SECURITIES AND EXCHANGE COMMISSION
14A-101)SCHEDULE 14A INFORMATION
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Diebold Nixdorf, Incorporated |
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5995 Mayfair Road
P. O. Box 3077 • North Canton, Ohio 44720-8077
13, 2017Dear Shareholder:
The
20152017 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held at the Courtyard Marriott, 4375 Metro Circle NW, North Canton, Ohio 44720, on Thursday,Wednesday, April 23, 201526, 2017 at 11:30 a.m. EDT.As described in the accompanying Notice and Proxy Statement, at the Annual Meeting, you will be asked to (1) elect tenthirteen directors, (2) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31,
2015,2017, (3) approve, on an advisory basis, our named executive officer compensation, and (4) approve the Diebold Nixdorf, Incorporated Annual Cash Bonus Plan.2017 Equity and Performance Incentive Plan, (5) approve an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections, (6) approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections, and (7) cast an advisory vote on the frequency of the shareholder advisory vote on named executive officer compensation.We are pleased to continue to take advantage of the Securities and Exchange Commission rules allowing us to furnish proxy materials to shareholders on the Internet. We believe that these rules provide you with proxy materials more quickly and reduce the environmental impact of our Annual Meeting. Accordingly, we are mailing to shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review our
20152017 Proxy Statement and Annual Report for the year ended December 31, 2014,2016, and to vote online or by telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions for requesting these materials on the Notice of Internet Availability of Proxy Materials. All holders of record of Diebold Nixdorf, Incorporated common shares at the close of business on
February 27, 20152017 are entitled to vote at the 20152017 Annual Meeting. You may vote online at www.proxyvote.com.www.proxyvote.com. If you received a paper copy of the proxy card by mail, you may also vote by signing, dating and mailing the proxy card promptly in the return envelope or by calling a toll-free number.If you are planning to attend the meeting, directions to the meeting location are included on the back page. If you are unable to attend the meeting, you may listen to a replay that will be available on our web sitewebsite at
http://www.diebold.com.www.dieboldnixdorf.com. The replay may be accessed on our web sitewebsite soon after the meeting and shall remain available for up to three months.We look forward to seeing those of you who will be attending the meeting.
Sincerely,
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Sincerely, | | |
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HENRY D.G.D. G. WALLACE | | ANDREAS W. MATTES |
Chairman of the Board | |
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ANDREAS W. MATTES
President and Chief Executive Officer | |
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held on
April 23, 2015.26, 2017.This proxy statement,Proxy Statement, along with our Annual Report for the year ended
December 31, 2014,2016, including exhibits, are available free of charge atwww.proxyvote.com (you will need to reference the 12-digit16-digit control number found on your proxy card or Notice of Internet Availability of Proxy Materials in order to vote).
5995 Mayfair Road
P.O.P. O. Box 3077 • North Canton, Ohio 44720-8077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 2017 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held at the Courtyard Marriott, 4375 Metro Circle NW, North Canton, Ohio 44720, on Wednesday, April 23, 201526, 2017 at 11:30 a.m. EDT, for the following purposes:
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| 1. | To elect tenthirteen directors; |
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| 2. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015; |
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| 3. | To approve, on an advisory basis, our named executive officer compensation; and |
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| 4. | To approve the Diebold Nixdorf, Incorporated Annual Cash Bonus Plan.2017 Equity and Performance Incentive Plan; |
| 5. | To approve an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections; |
| 6. | To approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections; and |
| 7. | To cast an advisory vote on the frequency of the shareholder advisory vote on named executive officer compensation. |
Your attention is directed to the attached proxy statement,Proxy Statement, which fully describes these items.
Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
Holders of record of Diebold Nixdorf, Incorporated common shares at the close of business on
February 27, 20152017 will be entitled to vote at the 2017 Annual Meeting.The enclosed proxy card is solicited, and the persons named therein have been designated, by Diebold’sDiebold Nixdorf’s Board of Directors.
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| | By Order of the Board of Directors |
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| | Jonathan B. Leiken |
| | Senior Vice President, Chief Legal Officer and Secretary |
13, 2017(approximate mailing date)
You are requested to cooperate in assuring a quorum by voting online at
www.proxyvote.comor, if you received a paper copy of the proxy materials, by filling in, signing and dating the
enclosed proxy and promptly mailing it in the return envelope.
DIEBOLD NIXDORF, INCORPORATED
P.O. Box 3077 • North Canton, Ohio 44720-8077
2017 ANNUAL MEETING OF SHAREHOLDERS APRIL 23, 2015
TABLE OF CONTENTS
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TABLE OF CONTENTS
(continued)
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PROXY SUMMARY
This proxy statementProxy Statement is furnished to shareholders of Diebold Nixdorf, Incorporated (“Diebold Nixdorf,” the “Company, “we,” and “us”) in connection with the solicitation by the Board of Directors of proxies to be used at our 20152017 Annual Meeting of Shareholders, and any postponements or adjournments of the meeting.
These proxy materials are being sent to our shareholders on or about
March 11, 2015.13, 2017.This proxy summary is intended to provide an overview of the information you can find elsewhere in this Proxy Statement. As this is only a summary, we encourage you to read the Proxy Statement in its entirety for more information about these topics before voting.
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Q:Meeting Information |
Time and Date | | When and where is the Annual Meeting?11:30 a.m. EDT, April 26, 2017 |
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A:Place | | The 2015 Annual Meeting will be held at the Courtyard Marriott 4375 Metro Circle NW North Canton, Ohio 44720 on April 23, 2015, at 11:30 a.m. EDT. |
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Record Date | | Close of Business on February 27, 2017 |
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| Proposals for Your Vote and Board Recommendations |
Proposal | | Board Recommendation | | Page References (for more detail) |
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Q:1. To elect thirteen directors | | FOR EACH NOMINEE | | 19-26 |
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2. To ratify the appointment of our independent registered public accounting firm (KPMG LLP) | | FOR | | 30 |
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3. To approve, on an advisory basis, our named executive officer compensation | | FOR | | 31, 49-91 |
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4. To approve the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan | | FOR | | 32 |
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5. To approve an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections | | FOR | | 44 |
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6. To approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections | | FOR | | 46 |
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7. To cast an advisory vote on the frequency of the shareholder advisory vote on named executive officer compensation | | 1 YEAR | | 48 |
Information on voting mechanics, approval requirements and related matters can be found in the “Voting Information” and “Other Matters” sections starting on pages 5 and 94. |
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| Business Performance and Strategic Initiatives |
In 2016, we transformed the Company and laid the foundation for our future. We acquired Wincor Nixdorf Aktiengesellschaft (which we refer to as “Wincor Nixdorf” in this Proxy Statement) to improve our business portfolio, broaden our scale, expand our leadership in services and software, and increase our capacity to innovate and collaborate with customers. We also divested our North America Electronic Security business and launched two new strategic alliances in China. These strategic achievements have had a profound impact on us, as we have doubled the size of our Company and have significantly enhanced our mix of revenue. We continue to make progress on our integration, and our cost synergy efforts are geared towards the realization of scale effects in the hardware business and streamlining our management and workforce composition. Our sales team is fully aligned around our goals, quotas and account plans. In 2017, we have made extensive changes to realign our sales organization to be closer to our customers, and we are investing in training so our sales executives can be best in class consultants to our customers on their digital journey. |
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| Corporate Governance Updates and Shareholder Outreach |
Following our acquisition of Wincor Nixdorf, we expanded our Board of Directors to include two directors from the Wincor Nixdorf board of directors as well as, more recently, our newly appointed COO. The skills that these new directors bring to the Board are instrumental to our achievement of synergies and global strategy going forward. We also are transitioning certain Management and Supervisory Board positions at the former Wincor Nixdorf level in connection with our integration efforts. In February 2017, our Board took the positive step of adopting “proxy access” in our Code of Regulations. Proxy access allows a long-term shareholder (or group of shareholders) that have held at least 3% of our outstanding shares for a period of at least three years, to nominate a limited number of directors and to have those nominees included in our proxy statement and proxy card for the shareholders’ annual meeting, subject to compliance with the processes and requirements stated in the Code of Regulations. The Board recognized the growing preference of shareholders for proxy access and the trend in governance best practices to implement proxy access, and therefore amended our Code of Regulations. At our 2016 Annual Meeting, the advisory vote to approve the executive compensation program for our named executive officers received solid support but represented a decline from previous years. As a result, we embarked on an extensive shareholder outreach and engagement strategy between August 2016 and February 2017 to meetin-person or by telephone with shareholders and proxy advisory services to understand concerns. We believe we have modified compensation practices and increased and clarified our disclosure in response to our shareholder interactions. As we continue our transformation, we will continue to engage with shareholders and create executive compensation strategies that align our strategic goals and incentivize our executives. |
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| Overview of Our Board Nominees |
You are being asked to vote to elect each of the following nominees to our Board of Directors. The tables that follow provide summary information about our nominees, and detailed information about each director’s background, skills and expertise can be found in Proposal 1: Election of Directors on pages 19-26. Information about our Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee, and Technology Strategy and Innovation Committee can be found on pages 9-11. |
| | | Committee Membership |
| Name and Occupation / Career Highlights | | Age | | Director
Since | | Independent | | Audit | | Board
Gov. | | Comp. | | Fin. | | TS&I |
Patrick W. Allender Retired Executive Vice President, Chief Financial Officer and Secretary, Danaher Corporation | | 70 | | 2011 | | Yes | | Chair | | | | | | • | | |
Phillip R. Cox President and Chief Executive Officer, Cox Financial Corporation | | 69 | | 2005 | | Yes | | | | • | | Chair | | | | |
Richard L. Crandall Managing Partner, Aspen Venture LLC; Executive Chairman, Pelstar LLC | | 73 | | 1996 | | Yes | | | | • | | | | | | Chair |
Dr. Alexander Dibelius Managing Partner, CVC Capital Partners (Deutschland) GmbH | | 57 | | 2016 | | Yes | | | | • | | | | • | | |
Dr. Dieter W. Düsedau Physicist and Former Director (Senior Partner), McKinsey & Co. | | 58 | | 2016 | | Yes | | • | | | | • | | | | |
Gale S. Fitzgerald Retired President and Director, TranSpend, Inc. | | 66 | | 1999 | | Yes | | • | | Chair | | | | | | |
Gary G. Greenfield Partner, Court Square Capital Partners | | 62 | | 2014 | | Yes | | | | | | | | • | | • |
Andreas W. Mattes Chief Executive Officer, Diebold Nixdorf, Incorporated | | 55 | | 2013 | | No | | | | | | | | | | |
Robert S. Prather, Jr. President and Chief Executive Officer, Heartland Media, LLC | | 72 | | 2013 | | Yes | | • | | | | | | • | | |
Rajesh K. Soin Chairman of the Board and Chief Executive Officer, Soin, LLC | | 69 | | 2012 | | Yes | | | | | | • | | | | • |
Henry D. G. Wallace Non-executive Chairman of the Board, Diebold Nixdorf, Incorporated | | 71 | | 2003 | | Yes | | | | | | | | | | |
Alan J. Weber Chief Executive Officer, Weber Group LLC | | 68 | | 2005 | | Yes | | | | | | • | | Chair | | |
Dr. Jürgen Wunram Senior Vice President and Chief Operating Officer, Diebold Nixdorf, Incorporated | | 58 | | 2017 | | No | | | | | | | | | | |
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 | | See pages 17-18 for more information on
our considerations of director nominees
and additional detail regarding the key
qualifications and skills of our 2017
nominees. Information about our directors’
compensation and share ownership is
provided on pages 14-16 and 28. |
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VOTING INFORMATION
| Q: | What items will be voted on at the Annual Meeting?Meeting and how does the Board recommend I vote? |
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| A: | | At the Annual Meeting, youYou are being asked to:to vote on the proposals outlined above in the proxy summary on page 1. The Board recommends a vote FOR each nominee, FOR each of Proposals 2, 3, 4, 5, and 6 and EVERY YEAR for Proposal 7. |
| Q. | What happens if other matters are properly presented at the Annual Meeting? |
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| | • Elect ten directors; |
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| | • Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015; |
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| | • Approve, on an advisory basis, our named executive officer compensation; and |
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| | • Approve the Diebold, Incorporated Annual Cash Bonus Plan. |
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| | If a permissible proposal other than the listed proposals is presented at the Annual Meeting, your proxy gives authority to the individuals named in the proxy to vote on any such proposal in accordance with their best judgment. We have not received notice of other matters that may be properly presented at the Annual Meeting. |
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Q: | | Who is entitled to vote at the Annual Meeting? |
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| A: | | Our record date for the 20152017 Annual Meeting is February 27, 2015.2017. Each shareholder of record of our common shares as of the close of business on February 27, 20152017 is entitled to one vote for each common share held. As of the record date, there were 64,824,932 75,442,887 common shares outstanding and entitled to vote at the Annual Meeting. |
| A: | | If you were a shareholder on the record date and you held shares in your own name, you have three ways to vote and submit your proxy before the 20152017 Annual Meeting: |
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| | • By mail – You may vote by completing, signing and returning the proxy card that you will receive in the mail; |
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| | • By Internet – We encourage you to vote and submit your proxy online at www.proxyvote.com. Even if you request and receive a paper copy of the proxy materials, you may vote online by going to www.proxyvote.com and entering your control number, which is a 12 digit number located in a box on your proxy card that you can also receive in the mail, if requested; or
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| | • By telephone – You may vote and submit your proxy by calling 1-800-690-6903 and providing your control number, which is a 12-digit number located in a box on your proxy card that you can also receive in the mail, if requested. |
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| | If you complete and submit a proxy card, the persons named as proxies on your proxy card, which we refer to as the Proxy Committee, will vote the shares represented by your proxy in accordance with your instructions. If you submit your proxy card but do not indicate your voting preferences, the Proxy Committee will vote according to the recommendation of the Board. |
By mail – You may vote by completing, signing and returning the proxy card that you will receive in the mail;
By telephone – You may vote and submit your proxy by calling1-800-690-6903 and providing your control number, which is a16-digit number located in a box on your proxy card that you can also receive in the mail, if requested.
If you complete and submit a proxy card, the persons named as proxies on your proxy card, which we refer to as the Proxy Committee, will vote the shares represented by your proxy in accordance with your instructions. If you submit your proxy card but do not indicate your voting preferences, the Proxy Committee will vote according to the recommendation of the Board.
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Q: | | How does the Board recommend I vote? |
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A: | | The Board recommends a vote: |
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| | • FOR each of our ten nominees for director;
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| | • FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015;
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| | • FOR the approval, on an advisory basis, of our named executive officer compensation; and
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| | • FOR the approval of the Diebold, Incorporated 2015 Annual Cash Bonus Plan.
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Q: | | Can I change my vote after I have voted? |
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| A: | | You may change your vote at any time before your proxy is voted at the 20152017 Annual Meeting by: |
Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 2017 Annual Meeting to our Corporate Secretary at the Company’s address above;
Submitting a later dated, signed proxy before the start of the 2017 Annual Meeting;
If you have voted by the Internet or by telephone, you may vote again over the Internet or by telephone up until 11:59 p.m. EDT on April 25, 2017; or
Attending the 2017 Annual Meeting, withdrawing your earlier proxy and voting in person.
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| | • Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 2015 Annual Meeting to our Corporate Secretary at the Company’s address above; |
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| | • Submitting a later dated, signed proxy before the start of the 2015 Annual Meeting; |
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| | • If you have voted by the Internet or by telephone, you may vote again over the Internet or by telephone up until 11:59 p.m. EDT on April 22, 2015; or |
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| | • Attending the 2015 Annual Meeting, withdrawing your earlier proxy and voting in person. |
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Q: | | What is cumulative voting and how can I cumulate my votes for the election of directors? |
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| A: | | In cumulative voting, each shareholder may cast a number of votes equal to the number of shares owned multiplied by the number of directors to be elected, and that number of the votes may be cast all for one director-nominee only or distributed among the director-nominees. |
In order to cumulate votes for the election of a director, a shareholder must give written notice to ournon-executive Chairman, any Vice President or our Corporate Secretary no later than 11:29 a.m. EDT on April 24, 2017 that the shareholder desires that the voting for the election of directors be cumulative, and if an announcement of such notice is made upon convening the Annual Meeting by the Chairman or Corporate Secretary of the meeting, or by or on behalf of the shareholder giving the notice, each shareholder will have cumulative voting. As of March 10, 2017 we have not received any notice that a shareholder desires to invoke cumulative voting for the election of directors.
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| | In order to cumulate votes for the election of a director, a shareholder must give written notice to our non-executive Chairman, any Vice President or our Corporate Secretary no later than 11:29 a.m. EDT on April 21, 2015 that the shareholder desires that the voting for the election of directors be cumulative, and if an announcement of such notice is made upon convening the Annual Meeting by the Chairman or Corporate Secretary of the meeting, or by or on behalf of the shareholder giving the notice, each shareholder will have cumulative voting. |
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| | We have received written notice from a shareholder that he desires that cumulative voting be in effect for the election of directors. Accordingly, unless contrary instructions are received on the enclosed proxy, it is presently intended that all votes represented by properly executed proxies will be divided evenly among the director-nominees. However, if voting in such manner would not be effective to elect all such director-nominees, votes will be cumulated at the discretion of the Proxy Committee so as to maximize the number of such director-nominees elected. |
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Q: | | How many votes are required to adopt each proposal? |
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| A: | | For Proposal 1, the director-nominees receiving the greatest number of votes will be elected, subject to our Majority Voting Policy described below. For each of Proposals 2, 3, and 4, the affirmative vote of the holders of a majority of the votes cast, whether in person or by proxy, is required for approval. For Proposals 5 and 6, an affirmative vote of holders oftwo-thirds of our outstanding shares is required for approval. For Proposal 7, the frequency of the shareholder advisory vote on named executive officer compensation receiving the greatest number of votes (every year, every two years or every three years) will be considered the frequency recommended by shareholders. The results of the voting at the meeting will be tabulated by the inspectors of election appointed for the Annual Meeting. |
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Q: | | What is the Majority Voting Policy? |
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| A: | | Our Board of Directors has adopted a policy that any director-nominee who is elected but receives a greater number of votes withheld from his or her election than votes in favor of election, in an election that is not a contested election, is expected to tender his or her resignation following certification of the shareholder vote, as described in greater detail below under “ Majority Voting Policy.” |
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Q: | | What is a “broker non-vote?”non-vote”? |
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| A: | | If your shares are held in the name of a brokerage firm, your shares may be voted even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under the New York Stock Exchange, or NYSE, rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters. When a proposal is not a routine matter under NYSE rules and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is referred to as a “brokernon-vote.” |
the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2017, is the only routine matter for which the brokerage firm who holds your shares can vote your shares on these proposals without your instructions. Accordingly, there should be no brokernon-votes with respect to Proposal 2. Brokernon-votes will have no effect on the outcome of Proposals 1, 3, 4, and 7. For proposals 5 and 6, brokernon-votes will have the same effect as shares voted against. |
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| | Proposal 2, the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015, is the only routine matter for which the brokerage firm who holds your shares can vote your shares on these proposals without your instructions. Accordingly, there should be no broker non-votes with respect to Proposal 2. Broker non-votes will have no effect on the outcome of Proposals 1, 3 or 4. |
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Q: | | How many shares must be present to constitute a quorum and conduct the Annual Meeting? |
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| A: | | A quorum is necessary to hold the Annual Meeting. A majority of the outstanding shares present or represented by proxy constitutes a quorum for the purpose of adopting a proposal at the Annual Meeting. If you are present and vote in person at the Annual Meeting, or vote on the Internet, by telephone or by submitting a properly executed proxy card, you will be considered part of the quorum. Brokernon-votes will not be part of the voting power present, but will be counted to determine whether or not a quorum is present. |
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Q: | | What happens if I abstain? |
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| A: | | AFor proposals except Proposal 4, a share voted “abstain” with respect to any proposal is considered as present and entitled to vote with respect to the proposal, but is not considered a vote cast with respect to the proposal. For Proposal 4, abstentions are considered votes cast for purposes of shareholder approval of an equity plan. For Proposals 5 and 6, shares voted abstain will have the same effect as shares voted against. Accordingly, for Proposal 1, abstentions will have no effect on the election of directors, except in regards to the Majority Voting Policy described below. For Proposals 2, 3, and 4,7, abstentions will not be counted for determining the outcome of these proposals. |
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Q: | | Why did I receive aone-page notice in the mail regarding Internet availability of proxy materials instead of a full set of proxy materials? |
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| A: | | Under rules adopted by the Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending you a Notice of Internet Availability of Proxy Materials. The instructions found in the noticeNotice explain that all shareholders will have the ability to access the proxy materials on www.proxyvote.com or request to receive a printed copy of the proxy materials. You may also request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Diebold encouragesWe encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual Meeting. |
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Q: | | What shares are included on my proxy card or Notice of Internet Availability of Proxy Materials? |
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| A: | | The number of shares printed on your proxy card(s) represents all your shares under a particular registration. Receipt of more than one proxy card or Notice of Internet Availability of Proxy Materials means that certain of your shares are registered differently and are in more than one account. If you receive more than one proxy card, sign and return all your proxy cards to ensure that all your shares are voted. If you receive more than one Notice, reference the distinct 12-digit16-digit control number on each Notice when voting by Internet. |
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TABLE OF CONTENTS
CORPORATE GOVERNANCE
Corporate Governance Highlights – Proxy Access AdoptionOur Board continues to evaluate our governance arrangements to best serve our shareholders. One notable action that we have recently taken is that our Board has adopted a proxy access provision as part of our Code of Regulations in February 2017. This new provision (described in more detail on page 17) provides shareholders with the right to nominate candidates for election to our Board and have their nominees included in our proxy statement.
Board Leadership Structure
Since 2006, we have separated theOur Board is committed to strong leadership and currently maintains separate roles of our Chief Executive Officer, or CEO, and our Chairman of the Board. The Company intends to maintain the separation between its CEOWe believe this structure is effective for our current circumstances and Chairman of the Board positions for the time being and at least through 2015. Otherwise, thea good governance practice. The Board does not have a specific policy with respect to separating versusor combining these roles, or whether the Chairman should be an employee ornon-employee director. As such, the Board, primarily under the guidance of the Board Governance Committee, director, and will continue to periodically review our leadership structure to determine whether to maintain this separation after 2015 in light of applicable corporate governance standards, market practices and our specific circumstances and needs, and any other factors that may be relevant to the analysis.
needs.
Board and Director Assessments
The Board Governance Committee oversees the Board and director assessment program, as noted below in “
Board Committees and Composition.” When taken together, the following assessment program provides a holistic review of the role, performance and function of the full Board, the Chairman and each director in relation to the Company’s needs, challenges and opportunities. The assessment program includes:•Full Board Self-Assessment. Annual self-assessment that includes a full board self-assessment, committee assessments, a chairman assessment, and individual director assessments. The full board self-assessment includes comprehensive questionnaire including a wide-range of topicsquestions designed to provide a holistic evaluation of the performance of the Board in light of the needs of the Company. Eachour needs. The committee, chairman, and individual director is required to complete the questionnaire.assessments are more specifically tailored. The assessment results are reviewedshared with the applicable directors, committee members, and discussed by the Board Governance Committee, and any proposed actions are then reported to the full Board, of Directors.
•Committee Assessments. Annual assessment of each Board Committee’s performance over the prior year, as led by the applicable Committee Chair. Resultsand appropriate action plans are reviewed by the respective Committee Chairs,prepared and discussed with the applicable Committee members, and any proposed actions are then reported to the full Board of Directors.
•Chairman Assessment. Annual assessment of the Chairman of the Board that includes a comprehensive questionnaire including relevant topics necessary to provide a thorough analysis of the Chairman’s performance and role in leading the Board in its responsibilities and obligations. Each director completes the questionnaire anonymously. The results are reviewed by the Chairman and the Board Governance Committee, and any proposed actions are then reported to the full Board of Directors.
•Individual Director Assessment. Annual assessment of each individual director, including of themselves, that includes a comprehensive questionnaire including relevant topics necessary to provide a thorough analysis of each director’s performance on the Board. Each director completes the questionnaires anonymously with respect to the other directors. The results are reviewed by the Chairman who delivers feedback to each individual director.
executed.
Board Meetings and Executive Sessions
During 2014, theThe Board held five regular meetings and two special meeting in person. With the exception of Mr. Artavia, allperson or telephonically during 2016, along with frequent telephonic updates around strategic transactions. All of our current directors attended 75% or more of the aggregate of all meetings of the Board and the Board committees on which they served during
2014. Due to scheduling conflicts with other professional obligations, Mr. Artavia attended 66% of the aggregate of the total Board and committee meetings on which he served in 2014.2016.In accordance with the NYSE’s corporate governance standards, our independent directors regularly meet in executive session without management present, generally following each regularly-scheduled Board meeting. In addition, on occasion, our independent directors will meet in executive session prior to the start of a Board meeting.
While Diebold doeswe do not have a formal policy regarding directors’ attendance at the Annual Meeting of Shareholders, it is expected that all directors attend the 20152017 Annual Meeting unless there are extenuating circumstances for nonattendance.non-attendance. All directors standing forre-election attended who were serving as directors as of the 20142016 Annual Meeting of Shareholders.
Shareholders, with the exception of Henry D. G. Wallace, attended the 2016 Annual Meeting.
Board Risk Oversight
The Board and the Board committees collectively play an active role in overseeing management of the Company’sour risks and in helping the Company establish an appropriate risk tolerance. The Board oversees the Company’sour risk strategy and effectiveness; however, management is responsible for identifying risks inherent in our business, as well as implementing and supervisingday-to-day risk management. Accordingly, the Board and the appropriate committees receive regular reports from our senior management on areas of material risk to us, including operational, financial, strategic, compliance, cybersecurity, competitive, reputational, legal and regulatory risks. The Board also meets with senior management as part of each Board meeting, and more frequently as needed, to discuss strategic planning, including the key risks inherent in our short- and long-term strategies. Senior management then provides the Board with periodic updates throughout the year with respect to these strategic initiatives and the impact and management of these key risks.
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In addition, each Board committee is responsible for evaluating certain risks within its area of responsibility and overseeing the management of such risks. The entire Board is then informed about such risks and management’s response to each risk through regular committee reports delivered by the Committee Chairs.
We also have robust internal dialog among our operations, finance, compliance, treasury, tax, legal and internal audit departments, among others, whenever a potential risk arises. These discussions are escalated to our CEO,Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Security Officer, Corporate Controller, Chief Legal Officer, Chief Ethics and Compliance Officer, Chief Human Resources Officer, Chief Communications Officer, and/or Vice President, Internal Audit and other Vice President leadsPresidents of our various divisions and regions, as appropriate, with open lines of communication among them, the various committees of the Board and the entire Board.
We believe that the Board’s approach and continued evaluation of its risk oversight, as described above, optimizesoptimize its ability to assess the various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Diebold.the Company. We also believe that our Board leadership structure complements our risk management structure because it allows our independent directors to exercise effective oversight of the actions of management in identifying risks and implementing effective risk management policies and controls.
Board Committees and Composition
The Board’s current standing committees are the Audit Committee, Board Governance Committee, Audit Committee, Compensation Committee, Finance Committee and Investment Committee. In 2014, the Board also formed a Technology Strategy & Innovation Committee, which is discussed further below. The following is a summary of our committee structure and membership:
Audit Committee
This committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, or the Exchange Act, and its functions are described below under “Report of Audit Committee.” The committee’s current charter is available on our web site at http://www.diebold.com.
The current members of the Audit Committee are Patrick W. Allender, Chair, Roberto Artavia, Bruce L. Byrnes, Robert S. Prather, Jr., and Alan J. Weber, all of whom are independent under the NYSE Rules and applicable SEC requirements. In addition, the Board has determined that Messrs. Allender and Weber are audit committee financial experts within the meaning of such term under Item 407(d)(5) of Regulation S-K. This committee met in person or telephonically eight times during 2014, and had informal communications between themselves and management, as well as with our independent auditors, at various other times during the year.
Board Governance Committee
This committee’s functions include reviewing the qualifications of potential director candidates and making recommendations to the Board to fill vacancies or consider the appropriate size of the Board. This committee makes recommendations regarding corporate governance principles, the composition of the Board committees, and the directors’ compensation for their services on the Board and on Board committees. This committee leads and oversees all of the Board assessments, including the Committee assessments with respect to process and design, as described above in “Board and Director Assessments.” This committee also oversees director orientation and education, as described in “Director Orientation and Education” below. The committee’s current charter is available on our web site at http://www.diebold.com.
The current members of the Board Governance Committee are Gale S. Fitzgerald, Chair, Patrick W. Allender, Bruce L. Byrnes, Rajesh K. Soin and Henry D. G. Wallace, all of whom are independent. This committee met in person or telephonically five times during 2014, and had informal communications between themselves and management at various other times during the year.
Compensation Committee
This committee administers our executive pay program. The role of the committee is to oversee our equity plans (including reviewing and approving equity grants to executive officers) and to annually review and approve all pay decisions relating to executive officers. This committee also determines and measures achievement of corporate and individual goals, as applicable, by the executive officers under our short- (annual) and long-term incentive plans, and makes recommendations to the Board for ratification of such achievements. This committee reviews the management succession plan and proposed changes to any of our benefit plans, such as retirement plans, deferred compensation plans and 401(k) plans. For a narrative description of the committee’s processes and procedures for the consideration of executive officer compensation, and for further discussion of the committee members, see “Compensation Discussion and Analysis” below. The committee’s current charter is available on our web site at http://www.diebold.com.
The current members of the Compensation Committee are Phillip R. Cox, Chair, Richard L. Crandall, Gale S. Fitzgerald, Rajesh K. Soin and Henry D. G. Wallace, all of whom are independent under the NYSE rules and applicable SEC requirements. This committee met in person or telephonically four times during 2014, and had informal communications between themselves and management, as well as the Committee’s independent compensation consultant, at various other times during the year.
Investment Committee
This committee’s functions include establishing the investment policies, including asset allocation, for our cash, short-term securities and retirement plan assets, overseeing the management of those assets, ratifying fund managers recommended by management and assessing at least annually the investment performance of our retirement plans and 401(k) plans. The committee’s current charter is available on our web site at http://www.diebold.com.
The current members of the Investment Committee are Alan J. Weber, Chair, Phillip R. Cox and Robert S. Prather, Jr. This committee met in person or telephonically once in 2014, and had informal communications between themselves and management at various other times during the year.
Technology Strategy and Innovation Committee
Upon the recommendationCommittee. Each committee’s members and meetings during 2016 and functions are described below. | | |
| Audit Committee* |
Members: Patrick W. Allender (Chair), Dr. Dieter W. Düsedau, Gale S. Fitzgerald and Robert S. Prather, Jr. All members of this committee qualify as independent. Meetings: This committee met in person or telephonically eleven times during 2016, and had informal communications with management, as well as with our independent auditors, at various other times during the year. Contact: auditchair@dieboldnixdorf.com Committee Report: See page 92. | | Primary Duties and Responsibilities: • Monitors the adequacy of our financial reporting process and systems of internal controls regarding finance, accounting and ethics and compliance. • Monitors the independence and performance of our outside auditors and performance and controls of our internal audit department. • Provides an avenue of communication among the outside auditors, management, the internal audit department and the Board. Financial Experts: The Board has determined that Mr. Allender is an audit committee financial expert within the meaning of such term under Item 407(d)(5) of RegulationS-K. |
| * | This committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, or the Exchange Act. |
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| | |
| Board Governance Committee |
Members: Gale S. Fitzgerald (Chair), Phillip R. Cox, Richard L. Crandall and Dr. Alexander Dibelius All members of this committee qualify as independent. Meetings: This committee met in person or telephonically five times during 2016, and had informal communications with management at various other times during the year. Contact: bdgovchair@dieboldnixdorf.com | | Primary Duties and Responsibilities: • Insures Board oversight of our enterprise risk management process. • Reviews qualifications of potential director candidates. • Makes recommendations to the Board to fill vacancies or consider the appropriate size of the Board. • Makes recommendations regarding corporate governance principles, Board committee composition, and the directors’ compensation for their services on the Board and on Board committees. • Leads and oversees all of the Board and Committee assessments. • Oversees director orientation and education, as described in “Director Orientation and Education” below. |
| | |
| Compensation Committee |
Members: Phillip R. Cox (Chair), Dr. Dieter W. Düsedau, Rajesh K. Soin and Alan J. Weber All members of this committee qualify as independent. Meetings: This committee met in person or telephonically five times during 2016, and had informal communications with management, as well as the committee’s independent compensation consultant, at various other times during the year. Contact: compchair@dieboldnixdorf.com Committee Report: See page 49. | | Primary Duties and Responsibilities: • Administers our executive compensation program. • Oversees our equity plans (including reviewing and approving equity grants to executive officers). • Annually reviews and approves all pay decisions relating to executive officers. • Determines and measures achievement of corporate and individual goals, as applicable, by our executive officers under our short- (annual) and long-term incentive plans, and makes recommendations to the Board for ratification of such achievements. • Reviews the management succession plan and proposed changes to any of our benefit plans, such as retirement plans, deferred compensation plans and 401(k) plans. • For additional discussion of the committee’s role, processes and procedures in connection with executive compensation, see “Compensation Discussion and Analysis - Role of the Compensation Committee” below. |
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| | |
| Finance Committee |
Members: Alan J. Weber (Chair), Patrick W. Allender, Dr. Alexander Dibelius, Gary G. Greenfield and Robert S. Prather, Jr. All members of this committee qualify as independent. Meetings: This committee met in person or telephonically five times in 2016, and had informal communications with management at various other times during the year. | | Primary Duties and Responsibilities: • Makes recommendations to the Board with respect to material or other significant transactions. • Oversees the Company’s borrowing structures and credit facilities. �� • Establishes investment policies, including asset allocation, for our cash, short-term securities and retirement plan assets and oversees the management of those assets. • Reviews our financial exposure and liabilities, including the use of derivatives and other risk management techniques. • Makes recommendations to the Board related to customer financing activities and funding plans for our Company. |
| | |
| Technology Strategy and Innovation Committee |
Members: Richard L. Crandall (Chair), Gary G. Greenfield and Rajesh K. Soin All members of this committee qualify as independent. Meetings: This committee did not formally meet in 2016 but met in January 2017. | | Primary Duties and Responsibilities: • Assists the Board in its oversight of our investment in software and services technology and intellectual property. • Evaluates our global technology and innovation strategies and initiatives, including their impact on our performance and competitive position. • Evaluates management proposals for strategic software and technology investments, divestitures, and acquisitions. • Provides clarification and validation to the Board on the direction of our company as it relates to technology and innovation. |
Corporate Governance Materials Available on Our Website
Copies of the Board Governance Committee, this committee was formed by the Board in April 2014, and its functions include overseeing the Company’s technology goals and strategies. Specifically, the committee focuses on overseeing strategies regarding innovation, competitive differentiation, customer and market understanding, research and development and engineering programs, security and privacy dimensions, as well as partnering and acquisition proposals. The committee’s current charter isfollowing documents, among others, are available on our web site at
http://www.diebold.com.The memberswebsite (www.dieboldnixdorf.com) in the Corporate Governance portion of the Investor Relations section under the Company tab:Current Charters for our Audit, Board Governance, Compensation, Finance, and Technology Strategy and Innovation Committee are Richard L. Crandall, Chair, Roberto Artavia and Gary G. Greenfield. This committee met in person or telephonically three times in 2014.Committees;
Our Director Independence Standards;
Our Corporate Governance Guidelines; and
Our Code of Business Ethics.
Information on our website is not, and will not be deemed to be, a part of or incorporated into this Proxy Statement.
Director Independence
The Board determined that each of Patrick W. Allender, Roberto Artavia, Bruce L. Byrnes, Phillip R. Cox, Richard L. Crandall, Dr. Alexander Dibelius, Dr. Dieter W. Düseadau, Gale S. Fitzgerald, Gary G. Greenfield, Robert S. Prather, Jr., Rajesh K. Soin, Henry D. G. Wallace and Alan J. Weber has no material relationship with Dieboldthe Company (either directly or as a
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partner, shareholder or officer of an organization that has a relationship with us) and is independent under our director independence standards, the NYSE director independence standards, and the SEC independence requirements, as applicable and as currently in effect. Andreas W. Mattes doesand Dr. Jürgen Wunram do not meet these independence standards because he isthey are employed by us as our PresidentCEO and CEO. Our director independence standards are available on our web site at
http://www.diebold.com.COO, respectively.In making the independence determinations, the Board considered the following:
Mr.Messrs. Crandall servesand Greenfield serve on the board of directors of R.R. Donnelley & Sons Company,Financial Solutions, Inc., which provided SEC filing and printing services in 2016 related to our acquisition of Wincor Nixdorf (including the tender offer registration and related disclosures in the United States and Germany), the filing and printing services related to the Company’s amended credit facilities and notes offering completed in 2016 in support of the business combination transaction, and our proxy statement for our 20142016 annual meeting of shareholders for a fee of approximately $31,000.$1,839,094. The Board determined that the provision of these services by Donnelley Financial Solutions, Inc. and Messrs. Crandall and Greenfield’s service on the Donnelley Financial Solutions, Inc. board did not create a material relationship or impair the independence of Messrs. Crandall and Greenfield.
Mr. Crandall’s boardCrandall owns the Enterprise Software CEO Roundtable and our CEO, Mr. Mattes, was a member of that Roundtable in 2016 and will also be a member in 2017. The standard annual fees, which were paid by the Company, were $9,500 for 2016. The Board determined that the Roundtable’s receipt of a membership fee from the Company did not create a material relationship or impair the independence of Mr. Crandall.
Mr. Weber serves on the board of directors of Broadridge Financial Solutions, Inc., which provided processing, mailing and tabulation services for our proxy statement in 20142016 for a fee of approximately $154,000.$107,000. The Board determined that the provision of these services and Mr. Weber’s board membership did not create a material relationship or impair the independence of Mr. Weber.
Mr. Cox serves as President and CEO of Cox Financial Corporation, which may act as the broker with respect to certain supplemental disability benefits purchased by our employees, at their own expense and election, from certain insurance companies. Diebold is not a client or customer of Cox Financial Corporation and does not participate in the employee’s decision. To date, Cox Financial has not received any remuneration as a result of these brokerage services. The Board determined that the provision of these brokerage services to our employees, at their own expense and election, for purposes of their long term disability insurance coverage, did not create a material relationship or impair the independence of Mr. Cox.
Related Person Transaction Policy
Pursuant to our director independence standards, discussed above, and our Corporate Governance Guidelines, discussed below in “
Board Diversity, Director Qualifications and Corporate Governance Guidelines,” we do not engage in transactions withnon-employee directors or their affiliates if a transaction would cause an independent director to no longer be deemed independent, would present the appearance of a conflict of interest or is otherwise prohibited by law, rule or regulation. This includes, directly or indirectly, any extension, maintenance or renewal of an extension of credit to any of our directors.This prohibition also includes significant business dealings with directors or their affiliates, charitable contributions that would require disclosure in our proxy statement under the rules of the NYSE, and consulting contracts with, or other indirect forms of compensation to, a director. Any waiver of this policy may be made only by the Board and must be promptly disclosed to our shareholders.
Our Corporate Governance Guidelines are available on our website at www.diebold.com.
In
2014,2016, we did not engage in any related person transaction(s) requiring disclosure under Item 404 of RegulationS-K.
Communications with Directors
The Company’s Board of Directors provides a process for shareholders to send communications to the Board. Shareholders and interested parties may communicate with our Audit, Board Governance and Compensation Committee Chairs by sending an email to the address provided in the applicable committee chairsdescription above or with ournon-employee directors as a group by sending an email to:
toAudit Committee – nonmanagementdirectors@dieboldnixdorf.comauditchair@diebold.com
Board Governance Committee – bdgovchair@diebold.com
Compensation Committee – compchair@diebold.com
Independent Directors – nonmanagementdirectors@diebold.com
.Communications may also be directed in writing to such person or group at Diebold Nixdorf, Incorporated, Attention: Corporate Secretary, 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077. The independent members of the Board hashave approved a process for handling communications we receive that are addressed tonon-employee members of the Board. Under that process, the Corporate Secretary will review all such communications and determine whether communications require immediate attention. The Corporate Secretary will forward communications, or a summary of communications, to the appropriate director or directors.
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A majority of the independent directors of the Board approved this process for determining which communications are forwarded to various members of the Board.
Code of Business Ethics
All of our directors, executive officers and employees are required to comply with certain policies and protocols concerning business ethics and conduct as provided in our Code of Business Ethics, or the Code.Ethics. The Code of Business Ethics ties our core values to the ethical principles that must guide our business decisions. The Code of Business Ethics also provides clear information on the resources available for directors, executive officers and employees to ask questions and report unethical behavior. All members of the Board have received training specific to the Code.
Code of Business Ethics.The Code of Business Ethics applies not only to us, but also toincluding all of our domestic and international affiliates and subsidiaries. The Code of Business Ethics describes certain responsibilities that our directors, executive officers and employees have to Diebold,the Company, to each other and to our global partners and communities. It covers many topics, including compliance with laws, including the Foreign Corrupt Practices Act and relevant global anti-corruption laws, conflicts of interest, intellectual property and the protection of competitive and confidential information, as well as maintaining a respectful andnon-retaliatory workplace. The Code of Business Ethics also includes and links to our Conflicts of Interest Policy, which further details the requirements for our officers, directors and employees to avoid and disclose potential conflicts, including those that may result from related-partyrelated party transactions. In addition, our employees are required to report any conduct that they believe in good faith to be a violation of the Code.Code of Business Ethics. Our Audit Committee has procedures to receive, retain and treat complaints received regarding accounting, internal financial controls or auditing matters, and to allow for the confidential and anonymous submission of concerns regarding questionable practices or potential violations of our policies, including the Code.
The Code of Business Ethics is available on our web site at http://www.diebold.com.
Ethics.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during the year ended
December 31, 20142016 were Phillip R. Cox, Chair, Richard L. Crandall, Gale S. Fitzgerald,Dr. Dieter W. Düsedau, Rajesh K. Soin, Alan J. Weber and Henry D. G. Wallace. Except with respect to Mr. Wallace’s temporary executive status during the period between our prior CEO stepping down in January 2013 until Mr. Mattes assumed the chief executive officer role (as previously disclosed in our 2014 annual proxy statement), no member of the Compensation Committee is or has been an employee of Diebold. In addition, noWallace (who served through October 2016). No member of the Compensation Committee has had any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of certain relationships and related person transactions. No officer or employee of Dieboldthe Company has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director of Dieboldthe Company or member of the Compensation Committee during 2014.
2016.
Director Orientation and Education
All new directors participate in a director orientation program. The Board Governance Committee oversees this introduction and orientation process where the new director meets with key senior management personnel and takes a tour through our global solutions center to improve his or her understanding of our business and global products and solutions. In addition, the orientation process educates the new director on the history of the Company, our strategic plans, significant financial matters, core values, including ethics and compliance programs (and also including our Code of Business Ethics), corporate governance practices and other key policies and practices.
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COMPENSATION OF DIRECTORS
The following director compensation is determined by the Board at the recommendation of the Board Governance Committee. With respect tonon-employee directors, it is our goal to provide directors with fair and competitive compensation, while ensuring that their compensation is closely aligned with stockholder interests and with our performance.
shareholder interests.The annual retainer received by the directors during 20142016 remained the same as thosethat paid in 2013.2015. Accordingly, during 2014,2016, ournon-employee directors received an annual retainer of $65,000 for their service as directors. Ournon-executive Chairman of the Board received an additional annual retainer of $100,000 (increased from $90,000 effective May 1, 2014).
$100,000.In addition to their annual retainers, ournon-employee directors also received the following annual committee fees for their participation as members or as Chairs of one or more Board committees:
|
| | | | | | | |
| | Member | | Chair |
| Audit Committee | $ | 11,000 |
| | $ | 25,000 |
|
| Compensation Committee | $ | 7,500 |
| | $ | 20,000 |
|
| Board Governance Committee | $ | 7,500 |
| | $ | 15,000 |
|
| Investment Committee | $ | 3,000 |
| | $ | 10,000 |
|
| Technology Strategy and Innovation Committee | $ | 7,500 |
| | $ | 15,000 |
|
| | | | | | | | |
| | | Member | | | Chair | |
Audit Committee | | $ | 12,500 | | | $ | 25,000 | |
Compensation Committee | | $ | 10,000 | | | $ | 20,000 | |
Board Governance Committee | | $ | 7,500 | | | $ | 15,000 | |
Finance Committee | | $ | 7,500 | | | $ | 15,000 | |
Technology Strategy and Innovation Committee | | $ | 7,500 | | | $ | 15,000 | |
The varying fee amounts are intended to reflect differing levels of responsibility, meeting requirements and fiduciary duties. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year arepro-rated for his or her period of actual service.
A director may elect to defer receipt of all or a portion of his or her cash compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
In addition to cash compensation, eachnon-employee director may also receive equity awards under our Amended and Restated 1991 Equity and Performance Incentive Plan, as amended and restated on February 12, 2014, which we refer to as the 1991 Plan. TheWe aim of the Board is to provide a balanced mix of cash and equity compensation to our directors that targets the directors’ total pay at the median of a peer group of companies in similar industries and of comparable size and revenue. This peer group is the same one used by our Compensation Committee for benchmarking executive compensation, which is discussed in more detail below in “
Role ofPeer Companies and Competitive Market Data” under “Compensation Discussion and Analysis.”Prior to 2007, our non-employee directors received stock option awards underWith the 1991 Plan. Those stock options that vested prior to December 31, 2005 are entitled to reload rights, under which an optionee can elect to pay the exercise price using previously owned sharesexception of Drs. Dibelius and receive a new option at the then-current market price for a number of shares equal to those surrendered. The reload feature is only available, however, if the optionee agrees to defer receipt of the balance of the option shares for at least two years.
BeginningDüsedau, in
2007, our 2016, eachnon-employee directors were director was awarded
4,504 deferred common shares,
instead of stock options.subject to aone-year vesting condition. Each award approximated $124,000 in value and provides for dividend equivalent payments in cash during the restricted period. Ournon-employee directors have received deferred common shares awards since 2007. We believe
deferred sharesthese awards strengthen the directors’ ties to shareholder interests by
providing awards that more effectively build stock ownership and ensure that the directors’aligning their long-term economic interests
are aligned with those of other shareholders. In addition, the non-employeeand that these awards provide effective ways to help our directors
are subject to thebuild stock ownership.-14-
2016 Director Stock Ownership Guidelines, as discussed below.
In 2014, each non-employee director was awarded 3,162 deferred common shares, subject to a one year vesting condition. Each award approximated $125,000 in value.
CompensationThe following table details the cash retainers and fees received bycompensation of ournon-employee directors during
2014, as well as the aggregate grant date fair value of stock grants awarded during 2014 pursuant to our 1991 Plan:
2014 Director Compensation
|
| | | | | | | | |
| Name | | Fees Earned or
Paid in Cash1 ($) | | Stock Awards2 ($) | | All Other
Compensation3 ($) | | Total ($) |
| Patrick W. Allender | | 93,334 | | 124,425 | | 14,400 | | 232,159 |
| Roberto Artavia | | 81,000 | | 124,425 | | 7,557 | | 212,982 |
| Bruce L. Byrnes | | 82,667 | | 124,425 | | 17,620 | | 224,712 |
| Phillip R. Cox | | 85,333 | | 124,425 | | 26,360 | | 236,118 |
| Richard L. Crandall | | 82,833 | | 124,425 | | 26,762 | | 234,020 |
| Gale S. Fitzgerald | | 85,000 | | 124,425 | | 25,900 | | 235,325 |
Gary G. Greenfield4 | | 48,333 | | 124,425 | | 2,727 | | 175,485 |
| Robert S. Prather, Jr. | | 78,000 | | 124,425 | | 7,557 | | 209,982 |
| Rajesh K. Soin | | 79,000 | | 124,425 | | 11,295 | | 214,720 |
| Henry D. G. Wallace | | 175,667 | | 124,425 | | 28,315 | | 328,407 |
| Alan J. Weber | | 84,333 | | 124,425 | | 25,900 | | 234,658 |
| | | | | | | | |
| Name | | Fees Earned
or Paid in
Cash1 ($) | | Stock
Awards2 ($) | | All Other
Compensation3
($) | | Total
($) |
Patrick W. Allender | | 97,500 | | 123,500 | | 16,211 | | 237,211 |
Phillip R. Cox | | 92,500 | | 123,500 | | 23,836 | | 239,836 |
Richard L. Crandall | | 87,500 | | 123,500 | | 24,172 | | 235,172 |
Dr. Alexander Dibelius | | 30,000 | | — | | — | | 30,000 |
Dr. Dieter W. Düsedau | | 32,813 | | — | | — | | 32,813 |
Gale S. Fitzgerald | | 92,500 | | 123,500 | | 25,836 | | 241,836 |
Gary G. Greenfield | | 80,000 | | 123,500 | | 4,056 | | 207,556 |
Robert S. Prather, Jr. | | 85,000 | | 123,500 | | 10,484 | | 218,984 |
Rajesh K. Soin | | 82,500 | | 123,500 | | 11,227 | | 217,227 |
Henry D. G. Wallace | | 182,500 | | 123,500 | | 27,857 | | 333,857 |
Alan J. Weber | | 91,250 | | 123,500 | | 23,451 | | 237,576 |
| |
1 | This column reports the amount of cash compensation earned in 20142016 for Board and committee service, including Board retainer amounts discussed above and the following committee fees earned in 2014 (partial2016. Partial amounts reflect pro-rated fees based on time of actual board or committee service during 2014, as well as an increase in committee and committee chair fees effective as of May 1, 2014):2016. |
|
| | | | | | | | | | |
| Name | | Audit Committee ($) | | Board
Governance
Committee ($) | | Compensation
Committee ($) | | Investment
Committee ($) | | Technology Strategy & Innovation Committee ($) |
| Patrick W. Allender | | 21,667 | | 6,667 | | — | | — | | — |
| Roberto Artavia | | 11,000 | | — | | — | | — | | 5,000 |
| Bruce L. Byrnes | | 11,000 | | 6,667 | | — | | — | | — |
| Phillip R. Cox | | — | | — | | 17,333 | | 3,000 | | — |
| Richard L. Crandall | | — | | — | | 7,333 | | 1,000 | | 9,500 |
| Gale S. Fitzgerald | | — | | 12,667 | | 7,333 | | — | | — |
| Gary G. Greenfield | | — | | — | | — | | — | | 5,000 |
| Robert S. Prather, Jr. | | 11,000 | | — | | — | | 2,000 | | — |
| Rajesh K. Soin | | — | | 6,667 | | 7,333 | | — | | — |
| Henry D. G. Wallace | | — | | 6,667 | | 7,333 | | — | | — |
| Alan J. Weber | | 11,000 | | — | | — | | 8,333 | | — |
| | | | | | | | | | |
| Name | | Audit
Committee ($) | | Board Governance
Committee ($) | | Compensation Committee ($) | | Finance Committee ($) | | Technology
Strategy &
Innovation
Committee ($) |
Patrick W. Allender | | 25,000 | | — | | — | | 7,500 | | — |
Phillip R. Cox | | — | | 7,500 | | 20,000 | | — | | — |
Richard L. Crandall | | — | | 7,500 | | — | | — | | 15,000 |
Dr. Alexander Dibelius | | — | | 2,813 | | — | | 2,813 | | — |
Dr. Dieter W. Düsedau | | 4,688 | | — | | 3,750 | | — | | — |
Gale S. Fitzgerald | | 12,500 | | 15,000 | | — | | — | | — |
Gary G. Greenfield | | — | | — | | — | | 7,500 | | 7,500 |
Robert S. Prather, Jr. | | 12,500 | | — | | — | | 7,500 | | — |
Rajesh K. Soin | | — | | — | | 10,000 | | — | | 7,500 |
Henry D. G. Wallace | | — | | 7,500 | | 10,000 | | — | | — |
Alan J. Weber | | 6,250 | | — | | 5,000 | | 15,000 | | — |
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2 | This column represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718 for deferred shares granted to ournon-employee directors in 2014,2016, as further described above. Each director received 3,1624,504 deferred shares as of April 24, 2014,21, 2016, with a closing price of our common shares on that date of $39.35.$27.42. The actual value a director may realize will depend on the stock price on the date the deferral period ends. As of December 31, 2014, the aggregate number of vested and unvested deferred shares held by our current directors was: Mr. Allender, 13,312; Mr. Artavia, 7,362; Mr. Byrnes, 16,112; Mr. Cox, 23,712; Mr. Crandall, 24,062; Ms. Fitzgerald, 23,312; Mr. Greenfield, 3,162; Mr. Prather, 7,362; Mr. Soin, 10,612; Mr. Wallace, 25,412; and Mr. Weber, 23,312. In addition, as of December 31, 2014, the aggregate number of common shares issuable pursuant to options outstanding held by current directors was: Mr. Cox, 9,000; Mr. Crandall, 9,000; Ms. Fitzgerald, 9,000; Mr. Wallace, 9,000; and Mr. Weber, 9,000. |
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3 | This column represents dividend equivalents paid in cash on shares deferred shares.by our directors. |
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4
| Mr. Greenfield was elected to the Board of Directors at the 2014 Annual Meeting of Shareholders in April 24, 2014. |
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Director Stock Ownership Guidelines
As reported in our 2014 proxy, theThe Board updated itsadopted stock ownership guidelines in 2013 to better align with the practices of our peer group (discussed further below under “
Role ofPeer Companies and Competitive Market Data”under “Compensation Discussion and Analysis”). Eachnon-employee director is expected to own common shares of Dieboldthe Company valued at least five times the annual retainer, and the directors are not permitted to sell any vested shares prior to meeting this ownership level. These ownershipWe count the deferred shares held by the directors for purposes of these guidelines, which are intended to build stock ownership amongnon-employee directors and ensure that their long-term economic interests are aligned with those of other shareholders. As reflected below under “Security Ownership of Directors and Management,” theThe majority of our directors have exceeded the ownership guidelines, while our directors who were appointed most recently are on track to achieve the ownership guidelines within the next few years.
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CONSIDERATION OF DIRECTOR-NOMINEES
Shareholder Nominees
The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “
Identifying and Evaluating Nominees for Directors.” In evaluating shareholder nominations, the Board Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under “Board Diversity, Director Qualifications and Corporate Governance Guidelines.”Any shareholder nominations proposed for consideration by theThe Board Governance Committee should include:
complete information as to the identity and qualifications of the proposed nominee, including name, address, present and prior business and/or professional affiliations, education and experience, and particular fields of expertise;expertise, and a representation that the shareholder is a holder of record;
an indication of the nominee’s consent to serve as a director of Dieboldthe Company if elected; and
why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a director of Diebold.the Company; and
whether the shareholder intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares entitled to vote that are required to elect a nominee.
Shareholder nominations should be addressed to Diebold Nixdorf, Incorporated, Attention: Corporate Secretary, 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077, Attention: Corporate Secretary. See also44720-8077. For important additional information related to proposal requirements, see “Shareholder Proposals” below.
Identifying and Evaluating Nominees for Directors
The Board Governance Committee considers many methods for identifying and evaluating director-nominees. The Board Governance Committee regularly reviews the appropriate size of the Board and whether any vacancies on the Board are anticipated due to retirement or otherwise. When vacancies arise or are anticipated, the Board Governance Committee considers various potential candidates. Candidates may come to the attention of the Board Governance Committee through current Board members, professional search firms, shareholders or other persons.
As described above, the Board Governance Committee considers properly submitted shareholder nominations for candidates for the Board. Following verification of the recommending shareholder’s status, recommendations are considered by the Board Governance Committee at a regularly scheduled meeting.
Proxy AccessIn February 2017, the Board adopted a proxy access provision as part of our Code of Regulations, which allows a shareholder, or a group of up to 20 shareholders in aggregate, owning 3% or more of our outstanding shares of common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our Code of Regulations.
Majority Voting Policy
In 2007, the Board adopted a majority voting policy, which provides that, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” election, which we refer to as a Majority Withheld Vote, is expected to tender his or her resignation following certification of the shareholder vote. The Board Governance Committee will then consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the Board Governance Committee’s recommendation within 90 days following certification of the shareholder
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vote. Any director who tenders his or her resignation pursuant to this policy will not participate in the Board Governance Committee recommendation or Board action regarding whether to accept or reject the tendered resignation.
However, if each member of the Board Governance Committee received a Majority Withheld Vote in the same election, then the Board will appoint a committee comprised solely of independent directors who did not receive a Majority Withheld Vote at that election to consider each tendered resignation offer and recommend to the Board whether to accept or reject each resignation. Further, if all of the directors received a Majority Withheld Vote in the same election, then the Board will appoint a committee comprised solely of independent directors to consider each tendered resignation offer and recommend to the Board whether to accept or reject each resignation.
Board Diversity, Director Qualifications and Corporate Governance Guidelines
In evaluating director-nominees, the Board Governance Committee considers many factors in order to strengthen the talent and capabilities of the Board and anythe committees, consistent with our Corporate Governance Guidelines and other criteria established by the Board. While the Board Governance Committee does not have a formal diversity policy, its general goal is to create a well-balanced Board that combines broad business and industry experience with comprehensive diversity characteristics and professional viewpoints. Together, these considerations enable us to appropriately pursue our strategic objectives domestically and abroad.
Qualifications for Board service have not been reduced to a checklist of specific standards or minimum qualifications, skills or qualities. However,Rather, the Board Governance Committee makes its determinations asdecides which nominees to director selectionrecommend based on the facts and circumstances at the time of the receipt of the director candidate recommendation.time. Applicable considerations include whether:
whether the Board Governance Committee is currently looking to fill a new position created by an expansion of the number of directors, or a vacancy that may exist or is anticipated on the Board;
whether the current composition of the Board is consistent with the criteria described in our Corporate Governance Guidelines;
whether the candidate possesses the qualifications that are generally the basis for selection of candidates to the Board, including the candidate’s applicable experience, skill set and diversity qualifications, as noted above, in order to support the current and future needs of the Company; and
whether the candidate would be considered independent under the rules of the SEC, NYSE and our standards with respect to director independence.
Final approval of any candidate is determined by the full Board. In addition, the performance and contributions of each incumbent director are assessed as part of the Board’s annual assessment program, as discussed above in “
Board and Director Assessments.”A copy of our Corporate Governance Guidelines is available on our web site at http://www.diebold.com.
The Board Governance Committee has identified the director-nominees below as fittingbelieves that each of our directors fits the general qualifications described above and in particular, due to the specificbrings valuable experience, skills and qualifications to the Board. Accordingly, each of them would bring or continue to bring toour current Board members is nominated for election at the Annual Meeting. Detailed information about each director’s background, experience and qualifications is provided in Proposal 1: Election of Directors.
Although Messrs. Crandall and Prather have reached the retirement age under our current Board retirement policy, the Board Governance Committee and the Board have waived the retirement age for them as set forth in more detail below.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board recommends that its ten nominees for director be elected at the 2015 Annual Meeting, each to hold office for a term of one year from the date of the Annual Meeting or until the election and qualification of a successor. In the absence of contrary instruction, the Proxy Committee will vote the proxies for the election of the ten nominees.
All director-nominees are presently members of the Board and were previously elected by our shareholders. All of the director-nominees, except for Andreas W. Mattes, our President and CEO, are independent as defined by the corporate governance standards of the NYSE.
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Board Recommendation: ☑FOR the election of each of our director nominees | | The Board recommends that its thirteen nominees for director be elected at the 2017 Annual Meeting, each to hold office for a term of one year from the date of the Annual Meeting or until the election and qualification of a successor. In the absence of contrary instruction, the Proxy Committee will vote the proxies for the election of the thirteen nominees. All of the director-nominees, except for Andreas W. Mattes, our CEO, and Dr. Jürgen Wunram, our COO, are independent as defined by the corporate governance standards of the NYSE. All director-nominees are presently members of the Board. All of our nominees, with the exception of Drs. Dibelius, Düsedau, and Wunram, were previously elected by our shareholders. Drs. Dibelius, Düsedau and Wunram were appointed to our Board as a result of our acquisition of Wincor Nixdorf. Additionally, the appointments of Drs. Dibelius and Düsedau were specifically provided for under our Business Combination Agreement with Wincor Nixdorf. |
If for any reason any director-nominee is not available for election when the election occurs, the Proxy Committee, at its option, may vote for substitute nominees recommended by the Board. Alternatively, the Board may reduce the number of director-nominees. The Board has no reason to believe that any director-nominee will be unavailable for election when the election occurs.
Recommendation of the Board
The board recommends a vote FOR the election of our ten nominees as directors.
The Director-Nominees are:
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Name, Term and Age Our Director Nominees |
Patrick W. Allender Age: 70 Director since 2011 Committees: Audit Committee (Chair) Finance Committee | | Position, Principal Occupation, Business ExperienceProfessional and Directorships Last Five Years, and Qualifications to Serve
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Patrick W. Board Experience:Mr. Allender Director since 2011
Age — 68
| | retired in February 2007: Retired as Executive Vice President, Chief Financial Officer and Secretary for Danaher Corporation, Washington, D.C. (diversified manufacturing) Currently(a diversified manufacturing company).He currently is a director of Brady Corporation, Milwaukee, Wisconsin (identification solutions)(an identification solutions company), where he has served since 2007 and where he serves as Chair of the Finance Committee and as a member of the Audit and Nominating Committees; andCommittees. Mr. Allender also is a director of Colfax Corporation, Fulton,Annapolis, Maryland (diversified manufacturing)(a diversified manufacturing company), where he has served since 2008 and where he serves as Chair of the Governance Committee and as a member of the Audit Committee. Chair of our Audit Committee and member of our Board Governance Committee.
Director Qualifications: Mr. Allender’s 18 years as Chief Financial Officerchief financial officer of a large publicly-tradedpublicly traded company with global operations provides our Board with valuable expertise in financial reporting and risk management. In addition, as a result of Mr. Allender’s public accounting background, including as audit partner of a major accounting firm, he is exceptionally qualified to serve as Chair of our Audit Committee. |
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| Our Director Nominees |
Phillip R. Cox Age: 69 Director since 2005
Age — 67 Committees: Compensation Committee (Chair) Board Governance Committee | | 1972 – Present:Principal Occupation, Professional and Board Experience: Mr. Cox has served as President and Chief Executive Officer of Cox Financial Corporation, Cincinnati, Ohio (financial(a financial planning and wealth management services).
Currentlyservices firm) since 1972.Mr. Cox currently is a director of Cincinnati Bell Inc., Cincinnati, Ohio (telecommunications) since 1993,(a telecommunications company), where he has served as a director since 1993 and as Chairman of the Board since 2003, and where he serves as a member of the Audit and Finance, Compensation, and Governance and Nominating Committees;Committees. He also serves as a director of Touchstone Investments, Cincinnati, Ohio (mutual(a mutual fund company), where he has served since 1993 and where he has served as Chairman of the Board since 2008; and The Timken Company,2008. Mr. Cox also is a director of TimkenSteel, Canton, Ohio (engineered(an engineered steel products) since 2004, where he has servedproducts company) and serves as a member of the Audit Committee since 2004, and Compensation Committees. Prior to TimkenSteel becoming an independent company, Mr. Cox served as a director of The Timken Company, Canton, Ohio (an engineered steel products company), and was a member of the Audit Committee from 2004-2016, and Chair of the Finance Committee from 2004 – 2011.
Chair of our Compensation Committee and member of our Investment Committee.
2004-2011. Director Qualifications: Mr. Cox’s 43 years of experience as a president and Chief Executive Officerchief executive officer in the financial services industry, as well as his experience as a director on the boards of several government-regulated businesses, a global manufacturing company, and the Federal Reserve Bank of Cleveland, provides theour Board with experience relevant to many key aspects of our business. Mr. Cox’s experience as a Chief Executive Officerchief executive officer also imparts appropriate insight into executive compensation and succession planning issues that are ideal for the Chairman of our Compensation Committee, and his extensive experience in the financial services industryserving on public company boards of directors provides the understanding necessary to serve on our InvestmentBoard Governance Committee. |
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Name, Term Our Director Nominees |
Richard L. Crandall Age: 73 Director since 1996 Committees: Technology Strategy and AgeInnovation Committee (Chair) Board Governance Committee | | Position, Principal Occupation, Business ExperienceProfessional and Directorships Last Five Years, and Qualifications to Serve
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Richard L. Board Experience:Mr. Crandall Director since 1996
Age — 71
| | 2001 - Present: is Managing Partner of Aspen Venture LLC, Aspen, Colorado (venture(a venture capital and private equity); 2007 - Present:equity firm), in which role he has served since 2001, and Executive Chairman of Pelstar LLC, Chicago, Illinois (medical(a medical equipment manufacturing and sales); 1995 - Present:sales company), in which role he has served since 2007. He is also the Chairman of the Enterprise Software Roundtable, Aspen, Colorado (CEO(a CEO roundtable for the software industry), and has served in that capacity since 1995.Mr. Crandall currently is the Chairperson of the Board and a member of the Corporate Responsibility and Governance Committee of Donnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company). Currently Mr. Crandall formerly was a director of R.R. Donnelley & Sons Company, Chicago, Illinois (interactive(an interactive communications provider) since January 2012,, where he serves asserved from 2012-2016 and was a member of the Governance, Responsibility and Technology Committee. FormerlyIn addition, Mr. Crandall is a director and member of the Governance Committee of the National Cybersecurity Center, Colorado Springs, Colorado (a government advisory group), where he has served since 2016. Mr. Crandall formerly was a director of Novell, Inc. (infrastructure software)(an infrastructure software company) from 2003 - 2011,2003-2011, where he served as Chairman of the Board from 2008 - 2011;2008-2011. He also formerly was a director of Claymore Dividend & Income Fund, Lisle, Illinois (management(a management investment company) from 2004 - 2010;2004-2010 and of Platinum Energy Solutions, Houston, Texas (energy services)(an energy services company) from 2012 - 2013.
Chair of our Technology Strategy and Innovation Committee and member of our Compensation Committee.
2012-2013.Director Qualifications: Mr. Crandall’s extensive experience as an entrepreneur, leader and Boardboard member with several companies in the information technology and technology fields, and in the financial industry, including serving as chairman of a $900 million global information technology business, brings diversity of thought and governance experience to our Board. Further, during his 19 years on our Board, Mr. Crandall has provided immeasurable assistance to our technology-driven businesses. Mr. Crandall’s background in the financial services industry also provides important financial and investment expertise, to our Compensation Committee, and his information technology experience provides perspective on cybersecurity, technology risks facing us,and technology-related strategies. |
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| Our Director Nominees |
Dr. Alexander Dibelius Age: 57 Director since 2016 Committees: Board Governance Committee Finance Committee | | Principal Occupation, Professional and Board Experience: Dr. Dibelius is Managing Partner of CVC Capital Partners (Deutschland) GmbH (a private equity advisor), in which capacity he has served since September 2015. Previously, he was Chairman of the Executive Board of Goldman Sachs AG (a financial services company) from 2002 to 2014, having been with Goldman Sachs in various capacities from 1993 until 2015. Prior to this, he worked as a consultant for McKinsey & Co. (a global management consulting firm), where he was appointed partner in 1992. Before his career in business, Dr. Dibelius was a surgeon at the University Clinic of Freiburg. Dr. Dibelius also is Chairman and a member of the supervisory board of Diebold Nixdorf AG (formerly, Wincor Nixdorf), a member of the supervisory board of KION Group AG, Wiesbaden (a fork lift manufacturing company), a member of the supervisory board of Douglas AG (a perfumery retail company) (as well as a member of the supervisory boards of Douglas GmbH, Düsseldorf, and Douglas Holding, Düsseldorf), a member of the supervisory board of Kirk Beauty Investments SA, Luxemburg, a member of the board of CVC Capital Partners Luxembourg SARL, Luxemburg, and a member of the shareholders’ committee of Tipico Group Ltd., Malta. Director Qualifications: Dr. Dibelius’ over twenty years of experience in the investment and merchant banking sectors and his management consulting experience bring important expertise and insight to our technology-related strategies.
Board. His historical knowledge from, and continued service leading, the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board. |
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Dr. Dieter W. Düsedau Age: 58 Director since 2016 Committees: Audit Committee Compensation Committee | | Principal Occupation, Professional and Board Experience: Dr. Düsedau is a physicist and formerly a Director (Senior Partner) of McKinsey & Co. (a global management consulting firm) from 1988 to 2014, based in Munich. He was leader of the German Strategy Practice and was the long-standing leader of McKinsey’s Telecoms, IT, and Media Sector in Germany. Prior to joining McKinsey, he worked at the Max Planck Institute, CERN (the European Organization for Nuclear Research), The University of Michigan, Ann Arbor, and M.I.T. on quantum field theories. Dr. Düsedau also is a member of the supervisory board of Diebold Nixdorf AG and a member of the supervisory board of Kontron AG (an embedded computing technology company). Director Qualifications: Dr. Düsedau’s experience as a senior partner of a top management consulting firm, and his years of experience leading its strategy practice and telecommunications, IT, and media industry sectors, provide helpful insight and strengthen our Board’s proficiencies in these areas. He also brings significant transactional experience to our Board, and his historical knowledge from and continued service on the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board. |
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Our Director Nominees |
Gale S. Fitzgerald Age: 66 Director since 1999
Age — 64 Committees: Board Governance Committee (Chair) Audit Committee | | Principal Occupation, Professional and Board Experience: Ms. Fitzgerald retired in December 2008 : Retired as President and Director of TranSpend, Inc., Bernardsville, New Jersey (total(a total spend optimization)optimization firm).CurrentlyShe currently is a director of Health Net, Inc., Woodland Hills, California (managed healthcare) since 2001, where she serves as Chair of the Finance Committee and a member of the Audit Committee; and Cross Country Healthcare, Inc., Boca Raton, Florida (healthcare staffing)(a healthcare staffing company), where she has served since 2007 and where she serves as Chair of the Governance and Nominating Committee and a member of the Audit Committee. She is a former director of Health Net, Inc., Woodland Hills, California (a managed healthcare company), where she served from 2001-2016 and was Chair of our Board Governancethe Finance Committee and a member of our Compensationthe Audit Committee. Director Qualifications: Ms. Fitzgerald’s international experience as Chief Executive Officerchief executive officer in the information technology industry, Chief Executive Officerchief executive officer of a business unit of International Business Machines and the Presidentpresident and Chief Executive Officerchief executive officer of two privately-held consulting companies brings a well-rounded and diverse perspective to our Board discussions and provides significant insight in critical areas that impact our company,Company, including information technology, supply chain management, procurement solutions, human resources and compensation, strategic planning and operations management. With over 20 years of multiple board and committee experiences, Ms. Fitzgerald provides valuable insight to our boardBoard processes and deliberations, and she provides a unique point of view to our Board Governance and CompensationAudit Committees. |
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Gary G. Greenfield Age: 62 Director since 2014
Age — 60 Committees: Finance Committee Technology Strategy and Innovation Committee | | 2013 - Present:Principal Occupation, Professional and Board Experience: Mr. Greenfield serves as a Partner for Court Square Capital Partners, New York, New York (private equity); 2007 - 2013:(a private equity company) and has served in that role since 2013. He was Chairman, CEO and President of Avid Technology, Inc., Burlington Massachusetts (digital(a digital media and entertainment).Formerlyentertainment company) from 2007-2013.Mr. Greenfield is currently a director of Donnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company), where he has served since October 2016 and is the Chairperson of the Compensation Committee and a member of the Audit Committee. He formerly was a director of Vocus, Inc., Beltsville, Maryland (marketing(a marketing and public relations software)software company), where he served as Chair of the Nominating and Governance Committee from 2008 - 2014. Member2008-2014, and of our Technology StrategyEpocrates, Inc., San Mateo, California (a company providing clinical content, practice tools and Innovation Committee.
health industry engagement at the point of care), from 2011-2013.Director Qualifications: Mr. Greenfield’s proven senior executive experience in high technology industries, coupled with his exceptional ability to grow markets, both domestic and international, and develop products, provides theour Board with experience relevant to many key aspects of our business. Mr. Greenfield’s strong skills at developing company vision and strategies in the evolving software development field strengthen the proficiency of our Board in this area.
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| Our Director Nominees |
Andreas W. Mattes Age: 55 Director since 2013 Age — 53
Chief Executive Officer | | 2013 - Present: PresidentPrincipal Occupation, Professional and Board Experience: Mr. Mattes is Chief Executive Officer of Diebold Incorporated; 2011 - 2013:Nixdorf, Incorporated and has served in that capacity since 2013. He also served as our Company’s President from 2013-2016, and he currently serves on the supervisory board of Diebold Nixdorf AG. He was Senior Vice President, Global Strategic Partnerships, Violin Memory (computer(a computer storage systems); 2008 - 2011:systems company) from 2011-2013, and was Senior Vice President and General Manager of Enterprise Services for the Americas, Hewlett-Packard Co. (computer technologies).(a computer technologies company) from 2008-2011.Director Qualifications: As President and Chief Executive Officer of Diebold,the Company, Mr. Mattes’day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions.
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Name, Term and Age | | Position, Principal Occupation, Business Experience and
Directorships Last Five Years, and Qualifications to Serve
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Robert S. Prather, Jr. Age: 72 Director since 2013
Age — 70 Committees: Audit Committee Finance Committee | | 2012 - Present: Managing Director,Principal Occupation, Professional and Board Experience: Mr. Prather serves as the President and Chief Executive Officer of Heartland Media, (television broadcast); 1992 – 2012:LLC (a television broadcast company), and has served in that position since 2013. From 1992-2013 he was President and Chief Operating Officer of Gray Television, Inc. (television broadcast)(a television broadcast company).
Mr. Prather currently serves as lead independent director of GAMCO Investors, Inc. (asset(an asset management and financial services)services company). Previously, Mr. Prather servedHe also serves as a director of Bull Run Corporation (sports marketing and management), Draper Holdings Business Trust (television broadcasting trust), and Ryman Hospitality Properties, Inc. (real(a real estate investment trust).
Member of our Audit and Investment Committees.
Director Qualifications: Mr. Prather brings significant acumen to theour Board as a result of his extensive, broad-based business background, and critical leadership and Boardboard roles in diverse industries. Particularly, Mr. Prather’s long-term experience within the financial and investment services market brings valuable insight to theour Board. In addition, his knowledge and familiarity with the specific needs of companies within regulated industries further strengthens the proficiency of our Board in that area. |
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Rajesh K. Soin Age: 69 Director since 2012 Age — 66
Committees: Compensation Committee Technology Strategy and Innovation Committee | | 1998 – Present:Principal Occupation, Professional and Board Experience: Mr. Soin is Chairman of the Board and Chief Executive Officer of Soin, International LLC, Beavercreek,West Carrollton, Ohio (investment(an investment holding company); 2002 - 2008: and has held those positions since 1998. He served as Chairman of the Board and Chief Executive Officer of MTC Technologies, Inc. (military(a military defense systems).
Member of our Board Governance and Compensation Committees.systems company) from 2002-2008.Director Qualifications: Mr. Soin’s experience as an entrepreneur is a tremendous asset. Mr. Soin has extensive experience in India, where we continue to focus on growth in thatits emerging market, and his engineering and software development background brings additional technical expertise to our Board. Further, Mr. Soin’s significant government contracting experience as the founder and Chairman of MTC Technologies Inc., a NASDAQ listed company before being acquired by BAE Systems, provides additional perspective in helping us grow our security business. |
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| Our Director Nominees |
Henry D.G.D. G. Wallace Age: 71 Director since 2003 Age — 69
Chairman of the Board | | Principal Occupation, Professional and Board Experience: Mr. Wallace is theAugust 2013 – Presentnon-executive: Non-executive Chairman of the Board of Diebold Incorporated; January 2013 –Nixdorf, Incorporated, in which capacity he has served since August 2013:2013. He was the Executive Chairman of theour Board Diebold, Incorporated
Currentlyfrom January 2013 until August 2013.Mr. Wallace currently is a director of Lear Corporation, Southfield, Michigan (automotive components) since 2005,(an automotive components company), where he has served as a director since 2005 and asnon-executive Chairman of the Board since August 2010 and where he serves as a member of the Governance & Nominating, and Compensation Committees.2010. Mr. Wallace also served as director of Hayes Lemmerz International Inc. (steel(a steel and aluminum wheels)wheels company) from 2003 until February 2012;2012, and served as a director of Ambac Financial Group, Inc., New York, New York (financial(a financial guarantee insurance holding company) from 2004 until March 2013.
Chairman of the Board and member of our Board Governance and Compensation Committees.
Director Qualifications: Mr. Wallace’s experience in various senior leadership positions, including Chief Financial Officer of Ford Motor Company and President and Chief Executive Officer of Mazda Motor Corporation, bring a broad understanding of managing a global business. Further, Mr. Wallace’s financial expertise, extensive experience in Europe, Latin America and Asia, and his demonstrated leadership on the boards of several publicly traded companies, is a tremendous asset to our Board. As a result of Mr. Wallace’s background as a Chief Financial Officer, he isBoard and makes him exceptionally qualified to serve as our current non-Executive Chairman of the Boardnon-executive Chairman. In addition, with his background as a chief financial officer and on our Governance and Compensation Committees, as well as previously servinghis prior service as Chair of our Audit Committee in 2012. |
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Alan J. Weber Age: 68 Director since 2005
Age — 66
Committees: Finance Committee (Chair) Compensation Committee | | 2007 - Present:Principal Occupation, Professional and Board Experience: Mr. Weber is the Chief Executive Officer of Weber Group LLC, Greenwich, Connecticut (investment advisory); 2009 - 2013:(an investment advisory firm). He was an Operating Partner of Arsenal Capital Partners, LLC, New York, New York (private equity).
Currently(a private equity firm) from 2009-2013.Mr. Weber currently is a director of Broadridge Financial Solutions, Inc., Lake Success, New York (investor(an investor communications, securities processing, and outsourcing)outsourcing company), where he has served since 2007 and where he serves as a member of the Audit Committee, and as Chairman of the Compensation Committee;Committee. He is also Chairman ofKGS-Alpha Capital Markets, Inc. (a fixed income broker dealer), a director and Treasurer of DCTV (a charitable organization), and a director of Street Diligence LLC (a Fintech company). He also is a former director of Sandridge Energy, Inc., Oklahoma City, Oklahoma (energy(an energy exploration and production) since 2013,production company), where he serves asserved from 2013-2016 and was Chairman of the Nominating and Governance Committee.
Chair of our Investment Committee and member of our Audit Committee.
Director Qualifications: Mr. Weber’s experience as a Chief Executive Officerchief executive officer and Chief Financial Officerchief financial officer in the financial industry, as well as his 27 years of experience at Citibank, including 10 years as an Executive Vice President, provides a tremendous depth of knowledge of our customers and our industry. Further, Mr. Weber ’sWeber’s experience as Chief Financial Officer of Aetna, Inc., an insurance services company, brings extensive financial expertise to both our Audit Committee and our InvestmentFinance Committee.
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| Our Director Nominees |
Dr. Jürgen Wunram Age: 58 Director since 2017 | | Principal Occupation, Professional and Board Experience: Dr. Jürgen Wunram is Chief Operating Officer of Diebold Nixdorf, Incorporated, and has served in that capacity since February 16, 2017. Prior to this, he served as our Company’s Senior Vice President and Chief Integration Officer. Dr. Wunram also currently serves as Chief Financial Officer, Chief Operating Officer and Deputy Chief Executive Officer and President of Diebold Nixdorf AG and has been appointed Chief Executive Officer of Diebold Nixdorf AG, effective April 1, 2017. He has served as the Chief Financial Officer, Chief Operating Officer, and as a member of the management board of Diebold Nixdorf AG since 2007 and was appointed Deputy Chief Executive Officer of Diebold Nixdorf AG in 2013. Director Qualifications: As Chief Operating Officer of the Company, Dr. Wunram’s responsibilities, which include integration, the Company’s EMEA and retail businesses, the Company’s subsidiary, AEVI International CmbH, as well as IT, security, quality and indirect procurement, provide him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, his role as CEO of Diebold Nixdorf AG provides an invaluable perspective to our Board. |
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BENEFICIAL OWNERSHIP OF SHARES
Beneficial Ownership of Shares
To our knowledge, no person beneficially owned more than five percent of our outstanding common shares as of December 31, 2014,2016, except for the shareholders listed below. The information provided below was derived from reports filed with the SEC by the beneficial owners on the dates indicated in the footnotes below.
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| Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of
Beneficial Ownership
| | | Percent of
Class
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Common Shares | | GGCP,BlackRock, Inc. et al One Corporate Center
Rye, 55 East 52nd Street New York, 10580 | | 6,317,214
| 7,779,754 | 1 | | | 9.90%10.40 | % |
| | | |
Common Shares | | State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, Massachusetts 02111
The Vanguard Group 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | 5,897,102
| 5,903,065 | 2 | | | 9.10%7.85 | % |
| | | |
Common Shares | | The Vanguard Group
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
GAMCO Investors, Inc., et al. One Corporate Center Rye, New York 10580 | | 4,069,258
| 5,659,997 | 3 | | | 6.30%7.54 | % |
| | | |
Common Shares | | SouthernSun AssetAtlantic Investment Management, LLC 6070 PoplarInc.666 Fifth Avenue Suite 300 Memphis, Tennessee 38119
New York, New York 10103 | | 4,055,030
| 3,854,761 | 4 | | | 6.30% |
Common Shares5.10 | | BlackRock, Inc.
55 East 52nd Street
New York, New York 10022
| | 3,959,6425
| | | 6.10% |
Common Shares | | Capital World Investors
333 South Hope Street
Los Angeles, California 90071
| | 3,925,0006
| | | 6.00% |
Common Shares | | Prudential Financial, Inc.
751 Broad Street
Newark, New Jersey 07102
| | 3,407,5607
| | | 5.30% |
Common Shares | | Jennison Associates LLC
466 Lexington Avenue
New York, New York 10017
| | 3,352,7308
| | | 5.20%% |
| |
1 | Information regarding share ownership was obtained from the Schedule 13D/A filed jointly on January 16, 2014 by Gabelli Funds, LLC, GAMCO Asset Management Inc., Gabelli Securities, Inc., MJG Associates, Inc., Gabelli Foundation, Inc., MJG-IV Limited Partnership, GGCP, Inc., GAMCO Investors, Inc. and Mario J. Gabelli. We have not received any evidence in the Schedule 13D filings of the foregoing entities that indicates an increase or decrease in the number of our common shares held by such entities during the fiscal year ended December 31, 2014. The entities reported their beneficial ownership as follows: (A) Gabelli Funds, LLC had sole voting and dispositive power with respect to 1,708,900 common shares; (B) GAMCO Asset Management Inc. had sole voting power with respect to 4,248,641 common shares and sole dispositive power with respect to 4,467,741 common shares; (C) MJG Associates, Inc. had sole voting and dispositive power with respect to 8,000 common shares; (D) MJG - IV Limited Partnership had sole voting and dispositive power with respect to 5,000 common shares; (E) Gabelli Foundation, Inc. had sole voting and dispositive power with respect to 5,000 common shares; (F) GGCP, Inc. had sole voting and dispositive power with respect to 35,000 common shares; (G) Mario J. Gabelli had sole voting and dispositive power with respect to 86,403 common shares; (H) GAMCO Investors, Inc. had sole voting and dispositive power with respect to 80 common shares; and (I) Gambelli Securities, Inc. had sole voting and dispositive power of 1,000 common shares. Mario J. Gabelli is deemed to have beneficial ownership of the securities owned beneficially by each of the foregoing persons. GAMCO Investors, Inc., and GGCP, Inc. are deemed to have beneficial ownership of the securities owned beneficially by each of the foregoing persons other than Mario J. Gabelli and the Gabelli Foundation, Inc. |
| |
| Information regarding share ownership was obtained from the Schedule 13G filed jointly on February 12, 2015 by State Street Corporation (“State Street”) and its subsidiary, SSGA Funds Management, Inc. (“SSGA”). State Street has shared voting and dispositive power over 5,897,102 shares of our common stock. SSGA is the beneficial owner of, and has shared dispositive and voting power over 3,822,059 of our common shares, or 5.9% of our common shares outstanding. In addition to SSGA, the following direct or indirect subsidiaries of State Street also beneficially own shares of our common stock: State Street Global Advisors Limited, State Street Global Advisors Australia Limited and State Street Global Advisors Asia Limited. |
| |
3
| Information regarding share ownership was obtained from the Schedule 13G/A filed February 10, 2015on January 9, 2017 by The Vanguard Group (“Vanguard”). VanguardBlackRock, Inc. BlackRock, Inc. has sole voting power over 43,3037,633,586 of our common shares and sole dispositive power over 7,779,754 of our common shares. BlackRock, Inc. is the parent company of the following subsidiaries that beneficially own our common shares: BlackRock (Netherlands) B.V.; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management Schweiz AG; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Institutional Trust Company, N.A.; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; and BlackRock Life Limited. BlackRock Fund Advisors is the only BlackRock, Inc. subsidiary whose interest in our common shares is more than 5% of our common shares outstanding. |
| 2 | Information regarding share ownership was obtained from the Schedule 13G/A filed on February 9, 2017 by The Vanguard Group. The Vanguard Group has sole voting power over 101,613 of our common shares, shared voting power over 8,402 of our common shares, sole dispositive power over 4,031,0555,796,221 of our common shares, and shared dispositive power over 38,203106,844 of our common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 38,20398,442 of our common shares or 0.1%.13% of our common shares outstanding, as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 5,10011,573 of our common shares or .01% of our common shares outstanding, as a result of its serving as investment manager of Australian investment offeringsofferings. |
| 3 | |
| Information regarding share ownership was obtained from the Schedule 13G13D/A filed jointly by GAMCO Investors Inc., et al, on February 13, 2015 by SouthernSunNovember 22, 2016. The entities of GAMCO Investors Inc., et al., that hold our common shares reported their beneficial ownership as follows: (i) Gabelli Funds, LLC has sole voting and dispositive power over 1,703,500 of our common shares; (ii) GAMCO Asset Management LLC (“SouthernSun”). SouthernSun is an investment adviser registered under section 203 of the Investment Advisers Act of 1940. SouthernSunInc. has sole voting power over 3,668,3603,657,097 of our common shares and sole dispositive power to dispose or direct the disposition of 4,055,030over 3,867,697 of our common shares; (iii) MJG Associates, Inc. has sole voting and dispositive power over 4,500 of our common shares; (iv) Gabelli Foundation, Inc. has sole voting and dispositive power over 1,500 of our common shares;(v) MJG-IV Limited Partnership has sole voting and dispositive power over 5,000 of our common shares; (vi) GGCP, Inc. has sole voting and dispositive power over 16,000 of our common shares; (vii) GAMCO Investors, Inc. has sole voting and dispositive power over 200 of our common shares; and (viii) Mario J. Gabelli has sole voting and dispositive power over 61,600 of our common shares. |
| 4 | |
| Information regarding share ownership was obtained from the Schedule 13G/A13D filed on February 9, 2015December 13, 2016 by BlackRock, Inc. (“BlackRock”). BlackRock has sole voting power over 3,779,962 of our common shares, and sole dispositive power over 3,959,642 of our common shares. BlackRock is the parent company of the following subsidiaries that beneficially own our common shares: BlackRock Advisors (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Fund Advisors; BlackRock Institutional Trust Company, N.A.; BlackRockAtlantic Investment Management, (Australia) Limited; BlackRockInc. Atlantic Investment Management, (UK) Ltd; BlackRock Investment Management, LLC; BlackRock Life Limited. No one BlackRock subsidiary’s interest in our common shares is more than 5% of our common shares outstanding. |
| |
6
| Information regarding share ownership was obtained from the Schedule 13G filed on February 13, 2015 by Capital World Investors (“Capital World”). Capital World is a division of Capital Research and Management Company (CRMC), and is deemed to be the beneficial owner of 3,925,000 of our common shares as a result of CRMC acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Capital World holds more than 5% of our outstanding common shares as of December 31, 2014 on behalf of The Income Fund of America. Capital WorldInc. has sole voting and dispositive power over 3,935,0003,854,761 of our common shares. |
| |
7
| Information regarding share ownership was obtained from Atlantic Investment Management, Inc. serves as the Schedule 13G filed on February 13, 2015 by Prudential Financial, Inc. (“Prudential”). Prudential is the parent holding company of Jennison Associates LLC, which is the beneficial owner of 3,352,730 of our common shares, or 5.2% of our common shares outstanding. Prudential is also the parent holding company of Quantitative Management Associates LLC, which is the beneficial owner of 54,380 of our common shares, or 0.1% of our common shares outstanding. Prudentialinvestment advisor and has sole voting and dispositive power over 261,070all of our common shares shared voting power over 2,572,633owned by the following parties: (i) AJR International Master Fund, Ltd., a British Virgin Islands company, owns 428,249 of our common shares; (ii) Cambrian Master Fund, Ltd., a British Virgin Islands company, owns 2,443,229 of our common shares; (iii) Cambrian Global Master Fund, Ltd., a British Virgin Islands company, owns 749,286 of our common shares; and (iv) 233,997 of our common shares and shared dispositive power over 3,146,490 of our common shares.are held in one or more other accounts. |
| |
8
| Information regarding share ownership was obtained from the Schedule 13G filed on February 9, 2015 by Jennison Associates LLC (“Jennison”). Jennison has sole voting power over 2,778,873 of our common shares and shared dispositive power over 3,352,730 of our common shares. Jennison furnishes investment advice to several investment companies, insurance separate accounts and institutional clients (“Managed Portfolios”). As a result of its role as investment adviser of the Managed Portfolios, Jennison may be deemed to be the beneficial owner of our common shares held by such Managed Portfolios. Prudential Financial, Inc. (“Prudential”) indirectly owns 100% of the equity interests of Jennison. As a result, Prudential may be deemed to have the power to exercise or to direct the exercise of such voting and/or dispositive power that Jennison may have with respect to our common shares held by the Managed Portfolios. Jennison does not file jointly with Prudential; as such, our common shares reported on Jennison Schedule 13G may be included in the shares reported by Prudential. |
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SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
Security Ownership of Directors and ManagementThe following table shows the beneficial ownership of Diebold’sthe Company’s common shares, including those shares that individuals have a right to acquire (for example, through exercise of options under the 1991 Plan) within the meaning of Rule 13d-3(d)(1) under the Exchange Act, by (1) each director-nominee, (2) (a)each of our CEO, (b) our CFO, and (c) our three other most highly compensatednamed executive officers, serving as of December 31, 2014, and (3) all director-nominees Named Executive Officers and other executive officers as a group as of
February 27, 2015. 2017.Ownership is also reported as of
February 27, 20152017 for shares in the 401(k) Savings Plan over which the individual has voting power, together with shares held in our Employee Stock Purchase Plan. |
| | | | | | | | |
| Director-Nominees: | | Common Shares
Beneficially Owned | | Stock Options
Exercisable Within 60 Days | | Deferred Shares1 | | Percent of Class |
| Patrick W. Allender | | — | | — | | 13,312 | | * |
| Roberto Artavia | | — | | — | | 7,362 | | * |
| Bruce L. Byrnes | | — | | — | | 16,112 | | * |
| Phillip R. Cox | | — | | 9,000 | | 23,712 | | * |
| Richard L. Crandall | | 6,089 | | 9,000 | | 24,062 | | * |
| Gale S. Fitzgerald | | 6,089 | | 9,000 | | 23,312 | | * |
| Gary G. Greenfield | | — | | — | | 3,162 | | * |
| Robert S. Prather, Jr. | | — | | — | | 7,362 | | * |
| Rajesh K. Soin | | 3,000 | | — | | 10,612 | | * |
| Henry D. G. Wallace | | 500 | | 9,000 | | 25,412 | | * |
| Alan J. Weber | | 1,500 | | 9,000 | | 23,312 | | * |
| Named Executive Officers: | | | | | | | | |
Andreas W. Mattes President and Chief Executive Officer | | 86,243 | | 83,955 | | — | | * |
Christopher A. Chapman Senior Vice President and Chief Financial Officer | | 21,825 2 | | 28,189 | | — | | * |
George S. Mayes, Jr. Executive Vice President and Chief Operating Officer | | 73,332 2 | | 117,591 | | — | | * |
Stefan Merz Senior Vice President, Strategic Projects | | 11,469 | | 4,916 | | — | | * |
Sheila M. Rutt Vice President, Chief Human Resources Officer | | 44,296 2 | | 49,188 | | — | | * |
| All Current Directors, Director-Nominees, Named Executive Officers and Current Executive Officers as a Group (19) | | 276,531 | | 368,794 | | 177,732 | | .995% |
* Less than 1%.
| | | | | | | | | | |
| Director-Nominees: | | Common Shares
Beneficially
Owned1 | | Stock Options
Exercisable Within
60 Days | | Percent
of
Class | | Number of
shares of
Diebold
Nixdorf
AG
Beneficially
Owned | | Percent
of
Class |
Patrick W. Allender | | 3,162 | | — | | * | | — | | — |
Phillip R. Cox | | 4,504 | | — | | * | | — | | — |
Richard L. Crandall | | 17,289 | | — | | * | | — | | — |
Dr. Alexander Dibelius | | — | | — | | — | | — | | — |
Dr. Dieter W. Düsedau | | — | | — | | — | | — | | — |
Gale S. Fitzgerald | | 9,251 | | — | | * | | — | | — |
Gary G. Greenfield | | 11,200 | | — | | * | | — | | — |
Robert S. Prather, Jr. | | 3,162 | | — | | * | | — | | — |
Rajesh K. Soin | | 14,200 | | — | | * | | — | | — |
Henry D. G. Wallace | | 3,662 | | — | | * | | — | | — |
Alan J. Weber | | 12,700 | | — | | * | | — | | — |
Named Executive Officers: | | | | | | | | | | |
Andreas W. Mattes Chief Executive Officer | | 207,590 | | 452,847 | | * | | — | | — |
Christopher A. Chapman Senior Vice President and Chief Financial Officer | | 47,7832 | | 82,791 | | * | | — | | — |
Eckard Heidloff President | | — | | — | | * | | ** | | — |
Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary | | 31,985 | | 22,457 | | * | | — | | — |
Dr. Jürgen Wunram Senior Vice President and Chief Operating Officer | | 8,740 | | — | | * | | ** | | — |
Stefan E. Merz Senior Vice President, Corporate Strategy and Development | | 22,627 | | 35,577 | | * | | — | | — |
| All Current Directors, Director-Nominees and Current Executive Officers as a Group (19) | | 410,203 | | 621,909 | | 1.37 | | ** | | — |
| ** | Ownership levels of the Diebold Nixdorf AG shares fall below the level that is required to be disclosed under German law. Mr. Heidloff and Dr. Wunram have authorized Diebold Nixdorf, Incorporated, through a power of attorney, to vote these Diebold Nixdorf AG shares on their behalf. |
| 1 | TheDirector amounts do not include shares deferred by ournon-employee directors under the Deferred Compensation Plan No. 2 for Directors. Director amounts, inclusive of shares awarded todeferred under the director-nominees, as discussed above under “ Deferred Compensation of Directors,” are not included in thePlan and shares reported in the “Common Shares Beneficially Owned” column, nor are they included in the “Percent of Class” column. |
2Includes shares held in his/her name under the 401(k) Savings Plan over which he/she has voting power.
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| 2 | Includes shares held in his/her name under the 401(k) Savings Plan over which he/she has voting power. |
SECTIONSection 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common shares, to file with the SEC reports of ownership of our securities on Form 3 and changes in reported ownership on Form 4 or Form 5, as applicable. Such directors, executive officers and greater than 10% shareholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of the reports furnished to us, or written representations from reporting persons that all other reportable transactions were reported, we believe that during the year ended
December 31, 2014,2016, our directors, executive officers and greater than 10% shareholders timely filed all reports they were required to file under Section 16(a).-29-
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| | |
Board Recommendation: ☑FOR Proposal 2 | | The Audit Committee has again appointed KPMG LLP, our independent registered public accounting firm since 1965, to examine our accounts and other records for the year ending December 31, 2017. This appointment is being presented to you for ratification at the Annual Meeting. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection. KPMG LLP has no financial interest, direct or indirect, in us or any of our subsidiaries. A representative of KPMG LLP is expected to be present at the 2017 Annual Meeting to make a statement if he or she desires and to respond to appropriate questions. |
Audit andNon-Audit Fees
The following table shows the aggregate fees billed to us for the annual audit and the review of the interim financial statements and other services provided by KPMG LLP for fiscal 2016 and 2015.
| | | | |
| | | 2016 | | 2015 |
| | |
Audit Fees1 | | $7,490,000 | | $4,624,000 |
Audit-Related Fees | | — | | — |
Tax Fees2 | | 344,000 | | $193,000 |
All Other Fees3 | | 718,000 | | — |
|
Total | | $8,552,000 | | $4,817,000 |
|
| 1 | Audit Fees consist of fees billed for professional services rendered for the audit of our annual financial statements and the review of the interim financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings. |
| 2 | Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning, both domestic and international. These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning. |
| 3 | All Other Fees consist of fees billed for those services not captured in the audit, audit-related and tax categories. For 2016, these fees correspond to services provided by KPMG LLP as part of our revenue recognition readiness standard efforts. |
Policy on Audit CommitteePre-Approval of Audit and PermissibleNon-Audit Services of Our Independent Registered Public Accounting Firm
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy topre-approve all audit andnon-audit services provided by the independent registered public accounting firm.
These services may include audit services, audit-related services, tax services and other services.Pre-approval is generally provided for and anypre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegatedpre-approval authority to Patrick W. Allender, Chair of the Audit Committee, when expedition of services is necessary, provided that Mr. Allender must report any decisions topre-approve to the full Audit Committee at its next scheduled meeting. All of the fees included under the categories “Audit-Related Fees,” “Tax Fees” and “All Other Fees” above werepre-approved by the Audit Committee. None of these fees were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC.
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 2.
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PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS,
OF OUR NAMED EXECUTIVE OFFICER COMPENSATION
| | |
Board Recommendation: ☑FOR Proposal 3 | | In this Proposal 3, as required by Section 14A of the Exchange Act and pursuant to Rule14a-21(a) promulgated thereunder, we are providing our shareholders the opportunity to cast an advisory(non-binding) vote to approve the compensation paid to our named executive officers, as disclosed in “Compensation Discussion and Analysis” and “Executive Compensation Matters” that follow the proposals, pursuant to the compensation rules of the SEC. While this vote is advisory, and thus not binding on us, the Board values the opinions of our shareholders and the Compensation Committee will review the results of the vote and expects to take them into consideration when making future decisions regarding named executive officer compensation. Under current Board policy, the shareholder vote for advisory approval of named executive officer compensation will occur annually. Subject to the results of Proposal 7 regarding the frequency of this advisory vote on executive compensation, we anticipate that the next such vote will occur at our 2018 Annual Meeting of Shareholders. |
The “Compensation Discussion and Analysis” and “Executive Compensation Matters” sections of this Proxy Statement describe our executive compensation program and the decisions and rationale of our Compensation Committee. Our executive pay program is designed to enable us to attract, retain and motivate high quality executives who will provide us with dynamic leadership and are instrumental to our success. We emphasize performance-based variable pay through a mix of base salary, annual cash bonuses and long-term incentives and seek to provide total pay that is commensurate with our performance and competitive with our peer group. Accordingly, we are asking our shareholders to voteFOR the following resolution:
“RESOLVED, that the compensation of our named executive officers as disclosed pursuant to the compensation rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby APPROVED.”
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 3.
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PROPOSAL 4: APPROVAL OF THE DIEBOLD NIXDORF, INCORPORATED
2017 EQUITY AND PERFORMANCE INCENTIVE PLAN
| | |
Board Recommendation: ☑FOR Proposal 4 | | We are asking our shareholders to approve the 2017 Equity and Performance Incentive Plan (which we refer to as the 2017 Plan), which was adopted by our Board on March 3, 2017 based on the recommendation of our Compensation Committee and subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the 2017 Plan will become effective on April 26, 2017 and replace our 1991 Equity and Performance Incentive Plan, as amended (which we refer to as the 1991 Plan). The 1991 Plan is the only equity plan that we have in place. Approval of the 2017 Plan by shareholders also will constitute approval of the material terms of the performance goals for performance-based compensation under the 2017 Plan for purposes of Section 162(m) of the Internal Revenue Code, or the Code. |
As of February 20, 2017, 1,541,934 common shares remain available for grants under the 1991 Plan. If our shareholders approve the 2017 Plan, no future awards will be granted under the 1991 Plan after the date of such approval. Awards previously granted under the 1991 Plan will remain outstanding in accordance with their terms, but none of the remaining shares authorized under the 1991 Plan will be transferred or used under the 2017 Plan. Awards under the 1991 Plan that are forfeited or expire without being exercised, paid or delivered will not be available for awards under the 2017 Plan. If the 2017 Plan is not approved, then the 1991 Plan will continue in accordance with its terms as previously approved by our shareholders until its expiration.
The affirmative vote of a majority of the shares of our common stock represented and voting at the Annual Meeting is required to approve the 2017 Plan.
The more significant features and provisions of the 2017 Plan are summarized below. The summary is not complete and is qualified in its entirety by the terms of the 2017 Plan, a copy of which is set forth asAppendix A to this Proxy Statement.
2017 Plan Highlights
The 2017 Plan authorizes the Compensation Committee to provide equity-based compensation in the form of options, stock appreciation rights (tandem and free-standing), restricted shares, restricted stock units, performance shares, performance units, dividend equivalents and other share-based awards for the purpose of providing ournon-employee directors, officers and other employees (and those of our subsidiaries) with incentives and rewards for performance.
We believe our future success depends in part on our ability to attract, motivate and retain high quality employees and directors and that the ability to provide equity-based and incentive-based awards under the 2017 Plan is critical to achieving this success. We would be at a severe competitive disadvantage if we could not use share-based awards to recruit and compensate ournon-employee directors, officers and other employees.
The use of our common shares as part of our compensation program fosters apay-for-performance culture that is an important element of our overall compensation philosophy. We believe that equity compensation motivates directors and employees to create shareholder value because the value they realize from their equity compensation is based on our stock price performance. Equity compensation also aligns the compensation interests of our directors and employees with the investment interests of our shareholders and promotes a focus on long-term value creation because our equity compensation awards can be subject to vesting and/or performance criteria.
Some of the key features of the 2017 Plan that reflect our commitment to effective management of equity and incentive compensation and our maintenance of sound governance practices in granting awards include:
Performance-Based Awards: The 2017 Plan provides that the payment of dividend equivalents with respect to performance-based awards will be deferred until and paid contingent upon the level of achievement of the applicable management performance goals.
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Detrimental Activity and Clawback: The 2017 Plan contains provisions that subject all awards under it to the terms of any recoupment or clawback policy required by law or applicable stock exchange requirement or adopted and in effect at the Company. The 2017 Plan also provides that in the event a participant participates in detrimental activity, as defined in the 2017 Plan, we have the right to have awarded shares returned.
Flexibility to Qualify for Section 162(m) Performance-Based Compensation Tax Treatment: The 2017 Plan provides us with the flexibility, when the Compensation Committee deems that to be in our best interests, to grant awards intended to qualify for the performance-based compensation exemption from the limitation on corporate tax deductions in Section 162(m) of the Code.
Minimum Vesting Period:The 2017 Plan requires that nearly all awards granted under it be subject to aone-year minimum vesting period.
Management Objectives and Goals: The 2017 Plan updates and expands the performance criteria and methodology (which we refer to as management objectives) used to develop performance goals for awarding performance-based awards, including those intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code.
No Discounted Options or Stock Appreciation Rights:The 2017 Plan prohibits the grant of options or stock appreciation rights with an exercise price less than the fair market value of our common shares on the grant date.
No Repricing of Options or Stock Appreciation Rights:The 2017 Plan generally prohibits the repricing of options or stock appreciation rights (outside of certain corporate transactions or adjustment events described in the 2017 Plan) without shareholder approval.
Change in Control Definition: In 2015, we revised and conformed the definition that we use for “change in control” across our executive change in control agreements. The 2017 Plan includes this definition of “change in control” so that our agreements and this 2017 Plan provide for consistency and uniformity in the event of a change in control.
Independent Committee Administration:Awards to our named executive officers under the 2017 Plan will be granted by a committee composed entirely of independent directors.
Term of the 2017 Plan:No awards may be granted under the 2017 Plan more than ten years from the date of shareholder approval.
Share Usage
We are committed to sound equity compensation practices because we recognize that equity compensation awards dilute shareholder equity. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of shareholder interests. For purposes of evaluating our equity compensation program, shareholders may wish to consider two metrics: historical burn rate and overhang.
Historical burn rate: Our historical burn rate is equal to the number of shares subject to equity awards granted during a period, in proportion to our outstanding shares. Our burn rate for 2016 was 2.28%, and our three-year average burn rate for 2014 through 2016 was 2.38%.
Overhang: Our overhang is the number of shares subject to unvested equity awards outstanding atyear-end plus the number of shares available for future grants of equity awards in proportion to our shares outstanding atyear-end. As of the end of 2016, our overhang was 10.58%.
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More detail regarding the overhang and dilution associated with the 1991 and 2017 Plans is below. The information is as of February 20, 2017. As of that date, there were approximately 75,347,468 of our common shares outstanding. If the 2017 Plan is approved, we will not make any additional awards under the 1991 Plan, and the below table therefore assumes that no shares are available for future issuance under the 1991 Plan. The 1991 Plan is the only equity plan we have in place currently.
| | |
Outstanding full-value awards assuming that the outstanding awards achieve maximum performance under the 1991 Plan | | 4,107,482 shares or 5.45%
of our outstanding shares |
Outstanding stock options under the 1991 Plan | | 2,330,605 shares or 3.09% of our outstanding shares |
Weighted average exercise price of outstanding options under the 1991 Plan | | $31.24 |
Weighted average remaining term of outstanding options under the 1991 Plan | | 8 years |
Total shares subject to outstanding awards under the 1991 Plan | | 6,438,087 shares or 8.54% of our outstanding shares |
Total shares available for future awards under the 1991 Plan | | 0 |
Current overhang percentage based on total number of shares subject to outstanding awards under the 1991 Plan | | 8.54% |
Additional shares requested under the 2017 Plan | | 4,941,117 |
Potential dilution of 4,941,117 shares as a percentage of outstanding shares | | 6.56% |
Total potential fully-diluted overhang under the 1991 Plan and the proposed 2017 Plan | | 11,379,204 shares or 15.10%. |
Based on the closing price on the NYSE for our common shares on February 20, 2017, of $30.10 per share, the aggregate market value as of that date of the 4,941,117 additional common shares requested for issuance under the 2017 Plan was $148,727,622.
In 2014, 2015 and 2016, we granted awards (including performance-based awards) under the 1991 Plan covering 1,582,000 shares, 1,563,000 shares, and 1,717,000 shares, respectively.
In determining the number of shares to request for approval under the 2017 Plan, our management team worked with Aon Hewitt, the Compensation Committee’s independent compensation consultant, and the Compensation Committee to evaluate a number of factors including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating our proposal for the 2017 Plan.
If the 2017 Plan is approved, we intend to utilize the shares authorized under the 2017 Plan to continue our practice of incentivizing key individuals through annual equity grants. We anticipate that the shares requested in connection with the approval of the 2017 Plan will last for about 2 years, based on our historic grant rates and the approximate current stock price, but could last for a shorter period of time if actual practice does not match historic rates or our share price changes materially. As noted in “2017 Plan Highlights” and elsewhere below, our Compensation Committee would retain full discretion under the 2017 Plan to determine the number and amount of awards to be granted under the 2017 Plan, subject to the terms of the 2017 Plan, and future benefits that may be received by participants under the 2017 Plan are not determinable at this time.
Summary of Material Terms of the 2017 Plan
Shares Available Under the 2017 Plan: Subject to adjustment as provided in the 2017 Plan, the number of common shares that may be issued or transferred:
upon the exercise of options or stock appreciation rights;
as restricted shares released from substantial risks of forfeiture;
in payment of performance shares or performance units that have been earned;
in payment for restricted stock units;
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in payment for other share-based awards; or
in payment of dividend equivalents paid with respect to awards made under the 2017 Plan
will not exceed in the aggregate 4,941,117 shares. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.
If an award is canceled, expires, lapses or is forfeited or is settled in cash, the common share underlying the award will be available for future grant. Common shares covered by an award are not counted as used unless and until they are issued or transferred. In the event that withholding tax liabilities arising from an award other than an option or stock appreciation right are satisfied by the tendering of common shares or by the withholding of common shares by us, the common shares so tendered or withheld shall be added to the common shares available for awards under the 2017 Plan. For the avoidance of doubt, the following will not again become available for issuance under the 2017 Plan: (i) any common shares withheld in respect of taxes upon settlement of an option or stock appreciation right, (ii) any common shares tendered or withheld to pay an exercise price, (iii) any common shares subject to a stock appreciation right that are not issued in connection with its stock settlement on exercise thereof, and (iv) any common shares reacquired by us on the open market or otherwise using cash proceeds.
Unless terminated earlier by the Board, the 2017 Plan will be in effect until all shares subject to it have been purchased or acquired. In no event will any award under the 2017 Plan be granted on or after the tenth anniversary of its effective date.
Limits on Awards:The following limits apply to awards under the 2017 Plan to each participant in a calendar year (subject to limited permitted adjustment under the 2017 Plan):
Aggregate awards of options and Stock Appreciation Rights up to 4,000,000 common shares;
Aggregate of awards of performance-based awards that are “qualified performance-based compensation” under Section 162(m) of the Code, other than performance units, up to 2,500,000 common shares;
Aggregate dollar value of performance units up to $30,000,000, measured as of the date of grant;
Aggregate number of common shares issued upon exercise of incentive stock options shall not exceed 4,941,117; and
With respect tonon-employee directors, the aggregate dollar value of awards granted to anynon-employee director shall not exceed $750,000, measured as of the date of grant.
Minimum Vesting Requirement: The Compensation Committee shall not award more than 5% of the aggregate number of common shares that become available for grant under the 2017 Plan pursuant to awards that are solely subject to a vesting or performance condition that provides for full vesting or completion of the performance period in less than one year following the grant date of the applicable award subject, in each case, to the Compensation Committee’s authority under the 2017 Plan to vest awards earlier, as the Committee deems appropriate, upon the occurrence of a Change in Control, in the event of a Participant’s termination of employment or service or otherwise as permitted by the 2017 Plan.
Eligibility: Our officers and employees (and those of our subsidiaries) (approximately 1,200 people) and ournon-employee directors (approximately 11 people) may be selected by the Board to receive benefits under the 2017 Plan. We refer to those individuals selected as “participants.”
Options: An option entitles the participant to purchase a common share at the exercise price. The Compensation Committee may grant incentive stock options,non-qualified stock options, or a combination of both, but incentive stock options cannot be granted tonon-employees. Dividends or dividend equivalents are not payable on options. Each option will be evidenced by an award agreement that specifies the number of common shares covered by the option, the exercise price and term of the option, any conditions to the exercise and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The exercise price
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for an option will not be less than 100% of the common shares’ fair market value on the date of grant (or, in the case of a 10% shareholder, 110% of the shares’ fair market value on the date of grant). The exercise price is payable in cash, check, common shares, consideration received under a broker-assisted cashless exercise program, by net exercise or any other combination or method of payment to the extent permitted by law and approved by the Compensation Committee. No option will be exercisable more than 10 years from the date of grant.
Stock Appreciation Rights (SARs): A SAR is the right to the equivalent of the increase in value of a specified number of our common shares over a specified period of time. The Compensation Committee may grant SARs alone (which we refer to as a free standing right) or in tandem with an option granted under the 2017 Plan (which we refer to as a related right). Dividends or dividend equivalents are not payable on SARs. Each SAR will be evidenced by an award agreement that describes the SAR, the exercise price and term of the SAR, any conditions to the exercise, any related option and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The exercise price for a SAR will not be less than 100% of the common shares’ fair market value on the date of grant (or, in the case of a related right, the same exercise price as the related option). The exercise price is payable in cash, check, common shares, consideration received under a broker-assisted cashless exercise program, by net exercise or any other combination or method of payment to the extent permitted by law and approved by the Compensation Committee. The amount payable by us upon exercise of the SAR shall be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternative. No SAR will be exercisable more than 10 years from the date of grant.
Restricted Shares: Restricted shares are common shares that are subject to forfeiture and may not be transferred by a participant until the restrictions established by the Compensation Committee have lapsed. Those restrictions may take the form of a period of continued employment, board service or achievement of certain performance criteria, for example. The award agreement for each grant of restricted shares will specify the restrictions, the number of restricted shares and any other terms and conditions the Compensation Committee specifies and are consistent with the 2017 Plan. The grant will constitute a transfer of ownership and, unless otherwise determined by the Compensation Committee, will entitle the participant to voting, dividend and other ownership rights during the restriction period. For purposes of qualifying a grant of restricted shares as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.
Restricted Stock Units (RSUs): An RSU is an award that is valued by reference to one common share. Payment of the value of the RSU will not be made until the restrictions established by the Compensation Committee have lapsed. Those restrictions may take the form of a period of continued employment, board service or achievement of certain performance criteria, for example. The award agreement for each RSU grant will specify the restrictions, the number of RSUs and any other terms and conditions the Compensation Committee specifies and are consistent with the 2017 Plan. At the discretion of the Compensation Committee, RSUs may be credited with dividend equivalents, provided that, with respect to RSUs that are subject to performance conditions, the dividend equivalents will be deferred and paid contingent on the level of performance achieved at the end of the performance period. The amount payable may be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternatives. For purposes of qualifying a grant of RSUs as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.
Performance Shares and Performance Units: Performance shares are shares that become payable upon the achievement of specified performance goals, which may include management goals. Performance units are valued by reference to $1.25 per unit and payable upon achievement of specified performance goals, which may include management goals. The grant may specify a minimum level of achievement of the performance or management goals and will include a formula for determining the number of shares or units earned at the end of the performance period. The Compensation Committee will certify achievement levels of performance prior to the payment of any shares or units. At the discretion of the Compensation Committee, performance shares or performance units may be credited with dividend equivalents, and in all cases the dividend equivalents will be deferred and paid contingent on the level
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of performance achieved at the end of the performance period. Each performance share or performance unit award will be evidenced by an award agreement that specifies the number of performance shares or performance units, the performance objectives (which may include management goals), the performance period applicable to the award, and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The amount payable may be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternative. For purposes of qualifying a grant of performance shares or performance units as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.
Other Share-Based Awards:The Compensation Committee may, from time to time, grant other share-based awards not otherwise described above but in all cases consistent with the terms and conditions of the 2017 Plan. Each such award will be expressed in terms of common shares or units based on common shares and will be evidenced by an award agreement that specifies the number of common shares or units granted, any conditions related to the award, and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The amount payable may be paid in cash, common shares or a combination of both, as determined by the Compensation Committee. For purposes of qualifying a share-based grant as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.
Section 162(m) Qualified Awards: The Internal Revenue Code limits to $1 million per taxable year the deduction allowed for federal income tax purposes for compensation paid to the Chief Executive Officer and the next three most highly compensated executive officers (other than the Chief Financial Officer) of public companies (we refer to this as the Deduction Limit). The Deduction Limit applies to compensation that does not qualify for any of a limited number of exceptions. The Deduction Limit does not apply to compensation paid under a shareholder-approved plan that meets certain requirements for “qualified performance-based compensation.”
The 2017 Plan, if approved by shareholders, will provide the opportunity for the Compensation Committee to designate at the time of grant those awards (other than options and SARs) that are intended to qualify as “qualified performance-based compensation” under Section 162(m) and therefore maintain our ability to deduct that compensation expense. The 2017 Plan includes the necessary steps that the Compensation Committee must take with respect to awards so designated, including, with respect to management objectives and goals discussed below, the timing of the performance period, the certification of the achievement levels and other required procedures.
Management Objectives and Goals: The 2017 Plan requires that the Compensation Committee use “Management Objectives” for purposes of establishing “Management Goals” for a performance period for any performance-based award, including those that the Compensation Committee intends to qualify as “qualified performance-based compensation” under Section 162(m) of the Code. Management objectives that will be used to establish management goals will be based on the attainment of specific levels of performance of the Company, a subsidiary, division, business unit, operational unit, department, region or function with the Company or subsidiary in which the participant is employed. The management objectives may also be used to establish management goals on an absolute or comparative basis with other companies or a published index, as the Compensation Committee deems appropriate. Management objectives applicable to any award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code shall be based on one or more of the following:
| (A) | Sales, including (i) net sales, (ii) unit sales volume, and (iii) aggregate product price; |
| (B) | Share price, including (i) market price per share, and (ii) share price appreciation; |
| (C) | Earnings, including (i) earnings per share, reflecting dilution of shares, (ii) gross orpre-tax profits,(iii) post-tax profits, (iv) operating profit, (v) earnings net of or including dividends, (vi) earnings net of or including theafter-tax cost of capital, (vii) earnings before (or after) interest and taxes (“EBIT”), (viii) earnings per share from continuing operations, diluted or basic, (ix) earnings before (or after) interest, taxes, depreciation and amortization (“EBITDA”), (x)pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items, (xi) operating earnings, (xii) growth in earnings or growth in earnings per share, and (xiii) total earnings; |
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| (D) | Return on equity, including (i) return on equity, (ii) return on invested capital, (iii) return or net return on assets, (iv) return on net assets, (v) return on gross sales, (vi) return on investment, (vii) return on capital, (viii) return on invested capital, (ix) return on committed capital, (x) financial return ratios, (xi) value of assets, and (xii) change in assets; |
| (E) | Cash flow(s), including (i) operating cash flow, (ii) net cash flow, (iii) free cash flow, and (iv) cash flow on investment; |
| (F) | Revenue, including (i) gross or net revenue, and (ii) changes in annual revenues; |
| (G) | Margins, including (i) adjustedpre-tax margin, and (ii) operating margins; |
| (H) | Income, including (i) net income, and (ii) consolidated net income; |
| (J) | Costs, including (i) operating or administrative expenses, (ii) operating expenses as a percentage of revenue, (iii) expense or cost levels, (iv) reduction of losses, loss ratios or expense ratios, (v) reduction in fixed costs, (vi) expense reduction levels, (vii) operating cost management, and (viii) cost of capital; |
| (K) | Financial ratings, including (i) credit rating, (ii) capital expenditures, (iii) debt, (iv) debt reduction, (v) working capital, (vi) average invested capital, and (vii) attainment of balance sheet or income statement objectives; |
| (L) | Market or category share, including (i) market share, (ii) volume, (iii) unit sales volume, and (iv) market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas; |
| (M) | Shareholder return, including (i) total shareholder return, (ii) shareholder return based on growth measures or the attainment of a specified share price for a specified period of time, and (iii) dividends; and |
| (N) | Objective nonfinancial performance criteria measuring either (i) regulatory compliance, (ii) productivity and productivity improvements, (iii) inventory turnover, average inventory turnover or inventory controls, (iv) net asset turnover, (v) customer satisfaction based on specified objective goals or company-sponsored customer surveys, (vi) employee satisfaction based on specified objective goals or company-sponsored employee surveys, (vii) objective employee diversity goals, (viii) employee turnover, (ix) specified objective environmental goals, (x) specified objective social goals, (xi) specified objective goals in corporate ethics and integrity, (xii) specified objective safety goals, (xiii) specified objective business expansion goals or goals relating to acquisitions or divestitures, (xiv) day sales outstanding, and (xv) succession plan development and implementation. |
The Compensation Committee will use the management objectives to set “management goals” for a set performance period. The Compensation Committee may provide that an evaluation of the management goals, shall include or exclude any of the following items: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (4) any reorganization and restructuring programs; (5) acquisitions or divestitures; (6) unusual nonrecurring or extraordinary items identified in our audited financial statements, including footnotes or in management’s discussion and analysis in our annual report; (7) foreign exchange gains and losses; (8) changes in our fiscal year; and (9) any other specific unusual or nonrecurring events, or objectively determinable category thereof. In the case of an award intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, any such item will be prescribed in a form and at a time that meets the requirements of Section 162(m) of the Code.
If the Compensation Committee determines that a change in our business, operations, corporate structure or capital structure, or the manner in which we conduct our business, or other events or circumstances render the management goals unsuitable, the Compensation Committee may in its discretion modify such management goals or the minimum acceptable level of achievement, in whole or in part, as the Compensation Committee deems appropriate and equitable, except in the case of an award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code where such action would result in the loss of the otherwise available exemption under Section 162(m). In such case, the Compensation Committee may not make any modification of the management goals or minimum acceptable level of achievement.
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Administration: The Board delegates authority to administer the 2017 Plan to the Compensation Committee or any other committee so designated by the Board. Unless otherwise determined by the Board, the Compensation Committee will consist of two or morenon-employee directors who are also “outside directors” within the meaning of Section 162(m) of the Code. The Compensation Committee may further delegate its authority to make awards under the 2017 Plan, complying in the Board’s discretion with the requirements ofSection 16b-3 and/or Section 162(m) of the Code.
The Compensation Committee is authorized to interpret the 2017 Plan and related agreements and other documents. The Compensation Committee may provide for special terms for awards to participants who are foreign nationals or who are employed by us or any of our subsidiaries outside of the United States of America as the Compensation Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom, in all cases consistent with the terms of the 2017 Plan.
Transferability: Except as otherwise determined by the Compensation Committee, no option, SAR or other derivative security is transferable by a participant except, upon death, by will or the laws of descent and distribution. If, however, a participant is not a director or officer of ours, transfer may be made to a fully revocable trust of which the participant is treated as the owner for federal income tax purposes. Except as otherwise determined by the Compensation Committee, options and SARs are exercisable during the participant’s lifetime only by him or her or by his or her guardian or legal representative. The Compensation Committee may provide for transferability of options and SARs under the 2017 Plan if such provision would not disqualify the exemption for other awards underRule 16b-3 of the Exchange Act and so long as such transfer is not to any third-party entity, including financial institutions.
The Compensation Committee may specify at the date of grant that part or all of the common shares that are (i) to be issued or transferred by us upon exercise of options or SARs or upon payment under any grant of performance shares, performance units, RSUs or other share-based awards or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer for restricted shares, shall be subject to further restrictions on transfer.
Adjustments: The maximum number of shares that may be issued and delivered under the 2017 Plan, the number of shares covered by outstanding options and SARs, and the prices per share applicable thereto, are subject to adjustment in the event of stock dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations, liquidations, issuances of rights or warrants, and similar events. In the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the 2017 Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require the surrender of all awards so replaced. The Compensation Committee may also make or provide for such adjustments in the numbers of shares authorized for issuance under the 2017 Plan as the Compensation Committee may determine appropriate to reflect any transaction or event described above.
Change in Control: Under the 2017 Plan, a “Change in Control” generally means the occurrence of any of the following events: (1) when any person, entity or group acquires beneficial ownership of 30% or more of our outstanding common shares or voting power of our stock entitled to vote to elect directors, subject to limited exceptions described in the 2017 Plan; (2) a turnover of a majority of the incumbent Board members as of the date of the 2017 Plan, subject to limited exceptions described in the 2017 Plan; (3) consummation of certain corporate transactions or a sale or other disposition of all or substantially all of our assets, subject to limited exceptions described in the 2017 Plan; or (4) when our shareholders approve a complete liquidation or dissolution of the Company.
Tax Withholding: To the extent that we are required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a participant or other person under this 2017 Plan, and the amounts available to us for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to us for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the
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Compensation Committee) may include relinquishment of a portion of such benefit. Participants must also make such arrangements as we may require for the payment of any withholding tax obligations that may arise in connection with the disposition of shares acquired upon the exercise of option rights. In no event, however, may we accept common shares for the payment of taxes in excess of required tax withholding rates. However, in the discretion of the Compensation Committee, a participant or such other person may surrender common shares owned for more than six months to satisfy any tax obligations resulting from any such transaction.
Detrimental Activity: Any award agreement may provide that if a participant, either during employment by us or any of our subsidiaries or within a specified period after termination of such employment, engages in any “Detrimental Activity” (as defined in the 2017 Plan), and the Compensation Committee so finds, upon notice of such finding, the participant must unless otherwise provided in the award agreement:
| (A) | Return to us, in exchange for payment by us of any amount actually paid therefor by the participant, all shares of common shares that the participant has not disposed of that were offered pursuant to the plan within a specified period prior to the date of the commencement of such detrimental activity, and |
| (B) | With respect to any common shares so acquired that the participant has disposed of, pay to us in cash the difference between: |
| (i) | Any amount actually paid therefor by the participant pursuant to the 2017 Plan, and |
| (ii) | The market value per share of the common shares on the date of such acquisition. |
To the extent that such amounts are not paid to us, we may set off the amounts so payable to us against any amounts (but only to the extent that such amount would not be considered“non-qualified deferred compensation” under Section 409A of the Code) that may be owing from time to time by us or one of our subsidiaries to the participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason.
Clawback:Any award under the 2017 Plan that is subject to recovery under any law, government regulation or stock exchange listing requirement (or any policy adopted by us pursuant to those requirements or pursuant to direction of the Board, including our current clawback policy) will be subject to clawback and deduction as required or permitted by the law, regulation, listing requirement or policy.
No Repricing Without Shareholder Approval: Subject to certaintax-related exceptions described in the 2017 Plan, in the case of termination of employment by reason of death, disability or normal or early retirement, or in the case of hardship or other special circumstances, of a participant who holds awards that are unearned, unvested or unexercisable, the Compensation Committee may, in its sole discretion, accelerate the time at which such awards are earned, vest or become exercisable. However, except in connection with a corporate transaction or event as described above with respect to adjustments, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding options or SARs, or cancel outstanding options or SARs in exchange for cash, other awards or options or SARs with an exercise price that is less than the exercise price of the original option or SAR, without shareholder approval.
Amendment and Termination: We may, by action of the Board, amend or terminate the 2017 Plan. Any amendment which must be approved by our shareholders in order to comply with applicable law or the national securities exchange upon which our commons shares are traded will not be effective until such approval is obtained. Any amendment or termination of the 2017 Plan will not impair in any material way the rights and obligations of the participants under any award that is outstanding without the written consent of the participant.
Governing Law: The 2017 Plan and all awards granted and actions taken thereunder will be governed by the internal substantive laws of Ohio.
New Plan Benefits: It is not possible to determine specific amounts that may be awarded in the future under the 2017 Plan because grants of awards under the 2017 Plan are discretionary.
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Tax Consequences to Participants
The following is a brief summary of some of the U.S. federal income tax consequences of certain awards under the 2017 Plan based on U.S. federal income tax laws in effect on January 1, 2017. This summary, which is presented for the information of shareholders considering how to vote on this Proposal 4 and not for 2017 Plan participants, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes, and Code Section 409A taxes), state, local or foreign tax consequences.
Non-qualified Stock Options: In general, (i) no income will be recognized by a participant at the time anon-qualified option right is granted; (ii) at the time of exercise of anon-qualified option right, ordinary income will be recognized by the optionee in an amount equal to the difference between the option price paid for the shares and the fair market value of the shares, if unrestricted, on the date of exercise; and (iii) at the time of sale of shares acquired pursuant to the exercise of anon-qualified option right, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.
Incentive Stock Options: No income generally will be recognized by a participant upon the grant or exercise of an incentive stock option (ISO). The exercise of an ISO, however, may result in alternative minimum tax liability. If common shares are issued to the optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of such shares is made by the participant within two years after the date of grant or within one year after the transfer of such shares to the participant, then upon sale of such shares, any amount realized in excess of the option price will be taxed to the participant as a long-term capital gain and any loss sustained will be a long-term capital loss.
If common shares acquired upon the exercise of an ISO are disposed of prior to the expiration of either holding period described above, the participant generally will recognize ordinary income in the year of disqualifying disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the option price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
Stock Appreciation Rights (SARs): No income will be recognized by a participant in connection with the grant of a SAR. When the SAR is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the fair market value of any unrestricted common shares received on the exercise.
Restricted Shares: The recipient of restricted shares generally will be subject to tax at ordinary income rates on the fair market value of the restricted shares (reduced by any amount paid by the participant for such restricted shares) at such time as the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code. However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of transfer of the shares will have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions) over the purchase price, if any, of such restricted shares. If a Code Section 83(b) election has not been made, any dividends received with respect to restricted shares that are subject to the restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.
Restricted Stock Units (RSUs): The recipient of an RSU award will not recognize income on the grant date. When any part of an RSU award is paid (in the case of cash) or delivered (in the case of unrestricted common shares), the participant will have taxable ordinary income on such date of receipt in an amount equal to the case and the fair market value of any unrestricted common shares received.
Performance Shares and Performance Units: No income generally will be recognized by a participant upon the grant of performance shares or performance units. Upon payment in respect of theearn-out of performance shares or performance units, the participant will have taxable ordinary income on the date of receipt in an amount equal to the amount of cash received and the fair market value of any unrestricted common shares received.
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Tax Consequences to the Company or Subsidiary
To the extent that a participant recognizes ordinary income in the circumstances described above, we or our subsidiary for which the participant performs services will be entitled to a corresponding income tax deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1 million limitation on certain executive compensation to our four covered employees (namely, our Chief Executive Officer and our three other highest-paid executive officers other than our Chief Financial Officer) under Section 162(m) of the Code. Compensation paid to our four covered employees is not subject to the $1 million deduction limitation if it is “qualified performance-based compensation” within the meaning of Code Section 162(m); and once approved by our shareholders, the 2017 Plan will permit the grant of “qualified performance-based compensation” awards to our four covered employees.
Registration with the SEC
We intend to file a Registration Statement on FormS-8 relating to the issuance of additional common shares under the 2017 Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the 2017 Plan by our shareholders.
Equity Compensation Plan Information
The following table reflects information as of December 31, 2016 and pertains to our 1991 Plan, which is the only equity plan we currently have in place:
| | | | | | | | | | | | |
Plan Category | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a) | | | Weighted-average exercise
price of outstanding options,
warrants and rights (b) | | | Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) (c) | |
Equity compensation plans approved by security holders | | | | | | | | | | | | |
Stock options | | | 1,689,172 | | | | $31.98 | | | | N/A | |
Restricted stock units | | | 1,154,015 | | | | N/A | | | | N/A | |
Performance shares | | | 1,241,403 | | | | N/A | | | | N/A | |
Non-employee director deferred shares | | | 125,800 | | | | N/A | | | | N/A | |
Deferred compensation | | | 8,311 | | | | N/A | | | | N/A | |
Total | | | 4,218,701 | | | | $31.98 | | | | 4,100,000 | |
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| | | | | | | | | | | | | |
Vote Required to Approve the 2017 Plan
A favorable vote of the majority of votes cast on the matter is necessary for approval of the 2017 Plan. Abstentions and brokernon-votes will not be counted for determining whether the 2017 Plan is passed.
Recommendation of the Board
The Board recommends a voteFOR the approval of the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan.
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COMPANY PROPOSALS RELATING TO CORPORATE GOVERNANCE MATTERS
We are asking our shareholders to approve two corporate governance proposals that our Board of Directors believes are in the best interests of our shareholders and our Company. Before voting on either of these proposals, we urge you to carefully read and consider each proposal as described in detail on the followingpages 44-48 of this Proxy Statement.
Proposal 5 would amend our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections. This proposed majority voting standard would require that each director candidate receive more votes “for” than “against” to be elected in an uncontested election. Conversely, a director candidate who receives more votes “against” than “for” would not be elected in an uncontested election. We expect to continue the director resignation policy that is prescribed currently in the Board-adopted policy relating to majority voting. Our Board of Directors is proposing this majority voting standard to reinforce the Board of Director’s accountability to our shareholders.
Proposal 6 would amend our Amended Articles of Incorporation to eliminate cumulative voting in Director elections. Our Board of Directors is proposing to eliminate cumulative voting because it views cumulative voting as incompatible with the objectives of a majority voting standard, and because it views the elimination of cumulative voting as important to ensuring that a majority voting standard is properly and effectively implemented.
Our Board of Directors has determined that Proposals 5 and 6 together represent a carefully balanced and integrated approach designed to further provide shareholders with a net positive result by empowering and enhancing the voice of our shareholders in director elections. These proposals are designed to work together to promote an orderly director election process that respects and satisfies the will of a majority of our shareholders. Because these amendments are designed to work together, the implementation of each of Proposal 5 (the proposal to adopt an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections) and Proposal 6 (the proposal to adopt an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections) is conditioned on shareholder approval of both proposals. In other words, if either is not approved, then neither proposal will be implemented.
Each of Proposal 5 and 6 require the affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting. Consequently, it is important that you vote on these items.
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PROPOSAL 5: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO IMPLEMENT A MAJORITY VOTING STANDARD IN UNCONTESTED DIRECTOR ELECTIONS
| | |
Board Recommendation: ☑FOR Proposal 5 | | Under this Proposal 5, we are asking our shareholders to adopt an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections. The implementation of this Proposal 5 is contingent upon the approval by our shareholders of Proposal 6 to eliminate cumulative voting. Consistent with our history of implementing policies to reinforce the accountability of our Board of Directors, in 2007 the Board adopted a majority voting policy, which provides that, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” election is expected to tender his or her resignation following certification of the shareholder vote. Our Governance Committee considers the resignation and makes a recommendation to the Board whether to accept or reject the resignation. Our Board is proposing the implementation of a majority voting standard in uncontested director elections to reflect our commitment to strong corporate governance. |
Under the proposed majority voting standard, for a nominee to be elected to our Board of Directors in an uncontested election, the number of votes cast “for” the nominee’s election must exceed the number of votes cast “against” his or her election. Abstentions and brokernon-votes would not be considered votes “for” or “against” a nominee. An “uncontested election” means an election in which the number of director nominees does not exceed the number of directors to be elected. In all other director elections, which we refer to as contested elections, a plurality voting standard would apply.
Our Board has concluded that the adoption of the proposed majority voting standard in uncontested elections will give shareholders a greater voice in determining the composition of our Board. A majority voting standard will give a more meaningful effect to shareholder votes “against” a Director nominee by requiring a majority of shareholder votes for a nominee to obtain or retain a seat on our Board. The adoption of this standard in uncontested elections is intended to reinforce the accountability of our Board to our shareholders in uncontested director elections. If adopted by our shareholders at this Annual Meeting, the majority voting standard would apply to all future uncontested director elections.
Our Board further believes that a plurality voting standard should still apply in contested director elections. If the plurality voting standard did not apply in contested elections, it is possible that more nominees could be elected than the number of director seats up for election because the proposed majority voting standard simply compares the number of “for” votes with the number of “against” votes for each director nominee without regard to voting for other nominees. Accordingly, the proposed majority voting standard retains plurality voting in contested director elections to avoid such inconsistent results.
If this Proposal 5, along with Proposal 6 (eliminating cumulative voting), are both approved by our shareholders and implemented, we expect to retain our director resignation policy (as reflected in our current majority voting policy), conformed as necessary to reflect the provisions of these proposals. Under Ohio law and our Code of Regulations, as amended, an incumbent director who is notre-elected remains in office until his or her successor is elected, continuing as a “holdover” director. We expect our director resignation policy to continue to require an incumbent director who does not receive more votes “for” than “against” his or her election in an uncontested election to tender his or her resignation to our Board, which will decide whether to accept or reject the resignation based on the recommendation from our Governance Committee. This process is described in greater detail in the section of our Proxy Statement entitled “Majority Voting Policy.”
Under Ohio law, a plurality voting standard applies for director elections unless an Ohio company’s Articles of Incorporation state otherwise. Our Amended Articles of Incorporation do not address the voting standard for director elections, and so our current standard is plurality voting. For the reasons outlined above, the Board determined that it is appropriate to amend the Amended Articles of Incorporation to add a majority voting standard,
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subject to our shareholders’ approval of Proposal 6. On March 3, 2017, our Governance Committee recommended, and our Board unanimously approved, resolutions approving and recommending to our shareholders the adoption of majority voting as stated in this Proposal 5.
The actual text of the proposed amendment to our Amended Articles of Incorporation is attached to this Proxy Statement asAppendix B. The amendment to the Amended Articles of Incorporation will become effective upon filing a Certificate of Amendment with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval), subject to approval of Proposal 6.
Shareholder Approval
The affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting is required to approve the proposed amendment. Abstentions and brokernon-votes will have the same effect as votes cast against this Proposal 5.
As noted above, if this Proposal 5 is approved by our shareholders at the Annual Meeting, it will be implemented only if Proposal 6 is also approved. Accordingly, even if this Proposal 5 is approved by our shareholders at the Annual Meeting, it will not be implemented unless Proposal 6 is also approved by our shareholders at the Annual Meeting.
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 5.
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PROPOSAL 6: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING IN DIRECTOR ELECTIONS
| | |
Board Recommendation: ☑FOR Proposal 6 | | Under this Proposal 6, we are asking our shareholders to approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections. Under Ohio law, because our Amended Articles of Incorporation currently do not address cumulative voting, our shareholders can cumulate votes in director elections at any meeting held for that purpose, whether or not the election is contested and subject to proper notice. Cumulative voting enables a shareholder to cumulate his or her voting power by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by the shareholder, or distributing those votes among two or more candidates as the shareholder sees fit. Thus, with cumulative voting, a shareholder can cast all of his, her or its votes “for” one candidate or a small group of candidates, instead of voting either “for” or “withheld” on each candidate. |
Consequently, a candidate may be elected even if he or she was not supported by the holders of a majority of our shares. For example, because thirteen directors are to be elected at the Annual Meeting, a shareholder holding approximately 6% of our outstanding common shares, by merely cumulating and casting votes for a single director candidate, could elect one director in a contested election, even if the candidate is not supported by nearly 94% of shareholders, based on 75,347,468 common shares outstanding on February 20, 2017 and assuming approximately 80% of the outstanding common shares are voted at the Annual Meeting.
As discussed above in Proposal 5, we are asking shareholders to implement a majority voting policy in uncontested director elections. Unlike cumulative voting, this majority voting policy seeks to hold Directors accountable to the holders of amajority of the shares voting. Our Board of Directors believes that cumulative voting is inconsistent with the objective of accountability, as it potentially allows a shareholder that holds significantly less than a majority of shares to elect one or more Directors. Our intent is that a majority voting standard, together with proxy access, will give all shareholders, including minority shareholders, the opportunity to express their opinions and actively participate in elections, while limiting the ability of a minority shareholder to have a disproportionate influence on director elections.
In addition, cumulative voting and majority voting are procedurally incompatible, and attempting to combine them in the same election of directors could create confusion and uncertainty in the director election process. If, for example, both majority voting and cumulative voting applied in the same election of directors, it would be very possible that a number of directors could receive more “against” votes than “for” votes, causing the Board to have multiple vacancies.
In February 2017, our Board took the positive step of providing our long-term shareholders with the right to nominate a limited number of director candidates and to have those nominees included in our proxy statement and proxy card for the annual meeting of shareholders, subject to the processes and requirements stated in our newly adopted proxy access provision stated in our Code of Regulations. The proxy access provision is summarized on page 17 of this proxy statement. As our Board considered the adoption of proxy access, the Board also recognized that the existing right of our shareholders to cumulate their votes in the election of directors could create a disproportionate amount of influence for the shareholders that may nominate directors under our new proxy access provision. While we have historically maintained cumulative voting as a mechanism for shareholders with less than a majority of shares to influence Director elections, the Board believes that this right is no longer appropriate in light of our proxy access procedure.
For these reasons, the Board determined that it is appropriate to eliminate cumulative voting in connection with amending the Company’s Amended Articles of Incorporation to adopt a majority voting standard. Accordingly, on March 3, 2017, the Board adopted resolutions approving and recommending to shareholders the adoption of an amendment to the Company’s Amended Articles of Incorporation to eliminate cumulative voting in director elections, subject to approval of Proposal 5.
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The actual text of the proposed amendment to the Company’s Amended Articles of Incorporation is attached to this Proxy Statement asAppendix B. The amendment to the Amended Articles of Incorporation will become effective upon filing a Certificate of Amendment with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval), subject to approval of Proposal 5.
Shareholder Approval
The affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting is required to approve the proposed amendment. Abstentions and brokernon-votes will have the same effect as votes cast against this Proposal 6.
As noted above, if this Proposal 6 is approved by our shareholders at the Annual Meeting, it will be implemented only if Proposal 5 is also approved. Accordingly, even if this Proposal 6 is approved by our shareholders at the Annual Meeting, it will not be implemented unless Proposal 5 is also approved by our shareholders at the Annual Meeting.
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 6.
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PROPOSAL 7: ADVISORY VOTE ON THE FREQUENCY OF THE SHAREHOLDER ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
| | |
Board Recommendation: ☑1 YEAR Proposal 7 | | As described in Proposal 3 above, pursuantto Rule 14a-21(b) under the Exchange Act, we are providing our shareholders with the opportunity to cast an advisory vote on our named executive officer compensation. This advisory vote is referred to asa “say-on-pay” vote. This Proposal 7 affords shareholders the opportunity to cast an advisory(non-binding) vote on how often we should includea say-on-pay vote in our proxy materials for future annual meetings of shareholders. Under this Proposal 7, shareholders may vote to havethe say-on-pay vote every year, every two years, every three years or abstain. |
We believethat say-on-pay votes should be conducted every year so that our shareholders are provided with the opportunity to frequently express their views on our executive compensation programs and practices. The Compensation Committee values the opinions expressed by shareholders insay-on-pay votes and considers the outcome of these votes in making decisions on named executive officer compensation.
The frequency of the shareholder advisory vote on named executive officer compensation receiving the greatest number of votes (every year, every two years or every three years) will be considered the frequency recommended by shareholders.
Recommendation of the Board
The Board recommends that shareholders vote to hold future shareholder advisory voteson say-on-pay 1 YEAR. Shareholders are not voting to approve or disapprove the Board’s recommendation. Shareholders may choose among the four choices (1 year, 2 years, 3 years or abstain) set forth above.
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EXECUTIVE COMPENSATION COMMITTEE REPORT
MATTERSCompensation Committee Report
The Compensation Committee has reviewed and discussed with management the following “Compensation“Compensation Discussion and Analysis”Analysis” section of this proxy statement. Based on our review and discussions, we recommend to the Board that the “Compensation“Compensation Discussion and Analysis”Analysis” be included in (or incorporated by reference as applicable) our Annual Report on Form10-K for the year ended December 31, 20142016 and this proxy statement.
The foregoing report was submitted by the Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act.
The Compensation Committee:
Richard L. Crandall
Gale S. Fitzgerald
Dr. Dieter Düsedau
Rajesh K. Soin
Henry D. G. Wallace
Alan J. Weber
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and AnalysisOur Compensation Committee, or the Committee, has oversight responsibility for the development and administration of our executive compensation policies and programs. This “
Compensation Discussion and Analysis” describes the material components of our executive pay program for our Named Executive Officers, or the NEOs, identified below, and explains how and why the Committee arrived at specific compensation policies and decisions for our NEOs in 2014. NameTitle
Andreas (Andy) W. Mattes President2016.NEOs Eckard Heidloff and Chief Executive Officer
Christopher A. Chapman Senior Vice PresidentDr. Jürgen Wunram both joined our company following our combination with Wincor Nixdorf in August 2016. Because the acquisition occurred in the middle of the year, and Chief Financial Officer
Georgebecause the domination and profit and loss transfer agreement with Diebold Nixdorf AG (f/k/a Wincor Nixdorf) was not effective until February 2017, the compensation with respect to these NEOs was largely determined by the Supervisory Board of Wincor Nixdorf (which is similar to the board of directors for a U. S. Mayes, Jr. Executive Vice Presidentcompany) prior to the acquisition. In addition, each of these NEOs had service agreements, summarized in this proxy statement on page 76-77, that contained contractual provisions related to their compensation and Chief Operating Officer
Stefan E. Merz Senior Vice President, Strategic Projects
Sheila M. Rutt Vice President, Chief Human Resources Officer
Our 2014 executivecontinued in effect following the acquisition. Although Mr. Heidloff has resigned effective March 31, 2017, we anticipate that Dr. Wunram’s compensation structure
consistswill be similar to the other NEOs for 2017.Therefore, with the exception of three primary components: base salary, annual cash bonus incentives,the 2016 Q5 VTI award discussed below, the Committee did not make decisions with respect to Mr. Heidloff’s or Dr. Wunram’s 2016 compensation, and long-term incentives. Within the long-term incentive component, we utilize a mix of programs, as shown below.
Our compensation structure for senior leadership is as follows:
this Compensation Discussion and Analysis should be read in that context. | | |
| Name | | Title |
Andreas (Andy) W. Mattes | | Chief Executive Officer |
Christopher A. Chapman | | Senior Vice President and Chief Financial Officer |
Eckard Heidloff* | | President |
Jonathan B. Leiken | | Senior Vice President, Chief Legal Officer and Secretary |
Dr. Jürgen Wunram** | | Senior Vice President and Chief Operating Officer |
Stefan E. Merz | | Senior Vice President, Corporate Strategy and Development |
| * | Mr. Heidloff resigned from his position as President, effective March 31, 2017. |
| ** | Dr. Wunram was promoted to Senior Vice President and Chief Operating Officer from Senior Vice President and Chief Integration Officer on February 16, 2017, and he will serve as CEO of Diebold Nixdorf AG, effective March 31, 2017. |
| | In addition, effective March 31, 2017, Mr. Chapman will step down from the Supervisory Board of Diebold Nixdorf AG and replace Dr. Wunram as CFO on the Management Board of Diebold Nixdorf AG, and Mr. Merz will step down from the Management Board of Diebold Nixdorf AG and replace Mr. Chapman on the Diebold Nixdorf AG Supervisory Board. |
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To assist shareholders in finding important information, this “
Compensation Discussion and Analysis” is organized as follows:-50-
Executive Summary
20142016 Company Highlights
During 2014, Mr. MattesIn 2016 we transformed the company and other senior leadership, including the other NEOs, implemented the strategy to transform Diebold into a world-class, services-led and software enabled company, supported by innovative hardware, that automates the way people connect with their money. The transformation strategy, referred to as Diebold 2.0, follows a “Crawl, Walk, Run” approach that requires the core business operations to be stabilized in the “Crawl” phase while buildinglaid the foundation for future growthour future. We acquired Wincor Nixdorf to improve our business portfolio, broaden our scale, expand our leadership in services and software, and increase our capacity to innovate and collaborate with customers. We also divested our North America Electronic Security business and launched two new strategic alliances in China. These strategic achievements have had a profound impact on us, as we have doubled the size of our company and have significantly enhanced our mix of revenue.
We continue to make progress on our integration, and our cost synergy efforts are geared towards the realization of scale effects in the “Walk”hardware business and “Run” phases. Four core pillars provide a clear path toward reaching this multi-year objective:
Reducestreamlining our cost structuremanagement and improveworkforce composition. Our sales team is fully aligned around our near-term deliverygoals, quotas and execution.
Generate increased free cash flowaccount plans. We have made extensive changes to realign our sales organization to be closer to our customers, and we are investing in
ordertraining so our sales executives can be best in class consultants to
fundour customers on their digital journey.In the investments necessarygovernance and compensation space, we expanded our Board to drive profitable growth, while preservinginclude two directors from the ability to return value to shareholdersWincor Nixdorf board of directors as well as our newly appointed COO more recently. We have engaged in extensive shareholder outreach around executive compensation matters, particularly given the form of reliable dividends and, as appropriate, share repurchases.
Attract and retain the talent necessary to drive innovation and the focused executioncomplexity of the transformation strategy.
Return to a sustainable, profitable growth trajectory.
We see opportunities to leveragecompensation arrangements following the Wincor Nixdorf acquisition. Those discussions are detailed below. Finally, our capabilitiesBoard took the positive step of adopting “proxy access” in services, software and innovation to meet the needsour Code of our rapidly evolving markets. We have sharpened our focus on executing our core strategiesRegulations in financial self-service and electronic security. This includes making the appropriate investments to deliver growth within these areas, especially in research, development and engineering. In addition, we remain committed to a disciplined risk assessment process, focused on proactively identifying and mitigating potential risks to our continued success.
Fiscal 2014 marked the first full year of executing our business transformation strategy, which encompassed foundational changes required to stabilize the Company and improve performance trends. We executed on the “Crawl” phase of our transformation in 2014 and ended the year with solid operational performance. While still in the “Crawl” phase, we now begin 2015 with a clear line of sight to “Walk.” Accordingly, the Committee believes that the executive pay program for our NEOs in 2014 was designed to incentivize and achieve our pay-for-performance goals, and was instrumental in helping us execute on this portion of our transformation strategy based on the Committee’s executive pay philosophy and its evaluationsrecognition of the following, among other factors:
The NEOs’ respective rolesgrowing trend to allow long-term shareholders to nominate a limited number of directors and to have those nominees included in
executing our
short-proxy statement and
long-term strategic goals relatedproxy card for the shareholders’ annual meeting. We are pleased to
be in line with this best practice in corporate governance.2016Say-on-Pay Vote and Shareholder Engagement
At our transformation; and
Achievement of the following 2014 financial results (discussed in more detail below under “Compensation Elements”), among others:
| |
◦ | Non-GAAP operating profit, or OP (OP is generally the GAAP operating profit of the Company, adjusted to exclude restructuring charges, non-routine income and expenses, and impairment charges); |
| |
◦ | Free cash flow, or FCF (FCF is net cash generated from our operating activities and available for execution of our business strategy, excluding capital expenditures); and |
| |
◦ | Non-GAAP earnings per share, or EPS (non-GAAP EPS is net income per share, excluding restructuring charges, non-routine income and expenses, and a non-cash impairment charge). |
The Committee believes that using non-GAAP financial metrics is a better indication of our base-line performance, and that the exclusion of restructuring charges, non-routine expenses and income and impairment charges, permits evaluation and comparison of results for our core business operations. Also, management internally assesses the Company’s performance and provides external guidance to our investors on a non-GAAP basis.
2014 Say-on-Pay Vote
At the 20142016 Annual Meeting of Shareholders, the advisory vote to approve the executive compensation program for our NEOs received
strongsolid support
(96.7%(70.9% of votes cast)
., but represented a decline from previous years. Management and the Committee
consideredwere disappointed by this
strong supportresult. In response, we broadened our shareholder outreach efforts to include corporate governance and executive compensation professionals from our largest shareholders. We sought to obtain their feedback, understand their positions, and consider necessary and appropriate actions for the future on our executive compensation plans and disclosures.We contacted shareholders, which collectively represented approximately half of the current pay structure byCompany’s outstanding shares. Employees from the company’s Human Resources, Investor Relations and Legal departments had extensive and meaningful dialogue with 10 shareholders who collectively representing approximately 30% of our outstanding shares. The remaining shareholders inwe contacted indicated a meeting was not needed at this time. We also held meetings with two leading proxy advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., to understand their compensation program discussions throughout 2014.
Basedviews.Shareholders and the proxy advisory firms noted varying levels of concern related topay-for-performance alignment, incentive metrics, the clarity with which we disclose our programs, and the impact of the Wincor Nixdorf acquisition on our say-on-pay results, the Committee expects to continue to apply the same principles in determining future executive compensation policiesstructure. All feedback is being considered for our future executive compensation program as we develop the appropriate structure following the major acquisition of Wincor Nixdorf. In the spirit of immediate and programs. Thecontinuous governance improvements, for this year’s CD&A the Committee is dedicatedfocused on shareholder feedback related to continuous improvement to the executive pay program,disclosure clarity and transparency because these attributes are consistent with its overall compensation strategy,our corporate culture and will continuebusiness strategy. We focused on clear and transparent disclosure with regard to review and evaluate market trends and best practices in designing and implementing elementsa number of key issues to enhance our shareholders’ understanding of our programs including, but not limited to,pre-acquisition incentives for legacy Wincor Nixdorf executives, performance goal disclosures for completed performance cycles and actual achievement against those goals, and actual compensation program.
earned vs. the Committee’s original approved targets.In addition to these outreach efforts, management met with fund managers who collectively held about 70% of Diebold Nixdorf’s actively-managed shares during 2016. Our recurring annual investor outreach activities are
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robust, and includenon-deal road shows, analyst meetings, investor conference presentations, phone calls andon-site investor meetings at our headquarters in North Canton, Ohio. We also communicate with shareholders and other stakeholders through our annual reports and SEC filings, proxy statements, press releases, news media and our dieboldnixdorf.com website. We hold conference calls and webcasts for our quarterly earnings releases and other major corporate events which are open to all investors. These calls are available live and materials also are archived on our website.
We view anon-going, constructive dialogue with our shareholders as critically important to ensuring that our disclosure provides the necessary transparency for them to make proper investment decisions. Engagement with our shareholders helps us better understand how they view the company, their expectations for our performance, and identify issues that may affect our strategies, corporate governance, valuation and other aspects of our operations.
Executive Compensation Best Practices
We maintain “best practice” executive compensation governance standards. Some of our following guidelines and policies are described in more detail below under “
Other Compensation Policies” or elsewhere in this “Compensation Discussion and Analysis”: | | | | | | | | |
| | What We Do | | | | | What We Don’t Do/Don’t Allow |
| | | |
What We Do (Best Practice)
| What We Don’t Do/Don’t Allow |
| Set stock ownership guidelines for executives and directors. | x | |  | | | No hedging or pledging of companyour stock by executives or directors. |
| | | |
| | Review tally sheets for executives. | x | | | | | No dividends are paid on unearned performanceperformance-based shares. |
| | | |
| | Disclose performance goals for incentive payments. | x | | | | | Nochange-in-control severance multiple in excess of threetwo times salary and target cash bonus. |
| | | |
| | Set maximum payout caps on our annual and long-term incentives. | x | | | | | No future excise taxgross-ups upon a change in control (except for current grandfathered arrangements).control. |
| | | |
| | Pay for performance with 84%86% of our Chief Executive Officer’s target total pay opportunity being performance-based “at risk” compensation. | x | | | | | Nore-pricing or cash buyout of underwater stock options is allowed.options. |
| | | |
| | Cap performance share payments if three-year shareholder return is negative, regardless of our ranking. | x | | | | | No enhanced retirement formulas. |
| | | |
| | Limit perquisites and other benefits, and do not include income tax gross-ups.gross-ups (except for relocation expenses). | x | | | | | No market timing with granting of equity awards. |
| | | |
| | Through the Committee’s independent consultant, engage in an ongoing assessment of the Company’sour compensation practices against the market, the Company’sour competition, and other applicable metrics. | | | | | | |
| | | |
| | Incorporate general cash severance andchange-in-control provisions that are consistent with market practice, including double-trigger requirements for certainchange-in-control protection. | | | | | | |
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| | | | | | |
| | What We Do | | | | What We Don’t Do/Don’t Allow |
| | | |
| | Perform an annual compensation risk assessment. | | | | |
| | | |
| | Hire an independent consultant reporting directly to the Compensation Committee. | | | | |
| | | |
| | Enforce strict insider trading policies, incentive plan clawback policies, and blackoutblack-out periods for executives and directors. | | | | |
Our Compensation Strategy
Our executive pay program is specifically designed to:
Focus on performance metrics that align executives and management with the creation of long-term shareholder value through performance-based compensation, including the direct utilization of total shareholder return, or TSR;
UtilizeUse metrics that are balanced and support our four pillar strategy of Cost, Cash, Growthmulti-year integration and Talent related to Diebold 2.0;transformation programs called DN2020;
Encourage decision-making in alignment with our business strategies, with goal-setting based on a philosophy of continuous improvement, commitment to becoming a “top tier” performer and supporting our longer-term business transformation strategy;
Reflect industry standards, offer globally competitive program design and pay opportunities, and balance our need for talent with our need to maintain reasonable compensation costs; and
Attract, motivate, and retain executive talent willing to commit to building long-term shareholder value.
Our 2016 executive compensation structure consists of three primary components: base salary, annual cash bonus, and long-term equity incentives. Within the long-term incentive (LTI) component, we utilize a mix of programs for senior leadership. Our target compensation structure for senior leadership is as follows:
As provided in more detail below, we generally target total compensation opportunity at or near thesize-adjusted 50th percentile of our compensation peer group (for more detail on our peer group, see “
Role of Peer Companies and Competitive Market Data” below). The NEOs may be above or below the 50th percentile based on their experience, performance, potential, and impact on shareholder value. As explained above, we will implement this compensation structure and opportunity for the executives that joined us from Wincor Nixdorf in 2017. Our compensation structure will continue to evolve in support of our strategic business transformation under Diebold 2.0.
plan, DN2020.-53-
The following table summarizes key elements of our 20142016 executive compensation program:
|
| | | | |
Element | | Primary ProposePurpose | | Key Characteristics |
| Base Salary | | To compensate the executive fairly and competitively for the responsibility level of the position. | | Fixed compensation.compensation |
| Annual Cash Bonus | | To motivate and reward organizational and individual achievement of annual strategic financial and individual objectives.
Our plan is intended to appropriately motivate the behaviors and performance results needed to accomplish our strategic transformation related to Diebold 2.0. | | Variable compensation component. The 20142016 primary performance components are:
• 50% Corporate Goals (70%) Corporatenon-GAAP OP • 30% Operating ProfitCorporate FCF • 20% Free Cash FlowIndividual Business Goals (30%) Key initiatives
InitiativesPerformance Gate: A minimum level of corporatenon-GAAP Operating Profit performance is required to earn aany bonus. |
| Long-Term Equity Incentives (LTI) | | To align executives with shareholderexecutives’ and shareholders’ interests, to reinforce long-term value creation, and to provide a balanced portfolio of long-term incentive opportunity. | | Variable compensation component. Reviewed and granted annually. |
| | |
Performance-Based Shares - Annual LTI Grants
| | To motivate the appropriate behaviors to provide superior total shareholder return, or TSR and strong operational performance over the long term. | | Cumulative three-year TSR relative to peers and the S&P 400 mid-cap companiesMid-Cap over a 3 year performance period. |
Performance-Based Shares -
Special Transformation Grant
| | |
Stock Options | | To support our multi-year strategic transformation related to Diebold 2.0 and to retain key executives. | | Non-GAAP EPS performance in 2014 and 2015. FCF performance in 2016. |
Stock Options | | To motivate the appropriate behaviors to increase shareholder value above the exercise price. | | Stock price growth above the exercise price. Subject to three-year ratable vesting. |
| | |
Restricted Stock Units (RSUs) | | To motivate the appropriate behaviors to increase shareholder value and promote a base-level of executive retention. | | Stock price growth. Subject to 3 year cliffthree-year ratable vesting. |
| Health/Welfare Plan and Retirement Benefits | | To provide competitive benefits promoting employee health and productivity and support financial security. | | Fixed compensation component. |
| Limited Perquisites and Other Benefits | | To provide limited business‑relatedbusiness-related benefits, where appropriate. | | Fixed compensation component. |
| Change-in-Control Protection | | To retain executives and provide management continuity in event of actual or threatenedchange-in-control and to bridge future employment if terminated following achange-in-control of the Company. | | Fixed compensation component; only paid in the event the executive’s employment is terminated following achange-in-control of the Company. |
| Severance Protection | | To bridge future employment if terminated other than “for cause.” | | Fixed compensation component; only paid in the event the executive’s employment is terminated other than “for cause.” |
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20142016 NEO Compensation Highlights - Target Compensation Structure
| | | | |
Pay Component | | Summary | | |
Target Total Compensation Opportunity | | Based on a review of individual performance and competitive market data, the Committee approved the following annual total compensation structure for 2016. Each element is discussed in detail in “2016 Compensation Elements.” The mix of pay elements is consistent with similar roles at our peer companies. • Mr. Mattes: No change to base salary or target bonus (as a percent of salary). Long-term incentive opportunity was increased from 400% of salary to 450% of salary to enhance long-term orientation and maintain a 50th percentile target total compensation opportunity. • Mr. Chapman: Increased base salary from $450,000 to $500,000 and long-term incentive opportunity from 175% of salary to 200% of salary. Target bonus as a percent of salary did not change. These adjustments moved total compensation opportunity closer to the 50th percentile. • Mr. Leiken: No change to target bonus or long-term incentive opportunity as a percent of salary. Base salary was increased from $400,000 to $440,000 to move total compensation opportunity closer to the 50th percentile. • Mr. Merz: No increase in base salary. Short-term incentive opportunity was increased from 80% of salary to 100% of salary in light of strategic initiatives and to maintain a 50th percentile target total compensation opportunity. • Our long-term incentive value mix continues to be 50% performance-based shares, 30% stock options, and 20% RSUs | | |
| • Mr. Heidloff and Dr. Wunram ○Approved prior to the Wincor Nixdorf transaction: The following target total compensation items for 2016 were determined by the terms of the service agreements that were in place between the executives and Wincor Nixdorf prior to our acquisition. Mr. Heidloff’s base salary was €700,000, and Dr. Wunram’s was €500,000. The long-term incentive portion was provided in the form of Wincor Nixdorf options granted in April 2016. The annual short-term incentive awards were related to Wincor Nixdorf’s fiscal year (October 1, 2015 – September 31, 2016) (the “15/16 VTI awards”) and tied to EBITDA and net income performance metrics. ○Approved after the Wincor Nixdorf acquisition: The Committee approved a pro-rata cash incentive award for the quarter ended December 31, 2016 (which we refer to below as the “2016 Q5 VTI awards”) in order to incentivize performance during our fiscal year fourth quarter. | | |
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In summary, the NEOs had the following keytotal compensation itemsstructure for 2016:
| | | | | | | | | | | | | | | |
| Name | | Salary | | Target Bonus (% of Salary) | | Target LTI (% of Salary) |
Andreas W. Mattes | | | $ | 937,500 | | | | | 140 | % | | | | 450 | % |
Christopher A. Chapman | | | $ | 500,000 | | | | | 100 | % | | | | 200 | % |
Eckard Heidloff | | | € | 700,000 | | | | | 100 | % | | | | 100 | % |
Jonathan B. Leiken | | | $ | 440,000 | | | | | 100 | % | | | | 100 | % |
Dr. Jürgen Wunram | | | € | 500,000 | | | | | 100 | % | | | | 100 | % |
Stefan E. Merz | | | $ | 400,000 | | | | | 100 | % | | | | 100 | % |
Total Target Compensation Mix
| | |
CEO 
| | Chapman, Leiken and Merz 
|
“At Risk” Compensation
| | |
CEO 
| | Chapman, Leiken and Merz 
|
2016 NEO Compensation Highlights—Actual Earned Compensation
The below table represents the Committee’s view of the compensation actually earned and paid to the NEOs in 2016. As explained earlier, we are not presenting this information with respect to Mr. Heidloff and Dr. Wunram.
| | | | | | | | | | | | | | | | | | | | | | |
| Earned vs. Targeted Compensation—2016* |
| Name | | Annual
Salary | | | Bonus | | | Long Term
Incentive | | | Transformation
Grant | | | Total Earned
Compensation | | | % of Target
Compensation
Received |
Andreas W. Mattes | | $ | 937,500 | | | $ | 585,000 | | | $ | 2,316,859 | | | | $891,277 | | | | $4,730,636 | | | 67% |
Christopher A. Chapman | | $ | 500,000 | | | $ | 331,500 | | | | $158,076 | | | | $60,489 | | | | $1,050,065 | | | 67% |
Jonathan B. Leiken | | $ | 440,000 | | | $ | 324,720 | | | | $120,790 | | | | $101,410 | | | | $986,919 | | | 89% |
Stefan E. Merz | | $ | 400,000 | | | $ | 295,200 | | | | $170,754 | | | | $93,425 | | | | $959,379 | | | 72% |
| * | This chart compares earned compensation in 2016 vs. the intended target at grant date. It includes earned and targeted values for 2016 base salary, 2016 annual bonus, and long-term incentives with scheduled vesting in 2016, including the 2016 tranche of the 2014 Transformation Grant. |
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The following incentive compensation payouts for 2016 performance were approved, each discussed further in “20142016 Compensation Elements” below. During the first half 2014, Mr. Chapman served as interim Chief Financial Officer until he was promoted to Chief Financial Officer in June 2014. The discussion below includes the aggregate compensation changes for him.
|
| |
Pay Component | Summary |
Base Salary | Ÿ Mr. Mattes, Mr. Mayes, and Ms. Rutt each received 10% increases to recognize individual performance and to move their salaries closer to the competitive 50th percentile of the peer group.
Ÿ Mr. Chapman’s salary was increased approximately 25% to recognize his promotion to Senior Vice President and Chief Financial Officer.
Ÿ Mr. Merz’s salary remained the same in 2014 because he joined Diebold in the fall of 2013.
|
Target Annual Cash Bonus | Ÿ Mr. Mattes’ target bonus percentage remained the same as in 2013 when he was appointed as CEO.
Ÿ Mr. Mayes’ and Ms. Rutt’s target bonuses were increased to 85% and 60% of salary, respectively, to move their annual targeted cash compensation closer to the competitive 50th percentile of our peer group.
Ÿ Mr. Merz’s target bonus remained the same in 2014 because he joined Diebold in the fall of 2013.
Ÿ Mr. Chapman’s target bonus was increased to 100% of base salary to recognize his promotion to Senior Vice President and Chief Financial Officer.
|
Long-Term Incentives (LTI) | Ÿ 2014 LTI value mix: 50% performance-based shares; 30% stock options; and 20% RSUs.
Ÿ Mr. Chapman’s LTI target was increased to 150% of base salary to recognize his promotion to Senior Vice President and Chief Financial Officer.
Ÿ Special performance-based transformation grant that is earned if performance goals critical to our multi-year transformational strategy (i.e., Diebold 2.0) are achieved. The performance metrics are non-GAAP EPS for 2014 and 2015, and FCF for 2016. For more detail, see “Long-Term Incentives - Special Performance-Based Transformation Grant” below.
|
Total Compensation | As noted above, we generally target total compensation opportunity at or near the size-adjusted 50th percentile of our peer group, while considering each NEO’s experience, performance, potential, and impact on shareholder value. Overall, the Committee believes targeted pay should be heavily weighted on variable “at-risk” compensation and longer-term components, as the following pie charts illustrate.
|
Total Compensation Mix
“At Risk” Compensation
In addition, the Committee approved the following 2014 targets as a percent of salary for the Annual Cash Bonus and LTI program:
|
| | | |
| Name | Salary | Target Annual Cash Bonus Incentive (% of Salary) | Target LTI (% of Salary) |
| Andreas W. Mattes | $852,500 | 120% | 400% |
| Christopher A. Chapman | $330,000 | 100% | 80% |
| George S. Mayes, Jr. | $550,000 | 85% | 250% |
| Stefan E. Merz | $325,000 | 75% | 100% |
| Sheila M. Rutt | $338,778 | 60% | 100% |
2014 NEO Compensation Highlights - Actual Earned Compensation
The Committee approved the following compensation items in 2014, each discussed further in “2014 Compensation Elements” below:
|
| |
Pay Component | Comments |
Actual Earned Annual Cash Bonus | Ÿ Mr. Mattes received $1,779,509.
Ÿ Mr. Chapman received $574,035.
Ÿ Mr. Mayes received $813,216.
Ÿ Mr. Merz received $424,003.
Ÿ Ms. Rutt received $353,583.
|
LTI | Ÿ Performance-based LTI share grant for the 2012-2014 performance period: No payout was earned, based on the performance / payout scale approved by the Committee at the start of the performance period. Our three-year TSR was 30.04%, which ranked at the 25th percentile versus the S&P 400 Midcap companies, and at the 33rd percentile versus our custom peer group (the minimum performance required for threshold payout was at the 35th percentile).
Ÿ Special performance-based transformation grant: We achieved non-GAAP EPS in 2014 of $1.73, representing 93.51% of the 2014 target of $1.85. As a result, each NEO earned 93.51% of their target opportunity for 2014. The Committee certified 2014 results and approved the following shares:
Ÿ Mr. Mattes received 29,307 shares.
Ÿ Mr. Chapman received 1,989 shares.
Ÿ Mr. Mayes received 11,817 shares.
Ÿ Mr. Merz received 3,072 shares.
Ÿ Ms. Rutt received 2,911 shares.
|
| | | | | | | | | | |
Pay Component | | Comments |
| | Based on the Committee’s assessment of the Annual Cash Bonus Plan goals, including both financial and individual performance (against personalized Key Initiatives), and the Committee’s assessment of the 2016 Q5 VTI award goals, the Committee approved the following cash bonus payments: |
| | | | | |
| | | | | Name | | Earned Bonus | | % of Target | | |
| | | | Andreas W. Mattes | | $585,000 | | 45% | | |
| | | | Christopher A. Chapman | | $331,500 | | 66% | | |
| | | | Eckard Heidloff | | $187,103* | | 100% | | |
| | | | Jonathan B. Leiken | | $324,720 | | 74% | | |
| | | | Dr. Jürgen Wunram | | $133,645* | | 100% | | |
| Annual Cash Bonus and 2016 Q5 VTI | | | | Stefan E. Merz | | $295,200 | | 74% | | |
| | * Paid in Euros and converted to U.S. dollars for this table using the exchange rate on the date that the Committee approved the performance achieved and payout amount. Financial targets were approved by the Committee in the first quarter of 2016. At the February 2017 Committee meeting, the Committee approved the following: • Financial targets: Above threshold achievement for thenon-GAAP operating profit but no payout based on the Committee’s assessment of facts and performance as presented by management; above threshold achievement for the free cash flow target, excluding certain transaction-related expenses (achieved $177 million on $175 million threshold) resulting in 46% payout on that portion of the award. • Individual business initiatives: Varies by individual. The Committee’s final performance assessment is discussed in more detail in the Annual Cash Bonus Plan section of “2016 Compensation Elements” below. • The 2016 Q5 VTI awards for Mr. Heidloff and Dr. Wunram paid out at target, based on achievement of target levels of EBITDA and net income: |
| | | | | |
| | | | | Name | | Earned Q5 Award* | | % of Target | | |
| | | | Eckard Heidloff | | €175,000 | | 100% | | |
| | | | Dr. Jürgen Wunram | | €125,000 | | 100% | | |
| | | * Actual awards earned converted to U.S. dollars based on the February 7, 2017 exchange rate were $187,103 and $133,645, respectively. |
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| | | | | | | | | | |
Pay Component | | Comments |
| | | The following 15/16 Annual VTI payments were made to Mr. Heidloff and Dr. Wunram based on the Supervisory Board’s adoption of the Wincor Nixdorf financial statements for the 15/16 fiscal year: |
| | | | | |
| | | | | Name | | Earned Bonus* | | % of Target | | |
| | | | Eckard Heidloff | | $1,477,862 | | 200% | | |
| | | | Dr. Jürgen Wunram | | $1,055,616 | | 200% | | |
15/16 Annual VTI | | * Paid in Euros and converted to U.S. dollars for this table using the exchange rate on November 23, 2016, the date that the Supervisory Board approved the findings of the auditor’s audit. The 15/16 Annual VTI award payouts were based on: • Above maximum performance for the Wincor Nixdorf 15/16 EBITDA goal (achieved €260.14 million of 15/16 EBITDA versus a €222.69 million maximum goal), resulting in 200% payout on that portion of the award. • Above maximum performance for the Wincor Nixdorf 15/16 net income goal (achieved €146.47 million of 15/16 net income versus a €92.43 million maximum goal), resulting in 200% payout on that portion of the award. |
LTI Completed Performance Periods Performance-Based Shares | | At the February 2017 Committee meeting, the Committee approved the following: 2014-2016 Performance Share Grant • No payout • Our three-year TSR ranking is below the 35th percentile threshold requirement against both the custom peer group and the S&P 400 Midcap Index companies 2015-2016 Performance-Based Deferred Share Grant for Mr. Mattes • Payout at target • Ourtwo-year cumulativenon-GAAP EBITDA for the period was $477 million, exceeding the target 2016 Tranche of Performance-Based Transformation Grant • Payout at 98% of target • We achieved $177 million of free cash flow, exceeding threshold of $162 million and slightly below target of $180 million |
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Compensation Decision Process
Role of the Compensation Committee
The Committee is responsible to our Board for oversight of our executive compensation programs.program. The Committee consists of independent directors and is responsible for the review and approval of all aspects of our program. Among its duties, the Committee is responsible for:
Reviewing and assessing competitive market data from the independent compensation consultant, discussed below;
Reviewing and approving incentive goals, objectives and compensation recommendations for the NEOs;
Evaluating the competitiveness of each executive’s total compensation package; and
Approving any changes to the total compensation package for the NEOs including, but not limited to, base salary, annual cash bonus, incentives, LTI award opportunities and payouts, and retention programs.
Following review and discussion, the Committee submits recommendations to the Board for ratification. The Committee is supported in its work by the Chief Human Resources Officer and staff and an independent compensation consultant, discussed in “
Role of the Independent Compensation Consultant” below. For additional information regarding the Committee’s duties and responsibilities, see “Compensation Committee Risk Oversight” and “Compensation Committee” above.
The Committee did not make compensation decisions for Mr. Heidloff or Dr. Wunram in 2016; please see the introduction to thisCompensation Discussion and Analysis for further explanation.
Role of the Independent Compensation Consultant
The Committee retains an independent compensation consultant, Aon Hewitt, in accordance with the Committee’s charter. The consultant reports directly to the Committee. The Committee retains sole authority to hire or terminate Aon Hewitt, approve its compensation, determine the nature and scope of services, and evaluate performance. A representative of Aon Hewitt attends Committee meetings, as requested, and communicates with the Committee Chair between meetings. The Committee makes all final decisions.
Aon Hewitt’s specific compensation consultation roles include, but are not limited to, the following:
AdviseAdvising the Committee on executive compensation trends and regulatory developments;
ProvideProviding a total compensation study for executives against the companies in our peer group and recommendations for executive pay;
ProvideProviding advice to the Committee on governance best practices, as well as any other areas of concern or risk;
ServeServing as a resource to the Committee Chair for meeting agendas and supporting materials in advance of each meeting;
| • | | Reviewing and commenting on proxy disclosure items, including the “Compensation Discussion and Analysis;” |
Review and comment on proxy disclosure items, including the “Compensation Discussion and Analysis;”
AdviseAdvising the Committee on management’s pay recommendations; and
From time to time, Aon Hewitt is also engaged byreviewing and providing compensation recommendations fornon-employee directors to the Board Governance Committee.
In 2016, the professional fees for the executive compensation services were approximately $305,000. In addition to Aon Hewitt’s executive compensation services for the Committee, tomanagement retained Aon Hewitt for unrelated services, including brokerage services for insurance products. Professional fees for these unrelated services were approximately $539,000 in 2016. The Board and Committee considered and approved these additional brokerage services, which were awarded following a competitive process. We have separate relationships with each of the service teams, and the executive compensation service team does not perform any other services on behalf of the Company. Following consideration and review, and provide compensation recommendations for non-employee directors.
the Committee determined that these unrelated services did not impact the independence of Aon Hewitt. The Committee
hasis aware that a significant level of fees for unrelated services could create a conflict of interest and will assess viable alternatives.-59-
The Committee assessed the independence of Aon Hewitt, as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including but not limited to those set forth in Rule 10C-1(b)Section240.10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to Aon Hewitt. Based on this review, the Committee determined there are no conflicts of interest raised by the work performed by Aon Hewitt.
Role of Management
Our Chief Human Resources Officer serves as management’s primary contact with the Committee and attends all Committee meetings. For executives other than the CEO position, our CEO and Chief Human Resources Officer make pay recommendations to the Committee based on market pay comparisons and an analysis of each executives’ individual performance. No member of our management team, including the CEO, has a role in making pay recommendations to the Committee for his or her own position.
Role of Peer Companies and Competitive Market Data
Annually, the Committee reviews competitive total compensation market data provided by Aon Hewitt. To assess competitive pay levels, the Committee first annually reviews and approves our peer group composition. The following peer group criteria are considered:
Company size: Approximately 0.50.4 to 2.5 times Diebold’s annual revenues, with a focus onsecondary reference being market capitalization of approximately 0.2 to 5 times Diebold’s market capitalization, as a secondary reference;capitalization;
•Direct competitors for business and management talent;
•Companies covered by the investment analysts that track Diebold;
•Companies that include Diebold in their compensation peer group; and
•Global companies that design, manufacture, and service products for their customers.
In October 2013,December 2015, Aon Hewitt conducted a total compensation study to assist with 20142016 compensation decisions. The Committee approved the following 25 companies for the compensation peer group:
| | | | |
| | |
Actuant Corp. | | Global Payments Inc. | | Netapp Inc. |
| | |
Actuant Corp Allegion PLC | Flowserve Corp. | NCR Corp. |
Benchmark Electronics Inc. | Global Payments Inc. | Outerwall Inc. (formerly Coinstar) |
Brady Corp. | Harris Corp. | Pitney Bowes | Outerwall Inc. |
| | |
Benchmark Electronics Inc. | | International Game Technology PLC | | Pitney-Bowes Inc. |
| | |
Brady Corp. | | Intuit Inc. | | Sensata Technologies Holding NV |
| | |
Convergys Corp. | | Lexmark International Inc. | | The Brinks Company |
International Game Technology | Sensata Technologies | |
Coinstar Inc. DST Systems | Intuit Inc.1
| SPX Corp. |
Convergys Corp1
Logitech International SA | Lexmark International | The Timken Company |
DST Systems | Logitech | |
| Fidelity National Information Services | | Mettler Toledo International SAInc. | | Unisys Corp. |
Fidelity National Information Services | Mettler-Toledo International | |
Fiserv Inc. | The | NCR Corp. | | Western Union Company (The) |
Fiserv, Inc. | | |
| | | | Woodward Inc. |
1 Denotes new peer company.
Aon Hewitt benchmarks total compensation opportunities for each of our NEOs using peer company proxy data, as well as published and private compensation survey data. Size-adjustedNote: Compensation market values for comparable executive compensation were developed using regression analysis. This statistical technique accounts for revenue size differences withinstress tested to determine the impact, if any, of companies with larger market capitalization. The impact was immaterial.
Note: In our 2016 pay study used to assist with 2017 pay decisions, we refined the peer group by excluding some companies with high market capitalization.
The average and develops an estimatedmedian annualized revenues for the peer companies were $3.5B and $2.9B, respectively, at the time of the December 2015 study. Diebold’s annual revenues were approximately $3.1B which was used to developsize-adjusted market valuevalues through regression analysis for a similar-size company as Diebold.each study position. Thesize-adjusted 50th
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percentile for total compensation is a key reference point for the Committee.
For executive positions where peer company proxy data is not available, Aon Hewitt utilized published and private compensation survey sources.
Timing of Compensation Decisions
Pay recommendations for our executives, including the NEOs, are typically made by the Committee at its first scheduled meeting of the year, normally held in February. This meeting is normally held around the same time we report our fourth quarter andyear-end financial results for the preceding fiscal year and provide our financial guidance for the upcoming year. This timing allows the Committee to have a complete financial performance picture prior to making compensation decisions.
Decisions with respect to prior year performance, performance for other relevant periods and any resulting award payouts, as well as annual equity awards, base salary increases and target performance levels for the current year and beyond, are also typically made at this meeting. Generally, any increases in base salaryEquity awards approved at this meeting are made effective in the next pay period. Further, any equity awards recommended by the Committee at this meeting are then reviewed by the Board and, if approved, aregenerally dated as of the date of the Board meeting held the following day. As such, the Committee does not time the grants of options or any other equity incentives to the release of materialnon-public information.
The exceptions to this timing are awards to executives who are promoted or hired from outside the Company during the year. These executives may receive salary increases or equity awards effective or dated, as applicable, as of the date of their promotion or hire.
Determination of CEO Compensation
At the February Committee meeting, in executive session without management present, the Committee reviews and evaluates CEO performance and determines achievement level for the prior fiscal year. The Committee also reviews competitive compensation data.data for the peer companies. The Committee presents pay recommendations for the CEO to the independent members of the Board. During executive session, the Board conducts its own review and evaluation of the CEO’s performance taking into consideration the recommendations of the Committee.
20142016 Compensation Elements
Base Salary
Base salary compensates the executive fairly and competitively for the responsibility level of the position. The Committee reviews the salaries are designed to recognize and reward the skill, competency, experience and performance anof our executive brings to his or her position.officers annually against competitive market data. Salary changesadjustments result primarily from a comparison againstcombination of competitive market data, individual and company
performance, internal equity considerations, promotions, and the executive’s specific responsibilities. The Committee reviews salaries for our executive officers annually.
For 2014,2016, the Committee reviewed competitive market data and individual performance assessments for the NEOs and approved the following values at the February 2016 Committee meeting:
| | | | |
| Name | | 2015 Salary | | 2016 Salary |
Andreas W. Mattes | | $937,500 | | $937,500 |
Christopher A. Chapman | | $450,000* | | $500,000 |
Jonathan B. Leiken | | $400,000 | | $440,000 |
Stefan E. Merz | | $400,000* | | $400,000 |
| * | Rate in effect atyear-end. |
The rationale for approved 2016 compensation actions is summarized in the table “2016 NEO Compensation Highlights – Target Compensation Structure.” Increases reflect adjustments made to NEO salaries to bring salary levels more in line with the market 50th percentile.
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Annual base salary changes:
|
| | | |
| Name | 2013 Salary | 2014 Salary | Increase % |
| Andreas W. Mattes | $775,000 | $852,500 | 10% |
| Christopher A. Chapman | $263,000 | $330,000 | 25%1 |
| George S. Mayes, Jr. | $500,000 | $550,000 | 10% |
| Stefan Merz | $325,000 | $325,000 | 0%2 |
| Sheila M. Rutt | $307,980 | $338,778 | 10% |
| | | | |
1
Name | Represents an increase to $280,000 effective March 1, 2014 in recognition of Mr. Chapman’s duties as principal financial officer, and an increase to $330,000 effective June 18, 2014 to reflect his promotion to Senior Vice President and Chief Financial Officer. | 2015 Salary | | 2016 Salary* |
Eckard Heidloff | | €700,000 | | €700,000 |
Dr. Jürgen Wunram | | €500,000 | | €500,000 |
2 Mr. Merz was hired on August 1, 2013 and did not receive an increase in 2014.
| * | 2016 annual salary converted to U.S. dollars using the average Euro to U.S. dollar foreign currency exchange rate for 2016 were approximately $774,659 and $553,328, respectively. |
Annual Cash Bonus Plan
Our NEOs are – Messrs. Mattes, Chapman, Leiken and MerzMessrs. Mattes, Chapman, Leiken and Merz were eligible to earn cash incentive awardsincentives for 2016 under our Annual Cash Bonus Plan, which was approved by shareholders in 2010, and which is proposed for renewal at the 2015 Annual Shareholder Meeting as Proposal 4 below. Payout under the Annual Cash Bonus Plan for our NEOs depends on2015. Performance measures include corporate, business unit and individual performance againstpre-determined performance objectives approved by the Committee at the beginning of the fiscal year.
Target opportunities
: Individual NEO targets (as a percent of base salary) are approved by the Committee at the beginning of the fiscal year. Actual cash bonuses may range from 0% to 200% of target (generally 40% of target is earned at threshold performance, 100% of target is earned as target performance, and 200% of target is earned at maximum performance).For 2014, based on a thorough review and comparison against2016, the Committee reviewed competitive market data and individual performance assessments for the Committeefollowing NEOs and approved the following targets:
|
| | | |
| Name | Target Incentive (% of Salary) | Target Incentive ($) | % of Target Total Comp Opportunity |
| Andreas W. Mattes | 120% | $1,023,000 | 19% |
| Christopher A. Chapman | 100%1 | $330,0001 | 29% |
| George S. Mayes, Jr. | 85% | $467,500 | 20% |
| Stefan Merz | 75% | $243,750 | 27% |
| Sheila M. Rutt | 60% | $203,267 | 23% |
1 The Committee approved an increase to 60% effective March 1, 2014 to reflect Mr. Chapman’s duties as principal financial officer, and an increase to 100% effective June 18, 2014 to reflect his promotion to Senior Vice President and Chief Financial Officer. The actual payout under the Annual Cash Bonus Plan is based on base salary and target incentive at year end.
bonus levels in February 2016: | | | | | | | | | | |
| Name | | Target
Incentive
(% of Salary) | | Threshold
Incentive
($) | | Target
Incentive
($) | | Maximum
Incentive
($) | | Target Incentive
as a % of Target
Total Comp
Opportunity |
Andreas W. Mattes | | 140% | | $562,500 | | $1,312,500 | | $2,625,000 | | 20% |
Christopher A. Chapman | | 100% | | $200,000 | | $500,000 | | $1,000,000 | | 25% |
Jonathan B. Leiken | | 100% | | $176,000 | | $440,000 | | $880,000 | | 33% |
Stefan E. Merz | | 100% | | $160,000 | | $400,000 | | $800,000 | | 33% |
Financial performance metrics
: For 2014,2016, to support the first fullthird year of our multi-year business transformation related to Diebold 2.0, the Committee approved Corporate OPnon-GAAP Operating Profit (OP) and FCFCorporate Free Cash Flow excluding certain transaction-related expenses (FCF) as the financial performance metrics forand Key Business Initiatives specific to each NEO.NEO as the individual performance metrics. The Committee also approved a minimum performance level requirement for OP of $125M, below which no bonuses willwould be paid, regardless of the performance level attained for FCF, Corporate OP or individual Key Initiatives. Although non-GAAP OP was achieved above threshold, the Committee determined that no payout was earned following consideration of the facts and performance presented by management. Management viewed the technical achievement of above-threshold non-GAAP OP metric to be anomalous in a transformative year involving combined financials from two legacy corporations, and therefore recommended to the Committee no pay out on the operating profit metric. Management took this position due to disappointing results in key initiatives (reference next section). |
| | | | | | | | | | | | | | | | | |
Performance Measure1 | Organizational Level | Weighting |
Threshold1 |
Target1 |
Maximum1 | Actual Achieved | Payout as % of Target |
OP2 | Corporate | 50% | $145 | $170 | $196 | $182 | 148% |
| FCF | Corporate | 30% | $91 | $107 | $123 | $125 | 200% |
Key Initiatives3 | Individual | 20% | varies | varies | varies | varies | varies |
| | | | | | | | | | | | | | |
| Annual Cash Bonus Plan for NEOs |
| Performance Measure | | Organizational
Level | | Weighting | | Threshold1 (40%
payout) | | Target1 (100%
payout) | | Max1
(200%
payout) | | Actual
Achieved | | Payout as
% of Target |
OP | | Corporate | | 40% | | $140 | | $170 | | $200 | | $159 | | 0% |
FCF | | Corporate | | 30% | | $175 | | $195 | | $215 | | $177 | | 46% |
Key Initiatives | | Individual | | 30% | | varies | | varies | | varies | | varies | | varies |
| 1 | |
| Payment opportunities are extrapolated between threshold, target, and maximum performance --– 0% payout below threshold; 40% payout at threshold; 100% payout at target; and 200% payout at maximum.threshold. Dollars are shown in millions. |
| |
2
| A minimum-required performance level of $135M for OP was approved by the Committee. If 2014 performance falls below this level, then no bonuses are paid, regardless of 2014 FCF or key initiative performance levels. |
| |
3
| Disclosing the qualitative and quantitative performance measures for key initiatives, which we do not otherwise disclose publicly, would cause us competitive harm by potentially disrupting our customer relationships and providing competitors with insight to our specific strategy. We establish |
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threshold, target, and maximumKey Business Initiative performance levels that are difficult to achieve, but reasonable based on a thorough review of the external economic environment and our internal business transformation strategy.
Key initiative performance metrics: For 2014,2016, the Committee approved certain key initiatives forKey Business Initiatives specific to each NEO. These key initiatives are intendedThe Committee increased the weighting from 20% to 30% in 2016 to enhance focus on critical efforts needed to drive strategic and operating results.financial performance, such as the transformative portfolio changes. Similar to the Committee’s assessment of financial performance, the Committee’s assessment of key initiativeKey Business Initiative performance generally excludesnon-recurring/extraordinary items.
|
| |
| Name | | Key InitiativesBusiness Initiative Categories (30% weighting) |
Andreas W. Mattes | Ÿ Execute business transformation
| • Deliver on specific financial commitments • Complete portfolio-shaping actions and execution • Long-term strategy related to Diebold 2.0 Ÿ Achieve growth strategy / results
Ÿ Investment community relations
Ÿ Critical leadership team review
• Talent initiatives |
Christopher A. Chapman | Ÿ Business process outsourcing, or BPO
Ÿ Treasury debt refinancing / restructuring
Ÿ Cost savings
| • Successful completion of specific strategic projects • Information technology initiatives (current and future) Ÿ Investment community relations
• Organizational strategy initiatives • Capital allocation strategies |
George S. Mayes, Jr. Jonathan B. Leiken | Ÿ Execute
| • Ethics and compliance enhancements • Successful completion of specific strategic projects • Successful fulfillment of specific legal requirements • Effective support of our commercial business transformation strategy related to Diebold 2.0 Ÿ New platform launch
Ÿ Successful BPO and IT blueprint rollout
Ÿ Prepare future growth and ensure proof of concept
|
Stefan E. Merz | Ÿ Execute
| • Completion of China joint venture with Inspur • Successful completion of specific strategic projects • Completion of electronic security business transformation strategy related to Diebold 2.0 Ÿ Transformation Management Office and cost savings
Ÿ Strategic mergers and acquisitions with successful integrations
Ÿ Sales excellence
|
Sheila M. Rutt | Ÿ Leadership team review
Ÿ Leadership goal alignment
Ÿ Human Resources, or HR, tower of the BPO
Ÿ Systemic workforce planning
Ÿ HR process upgrade
divestiture |
2014The Committee reviewed Key Business Initiative performance assessments prepared by Mr. Mattes for each of the NEOs, and separately, during executive session, the Committee reviewed Mr. Mattes’ performance against his Key Business Initiatives.
The Committee acknowledged the tremendous effort and work that the above NEOs invested in accomplishing the largest transaction in the history of the Company – the acquisition of Wincor Nixdorf. That transaction presented financing, legal, strategic and regulatory hurdles to overcome in order to move the Company into the future, and each of the individuals had the accomplishment of various aspects of this transaction as part of their Key Business Initiatives for 2016. In addition, we executed on strategic projects to divest of the electronic security business and to negotiate and enter into a joint venture with Inspur in China. We also successfully concluded the monitorship that the Company had been under after completing compliance and ethics enhancements. In sum, the Committee felt that each of the above NEOs had met and, in some cases, exceeded their Key Business Initiative performance goals for 2016. The amount earned, including as a percentage of target, is listed below.
Key Business Initiative Performance
| | | | |
| Name | | Amount Earned | | % of Target |
Andreas W. Mattes | | $393,750 | | 100% |
Christopher A. Chapman | | $262,500 | | 175% |
Jonathan B. Leiken | | $264,000 | | 200% |
Stefan E. Merz | | $240,000 | | 200% |
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2016 Actual Bonuses Earned:
Earned: Based on the previous table showingCommittee’s assessment of financial and individual performance according to the approvedtables above, the following summarizes actual bonuses earned: | | | | | | |
| Name | | 2016
Actual Bonus | | 2016
Target Bonus | | Actual as %
of Target |
Andreas W. Mattes | | $585,000 | | $1,312,500 | | 45% |
Christopher A. Chapman | | $331,500 | | $500,000 | | 66% |
Jonathan B. Leiken | | $324,720 | | $440,000 | | 74% |
Stefan E. Merz | | $295,200 | | $400,000 | | 74% |
Cash Incentive Compensation—Mr. Heidloff and Dr. Wunram
15/16 VTI Awards (pre-acquisition arrangement): Mr. Heidloff and Dr. Wunram’s annual short-term incentive awards were related to Wincor Nixdorf’s fiscal year (October 1, 2015—September 31, 2016) and tied to EBITDA and net income performance achievement levelsmetrics. The targets to be applied as the basis to calculate these awards were set by the Supervisory Board in September 2015, and these awards were paid in December 2016 following adoption by the percentageSupervisory Board of target earned,Wincor Nixdorf’s financial statements.
Target 15/16 VTI award opportunities were as follows under their respective service agreement:*
| | | | | | | | | | |
Name | | Target Incentive
(% of Salary) | | Threshold
Incentive
(€) | | Target
Incentive
(€) | | Interim
Incentive Above
Target (€) | | Maximum
Incentive (€) |
Eckard Heidloff | | 100% | | €175,000 | | €700,000 | | €1,225,000 | | €1,400,000 |
Jürgen Wunram | | 100% | | €125,000 | | €500,000 | | €875,000 | | €1,000,000 |
| * | See the “2016 Grants of Plan-Based Awards Table” for the amounts of these award opportunities converted to U.S. dollars using the average Euro to U.S. dollar exchange rate for 2016. |
Financial performance metrics for the table15/16 Annual VTI awards were as follows:
| | | | | | | | | | | | | | | | |
Performance Measure | | Weighting | | Threshold1 (25%
payout) | | Target1 (100%
payout) | | Interim
Level
Above
Target1 (175%
payout) | | Max1
(200%
payout) | | | | Actual
Achieved | | Payout as
% of
Target |
Wincor Nixdorf 15/16 EBITDA | | 50% | | €137.04 | | €171.30 | | €205.56 | | €222.69 | | | | €260.14 | | 200% |
Wincor Nixdorf 15/16 Net Income | | 50% | | €56.88 | | €71.10 | | €85.32 | | €92.43 | | | | €146.47 | | 200% |
| 1 | Payment opportunities are linearly interpolated between performance levels. If performance is achieved below 80% of either target (threshold performance), the executive is not entitled to a bonus with respect to the other target, and the Supervisory Board will decide on the amount of a possible bonus. Euros are shown in millions. |
Based on the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes earned dollar amountsactual 15/16 Annual VTI awards earned:
| | | | | | |
Name | | Actual 15/16 Annual
VTI Award Earned | | Target 15/16 Annual
VTI Award | | Actual as %
of Target |
Eckard Heidloff | | €1,400,000* | | €700,000 | | 200% |
Jürgen Wunram | | €1,000,000* | | €500,000 | | 200% |
| * | Actual awards earned converted to U.S. dollars based on the November 23, 2016 exchange rate were $1,477,862 and $1,055,616, respectively. |
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2016 Q5 VTI Awards: Following our acquisition, Mr. Heidloff and Dr. Wunram each received a pro rata cash incentive award based on performance for the quarter ended December 31, 2016. The Committee and Supervisory Board believed these awards were useful to incentivize performance during our fourth quarter immediately following the acquisition. In addition, because Wincor Nixdorf’syear-end was September 30, 2016, this award helped align compensation during this “extra” quarter.
Target 2016 Q5 VTI award opportunities were set by NEO:
|
| | | |
| Name | 2014 Actual Bonus1 | 2014 Target Bonus | Actual as % of Target |
| Andreas W. Mattes | $1,779,509 | $1,023,000 | 174% |
| Christopher A. Chapman | $574,035 | $330,000 | 174% |
| George S. Mayes, Jr. | $813,216 | $467,500 | 174% |
| Stefan E. Merz | $424,003 | $243,750 | 174% |
| Sheila M. Rutt | $353,583 | $203,267 | 174% |
1 Assumes maximumthe Committee and Supervisory Board as follows: | | | | | | | | | | |
Name | | Target Incentive
(% of Salary) | | Threshold
Incentive
(€) | | Target
Incentive
(€) | | Interim
Incentive Above
Target
(€) | | Maximum
Incentive (€) |
Eckard Heidloff | | 25% | | €43,750 | | €175,000 | | €306,250 | | €350,000 |
Jürgen Wunram | | 25% | | €31,250 | | €125,000 | | €218,750 | | €250,000 |
| * | See the “2016 Grants of Plan-Based Awards Table” for the amounts of these award opportunities converted to U.S. dollars using the average Euro to U.S. dollar exchange rate for 2016. |
Financial performance metrics for the 2016 Q5 VTI awards were as follows:
| | | | | | | | | | | | | | | | |
Performance Measure | | Weighting | | Threshold1 (25%
payout) | | Target1 (100%
payout) | | Interim
Level
Above
target
(175%
payout) | | Max1
(200%
payout) | | | | Actual
Achieved | | Payout as
% of
Target |
Diebold Nixdorf EBITDA | | 50% | | 50.40 | | 63 | | 75.6 | | 81.9 | | | | 63 | | 100% |
Diebold Nixdorf Net Income | | 50% | | 25.6 | | 32 | | 38.4 | | 41.6 | | | | 32 | | 100% |
| 1 | Payment opportunities are linearly interpolated between performance levels—0% payout for performance is achieved below threshold. |
Based on key initiatives.
the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes actual 2016 Q5 VTI awards earned: | | | | | | |
Name | | Actual Q5 VTI Award
Earned* | | Target Q5 VTI Award | | Actual as %
of Target |
Eckard Heidloff | | €175,000 | | €175,000 | | 100% |
Jürgen Wunram | | €125,000 | | €125,000 | | 100% |
| * | Actual awards earned converted to U.S. dollars based on the February 7, 2017 exchange rate were $187,103 and $133,645, respectively. |
Long-Term Incentives
We believe in a balanced approach to LTI compensation. Incentives—2016 Regular Annual Grants (Messrs. Mattes, Chapman, Leiken and Merz)Our regular annual LTI grants to NEOs include a value mix of performance-based shares (50%), stock options (30%), and RSUs (20%), as discussed above in “
20142016 NEO Compensation Highlights - Highlights—Target Compensation Structure.” In this balanced approach, the Committee strikes a balance of awards based on the full value of our shares, awards tied solely to stock price appreciation, and awards tied to performance metrics, including stock price growth. This approach aligns our LTI compensation with market practice, mitigates risk and enhances alignment of our executives with our shareholders. For illustration of the impact of termination, death, disability and change in control on these various awards, see the “Potential Payments Upon Termination or Change in Control” below. Structure.These awards are also subject to our other compensation policies generally, such as our Clawback Policy, each as discussed in “Other Compensation Policies” below.
To determine annual grant levels for the NEOs, the Committee subjectively considers competitive market data, individual performance, potential future contributions to our business, internal equity, and competitive market values between the 50
th and 75th percentiles of our peer group, in addition to management’s recommendations. The Committee approves long-term incentive grants at the regular February Committee meeting, and actual grants are generally made effective on the day of the February Board Meeting.-65-
The following table summarizes 2016 targeted LTI values for our NEOs in accordance with our customary annual LTI grant cycle:
| | | | | | | | |
| Name | | Salary | | Target LTI
(% of Salary) | | Approximate
Target LTI Value1 | | % of Target
Total Comp |
Andreas W. Mattes | | $937,500 | | 450% | | $4,218,750 | | 65% |
Christopher A. Chapman | | $500,000 | | 200% | | $1,000,000 | | 50% |
Jonathan B. Leiken | | $440,000 | | 100% | | $440,000 | | 33% |
Stefan E. Merz | | $400,000 | | 100% | | $400,000 | | 33% |
| 1 | The target award values shown here generally vary from the award values listed in the Grant of Plan-Based Awards Table (GPBAT) for two reasons. First, to mitigate the potential impact of stock price swings on our equity grants, we use the20-day average closing stock price immediately preceding the grant date to determine the grant size, rather than the stock price on the actual grant date as shown in the GPBAT and used for accounting purposes. Second, for performance-based shares, we use the 20-day average closing stock price immediately preceding the grant date to determine the number of shares to grant. The GPBAT uses the Monte Carlo valuation (the method used to determine accounting expense) which often generates a value higher than target on the grant date, which we believe is inappropriate for purposes of setting compensation opportunity. |
For
2014,2016, the long-term incentive grants includedCommittee approved a balanced LTI portfolio approach, with the following components:
Regular Performance-based LTIhighest weight applied to the performance-based shares: These awards are earned based to focus on a three-yearrelative TSR performance period that measures our TSR ranking relative to our peer group andvs. the S&P 400 Midcap Index each weighted equally. The numbercompanies.Because we acquired Wincor Nixdorf after making our regular 2016 LTI grants to our NEOs, Mr. Heidloff and Dr. Wunram did not receive any of shares earnedthese awards in 2016. Options granted to Mr. Heidloff and Dr. Wunram by Wincor Nixdorf in 2016 prior to the acquisition and other prior year Wincor Nixdorf options that remained outstanding at the completion ofacquisition are discussed below in the performance period may range from 0% to 200% of target,“Service Agreements with Mr. Heidloff and Dr. Wunram” section, the “Outstanding Equity Awards at 2016 FiscalYear-End” table and the “2016 Option Exercises and Stock Vested” table.
Performance-based shares (50%): Provide value based on our relativea combination of three-year (2016—2018) total shareholder return ranking against the two groups. This performance-based portion of our long-term compensation program meets three key objectives of our
compensation strategy: (1) to focus on performance metrics that drive shareholder value, (2) to achieve “top tier” performance, and (3) to require a minimum performance level before incentive compensation is earned. The minimum performance requirement is 35th percentile, at which 25% of target may be earned against each of the peer group and S&P 400 grouping. The maximum performance requirement is 80th percentile, at or above which 200% of target may be earned. No dividends are paid until shares are earned.
For the performance-based LTI shares covering the 2012-2014 performance period, no payout was earned because Diebold’s 2012-2014 TSR ranked at the 25th percentile versusvs. the S&P 400 MidcapsMidcap Index companies and our stock price performance. The Committee approved the 33rd percentile versus our peer group, falling belowfollowing performance / payout schedule for the minimum threshold2016 grant based on TSR ranking for the 2016—2018 performance requirementperiod: | • | | Threshold: 30th percentile ranking earns 50% of target payout. |
| • | | Target: 50th percentile ranking earns 100% payout. |
| • | | Maximum: 75th percentile ranking earns 200% payout. |
For Mr. Mattes, due to annual grant limits in the Plan, we utilized a combination of 35%performance shares and performance-based deferred shares to deliver competitive LTI value. The performance requirements are identical.
Also, the Committee removed three-year cumulativenon-GAAP EBITDA as a performance measure for the 2016 grant due to significant business portfolio changes that were being considered and not yet finalized at the time that the Committee set the performance metrics, such as the acquisition of Wincor Nixdorf.
The Committee felt that relative TSR performance was the correct measurement during this integration period.Stock options
(30%): Provide value based solely on stock price appreciation. Grants of stock options have aten-year term and vest ratably over a three-year period. The exercise price is based on the closing price of our common stock on the grant date and is valued using the Black-Scholes stock option valuation method. RSUs
(20%): Provide a base level of retention value in our executive compensation program, and incentive for building shareholder value. RSUs provide additional value if our stock price appreciates. RSU grants cliffRSUs vest at the end ofratably over three years to enhance retention following the grant date.years. Dividend equivalents are paid on time-basedtime-vested RSU awards.2014grants.-66-
Long-Term Incentives—Additional RSU Grants
. The Committee performed a thorough review of competitive market data, individual to Messrs. Leiken and company performance, and management’s recommendations. Based on the review and the Committee’s objective to deliver 50th percentile total compensation opportunity relative to our peer group, and consistent with the Committee’s philosophy with respect to LTI pay mix, as discussed above in “2014 NEO Compensation Highlights - Target Compensation Structure,” the Committee approved the following equity grants to NEOs in 2014: |
| | | |
| Name | Stock Options | Performance-Based LTI Shares | RSUs |
| Andreas W. Mattes | 154,766 | 26,181 | 20,166 |
| Christopher A. Chapman | 10,166 | 3,312 | 1,325 |
| George S. Mayes, Jr. | 62,405 | 20,328 | 8,131 |
| Stefan Merz | 14,750 | 4,805 | 1,922 |
| Sheila M. Rutt | 15,376 | 5,009 | 2,003 |
Long-Term Incentives - Special Performance-Based Transformation Grant
The Committee in consultation with the Board determined in early 2014 that certain members of our leadership team should receive a special equity grant to incentivize and retain them through the execution of the multi-year business transformation strategy related to Diebold 2.0. Therefore,MerzIn February 2016, the Committee approved a special one-time performance-based transformation10,000 share RSU grant, or the Transformation Grant, that could be potentially earned over asubject to three-year period (in annual increments) as the Diebold 2.0 transformational strategy progresses. For NEOs other than our CEO, one-thirdratable vesting to Mr. Leiken and Mr. Merz. These awards were made in recognition of the grant may be paid out for each of 2014, 2015,multiple strategic initiatives that Messrs. Leiken and 2016 if pre-approved performance metrics are achieved. Our CEO’s Transformation Grant was awarded in two separate grants, one in 2014 and oneMerz were engaged in 2015, in accordance with share limits underincluding the 1991 Plan. The CEO’s 2014 Transformation Grant may be paid if the 2014 metrics are achieved, and halfnegotiation of the 2015 grant may pay out for eachdivestiture of 2015our electronic security business and conclusion of our acquisition of Phoenix Interactive.
Long-Term Incentives—Completed Performance Cycles
The following performance-based grants were completed on December 31, 2016. At the February 2017 Committee meeting, the Committee reviewed and approved the following performance achievements and payout levels:
2014—2016 if the pre-approved performance metrics are achieved. Payouts of this special performance-based TransformationPerformance Share Grant: No payout was earned.
| • | | Our three-year TSR performance was below the 35th percentile threshold requirement against both the custom peer group and the S&P 400 Midcap Index companies. |
2015—2016 Performance-Based Deferred Share Grant for 2014 are noted in “Mr. Mattes: Payout was earned at target.
The approvedtwo-year target cumulative2014 NEO Compensation Highlights - Actual Earned Compensationnon-GAAP” above.
Key features EBITDA goal was $450 million, at which 100% of the special performance-basedtarget award would be earned. If thresholdtwo-year cumulativenon-GAAP EBITDA performance of $225 million were achieved, then 50% would be earned. Payouts for performance between points is interpolated on a straight-line basis.
Actualtwo-year cumulativenon-GAAP EBITDA achievement was $477 million, resulting in a payout of 100% of target.
2016 Tranche of Performance-Based Transformation Grant include:
target, |
| | |
Feature | Description |
Performance periods and Metrics | Year 1: 2014 EPS (for actual results see “2014 NEO Compensation Highlights - Actual Compensation Earned” above)
Year 2: 2015 EPS1
Year 3: 2016 FCF1
|
Payout opportunity | Below minimum: No payout
Minimum: 90% of target
Maximum: 110% of target
Payout opportunity for financial performance between 90% and 110% of the target goal is interpolated on a straight-line basis
|
Target opportunity2
| Andreas W. Mattes
Christopher A. Chapman
George S. Mayes, Jr.
Stefan E. Merz
Sheila M. Rutt
| 400% of salary3
80% of salary
250% of salary
100% of salary
100% of salary
|
| |
1
| Disclosing the qualitative performance metric targets for years 2015 and 2016 of the Transformation Grant, which we do not otherwise disclose publicly, would cause us competitive harm by potentially disrupting our customer relationships and providing competitors with insight to our specific strategy. We establish threshold, target, and maximum performance levels that are difficult to achieve, but reasonable based on a thorough review of the external economic environment and our internal business transformation strategy. |
2 Represents the NEO’s LTIA target percentage2016 Free Cash Flow (FCF) target of salary effective January 15, 2014.
| |
3
| Due to certain annual limits under the 1991 Plan, Mr. Mattes’ Transformation Grant was provided in two separate grants, with the first grant in 2014 covering the 2014 performance period (31,341 shares at target), and the second grant in 2015 covering the 2015 and 2016 performance period (62,684 shares at target). |
Compensation Decisions For 2015
To ensure the compensation structure supported the business transformation strategy related to Diebold 2.0,$180 million was set when the Committee performedapproved this grant at the February 2014 Committee meeting. Threshold and maximum performance levels were set at $162 million and $198 million of the target goal, respectively. Payout opportunity was set at 90% of target for threshold performance and 110% of target for maximum performance. Payout is interpolated on a thorough reviewstraight-line basis between performance levels.
The Committee approved 2016 FCF achievement of incentive plan alignment and unvested equity. Based on this review, the Committee determined that certain design changes to the LTI structure were needed to retain critical executives and recruit strong leaders to fill important strategic roles. The design changes included, but are not limited to:
Revising the metrics for the performance-based LTI share plan to three-year non-GAAP cumulative EBITDA and our relative TSR performance compared against the S&P 400; and
Refining the peer groups used to measure TSR performance (TSR portion is capped at 125% if the three-year TSR result is negative, regardless$177 million, earning a payout of ranking).98% of target.
Benefits and Perquisites
We provide our U.S. executives with medical, dental, long-term disability, and life insurance under the same programs used to provide benefits to all U.S.-based associates. Our executives may buy additional life insurance coverage at their own expense. The maximum life insurance coverage that may be purchased by an executive is $1.5$1 million. Our executives’ personal benefits are not tied to individual or company performance and changes to these benefits reflect the changes to the benefits of all U.S.-based associates.
Deferred Compensation
Our executives, including the NEOs, may elect to defer receipt of compensation from the Annual Cash Bonus Plan and performance-based shares pursuant to our Deferred Incentive Compensation Plan No. 2 (as discussed below under “
Non-Qualified Deferred Compensation Plans”). Current investment choices under the plan for cash deferrals (cash bonuses and dividends on deferred performance shares) mirror those in our 401(k)
plan, except it does not include Diebold common shares.plan. Our deferred compensation plan does not provide participants with additional pay, but merely provides a tax deferred investment vehicle. Moreover, we do not guarantee any specific rate of return and do not contribute to the return that may be earned.
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Retirement
We maintain qualified andnon-qualified retirement programs.programs for our U.S. executives. Our U.S. executives, including the NEOs, participate in our qualified defined benefit (pension) and defined contribution (401(k)) plans on the same terms as all U.S.-based associates. In 2013, we amended the pension plan to cease future benefit accruals for all participants after December 31, 2013.
We also have four twonon-qualified supplemental retirement plans:plans in which certain NEOs participate: (1) the Pension Supplemental Executive Retirement Plan, or Pension SERP, (2) the Pension Restoration Supplemental Executive Retirement Plan, or Pension Restoration SERP, (3)and (2) the 401
(k)401(k) Restoration Supplemental Executive Retirement Plan, or 401(k) Restoration SERP, and (4) the 401(k) Supplemental Executive Retirement Plan, or 401(k) SERP. These plans are described in detail below under “20142016 Pension and Retirement Benefits.” Participation in the 401(k) Restoration SERP is based on the annual IRS compensation limits. Participation in the other plansPension Restoration SERP is limited to executive officers in positions that help develop, implement and modify our long-term strategic plan, as nominated by the CEO and approved by the Committee; however, we closed the Pension SERP, Pension Restoration SERP and 401(k) SERP to any new participants effective December 31, 2013 and also amended these Plansthe Plan to cease future benefit accruals after December 31, 2013. In addition, we provided immediate vesting under our 401(k) SERP for all active participant effective as of December 31, 2013.
The participation status of our NEO’s in the SERPs is summarized below:
|
| | | | |
Named Executive Officer | 401(k) SERP | 401(k) Restoration
SERP | | Pension SERP | Pension
Restoration SERP |
Andreas W. Mattes | | X | | |
Christopher A. Chapman | | | | X |
Jonathan B. Leiken | | X | | |
Stefan E. Merz | | X | | |
Christopher A. Chapman | | | | X |
George S. Mayes, Jr. | X | X | | |
Stefan Merz | | X | | |
Sheila M. Rutt | | X | X | X |
Mr. Heidloff and Dr. Wunram participate in the Wincor Nixdorf AG Pension Scheme (the “Wincor Pension Plan”) pursuant to their service agreements. The Wincor Pension Plan is a contribution-defined pension system, and is based on aone-time payout or installment payments and is governed by the rules outlined in the Wincor Nixdorf International GMBH Pension Scheme. Their service agreements in effect for 2016 provided for certain annual contribution commitments of €126,082 for Mr. Heidloff and €100,000 for Dr. Wunram. Mr. Heidloff’s Wincor Pension Plan balance as of his resignation is discussed below under “Potential Payments Upon Termination or Change in Control—Potential Termination Payments under Service Agreements—Mr. Heidloff and Dr. Wunram.”
Perquisites
and Fringe BenefitsWe provide our executives with limited perquisites. The Committee believes that these benefits are set at a reasonable level, are highly valued by recipients, have limited cost to the Company, are part of a competitive reward system, and help in attracting and retaining top management talent. Perquisites received by executives include the following, the values of which differ based on an executive’s reporting level:
A local country club membership is maintained by the Company for business purposes. Access to this membership is generally available on an individual basis only to our CEO, Mr. Mattes, as it is believed Diebold will benefit from the business development and networking opportunities provided to Mr. Mattes by this corporate club membership;
Reimbursement for financial planning services up to $12,000 for Mr. Mattes, up to $10,000 for Mr. Chapman, Mr. Mayes, and Ms. Rutt, and up to $7,500 for Mr. Merz; and
A complete annual physical exam (assessment of overall health, screening and risk reviews for chronic diseases, exercise and dietary analysis, and other specialty consultations), which helps protect in small measure the investment we make in these key individuals.
The Committee periodically reviews our practices in this area and makes any necessary adjustments based on market trends and the cost to provide these benefits.
Perquisites received by U.S. executives include the following, the values of which differ based on an executive’s reporting level:
Reimbursement for financial planning services up to $12,000 for Mr. Mattes, up to $10,000 for Mr. Chapman and up to $7,500 for Messrs. Leiken and Merz;
A complete annual physical exam, which helps protect in small measure the investment we make in these key individuals;
Payment of annual premiums for supplemental executive disability insurance; and
Executive long term disability policies.
Contractual fringe benefits to Mr. Heidloff and Dr. Wunram under their service agreements include accident and liability insurance, health insurance, and life insurance premiums paid by Wincor Nixdorf and lease payments on a company car.
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Change-in-Control Protection
We maintainchange-in-control agreements for our executive officers, including the NEOs (except for Mr. Mattes, whosechange-in-control protection is protections are included in his employment agreement, discussed in more detail under “
Employment Agreements” below)below and Mr. Heidloff and Dr. Wunram who do not currently havechange-in-control agreements), that provide our executives with the potential for continued employment (or benefits) for three years following achange-in-control. AsThe benefits available under the agreements are subject to a result, these agreements help retain these executives and provide for management continuity in the event of an actual or threatened change-in-control of the Company. They also help ensure“double trigger,” so that our executives’ interests remain aligned with shareholders’ interests during a time when their continued employment may be in jeopardy. Finally, they provide some level of income continuity should an executive’s employment be terminated without cause in connection with a change-in-control.
The agreements provide:
| |
▪ | Severance of two times base salary for agreements entered into before 2011. Severance of two times base salary and target bonus for agreements entered after 2011; |
| |
▪ | One year of continued participation in our employee retirement income, health and welfare benefit plans, including perquisites; and |
| |
▪ | One year of additional service for determining the executives’ non-qualified retirement benefits in the 401(k) Restoration SERP, to the extent applicable. |
Change-in-control benefits are paid only paid upon the occurrence of two events. First, there must befollowing both (i) a “change-in-control” of the Company, aschange-in-control (as defined in the agreements. Second, an executive must be terminatedagreement) and (ii) a termination of the executive’s employment without cause by us or he or she must terminate
his or her own employment forwith good
cause, as describedreason by the executive (as such terms are defined in the
agreements. In this manner,agreement) in the three-year period following achange-in-control.The agreements include the following items:
Achange-in-control definition that is the same as thechange-in-control definition in our shareholder-approved Plan, its equity award agreements, and the Amended and Restated Executive Employment Agreement with our CEO, discussed below;
A lump sum payment equal to two times base salary and target cash bonus;
Two years of continued participation in our health and welfare benefit plans;
A lump sum payment in an amount equal to the additional benefits arethe executive would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan for one additional year of service, provide the executive was fully vested prior to termination;
Aone-year post-termination noncompete and nonsolicit period;
An initial term of two years with automaticone-year extensions each January unless either party provides three months’ notice that the agreement should not extend;
An automatic three-year extension following achange-in-control; and
Forfeiture of severance (in whole or in part) to eliminate excise tax but only paid to executives if they are adversely affected byit results in a change-in-control, consistent withbetternet-of-tax result for the agreements’ objectives.executive.
The Committee periodically reviews our policy with respect to thesechange-in-control agreements, and engages its independent compensation consultant to provide a competitive analysis of our practices. The Committee has determined that this type of agreement is still a valued component of overall compensation for purposes of attracting and retaining quality executive officers and, as such, the Committee approved the continued award of these agreements to new executives.
Aon Hewitt’s market review of our change-in-control benefits in late 2011 reflected that defining “pay” in a change-in-control setting to include only base salary was below market. Therefore, the Committee determined, beginning in 2012, that any new change-in-control agreements provided to executives would define “pay” to include base salary and target bonus.
In addition, the agreements in place prior to 2012 provide a tax gross-up for any excise tax imposed under Section 280G of the Internal Revenue Code covering severance amounts payable under any other agreement, plan or arrangement. However, the Committee decided that, beginning in 2012, any new change-in-control agreements will no longer provide a tax gross-up feature for any excise tax imposed under Section 280G of the Internal Revenue Code. The change-in-control provisions in Mr. Mattes’ employment agreement reflect these new compensation policies.
The Committee does not account for the value of these agreements when making other compensation decisions.
Severance Protection
Our Senior Leadership Severance PolicyPlan provides coverage to executives thatwho are involuntarily terminated other than forwithout cause or upon certain constructive terminations,who terminate their employment for good reason, in each case separate from a change-in-control. These benefits also providechange-in-control and subject to a consistent approachgeneral release of claims and acknowledgement of the executive’s confidentiality,non-competition and other applicable obligations. This policy does not apply to ensuring reinforcement of an executive’s confidentiality, non-competitionMessrs. Mattes and non-solicitation obligations.Heidloff and Dr. Wunram because they have employment agreements. Our policy provides for the following:
A lump sum payment equal to two times (for Mr. Chapman) and one andone-half times (for Messrs. Leiken and Merz) base salary in effect on the date of termination and target bonus opportunity under our Annual Cash Bonus Plan in the year of termination;
| |
▪ | Severance of two times salary and target bonus for the CEO, and one and a half times salary and target bonus for the other NEOs, as well as a pro-rated bonus payment in the year of termination, based on actual performance; |
| |
▪ | Two years of continued participation in our employee health and welfare benefit plans for our CEO, and one and one-half years of continued participation for the other NEOs (excluding perquisites and any qualified or non-qualified pension or 401(k) plans); |
| |
▪ | Vesting of all outstanding unvested options, which shall remain exercisable for three months; |
| |
▪ | Pro-rata vesting of all outstanding restricted stock, RSUs and performance shares (to the extent such performance awards are earned); and |
| |
▪ | Professional outplacement services for a limited time period. |
A lump sumpro-rata payment of the bonus under our Annual Cash Bonus Plan, based upon the time employed in the year of termination and actual full-year performance results;
Continued participation in all of our employee health and welfare benefit plans for the shorter of (i) two years (for Mr. Chapman) or one andone-half years (for Messrs. Leiken and Merz), and (ii) the date such NEO receives equivalent coverage from a subsequent employer;
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All outstanding unvested options immediately vest and generally remain exercisable for a period of twelve months (or the earlier scheduled expiration) following the date of termination;
All outstanding RSUs vestpro-rata based upon the time employed in the year of termination relative to the vesting period of the RSUs;
Pro-rata performance-based share amounts (except amounts granted under the Transformation Grant), based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others; and
Professional outplacement services for up to two years.
Employment Agreements
Historically, in order to attract high-quality candidates, we have entered into formal employment agreements with our President and CEO, and when those positions have been held by separate individuals, with both our President and our CEO. Accordingly, in June 2013, we entered into an employment agreement with Mr. Mattes, (forwhich we amended on July 24, 2015. For a summary of this agreement, including benefits paid following achange-in-control,see the discussion following the “
20142016 Grants of Plan-Based Awards” table below). No other NEO hasbelow. Messrs. Chapman, Leiken and Merz do not have employment agreements.Mr. Heidloff and Dr. Wunram had service agreements in place with Wincor Nixdorf prior to the acquisition with provisions that largely governed their 2016 compensation. Dr. Wunram received an employment agreement.
offer letter in connection with his promotion to be our Chief Operating Officer in February 2017, and his service agreement will continue in effect until February 28, 2019 as amended by and subject to the terms of the offer letter. On February 16, 2017, Mr. Heidloff and Diebold Nixdorf AG mutually agreed to terminate the service agreement that was in place with Mr. Heidloff, and entered into a separation agreement providing for certain severance benefits in connection with his resignation from his position as our President and the termination of his employment. These agreements are discussed in more detail under “Service Agreements with Mr. Heidloff and Dr. Wunram” and in the “Potential Payments Upon Termination or Change in Control—Potential Termination Payments under Service Agreements—Mr. Heidloff and Dr. Wunram” section.
Other Compensation Policies
Clawback Policy
In addition to any other rights or remedies legally available to us, all of our equity plans include provisions that allow us to cancel awards or “claw back” any shares received pursuant to awards or the exercise of stock options for certain specified conduct that is deemed detrimental to the Company. To the extent that an executive has already received value for such awards, these provisions also allow us to seek reimbursement of such value directly from the executive or through the garnishment of salary or cash bonus. Examples of such detrimental conduct include:
Engaging, directly or indirectly, in any activity in competition with us, in any product, service or business activity for which the executive had any direct responsibility or direct involvement during the two previous years.
Soliciting one of our employees to terminate his or her employment with us.
Unauthorized disclosure of confidential, proprietary or trade secret information obtained during employment with us.
Failure to promptly disclose and assign any interest in any invention or idea conceived during the executive’s employment and related to any of our actual or anticipated business, research or development work.
Any activity that results in a termination for cause, including gross neglect and any act of dishonesty constituting a felony.
In addition, the Committee has implemented a separate and independent Clawback Policy effective August 2, 2012, which provides an additional avenue to recover excessive performance-based incentive compensation (whether equity or cash) paid during a three-year look-back period in the event of willful act of misconduct resulting in an obligation on the Company to prepare a
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financial accounting restatement due to a material noncompliance with any reporting requirement under the U.S. federal securities laws.
This policy will be updated as necessary when the claw back requirements under Dodd Frank are fully effective.
Insider Trading Policy
Under our Insider Trading Policy, each employee, officer and director of the Company is prohibited from buying or selling our securities when he or she is aware of material,non-public information about the Company, or information about other public companies which he or she learns as our employee or director. These individuals are also prohibited from providing such information to others. In addition, this policy prohibits employees, officers and directors from pledging Diebold Nixdorf stock, engaging in short sales of Diebold Nixdorf stock, and from buying or selling any derivative securities related to Diebold Nixdorf stock.
Company-ImposedCompany-Imposed Black-Out Periods
As noted above, if an executive is in possession of materialnon-public information, he or she is prohibited from trading in our stock. Apart from these trading restrictions, we also impose routineblack-out periods that prohibit executives, including the NEOs, from trading during the period that begins two weeks prior to the end of each quarter and extends through the first business day following our next scheduled quarterly earnings release. These self-imposedblack-out periods are an example of good corporate governance and help to protect both us and the individual from allegations of insider trading violations.
However, ourblack-out policy was not intended to penalize employees for this type of positive corporate behavior, and in the past the Committee has approved a cash distribution to employees, including NEOs, who were barred from exercising stock options prior to their expiration due to extended company-imposedblack-out periods. No such exceptions were made during 2014.
2016.
Stock Ownership Guidelines
The Committee believes that stock ownership guidelines reinforce executive and shareholder alignment. Our executive stock ownership guidelines are:
CFO, COO and Section 16 Officers:Other NEOs: 3x salary
Other CEO direct reports: 1.5x salary
The Committee monitors progress towards achievement for the stated guidelines annually. In determining an executive’s stock holdings, we count the shares beneficially owned, including theafter-tax value of unvested RSUs, shares deferred pursuant to our deferred compensation program, and shares owned through our 401(k) savings plan. Outstanding stock options and unearned performance shares do not count towards the executives’ stock ownership guidelines.
Our executives are not allowed to sell shares until they meet the guidelines.
Limitations on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally limits the deductibility of executive compensation paid by publicly-held corporations to $1 million per year for the CEO and the next three most highly compensated executive officers, excluding the CFO. The $1 million limitation does not apply to compensation that qualifies as performance-based. We consider the tax and accounting impact of all compensation, and our annual and long-term incentive plans have been designed so that awards granted under such plans may be able to qualify as performance-based compensation. To the extent possible and consistent with the goals and philosophy of compensation stated throughout, the Committee endeavors to limit the impact of Section 162(m) of the Code. The Committee also believes that the tax deduction is only one of several relevant considerations in setting compensation and that the tax deduction limitation should not be permitted to compromise the Company’s ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.
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EXECUTIVE COMPENSATION
Executive Compensation TablesThe table below summarizes the total compensation earned by each of our NEOs for the fiscal years ended December 31, 2014, 20132016, 2015 and 2012,2014, as applicable. The amounts shown include compensation for services in all capacities that were provided to us.
20142016 Summary Compensation Table
|
| | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($) | | Bonus1($) | | Stock
Awards2 ($) | | Option
Awards3 ($) | |
Non-Equity
Incentive Plan
Compensation4 ($) | | Change in
Pension Value
and Non-qualified
Deferred
Compensation
Earnings5 ($) | | All Other
Compensation6 ($) | | Total ($) |
Andreas W. Mattes President and Chief Executive Officer | | 2014 | | 836,106 | | — | | 2,900,655 | | 1,044,825 | | 1,779,509 | | — | | 206,842 | | 6,767,937 |
| | 2013 | | 408,365 | | 370,980 | | 2,104,265 | | 813,747 | | 529,973 | | — | | 95,732 | | 4,323,062 |
| | 2012 | | — | | — | | — | | — | | — | | — | | — | | — |
Christopher A. Chapman Senior Vice President, Chief Financial Officer | | 2014 | | 301,019 | | — | | 410,137 | | 68,631 | | 574,035 | | 135,094 | | 25,343 | | 1,514,259 |
| | 2013 | | 239,238 | | — | | 190,651 | | 57,095 | | 184,100 | | — | | 20,366 | | 691,450 |
| | 2012 | | — | | — | | — | | — | | — | | — | | — | | — |
George S. Mayes, Jr. Executive Vice President and Chief Operating Officer
| | 2014 | | 539,423 | | — | | 2,472,994 | | 421,296 | | 813,216 | | — | | 195,922 | | 4,442,851 |
| | 2013 | | 468,674 | | — | | 722,114 | | 336,051 | | 525,000 | | — | | 193,797 | | 2,245,636 |
| | 2012 | | 360,797 | | — | | 488,880 | | 264,500 | | 149,093 | | — | | 175,522 | | 1,438,792 |
Stefan Merz Senior Vice President, Strategic Projects | | 2014 | | 325,000 | | — | | 616,051 | | 99,577 | | 424,003 | | — | | 36,935 | | 1,501,566 |
| | 2013 | | — | | — | | — | | — | | — | | — | | — | | — |
| | 2012 | | — | | — | | — | | — | | — | | — | | — | | — |
Sheila M. Rutt Vice President and Chief Human Resources Officer
| | 2014 | | 332,263 | | — | | 609,310 | | 103,803 | | 353,583 | | 241,343 | | 44,489 | | 1,684,791 |
| | 2013 | | — | | — | | — | | — | | — | | — | | — | | — |
| | 2012 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | | | |
Name and Principal
Position | | Year | | Salary1
($) | | Bonus
($) | | Stock
Awards2
($) | | Option
Awards3
($) | | Non-Equity
Incentive Plan
Compensation4
($) | | Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings5
($) | | All Other
Compensation6
($) | | Total
($) |
Andreas W. Mattes Chief Executive Officer | | 2016 | | 937,500 | | — | | 3,179,794 | | 1,074,000 | | 585,000 | | — | | 190,458 | | 5,966,752 |
| | 2015 | | 928,418 | | — | | 6,271,703 | | 1,408,680 | | 459,375 | | — | | 322,998 | | 9,391,174 |
| | 2014 | | 836,106 | | — | | 2,900,655 | | 1,044,825 | | 1,779,509 | | — | | 206,842 | | 6,767,937 |
Christopher A. Chapman Senior Vice President, Chief Financial Officer | | 2016 | | 500,000 | | — | | 700,757 | | 300,000 | | 331,500 | | 47,575 | | 39,797 | | 1,919,629 |
| | 2015 | | 402,658 | | — | | 499,284 | | 263,740 | | 180,000 | | — | | 34,432 | | 1,380,114 |
| | 2014 | | 301,019 | | — | | 410,137 | | 68,631 | | 574,035 | | 135,094 | | 25,343 | | 1,514,259 |
Eckard Heidloff President | | 2016 | | 322,775 | | — | | — | | — | | 1,295,500 | | — | | 142,385 | | 1,758,794 |
| | — | | — | | — | | — | | — | | — | | — | | — | | — |
| | — | | — | | — | | — | | — | | — | | — | | — | | — |
Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary | | 2016 | | 440,000 | | — | | 538,448 | | 132,000 | | 324,720 | | — | | 37,210 | | 1,472,378 |
| | 2015 | | 400,000 | | — | | 285,304 | | 150,708 | | 160,000 | | — | | 26,392 | | 1,022,404 |
| | — | | — | | — | | — | | — | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | | | |
Dr. Jürgen Wunram Chief Operating Officer | | 2016 | | 230,553 | | — | | — | | — | | 925,357 | | — | | 116,133 | | 1,270,711 |
| | — | | — | | — | | — | | — | | — | | — | | — | | — |
| | — | | — | | — | | — | | — | | — | | — | | — | | — |
Stefan E. Merz Senior Vice President, Corporate Strategy and Development | | 2016 | | 400,000 | | — | | 510,392 | | 119,998 | | 295,200 | | — | | 61,774 | | 1,387,364 |
| | 2015 | | 374,726 | | — | | 267,473 | | 141,291 | | 128,000 | | — | | 50,420 | | 961,910 |
| | 2014 | | 325,000 | | — | | 616,051 | | 99,577 | | 424,003 | | — | | 36,935 | | 1,501,566 |
| | | | | | | | | | | | | | | | | | |
| 1 | Salary amounts reported for Mr. Heidloff and Dr. Wunram reflect salary earned during calendar year 2016 and paid after the consummation of our acquisition of Wincor Nixdorf, which closed on August 15, 2016. These amounts are included in the table in U.S. dollars, but Mr. Heidloff and Dr. Wunram receive their salaries in Euros. To convert their Euro salary amounts to U.S. dollars for the table, we used the average Euro to U.S. dollar foreign currency exchange rate for 2016 of 1.106656. The annual salary rates for Mr. Heidloff and Dr. Wunram during calendar year 2016 under their service agreements were € 700,000 and € 500,000, respectively. See “Service Agreements with Mr. Heidloff and Dr. Wunram” below for additional information. |
12 | As disclosed2016 amounts in our 2014 proxy, this column represents that portion of Mr. Mattes ’ annual cash bonus in 2013 that did not qualify for inclusion in the “Non-Equity Incentive Plan Compensation” column above. |
| |
2
| This column representsrepresent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718 (ASC 718), for RSUs and performance-based LTI shares the Transformation Grant, and RSUs awarded to the NEOs in 2014.2016. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For the performance-based LTI shares, such amounts are calculated based on the probable outcome of the relevant performance conditions as of theThe grant date using a Monte Carlo simulation model. Forvalues in the Transformation Grant, such amounts are calculated based on the probable outcome of the relevant performance conditions as of the grant date, as detailed in Footnote 5 to the “2014 Grants of Plan-Based Awards” table below. For more information regarding 2014 awards, including the assumptions used in calculating the fair value of performance shares, see the “2014 Grants of Plan-Based Awards Table” below. The maximum number of performance-based LTI shares that may be earned is also reflected below under the “2014 Grants of Plan-Based Awards Table,” the grant date fair value of which would be: for Mr. Mattes; $2,219,625; for Mr. Chapman, $280,791; for Mr. Mayes, $1,723,408; for Mr. Merz, $407,368; and for Ms. Rutt, $424,663. The maximum number of Transformation Grant shares that may be earned is also reflected below under the “2014 Grants of Plan-Based Awards Table,” the aggregate grant date fair value of which would be: for Mr. Mattes, $1,212,834; for Mr. Chapman, $246,971; for Mr. Mayes, $1,467,157; for Mr. Merz, $381,446; and for Ms. Rutt, $361,478. The specific terms of the performance-based LTI shares, the Transformation Grant, and RSUs are discussed in more detail in “Compensation Discussion and Analysis” above. These maximum amounts reflect the grant date fair value for these awards, andthis footnote do not necessarily correspond to the actual value that will be realized by the NEOs.
|
The grant date fair values for the RSUs are determined using the closing price of our common shares on the grant date. The grant date fair values included in the table for the performance-based LTI shares are calculated based on the probable outcome of the relevant performance conditions as of the grant date, which we calculate using a Monte Carlo simulation model. See the “2016 Grants of Plan-Based Awards Table” below for the threshold, target and maximum numbers of shares that each NEO may earn under these performance-based LTI awards and Footnote 5 to that table for additional information on assumptions used in calculating the grant date valuations. The ASC 718 grant date fair values for each NEO’s 2016 performance-based LTI awards assuming the achievement of the maximum level of performance would be: for Mr. Mattes, $4,205,473; for Mr. Chapman, $985,404;for Mr. Leiken, $433,621; and for Mr. Merz, $394,161.
The specific terms of each of these awards are discussed in more detail in “Compensation Discussion and Analysis” above.
Mr. Heidloff and Dr. Wunram did not receive any stock awards in 2016.
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| |
3 | This column represents the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, for options awarded to the NEOs in 2014.2016. For more information regarding 20142016 grants, see the “20142016 Grants of Plan-Based Awards Table” below. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The assumptions used in calculating the fair value of these stock options can be found under Note 46 to the Consolidated Financial Statements in our Annual Report on Form10-K for the year ended December 31, 2014.2016. The specific terms of the stock options are discussed in more detail above under “Compensation Discussion and Analysis.Analysis.” These amounts reflect the grant date fair value for these awards, and do not necessarily correspond to the actual value that will be realized by the NEOs. |
Mr. Heidloff and Dr. Wunram did not receive any option awards in 2016 subsequent to our acquisition of Wincor Nixdorf in August 2016. The options granted to Mr. Heidloff and Dr. Wunram in 2016 prior to the acquisition are omitted from this table. Please see the “Outstanding Equity Awards at 2016 FiscalYear-End Table” for additional information regarding those options.
| |
4 | This column reflects amounts earned by the NEOsMessrs. Mattes, Chapman, Leiken and Merz under our Annual Cash Bonus Plan for the 20142016 fiscal year, but that were not actually paid out until February 2015. |
For Mr. Heidloff and Dr. Wunram, this column reflects amounts earned under their 2016 Q5 VTI awards (for the performance period from October 1, 2016—December 31, 2016) plus three-fourths of the amounts earned under their 15/16 Annual VTI awards. These amounts are included in the table in U.S. dollars, but were paid to Mr. Heidloff and Dr. Wunram in Euros. To convert the Euro amounts for the 2016 Q5 VTI awards to U.S. dollars for the table, we used the exchange rate on February 7, 2017 of 1.0691610732, the date that the Compensation Committee approved the performance achieved and payouts for those awards. To convert the Euro amounts for the included portion of the 15/16 Annual VTI awards to U.S. dollars for the table, we used the Euro to U.S. dollar foreign currency exchange rate on November 23, 2016 of 1.055616, the date that the Wincor Nixdorf Supervisory Board approved the findings of its auditor’s audit for its fiscal year ended September 30, 2016. The performance period for the 15/16 Annual VTI awards was Wincor Nixdorf’s 15/16 year (October 1, 2015—September 30, 2016), and the full amounts that Mr. Heidloff and Dr. Wunram earned under the 15/16 Annual VTI awards were €1,400,000 and €1,000,000, respectively (or $1,477,862 and $1,055,616, respectively, when converted to U.S. dollars based on the November 23, 2016 exchange rate). See the “2016 Grants of Plan-Based Awards Table” and “Service Agreements with Mr. Heidloff and Dr. Wunram” below for additional information.
| |
5 | These amountsThe amount shown arefor Mr. Chapman is the difference (to the extent positive) between the actuarial present value of pension benefits as of December 31, 2014 based on a 4.21% discount rate and the RP-2014 Mortality Table for non-annuitants without collar adjustment with MP-2014 fully generational mortality improvement projection2016 and the actuarial present value of pension benefits as of December 31, 20132015 under the pension plans in which he participates. The actuarial present value as of December 31, 2016 is calculated based on a 5.09%4.24% discount rate and the RP-2000 Combined HealthyRP-2014 mortality tables, including theMP-2016 generational projection scales. The actuarial present value of pension benefits as of December 31, 2015 is based on a 4.62% discount rate and theRP-2014 Mortality Table fornon-annuitants without collar adjustment withMP-2014 fully generational mortality improvement to December 31, 2013 based on Scale AA. Further, theprojection. The values were determined assuming the probability is nil that the NEO will terminate, retire, die or become disabled before their normal retirement date. There was no above-market or preferential interest earned by any NEO in 2014 on non-qualified deferred compensation.date (unless already known). The increases in pension values shown above are attributable to the decrease in the discount rate from December 31, 2013 to December 31, 2014 and the decrease in the discounting period by one year due to the change in mortality assumption to better reflect current and future mortality improvements.aging of the affected NEOs. |
There was no above-market or preferential interest earned by any NEO in 2016 onnon-qualified deferred compensation.
| |
6 | For 2014, theThe amounts reported foras “All Other Compensation” consist of amounts provided to the NEOs asfor 2016 for Messrs. Mattes, Chapman, Leiken, and Merz are outlined in the table below, with respect to: (a) for Mr. Mattes, housing allowances and expenses in connection with his relocation to Ohio, (b) amounts contributed for the executive by us under our 401(k) plan and anynon-qualified defined contribution plan, including taxes attributable to suchnon-qualified defined contribution plan, for which the executive is a participant, (c) financial planning services/tax assistance, (d) dividend equivalents paid on unvested RSUs, and (e) other. For NEOs, as applicable, theThe amount in column (e) reflects, as applicable: expenses related to the Company’s sales awards recognition program (Mr. Mattes: $8,891;Mattes $6,946; Mr. Chapman $6,272;$7,201; and Mr. Mayes, |
$6,272;our acquisition of Wincor Nixdorf. As outlined in the table below, such amounts include the annual pension benefit contributions for the executives by Wincor Nixdorf under the Wincor Pension Plan and Mr. Merz, $6,377)the executive’s service agreement (column (b)), as well aswhich are reflected in the tables in U.S. dollars and were converted from their Euro amounts to U.S. dollars using the exchange rate of 1.052255 at December 31, 2016. These amounts also include the following (column (e) below): the value of life insurance benefits (Mr. Mattes, $1,620; Mr. Chapman $623; Mr. Mayes $1,205; Mr. Merz, $790, and Ms. Rutt, $743),premiums; the value of accident liability insurance premiums paid for the NEOs; the value of health insurance premiums paid for the NEOs; and the approximate value of an annual physical examamounts provided to our executives (Mr. Mattes, $3,475; Mr. Merz, $3,896,the NEOs related to use of a company car. Amounts included in column (e) in the table below are in U.S. dollars, but were received in Euros, and Ms. Rutt, $1,513).
|
| | | | | | | | | | | | |
| | All Other Compensation |
| Named Executive Officer | | (a) | | (b) | | (c) | | (d) | | (e) | |
| Andreas W. Mattes | | 76,945 | | 60,938 | | 12,000 | | 42,974 | | 13,986 | |
| Christopher A. Chapman | | — | | 9,360 | | — | | 9,087 | | 6,895 | |
| George S. Mayes, Jr. | | — | | 149,527 | | 10,000 | | 28,918 | | 7,447 | |
| Stefan Merz | | — | | 17,912 | | — | | 7,960 | | 11,063 | |
| Sheila M. Rutt | | — | | 19,723 | | 7,616 | | 14,895 | | 2,256 | |
we used the average Euro to U.S. dollar foreign currency exchange rate for 2016 of 1.106656 for these amounts. | | | | | | | | | | |
| | �� | All Other Compensation |
Named Executive Officer | | (a) | | (b) | | (c) | | (d) | | (e) |
Andreas W. Mattes | | 20,294 | | 52,195 | | 12,000 | | 89,981 | | 15,988 |
Christopher A. Chapman | | — | | 9,305 | | 2,844 | | 16,479 | | 11,169 |
Eckard Heidloff | | — | | 132,670 | | — | | — | | 9,715 |
Jonathan B. Leiken | | — | | 11,607 | | 7,500 | | 15,266 | | 2,837 |
Dr. Jürgen Wunram | | — | | 105,226 | | — | | — | | 10,907 |
Stefan E. Merz | | — | | 19,707 | | 6,310 | | 20,984 | | 14,773 |
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20142016 Grants of Plan-Based Awards Table |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | All Other Stock
Awards: Number
of Shares of Stock
or Units3 (#) | | All Other Option
Awards: Number
of Securities
Underlying
Options4 (#) | | Exercise or
Base Price of
Option
Awards ($/Sh) | | Grant Date
Fair Value of
Stock and
Option
Awards5 ($) |
| Name | | Grant Date | | Thresh. ($) | | Target ($) | | Max. ($) | | Thresh. (#) | | Target (#) | | Max. (#) | | | | |
Andreas W. Mattes6 | | 1/15/14 | | - | | - | | - | | 28,207 | | 31,341 | | 34,476 | | - | | - | | - | | 1,102,576 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | - | | 154,766 | | 34.13 | | 1,044,825 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | 20,166 | | - | | - | | 688,266 |
| | 2/11/14 | | - | | - | | - | | 6,546 | | 26,181 | | 52,362 | | - | | - | | - | | 1,109,813 |
| | 2/11/14 | | 491,040 | | 1,023,000 | | 2,046,000 | | - | | - | | - | | - | | - | | - | | - |
| Christopher A. Chapman | | 1/15/14 | | - | | - | | - | | 5,744 | | 6,382 | | 7,021 | | - | | - | | - | | 224,519 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | - | | 10,166 | | 34.13 | | 68,631 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | 1,325 | | - | | - | | 45,222 |
| | 2/11/14 | | - | | - | | - | | 828 | | 3,312 | | 6,624 | | - | | - | | - | | 140,396 |
| | 2/11/14 | | 132,000 | | 330,000 | | 660,000 | | - | | - | | - | | - | | - | | - | | - |
| George S. Mayes, Jr. | | 1/15/14 | | - | | - | | - | | 34,122 | | 37,913 | | 41,705 | | - | | - | | - | | 1,333,779 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | - | | 62,405 | | 34.13 | | 421,296 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | 8,131 | | - | | - | | 277,511 |
| | 2/11/14 | | - | | - | | - | | 5,082 | | 20,328 | | 40,656 | | - | | - | | - | | 861,704 |
| | 2/11/14 | | 187,000 | | 467,500 | | 935,000 | | - | | - | | - | | - | | - | | - | | - |
| Stefan Merz | | 1/15/14 | | - | | - | | - | | 8,872 | | 9,857 | | 10,843 | | - | | - | | - | | 346,769 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | - | | 14,750 | | 34.13 | | 99,577 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | 1,922 | | - | | - | | 65,598 |
| | 2/11/14 | | - | | - | | - | | 1,202 | | 4,805 | | 9,610 | | - | | - | | - | | 203,684 |
| | 2/11/14 | | 113,750 | | 243,750 | | 487,500 | | - | | - | | - | | - | | - | | - | | - |
| Sheila M. Rutt | | 1/15/14 | | - | | - | | - | | 8,407 | | 9,341 | | 10,276 | | - | | - | | - | | 328,616 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | - | | 15,376 | | 34.13 | | 103,803 |
| | 2/11/14 | | - | | - | | - | | - | | - | | - | | 2,003 | | - | | - | | 68,362 |
| | 2/11/14 | | - | | - | | - | | 1,253 | | 5,009 | | 10,018 | | - | | - | | - | | 212,332 |
| | 2/11/14 | | 81,304 | | 203,267 | | 406,534 | | - | | - | | - | | - | | - | | - | | - |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under
Equity Incentive Plan Awards2 | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units3 (#) | | All Other
Option
Awards:
Number
of
Securities
Underlying
Options4 (#) | | Exercise
or
Base
Price of
Option
Awards ($/Sh) | | Grant Date
Fair Value of
Stock and
Option
Awards5 ($) |
| Name | | Grant
Date | | Threshold ($) | | Target
($) | | | | Max. ($) | | Threshold (#) | | Target
(#) | | | | Max. (#) | | | | |
Andreas W. Mattes | | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | - | | 200,000 | | 27.39 | | 1,074,000 |
| | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | 39,323 | | - | | - | | 1,077,057 |
| | 2/3/16 | | - | | - | | | | - | | 27,382 | | 54,764 | | | | 109,528 | | - | | - | | - | | 1,478,080 |
| | 2/3/16 | | - | | - | | | | - | | 11,572 | | 23,144 | | | | 46,228 | | - | | - | | - | | 624,657 |
| | | - | | 562,500 | | 1,312,500 | | | | 2,625,000 | | - | | - | | | | - | | - | | - | | - | | - |
Christopher A. Chapman | | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | - | | 55,866 | | 27.39 | | 300,000 |
| | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | 7,596 | | - | | - | | 208,054 |
| | 2/3/16 | | - | | - | | | | - | | 9,128 | | 18,255 | | | | 36,510 | | - | | - | | - | | 492,702 |
| | - | | 200,000 | | 500,000 | | | | 1,000,000 | | - | | - | | | | - | | - | | - | | - | | - |
Eckard Heidloff | | - | | 193,665 | | 774,659 | | | | 1,549,318 | | - | | - | | | | - | | - | | - | | - | | - |
| | - | | 48,416 | | 193,665 | | | | 387,330 | | - | | - | | | | - | | - | | - | | - | | - |
Jonathan B. Leiken | | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | - | | 24,581 | | 27.39 | | 132,000 |
| | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | 3,342 | | - | | - | | 91,537 |
| | 2/3/16 | | - | | - | | | | - | | 4,017 | | 8,033 | | | | 16,066 | | - | | - | | - | | 216,811 |
| | 2/11/16 | | - | | - | | | | - | | - | | - | | | | - | | 10,000 | | - | | - | | 230,100 |
| | - | | 176,000 | | 440,000 | | | | 880,000 | | - | | - | | | | - | | - | | - | | - | | - |
Dr. Jürgen Wunram | | - | | 138,332 | | 553,328 | | | | 1,106,656 | | - | | - | | | | - | | - | | - | | - | | - |
| | - | | 34,583 | | 138,332 | | | | 276,664 | | - | | - | | | | - | | - | | - | | - | | - |
Stefan E. Merz | | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | - | | 22,346 | | 27.39 | | 119,998 |
| | 2/3/16 | | - | | - | | | | - | | - | | - | | | | - | | 3,038 | | - | | - | | 83,211 |
| | 2/3/16 | | - | | - | | | | - | | 3,651 | | 7,302 | | | | 14,604 | | - | | - | | - | | 197,081 |
| | 2/11/16 | | - | | - | | | | - | | - | | - | | | | - | | 10,000 | | - | | - | | 230,100 |
| | - | | 160,000 | | 400,000 | | | | 800,000 | | - | | - | | | | - | | - | | - | | - | | - |
| 1 | |
1 | TheseFor Messrs. Mattes, Chapman, Leiken and Merz, these columns present information about the potential payoutpayouts under our Annual Cash Bonus Plan for fiscal year 2014.2016. The actual amount paid in February 2015March 2017 for each NEO is reflected above in the “20142016 Summary Compensation Table” under the “Non-Equity“Non-Equity Incentive Plan Compensation”Compensation” column. For Mr. Heidloff and Dr. Wunram these columns present potential payouts under their 15/16 Annual VTI awards and their 2016 Q5 VTI awards. The potential payouts for these awards were converted to U.S. dollars using the average Euro to U.S. dollar foreign currency exchange rate for 2016 of 1.106656. For a more detailed description of the related performance measures for our Annual Cash Bonus Plan,all of these cash incentive awards see above under “Compensation Discussion and Analysis.Analysis.” |
| |
2 | These columns present information about performance-based LTI shares awarded during 20142016 pursuant to the 1991 Plan (shown withfor Messrs. Mattes, Chapman, Leiken and Merz. The payout of the February 11, 2014 grant date) as well as the Transformation Grant (shown with the January 15, 2014 grant date). For each respective grant type, specific performance measuresperformance-based LTI shares will be determined based on the achievement of specific relative TSR goals calculated over the three-year period beginning on January 1, 20142016 and ending on December 31, 2016, except with respect to the Transformation Grant for Mr. Mattes which is calculated over the 2014 performance period. No amount is payable unless the threshold performance is met. For performance-based LTI shares granted, the2018. The maximum award amount offor the performance-based LTI awards is 200% of the target amount, which will be earned only if we achieve maximum performance pursuant to thatthe grant’s specific performance measures.measures, and no amount is payable unless the threshold performance is met. For the Transformation Grant, the maximum award amount of 110% of the target amount, will be earned only if we achieve maximum performanceMr. Mattes, this column also presents information about his performance-based deferred shares awarded during 2016 pursuant to that grant’s specificthe Plan. The performance measures.requirements for Mr. Mattes’s performance-based deferred shares are identical to those of his performance-based LTI shares. For a more detailed description of the performance-based LTI shares, the Transformation Grant,these awards and the related performance measures, see above underthe related descriptions in the “Compensation Discussion and Analysis.Analysis.” |
| |
3 | This column presents information about RSUs awarded during 20142016 pursuant to the 1991 Plan. For a more detailed description of the RSUs, see above under “Compensation Discussion and Analysis.” |
| |
4 | All stock option grants in this table were new and not granted in connection with an optionre-pricing transaction, and the terms of the stock options were not materially modified in 2014.2016. For a more detailed description of the stock options, see above under “Compensation Discussion and Analysis.Analysis.” |
The options granted to Mr. Heidloff and Dr. Wunram in 2016 prior to the acquisition are omitted from this table. Please see “Service Agreements with Mr. Heidloff and Dr. Wunram” and the “Outstanding Equity Awards at 2016 FiscalYear-End Table” for additional information regarding those options.
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| |
5 | For the performance-based LTI shares, the grant date fair value of $42.39$26.99 per share as of the grant date was calculated using a Monte Carlo simulation model that considers the likelihood of our TSR ending at various percentile levels and such values reflect the total amount that we would expect to expense in our financial statements over the awards’ three-year performance period, based onexpected stock price at those levels and which reflects the probable outcome of the performance conditions at target as of the grant date, excluding the effect of estimated forfeitures, in accordance with FASB ASC Topic 718. The assumptions used in calculating the fair value of the performance-based LTI shares were as follows: (a) an expected performance period of three years; (b) a risk-free interest rate of 0.4%0.89%, which is thean estimated interest rate for azero-coupon U.S. government bond with a maturityterm commensurate with the remaining term of threethe performance period as of the grant date (2.91 years), calculated by linear interpolation of the interest rates on the grant date for zero coupon U.S. government bonds with maturities of 2.50 and 3.0 years; (c) volatilityhistorical volatilities of 30.6%,the Company and peer group, calculated using the adjusted daily ending stock priceprices for the equivalent2.91 year period prior to the expected term prior to grant date; and (d) a dividend yield of 3.85% asfor the company and any of the grant date. Forpeer group companies in the Transformation Grant, except for Mr. Mattes, the fair value of $34.18 per share is calculated based upon the probable outcome of all three performance periods for 2014, 2015 andperiod from January 1, 2016 to February 3, 2016. |
respectively, as follows: (a) 2014 (100% of the 2014 performance period plus 50% of the 2015 performance period, plus 33 1/3% of the 2016 performance period), (b) 2015 (50% of the 2015 performance period plus 33 1/3 of the 2016 performance period), and (c) 2016 (33 1/3% of the 2016 performance period), the total of such value reflects the total amount that we would expect to expense in our financial statements for the total of all three performance periods. For the Transformation Grant for Mr. Mattes, the fair value of $34.18 per share is calculated by based upon the probable outcome for the 2014 performance period at 100%. For RSUs, the fair value is calculated using the closing market price of the shares on the applicable grant date ($27.39 for the February 3, 2016 grants and $23.01 for the February 11, 2014 grant date of $34.13,2016 grants), and such value reflects the total amount that we would expect to expense in our financial statements over the awards’ three-year vesting period. For stock options, the fair value was calculated using the Black-Scholes value on the grant date of $6.75,$5.37, calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the fair value of these stock options can be found under Note 36 to the Consolidated Financial Statements in our Annual Report on Form10-K for the year ended
December 31, 2014. | |
6
| For additional information regarding the Transformation Grant awarded to Mr. Mattes on January 15, 2014, see the discussion above in the “Compensation Discussion and Analysis.”
|
2016.Mattes Amended and Restated Employment Agreement
In June 2013, we entered into an employment agreement with Mr. Mattes in connection with his appointment as our President and CEO. TheWe amended that agreement has an initialon July 24, 2015 in order to align the“change-in-control” definition and the “cause” definition that applies in thetwo-year period following achange-in-control as stated in Mr. Mattes’ employment agreement with the definitions used in thechange-in-control agreements with our other executives. In addition, the amendments to the agreement also included:
Atwo-year term of two years and automatically renews for (through July 24, 2017) with automaticone-year terms renewals unless either party gives the otherprovides at least six months’ notice that the agreement should not be renewed;
“Termination without cause” benefits if we do not renew Mr. Mattes agreement and his employment does not continue;
An extension of non-renewal priorthe exercise period for stock options and stock appreciation rights following termination from three months to twelve months, consistent with the scheduled expiration date. Senior Leadership Severance Plan; and
Forfeiture of severance (in whole or in part) to eliminate excise tax but only if it results in a betternet-of-tax result, for Mr. Mattes.
Pursuant to the agreement, Mr. Mattes is entitled to receive an annual base salary of $775,000 for the first yearnot less than $937,500 and will beis eligible for annual incentive awards as determined by the Company in its sole discretion; provided that, for 2013, any annual incentive award for Mr. Mattes will be paid on a pro rata basis, based upon a guaranteed minimum payout of at least 100% of the target opportunity. Under the agreement, Mr. Mattes also received an inducement grant of $500,000 in the form of the Company’s common shares, subject to an obligation to repay 100% of such shares (or equivalent value) to the Company in the event that he voluntarily terminated his employment prior to the first year anniversary of the agreement, and repay 50% of such shares in the event that he voluntarily terminated his employment prior to the second anniversary of the agreement.discretion. Additionally, Mr. Mattes is eligible to participate in the Company’s long-term equity incentive plan as determined by the Company in its sole discretion.
Under the terms of the agreement, if Mr. Mattes is terminated without cause (as defined in the agreement) or he terminates his employment for “good reason” (as defined in the agreement and subject to the Company’s right to cure), in either case other than in thetwo-year period following a “change-in-control”“change-in-control” (as defined in the agreement), or if we decide not to renew Mr. Mattes’ agreement and his employment ends, assuming he otherwise satisfies certain conditions, he will be entitled to receive, among other things, (i) a lump sum amount equal to any unpaid salary and accrued vacation pay and unreimbursed business expenses, (ii) a lump sum amount equal to two times his annual base salary and annual incentive award at target, (iii) a lump sum pro ratapro-rata amount, if any, equal to the actual annual incentive that would have been payable to him based on the Company’s actual performance against applicable goals and his personal goals/key initiatives (based on his assumed target level performance), and (iv) continuation of medical, dental, vision and Company-paid basic life insurance coverage for the shorter of (i) 24 months and (ii) the date he receives equivalent coverage from a subsequent employer, and (A) any outstanding and unvested stock options will immediately vest and remain exercisable for twelve months (or the earlier expiration), (B) any restrictions on unvested RSUs will immediately lapse on a pro ratapro-rata basis and (C) all unearned performance-based shares and performance units will be paid out on a pro ratapro-rata basis, (except with respect tofor Transformation Grant shares as noted below in “
Potential Payments Upon Termination or Change in Control”)which will be forfeited).-75-
In addition, in connection with achange-in-control, the term of Mr. Mattes’ employment will automatically be extended to the second anniversary of thechange-in-control. If, during thetwo-year period following a change in control, Mr. Mattes is terminated without cause or he terminates his employment for good reason, assuming he otherwise satisfies certain conditions, he will be entitled to receive, among other things, (i) a lump sum amount equal to any unpaid salary and accrued vacation pay and unreimbursed business expenses, (ii) a lump sum amount equal to two times Mr. Mattes’ annual base salary and annual incentive award at target, (iii) a lump sum pro ratapro-rata amount, if any, equal to the actual annual incentive that would have been payable to him based on the Company’sour actual performance against applicable goals and his personal goals/key initiatives (based on his assumed target level performance), and (iv) continuation of medical, dental, vision and Company-paid basic life insurance coverage for the shorter of (i) 24 months and (ii) the date he receives equivalent coverage from a subsequent employer, and (A) any outstanding and unvested stock options will immediately vest and remain exercisable for twelve months (or the earlier expiration), (B) any restrictions on unvested RSUs will immediately lapse, and (C) all unearned performance-based shares and performance units will becomenon-forfeitable at 100% of target (except with respect to Transformation Grant shareswhich will be earned at 100% as noted below in “
Potential Payments Upon Terminationlong as Mr. Mattes is employed at the end of the performance period or Change in Control”)was terminated without cause or with good reason).The employment agreement also provides that Mr. Mattes will not (i) compete with the Companyus for a period of two years after the termination of his employment or (ii) solicit employees of the Company for a period of three years after the termination of his employment. Mr. Mattes’ employment agreement does not provide for any taxgross-ups for any excise tax that may be imposed under Section 280G of the Internal Revenue Code.
Service Agreements with Mr. Heidloff and Dr. Wunram
Compensation for Mr. Heidloff and Dr. Wunram for 2016 was pursuant to their service agreements with Wincor Nixdorf, as amended. The term of these agreements was through February 28, 2019. As discussed immediately below, we have entered into a separation agreement with Mr. Heidloff and have extended an offer letter to Dr. Wunram.
When in effect, these service agreements provide for the following annual compensation: (i) fixed annual base salary compensation (€700,000 for Mr. Heidloff and €500,000 for Dr. Wunram in 2016); (ii) short-term variable cash compensation dependent on the attainment of specific performance targets; (iii) long-term incentive share-based compensation grants in the form of participation in Wincor Nixdorf’s share option program; (iv) certain pension benefits pursuant to the agreement and the Wincor Pension Plan (with yearly pension benefit contribution commitments of €126,082 for Mr. Heidloff and €100,000 for Dr. Wunram); and (v) certainnon-performance-based fringe benefits (€37,301 for Mr. Heidloff and €25,619 for Dr. Wunram for Wincor Nixdorf’s fiscal year ended September 30, 2016), which include accident and liability insurance, health insurance, and life insurance premiums paid by the company and lease payments on a company car.
Under the service agreements, the annual short-term variable cash compensation was dependent on the attainment of specific EBITDA and net income targets set by the Supervisory Board at the beginning of the fiscal year. The targets receive the same weighting and are reviewed and settled separately. If performance is achieved at target, Mr. Heidloff and Dr. Wunram receive 100% of their annual base salary as a cash bonus. If performance is achieved below 80% of either target (threshold performance), the executive is not entitled to a bonus with respect to the other target, and the Supervisory Board will decide on the amount of a possible bonus. If a threshold of 80% of the performance targets are achieved, 25% of the target bonus is payable. If performance is between threshold and target, the payment decreases linearly from 100% of salary at target to 25% of salary at threshold. If performance is achieved at 120% of the target level, the award is payable at 175% of base salary, and the amount payable increases linearly from 100% to 175% for performance achieved between 100% and 120% of target. The maximum amount payable is 200% of the annual base salary (for performance at 130% or more of the target goals), and the amount payable increases linearly from 175% to 200% of annual base salary for performance achieved between 120% and 130% of target.
Mr. Heidloff and Dr. Wunram received option grants from Wincor Nixdorf under the service agreements in 2013, 2014, 2015 and 2016, which are reflected below in the “Outstanding Equity at 2016 FiscalYear-End Table.”
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All of these options were granted prior to the closing of the Wincor Nixdorf acquisition and remained outstanding and were not adjusted when we closed the Wincor Nixdorf acquisition. Options granted to Mr. Heidloff and Dr. Wunram in 2012, as modified by the Wincor Nixdorf Annual General Meeting in January 2016, vested and were exercised during 2016, and are reflected in the “2016 Options Exercised and Stock Vested Table” below. Under the terms of the service agreements, the exercise price per share for the options equals the initial value plus 12% less gross dividend payment. Under the service agreement provisions, the number of options granted each year was determined in a manner designed such that the desired value of the options would be achieved if the stock appreciated in value by an average of 6% per year over the entire four year term of the option, calculated in terms of movements in the share price and the dividend yield. A subsequent adjustment is possible if three times the amount of the executive’s planned annual compensation is exceeded when their total compensation is evaluated over a five-year consecutive period. Outstanding options are to be settled in cash pursuant to our Business Combination Agreement with Wincor Nixdorf.
Under the service agreements, Mr. Heidloff and Dr. Wunram are subject to thenon-competition obligations provided under German law and may not, without the prior written approval of the chairman of the Supervisory Board, work for a company or a third party which is a competitor. The service agreements provide for certain payments and benefits in the event of qualifying terminations of employment, which are described in detail below under “Potential Payments Upon Termination or Change in Control—Potential Termination Payments under Service Agreements—Mr. Heidloff and Dr. Wunram.” Additional information regarding the Wincor Pension Plan is provided under the “German Pension Benefits” section that follows the “2016Non-Qualified Deferred Compensation” table below.
Separation Agreement—Mr. Heidloff
In connection with the effectiveness of the domination and profit and loss transfer agreement, Mr. Heidloff resigned from his position as President effective March 31, 2017. Mr. Heidloff and Diebold Nixdorf AG agreed that he would receive the following severance benefits under a separation agreement, dated February 16, 2017 (the “Separation Agreement”). Payable on March 31, 2017, Mr. Heidloff will receive a severance payment in the amount of €4,310,810 and two other severance payments of €350,000 each, which are based on his pro rata short-term and pro rata long-term variable compensation for Diebold Nixdorf AG’s fiscal year 2016/2017. In addition, Mr. Heidloff will continue to be entitled to exercise the stock options allocated to him under his employment agreement, pursuant to the terms of the Wincor Nixdorf stock option plan. He will also receive his monthly fixed compensation and monthly fringe benefits through March 31, 2017. These severance benefits were approved by our Compensation Committee.
Offer Letter—Dr. Wunram
On February 16, 2017, Dr. Wunram was appointed as our Chief Operating Officer and as a director on our Board. Pursuant to the terms of an offer letter effective as of that date (the “Offer Letter”), Dr. Wunram will be entitled to an annual base salary of €535,000 in addition to continued participation in our annual cash bonus plan (with a target equal to 100% of base salary) and our equity incentive plan (with an annual target of 200% of annual base salary). In connection with Dr. Wunram’s appointment to the Board, he has also agreed to dispose of his Diebold Nixdorf AG shares.
Since Dr. Wunram also currently serves as Chief Financial Officer, Chief Operating Officer and Deputy Chief Executive Officer and President of Diebold Nixdorf AG and was appointed Chief Executive Officer of Diebold Nixdorf AG (effective April 1, 2017), his existing employment contract with Diebold Nixdorf AG, as amended (which expires by its terms on February 28, 2019), will continue in effect and is subject to the terms of the Offer Letter. Pursuant to the Offer Letter, Dr. Wunram shall be entitled to severance benefits as and to the extent provided in the Company’s Senior Leader Severance Plan.
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Outstanding Equity Awards at 2016 Fiscal2014 Fiscal Year-End
The following table provides information relating to exercisable and unexercisable stock options as of
December 31, 20142016 for the NEOs. In addition, the following table provides information relating to grants of RSUs, deferred shares and performance-based awards to the NEOs that had not yet vested as of December 31, 2014.2016. No stock appreciation rights were outstanding as of December 31, 2014. |
| | | | | | | | | | | | | | | | | | |
| | | | | Option Awards1 | | Stock Awards |
| | | | | Number of Securities Underlying Unexercised Options | | Equity Incentive Plan Awards: Number of
Securities Underlying
Unexercised Unearned
Options (#) | | | | | | | | | | | |
| | | | | | | | | | | | | | | Equity Incentive Plan Awards: |
| Name | | Grant Date of Award | | Exercisable (#) | Unexercisable (#) | | | Option Exercise
Price ($) | | Option Expiration Date | | Number of Shares
or Units of Stock
That Have Not
Vested2 (#) | | Market Value of
Shares or Units of
Stock That Have
Not Vested3 ($) | | Number of Unearned
Shares, Units or Other
Rights That Have Not
Vested4 (#) | Market or Payout Value
of Unearned Shares,
Units or Other Rights
That Have Not Vested4 ($) |
| Andreas W. Mattes | | 6/6/2013 | | 32,367 | 65,715 | | — | | 31.92 | | 6/6/2023 | | — | | — | | — | — |
| | 2/11/2014 | | — | 154,766 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | — |
| | 6/6/2013 | | — | — | | — | | — | | — | | 17,203 | | 595,912 | | — | — |
| | 2/11/2014 | | — | — | | — | | — | | — | | 20,166 | | 698,550 | | — | — |
| | 6/6/2013 | | — | — | | — | | — | | — | | — | | — | | 9,259 | 320,697 |
| | 1/15/2014 | | — | — | | — | | — | | — | | — | | — | | 28,207 | 977,087 |
| | 2/11/2014 | | — | — | | — | | — | | — | | — | | — | | 26,181 | 906,910 |
| Christopher A. Chapman | | 2/20/2006 | | 700 | — | | — | | 39.43 | | 2/20/2016 | | — | | — | | — | — |
| | 2/14/2007 | | 1,250 | — | | — | | 47.27 | | 2/14/2017 | | | | | | — | — |
| | 2/11/2009 | | 1,250 | — | | — | | 24.79 | | 2/11/2019 | | — | | — | | — | — |
| | 2/11/2010 | | 2,500 | — | | — | | 27.88 | | 2/11/2020 | | — | | — | | — | — |
| | 2/10/2011 | | 5,250 | 1,750 | | — | | 32.67 | | 2/10/2021 | | — | | — | | — | — |
| | 2/8/2012 | | 4,750 | 4,750 | | — | | 34.89 | | 2/8/2022 | | — | | — | | — | — |
| | 2/6/2013 | | 2,488 | 5,052 | | — | | 29.87 | | 2/6/2023 | | — | | — | | — | — |
| | 2/11/2014 | | — | 10,166 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | — |
| | 2/11/2010 | | — | — | | — | | — | | — | | 2,000 | | 69,280 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | 1,300 | | 45,032 | | — | — |
| | 2/6/2013 | | — | — | | — | | — | | — | | 1,277 | | 44,235 | | — | — |
| | 11/4/2013 | | — | — | | — | | — | | — | | 2,000 | | 69,280 | | — | — |
| | 2/11/2014 | | — | — | | — | | — | | — | | 1,325 | | 45,898 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | — | | — | | 750 | 25,980 |
| | 2/6/2013 | | — | — | | — | | — | | — | | — | | — | | 798 | 27,643 |
| | 1/15/2014 | | — | — | | — | | — | | — | | — | | — | | 5,744 | 198,965 |
| | 2/11/2014 | | — | — | | — | | — | | — | | — | | — | | 3,312 | 114,728 |
| George S. Mayes, Jr. | | 2/10/2005 | | 3,000 | — | | — | | 55.23 | | 2/10/2015 | | — | | — | | — | — |
| | 2/20/2006 | | 8,000 | — | | — | | 39.43 | | 2/20/2016 | | — | | — | | — | — |
| | 2/14/2007 | | 9,500 | — | | — | | 47.27 | | 2/14/2017 | | — | | — | | — | — |
| | 2/11/2009 | | 3,750 | — | | — | | 24.79 | | 2/11/2019 | | — | | — | | — | — |
| | 2/11/2010 | | 7,500 | — | | — | | 27.88 | | 2/11/2020 | | — | | — | | — | — |
| | 2/10/2011 | | 15,000 | 5,000 | | — | | 32.67 | | 2/10/2021 | | — | | — | | — | — |
| | 2/8/2012 | | 12,500 | 12,500 | | — | | 34.89 | | 2/8/2022 | | — | | — | | — | — |
| | 2/6/2013 | | 14,645 | 29,734 | | — | | 29.87 | | 2/6/2023 | | — | | — | | — | — |
| | 2/11/2014 | | — | 62,405 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | — |
| | 2/11/2010 | | — | — | | — | | — | | — | | 5,000 | | 173,200 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | 4,500 | | 155,880 | | — | — |
| | 2/6/2013 | | — | — | | — | | — | | — | | 7,515 | | 260,320 | | — | — |
| | 2/11/2014 | | — | — | | — | | — | | — | | 8,131 | | 281,658 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | — | | — | | 1,875 | 64,950 |
| | 2/6/2013 | | — | — | | — | | — | | — | | — | | — | | 4,697 | 162,704 |
| | 1/15/2014 | | — | — | | — | | — | | — | | — | | — | | 34,122 | 1,181,976 |
| | 2/11/2014 | | — | — | | — | | — | | — | | — | �� | — | | 20,328 | 704,162 |
| Stefan Merz | | 2/11/2014 | | — | 14,750 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | — |
| | 8/1/2013 | | — | — | | — | | — | | — | | 5,000 | | 173,200 | | — | — |
| | 2/11/2014 | | — | — | | — | | — | | — | | 1,922 | | 66,578 | | — | — |
| | 1/15/2014 | | — | — | | — | | — | | — | | — | | — | | 8,872 | 307,302 |
| | 2/11/2014 | | — | — | | — | | — | | — | | — | | — | | 4,805 | 166,445 |
| Sheila M. Rutt | | 2/10/2005 | | 6,000 | — | | — | | 55.23 | | 2/10/2015 | | — | | — | | — | — |
| | 2/20/2006 | | 8,000 | — | | — | | 39.43 | | 2/20/2016 | | — | | — | | — | — |
| | 2/14/2007 | | 7,500 | — | | — | | 47.27 | | 2/14/2017 | | — | | — | | — | — |
| | 2/10/2011 | | 9,000 | 3,000 | | — | | 32.67 | | 2/10/2021 | | — | | — | | — | — |
| | 2/8/2012 | | 8,250 | 8,250 | | — | | 34.89 | | 2/8/2022 | | — | | — | | — | — |
| | 2/6/2013 | | — | 8,505 | | — | | 29.87 | | 2/6/2023 | | — | | — | | — | — |
| | 2/11/2014 | | — | 15,376 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | — |
| | 2/11/2010 | | — | — | | — | | — | | — | | 4,000 | | 138,560 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | 2,300 | | 79,672 | | — | — |
| | 1/14/2013 | | — | — | | — | | — | | — | | 2,500 | | 86,600 | | — | — |
| | 2/6/2013 | | — | — | | — | | — | | — | | 2,149 | | 74,441 | | — | — |
| | 2/11/2014 | | — | — | | — | | — | | — | | 2,003 | | 69,384 | | — | — |
| | 2/8/2012 | | — | — | | — | | — | | — | | — | | — | | 1,250 | 43,300 |
| | 2/6/2013 | | — | — | | — | | — | | — | | — | | — | | 1,343 | 46,530 |
| | 1/15/2014 | | — | — | | — | | — | | — | | — | | — | | 8,407 | 291,215 |
| | 2/11/2014 | | — | — | | — | | — | | — | | — | | — | | 5,009 | 173,512 |
2016. | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Option Awards1 | | Stock Awards |
| | | | | | Number of Securities
Underlying Unexercised
Options | | | | | | | | | | | | Equity Incentive Plan
Awards: |
| Name | | Grant Date of
Award | | | Exercisable
(#) | | Unexercisable
(#) | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | Option
Exercise
Price2
($) | | Option
Expiration
Date | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested3
(#) | | Market
Value of
Shares or
Units of
Stock That Have Not
Vested4 ($) | | Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested5
(#) | | Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested6 ($) |
| Andreas W. Mattes | | | 6/6/2013 | | | 98,082 | | — | | — | | 31.92 | | 6/6/2023 | | — | | — | | — | | — |
| | | 2/11/2014 | | | 103,177 | | 51,589 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | | — |
| | | 2/5/2015 | | | 66,666 | | 133,334 | | — | | 32.33 | | 2/5/2025 | | — | | — | | — | | — |
| | | 2/3/2016 | | | — | | 200,000 | | — | | 27.39 | | 2/3/2026 | | — | | — | | — | | — |
| | | 2/11/2014 | | | — | | — | | — | | — | | — | | 20,166 | | 507,175 | | — | | — |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | 23,721 | | 596,583 | | — | | — |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | 39,323 | | 988,973 | | — | | — |
| | | 2/5/20156 | | | — | | — | | — | | — | | — | | 48,466 | | 1,218,920 | | — | | — |
| | | 2/5/20157 | | | — | | — | | — | | — | | — | | 30,471 | | 766,345 | | — | | — |
| | | 2/11/20148 | | | — | | — | | — | | — | | — | | — | | — | | 6,546 | | 164,632 |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | — | | — | | 29,519 | | 742,403 |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | — | | — | | 38,954 | | 979,693 |
Christopher A. Chapman | | | 2/14/2007 | | | 1,250 | | — | | — | | 47.27 | | 2/14/2017 | | — | | — | | — | | — |
| | | 2/11/2009 | | | 1,250 | | — | | — | | 24.79 | | 2/11/2019 | | — | | — | | — | | — |
| | | | 2/11/2010 | | | 2,500 | | — | | — | | 27.88 | | 2/11/2020 | | — | | — | | — | | — |
| | | | 2/10/2011 | | | 7,000 | | — | | — | | 32.67 | | 2/10/2021 | | — | | — | | — | | — |
| | | | 2/8/2012 | | | 9,500 | | — | | — | | 34.89 | | 2/8/2022 | | — | | — | | — | | — |
| | | | 2/6/2013 | | | 7,540 | | — | | — | | 29.87 | | 2/6/2023 | | — | | — | | — | | — |
| | | | 2/11/2014 | | | 6,777 | | 3,389 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | | — |
| | | | 2/5/2015 | | | 12,481 | | 24,964 | | — | | 32.33 | | 2/5/2025 | | — | | — | | — | | — |
| | | | 2/3/2016 | | | — | | 55,866 | | — | | 27.39 | | 2/3/2026 | | — | | — | | — | | — |
| | | | 2/11/2010 | | | — | | — | | — | | — | | — | | 2,000 | | 50,300 | | — | | — |
| | | | 2/11/2014 | | | — | | — | | — | | — | | — | | 1,325 | | 33,324 | | — | | — |
| | | | 2/5/2015 | | | — | | — | | — | | — | | — | | 4,408 | | 110,861 | | — | | — |
| | | | 2/3/2016 | | | — | | — | | — | | — | | — | | 7,596 | | 191,039 | | — | | — |
| | | | 1/15/20147 | | | — | | — | | — | | — | | — | | 2,069 | | 52,035 | | | | |
| | | | 2/11/20148 | | | — | | — | | — | | — | | — | | — | | — | | 828 | | 20,824 |
| | | | 2/5/2015 | | | — | | — | | — | | — | | — | | — | | — | | 5,510 | | 138,576 |
| | | | 2/3/2016 | | | — | | — | | — | | — | | — | | — | | — | | 9,128 | | 229,569 |
| Eckard Heidloff | | | 3/22/2013 | | | — | | 127,398 | | — | | €43.20 | | 4/1/2017 | | — | | — | | — | | — |
| | | 3/26/2014 | | | — | | 87,364 | | — | | €62.94 | | 4/5/2018 | | — | | — | | — | | — |
| | | 3/25/2015 | | | — | | 111,793 | | — | | €49.20 | | 4/6/2019 | | — | | — | | — | | — |
| | | 4/12/2016 | | | — | | 92,422 | | — | | €59.49 | | 4/22/2020 | | — | | — | | — | | — |
| Jonathan B. Leiken | | | 2/5/2015 | | | 7,132 | | 14,265 | | — | | 32.33 | | 2/5/2025 | | — | | — | | — | | — |
| | | 2/3/2016 | | | — | | 24,581 | | — | | 27.39 | | 2/3/2026 | | — | | — | | — | | — |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | 2,519 | | 63,353 | | — | | — |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | 3,342 | | 84,051 | | — | | — |
| | | 2/11/2016 | | | — | | — | | — | | — | | — | | 10,000 | | 251,500 | | — | | — |
| | | 5/26/20147 | | | — | | — | | — | | — | | — | | 3,468 | | 87,220 | | — | | — |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | — | | — | | 3,149 | | 79,197 |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | — | | — | | 4,017 | | 101,028 |
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| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Option Awards1 | | Stock Awards |
| | | | | | Number of Securities
Underlying Unexercised
Options | | | | | | | | | | | | Equity Incentive Plan
Awards: |
| Name | | Grant Date of
Award | | | Exercisable
(#) | | Unexercisable
(#) | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | Option
Exercise
Price2
($) | | Option
Expiration
Date | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested3
(#) | | Market
Value of
Shares or
Units of
Stock That Have Not
Vested4 ($) | | Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested5
(#) | | Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested6 ($) |
| Dr. Jürgen Wunram | | | 3/22/2013 | | | — | | 90,999 | | — | | €43.20 | | 4/1/2017 | | — | | — | | — | | — |
| | | 3/26/2014 | | | — | | 62,403 | | — | | €62.94 | | 4/5/2018 | | — | | — | | — | | — |
| | | 3/25/2015 | | | — | | 79,852 | | — | | €49.20 | | 4/6/2019 | | — | | — | | — | | — |
| | | 4/12/2016 | | | — | | 66,016 | | — | | €59.49 | | 4/22/2020 | | — | | — | | — | | — |
| Stefan E. Merz | | | 2/11/2014 | | | 9,833 | | 4,917 | | — | | 34.13 | | 2/11/2024 | | — | | — | | — | | — |
| | | 2/5/2015 | | | 6,686 | | 13,374 | | — | | 32.33 | | 2/5/2025 | | — | | — | | — | | — |
| | | 2/3/2016 | | | — | | 22,346 | | — | | 27.39 | | 2/6/2026 | | — | | — | | — | | — |
| | | 2/11/2014 | | | — | | — | | — | | — | | — | | 1,922 | | 48,338 | | — | | — |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | 2,361 | | 59,379 | | — | | — |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | 3,038 | | 76,406 | | — | | — |
| | | 2/11/2016 | | | — | | — | | — | | — | | — | | 10,000 | | 251,500 | | — | | — |
| | | 1/15/20147 | | | — | | — | | — | | — | | — | | 3,195 | | 80,354 | | — | | — |
| | | 2/11/20148 | | | — | | — | | — | | — | | — | | — | | — | | 1,202 | | 30,230 |
| | | 2/5/2015 | | | — | | — | | — | | — | | — | | — | | — | | 2,952 | | 74,243 |
| | | 2/3/2016 | | | — | | — | | — | | — | | — | | — | | — | | 3,651 | | 91,823 |
| |
1 | AllFor Messrs. Mattes, Chapman, Leiken and Merz, all stock options outstanding at the 20142016 fiscalyear-end which were issued prior to 2013 vest ratably over a four-year period beginning on the first anniversary of the date of grant. All stock option grants outstanding at the 20142016 fiscalyear-end which were issued in and after 2013 to these NEOs vest ratably over a three-year period beginning on the first anniversary of the date of grant. |
For Mr. Heidloff and Dr. Wunram, all stock options reported in this table represent options granted to them by Wincor Nixdorf prior to our August 2016 acquisition. These stock options have a four year vesting period and must be exercised within 10 days of vesting. Pursuant to our Business Combination Agreement with Wincor Nixdorf, these options will be settled in cash upon exercise and are no longer exercisable for Wincor Nixdorf shares. The cash settlement for these outstanding options is based on the difference between the grant price (2013: €38.57, 2014: €56.20, 2015: €43.93 and 2016: €53.12), and the adjusted exercise price.
| |
2 | For Mr. Heidloff and Dr. Wunram, the option exercise price reflected is the adjusted Option Exercise Price in Euros. The adjusted exercise price is equivalent to 112% of the average exchange price on the 30 stock exchange trading days that immediately preceded the issue of the stock options and takes into account any dividend payments made during the four year term. |
| 3 | This column reflects unvested RSUs granted to the NEOs that had not yet vested as of December 31, 2014.2016. The RSUs included in this column have a three-year cliff vest.vest, except for the RSUs granted on 2/11/2010 (which vested after fiscal year end on February 11, 2017) and the RSUs granted on 2/3/2016 and 2/11/2016 (which vest ratably over a three-year period,one-third of which vested after fiscal year end in February 2017). |
| |
34
| The market value was calculated using the closing price of our common shares of $34.64$25.15 as of December 31, 2014.2016. |
| |
45
| These columns report the performanceperformance-based LTI shares granted to the NEOs for the 2012-2014, 2013-20152015-2017 and 2014-20162016-2018 performance periods, as applicable. For both the 2012-20142015-2017 and 2013-2015the 2016-2018 performance periods, relative TSR was below the current performanceapplicable threshold as of December 31, 2014 was below threshold,2016, and therefore,we have included the awards at threshold. The 2015-2017 and 2016-2018 performance-based LTI awards are reportedscheduled to vest and be paid in February 2018 and February 2019, respectively. |
| 6 | The number of shares reflected in this row represents the actual number of shares earned under Mr. Mattes’ 2015-2016 performance-based deferred shares award, as determined by the Compensation Committee following the end of the performance period. Market value is calculated using the closing price of our common shares as of December 31, 2016. |
| 7 | The numbers of shares reflected in these rows represent the actual number of shares earned under the 2016 portion of the Transformation Grants, as determined by the Compensation Committee following the end of the performance period based on performance achieved for 2016. Market value is calculated using the closing price of our common shares as of December 31, 2016. |
| 8 | Amounts represent 2014-2016 performance-based LTI awards and are reflected at the threshold level. For the 2014-2016The threshold performance period, the current performance as of December 31, 2014 was above threshold, but below target,goals for these awards were not met, and therefore, the award is reported at target. In addition, foropportunities with respect to these 2014-2016 awards were forfeited, as determined by the Transformation Grant,Compensation Committee following the 2014 performance (which was the first performance year) was below target, and is therefore reported at threshold. There is no performance yet achieved for eitherend of the 2015 and 2016 performance periods of the Transformation Grant, and therefore, those performance periods are also included at the threshold level.period. |
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20142016 Option Exercises and Stock Vested |
| | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares
Acquired on
Exercise (#) | | Value
Realized on
Exercise1 ($) | | Number of Shares
Acquired
on Vesting (#) | | Value
Realized on
Vesting2 ($) |
| Andreas W. Mattes | | — | | — | | — | | — |
| Christopher A. Chapman | | — | | — | | 5,250 | | 177,713 |
| George S. Mayes, Jr. | | — | | — | | 4,500 | | 152,325 |
| Stefan Merz | | — | | — | | — | | — |
| Sheila M. Rutt | | 13,188 | | 134,398 | | 7,000 | | 236,950 |
| | | | | | | | |
| | | Option Awards | | Stock Awards |
Name | | Number of Shares
Acquired on
Exercise1
(#) | | Value
Realized on
Exercise
($) | | Number of Shares
Acquired
on Vesting
(#) | | Value
Realized on
Vesting2
($) |
Andreas W. Mattes | | — | | — | | 40,905 | | 1,005,563 |
Christopher A. Chapman | | — | | — | | 4,522 | | 105,488 |
Eckard Heidloff | | 122,111 | | 1,712,188 | | — | | — |
Jonathan B. Leiken | | — | | — | | — | | — |
Dr. Jürgen Wunram | | 87,222 | | 1,222,989 | | — | | — |
Stefan E. Merz | | — | | — | | 5,000 | | 137,250 |
| |
1 | Mr. Heidloff and Dr. Wunram’s 2012 options previously granted by Wincor Nixdorf were cash settled. They did not receive any shares upon exercise. The value realized on exercise was €1,511,734 for Mr. Heidloff and €1,079,808 for Dr. Wunram. These amounts were converted to U.S. dollars for the table using the Euro to U.S. dollar foreign currency exchange rate on March 30, 2016. |
| 2 | The value realized is calculated by multiplying the number of stock options by the difference between the market value of the underlying securities on the date of exercise and the exercise price of the stock option. |
| |
2
| The value realized is calculated for RSUs by multiplying the number of shares of stock by the market value of the underlying securities on the vesting date. The number of shares actually received upon vesting may be less than the number shown, due to shares being withheld for the payment of applicable taxes. |
20142016 Pension and Retirement Benefits
|
| | | | | | | | |
| Name | | Plan Name | | Number of Years
Credited Service (#) | | Present Value of
Accumulated Benefit1 ($) | | Payments During
Last Fiscal Year ($) |
| Andreas W. Mattes | | - | | - | | - | | - |
| Christopher A. Chapman | | Qualified Retirement Plan | | 18.3333 | | $240,949 | | - |
| | Pension Restoration SERP | | 18.3333 | | $114,365 | | - |
| George S. Mayes, Jr. | | - | | - | | - | | - |
| Stefan Merz | | - | | - | | - | | - |
| Sheila M. Rutt | | Qualified Retirement Plan | | 14.250 | | $247,403 | | - |
| | Pension SERP | | 14.250 | | $288,397 | | - |
| | Pension Restoration SERP | | 14.250 | | $92,496 | | - |
| | | | | | | | |
Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value of
Accumulated
Benefit
($) | | Payments
During
Last Fiscal Year
($) |
Andreas W. Mattes | | - | | - | | - | | - |
Christopher A. Chapman | | Qualified Retirement Plan | | 20.3333 | | 252,2331 | | — |
| | Pension Restoration SERP | | 20.3333 | | 119,7211 | | |
Eckard Heidloff | | Wincor Nixdorf AG
Pension Scheme | | 34 | | 1,565,7552 | | 132,670 |
Jonathan B. Leiken | | - | | - | | - | | - |
Dr. Jürgen Wunram | | Wincor Nixdorf AG
Pension Scheme | | 9.83 | | 1,336,3642 | | 105,226 |
Stefan E. Merz | | - | | - | | - | | - |
| |
1 | TheFor Mr. Chapman, the values are determined based on a 4.21%4.24% discount rate and theRP-2014 Mortality Table for non-annuitants without collar adjustment with MP-2014 fully mortality tables, including theMP-2016 generational mortality improvement projection scales and are calculated assuming that the probability is nil that a NEO terminates, dies, retires or becomes disabled before normal retirement date. |
| 2 | For Mr. Heidloff and Dr. Wunram, the present value of accumulated benefit is based on projected benefits earned through ages 60 and 63, respectively, assuming a discount rate of 1.5%, and that there is no probability of termination, retirement, death, or disability for Mr. Heidloff or Dr. Wunram before normal retirement age. The present value of accumulated benefit for Mr. Heidloff and Dr. Wunram is €1,488,000 and €1,270,000, respectively. The dollar amounts reflected in the table were calculated using the Euro to U.S. dollar foreign currency exchange rate on December 31, 2016. |
Mr. Chapman and Ms. Rutt currently participateparticipates in the Diebold Nixdorf, Incorporated Retirement Plan for Salaried Employees, or Qualified Retirement Plan, which provides funded,tax-qualified benefits under the Internal Revenue Code to all salaried andnon-union hourly U.S.-based employees who were hired before July 1, 2003. This plan provides benefits that are limited by Internal Revenue Code requirements applicable to alltax-qualified pension plans. As noted above, we also maintain defined benefit Supplemental Executive Retirement Plans, or SERPs, which provide unfunded,non-qualified benefits to select executives. The purpose of the SERPs is to provide additional benefits above those provided under the Qualified Retirement Plan. Accruals in the Qualified Retirement Plan and the defined benefit SERPs were frozen as of December 31, 2013.
-80-
Qualified Retirement Plan
The benefit provided under the Qualified Retirement Plan is payable as a life annuity beginning at normal retirement age (age 65). The benefit is determined based on the following formula:
0.8% of final average compensation up to the Covered Compensation level; plus
1.25% of final average compensation in excess of the Covered Compensation level;
which sum is multiplied by years of service (subject to a maximum of 30 years).
In addition, a benefit equal to $50.40 times the number of years of service (subject to a maximum of 30 years) is added to the amount determined above.
Final average compensation is an average of the five highest consecutive full calendar years of salary and bonus out of the last ten full calendar years, with each year’s compensation held to a maximum of the IRS compensation limit for that year. The participant’s individual “Covered Compensation” is as defined under the Internal Revenue Code. The benefit is payable for the lifetime of the participant, with alternative forms of payment available to the participant with an actuarial reduction.
Participants may retire early if they are at least age 50 and the sum of their age plus service is at least 70, or at any age with 30 years of service. Benefits may begin upon retirement on an actuarially reducedactuarially-reduced basis. Participants with at least 15 years of service who become disabled while employed are eligible for an immediate unreduced benefit. Participants terminating with at least five years of service are entitled to a deferred vested benefit at age 65, or may commence the benefit on an actuarially reducedactuarially-reduced basis, if they are at least age 50 and the sum of their age plus service is at least 70.
Benefits under the Pension Restoration SERP are determined using the same formula as stated above for the Qualified Retirement Plan except the IRS compensation limit is ignored. Net benefits payable from the Pension Restoration SERP at age 65 equal the difference between the benefit determined using total pensionable pay, ignoring qualified plan compensation limits, and the benefit payable from the Qualified Retirement Plan. All other provisions of the Pension Restoration SERP are identical to the Qualified Retirement Plan with the exception of the actuarial reduction factors for retirement before age 65. Mr. Chapman and Ms. Rutt areis the only NEOsNEO who participateparticipates in the Pension Restoration SERP. The Pension Restoration SERP was amended in 2013 to freeze all future benefit accruals after December 31, 2013.
Pension SERP
The Pension SERP provides a supplemental monthly retirement benefit in an amount such that a participant’s total retirement benefit from the Qualified Retirement Plan, the Pension Restoration SERP, the annuity equivalent of the projected employer-provided balance in the 401(k) Restoration SERP (assuming a 3% employer match and a fixed rate of return of 8%) and the Pension SERP, plus one-half of the participant’s anticipated Social Security benefit payable at age 65, equals 50% (pro-rated for less than 25 years of service) of the participant’s final average compensation received from us during the highest five consecutive full calendar years of the last ten full calendar years of employment. Compensation is defined for this purpose as salary plus bonus accrued for each such calendar year. The Pension SERP benefits are payable at age 65 as a straight life annuity. Joint and survivor options are available on an actuarially equivalent basis. Benefits are available to participants retiring or terminating employment with at least 10 years of service, and are payable at the later of (1) attaining both the age of 50 and 70 points (determined by age plus years of service), or (2) separation from service (on a reduced basis if payments begin before age 65). Participants who become disabled while employed and have at least 15 years of service are eligible for an immediate benefit. The Pension SERP was amended in 2013 to freeze all future benefit accruals after December 31, 2013.
Accrued benefits under the Pension SERP are fully vested in the event of a change-in-control of the Company. Ms. Rutt is the only NEO who participates in the Pension SERP.
Present Value of Accumulated Benefits
The “Present Value of Accumulated Benefits” is thesingle-sum value as of December 31, 20142016 of the annual pension benefit that was earned through that date payable under a plan beginning at the NEO’s normal retirement age.
The normal retirement age is defined as age 65 for the Qualified Retirement Plan and Pension Restoration SERP and Pension SERP. We used certain assumptions to determine thesingle-sum value of the annual benefit that is payable beginning at normal retirement age. The key assumptions are as follows:
An interest rate of 4.21%4.24%, the FASB ASC 715 discount rate as of December 31, 2014;2016;
TheRP-2014 Mortality Table for non-annuitants without collar adjustment mortality tables with MP-2014 fullyMP-2016 generational mortality improvement projection;projection scales; and
A probability of 100% that benefits are paid as annuities; and
No probability of termination, retirement, death, or disability before normal retirement age.
The normal retirement age for Mr. Heidloff and Dr. Wunram under the Wincor Nixdorf AG Pension Scheme is 60 and 63, respectively. The key assumptions are as follows:
A discount rate of 1.5%; and
44No probability of termination, retirement, death or disability before normal retirement age.
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2014 2016Non-Qualified Deferred Compensation
|
| | | | | | | | | | |
| 401(k) Restoration SERP and 401(k) SERP |
| Name | | Executive
Contributions
in 20141 ($) | | Registrant
Contributions
in 20142 ($) | | Aggregate
Earnings in
20143 ($) | | Aggregate
Withdrawals/
Distributions ($) | | Aggregate Balance
as of December 31,
20144 ($) |
| Andreas W. Mattes | | 88,534 | | 53,120 | | 7,926 | | — | | 173,224 |
| Christopher A. Chapman | | — | | — | | — | | — | | — |
| George S. Mayes, Jr. | | 26,596 | | 15,958 | | 94,473 | | — | | 1,175,362 |
| Stefan Merz | | 14,254 | | 8,552 | | 488 | | — | | 23,294 |
| Sheila M. Rutt | | 17,271 | | 10,363 | | 12,981 | | — | | 191,139 |
| | | | | | | | | | |
Name | | Executive
Contributions
in 20161
($) | | Registrant
Contributions
in 20162
($) | | Aggregate
Earnings in
20163
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate Balance
as of December 31,
20164
($) |
Andreas W. Mattes | | 70,076 | | 42,046 | | 43,605 | | — | | 554,158 |
Christopher A. Chapman | | — | | — | | — | | — | | — |
Eckard Heidloff | | — | | — | | — | | — | | — |
Jonathan B. Leiken | | 3,396 | | 2,038 | | 3,761 | | — | | 41,326 |
Dr. Jürgen Wunram | | — | | — | | — | | — | | — |
Stefan E. Merz | | 16,703 | | 10,022 | | 13,584 | | — | | 201,945 |
| |
1 | These amounts are included in the “Salary” column of the “ 20142016 Summary Compensation Table.” |
| |
2 | These amounts are included in the “All Other Compensation” column of the “ 20142016 Summary Compensation Table” and include amounts contributed in 20142016 for the 20142016 plan year under the 401(k) Restoration SERP. |
| |
3 | These amounts represent aggregate earnings on executive and registrant contributions. These amounts are not reflected in the “ 20142016 Summary Compensation Table,” as they are not considered preferential or above-market earnings on deferred compensation. |
| |
4 | This column reflects the balance of all contributions and the aggregate earnings (or losses) on such contributions. No portion of this amount is reflected in the “All Other Compensation” column or the “Salary” column of the “ 20142016 Summary Compensation Table” except current-year Registrant Contributions and Executive Contributions, respectively. |
Non-Qualified Deferred Compensation Plans
Deferred Incentive Compensation Plan No. 2
Pursuant to our 1992 Deferred Incentive Compensation Plan, certain executives, including the NEOs, were able to defer cash bonuses received under our Annual Cash Bonus Plan and performance-based share awards earned under the 1991 Plan; however, none of the NEOs were participants in this Deferred Incentive Compensation Plan in 2014.2015. Effective December 31, 2004, as a result of the passage by Congress of the American Jobs Creation Act of 2004, we elected to freeze the 1992 Deferred Incentive Compensation Plan and closed the plan to future deferrals. Effective January 1, 2005, the Board approved the Deferred Incentive Compensation Plan No. 2, which is substantially similar to the 1992 Deferred Incentive Compensation Plan in all material respects, but was designed to be administered in accordance with Section 409A of the Internal Revenue Code.
Under the Deferred Incentive Compensation Plan No. 2, an executive may defer all or a portion of his or her annual cash bonus or performance-based share amount. Deferral elections for cash bonuses must be made prior to the end of the year preceding the year in which such bonuses would be earned (and payable in the following year). Deferral elections for performance-based shares must be made at least six months prior to the end of the three-year performance period specified in the grant.
Deferrals of performance-based shares are treated as a line-item in the executive’s deferred account with us; however, the earnings on the performance shares (dividends and interest) are invested in the same manner as deferrals of cash compensation. Executives may invest such cash deferrals in any funds available under our 401(k) plan, except the Northern Trust, and Invesco Stable Value Fund and Diebold Inc. Stock Fund. The table below shows the funds available under the deferred compensation plans and their annual rate of return for the year ended December 31, 2014,2016, as reported by Merrill Lynch.
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|
| | | | | | |
| Name of Fund | Rate of Return |
| | Name of Fund | Rate of Return |
|
| Allianzgi NFJ Intrnl VAL Instl | (5.3 | )% | | Vanguard Target Retirement 2055 | 7.16 | % |
| Calamos International Growth I | (6.12 | )% | | Vanguard Target Retirement 2060 | 7.16 | % |
| Invesco Diversified DIV CL R5 | 12.32 | % | | Loomis Sayles Bond FD Instl | 4.76 | % |
| Janus Triton Fund CL I | 9.58 | % | | Loomis Sayles Small Cap Value Instl | 5.33 | % |
| John Hancock Disciplined Value Mid Cap Instl | 13.29 | % | | Vanguard Institutional Index | 13.65 | % |
| Vanguard Target Retirement 2010 | 5.30 | % | | Vanguard Total Bond Market Instl | 5.29 | % |
| Vanguard Target Retirement 2015 | 6.56 | % | | Vanguard Mid-Cap Index Fund | 13.60 | % |
| Vanguard Target Retirement 2020 | 7.11 | % | | Vanguard Primecap FD-ADM CL | 18.83 | % |
| Vanguard Target Retirement 2025 | 7.17 | % | | Vanguard Target Income Retirement | 5.54 | % |
| Vanguard Target Retirement 2030 | 7.17 | % | | T Rowe Price Blue Chip Growth | 9.28 | % |
| Vanguard Target Retirement 2035 | 7.24 | % | | Oppenheimer Developing Markets Fund Y | (4.55 | )% |
| Vanguard Target Retirement 2040 | 7.15 | % | | FFI Institutional Fund | 0.04 | % |
| Vanguard Target Retirement 2045 | 7.16 | % | | American Balanced Fund R5 | 9.16 | % |
| Vanguard Target Retirement 2050 | 7.18 | % | | | |
| | | | | | |
| Name of Fund | | Rate of Return | | Name of Fund | | Rate of Return |
Federated International CL IS | | -2.68% | | Vanguard Target Retirement 2055 | | 8.88% |
Invesco Diversified DIV CL R5 | | 14.66% | | Vanguard Target Retirement 2060 | | 8.84% |
Janus Triton Fund CL I | | 10.59% | | Loomis Sayles Bond FD Instl | | 8.63% |
John Hancock Disciplined Value Mid Cap Instl | | 15.25% | | Loomis Sayles Small Cap Value Instl | | 26.47% |
Vanguard Target Retirement 2010 | | 5.22% | | Vanguard Institutional Index | | 11.93% |
Vanguard Target Retirement 2015 | | 6.16% | | Vanguard Total Bond Market Instl | | 2.61% |
Vanguard Target Retirement 2020 | | 6.95% | | VanguardMid-Cap Index Fund | | 11.07% |
Vanguard Target Retirement 2025 | | 7.48% | | Vanguard PrimecapFD-ADM CL | | 10.72% |
Vanguard Target Retirement 2030 | | 7.85% | | Vanguard Target Income Retirement | | 5.25% |
Vanguard Target Retirement 2035 | | 8.26% | | T Rowe Price Blue Chip Growth | | 0.98% |
Vanguard Target Retirement 2040 | | 8.73% | | Oppenheimer Developing Markets Fund Y | | 7.17% |
Vanguard Target Retirement 2045 | | 8.87% | | American Balanced Fund R5 | | 8.88% |
Vanguard Target Retirement 2050 | | 8.85% | | BlackRock Liquidity FD T Instl | | 0.21% |
Executives deferring under the Deferred Incentive Compensation Plan No. 2 select their period of deferral and method of payment at the time of making their deferral elections. Executives may elect to defer their payments until a specified date or until the date they cease to be an associate of the Company. Further, the executives may elect to receive their distribution either as a lump sum or in approximately equal quarterly installments, not to exceed 40 installments.
The 401(k) Restoration SERP is designed to replace lost retirement benefits due solely to IRS compensation limits. Benefits under this plan are determined exactly as in our 401(k) Plan except that compensation limits are ignored. NEOs are permitted to elect to defer compensation above the annual IRS limit and we provide a matching contribution at the same rate as under the 401(k) Plan. Both the salary deferrals and our matching contributions may be invested in any funds available under our Deferred Incentive Compensation Plan No. 2 (except the Northern Trust and Invesco Stable Value Fund). All of the NEOs, except for Mr.Messrs. Chapman and Heidloff and Dr. Wunram, participate in the 401(k) Restoration SERP.
401(k) SERP
The 401(k) SERP is designed to provide supplemental retirement benefits to executives hired after July 1, 2003, because those executives are not eligible toGerman Pension Benefits
Mr. Heidloff and Dr. Wunram participate in the Qualified RetirementWincor Pension Plan pursuant to their service agreements. The Wincor Pension Plan is a contribution-defined pension system, and Pension SERP. Each yearis based on aone-time payout or up to ten annual installment payments. Mr. Heidloff and Dr. Wunram are entitled to the pension payments when reaching the age of sixty. However, if Mr. Heidloff or Dr. Wunram remain on the Wincor Nixdorf management board in an active capacity beyond this period, the receipt of retirement benefits will be deferred until the end of his service agreement. In the event that the executive is providedcontinues to hold a contribution based upon a points formula (age plus service) as follows:
|
| | |
Points | | Contribution Credit |
Under 50 | | 5% |
50-59 | | 10% |
60-69 | | 12.5% |
70-79 | | 15% |
80 and over | | 20% |
The 401(k) SERP was amended in 2013 to close participationposition on the Wincor Nixdorf management board, the actual pensions and/orone-time payout benefits will be higher than those presented in the
Plan andtable, particularly as a result of future financing contributions. The amounts credited to
cease any future contributions after those made for the
2013 planpension accounts bear interest at 3.5% per year.
Mr. Mayes is the only NEO who currently participatesPotential Payments Upon Termination or Change in the 401(k) SERP. Upon amendment, all active participants as of December 31, 2013 were immediately vested in any benefit that had accrued on their behalf. The executive may invest his account balance in any investment funds available under our 401(k) Restoration SERP, except the Northern Trust and Invesco Stable Value Fund.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
ControlThe amount of compensation payable to each NEO upon voluntary or involuntary termination (with and without cause), retirement, death, disability or in the event of achange-in-control (with and without termination) is described qualitatively in the following narrative and is shown quantitatively in the table below. The amounts shown assume that such termination orchange-in-control was effective as of December 31, 2014, and2016, include amounts earned through such timedate, and are estimates of the amounts that would be paid out to the executives upon his or her termination orchange-in-control. The actual amounts to be paid out can only be determined at the time of each NEO’s separation. Messrs. Chapman, Leiken and Merz participate in our Severance Policy. Messrs. Mattes and Heidloff and Dr. Wunram have employment agreements and their rights upon termination are set forth in those agreements. The
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employment agreements for Mr. Heidloff and Dr. Wunram are structured in a different manner from the other NEOs with respect to termination payments, and so we have summarized their rights to payments separately, immediately following the discussion of the other NEOs that follows. Our stock price as of December 31, 20142016 was $34.64.
$25.15.
Payments Made Upon Termination
– Messrs. Mattes, Chapman, Leiken, and MerzVoluntary Without Good Reason or Involuntary With Cause
Whether a NEO’s employment terminates voluntarily without “good reason” or terminates involuntarily with cause,“cause” (as those terms may be defined in various agreements), he or she is generally only entitled to base salary earned through the date of termination, along with any deferred compensation earnings payable upon separation from service and any benefits that have accrued under our Qualified Retirement Plan, and any SERP or 401(k) plan (except that no employer-paid SERP benefits are payable in the event of involuntary termination with cause). The Qualified Retirement Plan benefit, under both termination scenarios, and the SERP benefit, if termination is voluntary, is determined as described in “
20142016 Pension and Retirement Benefits” above. For Mr. Chapman, and Ms. Rutt, the values shown reflect the present value of the normal retirement benefit at age 65 for the Qualified Retirement Plan and for the Pension Restoration SERP. For Messrs. MattesSERP and Mayes, and Ms. Rutt, the nonqualified defined contribution plan values shown reflect the vested balances in the 401(k) Restoration SERP. Mr. Mayes is also vested in the 401(k) SERP.If termination is involuntary with cause, only the portion of the 401(k) Restoration Plan benefit derived from employee contributions isand qualified defined benefit plan vested benefit are payable to the NEO. The entire 401(k) SERP balance is forfeited if termination is involuntary with cause. The 401(k) SERP and 401(k) Restoration SERP balances are not payable until the NEO attains age 55.
Pursuant to the Severance Policy discussed in more detail above under “Compensation Discussion and Analysis,” a voluntary termination by a NEO will be deemed a constructive termination thereby entitling him or her to the payments and benefits discussed below under “Involuntary Without Cause” upon the occurrence of any of the following events without the NEO’s express written consent:
A material reduction in the amount of the executive’s then current base salary or target bonus;
We require the executive to change his or her principal location of work to any location which is in excess of 50 miles from his or her previous location of work;
Our failure to obtain in writing the obligation to perform or be bound byUnder the terms of the Severance Policy by any successor company or any purchaser of all or substantially all of our assets; or
Any other action or inaction by us that constitutes a material breach of the terms and conditions of the Severance Policy.
Specifically regarding Mr. Mattes, under the terms of hisMattes’ employment agreement, he would alsois be entitled to receive in the event of an involuntary termination with cause or a voluntary termination, payment for any unused vacation and unreimbursed business expenses, and his vested stock options would remain exercisable for 30 days (or the earlier scheduled expiration of the awards) unless otherwise determined by the Compensation Committee.
Involuntary Without Cause
In general, if or Voluntary With Good ReasonIf a NEO is involuntarily terminated without cause, or a voluntary termination is deemed a constructive termination, pursuant to the Severance Policy and Mr. Mattes’ employment agreement, in addition to the foregoing, he or she is entitled to the following (subject to a general release of claims and acknowledgment of the executive’s confidentiality,non-competition and non-competition (or other applicable)applicable obligations):
With respect to Messrs. Mattes, Chapman and Mayes, aA lump sum payment equal to two times (for Mr.Messrs. Mattes and Chapman) and one andone-half times (for Messrs. Merz and Ms. Rutt, one and one-half times)Leiken) base salary in effect on the date of termination and target bonus opportunity under our Annual Cash PlainBonus Plan in the year of termination;
A lump sumpro-rata award payment of the bonus under our Annual Cash Bonus Plan, based upon the time employed in the year of termination to the extent such awards are otherwise earnedand actual full-year performance results (and, under Mr. Mattes’ employment agreement, assuming individual performance at target levels), payable when such awards are generally paid to others;;
With respect to Messrs. Mattes, Chapman and Mayes, continuedContinued participation in all of our employee health and welfare benefit plans for the shorter of (i) two years (for Mr.Messrs. Mattes and Chapman) or one andone-half years (for Messrs. Merz and Ms. Rutt, oneLeiken), and one-half years), or(ii) the date such NEO receives equivalent coverage from a subsequent employer;
All outstanding unvested options immediately vest and generally remain exercisable for a period of threetwelve months (or the earlier scheduled expiration) following the date of termination;
All outstanding RSUs vestpro-rata based upon the time employed in the year of termination relative to the vesting period of the RSUs;
Pro-rata performance performance-based share amounts (except amounts granted under the Transformation Grant), based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others;
| • | | A Qualified Retirement Plan benefit using the plan provisions as described in “2016 Pension and Retirement Benefits” above; |
A Qualified Retirement Plan benefit using the plan provisions as described in “2014 Pension and Retirement Benefits” above; and
Professional outplacement services for up to two years.years; and
For Mr. Mattes, a lump sum payment of accrued vacation pay and unreimbursed business expenses.
The Pension SERP, Pension Restoration SERP, 401(k) SERP and 401(k) Restoration SERP do not provide any additional benefits upon an involuntary termination. The NEO is only entitled to a SERP benefit if he or she otherwise qualifies for a normal, early or deferred vested SERP benefit at termination.
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For Mr. Chapman, and Ms. Rutt, the values shown reflect the present value of the normal retirement benefit at age 65 for the Qualified Retirement Plan. The nonqualified defined benefit plan values shown reflect the present value of the normal retirement benefit at age 65 as well. For Messrs. Mattes, Leiken, and Mayes and Ms. Rutt,Merz, the nonqualified defined contribution plan values shown reflect the vested balances in the 401(k) Restoration SERP. Mr. Mayes is also vested in the 401(k) SERP.
For all applicable NEOs, we have included the value of their vested nonqualified defined contribution balances, footnoting that these amounts are not payable until the NEO attains age 55.
Pursuant to the Severance Policy, if a NEO terminates his employment due to the occurrence of any of the following events without his consent and following our right to cure, each of which constitute the basis for “good reason,” he will be entitled to receive the payments and benefits discussed immediately above:
A material reduction in the amount of the executive’s then current base salary or target annual bonus;
A requirement that the executive change his principal location of work to a location which is in excess of 50 miles from his current location of work;
Our failure to obtain in writing the obligation to perform or be bound by the terms of the Severance Policy by any successor company or any purchaser of all or substantially all of our assets; or
Any material breach by us of the terms and conditions of the Severance Policy.
Pursuant to Mr. Mattes’ employment agreement, if we decide not to renew Mr. Mattes’ employment agreement and his employment terminates or if Mr. Mattes terminates his employment with “good reason”, he will be entitled to receive the payments and benefits discussed above for a termination without cause. “Good reason” is defined as the occurrence of any of the following events, without Mr. Mattes’ written consent and following our opportunity to cure:
A change in title or material duties that results in a material diminution of his authority;
A material reduction in base salary or target annual incentive opportunity;
A requirement that he change his principal job location in excess of 50 miles from North Canton, Ohio;
He is removed from the Board of the Board’s own volition;
Our failure to obtain in writing the obligation to perform or be bound by the terms of the employment agreement by any successor or purchaser of substantially all of our assets; or
Any material breach by us of the terms and conditions of the employment agreement.
Payments Made Upon Retirement
Generally, in the event of the retirement of a NEO at or after the earliest voluntary retirement age, in addition to the benefits identified above under “
Voluntary Without Good Reason or Involuntary With Cause,” he or she is entitled to the following:All outstanding unvested options and RSUs immediately vest if the NEO had attained the age of 65 and completed five or more years of continuous employment;
All outstanding RSUs vestpro-rata based upon the time employed in the year of termination relative to the deferral period of the RSUs, if the sum of the NEO’s age and years of continuous employment equals or exceeds 70; and
Pro-rata performance performance-based share amounts (except amounts granted under the Transformation Grant), based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others;others if the NEO had attained the age of 65 and completed five or more years of continuous employment or if the sum of the NEO’s age and years of continuous employment equal or exceed 70.
In 2014,2016, Mr. Chapman did not satisfy the retirement eligibility conditions for either the Qualified Retirement Plan or the Pension Restoration SERP. Similarly, in 2014, Ms. Rutt did not satisfy the retirement eligibility conditions for the Qualified Retirement Plan, the Pension Restoration SERP, or the Pension SERP.
The amounts shown for Messrs. Mattes, Leiken, and Mayes, and Ms. Rutt,Merz also include the value of their vested nonqualified defined contribution balance in the 401(k) Restoration SERP. Mr. Mayes is also vested in his 401(k) SERP balance. Retirement eligibility is age 55 under the 401(k) SERP and the 401(k) Restoration SERP.
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Payments Made Upon Death or Disability
Generally, inIn the event of the death or disability of a NEO (other than Mr. Mattes, whose treatment is summarized below), the NEO or his or her estate or beneficiaries would receivereceives:
A lump sumpro-rata payment of the same equity benefits indicated above under “Payments Made Upon Retirement,” except that all outstanding and unvested options and RSUs, regardless of when awarded, would immediately vest and become nonforfeitable and unvested options will be remmain exercisable for one year (or the earlier scheduled expiration thereof). In addition, the NEO or his or her estate or beneficiaries would receive benefits under our disability plan or payments under our group term life insurance plan or any supplemental life insurance plan, as appropriate.
Additionally, under Mr. Mattes’ employment agreement, Mr. Mattes (or Mr. Mattes’ estate or beneficiaries, as applicable) would be entitled to the following upon his death or disability (subject to a general release of claims and acknowledgment of his two-year non-competition, three-year non-solicitation and confidentiality covenants contained in the employment agreement only in the case of disability):
A pro-rata target awardbonus under our Annual Cash Bonus Plan, based upon the time employed in the year of termination;termination and actual full-year performance results;
All outstanding RSUs vest;
Pro-rata performance-based share amounts, based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others; and
(OnlyBenefits under our group term life insurance plan or any supplemental life insurance plan, as applicable.
If a NEO (other than Mr. Mattes, whose treatment is summarized below) has a termination from employment for disability that is a “separation from service,” as that term is defined in Section 409A of the Internal Revenue Code, the NEO has the right to receive the same benefits as if he were terminated without cause, as listed above, except that the Transformation Grant will vest on apro-rated basis together with all other performance-based grants.
Under Mr. Mattes’ employment agreement, Mr. Mattes (or Mr. Mattes’ estate or beneficiaries, as applicable) would be entitled to the following upon his disability)death or disability (subject, in the case of disability, to a general release of claims and acknowledgment of histwo-yearnon-competition, three-yearnon-solicitation and confidentiality covenants contained in the employment agreement):
A lump sum payment of accrued vacation pay and unreimbursed business expenses;
A lump sumpro-rata payment of the bonus, at target, under our Annual Cash Bonus Plan based upon the time employed in the year of termination;
All outstanding unvested options and stock appreciation rights vest and remain exercisable for a period of twelve months (or the earlier scheduled expirations);
Pro-rata performance-based share amounts, based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others; and
In the case of disability, continued participation in all of our employee health and welfare benefit plans for a periodthe shorter of (i) two years orand (ii) the date he receives equivalent coverage from a subsequent employer.
NEOs who die while actively employed are eligible for surviving spouse benefits from the Qualified Retirement Plan payable at the NEO’s normal retirement date (or on an actuarially reduced basis at an early retirement date) if the NEO had at least five years of service. The benefit is equal to 50% of the benefit payable if the NEO terminated employment on the date of his death, survived to the payment date as elected by his or her spouse, and elected to begin receiving the 50% joint and survivor form of payment. Benefits payable to the surviving spouse upon death of the NEO from the Pension SERP and the Pension Restoration SERP are payable at the later of the executive’s early retirement date or date of death. For the Pension SERP, the death benefit is equal to the benefit that would have been payable to the NEO if he or she terminated employment on the date of death and survived to his or her first payment date. NEOs must have ten years of service at the time of death for death benefits to be payable under the Pension SERP. For the Pension Restoration SERP, the death benefit is equal to 50% of the benefit, actuarially adjusted for the difference in age between the NEO and spouse, that would have been payable to the executive if he or she terminated employment on the date of death and survived to his or her first payment date. NEOs must have five years of service at the time of death for death benefits to be payable under the Pension Restoration SERP. The 401(k) SERP and 401(k) Restoration SERP paypays a death benefit equal to the executive’s plan account if the executive had ten years of service and three years of service, respectively.
Disability benefits are payable immediately on an unreduced basis from the Qualified Retirement Plan based on service at the date of disability if the NEO had at least 15 years of service and was determined to be totally and
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permanently disabled. Disability benefits under the Pension SERP, Pension Restoration SERP, and 401(k) SERP, are payable immediately on an unreduced basis for disability after the NEO has at least 15 years of service. Disability benefits under the 401(k) Restoration SERP are payable immediately on an unreduced basis.
For the defined benefit plans, we have shown the present value of the death benefits payable to the NEO’s spouse in case of the NEO’s death as of December 31, 2014.2016. For the Qualified Retirement Plan Pension SERP and Pension Restoration SERP, the values shown reflect the present value of the early retirement benefits.
Under the disability scenario for the defined benefit plans, we have reflected the present value of the immediately payable benefit if the NEO is eligible for disability as of the measurement date. In determining the value of the disability benefits, we used theRP-2014 Disabled Retirees mortality table with fully generational projection using MP-2014MP-2016 and the assumptions noted under “
Present Value of Accumulated Benefits” above. Mr. Chapman is eligible for the enhanced disability benefit under the defined benefit plans.For both the death and disability scenarios, for all NEOs, we have included the value of their vested nonqualified defined contribution balances which are payable immediately.
Payments Made Upon a Change-in-Control or Termination Following aChange-in-Control
Pursuant to thechange-in-control agreements described previously, as well as Mr. Mattes’ employment agreement, in connection withfollowing achange-in-control the term of employment for each NEO will extend until at least the third anniversary of thechange-in-control (two years for Mr. Mattes). If, a NEO has hiswithin that time period, an NEO’s employment is terminated without cause within such time following a change-in-control or if the NEO terminates his employment within such time under the constructive termination circumstances identified below,for good reason, the NEO is entitled to the following benefits:
Unpaid base salary and accrued vacation pay and unreimbursed business expenses;
A lump sum payment equal to two times base salary as in effect on the date of termination for agreements entered into before 2011 and two times base salary and target bonus for agreements entered into thereafter (for Mr. Mattes, two times base salary and target bonus opportunity under our Annual Cash Bonus Plan in the year of termination); andcash bonus;
Continued participation in our employee health and welfare benefit plans, including executive perquisites (or substantially similar plans) for a period of 12 months (24 months for Mr. Mattes), excluding any equity compensation plans.
In addition to the benefits mentioned above, in the event of a change-in-control, pursuant to the termsA lump sumpro-rata payment of the applicable equity compensation agreements, if following the change-in-control the NEO is terminated without cause or he terminates his employment under the constructive termination circumstances identified below, each NEO is automatically entitled to the following benefits:
If terminated after such change-in-control but before the expiration of the applicable deferral period, all outstanding unvested options immediately vest and remain exercisable pursuant to the terms of the applicable award agreement;
All outstanding RSUs immediately vest and become nonforfeitable; and
Unearned and non-forfeited performance-based shares become nonforfeitable at 100% of target.
Under Mr. Mattes’ employment agreement, in connection with a change-in-control, in addition to the benefits identified above, if within two years following the change-in-control Mr. Mattes is terminated without cause or he terminates his employment under the constructive termination circumstances identified in the employment agreement, he will also be entitled to receive:
A pro-rata awardbonus under our Annual Cash Bonus Plan, based upon the time employed in the year of termination to the extent such awards are otherwise earned and actual full-year performance results (and, under Mr. Mattes’ employment agreement, assuming individual performance at target levels, payable when such awards are generally paidlevels;
Two years of continued participation in our employee health and welfare benefit plans; and
A lump sum payment in an amount equal to others;the additional benefits the NEO would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan for one additional year of service, provided the NEO was fully vested prior to termination.
Pursuant to the terms of the applicable equity compensation agreements, if following thechange-in-control the NEO is terminated without cause or he terminates employment for good reason, the NEO is entitled to the following benefits:
All outstanding unvested options immediately vest;
All outstanding RSUs immediately vest and become nonforfeitable; and
Unearned and nonforfeited performance-based shares become nonforfeitable at 100% of target as long as the NEO is employed at the end of the performance period or was terminated without cause or with good reason.
In addition to the above, if within two years following thechange-in-control Mr. Mattes is terminated without cause or he terminates his employment with good reason, he will also be entitled to receive:
All unearned performance-based shares or performance units will become nonforfeitable at 100% of target; and
Professional outplacement services for up to two years.
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For purposesall of Mr. Mattes’ employment agreement, the equity compensationthese agreements, and the achange-in-control agreements for the other NEOs, a change-in-control is deemed to occur upon any of the following events (subject to limited exceptions described in such agreements):
We are merged, consolidated or reorganized with another company, and as a result, less than a majority of the combined voting power of the then-outstanding securities is heldAcquisition by our shareholders of record immediately prior to such transaction;
We sell or otherwise transfer all or substantially all of our assets, and as a result, less than a majority of the combined voting power of the then-outstanding securities is held by our shareholders of record immediately prior to such transaction;
There is a report filed with the SEC disclosing that any personindividual, group or entity has become theof beneficial ownerownership of 20%thirty percent or more of the combined voting power of our then-outstanding securities (except thatoutstanding shares;
The incumbent board ceases, for equity compensation agreements entered into after September 2009, the applicable beneficial ownership threshold is 30%);
We file a current reportany reason other than death or proxy statement with the SEC disclosing that a change-in-control has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction (however, this event would not trigger a change-in-control for purposes of Mr. Mattes’ employment agreement); or
If, during any period of two consecutive years, directors at the beginning of such period ceasedisability, to constitute at least a majority of the board, unless theBoard, with any individual whose nomination and election or nomination for election of each director first elected during the period was approved by at least a majority vote of at least two-thirdsthe incumbent directors considered as though a member of the directors then still inincumbent board, and excluding for these purposes any individual whose initial assumption of office who were directors at the beginningoccurs as a result of the period.an actual or threatened election contest;
A reorganization, merger, consolidation or sale of all or substantially all of our assets; or
Approval by our shareholders of a complete liquidation or dissolution.
Further, for purposes of the equity compensation agreements and thechange-in-control agreements, a voluntary termination by a NEO upon achange-in-control will be deemed a constructive termination by usfor good reason upon the occurrence of any of the following events:
Failure to elect,re-elect or otherwise maintain the executiveNEO in the offices or positions held prior to thechange-in-control;
A significant adverse changematerial reduction in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position held by the executive,NEO, or a reduction in his aggregate compensation or employee benefit plans;
A good faith determination by the executive that the change-in-control has rendered him or her substantially unable to carry out or has substantially hindered his or her ability to perform any of the authorities, powers, functions, responsibilities or duties attached to the position he or she held prior to the change-in-control;
We liquidate, dissolve, merge, consolidate or reorganize or transfer all or a significant portion of our business or assets, unless the successor has assumed all duties and obligations of thechange-in-control agreements; or
We relocate and require the executiveNEO to change his or her principal location of work to any location which is in excess of 50 miles from his or her previous location of work, or requires the executiveNEO to travel significantly more than was previously required.required; or
Any material breach of the agreement.
For purposes ofthe “good reason” definition under Mr. Mattes’ employment agreement, please see the constructive termination circumstances that may trigger the receipt of severance payments and benefits as described above consist of (without Mr. Mattes’ express written consent):
Changes to Mr. Mattes’ titlediscussion under “Involuntary Without Cause or material job duties resulting in a material diminution of his authority, duties, or responsibilities;
Material reduction in Mr. Mattes’ base salary rate or target annual cash bonus opportunity;
A requirement that Mr. Mattes move his principal job location more than 50 miles from our North Canton, Ohio corporate headquarters;
Mr. Mattes is removed by the Board of its own volition as a director;
Failure to obtain in writing the agreement of any of our successors (or purchaser of all or substantially all of our assets) to perform or be bound by the terms of Mr. Mattes’ employment agreement; or
Any other action or inaction by us that constitutes a material breach by us of Mr. Mattes’ employment agreement.
Voluntary With Good Reason” above.For purposes of calculating the retirement benefits payable when achange-in-control occurs with termination, each NEO actively employed as of December 31, 20142016 may be entitled to the following:
| • | | If participating in the Qualified Pension Retirement Plan and/or Pension Restoration SERP, the benefits are determined using the plan provisions as described in the “2016 Pension and Retirement Benefits” above; |
If participating in the Qualified Pension Retirement Plan, Pension SERP and/or Pension Restoration SERP the benefits are determined using the plan provisions as described in the “2014 Pension and Retirement Benefits” above;
If participating in the 401(k) Restoration Plan, a benefit equal to the one additional year of employer match, the amount of which is contributed to the 401(k) Restoration SERP; and
401(k) SERP benefit; and
401(k) Restoration which includes for immediate vesting under the 401(k) Restoration Plan.
For the Qualified Retirement Plan, the Pension SERP and the Pension Restoration SERP, we have reflected, in the “
Post-Termination Payments Table” below the present value of the accrued benefit payable at normal retirement. Under the terms of the defined benefit SERPs, these benefits are payable at the later of the executive’s early retirement date or the date of achange-in-control with termination.For the 401(k) SERP and the 401(k) Restoration SERP, thechange-in-control trigger provides for the immediate vesting of all defined contribution balances, as well as an additional year of employer match. These balances are not payable to the
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NEO until he has attained at least age 55 under the terms of the nonqualified defined contribution plans. All NEOs are entitled to enhancements due to the change in controlchange-in-control provisions, except for Mr. Chapman, who does not participate in the 401(k) SERP or the 401(k) Restoration SERP.
Each of the change-in-control agreements with the NEOs is substantially similar. A form of these amended and restated agreements was filed as Exhibit 10.1 to our Annual Report on Form 10-K for the year ended December 31, 2008 and Exhibit 10.1(ii) to our Annual Report on Form 10-K for the year ended December 31, 2013.
Effect of Certain Tax Regulations on Payments
Effect of Excise Tax on Parachute Payments
Under our existing change-in-control agreements as in effect for the NEOs (except Messrs. Mattes and Merz), if any amount or benefit paid under the agreement, taken together with any amounts or benefits otherwise paid to the executives under any other agreement, are deemed to be “excess parachute payments” subject to excise tax under Sections 280G and 4999 of the Internal Revenue Code, we will reimburse the executive for the excise tax and any additional income, employment and excise taxes incurred on the gross-up payment. The change in control agreements with Messrs. Mattes and Merz do not, and any future change-in-control agreements will not, include excise tax gross-ups.
Effect of Section 409A on Timing of Payments
With respect to any severance amounts payable to our executives, any amounts that are not exempt from Section 409A of the Internal Revenue Code will be subject to the requiredsix-month delay in payment after termination of service, provided that the executive is deemed a “specified employee” for purposes of Section 409A at the time of termination of service.
TablePotential Termination Payments under Service Agreements—Mr. Heidloff and Dr. WunramMr. Heidloff and Dr. Wunram’s existing service agreements govern payments made upon death, disability, retirement, or termination. Mr. Heidloff and Dr. Wunram are also eligible for certain benefits under the Wincor Nixdorf pension plan should their service terminate.
Upon retirement, Mr. Heidloff and Dr. Wunram will receive certain benefits under Wincor Pension Plan pursuant to their service agreements as discussed above in the “Benefits and Prerequisites” section. Mr. Heidloff and Dr. Wunram are entitled to the pension payments upon reaching the age of Contents60. However, if Mr. Heidloff or Dr. Wunram remains on the Wincor Nixdorf management board in an active capacity beyond this period, the receipt of retirement benefits will be deferred until the end of his service agreement. Any stock options do not lapse but may be exercised until the end of the vesting period if the other vesting requirements are fulfilled.
In the event of the death of either Mr. Heidloff or Dr. Wunram, his widow and minor children are entitled to continued payment of remuneration for 6 months from the end of the month in which Mr. Heidloff or Dr. Wunram died. They are also entitled topro-rata bonus payments for performance under the annual VTI award.
Should Mr. Heidloff or Dr. Wunram become unable to work due to illness or another reason for which they are not responsible, he is entitled to receive his fixed remuneration for a period that is the earlier of 18 months or when he leaves the company. Any annual VTI award will be paid for a period of 6 months from the beginning of the illness for any performance achieved during those 6 months. After 18 months, the company may terminate Mr. Heidloff or Dr. Wunram’s service agreement and they will receive pension benefits, even if they have not reached the age of 60. Any stock options do not lapse but may be exercised until the end of the vesting period if the other vesting requirements are fulfilled.
Mr. Heidloff and Dr. Wunram’s service agreements contain a number of provisions relating to their resignation, termination, or mutually agreed separation from the company. Those termination provisions are substantially similar and summarized below. Either the executive or Diebold Nixdorf AG may terminate the service agreement for cause at any time, without prior notice. “Cause” includes a severe breach of the service agreement. Mr. Heidloff and Dr. Wunram receive the following compensation upon termination:
If the executive voluntarily resigns: fixed or variable compensation is forfeited, except stock options issued prior to the resignation may be exercised at the end of the vesting period if the vesting requirements are fulfilled.
If the executive resigns for good reason: he will receive fixed annual compensation for the remaining term, and stock options issued prior to the resignation may be exercised at the end of the vesting period if the vesting requirements are fulfilled.
If the service agreement is terminated by the company for cause, with or without a phasing out period, they forfeit any variable compensation for the current fiscal year and any possible phasing out period.
If Mr. Heidloff or Dr. Wunram are terminated without cause, or in the event of a mutually agreed termination of their service agreement, they receive a severance payment equal to either the sum of (i) two times their annual fixed compensation, including all fringe benefits, (ii) their pension contribution and (iii) two times the target value of their annual VTI award, plus two times the target value of their annual long term incentive award,or the compensation for the remaining term, whichever is lower. Any stock options do not lapse but may be exercised until the end of the vesting period if the other vesting requirements are fulfilled. The severance payment is the sum of (i)—(iii) above if Mr. Heidloff and Dr. Wunram are, for example, demoted from the Executive Committee of Diebold Nixdorf, Incorporated, had diminution of responsibilities or a substantial change in responsibilities, or terminate membership in the Executive Committee.
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Post-Termination Payments Table |
| | | | | | | | | | | | | | | | | | |
| Name | | Compensation Components | | Voluntary ($) | | Involuntary
with Cause ($) | | Involuntary
w/o Cause ($) | | Retirement ($) | | Death ($) | | Disability ($) | | Change in
Control1 ($) | | Change in Control w/ Termination ($) |
| Andreas W. Mattes | | Salary/Bonus | | — | | — | | 4,774,000 | | — | | 1,023,000 | | 1,023,000 | | 1,023,000 | | 4,774,000 |
| | | Accelerated Long-Term Incentives: | | | | | | | | | | | | | | | | |
| | | Stock options | | — | | — | | 345,714 | | — | | 345,714 | | 345,714 | | 345,714 | | 345,714 |
| | | Performance shares2 | | — | | — | | 1,438,781 | | — | | 2,526,438 | | 2,526,438 | | 6,286,190 | | 6,286,190 |
| | | RSUs | | — | | — | | 478,296 | | — | | 1,294,462 | | 1,294,462 | | 1,294,462 | | 1,294,462 |
| | | Retirement Benefits: | | | | | | | | | | | | | | | | |
| | | Qualified Retirement Plan/ SERP3 | | 108,265 | | 108,265 | | 108,265 | | 108,265 | | 108,265 | | 108,265 | | 271,036 | | 271,036 |
| | | Deferred Compensation Plan4 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | Other Benefits5 | | — | | — | | 105,698 | | — | | — | | 39,349 | | 39,349 | | 66,349 |
| | | Total: | | 108,265 | | 108,265 | | 7,250,754 | | 108,265 | | 5,297,879 | | 5,337,228 | | 9,259,751 | | 13,037,751 |
| Christopher A. Chapman | | Salary/Bonus | | — | | — | | 990,000 | | — | | 330,000 | | 330,000 | | 330,000 | | 990,000 |
| | | Accelerated Long-Term Incentives: | | | | | | | | | | | | | | | | |
| | | Stock options | | — | | — | | 39,624 | | — | | 39,624 | | 39,624 | | 39,624 | | 39,624 |
| | | Performance shares2 | | — | | — | | 112,060 | | — | | 185,885 | | 185,885 | | 446,371 | | 446,371 |
| | | RSUs | | — | | — | | 115,975 | | — | | 273,725 | | 273,725 | | 273,725 | | 273,725 |
| | | Retirement Benefits: | | | | | | | | | | | | | | | | |
| | | Qualified Retirement Plan/ SERP3 | | 355,314 | | 240,949 | | 355,314 | | — | | 103,242 | | 1,082,435 | | 355,314 | | 355,314 |
| | | Deferred Compensation Plan4 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | Other Benefits5 | | — | | — | | 31,731 | | — | | — | | — | | 16,731 | | 16,731 |
| | | 280G Excise Tax and Gross-up6 | | — | | — | | — | | — | | — | | — | | — | | 480,915 |
| | | Total: | | 355,314 | | 240,949 | | 1,644,704 | | — | | 932,476 | | 1,911,669 | | 1,461,765 | | 2,602,680 |
| George S. Mayes, Jr. | | Salary/Bonus | | — | | — | | 2,268,750 | | — | | 467,500 | | 467,500 | | 467,500 | | 1,567,500 |
| | | Accelerated Long-Term Incentives: | | | | | | | | | | | | | | | | |
| | | Stock options | | — | | — | | 240,192 | | — | | 240,192 | | 240,192 | | 240,192 | | 240,192 |
| | | Performance shares2 | | — | | — | | 669,202 | | — | | 1,107,769 | | 1,107,769 | | 2,668,250 | | 2,668,250 |
| | | RSUs | | — | | — | | 525,580 | | — | | 871,057 | | 871,057 | | 871,057 | | 871,057 |
| | | Retirement Benefits: | | | | | | | | | | | | | | | | |
| | | Qualified Retirement Plan/ SERP3 | | 1,175,362 | | 237,812 | | 1,175,362 | | 1,175,362 | | 1,175,362 | | 1,175,362 | | 1,195,162 | | 1,195,162 |
| | | Deferred Compensation Plan4 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | Other Benefits5 | | — | | — | | 42,440 | | — | | — | | — | | 13,720 | | 23,720 |
| | | 280G Excise Tax and Gross-up6 | | — | | — | | — | | — | | — | | — | | — | | 1,834,285 |
| | | Total: | | 1,175,362 | | 237,812 | | 4,921,526 | | 1,175,362 | | 3,861,880 | | 3,861,880 | | 5,455,881 | | 8,400,166 |
| Stefan Merz | | Salary/Bonus | | — | | — | | 893,750 | | — | | 243,750 | | 243,750 | | 243,750 | | 893,750 |
| | | Accelerated Long-Term Incentives: | | | | | | | | | | | | | | | | |
| | | Stock options | | — | | — | | 7,522 | | — | | 7,522 | | 7,522 | | 7,522 | | 7,522 |
| | | Performance shares2 | | — | | — | | 55,583 | | — | | 169,606 | | 169,606 | | 507,891 | | 507,891 |
| | | RSUs | | — | | — | | 102,132 | | — | | 239,778 | | 239,778 | | 239,778 | | 239,778 |
| | | Retirement Benefits: | | | | | | | | | | | | | | | | |
| | | Qualified Retirement Plan/ SERP3 | | 14,559 | | 14,559 | | 14,559 | | 14,559 | | 14,559 | | 14,559 | | 28,059 | | 28,059 |
| | | Deferred Compensation Plan4 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | Other Benefits5 | | — | | — | | 33,844 | | — | | — | | 18,844 | | 18,844 | | 18,844 |
| | | Total: | | 14,559 | | 14,559 | | 1,107,390 | | 14,559 | | 675,215 | | 694,059 | | 1,045,844 | | 1,695,844 |
| Sheila M. Rutt | | Salary/Bonus | | — | | — | | 880,823 | | — | | 203,267 | | 203,267 | | 203,267 | | 880,823 |
| | | Accelerated Long-Term Incentives: | | | | | | | | | | | | | | | | |
| | | Stock options | | — | | — | | 54,321 | | — | | 54,321 | | 54,321 | | 54,321 | | 54,321 |
| | | Performance shares2 | | — | | — | | 182,080 | | — | | 290,134 | | 290,134 | | 683,205 | | 683,205 |
| | | RSUs | | — | | — | | 250,991 | | — | | 448,657 | | 448,657 | | 448,657 | | 448,657 |
| | | Retirement Benefits: | | | | | | | | | | | | | | | | |
| | | Qualified Retirement Plan/ SERP3 | | 819,435 | | 396,957 | | 819,435 | | 191,139 | | 191,139 | | 191,139 | | 844,764 | | 844,764 |
| | | Deferred Compensation Plan4 | | — | | — | | — | | — | | — | | — | | — | | — |
| | | Other Benefits5 | | — | | — | | 24,688 | | — | | — | | — | | 9,688 | | 17,302 |
| | | Total: | | 819,435 | | 396,957 | | 2,212,338 | | 191,139 | | 1,187,518 | | 1,187,518 | | 2,243,902 | | 2,929,072 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Voluntary
or w/
Cause ($) | | | Involuntary
w/o Cause
or w/ Good
Reason ($) | | | Retirement ($) | | | Death ($) | | | Disability ($) | | | Change in
Control w/
Termination
($) | |
Andreas W. Mattes | | | | | | | | | | | | | | | | | | | | | | | | |
Salary/Bonus | | | - | | | | 5,085,000 | | | | - | | | | 1,312,500 | | | | 1,312,500 | | | | 5,085,000 | |
Stock options | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Performance shares1 | | | - | | | | 5,096,857 | | | | - | | | | 5,096,857 | | | | 5,096,857 | | | | 5,096,857 | |
RSUs | | | - | | | | 1,166,691 | | | | - | | | | 2,092,732 | | | | 2,092,732 | | | | 2,092,732 | |
Pension Plans and SERP Benefits2 | | | 554,1585 | | | | 554,158 | | | | 554,158 | | | | 554,158 | | | | 554,158 | | | | 608,968 | |
| | | 346,3486 | | | | - | | | | - | | | | - | | | | - | | | | - | |
Other Benefits3 | | | - | | | | 70,125 | | | | - | | | | - | | | | 55,125 | | | | 70,125 | |
| | | | | | |
Total: | | | 554,1585 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total: | | | 346,3486 | | | | 11,972,832 | | | | 554,158 | | | | 9,043,247 | | | | 9,111,372 | | | | 14,754,8664 | |
| | | | | | |
Christopher A. Chapman | | | | | | | | | | | | | | | | | | | | | | | | |
Salary/Bonus | | | - | | | | 2,331,500 | | | | - | | | | 500,000 | | | | 500,000 | | | | 2,331,500 | |
Stock options | | | - | | | | 450 | | | | - | | | | 450 | | | | 450 | | | | 450 | |
Performance shares1 | | | - | | | | 469,291 | | | | | | | | 469,291 | | | | 469,291 | | | | 867,750 | |
RSUs | | | - | | | | 209,875 | | | | - | | | | 385,524 | | | | 385,524 | | | | 385,524 | |
Pension Plans and SERP Benefits2 | | | 371,9545 | | | | 252,233 | | | | - | | | | 104,701 | | | | 1,032,736 | | | | 371,954 | |
| | | 252,2336 | | | | - | | | | - | | | | - | | | | - | | | | - | |
Other Benefits3 | | | - | | | | 67,726 | | | | - | | | | - | | | | - | | | | 41,363 | |
| | | | | | |
Total: | | | 371,9545 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total: | | | 252,2336 | | | | 3,331,074 | | | | - | | | | 1,459,966 | | | | 2,388,001 | | | | 3,998,5414 | |
| | | | | | |
Jonathan B. Leiken | | | | | | | | | | | | | | | | | | | | | | | | |
Salary/Bonus | | | - | | | | 1,644,720 | | | | - | | | | 440,000 | | | | 440,000 | | | | 2,084,720 | |
Stock options | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Performance shares1 | | | - | | | | 253,680 | | | | - | | | | 253,680 | | | | 253,680 | | | | 441,156 | |
RSUs | | | - | | | | 140,111 | | | | - | | | | 398,904 | | | | 398,904 | | | | 398,904 | |
Pension Plans and SERP Benefits2 | | | 29,118 | | | | 29,118 | | | | 29,118 | | | | 29,118 | | | | 29,118 | | | | 53,918 | |
Other Benefits3 | | | - | | | | 44,971 | | | | - | | | | - | | | | - | | | | 41,641 | |
| | | | | | |
Total: | | | 29,118 | | | | 2,112,599 | | | | 29,118 | | | | 1,121,702 | | | | 1,121,702 | | | | 3,020,3394 | |
| | | | | | |
Stefan E. Merz | | | | | | | | | | | | | | | | | | | | | | | | |
Salary/Bonus | | | - | | | | 1,495,200 | | | | - | | | | 400,000 | | | | 400,000 | | | | 1,495,200 | |
Stock options | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Performance shares1 | | | - | | | | 355,445 | | | | - | | | | 355,455 | | | | 355,455 | | | | 527,370 | |
RSUs | | | - | | | | 181,799 | | | | - | | | | 435,623 | | | | 435,623 | | | | 435,623 | |
Pension Plans and SERP Benefits2 | | | 201,9455 | | | | 201,945 | | | | 201,945 | | | | 201,945 | | | | 201,945 | | | | 201,945 | |
| | | 162,2576 | | | | - | | | | - | | | | - | | | | - | | | | - | |
Other Benefits3 | | | - | | | | 44,766 | | | | - | | | | - | | | | - | | | | 67,917 | |
| | | | | | |
Total: | | | 201,9455 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total: | | | 162,2576 | | | | 2,279,155 | | | | 201,945 | | | | 1,393,013 | | | | 1,393,013 | | | | 2,754,5164 | |
| |
1 | For this column, amounts assume a change-in-controlall outstanding performance-based awards, we have assumed that the payouts of the Company effective as of December 31, 2014. The “Salary/Bonus” figure assumes the NEO's respective salary had already been paid throughout the 2014 year, and assumes the annual cash incentive bonus amount payable for 2014awards will be made at target levels, although actual amounts receivedlevels. In reality, the payouts may be higherlower or lowerhigher depending upon the actual level of performance achieved. In addition,achieved in the “Other Benefits” in this column excludes financial planning benefits for Messrs. Mattesfuture. |
| 2 | The Pension Plans and Mayes, and Ms. Rutt, as well as outplacement services for Mr. Mattes. |
| |
2
| For purposes ofSERP Benefits amount represents the 2012 to 2014 performance period, the actual payout was 0%. For the 2013 to 2015 period and 2014 to 2015 performance periods, payout was assumed to be at target levels. With respecttotal value to the Transformation Grant (as discussed in more detail inNEO under our defined benefit and defined contribution plans, excluding the “Compensation Discussion and Analysis”),
|
the payout for the applicable performance periods, where applicable, was assumed to be at target levels. In reality, the payouts may be lower or higher depending upon the actual level of performance achieved.
| |
3
| Qualified 401(k) Plan. The assumptions used to calculate the value of the Qualified Retirement Plan Pension SERP and Pension Restoration SERP benefits are consistent with those used to calculate the values above under “20142016 Pension and Retirement Benefits.” The values were determined as of December 31, 2014 based on accrued benefits as of December 31, 2014, the date that accruals in these plans ceased. In addition, these values represent total values to the NEO under the given termination scenario. Retirement eligibility is age 50 with 70 points under the Qualified Pension the Pension SERP and Pension Restoration SERP. The amounts shown above exclude the Qualified 401(k) Plan information. For Messrs. Leiken, Mattes, and Mayes and for Ms. Rutt,Merz, the values include the vested balance in the 401(k) Restoration SERP. For Mr. Mayes,This balance is payable when the values include his vested balance in the 401(k) SERP. participant turns age 55 or their current age if older than 55. |
| |
43
| Distribution of the amounts reflected for deferred compensation remains subject to the deferral elections made by the executive, as discussed above under “Non-Qualified Deferred Compensation Plans.”
|
| |
| “Other Benefits” includes, as applicable, the total value of any other contributions by us on behalf of the NEO for health and welfare benefit plans and outplacement services, and vacation payouts which the NEO was eligible to receive as of December 31, 2014.2016. |
| |
64
| Upon a change-in-control of the Company, certain of the executive mayThese payments would be subject (in whole or in part) to an excise taxes pursuant totax imposed by Section 280G of the Internal Revenue Code. We have agreedIn accordance with the NEO’s change in control or employment agreement, we will reduce certain of these payments to reimburse the executive for all excise taxesextent necessary so that are imposed on the executive under Section 280G and any income or other taxes that are payable by the executive as a result of any reimbursements for Section 280G taxes. The calculationno portion of the 280G gross-up amounttotal payment is based upon a 280Gsubject to the excise tax, rate of 20%. For purposesbut only if this results in a betternet-of-tax result for the NEO. The calculations in this table do not reflect any such reduction or adjustment. |
| 5 | Payment for voluntary termination. |
| 6 | Payment for termination with cause. |
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As discussed above, Mr. Heidloff and Dr. Wunram’s respective service agreements govern their severance payments. These agreements do not provide change in control protection for Mr. Heidloff or Dr. Wunram. Amounts presented in the table below assume a hypothetical termination event as of December 31, 2016 and may vary from the amounts and German law presentation in the Compensation Report included in Wincor Nixdorf’s 15/16 Annual Report. For a discussion of their current severance agreements see “Separating Agreement—Mr. Heidloff” and “Offer Letter—Dr. Wunram.”
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Voluntary
or w/
cause | | | Resignation
for Good
Reason | | | Mutually
Agreed
Termination
or Special
Circumstances | | | Retirement | | | Death | | | Disability | |
Eckard Heidloff | | | | | | | | | | | | | | | | | | | | | | | | |
Severance | | | - | | | | €1,513,151 | | | | €4,498,236 | | | | - | | | | €700,000 | | | | €1,400,000 | |
Stock options1 | | | €7,748,199 | | | | €7,748,199 | | | | €7,748,199 | | | | €7,748,199 | | | | - | | | | €7,748,199 | |
Pension Plan Benefits2 | | | €1,488,000 | | | | €1,488,000 | | | | €1,488,000 | | | | €1,488,000 | | | | €1,488,000 | | | | €1,488,000 | |
| | | | | | |
Total : | | | €9,236,199 | | | | €10,749,350 | | | | €13,734,435 | | | | €9,236,199 | | | | €2,188,000 | | | | €10,636,199 | |
| | | | | | |
Jürgen Wunram | | | | | | | | | | | | | | | | | | | | | | | | |
Severance | | | - | | | | €1,080,822 | | | | €3,251,236 | | | | - | | | | €500,000 | | | | €1,000,000 | |
Stock options1 | | | €5,534,441 | | | | €5,534,441 | | | | €5,534,441 | | | | €5,534,441 | | | | - | | | | €5,534,441 | |
Pension Plan Benefits2 | | | €1,270,000 | | | | €1,270,000 | | | | €1,270,000 | | | | €1,270,000 | | | | €1,270,000 | | | | €1,270,000 | |
| | | | | | |
Total: | | | €6,804,441 | | | | €7,885,263 | | | | €10,055,677 | | | | €6,804,441 | | | | €1,770,000 | | | | €7,804,441 | |
| 1 | Amounts in this row relate to Wincor Nixdorf AG stock options awarded in 2013, 2014, 2015, and 2016. These options are cash settled and cannot be exercised for shares. The above values are calculated in accordance with the terms of the 280G calculation, it is assumed that no amountsaward agreement and German law and are based on a December 31, 2016 closing price of €65.95 for Wincor Nixdorf stock. The value of these options will be discounted as attributablepay out over time in accordance with the terms of the stock option award agreement. |
| 2 | The pension plan benefits amount represents the total value to reasonable compensationMr. Heidloff and noDr. Wunram under the Wincor Nixdorf AG Pension Scheme. The assumptions used to calculate the value will be attributed to the executive executing a non-competition agreement.are consistent with those described above under “2016 Pension and Retirement Benefits.” |
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REPORT OF AUDIT COMMITTEE
The Audit Committee is currently comprised of Patrick W. Allender, Chair, Roberto Artavia, Bruce L. Byrnes,Dr. Dieter W. Düsedau, Gale S. Fitzgerald, and Robert S. Prather, Jr. and Alan J. Weber. Each member of the committee is independent as defined in the NYSE Listed Company Manual and SEC rules. The primary duties and responsibilities of the committee are (1) to monitor the adequacy of our financial reporting process and systems of internal controls regarding finance, accounting and legal compliance, (2) to monitor the independence and performance of our outside auditors and internal audit department, and (3) to provide an avenue of communication among the outside auditors, management, the internal audit department and the Board. The Board has adopted an Audit Committee Charter, which is available on our web sitewebsite athttp://www.diebold.comwww.dieboldnixdorf.com.
The Audit Committee has reviewed and discussed with our management and KPMG LLP, our independent registered public accounting firm, the audited financial statements contained in our Annual Report to Shareholders for the year ended
December 31, 2014.2016. The Audit Committee has also discussed with our independent registered public accounting firm the matters required to be discussed pursuant to SASAS No. 61 “Communications1301 “Communications with Audit Committees,,” as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adoptedissued by the Public Company Accounting Oversight Board (United States) (PCAOB).The Audit Committee has received and reviewed the written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP its independence. The Audit Committee has also considered whether the provision ofnon-audit services to us by KPMG LLP is compatible with maintaining its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form10-K for the fiscal year ended
December 31, 20142016 filed with the SEC.The foregoing report was submitted by the Audit Committee and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act.
Patrick W. Allender, Chair
Roberto Artavia
Bruce L. Byrnes
Dieter W. Düsedau
Gale S. Fitzgerald
Robert S. Prather, Jr.
Alan J. Weber
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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has again appointed KPMG LLP, our independent registered public accounting firm since 1965, to examine our accounts and other records for the year ending December 31, 2015. This appointment is being presented to you for ratification at the Annual Meeting. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection.
KPMG LLP has no financial interest, direct or indirect, in us or any of our subsidiaries.
A representative of KPMG LLP is expected to be present at the 2015 Annual Meeting, to make a statement if he or she desires and to respond to appropriate questions.
Audit and Non-Audit Fees
The following table shows the aggregate fees billed to us for the annual audit and the review of the interim financial statements and other services provided by KPMG LLP for fiscal 2014 and 2013.
|
| | | | |
| | | 2014 | | 2013 |
Audit Fees1 | | $4,289,000 | | $4,694,000 |
| Audit-Related Fees | | — | | — |
Tax Fees2 | | 356,000 | | 371,000 |
All Other Fees3 | | — | | 30,000 |
| Total | | $4,645,000 | | $5,095,000 |
| |
1
| “Audit Fees” consist of fees billed for professional services rendered for the audit of our annual financial statements and the review of the interim financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings. |
| |
2
| “Tax Fees” consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning, both domestic and international. These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning. |
| |
3
| “All Other Fees” consist of fees billed for those services not captured in the audit, audit-related and tax categories. We generally do not request such services from our independent registered public accounting firm; however, for 2013, these fees consisted of transaction advisory services for our subsidiary in Turkey performed in 2012, but invoiced in 2013, as well as limited advisory services with respect to certain restructuring activities in the United Kingdom. |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent registered public accounting firm.
These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegated pre-approval authority to Patrick W. Allender, Chair of the Audit Committee, when expedition of services is necessary, provided that Mr. Allender must report any decisions to pre-approve to the full Audit Committee at its next scheduled meeting. All of the fees included under the categories “Audit-Related Fees,” “Tax Fees” and “All Other Fees” above were pre-approved by the Audit Committee. None of these fees were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC.
Recommendation of the Board
The board recommends a vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015.
PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS, OF NAMED EXECUTIVE OFFICER
COMPENSATION
In this Proposal 3, as required by Section 14A of the Exchange Act and pursuant to Rule 14a-21(a) promulgated thereunder, we are providing our shareholders the opportunity to cast an advisory (non-binding) vote to approve the compensation paid to our NEOs, as disclosed in “Compensation Discussion and Analysis” and “Executive Compensation” above, pursuant to the compensation rules of the SEC. While this vote is advisory, and thus not binding on the Company, the Board values the opinions of our shareholders and the Compensation Committee will review the results of the vote and expects to take them into consideration when making future decisions regarding named executive officer compensation. Under current Board policy, the shareholder vote for advisory approval of named executive officer compensation will occur annually. After the 2015 Annual Meeting, the next such vote will occur at our 2016 Annual Meeting of Shareholders.
“Compensation Discussion and Analysis” and “Executive Compensation” above describe our executive compensation program and the decisions and rationale of our Compensation Committee. Our executive pay program is designed to enable us to attract, retain and motivate high quality executives who will provide us with dynamic leadership and are instrumental to our success. We emphasize performance-based variable pay through a mix of base salary, annual cash bonuses and long-term incentives and seek to provide total pay that is commensurate with our performance and competitive with our peer group. Accordingly, we are asking our shareholders to vote FOR the following resolution:
“RESOLVED, that the compensation of our named executive officers as disclosed pursuant to the compensation rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby APPROVED.”
Recommendation of the Board
The Board recommends that you approve, on an advisory basis, the Company’s named executive officer compensation by voting FOR Proposal 3.
PROPOSAL 4: APPROVAL OF THE DIEBOLD, INCORPORATED
ANNUAL CASH BONUS PLAN
General
The Diebold, Incorporated Annual Cash Bonus Plan has afforded the Board and the Compensation Committee the ability to offer compensatory cash awards designed to reward and incent our officers and key employees in advancement of our interests and long-term strategies. In order to continue to enhance our ability to attract and retain officers and key employees, the Board revised the Plan subject to approval of our shareholders (the “Cash Bonus Plan”). A prior version of the Cash Bonus Plan was previously approved by the Company’s shareholders in 2010 and will expire at this Annual Meeting. If the new Cash Bonus Plan is not approved, cash bonus payments made by us will not qualify as “performance-based compensation” for purposes of 162(m) of the Internal Revenue Code, and we will not be able to deduct certain compensation expenses.
The Board recommends a vote for approval of the Cash Bonus Plan. Incentive bonus payments made under the Cash Bonus Plan are intended to constitute qualified “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code, as amended, and Section 1.162-27 of the Treasury Regulations promulgated thereunder. Generally, Section 162(m) prevents a company from receiving a federal income tax deduction for compensation paid to its Chief Executive Officer or certain of its most highly compensated executive officers in excess of $1.0 million for any year, unless that compensation is performance-based. One of the requirements of “performance-based compensation” for purposes of Section 162(m) is that the compensation be paid pursuant to a plan that has been approved by the company’s shareholders every five years. As in the past, the Cash Bonus Plan will require the Compensation Committee to use goals and formulas that could be verified by an independent third party to fund bonuses, without the exercise of discretion, except to reduce the amount of compensation that might otherwise be payable under the Cash Bonus Plan.
Summary of Terms
The following is a summary of the terms of the Cash Bonus Plan and is qualified in its entirety by reference to the complete text of the Cash Bonus Plan, which is set forth in Exhibit A.
Administration
The Cash Bonus Plan is administered by the Compensation Committee or any other committee appointed by the Board to administer the Cash Bonus Plan (consisting of at least two directors, each of whom must be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code). In administering the Cash Bonus Plan, the Compensation Committee shall have full power and authority to interpret and administer the Cash Bonus Plan and shall have the exclusive right to establish Management Objectives (as defined below) and the amount of incentive bonuses payable upon achievement of such objectives.
Eligible Executive
Participation in the Cash Bonus Plan will be limited to “Eligible Executives,” which includes our Chief Executive Officer, each employee who the Compensation Committee determines is reasonably likely to be a “covered employee” within the meaning of Section 162(m) of the Internal Revenue Code and each other executive officer or other employee of Diebold or our subsidiaries designated by the Compensation Committee. At present, under the Cash Bonus Plan, there would be approximately 15 Eligible Executives, including the NEOs, participating.
Management Objectives
An Eligible Executive’s right to receive a bonus under the Cash Bonus Plan depends on achievement of certain specified performance goals, referred to as “Management Objectives.” Management Objectives may be described in terms of company-wide objectives or objectives that are related to the performance of the individual Eligible Executive or of the subsidiary, division, department or function within the company or subsidiary in which the Eligible Executive is employed. The Management Objectives are limited to specified levels of growth in, or relative peer company performance in, one or more of the following: (i) sales, including net sales, unit sales volume, and aggregate product price; (ii) share price, including market price per share, and share price appreciation; (iii) earnings, including earnings per share, reflecting dilution of shares, gross or pre-tax profits, post-tax profits, operating profit, earnings net of or including dividends, earnings net of or including the after-tax cost of capital, earnings before (or after) interest and taxes (“EBIT”), earnings per share from continuing operations, diluted or basic, earnings before (or after) interest, taxes, depreciation and amortization (“EBITDA”), pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items, operating earnings, growth in earnings or growth in earnings per share, and total earnings; (iv) return on equity, including return on equity, return on invested capital, return or net return on assets, return on net assets, return on equity, return on gross sales, return on investment, return on capital, return on invested capital, return on committed capital, financial return ratios, value of assets, and change in assets; (v) cash flow(s), including operating cash flow, net cash flow, free cash flow, and cash flow on investment; (vi) revenue, including gross or net
revenue, and changes in annual revenues; (vii) margins, including adjusted pre-tax margin, and operating margins; (viii) income, including net income, and consolidated net income; (ix) economic value added; (x) costs, including operating or administrative expenses, operating expenses as a percentage of revenue, expense or cost levels, reduction of losses, loss ratios or expense ratios, reduction in fixed costs, expense reduction levels, operating cost management, and cost of capital; (xi) financial ratings, including credit rating, capital expenditures, debt, debt reduction, working capital, average invested capital, and attainment of balance sheet or income statement objectives; (xii) market or category share, including market share, volume, unit sales volume, and market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas; (xiii) shareholder return, including total shareholder return, shareholder return based on growth measures or the attainment of a specified share price for a specified period of time, and dividends; and (xiv) objective nonfinancial performance criteria measuring either regulatory compliance, productivity and productivity improvements, inventory turnover, average inventory turnover or inventory controls, net asset turnover, customer satisfaction based on specified objective goals or company-sponsored customer surveys, employee satisfaction based on specified objective goals or company-sponsored employee surveys, objective employee diversity goals, employee turnover, specified objective environmental goals, specified objective social goals, specified objective goals in corporate ethics and integrity, specified objective safety goals, specified objective business expansion goals or goals relating to acquisitions or divestitures, and succession plan development and implementation.
Subject to compliance with Section 162(m), the Compensation Committee may, for a Performance Period, amend or adjust the applicable Management Objective(s) or other terms and conditions relating thereto in recognition of acquisitions or divestitures; litigation or claim judgments or settlements; or reorganization and restructuring programs; or unusual, nonrecurring or one-time events affecting us or our subsidiaries, our financial statements, or changes in law or accounting principles.
Awards
Not later than the earlier of (i) 90th day of after the beginning of the Performance Period or (ii) the expiration of twenty-five percent (25%) of the Performance Period, the Compensation Committee will establish the Management Objectives for all Eligible Executives and the amount of incentive bonus payable (or formula for determining such amount) upon full achievement of the specified Management Objectives. The Compensation Committee may further specify in respect of the specified Management Objectives a minimum acceptable level of achievement below which no incentive bonus payment will be made and shall set forth a formula for determining the amount of any payment to be made if performance is at or above the minimum acceptable level but falls short of full achievement of the specified Management Objectives.
The Compensation Committee may not modify any terms of awards established (other than in connection with an Eligible Executive’s death or disability, or a change in control), except to the extent that after such modification the incentive bonus would continue to constitute qualified “performance-based compensation” for purposes of Section 162(m).
The Compensation Committee retains the discretion to reduce the amount of any incentive bonus that would be otherwise payable to an Eligible Executive (including a reduction in such amount to zero). Notwithstanding any other provision of the Cash Bonus Plan to the contrary, in no event shall the incentive bonus paid to an Eligible Executive under the Cash Bonus Plan for a year exceed $10 million.
If an Eligible Executive’s employment with us is terminated during a Performance Period by reason of his or her death or disability, or in the Compensation Committee’s discretion any other termination other than a termination for “cause,” to the extent not established by another applicable agreement, the Eligible Executive will receive a pro-rated incentive bonus.
Committee Certification
As soon as practicable after the end of the Performance Period, which is typically the fiscal year of the Company, the Compensation Committee will determine whether the Management Objective(s) have been achieved and the amount of the incentive bonus to be paid to each Eligible Executive for such Performance Period and shall certify such determinations in writing.
Amendment and Termination
The Committee may amend the Cash Bonus Plan from time to time, provided that any such amendment is subject to shareholder approval to the extent required to satisfy Section 162(m). The Committee may also terminate the Cash Bonus Plan, on a prospective basis only, at any time.
Effective Date
Subject to approval by the shareholders, the Cash Bonus Plan shall remain effective until the first annual meeting of shareholders held in the 2020 fiscal year, subject to any further shareholder approvals (or re-approvals) mandated for performance-based compensation under Section 162(m).
Cash Bonus Plan Benefits
Since the Cash Bonus Plan affords the Compensation Committee discretion in establishing target bonuses and payouts (subject to the $10 million annual limit per person noted above), it is not possible to determine the amount of the benefits that may become payable under the Cash Bonus Plan. If the Cash Bonus Plan is not approved by shareholders, no bonuses will be paid under the Cash Bonus Plan. The prior version of the Cash Bonus Plan will expire at this Annual Meeting, and no bonuses will be paid under that plan for fiscal years beginning on or after January 1, 2016.
Federal Tax Implications
Under present federal income tax law, a Cash Bonus Plan participant will be taxed at ordinary income rates on the amount of any payment received pursuant to the Cash Bonus Plan. Generally, and subject to the provisions of Section 162(m), the Company will receive a federal income tax deduction corresponding to the amount of income recognized by a Cash Bonus Plan participant.
Recommendation of the Board
The Board recommends a vote FOR the approval of the Diebold, Incorporated Annual Cash Bonus Plan, as revised.
SHAREHOLDERS SHARING THE SAME ADDRESS
Some banks, brokers and other intermediaries engage in the practice of “householding” our proxy statements, annual reports and Notice of Internet Availability of Proxy Materials. This means that, if shareholders within the same household request a physical copy of our proxy statement, annual report or Notice of Internet Availability of Proxy Materials, only one copy may be sent to that household unless the shareholders specifically request to receive multiple copies. We will promptly deliver a separate copy of our Annual Report on Form10-K for the year ended December 31, 2014,2016, this proxy statementProxy Statement or Notice of Internet Availability of Proxy Materials to you if you share an address subject to householding. Please contact our Corporate Secretary at 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077 or (330)490-4000.
Please contact your bank, broker or other intermediary if you wish to receive individual copies of our proxy materials in the future. Please contact your bank, broker or other intermediary, or our Corporate Secretary as provided above if members of your household are currently receiving individual copies and you would like to receive a single household copy for future meetings.
EXPENSES OF SOLICITATION
The cost of soliciting the proxies will be paid by us. In addition to solicitation by mail, some of our directors, officers and employees, without extra compensation, may conduct additional solicitations by telephone, facsimile and personal interviews. We may also enlist, at our own cost, the assistance of banks, bankers and brokerage houses in additional solicitations of proxies and proxy authorizations, particularly from those of their clients or customers whose shares are not registered in the clients’ or customers’ own names. Brokers, bankers, etc., will be reimbursed forout-of-pocket and reasonable clerical expenses incurred in obtaining instructions from beneficial owners of the common shares. It is estimated that the expense of such special solicitation will be nominal. In addition, Innisfree M&A Incorporated, New York, New York, has been retained to assist in the solicitation of proxies for an estimated fee of $15,000.
SHAREHOLDER PROPOSALS
We must receive by November 14, 201513, 2017 any proposal of a shareholder intended to be presented at our 20162018 Annual Meeting of Shareholders and to be included in our proxy, notice of meeting and proxy statement related to the 20162018 Annual Meeting pursuant to Rule14a-8 under the Exchange Act. Such proposals should be submitted to our Corporate Secretary at our principal executive office by certified mail, return receipt requested.
Notice of proposals of shareholders submitted outside the processes of Rule14a-8 under the Exchange Act includingregarding the nominations of directors, which a shareholder intends to present at our 20162018 Annual Meeting but which will not be included in our proxy, notice of meeting and proxy statement related to the 2016 Annual Meeting, or non-Rule 14a-8 proposals, must be received by us at our principal executive office on or between DecemberOctober 14, 20152017 and JanuaryNovember 13, 20162017 (or, if the 20162018 Annual Meeting is held more than 30 days prior to or after April 23, 2016,26, 2018, not later than the close of business on the later of the 90th180th day prior to the 20162018 Annual Meeting or the 10th day following the day on which public announcement of the date of the 20162018 Annual Meeting is first made), or such proposals will be considered untimely under the advance notice provisions of our codeCode of regulations.
Non-Rule 14a-8Regulations. Othernon-Rule14a-8 proposals must be received by us at our principal executive office on or between December 13, 2017 and January 12, 2018 (or, if the 2018 Annual Meeting is held more than 30 days prior to or after April 26, 2018, not later than the close of business on the later of the 90th day prior to the 2018 Annual Meeting or the 10th day following the day on which public announcement of the date of the 2018 Annual Meeting is first made), or such proposals will be considered untimely under the advance notice provisions of our Code of Regulations.Non-Rule14a-8 proposals must comply with certain provisions of our codeCode of regulations.Regulations. Our proxy related to the 20162018 Annual Meeting will give discretionary authority to the Proxy Committee to vote with respect to all non-Rule 14a-8non-Rule14a-8 proposals properly brought before the 20162018 Annual Meeting.
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OTHER MATTERS
We are not aware of any matters to be presented at the 20152017 Annual Meeting other than the matters set forth herein. Should any other matters be presented for a vote of the shareholders, the proxy in the enclosed form confers discretionary voting authority upon the Proxy Committee. In accordance with the provisions of the Ohio Revised Code, the Board has appointed inspectors of elections to act at the 20152017 Annual Meeting.
For information on how to obtain directions to be able to attend the
20152017 Annual Meeting and vote in person, please see the directions at the end of this proxy statementProxy Statement or contact our Corporate Secretary at 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077 or (330)490-4000. | | |
By Order of the Board of Directors | | |
| | 
|
| |
| | Jonathan B. Leiken |
| | Senior Vice President, Chief Legal Officer and Secretary |
Canton, Ohio | | |
March 13, 2017 | | |
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APPENDIX A
DIEBOLD NIXDORF, INCORPORATED
2017 EQUITY AND PERFORMANCE INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1Purpose. The purpose of this Equity and Performance Incentive Plan (this “Plan”) is to attract and retain directors, officers and employees for Diebold Nixdorf, Incorporated (the “Company”) and its Subsidiaries and to provide to such persons incentives and rewards for performance.
1.2Participation. Persons eligible to participate in this Plan include Employees and Directors. Subject to the provisions of this Plan, the Committee may from time to time select those Employees and Directors to whom Awards shall be granted and shall determine the nature and amount of those Awards. No Employee or Director shall have the right to be granted an Award.
1.3Duration of the Plan. This Plan shall become effective on the date that it is approved by the Company’s shareholders (the “Effective Date”) and shall remain in effect, subject to the right of the Board to terminate this Plan at any time pursuant to Section 16.1, until all Shares subject to it have been purchased or acquired. However, in no event shall any Award be granted under this Plan on or after the tenth (10th) anniversary of the Effective Date.
ARTICLE II
DEFINITIONS
As used in this Plan,
2.1 “Annual Meeting” means the annual meeting of shareholders of the Company.
2.2 “Award” means any right granted under this Plan, including an Option, a Stock Appreciation Right, a Restricted Share award, a Restricted Stock Unit award, Performance Share or Performance Unit award, or an Other Share-Based award.
2.3 “Award Agreement” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an individual Award granted under this Plan which may, in the discretion of the Company, be transmitted electronically to the Participant. Each Award Agreement shall be subject to the terms and conditions of this Plan.
2.4 “Board” means the Board of Directors
2.5 “Change in Control” means the occurrence of any of the following:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), (a “Person”) of beneficial ownership (within the meaning ofJonathan B. LeikenRule 13d-3
Senior Vice President, Chief Legal Officer promulgated under the Exchange Act) of 30% or more of either: (A) the then-outstanding shares of common stock of the Company (the “Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (“Voting Stock”);provided,however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and Secretary
Canton, Ohio
(C) of subsection (c) of this Section 2.5; or-A-1-
(b) Individuals who, as of the date hereof, constitute the Board (as modified by this subsection (b), the “Incumbent Board”), cease for any reason (other than death or disability) to constitute at least a majority of the Board;provided,however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Company Common Stock and Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Company Common Stock and Voting Stock of the Company, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
A “Change in Control” will be deemed to occur (i) with respect to a Change in Control pursuant to subsection (a) above, on the date that any Person becomes the beneficial owner of thirty percent (30%) or more of either the Company Common Stock or the Voting Stock, (ii) with respect to a Change in Control pursuant to subsection (b) above, on the date the members of the Incumbent Board first cease for any reason (other than death or disability) to constitute at least a majority of the Board, (iii) with respect to a Change in Control pursuant to subsection (c) above, on the date the applicable transaction closes and (iv) with respect to a Change in Control pursuant to subsection (d) above, on the date of the shareholder approval. Notwithstanding the foregoing provisions, a “Change in Control” shall not be deemed to have occurred for purposes of this Plan solely because of a change in control of any Subsidiary by which the Participant may be employed.
2.6 “Code” means the Internal Revenue Code of 1986, as amended from time to time.
2.7 “Committee” has the meaning provided in Section 15.1 of this Plan.
2.8 “Common Shares” means shares of common stock, $1.25 par value per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Article XII of this Plan.
2.9 “Covered Employee” means a Participant who is, or is determined by the Board to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).
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2.10 “Date of Grant” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such later date as is set forth.
2.11 “Designated Subsidiary” means a Subsidiary that is (i) not a corporation or (ii) a corporation in which at the time the Company owns or controls, directly or indirectly, less than eighty percent (80%) of the total combined voting power represented by all classes of stock issued by such corporation.
2.12 “Detrimental Activity” means any of the following:
(a) Engaging in any activity, as an employee, principal, agent or consultant for another entity, and in a capacity, that directly competes with the Company or any Subsidiary in any actual product, service, or business activity (or in any product, service, or business activity which was under active development while the Participant was employed by the Company if such development is being actively pursued by the Company during theone-year period following the termination of Participant’s employment by the Company or a Subsidiary) for which the Participant has had any direct responsibility and direct involvement during the last two years of his or her employment with the Company or a Subsidiary, in any territory in which the Company or a Subsidiary manufactures, sells, markets, services, or installs such product or service or engages in such business activity.
(b) Soliciting any Employee to terminate his or her employment with the Company or a Subsidiary.
(c) The disclosure to anyone outside of the Company or a Subsidiary, or the use in other than the Company or a Subsidiary’s business, without prior written authorization from the Company, of any confidential, proprietary or trade secret information or material relating to the business of the Company and its Subsidiaries, acquired by the Participant during his or her employment with the Company or its Subsidiaries or while acting as a consultant for the Company or its Subsidiaries thereafter;provided,however, that nothing in this Plan limits a Participant’s ability to file a charge or complaint or to communicate, including by providing documents or other information without notice to the Company, with the Securities and Exchange Commission or any other governmental agency or commission (“Government Agency”) or limits a Participant’s right to receive an award for information provided to any Government Agency.
(d) The failure or refusal to disclose promptly and to assign to the Company upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Company or any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Company or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Company or any Subsidiary to secure a patent where appropriate in the United States and in other countries.
(e) Activity that results in “termination for cause,” as such term is defined in the applicable Award Agreement.
2.13 “Director” means a director of the Company.
2.14 “Disability” means totally and permanently disabled as from time to time defined under the long-term disability plan of the Company or a Subsidiary applicable to the Participant, or, in the case where there is no applicable plan, permanent and total disability as defined in Section 22(e)(3) of the Code (or any successor section);provided,however, that to the extent an amount payable under this Plan which constitutes deferred compensation subject to Section 409A of the Code would become payable upon Disability, “Disability” for purposes of such payment shall not be deemed to have occurred unless the disability also satisfies the requirements of treasury regulation1.409A-3.
2.15 “Effective Date” has the meaning provided in Section 1.3 of this Plan.
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2.16 “Employee” means an employee of the Company or any of its Subsidiaries, including an employee who is an officer or a Director.
2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
2.18 “Exercise Price” means, with respect to an Option or Stock Appreciation Right, the price at which a Common Share may be purchased upon exercise thereof.
2.19 “Fair Market Value” means, as of any particular date, the closing price of a Common Share as reported for that date on the New York Stock Exchange or, if the Common Shares are not then listed on the New York Stock Exchange, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred. If there is no regular public trading market for the Common Shares, then the Fair Market Value shall be the fair market value as determined in good faith by the Board.
2.20 “Free Standing Rights” has the meaning provided in Section 5.1 of this Plan.
2.21 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option under Section 422 of the Code or any successor provision.
2.22 “Incumbent Board” has the meaning provided in Section 2.5 of this Plan.
2.23 “Management Objectives” means the measurable performance objective or objectives selected by the Committee for purposes of establishing the Management Goal(s) for a Performance Period with respect to any Award under this Plan. The Management Objectives that will be used to establish the Management Goals shall be based on the attainment of specific levels of performance of the Company, a Subsidiary, division, business unit, operational unit, department, region or function within the Company or Subsidiary in which the Participant is employed. The Management Objectives applicable to any Award subject to Article X shall be limited to one or more of, or a combination of, the following:
(a) Sales, including (i) net sales, (ii) unit sales volume and (iii) aggregate product price;
(b) Share price, including (i) market price per share, and (ii) share price appreciation;
(c) Earnings, including (i) earnings per share, reflecting dilution of shares, (ii) gross orpre-tax profits,(iii) post-tax profits, (iv) operating profit, (v) earnings net of or including dividends, (vi) earnings net of or including theafter-tax cost of capital, (vii) earnings before (or after) interest and taxes (“EBIT”), (viii) earnings per share from continuing operations, diluted or basic, (ix) earnings before (or after) interest, taxes, depreciation and amortization (“EBITDA”), (x)pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items, (xi) operating earnings, (xii) growth in earnings or growth in earnings per share, (xiii) total earnings;
(d) Return on equity, including (i) return on equity, (ii) return on invested capital, (iii) return or net return on assets, (iv) return on net assets, (v) return on gross sales, (vi) return on investment, (vii) return on capital, (viii) return on invested capital, (ix) return on committed capital, (x) financial return ratios, (xi) value of assets, and (xii) change in assets;
(e) Cash flow(s), including (i) operating cash flow, (ii) net cash flow, (iii) free cash flow, and (iv) cash flow on investment;
(f) Revenue, including (i) gross or net revenue, and (ii) changes in annual revenues;
(g) Margins, including (i) adjustedpre-tax margin, and (ii) operating margins;
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(h) Income, including (i) net income, and (ii) consolidated net income;
(i) Economic value added;
(j) Costs, including (i) operating or administrative expenses, (ii) operating expenses as a percentage of revenue, (iii) expense or cost levels, (iv) reduction of losses, loss ratios or expense ratios, (v) reduction in fixed costs, (vi) expense reduction levels, (vii) operating cost management, and (viii) cost of capital;
(k) Financial ratings, including (i) credit rating, (ii) capital expenditures, (iii) debt, (iv) debt reduction, (v) working capital, (vi) average invested capital, and (vii) attainment of balance sheet or income statement objectives;
(l) Market or category share, including (i) market share, (ii) volume, (iii) unit sales volume, and (iv) market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas;
(m) Shareholder return, including (i) total shareholder return, (ii) shareholder return based on growth measures or the attainment of a specified share price for a specified period of time, and (iii) dividends; and
(n) Objective nonfinancial performance criteria measuring either (i) regulatory compliance, (ii) productivity and productivity improvements, (iii) inventory turnover, average inventory turnover or inventory controls, (iv) net asset turnover, (v) customer satisfaction based on specified objective goals or company-sponsored customer surveys, (vi) employee satisfaction based on specified objective goals or company-sponsored employee surveys, (vii) objective employee diversity goals, (viii) employee turnover, (ix) specified objective environmental goals, (x) specified objective social goals, (xi) specified objective goals in corporate ethics and integrity, (xii) specified objective safety goals, (xiii) specified objective business expansion goals or goals relating to acquisitions or divestitures, (xiv) day sales outstanding and (xv) succession plan development and implementation.
Any one or more of the Management Objectives may be used on an absolute, relative or comparative basis to measure the performance, as the Committee may deem appropriate, or as compared to the performance of another company or a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, including various stock market indices.
2.24 “Management Goals” means, for a Performance Period, the one or more goals established by the Committee, which, for any Award subject to Article X shall be based only upon the Management Objectives.
The Committee may provide that any evaluation of Management Goals shall include or exclude any of the following items: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (4) any reorganization and restructuring programs; (5) acquisitions or divestitures; (6) unusual, nonrecurring or extraordinary items identified in the Company’s audited financial statements, including footnotes, or in management’s discussion and analysis in the Company’s annual report; (7) foreign exchange gains and losses; (8) change in the Company’s fiscal year; and (9) any other specific unusual or nonrecurring events, or objectively determinable category thereof. In the case of an Award subject to Article X, any such item will be prescribed in a form and at a time that meets the requirements of Section 162(m) of the Code.
If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Goals unsuitable, the Committee may in its discretion modify such Management Goals or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, except in the case of any Award subject to Article X if such action would result in the loss of the otherwise available exemption under Section 162(m) of the Code. In such case, the Committee shall not make any modification of the Management Goals or minimum acceptable level of achievement.
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2.25 “Negative Discretion” means the discretion authorized by this Plan to be applied by the Committee to eliminate or reduce the size of an Award in accordance with Article X of this Plan.
2.26 “Non-Employee Director” means a Director who is a“non-employee director” within the meaning of Rule16b-3.
2.27 “Non-qualified Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
2.28 “Option” means an Incentive Stock Option or aNon-qualified Stock Option granted pursuant to Article IV of this Plan.
2.29 “Other Share-Based Award” means an Award granted pursuant to Article IX, which is payable in, valued in whole or in part by reference to, or otherwise based on or related to Common Shares, excluding any Option, Stock Appreciation Right, Restricted Share, Restricted Stock Unit, Performance Share or Performance Unit.
2.30 “Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations Section1.162-27(e)(3) or any successor to such statute and regulation.
2.31 “Participant” means an Employee or Director who has been granted an Award under this Plan.
2.32 “Performance Period” means the one or more periods of time (which shall not be less than one fiscal quarter in duration) as the Committee may select, over which the attainment of one or more Management Goals will be measured for purposes of determining a Participant’s right to and the payment of an Award subject to such Performance Period.
2.33 “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Article VIII of this Plan.
2.34 “Performance Unit” means a bookkeeping entry that records a unit equivalent to $1.25 awarded pursuant to Article VIII of this Plan.
2.35 “Related Rights” has the meaning provided in Section 5.1 of this Plan.
2.36 “Restricted Period” has the meaning provided in Section 6.1 of this Plan.
2.37 “Restricted Shares” means Common Shares granted or sold pursuant to Article VI of this Plan.
2.38 “Restricted Stock Unit” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Article VII of this Plan.
2.39 “Rulel6b-3” meansRule 16b-3 promulgated under the Exchange Act (or any successor rule toRule 16b-3) as is in effect and may be amended from time to time.
2.40 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
2.41 “Stock Appreciation Right” means a right granted pursuant to Article V of this Plan.
2.42 “Subsidiary” means corporation, company or other entity (i) more than fifty percent (50%) of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than fifty percent (50%) of whose ownership interest representing
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the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company except that for purposes of determining whether any person may be a Participant for purposes of a grant of Incentive, Stock Options, “Subsidiary” means any corporation which is a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
2.43 “Ten Percent Shareholder” means an employee of the Company, or of a parent or subsidiary corporation within the meaning of Section 424 of the Code, who owns (or is deemed to own pursuant to Section 424(d) of the Code) more than ten percent (10%) of the total combined voting power of all classes of voting stock of the Company, the Company’s parent (if any) or any Subsidiary.
2.44 “Voting Shares” means at any time, the then-outstanding securities entitled to vote generally in the election of Directors.
ARTICLE III
SHARES SUBJECT TO THE PLAN
3.1Number of Shares. Subject to adjustment as provided in Article XII of this Plan, the number of Common Shares that may be issued or transferred under this Plan shall not exceed in the aggregate 4,941,117 shares. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.
(a) Common Shares covered by an Award granted under this Plan will not be counted as used unless and until they are actually issued or transferred.
(b) If any Award is forfeited, expires, terminates, otherwise lapses or is settled for cash, in whole or in part, without the delivery of Common Shares, then the Common Shares covered by such forfeited, expired, terminated, lapsed or cash-settled Award shall again be available for grant under this Plan. In the event that withholding tax liabilities arising from an Award other than an Option or Stock Appreciation Right are satisfied by the tendering of Common Shares (either actually or by attestation) or by the withholding of Common Shares by the Company, the Common Shares so tendered or withheld shall be added to the Common Shares available for Awards under this Plan. For the avoidance of doubt, the following will not again become available for issuance under this Plan: (i) any Common Shares withheld in respect of taxes upon settlement of an Option or Stock Appreciation Right, (ii) any Common Shares tendered or withheld to pay an Exercise Price, (iii) any Common Shares subject to a Stock Appreciation Right that are not issued in connection with its stock settlement on exercise thereof, and (iv) any Common Shares reacquired by the Company on the open market or otherwise using cash proceeds.
3.2Share Limits. Notwithstanding anything in this Article III or elsewhere in this Plan to the contrary, and subject to adjustments as provided in Article XII of this Plan, the limits specified below shall apply to any grants of the following types of Awards:
(a) Options and Stock Appreciation Rights. No Participant shall be granted, in the aggregate during any calendar year, Awards of Options and Stock Appreciations Rights covering more than a total of four million (4,000,000) Common Shares.
(b) Performance-Based Awards Subject to Article X. No Participant shall be granted, in the aggregate during any calendar year, performance-based Awards that are designated by the Committee as subject to Article X covering more than a total of two million five hundred thousand (2,500,000) Common Shares.
(c) Performance Units. The aggregate dollar value of Performance Units granted to any Participant in any calendar year shall not exceed $30,000,000. The value of the Performance Units shall be determined based on the Fair Market Value of each Award on the Date of Grant.
(d) Incentive Stock Options. Notwithstanding any designation of an Option as an Incentive Stock Option in an Award Agreement, to the extent the aggregate Fair Market Value of the Common Shares with respect to
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which the Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans) exceeds one hundred thousand dollars ($100,000), the portion of the Options falling within such limit shall be Incentive Stock Options and the excess Options shall be treated as Nonqualified Stock Options. For these purposes, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Common Shares shall be determined as of the time the Option was granted. Incentive Stock Options covering no more than 4,941,117 Common Shares may be granted under this Plan.
(e)Non-Employee Director Limit. The aggregate dollar value of Awards granted to anynon-Employee Director in any calendar year shall not exceed $750,000. The value of the Awards shall be determined based on the Fair Market Value of each Award on the Date of Grant.
3.3Minimum Vesting Requirements. Notwithstanding any provision of this Plan to the contrary, on and after the Effective Date, the Committee shall not award more than 5% of the aggregate number of Common Shares that become available for grant under this Plan as of the Effective Date pursuant to Awards that are solely subject to vesting conditions or performance periods that are less than one year following the Date of Grant of the applicable Award, subject, in each case, to the Committee’s authority under this Plan to vest Awards earlier, as the Committee deems appropriate, upon the occurrence of a Change in Control, in the event of a Participant’s termination of employment or service or otherwise as permitted by this Plan.
ARTICLE IV
OPTIONS
4.1Grant of Options. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Options to purchase Common Shares to Participants. Options granted under this Plan may be (i) Incentive Stock Options,(ii) Non-qualified Stock Options, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code. Options granted under this Plan may not provide for any dividends or dividend equivalents thereon. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
4.2Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the number of Common Shares covered by the Option, the Exercise Price of the Option, the term of the Option, whether the Option is intended to be an Incentive Stock Option, any conditions to exercise of the Option, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
4.3Exercise Price. Each grant shall specify an Exercise Price per share, which shall not be less than one hundred percent (100%) of the Fair Market Value on the Date of Grant; provided,however, that a Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the Exercise Price per share is at least one hundred ten percent (110%) of the Fair Market Value on the Date of Grant and the Incentive Stock Option is not exercisable after expiration of 5 years from the Date of Grant.
4.4Exercise and Form of Consideration. To the extent exercisable, Options granted under this Plan shall be exercised by delivery of a written notice to the Company setting forth the number of Common Shares with respect to which the Option is being exercised, accompanied by full payment of the applicable Exercise Price. The Committee shall determine the acceptable form of consideration for the Exercise Price, including the method of payment, and for an Incentive Stock Option that determination shall be made at the time of grant. Consideration may consist of: (a) cash; (b) checks; (c) Common Shares, provided that such Common Shares have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price and provided that accepting the Common Shares does not result in any adverse accounting consequences to the Company; (d) consideration received by the Company under a broker-assisted (or other) cashless exercise program implemented by the Company in connection with this Plan; (e) by net exercise; (g) other consideration and method of payment to the extent permitted by applicable law and approved by the Committee; or (f) any combination of the foregoing methods.
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4.5Related Rights. The exercise of an Option shall result in the cancellation on ashare-for-share basis of any Related Rights authorized under Article V of this Plan.
4.6Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall vest sooner than 12 months from the Date of Grant.
4.7Maximum Term. No Option shall be exercisable more than 10 years from the Date of Grant.
ARTICLE V
STOCK APPRECIATION RIGHTS
5.1Grant of Stock Appreciation Rights. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Stock Appreciation Rights alone (“Free Standing Rights”) or in tandem with an Option granted under this Plan (“Related Rights”). Any Related Right that relates to aNon-qualified Stock Option may be granted at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted. Stock Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
5.2Award Agreement. Each Stock Appreciation Right shall be evidenced by an Award Agreement that shall describe such Stock Appreciation Right, the Exercise Price of the Stock Appreciation Right, the term of the Stock Appreciation Right, any conditions to the exercise of such Stock Appreciation Right, identify any related Option, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
5.3Exercise Price. Each grant shall specify an Exercise Price for a Free Standing Right, which shall not be less than one hundred percent (100%) of the Fair Market Value on the Date of Grant. A Related Right shall have the same Exercise Price as the related Option, and shall be exercisable only to the same extent as the related Option.
5.4Exercise and Form of Consideration. To the extent exercisable, Stock Appreciate Rights granted under this Plan shall be exercised by delivery of a written notice to the Company setting forth the number of Common Shares with respect to which the Stock Appreciation Right is being exercised, accompanied by full payment of the applicable Exercise Price. The Committee shall determine the acceptable form of consideration for the Exercise Price, including the method of payment. Consideration may consist of: (a) cash; (b) checks; (c) Common Shares, provided that such Common Shares have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price and provided that accepting the Common Shares does not result in any adverse accounting consequences to the Company; (d) consideration received by the Company under a broker-assisted (or other) cashless exercise program implemented by the Company in connection with this Plan; (e) by net exercise; (g) other consideration and method of payment to the extent permitted by applicable law and approved by the Committee; or (f) any combination of the foregoing methods.
5.5Payment. Upon exercise of a Stock Appreciation Right, the Participant shall be entitled to receive from the Company an amount equal to the number of Common Shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of the (i) Fair Market Value of a Common Share on the date the Award is exercised, over (ii) the Exercise Price specified in the Stock Appreciation Right or related Option. The grant shall specify whether the amount payable by the Company on exercise of the Stock Appreciation Right shall be paid in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Committee the right to elect among those alternatives. Any grant may specify that the amount payable on exercise of a Stock Appreciation Right may not exceed a maximum specified by the Committee at the Date of Grant.
5.6Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall vest sooner than 12 months from the Date of Grant.
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5.7Maximum Term. No Stock Appreciation Right shall be exercisable more than 10 years from the Date of Grant.
ARTICLE VI
RESTRICTED SHARES
6.1Grant of Restricted Shares. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Restricted Shares to Participants. Each such grant shall provide that during the period for which substantial risk of forfeiture is to continue (the “Restricted Period”), the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to continuing substantial risk of forfeiture in the hands of any transferee). Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
6.2Award Agreement. Each grant of Restricted Shares shall be evidenced by an Award Agreement that shall specify the number of Restricted Shares subject to the Award, the Restricted Period, any other conditions or restrictions on the Award, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
6.3Rights. Each such grant shall constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, and unless otherwise determined by the Committee, entitling such Participant to voting, dividend and other ownership rights, subject to the substantial risk of forfeiture and the Restricted Period.
6.4Certificates. Unless otherwise directed by the Committee, all certificates representing Restricted Shares shall be held in custody by the Company until all restrictions thereon shall have lapsed, together with a stock power executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Restricted Shares.
6.5Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall vest sooner than 12 months from the Date of Grant.
6.6Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Shares as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Management Goals. In granting Restricted Shares that are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m), including those stated in Article X.
ARTICLE VII
RESTRICTED STOCK UNITS
7.1Grant of Restricted Stock Units. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Restricted Stock Units to Participants. Each Restricted Stock Unit represents one Common Share. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
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7.2Award Agreement. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the number of Restricted Stock Units subject to the Award, the Restricted Period, any other conditions or restrictions on the Award, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
7.3Rights. No Common Shares shall be issued at the time a Restricted Stock Unit is granted, and a Participant shall have no voting rights with respect thereto. Restricted Stock Units shall be subject to forfeiture until the expiration of the Restricted Period and satisfaction of any applicable conditions, including vesting time periods or performance requirements, to the extent provided in the applicable Award Agreement.
7.4Dividend Equivalents. At the discretion of the Committee, each Restricted Stock Unit may be credited with dividend equivalents or other equivalent distributions. Dividend equivalents or other equivalent distributions shall be paid on a current basis unless the Award Agreement requires otherwise;provided,that dividend equivalents or other equivalent distributions on Restricted Stock Units that are subject to performance requirements, including Management Goals, shall be deferred until and paid contingent upon the level of achievement of the applicable performance or Management Goals at the end of the related Performance Period.
7.5Payment. Each grant shall specify the time and manner of payment of Restricted Stock Units. Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Committee the right to elect among those alternatives.
7.6Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall vest sooner than 12 months from the Date of Grant.
7.7Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Management Goals. In granting Restricted Stock Units that are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m), including those stated in Article X.
ARTICLE VIII
PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1Grant of Performance Shares and Performance Units. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Performance Shares and Performance Units to Participants that will become payable upon achievement of specified performance goals, which may include Management Goals. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
8.2Award Agreement. Each grant of Performance Shares or Performance Units shall be evidenced by an Award Agreement that shall specify the number of Performance Shares or Performance Units subject to the Award, the performance objectives (which may include Management Goals), the Performance Period applicable to the Award, any other conditions or restrictions on the Award, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
8.3Performance Objectives. Any grant of Performance Shares or Performance Units shall specify the performance objectives, which may include Management Goals, which, if achieved, will result in payment or early payment of the Award. Each grant may specify a minimum acceptable level of achievement of the performance objectives and shall set forth a formula for determining the number of Performance Shares or Performance Units that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified performance objectives. Before the Performance Shares or Performance Units shall be earned and paid, the Committee must certify the level of achievement of the performance objectives.
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8.4Dividends and Dividend Equivalents. The Committee may, at the Date of Grant of Performance Shares or Performance Units, provide for the payment of dividends or dividend equivalents to the Participant thereof either in cash or in additional Common Shares, subject in all cases to deferral and payment on a contingent basis based on the Participant’s earning of the Performance Shares or Performance Units with respect to which such dividend equivalents are paid.
8.5Payment. Each grant shall specify the time and manner of payment of Performance Shares or Performance Units which have been earned. Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Committee the right to elect among those alternatives.
8.6Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall have a Performance Period of less than 12 months from the Date of Grant.
8.7Section 162(m) Performance Restrictions. For purposes of qualifying the grants of Performance Shares or Performance Units as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Management Goals. In granting Performance Shares or Performance Units that are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m), including those stated in Article X.
ARTICLE IX
OTHER SHARE-BASED AWARDS
9.1Grant of Other Share-Based Awards. Subject to the limits of Sections 3.2 and 3.3 and the other terms and conditions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, grant Other Share-Based Awards not otherwise described by the terms of this Plan to Participants. Such Awards may involve the transfer of actual Common Shares to Participants and may include Awards designed to comply with or take advantage of applicable local laws of jurisdictions other than the United States. Each Other Share-Based Award will be expressed in terms of Common Shares or units based on Common Shares. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions.
9.2Award Agreement. Each grant of an Other Share-Based Award shall be evidenced by an Award Agreement that will specify the number of Common Shares or units covered by the Award, any conditions related to the Award, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
9.3Payment. Payment, if any, with respect to an Other Share-Based Award, will be made in accordance with the terms of the Award, in cash, in Common Shares or a combination of both as determined by the Committee.
9.4Minimum Vesting Requirements. Subject to the exceptions stated in Section 3.3, no Award under this Section shall vest sooner than 12 months from the Date of Grant.
9.5Section 162(m) Performance Restrictions. For purposes of qualifying the grants of Other Share-Based Awards as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Management Goals. In granting Other Share-Based Awards that are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m), including those stated in Article X.
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ARTICLE X
PERFORMANCE-BASED COMPENSATION UNDER 162(M)
10.1Qualified Performance-Based Awards. The Committee may, at its discretion and subject to the limits of Sections 3.2 and 3.3 of this Plan, designate at the time of grant that an Award (other than Options and Stock Appreciation Rights) is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, and if so designated, the provisions of this Article X shall control over any contrary provision of this Plan.
10.2Designation of Terms. The Committee shall, in its sole discretion, designate and record in writing within the first 90 days of a Performance Period (or within such maximum time allowed under Section 162(m) of the Code): (a) which Participants will be eligible to receive 162(m) qualified Awards for that Performance Period; (b) the length of the Performance Period; (c) the type of Award to be issued; (d) the Management Objectives to be used to establish the Management Goals and at what levels; (e) the Management Goals applicable to the Performance Period; and (f) the relationship between the Management Goals and the amount of such Award to be earned by each Participant for the Performance Period.
10.3Measurement and Certification of Performance related to Management Goals. Following completion of a Performance Period, the Committee shall review and certify in writing whether and to what extent the Management Goals for the Performance Period were achieved and, if so, calculate and certify in writing the Awards earned. The Committee may exercise Negative Discretion in determining the actual size of a Participant’s Award, if and when it deems appropriate. A Participant shall be eligible to receive payment in respect of the 162(m) qualified Award only to the extent that the Management Goals for such Performance Period are achieved.
10.4Payment. A 162(m) qualified Award shall be paid to Participants as soon as administratively practicable following the Committee’s completion of the certifications required by Section 162(m) of the Code, but in no event later than 2 1⁄2 months following the end of the applicable Performance Period.
ARTICLE XI
TRANSFERABILITY
11.1Transfer Limits. Except as otherwise determined by the Committee, no Options, Stock Appreciation Right or other derivative security granted under this Plan shall be transferable by a Participant other than by will or the laws of descent and distribution, except (in the case of a Participant who is not a Director or officer of the Company) to a fully revocable trust of which the holder is treated as the owner for federal income tax purposes, and in no event will any such Award granted under this Plan be transferred for value. Except as otherwise determined by the Committee, Options and Stock Appreciation Rights shall be exercisable during the Participant’s lifetime only by him or her or by his or her guardian or legal representative. Notwithstanding the foregoing, the Committee in its sole discretion may provide for transferability of Options and Stock Appreciation Rights under this Plan so long as such provisions will not disqualify the exemption for other awards underRule 16b-3 and so long as such transfer is not to a third-party entity, including financial institutions.
11.2Further Restrictions. The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Options or Stock Appreciation Rights or upon payment under any grant of Performance Shares, Performance Units, Restricted Stock Units or Other Share-Based Award or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Article VI of this Plan, shall be subject to further restrictions on transfer.
ARTICLE XII
ADJUSTMENTS
The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Awards granted hereunder, in the prices per share applicable to such Options and Stock Appreciation
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Rights and in the kind of shares covered thereby, as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation,spin-off,split-off,spin-out,split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding Awards under this Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Awards so replaced. In addition, for each Option or Stock Appreciation Right with an Exercise Price greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its sole discretion elect to cancel such Option or Stock Appreciation Right without any payment to the person holding such Option or Stock Appreciation Right. The Committee may also make or provide for such adjustments in the numbers of shares specified in Section 3.2 of this Plan as the Committee in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Article XII.
ARTICLE XIII
TAX WITHHOLDING
To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. Participants shall also make such arrangements as the Company may require for the payment of any withholding tax obligations that may arise in connection with the disposition of shares acquired upon the exercise of Options. In no event, however, shall the Company accept Common Shares for payment of taxes in excess of required tax withholding rates (or, after the Company’s adoption of ASU2016-09,Compensation-Stock Compensation (Topic 718)dated March, 11, 2015
maximum applicable tax rates), except that, in the discretion of the Committee, a Participant or such other person may surrender Common Shares owned for more than 6 months to satisfy any tax obligations resulting from any such transaction.ARTICLE XIV
SUBSIDIARIES ANDNON-US JURISDICTIONS
14.1Participation by Employees of Designated Subsidiaries. As a condition to the effectiveness of any grant or Award to be made hereunder to a Participant who is an employee of a Designated Subsidiary, whether or not such Participant is also employed by the Company or another Subsidiary, the Committee may require such Designated Subsidiary to agree to transfer to such employee (when, as and if provided for under this Plan and any applicable agreement entered into with any such employee pursuant to this Plan) the Common Shares that would otherwise be delivered by the Company, upon receipt by such Designated Subsidiary of any consideration then otherwise payable by such Participant to the Company. Any such award shall be evidenced by an agreement between the Participant and the Designated Subsidiary, in lieu of the Company, on terms consistent with this Plan and approved by the Committee and such Designated Subsidiary. All such Common Shares so delivered by or to a Designated Subsidiary shall be treated as if they had been delivered by or to the Company for purposes of Article III of this Plan, and all references to the Company in this Plan shall be deemed to refer to such Designated Subsidiary, except for purposes of the definition of “Board” and “Committee” and except in other cases where the context otherwise requires.
14.2Employees Outside the US. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America as the Committee may
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consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, shall include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Company.
ARTICLE XV
ADMINISTRATION
15.1Delegation to Committee. The Board hereby delegates authority to administer this Plan to the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board hereafter designated by the Board to administer this Plan, and the term “Committee” shall apply to any persons to whom such power is delegated. The Committee described in this Section 15.1 may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof (to the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee). A majority of the Committee (or subcommittee thereof) shall constitute a quorum, and the action of the members of the Committee (or subcommittee thereof) present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee (or subcommittee thereof).
15.2Committee Requirements. Except as otherwise determined by the Board, the Committee shall consist solely of two or moreNon-Employee Directors who are also Outside Directors. The Board shall have discretion to determine whether it intends to comply with the exemption requirements of Section16b-3 and/or Section 162(m) of the Code. However, if the Board intends to satisfy such exemption requirements, with respect to Awards to any Covered Employee and with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or moreNon-Employee Directors who are also Outside Directors. Within the scope of that authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Awards to eligible persons who are either (X) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award or (Y) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code or (ii) delegate to a committee of one or more members of the Board who are notNon-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under this Plan in the event Awards are granted under this Plan by a Committee that does not at all times consist solely of two or moreNon-Employee Directors who are also Outside Directors.
15.3Interpretation. The interpretation and construction by the Committee of any provision of this Plan or of any Award Agreement and any determination by the Committee pursuant to any provision of this Plan or of any such Award Agreement, notification or document shall be final and conclusive. No member of the Board or the Committee shall be liable for any such action or determination made in good faith.
15.4Company’s Rights Upon Occurrence of Detrimental Activity. Any Award Agreement may provide (whether or not such would result in additional tax to a Participant under Section 409A of the Code) that if a Participant, either during employment by the Company or a Subsidiary or within a specified period after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, forthwith upon notice of such finding, the Participant shall, unless otherwise provided in the Award Agreement:
(a) Return to the Company, in exchange for payment by the Company of any amount actually paid therefor by the Participant, all Common Shares that the Participant has not disposed of that were offered pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity, and
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(b) With respect to any Common Shares so acquired that the Participant has disposed of, pay to the Company in cash the difference between:
(i) Any amount actually paid therefor by the Participant pursuant to this Plan, and
(ii) The Fair Market Value of the Common Shares on the date of such acquisition.
To the extent that such amounts are not paid to the Company, the Company may set off the amounts so payable to it against any amounts (but only to the extent that such amount would not be considered “nonqualified deferred compensation” within the meaning of Section 409A of the Code) that may be owing from time to time by the Company or a Subsidiary to the Participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason.
15.5Clawback. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any of the foregoing) will be subject to such deductions and clawback as may be required or permitted to be made pursuant to such law, government regulation, stock exchange listing requirement or policy (or pursuant to any other policy adopted by the Company at the direction of the Board, including the Company’s current clawback policy).
15.6Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code. This Plan and any grants made hereunder shall be administered in a manner consistent with this intent.
15.7Fractional Shares. The Company shall not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.
ARTICLE XVI
AMENDMENT AND TERMINATION
16.1Amendment or Termination Authority. The Company, by action of the Board (or its designee), may at any time and from time to time amend or terminate this Plan in whole or in part. Any amendment which must be approved by the shareholders of the Company in order to comply with applicable law or the rules of any national securities exchange upon which the Common Shares are traded or quoted shall not be effective unless and until such approval has been obtained. Presentation of this Plan or any amendment thereof for shareholder approval shall not be construed to limit the Company’s authority to offer similar or dissimilar benefits in plans that do not require shareholder approval. Any amendment or termination of this Plan shall not impair in any material way the rights or obligations of any Participant under any Award that is outstanding as of the effective date of the amendment or termination without the written consent of the Participant. The Committee shall maintain its right to exercise its authority under this Plan with respect to any outstanding Awards at the effective date of termination.
16.2Deferrals. Except with respect to Options and Stock Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Shares or the settlement of awards in cash under this Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
16.3Conditions. The Committee may condition the grant of any Award or combination of Awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.
16.4Special Circumstances. If permitted by Section 409A of the Code and except in the case of an Award subject to Article X (other than in connection with the Participant’s death or Disability, or a Change in Control)
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where such action would result in the loss of an otherwise available exemption under Section 162(m) of the Code, in case of termination of employment by reason of death, Disability or normal or early retirement, or in the case of hardship or other special circumstances, of a Participant who holds Options or Stock Appreciation Rights not immediately exercisable in full, or any Restricted Shares or Restricted Stock Units as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Performance Shares or Performance Units which have not been fully earned, or other Share-Based Awards subject to restrictions or conditions, the Committee may, in its sole discretion, accelerate the time at which such Options or Stock Appreciation Rights may be exercised, or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse for Restricted Shares or Restricted Units, or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned, or the time when such restrictions or conditions will terminate with respect to Other Share-Based Awards, or may waive any other limitation or requirement under any such award.
16.5Change in Exercise Price Prohibited. Except in connection with a corporate transaction or event described in Article XII of this Plan, the terms of outstanding Awards may not be amended to reduce the Exercise Price of outstanding Options or Stock Appreciation Rights, or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an Exercise Price that is less than the Exercise Price of the original Option Stock Appreciation Right, as applicable, without shareholder approval.
16.6No Right to Continued Employment. This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor shall it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time. Prior to exercise of any Option, and prior to exercise, payment or delivery pursuant to any other Award, the Participant may be required, at the Company’s request, to certify in a manner reasonably acceptable to the Company that the Participant has not engaged in, and has no present intention to engage in the future in, any Detrimental Activity.
16.7Incentive Stock Options. To the extent that any provision of this Plan would prevent any Option that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option. Such provision, however, shall remain in effect for other Options and there shall be no further effect on any provision of this Plan.
ARTICLE XVII
GOVERNING LAW
This Plan and all Awards granted and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio, without regard to conflicts of law principles thereof.
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APPENDIX B
DIEBOLD NIXDORF, INCORPORATED
AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
SEVENTH. No holder of shares of the Corporation of any class shall have any right to cumulate the voting power of such shares in the election of Directors. The right to cumulate the voting power of the holder as provided in Section 1701.55 of the Ohio Revised Code (or any successor provision) is hereby specifically denied to all holders of shares of any class of stock of the Corporation.
EIGHTH. At each meeting of shareholders at which directors are to be elected, a nominee for director shall be elected only if the votes “for” the nominee exceed the votes “against” the nominee. Abstentions and brokernon-votes shall not be counted as votes “for” or “against” a nominee. Notwithstanding the foregoing, if the Board of Directors determines that the number of nominees exceeds the number of directors to be elected, then in that election the nominees receiving the greatest number of votes shall be elected.
SEVENTH NINTH. These Amendedand Restated Articles of Incorporation supersede and take the place of the existing Amended Articles of Incorporation, as heretofore amended.
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Directions to Courtyard Marriott |
4375 Metro Circle NW, North Canton, Ohio 44720 |
From Akron-Canton Regional Airport |
Take Interstate 77 South to the Everhard Road Exit. Turn right onto Everhard Road NW. Take the first right onto Dressler Road NW. Take the first right onto Metro Circle NW. The hotel is located on the left. |
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Take Interstate 76 West to Interstate 77 South. Proceed on Interstate 77 South to the Everhard Road Exit. Turn right onto Everhard Road NW. Take the first right onto Dressler Road NW. Take the first right onto Metro Circle NW. The hotel is located on the left. |
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From Cleveland Hopkins International Airport |
Take Route 71 South to the Ohio Turnpike (80 East). Proceed on the Ohio Turnpike to Exit 180 (Route 8 South). Continue on Route 8 South to Interstate 77 South. Proceed on Interstate 77 South to the Everhard Road Exit. Turn right onto Everhard Road NW. Take the first right onto Dressler Road NW. Take the first right onto Metro Circle NW. The hotel is located on the left. |
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Take Interstate 71 North to Interstate 76/224 East. Continue for approximately 20 miles to Interstate 77 South. Proceed on Interstate 77 South to the Everhard Road Exit. Turn right onto Everhard Road NW. Take the first right onto Dressler Road NW. Take the first right onto Metro Circle NW. The hotel is located on the left. |
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DIEBOLD NIXDORF, INCORPORATED 5995 MAYFAIR ROAD P.O. BOX 3077 NORTH CANTON, OH 44720-8077 | | | | VOTE BY INTERNET -www.proxyvote.com |
| | | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
DIEBOLD, INCORPORATED
5995 MAYFAIR ROAD
PO. BOX 3077
NORTH CANTON, OH 44720-8077
| Electronic Delivery of Future
| | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS |
| | | If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. |
| | | | VOTE BY PHONE -1-800-690-6903 |
| | | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. |
| | | | VOTE BY MAIL |
| | | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
| E22542-P87032 KEEP THIS PORTION FOR YOUR RECORDS |
| | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| | DIEBOLD NIXDORF, INCORPORATED | | For
All
| | Withhold
| | | | For All | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | |
| | The Board of Directors recommends you vote FOR each of the following nominees: | | | | | | | | | | | | | | | |
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| | 1. | | oElection of Directors | | o | | o | | ☐ | | ☐ | | | |
1. Election of Directors
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Nominees | | Nominees: | | | | | | | | | | | | | | | | | | | | | | |
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| | | | 01) Patrick W. Allender | | 0208) Andreas W. Mattes | | | | | | | | | | | | | | | | | | | | |
| | | | 02) Phillip R. Cox | | 03 Richard L. Crandall | | 04 Gale S. Fitzgerald | 05 Gary G. Greenfield | | | | |
06 Andreas W. Mattes | | 0709) Robert S. Prather, Jr. | | 08 | | | | | | | | | | | | | | | | | | |
| | | | 03) Richard L. Crandall | | 10) Rajesh K. Soin | | 09 | | | | | | | | | | | | | | | | | | |
| | | | 04) Alexander Dibelius | | 11) Henry D. G.D.G. Wallace | 10 | | | | | | | | | | | | | | | | | | | |
| | | | 05) Dieter W. Düsedau | | 12) Alan J. Weber | | | | |
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| | | | 06) Gale S. Fitzgerald | | 13) Jürgen Wunram | | | | | | | | | | | | | | | | | | | | |
| | | | 07) Gary G. Greenfield | | | | | | | | | | | | | | | | | | | | | | |
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| | The Board of Directors recommends you vote FOR proposals 2, 3, and 4. | | | 2-6: | | For | | Against | | Abstain | | |
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| | 2. | | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015;2017 | | o | o | o☐ | | ☐ | | ☐ | | |
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| | 3. | | To approve, on an advisory basis, named executive officer compensation.compensation | | | o | o☐ | o | ☐ | | ☐ | | |
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| | 4. | | To approve the Diebold Nixdorf, Incorporated Annual Cash Bonus Plan.2017 Equity and Performance Incentive Plan | | | o | o☐ | o | ☐ | | ☐ | | |
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| | 5. | | To approve an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections | | | | ☐ | | ☐ | | ☐ | | |
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| | 6. | | To approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections | | | | ☐ | | ☐ | | ☐ | | |
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| | The Board of Directors recommends you vote 1 YEAR on the following proposal: | | 1 Year | | 2 Years | | 3 Years | | Abstain | | |
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| | 7. | | To cast an advisory vote on the frequency of the shareholder advisory vote on named executive officer compensation | | ☐ | | ☐ | | ☐ | | ☐ | | |
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| | NOTE: The Common Shares represented by this proxy will be voted by the Proxy Committee, as recommended by the Board of Directors, unless otherwise specified.The Board of Directors recommends a vote FOR these items. | | |
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| Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. | | |
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| Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | | | Signature (Joint Owners) | | Date | | | | | | |
V.1.1
PLEASE VOTE TODAY
FOR THREE EASY WAYS TO VOTE!
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report, Notice & Proxy Statement is/are available at www.proxyvote.com.
E22543-P87032
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/are available at www.proxyvote.com.
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DIEBOLD NIXDORF, INCORPORATED |
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This Proxy is Solicited on Behalf of the Board of Directors |
The undersigned hereby appoints Andreas W. Mattes and Christopher A. Chapman, and each of them, as the Proxy Committee, with full power of substitution, to represent and to vote all the Common Shares of Diebold Nixdorf, Incorporated held of record by the undersigned on February 27, 2015,2017, at the annual meetingAnnual Meeting of shareholders,Shareholders which will be held at the Courtyard Marriott, 4375 Metro Circle NW, North Canton, Ohio 44720 (directions available in the proxy statement)Proxy Statement) on April 23, 201526, 2017 at 11:30 a.m. EDT, or at any adjournment or postponement thereof, as indicated on the reverse side. ThisThisproxy card also constitutes your voting instructions for any and all shares held of record by Wells Fargo Bank, N.A. for the account in the Dividend Reinvestment Plan. |
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This proxy covers all shares for which the undersigned has the right to give voting instructions to Bank of America Merrill Lynch, Trustee of the DIEBOLD NIXDORF, INCORPORATED 401(K) SAVINGS PLAN #610146 and the DIEBOLD NIXDORF, INCORPORATED 401(K) SAVINGS PLAN FOR PUERTO RICO ASSOCIATES #610147. This proxy, when properly executed, will be voted as directed. If no direction is given to the Trustee by 5:30 p.m. EDT on April 22, 201524, 2017 the Trustee will vote yourthese shares held in the Plans. |
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You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The Proxy Committee cannot vote the shares unless you sign and return this Card.proxy card. In its discretion, the Proxy Committee is authorized to vote upon such other business as may properly come before the meeting. |
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Continued and to be signed on reverse side |
V.1.1
