KELLY SERVICES INCKELYA
KELLY SERVICES INC Stock Compensation Disclosure
14. Stock-Based Compensation
On May 8, 2025 (the “Effective Date”), the Company’s stockholders approved the Kelly Services, Inc. 2025 Equity Incentive Plan (the “EIP”). Upon approval of the EIP, the Company’s Equity Incentive Plan, as amended and restated February 15, 2017, (the “Prior Plan”) terminated in its entirety and no further awards may be granted under the Prior Plan. All outstanding awards under the Prior Plan as of the Effective Date, shall remain outstanding and shall be administered and settled in accordance with their terms and the provisions of the Prior Plan. Under the EIP, the Company may grant key employees restricted stock and performance awards associated with the Company’s Class A stock. The EIP provides that the maximum number of shares available for grants is 4.0 million, plus 0.8 million shares that were available to be granted under the Prior Plan immediately prior to the Effective Date. Shares available for future grants at year-end 2025 are 4.6 million. The Company issues shares out of treasury stock to satisfy stock-based awards, if available; otherwise new shares of common stock are issued from authorized shares. The Company presently has no intent to repurchase additional shares for the purpose of satisfying stock-based awards.
The Company recognized stock-based compensation cost of $12.3 million in 2025, $11.8 million in 2024 and $9.7 million in 2023, as well as related tax benefits of $2.0 million in 2025, $2.6 million in 2024 and $1.7 million in 2023.
Restricted Stock
Restricted stock, which typically vests pro-rata over three years, is issued to certain key employees and is subject to forfeiture until the end of an established restriction period. The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.
A summary of the status of nonvested restricted stock as of year-end 2025 and changes during this period is presented as follows below (in thousands of shares except per share data):
| Restricted Stock | ||||||||
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Nonvested at year-end 2024 | 1,061 | $ | 19.79 | |||||
| Granted | 980 | 13.50 | ||||||
| Vested | (477) | 19.62 | ||||||
| Forfeited | (235) | 16.94 | ||||||
| Nonvested at year-end 2025 | 1,329 | $ | 15.72 | |||||
As of year-end 2025, unrecognized compensation cost related to unvested restricted stock totaled $14.1 million. The weighted average period over which this cost is expected to be recognized is approximately 1.5 years. The weighted average grant date fair value per share of restricted stock granted during 2025, 2024 and 2023 was $13.50, $20.70 and $17.33, respectively. The
total fair value of restricted stock, which vested during 2025, 2024 and 2023, was $6.4 million, $6.5 million and $3.3 million, respectively.
Performance Shares
During 2025, 2024 and 2023, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers, which are contingent upon achievement of specific revenue growth and EBITDA margin performance goals over a stated period of time (“performance awards”). The maximum number of performance shares that may be earned is 200% of the target shares originally granted. These awards have three one-year performance periods with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods. Earned shares during each performance period will cliff vest in February subsequent to the third performance period, after approval of the financial results by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares.
On February 10, 2026, the Compensation Committee approved the actual performance achievement of 54% of target for the 2025 performance period of the annual 2025, 2024 and 2023 annual grants. All of the shares earned for the 2025 performance period will cliff vest in February 2028, 2027 and 2026, respectively, if not forfeited by the recipient.
The 2025, 2024 and 2023 performance awards have a weighted average grant date fair value of $12.59, $17.60 and $16.20, respectively, which was determined by the market price on the date of grant less the present value of the expected dividends not received during the vesting period.
The total nonvested shares related to 2025, 2024 and 2023 performance awards at year-end 2025 is 262,000, 157,000 and 198,000, respectively.
A summary of the status of nonvested performance shares at target as of year-end 2025 and changes during this period is presented as follows below (in thousands of shares except per share data). The vesting adjustment in the table below represents a portion of the 2022 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.
| Performance Shares | ||||||||
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Nonvested at year-end 2024 | 568 | $ | 18.66 | |||||
| Granted | 291 | 12.59 | ||||||
| Vested | (162) | 20.18 | ||||||
| Forfeited | (53) | 14.64 | ||||||
| Vesting Adjustment | (28) | 15.48 | ||||||
| Nonvested at year-end 2025 | 616 | $ | 15.00 | |||||
As of year-end 2025, unrecognized compensation cost related to all unvested performance shares totaled $3.2 million. The weighted average period over which the costs are expected to be recognized is approximately 1.3 years for performance shares. The total fair value of performance shares, which vested during 2025, 2024 and 2023, was $1.8 million, $2.6 million and $3.4 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 20, 2024 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.