¨ | Preliminary Proxy Statement | |
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2020 | Proxy Statement |
1. | Elect two Class II directors to hold office for a three-year term expiring in 2023; |
2. | Ratify the appointment of Deloitte & Touche LLP as Kforce’s independent registered public accountants for 2020; |
3. | Conduct an advisory vote on executive compensation; |
4. | Approve the Kforce Inc. 2020 Stock Incentive Plan; and |
5. | Attend to other business properly presented at the meeting. |
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on April 28, 2020. This proxy statement and our 2019 Annual Report to Shareholders are available at http://investor.kforce.com/investor-relations/financial-information/annual-reports-and-proxy. |
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David L. Dunkel Chairman and Chief Executive Officer | Ralph E. Struzziero Lead Independent Director |
Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | Independent | Audit Comm | Comp. Comm | Nomin. Comm | Corp. Gov. Comm | Exec. Comm | |
Directors with Terms Expiring at the Annual Meeting and/or Nominees | ||||||||||||
Ann E. Dunwoody | II | 67 | Director | 2016 | 2020 | 2023 | ü | ![]() | ![]() | |||
N. John Simmons (1) | III | 64 | Director | 2014 | 2021 | 2023 | ü | ![]() ![]() | ![]() | |||
Continuing Directors | ||||||||||||
David L. Dunkel | III | 66 | Chairman, CEO Director | 1994 | 2021 | N/A | ![]() | |||||
Mark F. Furlong | III | 62 | Director | 2001 | 2021 | N/A | ü | ![]() ![]() | ![]() | ![]() | ||
Randall A. Mehl | I | 52 | Director | 2017 | 2022 | N/A | ü | ![]() ![]() | ![]() | |||
Elaine D. Rosen | I | 67 | Director | 2003 | 2022 | N/A | ü | ![]() | ![]() | ![]() | ||
Ralph E. Struzziero | I | 75 | Director | 2000 | 2022 | N/A | þ | ![]() | ![]() | |||
Non-Continuing Directors (1) | ||||||||||||
John N. Allred | II | 73 | Director | 1998 | 2020 | N/A | ü | ![]() | ![]() | ![]() | ||
Richard M. Cocchiaro | II | 65 | Director | 1994 | 2020 | N/A | ![]() | |||||
A. Gordon Tunstall | II | 76 | Director | 1995 | 2020 | N/A | ü | ![]() | ![]() | ![]() | ![]() |
Legend: | þ | Lead Independent Director | ![]() | Chair | ![]() | Member | ![]() | Financial Expert |
Ann E. Dunwoody | |||
![]() | General (Ret.) Dunwoody was the first woman in U.S. military history to achieve the rank of four-star general. From 2008 until her retirement in 2012, she led and ran the largest global logistics command in the Army comprising 69,000 military and civilian individuals, located in all 50 states and over 140 countries with a budget of $60 billion dollars. General (Ret.) Dunwoody served on the Board of Directors of Republic Services Inc., and L-3 Communications. She currently serves on the Board for Logistics Management Institute, Fidelity Fixed Income Asset Allocation (FIAA) Board of Trustees, and Automattic. She also serves on the Council of Trustees for the Association of the United States Army and the Board of Trustees for the Florida Institute of Technology and she is the president of First 2 Four LLC, a leadership mentoring and strategic advisory services company. She authored “A Higher Standard: Leadership Strategies from the First Female Four Star General”, is a recipient of The Ellis Island Medal of Honor and was West Point’s US Military Academy 2019 recipient of the Thayer Award. General (Ret.) Dunwoody brings to the Board extensive military and management experience, including managing a significant portion of the United States Army’s budget as Commanding General, U.S. Army Materiel Command. General (Ret.) Dunwoody is also certified as an NACD Governance Fellow. She has also served as a member of the Board of Directors on other publicly traded companies and is engaged in numerous charitable and civic activities, which the Board believes allows her to provide valuable and varied perspective. | ||
Director since 2016 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Nomination and Corporate Governance | |
Age | 67 |
N. John Simmons | |||
![]() | Mr. Simmons is the Chief Operating Officer and Chief Financial Officer of DeMert Brands, Inc., a designer, manufacturer and distributor of haircare products. He previously served as the Chief Executive Officer of Growth Advisors, LLC, a provider of C-level advisory services to high-growth companies. He has served on various boards of directors, including Bonds.com Group, Inc. from 2013 to 2014, Loyola University New Orleans Board of Trustees from 2009 to 2015, during which he was Chairman of the Audit Committee and an Executive Committee member; Lifestyle Family Fitness, Inc. from 2001 to 2012; Technology Research Corporation as Chairman of the Compensation Committee from 2010 to 2011 and as Lead Director and Chairman of the Governance and Nominating Committee from 2009 to 2010; Medquist, Inc. as Chairman of the Audit Committee from 2005 to 2007; and SRI Surgical Express, Inc. as Lead Director, then Chairman of the Board from 2001 to 2008. He served as the CEO and President of Lifestyle Family Fitness, Inc. from 2008 to 2012. Mr. Simmons’ prior experience also includes service as President of New Homes Realty, a Florida-based residential real estate company operating in 35 states for two years, President of Quantum Capital Partners, a privately held venture capital firm for 14 years, Vice President and Controller for Eckerd Corporation for three years, Chief Financial Officer of Checkers Drive-In Restaurants for two years and as an audit partner with KPMG Peat Marwick. Mr. Simmons is an Audit Committee financial expert; he has extensive financial, accounting, management and director experience in several different industries. As a result, the Board believes that he brings valuable insight due to his extensive and varied experiences as a chief executive officer, chief financial officer, audit partner and director. | ||
Director since 2014 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Audit and Corporate Governance | |
Age | 64 |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1. |
David L. Dunkel | |||
![]() | Mr. Dunkel has served as Kforce’s Chairman, Chief Executive Officer and a director since the Firm’s incorporation in 1994 and possesses a deep and unique understanding of the Firm’s business and operations. The Board believes that this experience, coupled with his extensive knowledge of the staffing industry, provides strong, consistent leadership and allows him to serve as a highly effective bridge between the Board and management. In addition, in his capacity as CEO, Mr. Dunkel frequently meets with shareholders, clients and other Firm stakeholders to communicate our business and strategy and to understand their various perspectives and insights, which he is then able to relay to the full Board for consideration and assessment. | ||
Director since 1994 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Executive (Chair) | |
Age | 66 |
Mark F. Furlong | |||
![]() | Mr. Furlong has served as a director of Heska Corporation, a provider of advanced veterinary diagnostic and specialty products, since March 2019 and of Boston Private Financial Holdings, Inc., a provider of wealth management, trust and private banking services, since September 2016; he has also served as a director of Antares Capital, a provider of financing solutions for middle market, private equity-backed transactions, since December 2015. He served as the President and Chief Executive Officer of BMO Harris Bank, N.A. from July 2011 to June 2015. Mr. Furlong served as a director of BMO Harris Bank, N.A. and BMO Financial Corporation from July 2011 to June 2015. Prior to its acquisition by BMO Harris Bank, N.A. in 2011, he served as Chairman of Marshall & Ilsley Corporation from October 2010, Chief Executive Officer from April 2007 and as President from July 2004. He also served as Chief Financial Officer of Marshall & Ilsley Corporation from April 2001 to October 2004. Mr. Furlong’s prior experience also includes service as an audit partner with Deloitte & Touche LLP. Mr. Furlong is an Audit Committee financial expert. Kforce believes his considerable expertise, including his experience as President and Chief Executive Officer of BMO Harris Bank, N.A., the former Chairman, President and Chief Executive Officer of Marshall & Ilsley Corporation and a former audit partner with Deloitte & Touche LLP, brings unique insight to the Board concerning capital allocation strategies and banking issues, in addition to his overall management and financial expertise. | ||
Director since 2001 | Other Current Public Company Board(s): Boston Private Financial Holdings, Inc. (NASDAQ: BPFH); Heska Corporation (NASDAQ: HSKA) | Kforce Board Committee(s): Audit (Chair); Compensation; and Corporate Governance | |
Age | 62 |
Randall A. Mehl | |||
![]() | Mr. Mehl is President and Chief Investment Officer of Stewardship Capital Advisors, LLC, which manages an equity fund focused on making investments in business and technology services. He also currently serves on the Board of Directors of two public companies, Insperity, Inc. and ICF International, Inc., as well as Stowell Associates Inc., a privately held home care agency. He previously served as a Managing Director and a partner with Baird Capital, a middle market private equity group, leading a team focused on the business and technology services sector from 2005 to 2016. From 1996 to 2005, Mr. Mehl was a senior equity research analyst with Robert W. Baird & Company, covering various areas within the broader business and technology services sector, including staffing. Mr. Mehl is an Audit Committee financial expert. Mr. Mehl has also previously served on various boards of directors, including Workforce Insight LLC, Myelin Communications, Vitalyst LLC, MedData, LLC, now a subsidiary of MEDNAX, American Auto Auction, LLC, Accume Partners, Inc, and Harris Research Inc. Mr. Mehl has previously served on the investment committee for several funds, and has expertise analyzing, acquiring and selling businesses. | ||
Director since 2017 | Other Current Public Company Board(s): ICF International, Inc. (NASDAQ: ICFI); Insperity, Inc. (NYSE: NSP) | Kforce Board Committee(s): Audit and Corporate Governance | |
Age | 52 |
Elaine D. Rosen | |||
![]() | Ms. Rosen has served as a director of Assurant, Inc., a provider of specialized insurance and insurance-related products and services since March 2009 and became the non-executive Chair of the Board in November 2010. Ms. Rosen has also served as the Chair of the Board of The Kresge Foundation since January 2007. Ms. Rosen serves as trustee or director of several non-profit organizations, is a past Chair of the Board of Preble Street, a homeless collaborative in Portland, Maine, and has served as a trustee of the Foundation for Maine’s Community Colleges since 2008. Ms. Rosen was a director of the Elmina B. Sewall Foundation from 2008 to 2012 and Downeast Energy Corp., a privately-held company that provides heating products and building supplies, from 2003 until its sale in April 2012. From 1975 to March 2001, Ms. Rosen held a number of positions with Unum Life Insurance Company of America, including President. Ms. Rosen has extensive experience as a senior executive in the insurance industry and as a director of several companies, as well as substantial experience with charitable organizations, particularly as the Chair of one of the largest private foundations in the country. With her background and experience as Chair of the Compensation Committee of Kforce; on the Board of Assurant, Inc., where she currently serves as the non-executive Chair and serves on the compensation committee, she has considerable expertise in, among other things, executive compensation, which is a subject matter that is undergoing dynamic change. | ||
Director since 2003 | Other Current Public Company Board(s): Assurant, Inc. (NYSE: AIZ) | Kforce Board Committee(s): Compensation (Chair); Nomination; and Corporate Governance | |
Age | 67 |
Ralph E. Struzziero | |||
![]() | Since 1995, Mr. Struzziero has operated an independent business consulting practice, providing interim executive-level advisory and professional services to a variety of organizations. In addition, he served as an adjunct professor at the University of Southern Maine from 1997 to 2006. Mr. Struzziero previously served as Chairman (1990-1994) and President (1980-1994) of Romac & Associates, Inc., one of Kforce’s predecessors. Mr. Struzziero is also currently a director of Automobile Club of Southern California, a travel club and property and casualty insurer in California, AAA of Northern New England, a travel club serving Maine, New Hampshire and Vermont, and Auto Club Enterprise, a holding company of these two companies. Mr. Struzziero previously served on the Board of Directors of Prism Medical Ltd., a publicly traded corporation on the TSX Venture Exchange in Canada and manufacturer and distributor of moving and handling equipment for the mobility challenged, from July 2011 until its sale in August 2016, and Downeast Energy Corp., a privately-held company that provides heating products and building supplies, from January 2001 until its sale in April 2012. Mr. Struzziero has extensive experience in the staffing industry. The Board believes this gives Mr. Struzziero, in his capacity as Lead Independent Director, a unique insight among the non-employee directors relating to Kforce’s business and operations. | ||
Director since 2000 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Compensation; and Corporate Governance (Chair) | |
Age | 75 |
John N. Allred | |||
![]() | Mr. Allred has served as President of A.R.G., Inc., a provider of temporary and permanent physicians located in the Kansas City area since January 1994. He was a director at Source Services Corporation (Source) prior to its merger with Kforce in 1998 and served in various capacities with Source from 1976 to 1993 including Vice President (1987-1993), Regional Vice President (1983-1987) and Kansas City Branch Manager (1976-1983). | ||
Director since 1998 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Audit; Nomination (Chair); and Corporate Governance | |
Age | 73 |
Richard M. Cocchiaro | |||
![]() | Mr. Cocchiaro served as a Vice Chairman of Kforce from 2004 through his retirement in January 2016, during which time he oversaw Customer First, our customer loyalty program, and served on both Kforce’s internal executive committee and innovation council. Previously, Mr. Cocchiaro served as Vice President of Strategic Accounts for Kforce (2000–2004), Vice President of Strategic Alliances for Kforce.com Interactive (1999) and National Director of Strategic Solutions within Kforce’s emerging technologies group (1994-1999). | ||
Director since 1994 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Executive | |
Age | 65 |
A. Gordon Tunstall | |||
![]() | Mr. Tunstall is the founder, and for more than 30 years has served as President, of Tunstall Consulting, Inc., a provider of strategic consulting and financial planning services. He has also served as a director of Tabula Rasa Healthcare, Inc., a medication risk management and distribution pharmacy, since March 2012. Mr. Tunstall previously served as a director for JLM Industries, Inc., Orthodontics Center of America, Inc., Discount Auto Parts, Inc., Advanced Lighting Technologies Inc., Health Insurance Innovations, Horizon Medical Products Inc., and L.A.T. Sportswear. | ||
Director since 1995 | Other Current Public Company Board(s): None | Kforce Board Committee(s): Nomination; Corporate Governance; and Executive | |
Age | 76 |
• | oversee management performance on behalf of our shareholders; |
• | advocate on behalf of the long-term interests of our shareholders; |
• | discuss and consider the Firm’s strategic planning and executive succession activities; |
• | review and approve the Firm’s long-term strategic plan developed by management; |
• | be actively involved in the oversight of risk that could affect Kforce; |
• | promote the exercise of sound corporate governance; and |
• | carry out other duties and responsibilities as may be required by state and federal laws, as well as the NASDAQ rules. |
• | an executive summary that includes, among other items, a risk factors section; |
• | Kforce’s financial and operational performance, including progress against its objectives; |
• | an update on our continued innovation (both technological and process) efforts; |
• | management’s assessment of the current state of the capital markets and macro-economic environment; |
• | management’s analysis on the current state of the staffing industry and corporate development activities; |
• | a claims, litigation and ethics hotline summary; |
• | a report on the Firm’s Enterprise Risk Management (ERM) program; and |
• | reports on other matters that may arise from time to time, that require reporting to the Board. |
• | a description of certain significant events and risk factors, if any, that have occurred in each period; |
• | a financial update from management, including operating trends against expectations; and |
• | any other necessary items requiring the attention of the Board. |
Audit Committee | |
Members: | Roles and Responsibilities of the Committee: |
Mark F. Furlong (Chair) | The Audit Committee oversees the accounting and financial reporting processes of the Firm and the audits of the Firm’s financial statements. In discharging this oversight role, the Audit Committee is empowered to investigate any matter brought to its attention, with full access to all books, records, facilities and personnel of Kforce, and the power to retain outside counsel or other experts. This committee also has the responsibility for selecting, evaluating, compensating, and monitoring the independence and performance of the Firm’s independent auditors, reviewing and approving related party transactions and overseeing the Firm’s internal audit function and ERM program, including cybersecurity risk assessment. At each quarterly meeting, or more frequently as needed, the members of the Audit Committee meet in executive session. The Audit Committee also meets regularly in separate executive sessions with the Firm’s Vice President of Internal Audit, General Counsel, and Deloitte & Touche LLP, our independent registered public accountants. The Board has determined that Messrs. Furlong, Mehl and Simmons are considered an “audit committee financial expert,” as defined by SEC Rules. |
John N. Allred | |
Randall A. Mehl | |
N. John Simmons | |
Number of Meetings: | |
5 |
Compensation Committee | |
Members: | Roles and Responsibilities of the Committee: |
Elaine D. Rosen (Chair) | The Compensation Committee is responsible for development of the compensation principles to guide the design of the Firm’s executive compensation program. It is also responsible for reviewing and approving the executive compensation and benefits policies and practices of the Firm, approving any new or amended employment agreements for executive management including grants or awards to executive management under the Firm’s long-term incentive program and preparing an annual report on the Firm’s executive compensation policies and practices as required by SEC Rules. In the discharge of its duties, the Compensation Committee also has the authority to select and utilize a compensation consultant to assist in the evaluation of director and executive officer compensation. |
Mark F. Furlong | |
Ralph E. Struzziero | |
Number of Meetings: | |
6 |
Nomination Committee | |
Members: | Roles and Responsibilities of the Committee: |
John N. Allred (Chair) | The Nomination Committee is responsible for providing assistance to the Board in the selection of director candidates for election. In addition to identifying and recommending candidates for election to the Board, this committee also makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the nomination process and recommends candidates for election to our Board. The Nomination Committee has the authority to retain a search firm to be used to identify director candidates and to approve the search firm’s fees and other retention terms. The Nomination Committee has not established “minimum qualifications” for director nominees because it is the view of this committee that the establishment of rigid “minimum qualifications” might preclude the consideration of otherwise desirable candidates for election to the Board. The Nomination Committee will consider director candidates recommended by shareholders. Refer to the section titled “Shareholder Communications, Proposals and Other Matters” below. |
Ann E. Dunwoody | |
Elaine D. Rosen | |
A. Gordon Tunstall | |
Number of Meetings: | |
4 |
Corporate Governance Committee | |
Members: | Roles and Responsibilities of the Committee: |
Ralph E. Struzziero (Chair) | The functions of the Corporate Governance Committee are to: encourage and enhance communication among independent directors; provide a forum for independent directors to meet separately from management; provide leadership and oversight related to ethical standards; and provide a channel for communication with the CEO. The Corporate Governance Committee also coordinates a formal, written annual evaluation of the performance of the Board and each of its committees. Each member of the Board who is independent, within the meaning of these rules, serves on the Corporate Governance Committee. This committee is designed to fulfill the requirements of NASDAQ Rule 5605(b)(2) (i.e., through the meetings of this committee, our “independent” directors (as determined under the NASDAQ Rules) meet at least once annually in executive session without any of our management present). The Firm’s Lead Independent Director serves as the Chair of the Corporate Governance Committee. |
John N. Allred | |
Ann E. Dunwoody | |
Mark F. Furlong | |
Randall A. Mehl | |
Elaine D. Rosen | |
N. John Simmons | |
A. Gordon Tunstall | |
Number of Meetings: | |
4 |
Executive Committee | |
Members: | Roles and Responsibilities of the Committee: |
David L. Dunkel (Chair) | The Executive Committee has the authority to act in place of the Board on all matters that would otherwise come before the Board, except for such matters that are required by law or by our Articles of Incorporation or Bylaws to be acted upon exclusively by the Board. |
Richard M. Cocchiaro | |
A. Gordon Tunstall | |
Number of Meetings: | |
None |
Audit | Compensation | Nomination | Corporate Governance | ||||
l | Responsible for the Firm’s risk assessment and ERM program | l | Oversees executive compensation plan design and approval risk | l | Oversees Board refreshment activities including director succession risk | l | Leadership and oversight of ethical standards |
l | Monitors risk relating to the Firm’s financial statements, systems, reporting process and compliance | l | Responsible for preparation and required disclosures regarding compensation practices | l | Establishes procedures for the Board’s nomination process | l | Provides a forum for the Board’s independent directors to meet separately from management |
l | Reviews and approves related party transactions and relationships involving directors and executive officers | l | Responsible for review of the executive compensation and benefits policies and practices of the Firm, including determining whether such policies and practices are reasonably likely to have a material adverse effect on the Firm | l | Recommends candidates for election to the Board | l | Reviews and recommends to the Board any changes to the corporate governance guidelines |
l | Monitors and receives reports on the Firm’s cybersecurity risks and incidents | l | Oversees the evaluation of the Board’s performance and sufficiency of its activities |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | Unvested Restricted Stock (4) | Deferred Restricted Stock Units (4) | ||||||||||
John N. Allred (5) | $ | 107,000 | $ | 100,001 | $ | 2,124 | $ | 209,125 | 2,743 | — | ||||||
Richard M. Cocchiaro (5) | $ | 50,000 | $ | 100,001 | $ | 7,478 | $ | 157,479 | 2,743 | 8,505 | ||||||
Ann E. Dunwoody | $ | 77,000 | $ | 100,001 | $ | 4,993 | $ | 181,994 | 2,743 | 3,846 | ||||||
Mark F. Furlong | $ | 107,000 | $ | 100,001 | $ | 2,124 | $ | 209,125 | 2,743 | — | ||||||
Randall A. Mehl | $ | 77,000 | $ | 100,001 | $ | 4,181 | $ | 181,182 | 2,743 | 3,846 | ||||||
Elaine D. Rosen | $ | 107,000 | $ | 100,001 | $ | 11,519 | $ | 218,520 | 2,743 | 14,197 | ||||||
N. John Simmons | $ | 77,000 | $ | 100,001 | $ | 2,124 | $ | 179,125 | 2,743 | — | ||||||
Ralph E. Struzziero | $ | 92,000 | $ | 100,001 | $ | 11,519 | $ | 203,520 | 2,743 | 14,197 | ||||||
A. Gordon Tunstall (5) | $ | 77,000 | $ | 100,001 | $ | 2,124 | $ | 179,125 | 2,743 | — | ||||||
Former Director - Term Expired at the 2019 Annual Meeting | ||||||||||||||||
Howard W. Sutter (6) | $ | — | $ | — | $ | 582,335 | $ | 582,335 | — | — |
(1) | Fees earned or paid in cash consisted of: (a) annual retainer for each director of $30,000; (b) annual retainers for each committee chairperson of $15,000; (c) quarterly fees for each quarter of board service of $5,000; and (d) quarterly fees for each quarter of committee service of $3,750 for each of the Audit Committee, Compensation Committee and Nomination Committee and $3,000 for the Corporate Governance Committee. |
(2) | The amounts in this column represent the aggregate grant date fair value in accordance with FASB ASC 718. The amounts for all directors reflect a grant of 2,702 shares of restricted stock with a closing stock price on the April 26, 2019 grant date of $37.01. |
(3) | The amounts reported in this column for all directors, except Mr. Sutter, represent the dollar value of dividend equivalents credited on unvested restricted stock and deferred restricted stock units in the form of additional restricted stock. |
(4) | The beneficial ownership of common shares as of the Record Date for each of our directors is presented below under the heading of “Security Ownership of Certain Beneficial Owners and Management.” |
(5) | On January 30, 2020, John N. Allred, Richard M. Cocchiaro and A. Gordon Tunstall each informed Kforce that due to his long tenure as a member of the Board and consistent with the Board’s refreshment initiatives, they would not stand for re-election as a Class II director at the Annual Meeting. |
(6) | For Mr. Sutter, this compensation includes his employment compensation through his retirement date on August 23, 2019. This amount consisted of: $197,850 in salary; $375,000 in bonus; $8,046 for a retirement gift and related tax gross-up; and $1,439 in dividend equivalents credited on unvested restricted stock (which were subsequently forfeited as they were not vested as of August 23, 2019). Mr. Sutter was not compensated for his service on the Board. |
David L. Dunkel | Age: | 66 | |
Chairman and Chief Executive Officer | Mr. Dunkel has served as Kforce’s Chairman, Chief Executive Officer and a director since its incorporation in 1994. He previously served as President and Chief Executive Officer of Romac-FMA, one of Kforce’s predecessors, for 14 years. | ||
Michael R. Blackman | Age: | 65 | |
Chief Corporate Development Officer | Mr. Blackman has served as Kforce’s Chief Corporate Development Officer since December 2009, prior to which he served as the Firm’s Senior Vice President of Investor Relations from 1999 to 2009 and Director of Selection and Senior Consultant in the healthcare services specialty from 1992 to 1999. | ||
Jeffrey B. Hackman | Age: | 41 | |
Senior Vice President, Finance and Accounting | Mr. Hackman has served as Kforce’s Principal Accounting Officer since October 2015 and as Senior Vice President of Finance and Accounting since March 2015. He is responsible for overseeing Kforce's finance, accounting, SEC reporting, tax, treasury, procurement and real estate functions in addition to investor relations and mergers and acquisitions. He previously served as the Firm’s Chief Accounting Officer and Principal Accounting Officer from February 2009 until September 2013 and as Kforce’s SEC Reporting Director from September 2007 to February 2009. Mr. Hackman served as the Global Chief Accounting Officer of Cunningham Lindsey from September 2013 until he rejoined Kforce in March 2015. Prior to 2007, he was an Audit Senior Manager with Grant Thornton LLP. | ||
David M. Kelly | Age: | 54 | |
Chief Financial Officer | Mr. Kelly has served as Kforce’s Chief Financial Officer since January 2013 and Corporate Secretary since February 2013. Mr. Kelly joined Kforce in 2000 and has served as Senior Vice President of Finance and Accounting from February 2009 to December 2012, Corporate Assistant Secretary from October 2010 to February 2013, Vice President of Finance from January 2005 to February 2009, Chief Accounting Officer from November 2000 to January 2005 and Group Financial Officer from January 2000 to November 2000. Before joining Kforce, Mr. Kelly served in various roles with different companies that included treasury director, vice president, and controller. | ||
Joseph J. Liberatore | Age: | 56 | |
President | Mr. Liberatore has served as Kforce’s President since January 2013. He previously served as Corporate Secretary from February 2007 to February 2013, Chief Financial Officer from October 2004 to December 2012, Executive Vice President from July 2008 to December 2012, Senior Vice President from 2000 to July 2008, Chief Talent Officer from 2001 to 2004 and Chief Sales Officer from September 2000 to August 2001. Mr. Liberatore has served in various other roles in Kforce (and its predecessors) since he joined the Firm in 1988. | ||
Kye L. Mitchell | Age: | 50 | |
Chief Operations Officer | Ms. Mitchell has served as Kforce’s Chief Operations Officer since March 2016. Before her appointment as Chief Operations Officer, Ms. Mitchell served as Chief Operations Officer for the East Region from January 2013 to March 2016, Field President from January 2009 through December 2012, Market President from February 2006 to December 2008, and Market Vice President from February 2005 through January 2006. Ms. Mitchell joined Kforce in 2005 when Kforce acquired VistaRMS where she served as President. | ||
Andrew G. Thomas | Age: | 53 | |
Chief Marketing Officer | Mr. Thomas has served as Kforce’s Chief Marketing Officer since July 2018. In his current role, he leads the Firm’s marketing, digital strategy, training and development, human resources, compensation and benefits organizations. Prior to this role, Mr. Thomas was the Firm’s Chief Field Services officer from December 2013 to July 2018. He has also served as the Executive Director of Kforce’s Finance and Accounting product offering where he oversaw strategy, operating model and critical activities, as well as various other roles in Kforce since he joined the Firm in 1997. |
Fee Type | 2019 | 2018 | |||||
Audit Fees (1) | $ | 986,137 | $ | 879,827 | |||
Audit-Related Fees (2) | $ | — | $ | 11,500 | |||
Tax Fees (3) | $ | 56,847 | $ | 35,467 | |||
All Other Fees (4) | $ | 1,895 | $ | 1,895 |
(1) | Relates to the annual audit of our financial statements and internal control over financial reporting, the review of our quarterly financial statements and audit services provided in connection with other statutory and regulatory filings. |
(2) | Relates to assurance and related services that are reasonably related to the performance of the audit or review of our financial statements or other filings. |
(3) | Relates to tax advice, tax planning and tax consultation primarily for the divestiture of our Government Solutions (“GS”) segment. |
(4) | Relates to an annual subscription to a Deloitte & Touche LLP research database. |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2. |
1. | The Audit Committee has reviewed and discussed the audited consolidated financial statements with Kforce Inc.’s management; |
2. | The Audit Committee has discussed with the independent auditors the matters required to be discussed by PCAOB Standard No. 1301 (Communications with Audit Committees) and the SEC; |
3. | The Audit Committee has received the written disclosures and the letter from the independent auditors required by the applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit committee concerning independence, and has discussed with the independent auditors the independent auditors’ independence; and |
4. | Based on the review and discussion referred to in the above paragraphs, the Audit Committee recommended to the Board that the audited financial statements be included in Kforce Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC. The Audit Committee has also selected Deloitte & Touche LLP, subject to ratification by shareholders, to audit our consolidated financial statements for the year ending December 31, 2020, and to provide review services for each of the quarters in the year ending December 31, 2020. |
Compensation Committee Report The Compensation Committee of Kforce (the Committee) has reviewed and discussed the Compensation Discussion and Analysis (CD&A) required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated into Kforce’s Annual Report on Form 10-K for the year ended December 31, 2019. Submitted by the Compensation Committee Elaine D. Rosen (Chair) ¦ Mark F. Furlong ¦ Ralph E. Struzziero |
• | David L. Dunkel, Chairman and Chief Executive Officer |
• | Joseph J. Liberatore, President |
• | David M. Kelly, Chief Financial Officer |
• | Kye L. Mitchell, Chief Operations Officer |
• | Andrew G. Thomas, Chief Marketing Officer |
• | Attained 100% of our target revenue and 103% of our target diluted earnings per share (EPS). |
• | Attained maximum performance for our equity long-term incentive (LTI) metric due to our total shareholder return (TSR) over the past three years (January 1, 2017 through December 31, 2019) of 83% ranking 1st amongst our Peer Group of 14 other companies. |
• | Grew our largest business, Tech Flex, in excess of two times the market and made significant strides in improving our profitability through improving associate productivity and exercising better expense discipline. |
• | Completed and made progress on various strategic initiatives including, among others, the completion of a multi-year effort to divest of non-core businesses with the divestiture of our GS segment, entering into a strategic joint venture, implementing a new consultant referral technology and making continued progress on implementing new and upgrading existing technologies that we believe will allow us to more effectively and efficiently serve our clients, consultants and candidates and improve the scalability of our organization. We also improved our client and consultant net promoter scores and made significant progress on reshaping our talent strategies. |
• | Annual incentive payouts based on the performance against our financial metrics (payouts were at target for our revenue metric and slightly above target for our EPS metric) and on individual performance objectives (payouts were above target). |
• | Equity LTI payouts at maximum, based on the 1st place ranking for TSR performance relative to our Peer Group. |
What We Do | What We Don’t Do | ||
þ | Target Annual NEO Compensation at Market Median for Median Performance | ý | Define Market Median by Comparison to Companies Outside of our Primary Sector |
þ | Provide Pay for Performance by Paying Higher Compensation for Above Median Performance and Lower Compensation for Below Median Performance | ý | Set Targets for Incentive Plans that are Easy to Attain |
þ | Ensure Performance-Based Compensation is the Largest Part of Total Compensation | ý | Provide Excessive Perquisites |
þ | Ensure Equity-Based LTI Compensation is a Significant Component of Performance-Based Compensation | ý | Allow Repricing or Cash Buyouts of Previous Equity-Based LTI Grants |
þ | Require Minimum Levels of Share Ownership | ý | Allow Hedging or Pledging of Company Stock or Other Related Activities |
þ | Maintain a Significant Clawback Policy | ý | Create New Excise Tax Gross-ups |
ý | Create New or Materially Amend Executive Employment Agreements with Provisions for Severance Payouts Exceeding 1x Cash Compensation or Change in Control Severance Payouts Exceeding 2x Cash Compensation |
Attract and Retain Key Executives | Attracting and retaining key executive talent is critical to the success of a staffing and solutions firm in which people represent the true “assets.” The Committee believes an understanding of competitive market pay levels is essential to hiring and retaining qualified executives able to drive our long-term profitable growth and, consequently, long-term shareholder value. The Committee further believes it is important to be knowledgeable concerning best practices and how comparable organizations compensate their executives. |
Target Annual NEO Compensation at Market Median | The executive compensation plan is designed to target the total pay level for our NEOs at the median of comparable companies. To effectively accomplish this, the Committee annually reviews compensation data from several independent sources. Our competitive market for executive talent is primarily staffing organizations; however, the Committee also reviews pay data for other professional service and consulting organizations of comparable size and similar business models. |
Provide Pay for Performance by Paying Higher Compensation for Above Median Performance and Lower Compensation for Below Median Performance | The Committee believes executive compensation should align with our revenue, profitability and TSR performance and provide superior cash and equity compensation opportunities for superior performance. The same is true for below median performance resulting in lower compensation. The Committee also believes the design of our compensation programs provides incentives for our NEOs to exceed targeted performance, which results in significant relative shareholder value creation and creates a positive perception of Kforce in the highly competitive market for executive talent. |
Ensure Performance-Based Compensation is the Largest Part of Total Compensation | The Committee designs the compensation framework with significant emphasis on performance-based compensation over fixed compensation to motivate our NEOs to drive operational performance without encouraging unreasonable risk. Performance-based compensation at target comprised 77% of target total direct compensation for our CEO and between 67% to 78% for our other NEOs in 2019. |
Ensure Equity-Based LTI Compensation is a Significant Component of Performance-Based Compensation | The Committee believes equity-based LTI compensation should be a significant component of performance-based compensation to further focus executive efforts on long-term shareholder returns. Target equity LTI ranged from 45% to 63% of target total performance-based compensation for our NEOs in 2019. We believe the opportunity to earn the designated equity LTI performance objectives motivates the achievement of higher relative TSR and driving continued improved shareholder value; it also serves to retain our executives for the long-term, given that our LTI awards have time-based vesting provisions between three and four years. |
Require Minimum Levels of Share Ownership | The Committee believes our executives should have a personal financial stake in Kforce’s ongoing future success, primarily driven by a desire to match their interests with those of our shareholders. In addition to equity-based LTIs playing a significant role in our executive compensation program, all employees, including the NEOs, are eligible to purchase stock through the Kforce Inc. 2009 Employee Stock Purchase Plan. To further align the interests of executives and long-term shareholders, our Board has adopted formal ownership guidelines, set forth below. |
Set Challenging Performance Objectives | We work to set difficult but attainable financial growth performance objectives for our NEOs in the context of the annual incentive plan as evidenced by the fact that threshold and target goals and objectives have not been met in every plan year. |
Consider Tax Deductibility in Compensation Plan Design | The Committee considers all possible tax consequences in the design of our executive compensation programs. Our NEO compensation framework was structured so that our performance-based annual incentive and LTI awards would be deductible under Section 162(m) of the Internal Revenue Code (the Code). The enactment of the 2017 Tax Cuts and Jobs Act (TCJA) resulted in the elimination of performance-based compensation exemptions, except with respect to certain grandfathered arrangements granted prior to November 2, 2017 and up to certain annual levels. As a result, this has limited the tax deductibility of NEO compensation beginning in 2018. Despite the changes to Section 162(m), we expect the structure of our NEO compensation program will continue to include a significant portion of performance-based compensation, which is consistent with our compensation philosophy of linking pay to performance and aligning executive interests with those of our shareholders. |
Minimum Required Share Ownership Guidelines | Our Corporate Governance Guidelines include a stock ownership policy for our directors and executives. The minimum level of holdings for each position is as follows: | |||||
Target Holding Level (Lesser Of) | ||||||
Position | Annual Retainer / Salary | OR | Shares | |||
Director | 3x | 5,000 | ||||
Chief Executive Officer | 5x | 200,000 | ||||
President | 3x | 100,000 | ||||
Chief Financial Officer | 2x | 50,000 | ||||
Chief Operations Officer | 2x | 30,000 | ||||
Other members of Kforce’s Executive Leadership Team | 0.5x | 10,000 | ||||
In accordance with the policy, directors have three years from the effective date of joining the Board, and executives have two years from the effective date of a promotion or salary increase, to attain the ownership level. As of the Record Date, all directors, NEOs and other members of our executive leadership were in compliance with the policy. |
Clawback Policy | Our Corporate Governance Guidelines include a clawback policy applicable to all executive officers. Accordingly, in the event of a restatement of our financial statements because of a material noncompliance with any financial reporting requirements under the federal securities laws, the Board will, if determined appropriate, recover from current executives any incentive-based compensation paid for any applicable performance periods beginning after March 30, 2012. |
Equity Plan Features | The Committee believes Kforce’s equity plans are structured to avoid problematic pay practices and features that could be detrimental to shareholder interests. None of our Stock Incentive Plans (as approved by shareholders in 2013, 2016, 2017 and 2019 and pending approval of Proposal 4 in 2020) permit repricing or cash buyouts of underwater options or stock appreciation rights without shareholder approval. The 2017, 2019 and 2020 Plans require a minimum vesting period of one year on all award types. In addition, the 2019 and 2020 Plans require a minimum holding period of one year after exercise of any options and stock appreciation rights for all NEOs; we will also apply this policy to any awards granted outside of this plan. |
Insider Trading | Our Insider Trading Policy governs the trading in our securities by directors, officers and employees and other persons who have or may have access to material, nonpublic information. The policy has the following restrictions: | ||
s | No trading while in the possession of material, nonpublic information | ||
s | No trading during designated black-out periods | ||
s | No trading without pre-approval (certain insiders) | ||
s | No margin accounts | ||
s | No pledging | ||
s | No hedging (including, but not limited to, prepaid variable forwards, equity swaps, collars and exchange funds) | ||
s | No trading in any interest or position relating to future stock price, such as a puts, calls or short sales |
Hedging and Pledging | Our Insider Trading Policy expressly prohibits the Firm’s directors, officers, employees, consultants, contractors and other individuals determined by the Firm as “Insiders”, including any persons living in their household and family members who do not reside with them but whose investment decisions are directed by them or who otherwise confer with them when making investment decisions with respect to Firm securities and any entities controlled by them, from engaging in any hedging transaction related to the Firm’s securities (including, without limitation, prepaid variable forwards, equity swaps, collars and exchange funds) or otherwise trading in any interest or position relating to the future price of the Firm’s securities, such as a put, call or short sale. This Insider Trading Policy similarly prohibits any Firm Insider from holding any of the Firm’s securities in a margin account or otherwise pledging any of the Firm’s securities as collateral unless approved in advance by the Insider Trading Compliance Committee or, in the case of Section 16 insiders, the Compensation Committee of the Board of Directors. |
Elimination of Excise Tax Gross-Up | In 2009, the Committee resolved to not enter into any new employment agreements, or materially amend any existing employment agreements with its executives that contain excise tax gross-up provisions in the event of a change-in-control event going forward. Since the Committee’s resolution, all new or amended executive employment agreements have excluded excise tax gross-up provisions. As a result, the only remaining employment agreements which continue to include excise tax gross-up provisions are with Messrs. Dunkel and Liberatore; both of these agreements were most recently amended in 2008. |
• | staying informed of current issues and emerging trends; |
• | ensuring Kforce’s executive compensation program remains aligned with best practices and are in the best interests of the shareholders; and |
• | establishing and maintaining a pay-for-performance executive compensation program consistent with our shareholders’ interests while providing appropriate incentives to our executives. |
AMN Healthcare Services, Inc. | Heidrick & Struggles International, Inc. | Resources Connection, Inc. |
ASGN Incorporated | Huron Consulting Group Inc. | Robert Half International Inc. |
Cross Country Healthcare, Inc. | Kelly Services, Inc. | TrueBlue, Inc. |
Computer Task Group, Incorporated | Korn/Ferry International | Volt Information Sciences, Inc. |
The Hackett Group, Inc. | Manpower Group Inc. |
Revenue | Market Capitalization | |||||||
25th Percentile | $ | 755,862 | $ | 454,569 | ||||
Median | $ | 1,461,444 | $ | 843,937 | ||||
75th Percentile | $ | 3,174,638 | $ | 2,542,327 | ||||
Kforce Inc. | $ | 1,418,353 | $ | 804,971 | ||||
Percentile Rank | 50 | 50 |
• | Annual incentive compensation, which was based on certain financial metrics and, to a lesser extent, individual accomplishments and management business objectives (MBO). |
• | For 2019, the Committee provided for an additional one-time cash MBO potential for Messrs. Dunkel and Liberatore, which was based on the successful sale of our GS segment (the GS MBO), which was fundamental to the completion of a multi-year strategic objective to divest of non-core businesses. |
• | Equity LTI compensation, which was based on Kforce’s TSR performance over a three-year measurement period relative to our pre-determined peer group. |
2019 COMPENSATION AT TARGET |
(1) The GS MBO in the “All Other NEOs” chart applies only to Mr. Liberatore. |
• | Payment of slightly above target annual incentive levels, driven by performance against our financial metrics and individual performance objectives for 2019. |
• | Payment of the GS MBO for Messrs. Dunkel and Liberatore as a result of the successful sale of the GS segment. |
• | Grant of equity LTIs at maximum due to achieving 1st place for three-year TSR performance relative to our Peer Group for 2019. |
2019 ACTUAL COMPENSATION PAYOUTS |
(1) The GS MBO in the “All Other NEOs” chart applies only to Mr. Liberatore. |
Name | Salary | ||
David L. Dunkel | $ | 875,000 | |
Joseph J. Liberatore | $ | 660,000 | |
David M. Kelly | $ | 480,000 | |
Kye L. Mitchell | $ | 480,000 | |
Andrew G. Thomas | $ | 350,000 |
1. | A financial metric incentive (the Financial Performance Incentive). The 2019 Financial Performance Incentive represented 80% (50% for Mr. Thomas) of the total target incentive award and required achievement of annual year-over-year revenue growth and year-over-year diluted EPS growth performance goals. Revenue growth and EPS growth incentives continue to be the metrics that we believe demonstrate our annual progression towards generating long-term shareholder value and align to our commitment of improving our levels of profitability as we grow revenues. |
2. | An objectives-based incentive for individual accomplishments and management business objectives (the MBO Incentive). The MBO Incentive represented 20% (50% for Mr. Thomas) of the total target incentive award. |
2019 Target Annual Incentive | 2019 Target Annual Incentive Allocations | |||||||||||||||||||
Name | Salary | % | $ | Revenue (40%; 25% for Mr. Thomas) | EPS (40%; 25% for Mr. Thomas) | MBO (20%; 50% for Mr. Thomas) | ||||||||||||||
David L. Dunkel | $ | 875,000 | 100 | % | $ | 875,000 | $ | 350,000 | $ | 350,000 | $ | 175,000 | ||||||||
Joseph J. Liberatore | $ | 660,000 | 90 | % | $ | 594,000 | $ | 237,600 | $ | 237,600 | $ | 118,800 | ||||||||
David M. Kelly | $ | 480,000 | 90 | % | $ | 432,000 | $ | 172,800 | $ | 172,800 | $ | 86,400 | ||||||||
Kye L. Mitchell | $ | 480,000 | 90 | % | $ | 432,000 | $ | 172,800 | $ | 172,800 | $ | 86,400 | ||||||||
Andrew G. Thomas | $ | 350,000 | 90 | % | $ | 315,000 | $ | 78,750 | $ | 78,750 | $ | 157,500 |
Revenue (in millions) | Year-over-Year Growth | Payout % of Target | Diluted EPS | Year-over-Year Growth | Payout % of Target | |||
Threshold | $1,316 | 1% | 25% | $2.12 | 5% | 25% | ||
Target | $1,343 | 3% | 100% | $2.23 | 10% | 100% | ||
Maximum | $1,409 | 8% | 200% | $2.48 | 23% | 200% |
2019 Attainment as a % of Target | 2019 Incentive Payouts | ||||||||||||||||||||
Name | Target Annual Incentive | Revenue (40%; 25% for Mr. Thomas) | EPS (40%; 25% for Mr. Thomas) | MBO (20%; 50% for Mr. Thomas) | Revenue | EPS | MBO | Total | |||||||||||||
David L. Dunkel | $ | 875,000 | 100% | 120% | 135% | $ | 350,000 | $ | 420,000 | $ | 236,250 | $ | 1,006,250 | ||||||||
Joseph J. Liberatore | $ | 594,000 | 100% | 120% | 135% | $ | 237,600 | $ | 285,120 | $ | 160,380 | $ | 683,100 | ||||||||
David M. Kelly | $ | 432,000 | 100% | 120% | 135% | $ | 172,800 | $ | 207,360 | $ | 116,640 | $ | 496,800 | ||||||||
Kye L. Mitchell | $ | 432,000 | 100% | 120% | 135% | $ | 172,800 | $ | 207,360 | $ | 116,640 | $ | 496,800 | ||||||||
Andrew G. Thomas | $ | 315,000 | 100% | 120% | 140% | $ | 78,750 | $ | 94,500 | $ | 220,500 | $ | 393,750 |
Peer Group Relative TSR Rank: | 14/15 | 13 | 8 | 1 | ||||||||
Name | Below Threshold | Threshold | Target | Max | ||||||||
David L. Dunkel | $ | — | $ | 700,000 | $ | 1,350,000 | $ | 2,625,000 | ||||
Joseph J. Liberatore | $ | — | $ | 700,000 | $ | 1,400,000 | $ | 2,550,000 | ||||
David M. Kelly | $ | — | $ | 575,000 | $ | 725,000 | $ | 1,345,000 | ||||
Kye L. Mitchell | $ | — | $ | 525,000 | $ | 650,000 | $ | 1,312,500 | ||||
Andrew G. Thomas | $ | — | $ | 300,000 | $ | 400,000 | $ | 625,000 |
Measurement Period | TSR Performance | Peer Group Relative TSR Rank | Grant Date of Restricted Stock Award | Grant Date Closing Stock Price |
2017-2019 | 83% | 1st | December 31, 2019 | $39.70 |
Name | # of Shares | Grant Date Fair Value | |||||
David L. Dunkel | 66,121 | $ | 2,625,004 | ||||
Joseph J. Liberatore | 64,232 | $ | 2,550,010 | ||||
David M. Kelly | 33,879 | $ | 1,344,996 | ||||
Kye L. Mitchell | 33,060 | $ | 1,312,482 | ||||
Andrew G. Thomas | 15,743 | $ | 624,997 |
Kforce Inc. Supplemental Executive Retirement Plan | During 2006, Kforce adopted a Supplemental Executive Retirement Plan (SERP) for all NEOs. Of the current NEOs, only Messrs. Dunkel and Liberatore participate in the SERP. The Committee previously decided to not allow any additional participants into the SERP. The primary goals of the SERP are to create an additional wealth accumulation opportunity, restore lost qualified pension benefits due to government limitations and retain our covered executive officers. The SERP will be funded entirely by Kforce, and benefits are taxable to the executive officer upon receipt and deductible by Kforce when paid. Benefits payable under the SERP upon the occurrence of a qualifying distribution event, as defined, are targeted at 45% of the covered executive officers’ average salary and annual incentive, as defined, from the three years in which the covered executive officer earned the highest salary and annual incentive during the last 10 years of employment, which is subject to adjustment for retirement prior to the normal retirement age and the participant’s vesting percentage. Benefits under the SERP are based on the lump sum present value but may be paid over the life of the covered executive officer or 10-year annuity, as elected by the covered executive officer upon commencement of participation in the SERP. Both participants are fully vested in accordance with the plan provisions. Normal retirement age under the SERP is defined as age 65. Certain conditions allow for early retirement as early as age 55. The benefits under the SERP are reduced for a participant who has not either reached age 62 and 10 years of service or age 55 and 25 years of service with a percentage reduction up to the normal retirement age. On each anniversary of the effective date, each NEO is credited with a year of service. The NEOs were not credited with any years of service prior to December 31, 2006, the effective date of the plan. The Committee believes the SERP provides significant retention benefits for the participants. |
Kforce Nonqualified Deferred Compensation Plan | Kforce maintains a nonqualified deferred compensation plan in which eligible management and highly compensated key employees, as defined by IRS regulations, may elect to defer all or part of their compensation to later years. Amounts deferred are indexed to investment options selected by the eligible employees and the increase or decrease in value is based upon the performance of the selected investments. Eligible employees are permitted to change investment options and scheduled distributions annually. Kforce has insured the lives of certain participants in the deferred compensation plan to assist in the funding of the deferred compensation liability. Employer matching contributions to the nonqualified deferred compensation plan are discretionary and are funded annually, as approved by the Board. |
Employment, Severance and Change in Control Agreements | Kforce has employment agreements with each of its NEOs, which provide for severance payments under certain termination circumstances, including termination following a change in control, as defined in the employment agreements. The Committee has determined it is in Kforce’s and its shareholders’ best interests to recognize the contributions of and retain the NEOs. The specific amounts the NEOs would receive under the employment agreements are described in the “Potential Payments Upon Termination or Change in Control” section below. The Committee believes the employment agreements are an essential component of the executive compensation program and are helpful in attracting and retaining executive talent in a competitive market. The Committee periodically reviews the benefits provided under the employment agreements to determine that they continue to serve Kforce’s interests in providing significant retention benefits to these key executives, are consistent with market practice and are reasonable. In 2009, the Committee resolved to not enter into any new employment agreements, or materially amend any existing employment agreements with its executives, that contain excise tax gross-up provisions going forward. At this time, only Messrs. Dunkel and Liberatore have excise tax gross-up provisions in their existing employment agreements. In 2017, the Committee resolved to not enter into any new employment agreements or materially amend any existing employment agreements with its executives that contain provisions for severance payments that exceed 1x cash compensation or change in control severance payments that exceed 2x cash compensation. |
Perquisites and Other Personal Benefits | Kforce does not provide perquisites or other personal benefits to its NEOs. |
Equity Method Investment Management Incentive Unit Awards | To incentivize certain Kforce executives that were critical in the inception of our 50% noncontrolling ownership in a newly formed joint venture, WorkLLama, LLC, the board of managers of WorkLLama granted management incentive units in WorkLLama (“MIUs”) to certain NEOs on November 19, 2019; the awards were also approved by our Board. The MIUs were fully vested on the grant date and provide a limited non-voting ownership interest in WorkLLama that entitles the holder to a distribution on the holder’s vested MIUs with respect to a liquidating distribution, provided that certain participation thresholds (as defined in the holder’s unit grant agreement) have been met. The vested MIUs are subject to certain forfeiture conditions. The grant date fair value of the MIUs for Messers. Dunkel, Liberatore, Kelly and Thomas were $11,693, $11,693, $5,847 and $1,169, respectively. The grant date fair value for the MIUs of $0.023 per share was determined in accordance with FASB ASC 718 using the options pricing methodology. |
Name and Principal Position | Year | Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) | All Other Compensation (4) | Total | ||||||||||||
David L. Dunkel | 2019 | $ | 875,000 | $ | 2,625,004 | $ | 1,756,250 | $ | 1,686,114 | $ | 118,433 | $ | 7,060,801 | ||||||
Chief Executive Officer | 2018 | $ | 875,000 | $ | 1,499,991 | $ | 1,158,500 | $ | 653,336 | $ | 102,435 | $ | 4,289,262 | ||||||
2017 | $ | 800,000 | $ | 750,001 | $ | 435,200 | $ | 1,005,233 | $ | 88,518 | $ | 3,078,952 | |||||||
Joseph J. Liberatore | 2019 | $ | 660,000 | $ | 2,550,010 | $ | 983,100 | $ | 1,366,903 | $ | 106,492 | $ | 5,666,505 | ||||||
President | 2018 | $ | 660,000 | $ | 1,200,005 | $ | 786,456 | $ | 37,547 | $ | 98,012 | $ | 2,782,020 | ||||||
2017 | $ | 600,000 | $ | 900,011 | $ | 293,760 | $ | 656,799 | $ | 92,056 | $ | 2,542,626 | |||||||
David M. Kelly | 2019 | $ | 480,000 | $ | 1,344,996 | $ | 496,800 | $ | — | $ | 75,709 | $ | 2,397,505 | ||||||
Chief Financial Officer | 2018 | $ | 480,000 | $ | 987,492 | $ | 537,408 | $ | — | $ | 65,239 | $ | 2,070,139 | ||||||
2017 | $ | 480,000 | $ | 725,003 | $ | 235,008 | $ | — | $ | 54,998 | $ | 1,495,009 | |||||||
Kye L. Mitchell | 2019 | $ | 480,000 | $ | 1,312,482 | $ | 496,800 | $ | — | $ | 71,842 | $ | 2,361,124 | ||||||
Chief Operations Officer | 2018 | $ | 480,000 | $ | 949,986 | $ | 537,408 | $ | — | $ | 61,482 | $ | 2,028,876 | ||||||
2017 | $ | 480,000 | $ | 650,011 | $ | 235,008 | $ | — | $ | 231,677 | $ | 1,596,696 | |||||||
Andrew G. Thomas | 2019 | $ | 350,000 | $ | 624,997 | $ | 393,750 | $ | — | $ | 37,779 | $ | 1,406,526 | ||||||
Chief Marketing Officer | 2018 | $ | 350,000 | $ | 470,015 | $ | 313,160 | $ | — | $ | 31,459 | $ | 1,164,634 |
(1) | The amounts in this column represent the aggregate grant date fair value in accordance with FASB ASC 718. |
(2) | Represents annual incentive compensation earned by the NEOs. For Messrs. Dunkel and Liberatore, this also includes $750,000 and $300,000, respectively, related to a one-time MBO earned as a result of the successful completion of the sale of our GS segment. |
(3) | For Messrs. Dunkel and Liberatore, the amounts in this column represent the aggregate change in the accumulated benefit obligation for the SERP using the same measurement dates used for reporting Kforce’s consolidated financial statements for fiscal years 2019, 2018 and 2017. There were no changes made to the plan during the year and no increases to the benefits provided to the NEOs. |
(4) | The “All Other Compensation” column for 2019 includes: |
Name | Dividends (a) | Defined Contribution Plans (b) | Total | ||||||
David L. Dunkel | $ | 118,433 | $ | — | $ | 118,433 | |||
Joseph J. Liberatore | $ | 106,492 | $ | — | $ | 106,492 | |||
David M. Kelly | $ | 73,809 | $ | 1,900 | $ | 75,709 | |||
Kye L. Mitchell | $ | 69,942 | $ | 1,900 | $ | 71,842 | |||
Andrew G. Thomas | $ | 37,779 | $ | — | $ | 37,779 |
(a) | This column reflects the value of dividend equivalents issued on unvested restricted stock in the form of additional shares of restricted stock. |
(b) | This column reflects the value of employer matching contributions attributable to our defined contribution 401(k) plan. |
Restricted Stock Awards | |||||||
Name | Unvested Shares | Market Value of Unvested Shares ($)(1) | |||||
David L. Dunkel | 66,121 | (2) | $ | 2,625,004 | |||
33,005 | (3) | $ | 1,310,299 | ||||
10,289 | (4) | $ | 408,473 | ||||
30,732 | (5) | $ | 1,220,060 | ||||
16,722 | (6) | $ | 663,863 | ||||
Joseph J. Liberatore | 64,232 | (2) | $ | 2,550,010 | |||
29,705 | (3) | $ | 1,179,289 | ||||
22,218 | (4) | $ | 882,055 | ||||
24,572 | (5) | $ | 975,508 | ||||
13,329 | (6) | $ | 529,161 | ||||
David M. Kelly | 33,879 | (2) | $ | 1,344,996 | |||
24,443 | (3) | $ | 970,387 | ||||
17,898 | (4) | $ | 710,551 | ||||
14,956 | (5) | $ | 593,753 | ||||
6,996 | (6) | $ | 277,741 | ||||
Kye L. Mitchell | 33,060 | (2) | $ | 1,312,482 | |||
23,514 | (3) | $ | 933,506 | ||||
16,048 | (4) | $ | 637,106 | ||||
13,802 | (5) | $ | 547,939 | ||||
6,996 | (6) | $ | 277,741 | ||||
Andrew G. Thomas | 15,743 | (2) | $ | 624,997 | |||
11,635 | (3) | $ | 461,910 | ||||
9,876 | (4) | $ | 392,077 | ||||
7,635 | (5) | $ | 303,110 | ||||
3,340 | (6) | $ | 132,598 | ||||
2,542 | (7) | $ | 100,917 |
(1) | This column represents a market value of $39.70 per share, which is the closing stock price on December 31, 2019. |
(2) | With respect to the restricted stock granted to Mr. Dunkel on December 31, 2019, 33% of the total shares granted vest on: December 27, 2020, 2021 and 2022. With respect to the restricted stock granted to Messrs. Liberatore, Kelly and Thomas and Ms. Mitchell on December 31, 2019, 25% of the total shares granted vest on: December 27, 2020, 2021, 2022 and 2023. |
(3) | With respect to the restricted stock granted to Mr. Dunkel on December 31, 2018, and the additional shares granted due to Kforce’s quarterly dividends, 33% of the total shares granted vest(ed) on: December 27, 2019, 2020 and 2021. With respect to the restricted stock granted to Messrs. Liberatore, Kelly and Thomas and Ms. Mitchell on December 31, 2018, and the additional shares granted due to Kforce’s quarterly dividends, 25% of the total shares granted vest(ed) on: December 27, 2019, 2020, 2021 and 2022. |
(4) | With respect to the restricted stock granted to Mr. Dunkel on December 31, 2017, and the additional shares granted due to Kforce’s quarterly dividends, 33% of the total shares granted vest(ed) on: December 27, 2018, 2019 and 2020. With respect to the restricted stock granted to Messrs. Liberatore, Kelly and Thomas and Ms. Mitchell on December 31, 2017, and the additional shares granted due to Kforce’s quarterly dividends, 20% of the total shares granted vest(ed) on: December 27, 2018, 2019, 2020, 2021 and 2022. |
(5) | With respect to the restricted stock granted to Messrs. Dunkel, Liberatore, Kelly and Thomas and Ms. Mitchell on December 31, 2016, and the additional shares granted due to Kforce’s quarterly dividends, 20% of the total shares granted vest(ed) on: December 31, 2017 and December 27, 2018, 2019, 2020 and 2021. |
(6) | With respect to the restricted stock granted to Messrs. Dunkel, Liberatore, Kelly and Thomas and Ms. Mitchell on January 4, 2016, and the additional shares granted due to Kforce’s quarterly dividends, 20% of the total shares granted vest(ed) on: January 4, 2017, December 31, 2017 and December 27, 2018, 2019 and 2020. |
(7) | With respect to the restricted stock granted to Mr. Thomas on October 14, 2013, and the additional shares granted due to Kforce’s quarterly dividends, 20% of the total shares granted vest(ed) on: October 14, 2019, 2020, 2021, 2022 and 2023. |
Name | Type of Award | Approval Date | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards No. of Shares of Stock | Grant Date Fair Value | |||||||||||
Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||
David L. Dunkel | Annual Incentive (1) | 2/1/2019 | 12/31/2019 | $ | 218,750 | $ | 875,000 | $ | 1,750,000 | — | $ | — | |||||
One-Time MBO (2) | 2/1/2019 | 4/25/2019 | $ | — | $ | 750,000 | $ | 750,000 | — | $ | — | ||||||
Equity LTI (3) | — | 12/31/2019 | $ | — | $ | — | $ | — | 66,121 | $ | 2,625,004 | ||||||
Joseph J. Liberatore | Annual Incentive (1) | 2/1/2019 | 12/31/2019 | $ | 148,500 | $ | 594,000 | $ | 1,188,000 | — | $ | — | |||||
One-Time MBO (2) | 2/1/2019 | 4/25/2019 | $ | — | $ | 300,000 | $ | 300,000 | — | $ | — | ||||||
Equity LTI (3) | — | 12/31/2019 | $ | — | $ | — | $ | — | 64,232 | $ | 2,550,010 | ||||||
David M. Kelly | Annual Incentive (1) | 2/1/2019 | 12/31/2019 | $ | 108,000 | $ | 432,000 | $ | 864,000 | — | $ | — | |||||
Equity LTI (3) | — | 12/31/2019 | $ | — | $ | — | $ | — | 33,879 | $ | 1,344,996 | ||||||
Kye L. Mitchell | Annual Incentive (1) | 2/1/2019 | 12/31/2019 | $ | 108,000 | $ | 432,000 | $ | 864,000 | — | $ | — | |||||
Equity LTI (3) | — | 12/31/2019 | $ | — | $ | — | $ | — | 33,060 | $ | 1,312,482 | ||||||
Andrew G. Thomas | Annual Incentive (1) | 2/1/2019 | 12/31/2019 | $ | 78,750 | $ | 315,000 | $ | 630,000 | — | $ | — | |||||
Equity LTI (3) | — | 12/31/2019 | $ | — | $ | — | $ | — | 15,743 | $ | 624,997 |
(1) | These amounts represent the estimated payouts under the 2019 annual incentive compensation plan. The threshold, as defined in Item 402(d) of Regulation S-K, represents the minimum amount payable upon attaining minimum performance thresholds established by the Committee each year. If the minimum performance thresholds are not attained, there would be no payout. The maximum payout is 200% of the target multiplier for all components of the 2019 annual incentive compensation plan. Actual payments for annual incentive compensation earned during 2019 are listed in the “Non-Equity Incentive Plan Compensation” column of the SCT. |
(2) | These amounts represent the potential payouts upon attaining a performance threshold established by the Committee based on the successful sale of our GS segment. |
(3) | The equity LTI awards granted in the form of restricted stock under the 2019 Stock Incentive Plan on December 31, 2019 have a four-year vesting period with 25% of the award vesting annually, except for Mr. Dunkel’s award, which has a three-year vesting period with 33% of the award vesting annually. Restricted stock awards contain the right to forfeitable dividends in the form of additional shares of restricted stock at the same rate as the cash dividend on common stock and containing the same vesting provisions as the underlying award. The fair market value of restricted stock is determined based on the closing stock price of Kforce’s common stock at the date of grant. The stock price and grant date fair value for the December 31, 2019 awards was $39.70. The aggregate grant date fair value of the awards is included within the amounts presented in the “Stock Awards” column of the SCT. |
Stock Awards | |||||||
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting (1) | |||||
David L. Dunkel | 75,762 | $ | 3,024,419 | ||||
Joseph J. Liberatore | 63,409 | $ | 2,478,104 | ||||
David M. Kelly | 43,441 | $ | 1,674,548 | ||||
Kye L. Mitchell | 41,940 | $ | 1,614,628 | ||||
Andrew G. Thomas | 18,331 | $ | 729,979 |
(1) | The value realized for Kforce restricted stock vesting represents the market value of Kforce common stock at the time of vesting multiplied by the number of shares vested. |
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |||||||||
David L. Dunkel | Supplemental Executive Retirement Plan | 13 | $ | 13,713,443 | $ | — | |||||||
Joseph J. Liberatore | Supplemental Executive Retirement Plan | 13 | $ | 4,366,333 | $ | — |
(1) | On each anniversary of the effective date, each NEO is credited with a year of service. The NEOs were not credited with any years of service prior to December 31, 2006, which is the effective date of the plan. |
(2) | Represents the actuarial present value of the accumulated benefit obligation computed as of the same pension plan measurement date used for financial reporting purposes with respect to Kforce’s consolidated financial statements for fiscal year 2019. For a discussion of the assumptions used, refer to Note 12, Employee Benefit Plans, to Kforce’s Consolidated Financial Statements, included in our Annual Report on Form 10-K for fiscal year 2019. |
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(3) | |||||||||||||||
David L. Dunkel | $ | — | $ | — | $ | 67,516 | $ | — | $ | 264,708 | ||||||||||
Joseph J. Liberatore | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
David M. Kelly | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Kye L. Mitchell | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Andrew G. Thomas | $ | — | $ | — | $ | 143,466 | $ | — | $ | 543,158 |
(1) | None of our NEOs participated in Kforce’s nonqualified deferred compensation plan during 2019. |
(2) | The aggregate earnings for 2019 represents appreciation or depreciation in the market value of the respective accounts’ holdings and interest and dividends generated thereon. These amounts were not reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the SCT for 2019 as there were no above-market or preferential earnings generated. |
(3) | The aggregate balance include amounts related to employer contributions made by Kforce that were previously reported in the SCTs for prior years. |
Name | Retirement | Termination By Employer Without Cause or By Employee For Good Reason | Following CIC - Termination By Employer Without Cause or By Employee For Good Reason | CIC - No Termination | Death | Disability | |||||||||||||||||
David L. Dunkel | |||||||||||||||||||||||
Severance payment (1) | $ | — | $ | 5,955,034 | $ | 12,618,019 | $ | — | $ | — | $ | — | |||||||||||
Equity-based compensation (2) | — | — | 6,227,699 | 6,227,699 | 6,227,699 | 6,227,699 | |||||||||||||||||
Continuation of base salary (3) | — | — | — | — | 2,502,893 | — | |||||||||||||||||
Continuation of health benefits (4) | — | — | 8,698 | — | 8,698 | — | |||||||||||||||||
SERP (5) | 13,081,249 | — | 13,081,249 | — | 10,578,356 | 13,081,249 | |||||||||||||||||
Total | $ | 13,081,249 | $ | 5,955,034 | $ | 31,935,665 | $ | 6,227,699 | $ | 19,317,646 | $ | 19,308,948 | |||||||||||
Joseph J. Liberatore | |||||||||||||||||||||||
Severance payment (1) | $ | — | $ | 3,089,556 | $ | 9,253,413 | $ | — | $ | — | $ | — | |||||||||||
Equity-based compensation (2) | — | — | 6,116,023 | 6,116,023 | 6,116,023 | 6,116,023 | |||||||||||||||||
Continuation of base salary (3) | — | — | — | — | 1,887,896 | 1,887,896 | |||||||||||||||||
Continuation of health benefits (4) | — | — | 17,699 | — | 17,699 | 17,699 | |||||||||||||||||
SERP (5) | 3,581,555 | — | 5,785,687 | — | 1,693,659 | 1,693,659 | |||||||||||||||||
Total | $ | 3,581,555 | $ | 3,089,556 | $ | 21,172,822 | $ | 6,116,023 | $ | 9,715,277 | $ | 9,715,277 | |||||||||||
David M. Kelly | |||||||||||||||||||||||
Severance payment (1) | $ | — | $ | 1,197,104 | $ | 4,326,696 | $ | — | $ | — | $ | — | |||||||||||
Equity-based compensation (2) | — | — | 3,897,428 | 3,897,428 | 3,897,428 | 3,897,428 | |||||||||||||||||
Continuation of base salary (3) | — | — | — | — | 471,656 | 928,249 | |||||||||||||||||
Continuation of health benefits (4) | — | — | 11,960 | — | 6,062 | 11,960 | |||||||||||||||||
Total | $ | — | $ | 1,197,104 | $ | 8,236,084 | $ | 3,897,428 | $ | 4,375,146 | $ | 4,837,637 | |||||||||||
Kye L. Mitchell | |||||||||||||||||||||||
Severance payment (1) | $ | — | $ | 1,197,104 | $ | 4,256,676 | $ | — | $ | — | $ | — | |||||||||||
Equity-based compensation (2) | — | — | 3,708,774 | 3,708,774 | 3,708,774 | 3,708,774 | |||||||||||||||||
Continuation of base salary (3) | — | — | — | — | 471,656 | 928,249 | |||||||||||||||||
Continuation of health benefits (4) | — | — | 18,247 | — | 9,249 | 18,247 | |||||||||||||||||
Total | $ | — | $ | 1,197,104 | $ | 7,983,697 | $ | 3,708,774 | $ | 4,189,679 | $ | 4,655,270 | |||||||||||
Andrew G. Thomas | |||||||||||||||||||||||
Severance payment (1) | $ | — | $ | 903,455 | $ | 2,501,922 | $ | — | $ | — | $ | — | |||||||||||
Equity-based compensation (2) | — | — | 2,015,609 | 2,015,609 | 2,015,609 | 2,015,609 | |||||||||||||||||
Continuation of base salary (3) | — | — | — | — | 343,916 | 676,848 | |||||||||||||||||
Continuation of health benefits (4) | — | — | 5,878 | — | 2,979 | 5,878 | |||||||||||||||||
Total | $ | — | $ | 903,455 | $ | 4,523,409 | $ | 2,015,609 | $ | 2,362,504 | $ | 2,698,335 |
(1) | If any payment or distribution by Kforce to Messrs. Dunkel or Liberatore is determined to be subject to the excise tax imposed under Section 4999 of the Code, Messrs. Dunkel or Liberatore would be entitled to receive from Kforce a payment in an amount sufficient to place them in the same after-tax financial position that they would have been if they had not incurred any excise tax. The severance amount in the event of a CIC for Mr. Dunkel includes $1.8 million of excise tax gross-up, while the amount for Mr. Liberatore does not include any excise tax gross-up because the calculation resulted in no excise tax amount. Employment agreements with Messrs. Kelly and Thomas and Ms. Mitchell do not contain excise tax gross-up provisions and, thus, no amounts were included in the tables above. |
(2) | The amounts represent the number of applicable unvested restricted stock shares on December 31, 2019, multiplied by $39.70, which was Kforce’s closing stock price on that date. |
(3) | For purposes of the Disability scenario, we have used 2.99 years for Mr. Liberatore and 2.00 years for Messrs. Kelly and Thomas and Ms. Mitchell as these are deemed to be the most probable outcomes if a disability occurred on December 31, 2019, given their current ages, while Mr. Dunkel’s amount is zero due to his current age. The annual payment amounts have been discounted at a rate of 3.25%, which is the lump sum conversion rate that was utilized for the SERP benefit at December 31, 2019. |
(4) | These amounts represent the value of Kforce’s portion of the health care benefits provided to each respective NEO consistent with those benefits received as of December 31, 2019. For purposes of the Disability scenario, Mr. Dunkel’s portion is zero due to his current age. The annual benefit amounts have been discounted at a rate of 2.75%, which is the discount rate that was utilized for the SERP benefit at December 31, 2019. |
(5) | These amounts represent the lump sum present value of the future monthly vested benefit as determined pursuant to the SERP, using a lump sum conversion rate of 3.25%. Upon death or disability, Messrs. Dunkel and Liberatore are entitled to continuation of base salary pursuant to their employment agreements and if this benefit is less than the benefit otherwise payable under the SERP, the SERP benefit disclosed is net of the related benefit under their employment agreements. |
THE BOARD UNANIMOUSLY RECOMMENDS AN ADVISORY VOTE FOR PROPOSAL 3. |
Award Type | Shares Outstanding | ||
Restricted stock outstanding (unvested) | 1,163 | ||
Stock options outstanding | None | ||
Shares remaining for grant under the 2019 SIP (1) |