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KELLY SERVICES, INC.
SHORT-TERM INCENTIVE PLAN
(As Amended and Restated by Action
of the Board of Directors)
(March 23, 1998)
Section 1 - Purposes.
This KELLY SERVICES, INC. SHORT-TERM INCENTIVE PLAN (the "Plan")
provides for annual incentive compensation payable in cash to those key
officers and employees of the Company or any affiliated entity, who, from
time to time, may be selected for participation. The Plan is intended to
provide incentives and rewards for the contributions of such employees toward
the successful achievement of the Company's financial and business goals
established for the current year.
Section 2 - Administration.
The Plan shall be administered by the Compensation Committee of the
Board of Directors. The Committee shall have authority to make rules and
adopt administrative procedures in connection with the Plan and shall have
discretion to provide for situations or conditions not specifically provided
for herein consistent with the overall purposes of the Plan.
Section 3 - Selection of Participants.
The Committee may delegate to the chief executive officer of the
Company, if also a director, its authority to select those key officers and
employees entitled to participate under the Plan each year. Approval of
eligible participants may be made at any time during each award year.
Section 4 - Establishing Performance Objectives.
The Committee annually, during the first quarter of the year, shall
establish one or more performance objectives which may consist of
quantitatively measurable performance standards or qualitative performance
standards, the achievement of which requires subjective assessment, or both.
With respect to those senior executive officers determined by the Committee
most likely to be named in the Summary Compensation Table of the Company's
proxy statement for the following year's Annual Meeting of Stockholders (the
"Named Officers"), the Committee shall apply the special provisions of
Section 7.
Section 5 - Establishing Target Awards.
During the first quarter of each year the Committee shall establish a
target award, expressed as a percentage of eligible salary for that year
(annual base salary, excluding pay for disability, overtime, bonuses, sick
pay and other reimbursements and allowances), for each officer or other
employee selected to participate under the Plan. Individual participants may
earn an award payout ranging from zero percent to the maximum percent of
their target award that the Committee may set in place from time to time.
The Committee shall also specify what portion of the target award, if any, is
based on the achievement of the Company performance objective(s) and what
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portion or portions are based on the achievement of other objectives. The
Committee will establish an award payout schedule based upon the extent to
which the Company performance objective (or objectives) is or is not achieved
or exceeded.
Section 6 - Determining Final Awards.
The Committee shall have discretion to adjust final awards up or down
from the target award depending on (a) the extent to which the Company
performance objective(s) is either exceeded or not met, and (b) the extent to
which other objectives, e.g. subsidiary, division, department, unit or other
performance objectives are attained. The Committee shall have full
discretion to make other adjustments in final awards based on individual
performance as it considers appropriate in the circumstances.
Section 7 - Special Provisions Applicable to the Named Officers.
During the first quarter of each year the Committee shall consider the
establishment of a Plan target award, expressed as a percentage of eligible
salary, for each of the Named Officers.
The Committee shall next establish objective performance standards for
the corporate and/or divisional/departmental portions of the awards, and
determine what percentage of the target award, if any, will be based on each
such objective performance standard.
The Committee will select one or a combination of the following as
objective performance standards: pre-tax or after tax corporate earnings for
the year or the equivalent of such amounts in basic or diluted earnings per
share, sales, gross profit, earnings from operations, net operating profit
after taxes above the cost of capital, market share, customer satisfaction,
quality metrics, shareholder value and return on assets, investment or
equity.
The Committee shall also specify during the first quarter which, if any,
types or categories of extraordinary, unusual, non-recurring or other items
of gain or loss shall be excluded or otherwise not taken into account when
actual corporate or divisional/departmental results are calculated.
The Committee will finally establish an award payout schedule based upon
the extent to which the objective performance standard(s) is or is not
achieved or exceeded. The Committee retains the right in its discretion to
reduce an award based on Company, divisional/departmental or individual
performance, but will have no discretion to increase any award so calculated.
In addition to awards based on quantitatively determinable performance
standards, the Committee may, in its discretion and acting in the best
interests of the Company, set one or more other incentive goals for a portion
or all of a Named Officer's Plan award, the achievement of which need not be
quantitatively determinable but, instead, may require subjective assessments
of the quality of performance to which the goals relate ("qualitative
performance standards"). If a qualitative performance standard is
established with respect to a Named Officer's Plan target award, the
Committee shall specify at the time of the award what percentage of the total
award will be based on that objective. The Committee will, however, have
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discretion to increase or decrease that portion of an award which does not
qualify for the performance-based exclusion from the Section 162(m) cap on
compensation deductibility.
In no event shall the total annual Plan award to a Named Officer,
including the non-performance-based portion, exceed $2,000,000 a year.
Section 8 - Time of Distribution.
Distribution of awards shall be made in one or more installments, as the
Committee shall determine. When made in one installment, distribution of the
award shall be made as soon as practicable following the close of the year
for which earned. If an award is less than $3,000, the full amount of the
award shall be paid in the year following the award year.
Section 9 - Forfeiture.
Until such time as the full amount of an award has been paid, a
participant's right to receive any unpaid amount shall be wholly contingent
and shall be forfeited if, prior to payment, the participant is no longer in
the employ of the Company, provided, however, that the Committee may in its
discretion waive such condition of continued employment. It shall be an
overriding precondition to the payment of any award (a) that the participant
not engage in any activity that, in the opinion of the Committee, is in
competition with any activity of the Company or any affiliated entity or
otherwise inimical to the best interests of the Company and (b) that the
participant furnish the Committee with all such information confirming
satisfaction of the foregoing condition as the Committee shall reasonably
request. If the Committee makes a determination that a participant has
engaged in any such competitive or otherwise inimical activity, such
determination shall operate to immediately cancel all then unpaid award
amounts.
Section 10 - Death.
Any award remaining unpaid, in whole or in part, at the death of a
participant shall be paid to the participant's legal representative or to a
beneficiary designated by the participant in accord with rules established by
the Committee.
Section 11 - No Right to Employment or Award.
No person shall have any claim or right to receive an award, and
selection to participate in the Plan shall not confer upon any employee a
right with respect to continued employment by the Company. Further the
Company and each affiliated entity reaffirms its at-will relationship with
its employees and expressly reserves the right at any time to dismiss a
participant free from any liability or claim, except as provided under this
Plan.
Section 12 - Amendment or Termination.
The term of the performance-based annual incentive criteria under
Section 7 of the Plan, assuming approval by stockholders, will be five Plan
years, 1998 through 2002, unless sooner terminated or amended by the Board.
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The Board of Directors of the Company reserves the right at any time to
make any changes in the Plan as it may consider desirable or may discontinue
or terminate the Plan at any time, except that Section 7 cannot be changed in
anyway which would violate IRS regulations under Internal Revenue Code
Section 162(m) without stockholder approval.