SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KELLY SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
KELLY SERVICES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
______________________________________________________________________
(2) Aggregate number of securities to which transactions applies: ________
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:* _________________________________
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _____________________
______________________________________________________________________
[ ] 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: _________________________________________________________
________________
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[ Kelly Logotype ]
KELLY SERVICES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 21, 1996
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 21, 1996 at 11 o'clock in the forenoon, Eastern Daylight Time, for the
following purposes:
1. To elect Directors as set forth in the accompanying Proxy
Statement.
2. To consider and act upon a proposed amendment to the Certificate
of Incorporation to establish a Board of Directors consisting of no
fewer than five (5) and no more than nine (9) members, divided into
three classes, the exact number of directors to be determined from
time to time by resolution of the Board of Directors.
3. To consider and act upon a proposal for approval of the Company's
Performance Incentive Plan as Amended and Restated including
performance-based criteria for performance awards for senior
executive officers.
4. To ratify the appointment of Price Waterhouse LLP as independent
accountants.
5. 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, 1996 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 22, 1996
999 West Big Beaver Road Eugene L. Hartwig
Troy, Michigan 48084-4782 Secretary
<PAGE>
KELLY SERVICES, INC.
999 West Big Beaver Road
Troy, Michigan 48084-4782
April 22, 1996
PROXY STATEMENT
1996 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 21, 1996 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 22, 1996. 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 the directors, designated Proposal
1 on the proxy, FOR the proposal to the amendment to the Certificate of
Incorporation to enlarge the Board of Directors, designated Proposal 2, FOR
the proposal to approve the Company's Amended and Restated Performance
Incentive Plan including performance-based critieria for performance awards
for senior executive officers, designated Proposal 3, FOR the proposal to
ratify the selection of independent accountants, designated Proposal 4 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 (including 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, 1996, the outstanding number of
voting securities (exclusive of treasury shares) was 3,598,520 shares of the
Class B common stock, having a par value of $1.00. Class B common stock is the
only class of the Company's securities with voting rights.
1
<PAGE>
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
1,1996, 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:
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of and Nature of of
Beneficial Owners Beneficial Ownership (a) Class
------------------- ------------------------ -------
<S> <C> <C>
W. R. Kelly............................ 2,189,840(b) 60.9
999 W. Big Beaver Road
Trod, Michigan 48084
T. E. Adderley......................... 1,024,726(c) 28.4
999 W. Big Beaver Road
Troy, Michigan 48084
First Chicago NBD Corporation.......... 193,419(d) 5.4
One First National Plaza
Chicago, Illinois 60670
<FN>
(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) All shares directly held. Because of his substantial stockholdings, Mr.
Kelly may be deemed to be a "control person" of the Company under
applicable regulations of the Securities and Exchange Commission.
(c) Includes 952,100 shares directly held; 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) Based upon a report filed by First Chicago NBD Corporation with the
Securities and Exchange 1 Commission on Schedule 13G upon which the
company relies for the information presented. The report indicates that
the number of shares of common stock owned by the reporting person are:
121,469, sole voting power; 71,825, shared voting power; 109,156, sole
dispositive power; and 84,263, shared dispositive power.
</TABLE>
2
<PAGE>
Set forth in the following table are the beneficial holdings of the Class
A and Class B common stock on March 1, 1996, on the basis described above, of
each director and the nominees for election, and all directors and officers as
a group.
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock
------------------------------ -----------------------------
Number of Shares Percent Number of Shares Percent
Directors and and Nature of of and Nature of of
Nominees Beneficial Ownership Class Beneficial Ownership Class
------------- -------------------- ------- -------------------- -------
<S> <C> <C> <C> <C>
W. R. Kelly............. 14,771,161(a) 42.9 2,189,840(d) 60.9
T. E. Adderley.......... 3,281,754(b)(c) 9.5 1,024,726(e) 28.4
C. V. Fricke ........... 4,051 * 781 *
H. E. Guenther.......... 3,061 * 875 *
V. G. Istock ........... 1,834 * 875 *
B. J. White............. 459 * 0 *
All Directors and
Executive Officers as
a group ............... 18,222,452(c) 52.9 3,218,414 89.4
<FN>
* Less than 1%
(a) All shares directly held except 568,324 shares owned by Mr. Kelly's wife,
in which he disclaims beneficial interest.
(b) Includes 675,103 shares directly held; 310,612 shares in an irrevocable
trust, of which he is beneficiary; 2,227,092 shares held in eleven
separate trusts of which he is co-trustee with sole or shared investment
power, in which he has no equity interest; 49,209 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) Includes shares which the individuals have a right to acquire through the
exercise of stock options within 60 days.
(d) See footnote (b) to first table.
(e) See footnote (c) to first table.
</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.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended December 31, 1995 all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten-percent beneficial owners have been met, except
with respect to Senior Vice President Carl T. Camden who filed a late Form 3
due in April 1996 reporting his initial ownership of shares of the Company's
common stock. A Form 3 reporting that he did not own any of the Company's
common stock was filed in May 1995.
3
<PAGE>
Board of Directors
The business, property and affairs of the Company are managed by the
Board of Directors, which establishes broad corporate policies and performance
objectives, but is not involved in the day-to-day operating details. Regular
meetings of the Board of Directors are held in each quarter and special
meetings are scheduled when required. The Board held four meetings during the
last fiscal year.
The Board of Directors has a standing Audit Committee, composed of
Messrs. Fricke, Guenther, Istock and White, which held four meetings in 1995.
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.
During 1995 the Board of Directors did not have a nominating committee.
The Compensation Committee whose functions are described in the Compensation
Committee Report on page 5 of this Proxy Statement held six meetings in 1995
and is composed of Messrs. Fricke, Guenther and White.
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, except for Mr. White who, because of a scheduling conflict,
missed satisfying 75 percent attendance by one meeting.
Compensation of Directors
Directors of the Company who are not salaried officers are paid an annual
retainer fee of $21,000, 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. In addition, under the Non-Employee Director
Stock Award Plan approved by the stockholders in 1995, each non-officer
Director receives an annual grant of shares of the Company's Class A common
stock equal in value to one-half of the Director's annual retainer fee.
Compensation Committee Interlocks and Insider Participation
Messrs. Fricke, Guenther and White served on the Compensation Committee
during 1995.
Mr. Adderley, the Company's President and Chief Executive Officer, serves
on the board of directors of First Chicago NBD Corporation. Prior to the
merger of NBD Bancorp, Inc. and First Chicago Corporation effective on
December 1, 1995 to form First Chicago NBD Corporation, Mr. Adderley served on
the board of directors of NBD Bancorp, Inc. and was a member of its
Compensation Committee. Mr. Istock, a director of the Company, and a director
of First Chicago NBD Corporation, was Chairman and Chief Executive Officer and
a director of NBD Bancorp, Inc. Effective with the merger, Mr. Istock was
named President and Chief Executive Officer of First Chicago NBD Corporation.
4
<PAGE>
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 Messrs. Fricke,
Guenther and White, each of whom is an outside 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 1995, 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, retain
and motivate 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 will be 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 or grants of performance shares, or cash
equivalents, will be 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, unit and individual
performance. Some performance objectives are Company-wide; others will vary,
depending on individual responsibilities, groups of employees or particular
projects and plans.
The Company has reviewed the nondeductibility of executive compensation
in excess of $1 million as required under Section 162(m) of the Internal
Revenue Code. The Company will be submitting for stockholder approval at the
Annual Meeting of Stockholders on May 21, 1996 a proposal setting forth
performance-based, objective criteria governing whether performance awards
under the Company's Performance Incentive Plan will be subject to forfeiture
in whole or in part over the award period. The Company's purpose in securing
such approval is to preserve the Company's tax deduction for such performance
awards made to its Chief Executive Officer and those executives to whom such
awards are granted who are vice presidents and above whose annual compensation
may in the future exceed $1 million.
In order to encourage substantial stock ownership by the Company's senior
executive group so as to align their interests more closely with the
stockholders' interests, the Committee earlier this year approved share
ownership guidelines as objectives to be worked toward by these executives. The
5
<PAGE>
guideline for the chief executive officer is ownership of shares having a
value five times base salary; for executive vice presidents, four times base
salary and for senior vice presidents, 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 1995 compensation of Mr.
Adderley as the Company's Chief Executive Officer.
Annual Compensation
Annual cash compensation for executive officers consists of base salaries
and, for 1995, short-term incentive awards earned under the Company's
Short-Term Incentive Plan. 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 and credible within the professional field of
compensation management. Because the Company competes for executive-level
personnel beyond the temporary help industry, the companies included in the
surveys referred to above are not the same as those included in the Industry
Index presented in the performance graph in the Company's Proxy Statement.
Base salaries are targeted to correspond generally with the median of the
range of salaries in the surveys consulted.
Competitive assessments incorporate benchmarking against companies, not
in the temporary help industry, having similar revenue and other relevant
factors. Individual performance is also a factor in determining base salary.
The Committee is responsible for reviewing and approving the annual salary
increase budget for all officers.
For 1995, Mr. Adderley received a 10.17 percent salary increase from
$590,000 to $650,000 to bring his base salary more in line with the median
base salaries of chief executive officers of other companies of comparable
size.
Annual incentive awards for executive officers paid under the Short-Term
Incentive Plan required that the Company achieve a certain level of pre-tax
earnings, as established by the Committee at its February 1995 meeting.
Because the Company exceeded the threshold pre-tax earnings objective
established for 1995, the Committee approved short-term incentive awards based
upon a percentage of the individual executive's target award combined with an
assessment of unit and individual officer performance.
Mr. Adderley's 1995 Short-Term Incentive Plan award was based entirely on
the Company's financial performance. In 1995, corporate pre-tax earnings did
not reach the corporate pre-tax earnings level necessary for 100 percent
payout of his target award of $390,000. Under the award payout schedule
established at the time the pre-tax earnings target was set, Mr. Adderley's
award was determined to be 62 percent of his target award or $241,000.
Awards for other executive officers, including the four executive
officers named in the accompanying table ("Named Executives"), were determined
based on the Company's pre-tax earnings results combined with an assessment of
their individual and unit performance, except for Messrs. Barranco and
Thompson whose awards were based entirely on the Company's pre-tax earnings.
6
<PAGE>
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, Restricted Stock
Awards and Performance Share Awards (subject to the approval of stockholders
under Proposal 3), in the case of certain senior executives, are currently the
only type of awards outstanding under the Performance Incentive Plan.
During 1995, a review of compensation components for chief executive
officers in companies of similar size indicated that Mr. Adderley's
compensation was substantially below competitive levels. As a result, the
Committee during 1995 recommended that Mr. Adderley be awarded a Non-Qualified
Stock Option to purchase 26,000 shares of Class A common stock and an
Incentive Stock Option to purchase 4,000 shares of Class A common stock to
bring his total compensation package more in line with competitive practice.
The decision to grant stock options is considered periodically by the
Committee during each year. Grants may be given to new hires, employees
promoted to new positions and other key managers and executives as deemed
appropriate by the Committee. Grant size is determined based on a guideline of
option shares for each management level that is generally competitive with the
median level of grants awarded by companies of similar size. Decisions
regarding the size of individual grants take into consideration the number of
outstanding unexercised option shares available to the individual compared to
the targeted guideline of the number of shares for the respective management
level of the employee.
In 1995, Mr. Adderley and the other members of the Company's Managing
Committee, who together constitute the 14 most senior officers of the Company,
were awarded Restricted Shares of the Company's Class A common stock under the
Company's Performance Incentive Plan. The Restricted Share awards, which vest
in three equal annual installments beginning in May 1996, are intended to
secure the long-term commitment of senior executives to remain with the
Company, incentivized by the prospect of increasing the value of their stock
holdings through increased profitability and growth of the Company. The award
in Mr. Adderley's case was for 15,000 shares.
Conclusion
The Committee believes that the Company's executive compensation program,
providing as it does for competitive base salaries along with short and
long-term incentive compensation opportunities, is an important factor in
motivating senior officers as well as maintaining an appropriate focus on
increasing stockholder value.
HAROLD E. GUENTHER
CEDRIC V. FRICKE
B. JOSEPH WHITE
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid or accrued for
services rendered to the Company and its subsidiaries for the last three
fiscal years by the Chief Executive Officer and the four highest-paid
executive officers of the Company:
<TABLE>
<CAPTION>
Long-Term
Compensation
---------------------------
Annual Compensation Awards
------------------- ---------------------------
Restricted Securities
Name and Stock Underlying All Other
Principal Position Year Salary Bonus Award(s)($)(1) Options (#) Compensation(2)
------------------ ---- ------ ----- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
T. E. Adderley 1995 $650,000 $241,000 $442,500 30,000 $170,064
President and Chief 1994 590,000 531,000 381,500 22,000 112,320
Executive Officer 1993 540,000 190,000 31,000 98,219
R. G. Barranco 1995 $380,000 $106,000 $191,750 15,000 $ 35,160
Executive Vice President, 1994 323,334 206,000 163,500 12,000 25,400
Operations 1993 265,000 100,000 14,000 19,606
R. E. Thompson 1995 $380,000 $106,000 $191,750 15,000 $ 35,160
Executive Vice President, 1994 323,334 206,000 163,500 12,000 24,380
Administration 1993 265,000 83,000 14,000 18,480
P. K. Geiger(3) 1995 $249,583 $ 61,000 $ 94,400 8,000 $ 20,914
Senior Vice President and 1994 200,000 99,000 90,750 7,000 13,239
Chief Financial Officer 1993 103,285 20,660 5,000 6,197
R. H. McNabb(3) 1995 $241,333 $ 60,000 $ 94,400 8,000 $ 16,663
Senior Vice President- 1994 69,323 36,400 84,000 7,000 3,267
Business Solutions and 1993
General Manager
<FN>
(1) Restricted Shares of the Company's Class A common stock, which vest in
three equal annual installments beginning in May 1996, were awarded in May
1995. 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 were: T. E. Adderley, 15,000 shares; R. G. Barranco, 6,500 shares;
R. E. Thompson, 6,500 shares; P. K. Geiger, 3,200; R. H. McNabb, 3,200
shares.
(2) Represents company contributions to non-qualified defined
contribution/deferred compensation plan for officers and certain other
management employees known as the Management Retirement Plan. The amount
reported above for Mr. Adderley includes contributions of $99,204, $65,520
and $57,295 for 1995, 1994 and 1993, respectively, made because he would
have earned a greater benefit had he remained under a defined benefit
Retirement Plan which was terminated December 31, 1988.
(3) Messrs. Geiger and McNabb became employees of the Company in 1993 and
1994, respectively.
</TABLE>
Option Grants in 1995
The following table shows all grants of stock options to the officers
named in the Summary Compensation Table above in 1995. The exercise price of
all such options was the fair market value on the date of grant except that
the option for 4,000 shares granted to Mr. Adderley at $32.45 was at 110%
8
<PAGE>
of the fair market value of $29.50 on the date of the grant. With respect to
this option for 4,000 shares awarded to Mr. Adderley, fifty (50%) percent are
exercisable one year after the date grant with an additional twenty-five (25%)
percent exercisable on each of the next two anniversary dates of the grant. Of
the remaining options awarded, twenty (20%) percent are exercisable one year
after the grant date with an additional twenty (20%) percent exercisable on
each of the next four 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.
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------
Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities % of Total Price Appreciation for Option Term
Underlying Options ----------------------------------
Options Granted to
Granted Employees Exercise or Expiration
Name (#) in Fiscal Year Base Price Date 0% 5% 10%
---- --------- -------------- ---------- --------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
T. E. Adderley.. 4,000 $32.45 05/17/00 0 $ 62,410 $ 176,262
26,000 29.50 05/17/05 482,362 1,222,400
------ -------- ----------
30,000 16.84 $544,772 $1,398,662
R. G. Barranco.. 4,000 $29.50 05/17/05 0 $ 74,210 $ 188,062
11,000 29.50 05/17/05 204,076 517,169
------ -------- ----------
15,000 8.42 $278,286 $ 705,231
R. E. Thompson.. 4,000 $29.50 05/17/05 0 $ 74,210 $ 188,062
11,000 29.50 05/17/05 204,076 517,169
------ -------- ----------
15,000 8.42 $278,286 $ 702,231
P. K. Geiger.... 4,000 $29.50 05/17/05 0 $ 74,210 $ 188,062
4,000 29.50 05/17/05 74,210 188,062
------ -------- ----------
8,000 4.49 $148,420 $ 376,124
R. H. McNabb.... 4,000 $29.50 05/17/05 0 $ 74,210 $ 188,062
4,000 29.50 05/17/05 74,210 188,062
------ -------- ----------
8,000 4.49 $148,420 $ 376,124
</TABLE>
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 shareowners. For example, in order for any of the named officers to
realize the potential values set forth in the 5% and 10% columns in the table
above with respect to the exercise price of $29.50 (the fair market value on
the date of the grant), the price per share of the Company's Class A common
stock would be approximately $48.05 and $76.52, respectively, as of the
expiration date of their options.
9
<PAGE>
Option Exercises During 1995 and Year-End Option Values
The following table shows stock option exercises during 1995 by each of
the officers named in the Summary Compensation Table and the value of
unexercised options at December 31, 1995:
<TABLE>
<CAPTION>
Number of
Securities Underlying
Unexercised Options Value of Unexercised In-the-Money
at Year End (#) Options at Year End
--------------------- ---------------------------------
Shares Acquired
Name on Exercise (#) Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ---------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. E. Adderley.. 0 0 18,600 64,400 $3,375 $ 8,775
R. G. Barranco.. 1,875 $11,531 10,813 33,000 $6,000 $12,000
R. E. Thompson.. 2,500 $15,375 8,000 33,000 $6,000 $12,000
P. K. Geiger.... 500 $ 5,125 2,900 16,600 $2,200 $ 7,300
R. H. McNabb.... 0 0 1,400 13,600 $ 700 $ 2,800
</TABLE>
10
<PAGE>
Performance Graph
The following graph compares the cumulative total return of the Company's
Class A common stock, with that of the NASDAQ Stock Market Index, a Peer Group
Index, and the S&P Specialized Services Index (added in 1995) for the five
years ended December 31, 1995. The graph assumes an investment of $100 on
January 1, 1990 and that all dividends were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Kelly Services, NASDAQ Stock Market Index, Peer Group Index
and S&P Specialized Services Index
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Kelly Services 100 98 139 113 114 119
NASDAQ Stock Market Index 100 161 187 215 210 296
Peer Group Index (See note 1) 100 145 167 207 296 349
S&P Specialized Services Index (See note 2) 100 109 108 104 96 130
<FN>
Notes:
1. The Peer Group Index consists of other U.S. temporary help service
companies selected by the Company which have a stock market capitalization
of more than $100,000,000. The index includes: CDI Corp., Manpower Inc.,
Olsten Corp., and Robert Half International Inc. (all of which are traded
on the NYSE). Adia Services, Inc., which appeared in prior years, has been
removed from the Peer Group Index because it was absorbed by its Swiss
parent, Adia S.A., in late 1994.
2. The S&P Specialized Services Index consists of the following service
companies: H & R Block Inc., CUC International Inc., Ecolab Inc.,
Interpublic Group COS Inc., National Service Industries, Inc., Ogden
Corp., Safety Kleen Corp., and Service Corp. International.
</TABLE>
11
<PAGE>
Matters to be Brought Before the Meeting
Election of Directors
Proposal 1
The Board of Directors is divided into three classes with each class
elected for a three-year term. Under the Certificate of Incorporation, the
Board of Directors shall consist of no fewer than five (5) and no more than
seven (7) 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 two (2) nominees named below
be elected to serve as Directors. Each of 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 3, 1998.
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 directors (which event is not anticipated), the persons
named in the enclosed form of proxy may vote for the election of a person
designated by a majority of the proxy attorneys present at the meeting. The
directors will be elected by a majority of the votes cast by holders of Class
B common stock who are present in person, or represented by proxy, and
entitled to vote at the meeting.
The name and age of the nominees and for each person whose term of office
as a director will continue after the meeting as of March 1, 1996, 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:
<TABLE>
<CAPTION>
Year of Year First
Expiration of Principal Elected as
Name and Age Elective Term Occupation Director
- ------------ ------------- ---------- ----------
Nominees for Election as Director to be Elected for a Three-Year Term
<S> <C> <C> <C>
W. R. Kelly .......... 1996 Chairman of the Board of the Company 1952
Age 90
B. J. White .......... 1996 Dean and Professor of Business Administration
Age 48 of the University of Michigan 1995
School of Business Administration; Director
of Equity Residential Property Trust;
Director of Falcon Building Products, Inc.;
Director of Three-D Departments, Inc.;
Director of Union Pump Co., Inc.
<CAPTION>
Directors Continuing in Office
<S> <C> <C> <C>
T. E. Adderley(a)(b)... 1998 President and Chief Executive Officer of the 1962
Age 62 Company; Director of Detroit
Edison Company; Director of First Chicago
NBD Corporation.
H. E. Guenther ........ 1998 Retired Senior Vice President, Kemper Financial
Age 68 Services, Inc. 1985
C. V. Fricke .......... 1997 Professor Emeritus, University of Michigan-
Age 67 Dearborn 1978
V. G. Istock .......... 1997 President and Chief Executive Officer of First 1991
Age 55 Chicago NBD Corporation; Chief
Executive Officer of First National Bank of
Chicago; and Chairman and Chief Executive
Officer of NBD Bank, Michigan
<FN>
(a) Mr. Adderley is a director and executive officer of all subsidiaries of
the Company.
(b) Mr. Adderley is the son of Mr. Kelly.
</TABLE>
12
<PAGE>
Proposed Amendment to Certificate of Incorporation
to Increase the Maximum Size of the Board of Directors
from Seven to Nine Members
Proposal 2
Article Fifth of the Company's Certificate of Incorporation provides that
the "business, property and affairs of this corporation shall be managed by a
Board Directors consisting of no fewer than five (5) and no more than seven
(7) members, the exact number to be determined from time to time by resolution
of the Board of Directors."
Currently the Board of Directors consists of six (6) directors divided
into three classes, which classes hold office for successive terms of three
years, respectively.
Given the increasing size, scope and complexity of the Company's
business, the Board believes it desirable to amend Article Fifth to provide
that the "business, property and affairs of this corporation shall be managed
by a Board of Directors consisting of no fewer than five (5) and no more than
nine (9) members, the exact number to be determined from time to time by
resolution of the Board of Directors." The proposed amendment is set forth in
Exhibit A.
Increasing the number of available seats on the Board will enable the
Company to attract additional expertise to assist the Board in its
consideration of issues facing the Company as it moves into the next century.
Although the Board expects to fill some or all of these Board seats, it has no
candidates currently under consideration.
Required Vote
For the adoption of the foregoing amendment to Article Fifth of the
Company's Certificate, the affirmative vote of the holders of at least
seventy-five percent (75%) of the voting power of the shares of the Company's
stock entitled to vote at the meeting is required pursuant to Article
Fifteenth of the Certificate. The approval of these amendments is not
contingent upon any other consideration or approvals sought in this proxy
statement. Directors and officers own sufficient shares to ensure adoption of
the proposal.
The proposed amendment to Article Fifth of the Certificate, if approved
by the stockholders, will become effective upon the filing of a Certificate of
Amendment with the Secretary of Delaware. The filing is expected to take place
promptly after the meeting if stockholders approve the amendments.
The Board recommends a vote FOR the proposed amendment to Article
Fifth of the Certificate.
13
<PAGE>
Approval of the
Performance Incentive Plan as Amended and Restated
Including Performance-Based Criteria for
Performance Awards
For Senior Executive Officers
Proposal 3
Background for Proposal. The Kelly Services, Inc. Performance Incentive Plan
was approved by the Company's stockholders at the Annual Meeting held in 1992.
Since that time, Section 162(m), added to the Internal Revenue Code in 1993,
established a limit of $1 million per year on the tax deductibility of annual
compensation paid to the top five executive officers of a public company,
unless such compensation is "performance-based" and certain conditions are
met. These conditions include that an award under an incentive plan be
objectively determinable based upon a performance standard and that the nature
of the standard be approved by the company's stockholders. There must also be
a limitation on the size of the award to any covered executive. Internal
Revenue Service regulations further specify that with respect to stock options
granted after the 1997 annual meeting of stockholders, there must be a
limitation in the plan on the number of shares which may be granted as options
during a specified period to any single employee.
Finally, experience gained in administering the Plan since its inception
in 1992 has led the Board of Directors to approve certain amendments which
improve the Plan's flexibility and better achieve its purpose of encouraging
key officers and executives of the Company selected to participate to further
the long-term growth and profitability of the Company. These are technical
amendments which add or modify certain definitions, provide greater
flexibility in administering the Plan in cases of employment termination,
provide for deferral of the payout of awards as the Compensation Committee
shall determine and which permit the transfer of awards to family members
under certain circumstances.
Accordingly, the Board of Directors has adopted, subject to stockholder
approval, an Amended and Restated Kelly Services, Inc. Performance Incentive
Plan as set forth in Exhibit B to this Proxy Statement. Although only those
amendments to the Plan which are printed in boldface type require approval of
the stockholders, the Board is seeking approval of the entire Plan as amended
and restated.
Only those amendments to the Plan requiring stockholder approval are
discussed below.
Increasing the Maximum Number of Shares Awardable under the Plan. In general,
the Performance Incentive Plan is designed as a so-called "evergreen" plan in
that it does not specify a maximum number of shares of Class A stock that may
be issued and made subject to issuance over the life of the Plan. Instead, it
provides that, at any given time, the maximum number of shares which may be
issued and made subject to future issuance shall equal 5% of the number of
shares of Class A stock that were outstanding (exclusive of treasury shares)
as of the end of the immediately preceding Company fiscal year (rounded
downward if necessary to eliminate fractional shares), reduced to take into
account various awards made during the period consisting of the immediately
preceding four complete fiscal years of the Company and its then-current
fiscal year to date (the "Adjustment Period"), and increased by the number of
shares as to which stock options granted during the Adjustment Period have
since expired or terminated for any reason other than exercise of such options
or related Stock Appreciation Rights ("SARs").
14
<PAGE>
The continued growth of the Company (revenues have increased from $1.7
billion in 1992 when the Plan was adopted, to $2.7 billion in 1995) and the
corresponding increase in the number of executives and other key employees who
may be selected for stock-related awards under the Plan has caused the Board
to conclude that the maximum number of shares, which may be issued and made
subject to future issuance, should be increased to 7.5% of the number of
shares of Class A stock (exclusive of treasury shares), as of the end of the
immediately preceding Company fiscal year subject to rounding down and
adjusted for prior awards and options expired or terminated other than for
exercise, in order to insure an adequate number of shares for stock-related
awards going forward.
Increasing the Number of ISOs Available for Grant under the Plan. Currently,
the total number of shares covered by outstanding Incentive Stock Options
(ISOs) plus the number of shares issued in settlement of exercised ISOs,
whenever granted, may not exceed 1,687,500 shares as adjusted for the May 1993
five-for-four stock split. At present, there are 976,710 shares either covered
by outstanding ISOs or which are shares issued in settlement of exercised
ISOs. To continue to provide flexibility under the Plan to make stock option
grants consisting of both ISOs and Nonqualified Stock Options (NQSOs), Section
5 of the Plan has been amended to increase the total shares available for ISOs
to 4,000,000 shares. This ISO limit is subject to the general award limit set
forth in Section 5 of the Plan. Additionally, to clarify the treatment to be
accorded stock options, SARs or other equity-based awards assumed by the
Company in connection with a merger or acquisition of another company, the
Plan has been amended at the end of Section 5, in keeping with common practice
under other similar incentive plans, to provide that such extraordinary awards
shall not count against the shares available for award under the Plan.
Limitation on Maximum Number of Shares which May Be Granted as Options During
Any Consecutive Fee Calendar Years to Any Single Employee. Effective with
stock option grants made after the 1997 annual meeting of stockholders,
regulations under the Internal Revenue Code will require that incentive
compensation plans contain a limitation on the maximum number of shares which
may be granted as options (whether or not in tandem with SARs) in a specified
period to any single employee. Accordingly, the Plan has been amended to
provide in Section 6(b) that the maximum number of shares which may be granted
as Options (whether or not in tandem with SARs) during any consecutive five
calendar years to any single employee shall be 750,000, subject to adjustment
under Section 13 of the Plan.
Performance Awards to Senior Executive Officers. In order to facilitate
exemption of compensation paid in connection with performance awards to senior
executive officers of the Company (vice presidents and above designated by the
Compensation Committee at the time of grant) from the $1 million tax deduction
limit imposed by Section 162(m) of the Internal Revenue Code, a new Section 9B
has been added to the Plan requiring that such awards be "performance based"
and that certain other requirements be met.
As set forth in Section 9B of the Amended and Restated Plan, performance
awards may be granted to senior executive officers only during the first
quarter of the Company's fiscal year. Subject to the general limits on award
amounts set forth in Section 5 and the adjustment provisions of Section 13,
the maximum number of performance shares and/or performance share units that
may be granted to any given senior executive officer with respect to a single
performance period is 25,000.
At or prior to the grant of any performance award to a senior executive
officer, the Compensation Committee of the Board of Directors shall establish
one or more objectively determinable performance goals for the award relating
to one or more of the following areas of Company performance over the relevant
performance period: earnings per share of Common Stock; revenue growth;
operating income; net income, before or after taxes; operating cash flow;
return on revenues, assets or equity: customer or employee retention; or an
index of customer satisfaction.
15
<PAGE>
At the same time, the Committee shall establish a "payout" schedule for
the performance award, which shall range from 100 percent of the performance
shares and/or performance share units constituting the award (if actual
Company results for the performance period at least equal the performance
goal(s) established) to zero percent of such award (if actual Company results
for the period do not at least equal a minimum amount or level specified by
the Committee) and shall be structured so as to permit objective determination
of payouts over the full range of actual Company results.
In connection with the establishment of the performance goal(s), the
Committee shall specify which (if any) types or categories of extraordinary,
unusual, non-recurring, or other items or events shall be excluded or
otherwise not taken into account when actual Company results relating to such
goal(s) are calculated. The only adjustments in actual Company results which
thereafter shall be permissible for purposes of applying the payout schedule
shall be objectively determinable adjustments for the items or events so
specified.
The Committee may establish other preconditions to the payout of awards,
including preconditions the satisfaction of which may call for subjective
determinations by the Committee. The payout on any performance award may also
be reduced if, in the Committee's judgment, the individual performance of the
senior executive officer during the performance period has not warranted the
payout so calculated. In no event, shall the payout on any performance award
exceed the payout permissible under the award's payout schedule nor shall any
additional shares be granted to any senior executive officer under Section
9A(c) of the Plan so long as Section 162(m) of the Code remains in effect.
If a performance award is granted to a senior executive officer and prior
to the third anniversary of the date of grant, the grantee ceases to be an
employee due to the grantee's disability, that percentage of the total number
of performance shares and/or performance share units comprising such award
which equals the percentage of the entire performance period by then elapsed
shall be unaffected by the employment termination and the unaffected portion
of the award subsequently shall vest or be forfeited or canceled in accordance
with the payout schedule, any preconditions, and the provisions of the Plan
applicable to the original award. If the grantee's employment terminates due
to death, the performance period for such grantee shall terminate at the end
of the year in which death occurs (but no later than the normal performance
period). The number of performance shares and/or performance share units
payable to the grantee's estate or beneficiary shall be the maximum award
payable, adjusted by a performance factor (the percent of the award earned
according to the payout schedule calculated as of the end of the year in which
death occurs) times a time factor (a fraction, the numerator of which is the
time elapsed between the date of grant and the date of death and the
denominator of which is the number of days in the performance period). If the
grantee of a performance award ceases to be an employee before the third
anniversary of the grant date for any other reason, the Committee shall
determine the disposition of the Award.
1996 Performance Share Awards to Chief Executive Officer and the Next Four
Highest Paid Executive Officers. On March 18, 1996, the following performance
share awards were made, consistent with the above-described criteria, to the
chief executive officer and the next four highest paid senior executive
officers with the concurrence of those members of the Board of Directors who
are "disinterested persons" as that term is used in Securities and Exchange
Commission Rule 16b-3, subject to stockholder approval of this proposal: T. E.
Adderley-12,000 shares; R. G. Barranco-5,000 shares; R. E. Thompson-5,000
shares; P. K. Geiger-2,500 shares; and R. H. McNabb-2,500 shares. The
objective performance measure upon which payout of these awards will be based
is the achievement of specified cumulative earnings per share over the
three-year performance period, 1996 through 1998. In
16
<PAGE>
making these awards, the Compensation Committee has agreed to exclude the
following items from earnings per share (i.e., fully diluted as reported,
transitioning to diluted if the Financial Standards Accounting Board changes
the definition) for performance measurement and performance share payout
purposes for the 1996-1998 award cycle: extraordinary items (accounting
definition); losses on discontinued operations; changes in accounting
principles, tax laws and tax regulations; gains or losses on acquisitions or
divestitures, and restructuring charges and other unusual or non-recurring
items which are identified as such and quantified in the financial statements
and/or footnotes thereto in the Company's Annual Report. These awards are
subject to stockholder approval of the Amended and Restated Plan.
Effect of Non-Approval. If this Proposal is not approved by stockholders, the
1996 performance share awards, which have been made subject to stockholder
approval of this Proposal, will be forfeited and the amendments specifically
addressed in this Proposal will not become effective. The Company's
Performance Incentive Plan, including those amendments approved by the Board
of Directors not requiring stockholder approval will, however, be unaffected.
Required Vote. The proposal to approve the Amended and Restated Performance
Incentive Plan incorporating provisions for performance-based criteria for
performance share awards 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. For this
purpose, any abstention with respect to such shares will have the same effect
as a vote against the proposal, but any such shares that are the subject of a
broker non-vote will not be considered to be present. Accordingly, any broker
non-vote will have no effect on the outcome of the vote on this proposal.
The Board of Directors recommends a vote "FOR" approval of the Amended
and Restated Performance Incentive Plan including those provisions
establishing performance-based criteria for performance awards for senior
executive officers of the Company.
Relationship with Independent Accountants
Proposal 4
The Board of Directors of the Company has appointed the firm of Price
Waterhouse LLP as independent accountants of the Company for the current
fiscal year ending December 29, 1996, subject to ratification by the
stockholders. This firm has served as independent accountants for the Company
for many years and is considered to be well qualified by the Board of
Directors. As in prior years, a representative of that firm will be present at
the Annual Meeting and will have the opportunity to make a statement and to
respond to appropriate questions.
It is recommended by the Board of Directors that the proposal to ratify
the appointment of Price Waterhouse LLP as independent accountants for the
year 1996 be approved. If stockholders fail to approve this proposal, the
Board will reconsider the appointment of Price Waterhouse LLP as independent
accountants for the year 1996.
The proposal to ratify the appointment of Price Waterhouse 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.
17
<PAGE>
Stockholder Proposals
Proposals of stockholders intended to be presented at the next Annual
Meeting must be received by the Secretary, Kelly Services, Inc., 999 West Big
Beaver Road, Troy, Michigan 48084, no later than December 9, 1996.
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 31, 1995,
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
EUGENE L. HARTWIG
Secretary
18
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE FIFTH
CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of Kelly Services, Inc. shall be amended
as follows:
(1) By changing Article FIFTH to read in its entirety as follows:
"The business, property and affairs of this corporation shall be managed
by a Board of Directors consisting of no fewer than five (5) and no more than
nine (9) members, the exact number to be determined from time to time by
resolution of the Board of Directors. The directors shall be classified with
respect to the term for which they shall severally hold office by dividing
them into three classes as nearly equal in number as may be, the classes to
hold office for successive terms of three years, respectively, but all
directors of the corporation shall hold office until their successors are
elected and qualified. The Board of Directors may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute
or by the Certificate of Incorporation or by the by-laws directed or required
to be exercised or done by the stockholders.
"Newly created directorships resulting from any increase in the
authorized number of directors and vacancies in the Board of Directors from
death, resignation, retirement, disqualification, removal from office or other
cause, shall be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office for a term expiring at the annual
meeting at which the term of the class to which they shall have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
"Any director, or the entire Board of Directors, may be removed at any
time, but only for cause. The affirmative vote of the holder of 75% of the
voting power of all of the stock of this corporation entitled to vote in
elections of directors shall be required to remove a director from office. The
stockholders of the corporation are expressly prohibited from cumulating their
votes in any election of directors of the corporation."
A-1
<PAGE>
EXHIBIT B
KELLY SERVICES, INC.
PERFORMANCE INCENTIVE PLAN
(As Amended and Restated by Action of the Board of Directors)
(March 29, 1996)
Section 1-Purposes
This KELLY SERVICES, INC. PERFORMANCE INCENTIVE PLAN (the "Plan")
provides for long-term incentive compensation to those key officers and
employees of Kelly Services, Inc. (the "Company") or any Affiliated Entity,
who, from time to time, may be selected for participation. The Plan is
intended to provide incentives and rewards for such employees (i) to support
the execution of the Company's business strategies and the achievement of its
goals and (ii) to associate the interests of employees with those of the
Company's stockholders.
Section 2-Certain Additional Definitions and Rules of Construction
(a) The terms set forth in quotation marks below have the following
meanings under the Plan:
"Additional Shares" means immediately vested shares of Company Stock
awarded pursuant to Section 9(A)(c) of the Plan.
"Affiliated Entity" means a corporation, partnership or other
business enterprise in which the Company directly or indirectly has a
significant equity interest under United States generally accepted
accounting principles.
"Award" means a Restricted Award, Performance Award, award of
Additional Shares, Option, SAR or Foreign Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board or any
other committee designated by the Board to administer this Plan. The
Committee shall not include any person who is an employee of the Company
or who otherwise would not be considered a disinterested person within the
meaning of Rule 16b-3 of the Securities and Exchange Commission.
"Company Stock" means the Class A Common Stock, $1.00 par value, of
the Company.
"Deferred Compensation Plan" means a plan of the Company or an
Affiliated Entity the terms of which satisfy all conditions necessary to
assure the deductibility under Section 162(m) of all compensation payable
in connection with Performance Share Unit Awards and which permits an
Employee voluntarily to defer receipt of stock that otherwise would be
payable in settlement of a Share Unit Award.
B-1
<PAGE>
"Disabled" means the total and permanent inability of an Employee by
reason of sickness or injury to perform the material duties of such
Employee's regular occupation with his or her Employer where such
inability has existed for at least six continuous months.
"Disability" means the condition of being Disabled.
"Employee" means an employee of the Company or an Affiliated Entity.
"Employer" means the Company or the Affiliated Entity which employs
an Employee at any given time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means (1) as of any given date on which Company
Stock is authorized for quotation in the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") as a
NASDAQ National Market System Security, the average of the high and low
trading prices for a share of Company Stock reported by NASDAQ for such
date (or, if no sale is so reported for such date, for the latest
preceding date on which such a sale was so reported) and (2) as of any
other given date, the fair market value of a share of Company Stock as
determined in good faith by the Committee.
"Foreign Award" means an award granted pursuant to Section 10 of
the Plan.
"Incentive Stock Option" or "ISO" means an Option that meets the
requirements of Section 422 of the Code (or any successor provision in
effect at a relevant time) and that is identified as intended to be an
ISO in the written agreement evidencing the Option.
"Nonqualified Stock Option" or "NQSO" means an Option that is not
an ISO.
"Option" means an Option to purchase Company Stock granted pursuant
to Section 6 of the Plan.
"Over-10% Owner" means an owner of over 10% of the total combined
outstanding voting power of all classes of capital stock of the Company.
"Performance Award" means an award of Performance Shares or
Performance Share Units.
"Performance Shares" and "Performance Share Units" mean,
respectively, shares of Company Stock and Share Units granted under
Section 9 of the Plan which, until vested, are subject to forfeiture.
"Restoration Option" has the meaning set forth in Section 6(f) of the
Plan.
"Restricted Award" means an award of Restricted Shares or Restricted
Share Units.
"Restricted Shares" and "Restricted Share Units" mean, respectively,
shares of Company Stock and Share Units granted under Section 8 of the
Plan which, until vested, are subject to forfeiture.
"Rule 16b-3" means Securities and Exchange Commission Rule 16b-3, as
amended.
B-2
<PAGE>
"Section 16 Reporting Person" means a person required by Section 16
of the Exchange Act and related rules to file reports concerning such
person's ownership of and transactions in Company equity securities.
"Section 162(m)" means Section 162(m) of the Code (or such successor
section as may be in effect at a given time), together with the
regulations of the U.S. Department of the Treasury promulgated
thereunder.
"Senior Executive Officer" means, for purposes of Section 9B, an
Employee who is an officer of the Company at or above the rank of Vice
President and who is designated as such by the Committee at the time of
grant.
"Share Unit" means a unit available for award under the Plan which:
(1) upon vesting or payout, shall entitle the holder to receive from the
Company for each Share Unit vested or paid, a share of Company Stock, and
(2) until settled after vesting, or until forfeited, shall entitle the
holder to be paid by the Company the equivalent of any cash dividend paid
on Company Stock to which the holder would have been entitled if, on the
date of grant of such Share Unit, the grantee of the Share Unit had
instead been granted a Restricted Share or Performance Share.
"Stock Appreciation Right" or "SAR" means a right granted pursuant to
Section 7 of the Plan which, upon exercise, shall entitle the holder to
receive from the Company the Fair Market Value of a share of Company
Stock on the exercise date, minus the Fair Market Value of such a share
on the date of grant of the Option to which such right is related.
(b) All references herein to the "issuance" of shares, to shares
"issued" or "issuable," and the like, are intended to include transfers
of previously issued shares held in the treasury of the Company
("treasury shares"), as well as new issuances of authorized but
previously unissued shares as determined from time to time by the Board.
Section 3-Administration
The Plan shall be administered by the Committee which, subject to such
limitations as are expressly set forth in the Plan, shall make recommendations
with respect to granting Awards and determining the type, amount and other
terms and conditions of each Award. Each Award shall be recommended subject to
review and approval by a majority of the full complement of those members of
the Board who are "disinterested persons" as that term is used in Rule 16b-3
(or any successor provision in effect at the time). Awards shall not be deemed
to be granted unless and until so approved. The Committee shall have authority
to prescribe the forms of written agreements to evidence Awards, to interpret
the Plan and the provisions of such agreements, to adopt administrative rules
and procedures concerning administration of the Plan and to take such other
action as it determines to be necessary, advisable, appropriate or convenient
for the administration of the Plan in accordance with its purposes. The
Committee may delegate to the chief executive officer of the Company, if also
a director, some or all of its authority to grant Awards under the Plan to
Employees who are not Section 16 Reporting Persons, in which case actions
taken by the chief executive officer pursuant to such delegated authority
shall have the same effect as if taken by the Committee. The Committee may
delegate performance of record-keeping and other ministerial functions
concerning the Plan and its day-to-day operations to such persons as it may
specify from time to time.
B-3
<PAGE>
Section 4-Eligibility for Awards; No Requirement of Uniformity
Any type of Award may be granted to any Employee at any time, except that
Foreign Awards may only be granted to such Employees as are permissible
grantees under Section 10 of the Plan. The type, amount and other terms and
conditions of an Award made to a grantee at any given time need not be the
same as for any other Award granted then or at any other time to the same or
any other grantee.
Section 5-Maximum Number of Shares
At any given time, the maximum number of shares of Company Stock which
may be issued as Restricted Shares or Units, Performance Shares or Units,
Additional Shares or similar Foreign Awards and made subject to future
issuance in settlement of Options (whether or not with related SARs), Share
Units or Foreign Awards shall be 7.5% of the number of shares of Company Stock
that were outstanding (exclusive of treasury shares) as of the end of the
immediately preceding Company fiscal year (rounded downward, if necessary to
eliminate fractional shares),
(a) minus the sum of:
(1) the number of shares awarded as Restricted Shares, Performance
Shares or Additional Shares during the period consisting of the
immediately preceding four complete fiscal years of the Company and its
then-current fiscal year to date (the "Adjustment Period");
(2) the number of Share Units awarded during the Adjustment Period;
(3) the number of shares made subject to Options granted (including
Restoration Options arising) during the Adjustment Period; and
(4) the total number of shares issued as Foreign Awards, and the
maximum number of shares which in the future may be issued in settlement
of Foreign Awards, granted during the Adjustment Period,
(b) plus the sum of:
(1) the number of shares as to which Options have expired or
terminated during the Adjustment Period for any reason other than
exercise of such Options or of related SARs;
(2) the number of shares as to which Restricted Awards and
Performance Awards granted during the Adjustment Period have since been
forfeited and not vested; and
(3) the number of shares transferred to the Company (actually or
constructively) to satisfy the exercise price of an outstanding Option
during the Adjustment Period.
In addition to the foregoing, in no event may the total number of shares
covered by outstanding ISOs plus the number of shares issued in settlement of
exercised ISOs, whenever granted, exceed 4,000,000 shares.
Any stock options, SARs or other equity-based awards assumed by the
Company in a merger or acquisition of another company shall not count against
the shares available for Award under the Plan.
Section 6-Options
(a) Incentive Stock Options and Nonqualified Stock Options. At the time
of grant of an Option, it shall be specified whether it is intended to be an
Incentive Stock Option or a Nonqualified Stock Option, and the agreement
evidencing such Option shall designate the Option accordingly. In connection
with the
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grant of any Option intended to be an ISO, the Committee may prescribe such
terms and conditions, other than those specified in the Plan, as it deems
desirable to qualify the Option as an incentive stock option under the Code.
If for any reason an Option (or any portion thereof) intended by the Committee
to be an ISO nevertheless does not so qualify, either at the time of grant or
subsequently, such failure to qualify shall not invalidate the Option (or such
portion), and instead the nonqualified portion (or, if necessary, the entire
Option) shall be deemed to have been granted as a Nonqualified Stock Option
irrespective of the manner in which it is designated in the Option agreement.
(b) Number of Shares and Exercisability. The number of shares subject to
an Option, the time at which the Option or any portion thereof first becomes
exercisable (which time may, but need not, be coincident with the date of
grant) and the latest date on which the Option may be exercised (the
"expiration date") shall be as specified at the time of grant; provided,
however, that the expiration date for any ISO granted to an Over-10% Owner may
be no later than five years, and the expiration date for any other Option may
be no later than ten years, after the date of grant of the Option and provided
further that the maximum number of shares which may be granted as Options
(whether or not in tandem With SARs) during any consecutive five calendar
years to any single Employee shall be 750,000, subject to adjustment under
Section 13 of the Plan. The Committee may, in its discretion, accelerate the
exercisability of any Option (or Option portion) at any time or provide for
automatic acceleration of exercisability of any Option (or portion) upon the
occurrence of such events as it may specify, except that no acceleration of
exercisability of an ISO or any portion thereof shall be effective without the
consent of the Option holder if such acceleration would cause the ISO or any
other ISO of such holder (or any portion thereof) to become a Nonqualified
Stock Option. During the lifetime of the grantee of an Option, the Option may
be exercised only by the grantee or the grantee's legal representative.
(c) Exercise Price. Unless a higher price is specified at the time of
grant, the per share exercise price of each Option shall be the Fair Market
Value of a share of Company Stock on the date of grant, except that the per
share exercise price of any ISO granted to an Over-10% Owner shall be at least
equal to 110% of such Fair Market Value on the grant date.
(d) Exercise Procedures and Payment. The holder of an exercisable Option
(or Option portion) may exercise it in whole or in part by complying with such
procedures for exercise as are then in effect and tendering payment in full of
the aggregate exercise price for the number of shares in respect of which the
Option is then being exercised. Except to the extent further restricted or
limited at the time of grant, payment may be made (1) entirely in cash or (2)
by delivery of whole shares of Company Stock owned by the Option holder and
the balance in cash. Shares delivered in payment shall be valued at their Fair
Market Value on the date of delivery.
(e) Effect of Employment Termination. The Committee shall determine the
disposition of the grant of each Option in the event of the retirement,
disability, death or other termination of employment of an Employee.
(f) Restoration Options. At the time of grant of an Option (for purposes
of this paragraph an "original Option") that is not itself a Restoration
Option (as hereinafter defined), or at the time a Restoration Option arises,
or at any other time while the grantee continues to be eligible for Awards and
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the original or Restoration Option (the "prior Option") is outstanding, the
Committee may provide that the prior Option also shall carry with it a right
to receive another Option (a "Restoration Option") if, earlier than six months
before the expiration date of the prior Option, the grantee exercises the
prior Option (or a portion thereof) while still an Employee and pays all or
some of the relevant exercise price in shares of Company Stock that have been
owned by the grantee for at least six months prior to exercise. In addition to
any other terms and conditions (including additional limitations on
exercisability) that the Committee deems appropriate, each Restoration Option
shall be subject to the following:
(1) the number of shares subject to the Restoration Option shall be
the lesser of (i) the number of whole shares delivered in exercise of the
prior Option or (ii) the number of shares of Company Stock which may be
made subject to future issuance in settlement of Options pursuant to
Section 5 of the Plan and the per person grant limits set forth in
Section 6(b) at the time the Restoration Option arises;
(2) the Restoration Option automatically shall arise and be granted
(if ever) at the time of payment of the relevant exercise price in
respect of the prior Option;
(3) the per share exercise price of the Restoration Option shall be
the Fair Market Value of a share of Company Stock on the date the
Restoration Option arises;
(4) the expiration date of the Restoration Option shall be the same
as that of the prior Option;
(5) the Restoration Option shall first become exercisable six months
after it arises; and
(6) the Restoration Option shall be a Nonqualified Stock Option.
Section 7-Stock Appreciation Rights
(a) Grant, Exercisability and Termination. At the time of grant of an
Option, or at any time while the Option is outstanding and the Option holder
continues to be eligible to receive Awards, Stock Appreciation Rights may be
granted to the holder with respect to some or all of the shares covered by the
Option. The only persons entitled to exercise such SARs shall be the holder of
the related Option or such holder's legal representative, and the expiration
date of such SARs shall be the same as that of the related Option. SARs shall
be exercisable if (and only if) and to the extent that the related Option is
then exercisable, except that SARs shall not be exercisable by a Section 16
Reporting Person at any time within six months after the date on which the
SARs were granted even if the related Option is then exercisable. Exercise of
SARs shall automatically terminate the related Option with respect to that
number of shares which equals the number of SARs being exercised, and
exercise, cancellation or termination of an Option shall automatically
terminate that number of related SARs which equals the number of shares with
respect to which the Option is being exercised, canceled or terminated.
(b) Exercise Procedures and Settlement Elections. Exercisable SARs may be
exercised at any time in accordance with such exercise procedures as are then
in effect. Except to the extent further restricted at the time of grant, at or
prior to exercise of SARs, the holder may elect to have the exercised SARs
settled (1) entirely in cash, (2) to the extent possible, in whole shares of
Company Stock and the balance in cash, or (3) partially in cash in an amount
specified by the holder and the balance in whole shares of Company Stock plus
cash in lieu of any fractional share. If no election is made, the SARs shall
be settled in any of the foregoing manners as the Committee shall determine.
For purposes of settlement, shares of Company Stock shall be valued as of the
settlement date.
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Section 8-Restricted Awards
(a) Restriction Period. At the time of grant of a Restricted Award, the
Committee shall establish a period of no less than twelve months with respect
to such Restricted Award, which period (the "restriction period") shall
commence as of the date of grant. The Committee may provide for the lapse of
such restriction period in installments.
(b) Vesting and Forfeiture. If the grantee of a Restricted Award remains
an Employee throughout the applicable restriction period, the entire
Restricted Award shall be fully vested and no longer subject to forfeiture as
of the end of the restriction period. If the grantee ceases to be an Employee
at any time during the restriction period due to death or Disability, that
percentage of the total number of Restricted Shares and/or Restricted Share
Units comprising such Award which equals the percentage of the entire
restriction period by then elapsed shall be vested, and the remainder of such
Award shall be forfeited, unless the Committee determines to waive such
forfeiture in whole or in part, in which event that portion of the Restricted
Award with respect to which the forfeiture has been waived shall be vested. If
the grantee otherwise ceases to be an Employee during the restriction period,
the Committee shall determine the disposition of the Award.
(c) Other Matters. Restricted Shares comprising a Restricted Award shall
be issued to the grantee as promptly as practicable after grant of the
Restricted Award, but the certificates representing such Restricted Shares
shall bear an appropriate legend and shall be held by the Company, and any and
all non-cash dividends or other distributions upon such Restricted Shares
shall be retained and held by the Company, pending vesting or forfeiture of
such Restricted Shares. Such retained non-cash dividends and other
distributions upon a Restricted Share thereafter shall be vested or forfeited,
as the case may be, upon the vesting or forfeiture of such Restricted Share
and, in the case of non-cash dividends and other distributions which vest,
shall be distributed to the holder of the Restricted Shares as promptly as
practicable after the vesting date. Subject to the Plan's limitations on
available shares, and except to the extent further limited by the Committee in
connection with a given Award of Restricted Share Units (which limitations may
be imposed by the Committee at the time of grant of the Award or at any other
time while the Award is unvested and the grantee is still an Employee), an
Award of Restricted Share Units which vests shall be settled in cash, whole
shares of Company Stock (valued at their Fair Market as of the settlement
date), or a combination thereof, as the Committee shall determine. The holder
of any Award of Restricted Share Units who is eligible to participate in a
Deferred Compensation Plan may make an advance election, in accordance with
the terms of such Deferred Compensation Plan, to defer settlement of any
portion of his or her Restricted Share Unit Award that thereafter becomes
payable in stock; otherwise, Restricted Share Units which vest shall be
settled in full as soon as practicable after the vesting date.
Section 9A-Performance Awards and Additional Shares in General
(a) Performance Period and Goals. At the time of grant of a Performance
Award, the Committee shall establish a period of not less than one year nor
more than five years with respect to such Performance Award, which period (the
"performance period") shall commence as of the first day of the Company fiscal
year in which such Award is granted, if it is granted during the first fiscal
quarter of such fiscal year, and otherwise shall commence as of the date of
grant. At the time of grant of the Performance Award, the Committee also shall
establish one or more business performance goals for the applicable
performance period and, if more than one has been established, the weight to
be given each such goal
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(collectively, "performance goals"). The performance goals initially
established with respect to a Performance Award may be modified and adjusted
during the performance period in light of previously unforeseen transactions,
events or circumstances occurring after the initial performance goals are
established.
(b) Vesting and Forfeiture. As soon as practicable following the end of
the performance period for a Performance Award, the Committee shall determine
the extent to which the performance goals for that Award were attained. If the
Committee determines that the performance goals have been fully attained, and
if the grantee of the Performance Award has remained an Employee throughout
the performance period and up to the first anniversary of the grant date
occurring after the end of the performance period (the "Grant Anniversary"),
the entire Performance Award shall, upon such determination, be fully vested
and no longer subject to forfeiture. If the grantee has remained an Employee
throughout the performance period and to the Grant Anniversary but the
Committee determines that the performance goals were only partially met, or
were not met, the Committee nevertheless may determine to permit vesting of
all or a portion of the Performance Award, whereupon such Award or portion
shall be vested, but any portion of the Award not so vested shall be
forfeited. If the grantee ceases to be an Employee at any time during the
performance period or through the Grant Anniversary, the consequences thereof
shall be the same, adjusted by a performance factor as determined by the
Committee, as if the Performance Award had been a Restricted Award and the
performance period a restriction period.
(c) Additional Shares. Following the end of the performance period, the
Committee may recommend a grant of Additional Shares to the grantee of a
Performance Award if the grantee is then an Employee and the Committee
determines that satisfaction of the performance goals for such Performance
Award so warrants. Additional Shares awarded to a grantee shall be immediately
vested and shall be issued to the grantee as soon as practicable after the
grant.
(d) Other Matters. The provisions of Section 8(c) of the Plan concerning
issuance of Restricted Shares, concerning retention of non-cash dividends and
other distributions thereon, and concerning subsequent vesting and
distribution, or forfeiture, of such non-cash dividends and other
distributions also shall apply to Performance Shares, and the provisions
thereof concerning settlement of Restricted Share Units also shall apply to
Performance Share Units. The Committee may make interim grants of Awards to
new participants in a fair and equitable manner.
Section 9B-Performance Awards to Senior Executive Officers
(a) Special Provisions Applicable. In order to facilitate exemption of
compensation paid in connection with Performance Awards to Senior Executive
Officers (as defined in Section 2(a) above) from the tax deduction limit
imposed by Section 162(m), the special provisions set forth in this Section 9B
shall apply to all such Awards, notwithstanding any other provision of the
Plan to the contrary. Except as superseded by this Section 9B, all provisions
of the Plan applicable to Performance Awards also shall apply to such Awards
granted to Senior Executive Officers.
(b) Timing of Grants. Performance Awards may be granted to Senior
Executive Officers only during the first quarter of the Company's fiscal year.
(c) Limits on Award Amounts. Subject to the general limits on Award
amounts set forth in Section 5 and the adjustment provisions of Section 13,
the maximum number of Performance Shares and/or Performance Share Units that
may be granted to any given Senior Executive Officer with respect to a single
performance period is 25,000.
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(d) Performance Objectives and Payout Schedules. At or prior to the grant
of any Performance Award to a Senior Executive Officer, the Committee shall
establish one or more objectively determinable performance goals for the Award
relating to one or more of the following areas of Company or other business
unit performance over the relevant performance period: earnings per share of
Company Stock; revenue growth; operating income; net income, before or after
taxes; operating cash flow; return on revenues, assets or equity; customer or
employee retention; or an index of customer satisfaction. At the same time,
the Committee shall establish a "payout" schedule for the Performance Award,
which shall range from 100 percent of the Performance Shares and/or
Performance Share Units constituting the Award (if actual Company results for
the performance period at least equal the performance goal(s) established) to
zero percent of such Award (if actual Company results for the period do not at
least equal a minimum amount or level specified by the Committee) and shall be
structured so as to permit objective determination of payouts over the full
range of actual Company results. In connection with establishment of the
performance goal(s) for a Performance Award to a Senior Executive Officer, the
Committee shall specify which (if any) types or categories of extraordinary,
unusual, non-recurring, or other items or events shall be excluded or
otherwise not taken into account when actual Company results relating to such
goal(s) are calculated, and the only adjustments in actual Company results
which thereafter shall be permissible for purposes of applying the established
payout schedule for the Performance Award shall be objectively determinable
adjustments for the items or events so specified.
(e) No Discretion to Increase Awards or Waive Forfeitures. In connection
with the grant of a Performance Award to a Senior Executive Officer, the
Committee may establish other preconditions to payout of the Award, including
preconditions the satisfaction of which may call for subjective determinations
by the Committee. In addition, the payout on any Performance Award granted to
a Senior Executive Officer as calculated pursuant to the payout schedule
established for the Award may be reduced by the Committee to the extent it
deems appropriate if, in the Committee's judgment, the individual performance
of the Senior Executive Officer during the performance period has not
warranted the payout so calculated. However, for so long as Section 162(m) may
require, in no event shall the payout on any Performance Award granted to a
Senior Executive Officer exceed the payout permissible under the Award's
payout schedule, and in no event shall any Additional Shares be granted to any
Senior Executive Officer.
(f) Effect of Employment Termination. If a Performance Award is granted
to a Senior Executive Officer and prior to the Grant Anniversary the grantee
ceases to be an Employee due to the grantee's Disability, that percentage of
the total number of Performance Shares and/or Performance Share Units
comprising such Award which equals the percentage of the entire performance
period by then elapsed shall be unaffected by the employment termination and
the unaffected portion of the Award subsequently shall vest or be forfeited or
canceled in accordance with the payout schedule, any preconditions, and the
provisions of the Plan applicable to the original Award. If, prior to the
Grant Anniversary, the grantee's employment terminates due to death, the
performance period for such grantee shall terminate at the end of the year in
which death occurs (but no later than the normal performance period). The
number of Performance Shares and/or Performance Share Units payable to the
grantee's estate or beneficiary shall be the maximum award payable, adjusted
by a performance factor (the percent of the award earned according to the
payout schedule calculated as of the end of the year in which death occurs),
times a time factor (a fraction, the numerator of which is the time elapsed
between the date of grant and the date of death and the denominator of which
is the number of days in the performance period). If the grantee of a
Performance Award otherwise ceases to be an Employee before the Grant
Anniversary, the Committee shall determine the disposition of the Award.
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(g) Stockholder Approval Requirements. Those aspects of the Plan
concerning Performance Awards to Senior Executive Officers for which
stockholder approval is required under Section 162(m) shall be disclosed to
and submitted for approval by the Company's stockholders at its 1996 annual
meeting, and any grants of Performance Awards to Senior Executive Officers
occurring prior to such meeting shall be subject to such approval and shall be
canceled and of no effect if such approval is not obtained. If such approval
is obtained, those aspects of the Plan concerning subsequent grants of
Performance Awards to Senior Executive Officers for which additional
stockholder approval may become required under Section 162(m) also shall be
disclosed to and submitted for approval by the Company's stockholders as and
to the extent so required. In no event may any Performance Award be granted to
a Senior Executive Officer unless, either any and all of such stockholder
approval requirements as Section 162(m) then would impose concerning the Award
already have been satisfied, or the Award is granted subject to such approval.
Section 10-Foreign Awards
The Committee may modify the terms of any type of Award described in
Section 6, 7, 8 or 9A of the Plan for grant to an Employee who is subject to
tax or similar laws of a country other than the United States and may grant
such modified Award, and structure and grant other types of awards related to
appreciation in value of Company Stock, to such an Employee, to the extent
that the Committee determines that doing so is necessary or advisable in order
to provide such grantee with benefits and incentives comparable (to the extent
practically possible) to those which would be provided the grantee by an Award
under Section 6, 7, 8 or 9A if the grantee were not subject to such foreign
laws.
Section 11-Certain Provisions Generally Applicable to Awards
(a) Award Agreements. Each Award granted under the Plan (other than any
award of Additional Shares and any similar Foreign Award unless the Committee
otherwise determines) shall be evidenced by a written agreement setting forth
(including, to the extent appropriate, by incorporating applicable provisions
of the Plan) the type, amount and other terms and conditions of such Award,
including, in addition to such terms and conditions as are expressly required
to be determined by the Committee, all such other terms and conditions not
inconsistent with the Plan as the Committee shall have specified with respect
to such Award.
(b) Transfer Restrictions; Potential Forfeiture. No Option or SAR, no
untested Performance Award or Restricted Award, no Foreign Award similar to
any of the foregoing, and none of the rights or privileges conferred by any
such Award may be sold, assigned, pledged, hypothecated or otherwise
transferred in any manner whatsoever, except that, if the Committee determines
that such transfer will not violate any requirements of the Securities and
Exchange Commission or the Internal Revenue Service, the Committee may permit
an intervivos transfer by gift to or for the benefit of a family member of the
grantee. Any attempt to sell, assign, pledge, hypothecate or otherwise
transfer any such Award or any of the rights and privileges conferred thereby
contrary to the provisions of the Plan shall be void and unenforceable against
the Company.
(c) Overriding Precondition; Potential Forfeiture. It shall be an
overriding precondition to the vesting of each Performance Award, Restricted
Award and similar Foreign Award and the exercisability of each Option, SAR and
similar Foreign Award: (1) that the grantee of such Award not engage in any
activity that, in the opinion of the Committee, is in competition with any
activity of the Company or any Affiliated Entity or otherwise inimical to the
best interests of the Company (except that employment with any entity at the
request of the Company and employment that has been specifically approved by
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<PAGE>
the Committee shall not be considered an activity in competition with or, in
itself, otherwise inimical to the Company or any Affiliated Entity) and (2)
that the grantee furnish the Committee with all such information confirming
satisfaction of the foregoing condition as the Committee shall reasonably
request. If the Committee makes a determination that a grantee, whether while
still an Employee or afterward, has engaged in any such competitive or
otherwise inimical activity, such determination shall operate to immediately
cancel all then outstanding Options, SARs and similar Foreign Awards, and as
an immediate forfeiture of all then unvested Restricted Awards, Performance
Awards and similar Foreign Awards, theretofore granted to the grantee.
(d) Tax Withholding. The Committee may make provision for withholding of
shares otherwise issuable upon the grant, exercise, vesting or settlement of
Awards, including by permitting grantees or other holders to request or to
elect such withholding and/or by permitting grantees or other holders to
tender other shares of Company Stock owned by such grantee or holder
(including Additional Shares, vested Performance Shares and vested Restricted
Shares), as a means of satisfying tax withholding obligations arising in
connection with the grant, exercise, vesting or settlement of Awards. If the
Committee determines to grant the right to make any such election to a grantee
or holder, the Committee may condition, limit or qualify such election right
in any manner it deems appropriate.
(e) Stockholder Status. Neither the grantee of an Award, nor any other
person to whom the Award or the grantee's rights thereunder may pass, shall
be, or have any rights or privileges of, a holder of shares of Company Stock,
in respect of any shares issuable pursuant to or in settlement of such Award,
unless and until certificates representing such shares have been issued in the
name of such grantee or other person.
Section 12-No Right to Employment or Award
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not confer upon any Employee a right with respect to
continued employment by the Company. Further, the Company and each Affiliated
Entity reaffirms its at-will employment relationship with its Employees and
expressly reserves the right at any time to dismiss a grantee free from any
liability or claim, except as provided under this Plan.
Section 13-Adjustments upon Changes in Capitalization
In the event of a reorganization or recapitalization, merger,
consolidation or similar transaction involving the Company, a stock-on-stock
dividend or split, spin-off, reverse split or combination of Company Stock, a
rights offering, or any other change in the corporate or capital structure of
the Company, the Board shall make such adjustments as it may deem appropriate
in the number and kind of shares available for issuance in the aggregate and
to any individual under and pursuant to the Plan (including in settlement of
ISOs), the number and kind of shares covered by outstanding Options and the
per share exercise price of such Options, the numbers of outstanding SARs and
Share Units and the terms of Foreign Awards. Any adjustment with respect to an
ISO in connection with a transaction to which Section 424(a) of the Code (or
any successor provisions then in effect) applies shall be made in accordance
therewith unless the Board specifically determines otherwise.
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Section 14-Duration, Amendment, Suspension and Termination
The Plan shall become effective upon approval by the stockholders of the
Company entitled to vote thereon, as provided in the Board resolutions
adopting the Plan, and shall continue thereafter until terminated by the Board
as hereinafter provided. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, but no such Board action shall adversely
affect the rights of any grantee or other holder of any Award then outstanding
or unvested without the consent of such grantee or holder.
Adopted by the Board of Directors of the Company: March 29,1996.
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<PAGE>
[ Form of Proxy -- Front ]
<TABLE>
<S> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE With- For All
For hold Except For Against Abstain
1.) Election of Directors. / / / / / / 2.) Approve amendment to Certificate of / / / / / /
Incorporation to increase the size
W. R. Kelly of the Board of Directors.
and B. J. White
3.) Approve Amended and Restated Performance / / / / / /
Incentive Plan including performance-based
NOTE: If you do not wish your shares voted "FOR" criteria for Performance Awards under the
a particular Nominee, mark the "For All Except" Plan.
box and strike a line through that particular
nominees name. Your shares will be voted for the 4.) Ratify the appointment of Price Warehouse / / / / / /
remaining nominees. LLP as independent accountants.
5.) In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting.
Mark box at right if you wish only one Annual Report to be / /
mailed to your household.
Please be sure to sign and date this Proxy.
Date _________ Mark box at right if comments or address change have been noted / /
on the reverse side of this card.
______________________ _______________________
Stockholder sign here Co-owner sign here RECORD DATE SHARES:
</TABLE>
<PAGE>
[ Form of Proxy -- Back ]
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 21, 1996
The undersigned hereby appoints as Proxies, William R. Kelly, Terence E.
Adderley, and Eugene L. Hartwig, 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, 1996 at the Annual Meeting of Stockholders to be held on May 21, 1996
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, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF
AMERICA.
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Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, the
signature should be that of an authorized officer who should state his or
her title.
- --------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_______________________________ _______________________________
_______________________________ _______________________________
_______________________________ _______________________________
