
Industry, including experience or skill in human resources, talent/workforce solutions, organizational behavior, or the staffing or business services industry.
Technology, experience in the high-level planning and execution of business initiatives through use of technology to build business efficiencies and competitive advantage; proactive leader in enabling the business to achieve objectives through the effective use of technology; experience defining opportunities and prioritizing technology projects based on predefined criteria (e.g., ROI, productivity, compliance).
Digitization and Modernization experience.
Financial Acumen, including the ability to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement.
Financial Expert, including financial and/or accounting expertise, generally, and as necessary to fulfill the financial requirements of NASDAQ and the Securities and Exchange Commission (education and experience as CFO, finance/accounting executive, public accountant or auditor, or person performing similar functions).
Risk Management, including experience with risk management and/or cybersecurity and data privacy expertise.
Legal or Corporate Governance experience.
Mergers & Acquisitions experience.
Social, Climate, and Environmental, and/or sustainability-related skills and experience.
Exemplification of Russ Kelly Family Characteristics, including high personal and professional ethics, integrity and values, pioneering spirit, and human capital experience.
Audit Committee experience (other than Kelly).
Compensation Committee experience (other than Kelly).
Governance & Nominating Committee experience (other than Kelly).
In determining whether to recommend a director forre-nomination, the Committee also considers the director’s recent contributions and potential for continuing contributions to the work of the Board. 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.
Each The Committee may engage third parties to assist in the search for director candidates. The director selection process is described in greater detail in the “Corporate Governance” section of our director nominees has been recommended for election by our Corporate Governance and Nominating Committee and nominated by our Board. 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 refreshment.
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.proxy statement.
| 14 | |
Proposal 1: Election of Directors
The matrix below is a summary of the range of key experience, skills, and attributes that each director nominee brings to our Board. Because it is a summary, it is not intended to be a complete description of each director nominee’s strengths or contributions to the Board. Additional details on each director nominee’s qualifications, experiences, skills and attributes are set forth in their biographies.
| Director Nominees | |||||||||||||||||||||||||||||||||||||||||||||
| Specific Experience and Skills (May vary based on current and future Company priorities/needs) | COB Parfet | CEO Quiqley | Dir Adolph | Dir Corona | Comp Chair Cubbin | Dir Duggirala | Dir Johnson | Gov Chair Larkin | Audit Chair Murphy | ||||||||||||||||||||||||||||||||||||
Executive Experience | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||
Complex Organizations | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||
Transformation | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||
Innovation | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||
Industry | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||
Technology | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||||||
Digitization and Modernization | ● | ||||||||||||||||||||||||||||||||||||||||||||
Financial Acumen | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||
Financial Expert | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||||||
Risk Management | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||
Legal or Corporate Governance | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||||||
Mergers & Acquisitions | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||
Social, Climate, and Environmental | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||||||
Exemplification of Russ Kelly Family Characteristics | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||
Audit Committee (other than Kelly) | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||||
Compensation Committee (other than Kelly) | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||||
Governance & Nominating Committee (other than Kelly) | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||||||
Tenure and Independence | |||||||||||||||||||||||||||||||||||||||||||||
Board Tenure (years) | 17 | 2 | 4 | 4 | 7 | <1 | <1 | 11 | 14 | ||||||||||||||||||||||||||||||||||||
Independence | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||||||||||
Demographics | |||||||||||||||||||||||||||||||||||||||||||||
Age | 69 | 60 | 68 | 63 | 64 | 47 | 57 | 67 | 70 | ||||||||||||||||||||||||||||||||||||
Gender Identity | M | M | M | M | M | F | F | M | F | ||||||||||||||||||||||||||||||||||||
African American or Black | ● | ● | |||||||||||||||||||||||||||||||||||||||||||
Alaskan Native or American Indian | |||||||||||||||||||||||||||||||||||||||||||||
Asian | ● | ||||||||||||||||||||||||||||||||||||||||||||
Hispanic or Latinx | |||||||||||||||||||||||||||||||||||||||||||||
Native Hawaiian or Pacific Islander | |||||||||||||||||||||||||||||||||||||||||||||
White | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||||||||||||
Two or More Races or Ethnicities | |||||||||||||||||||||||||||||||||||||||||||||
LGBTQ+ | |||||||||||||||||||||||||||||||||||||||||||||
Did Not Disclose Demographic Background | |||||||||||||||||||||||||||||||||||||||||||||
| | | 15 |
Proposal 1: Election of Directors
BOARD DIVERSITYBoard Diversity
 | “Kelly is proud to have a rich history of diverse representation on its board. The inclusion of diverse voices has guided Kelly’s evolution and is playing a crucial role in enabling the bold decisions that upderpin the company’s strategy for growth.” Donald Parfet Chairman of the Board |
|
| |
| ||
| 16 | |
Proposal 1: Election of Directors
Biographical Information About Director Nominees
 | ||||||||||
 |
Age: Director since: 2004 Chairman of the Board Independent |  |  |
Age: Director since: 2019
Chief Executive Officer | ||||||
Board Committees:
• None | Board Committees:
• None | |||||||||
Principal Occupation and Directorships:
• Managing Director, Apjohn Group, LLC (2001 - present)
• 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. (2019 - present)
• 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, MBA, Finance
• University of Arizona, BA, Economics | Education:
• National Law Center at George Washington University, JD
• University of Michigan, BA | |||||||||
|
| Mr. Quigley was appointed President and Chief Executive Officer of Kelly in October 2019. | ||||||||
| | 17 | |
Proposal 1: Election of Directors
 | ||||||||||||||
 |
Age:
|  |
Director since: 2018 Independent |  | GEORGE S. CORONA Age: 63 Director since: 2017 | |||||||||
Board Committees: • Audit • Compensation and Talent Management
• Governance and Nominating | Board Committees:
•
| |||||||||||||
Principal Occupation and Directorships:
|
• Director,
• Director, Cintas Corporation (2006 - present)
• Board Chair, Cardinal Spellman High School Board (2022 - present) • Trustee, Cardinal Spellman High School Board (2010 -
• Senior Partner and other executive positions, Booz & Co. (1981 - 2016) | Principal Occupation and Directorships: • President and Chief Executive Officer, Kelly Services, Inc. (2017 - 2019) • Executive Vice President and Chief Operating Officer, Kelly Services, Inc. (2009 - 2017) | ||||||||||||
Education:
|
• Harvard Business School, MBS
• 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 | Education: • Oakland University, MBA • Wayne State University, BSBA | ||||||||||||
|
| |||||||||||||
|
Proposal 1: Election of Directors served as co-chair from 2011 to 2021. Mr. Adolph is a founding board member of Black Economic Alliance and served as a director from 2017 to 2020. He also serves on the board of Abt Associates. His extensive business expertise, strategic perspective, and strong leadership skills make him a valued contributor to the Board.
 |
|  |
| |||
|
| |||||
|
| |||||
|
| |||||
| ||||||
| 18 | |
Proposal 1: Election of Directors
 | ROBERT S. CUBBIN Age: 64 Director since: 2014 Independent |  |
Age: 47 Director since: 2022 Independent | |||||||
Board Committees: • Audit • Compensation and Talent Management (Chair) • Governance and Nominating | Board Committees: • None | |||||||||
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) | Principal Occupation and Directorships: • Executive Vice President and Chief Information Officer, United Services Automobile Association (USAA) (2022 – present) • Senior Executive Vice President, Chief Operations and Technology Officer, Regions Financial Corporation (2017 – 2021) • Director, Innovation Depot (2021) • Director, Techbridge, Inc. (2016 - 2020) | |||||||||
Education: • Detroit College of Law, JD • Wayne State University, BA, Psychology | Education: • Columbia University, MS, Technology Management • University of Nebraska at Omaha, MBA, International Business • Osmania University, BS, Electronics and Communications Engineering | |||||||||
| Mr. Cubbin is an attorney with 31 years of experience in insurance law. In 2016, he retired as President and Chief Executive Officer of an insurance company. | Ms. Duggirala joined our Board in January 2022. She is a leading strategist in digital transformation and technology with more than 24 years of leadership experience with global organizations. In addition to her strong fin-tech background, she brings to the Board extensive experience in vendor management, acquisition due-diligence, integrations, strategic planning, product development, operations, engineering, and data management. | |||||||||
| | 19 | |
Proposal 1: Election of Directors
 | ||||||||||||||
 |
Age: 57 Director since: 2022 Independent |  | TERRENCE B. LARKIN Age: 67
|  |
Director since: 2010 Independent | |||||||||
Board Committees:
• | Board Committees: • Audit
• Governance and Nominating (Chair) | |||||||||||||
•
• • Director, Entrepreneurship for All (EforAll) (2020 - present) | ||||||||||||||
Principal Occupation and Directorships:
|
• Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation (2008 - 2020) | |||||||||||||
Education:
•
• | Education:
• Wayne State University Law School, JD cum laude
• Michigan State University, BA (High Honors), Finance | |||||||||||||
|
| |||||||||||||
| 20 | |
Proposal 1: Election of Directors
 | ||||||||||
 |
Age: Director since: 2008 Independent | |||||||||
Board Committees:
• Audit (Chair)
• Compensation and Talent Management |
|
| ||||||||
Principal Occupation and Directorships:
• President and CEO, Murphy Consulting, Inc. (2008 - present)
• Certified Public Accountant
• Member of AICPA’s Governing Council (2000 - present)
• Member of NACD Advisory Councils on Audit Committee Issues and Risk Oversight (2012 - present)
• Director, Detroit Legal News Company (2012 - present) | ||||||||||
Education:
• University of Michigan, BBA, Accounting | ||||||||||
| ||||||||||
The Board of Directors recommends a vote “FOR” the election of nine directors. |
| | 21 | |
Compliance with Nasdaq Independence Standards forNon-Controlled Companies
Nasdaq, on which the Company’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 voting power for the election of its directors. The Company is a “controlled company” by virtue of the fact that the Terence E. Adderley Revocable Trust K, (“Trust K”), discussed below, has the power to vote approximately 91.6%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 all members of the Compensation Committee are independent directors and all members of the three Board Committees, Audit, Committee are independent directors (which is a Nasdaq requirement for all listed companies). Commencing with the Annual Meeting of the Board to be held on May 6, 2020, when committee assignments will be made, all members of theCompensation and Talent Management, and Corporate Governance and Nominating, Committee will be independent directors and the Company will fully satisfy the Nasdaq independence standards for boards and board committees ofnon-controlled companies.are independent.
Prior to his death in October 2018, Mr.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”). Theco-trustees are required to act by a majority vote in voting andwhen 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 beneficiaries of Trust K.
William U. Parfet, aco-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 theco-trustees are required to act by majority vote and that none of theco-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.
Role of the Board of Directors
The Board bears responsibility for the oversight of management on behalf of stockholders in order to ensure long-term value creation. In that regard, the Board oversees and provides guidance for the Company’s business, property, and affairs. On an ongoing basis, the Board oversees management’s development and implementation of the Company’s strategy and business planning process, and monitors performance relative to the achievement of those plans. The Board sets the tone at the top to support a corporate culture that emphasizes ethical standards, professionalism, integrity, and compliance. The Board and its committees consider long-range strategic issues and material risks facing the Company, together with management’s actions to address and mitigate these risks; oversee corporate policies and processes to promote and maintain the integrity of the Company’s financial reporting and controls, legal and ethical compliance, and relationships with customers and suppliers; review the Company’s sustainability practices and strategies; and provide oversight relative to the compensation of senior management, leadership development, and management succession planning.
As part of its oversight of the strategic direction of the Company, senior leadership presents to the Board at the beginning of each year the annual business plans for each business unit and the consolidated annual business plan for the Company as a whole. At each subsequent meeting throughout the year, management shares quarterly performance results for each business unit and the whole Company, and the Board discusses how these outcomes compare to the annual plans. Each year, the Board engages in a two-day offsite strategic planning meeting with management where it conducts a comprehensive review and discussion of the Company’s strategic direction and goals over the short-, medium-, and long-term, as well as management’s plans to achieve such goals. At least twice each year, the business unit presidents provide an in-depth review of their businesses to the Board, which includes a review of the strategic goals of the business and business performance relative to business strategy.
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 and the Chief Executive Officer
| 22 | |
Corporate Governance
should be separate, with the Chairman being an independent director, because that structure affords independent Board leadership and allows the Chief Executive Officer to concentrate on the Company’s business. Donald R. Parfet serves as Chairman of the Board and Peter W. Quigley serves as Chief Executive Officer.
The Chairman of the Board’s duties include consulting with and advising our Chief Executive Officer, presiding over meetings of the Board and, together with our Chief Executive Officer, presiding over meetings of stockholders. The Chairman of the Board’s duties also include providing effective leadership to the Board including ongoing monitoring of its performance, compliance with governance requirements and best practices, serving as liaison among the Chief Executive Officer and the independent directors, establishing the annual schedule for Board meetings (in consultation with the Chief Executive Officer), developing and approving agendas for Board meetings, working with the Chief Executive Officer to ensure that information flows to the Board to facilitate understanding of, and discussion regarding, matters of interest or concern to the Board, 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, authority to call and preside over special meetings of the Board, 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, the Company’s Corporate Governance Principles provide that the independent directors will elect one of their number to serve as Lead Director and fulfill many of the Chairman of the 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 leadinginclude: providing leadership to the Company’s management team,team; developing and presenting to the Board the Company’s strategy and long-term plans, medium-term plans and annual budgets, and within this framework, the performance of the business; complying with legal and corporate governance requirements, making recommendations on the appointment and compensation of executive officers, management development, and succession planning; representing the Company externally,externally; consulting with the Chairman of the Board about developments in the Company,Company; and communicating with all directors about key issues outside of Board meetings.
| | 23 | |
Corporate Governance
| ||||||||
| ||||||||
| ||||||||
The Board has established three standing committees: an Audit Committee, a Compensation and Talent Management Committee, and a Corporate Governance and Nominating Committee. Each committee functions under a written charter adopted by the Board, which is available on the Company’s website atkellyservices.com or to any stockholder who requests a copy. The current members, responsibilities, and the number of meetings each of these committees held in 20192021 are shown below.
 | Audit Committee All Independent |  | Compensation and Talent Management Committee All Independent |  | Governance and Nominating Committee All Independent |
| Audit Committee |  | |
Members: All Independent
Leslie A. Murphy (Chair)
Gerald S. Adolph Robert S. Cubbin Terrence B. Larkin
Meetings in
The Board | Key Responsibilities: • Oversees and reports to the Board with respect to the quality, integrity, and • Appoints, compensates, 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 • Reviews and discusses with management the Company’s major financial, security, and cybersecurity risk exposures and the steps management has taken to monitor and control such exposures • 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 with respect to reports of potential material violations by the Company or its officers, directors, employees, or agents, of applicable U.S. federal or state law or fiduciary duty arising under such law, and of the Company’s policies including the Code of Business Conduct and Ethics | |
| 24 | |
Corporate Governance
| Compensation and Talent Management Committee |  | |
Members: All Independent
Robert S. Cubbin (Chair)
Gerald S. Adolph Jane E. Dutton
Meetings in
| 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 annually, for senior officers (including the CEO), corporate and business unit goals and establishes the level of performance that must be achieved for each • • Reviews stock ownership requirements for 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 • Appoints, compensates, and oversees the work performed by an independent compensation or legal advisor • Oversees the Company’s strategies, initiatives, and programs related to human capital management and determines their effectiveness, including with respect to diversity, equity, and inclusion, workplace and culture, benefits and well-being, employee engagement, performance management, and talent recruitment, development, and retention | |
Compensation and Talent Management Committee Interlocks and Insider Participation
During 2021, none of the Company’s executive officers served on the Board of Directors of any entities whose directors or officers served on the Company’s Compensation and Talent Management Committee. No current or past executive officers of the Company or its subsidiaries serve on the Compensation and Talent Management Committee.
|
Corporate Governance
| Corporate Governance and Nominating Committee | |||
 | |||
Members:
Terrence B. Larkin (Chair)
Gerald S. Adolph Robert S. Cubbin Jane E. Dutton
Meetings in
| Key Responsibilities:
• 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 • Engages in succession planning for our Board of Directors • • Identifies and assesses the independence, backgrounds, and skills required for members of the Board and Board committees • Identifies, considers, and recommends, consistent with criteria approved by the Board, qualified candidates for election as directors, including the slate of directors to be nominated by the Board for election at the Company’s Annual Meeting • Oversees the orientation and education of new directors • Oversees the annual evaluation process of the Board and Board committees, as well as the director peer review • Oversees and periodically reports to the Board on matters concerning | ||
| | 25 |
Corporate Governance
The Board is committed to ensuring that the Company has the right executive leadership team in place. Under our Chief Executive Officer’s leadership, the Company has transformed the management team by elevating strong internal talent while bringing in people with the experience and skills necessary for our success.
The following lists our executive officers as of April 18, 2022. Additional biographical information for each of our executive officers can be found at kellyservices.com.
Name | Age | Biographical Information | ||||||
| Peter W. Quigley President and Chief Executive Officer | 60 | Mr. Quigley served as Executive Vice President, President, Global Staffing, and General Manager, Global Information Technology, Global Business Services and Global Service from May 2017 through September 2019. He served as the Company’s Chief Administrative Officer and General Counsel from May 2015 to May 2017, General Counsel from January 2013 to May 2015. Mr. Quigley led the Company’s Global Client Relationships group from January 2008 to December 2012 and served in multiple roles including Sr. Director of Service, Vice President, Contract Administration, and Vice President, Associate General Counsel from the time he joined the company in November 2002 until December 2007. Prior to joining the Company, Mr. Quigley held a variety of roles at Lucent Technologies and AT&T Corporation. | |||||
| Olivier G. Thirot Executive Vice President and Chief Financial Officer | 61 | Mr. Thirot served as the Company’s acting Chief Financial Officer from March 2015 to January 2016 when he was appointed Chief Financial Officer. He served as the Company’s Senior Vice President and Chief Accounting Officer from September 2014 to March 2015. Mr. Thirot was Vice President, Finance for the Company’s EMEA business beginning in 2008 when he joined the Company and assumed added responsibility for the APAC business in 2011. Prior to joining the Company, he worked at L. Raphael as Chief Financial Officer and prior to that, he spent 18 years with Bacardi, LTD in various leadership positions. | |||||
| Peter M. Boland Senior Vice President Chief Marketing Officer | 58 | Mr. Boland has served as the Company’s Chief Marketing Officer since January 2018. Prior to joining the Company, he was Senior Vice President, Brand Marketing for Charles Schwab from January 2012 to June 2017. Mr. Boland held several positions at BlackRock including Managing Director, Head of Global Brand Marketing from June 2011 to December 2011; Managing Director, Brand Marketing iShares from December 2009 to August 2011, and Senior Director, Brand Marketing iShares from December 2006 to November 2009. | |||||
| Amy J. Bouque Senior Vice President Chief People Officer | 53 | Ms. Bouque has served as the Company’s Chief People Officer since September 2020. Prior to joining the Company, she spent 12 years with Ally Financial Inc in several roles, serving as Executive Director of Talent Management from January 2016 to September 2020, Senior Director, Human Resources January 2014 to January 2016, Director, Talent Acquisition from January 2012 to January 2014, and Director, Human Resources from June 2008 to January 2012. Prior to that she worked for DTE Energy from 2004 to 2008. | |||||
| Tammy L. Browning Senior Vice President President, KellyOCG | 48 | Ms. Browning most recently served as Senior Vice President and Vice President and Managing Director, GTS Talent Fulfillment from October 2018 to July 2020. She rejoined the Company in April 2017 as Integrated Vertical Lead after leaving in 2010 to join Yoh as Senior Vice President of their U.S. Operations. During her previous tenure with the Company, Ms. Browning served as Americas Product Group Leader from September 2009 to February 2010, West Region Manager from May 2006 to September 2009, Branch Manager from April 2004 to May 2006, and Sales Manager from February 2003 to April 2004. | |||||
| 26 | |
Corporate Governance
| Timothy L. Dupree Senior Vice President President, Kelly Professional & Industrial | 45 | Mr. Dupree most recently served as the Company’s Senior Vice President and Chief Growth Officer from January 2020 to January 2021. He served as Vice President and Managing Director, Global Service from August 2017 through December 2019, Vice President, Global Solutions Design from October 2014 to August 2017, Vice President, Global Talent Supply Chain Management from November 2013 to October 2014, Director and Vice President, Global Solutions from January 2009 to November 2013, Sr. Manager and Manager, Corporate Accounts from March 2004 to December 2008, and Recruiting & Sales Manager from August 2000 to April 2004. | |||||
| Dinette Koolhaas Senior Vice President President, Kelly International | 53 | Ms. Koolhaas previously served as Vice President, EMEA Operations from September 2013 to February 2017, at which time she took on Managing Director responsibilities for EMEA until July 2020 when she took on her current role. Prior to that, she was Vice President and Regional Manager of Western Europe from June 2008 through August 2013. Prior to joining the Company in 2008, Ms. Koolhaas served in various roles with USG People. | |||||
| Daniel Hugo Malan Senior Vice President President, Kelly Science, Engineering & Technology | 52 | Mr. Malan has served as the Company’s President of Science, Engineering, and Technology since March 2020. Prior to that he worked at EmployBridge for three years, serving as President of its Commercial Business from December 2016 to July 2018 before being named Chief Operating Officer in August 2018 through November 2019. From November 2014 to November 2016, Mr. Malan was Executive Vice President and President, North American Staffing for CDI Talent and Technology Solutions, and from March 2009 to October 2014 served as Senior Vice President and President of operating units for Sears Holdings. | |||||
| Nicola M. Soares Senior Vice President President, Kelly Education | 53 | Ms. Soares has led the Education business since joining the Company in November 2010. Prior to that, she was Vice President, Marketing and Sales NBC Learn for NBC Universal from May 2007 through December 2009. She also held various positions at McGraw-Hill Education including Vice President, National Sales Manager K-12, Vice President of Product Innovation and Director of Marketing, Secondary Social Studies from November 1996 through May 2007. Early in her career, Ms. Soares spent five years as a public school educator teaching at both middle and high school levels. | |||||
| Vanessa P. Williams Senior Vice President | 50 | Ms. Williams has served as General Counsel since joining the Company in September 2020. Previously, she worked from July 2006 to September 2020 in a variety of roles for IHS Markit including Senior Vice President, Legal, Risk and Compliance; Vice President, Divisional Counsel-Transportation; Vice President, Chief Legal Counsel and Global Privacy Officer (IHS, Inc.); Vice President and Deputy General Counsel and Chief Compliance Officer; Deputy General Counsel; and Associate General Counsel (R.L. Polk & Co.). | |||||
| | 27 |
Corporate Governance
While management is responsible for managing risk, one of the important functions of the Board and its committees is oversight of risk management. This includes consideration of strategic issues and risks to the Company as well as management’s actions to address and mitigate those risks. Risk is inherent in business, and the Board’s oversight, assessment, and decisions regarding risks occur in conjunction with the other activities of the Board and its committees.
Risk Governance and 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 to the full Board presented at regular Board meetings. Focuses on risk management strategy and risks of greatest significance, and seeks
| 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. | ||||||
Audit Committee | Compensation and Talent 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 • Oversees the Company’s overall risk management governance structure, risk assessment, and enterprise risk management processes • Reviews all quarterly and annual reports, including any disclosure of risk factors affecting the business • Oversees risks associated with information technology security, cybersecurity, and data privacy, and breach preparedness and response plans • 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 • 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 • Oversees management of risks related to the Company’s human capital • Oversees the Company’s Clawback Policy | • Manages risk associated with governance issues, such as the independence of the Board and its | ||
|
| • Maintains | ||
|
Corporate GovernancePolicy
|
|
| ||
• |
| • 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 | ||
|
|
| ||
• Oversees emergency succession planning for the | • 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 | |||
| 28 | |
Corporate Governance
| ||||
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 are under the direction of the Vice President and Chief Risk, Compliance, and Privacy Officer (“Chief Risk Officer”). 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 Compensation Programs.”
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.
Enterprise Risk Management 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, facilitatedfacilitates 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 periodicin-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 cyber security,pandemic response, cybersecurity, integration of risk appetite practices into the Company’s ongoing operations, data privacy, wage-hour risk management, third-party risk management, and improvements to the Company’s compliance governance and incident reporting 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.cybersecurity 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 on the effectiveness of the Company’s risk identification, prioritization, and mitigation processes to the Audit Committee.
Since 2020, the ERM team has 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 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. During these discussions, the Board provided guidance and support for the Company’s initiatives to mitigate the risks presented by the pandemic and its impact on global markets.
BUSINESS CONTINUITY PLAN & RESPONSE | ||||||
| Emergency Management Team Global, interdepartmental group is empowered to quickly make strategic decisions in response to critical events that affect our employees and facilities. |
| Communications A comprehensive protocol which leverages a variety of methods, including e-mail, audio calls, and text messaging, to maintain communication with employees, clients and vendors/suppliers. | |||
| Continuity of Operations The depth and breadth of our field network and our operations allow us to shift sites to support customers from a remote location. |
| Business Continuity Plan Testing Kelly’s Business Continuity and IT Disaster Recovery programs are tested at least annually. Most recently, the Business Continuity Plan was tested in September 2021, and the Disaster Recovery Plan in October 2021. | |||
| Pandemic Planning Specific Business Continuity planning for pandemics includes infections control measures, communication, education, and travel safety mechanisms. | |||||
| | 29 | |
Corporate Governance
Risk Assessment of Employee Compensation Programs
Annually, at its February meeting, the Compensation and Talent Management Committee reviews management’s Compensation Program Risk Assessment Report. The report is prepared by the Company’s Executive Compensation group and Human Resources groups and is reviewed by the Company’s 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 Board’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:
Short- and long-term incentive performance measures and equity award types do not encourage excessive risk-taking
A balanced structure with a mix of compensation that includes an appropriate mix of fixed and variable cash and equity; and, for variable compensation, 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 oftop-line vs. bottom-line metrics; and use annual and long-term measures that complement each other
Plans are well-designed and do not include steep payout curves, uncapped incentive payouts, and misaligned payout timing
Incentive plans are tested for multiple scenarios under realistic assumptions to ensure that potential payouts are reasonable relative to results
A thorough and qualitative assessment of how results were achieved, and the quality and sustainability of the results is conducted
Validation of the relationship between performance and incentive plan payouts to ensure it falls within the range of competitive practices determined by comparison with a representative peer group and general industry
Implementation of risk-mitigating features such as a clawback policy that applies in certain circumstances involving 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 approaches
Incentive plan governance includes involvement at a variety of levels from the Compensation Committee to various corporate functions including Corporate Governance, Executive Compensation, Finance, HR, Legal, and the Board’s outside consultant, Pay Governance
Potential risk is discussed with the Compensation Committee, recorded in Committee minutes, and discussed in the Compensation Discussion and Analysis section of the Company’s Annual Proxy Statement
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, 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 | ||
To assess the risk of employee compensation programs below the executive level, the Company’s Human ResourcesCompensation group has implemented aan internal 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
Modeling, approval, and communication of incentive plans;plans
Calculation, audit, approval, and communication of incentive payments; andpayments
Annual plan reviews to ensure planned design updates align with business goals and budgets, and do not present a material risk to the Company.Company
After due consideration of management’s 20192021 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.
| 30 | |
Corporate Governance
| (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, Sustainable Development Goals (“SDGs”), United Nations (“UN”) Guiding Principles on Business and Human Rights, United Nations Global Compact (“UNGC”), and the World Employment Confederation. |
| | 31 |
Corporate Governance
Based on six key pillars, our Corporate Sustainability and ESG Strategy focuses on an ESG structure that is aligned with our critical business values:
Environmental: Occupational Health and Safety (“OH&S”); 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 Corporate Sustainability and ESG Strategy, we work closely with cross-functional areas to assess our outreach and impact, considering an interdisciplinary perspective. Since 2019, we formalized the oversight of our ESG efforts through an ESG advisory team represented by executive leaders and overseen by the Corporate Governance and Nominating Committee of the Board. Kelly’s ESG advisory team met quarterly in 2021 to drive strategy and provide decision-making guidance to the Company. The sustainability and ESG lead 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.
In 2021, we continued to engage with our customers and suppliers worldwide, and formalized ESG requirements on the supplier risk assessment methodology to evaluate their commitment to these issues and opportunities. In 2020 we conducted a third-party risk analysis gap assessment to identify supplier performances and capabilities around ESG. As a result of the assessment, we redesigned our responsible supply chain management approach to better align to sustainable management standards, and in 2021 we implemented a new and improved Supplier Code of Conduct that helped our suppliers improve their practices around ESG topics.
| 32 | |
Corporate Governance
During 2021, we continued our focus to improve Kelly’s ESG performance. Listed below are key goals and outcomes in each area for the year. These results may have been impacted by COVID-19.
Environmental
2021 Goals
The challenges we faced in 2020 as a result of the pandemic; the sale of Kelly’s corporate headquarters, HQ Annex, and Lindsey Centre properties; and adoption of a remote workforce model, prompted us to reassess and redesign our environmental management process and goals to better align with our operational footprint, legislation changes, and proposed SEC rules for disclosures of ESG performance, specifically climate risk. Our 2021 goals were redefined as:
Establish a new environmental science-based baseline to define targets in 2021 and moving forward for 2022 and beyond.
| • | Achieved: Although Kelly has been reporting carbon emission following a different accounting methodology and tools; in 2021, the Company’s greenhouse gas (“GHG”) accounting now aligns with the GHG Protocol Corporate Standard methodology. This process has allowed us to increase our measurement scope, and our GHG emissions inventory now includes metrics from our global IT assets, working remotely, employee commuting, waste, and leased assets across global operations. Future targets will be measured against our new 2021 baseline: |
| Emissions | Total (mt CO2 emissions) | |||
Scope 1 | 1,838 | |||
Scope 2 (lb.) – Office | 5,735 | |||
Scope 2 (lb.) – Data Centers | 360 | |||
Scope 2 – DC (Market-based) | 0 | |||
Scope 3 | 7,442 | |||
TOTAL GHG emissions | 15,375 | |||
Note: The above table represents global locations, excluding EMEA. As of publish date, our metrics and methodology were under review and as such may be subject to restatement.
Increase transparency, accuracy, and benchmark our carbon footprint to industry standards
| • | Achieved: In 2021, we aligned our greenhouse gases metrics across scope 1, 2 and 3 to the GHG Protocol: Corporate Standard methodology and we will continue to report progress in our Corporate Sustainability and ESG Report, CDP, and EcoVadis. |
Additional Achievements for 2021
3.97 tons of building material waste was recycled from our corporate campus.
| • | Recycled over 141,000 lbs. of paper through the Shred-it® recycling program, saving over 1200 trees, 493,700 gallons of water, and 26,800 gallons of oil. |
28,863.84 pounds of e-waste recycled and over 1,500 units remarketed.
We held our second Supplier Carbon Offset Project where we avoided an estimated 34.7 tons of CO2 emissions into the atmosphere by holding the event virtually. This year our carbon offsetting initiative supported Women-Owned Farmers in Rwanda, Tanzania, and Malawi, through reforestation of native and agricultural species, where we engaged our suppliers and internal team in planting approximately 2,700 trees, exceeding our target of 2,500 trees for One Tree Planted, our partner in reforestation efforts.
Our Absolute Zero program continued to record the lowest recordable incident rate against the industry standard for the last 10 years, demonstrating Kelly’s leadership on OH&S.
| | 33 |
Corporate Governance
Social
2021 Goals
Engage: 4,000 hours of volunteer work with 20% employee participation by December 2021.
| • | Achieved: Exceeded our service day volunteer hours goal with more than 900 employees contributing over 6,900 volunteer hours in social impact and a 21% participation rate. |
Human Rights: publish global Human Rights policy with alignment to global initiatives that include the International Labour Organization (“ILO”) Convention and the UN Guiding Principles on Business and Human Rights.
| • | Achieved: Emphasizing our commitment to ethical business practices, Kelly published a global Human Rights policy applicable to all employees, customers, suppliers and interested parties, in July 2021. |
Accelerate Kelly’s Diversity, Equity, and Inclusion (“DEI”).
Ongoing: there are continuous efforts in place to strengthen, accelerate and integrate DEI practices into all Company policies, programs, products, processes, and behaviors.
| ○ | Seven affinity groups established in 2020 and operating globally in 2021. |
Additional Achievements for 2021
Employee contributions of over $98,400 USD towards charitable organizations.
Corporate contributions of over $112,000 USD towards social investment programs.
Employee contributions of over $31,000 USD towards the Kelly Relief Fund, providing grants totaling over $14,000 USD to 18 of our eligible full-time and temporary employees affected by natural or human-made disasters.
Received top score on the Human Rights Corporate Equality Index 2022 for the fifth consecutive year.
Over 1,300 Kelly temporary employees trained out of which 91.2% received certifications through our Kelly Certification Institute program.
Introduced the Automation Enablement Center (“AEC”) program offering an automation and learning certification for Kelly internal employees, focused on promoting the use of accessible no/low code platforms.
Launched Kelly 33 Second Chances Program, an Equity@Work initiative that provides a second chance for talent with a non-violent/non-relevant criminal history to play a contributing role in the workplace.
Implemented a new, more robust Supplier Code of Conduct, aligned with international frameworks and standards.
Our Diverse Global Supplier Network connected approximately 441 certified small and diverse suppliers to our Kelly network in 2021.
Ongoing COVID-19 response:
Protecting the health and safety of employees during the COVID-19 crisis was our top priority, and in response we implemented and continue to maintain 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. While the COVID-19 crisis has been mostly controlled, Kelly remains vigilant of health and safety mandates, protocols and procedures that can help our stakeholders remain safe.
Provided immediate and frequent communications to all employees using multiple channels that included: emails, text messages, social media, periodic webcasts, and leadership messages. Maintain a specific page on our web site and also 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.
Maintain 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, communicated, and maintained detailed plans for the return of employees to the workplace, to ensure employee confidence in a safe workplace.
| 34 | |
Corporate Governance
Governance
2021 Goals
Actively and formally communicate our non-financial and sustainability performance to all stakeholders (employees, investors, community, authorities, customers, etc.) by December 2021.
| • | Achieved: In May 2021 we published our 2020 Sustainability Report, prepared in accordance with the GRI Standards: Core Option, Sustainability Accounting Standards Board (“SASB”), and Communication on Progress according to the United Nations Global Compact Guidelines. The report formalizes and discloses our Corporate Sustainability Strategy and outcomes as aligned to the above mentioned ESG framework and reporting guidelines. |
Conduct our second materiality assessment with key stakeholders identifying significant ESG issues in order to define performance indicators and initiatives within our sustainability strategy and ESG reporting.
| • | Achieved: Engaged over 600 global stakeholders in materiality assessment process, prioritizing most relevant topics and establishing the model for Kelly’s ESG strategy. The stakeholders engaged in this process were identified across our global operations considering: the number of social dialogues and interactions; the level of influence for our business based on their type of service, industry, and business sector; and the diversity and variety of their representation. The stakeholders who participated in this process were: suppliers, customers, employees, contractors, talent and Kelly’s leadership (ESG Advisory team). |
Additional Achievements for 2021
44% of the Board’s Directors are diverse, representing women or diverse members.
Streamlined global policy process into quarterly acknowledgements and integrated trainings.
91% of employees signed the Code of Business Conduct and Ethics.
88% of employees completed global policy training on business ethics and human rights topics.
In 2021 we launched improvements to our Supplier Code of Conduct mid-year, starting with our suppliers with the highest spend and headcount and including changes to how suppliers acknowledge acceptance of each standard.
External Assessments
External assessments, like EcoVadis and CDP, help Kelly align its corporate sustainability initiatives to the expectations of our customers, as well as to accurately report results. Since 2018, we have adopted international sustainability standards such as GRI, UNGC, and 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 measure our sustainability performance and provide recommendations on our strategy implementation.
2021 EcoVadis achievements:
Recognized as a Silver Supplier for fourth consecutive year.
Ranked in top 6% and 88th percentile of companies assessed in the temporary employment agency activities industry.
Placed in top 1% of companies rated in the industry’s environment category and top 5% in the sustainable procurement category.
The Company’s current Corporate Sustainability and ESG Report: Growing with Purpose is available for viewing in its entirety on kellyservices.com. We plan to publish our 2021 report in early May 2022.
| | 35 |
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. 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 the talent we put to work for our customers. As part of these efforts, we strive to offer competitive total rewards programs, promote employee development, foster an 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, we implement policies and practices that align with applicable laws and regulations and are in the best interest of our employees and talent, and the communities in which we operate.
| As of January 2, 2022, we employed approximately 4,500 staff members in the United States and an additional 2,900 in our international locations. The Company’s 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 2021, we placed more than 350,000 individuals in positions with our customers. In instances where Kelly remains the employer of record for talent working at customer locations, it retains certain responsibilities associated with the employees (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and administration and payment of the employers’ share of applicable payroll taxes. We also offer our Kelly talent access to competitive health and benefit programs while they are working with us. |
| 36 | |
Corporate Governance
 | The Company provides employees with competitive compensation opportunities, aligning employee and stockholder interests 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 attract, retain, and reward talented individuals who possess the skills necessary to achieve our strategic goals and create long-term value for our stockholders. In addition to cash and equity compensation, we also offer benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits, and defined contribution retirement plans. We review our compensation and benefit programs regularly and respond to changes in market practice. Recent changes have included enhancements to our U.S. paid time off for mental health and well-being, voting and family and parental support. Pay and benefits programs provided to our international employees are in line with competitive local practice. |
 | Since 1946, our founder fought to increase access to work for women and advocate for the value temporary and independent workers bring to the workplace. We are committed to fostering an inclusive, equitable, and diverse workforce, which we believe produces more creative solutions, and results in better, more innovative products and services. A significant majority of Kelly’s U.S. workforce are women, including a majority of director and above roles. Additionally, for a fifth consecutive year, the Company achieved a 100% rating from the Human Rights Campaign Foundation’s Corporate Equality Index for LGBTQ+ equality in the workplace. Kelly is a workplace leader in creating an inclusive environment with diverse teams, aiding our ability to attract and retain key talent. The Company fosters a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together. Kelly promotes employee development and internal career mobility to enable our team to achieve their full potential and ensure we have the evolving workforce capabilities that the future demands. |
 | We consider sustainability to be a guiding principle in strengthening the relationship with our global workforce, suppliers, and customers. We seek to contribute to improving the quality of life of our employees, their families, as well as the communities in which they operate. Designed on the concept of social investment and creating shared values, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives, including offering paid time off to volunteer, where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy. Through our Equity@Work initiative, 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. For more information on our diversity, equity, and inclusion and community involvement initiatives, please see our Sustainability Report at kellyservices.com. |
| | 37 |
Corporate Governance
The Corporate Governance and Nominating Committee is responsible for the identification, screening, and recommendation of qualified candidates for nomination by the full Board. For director selection conducted during 2021, a subcommittee comprised of three Directors led the process. The subcommittee retained an independent third-party search firm, which recommended candidates who satisfied the Board’s criteria. The search firm also provided research and pertinent information related to candidates, as requested. Potential candidates were also suggested by several members of the Company’s Board and senior leadership team. In evaluating prospective nominees, the subcommittee considered the current composition of the Board, the business and strategic needs of the Company, and the desired composition of the Board. An overview of the Board’s director selection process is provided below.
| Evaluate Board Composition | Using the Company’s Corporate Governance Principles, Board Composition Matrix and Board self-evaluation process, the Committee (or subcommittee) evaluates the size, composition, priorities, and needs of the Board with respect to its desired experience, skills, and diversity in consideration of the Company’s current and anticipated business needs and strategies. | |
| Identification of Potential Candidates | The Committee instructs the search firm to provide an initial pool of candidates that reflect gender, race, ethnic and cultural diversity, possess the core qualifications required, and includes the specific experience and skills as identified during the evaluation of current board composition. The Committee also encourages and considers candidate submissions from other directors and members of Company management. | |
| Evaluation of Candidates | Through meetings with the Committee, a screening process of potential candidates is conducted with the independent external search firm that includes a thorough review of identified candidates’ qualifications, potential conflicts, independence, backgrounds, and experience to assess how each candidate fits the needs of the Company and Board. The candidate pool is narrowed for individual interviews with the Committee and full Board. | |
| Recommendation | Interview feedback is assessed, and the Committee recommends final candidate(s) to the full Board for appointment. | |
| Review and Appointment by Full Board | The full Board appoints new director(s), who then stand for election by stockholders at the next Annual Meeting. |
Directors are expectedWe expect directors 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 2019. All directors then in office attended the 20192021 Annual Meeting of Stockholders. Director attendance averaged 96%The Board held seven meetings during 2021. All directors attended 100% of the aggregate number ofall Board and committee meetings of the Board of Directors and the committees on which they individually served during 2019. Mr. Wada’s attendance averaged 86% of the aggregate number of meeting of the Board of Directors on which he served during 2019.in 2021. The independent directors met in executive sessions at which only they were present at least sixfive times during 2019.2021.
| 38 | |
Corporate Governance
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 eleven members of the Board. Election of the 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 is outweighed by the contributions of directors who have been able to develop, over a period of time, increasing insight into the Company’s operations and strategic direction and, therefore, provide an increasing contribution to the effectiveness of thefacilitate Board as a whole.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 addressesacquaints new directors with the Company’s business, history, vision, Noble Purpose, strategic direction and plans, competitive landscape, core values, ethics,Code of Business Conduct and Ethics, Insider Trading Policy and other corporate governance practices, financial, accounting, and risk management matters, key policies, sustainability strategy, senior leadership, and senior leadership.internal and independent auditors. The program is conducted by meansconsists of, as appropriate, writtena comprehensive review of background materials, briefings by the senior management, and visits to Company facilities. In 2021, the Board developed a mentoring program to provide additional support and resources to new directors. Our newly appointed directors, Mss. Duggirala and Johnson, are each being mentored by two of our Board members.
Directors are also encouraged to participate in continuing director education programs to help them stay current on emerging practices and issues and in carrying out their responsibilities. These programs include formal education sessions with management or third-party subject matter experts that include presentationsmay occur as part of regular Board or committee meetings, and participation in industry forums on business, financial, accounting, legal, and other subjects relevant to the Company’s business. ReasonableThe Company reimburses reasonable costs and expenses incurred by directors for continuing education are reimbursed by the Company.education.
Board, Committee, and CommitteePeer Evaluation
The Board recognizes that a robust and constructive evaluation process is essential to good governance and enhanced effectiveness. The Corporate Governance and Nominating Committee organizes and oversees an annual evaluation by the Board and its committees of their performance. The evaluation is intended to facilitatefacilitates an examination and discussion by the entire Board and each Committeecommittee of its effectiveness in fulfilling its charter requirements and other responsibilities, 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 2021, the Corporate Governance and Nominating Committee engaged an independent external advisor to conduct Board and committee evaluations. The process included the completion of an online self-evaluation with rated and open-ended questions, with follow-up discussions by the advisor on certain individual responses, as needed. All of the Board’s nine directors at that time participated in the process.
| | 39 |
Corporate Governance
The typical process includes the following:
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, and employeesemployees. Each year the Company performs a thorough assessment and benchmarking of the Code of Conduct to help themensure regulatory compliance and cultural alignment. 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 any 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 addresses conflicts of interest; anti-bribery/anti-corruption; insider trading; corporate opportunities; confidentiality and privacy; external communications; protection and proper use of assets; fair dealing; contract management; acceptable behavior in the workplace; corporate sustainability; compliance with laws, rules and regulations; risk tolerance; anti-human trafficking and slavery; seeking advice and reporting concerns; outside activities; political contributions; public company reporting requirements; and other policies. The Code of Conduct includes an enforcement mechanism. Each of the Company’s Board members, officers, and employees is required to acknowledge their acceptance of the Code of Conduct.
The full text of the Code of Conduct is posted on the Company’s website atkellyservices.com.kellyservices.com. This information is also available in print to any stockholder who requests it from the Company’s Investor Relations department. The Company will disclose future amendments to the Code of Conduct and material waivers of its provisions for its directors and executive officers on its website and/or by filing a current report on Form8-K within four business days following the date of amendment or waiver, or such earlier period as may be prescribed by Nasdaq or the SEC.
| 40 | |
Corporate Governance
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, directors and executive officers are required tomust 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 RegulationS-K (“Related Party Transactions”). Directors and executive 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 directors and executive and senior officers. The Company maintains a formal written policy addressing the reporting, review, and approval or ratification of transactions with related persons.
Mr. Wada, a director of the Company whose term expires as of the date of the Company’s 2020 Annual Meeting, served as the designated representative of Persol, which owns 4.4% 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 Form10-K for the fiscal year ended December 29, 2019. Mr. Wada received no compensation for his service as a director.
| | 41 | |
Our approach to director compensation is to appropriately compensate ournon-employee directors for the time, expertise, and effort required to serve as a director of a large, complex company and to align the interests of directors with those of stockholders. Compensation levels for ournon-employee directors are periodically reviewed for market competitiveness. Compensation payments are made after thenon-employeeNon-employee directors are electedreceive 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.
The Compensation and Talent Management Committee typically reviews market benchmarking of non-employee director compensation in alternating years.In 2018,years. In 2021, the Compensation and Talent Management Committee engaged its independent compensation consultant, Pay Governance, to evaluate itsnon-employee director compensation. Pay Governance conducted a comprehensive review of the most recent proxy filings of the Company’s peer group and general industry data of comparably sized companies to assess the market competitiveness of the Company’snon-employee director compensation. Based on the results of the review, the Committee approved an increase indecided to maintain the value of the equity portion of the annual retainer in 2018. No changes were made tonon-employee director compensation levels as approved at its May 2018 meeting of the Board of Directors. In doing so, the Committee restored the amount of the cash payments they had elected to voluntarily reduce in 2019.2020 in support of other actions the Company had taken in response to the global pandemic. The compensation of ournon-employee directors will next be reviewed in 2020,2022, with the assistance of Pay Governance. The following table illustrates our 20192021 non-employee director compensation:
| Annual Base Retainer | Board Leadership Positions - Additional Retainer (Committee Chairs) | |||||||||||||||||||
| Non-Employee Directors | Chairman of the Board | Audit Committee | Compensation Committee | Corporate Governance & Nominating Committee | ||||||||||||||||
Cash | $ | 100,000 | $ | 150,000 | $ | 20,000 | $ | 15,000 | $ | 10,000 | ||||||||||
Equity (Kelly Class A Stock - $ Value) | $ | 110,000 | $ | 165,000 | — | — | — | |||||||||||||
TOTAL | $ | 210,000 | $ | 315,000 | $ | 20,000 | $ | 15,000 | $ | 10,000 | ||||||||||
| Annual Base Retainer | Board Leadership Positions - Additional Retainer (Committee Chairs) | |||||||||||||||||||
| Non- Employee Directors | Chairman of the Board | Audit Committee | Compensation & Talent Management Committee | Corporate Governance & Nominating Committee | ||||||||||||||||
Cash | $100,000 | $150,000 | $20,000 | $15,000 | $10,000 | |||||||||||||||
Equity (Kelly Class A Stock – $ Value) | $110,000 | $165,000 | — | — | — | |||||||||||||||
Total | $210,000 | $315,000 | $20,000 | $15,000 | $10,000 | |||||||||||||||
Under the Company’s amended and restated Equity Incentive Plan (“EIP”), the Board of Directors is required tomust periodically determine the percentage of the base retainer that will be issued tonon-employee directors in shares of Class A Common Stock. The Compensation and Talent Management Committee and Board of Directors have approved fixing the portion of the annual base retainer that is paid in cash at $100,000, and the portion paid in equity at $110,000 (cash portion of $150,000 and equity portion of $160,000$165,000 for the Chairman of the Board).
Non-employee directors are subject to a stock ownership requirement that is a minimum fair market value of four times the value of the cash portion of the annual base retainer (which currently equates to $400,000). Although there is not a fixed compliance period, it is expected that new directors will likely reach the ownership requirements within five years from their appointment date. All directors are compliant with the Company’s stock ownership requirements.
Non-Employee Directors Deferred Compensation Plan
The Company has established theNon-Employee Directors Deferred Compensation Plan (“DDCP”), which providesnon-employee 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 anon-qualified plan that allows for the deferral of all or a portion of annual cash payments to a notional account with investment fund choices that mirror those provided to participants in the Company’s Management Retirement Plan (“MRP”). 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 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 director of the Company or at a future date that is between one and ten years following the date they cease to be a director of the Company.Non-employee directors can elect to have distributions from the DDCP made in either a lump sum or in annual installment payments made over atwo-to-ten-year period.
| 42 | |
Director Compensation
The following table sets forth the compensation paid during 20192021 to the Company’snon-employee directors. Mr. Quigley received no compensation for his services as a director in 2019, for the period of time he served as our President and Chief Executive Officer.2021. Mr. Quigley’s compensation as President and Chief Executive Officer 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 | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Award Options | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||||||||||||||||||||
Carol M. Adderley | $ | 100,000 | $ | 110,000 | — | — | ($ | 340 | ) | — | $ | 209,660 | ||||||||||||||||||||||||||||||||||||||||||||
Carol M. Adderley(3) | $100,000 | $110,000 | — | — | ($24,751 | ) | — | $185,249 | ||||||||||||||||||||||||||||||||||||||||||||||||
Gerald S. Adolph | $ | 100,000 | $ | 110,000 | — | — | ($ | 10,006 | ) | — | $ | 199,994 | $100,000 | $110,000 | — | — | ($85,366 | ) | — | $124,634 | ||||||||||||||||||||||||||||||||||||
George S. Corona(3) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
George S. Corona | $100,000 | $110,000 | — | — | ($60,038 | ) | — | $149,962 | ||||||||||||||||||||||||||||||||||||||||||||||||
Robert S. Cubbin | $ | 115,000 | $ | 110,000 | — | — | $ | 16,012 | — | $ | 241,012 | $115,000 | $110,000 | — | — | ($126,395 | ) | — | $98,605 | |||||||||||||||||||||||||||||||||||||
Jane E. Dutton | $ | 110,000 | $ | 110,000 | — | — | $ | 75,470 | — | $ | 295,470 | |||||||||||||||||||||||||||||||||||||||||||||
Amala Duggirala | $34,794 | $38,273 | — | — | — | — | $73,067 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jane E. Dutton(4) | $100,000 | $110,000 | — | — | ($13,563 | ) | — | $196,437 | ||||||||||||||||||||||||||||||||||||||||||||||||
InaMarie F. Johnson | $34,794 | $38,273 | — | — | — | — | $73,067 | |||||||||||||||||||||||||||||||||||||||||||||||||
Terrence B. Larkin | $ | 100,000 | $ | 110,000 | — | — | — | — | $ | 210,000 | $110,000 | $110,000 | — | — | — | — | $220,000 | |||||||||||||||||||||||||||||||||||||||
Leslie A. Murphy | $ | 120,000 | $ | 110,000 | — | — | ($ | 1,359 | ) | — | $ | 228,641 | $120,000 | $110,000 | — | — | ($99,002 | ) | — | $130,998 | ||||||||||||||||||||||||||||||||||||
Donald R. Parfet | $ | 150,000 | $ | 165,000 | — | — | — | — | $ | 315,000 | $150,000 | $165,000 | — | — | — | — | $315,000 | |||||||||||||||||||||||||||||||||||||||
Takao Wada(4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
|
| (2) | Represents the aggregate fair market value of grants awarded on May |
| (3) |
|
| (4) |
|
| | 43 | |
Beneficial Ownership of Shares
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth, as of March 16, 2020,28, 2022, (i) the beneficial ownership of the Company’s Class B Common Stock by each person known by the Company to own beneficially more than 5% of the Class B Common Stock, and (ii) the beneficial ownership of the Company’s Class A and Class B Common Stock by (a) each director (each of whom, other than Mr. Wada,Ms. Adderley and Ms. Dutton, is a nominee for election as a director at the Annual Meeting), (b) each of the named executive officers, and (c) all directors and executive officers as a group.
| Class B Common Stock | ||||||||||||||||||||
Greater than Five Percent Class B Stockholders | Class B Common Stock | Number of Shares and Nature of Beneficial Ownership(1) | Percent of Class |
| ||||||||||||||||
| Number of Shares and Nature of Beneficial Ownership(1) | Percent of Class | |||||||||||||||||||
Terence E. Adderley Revocable Trust K | 3,139,940 | 91.6 | % | 3,139,940 | 93.5 | % | ||||||||||||||
| Class A Common Stock | Class B Common Stock | |||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | |||||||||||||||||||||||||||||||
Directors and Named Executive Officers | Number of Shares and Nature of Beneficial Ownership | Percent of Class | Number of Shares and Nature of Beneficial Ownership | Percent of Class | Number of Shares and Nature of Beneficial Ownership | Percent of Class | Number of Shares and Nature of Beneficial Ownership | Percent of Class | ||||||||||||||||||||||||
Directors: | ||||||||||||||||||||||||||||||||
Directors(7): | ||||||||||||||||||||||||||||||||
Carol M. Adderley | 343,401 | (2)(3) | 1.0 | 425 | (2) | * | 331,203 | (2)(3)(5) | 0.9 | % | 425 | (2) | * | |||||||||||||||||||
Gerald S. Adolph | 8,478 | (3) | * | 100 | * | 21,530 | (3) | * | 100 | * | ||||||||||||||||||||||
George S. Corona | 153,018 | * | 100 | * | 79,230 | (3) | * | 100 | * | |||||||||||||||||||||||
Robert S. Cubbin | 26,348 | (3) | * | 100 | * | 39,487 | (3) | * | 100 | * | ||||||||||||||||||||||
Amala Duggirala(4) | 2,330 | (3) | * | — | * | |||||||||||||||||||||||||||
Jane E. Dutton | 31,899 | (3) | * | 100 | * | 35,734 | (3)(6) | * | 100 | * | ||||||||||||||||||||||
InaMarie F. Johnson(4) | 2,136 | (3) | * | — | * | |||||||||||||||||||||||||||
Terrence B. Larkin | 31,211 | * | 100 | * | 34,313 | * | 100 | * | ||||||||||||||||||||||||
Leslie A. Murphy | 30,824 | (3) | * | 100 | * | 33,905 | (3) | * | 100 | * | ||||||||||||||||||||||
Donald R. Parfet | 33,675 | * | 100 | * | 67,045 | * | 100 | * | ||||||||||||||||||||||||
Takao Wada | 1,576,169 | (4) | 4.4 | 1,475 | * | |||||||||||||||||||||||||||
Named Executive Officers: | ||||||||||||||||||||||||||||||||
Peter W. Quigley (also a director) | 132,634 | * | 100 | * | 208,420 | * | 100 | * | ||||||||||||||||||||||||
Olivier G. Thirot | 87,266 | * | 10 | * | 117,137 | * | 10 | * | ||||||||||||||||||||||||
Peter M. Boland | 9,636 | * | — | * | ||||||||||||||||||||||||||||
James H. Bradley | 24,452 | * | — | * | ||||||||||||||||||||||||||||
HannahLim-Johnson(5) | 11,490 | * | — | * | ||||||||||||||||||||||||||||
All directors and executive officers as a Group (14 persons) | 2,500,501 | 7.0 | 2,710 | 0.0 | ||||||||||||||||||||||||||||
Tammy L. Browning | 25,365 | * | — | * | ||||||||||||||||||||||||||||
Timothy L. Dupree | 25,207 | * | — | * | ||||||||||||||||||||||||||||
Dinette Koolhaas | 17,556 | * | — | * | ||||||||||||||||||||||||||||
All directors and executive officers as a Group | 1,162,193 | 3.3 | % | 1,335 | 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 the Terence E. Adderley Revocable Trust K (“Trust K”) and the threeco-trustees of Trust K. Trust K was created by Terence E. Adderley, the Company’s former Chairman of the Board, during his lifetime as a revocable trust, with Mr. Adderley serving as the trustee of and retaining the right to revoke the trust during his lifetime. Mr. Adderley funded Trust K, including a gift of 3,139,940 shares of Class B Stock. Mr. Adderley died on October 9, 2018, at which time the trust became irrevocable. In accordance with the provisions of Trust K, Andrew H. Curoe, David M. Hempstead and William U. Parfet, were appointed as successorco-trustees of Trust K following Mr. Adderley’s death. They are required by the provisions of Trust K to act by majority vote to exercise voting or investment power over the Class B stock held by Trust K and have stated in the 13D that the filing is not an admission that theco-trustees are beneficial owners of such Class B stock. Mr. Curoe may be deemed the beneficial owner of an additional |
|
Beneficial Ownership of Shares
| (2) | Includes |
| (3) | Includes |
| 44 | |
Beneficial Ownership of Shares
| (4) |
|
| (5) | Ms. Adderley will not be standing for reelection effective May 18, 2022. |
| (6) | Ms. Dutton will be retiring from the |
|
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and certain officers, as well as persons who beneficially own more than 10% of the outstanding shares of common stock, to file reports regarding their initial stock ownership and subsequent changes to their ownership with the SEC.
Based solely upon a review of filings for fiscal year 20192021 with the SEC and related written representations that no other reports were required, we believe that all Section 16(a) reports were filed on a timely basis, except a Form 4 for Ms. Adderley due April 5, 2019, which was filed on February 18, 2020 to report her sale of 5,000 shares of Class A Common Stock on April 3, 2019.basis.
| | 45 | |
Proposal 2 – Advisory Vote to Approve the Company’s Executive Compensation
PROPOSAL 2 – 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 officers with those of our stockholders 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 who are critical to the long-term success of our business. Under these programs, our named executive officers are rewarded for the Company’s financial performance, individual performance, and long-term 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 20192021 compensation of our 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’ compensation, as disclosed in this Proxy Statement pursuant to Item 402 of RegulationS-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, as disclosed in the Company’s Proxy Statement for the 20202022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 20192021 Summary Compensation Table, and the other related tables and disclosure.”
Thesay-on-pay vote is 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 consider 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, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC.
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. |
| 46 | |
Compensation Discussion and Analysis
COMPENSATION 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.
The Compensation Discussion and Analysis is organized in the following sections:
Our named executive officers for
Kelly’s philosophy as a talent company is rooted in the 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. As work has evolved so has our range of solutions, growing over the years to reflect the changing needs of our customers and the changing nature of work itself.
Compensation Discussion and Analysis
a reduced maximum payout opportunity of 150% of target; greater funding weighting on overall corporate performance earnings results; and
delayed annual base salary review process from Q1 to Q3 for majority of employees with selective salary increases provided to named executive officers (the CEO did not receive a salary increase); reduced annual restricted stock awards by approximately 25% for majority of organization; implemented three one-year annual goals for performance-based Long Term Incentives (“LTI”) program;
granted special recognition awards to two senior officers; implemented a special equity award “Key Employee Equity Plan (KEEP)” designed to reward senior leaders for achieving key financial milestones (reflecting record high Company performance) as part of Kelly’s transformation strategy; and reinstated Company match to employee retirement plan contributions. The above-described actions provided fiscally responsible rewards programs while also providing targeted investments needed to reward employees for achieving important financial and operational goals, and to support the longer-term retention of critical talent. As our Kelly’s business model brings together both staffing and outcome-based solutions under a single specialty leader and aggregates assets to accelerate specialty growth and profitability. We believe this specialty structure gives us greater advantages in the market, and we expect our disciplined focus will enable us to achieve greater efficiencies and deliver profitable growth coming out of the crisis. In addition, we intend to invest in strategic, targeted M&A opportunities in our specialties, while optimizing our portfolio, as demonstrated by the acquisition of Softworld in the second quarter of 2021. We enter 2022 having shifted from recovery to an elevated focus on growth. Our permanent placement fee growth points toward our customers’ investments in their future workforce, and increased demand in our staffing and outcome-based businesses reflects a market eager for the specialty solutions we provide. Our business is arranged around specialties that target these areas of strong demand, promising growth opportunities, and Kelly’s proven ability to win. Our segments also reflect our intent to shift our portfolio toward higher-margin, higher-value specialties that deliver a competitive edge and increased stockholder value. As we continue our strategic growth journey in the year ahead, we will invest in key value drivers such as: mapping our digital transformation journey, building a technology foundation to optimize our business, personalize the talent journey and improve the client experience. For example, in 2021 we launched Helix UX, an industry-leading talent management tool that is enabling our KellyOCG customers to better manage their global workforce across temporary, full-time, and cloud-based talent pools; consistently striving to better understand and support our talent and their shifting needs. We have reallocated resources to be solely focused on the temporary worker experience, and our Equity@Work platform is designed to break down long-standing, systemic barriers that make it difficult for many people to participate in the labor market; and
Compensation Discussion and Analysis investing in the talent experience of our full-time employees, taking action to ensure we have the people coaches and performance management systems that will help our employees thrive in their Kelly careers. We know that our success is powered by our people, and we are aiming for industry-leading results. Key Executive Compensation Program Highlights for Fiscal We believe compensation should align with and enhance long-term stockholder 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 2021 as a result of Company performance and management’s decision to focus on the Company’s transition in becoming a specialty talent solutions company: Salary increases were selective, with two named executive officers receiving a base salary increase during 2021 2021 STIP was earned at below target levels 2019-2021 Performance Shares were not earned for the three-year assessment period ending 2021 (the RSU/RSA portion of this 2019 grant continues to vest) 2020 Performance-Contingent Shares were earned for achieving the 2021 Earnings from Operations (“EFO”) goal, with these shares vesting over four years (final vesting installment in early 2025) 2021 LTI award opportunity was granted in a mix of Performance Shares 75% weighting and time-based vesting restricted shares 25% weighting Granted special performance contingent restricted shares (“KEEP” Awards) to named executive officers and other senior leaders to focus on the Company’s critical transition as reflected by financial milestones that are set at performance levels that are at record high levels The Committee believes the actions taken in response to the continued global pandemic during 2021 and our continued transformation will help ensure alignment of executive and stockholder interests. We continue to evaluate our executive compensation program and make changes to further align
The
The Short-Term Incentive Plan (“STIP”) provides for annual cash-based incentive opportunities
The Equity Incentive Plan (“EIP”) provides the Committee the ability to grant long-term incentive (“LTI”) opportunities, in various award types, that focus on the long-term performance of the Company and align the interests of senior officers with those of stockholders.
2021 goals
Executive officers who are responsible for providing direct leadership to a business unit have at least
Based
LTI design was influenced by the continuing challenges related to the pandemic.
Maintained LTI grant mix for senior officers, including our executive officers, that heavily emphasizesat-risk performance-based pay opportunities through the following equity vehicles:
Performance Share Units = 75% of LTI mix; and
Restricted Stock Awards/Units (RSAs/RSUs) = 25% of LTI mix.
Compensation Discussion and Analysis Approved two new LTI performance measures for the
2021 Special (“KEEP”) Award In December 2021 a
If goals are achieved, resulting growth will
Because no shares were earned for the financial measures described above, the awards’ relative TSR modifier did not come into consideration. As a result of the above, no awards were earned under the 2019-2021 LTI Performance Shares. 2020 LTI Results The 2020 performance contingent awards’ EFO goal of $49.4 million was achieved. The Company’s 2021-2023 LTI – Year 1 Results The 2021-2023 performance shares are allocated among three separate one-year performance periods with the Based upon 2021 results for the These 2021 earned performance shares
Compensation Discussion and Analysis
The Committee believes these actions 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 short- and long-term business
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 Attract and retain Support Create an ownership mindset that closely aligns the interests of management with those of Provide
The Committee believes that a majority of a 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 an individual’s performance. As a result, senior officers participate in incentive programs that provide them with the opportunity to 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 senior 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 incentive awards and long-term equity incentive awards align the interests of our senior officers with the interests of our stockholders.
Compensation Discussion and Analysis CEO and Other Named Executive Officers Pay Mix While we believe that a majority of an executive 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 Chief 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 (“NEOs”).At-risk compensation consists of annual cash incentive awards and Typical Target Compensation Mix
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 senior officers, a group that includes the named executive officers. The elements and corresponding weightings of our
For the 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
Compensation Discussion and Analysis the CEO. The CEO’s total compensation The responsibilities of the Committee are defined in its charter, which can be found on the Company’s website atkellyservices.com. Role of the Independent Compensation Consultant
During The Committee conducts an annual assessment of the Consultant’s independence, using factors established by Nasdaq. The Consultant provided no services to the Company in The Committee consults with the CEO and the The CEO makes recommendations for each of the executive officers about elements of their total compensation. 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 Consultant on matters related to executive and director stock ownership requirements and Director compensation. 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
Compensation Discussion and Analysis Each senior officer’s performance is reviewed (see Senior Officer Performance Reviews and Succession Planning below) and compensation decisions are made on an annual basis (or as a 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 officers that are near a competitive range of the median of the market data. Compensation ultimately earned from these opportunities can vary from the targeted levels based on In The Consultant worked with the Committee and management to develop
The Committee considers peer group and general industry survey data as a point of reference, not the sole factor in determining senior 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. 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, 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 award opportunities. The Committee reviews tally sheets for the executive 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.
Compensation Discussion and Analysis Senior Officer Performance Reviews and Succession Planning Annually, the Committee conducts a comprehensive senior officer performance review that includes succession planning and identification of officer developmental opportunities.
officers, including The performance review information for each of the senior officers other than the CEO, includes key annual initiatives, performance results, In third quarter 2021, the Committee engaged an outside consultant to conduct a 360 assessment of the Company’s CEO. Participants in the review included: the CEO, select members of the Board, and select members of management who are direct reports to the CEO. The evaluation process included interviews held with the independent consultant. Responses and comments from the evaluation were anonymized and presented to the Chief People Officer and the Committee. 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 In addition to the Senior officers are not present The Board approves the Company’s succession plan Compensation Programs: Decisions and Actions in
Base salaries for senior officers, including the named executive officers are
The Committee reviews the base salaries of senior officers, including the named executive officers, on an annual basis (or as a senior officer’s duties and responsibilities change). Base salaries are determined by the Committee for each of the senior 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.
Compensation Discussion and Analysis The Company’s annual total compensation review and target pay adjustment process for all employees, including the senior officers, typically occurs during the first quarter to coincide with the timing of any potential incentive award payouts. The timing alignment of compensation elements is intended to reinforce the Company’s In
In consideration of the factors noted above, the following base salaries for the named executive officers were approved by the Committee in
Notes:
Amounts represent base salaries in effect on December 31 of each applicable year.
Mr.
Amounts reported for Ms. The Committee believes that the named 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 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. For 2021 STIP payments for all participants
Compensation Discussion and Analysis
The following table shows the
In the months leading up to
Payout for threshold performance under the corporate component of STIP is Performance measures used for purposes of funding STIP are the same as defined in the Company’s GAAP financial statements, excluding at the discretion of the Committee 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 Form10-K. Adjustments would apply only to unbudgeted items. In February
Compensation Discussion and Analysis
Ms. Performance results for each of Ms.
Performance results for each of Ms. Koolhaas’ measures are as follows:
Timothy L. Dupree Mr. Dupree’s STIP opportunity was based 50% on the corporate measures and 50% on the business unit measure for which he was
accountable. Performance results for each of Mr.
Mr.
Under the terms of the STIP, the Committee retains the right in its discretion to
Compensation Discussion and Analysis Based on these performance results, at its February
2021 STIP Payout amounts rounded to the nearest thousand. Mr. Thirot’s final payout percentage of 38.3% includes the assessment of his individual performance reflecting his leadership in a challenging pandemic-impacted year, an increase based on his individual component. For consistency, Ms. Koolhaas’ amounts shown in USD using the 2021 budgeted exchange rate of 1.098. The actual exchange rate reflects the then-current rate. Mr. Dupree’s final payout percentage of 69.0% includes an increase based on his individual component. 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 andnon-equity awards to key employees.
The Committee believes that compensation programs for the Company’s senior officers should include strong alignment between pay and performance, with a significant portion of “at risk” pay. As a result, since 2015 the Committee has provided regular long-term incentives for senior officers, including the 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 Typical Long-Term Incentive Mix
Compensation Discussion and Analysis On average, target LTI awards granted to senior officers have historically been and currently remain below market median. The target LTI award amounts for each senior officer, 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. LTI grants Performance Shares Performance shares provide senior officers with the opportunity to earn shares, from zero to 200% of their target opportunity, based on achievement ofpre-established measures and goals.
For achievement of threshold performance, 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 For the 2021-2023 grant of performance shares, the two financial measures, revenue growth and EBITDA margin, will have one-year goals established for each of the three performance periods (2021, 2022, 2023) that are set in the beginning of each performance period. This design provides the ability to set meaningful goals in the unpredictable pandemic climate. In February 2021, the Committee approved goals at threshold, intermediate target, and maximum levels of performance for each of the measures for 2021. At the end of the 2021 performance period in early 2022, results for each of the two financial measures, will determine achievement and earning, if any, of shares. For the 2022 performance period, goals will be approved in early 2022 with results being reviewed in early 2023. Any earned shares will vest 50% upon Committee approval and 50% upon the third anniversary of the grant (February 2024). The following target number of performance shares were awarded for each performance measure to the named executive officers in 2021:
The 2021 threshold goals were set at levels for which the Committee believed it was appropriate to start earning incentives;
In the event of a senior officer’s termination of employment due to death, disability, normal retirement, or termination not for cause, the 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, or a combination of age plus years of service
Compensation Discussion and Analysis 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 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 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.
Restricted Stock
Alignment with stockholder
Facilitate retention through an extended pro rata vesting
Support meaningful stock At its February
Special Awards During their December 17, 2021 special session, the Committee approved performance In 2021, there were
Compensation Discussion and Analysis
As outlined in the Company’s
As a result of the above level of achievement for each of the performance measures of the 2019-2021 LTI award, no performance shares were approved for vesting by the Committee. 2021-2023 Long-Term Incentive Performance Results As described above, the 2021-2023 performance shares have two financial measures, revenue growth and EBITDA margin, which have three one-year goals set in the beginning of each performance year. In February 2021, the Committee approved goals at threshold, target, intermediate, and maximum levels of performance for each of the measures for the 2021 portion of the award opportunity. During its February 15, 2022 meeting, the Committee approved the results for the 2021 performance year. Earned shares vested 50% upon Committee approval and 50% upon the third anniversary of the grant (February 2024). Aggregate funding for all performance measures during the 2021 performance year was 29.69% of target. The final performance results for the 2021 performance year are provided in the following chart:
Compensation Discussion and Analysis
As a result of the above level of achievement for each of the performance measures for year 1 of the
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, 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. 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, with a taxgross-up of Medicare taxes incurred on contributions to the plan. The Medicare taxgross-up provides for parity with other employees who are eligible to participate in the Company’stax-qualified 401(k) plan and therefore do not pay Medicare tax on Company contributions. Mr. Thirot’s Retirement Benefits
Ms. Koolhaas’ Retirement Benefits As a resident of Switzerland, Ms. Koolhaas participates in the Swiss Social Insurance System (“Swiss System”) that provides retirement, disability, and death benefits. Her retirement benefit includes contributions The health and welfare plans, including Company-provided life insurance, provided to Mr. Thirot’s Health and Welfare Benefits Mr. Thirot is required by Swiss law to carry health care coverage. However, the Company’s Swiss entity does not provide health care coverage to its employees nor do we provide Mr. Thirot with a health care allowance. Under the Swiss System, Mr. Thirot’s spouse is eligible to receive benefits in the event of his death from sickness or accident. He no longer participates in any U.S. health and welfare benefit programs.
Compensation Discussion and Analysis
Ms. Koolhaas’ Health and Welfare Benefits Ms. 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 herself and her family in Switzerland. Residents in Switzerland are required to carry health care coverage, however it is not common for Swiss 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 accident. She is not a participant in any U.S. health and welfare benefit programs. A modest level of perquisites is available to named executive officers:
The aggregate amount of perquisites provided in 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. 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 (e.g., “double trigger”), which is also explained in Potential Payments Upon Under the terms of the Severance Plan covering the eligible 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
Compensation Discussion and Analysis
Mr. Thirot was a participant in the Severance Plan
Ms. Koolhaas’ Severance Benefit Under the terms of Ms. Koolhaas’ Swiss employment agreement, if she is terminated by the Governance of Executive Compensation Programs The frequency of the Company’s Say on Pay vote is annual and, as such, the Committee considers the Executive Stock Ownership and Retention Requirements The Committee implemented minimum stock ownership and retention requirements to encourage meaningful stock ownership by the Company’s executives that aligns their interests more closely with stockholders’ interests. The Committee periodically reviews the Executive Stock Ownership Requirements to ensure the design is consistent with current market practice and those of our peers, as determined by research performed by the Consultant. The requirements are expressed as a multiple of base salary for each level of senior officer, as shown in the table below.
Under the ownership requirements, senior officers are required to hold all (100%) of theafter-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, As of March 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 incentive compensation, based on the achievement of financial results that were subsequently restated due to the Company’s materialnon-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
Compensation Discussion and Analysis 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 is included as part of the Company’s updated Insider Trading Policy and Section 16 Compliance Procedures. Hedging and Pledging of Shares The Company’s Insider Trading Policy and Section 16 Compliance Procedures strictly prohibit the Company’s directors and all employees, including the named executive officers, from engaging in hedging, monetization or other derivative 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 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
Compensation and Talent Management Committee Report Prior to and at the Compensation and Talent Management Committee meeting held on March This report is submitted by the Compensation and Talent Management Committee of the Board of Directors. THE COMPENSATION AND TALENT MANAGEMENT COMMITTEE
Summary Compensation Table
Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year End
2021 Executive Compensation Tables
Nonqualified Deferred Compensation
Potential Payments Upon Termination This section describes the potential additional payments and benefits under our compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment under certain circumstances. Named executive 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
2021 Executive Compensation Tables Senior Executive Severance Plan The Company implemented the Senior Executive Severance Plan (“Severance Plan”) for a limited number of executive officers in March 2017. Described below and illustrated in the table, Potential If one of the eligible named executive officers were to have experienced a qualifying termination under the Severance Plan in 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 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
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 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 officer and his or her eligible dependents for the severance period, provided the named executive officer continues to pay the applicable employee rate for such coverage and the named executive officer remains eligible for COBRA coverage. The severance period for a Tier 1 participant is 24 months, The eligible named executive officer will be entitled to receive reimbursement for professional outplacement services actually incurred during the initial12-month period following termination, not to exceed $10,000.
2021 Executive Compensation Tables The eligible 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 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 officers covered under the Severance Plan may not disparage, slander, or injure the business reputation or goodwill of the Company. Named executive 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. Noncompliance with any of the above may result in the loss of severance benefits.
Ms. Under the terms of
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 coveringnon-disparagement and confidentiality terms. Each of our named 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.
2021 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 officer would receive in each of the potential termination scenarios.
2021 Executive Compensation Tables
The named executive officers would also be entitled to the vested benefits included in the Outstanding Equity Awards at FiscalYear-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 anon-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.
As required by Section 953(b) of Dodd-Frank and Item 402(u) of RegulationS-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. Quigley, our President and Chief Executive Officer For fiscal
The median of the annual total compensation of all employees of our company (other than
The annualized total compensation of
Based on this information, the ratio of the annual total compensation for our 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
We selected December
As of December
The vast majority of our employees, about 94%, are temporary employees who work anywhere from one week tofifty-two weeks in a calendar year.
Approximately
To identify the “median employee” we collected actual base salary earnings and overtime paid for the12-month period ending December
In making this determination, the compensation for all regular employees hired after January 1,
CEO Pay Ratio
Compensation for temporary workers, pursuant to SEC rules, was not annualized, but all earnings for the12-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 anycost-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, Using this methodology, we determined that our median employee was a temporary employee located in the U.S. with base salary and overtime earnings in the amount of
Proposal
On an annual basis, the Audit Committee approves and appoints the independent registered public accounting firm. During its February
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 requirespre-approval of all audit andnon-audit services prior to engagement by the Company. In conjunction with thepre-approval, the Committee considers whethernon-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. The table below displays the fees incurred from the audit andnon-audit services provided by PwC.
Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP Audit Fees: Audits and quarterly reviews of our consolidated financial statements, statutory audits, Audit Related Fees: Tax Fees:Tax and transfer pricing consulting. All Other Fees: Accounting
Management is responsible for the preparation, presentation and integrity of Kelly’s financial statements, for its accounting and financial reporting principles, and for the 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 standards 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 to discuss any matters it deems appropriate. In performing its oversight role, the Committee has considered and discussed the audited financial statements of Kelly for the fiscal year ended Based on the reports and discussions described in this Report, the Committee recommended to the Board that the audited financial statements of Kelly for THE AUDIT COMMITTEE
KELLY SERVICES, INC. 999 West Big Beaver Road Troy, Michigan 48084-4716 April QUESTIONS AND ANSWERS ABOUT THE PROXY STATEMENT AND THE ANNUAL MEETING
Questions and Answers
Questions and Answers
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
03LN1A
May 18, 2022 at 11:00 a.m. Eastern Time, virtually via the internet at meetnow.global/M6ZVQ4M. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of The material is available at: www.envisionreports.com/kelyb
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Notice of Annual Meeting of Proxy Solicited by Board of Directors for Annual Meeting The undersigned hereby names, constitutes and appoints 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.)
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
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.
Notice of Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting – May 18, 2022 The undersigned hereby names, constitutes and appoints Vanessa P. Williams 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 18, 2022 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.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
