ThZeal - The Zeal

DEF 14A 1 k67670def14a.txt DEFINITIVE PROXY STATEMENT SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement. [ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)). [X] Definitive proxy statement. [ ] Definitive additional materials. [ ] Soliciting material pursuant to Section 240.14a-12 KELLY SERVICES -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if Other Than the Registrant) 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 previously 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: -------------------------------------------------------------------------------- [KELLY SERVICES LOGO] April 12, 2002 To Our Stockholders: You are cordially invited to attend the Annual Meeting of Stockholders of Kelly Services, Inc., which will be held at 11:30 a.m., Eastern Daylight Time, Tuesday, May 14, 2002, 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 two Directors and ratification of the appointment of PricewaterhouseCoopers LLP as the independent public accountants for the Company for 2002. The Meeting will also provide an opportunity to review with you the business of the Company during 2001 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 and Chief Executive Officer [KELLY SERVICES LOGO] KELLY SERVICES, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS 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 14, 2002 at 11:30 a.m., Eastern Daylight Time, for the following purposes: 1. To elect two Directors as set forth in the accompanying Proxy Statement. 2. To ratify the appointment of PricewaterhouseCoopers LLP as independent accountants. 3. 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 25, 2002 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 12, 2002 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 12, 2002 PROXY STATEMENT 2002 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 14, 2002 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 12, 2002. 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 two Directors, designated Proposal 1 on the proxy, FOR the proposal to ratify the selection of independent accountants, designated Proposal 2 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 25, 2002, the number of issued and outstanding voting securities (exclusive of treasury shares) was 3,491,113 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. The cost of soliciting proxies shall be borne by the Company. The solicitation of proxies will be made primarily by mail. The Company may also make arrangements with brokerage houses, custodians, banks, nominees, and fiduciaries to forward solicitation material to beneficial owners of stock held of record by them and to obtain authorization to execute proxies. The Company may reimburse such institutional holders for reasonable expenses incurred by them in connection therewith. 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, 2002, 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:

(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 Class B 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, 2002, on the basis described above, of each director and all directors and officers as a group.

* Less than 1% (a) Includes shares which the individuals have a right to acquire through the exercise of stock options within 60 days. Such exercisable options include: 367,100 for T. E. Adderley; 12,500 for M. A. Fay; 12,500 for C. V. Fricke; 12,500 for V. G. Istock; 12,500 for B. J. White; 114,500 for C. T. Camden; 25,000 for M. L. Durik; 72,750 for W. K. Gerber; 28,450 for G. M. Reardon; and 64,400 for A. G. Grimsley. (b) Includes 1,035,452 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 a 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; 35,631 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 does not actively manage the day-to-day operations. 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 2001. 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 2001 and is composed of M. A. Fay, C. V. Fricke, V. G. Istock and B. J. White. During 2001 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 $50,000 (consisting of a $25,000 cash retainer fee and a stock award worth $25,000), 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 $25,000 stock award portion of the annual fee is made under the Non-Employee Director Stock Award Plan approved by the stockholders in 1995, as amended on May 14, 2001, from which each non-officer Director receives an annual grant of shares of the Company's Class A common stock equal in value to 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 2001, the Board granted to each non-employee director an option to purchase 1,500 shares of Class A common stock at the Fair Market Value of the stock on the day of the grants. Each of these 10-year options vests in thirds on the first day of January of each of the three years immediately following the grant. 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 (Chair), 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 2001, 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 Chairman and Chief Executive Officer is ownership of shares having a value five times his base salary; for the President and Chief Operating Officer, the guideline is four and a 5 half 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. 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 2001 compensation of Mr. Adderley as the Company's Chairman and 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 budget for all officers. In April 2001, Mr. Adderley received a 3.75 percent salary increase from $800,000 to $830,000 to bring his annualized base salary more in line with the median base salaries of chief executive officers of other companies of comparable size. All potential 2001 cash bonuses to executive officers (including Mr. Adderley) were subject to the terms of the Company's Short-Term Incentive Plan. In accordance with that plan, in the first quarter of 2001 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 2001 diluted earnings per share met or exceeded the threshold. The entire potential bonus for Mr. Adderley and for the each other named executive officer was tied solely to this objectively determinable standard. The potential bonuses for other executive participants in the Plan were tied partially to this corporate earnings standard and partially 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. The Company's actual earnings per share for the year 2001 did not exceed the payout threshold the Committee had established for the year. After the end of the year, the Committee determined that, based on the schedule, no cash bonus would be approved for 2001 for Mr. Adderley or for any named executive officer and that no payment under the corporate performance portion of the Plan would be made for any other executive. Similarly, because the other performance goals taken into account for participants in the Plan were affected by the same factors that caused the overall corporate performance 6 to fall below the bonus threshold, the Committee decided that no regular bonus payments would be approved for 2001 for any executive in the Plan. 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, are currently the only type of awards outstanding under the Performance Incentive Plan. During 2001, 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 2001 recommended that Mr. Adderley be awarded a Non-Qualified Stock Option to purchase 45,000 shares of Class A common stock, in accordance with the parameters of 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 2001, 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 two Restricted Share Awards totaling 22,500 shares. Since 2000 was the final year of the last Performance Share Award granted by the Committee, there were no Performance Share payments to anyone in 2001. No new Performance Share Awards were made in 2001. 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 executives 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 REPORT OF THE AUDIT COMMITTEE ORGANIZATION The Audit Committee of the Board of Directors is composed of four independent directors, as defined by Nasdaq rules, and operates under a written charter adopted by the Board of Directors on May 15, 2000 (previously published in the 2001 Proxy Statement). The current members of the Audit Committee are C. V. Fricke (Chair), B. J. White, M. A. Fay, and V. G. Istock. PRIMARY FUNCTION The primary function of the Audit Committee is to oversee the audit process and provide assistance to the Board of Directors in fulfilling its responsibilities relating to the corporate accounting and reporting practices. In addition, the Audit Committee shall review other financial matters as delegated by the Board of Directors. REVIEW AND INDEPENDENT ACCOUNTANTS The Audit Committee has reviewed the Company's audited consolidated financial statements and discussed such statements with the Company's management and with PricewaterhouseCoopers LLP, the Company's independent accountants for fiscal year 2001. The Audit Committee has discussed with its independent accountants the matters required to be discussed by Statement of Auditing Standards No. 61, "Communication with Audit Committees." The Audit Committee received from PricewaterhouseCoopers LLP the written disclosures required by Independence Standards Board Standard No. 1 and discussed the same with PricewaterhouseCoopers LLP, including their independence. RECOMMENDATION Based upon the forgoing review and discussions, the Audit Committee recommended to the Board of Directors of the Company that the Company's audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2001, and be filed with the U.S. Securities and Exchange Commission. This report is submitted by the Audit Committee of the Board of Directors. C. V. FRICKE, Chair B. J. WHITE M. A. FAY V. G. ISTOCK 8 AUDIT AND RELATED FEES AUDIT FEES Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") in connection with its audit of the Company's consolidated financial statements as of and for the year ended December 30, 2001 and its limited reviews of the Company's unaudited condensed consolidated interim financial statements were $436,580. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES During the year ended December 30, 2001, PricewaterhouseCoopers rendered no professional services to the Company in connection with the design and implementation of financial information systems. ALL OTHER FEES In addition to the fees described above, aggregate fees of $611,090 were billed by PricewaterhouseCoopers during the year ended December 30, 2001, for the following professional services: ~~Audit-related services(a)................................... $260,920 Income tax compliance and related tax services.............. 350,170~~

(a) Audit related fees include fees for statutory and subsidiary audits and for audits of Company benefit plans. 9 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, the four highest-paid executive officers, and a former Executive Vice President of the Company, as well as the total compensation paid to each individual during the Company's last three fiscal years:
Long-Term Compensation ------------------------------------------ Annual Compensation Awards Payouts -------------------- ------------------------- -------------- Number Restricted of Shares Long-Term Name and Share Underlying Incentive Plan All Other Principal Position Year Salary Bonus Award(s)(1) Options Payouts(2) Compensation(3) ------------------ ---- ------ ----- ------------ ---------- -------------- --------------- T. E. Adderley................ 2001 $817,500 $ 0 $596,160 45,000 $ 0 $69,162 Chairman and 2000 800,000 440,000 432,000 90,000 209,834 85,800 Chief Executive Officer 1999 790,000 630,000 394,800 72,000 301,560 76,634 C. T. Camden.................. 2001 $655,000 $ 0 $384,640 75,000 $ 0 $48,840 President and 2000 600,000 233,000 240,000 40,000 87,431 49,500 Chief Operating Officer 1999 575,000 300,000 210,560 30,000 125,650 45,132 W. K. Gerber.................. 2001 $561,667 $ 0 $252,160 15,000 $ 0 $41,671 Executive Vice President 2000 550,000 196,000 192,000 30,000 0 48,000 and Chief Financial Officer 1999 535,000 250,000 157,920 25,000 0 45,853 M. L. Durik................... 2001 $487,500 $ 0 $252,160 15,000 $ 0 $ 9,443 Executive Vice President, 2000 440,000 142,000 144,000 30,000 0 10,800 Human Resources(4) 1999 200,532 100,000 108,800 20,000 0 8,794 T.A. White.................... 2001 $420,769 $ 0 $267,200 0 $ 0 $26,151 Former Executive VP, 2000 600,000 233,000 240,000 40,000 87,431 54,000 Chief Administration and 1999 575,000 300,000 210,560 30,000 125,650 48,432 Technology Officer(5) A. G. Grimsley................ 2001 $410,000 $ 0 $252,160 15,000 $ 0 $33,550 Executive Vice President, 2000 340,500 200,000 144,000 30,000 52,459 31,830 US Commercial 1999 309,000 190,000 105,280 20,000 0 25,477
(1) Restricted Shares of the Company's Class A common stock were awarded in March 2001, August 2001, March 2000, and March 1999. The shares awarded vest in three equal annual installments beginning one year after the date of grant, except for one award granted to M.L. Durik in August of 1999 which vests in four equal annual installments. 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 2001 were: T. E. Adderley, 22,500; C. T. Camden, 14,500; T. A. White, 10,000; W. K. Gerber, 9,500; M. L. Durik, 9,500; and A. G. Grimsley, 9,500. The number of shares awarded in 2000 were: T. E. Adderley, 18,000; C. T. Camden, 10,000; T. A. White, 10,000; W. K. Gerber, 8,000; M. L. Durik, 6,000; and A. G. Grimsley, 6,000. 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; M. L. Durik, 4,000, and A. G. Grimsley, 4,000. Dividends are payable on Restricted Shares. 10 At December 30, 2001, (the end of the Company's fiscal year) the aggregate number of unvested Restricted Shares of the Company's Class A common stock held by the executive officers named in the Summary Compensation Table and the value of these shares, based upon the $22.06 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......................................... 39,500 $871,370 C. T. Camden........................................... 23,833 525,756 W. K. Gerber........................................... 18,833 415,456 M. L. Durik............................................ 15,500 341,930 T. A. White (*)........................................ 0 0 A. G. Grimsley......................................... 14,833 327,216
(*) All unvested Restricted Shares held by Ms. White on August 31, 2001 were cancelled upon her departure from the Company. (2) Value of shares received in each year for the three year performance period ending December 31 of the year preceding the year in which the shares were received. (3) Represents Company contributions to non-qualified defined contribution/deferred compensation plan for officers and certain other management employees known as the Management Retirement Plan. (4) Mr. Durik has been an employee of the Company since July 1999. (5) Ms. White served as an executive officer until her departure on August 31, 2001. 11 OPTION GRANTS IN 2001 The following table shows all grants of stock options to the officers named in the Summary Compensation Table above in 2001. The exercise price of all such options was the fair market value on the date of grant. One third (1/3) are exercisable one year after the grant date with an additional one third (1/3) exercisable on each of the next two 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 ------------------------------------------------------------------------------------- Number of % of Total Potential Realizable Value at Shares Options Assumed Annual Rates of Stock Underlying Granted to Price Appreciation for Option Term(2) Options Option Employees Exercise or Expiration ----------------------------------------- Name Granted Type(1) in Fiscal Year Base Price Date 0% 5% 10% ---- ---------- ------- -------------- ----------- ---------- --- ---------- ---------- T. E. Adderley....... 45,000 NQ 8.45 $25.60 08/13/11 $0 $ 724,487 $1,835,991 C. T. Camden......... 3,500 ISO $25.60 08/13/11 $0 $ 56,349 $ 142,799 21,500 NQ $25.60 08/13/11 0 346,144 877,196 4,000 ISO $21.00 12/03/11 0 52,827 133,874 46,000 NQ $21.00 12/03/11 0 607,512 1,539,555 ------ -- ---------- ---------- 75,000 14.08 $0 $1,062,832 $2,693,424 W. K. Gerber......... 3,500 ISO $25.60 08/13/11 $0 $ 56,349 $ 142,799 11,500 NQ $25.60 08/13/11 0 185,147 469,198 ------ -- ---------- ---------- 15,000 2.82 $0 $ 241,496 $ 611,997 M. L. Durik.......... 3,500 ISO $25.60 08/13/11 $0 $ 56,349 $ 142,799 11,500 NQ $25.60 08/13/11 0 185,147 469,198 ------ -- ---------- ---------- 15,000 2.82 $0 $ 241,496 $ 611,997 T. A. White.......... 0 -- 0 0 -- $0 $ 0 $ 0 A. G. Grimsley....... 3,500 ISO $25.60 08/13/11 $0 $ 56,349 $ 142,799 11,500 NQ $25.60 08/13/11 0 185,147 469,198 ------ -- ---------- ---------- 15,000 2.82 $0 $ 241,496 $ 611,997
(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, with respect to the grants expiring on August 13, 2011, 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 $25.60 (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 $41.70 and $66.40, respectively, as of the expiration date of their options. 12 OPTION EXERCISES DURING 2001 AND YEAR-END OPTION VALUES The following table shows stock option exercises during 2001 by each of the officers named in the Summary Compensation Table and the value of unexercised options at December 30, 2001:
Number of Shares Underlying Value of Unexercised Unexercised Options In-the-Money Number of at Year End Options at Year End Shares Acquired Value ---------------------------- ---------------------------- Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable ---- --------------- -------- ----------- ------------- ----------- ------------- T. E. Adderley............ 0 $0 298,900 190,100 $0 $ 0 C. T. Camden.............. 0 $0 85,000 138,000 $0 $53,000 W. K. Gerber.............. 0 $0 59,000 76,000 $0 $ 0 M. L. Durik............... 0 $0 17,500 47,500 $0 $ 0 T. A. White............... 0 $0 0 0 $0 $ 0 A. G. Grimsley............ 0 $0 45,300 57,700 $0 $ 0
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR TABLE There were no performance share awards made by the Company in 2001 under the Company's Performance Incentive Plan. 13 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, 2001. The graph assumes an investment of $100 on December 31, 1996 and that all dividends were reinvested. The Peer Group Index consists of the following publicly traded staffing services companies: CDI Corp., Manpower Inc., and Spherion Corporation. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN KELLY SERVICES, INC., PEER GROUP INDEX AND S&P MIDCAP 400 INDEX [PERFORMANCE GRAPH]
------------------------------------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 ------------------------------------------------------------------------------------------------------------- KELLY SERVICES, INC. 100 115 125 102 100 96 ------------------------------------------------------------------------------------------------------------- PEER GROUP INDEX 100 123 87 115 92 84 ------------------------------------------------------------------------------------------------------------- S&P MIDCAP 400 INDEX 100 132 157 181 212 211 -------------------------------------------------------------------------------------------------------------
14 MATTERS TO BE BROUGHT BEFORE THE MEETING ELECTION OF DIRECTOR 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 six (6). The Board of Directors recommends that the nominees named below be elected to serve as Directors. The nominees will serve for a three (3) year term ending at the Annual Meeting of Stockholders held after the close of the fiscal year ended January 2, 2005. 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 Director 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 (as of March 1, 2002) of the nominee and of each person whose term of office as a Director will continue after the Meeting, 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 Expiration of Year First Elective Principal Elected as Name and Age Term Occupation Director ------------ ------------- ---------- ---------- NOMINEES FOR ELECTION AS DIRECTOR TO BE ELECTED FOR A THREE-YEAR TERM B. J. White................. 2002 Interim President, University of Michigan; Dean, Wilbur 1995 Age 54 K. Pierpont Collegiate Professor and Professor of Business Administration of the University of Michigan Business School; Trustee of Equity Residential Properties Trust, Inc. and the mutual funds of Fred Alger Management Company; Director of Gordon Food Service, Inc. and of Kaydon Corporation. Formerly: Director of Union Pump Company, Inc. and of Three-D Departments, Inc. C. T. Camden (b)............ (c) President and Chief Operating Officer (2001) of the (c) Age 47 Company. Formerly: Executive Vice President and Chief Operating Officer (2001), Executive Vice President of Operations, Sales and Marketing (1997), and Senior Vice President Sales and Marketing (1995) of the Company. DIRECTORS CONTINUING IN OFFICE T. E. Adderley(a)........... 2004 Chairman (1998) and Chief Executive Officer of the 1962 Age 68 Company and past President of the Company; Director of DTE Energy Company. Formerly: Director of First of Chicago NBD Corporation and Director of Detroit Edison Company.
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Year of Expiration of Year First Elective Principal Elected as Name and Age Term Occupation Director ------------ ------------- ---------- ---------- M. A. Fay, O. P. ........... 2003 President of the University of Detroit Mercy; Director 1997 Age 67 of Bank One Corporation. Formerly: Director of First Chicago NBD Corporation. C. V. Fricke................ 2003 Professor Emeritus, University of Michigan-Dearborn. 1978 Age 73 V. G. Istock................ 2003 Retired Chairman/President of Bank One Corporation; 1991 Age 61 Director of Masco Corporation. Formerly: Chairman, President and Chief Executive Officer of First Chicago NBD Corporation; Chairman and Chief Executive Officer of First National Bank of Chicago; Chairman and Chief Executive Officer of NBD Bank, Michigan; Director of Bank One Corporation and First Chicago NBD Corporation; Director of Federal Reserve Bank of Chicago.
(a) Mr. Adderley is a director and executive officer of virtually all subsidiaries of the Company. (b) Mr. Camden is a director and executive officer of virtually all subsidiaries of the Company. (c) Mr. Camden was appointed by the Board of Directors to fill the vacant seat created by the Board of Directors at the November 29, 2001 meeting of the Board of Directors. Upon election at the 2002 Annual Meeting of Stockholders, his term will expire in 2005. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS PROPOSAL 2 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 December 29, 2002, 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 respond to appropriate questions. Fees paid to PricewaterhouseCoopers LLP for fiscal year 2001 are set forth on page 9 of the Proxy Statement under the heading Audit and Related Fees. It is recommended by the Board of Directors that the proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent accountants for the year 2002 be approved. If stockholders fail to approve this proposal, the Board will reconsider the appointment of PricewaterhouseCoopers LLP as independent accountants for the year 2002. The proposal to ratify the appointment of PricewaterhouseCoopers LLP will be carried if it 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. 16 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 14, 2002. 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 December 30, 2001, 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 17 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 14, 2002 The undersigned hereby appoints as Proxies T.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 25, 2002 at the Annual Meeting of Stockholders to be held on May 14, 2002 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, THIS SIGNATURE SHOULD BE THAT OF AN AUTHORIZED OFFICER WHO SHOULD STATE HIS OR HER TITLE. DO YOU HAVE ANY COMMENTS? -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - YOU CAN NOW ACCESS YOUR KELLY SERVICES, INC. ACCOUNT ONLINE. Access your Kelly Services shareholder account online via Investor ServiceDirect(SM) (ISD). Mellon Investor Services LLC, agent for Kelly Services, now makes it easy and convenient to get current information on your shareholder account. After a simple, and secure process of establishing a Personal Identification Number (PIN), you are ready to log in and access your account to: - View account status - View payment history for dividends - View certificate history - Make address changes - View book-entry information - Obtain a duplicate 1099 tax form - Establish/change your PIN VISIT US ON THE WEB AT HTTP://WWW.MELLONINVESTOR.COM AND FOLLOW THE INSTRUCTIONS SHOWN ON THIS PAGE. STEP 1: FIRST TIME USERS - ESTABLISH A PIN You must first establish a Personal Identification Number (PIN) online by following the directions provided in the upper right portion of the web screen as follows. You will also need your Social Security Number (SSN) available to establish a PIN. INVESTOR SERVICEDIRECT(SM) IS CURRENTLY ONLY AVAILABLE FOR DOMESTIC INDIVIDUAL AND JOINT ACCOUNTS. - SSN - PIN - Then click on the ESTABLISH PIN button Please be sure to remember your PIN, or maintain it in a secure place for future reference. STEP 2: LOG IN FOR ACCOUNT ACCESS You are now ready to log in. To access your account please enter your: - SSN - PIN - Then click on the SUBMIT button If you have more than one account, you will now be asked to select the appropriate account. STEP 3: ACCOUNT STATUS SCREEN You are now ready to access your account information. Click on the appropriate button to view or initiate transactions. - Certificate History - Book-Entry Information - Issue Certificate - Payment History - Address Change - Duplicate 1099 FOR TECHNICAL ASSISTANCE CALL 1-877-978-7778 BETWEEN 9AM-7PM MONDAY-FRIDAY EASTERN TIME PLEASE MARK YOUR VOTES AS INDICATED IN /X/ THIS EXAMPLE 1. Election of Directors FOR WITHHOLD FOR AGAINST ABSTAIN 01 Carl T. Camden / / / / 2. Ratify the appointment of / / / / / / PricewaterhouseCoopers LLP as independent accountants FOR WITHHOLD 02 B. Joseph White / / / / 3. In their discretion, the proxies are authorized to vote upon any other business that may properly come before the meeting. Please be sure to sign and date this Proxy. SIGNATURE _______________________________________________ SIGNATURE _______________________________________________ DATE __________ NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. ----------------------------------------------------------------------------------------------------------------------------------- - FOLD AND DETACH HERE -