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:

Kelly Services, Inc.

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

2021 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS WE CONNECT PEOPLE TO WORK IN WAYS THAT ENRICH THEIR LIVES. KELLY

April 19, 2021

Dear Stockholders:

2020 was a year of extraordinary change and challenge for the world at large and for Kelly, our employees, and the talent and businesses we connect. We entered the year on track to accelerate our transformation into a growth-driven specialty talent company and were quickly faced with the COVID-19 pandemic – one of the most intense and protracted global crises in modern history. Kelly’s response was swift and decisive. Our actions not only protected our people, they also positioned our business to emerge from the pandemic poised for growth. Indeed, our journey through the many unexpected turns of 2020 both challenged and strengthened Kelly’s ability to adapt, innovate, and execute on our strategic promise. We’re proud of our people and what we collectively accomplished during a year of unparalleled disruption.

A People-First Response

When the pandemic struck, our first instinct and our immediate priority was to protect the safety of our full-time and temporary employees. We activated Kelly’s Emergency Management Team to identify operational priorities, contain risks, activate pandemic policies, and communicate openly with all stakeholders. We expanded our Kelly Anywhere platform to enable more than 90% of our full-time employees to immediately transition to remote work, ensuring business continuity and the health and safety of our employees throughout the crisis. We partnered with healthcare providers to offer special medical plans and benefits to temporary workers and launched the Kelly Cares Hotline to stay connected with talent.

We also advanced our long-term commitment to talent in 2020. We appointed the industry’s first Chief Talent Officer, dedicated to the temporary employee experience, and launched Kelly’s five-point Talent Promise to confirm the safety, value, well-being, investment, and opportunity that every temporary worker deserves – not just during a crisis, but each day of every year.

Financial Resilience

Kelly entered the pandemic with a healthy balance sheet, and we acted quickly and decisively to protect it. We made difficult decisions with discernment and speed, implementing temporary measures such as employee, executive, and board compensation cuts; furloughs; hiring freezes; suspension of the quarterly dividend; and reduced capital expenditures.

Our defensive short-term actions proved successful and paved the way for positive momentum. Kelly produced positive adjusted earnings each quarter of 2020; ended the year with all five of our specialty business units showing sequential growth; and maintained ample cash and available capacity to pursue strategic opportunities. In the fourth quarter, encouraged by gradual improvements in economic and business conditions, we carefully began lifting some of our temporary expense mitigation measures. We will continue to evaluate the remaining measures as the economic recovery and demand for talent stabilize in 2021.

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Letter to our Stockholders

A Two-Pronged Approach to Growth

Even as we navigated economic and labor market turmoil, Kelly remained steadfast in executing our growth strategy. In July 2020, we implemented a new operating model designed to drive increased specialization, launching five new operating segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. This approach to organizing our business leverages Kelly’s existing strengths and the significant market opportunities that lie ahead, focusing our efforts where we are best able to win. We began seeing benefits from this new structure in the third and fourth quarters, and we attribute much of the momentum we’ve brought into 2021 to our newly structured specialty focus.

At the same time, we are committed to seizing inorganic growth opportunities that align with our strategy. During 2020, we completed two strategic acquisitions in our Education segment: Insight, a K-12 education staffing company, and Greenwood/Asher & Associates, a higher education executive search firm. We continue to monitor the market for acquisition targets to bolster our aggressive inorganic growth aspirations within specialties that offer the most promise for growth.

Governance Practices

Kelly’s governance practices played an invaluable role in 2020. Our highly engaged board of directors provided keen insight from diverse viewpoints throughout the crisis, helping to guide Kelly’s successful response. Women and ethnically diverse members make up 44% of the board, which also spans a wide variety of industries, backgrounds, and tenures. Additionally, in 2020, the membership of each of the Board’s three committees—Audit, Compensation and Talent Management, and Corporate Governance and Nominating—became fully independent.

In keeping with our commitment to formally communicate our non-financial and sustainability performance to all stakeholders, we adopted an integrated Environmental, Social, and Governance (“ESG”) reporting framework and published our Sustainability Report in May 2020. The report, prepared in accordance with the Global Reporting Initiative Standards: Core option, the Communication on Progress according to the United Nations Global Compact Guidelines, formalizes and discloses Kelly’s Corporate Sustainability Strategy aligned to the ESG framework.

Inclusion, Equity, and Diversity

The widespread social unrest of 2020 shone a light on systemic injustice and the ongoing need for equity, inclusion, and diversity in all facets of modern life. We believe Kelly can play a powerful role in championing those who are not given a fair opportunity to secure meaningful work. In addition to joining the CEO Action for Diversity and Inclusion, in late 2020 we launched Equity@Work, a forward-looking initiative designed to remove systemic barriers to employment and make the labor market more equitable and accessible. We also looked within and began re-designing our own hiring practices, as well as bolstering

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Letter to our Stockholders

the voices of diverse talent by launching five new affinity groups and an internal Inclusion Council. Guided by our noble purpose of connecting people to meaningful work, we remain committed to making Kelly – and all workplaces – more inclusive and equitable.

Looking Ahead

There’s no question the COVID-19 crisis has reshaped the world of work, but Kelly is ready to lead our talent and customers into what’s next. We enter our 75^th year with gratitude and optimism. We are guided by a seasoned executive team and an engaged board of directors committed to Kelly’s success. Our noble purpose is brought to life by talented employees, temporary workers, and suppliers around the globe. We continue to make their health and safety a top priority as we actively monitor and respond to evolving COVID-19 protocols.

We are thankful to the customers who partnered with us to keep their businesses going amid the crisis. And we are grateful to you, the stockholders whose confidence enabled us to protect our resources and position Kelly for brighter days ahead.

With sincere appreciation,

				DONALD PARFET Chairman of the Board				PETER QUIGLEY President & CEO

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Notice of Annual Meeting of Stockholders

2021 Annual Meeting of Stockholders

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Table of Contents

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Proxy Summary

Proxy Summary

This summary highlights information contained elsewhere in this Proxy Statement. Please refer to the complete Proxy Statement and Kelly’s 2020 Annual Report before you vote.

 

 

2021 Annual Meeting of Stockholders Details
Date and Time:		Wednesday, May 19, 2021 at 11:00 a.m., Eastern Daylight Time
Place:		Virtual Meeting: kellyservices.com
Record Date:		Close of Business, Eastern Daylight Time, March 29, 2021
Voting:		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.

 

 

VOTING MATTERS
Election of nine directors		Advisory vote to approve the Company’s executive compensation		Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the 2021 fiscal year
BOARD RECOMMENDATIONS
✓ FOR Each Nominee		✓ FOR		✓ FOR
PAGE REFERENCE FOR MORE DETAILS
14		39		69

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Proxy Summary

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Proxy Summary

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Proxy Summary

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Proxy Summary

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Proxy Summary

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Proxy Summary

Awards and Recognitions

EcoVadis Achievements   • Recognized as a Silver Supplier for third consecutive year.   • Increased our score by 20 points since 2017.   • Ranked top 6% and 91st percentile of companies assessed on environment, labor and human rights, ethics, and sustainable procurement.   • Placed in top 8% for ethics and top 5% for sustainable procurement categories.
National Minority Supplier Development Council (NMSDC) – Class 1 honors – 2020 Corporation of the Year		Michigan Minority Supplier Diversity Council (MMSDC) – 2020 ACE Award – Corporation of the Year for Professional Services & Staffing		Kelly was awarded the 2021 Military Friendly Employer designation and 2021 Military Friendly Spouse Employer by VIQTORY		For the 10th consecutive year, Kelly was recognized as one of America’s Top Corporations for Women- Owned Businesses by WBENC
For the 4th consecutive year, Kelly received a top score on the Human Rights Corporate Equality Index 2021. Best Place to Work for LGBTQ Equality		Kelly earned Silver Supplier status in business sustainability from EcoVadis		Kelly was named to FlexJobs® Top 100 Companies for Remote Jobs in each of the eight years the award has been in existence, 2014-2021		For the second year in a row, Kelly earned No. 3 spot on the global diversity award by WEConnect International
KellyOCG outsourcing excellence by the International Association of Outsourcing Professionals (IAOP) 2020 Global Outsourcing 100 List		HR Vendor of the Year by Human Resources Online 2020 – Gold Award for Best Recruitment Process Outsourcing Partner – KellyOCG Singapore		Forbes named Kelly as one of America’s top recruiting firms for 2020		KellyOCG – Leader for Services Procurement by Everest Group
Great Place to Work – KellyOCG India				Best Use of Online Recruitment by a Recruitment Agency, OnRec

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Proxy Summary

Executive Compensation Highlights

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Proposal 1: Election of Directors

Proposal 1 – Election of Directors

The Board 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. All of these individuals are currently serving on the Board.

Directors will be elected by a plurality of the votes cast by holders of Class B Common Stock who are present in person, or represented by proxy, and entitled to vote at the Annual Meeting. Our controlling stockholder has indicated its support and intention to vote for each of the director nominees.

We do not contemplate that any of the nominees will be unavailable to serve at the time of the Annual Meeting; in that event, however, the persons named in the enclosed form of proxy may vote for the election of a substitute selected by the Board or the Board may reduce its size.

Director Independence

On February 17, 2021, our Board affirmatively determined that directors Gerald S. Adolph, Robert S. Cubbin, Jane E. Dutton, 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.

Board Nominees

The Corporate Governance and Nominating Committee regularly reviews the mix of individual directors on the Board to assess overall Board composition and is responsible for identifying and recommending to the Board qualified candidates for Board membership. The goal is to build a Board that is effective, collegial, diverse, responsive to the current and anticipated needs of the Company, and effectively represents the long-term interests of stockholders. The Committee considers the following criteria: (i) ethics, character, and judgment; (ii) business and other experience, expertise, skills, and knowledge relevant to the Company’s business and strategy; (iii) objectivity and independence of thought; (iv) diversity of viewpoints and perspectives, personal and professional experience, background, and personal characteristics such as gender, race, ethnicity, sexual orientation, and age; and (v) the balance of the candidate’s qualities with those of other members of the Board. The Board values diversity and takes it into consideration as we strive to maintain a Board that is strong collectively in its backgrounds, knowledge, and experience. Director candidates must also have a willingness to devote sufficient time to discharge their duties, taking into consideration principal occupation, memberships on other boards, attendance at Board and committee meetings, and other responsibilities. The Committee may engage third parties to assist in the search for director candidates. In determining whether to recommend a director for re-nomination, the Committee also considers the director’s recent contributions and potential for continuing contributions to the work of 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 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, academia, nonprofit organizations, and other businesses. They represent diverse backgrounds and viewpoints. Together, they bring to our Board broad diversity in terms of experience, skills, and personal attributes. The Board believes that this diversity strengthens the Board’s ability to carry out its oversight role on behalf of stockholders. While we do not have a formal diversity policy, the Board will seek to build upon its diversity in connection with future Board membership.

The following graphics highlight the personal diversity and breadth of skills, knowledge, and experience that are represented on the Board. A particular director may possess other skills, knowledge, or experience in addition to those noted below.

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Proposal 1: Election of Directors

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Proposal 1: Election of Directors

Biographical Information About Director Nominees

		DONALD R. PARFET   Age: 68   Director since: 2004   Chairman of the Board   Independent								PETER W. QUIGLEY   Age: 59   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. Parfet was appointed Chairman of the Board in 2018. Prior to being appointed to the Chairman role, he had served as the Board’s Lead Director since 2012. Mr. Parfet brings extensive financial and operating experience to the Board as an executive with responsibilities for numerous global businesses. He currently leads a business development company and a venture capital firm focused on the development of emerging medicines. He also serves as a director of two large publicly held companies and is a director and Trustee of a number of charitable and civic organizations. Mr. Parfet brings to the Board global operating experience, strong financial background, and proven leadership capabilities.								Mr. Quigley was appointed President and Chief Executive Officer of Kelly in October 2019. He has 18 years of experience in a variety of roles at Kelly and has served as an officer of the Company since 2004. Prior to joining Kelly, Mr. Quigley held an array of roles at Lucent Technologies and AT&T Corporation. He earned a Juris Doctorate (J.D.) from the National Law Center at George Washington University and a bachelor’s degree from the University of Michigan. Mr. Quigley also serves on the Board of the American Staffing Association, Detroit Regional Chamber and the Detroit Economic Club.

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Proposal 1: Election of Directors

		CAROL M. ADDERLEY   Age: 61   Director since: 2010								GERALD S. ADOLPH   Age: 67   Director since: 2018   Independent
Board Committees:   •  None								Board Committees:   •  Audit   •  Compensation and Talent Management   •  Governance and Nominating
Principal Occupation and Directorships:   •  Writer and Researcher in the Humanities								Principal Occupation and Directorships:   •  Director and Co-Chair, NAACP Legal Defense and Education Fund (1998 - present)   •  Director, Cintas Corporation (2006 - present)   •  Trustee, Cardinal Spellman High School Board (2010 - present)   •  Senior Partner and other executive positions, Booz & Co. (1981 - 2016)
Education:   •  University of Iowa, MA, English Literature   •  University of Chicago, AM, General Studies in Humanities, Literature and Social Change   •  University of Western Ontario, BA (Honors), English and Philosophy								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
Ms. Adderley is the granddaughter of William R. Kelly, the Company’s founder, and the daughter of Terence E. Adderley, who served for many years as Chief Executive Officer and as Chairman of the Board. Ms. Adderley holds advanced degrees in the humanities and is a published author.								Mr. Adolph, who joined our Board in March 2018, has over 35 years of experience in growth strategy, mergers and acquisitions, and technology-driven industry changes. Mr. Adolph also has governance experience through his past service on the board of Booz & Co. and current service on the boards of Cintas Corp., where he chairs the compensation committee, and the NAACP Legal Defense and Education Fund, which he co-chairs.

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Proposal 1: Election of Directors

		GEORGE S. CORONA   Age: 62   Director since: 2017								ROBERT S. CUBBIN   Age: 63   Director since: 2014   Independent
Board Committees:   •  None								Board Committees:   •  Audit   •  Compensation and Talent Management (Chair)   •  Governance and Nominating
Principal Occupation and Directorships:   •  President and Chief Executive Officer, Kelly Services, Inc. (2017 - 2019)   •  Executive Vice President and Chief Operating Officer, Kelly Services, Inc. (2009 - 2017)								Principal Occupation and Directorships:   •  Director, Huntington Bancshares Incorporated (2017 - present)   •  Director, First Merit Corporation (2013 - 2017)   •  President and Chief Executive Officer, Meadowbrook Insurance Group, Inc. (2002 - 2016)
Education:   •  Oakland University, MBA   •  Wayne State University, BSBA								Education:   •  Detroit College of Law, JD   •  Wayne State University, BA, Psychology
Mr. Corona served as President and Chief Executive Officer of Kelly from May 2017 until his retirement in September 2019. He had more than 20 years of experience in a variety of executive roles with Kelly, including eight years as Executive Vice President and Chief Operating Officer. Prior to joining Kelly in 1994, he held management roles at Digital Equipment Professional Services Group and Burroughs Corporation. Mr. Corona also serves on the boards of several not-for-profit organizations.								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. Mr. Cubbin currently serves as a director of one other publicly held company. In addition to his leadership experience, he brings to the Board expertise in the areas of legal, insurance, management, accounting, actuarial, investment, underwriting, reinsurance, and claims experience.

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Proposal 1: Election of Directors

		JANE E. DUTTON   Age: 68   Director since: 2004   Independent								TERRENCE B. LARKIN   Age: 66   Director since: 2010   Independent
Board Committees:   •  Compensation and Talent Management   •  Governance and Nominating								Board Committees:   •  Audit   •  Governance and Nominating (Chair)
Principal Occupation and Directorships:   •  Robert L. Kahn Distinguished University Professor Emeritus of Business Administration and Psychology, The University of Michigan Business School (2017 - present)   •  Robert L. Kahn Distinguished University Professor of Business Administration and Psychology, The University of Michigan Business School (2007 - 2017)								Principal Occupation and Directorships:   •  Executive Vice President, Business Development, General Counsel and Corporate Secretary, Lear Corporation (2008 - 2020)
Education:   •  Northwestern University, Ph.D. and MS, Organizational Behavior   •  Colby College, BA Sociology								Education:   •  Wayne State University Law School, JD cum laude   •  Michigan State University, BA (High Honors), Finance
Ms. Dutton is an expert in the field of organizational behavior and has researched and published numerous works on best practices related to engagement, commitment, and productivity of employees. Her understanding of factors contributing to organizational excellence provides the Board with a vital perspective on the Company’s transformation into a specialty talent company.								Mr. Larkin is an attorney with 28 years of experience in a business law practice. He retired in January 2020 as a member of the senior management team of a global manufacturing company with responsibility for legal affairs, internal audit, and global business development for mergers, acquisitions, and joint ventures. Mr. Larkin currently serves on the board of one not-for-profit organization. He brings to the Board a valuable combination of complex problem-solving skills, governance expertise, and global experience.

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Proposal 1: Election of Directors

		LESLIE A. MURPHY   Age: 69   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
Ms. Murphy is a certified public accountant, former chair of the American Institute of Certified Public Accountants, and former Group Managing Partner of Plante & Moran, LLP, a national accounting firm. The Board has determined that Ms. Murphy qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations and has the leadership skills to chair the Audit Committee. She brings to the Board analytical capability, understanding of the economics and strategic elements of business, and expertise in enterprise risk management and cyber security.

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Corporate Governance

Corporate Governance

Compliance with Nasdaq Independence Standards for Non-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 93.5% of the Company’s outstanding shares of Class B Common Stock.

In keeping with the Company’s historic recognition of the importance of having a majority of independent directors, the Company has elected to comply voluntarily with all the Nasdaq listing standards that otherwise do not apply to controlled companies. Thus, a majority of the Board are independent directors and all members of the three Board Committees, Compensation and Talent Management, Audit, and Corporate Governance and Nominating, are independent (which is a Nasdaq requirement for all listed companies and fully satisfies the Nasdaq independence standards for boards and board committees of non-controlled companies).

Prior to his death in October 2018, Terence E. Adderley, our former Chairman, was the trustee of Trust K. Upon his death, Trust K became irrevocable and, in accordance with the provisions of the trust, Andrew H. Curoe, David M. Hempstead, and William U. Parfet were appointed as successor trustees (the “co-trustees”). The co-trustees are required to act by a majority vote in voting and making investment decisions with respect to the Class B Common Stock held by Trust K. The co-trustees, acting as a majority, have sole voting and investment authority over Trust K and cannot be removed or replaced by the beneficiary(ies) of Trust K.

William U. Parfet, a co-trustee, is the brother of Donald R. Parfet, Chairman of the Board. In determining that Donald R. Parfet is an independent director, the Board considered, among other things, that Donald R. Parfet and William U. Parfet are financially independent of one another, that the co-trustees are required to act by majority vote and that none of the co-trustees serves as an officer or director of the Company or has any personal financial interest in Trust K that could benefit from actions taken by the Board.

Board Leadership and Governance Structure

The Board is responsible for establishing and maintaining the most effective leadership structure for the Company. At the present time, the Board has determined that the roles of the Chairman of the Board and the Chief Executive Officer should be separate, with the Chairman 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 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 serving as liaison among the Chief Executive Officer and the independent directors, establishing the schedule for Board meetings (in consultation with the Chief Executive Officer), developing and approving agendas for Board meetings, approving the information sent to the Board for meetings, establishing the schedule and agendas for and presiding over meetings of the independent directors in executive session, providing feedback to the Chief Executive Officer on those executive sessions, and facilitating discussions among independent directors on key issues outside of Board meetings.

In the event that the Chairman of the Board is not an independent director, 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 leading the management team, representing the Company externally, consulting with the Chairman of the Board about developments in the Company, and communicating with all directors about key issues outside of Board meetings.

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Corporate Governance

Committees of the Board

The Board established three standing committees: Audit Committee, Compensation and Talent Management Committee, and Corporate Governance and Nominating Committee. Each committee functions under a written charter adopted by the Board, which is available on the Company’s website at kellyservices.com or to any stockholder who requests a copy. The current members, responsibilities, and the number of meetings each of these committees held in 2020 are shown below.

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Corporate Governance

Compensation and Talent Management Committee Interlocks and Insider Participation

During 2020, 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.

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Corporate Governance

Risk Governance and Oversight

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

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Corporate Governance

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, among other activities, performs assessments of risks to the Company, participates in the development and execution of mitigation programs for critical risks, facilitated the establishment of a corporate risk appetite and tolerance statement, oversees the privacy governance function, and assists in the integration of risk concepts within the Company’s strategic planning process and in alignment with the functional and business risk owners.

The ERM team reports its findings to the Audit Committee on a quarterly basis, providing both written reports and periodic in-person presentations. Its current activities remain focused on mitigation and oversight of specific risk exposures, analysis of the breadth and effectiveness of existing risk management practices, and maturation of measurement and monitoring practices concerning high-priority strategic and operational risks. Current areas of particular emphasis include pandemic response, third-party risk management, integration of risk assessment practices into the Company’s new structure, cyber security, data privacy, wage-hour risk management, and improvements to the Company’s compliance governance practices.

The Company’s Information Technology and Internal Audit groups provide regular quarterly updates to the Audit Committee with respect to the Company’s proactive approach to cyber security and other compliance controls. Controls are reviewed for operational effectiveness and to provide reasonable assurance that: business risk is managed; data, corporate information, and other assets are safeguarded; 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.

During 2020, the ERM team played a key role in the Company’s response to the COVID-19 pandemic, leading the core team charged with prioritizing the health and safety of our employees and temporary workers, conducting daily meetings to examine the impact of the pandemic on our business, suppliers and customers, and development of plans for safely continuing operations during the pandemic including remote work and other health and safety measures. The Chief Risk Officer and other senior officers stayed in constant contact with the Board, providing updates on the COVID-19 situation and its impact on the Company at special and regularly planned meetings on at least ten occasions during 2020. During these discussions, the Board provided guidance and support for the Company’s key initiatives to preserve its liquidity and financial flexibility, and mitigate the risks presented by the pandemic and its impact on global markets.

Risk Assessment of Employee Compensation Programs

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 and Human Resources groups and reviewed by the Company’s Chief Risk Officer. The review and update of the Executive Compensation Program Risk Assessment Framework occurs, 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.

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Corporate Governance

To assess the risk of employee compensation programs below the executive level, the Company’s Human Resources group implemented a Governance Committee to review and approve plan design and address any significant issues that arise. The Governance Committee utilizes its Global Incentive Plan Design and Risk Mitigation Framework to consider alignment to the Company’s strategy and risks associated with the following elements of the design and implementation of each incentive plan:

After due consideration of management’s 2020 Compensation Program Risk Assessment Report, the Compensation and Talent Management Committee concluded that the Company’s compensation programs do not create a reasonable likelihood of a material adverse effect on the Company.

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Corporate Governance

Kelly’s ESG Strategy

The challenges of 2020 due to the pandemic resulted in strategic alignment for many companies to remain competitive. However, Kelly’s business continuity processes and strategic sustainability approach facilitated an increase in business opportunities in such a volatile global environment. In 2018, Kelly conducted a materiality assessment that helped define the policies and guidelines used to develop our sustainability agenda. This process helped us identify the main concerns and actions needed to focus on supporting the Triple Bottom Line⁽¹⁾. Our materiality assessment analyzed an exhaustive list of sustainability issues that cover all aspects of our business, considering Environmental, Social, and Governance (“ESG”) issues related to external standards⁽²⁾. Through this process, we identified stakeholders’ expectations and prioritized the most relevant topics upon which we developed our Corporate Sustainability Strategy.

Based on six key pillars, our Sustainability Strategy focuses on an ESG structure that is aligned with our critical business values:

As we continue developing and monitoring our Sustainability Strategy, we work closely with cross-functional areas to assess our outreach and impact, considering an interdisciplinary perspective. We also formalized the oversight of our ESG efforts through a sustainability governance committee represented by executive leaders and overseen by the Corporate Governance and Nominating Committee of the Board. Kelly’s governance team met multiple times in 2020 to drive strategy and provide decision-making guidance to the ESG team. The ESG leader represents the team in meetings with the Corporate Governance and Nominating Committee and the full Board to review the ESG framework and the Company’s progress toward achieving goals. The Corporate Governance and Nominating Committee supports and encourages Kelly’s commitment to ESG matters through discussions and recommendations for continued improvements in these important areas.

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Corporate Governance

In 2020, we continued to engage with our customers and suppliers worldwide, and formalized ESG requirements on the supplier risk assessment methodology in order to evaluate their commitment to these issues and opportunities. We conducted a third-party risk analysis gap assessment to identify supplier performances and capabilities to assess risk considering ESG. As a result of the assessment, we redesigned our responsible supply chain management approach to better align to sustainable management standards.

2020 Achievements

During 2020, we continued our focus to improve Kelly’s ESG performance. Listed below are key outcomes in each area for the year. These results may have been impacted by COVID-19.

Environmental

2020 Goal

Additional achievements for 2020

Social

2020 Goal

Additional achievements for 2020

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Corporate Governance

Governance

2020 Goal

Additional achievements for 2020

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, SASB to ensure consistency, accountability, and transparency on our annual goals and impact. We also participate in external assessments such as EcoVadis, CDP, Human Right Campaign Foundation’s Corporate Equality Index (“CEI”), Responsible Business Alliance (“RBA”), and the ISS Corporate Solutions (“ICS”), which measures our sustainability performance and provides recommendations on our strategy implementation.

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Corporate Governance

The Company’s current Sustainability Report is available for viewing in its entirety on kellyservices.com. We plan to publish our 2021 report in early May 2021.

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Corporate Governance

Human Capital

Kelly is a talent solutions company dedicated to connecting people to work in ways that enrich their lives and our employees are critical to achieving this noble purpose. In order to compete and succeed in a highly competitive and rapidly evolving market, it is crucial that the Company attracts and retains experienced internal employees, as well as talent to work for our customers. As part of these efforts, we strive to offer competitive total rewards programs, foster an equitable, inclusive, and diverse environment, and give employees the opportunity to give back to their communities and make a social impact.

First and foremost, is the Company’s commitment to the health, safety, and wellness of our employees and talent. The success of our business is fundamentally connected to the well-being of our people. Accordingly, in response to the COVID-19 pandemic, the Company implemented significant operating environment changes determined to be in the best interests of our employees and talent, as well as the communities in which we operate, and compliant with government regulations. This includes having most of the Company’s internal employees work from home, while implementing additional safety measures for employees and temporary employees continuing critical on-site work.

				In addition to our internal employees, the Company recruits talent on behalf of customers on a global basis. In 2020, we placed nearly 370,000 individuals in positions with our customers. In all of these instances, Kelly remains the employer of record for all talent working at customer locations. The Company retains responsibility for all assignments, wages, benefits, workers’ compensation insurance, as well as the employers’ share of applicable payroll taxes, and the administration of the employees’ share of these taxes. We also offer our talent access to competitive health and benefit programs while working with us.

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Corporate Governance

				The Company is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees. Compensation programs are designed to attract, retain, and reward talented individuals who possess the skills necessary to achieve our strategic goals and create long-term value for our stockholders. We provide employees with competitive compensation opportunities, with strong pay-for-performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards. We believe that our programs provide fair and competitive opportunities that align employee and stockholder interests. In addition to cash and equity compensation, we also offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits, and defined contribution retirement plans. Pay and benefits programs provided to our international employees are in line with competitive local practice.

				Since 1947, our founder fought to increase access to work for women and advocated for the value temporary and independent workers bring to the workplace. Today, we continue a commitment to fostering an inclusive and diverse workforce. A significant majority of Kelly’s U.S. workforce are women, including a majority of director and above roles. We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services and presents Kelly as a workplace leader, aiding our ability to attract and retain key talent. We focus on cultivating a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together.

				We consider sustainability to be a guiding principle in strengthening the relationship with our global workforce, suppliers, and customers. Through our programs and initiatives, we seek to contribute to improving the quality of life of our employees, their families, as well as the communities in which they live and work. Designed on the concept of social investment, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy. Through our Equity@Work platform, we are living our commitment to ensure equitable access to work and growth for all by creating alliances with like-minded companies, policy groups and institutions to positively impact the way companies hire, advance, and help more people thrive.

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Corporate Governance

Director Attendance

We 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 ten meetings during 2020. All directors then in office attended the 2020 Annual Meeting of Stockholders. In response to COVID-19 and to ensure a safe meeting environment, the Company conducted its 2020 Annual Meeting of Stockholders as a fully virtual meeting. In addition, all remaining 2020 Board and committee meetings were held virtually. Director attendance averaged 90% of the aggregate number of meetings of the Board of Directors and the committees on which they served during 2020. The majority of directors attended 100% of all Board and committee meetings on which they individually served in 2020. Mr. Wada completed his service as a director as of the date of the 2020 Annual Meeting. The independent directors met in executive sessions at which only they were present at least six times during 2020.

Size of the Board

Under the Company’s Amended and Restated Bylaws (the “Bylaws”), the number of directors constituting the Board may be fixed by the Board within the range of five to eleven directors. The size of the Board should not exceed a number that, as determined by the Board, will permit it to function efficiently in discharging its duties. There are currently nine members of the Board. Election of all director nominees will result in a nine-member Board immediately following the Annual Meeting.

Director Tenure

The Board does not have term or age limits. The Board believes that the contributions and insight of tenured directors into the Company’s operations and strategy outweigh the perceived value of such limits and facilitate Board effectiveness.

Director Service on Outside Public Company Boards

While there is no specified limit on the number of other public company boards on which a director may serve, the number of board memberships is a consideration, along with any other time commitments a director or nominee may have, in determining his or her ability to serve effectively. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and have an intention to serve an appropriate length of time in order to make a meaningful contribution to the Board and the Company. A director should engage in discussion with the Chair of the Corporate Governance and Nominating Committee prior to accepting an invitation to serve on an additional public company board or accepting an invitation to chair a committee of a public company board on which he or she currently serves.

Director Orientation and Continuing Education

Management, working with the Corporate Governance and Nominating Committee, provides an orientation program for new directors. The program includes a review of the Company’s business, history, vision, Noble Purpose, strategic direction, competitive landscape, core values, ethics, corporate governance practices, financial matters, key policies, and senior leadership. The program consists of, as appropriate, review of written materials, briefings by the senior management, and visits to Company facilities. Directors are also encouraged to participate in continuing director education programs that include formal education sessions with management subject matter experts and participation in industry forums on business, financial, accounting, legal, and other subjects relevant to the Company’s business. The Company reimburses reasonable costs and expenses incurred by directors for continuing education.

Board, Committee, and Peer Evaluation

The Board recognizes that a robust and constructive evaluation process is essential to good governance and effectiveness. The Corporate Governance and Nominating Committee organizes and oversees an annual evaluation by the Board and its committees of their performance. The evaluation facilitates an examination and discussion by the

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Corporate Governance

entire Board and each committee 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 2020, the Corporate Governance and Nominating Committee engaged an independent external advisor to conduct Board and committee evaluations, and a director peer review. The process included the completion of an online self-evaluation with both rated and open-ended questions, followed by confidential individual interviews with each director to elicit views on Board and committee effectiveness. During the one-on-one interviews, the independent advisor also asked each director to provide feedback on peer contributions to the Board’s effectiveness. This process was to encourage candid feedback from directors regarding the actions of the Board and its standing committees. All of the Board’s nine directors participated in the process. Prior to being presented to the Board, the external advisor aggregated results of the evaluation and interviews, anonymizing and randomizing responses, to promote healthy Board dynamics and best practices in corporate governance. The external advisor then presented a summary to the full Board and identified themes and issues that emerged from the evaluation or individual interviews. The Board and each committee discussed evaluation outcomes in executive session to determine what actions could further enhance its operations.

Code of Business Conduct and Ethics

The Board is 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 employees. 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.

The full text of the Code of Conduct is on the Company’s website at kellyservices.com. This information is 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 for its directors and executive officers on its website or by filing a current report on Form 8-K within four business days following the date of amendment, or such earlier period as may be prescribed by Nasdaq or the SEC.

Related Person Transactions and Certain Relationships

Pursuant to the Company’s Code of Conduct, any situation that involves, or may reasonably be expected to involve, a conflict of interest with the Company must be disclosed immediately to the Vice President of Internal Audit or to the General Counsel. In addition, directors and executive officers must complete a quarterly questionnaire that solicits information regarding any transactions or relationships between themselves or their immediate family members and the Company of the types described in Item 404(a) of SEC Regulation S-K (“Related Party Transactions”). Directors and executive 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.

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Director Compensation

Director Compensation

Our approach to director compensation is to appropriately compensate our non-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 our non-employee directors are periodically reviewed for market competitiveness. Non-employee directors receive compensation payments after election by stockholders at the Annual Meeting. Non-employee directors who begin their Board or committee chair service other than at the Annual Meeting receive a prorated amount of annual compensation.

Director Compensation Design

The Compensation and Talent Management Committee typically reviews non-employee director compensation in alternating years. In 2018, the Compensation and Talent Management Committee most recently engaged its independent compensation consultant, Pay Governance, to evaluate its non-employee director compensation. Pay Governance conducted a comprehensive review of the most recent proxy filings of the Company’s peer group and general industry to assess the competitiveness of the Company’s non-employee director compensation. Based on the results of the review, the Committee approved an increase in the value of the equity portion of the annual retainer in 2018. No changes were made to non-employee director compensation in 2019. At its May 6, 2020 meeting, the Board elected to voluntarily reduce, by 33.3%, the cash portion of its Annual Base Retainer and Committee Chair Fees for 2020 in consideration of recent expense mitigation actions taken by management during COVID-19. The compensation of our non-employee directors will next be reviewed in 2021, with the assistance of Pay Governance. The following table illustrates our 2020 non-employee director compensation, including the temporary reduction to the cash portion:

Under the Company’s amended and restated Equity Incentive Plan (“EIP”), the Board of Directors must periodically determine the percentage of the base retainer that will be issued to non-employee directors in shares of Class A Common Stock. The Compensation and Talent Management Committee and Board of Directors 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 $165,000 for the Chairman of the Board). However, as stated above, for 2020 the cash portion of $100,000 was reduced by 33.3% to $66,667 (cash portion of $150,000 was reduced by 33.3% to $100,000 for the Chairman of the Board).

Stock Ownership Requirements

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 retainer (which currently equates to $400,000). The requirement was not reduced for 2020, even with the temporary reduction in the cash portion of director compensation. All directors are compliant with the Company’s stock ownership requirements.

Non-Employee Directors Deferred Compensation Plan

The Company established the Non-Employee Directors Deferred Compensation Plan (“DDCP”), which provides non-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 a non-qualified plan that allows for the deferral of all or a portion of annual cash

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Director Compensation

payments to a notional account with investment fund choices that mirror those provided to participants in the Company’s Management Retirement Plan (“MRP”). In 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 a two-to-ten-year period.

The following table sets forth the compensation paid during 2020 to the Company’s non-employee directors. Mr. Quigley received no compensation for his services as a director in 2020. Mr. Quigley’s compensation as President and Chief Executive Officer is disclosed in the Compensation Discussion & Analysis section of this Proxy Statement.

2020 Director Compensation

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Beneficial Ownership of Shares

Beneficial Ownership of Shares

The following table sets forth, as of March 29, 2021, (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 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.

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Beneficial Ownership of Shares

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 2020 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.

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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 2020 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” proposal, seeks a stockholder advisory vote on our named executive officers’ compensation, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K and in the Compensation Discussion and Analysis, through the following resolution:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 2020 Summary Compensation Table, and the other related tables and disclosure.”

The say-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.

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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. This section describes the material elements of our executive compensation programs, the compensation decisions the Compensation and Talent Management Committee (the “Committee”) made under those programs, key factors considered, and details of the compensation paid to our named executive officers.

The Compensation Discussion and Analysis is organized in the following sections:

2020 Named Executive Officers

Our named executive officers for 2020, as defined by the SEC, were as follows:

Executive Summary

Fiscal 2020 Performance

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. The COVID-19 pandemic and related containment measures resulted in significant shifts in most aspects of the economy and the way people work and live. While the pace of change was unprecedented and the resulting impacts to be determined, our Noble Purpose, “We connect people to work in ways that enrich their lives,” continues to guide our strategy and actions. Kelly remains committed to being a leading talent solutions provider among the talent in our specialty areas and in the global markets where we compete. As we navigate the continued uncertainty, we will continue to demonstrate our expected behaviors and actions:

The COVID-19 pandemic had a global impact on industries, businesses, communities, families, and individuals. As implications of the pandemic became evident in the first quarter of 2020, we took immediate action to protect the health and safety of our most important asset, our full-time and temporary employees. We also took proactive steps in response to the crisis to reduce spending, minimize layoffs, and bolster the strength and flexibility of Kelly’s finances. These actions included:

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Compensation Discussion and Analysis

As noted earlier in this Proxy Statement, Kelly’s Board voluntarily reduced the cash portion of their 2020 Annual Retainer and Committee Chair Fees by 33.3% to show support and alignment with the actions of management.

The above-described actions generated substantial cost savings and allowed us the time necessary to assess the variety of impacts the crisis had on our business. These initial actions were intentionally broad in scope and as we moved forward, our actions targeted the areas of business where demand declines are more significant and persistent. Actions such as the 10% pay cut, compensation adjustments for senior leaders, and temporary furloughs ended early in the fourth quarter of 2020. The suspension of the Company match to retirement accounts ended in January 2021 and other steps, such as reductions in discretionary spending, capital expenditures, and carefully managing staffing levels in non-revenue generating positions, will continue. In addition, we benefited from CARES Act provisions allowing deferral of employer social security tax payments. In the fourth quarter of 2020, management reduced staffing levels to align with expected revenue levels.

Given the level of uncertainty surrounding the duration of the COVID-19 pandemic, the Board also voted to suspend the quarterly dividend effective May 2020 until conditions improve and continues to assess future actions with respect to our dividend policy.

The impact of the current economic slow-down resulting from the COVID-19 crisis began in March 2020 and continued through the end of 2020 as the effect of the pandemic response slowed global economic activity. We expect a continued impact on revenues through the first quarter of 2021 as demand for our services gradually recovers from the economic slowdown and the effects of customer and talent concerns related to operating safely during a pandemic.

While the severity of the economic impacts and their duration cannot be precisely predicted, we believe that the mid-term impacts on how people view, find, and conduct work will continue to align with our strategic path. As a result, we continued to move forward with our specialization strategy, reinventing our operating model and reorganizing our business into five distinct reporting segments. These specialties represent areas where we see the most robust demand, the most promising growth opportunities, and where we believe we excel in attracting and placing talent. Our new segments also reflect our desire to shift our portfolio toward high-margin, higher-value specialties.

Kelly’s business included these specialties for many years, but our new operating model represents a new approach – one that brings together both staffing and outcome-based pieces of a specialty under a single specialty leader and aggregates assets to accelerate specialty growth and profitability. We believe this new specialty structure gives us greater advantages in the market, and we expect our disciplined focus to 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 Greenwood/Asher & Associates in the fourth quarter and the sale of our operations in Brazil during the third quarter.

Faced with market conditions that may temporarily delay our growth efforts, Kelly continues to focus on accelerating the execution of our strategic plan and making necessary investments to advance that strategy.

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Compensation Discussion and Analysis

While the COVID-19 pandemic has resulted in uncertainty in the economy and the labor markets that will affect our near-term financial performance, we identified long-term measures to gauge our progress, including:

Key Executive Compensation Program Highlights for Fiscal 2020

We believe compensation should align with and enhance long-term shareholder value. Our pay-for-performance philosophy ensures that a significant portion of compensation for our senior officers is “at risk” and reflects our business performance. Our named executive officers experienced the following outcomes for 2020 as a result of Company performance and management’s decisions and actions in response to the pandemic:

The Committee believes the actions taken in response to the global crisis and our continued transformation to a specialty talent solutions company will help ensure alignment of executive and shareholder interests. We continue to evaluate our executive compensation program and make changes to further align it with our strategic priorities and to reward both short- and long-term business success. We designed a program that aligns with stockholder interests, incentivizes growth and operational excellence, and demonstrates a clear linkage between compensation and performance. The program continues to seek to minimize incentives for management to take excessive risks. The Committee worked with management and its independent compensation consultant, as described later in this document, to review current compensation programs, including the incentive plans, and taking into consideration the impact of COVID-19 on our business made the decisions described below in 2020.

The Board adopted two plans that provide the framework for incentive compensation opportunities for our senior officers, a group that includes our named executive officers.

2020 STIP Design

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Compensation Discussion and Analysis

2020 LTI Design

2018-2020 LTI Results

2020 Individual Compensation Decisions

The Committee believes these actions supported the strategic direction of the Company, taking into consideration the impact of the global pandemic, and helped position it for long-term success in achieving its goals. These compensation decisions and actions are discussed in more detail below.

Executive Compensation Philosophy, Objectives, and Design

Our executive compensation philosophy is to provide market-based pay opportunities with incentive payouts aligned with the achievement of the Company’s overall short- and long-term business strategy, performance goals, and results. The design of our executive compensation programs allocates total compensation to fixed and variable pay elements resulting in a mix of short-term and long-term pay elements. The Committee continually evaluates our executive compensation programs to ensure that the Company provides market-competitive opportunities that enable us to attract and retain highly qualified individuals to lead the organization and drive business success. Our executive compensation programs are designed to achieve the following objectives:

Pay-for-Performance Framework

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

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Compensation Discussion and Analysis

earn awards that are directly tied to the Company’s performance and that drive sustainable long-term stockholder value. The Company’s compensation programs provide an incentive for 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.

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 long-term equity awards (restricted shares and performance shares) that are contingent upon the achievement of pre-established performance goals. The following charts illustrate the typical Target Total Direct Compensation mix for our President and CEO and the other named executive officers combined (as of December 31, 2020) and includes the pay elements of base salary, STIP (at target), restricted shares, and performance shares (at target). Pay mixes shown below are based on target amounts under typical plan designs and do not reflect the reduction in base salaries, no STIP payout, or reduced LTI Awards for our named executive officers in fiscal year 2020.

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Compensation Discussion and Analysis

Elements of Compensation for Named Executive Officers

The Committee determines the elements of total direct compensation that we provide to our senior officers, a group that includes the named executive officers. The elements of our executive compensation program and the objectives for each are as follows:

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Compensation Discussion and Analysis

2021 Executive Incentive Plans

For the 2021 incentive plan designs, the Company continues to focus on pay-for-performance alignment by using multiple financial measures to strongly drive our key business objectives and stockholder value. Additional details regarding the 2021 incentive plan designs will be presented in our 2022 Proxy Statement.

Process for Determining Executive Compensation

Role of the Compensation and Talent Management Committee

The Committee designs and administers the Company’s executive compensation programs and policies, and regularly reviews the program and policy objectives, applicable new legal and regulatory practices, evolving best practices, and corporate governance trends. The Committee and members of the Board of Directors determine the compensation of the CEO. The CEO’s total compensation consists of base salary, STIP, and LTI award opportunities, and is the same design as the other named executive officers. The CEO does not participate in recommendations or discussions related to his own compensation levels. As part of its responsibility for executive compensation, the Committee annually reviews and determines the compensation of each of our senior officers, including the named executive officers listed in the Summary Compensation Table of this Proxy Statement, based on each individual’s performance including consideration of ethical behavior, achievement of planned goals, relevant market comparisons, the recommendations of the CEO, and other factors. The Committee reviews the costs and short- and long-term benefits of the compensation arrangements it considers and approves for senior officers.

The responsibilities of the Committee are defined in its charter, which can be found on the Company’s website at kellyservices.com.

Role of the Independent Compensation Consultant

Pay Governance LLC is the Committee’s independent compensation consultant (the “Consultant”). The Committee considers analysis and guidance from the Consultant when making compensation decisions on plan design; the merits of various incentive plan performance measures; senior officer pay levels, including that of the CEO and our other executive officers, relative to peer group and other market data; composition of peer group companies; stock ownership requirements; and other pay practices. In addition, the Consultant updates the Committee on market trends and best practices in executive compensation and as requested, provides data and guidance on other items such as Director compensation. The Committee uses its own independent judgment to make all decisions related to the compensation of the Company’s senior officers.

During 2020, the Consultant regularly attended Committee meetings and communicated with the Chairman of the Board, and the Committee Chairman outside of Committee meetings. The Committee regularly meets with the Consultant in private session (without members of management). As directed by the Compensation and Talent Management Committee, the Consultant also met with the Senior Vice President and Corporate Secretary (“Corporate Secretary”) and members of the Executive Compensation, Finance, and Corporate Governance teams of the Company. The Consultant maintains a direct reporting relationship to the Committee on all compensation matters.

The Committee conducts an annual assessment of the Consultant’s independence, using factors established by Nasdaq. The Consultant provided no services to the Company in 2020 other than services to the Committee. The Committee reviewed and affirmed the independence of the Consultant as the Compensation Consultant to the Committee and concluded the work performed by the Consultant did not raise a conflict of interest.

Role of Management

The Committee consults with the CEO and the Corporate Secretary to obtain feedback with respect to the strategic direction of our executive compensation programs.

The CEO makes recommendations for each of the executive officers about elements of their total compensation. He bases his recommendations on the assessment of each executive officer’s performance, as well as the performance of their respective business or function and other factors. The Committee takes into consideration the recommendations of the CEO when determining the compensation of the other executive officers.

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Compensation Discussion and Analysis

In addition, the CFO provides periodic financial updates and information to the Committee to aid in establishing incentive plan goals and determining payout amounts.

Comparator Data

The Committee uses third-party survey data for comparably sized general industry companies and available data from a select group of peer companies, in determining the competitive positioning of our compensation programs. Comparator data is also used to establish the individual compensation opportunities of each of our senior officers, including the named executive officers.

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 the company, business unit, and individual performance. Various other factors are taken into consideration and in certain circumstances, we may target pay above or below the competitive median. Individual target total direct compensation may be above or below the median depending on Company performance, cost considerations, the role’s scope of responsibilities, individual experience and performance, and any succession, retention, or internal equity considerations. The Company has taken a conservative approach to target long-term incentive opportunities generally below market median for senior officers. This approach is in support of the Company’s efforts to reduce costs in connection with its investment strategy and its goal to become more profitable.

In setting 2020 target compensation, a competitive executive compensation analysis was performed which included both an analysis of third-party survey data prepared internally by the Company’s Executive Compensation group, and a peer group review of CEO pay prepared by the Consultant. Third-party general industry survey data from Aon, Equilar, Mercer, and Willis Towers Watson was used to prepare the survey analysis. Specific companies that participated in the third-party surveys were unknown and not a factor in the Committee’s deliberations. The Consultant reviewed the survey analysis for the Committee.

The Consultant worked with the Committee and management in 2018 to develop an updated group of peer companies to be used for market comparison purposes in terms of CEO pay levels and executive pay practices. We do not believe many companies compete directly with us in all areas of our business or are of similar size. However, in order to have a reference group of publicly traded comparators, the Consultant identified a group of relevant companies that compare to Kelly in at least some areas of our business. The resulting group of twelve comparator companies consists solely of staffing and HR-focused companies with generally similar annual revenues and recent market cap. The majority are multi-national/global companies headquartered in U.S. The following group of companies includes direct peers and a balanced mix of some significantly smaller and larger companies in similar industries and was unchanged from last year. The peer group was used by the Committee and management as another reference point when assessing 2020 executive pay practices and CEO pay levels:

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.

2021 Kelly Proxy Statement        47

Compensation Discussion and Analysis

Tally Sheets

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.

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. The Chief Human Resources Officer (“CHRO”) prepares detailed executive performance review information for each of the senior officers, including named executive officers (other than the CEO). Methodology implemented in 2018 was used in 2020 to identify, evaluate, and develop the Company’s talent, including a framework to assess future leadership needs, and a succession planning and talent development system. Periodic sessions are held to discuss talent and development among multiple levels of the organization, increasing transparency and understanding of key talent across leadership teams and business units. Individual development plans continue to be prepared to identify future opportunities for emerging leaders, including increased development through experiential learning opportunities and formal coaching.

The performance review information for each of the senior officers other than the CEO, includes key annual initiatives, performance results, strengths, and development opportunities. The CEO reviews the performance of the other executive officers and presents their individual performance assessments, development plans, and succession strategies to the Committee. During the individual performance assessments, the Committee asks questions, renders advice, and makes recommendations on matters that include individual development needs, succession planning, and retention.

In third quarter 2020, the Committee engaged an outside consultant to conduct a performance evaluation of the Company’s CEO. Participants in the review included: the CEO, members of the Board, and members of management who are direct reports to the CEO. The evaluation process included the completion of a detailed questionnaire by each participant, as well as individual interviews held with the independent consultant. The CEO performance evaluation included a review of: strategy and vision, leadership, ethics and accountability, culture, personal development and interpersonal skills, financial acumen and results, Board relations, talent management, external relations: customers, investors, and stakeholders. Responses and comments from the evaluation were anonymized and randomized to promote healthy Board and management dynamics. The consultant presented a summary of the results to the Committee in executive session. The Company’s Chairman of the Board and the Committee Chair shared the results of the performance review with the CEO following the meeting, as the purpose of the evaluation was to provide the CEO with a greater understanding of his areas of strength and areas of opportunity that could help increase his effectiveness and overall performance.

Senior officers are not present during the discussion of their performance by the Committee. The Committee uses each executive’s individual performance assessment, the compensation analysis discussed in the previous section, and the recommendations of the CEO, to determine compensation for the senior officers.

The Board approves the Company’s succession plan annually, including updates, and in connection with the performance assessments. The plan documentation includes all executives at the senior officer level, as well as their potential successors from within the Company in case of an unexpected disability or departure of a senior officer. Documentation includes detailed executive performance review information as discussed above, readiness assessments, and at least one potential successor for each role. Any changes to the plan during the year also require the approval of the Board.

48        2021 Kelly Proxy Statement

Compensation Discussion and Analysis

Compensation Programs: Decisions and Actions in 2020

Base Salary

Base salaries for senior officers, including the named executive officers are competitive with Market Data to ensure that the Company can attract and retain the executives necessary to successfully lead and manage the organization. Base salaries generally fall within a range (+/- 15%) around the median of salaries in the Market Data, as individual base salaries will vary based upon the factors described below. Based on Market Data available at the time of the review in November 2019, we determined that the base salaries of our named executive officers were within this competitive range of the market medians for comparable roles. Base salary is only one component of target total direct compensation and may be affected by other components to ensure that target total direct compensation meets compensation objectives.

The Committee reviews the base salaries of 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.

The Company’s annual total compensation review 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 pay-for-performance philosophy and provide each employee with their “total compensation” overview. In November 2019, the Committee conducted its annual review of base salaries of the senior officers, including named executive officers.

In February 2020, we delayed decisions on changes to base salary levels for executive officers until implementation of the Company’s new operating model and determination of new leadership roles, expected to be effective July 2020. A review of executive officer compensation was conducted in July 2020, however as noted above, it was decided that in light of the broad-based compensation reductions implemented, it was not an appropriate time to provide base salary increases to executive officers.

In consideration of the factors noted above, no base salary increases for the named executive officers were approved by the Committee in 2020: