SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KELLY SERVICES, INC.
(Name of registrant as specified in its charter)
KELLY SERVICES, INC.
(Name of person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies: _________
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _____________________
______________________________________________________________________
(5) Total fee paid:
______________________________________________________________________
[ ] Fee paid previsouly with preliminary materials:___________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid: _____________________________________________
(2) Form, schedule or registration statement no.: _______________________
(3) Filing party: _______________________________________________________
(4) Date filed: _________________________________________________________
[LOGO]
KELLY SERVICES, INC.
April 14, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kelly Services, Inc., which will be held at 11:00 a.m., Eastern Daylight
Time, Monday, May 15, 2000, in the Auditorium located on the First Floor of
the Kelly Services Headquarters Building, 999 West Big Beaver Road, Troy,
Michigan.
Matters scheduled for consideration at this Meeting are the election of
three Directors, voting on a proposal to approve an amendment to the Kelly
Services, Inc. Performance Incentive Plan and ratification of the appointment
of PricewaterhouseCoopers LLP as the independent public accountants for the
Company for 2000.
The Meeting will also provide an opportunity to review with you the
business of the Company during 1999 and give you an opportunity to meet your
directors and officers.
Whether you plan to attend or not, please date, sign and return the
proxy card in the accompanying envelope. Your vote is important no matter how
many shares you own. If you do attend the Meeting and desire to vote in
person, you may do so even though you have previously submitted your proxy.
We look forward to seeing you at the Meeting.
Sincerely,
TERENCE E. ADDERLEY
Chairman, President and
Chief Executive Officer
[ LOGO ]
KELLY SERVICES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 15, 2000
To the Stockholders of
Kelly Services, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Kelly
Services, Inc., a Delaware corporation, will be held at the offices of the
Company, 999 West Big Beaver Road, Troy, Michigan 48084-4782, on May 15, 2000
at 11 o'clock in the forenoon, Eastern Daylight Time, for the following
purposes:
1. To elect three Directors as set forth in the accompanying Proxy
Statement.
2. To consider and act upon a proposal to approve an amendment to the
Kelly Services, Inc. Performance Incentive Plan, increasing the
maximum number of awardable shares.
3. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants.
4. To transact any other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
Only holders of the Company's Class B common stock of record at the
close of business on March 27, 2000 will be entitled to notice of and to vote
at the Meeting.
To ensure a quorum, it is important that your proxy be mailed promptly
in the enclosed envelope, which requires no postage.
By Order of the Board of
Directors
April 14, 2000
999 West Big Beaver Road
Troy, Michigan 48084-4782 GEORGE M. REARDON
Secretary
KELLY SERVICES, INC.
999 West Big Beaver Road
Troy, Michigan 48084-4782
April 14, 2000
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
This statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Kelly Services, Inc.
(hereinafter called the "Company") for use at the Annual Meeting of
Stockholders of the Company to be held at the corporate offices of the
Company in Troy, Michigan on May 15, 2000 for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The approximate date
on which this Proxy Statement and enclosed form of proxy are first being sent
to stockholders of the Company is April 14, 2000. If the enclosed form of
proxy is executed and returned by the stockholder, it may nevertheless be
revoked by the person giving it by written notice of revocation to the
Secretary of the Company, by submitting a later dated proxy or appearing in
person at the Meeting any time prior to the exercise of the powers conferred
thereby.
If a proxy in the accompanying form is properly executed, returned to
the Company and not revoked, the shares represented by the proxy will be
voted in accordance with the instructions set forth thereon. If no
instructions are given with respect to the matters to be acted upon, the
shares represented by the proxy will be voted FOR the election of three
Directors, designated Proposal 1 on the proxy, FOR the proposal to approve an
amendment to the Kelly Services, Inc. Performance Incentive Plan increasing
the maximum number of awardable shares, designated Proposal 2, FOR the
proposal to ratify the selection of independent accountants, designated
Proposal 3 on the proxy, and on any other matters that properly come before
the Annual Meeting in the manner as set forth on the proxy. Abstentions (but
not broker non-votes) are counted for purposes of determining a quorum.
However, abstentions and broker non-votes are not counted as votes cast in
the tabulation of votes on any matter submitted to stockholders.
Stockholders on the record date will be entitled to one vote for each
share held.
At the close of business on March 27, 2000, the number of issued and
outstanding voting securities (exclusive of treasury shares) was 3,501,659
shares of the Class B common stock, having a par value of $1.00. Class B
common stock is the only class of the Company's securities with voting
rights.
1
Securities Beneficially Owned by
Principal Stockholders and Management
Under regulations of the Securities and Exchange Commission, persons
who have power to vote or dispose of common stock of the Company, either
alone or jointly with others, are deemed to be beneficial owners of the
common stock.
Set forth in the following table are the beneficial holdings on March
1, 2000, on the basis described above, of each person known by the Company to
own beneficially more than five percent of the Class B common stock:
Name and Address Number of Shares Percent
of and Nature of of
Beneficial Owners Beneficial Ownership (a)(b) Class(b)
- ----------------- --------------------------- --------
T. E. Adderley ................ 3,214,566(c)(d) 91.8
999 W. Big Beaver Road
Troy, Michigan 48084
Bank One Corporation. ......... 2,382,709(e) 68.1
One First National Plaza
Chicago, Illinois 60670
(a) Nature of beneficial ownership of securities is direct unless otherwise
indicated by footnote. Beneficial ownership as shown in the table arises
from sole voting power and sole investment power unless indicated by
footnote.
(b) Because Securities and Exchange Commission attribution rules require
stock held in trust to be treated as beneficially held by each co-trustee
sharing voting power for the stock, the numbers of shares and percentages
shown total more than one hundred percent of the class.
(c) Includes 952,100 shares directly held; 2,189,840 shares in the William R.
Kelly Trust of which he is a co-trustee and has sole investment power and
has shared voting power with Bank One Corporation, the other co-trustee;
71,825 shares in an irrevocable trust, of which he is beneficiary; 625
shares held in five separate trusts of which he is co-trustee with sole
or shared voting and investment power, in which he has no equity
interest; and 176 shares owned by Mr. Adderley's wife, in which he
disclaims beneficial interest.
(d) Because of the shares in the William R. Kelly Trust of which he is a
co-trustee with Bank One Corporation and his own substantial
stockholdings, Mr. Adderley may be deemed to be a "control person" of the
Company under applicable regulations of the Securities and Exchange
Commission.
(e) Based upon a report filed by Bank One Corporation with the Securities and
Exchange Commission on Schedule 13G and upon subsequent information
received from Bank One Corporation upon which the Company relies for the
information presented. The report indicates that the 2,382,709 shares of
common stock held by Bank One Corporation are categorized as follows with
respect to voting power and dispositive power: Voting Power: sole voting
power 108,782; shared voting power 2,262,290; limited voting power
11,637; Dispositive Power: sole dispositive power 11,637; shared
dispositive power 2,371,072.
2
Set forth in the following table are the beneficial holdings of the
Class A and Class B common stock on March 1, 2000, on the basis described
above, of each director and all directors and officers as a group.
Class A Common Stock Class B Common Stock
--------------------------------- ------------------------------
Number of Shares Percent Number of Shares Percent
and Nature of of and Nature of of
Directors Beneficial Ownership(a) Class Beneficial Ownership Class
--------- ----------------------- ------- -------------------- -------
T. E. Adderley ............ 15,162,135 (b) 46.9 3,214,566 (c) 91.8
M. A. Fay, O.P ............ 11,165 * 0 *
C. V. Fricke .............. 15,257 * 781 *
V. G. Istock .............. 13,340 * 875 *
B. J. White ............... 11,965 * 0 *
All Directors and
Executive Officers as a
group .................. 15,439,601 47.8 3,216,422 91.9
* Less than 1%
(a) Includes shares which the individuals have a right to acquire through the
exercise of stock options within 60 days.
(b) Includes 870,797 shares directly held; 11,697,337 shares in the William
R. Kelly Trust of which he is co-trustee and has sole investment power
and has shared voting power with Bank One Corporation, the other
co-trustee; 310,612 shares in an irrevocable trust, of which he is
beneficiary; 2,227,092 shares held in eleven separate trusts of which he
is co-trustee with sole or shared investment power, in which he has no
equity interest; 55,159 shares held by Mr. Adderley and his wife as
custodian for certain of his minor children under the Michigan Uniform
Gifts to Minors Act, in which he has no equity interest; 1,138 shares
owned by Mr. Adderley's wife, in which he disclaims beneficial interest.
(c) See footnotes (c) and (d) to first table.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock of the Company. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
3
Board of Directors
The business, property and affairs of the Company are managed by the
Board of Directors, which establishes broad corporate policies and
performance objectives but is not involved in the day-to-day operating
details. Regular meetings of the Board of Directors are held in each quarter
and special meetings are scheduled when required. The Board held four
meetings during the last fiscal year.
The Board of Directors has a standing Audit Committee, composed of M.A.
Fay, C.V. Fricke, V.G. Istock and B.J. White, which held four meetings in
1999. The Audit Committee's purpose is to review the scope of the work and
fees of the independent accountants and to review with the independent
accountants their report or opinion on the Company's financial statements.
The Compensation Committee whose functions are described in the
Compensation Committee Report on page 5 of this Proxy Statement held six
meetings in 1999 and is composed of M.A. Fay, C.V. Fricke, V.G. Istock and
B.J. White. During 1999 the Board of Directors did not have a nominating
committee.
All of the Directors of the Company attended at least 75 percent of the
aggregate number of meetings of the Board of Directors and committees on
which each served.
Compensation of Directors
Directors of the Company who are not salaried officers are paid an
annual fee of $37,500 (consisting of a $25,000 cash retainer fee and a stock
award worth $12,500), a fee of $1,000 for each meeting of the Board of
Directors attended and a fee of $800 for each meeting of a committee of the
Board of Directors attended. The $12,500 stock award portion of the annual
fee is made under the Non-Employee Director Stock Award Plan approved by the
stockholders in 1995, from which each non-officer Director receives an annual
grant of shares of the Company's Class A common stock equal in value to
one-half of the Director's annual cash retainer fee.
On May 10, 1999, the stockholders approved the adoption of the Kelly
Services, Inc. 1999 Non-Employee Directors Stock Option Plan, under which the
Board of Directors from time to time may make discretionary grants of options
to purchase shares of Class A common stock to non-employee directors. In
1999, the Board granted to each non-employee director a vested option to
purchase 10,000 shares of Class A common stock at the Fair Market Value of
the stock on the day of the grants.
4
COMPENSATION COMMITTEE REPORT
COVERING EXECUTIVE COMPENSATION
The Company's compensation program for executives is administered by
the Compensation Committee of the Board of Directors, consisting of B. J.
White, M. A. Fay, C. V. Fricke, and V. G. Istock, each of whom is an
independent director. The Committee has responsibility for review and final
approval of all adjustments in salary and short-term incentive awards for
executives of the Company, including, with respect to 1999, administering the
Kelly Services, Inc. Short-Term Incentive Plan. The Committee also
administers the Kelly Services, Inc. Performance Incentive Plan (the
Company's long-term incentive plan) and makes recommendations with respect to
granting awards under such Plan subject to review and approval by a majority
of the full complement of those members of the Board of Directors who are
"disinterested persons" as that term is used in Rule 16b-3 of the Securities
and Exchange Commission.
Compensation Principles
The philosophy underlying the Company's executive compensation program
has the following goals: (a) to align key executive and management employees
with the Company's strategic and financial objectives; (b) to attract and
retain a management team of high quality; (c) to create incentives which
motivate employees to achieve continual growth and increasing profitability
of the Company; and (d) to promote appreciation of the common interests of
stockholders, executives, and key management employees.
Total compensation is directly related to the successful achievement of
the Company's performance objectives. Short-term objectives are established
on an annual basis, the achievement of which is rewarded annually. Long-term
objectives are linked to a two-to-five-year performance period, the
achievement of which will be rewarded accordingly. All compensation, other
than stock options and restricted stock awards, whether in the form of
salary, short-term incentive awards, grants of performance shares, or cash
equivalents, are based on successful accomplishment of periodically
established objectives reflecting the Company's business and financial goals.
Performance objectives, which are identified as short or long-term, provide
standards for the measurement of Company and unit performance. Some
performance objectives are Company-wide; others will vary, depending on
individual responsibilities, groups of employees, or particular projects and
plans.
The Company ordinarily seeks to provide performance-based compensation
that allows for maximum deductibility under Section 162(m) of the Internal
Revenue Code and related regulations. However, tax deductibility is only one
of many factors that must be considered in any final decision regarding
executive compensation. In order to best serve the Company and the interests
of its stockholders, the Company may determine that payment of non-deductible
compensation is necessary and appropriate to provide awards consistent with
the overall philosophy and objectives of the compensation programs.
The Company also seeks to encourage substantial stock ownership by the
Company's senior executives so as to align their interests more closely with
the stockholders' interests. In order to do so, the Committee has approved
share ownership guidelines as objectives to be worked toward by these
executives. The guideline for the Chief Executive Officer is ownership of
shares having a value five times his base salary; for executive vice
presidents, the guideline is four times base salary; and for senior vice
presidents, the guideline is three times base salary.
5
The following is a discussion of the major elements of the Company's
executive compensation program along with a description of the decisions and
actions taken by the Committee with regard to 1999 compensation of Mr.
Adderley as the Company's Chief Executive Officer.
Annual Compensation
Annual cash compensation for executive officers consists of base
salaries and cash incentive bonuses.
Base salaries for executive officers are targeted to be competitive
with the marketplace, identified by national surveys of executive
compensation in which the Company periodically participates and which are
recognized as credible within the professional field of compensation
management. Because the Company competes to recruit executive-level personnel
from many industries and not just from the staffing industry, the companies
included in the surveys referred to above are not the same as those included
in the Peer Group Index used in this Proxy Statement for performance graph
purposes. Base salaries are targeted to correspond generally with the median
of the range of salaries in the surveys consulted.
Competitive assessments include reviewing salary survey data of
comparative companies, not necessarily in the staffing industry, and other
relevant factors. Individual performance is also a factor in determining base
salary. The Committee is responsible for reviewing and approving the annual
salary increase budget for all officers.
In April 1999, Mr. Adderley received a 5.3 percent salary increase from
$760,000 to $800,000 to bring his annualized base salary more in line with
the median base salaries of chief executive officers of other companies of
comparable size.
One newly hired executive was paid a predetermined cash bonus for 1999
as a recruiting inducement, negotiated with him before he joined the Company.
All other 1999 cash bonuses to executive officers (including Mr. Adderley)
were cash incentive bonuses paid pursuant to the Company's Short-Term
Incentive Plan.
In accordance with that plan, in the first quarter of 1999 the
Committee established target and threshold goals relating to corporate
diluted earnings per share and a payout schedule for each executive showing a
range of potential bonus amounts the executive could receive under the plan,
which depended on the extent to which the Company's actual 1999 diluted
earnings per share met or exceeded the threshold. Mr. Adderley's entire
potential bonus was tied to this objectively determinable standard and a
fixed percentage of the potential bonus under the plan for each of the other
executive officers also was tied to this standard. The rest of the potential
bonuses for the other executive officers were tied to other performance
goals, which also were established by the Committee in the first quarter of
the year and were set in light of the particular functions and
responsibilities of the individual executives.
Because the Company's actual diluted earnings per share for 1999
exceeded the threshold the Committee had established for the year, after the
end of the year the Committee approved a $630,000 cash bonus for Mr. Adderley
and the portions of the Short-Term Incentive Plan bonuses for other executive
officers that had been tied to diluted earnings per share, all in amounts
determined by their pre-established schedules for the level of diluted
earnings per share actually achieved. The remainder
6
of the 1999 Short-Term Incentive Plan bonuses paid to those other executive
officers were determined by the Committee after the end of the year based on
judgments of the Committee concerning how successful they were in achieving
their individualized goals.
Long-Term Compensation
The long-term incentive compensation for executive officers can consist
of cash and stock-based awards made under the Company's Performance Incentive
Plan. Non-Qualified Stock Options, Incentive Stock Options, and, in the case
of certain executives, Restricted Stock Awards and Performance Share Awards,
are currently the only type of awards outstanding under the Performance
Incentive Plan.
During 1999, there was a review of compensation components for chief
executive officers in companies of similar size. As a result of that review,
the Committee during 1999 recommended that Mr. Adderley be awarded a
Non-Qualified Stock Option to purchase 72,000 shares of Class A common stock
to bring his total compensation package more in line with competitive
practice.
The decision to grant stock options is considered periodically by the
Committee during each year. Grants may be given to new hires, employees
promoted to new positions, and other key managers and executives as deemed
appropriate by the Committee. Grant size is determined based on a guideline
of option shares for each management level that is generally competitive with
the median level of grants awarded by companies of similar size.
In 1999, Mr. Adderley and the other most senior officers of the Company
were granted Restricted Shares of the Company's Class A common stock under
the Company's Performance Incentive Plan. These Restricted Shares vest over a
three year period. Mr. Adderley received a Restricted Share Award totaling
15,000 shares.
1999 was also the final year of the 1997-1999 Performance Share Award
cycle. Payments with respect to that cycle were made according to the
predetermined earnings per share criteria established by the Committee; Mr.
Adderley's payout was 12,000 shares. No new Performance Share Awards were
made in 1999.
Conclusion
The Committee believes that the Company's executive compensation
program, providing as it does for competitive base salaries along with short
and long-term incentive compensation opportunities, is an important
factor in motivating senior officers as well as maintaining an appropriate
focus on increasing stockholder value.
B. J. WHITE, Chair
M. A. FAY, O.P.
C. V. FRICKE
V. G. ISTOCK
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid or accrued for
services rendered to the Company and its subsidiaries for the last three
fiscal years by the Chief Executive Officer and the four highest-paid
executive officers of the Company:
Long-Term
Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------- ----------------------- ---------
Restricted Number of Long-Term
Share Shares Incentive All Other
Name and Award(s) Underlying Plan Compensation
Principal Position Year Salary Bonus ((1)) Options Payouts ((4))
------------------ ---- ------ ----- ---------- ---------- --------- ------------
T. E. Adderley 1999 $790,000 $630,000 $394,800 72,000 $301,560 (2) $76,634
Chairman, President and 1998 750,000 414,000 72,000 266,700 (3) 71,580
Chief Executive Officer 1997 711,250 443,000 72,000 60,195
C. T. Camden 1999 $575,000 $300,000 $210,560 30,000 $125,650 (2) $45,132
Executive Vice President, Field 1998 462,500 220,000 30,000 44,450 (3) 36,750
Operations, Sales and Marketing 1997 300,000 150,000 231,280 30,000 20,880
T. A. White 1999 $575,000 $300,000 $210,560 30,000 $125,650 (2) $48,432
Executive Vice President, Chief 1998 462,500 220,000 30,000 44,450 (3) 36,750
Administration and Technology Officer 1997 306,250 150,000 231,280 30,000 21,615
W. K. Gerber 1999 $535,000 $250,000 $157,920 25,000 $45,853
Executive Vice President and Chief 1998 348,968 220,000 181,100 65,000 74,045
Financial Officer(5)
A. G. Grimsley 1999 $309,000 $190,000 $105,280 20,000 $25,477
Senior Vice President, Professional, 1998 275,000 110,000 18,000 22,500
Technical and Staffing Alternatives 1997 187,500 90,000 56,120 15,000 12,840
(1) Restricted Shares of the Company's Class A common stock were awarded in
March 1999, May 1998 and November 1997. The shares awarded in 1999 vest
in three equal annual installments beginning one year after the date of
grant. The shares awarded in 1998 vest in five equal annual installments
beginning one year after the date of grant. The shares awarded in
November 1997 vest in four equal annual installments beginning one year
after the date of grant. The above amounts represent the fair market
value of the entire award for each executive officer at the grant date.
The number of shares awarded in 1999 were: T.E. Adderley, 15,000; C.T.
Camden, 8,000; T.A. White, 8,000; W.K. Gerber, 6,000; and A. G. Grimsley,
4,000. The number of shares awarded in 1998 were: W. K. Gerber, 5,000.
The number of shares awarded in 1997 were: C. T. Camden, 8,000; T. A.
White, 8,000; and A. G. Grimsley, 2,000. Dividends are payable on
Restricted Shares.
At December 31, 1999, the aggregate number of Restricted Shares of the
Company's Class A common stock held by the executive officers named in
the Summary Compensation Table and the
8
value of these shares, based upon the $25.13 per share closing price of
the Company's Class A common stock on that date, were as follows:
Name No. of Shares Value
---- ------------- -----
T. E. Adderley ...... 15,000 $376,950
C. T. Camden ........ 12,000 301,560
T. A. White ......... 12,000 301,560
W. K. Gerber ........ 10,000 251,300
A. G. Grimsley ...... 4,666 117,257
(2) Value of shares received in 2000 for the three year performance period
ending December 31, 1999.
(3) Value of shares received in 1999 for the three year performance period
ending December 31, 1998.
(4) Represents Company contributions to non-qualified defined
contribution/deferred compensation plan for officers and certain other
management employees known as the Management Retirement Plan. The amount
reported for Mr. Gerber includes a contribution of $50,000 made as a
recruiting inducement.
(5) Mr. Gerber has been an employee of the Company since April 1998.
Option Grants in 1999
The following table shows all grants of stock options to the officers
named in the Summary Compensation Table above in 1999. The exercise price of
all such options was the fair market value on the date of grant. Twenty five
(25%) percent are exercisable one year after the grant date with an
additional twenty five (25%) percent exercisable on each of the next three
anniversary dates. Upon exercise of an option, an officer purchases all or a
portion of the shares covered by the option by paying the exercise price
multiplied by the number of shares as to which the option is exercised,
either in cash or by surrendering common shares already owned by the officer.
Individual Grants
- ------------------------------------------------------------------------------------- Potential Realizable Value at
Number of % of Total Assumed Annual Rates of Stock
Shares Options Price Appreciation for Option Term(2)
Underlying Granted to -------------------------------------
Options Option Employees Exercise or Expiration
Name Granted Type(1) in Fiscal Year Base Price Date 0% 5% 10%
---- ---------- ------- -------------- ---------- ---------- -- -- ---
T. E. Adderley .. 72,000 NQ 13.04 $24.50 03/08/09 $0 $1,109,370 $2,811,362
------ ---------- ----------
C. T. Camden .... 26,000 NQ $24.50 03/08/09 $0 $ 400,606 $1,015,214
4,000 ISO $24.50 03/08/09 $0 61,632 156,187
------ ---------- ----------
30,000 5.43 $0 $ 462,238 $1,171,401
T. A. White ..... 26,000 NQ $24.50 03/08/09 $0 $ 400,606 $1,015,214
4,000 ISO $24.50 03/08/09 $0 61,632 156,187
------ ---------- ----------
30,000 5.43 $0 $ 462,238 $1,171,401
W. K. Gerber .... 21,000 NQ $24.50 03/08/09 $0 $ 323,566 $ 819,980
4,000 ISO $24.50 03/08/09 $0 61,632 156,187
------ ---------- ----------
25,000 4.53 $0 $ 385,198 $ 976,167
A. G. Grimsley .. 16,000 NQ $24.50 03/08/09 $0 $ 246,527 $ 624,747
4,000 ISO $24.50 03/08/09 $0 61,632 156,187
------ ---------- ----------
20,000 3.62 $0 $ 308,159 $ 780,934
9
(1) Option type is either Incentive Stock Option (ISO) or Non-Qualified Stock
Option (NQ).
(2) The dollar amounts under the 5% and 10% columns in the table above are
the result of calculations required by the Securities and Exchange
Commission's rules and therefore are not intended to forecast possible
future appreciation of the stock price of the Company. As shown in the 0%
column above, no gain to the named officers or all employees is possible
without appreciation in the price of the Company's common stock, which
will benefit all stockholders. For example, in order for any of the named
officers to realize the potential values set forth in the 5% and 10%
columns in the table above with respect to the exercise price of $24.50
(the fair market value on the date of the grant), the price per share of
the Company's Class A common stock would be approximately $39.91 and
$63.55, respectively, as of the expiration date of their options.
Option Exercises During 1999 and Year-End Option Values
The following table shows stock option exercises during 1999 by each of
the officers named in the Summary Compensation Table and the value of
unexercised options at December 31, 1999:
Number of
Shares Underlying Value of Unexercised
Unexercised Options In-the-Money
Number of at Year End Options at Year End
Shares Acquired --------------------------- ---------------------------
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
T. E. Adderley ....... 0 $0 157,200 203,800 $0 $45,360
C. T. Camden ......... 0 $0 30,000 78,000 $0 $18,900
T. A. White .......... 0 $0 40,300 78,200 $0 $18,900
W. K. Gerber ......... 0 $0 13,000 77,000 $0 $15,750
A. G. Grimsley ....... 0 $0 13,200 44,800 $0 $12,600
Long-Term Incentive Plans -- Awards in Last Fiscal Year Table
There were no performance share awards made by the Company in 1999
under the Company's Performance Incentive Plan.
10
Performance Graph
The following graph compares the cumulative total return of the
Company's Class A common stock, with that of a Peer Group Index and the S&P
MidCap 400 Index for the five years ended December 31, 1999. The graph
assumes an investment of $100 on December 31, 1994 and that all dividends
were reinvested. The Peer Group Index consists of other publicly traded
staffing services companies including: CDI Corp., Interim Services Inc.,
Manpower Inc. and Olsten Corporation. The Peer Group reflects the elimination
of Norrell Corporation as Norrell was acquired by Interim Services Inc.
during 1999 and is no longer publicly traded.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Kelly Services, Inc., Peer Group Index and S&P MidCap 400 Index
[graphic omitted]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Kelly Services, Inc. 100 104 104 119 129 106
Peer Group Index 100 110 107 127 84 114
S&P MidCap 400 Index 100 131 156 206 246 282
11
Matters to be Brought Before the Meeting
Election of Directors
Proposal 1
The Board of Directors is divided into three classes with each class
elected for a three-year term. Under the Certificate of Incorporation, the
Board of Directors shall consist of no fewer than five (5) and no more than
nine (9) members, the exact number of Directors to be determined from time to
time by the Board of Directors. The Board of Directors has fixed the number
of Directors constituting the whole Board at five (5).
The Board of Directors recommends that the nominees named below be
elected to serve as Directors. The nominees will each serve for a three (3)
year term ending at the Annual Meeting of Stockholders held after the close
of the fiscal year ended December 31, 2002.
The shares represented by the enclosed form of proxy, when properly
executed by a stockholder of record, will be voted at the Annual Meeting, or
any adjournment thereof, as designated thereon if unrevoked at the time of
the Meeting. If a nominee is unavailable for election for any reason on the
date of the election of the Director (which event is not anticipated), the
persons named in the enclosed form of proxy may vote for the election of a
person designated by a majority of the proxy attorneys present at the
Meeting. The Directors will be elected by a majority 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 Meeting.
The name and age of each nominee and for each person whose term of
office as a Director will continue after the Meeting as of March 1, 2000,
their present occupations or employment during the past five years and other
data regarding them, based upon information received from the respective
individuals, are hereinafter set forth:
Year of Year First
Expiration of Principal Elected as
Name and Age Elective Term Occupation Director
- ------------ ------------- ---------- ----------
Nominees for Election as Director to be Elected for a Three-Year Term
M. A. Fay, O.P. ...... 2000 President of the University of Detroit Mercy; 1997
Age 65 Director of Bank One Corporation.
C. V. Fricke ......... 2000 Professor Emeritus, University of Michigan-Dearborn. 1978
Age 71
V. G. Istock ......... 2000 President of Bank One Corporation; Director of Bank 1991
Age 59 One Corporation; Director of Masco Corporation;
Director of Federal Reserve Bank of Chicago.
Directors Continuing in Office
B. J. White .......... 2002 Dean and Professor of Business Administration of the 1995
Age 52 University of Michigan Business School; Director of
Equity Residential Property Trust.
T. E. Adderley(a)..... 2001 Chairman, President and Chief Executive Officer of 1962
Age 66 the Company; Director of DTE Energy Company.
(a) Mr. Adderley is a director and executive officer of virtually all
subsidiaries of the Company.
12
Approval of Amendment to the Performance Incentive Plan
Increasing the Maximum Number Of Awardable Shares
Proposal 2
Background for Proposal. The Kelly Services, Inc., Performance
Incentive Plan, under which various stock-related awards (stock options,
restricted shares, performance shares, additional shares, share appreciation
rights, or foreign awards) are made to Company employees, was last restated,
amended, and approved by the stockholders in 1996. The Plan limits the number
of shares that can be used for awards, using an overall percentage of the
Company's outstanding shares, modified by a so-called "evergreen" approach
that recycles (and makes available for new awards) shares that were the
subject of previous awards that have expired, have been forfeited, or have
been outstanding over five years.
Since the 1996 amendment, the limitation rule has been that, at any
given time, the number of shares that may be issued or made subject to future
issuance under the Plan may not exceed 7.5% of the non-treasury Class A stock
outstanding at the Company's last fiscal year end, adjusted by the items
listed in subsections (a) and (b) of Section 5 of the Plan (see Exhibit A to
this Proxy Statement.)
As the proportion of incentive based compensation and the number of
eligible participants have increased, the number of shares available under
the Plan has become insufficient. Consequently, the Board has concluded that
the maximum number of shares which may be issued or made subject to future
issuance under the Plan should be increased from 7.5% to 10%, subject to the
same "evergreen" adjustments, in order to ensure an adequate number of shares
for future stock-related awards.
Accordingly, as authorized under the Plan, subject to stockholder
approval, the Board of Directors has adopted an amendment to Section 5 of the
Plan that would substitute "10%" for "7.5%." The amended section is
reproduced in full in Exhibit A to this Proxy Statement.
The Board of Directors recommends a vote "FOR" approval of the
Amendment to the Performance Incentive Plan Increasing the Maximum Number of
Awardable Shares.
Relationship with Independent Accountants
Proposal 3
The Board of Directors of the Company has appointed the firm of
PricewaterhouseCoopers LLP as independent accountants of the Company for the
current fiscal year ending January 2, 2001, subject to ratification by the
stockholders. This firm has served as independent accountants for the Company
for many years and is considered to be well qualified by the Board of
Directors. As in prior years, a representative of that firm will be present
at the Annual Meeting and will have the opportunity to make a statement and
to respond to appropriate questions.
It is recommended by the Board of Directors that the proposal to ratify
the appointment of PricewaterhouseCoopers LLP as independent accountants for
the year 2000 be approved. If stockholders fail to approve this proposal, the
Board will reconsider the appointment of PricewaterhouseCoopers LLP as
independent accountants for the year 2000.
The proposal to ratify the appointment of PricewaterhouseCoopers LLP
will be carried if it
13
receives the affirmative vote of the holders of a majority of the Company's
Class B common stock present in person or by proxy and entitled to vote at
the Annual Meeting.
Stockholder Proposals
Proposals of stockholders intended to be presented at the next Annual
Meeting must be received by the Secretary, Kelly Services, Inc., 999 West Big
Beaver Road, Troy, Michigan 48084, no later than December 9, 2000.
Other Matters
At the date of this Proxy Statement the Company knows of no matters,
other than the matters described herein, that will be presented for
consideration at the Meeting. If any other matters do properly come before
the Meeting, all proxies signed and returned by holders of the Class B common
stock, if not limited to the contrary, will be voted thereon in accordance
with the best judgment of the persons voting the proxies.
A copy of the Company's printed Annual Report as of January 2, 2000,
the close of the Company's latest fiscal year, has been mailed to each
stockholder of record. The expense of preparing, printing, assembling and
mailing the accompanying form of proxy and the material used in the
solicitation of proxies will be paid by the Company. In addition, the Company
may reimburse brokers or nominees for their expenses in transmitting proxies
and proxy material to principals.
It is important that the proxies be returned promptly. Therefore,
stockholders are urged to execute and return the enclosed form of proxy in
the enclosed postage prepaid envelope.
By Order of the Board of Directors
GEORGE M. REARDON
Secretary
14
EXHIBIT A
The following excerpt is a complete copy of Section 5 from the Kelly
Services, Inc. Performance Incentive Plan, as amended and restated by the
shareholders in 1996 (the "Plan"). A complete copy of the Plan was provided
as an exhibit to the 1996 Proxy Statement. This excerpt has been modified to
reflect the change proposed by Proposal 2 in this Proxy Statement. The one
change has been highlighted in bold type. [For the EDGAR version of this
Exhibit A only, the change has been marked in brackets.]
Section 5 -- Maximum Number of Shares
At any given time, the maximum number of shares of Company Stock which
may be issued as Restricted Shares or Units, Performance Shares or Units,
Additional Shares or similar Foreign Awards and made subject to future
issuance in settlement of Options (whether or not with related SARs), Share
Units or Foreign Awards shall be [10%] of the number of shares of Company
Stock that were outstanding (exclusive of treasury shares) as of the end of
the immediately preceding Company fiscal year (rounded downward, if
necessary to eliminate fractional shares),
(a) minus the sum of:
(1) the number of shares awarded as Restricted Shares,
Performance Shares or Additional Shares during the period consisting of
the immediately preceding four complete fiscal years of the Company and
its then-current fiscal year to date (the "Adjustment Period");
(2) the number of Share Units awarded during the Adjustment
Period;
(3) the number of shares made subject to Options granted
(including Restoration Options arising) during the Adjustment Period;
and
(4) the total number of shares issued as Foreign Awards, and the
maximum number of shares which in the future may be issued in
settlement of Foreign Awards, granted during the Adjustment Period;
(b) plus the sum of:
(1) the number of shares as to which Options have expired or
terminated during the Adjustment Period for any reason other than
exercise of such Options or of related SARs;
(2) the number of shares as to which Restricted Awards and
Performance Awards granted during the Adjustment Period have since been
forfeited and not vested; and
(3) the number of shares transferred to the Company (actually or
constructively) to satisfy the exercise price of an outstanding Option
during the Adjustment Period.
In addition to the foregoing, in no event may the total number of
shares covered by outstanding ISOs plus the number of shares issued in
settlement of exercised ISOs, whenever granted, exceed 4,000,000 shares.
Any stock options, SARs or other equity-based awards assumed by the
Company in a merger or acquisition of another company shall not count against
the shares available for Award under the Plan.
A-1
[FRONT OF PROXY CARD]
KELLY SERVICES, INC.
999 West Big Beaver Road
Troy, Michigan 48084
Solicited by the Board of Directors
for the Annual Meeting of Stockholders on May 15, 2000
The undersigned hereby appoints as Proxies Terence E. Adderley, William K.
Gerber and George M. Reardon, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated on the
reverse side, all shares of Class B Common Stock of Kelly Services, Inc. (the
"Company") held of record by the undersigned on March 27, 2000 at the Annual
Meeting of Stockholders to be held on May 15, 2000 and any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
Please sign this Proxy exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation, the
signature should be that of an authorized officer who should state his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
- ------------------------------------------------------------------------------
[BACK OF PROXY CARD]
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
KELLY SERVICES, INC.
CLASS B COMMON STOCK
Mark box at right if an address change or comment has been
noted on the reverse side of this card. / /
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date______________________
________________________________ ________________________________
Stockholder sign here Co-owner sign here
1. Election of Directors.
For All With- For All
Nominees hold Except
(01) M.A. Fay, O.P. / / / / / /
(02) C.V. Fricke / / / / / /
(03) V.G. Istock / / / / / /
NOTE: If you do not wish to vote your shares "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Approve Amendment to Performance Incentive
Plan Increasing the Maximum Number of
Awardable Shares. / / / / / /
3. Ratify the appointment of PricewaterhouseCoopers
LLP as independent accountants. / / / / / /
4. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting.
Mark box at right if you wish only one Annual Report to be mailed
to your household. / /
DETACH CARD DETACH CARD
