UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
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Diebold Nixdorf, Incorporated
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5995 Mayfair Road
P. O.P.O. Box 3077• North Canton, Ohio 44720-8077
March 13, 201715, 2019
Dear Shareholder:
The 20172019 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held at the CourtyardCleveland Marriott 4375 Metro Circle NW, North Canton,at Key Tower, 1360 West Mall Drive, Cleveland, Ohio 44720,44114, on Wednesday,Thursday, April 26, 201725, 2019 at 11:8:30 a.m. EDT.
As described in the accompanying Notice and Proxy Statement, at the Annual Meeting, you will be asked to (1) elect thirteen directors, (2) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2017,2019, (3) approve, on an advisory basis, our named executive officer compensation, and (4) approve an amendment to the Diebold Nixdorf, Incorporated 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.Plan.
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 20172019 Proxy Statement and Annual Report for the year ended December 31, 2016,2018, 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, 201725, 2019 are entitled to vote at the 20172019 Annual Meeting. You may vote online at 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 website at http://www.dieboldnixdorf.com. The replay may be accessed on our website 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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Chairman of the Board | GERRARD B. SCHMID President and Chief Executive Officer |
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held on April 26, 2017.25, 2019.
This Proxy Statement, along with our Annual Report for the year ended December 31, 2016,2018, including exhibits,
are available free of charge atwww.proxyvote.com (you will need to reference the16-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
April 26, 2017
11:30 a.m. EDT
Dear Shareholder:
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 26, 2017 at 11:30 a.m. EDT, for the following purposes:SHAREHOLDERS
DATE: April 25, 2019 TIME: 8:30 a.m. EDT LOCATION: Cleveland Marriott at Key Tower 1360 West Mall Drive Cleveland, Ohio 44114 | ITEMS TO BE DISCUSSED: | |||||
1. | To elect thirteen directors; |
2. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, |
3.
To approve, on an advisory basis, our named executive officer compensation; and |
4. | To approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive |
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Your attention is directed to the attached 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, 201725, 2019 will be entitled to vote at the 20172019 Annual Meeting.
The enclosed proxy card is solicited, and the persons named therein have been designated, by Diebold Nixdorf’s Board of Directors.
By Order of the Board of Directors | ||
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Jonathan B. Leiken | ||
Senior Vice President, Chief Legal Officer and Corporate Secretary |
March 13, 201715, 2019
(approximate mailing date)
You are requested to cooperate in assuring a quorum by voting online at www.proxyvote.com
or, 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
5995 Mayfair Road
P.O. Box 3077• North Canton, Ohio 44720-8077
PROXY STATEMENT
20172019 ANNUAL MEETING OF SHAREHOLDERS
PROXY SUMMARY | 1 | |||
VOTING INFORMATION | 5 | |||
CORPORATE GOVERNANCE | ||||
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COMPENSATION OF DIRECTORS | ||||
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PROPOSAL 1: ELECTION OF DIRECTORS | 19 | |||
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TABLE OF CONTENTS
(continued)
EXECUTIVE COMPENSATION MATTERS | ||||
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Payments Made Upon | 78 | |||
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REPORT OF AUDIT COMMITTEE | ||||
SHAREHOLDERS SHARING THE SAME ADDRESS | ||||
EXPENSES OF SOLICITATION | ||||
SHAREHOLDER PROPOSALS | ||||
OTHER MATTERS |
ii | | 2019 PROXY STATEMENT |
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This Proxy Statement is furnished to shareholders of Diebold Nixdorf, Incorporated (“Diebold Nixdorf,” the “Company,” “we,” “our,” and “us”) in connection with the solicitation by the Board of Directors of proxies to be used at our 20172019 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 13, 2017.15, 2019.
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.
MEETING INFORMATION
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TIME AND DATE 8:30 a.m. EDT, April 25, 2019 |
Cleveland Marriott at Key Tower 1360 West Mall Drive Cleveland, Ohio 44114 *Please note new location* | RECORD DATE Close of Business on February 25, 2019 | ||||||||||||||||||
PROPOSALS FOR YOUR VOTE AND BOARD RECOMMENDATIONS
PROPOSAL | BOARD RECOMMENDATION | PAGE REFERENCES (FOR MORE DETAIL) | ||||
FOR EACH NOMINEE |
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2. To ratify the appointment of KPMG LLP as our independent registered | FOR |
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3. To approve, on an advisory basis, our named executive officercompensation | FOR | 31 | ||||
4. To approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity | FOR |
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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.
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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 |
• |
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Rajesh K. Soin Chairman of the Board and Chief Executive Officer, Soin, LLC |
69 |
2012 |
Yes |
• |
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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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2019 PROXY STATEMENT | | 1 |
PROXY SUMMARY |
KEY LEADERSHIP AND BOARD DEVELOPMENTS
In 2018, a new Chairman of the Board, a new Chief Executive Officer and ultimately a new Chief Financial Officer significantly reset Diebold Nixdorf by launching a transformation and turnaround to reshape the Company’s future. The work in 2018 included:
At the same time, our Board of Directors continued a thorough refreshment process to align our Board with the strategic goals and challenges of the organization resulting in:
Entering 2019, we are focused on serving our dynamic customer needs, improving operational efficiency and advancing our leadership position within the retail and banking industries.
On January 1, 2018, Gary Greenfield assumed the position of Chairman of the Board and immediately undertook, with his fellow directors, to identify our next CEO to lead the Company forward. Mr. Greenfield also continued the board refreshment process, adding two new independent directors in 2018. Mr. Greenfield brings to the chairmanship more than 30 years of experience in corporate turnarounds and transformation, particularly focused on technology.
The Board’s CEO search process was both expeditious and impactful. In February 2018, Gerrard Schmid, a seasoned corporate executive with a track record of delivering value in a transforming environment, including as a public company CEO, joined the Company as our President and CEO. Under
Mr. Schmid’s leadership, the Company promptly developed strategies and initiatives, including DN Now, to improve financial performance, deliver value to customers and shareholders and create growth opportunities for our employees. By the end of the year, despite unexpected challenges stemming from the Company’s 2016 German acquisition, these initiatives bore significant fruit. We finished the year with fourth quarter profit and cash flow performance that was the strongest since the combination of Diebold and Wincor Nixdorf.
In October 2018, the Company attracted an experienced interim CFO, Jeffrey Rutherford, with substantial turnaround credentials across manufacturing and technology industries. In November 2018, Mr. Rutherford hired a new head of global finance whose responsibilities include improvements to the Company’s forecasting function. Mr. Rutherford was named permanent CFO on January 3, 2019. Mr. Rutherford is responsible for overseeing the implementation of the DN Now program across the Company’s global finance function.
Our DN Now transformation requires rigorous work and extensive contributions from virtually all functions of the business. Our early success is creating good energy within our leadership team and we are strengthening the team with new, experienced leaders such as Hermann Wimmer to lead retail and Julian Sparkes to transform internal IT as our Chief Digital Officer.
In addition, the Company’s transformation is taking effect in the marketplace. Key accomplishments include:
2 | | 2019 PROXY STATEMENT |
PROXY SUMMARY |
OVERVIEW OF OUR BOARD NOMINEES
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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 nominee’s background, skills and expertise can be found in Proposal 1: Election of Directors on pages 19-25.
COMMITTEE MEMBERSHIP | ||||||||||||||||
NAME AND OCCUPATION / CAREER HIGHLIGHTS
| AGE
| DIRECTOR SINCE
| INDEPENDENT
| AUDIT
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BOARD GOV.
| COMP.
| FIN.
| TS&I
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Patrick W. Allender Retired Executive Vice President, Chief Financial Officer and Secretary, Danaher Corporation | 72 | 2011 | Yes | Chair | · | |||||||||||
Arthur F. Anton Chairman and Chief Executive Officer, | 61 | — | Yes | |||||||||||||
Bruce H. Besanko Chief Financial Officer, Kohl’s Corporation | 60 | 2018 | Yes | · | · | |||||||||||
Reynolds C. Bish Chief Executive Officer, Kofax Limited | 66 | — | Yes | |||||||||||||
Ellen M. Costello Retired Chief Executive Officer, BMO Financial | 64 | 2018 | Yes | · | · | |||||||||||
Phillip R. Cox President and Chief Executive Officer, Cox Financial Corporation | 71 | 2005 | Yes | · | Chair | |||||||||||
Dr. Alexander Dibelius Managing Partner, CVC Capital Partners (Deutschland) GmbH | 59 | 2016 | Yes | · | · | |||||||||||
Dr. Dieter W. Düsedau Physicist and Former Director (Senior Partner), McKinsey & Co. | 60 | 2016 | Yes | · | · | |||||||||||
Matthew Goldfarb Partner, Investment Manager—North American | 47 | — | Yes | |||||||||||||
Gary G. Greenfield Non-executive Chairman of the Board, Diebold | 64 | 2014 | Yes | · | ||||||||||||
Gerrard B. Schmid President and Chief Executive Officer, Diebold | 50 | 2018 | No | |||||||||||||
Kent M. Stahl Retired Partner, Chief Investment Strategist and | 56 | — | Yes | |||||||||||||
Alan J. Weber Chief Executive Officer, Weber Group LLC | 70 | 2005 | Yes | · | Chair |
2019 PROXY STATEMENT | | 3 |
PROXY SUMMARY |
See pages 16-17 for more information on our considerations of a director nominee and additional detail regarding the key qualifications and skills of our 2019 nominees. Information about our directors' compensation and share ownership is provided on pages 13-15 and 27-28.
SNAPSHOT OF KEY QUALIFICATIONS AND SKILLS OF OUR NOMINEES | ||||||||||||||||||||||||||||||
International | 9 | |||||||||||||||||||||||||||||
Technology/Innovation | 10 | |||||||||||||||||||||||||||||
Financial Services | 10 | |||||||||||||||||||||||||||||
Retail | 7 | |||||||||||||||||||||||||||||
Leadership | 13 | |||||||||||||||||||||||||||||
Corporate Governance | 11 | |||||||||||||||||||||||||||||
Audit/Finance | 12 | |||||||||||||||||||||||||||||
Gov’t Regulated Industries | 3 | |||||||||||||||||||||||||||||
4 | | 2019 PROXY STATEMENT |
Q: | What items will be voted on at the Annual Meeting and how does the Board recommend I vote? |
A: | You are being asked to vote on the proposals outlined above in the proxy summary on page 1. The Board recommends a vote FOR each nominee, and FOR each of Proposals 2, 3 |
Q. | What happens if other matters are properly presented at the Annual Meeting? |
A. | 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. |
Q: | Who is entitled to vote at the Annual Meeting? |
A: | Our record date for the |
Q: | How do I vote? |
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 |
By mail – mail—You may vote by completing, signing and returning the proxy card that you will receive in the mail;
By Internet – Internet—We encourage you to vote and submit your proxy online atwww.proxyvote.com. Even if you request and receive a paper copy of the proxy materials, you may vote online by going towww.proxyvote.com and entering your control number, which is a 16 digit number located in a box on your proxy card that you can also receive in the mail, if requested; or
By telephone – 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.
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. |
Q: | Can I change my vote after I have voted? |
A: | You may change your vote at any time before your proxy is voted at the |
Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 20172019 Annual Meeting to our Corporate Secretary at the Company’s address above;
Submitting a later dated, signed proxy before the start of the 20172019 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;24, 2019; or
Attending the 20172019 Annual Meeting, withdrawing your earlier proxy and voting in person.
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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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Q: | How many votes are required to adopt each proposal? |
A: | For Proposal 1, the |
Q: | What is the Majority Voting Policy? |
A: | Our Board of Directors has adopted a policy that any director-nominee who is elected but receives a greater number of votes |
2019 PROXY STATEMENT | | 5 |
VOTING INFORMATION |
Q: | What is a “brokernon-vote”? |
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.” |
Proposal 2, the ratification of 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.
Proposal 2, the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019, 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 and 4. |
Q: | How many shares must be present to constitute a quorum and conduct the Annual Meeting? |
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. |
Q: | What happens if I abstain? |
A: | For all 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 amendment to an equity plan. |
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? |
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 Notice 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. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual |
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Q: | What shares are included on my proxy card or Notice of Internet Availability of Proxy Materials? |
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 of your proxy cards to ensure that all of your shares are voted. If you receive more than one Notice, reference the distinct16-digit control number on each Notice when voting by Internet. |
6 | | 2019 PROXY STATEMENT |
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Corporate Governance Highlights – Proxy Access Adoption
Our Board continuesis committed to evaluate ourstrong corporate governance arrangementsprinciples and practices to best serve our shareholders. One notable actionensure that we have recently taken is that ourthe Board has adopted a proxy access provision as partmost effectively and efficiently serves in its oversight obligations.
This section provides an overview of our Codethe organization 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, its committees, responsibilities and have their nominees included in our proxy statement.other related topics and initiatives.
Board Leadership StructureBOARD LEADERSHIP STRUCTURE
Our Board is committed to strong leadership and currently maintains separate roles of our Chief Executive Officer, or CEO, and our Chairman of the Board. We believe this structure is effective for our current circumstances and a good governance practice. The Board does not have a specific policy with respect to separating or
combining these roles, or whether the Chairman should be an employee ornon-employee director, and will continue to periodically review our leadership structure in light of corporate governance standards, market practices and our specific circumstances and needs.
BOARD AND DIRECTOR ASSESSMENTSBoard and Director Assessments
The Board Governance Committee overseesleads 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. Our Board and director assessments helped inform our recent refreshment efforts, including the four new nominees for director this year. The assessment program includes a full board self-assessment,
committee assessments, a chairman assessment and individual director assessments. The full board self-assessment includes comprehensive questions designed to provide a holisticanall-inclusive evaluation of the performance of the Board in light of our needs.needs and strategies. The committee, chairman, and individual director assessments are more specifically tailored. The assessment results are shared with theour Chairman, and applicable directors, committee members, and the full Board as appropriate, and appropriate action plans are prepared and executed.executed as necessary.
BOARD MEETINGS AND EXECUTIVE SESSIONSBoard Meetings and Executive Sessions
The Board held five regular meetings and twofive special meetingmeetings in person or telephonically during 2016, along with frequent telephonic updates around strategic transactions.2018. 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 2016.2018.
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. Gary
Greenfield, the Chairman of our Board, presides over these meetings in executive session. The executive sessions of each Board committee are overseen by the respective committee chair.
While we do not have a formal policy regarding directors’ attendance at the Annual Meeting of Shareholders, it is expected that all directors attend the 2017 Annual Meeting unless there are extenuating circumstances fornon-attendance. All directors standing forre-election who were serving as directors as of the 2016 Annual Meeting2018 annual meeting of Shareholders, with the exception of Henry D. G. Wallace,shareholders attended the 2016 Annual Meeting.2018 annual meeting.
Board Risk OversightBOARD RISK OVERSIGHT
The Board and the Board committees collectively play an active role in overseeing management of our risks and in helping establish an appropriate risk tolerance. The Board oversees our 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,
2019 PROXY STATEMENT | | 7 |
CORPORATE GOVERNANCE |
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. Our Compensation Committee performs an annual compensation risk assessment, and we believe that our compensation practices are not reasonably likely to have a material adverse effect on the Company.
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 President and 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 CommunicationsPeople Officer, and/or Vice President, Security Office, Vice President, Internal Audit and other Vice Presidents 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, optimizeenhances its ability to assess the various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for 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 CompositionBOARD COMMITTEES AND COMPOSITION
The Board’s current standing committees are the Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee and Technology Strategy and Innovation Committee. Each committee’s members and meetings during 20162018 and functions are described below. The Board reviews committee membership, charters and responsibilities every year and will do so in 2019 following the Annual Meeting.
| ||
Members:
Patrick W. Allender (Chair), Bruce H. Besanko, Ellen M. Costello and Dr. Dieter W. Düsedau
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically
Contact:
auditchair@dieboldnixdorf.com
Committee Report: See page
| 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
• Provides an avenue of communication among the
Financial Experts:
The Board has determined that
|
* | 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 |
-9-
8 | | 2019 PROXY STATEMENT |
|
BOARD GOVERNANCE COMMITTEE | ||
Members:
Gale S. Fitzgerald (Chair), Phillip R. Cox, Richard L. Crandall and Dr.
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically
Contact:
bdgovchair@dieboldnixdorf.com | Primary Duties and Responsibilities:
•
• 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
• Oversees director orientation and education, as described in “Director Orientation and • Ensures Board oversight of our enterprise risk management process.
|
| ||
Members:
Phillip R. Cox (Chair), Dr.
All members of this committee qualify as independent.
This committee met in person or telephonically
Contact:
compchair@dieboldnixdorf.com
Committee Report: See page | 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
|
-10-
| ||
Members:
Alan J. Weber (Chair), Patrick W. Allender, Bruce H. Besanko, Ellen M. Costello and Dr. Alexander Dibelius
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically | 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.
|
2019 PROXY STATEMENT | | 9 |
|
TECHNOLOGY STRATEGY AND INNOVATION COMMITTEE | ||
Members:
Richard L. Crandall (Chair)
All members of this committee qualify as independent.
Meetings: This committee | 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
|
10 | | 2019 PROXY STATEMENT |
CORPORATE GOVERNANCE |
Corporate Governance Materials Available on Our WebsiteCORPORATE GOVERNANCE MATERIALS AVAILABLE ON OUR WEBSITE
Copies of the following documents, among others, are available on our website (www.dieboldnixdorf.com) in the Corporate Governance portion of the Investor Relations section under the CompanyPolicies and Charters tab:
Current Charters for our Audit, Board Governance, Compensation, Finance, and Technology Strategy and Innovation Committees;
Our Director Independence Standards;
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.
For a discussion of our Insider Trading Policy, which prohibits hedging or pledging our stock by employees, see “Compensation Discussion and Analysis—Insider Trading Policy” below.
Director IndependenceDIRECTOR INDEPENDENCE
The Board determined that each of Patrick W. Allender, Arthur F. Anton, Bruce H. Besanko, Reynolds C. Bish, Ellen M. Costello, Phillip R. Cox, Richard L. Crandall, Dr. Alexander Dibelius, Dr. Dieter W. Düseadau,sedau, Gale S. Fitzgerald, Matthew Goldfarb, Gary G. Greenfield, Robert S. Prather, Jr., Rajesh K. Soin, Henry D. G. WallaceKent M. Stahl and Alan J. Weber has no material relationship with the Company (either directly or as a
-11-
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. MattesIn addition, former directors Robert S. Prather, Jr., Rajesh K. Soin and Dr. Jürgen Wunram doHenry D. G. Wallace, also met these independence standards at the time of their service in 2018. Gerrard Schmid does not meet these independence standards because they arehe is employed by us as our CEOPresident and COO, respectively.CEO.
In making the independence determinations, the Board considered the following:following business or professional relationships and determined, in each instance, that the relationship was not material or did not impair the independence of the respective directors:
Messrs. Crandall and Greenfield serve on the board of directors of Donnelley 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 2016 annual meeting of shareholders for a fee of approximately $1,839,094. The Board determined that the provision of 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.
provided SEC filing and printing services in 2018 related to our proxy statement for our 2018 Annual Meeting of Shareholders for a fee of approximately $64,483. |
Mr. Crandall 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 20162018 for a fee of approximately $107,000. The$117,909.
Related Person Transaction PolicyRELATED 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.
In 2016,2018, we did not engage in any related person transaction(s) requiring disclosure under Item 404 of RegulationS-K.
2019 PROXY STATEMENT | | 11 |
CORPORATE GOVERNANCE |
Communications with DirectorsCOMMUNICATIONS 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 description above or with ournon-employee directors as a group by sending an email tononmanagementdirectors@dieboldnixdorf.comnonmanagementdirectors@dieboldnixdorf.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 have 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.
-12-
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. 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 of Business Ethics.
The Code of Business Ethics applies to us, including 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 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 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 of Business Ethics. Our Audit Committee has procedures to receive, retain and treat complaints 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 of Business Ethics.
Compensation Committee Interlocks and Insider ParticipationCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December 31, 20162018 were Phillip R. Cox, Dr. Alexander Dibelius, Dr. Dieter W. Düsedau, Gale S. Fitzgerald, Rajesh K. Soin, and Alan J. Weber and Henry D. G. Wallace (who served through October 2016).Weber. 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 the 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 the Company or member of the Compensation Committee during 2016.2018.
Director Orientation and EducationDIRECTOR ORIENTATION AND EDUCATION
All new directors participate in a director orientation program. The Board Governance Committee oversees this introduction and orientation process whereduring which 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 his or her obligations as a director, 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.
12 | | 2019 PROXY STATEMENT |
-13-
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 shareholder interests.
The annual retainer received by theournon-employee directors during 20162018 remained the same as that paid in 2015.2017. Accordingly, during 2016,2018, ournon-employee directors received an annual cash retainer of $65,000$75,000 for their service as directors. Ournon-executive Chairman of the Board received an additional annual cash retainer of $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 | $ | 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 compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
In addition to cash compensation,retainers, eachnon-employee director may receive equity awards under our Amended and Restated 1991Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan as amended and restated on February 12, 2014,(as amended), which we refer to as the 19912017 Plan. We aim 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.”
With As such, in 2018, the exception of Drs. Dibelius and Düsedau, in 2016,Company awarded RSUs to eachnon-employee director was awarded 4,504 deferred common shares, subject to aone-year vesting condition. Each awardwhich approximated $124,000$158,323 in value at the time of grant, except for Mr. Besanko who joined our Board in September and therefore received an RSU grant on apro-rated basis to reflect partial year service. Each award provides for dividend equivalent payments in cash during the restricted period. Ournon-employee directors have received deferred common shares awards since 2007. We believe these awards strengthen the directors’ ties to shareholder interests by aligning their long-term economic interests and that these awards provide effective ways to help our directors build stock ownership.
Ournon-employee directors also received the following annual committee fees for their participation as members or as Chairs of one or more Board committees:
-14-
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 and meeting requirements. 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 compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
2019 PROXY STATEMENT | | 13 |
COMPENSATION OF DIRECTORS |
2016 Director Compensation2018 DIRECTOR COMPENSATION
The following table details the compensation of ournon-employee directors for 2016:2018:
Name | Fees Earned ($) | Stock ($) | All Other Compensation3 ($) | Total ($) | ||||||||||||||||||||||||
NAME |
FEES EARNED OR PAID IN CASH1 ($) | STOCK AWARDS2 ($) | ALL OTHER COMPENSATION3 ($) | TOTAL ($) | ||||||||||||||||||||||||
Patrick W. Allender | 97,500 | 123,500 | 16,211 | 237,211 |
|
107,500
|
|
|
158,352
|
|
|
2,335
|
|
|
268,187
|
| ||||||||||||
Bruce H. Besanko
|
|
23,750
|
|
|
22,994
|
|
|
—
|
|
|
46,744
|
| ||||||||||||||||
Ellen M. Costello
|
|
55,417
|
|
|
159,244
|
|
|
—
|
|
|
214,661
|
| ||||||||||||||||
Phillip R. Cox | 92,500 | 123,500 | 23,836 | 239,836 |
|
102,500
|
|
|
158,352
|
|
|
2,571
|
|
|
263,423
|
| ||||||||||||
Richard L. Crandall | 87,500 | 123,500 | 24,172 | 235,172 |
|
97,500
|
|
|
158,352
|
|
|
2,606
|
|
|
258,458
|
| ||||||||||||
Dr. Alexander Dibelius | 30,000 | — | — | 30,000 |
| 91,250
|
|
|
158,352
|
|
| 516
|
|
|
250,118
|
| ||||||||||||
Dr. Dieter W. Düsedau | 32,813 | — | — | 32,813 |
|
96,250
|
|
|
158,352
|
|
|
516
|
|
|
255,118
|
| ||||||||||||
Gale S. Fitzgerald | 92,500 | 123,500 | 25,836 | 241,836 |
|
102,500
|
|
|
158,352
|
|
|
3,335
|
|
|
264,187
|
| ||||||||||||
Gary G. Greenfield | 80,000 | 123,500 | 4,056 | 207,556 |
|
186,250
|
|
|
158,352
|
|
|
516
|
|
|
345,118
|
| ||||||||||||
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 | ||||||||||||||||||||||||
Robert S. Prather4
|
|
31,667
|
|
|
—
|
|
|
1,740
|
|
|
33,407
|
| ||||||||||||||||
Rajesh K. Soin5
|
|
69,375
|
|
|
158,352
|
|
|
1,261
|
|
|
228,988
|
| ||||||||||||||||
Henry D.G. Wallace4
|
|
25,000
|
|
|
—
|
|
|
3,545
|
|
|
28,545
|
| ||||||||||||||||
Alan J. Weber | 91,250 | 123,500 | 23,451 | 237,576 |
|
100,000
|
|
|
158,352
|
|
|
2,531
|
|
|
260,883
|
|
1 | This column reports the amount of cash compensation earned in |
Name | Audit ($) | Board Governance ($) | Compensation Committee ($) | Finance Committee ($) | Technology ($) | ||||||||||||||||||||||||||||||
NAME | AUDIT COMMITTEE ($) | BOARD GOVERNANCE COMMITTEE ($) | COMPENSATION COMMITTEE ($) | FINANCE COMMITTEE ($) |
TECHNOLOGY STRATEGY & INNOVATION COMMITTEE ($) | ||||||||||||||||||||||||||||||
Patrick W. Allender | 25,000 | — | — | 7,500 | — |
|
25,000
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| |||||||||||||||
Bruce H. Besanko
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||||||||||||
Ellen M. Costello
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||||||||||||
Phillip R. Cox | — | 7,500 | 20,000 | — | — |
|
—
|
|
|
7,500
|
|
|
20,000
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Richard L. Crandall | — | 7,500 | — | — | 15,000 |
|
—
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
15,000
|
| |||||||||||||||
Dr. Alexander Dibelius | — | 2,813 | — | 2,813 | — |
|
—
|
|
|
—
|
|
|
10,000
|
|
|
7,500
|
|
|
—
|
| |||||||||||||||
Dr. Dieter W. Düsedau | 4,688 | — | 3,750 | — | — |
|
12,500
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Gale S. Fitzgerald | 12,500 | 15,000 | — | — | — |
|
—
|
|
|
15,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Gary G. Greenfield | — | — | — | 7,500 | 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 | — |
|
—
|
|
|
—
|
|
|
10,000
|
|
|
15,000
|
|
|
—
|
|
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 |
3 | This column represents dividend equivalents paid in cash on shares deferred by our directors. |
4 | Messrs. Prather and Wallace did not stand forre-election to the Board at the Company’s 2018 annual meeting of shareholders and their terms ended on April 25, 2018. |
5 | Mr. Soin resigned from the Board on September 9, 2018. |
14 | | 2019 PROXY STATEMENT |
COMPENSATION OF DIRECTORS |
DIRECTOR STOCK OWNERSHIP GUIDELINES
-15-
Director Stock Ownership Guidelines
The Board has adopted stock ownership guidelines in 2013 to 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 the 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. We 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. TheIn 2017, the majority of our directors have exceeded thethese ownership guidelines, while our directors whoor were appointed most recently are on track to achieve the ownership guidelines within the next few years. However, as a result of the recent decline in our stock price in 2018, our directors did not meet their ownership requirements as of December 31, 2018.
2019 PROXY STATEMENT | | 15 |
-16-IDENTIFYING AND EVALUATING
DIRECTOR-NOMINEES
We are pleased to include four new nominees for director this year: Arthur F. Anton, Reynolds C. Bish, Matthew Goldfarb and Kent M. Stahl. These new director nominees, together with Ms. Costello and Mr. Besanko, who joined our Board during the course of this past year, reflect the ongoing efforts by our Board Governance Committee to identify talented nominees and directors that bring skills and strategic vision to the Company. We have also engaged with shareholders, including GAMCO, for their input and views regarding our Board succession planning.
The Board has determined to increase the size of our Board to thirteen members effective as of the date of the Annual Meeting. The Board views this number of directors as the correct balance of new perspectives with the experience and historical knowledge of the Company and its markets held by our continuing directors. The Board Governance Committee and Board have determined that this is the appropriate size for our Board as we continue our director succession planning efforts, focusing on bringing the skills necessary to support our strategic initiatives and considering the overall diversity of our Board. The Board Governance Committee will continue to evaluate the Board size commensurate with evolving needs of the Company.
Richard L. Crandall and Gale S. Fitzgerald are retiring from our Board at the Annual Meeting after 23 and 20 years, respectively, of service to the Company. We thank Mr. Crandall and Ms. Fitzgerald for their service to the Company.
Although Mr. Allender has reached the retirement age set forth in our Board governance policy, the Board Governance Committee and the Board determined that a waiver of the policy was warranted in order to maintain continuity on the Board in light of the recent refreshment efforts, particularly in light of Mr. Allender’s financial expertise and extensive knowledge of the Company’s finances and accounting.
IDENTIFICATION AND EVALUATION OF DIRECTOR-NOMINEES
The Board Governance Committee considers many methods for identifying and evaluating director-nominees, plans for any anticipated vacancies and also regularly reviews the appropriate size of the Board. 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. This past year, the Company engaged a third-
party search firm, Korn Ferry, to assist the Board Governance Committee in identifying, evaluating and conducting due diligence on potential director nominees. As described below, the Board Governance Committee also 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.
In evaluating director-nominees, including there-election of continuing directors, the Board Governance Committee considers many factors in order to maintain and strengthen the talent and capabilities of the Board and the 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.
Of particular interest in our current search were individuals with experience as executives responsible for technology operations in companies undergoing transformation with a digital emphasis, focusing on individuals with experience in industries which have gone through technology-driven business model change, conversions fromnon-cloud to cloud based technology and industrial companies transforming to digital. As we continue to substantially evolve the Company, the Board also looked for candidates with deep shareholder rights experience as we evolve our business models and capital structure.
Qualifications for Board service have not otherwise been reduced to a checklist of specific standards or minimum qualifications, skills or qualities. Rather, the Board Governance Committee decides which nominees to recommend based on the facts and circumstances at the time. Applicable considerations for new nominees or for directors potentially standing forre-election include:
16 | | 2019 PROXY STATEMENT |
IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES |
by contributing a variety of experiences, backgrounds, qualifications, technical expertise and other characteristics; and |
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.” The Board Governance Committee believes that each of the director-nominees fits the general qualifications described above and brings valuable experience, skills and qualifications to the Board. Detailed information about each director nominee’s background, experience and qualifications is provided in Proposal 1: Election of Directors.
CONSIDERATION OF DIRECTOR-NOMINEESSHAREHOLDER NOMINEES
POLICY & PROCEDURE
The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described belowabove under “IdentifyingIdentification and Evaluating Nominees for DirectorsEvaluation Methods.” 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 belowabove under “Board Diversity, Director Qualifications and Corporate Governance Guidelines.”
The Board Governance Committee will consider any shareholder nominations for director that are properly proposed and meet the requirements set out in our Code of Regulations, which include but are not limited to:
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, particular fields of 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 the Company if elected;
why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a director of 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. For important additional information related to proposal requirements, see “Shareholder Proposals” below.
Compensation Committee
The $
10,000
$
20,000
Board Governance Committee considers many methods
$
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 and meeting requirements. 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 compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
2019 PROXY STATEMENT | | 13 |
COMPENSATION OF DIRECTORS |
The following table details the compensation of ournon-employee directors for 2018:
NAME |
FEES EARNED OR PAID IN CASH1 ($) | STOCK AWARDS2 ($) | ALL OTHER COMPENSATION3 ($) | TOTAL ($) | ||||||||||||||||
Patrick W. Allender
|
|
107,500
|
|
|
158,352
|
|
|
2,335
|
|
|
268,187
|
| ||||||||
Bruce H. Besanko
|
|
23,750
|
|
|
22,994
|
|
|
—
|
|
|
46,744
|
| ||||||||
Ellen M. Costello
|
|
55,417
|
|
|
159,244
|
|
|
—
|
|
|
214,661
|
| ||||||||
Phillip R. Cox
|
|
102,500
|
|
|
158,352
|
|
|
2,571
|
|
|
263,423
|
| ||||||||
Richard L. Crandall
|
|
97,500
|
|
|
158,352
|
|
|
2,606
|
|
|
258,458
|
| ||||||||
Dr. Alexander Dibelius
|
| 91,250
|
|
|
158,352
|
|
| 516
|
|
|
250,118
|
| ||||||||
Dr. Dieter W. Düsedau
|
|
96,250
|
|
|
158,352
|
|
|
516
|
|
|
255,118
|
| ||||||||
Gale S. Fitzgerald
|
|
102,500
|
|
|
158,352
|
|
|
3,335
|
|
|
264,187
|
| ||||||||
Gary G. Greenfield
|
|
186,250
|
|
|
158,352
|
|
|
516
|
|
|
345,118
|
| ||||||||
Robert S. Prather4
|
|
31,667
|
|
|
—
|
|
|
1,740
|
|
|
33,407
|
| ||||||||
Rajesh K. Soin5
|
|
69,375
|
|
|
158,352
|
|
|
1,261
|
|
|
228,988
|
| ||||||||
Henry D.G. Wallace4
|
|
25,000
|
|
|
—
|
|
|
3,545
|
|
|
28,545
|
| ||||||||
Alan J. Weber
|
|
100,000
|
|
|
158,352
|
|
|
2,531
|
|
|
260,883
|
|
1 | This column reports the amount of cash compensation earned in 2018 for |
NAME | AUDIT COMMITTEE ($) | BOARD GOVERNANCE COMMITTEE ($) | COMPENSATION COMMITTEE ($) | FINANCE COMMITTEE ($) |
TECHNOLOGY STRATEGY & INNOVATION COMMITTEE ($) | ||||||||||||||||||||
Patrick W. Allender
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Bruce H. Besanko
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Ellen M. Costello
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Phillip R. Cox
|
|
—
|
|
|
7,500
|
|
|
20,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Richard L. Crandall
|
|
—
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
15,000
|
| ||||||||||
Dr. Alexander Dibelius
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Dr. Dieter W. Düsedau
|
|
12,500
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Gale S. Fitzgerald
|
|
—
|
|
|
15,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Gary G. Greenfield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,500
|
| ||||||||||
Alan J. Weber
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
15,000
|
|
|
—
|
|
2 | This column represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board,
|
3 | This column represents dividend equivalents paid in cash on shares deferred by our directors. |
4 | Messrs. Prather and Wallace did not stand for
|
5 | Mr. Soin resigned from the Board |
-17-
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 the 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. Rather, the Board Governance Committee decides which nominees to recommend based on the facts and circumstances at the time. Applicable considerations include:
14 | | 2019 PROXY STATEMENT |
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.”
The Board Governance Committee believes that each of our directors fits the general qualifications described above and brings valuable experience, skills and qualifications to the Board. Accordingly, each of our 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 permitted under our Corporate Governance Guidelines.
|
DIRECTOR STOCK OWNERSHIP GUIDELINES
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.
-46-
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.
-47-
PROPOSAL 7: ADVISORY VOTE ON THE FREQUENCY OF THE SHAREHOLDER ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
|
|
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.
-48-
EXECUTIVE COMPENSATION MATTERS
The Compensation Committee has reviewed and discussed with management the following “Compensation“Compensation Discussion and Analysis”Analysis” section of this proxy statement.Proxy Statement. Based on our review and discussions, we recommendrecommended to the Board that the “Compensation“Compensation Discussion and Analysis”Analysis” be included in (or incorporated by reference as applicable) in our Annual Report on Form10-K for the year ended December 31, 20162018 and this proxy statement.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.
Phillip R. Cox, Chair
Dr. Dieter DüsedauAlexander Dibelius
Rajesh K. SoinGale S. Fitzgerald
Alan J. Weber
Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
Our 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,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 2016.2018.
Mr. Gerrard B. Schmid joined the Company as President and Chief Executive Officer on February 21, 2018. Mr. Jeffrey Rutherford joined the Company as Interim Chief Financial Officer on October 1, 2018 and was then appointed Senior Vice President and Chief Financial Officer on January 3, 2019. The terms of their employment are summarized on pages 70-71 of this Proxy Statement.
In addition, two of our NEOs Eckard Heidloffdeparted. Dr. Juergen Wunram retired from his position as Senior Vice President and Dr. Jürgen Wunram both joined our company following our combination with Wincor Nixdorf in August 2016. Because the acquisition occurred in the middleChief Operating Officer on May 31, 2018, and Christopher A. Chapman departed from his position as Senior Vice President and Chief Financial Officer on October 1, 2018. Both had served as InterimCo-Presidents andCo-CEOs of the year,Office of the Chief Executive from December 13, 2017 to February 21, 2018. They received payments in accordance with their respective separation agreements which are summarized on page 78 of this Proxy Statement. Accordingly, certain tables and disclosures in this Compensation Discussion and Analysis will exclude Messrs. Wunram and Chapman because the domination and profit and loss transfer agreement with Diebold Nixdorf AG (f/k/a Wincor Nixdorf)their compensation was not effective until February 2017, the compensation with respect to these NEOs was largely determined by the Supervisory Boardterms of Wincor Nixdorf (which is similar totheir agreements, rather than the board of directors for a U. S. company) 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 continued in effectCompensation Committee’s determination following the acquisition. Although Mr. Heidloff has resigned effective March 31, 2017, we anticipate that Dr. Wunram’s compensation structure will be similar to the other NEOs for 2017.ouryear-end performance results.
Therefore, with the exception of 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 this Compensation Discussion and Analysis should be read in that context.
Gerrard B. Schmid | President and Chief Executive Officer | |
Jeffrey Rutherford | Senior Vice President and Chief Financial Officer | |
Dr. Juergen Wunram* | Former Senior Vice President and Chief Operating Officer | |
Christopher A. Chapman* | Former Senior Vice President and Chief Financial Officer | |
Dr. Ulrich Näher | Senior Vice President, Products | |
Olaf Heyden | Senior Vice President, Services | |
Jonathan B. Leiken | Senior Vice President, Chief Legal Officer and Corporate Secretary | |
| ||
|
|
Dr. Wunram |
| 43 |
EXECUTIVE COMPENSATION MATTERS |
-49-
To assist shareholders in finding important information, this “Compensation Discussion and Analysis” is organized as follows:
| ||||
| ||||
COMPENSATION DECISION PROCESS | 52 | |||
PAGE | ||||
Annual Cash Bonus | ||||
Long-Term Incentives— | ||||
56 | ||||
Long-Term Incentives—2017 Performance-Based Cash Incentive Awards | 60 | |||
| ||||
EXECUTIVE SUMMARY
-50-
Executive SummaryYEAR IN REVIEW
In 2016 we transformedAs discussed previously, 2018 was a year of significant change and resetting for Diebold Nixdorf. Over the companycourse of the year, the Company’s new Chairman, Board of Directors (including two new independent directors) and laid the foundation fornew CEO together concluded that our future. We acquired Wincor Nixdorffocus should shift to improvestreamlining and simplifying 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 Securityoperations. The resulting 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.improvement plan, “DN Now,” included three primary work streams:
We continue to make progress on our integration, and our cost synergy efforts are geared towards the realization of scale effects
1) | streamlining management layers and transitioning to a new operating model; |
2) | implementing a globally-consistent approach to services through our Services Modernization Plan; and |
3) | streamlining our product portfolio. |
As these plans were being implemented, in the hardware businesssecond quarter the Company experienced higher service delivery costs and streamliningoperational challenges in our managementsupply chain which contributed to lower than expected profit and workforce composition. Our sales team is fully aligned around our goals, quotas and account plans. We have made extensive changes to realign our sales organization to be closercash flows. In reaction to our customers,second quarter results and we are investingrevised outlook, the Company experienced a wave of redemption requests from Diebold Nixdorf AG shareholders and the Company settled these requests, as mandated by German law, by using more than $300 million in training so our sales executives can be bestcash. These events placed a strain on the Company’s liquidity. Under the leadership of the Board of
Directors, the Company was able to successfully raise $650 million in class consultantsdebt financing and amend its credit facility. This added liquidity was needed to our customers on their digital journey.fund the minority shareholder obligations, support key DN Now transformation initiatives, as well as initiatesqueeze-out proceedings of the remaining minority shareholders. The Company then proceeded to onboard a new CFO to align the new focus and initiatives of the Company.
In the governancefall, additional DN Now initiatives were implemented to enhance the long-term profitability and compensation space, we expanded our Board to include two directors fromcash flows of the Wincor Nixdorf boardbusiness. This included further reduction of directorsG&A expenditures including global spend analytics for finance, real estate, information technology, as well as a company-wide program designed to harvest cash from net working capital. These efforts required significant incremental analysis, planning, collaboration and execution among the leadership team. In recognition of this significant increase in workload, the Compensation Committee and Mr. Schmid adjusted the compensation incentives to better align with the transformational turnaround initiatives. This work resulted in the granting of turnaround bonuses for certain executives and the creation of a Quarterly Bonus Program to drive the desired outcomes at an accelerated pace. These actions were important steps to retain and incentivize key leaders of the Company.
44 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
By the fourth quarter, due to the hard work and dedication of our newly appointed COOleadership team, the Company experienced significant benefits from DN Now as we delivered the strongest profit and cash flow performance since our combination with Wincor Nixdorf. The expected financial benefit of our DN Now initiatives has increased from approximately $250 million to approximately $400 million of savings through the year 2021. We expect to realize about $160 million in savings in 2019, with progressively more recently.savings to be delivered in 2020 and 2021.
Under new leadership, the Company overcame the liquidity squeeze inmid-2018 and achieved significantly better financial results in the second half of the year which demonstrates the strength of the new vision for the Company. Critical to this achievement was a renewed compensation program to properly reward and incentivize leaders for moving the Company through and beyond the crisis. We have engaged in extensive shareholder outreach around executive compensation matters, particularly givenretained valued members of our team and have been able to recruit new talent to execute our new CEO’s dynamic vision while overcoming the complexity of the compensation arrangements following the Wincor Nixdorf acquisition. Those discussions are detailed below. Finally, our Board took the positive step of adopting “proxy access” in our Code of Regulations in recognition of the growing trend to allow long-term shareholders 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. We are pleased to be in line with this best practice in corporate governance.unique challenges that we facedmid-year.
20162018Say-on-PaySAY-ON-PAY Vote and Shareholder EngagementVOTE AND SHAREHOLDER ENGAGEMENT
At our 2016 Annual Meeting2018 annual meeting of Shareholders,shareholders, the advisory vote to approve the executive compensation program for our NEOs received solid support (70.9%(90% of votes cast), but representedrepresenting a decline from previous years. Managementcontinued trend of positive shareholder support for our executive compensation program. We value the input of our shareholders and the Committee were disappointed by this result. In response, we broadened our shareholder outreach effortsare committed to includemaintaining a dialogue with portfolio managers, corporate governance and executive compensation professionalsprofessionals. In 2018, employees 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 Company’s outstanding shares. Employees from the company’s Human Resources, Investor Relations and Legal departments engaged with institutions owning about 2/3 of shares outstanding and had extensive and meaningful dialogue with 10 shareholders who collectively representing approximately 30% of our outstanding shares. The remaining shareholders we contacted indicated a meeting was not needed at this time. We also held meetings withand feedback from two leading proxy advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., to understand their views. regarding the Company and our corporate governance. Shareholder feedback is aggregated and shared with the full Board for consideration.
Shareholders and the proxy advisory firms notedprovided varying levels of concernfeedback related topay-for-performance alignment, incentive metrics, and the clarity with which we discloseof our programs, and the impact of the Wincor Nixdorf acquisition ondisclosure around our future executive compensation structure. AllWe also received feedback is beingregarding interest in diversity statistics, sustainability and director tenure and skillsets. We considered forthis feedback, as well as the results of last year’sSay-on-Pay proposal, as we structured our future executive compensation program as we developand drafted the appropriate structure following the major acquisition of Wincor Nixdorf. In the spirit of immediate and continuous governance improvements, for this year’s CD&A the Committee focusedrelated disclosure. We continue to prioritize our efforts on shareholder feedback related to disclosure clarity and transparency because these attributes are consistent withdelivering on our corporate culture and business strategy. We focused on clear and transparent disclosure with regard to a 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 thoselong-term strategic goals and actual compensation earned vs. the Committee’s original approved targets.bringing value to our shareholders.
In addition to these outreach efforts, management met with fund managers who collectively held about 70%more than 65% of Diebold Nixdorf’s actively-managed shares during 2016.2018. Our recurring annual investor outreach activities are
-51-
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 are 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,Company and their expectations for our performance, andas well as to identify issues that may affect our strategies, corporate governance, valuation and other aspects of our operations.
Executive Compensation Best Practices
2019 PROXY STATEMENT | | 45 |
EXECUTIVE COMPENSATION MATTERS |
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 PoliciesPolicies”” or elsewhere in this “Compensation Discussion and Analysis”:
WHAT WE DO |
WHAT WE DON’T DO/DON’T ALLOW | |||||||||
Set stock ownership guidelines for executives and directors. |
| No hedging or pledging of our stock by executives or directors. | ||||||||
Prescribe an annual limit on equity compensation for our directors. | ||||||||||
|
| No dividends paid on unearned performance-based shares. | ||||||||
Review tally sheets for executives. | ||||||||||
|
| No | ||||||||
Disclose performance goals for incentive payments. |
| No excise taxgross-ups upon a change in control. | ||||||||
Set maximum payout caps on our annual and long-term incentives. |
| Nore-pricing or cash buyout of underwater stock options. | ||||||||
| ||||||||||
Pay for performance with |
| No enhanced retirement formulas. | ||||||||
| Provide a minimum vesting period of at least one year for at least 95% of our equity awards. |
| ||||||||
| No market timing with granting of equity awards. | |||||||||
Cap performance share payments if three-year shareholder return is negative, regardless of our ranking. | |
| ||||||||
Limit perquisites and other benefits, and do not include income taxgross-ups (except for relocation expenses). | |
| ||||||||
Hire an independent consultant reporting directly to the Committee. | ||||||||||
Through the Committee’s independent consultant, engage in an ongoing assessment of our compensation practices against the market, our competition, and other applicable metrics. | ||||||||||
Incorporate general cash severance and |
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|
| |||||
Perform an annual compensation risk assessment. | ||||||
| ||||||
Enforce strict insider trading policies, incentive plan clawback policies, andblack-out periods for executives and directors. |
46 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
OUR COMPENSATION STRATEGY
Our executive pay program is specifically designed to:
Focus on performance metrics that align executives with the creation relative of long-term shareholder value through performance-based compensation, including the direct utilization of relative total shareholder return, or TSR;rTSR;
Use metrics that are balanced and support our multi-year integration and transformation programs called DN2020;program;
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 20162018 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. OurIn 2018, as discussed later in this Proxy Statement, we instituted a Quarterly Bonus Program to align certain senior leaders with the goals established by Mr. Schmid after he joined, and we awarded turnaround bonuses at the end of the year to reward extraordinary effort and accomplishment in the last six months of the year. These awards are described in more detail below under “Quarterly Bonus Program andTurnaround Bonus Awards.” Apart from the Quarterly Bonus Program and any turnaround bonuses, 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 50th50th 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 50th50th 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 plan, DN2020.
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2019 PROXY STATEMENT | | 47 |
EXECUTIVE COMPENSATION MATTERS |
The following table summarizes key elements of our 20162018 executive compensation program:
ELEMENT |
PRIMARY PURPOSE |
KEY CHARACTERISTICS | ||
Base Salary | To compensate the executive fairly and competitively for the responsibility level of the position. | Fixed compensation component. | ||
Annual Cash Bonus Plan | 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. | Variable compensation component. The
Corporatenon-GAAP Operating Profit (50%) Corporate Free Cash Flow (30%)
Individual Key Business Initiatives For Messrs. Näher and Heyden, the weighting was adjusted in April 2018 to 40% Corporatenon-GAAP Operating Profit and 30% Individual Performance Metrics.
Performance Gate: A minimum level of corporatenon-GAAP Operating Profit performance is required to earn | ||
Long-Term Equity Incentives (LTI) | To align executives’ 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 | To motivate the appropriate behaviors to provide superior | Cumulative three-year TSR relative to S&P 400Mid-Cap Index | ||
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 three-year ratable vesting. | ||
2017 Performance-Based Synergy Grant | To incentivize the accelerated achievement of cost reductions and scale efficiencies made possible by our business combination with Wincor Nixdorf. | In 2017,one-time variable compensation based on level of achievement of synergy savings, including realized cost reductions and scale efficiencies; implemented in response to comments received during 2016 shareholder outreach campaign. Our CEO was excluded from thisone-time grant. | ||
2017 Performance-Based Cash Incentive Awards | To align the legacy Wincor Nixdorf employees with achieving our company-wide goals. | In 2017,one-time variable compensation component based on our stock price; grant was contingent on cancellation of Wincor Nixdorf outstanding options; represents an exchange of existing value to align management incentives for the newly combined business. |
48 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
ELEMENT | PRIMARY PURPOSE | KEY CHARACTERISTICS | ||||
Quarterly Bonus Program | Created in fourth quarter 2018 following the liquidity crises and in support of our turnaround efforts. This program is designed to reward achievement of the DN Now initiatives and to incentivize near-term completion on a quarterly basis. The program will continue until otherwise determined by the Compensation Committee. | Variable cash bonus opportunity that can be earned on a quarterly basis in an amount up to 25% of 150% of the participant’s base salary. The Compensation Committee reviews performance of each NEO after the quarter is complete and in its discretion awards a bonus based on performance against strategic initiatives. | ||||
Turnaround Bonus Awards | Implemented after Mr. Schmid joined the Company to recognize and reward extraordinary performance and effort in connection with our turnaround in the last six months of 2018. | Cash bonus provided at the discretion of the Compensation Committee following performance evaluations and in light of effort in the last six months of the year. | ||||
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-related benefits, where appropriate. | Fixed compensation component. | ||||
|
| |||||
Change in Control Protection | To retain executives and provide management continuity in event of actual or threatened | Fixed compensation component; only paid in the event the executive’s employment is terminated following a | ||||
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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2016 NEO Compensation Highlights - Target Compensation Structure
2019 PROXY STATEMENT | | 49 |
EXECUTIVE COMPENSATION MATTERS |
2018 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
• Mr. • Mr. Rutherford: Hired on an interim basis in late 2018 with a monthly salary of $50,000. Transitioned to full-time position in early 2019 with a base salary of $600,000, an annual target bonus opportunity of 100% of base salary and a long-term incentive opportunity of 200% of base salary at target. • Dr. Wunram: Increased base salary from€535,000 to€551,050. No change
• Mr. Chapman: Increased base salary from
•
• Mr. Heyden: Increased base salary from€470,000 to€484,100. No change in target bonus or long-term incentive opportunity. • Mr. Leiken: Increased base salary from $475,000 to $489,250 and then to $510,000 in April 2018. No change in target bonus or long-term incentive opportunity. • Our 2018 long-term incentive value mix | |||
|
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In summary, the NEOs had the following total compensation structure for 2016:2018:
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 | % |
NAME | SALARY | TARGET BONUS (% OF SALARY) | TARGET LTI (% OF SALARY) | |||||||||
Gerrard B. Schmid | $ | 950,000 | 140 | % | 500 | % | ||||||
Jeffrey Rutherford1 | $ | 50,000 per month | | N/A | N/A | |||||||
Dr. Juergen Wunram | € | 551,050 | 100 | % | 200 | % | ||||||
Christopher A. Chapman | $ | 592,250 | 100 | % | 200 | % | ||||||
Dr. Ulrich Näher | € | 484,100 | 100 | % | 150 | % | ||||||
Olaf Heyden | € | 484,100 | 100 | % | 150 | % | ||||||
Jonathan B. Leiken | $ | 489,250 | 2 | 100 | % | 150 | % |
1 | Mr. Rutherford served as interim Chief Financial Officer in the fourth quarter of 2018. |
2 | Mr. Leiken’s base salary was increased to $510,000 on April 30, 2018. |
50 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
REGULAR TOTAL DIRECT COMPENSATION MIX
The graphics below represent the percentages of fixed and at risk compensation for our NEOs. The “Other NEOs” chart includes Messrs. Näher, Heyden and Leiken. Mr. Rutherford is excluded because he was not hired on a permanent basis until 2019. Dr. Wunram and Mr. Chapman are excluded because they separated from the Company in 2018.
CEO (Schmid) Other NEOs
2018 INCENTIVES
Our commitment to a pay for performance philosophy continued in 2018, and the NEOs ultimately received well below target total compensation levels during 2018. There was no payout under the Annual Cash Bonus Plan, and the long-term incentive performance-based shares also did not payout. The following decisions were made with respect to 2018 performance, each discussed further in “Total Target2018 Compensation MixElements” below:
PAY COMPONENT
|
COMMENTS
| |
Annual Cash
| No payout. The Company had below threshold achievement for thenon-GAAP operating profit and free cash flow metrics. In light of this, the Committee did not approve any payout for the individual performance goals. | |
Performance-Based Shares | No payout. Our three-year TSR ranking for the completed 2016-2018 performance share grant was below the 30th percentile threshold requirement against the S&P 400 Midcap Index companies. | |
Stock Options | All grants of options are underwater as of December 31, 2018. | |
RSUs | One-third ratable vest of grants made in 2015, 2016 and 2017. | |
2017 Performance-Based Synergy Grants | 50% acceleration of these awards based on above target level achievement of $205 million in synergy savings. Target was $200 million in savings. The remainder of the award will payout, if at all, at the end of the 2019 performance period. | |
2017 Performance-Based Cash Awards | No payout for the performance period that ended March 26, 2018. | |
Turnaround Bonus and Quarterly Bonus Plan | Paid out in varying amounts based on assessment of transformational performance requirements. See pages 57 and 59 for the individual amounts. | |
“At Risk” Compensation
2019 PROXY STATEMENT | | 51 |
|
|
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% |
|
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The following incentive compensation payouts for 2016 performance were approved, each discussed further in “2016 Compensation Elements” below:
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.
|
-57-
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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Role of the Compensation CommitteeROLE OF THE COMPENSATION COMMITTEE
The Committee is responsible to our Board for oversight of our executive compensation 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,metrics, 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, 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 ResourcesPeople 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” 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 ConsultantROLE 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’sAon’s specific compensation consultation roles include, but are not limited to, the following:
Advising the Committee on executive compensation trends and regulatory developments;
Providing a total compensation study for executives against the companies in our peer group and recommendations for executive pay;
Providing advice to the Committee on governance best practices, as well as any other areas of concern or risk;
• | Reviewing and commenting on proxy disclosure items, including the “Compensation Discussion and Analysis”; |
From time to time, reviewing and providing compensation recommendations fornon-employee directors to the Board Governance Committee.
In 2016,2018, the professional fees for the executive compensation services were approximately $305,000.$154,000. In addition to Aon Hewitt’sAon’s executive compensation services for the Committee, management retained Aon Hewitt for unrelated services, including brokerage services for insurance products. Professional fees for these unrelated services were approximately $539,000$665,000 in 2016.2018. The Board and the 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, the Committee determined that these unrelated services did not impact the independence of Aon Hewitt. The Committee is aware that a significant level of fees for unrelated services could create a conflict of interest and will assess viable alternatives.Aon.
-59-
The Committee assessed the independence of Aon, Hewitt, as required under NYSE listing rules. The Committee also considered and assessed all relevant factors, including but not limited to those set forth inSection240.10C-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.Aon. Based on this review, the Committee determined there are no conflicts of interest raised by the work performed by Aon Hewitt.Aon.
Role of ManagementROLE OF MANAGEMENT
Our Chief Human ResourcesPeople 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 ResourcesPeople Officer make pay recommendations to the Committee based on market pay comparisons and an analysis of each executives’executive’s 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
52 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
ROLE OF PEER COMPANIES AND COMPETITIVE MARKET DATA
Annually, the Committee reviews competitive total compensation market data provided by Aon Hewitt.Aon. 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 0.4 to 2.5 times Diebold’sDiebold Nixdorf’s annual revenues, with a secondary reference being market capitalization of approximately 0.2 to 5 times Diebold’sDiebold Nixdorf’s market capitalization;
Companies covered by the investment analysts that track Diebold;
Companies that include Diebold Nixdorf in their compensation peer group; and
Global companies that emphasize integrated service solutions and focus on manufacturing and hardware/software design manufacture, and service products for their customers.development.
In December 2015, Aon Hewitt conducted a total compensationthe fall of 2017, the Committee approved the following 17 peer companies to be used in Aon’s pay study to assist with 20162018 compensation decisions. The Committee approved the following 25 companies for the compensation peer group:
Alliance Data Systems Corp. | Logitech International SA | Total System Services* | ||||
| ||||||
| ||||||
Benchmark Electronics Inc. | Motorola Solutions, Inc. | |||||
Unisys Corp. | ||||||
| ||||||
Convergys Corp. | NCR Corp. | |||||
Verifone Systems* | ||||||
| ||||||
| Netapp Inc. | Western Union Company (The) | ||||
Harris Corporation | Pitney-Bowes Inc. | Zebra Technologies Corp. | ||||
Juniper Networks, Inc. | Sabre Corporation |
Note:Note 1: (*) Denotes new peer for 2018 compensation decisions.
Note 2: The following companies were removed from the peer group for 2018 compensation decisions: (a) Computer Sciences Corporation due to a merger with HPE Enterprise Services, (b) Lexmark which is no longer publicly traded, and (c) DST which no longer fits our size criteria.
Note 3: Compensation market values were stress 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/ median annualizedannual revenues for the peer companies were $3.5B$4.3B and $2.9B,$3.8B, respectively, atwhen the time ofCommittee approved the December 2015 study. Diebold’s annual revenues were approximately $3.1B which was used to developpeer group.size-adjustedSize-adjusted market values through regression analysis for each study position.were developed using our projected annual revenues. Thesize-adjusted 50th
-60-
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.
TimingOur over-arching goal is to form a consistent set of Compensation Decisionspeer companies to annually develop competitive market data. Periodic adjustments are made to account for changes or shifts in our business. For example, in response to a decline in our market capitalization in the fall of 2018, our Committee closely reviewed potential peer companies to ensure relevance for the fall 2018 pay study to assist with 2019 pay decisions. The Committee will continue to closely monitor peer group composition in future years as it relates to our market capitalization.
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 late January or early
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. Equity awards approved by the Committee at this meeting are generally 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 base salary increases or equity awards effective or dated, as applicable, as of the date of their promotion or hire.
2019 PROXY STATEMENT | | 53 |
EXECUTIVE COMPENSATION MATTERS |
DETERMINATION OF CEO CompensationCOMPENSATION
At the Februaryfirst Committee meeting of the year, 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 for the peer companies. TheNormally, 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. This year, because Mr. Schmid was hired after the meeting, his 2018 compensation was negotiated and approved by the Committee and Board at his time of hire.
In light of Mr. Chapman’s and Dr. Wunram’s service as InterimCo-Presidents andCo-CEOs, the Board reviewed the performance of these NEOs in executive session and made determinations as to compensation for the interim service at that time. Each of Mr. Chapman and Dr. Wunram received a stipend of $10,000 per month for each month (or portion thereof) that they served as InterimCo-Presidents andCo-CEOs. The Committee approved this compensation structure with the assistance of Aon’s research of competitive market practice for similar situations and management’s assessment of the proper internal alignment.
2016 Compensation Elements2018 COMPENSATION ELEMENTS
BASE SALARY
Base salary compensates the executive fairly and competitively for the responsibility level of the position. The Committee reviews the salaries of our executive officers annually against competitive market data. Salary adjustments result primarily from a combination of competitive market data, individual and company performance, internal equity considerations, promotions, and the executive’s specific responsibilities.
For 2016,2018, the Committee reviewed competitive market data and individual performance assessments for the NEOs and approved the following values at the February 2016 Committee meeting:approximately 3% increases to base salary to maintain competitive posture with peer companies.
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
|
NAME
| 2017 SALARY
| 2018 SALARY
| ||||||||
Gerrard Schmid |
|
N/A |
|
$ |
950,000 |
| ||||
Dr. Juergen Wunram |
€ |
535,000 |
|
€ |
551,050 |
| ||||
Christopher A. Chapman |
$ |
575,000 |
|
$ |
592,500 |
| ||||
Dr. Ulrich Näher |
€ |
470,000 |
|
€ |
484,100 |
| ||||
Olaf Heyden |
€ |
470,000 |
|
€ |
484,100 |
| ||||
Jonathan B. Leiken1 |
$ |
475,000 |
|
$ |
489,250 |
|
|
The rationale for approved 20162018 compensation actions is summarized in the table “20162018 NEO Compensation Highlights – Highlights—Target Compensation Structure.” Increases reflect adjustments made to NEO salaries to bring salary levels more in line with the market 50th percentile.
-61-ANNUAL CASH BONUS PLAN
Annual base salaries for Mr. Heidloff and Dr. Wunram during 2015 and 2016 under their service agreements with Wincor Nixdorf, which were in place prior to the acquisition, were as follows:
| ||||
|
|
Annual Cash Bonus Plan – Messrs. Mattes, Chapman, Leiken and Merz
Messrs. Mattes, Chapman, Leiken and MerzThe NEOs were eligible to earn cash incentives for 20162018 under our Annual Cash Bonus Plan, which was approved by shareholders in 2015. Performance measures include corporate, business unit and individual performance againstpre-determined financial and individual performance objectivesmetrics approved by the Committee at the beginning of the fiscal year.
TargetTarget 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 asat target performance, and 200% of target is earned at maximum performance).
54 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
For 2016,2018, the Committee reviewed competitive market data and individual performance assessments for the following NEOs and approved the following target bonus levels in February 2016:levels:
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%
|
NAME | TARGET | THRESHOLD | TARGET | MAXIMUM | TARGET | |||||||||||||||
Gerrard Schmid |
| 140 | % |
| $532,000 |
| $ | 1,330,000 |
| $ | 2,660,000 |
|
| 19 | % | |||||
Dr. Juergen Wunram |
| 100 | % |
| €220,420 |
| € | 551,050 |
| € | 1,102,100 |
|
| 25 | % | |||||
Christopher A. Chapman |
| 100 | % |
| $236,900 |
| $ | 592,250 |
| $ | 1,184,500 |
|
| 25 | % | |||||
Dr. Ulrich Näher |
| 100 | % |
| €193,640 |
| € | 484,100 |
| € | 968,200 |
|
| 29 | % | |||||
Olaf Heyden |
| 100 | % |
| €193,640 |
| € | 484,100 |
| € | 968,200 |
|
| 29 | % | |||||
Jonathan B. Leiken1 |
| 100 | % |
| $195,700 |
| $ | 489,250 |
| $ | 978,500 |
|
| 29 | % |
1 | Following Mr. Leiken’s salary increase in April 2018, the threshold incentive is $204,000, target incentive is $510,000, and maximum incentive is $1,020,000. |
Financial performanceperformance metrics: For 2016, to support the third year of our multi-year business transformation related to Diebold 2.0,2018, the Committee approved Corporatenon-GAAP Operating Profit (OP) and Corporate Free Cash Flow excluding certain transaction-related expenses (FCF) as the financial performance metrics and Key Business Initiatives specific to each NEO as the individual performance metrics. The Committee also approved a minimum performance level requirement for OP of $125M,$150 million, below which no bonuses would be paid, regardless of the performance level attained for FCF, Corporate OP or individual Key Business Initiatives. Although The Company did achieve $162 million in OP, exceeding the minimum performance requirement. However, there was no payout for this portion of the award because neithernon-GAAP OP nor FCF was achieved at or 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 areas that ultimately support the company’s operating profit goal, such as the North America segment.threshold.
Annual Cash Bonus Plan for NEOs | ||||||||||||||
Performance Measure | Organizational Level | Weighting | Threshold1 (40% | Target1 (100% | 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
|
ACTUAL CASH BONUS PLAN FOR NEOS
| ||||||||||||||||||||||||||||
PERFORMANCE MEASURE | ORGANIZATIONAL | WEIGHTING1 | THRESHOLD2 | TARGET1 | MAX1 | ACTUAL | PAYOUT AS | |||||||||||||||||||||
OP |
| Corporate |
|
| 50 | % |
| $180M |
| $ | 220M |
| $ | 260M |
| $ | 162M |
|
| 0 | % | |||||||
FCF |
| Corporate |
|
| 30 | % |
| $ 60M |
| $ | 100M |
| $ | 140M |
| $ | (163M | ) |
| 0 | % | |||||||
Key Business Initiatives |
| Individual |
|
| 20 | % |
| varies |
|
| varies |
|
| varies |
|
| varies |
|
| 0 | % |
1 | For Dr. Näher and Mr. Heyden, the weighting was adjusted in April 2018 to 40% OP and 30% Key Business Initiatives. |
2 | Payment opportunities are extrapolated between threshold, target, and maximum |
-62-
Key BusinessBusiness Initiative performance metrics: For 2016,Although the Company achieved approximately $162 million in OP, exceeding the minimum performance level of $150 million in OP required to make a payment under the Annual Cash Bonus Plan, the Committee approvedexercised its negative discretion and determined that the portion of the Annual Cash Bonus Plan allocated to Key Business Initiatives specific to each NEO. The Committee increased the weighting from 20% to 30% in 2016 to enhance focus on critical efforts needed to drive financial performance, such as the transformative portfolio changes. Similarwould not be paid to the Committee’s assessment of financial performance, the Committee’s assessment of Key Business Initiative performance generally excludesnon-recurring/extraordinary items.
|
| |
|
| |
|
| |
|
|
The Committee reviewed Key Business Initiative performance assessments prepared byNEOs. As explained in more detail below, upon 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 historySchmid’s appointment as Chief Executive Officer, he undertook a strategic review of the Company –to define the acquisitionbusiness critical initiatives that his leadership team needed to achieve over the remaining months of Wincor Nixdorf. That transaction presented financing, legal, strategic and regulatory hurdles2018. The Board, in consultation with Mr. Schmid, then established the Quarterly Bonus Program to overcome in order to move the Company into the future, and eachdrive performance 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.those critical initiatives.
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%
|
-63-
2016 Actual2018 Actual Bonuses Earned: Based on the Committee’s assessment of financial and individual performance according to the tables above, the following summarizes actualThe NEOs did not receive any bonuses earned:under this Plan for 2018.
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 metrics. 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 Supervisory Board of Wincor Nixdorf’s financial statements.
Target 15/16 VTI award opportunities were as follows under their respective service agreement:*
2019 PROXY STATEMENT | | 55 |
EXECUTIVE COMPENSATION MATTERS |
|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
Financial performance metrics for the 15/16 Annual VTI awards were as follows:
Performance Measure
| Weighting
| Threshold1 (25%
| Target1 (100%
| Interim (175%
| Max1
| Actual
| Payout as
| |||||||||
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% |
|
Based on the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes actual 15/16 Annual VTI awards earned:
|
|
|
| |||
|
|
|
| |||
|
|
|
|
|
-64-
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-endLONG-TERM INCENTIVES—2018 REGULAR ANNUAL GRANTS was September 30, 2016, this award helped align compensation during this “extra” quarter.
Target 2016 Q5 VTI award opportunities were set by the Committee and Supervisory Board as follows:
|
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|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
Financial performance metrics for the 2016 Q5 VTI awards were as follows:
Performance Measure
| Weighting
| Threshold1 (25%
| Target1 (100%
| Interim
| Max1
| Actual
| Payout as
| |||||||||
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% |
|
Based on the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes actual 2016 Q5 VTI awards earned:
|
|
|
| |||
|
|
|
| |||
|
|
|
|
|
Long-Term 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%(15%), and RSUs (20%(35%), as discussed above in “20162018 NEO Compensation Highlights—Target Compensation Structure.” These awards are subject to our other compensation policies generally, such as our Clawback Policy, as discussed in “Other Compensation Policies” below.
To determine annual grant levels for theour NEOs, the Committee considers competitive market data, individual performance, potential future contributions to our business, internal equity, and management’s recommendations. The Committee approves long-term incentive grants at its first regular meeting of the regular February Committee meeting,year, and actual grants are generally made effective on the day of the February Board Meeting.following that meeting.
-65-
The following table summarizes 20162018 targeted LTI values for our NEOs in accordance with our customaryregular annual LTI grant cycle:program.
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% |
NAME | SALARY | TARGET LTI (% OF SALARY) | APPROXIMATE TARGET LTI VALUE1 | |||||||||
Gerrard Schmid | $ | 950,000 |
|
| 500 | % |
| $4,750,000 |
| |||
Dr. Juergen Wunram | € | 551,050 |
|
| 200 | % |
| €1,102,100 |
| |||
Christopher A. Chapman | $ | 592,250 |
|
| 200 | % |
| $1,184,500 |
| |||
Dr. Ulrich Näher | € | 484,100 |
|
| 150 | % |
| € 726,150 |
| |||
Olaf Heyden | € | 484,100 |
|
| 150 | % |
| € 726,150 |
| |||
Jonathan B. Leiken | $ | 489,250 |
|
| 150 | % |
| $ 733,875 |
|
1 The target award values shown here generally vary from the award values listed in the Grant of Plan-Based Awards Table (GPBAT) |
For 2016, the Committee approved a balanced LTI portfolio approach, with the highest weight applied to the performance-based shares to focus on relative TSR performance vs. the S&P 400 Midcap Index companies.
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 these 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 acquisition are discussed below in the “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-basedPerformance-based shares (50%): Provide value based on a combination of three-year (2016—2018) total shareholder return(2018-2020) TSR ranking vs.versus the S&P 400 Midcap Index companies and our stock price performance. The Committee approved the following performance / performance/payout schedule for the 20162018 grant based on TSR ranking for the 2016—20182018-2020 performance period:
• | Threshold: 30th percentile ranking earns 50% of target payout. |
• | Target: 50th percentile ranking earns 100% payout. |
• | Maximum: 75th percentile ranking earns 200% |
For Mr. Mattes, due to annual grant limits in the Plan, we utilized a combination of 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%(15%): 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%(35%): 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. RSUs vest ratably over three years. Dividend equivalents are paid on time-vested RSU grants.
TURNAROUND BONUS AWARDS AND QUARTERLY BONUS PROGRAM
As discussed throughout this Proxy Statement, our compensation decisions with respect to 2018 were decided in late January while we conducted a search for our next CEO. After Mr. Schmid joined us, and following his assessment of the Company and the strategic initiatives and decisions that needed to be accomplished in order to improve performance and increase value to our shareholders, the Board and Mr. Schmid agreed that different incentives and goals were required to retain our key leaders, propel our turnaround and reward in line with transformational performance requirements. The turnaround bonuses and Quarterly Bonus Program (which was instituted in the fourth quarter) resulted from this realignment of goals and strategic initiatives. And by the end of the year, despite unexpected challenges including the liquidity crisis, these initiatives began to show results, and we finished the year with fourth quarter profit and cash flow performance that was the strongest since the combination with Wincor Nixdorf.
56 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
Turnaround Bonus: In the Committee’s 2018year-end review at the January 2019 meeting, the Committee reviewed and thoroughly assessed the turnaround performance criteria deemed critical by Mr. Schmid over the course of the year. Based on that assessment, the Committee approved turnaround cash bonuses for certain executives based on the evaluation criteria summarized below. As noted earlier, Mr. Rutherford joined the Company in the fourth quarter of 2018 and led the finance team in relation to the critical business criteria summarized below during that time. Due to the date that Mr. Rutherford joined the Company and the fact that the finance team’s performance in 2018 had been led by the prior CFO for the majority of the year, the Committee determined that providing Mr. Rutherford with a bonus through the Quarterly Bonus Program was the appropriate recognition for his performance and did not consider him for a turnaround bonus.
NAME | TURNAROUND BONUS | |||
Gerrard B. Schmid | $798,000 | |||
Dr. Ulrich Näher | €290,460 | |||
Olaf Heyden | €290,460 | |||
Jonathan B. Leiken | $306,000 |
2019 PROXY STATEMENT | | 57 |
EXECUTIVE COMPENSATION MATTERS |
Each NEO’s performance was measured against business goals that were identified as critical to the Company and its shareholders. These goals served as the primary data point in assessing potential turnaround bonuses and were also considered, particularly with respect to Mr. Rutherford, in connection with the Quarterly Bonus Program, to the extent a goal or initiative was achieved in the fourth quarter 2018. These were not, however, the only measures of performance for purposes of the above bonuses. All NEOs were expected to realize net target savings related to the operating model for their respective area. Mr. Schmid’s performance was assessed against achievement and progress towards all identified goals, among other measures.
NAME | CRITICAL BUSINESS CRITERIA | |
Gerrard B. Schmid | • Identify and create strategy to turnaround performance • Company-wide responsibility for substantial execution progress of target operating model cost savings • Company-wide responsibility to deliver results of all identified criteria for team | |
Jeffrey Rutherford | • Create and implement a finance modernization plan • Deploy capital structure changes • Improve ongoing management of financial metrics • Deliver new working capital improvements from a FCF perspective in excess of a set amount for the second half of 2018 • Improve cost financial reporting that is provided to leadership | |
Dr. Ulrich Näher | • Meet updated forecast • Minimize inventory to metric by end of 2018 • Meet segment and customer demand for product based on forecast • Harmonize integrated solutions value proposition and pricing | |
Olaf Heyden | • Meet updated forecast • Execute key actions under the Services Modernization plan and improve gross service margin by certain % byyear-end while maintaining customer SLAs • Create multi-year financial plan underpinning set amount of services improvement | |
Jonathan B. Leiken | • Update commercial agreements to reflect new pricing and updated solutions and portfolio • Launch cybersecurity portal • Materially engage with customers on cyber issues |
Quarterly Bonus Program: In the fourth quarter of 2018 following the successful refinancing, the Committee adopted the Quarterly Bonus Program to enhance focus on critical elements of the DN Now initiative and to incentivize near-term completion of key elements. Under that program, the NEOs (as well as certain other participants) were eligible to receive, on a quarterly basis, up to 25% of 150% of their annual base salary.
At the end of each quarter, the Compensation Committee assesses the NEO’s role in and contribution to the transformation and strategy and determines whether any bonus is earned. The NEO must be employed by the Company at the end of the quarter to potentially qualify. This program will continue until the Committee decides to discontinue it, and isre-evaluated quarterly.
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58 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
Long-Term Incentives—Additional RSU Grants
The Quarterly Bonus Plan monitors achievement of transformation performance requirements, as outlined in the DN Now initiative, and underpins the intense turnaround activity taking place at the Company. The Committee assess progress against these key actions, including the following:
The NEOs earned the following bonuses under the Quarterly Bonus Program:
NAME | FOURTH QUARTER | |||
Gerrard B. Schmid | $ | 356,250 |
| |
Jeffrey Rutherford | $ | 225,000 |
| |
Dr. Ulrich Näher | € | 181,538 |
| |
Olaf Heyden | € | 181,538 |
| |
Jonathan B. Leiken | $ | 191,250 |
|
Despite execution on these key initiatives and goals, each NEO finished 2018 with total compensation levels well below targeted amounts.
LONG-TERM INCENTIVES—2017 PERFORMANCE-BASED SYNERGY GRANT
In February 2017, the Committee grantedone-time cost synergy performance-based share awards (the Synergy Grants) to certain of the NEOs. The Synergy Grants were made under our 1991 Equity and Performance Incentive Plan, as amended, and were implemented in direct response to comments received during our 2016 shareholder outreach campaign that our shareholders wanted an increased focus on cost reduction and acquisition-related synergies.
The Synergy Grants are intended to incentivize the accelerated achievement of cost reductions and scale efficiencies made possible by our business combination with Wincor Nixdorf. Performance under the awards is based on the achievement of certain levels of “synergy savings,” defined as the realized cost reductions resulting from streamlined processes, the elimination of redundant/overlapping cost (including reductions in our workforce and facilities/overhead), and scale efficiencies gained due to the business combination. In 2017, the Committee approved the following metrics and payout schedule for the Synergy Grants based on synergy savings for the three-year performance period ending December 31, 2019.
THRESHOLD (50% PAYOUT) | TARGET (100% PAYOUT) | MAXIMUM (200% PAYOUT) | ||||||||||
Synergy Savings (millions) | $ | 160 | $ | 200 | $ | 240 |
2019 PROXY STATEMENT | | 59 |
EXECUTIVE COMPENSATION MATTERS |
To incentivize the achievement of savings as quickly as possible, the Committee assessed performance at two interim measurement dates (December 31, 2017 and December 31, 2018). If the synergy savings achieved at an interim
measurement date are at or above target, then 50% of the performance shares at target are deemed earned as of that measurement date. As of December 31, 2017, the synergy savings were not achieved at target.
As of December 31, 2018, the synergy savings were achieved above target, with achievement of $205 million in synergy savings. Therefore, 50% of the performance shares were earned on an accelerated basis, as indicated in the following table. The table also includes the 2017 Synergy Grant values at target for the NEOs, which were derived from a special 10,000 share RSUpercentage of salary ranging between 70% and 100%. The final payout will be determined by the level of cumulative synergy savings for the three-year performance period with amounts between threshold, target, and maximum calculated on a straight-line basis. The payout at the end of the performance period will be reduced by the number of performance shares already earned by the recipient as of the December 31, 2018 interim measurement date.
NAME | TARGET INCENTIVE | PERFORMANCE | ||||||
Christopher A. Chapman | $ | 437,676 |
| 8,227 / $ | 20,485 |
| ||
Dr. Ulrich Näher | $ | 357,451 |
| 6,719 / $ | 16,730 |
| ||
Olaf Heyden | $ | 357,451 |
| 6,719 / $ | 16,730 |
| ||
Jonathan B. Leiken | $ | 337,448 |
| 6,343 / $ | 15,794 |
|
1 Based on our stock price as of December 31, 2018 of $2.49. |
LONG-TERM INCENTIVES—2017PERFORMANCE-BASED CASH INCENTIVE AWARDS
In 2017, following our acquisition of Wincor Nixdorf, legacy Wincor Nixdorf employees continued to hold a portion of their incentive compensation in Wincor Nixdorf stock options. In order to incentivize these employees around the combined Company’s performance, in 2017 we made an offer to certain employees to replace their outstanding Wincor Nixdorf stock options with performance-based cash incentive awards (the DN Performance Awards).
The objective of this program was to simply convert existing Wincor Nixdorf stock options into a performance-based cash incentive for the newly-combined Company. It was not additional value. Without the employee’s agreement to cancel the outstanding Wincor Nixdorf stock options, they would remain in place and be payable based on the Wincor Nixdorf stock price until the stock options expire or lapse or stop trading.
The grant subjectof the DN Performance Awards was contingent on the employee’s agreement to three-year ratable vesting to Mr. Leiken and Mr. Merz.cancel his or her outstanding
Wincor Nixdorf options. These awards were madegranted by the Compensation Committee under our shareholder-approved Annual Cash Bonus Plan and were effective May 1, 2017. Drs. Wunram and Näher and Mr. Heyden participated in recognitionthis offer.
The DN Performance Awards replaced the Wincor Nixdorf stock options vesting in March of 2018, 2019 and 2020, respectively. Each tranche of stock options had a different vest date and a different “in the money” value, and so each tranche was replaced with a DN Performance Award that had the same measurement date (of 2018, 2019 or 2020). Each award is structured to approximate the original“in-the money” value of the multiple strategic initiatives that Messrs. Leikencancelled options at target, the option “under water” line at threshold, and Merz were engaged in 2015, includinga maximum at approximately 155% of our stock price. If the negotiationthreshold price is not met, there will be no payment of the divestitureaward. Any cash amount earned between threshold, target, and maximum will be calculated on a straight-line basis. The measurement of the share price for purposes of the DN Performance Awards will be based upon the average share price of our electronic security businessstock for the20-day trading period prior to the end of the applicable performance period.
60 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
See below for the threshold, target, and conclusioncash incentive that each participating NEO may earn under the DN Performance Awards at target.
NAME | OPTIONS CANCELLED | PERFORMANCE | CONVERTED | |||||||||
Dr. Juergen Wunram | 62,403 79,852 66,016 | 3/26/2018 3/25/2019 3/30/2020 | $ $ $ | 549,146 2,035,427 1,126,893 | ||||||||
Olaf Heyden | 43,682 55,897 56,774 | 3/26/2018 3/25/2019 3/30/2020 | $ $ $ | 384,402 1,424,815 969,132 | ||||||||
Dr. Ulrich Näher | 55,897 56,774 | 3/25/2019 3/30/2020 | $ $ | 1,424,815 969,132 |
The following table summarizes the performance measures for each DN Performance Award. Because the threshold share price for the portion of our acquisition of Phoenix Interactive.the award vesting in 2018 was not met, that award did not pay out.
Long-Term Incentives—Completed Performance Cycles
PERFORMANCE PERIOD ENDING | THRESHOLD | TARGET | MAXIMUM | ACHIEVEMENT | ||||||||||
3/26/2018 | $ | 17.37 |
| $ | 26.18 |
| $ | 40.76 |
| Below threshold; no payout | ||||
3/25/2019 | $ | 0.68 |
| $ | 26.18 |
| $ | 40.76 |
| Pending end of performance period | ||||
3/30/2020 | $ | 9.10 |
| $ | 26.18 |
| $ | 40.76 |
| Pending end of performance period |
LONG-TERM INCENTIVES—COMPLETED PERFORMANCE CYCLES
The following2016-2018 performance-based grants were completed on December 31, 2016.2018. At the February 2017January 2019 Committee meeting, the Committee reviewed the performance achievement and, approvedbecause our three-year TSR performance was below the following performance achievements and payout levels:
2014—2016 Performance Share Grant: No payout was earned.
|
2015—2016 Performance-Based Deferred Share Grant for Mr. Mattes: Payout was earned at target.
The approvedtwo-year target cumulativenon-GAAP EBITDA goal was $450 million, at which 100% of the target 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: Payout was earned at 98% of target,
A target 2016 Free Cash Flow (FCF) target of $180 million was set whenS&P 400 Midcap Index companies, the Committee approved no payout for 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 straight-line basis between performance levels.grant.
The Committee approved 2016 FCF achievement of $177 million, earning a payout of 98% of target.
Benefits and PerquisitesBENEFITS AND PERQUISITES
We provide our U.S.North America-based executives with medical, dental, and life insurance under the same programs used to provide benefits to all U.S.-based associates.North America-based associates within their applicable country of residence. 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 million. Our North America-based executives’ personal benefits are not tied to individual or companyCompany performance and changes to these benefits reflect the changes to the benefits of all U.S.-based associates.North America-based associates within their country of residence. Drs. Wunram and Näher and Mr. Heidloff and Dr. WunramHeyden receive certain fringe benefits pursuant to their service agreements with WincorDiebold Nixdorf AG, which are not tied to individual or companyCompany performance.
Deferred CompensationDEFERRED 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. 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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We maintain qualified andnon-qualified retirement 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. Similarly, we also maintain broad-based defined contribution plans qualified in Canada for the benefit of our Canadian employees. Mr. Schmid participates in these deferred profit sharing and retirement savings plans on the same terms as all Canadian-based associates.
2019 PROXY STATEMENT | | 61 |
EXECUTIVE COMPENSATION MATTERS |
We also have twonon-qualified supplemental retirement plans in which certain NEOs participate: (1) the Pension Restoration Supplemental Executive Retirement Plan, or Pension Restoration SERP, and (2) the 401(k) Restoration Supplemental Executive Retirement Plan, or 401(k) Restoration SERP. These plans are described in detail below under “20162017 Pension and Retirement Benefits.” Participation in the 401(k) Restoration SERP is based on the annual IRS compensation limits. Participation in the Pension 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 Restoration SERP to any new participants effective December 31,July 1, 2013 and also amended the Planplan to cease future benefit accruals after December 31, 2013.
The participation status of our NEO’s Mr. Chapman participates in the SERPs is summarized below:Pension Restoration SERP and Mr. Leiken participates in the 401(k) Restoration SERP.
|
|
| ||
| ||||
| ||||
| ||||
|
Mr. HeidloffHeyden and Dr.Drs. Wunram and Näher participate in the Wincor Nixdorf AG Pension Scheme (the “WincorWincor Pension Plan”)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 GMBHGmbH Pension Scheme. Their service agreements in effect for 20162018 provided for certain annual contribution commitments as follows:€50,000 to each of €126,082 forDr. Näher and Mr. HeidloffHeyden, and €100,000€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 ChangeWunram in Control—Potential Termination Payments under Service Agreements—Mr. Heidloff and Dr. Wunram.”accordance with the agreement that the Company entered into with him upon retirement.
Perquisites and Fringe BenefitsPERQUISITES AND FRINGE BENEFITS
We 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. 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.North America-based 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$25,000 for Mr. Mattes,Schmid, up to $10,000$14,000 for Mr. Chapman and up to $7,500$10,000 for Messrs. Leiken and Merz;
AThe option to receive 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 paid to Drs. Wunram and Näher and Mr. Heidloff and Dr. WunramHeyden under their service agreements include accident and liability insurance, health insurance, and lifesubsidy pension insurance premiums paid by Wincor Nixdorfthe Company and lease payments on a company car.
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Change-in-Control ProtectionCHANGE IN CONTROL PROTECTION
We maintainchange-in-control change in control agreements for ourcertain executive officers, including the NEOs (except for Mr. Mattes, whosechange-in-control protections are included in his employment agreement, discussed in more detail under “Employment Agreements” belowMessrs. Schmid, Rutherford and Mr. Heidloff and Dr. Wunram who do not currently havechange-in-control agreements), thatLeiken, which provide our executives with the potential for continued employment (or benefits) for three years following achange-in-control. change in control. The other NEOs do not currently have change in control agreements.
The benefits available under the agreements are subject to a “double trigger,” so that benefits are paid only following both (i) achange-in-control change in control (as defined in the agreement) and (ii) a termination of the executive’s employment without cause by us or with good reason by the executive (as such terms are defined in the agreement) in the three-year period following achange-in-control. change in control.
The agreements include the following items:
Achange-in-control change in control definition that is the same as thechange-in-control change in control definition in our shareholder-approved 2017 Plan and 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 the executive would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan for one additional year of service, provideprovided 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’three-months’ notice that the agreement should not extend;
An automatic three-year extension following achange-in-control; change in control; and
62 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
The Committee periodically reviews our policy with respect to thesechange-in-control change 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.
Severance ProtectionSEVERANCE PROTECTION
Our Senior Leadership Severance Plan provides coverage to executives who are involuntarily terminated without cause or who terminate their employment for good reason, in each case separate from achange-in-control change in control and subject to a general release of claims and acknowledgement of the executive’s confidentiality,non-competition and other applicable obligations. This policy does not apply to Messrs. Mattes and 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)Messrs. Schmid and Rutherford) and one andone-half times (for Messrs. Leiken and Merz)the other NEOs) base salary in effect on the date of termination and target bonus opportunity under our Annual Cash Bonus Plan in the year of termination;
Continued participation in all of our employee health and welfare benefit plans for the shorter of (i) two years (for Mr. Chapman)Messrs. Schmid and Rutherford) or one andone-half years (for Messrs. Leiken and Merz)the other NEOs), 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 CEO, and when those positions have been held by separate individuals, with both our President and our CEO. Accordingly, in June 2013,On February 21, 2018, we entered into an employment agreementoffer letter with Mr. Mattes, which we amended on July 24, 2015. For a summary of this agreement, including benefits paid following achange-in-control, see the discussion following theour new President and CEO, Gerrard Schmid. That offer letter is discussed in more detail under “2016 Grants of Plan-Based AwardsMr. Schmid Offer Letter” table below. Messrs. Chapman, Leikenon page 70.
Dr. Näher and Merz do not have employment agreements.
Mr. Heidloff and Dr. WunramHeyden had service agreements in place with Wincor Nixdorf prior to the acquisition with provisions that largely governed their 2016 compensation. Dr. Wunramacquisition. As part of our business combination, they received an offer letter in connection with his promotion to be our Chief Operating Officerletters in February 2017, and histheir service agreementagreements will continue in effect until February 28, 2019 as amended by2022 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.August 31, 2022, respectively. These agreements are discussed in more detail under “Service Agreements with Dr. Näher and Mr. Heidloff and Dr. WunramHeyden” and in the “Potential Payments Upon Termination or Change in Control—Potential Termination Payments under Service Agreements—Dr. Näher and Mr. HeidloffHeyden” sections.
None of Messrs. Rutherford, Leiken or Chapman had or have employment agreements. On January 31, 2018, we entered into an agreement with Mr. Chapman related to the potential accelerated vesting of his performance based shares, RSUs, options and Dr. Wunram” section.other types of equity that may be granted in the near future. If Mr. Chapman’s employment were terminated other than for cause or if he left our employ for good reason during the two years after we hire a new chief executive officer, then he would be deemed to have met certain age and continuous service requirements necessary for the continued or accelerated vesting for the performance shares, RSUs, options and other equity awards in accordance with the terms of the applicable award agreements. Awards granted prior to 2017 would not be subject to such treatment.
2019 PROXY STATEMENT | | 63 |
EXECUTIVE COMPENSATION MATTERS |
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 a separate and independent Clawback Policy 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 a 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 PolicyINSIDER 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-ImposedBlack-OutCOMPANY-IMPOSEDBLACK-OUT PeriodsPERIODS
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 firstsecond 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 2016.2018.
Stock Ownership GuidelinesSTOCK OWNERSHIP GUIDELINES
The Committee believes that stock ownership guidelines reinforce executive and shareholder alignment. Our executive stock ownership guidelines are:
CEO: 5x salary
Other NEOs: 3x 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 DeductibilityTAX REFORM AND LIMITATIONS ON DEDUCTIBILITY OF COMPENSATION
Prior to December 22, 2017, when the Tax Cuts and Jobs Act of Compensation
2017 (TCJA) was signed into law, Section 162(m) of the Internal Revenue Code generally limitslimited 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 doesdid not apply to compensation that qualifies as performance-based. We consider
64 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
Under the taxTCJA, the performance-based exception has been repealed and accounting impact of all compensation,the $1 million deduction limit now applies to anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year and our annual and long-term incentive plans have been designed sothe top three other highest compensated executive officers serving at fiscalyear-end. The new rules generally apply to taxable years beginning after December 31, 2017, but do not apply to remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that awards granted under such plans may be able to qualify as performance-based compensation. is not modified in any material respect after that date.
To the extent possible and consistent with the goals and philosophy of compensation stated throughout, the Committee
endeavors to limit the impact of Section 162(m) of the Code. The Committee also believes that the tax deduction is only one of several relevant considerations in setting compensation and that the tax deduction limitation should not be permitted to compromise the Company’s ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.
2019 PROXY STATEMENT | | 65 |
EXECUTIVE COMPENSATION MATTERS |
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The table below summarizes the total compensation earned by each of our NEOs for the fiscal years ended December 31, 2016, 20152018, 2017 and 2014,2016, as applicable. The amounts shown include compensation for services in all capacities that were provided to us.
2016 Summary Compensation Table2018 SUMMARY COMPENSATION TABLE
Name and Principal | Year | Salary1 ($) | Bonus ($) | Stock Awards2 ($) | Option Awards3 ($) | Non-Equity Incentive Plan Compensation4 ($) | Change in Pension Value and Non- qualified Deferred Compensation Earnings5 ($) | All Other Compensation6 ($) | Total ($) | |||||||||
Andreas W. Mattes Chief Executive Officer | 2016
| 937,500
| —
| 3,179,794
| 1,074,000
| 585,000
| —
| 190,458
| 5,966,752
| |||||||||
2015
| 928,418
| —
| 6,271,703
| 1,408,680
| 459,375
| —
| 322,998
| 9,391,174
| ||||||||||
2014
| 836,106
| —
| 2,900,655
| 1,044,825
| 1,779,509
| —
| 206,842
| 6,767,937
| ||||||||||
Christopher A. Chapman Senior Vice President, Chief Financial Officer |
2016
|
500,000
|
—
|
700,757
|
300,000
|
331,500
|
47,575
|
39,797
|
1,919,629
| |||||||||
2015
| 402,658
| —
| 499,284
| 263,740
| 180,000
| —
| 34,432
| 1,380,114
| ||||||||||
2014
| 301,019
| —
| 410,137
| 68,631
| 574,035
| 135,094
| 25,343
| 1,514,259
| ||||||||||
Eckard Heidloff President |
2016
|
322,775
|
—
|
—
|
—
|
1,295,500
|
—
|
142,385
|
1,758,794
| |||||||||
—
| —
| —
| —
| —
| —
| —
| —
| —
| ||||||||||
—
| —
| —
| —
| —
| —
| —
| —
| —
| ||||||||||
Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary
|
2016
|
440,000
|
—
|
538,448
|
132,000
|
324,720
|
—
|
37,210
|
1,472,378
| |||||||||
2015
| 400,000
| —
| 285,304
| 150,708
| 160,000
| —
| 26,392
| 1,022,404
| ||||||||||
—
| —
| —
| —
| —
| —
| —
| —
| —
| ||||||||||
Dr. Jürgen Wunram Chief Operating Officer |
2016
|
230,553
|
—
|
—
|
—
|
925,357
|
—
|
116,133
|
1,270,711
| |||||||||
—
| —
| —
| —
| —
| —
| —
| —
| —
| ||||||||||
—
| —
| —
| —
| —
| —
| —
| —
| —
| ||||||||||
Stefan E. Merz Senior Vice President, Corporate Strategy and Development
|
2016
|
400,000
|
—
|
510,392
|
119,998
|
295,200
|
—
|
61,774
|
1,387,364
| |||||||||
2015
| 374,726
| —
| 267,473
| 141,291
| 128,000
| —
| 50,420
| 961,910
| ||||||||||
2014
| 325,000
| —
| 616,051
| 99,577
| 424,003
| —
| 36,935
| 1,501,566
| ||||||||||
NAME AND PRINCIPAL POSITION | YEAR | SALARY1 ($) | BONUS2 ($) | STOCK AWARDS3 ($) | OPTION AWARDS4 ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION5 ($) | CHANGE IN PENSION VALUE AND NON- QUALIFIED DEFERRED COMPENSATION EARNINGS6 ($) | ALL OTHER COMPENSATION7 ($) | TOTAL ($) | |||||||||||||||||||||||||||
GERRARD B. SCHMID President and Chief Executive Officer |
| 2018 |
|
| 817,260 |
|
| 1,154,250 |
|
| 4,135,246 |
|
| 712,502 |
|
| — |
|
| — |
|
| 80,574 |
|
| 6,899,832 |
| |||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
JEFFREY RUTHERFORD Senior Vice President and Chief Financial Officer |
| 2018 |
|
| 150,000 |
|
| 225,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 375,000 |
| |||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
DR. JUERGEN WUNRAM Former Senior Vice President, Chief Operating Officer andCo-CEO |
| 2018 |
|
| 287,734 |
|
| — |
|
| 1,428,020 |
|
| 206,329 |
|
| — |
|
| 261,185 |
|
| 400,995 |
|
| 2,584,263 |
| |||||||||
| 2017 |
|
| 598,446 |
|
| — |
|
| 1,583,750 |
|
| 342,116 |
|
| 267,089 |
|
| 105,588 |
|
| 154,204 |
|
| 3,051,193 |
| ||||||||||
| 2016 |
|
| 230,553 |
|
| — |
|
| — |
|
| — |
|
| 925,357 |
|
| — |
|
| 116,133 |
|
| 1,272,043 |
| ||||||||||
CHRISTOPHER A. CHAPMAN Former Senior Vice President, Chief Financial Officer andCo-CEO |
| 2018 |
|
| 494,082 |
|
| — |
|
| 1,229,721 |
|
| 177,678 |
|
| — |
|
| — |
|
| 2,703,123 |
|
| 4,604,604 |
| |||||||||
| 2017 |
|
| 574,178 |
|
| — |
|
| 1,710,187 |
|
| 343,487 |
|
| 230,000 |
|
| 80,875 |
|
| 39,491 |
|
| 2,978,218 |
| ||||||||||
| 2016 |
|
| 500,000 |
|
| — |
|
| 700,757 |
|
| 300,000 |
|
| 331,500 |
|
| 47,575 |
|
| 39,797 |
|
| 1,919,629 |
| ||||||||||
DR. ULRICH NÄHER Senior Vice President, Products |
| 2018 |
|
| 570,549 |
|
| 557,665 |
|
| 940,877 |
|
| 135,948 |
|
| — |
|
| 59,569 |
|
| 109,693 |
|
| 2,374,301 |
| |||||||||
| 2017 |
|
| 460,411 |
|
| — |
|
| 1,017,990 |
|
| 225,411 |
|
| 234,639 |
|
| 68,392 |
|
| 104,992 |
|
| 2,111,835 |
| ||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
OLAF HEYDEN Senior Vice President, Services |
| 2018 |
|
| 570,549 |
|
| 557,665 |
|
| 940,877 |
|
| 135,948 |
|
| — |
|
| 60,714 |
|
| 129,193 |
|
| 2,394,946 |
| |||||||||
| 2017 |
|
| 460,411 |
|
| — |
|
| 1,017,990 |
|
| 225,411 |
|
| 234,639 |
|
| 71,992 |
|
| 129,237 |
|
| 2,139,680 |
| ||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
JONATHAN B. LEIKEN Senior Vice President, Chief Legal Officer and Corporate Secretary |
| 2018 |
|
| 502,025 |
|
| 497,250 |
|
| 761,880 |
|
| 110,081 |
|
| — |
|
| — |
|
| 29,764 |
|
| 1,901,000 |
| |||||||||
| 2017 |
|
| 472,849 |
|
| — |
|
| 1,227,054 |
|
| 212,813 |
|
| 190,000 |
|
| — |
|
| 36,818 |
|
| 2,139,534 |
| ||||||||||
| 2016 |
|
| 440,000 |
|
| — |
|
| 538,448 |
|
| 132,000 |
|
| 324,720 |
|
| — |
|
| 37,210 |
|
| 1,472,378 |
|
1 |
|
2 | 2018 amounts in this column reflect amounts earned under the Company’s Quarterly Bonus Program, as well as the turnaround cash bonus awards. |
3 | 2018 amounts in this column represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718 (ASC 718), for RSUs and performance-based LTI shares awarded to the NEOs in |
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. |
The specific terms of each of these awards are discussed in more detail in “Compensation Discussion and Analysis” above.
Mr. Rutherford did not receive any stock awards in 2018. |
Mr. Heidloff and Dr. Wunram did not receive any stock awards in 2016.
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66 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
This column represents the aggregate grant date fair value, computed in accordance with |
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.
Mr. Rutherford did not receive any option awards in 2018. |
|
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.
The amount shown for |
There was no above-market or preferential interest earned by any NEO in 2016
There was no above-market or preferential interest earned by any NEO in 2018 onnon-qualified deferred compensation. |
The amounts reported as “All Other Compensation” for |
The amounts reported as “All Other Compensation” for 2016 for Mr. Heidloff
2019 PROXY STATEMENT | | 67 |
EXECUTIVE COMPENSATION MATTERS |
The amounts reported as “All Other Compensation” for 2018 for Dr. Wunram and Mr. Chapman, with respect to column (d) also include the following payments and benefits accrued in relation to their termination. For Dr. Wunram: annual cash bonus, grantedpro-rata and based on 100% achievement of all relevant targets, $268,059. These amounts were paid to Dr. Wunram in Euros under the terms of his separation agreement and were converted to U.S. dollars using the exchange rate of 1.16748 at May 31, 2018. Dr. Wunram may be entitled to certain other future payments under his DN Performance Awards which have not been included in his 2018 “All Other Compensation” amount. Those potential payments and benefits are described in detail in the “Payments and Benefits in Connection with Dr. Wunram’s Retirement” section under “Potential Payments Upon Termination or Change in Control.” For Mr. Chapman: cash severance $2,369,000, the amount negotiated in connection with his departure and in lieu of any bonus eligibility for 2018 $300,000, and the aggregate value as of the separation date of the RSUs that vested upon his separation $8,451. Mr. Chapman is also entitled to certain other payments and benefits under his separation, which may be incurred in the future that are subject to thenon-competition,non-solicitation, and confidentiality provisions under his separation and which have not been included in his 2018 “All Other Compensation” amount. Those potential payments and benefits are described in detail in the “Payments and Benefits in Connection with Mr. Chapman’s Separation” section under “Potential Payments Upon Termination or Change in Control.” |
ALL OTHER COMPENSATION | ||||||||||||||||
NAMED EXECUTIVE OFFICER | (A) | (B) | (C) | (D) | ||||||||||||
Gerrard B. Schmid |
| 26,500 |
|
| 25,000 |
|
| 10,895 |
|
| 18,179 |
| ||||
Jeffrey Rutherford |
| — |
|
| — |
|
| — |
|
| — |
| ||||
Dr. Juergen Wunram |
| 116,748 |
|
| — |
|
| 3,391 |
|
| 280,856 |
| ||||
Christopher A. Chapman |
| 9,720 |
|
| 7,343 |
|
| 3,806 |
|
| 2,682,254 |
| ||||
Dr. Ulrich Näher |
| 57,278 |
|
| 10,149 |
|
| 2,234 |
|
| 40,032 |
| ||||
Olaf Heyden |
| 57,278 |
|
| 34,823 |
|
| 2,234 |
|
| 34,858 |
| ||||
Jonathan B. Leiken |
| 13,262 |
|
| 10,000 |
|
| 2,899 |
|
| 3,603 |
|
CEOPAY-RATIO DISCLOSURE
Under Section 953(b) of the Dodd-Frank Wall Street Reform and Dr. Wunram represent pension contributionsConsumer Protection Act and fringe benefits paid or allocatedItem 402(u) of RegulationS-K, we are required to them afterdisclose the consummationmedian of the annual total compensation of our acquisitionemployees, the annual total compensation of Wincor Nixdorf. As outlinedour principal executive officer, and the ratio of these two amounts. In calculating this ratio, we are required to identify our median employee once every three years and calculate total compensation for that employee each year.
We identified our median employee on December 1, 2017, and there has been no change in our employee population or employee compensation arrangements during 2018 that we reasonably believe would impact the pay ratio disclosures for 2018.
After identifying the median employee based on annualized base salaries, we calculated annual total compensation for such employee for 2018 using the same methodology we used for our NEOs as set forth in the table below, such amounts includeabove 2018 Summary Compensation Table. We have estimated the annual pension benefit contributions for the executives by Wincor Nixdorf under the Wincor Pension Plan and the executive’s service agreement (column (b)), which are reflectedtotal compensation of our median employee, excluding our CEO, to be $35,383. As reported in the tables in U.S. dollars2018 Summary Compensation Table, the total compensation of Mr. Schmid, our President and were converted from their Euro amountsCEO, was $6,899,832. Since Mr. Schmid was appointed to U.S. dollars usingthis position effective February 21, 2018, we annualized his salary (in the exchange rateamount of 1.052255 at December 31, 2016. These amounts also include the following (column (e) below):$950,000), and the value of life insurance premiums;and AD&D premiums and supplemental executive
disability insurance included in the value“All Other Compensation” column of accident liability insurance premiums paid for the NEOs;Summary Compensation Table (in the valuetotal amount of health insurance premiums paid for$19,057) to reflect a total annualized compensation in the NEOs;amount of $7,035,279. We did not annualize the bonus, stock awards,non-equity incentive awards and option awards columns of the amounts providedSummary Compensation Table, as these items consisted ofone-time inducement grants, reflected full year awards or were awarded under compensation programs not in effect on the date of his hire. For 2018, the ratio of the total compensation of our President and CEO to the NEOs relatedestimated median of the annual total compensation of our employees was approximately 199 to use1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules.
Because the SEC rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a company car. Amounts includedvariety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for our Company, as other companies have offices in column (e)different countries, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in the table below are in U.S. dollars, but were received in Euros, and we used the average Euro to U.S. dollar foreign currency exchange rate for 2016 of 1.106656 for these amounts.calculating their pay ratios.
�� |
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
|
68 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
2018 GRANTS OF PLAN-BASED AWARDS TABLE
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2016 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 (#) | All Other (#) | Exercise ($/Sh) | Grant Date ($) | |||||||||||||||||||||
Name | Grant Date |
Threshold ($) | 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
| -
| -
| -
| -
| -
| -
| -
|
NAME | 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 ($/SH) | GRANT FAIR VALUE STOCK AND OPTION AWARDS5 ($) | ||||||||||||||||||||||||||||||||||||||
GRANT DATE | THRESHOLD ($) | TARGET ($) | MAX. ($) | THRESHOLD (#) | TARGET (#) | MAX. (#) | ||||||||||||||||||||||||||||||||||||||
Gerrard B. Schmid | 2/20/2018 | — | — | — | — | — | — | — | 192,049 | 15.35 | 712,502 | |||||||||||||||||||||||||||||||||
2/21/2018 | — | — | — | — | — | — | 108,945 | — | — | 1,623,281 | ||||||||||||||||||||||||||||||||||
2/21/2018 | — | — | — | 77,818 | 155,636 | 311,272 | — | — | — | 2,511,965 | ||||||||||||||||||||||||||||||||||
— | 532,000 | 1,330,000 | 2,660,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Jeffrey Rutherford | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Dr. Juergen Wunram | 2/1/2018 | — | — | — | — | — | — | — | 45,953 | 18.75 | 206,329 | |||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | — | — | — | 26,717 | — | — | 500,944 | ||||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | 19,084 | 38,167 | 76,334 | — | — | — | 927,076 | ||||||||||||||||||||||||||||||||||
— | 275,102 | 687,754 | 1,375,508 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Christopher A. Chapman | 2/1/2018 | — | — | — | — | — | — | — | 39,572 | 18.75 | 177,678 | |||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | — | — | — | 23,007 | — | — | 431,381 | ||||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | 16,434 | 32,867 | 65,734 | — | — | — | 798,339 | ||||||||||||||||||||||||||||||||||
— | 236,900 | 592,250 | 1,184,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dr. Ulrich Näher | 2/1/2018 | — | — | — | — | — | — | — | 30,278 | 18.75 | 135,948 | |||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | — | — | — | 17,603 | — | — | 330,056 | ||||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | 12,574 | 25,147 | 50,294 | — | — | — | 610,821 | ||||||||||||||||||||||||||||||||||
— | 241,678 | 604,196 | 1,208,392 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Olaf Heyden | 2/1/2018 | — | — | — | — | — | — | — | 30,278 | 18.75 | 135,948 | |||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | — | — | — | 17,603 | — | — | 330,056 | ||||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | 12,574 | 25,147 | 50,294 | — | — | — | 610,821 | ||||||||||||||||||||||||||||||||||
— | 241,678 | 604,196 | 1,208,392 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Jonathan B. Leiken | 2/1/2018 | — | — | — | — | — | — | — | 24,517 | 18.75 | 110,081 | |||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | — | — | — | 14,254 | — | — | 267,263 | ||||||||||||||||||||||||||||||||||
2/1/2018 | — | — | — | 10,182 | 20,363 | 40,726 | — | — | — | 494,617 | ||||||||||||||||||||||||||||||||||
— | 204,000 | 510,000 | 1,020,000 | — | — | — | — | — | — | — |
1 |
|
2 | These columns present information about performance-based LTI shares awarded during |
3 | This column presents information about RSUs awarded during |
2019 PROXY STATEMENT | | 69 |
EXECUTIVE COMPENSATION MATTERS |
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 |
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.
-74-
5 | For the annual performance-based LTI shares, the grant date fair value of |
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
For RSUs, the fair value is calculated using the closing market price of the shares on the applicable grant date ($18.75 ($14.90 for Mr. Schmid)), 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 $4.49 ($3.71 for Mr. Schmid), calculated in accordance with ASC 718. The assumptions used in calculating the fair value of these stock options can be found under Note 3 |
10-KMR. SCHMID OFFER LETTER for the year ended December 31, 2016.
Mattes Amended and Restated Employment Agreement
In June 2013, we entered into an employment agreementconnection with Mr. Mattes in connection with hisSchmid’s appointment as our President and CEO. We amended that agreementCEO on July 24, 2015 in orderFebruary 21, 2018, we entered into an offer letter pursuant to align the“change-in-control” definition and the “cause” definition that applies in thetwo-year period following achange-in-control as stated inwhich 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 (through July 24, 2017) with automaticone-year renewals unless either party provides 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 the exercise period for stock options and stock appreciation rights following termination from three months to twelve months, consistent with the 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 toSchmid will receive an annual base salary of not less than $937,500at least $950,000 and iswill be eligible for annual incentive awards and long-term incentive plan awards as determined by the Company in its sole discretion. Additionally, Mr. Mattes is eligible to participate inCompany. For 2018, the Company’s long-term equityBoard set his initial annual cash incentive plan asaward target at $1,330,000, which represents 140% of his base salary. Any payout under this incentive award shall be determined by the Company in its sole discretion.Board based on the achievement of certain performance goals.
UnderThe Board also granted Mr. Schmid options, performance share units and RSUs as a material inducement to his hiring. Pursuant to the terms of the agreement,CEO Inducement Award Agreement, dated February 21, 2018 (the CEO Award Agreement), Mr. Schmid received (i) 192,049 options with an exercise price of $15.35 per share and which will vest in three equal installments on the first, second, and third anniversary of the grant date; (ii) 155,636 performance share units, which will be earned, if at all, based on the target level of achievement of established performance metrics during the performance period, which begins on his date of hire and ends on December 31, 2020; and (iii) 108,945 RSUs, which will vest in three equal installments on the first, second, and third anniversaries of the grant date. This inducement award was approved by all of the Company’s independent directors and was made outside of the terms of the 2017 Plan. Once vested, equity grants will not be subject to forfeiture unless Mr. MattesSchmid is terminated withoutfor certain activities constituting cause (as defined in the agreement)CEO Award Agreement). In the event Mr. Schmid’s employment is terminated by us without cause or he terminates his employmentresigns for “good reason”good reason (as defined in the agreement and subject to the Company’s right to cure),CEO Award Agreement) within three years after a change in either case other than in thetwo-year period following a“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,control, 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 award100% accelerated vesting of all such outstanding equity interests, with performance awards earned at the greater of target (iii) a lump sumpro-rata amount, if any, equal to the actual annual incentive that would have been payable to him based on the Company’sor actual performance against applicable goals and his personal goals/key initiatives (based on his assumed target level performance), and (iv) continuationas of medical, dental, vision and Company-paid basic life insurance coverage for the shorter of (i) 24 months and (ii) the date he receives equivalentof termination.
Mr. Schmid’s severance benefits will be governed by our current Senior Leadership Severance Plan, which provides coverage to executives who are involuntarily terminated without cause or who terminate their employment for good reason, in each case separate from a subsequent employer,change in control and (A)subject to a general release of claims and acknowledgement of the executive’s confidentiality,non-competition and other applicable obligations. With respect to Mr. Schmid, “good reason” as defined in the Senior Leadership Severance Plan shall also include a change in title, authority, duties or responsibilities or the assignment of any outstandingduties that are inconsistent with his position.
We also entered into a Change in Control Agreement with Mr. Schmid consistent with our existing program. Any benefits under the Change in Control Agreement are paid only following both (1) a change in control (as defined in the Change in Control Agreement) 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(2) apro-rata basis and (C) all unearned performance-based shares and performance units will be paid out on apro-rata basis, (except for Transformation Grant shares which will be forfeited).
-75-
In addition, in connection with achange-in-control, the term termination of Mr. Mattes’Schmid’s employment will automatically be extended towithout cause by the second anniversary ofCompany, or by him with good reason (as such terms are defined in thechange-in-control. If, during Change in Control Agreement) in thetwo-year three-year period following a change in control,control. Under such circumstances, Mr. Mattes isSchmid may be eligible for (i) a lump sum payment equal to two times base salary and target cash bonus, (ii) the acceleration of outstanding equity awards, (iii) payment of outstanding performance awards at the greater of target or actual performance, (iv) two years of continued participation in our health and welfare benefit plans, and (v) a lump sum payment in an amount equal to the additional benefits Mr. Schmid would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan for one additional year of service, provided he was fully vested prior to termination, including pro rata payment of his annual incentive award at the greater of target or actual performance.
70 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
MR. RUTHERFORD’S INDEPENDENT CONTRACTOR AGREEMENT; 2019 OFFER LETTER
Mr. Rutherford was appointed as our interim Chief Financial Officer on October 1, 2018. Pursuant to the terms of the independent contractor agreement between him and the Company, Mr. Rutherford received a monthly salary of $50,000 per month. The agreement had no set term, but Mr. Rutherford was entitled to receive a minimum of three months’ salary, unless he resigned earlier.
On January 4, 2019, we appointed Mr. Rutherford as Chief Financial Officer. Pursuant to the terms of his offer letter, Mr. Rutherford will receive an annual base salary of $600,000 and an initial annual cash incentive award target at $600,000 (which represents 100% of his base salary), and he will be eligible for long-term incentive plan awards as determined by the Company. Mr. Rutherford’s severance benefits will be governed by our Senior Leadership Severance Plan, which provides coverage to executives who are involuntarily terminated without cause or he terminates hiswho terminate their employment for good reason, assuming he otherwise satisfies certain conditions, he willin each case separate from a change in control and subject to a general release of claims and acknowledgement of the executive’s confidentiality,non-competition and other applicable obligations.
We also entered into a Change in Control Agreement with Mr. Rutherford that is consistent with our existing program. Mr. Rutherford would be entitled to receive among other things, (i) a lump sum amount equalbenefits in the same manner as described immediately above for Mr. Schmid.
SERVICE AGREEMENTS WITH DR. NÄHER AND MR. HEYDEN
Dr. Näher and Mr. Heyden are compensated pursuant to any unpaid salarytheir respective service agreements with Diebold Nixdorf AG and accrued vacation paycertain offer letters from us entered into in 2017 in connection with the continued integration following our business combination with Wincor Nixdorf. Pursuant to recent amendments extending their terms, their service agreements expire on February 28, 2022, 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 sumpro-rata amount, if any, equal to the actual annual incentive that would have been payable to him based on our 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 which will be earned at 100% as long as Mr. Mattes is employed at the end of the performance period or was terminated without cause or with good reason).August 31, 2022, respectively.
The employment agreement also provides that Mr. Mattes will not (i) compete with us for service agreements and offer letters provide the following annual compensation:
Service Agreements with Mr. Heidloffour Annual Cash Bonus Plan and Dr. Wunramlong-term equity incentive opportunity;
Compensation for Mr. Heidloff and Dr. Wunram for 2016 was
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 PlanNixdorf International GmbH pension directive (with yearly pension benefit contribution commitments of €126,082 for Mr. Heidloff and €100,000 for Dr. Wunram)€50,000); and (v)
insurance premiums paid by the Company, financial planning services, and lease payments on a company car. |
Under the service agreements, the annualThe short-term variable cash compensation wasincentive award under our Annual Cash Bonus Plan is dependent on the attainment of specific EBITDAtargets set by us at the beginning of each fiscal year, and net income targets setadopted by the Supervisory Board at the beginning of the fiscal year. The targets receive the same weighting and are reviewed and settled separately.Diebold Nixdorf AG (the Supervisory Board). If performance is achieved at target, Dr. Näher and Mr. Heidloff and Dr. WunramHeyden receive 100% of their annualfixed base salary as a cash bonus. If performanceA more detailed discussion of their short-term cash incentive component is achieved below 80% of either target (threshold performance),included above under 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%“Annual Cash Bonus Plan” section of the performance targets“Compensation Discussion and Analysis.”
Dr. Näher and Mr. Heyden 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%also eligible 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%long-term equity incentive awards based on 150% of annual base salary for performance achieved between 120% and 130%salary. A more detailed discussion of target.
Mr. Heidloff and Dr. Wunram received option grants from Wincor Nixdorfthese long-term equity incentive awards is included under the service agreements in 2013, 2014, 2015“Long Term Incentives—2018 Regular Annual Grants” section.
Dr. Näher and 2016, whichMr. Heyden are reflected below in the “Outstanding Equity at 2016 FiscalYear-End Table.”
-76-
All of these options were granted prioreligible 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 achievedreceive indemnification payments from us if the stock appreciatedtax liability resulting from their service to us exceeds the tax liability that they would otherwise be subject to if their compensation were solely taxable in value by an averageGermany as income of 6% per year over the entire four year term of the option, calculateda management board member in terms of movements in the share priceGermany.
Dr. Näher 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 optionsMr. Heyden are to be settled in cash pursuant to our Business Combination Agreement with Wincor Nixdorf.
Under the service agreements, Mr. Heidloff and Dr. Wunram arealso 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 and offer letters also 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—Dr. Näher and Mr. Heidloff and Dr. WunramHeyden.” Additional information regarding the Wincor Pension Plan is provided under the “German Pension Benefits” section that follows the “2016Non-Qualified Deferred Compensation2018 Pension and Retirement Benefits” table below.
Separation Agreement—Mr. HeidloffMESSRS. WUNRAM AND CHAPMAN SEPARATION AND OTHER AGREEMENTS
In connection with the effectiveness of the domination and profit and loss transfer agreement, Mr. Heidloff resignedAs disclosed above, Dr. Wunram retired from his position as Senior Vice President effective Marchand Chief Operating Officer on May 31, 2017.2018, and Mr. HeidloffChapman departed from his position as Senior Vice President and Diebold Nixdorf AG agreed that he would receive the following severance benefits under a separation agreement, dated February 16, 2017 (the “Separation Agreement”). PayableChief Financial Officer on March 31, 2017, Mr. Heidloff will receive a severance payment in the amount of €4,310,810October 1, 2018. The amounts payable 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,obligations pursuant to the termsagreements entered into with each of them at the Wincor Nixdorf stock option plan. He will also receive his monthly fixed compensationtime of separation are described below in the “Potential Payments Upon Termination or Change in Control” section. The “All Other Compensation” amount in the Summary Compensation Table includes payments 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. Pursuantaccrued 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 €535,000them 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.their departures.
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.
-77-
2019 PROXY STATEMENT | | 71 |
EXECUTIVE COMPENSATION MATTERS |
Outstanding Equity Awards at 2016 FiscalOUTSTANDING EQUITY AWARDS AT 2018 FISCALYear-EndYEAR-END
The following table provides information relating to exercisable and unexercisable stock options as of December 31, 20162018 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, 2016.2018. No stock appreciation rights were outstanding as of December 31, 2016.2018. Mr. Rutherford did not hold any outstanding equity awards at 2018 fiscalyear-end.
Option Awards1 | Stock Awards | |||||||||||||||||||||
Number of Securities Underlying Unexercised Options | Equity Incentive Plan Awards: | |||||||||||||||||||||
Name | Grant Date of | Exercisable (#) | Unexercisable (#) | Equity (#) | Option Exercise Price2 ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested3 (#) | Market That Have Not ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested5 (#) | Market or ($) | ||||||||||||
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 |
OPTION AWARDS1
| STOCK AWARDS
| |||||||||||||||||||||||||||||||||||||||
NUMBER OF SECURITIES
| EQUITY INCENTIVE PLAN
| |||||||||||||||||||||||||||||||||||||||
NAME
| GRANT
| EXERCISABLE
| UNEXERCISABLE
| EQUITY
| OPTION ($)
| OPTION
| NUMBER
| MARKET
| NUMBER
| MARKET OR
| ||||||||||||||||||||||||||||||
Gerrard B. Schmid |
| 2/20/2018 |
|
| — |
|
| 192,049 |
|
| — |
|
| 15.35 |
|
| 2/20/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/21/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 108,945 |
|
| 271,273 |
|
| — |
|
| — |
| |||||||||||
| 2/21/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 77,818 |
|
| 193,767 |
| |||||||||||
Jeffrey Rutherford |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
Dr. Juergen Wunram |
| 2/8/2017 |
|
| 25,118 |
|
| 50,238 |
|
| — |
|
| 26.60 |
|
| 2/8/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/1/2018 |
|
| — |
|
| 45,953 |
|
| — |
|
| 18.75 |
|
| 2/1/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,827 |
|
| 14,509 |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 26,717 |
|
| 66,525 |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 10,926 |
|
| 27,206 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 19,084 |
|
| 47,519 |
| |||||||||||
Christopher A. Chapman |
| 2/11/2009 |
|
| 1,250 |
|
| — |
|
| — |
|
| 24.79 |
|
| 2/11/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/11/2010 |
|
| 2,500 |
|
| — |
|
| — |
|
| 27.88 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/10/2011 |
|
| 7,000 |
|
| — |
|
| — |
|
| 32.67 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2012 |
|
| 9,500 |
|
| — |
|
| — |
|
| 34.89 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/6/2013 |
|
| 7,540 |
|
| — |
|
| — |
|
| 29.87 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/11/2014 |
|
| 10,166 |
|
| — |
|
| — |
|
| 34.13 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/5/2015 |
|
| 37,445 |
|
| — |
|
| — |
|
| 32.33 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/3/2016 |
|
| 55,8666 |
|
| — |
|
| — |
|
| 27.39 |
|
| 10/1/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| 25,219 |
|
| 50,4397 |
|
| — |
|
| 26.60 |
|
| 2/8/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| 39,5727 |
|
| — |
|
| 18.75 |
|
| 2/1/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,517 |
|
| 31,167 |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 23,007 |
|
| 57,287 |
|
| — |
|
| — |
| |||||||||||
| 2/3/20165 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8,621 |
|
| 21,466 |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 10,969 |
|
| 27,313 |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8,227 |
|
| 20,485 |
|
| 24,681 |
|
| 61,456 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 16,434 |
|
| 40,921 |
|
-78-
Option Awards1 | Stock Awards | |||||||||||||||||||||
Number of Securities Underlying Unexercised Options | Equity Incentive Plan Awards: | |||||||||||||||||||||
Name | Grant Date of | Exercisable (#) | Unexercisable (#) | Equity (#) | Option Exercise Price2 ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested3 (#) | Market That Have Not ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested5 (#) | Market or ($) | ||||||||||||
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 |
72 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
OPTION AWARDS1
| STOCK AWARDS
| |||||||||||||||||||||||||||||||||||||||
NUMBER OF SECURITIES
| EQUITY INCENTIVE PLAN
| |||||||||||||||||||||||||||||||||||||||
NAME
| GRANT
| EXERCISABLE
| UNEXERCISABLE
| EQUITY
| OPTION ($)
| OPTION
| NUMBER
| MARKET
| NUMBER
| MARKET OR
| ||||||||||||||||||||||||||||||
Dr. Ulrich Näher |
| 2/8/2017 |
|
| 16,550 |
|
| 33,100 |
|
| — |
|
| 26.60 |
|
| 2/8/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/1/2018 |
|
| — |
|
| 30,278 |
|
| — |
|
| 18.75 |
|
| 2/1/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,840 |
|
| 9,562 |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 17,603 |
|
| 43,832 |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7,199 |
|
| 17,926 |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,719 |
|
| 16,730 |
|
| 20,157 |
|
| 50,191 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,574 |
|
| 31,309 |
| |||||||||||
Olaf Heyden |
| 2/8/2017 |
|
| 16,550 |
|
| 33,100 |
|
| — |
|
| 26.60 |
|
| 2/8/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/1/2018 |
|
| — |
|
| 30,278 |
|
| — |
|
| 18.75 |
|
| 2/1/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,840 |
|
| 9,562 |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 17,603 |
|
| 43,832 |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7,199 |
|
| 17,926 |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,719 |
|
| 16,730 |
|
| 20,157 |
|
| 50,191 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,574 |
|
| 31,309 |
| |||||||||||
Jonathan B. Leiken |
| 2/5/2015 |
|
| 21,397 |
|
| — |
|
| — |
|
| 32.33 |
|
| 2/5/2025 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
| 2/3/2016 |
|
| 16,387 |
|
| 8,194 |
|
| — |
|
| 27.39 |
|
| 2/3/2026 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| 15,625 |
|
| 31,250 |
|
| — |
|
| 26.60 |
|
| 2/8/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| 24,517 |
|
| — |
|
| 18.75 |
|
| 2/1/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||
| 2/3/2016 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,114 |
|
| 2,774 |
|
| — |
|
| — |
| |||||||||||
| 2/11/2016 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,334 |
|
| 8,302 |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 10,292 |
|
| 25,627 |
|
| — |
|
| — |
| |||||||||||
| 2/3/20165 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4,017 |
|
| 10,002 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 14,254 |
|
| 35,492 |
|
| — |
|
| — |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,796 |
|
| 16,922 |
| |||||||||||
| 2/8/2017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,343 |
|
| 15,794 |
|
| 19,029 |
|
| 47,382 |
| |||||||||||
| 2/1/2018 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 10,182 |
|
| 25,353 |
|
1 |
|
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 |
|
This column reflects unvested RSUs granted to the NEOs as of December 31, |
3 | The market value was calculated using the closing price of our common shares of |
4 |
|
2019 PROXY STATEMENT | | 73 |
EXECUTIVE COMPENSATION MATTERS |
This column also reports the Synergy Grant shares that are not yet subject to accelerated vesting. Synergy savings was above the applicable target as of December 31, 2018, and we have included the remaining awards at maximum. The remainder of the Synergy Grant is scheduled to vest and be paid in February |
5 |
|
|
Amounts represent |
-79-
2016 Option Exercises and Stock Vested
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 ($) | ||||
Andreas W. Mattes | — | — | 40,905 | 1,005,563 | ||||
Christopher A. Chapman | — | — | 4,522 | 105,488 | ||||
Eckard Heidloff | 122,111 | 1,712,188 | — | — | ||||
Jonathan B. Leiken | — | — | — | — | ||||
Dr. Jürgen Wunram | 87,222 | 1,222,989 | — | — | ||||
Stefan E. Merz | — | — | 5,000 | 137,250 |
6 | The number of options reported include an aggregate amount of 18,622 options that immediately vested upon Mr. |
7 | These options are unexercisable as of December 31, 2018, but continue to vest over the remaining vesting schedule of the award. |
2018 OPTION EXERCISES AND STOCK VESTED
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||
NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($) | NUMBER OF SHARES ACQUIRED ON VESTING (#) | VALUE REALIZED ON VESTING 1 ($) | ||||||||||||||||
Gerrard B. Schmid |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
Jeffrey Rutherford |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
Dr. Juergen Wunram |
| — |
|
| — |
|
| 2,913 |
|
| 46,171 |
| ||||||||
Christopher A. Chapman |
| — |
|
| — |
|
| 19,583 |
|
| 288,832 |
| ||||||||
Dr. Ulrich Näher |
| — |
|
| — |
|
| 1,919 |
|
| 30,416 |
| ||||||||
Olaf Heyden |
| — |
|
| — |
|
| 1,919 |
|
| 30,416 |
| ||||||||
Jonathan B. Leiken |
| — |
|
| — |
|
| 14,675 |
|
| 228,267 |
|
The value realized is calculated 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. The value realized for Mr. Chapman’s accelerated RSUs (1,899 of the reported shares) is calculated by multiplying the shares of stock by the close price on his separation date ($4.45). As settlement of Mr. Chapman’s RSUs was delayed until 2019 in accordance with 409(A) and his release, the value of the shares provided to Mr. Chapman on the payment dates may differ from that in the table. |
2016 Pension and Retirement Benefits2018 PENSION AND RETIREMENT BENEFITS
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||
Andreas W. Mattes | - | - | - | - | ||||
Christopher A. Chapman | Qualified Retirement Plan | 20.3333 | 252,2331 | — | ||||
Pension Restoration SERP | 20.3333 | 119,7211 | ||||||
Eckard Heidloff | Wincor Nixdorf AG Pension Scheme | 34 | 1,565,7552 | 132,670 | ||||
Jonathan B. Leiken | - | - | - | - | ||||
Dr. Jürgen Wunram | Wincor Nixdorf AG Pension Scheme | 9.83 | 1,336,3642 | 105,226 | ||||
Stefan E. Merz | - | - | - | - |
NAME | PLAN NAME | NUMBER OF YEARS CREDITED SERVICE (#) | PRESENT VALUE OF ACCUMULATED BENEFIT ($) | PAYMENTS DURING LAST FISCAL YEAR ($) | ||||||||||
Gerrard B. Schmid | — | — | — | — | ||||||||||
Jeffrey Rutherford | — | — | — | — | ||||||||||
Dr. Juergen Wunram | Wincor Nixdorf AG Pension Scheme | 11.83 | 1,816,8421 | — | ||||||||||
Christopher A. Chapman | Qualified Retirement Plan | 22.0833 | 263,3442 | — | ||||||||||
Pension Restoration SERP | 22.0833 | 124,9952 | — | |||||||||||
Dr. Ulrich Näher | Wincor Nixdorf AG Pension Scheme | 4.00 | 254,3121 | — | ||||||||||
Olaf Heyden | Wincor Nixdorf AG Pension Scheme | 5.67 | 365,4301 | — | ||||||||||
Jonathan B. Leiken | — | — | — | — |
1 | For Drs. Wunram and Näher and Mr. Heyden, the present value of accumulated benefit is based on projected benefits earned through age 60 and assuming a discount rate of 1.5% and that there is no probability of termination, retirement, death, or disability before normal retirement age. The present value of accumulated benefit for Drs. Wunram and Näher and Mr. Heyden is€1,586,000,€222,000, and€319,000, respectively. The dollar amounts reflected in the table were calculated using the Euro to U.S. dollar foreign currency exchange rate on December 31, 2018 of 1.14555. |
2 | For Mr. Chapman, the values are determined based on a |
74 |
EXECUTIVE COMPENSATION MATTERS |
Mr. Chapman participates 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 PlanQUALIFIED 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-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-reduced basis, if they are at least age 50 and the sum of their age plus service is at least 70.
Pension RestorationPENSION RESTORATION SERP
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 is the only NEO who participates in the Pension Restoration SERP. The Pension Restoration SERP was amended in 2013 to freeze all future benefit accruals after December 31, 2013.
GERMAN PENSION BENEFITS
Drs. Wunram and Näher and Mr. Heyden participate in 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 up to ten annual installment payments. They are entitled to the pension payments when reaching the age of sixty. However, if they 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 their service agreement. In the event that the executive continues to hold a position on the Wincor Nixdorf management board, the actual pensions and/orone-time payout benefits will be higher than those presented in the table, particularly as a result of future financing contributions. The amounts credited to the pension accounts bear interest at 3.5% per year.
PRESENT VALUE OF ACCUMULATED BENEFITS
The Present Value of Accumulated Benefits
The “Present Value of Accumulated Benefits” is thesingle-sum value as of December 31, 20162018 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. 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 4.24%4.34%, the FASB ASC 715 discount rate as of December 31, 2016;
TheRP-2014 mortality tables withMP-2016MP-2018 generational projection scales; and
No probability of termination, retirement, death, or disability before normal retirement age.
The normal retirement age for Drs. Wunram and Näher and Mr. Heidloff and Dr. WunramHeyden under the Wincor Nixdorf AG Pension Scheme is 60 and 63, respectively.60. The key assumptions are as follows:
A discount rate of 1.5%; and
No probability of termination, retirement, death or disability before normal retirement age.
-81-
2016Non-Qualified Deferred Compensation
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
|
2019 PROXY STATEMENT | | 75 |
EXECUTIVE COMPENSATION MATTERS |
2018NON-QUALIFIED DEFERRED COMPENSATION
NAME
|
EXECUTIVE CONTRIBUTIONS IN 20181 ($)
| REGISTRANT CONTRIBUTIONS IN 20182 ($)
| AGGREGATE EARNINGS (LOSSES) ($)
| AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($)
| AGGREGATE BALANCE AS OF DECEMBER 31, 20184 ($)
| |||||||||||||||
Gerrard B. Schmid |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Jeffrey Rutherford |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Dr. Juergen Wunram |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Christopher A. Chapman |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Dr. Ulrich Näher |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Olaf Heyden |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Jonathan B. Leiken |
| 4,190 |
|
| 2,514 |
|
| (8,618 | ) |
| — |
|
| 67,531 |
|
1 |
|
2 |
|
3 |
|
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 “ |
Non-QualifiedNON-QUALIFIED Deferred Compensation PlansDEFERRED COMPENSATION PLANS
Deferred Incentive Compensation Plan No.
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 2015.2018. 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, 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, 2016,2018, as reported by Merrill Lynch.
-82-
76 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
Merrill Lynch Funds
MERRILL LYNCH FUNDS
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%
|
NAME OF FUND | RATE OF RETURN | NAME OF FUND | RATE OF RETURN | |||||||
FEDERATED INTERNATIONAL CL IS |
| -20.66 | % | VANGUARD 2015 INSTL TARGET RET |
| -2.91 | % | |||
INVESCO DIVERSIFIED DIV CL R5 |
| -7.54 | % | VANGUARD 2020 INSTL TARGET RET |
| -4.21 | % | |||
JANUS HENDERSON TRITON FUND I |
| -5.13 | % | VANGUARD 2025 INSTL TARGET RET |
| -5.02 | % | |||
JOHN HANCOCK DISCIPLINED |
| -14.74 | % | VANGUARD 2030 INSTL TARGET RET |
| -5.82 | % | |||
LOOMIS SAYLES SMALL CAP VALUE |
| -16.52 | % | VANGUARD 2035 INSTL TARGET RET |
| -6.56 | % | |||
OPPENHEIMER DEVELOPING MARKETS |
| -11.95 | % | VANGUARD 2040 INSTL TARGET RET |
| -7.31 | % | |||
T ROWE PRICE BLUE CHP GRTH INV |
| 2.01 | % | VANGUARD 2045 INSTL TARGET RET |
| -7.87 | % | |||
VANGUARD INSTITUTIONAL INDEX |
| -4.42 | % | VANGUARD 2050 INSTL TARGET RET |
| -7.87 | % | |||
VANGUARDMID-CAP INDEX FD |
| -9.34 | % | VANGUARD 2055 INSTL TARGET RET |
| -7.84 | % | |||
VANGUARD PRIMECAPFD-ADM CL |
| -1.95 | % | VANGUARD 2060 INSTL TARGET RET |
| -7.88 | % | |||
LOOMIS SAYLES BOND FD |
| -2.87 | % | VANGUARD 2065 INSTL TARGET RET |
| -7.84 | % | |||
VANGUARD TOTAL BOND MKT |
| -0.01 | % | VANGUARD INCM INSTL TARGET RET |
| -1.98 | % | |||
AMERICAN BALANCED FUND R5 |
| -2.47 | % | BLACKROCK LIQUIDITY FD T INSTL |
| 1.72 | % |
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.
401(k) Restoration401(K) RESTORATION SERP
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 Messrs. Chapman and Heidloff and Dr. Wunram, participate2. Mr. Leiken participates in the 401(k) Restoration SERP.
German Pension BenefitsPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Mr. Heidloff and Dr. Wunram participate in 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 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 continues to hold a position on the Wincor Nixdorf management board, the actual pensions and/orone-time payout benefits will be higher than those presented in the table, particularly as a result of future financing contributions. The amounts credited to the pension accounts bear interest at 3.5% per year.
Potential Payments Upon Termination or Change in Control
The 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 change in control (with and without termination) is described qualitatively in the following narrative and is shown quantitatively in the tabletables below. The amounts shown assume that such termination orchange-in-control change in control was effective as of December 31, 2016,2018, include amounts earned through such date, and are estimates of the amounts that would be paid out to the executives upon his termination orchange-in-control. change in control. As Dr. Wunram and Mr. Chapman’s separations from the Company occurred prior to December 31, 2018, they are not included in the tables below. Further, as Mr. Rutherford was an independent contractor of the Company as of December 31, 2018, he was not entitled to any such payments upon termination or change in control at that time. Beginning in 2019, Mr. Rutherford will be treated similar to Messrs. Schmid
and Leiken in terms of his participation in and rights to benefits and payments in the event of termination or change in control.
The actual amounts to be paid out can only be determined at the time of each NEO’s separation. Messrs. Chapman,Schmid and Leiken and Merz participate in our Senior Leadership Severance Policy. Messrs. MattesDr. Näher and Heidloff and Dr. WunramMr. Heyden have employment agreements, and their rights upon termination are set forth in those agreements. The
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employment agreements for Dr. Näher and Mr. Heidloff and Dr. WunramHeyden 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, 20162018 was $25.15.$2.49.
2019 PROXY STATEMENT | | 77 |
EXECUTIVE COMPENSATION MATTERS |
PAYMENTS AND BENEFITS IN CONNECTION WITH DR. WUNRAM’S RETIREMENT
Dr. Wunram retired from his position as Senior Vice President and Chief Operating Officer on May 31, 2018. In connection with his retirement, the Company and Dr. Wunram agreed that he would receive the following:
In addition, all of Dr. Wunram’s outstanding stock options and RSUs vest in accordance with the terms of their agreements, and Dr. Wunram remains eligible to receive his performance-based share awards and his performance-based cash incentive awards as if his employment had not terminated and pursuant to the terms of those awards.
PAYMENTS AND BENEFITS IN CONNECTION WITH MR. CHAPMAN’S SEPARATION
Mr. Chapman left the Company on October 1, 2018, to pursue other opportunities. In connection with his departure and subject to compliance withnon-competition andnon-solicitation obligations, Mr. Chapman was entitled to receive compensation (i) under the Company’s Senior Leadership Severance Plan with respect to termination of his employment without cause and (ii) pursuant to an agreement between the Company and Mr. Chapman dated January 31, 2018, as follows:
Mr. Chapman and the Company also entered into a consulting agreement whereby Mr. Chapman agreed to assist in the transition of his responsibilities through January 15, 2019 in exchange for aone-time payment in the amount of $300,000 and continued eligibility under his performance-based synergy award granted in 2017.
Payments Made Upon Termination – Messrs. Mattes, Chapman, Leiken, and MerzPAYMENTS MADE UPON TERMINATION—MESSRS. SCHMID AND LEIKEN
Voluntary Without Good Reason or Involuntary With Cause
VOLUNTARY WITHOUT GOOD REASON OR INVOLUNTARY WITH CAUSE
Whether a NEO’s employment terminates voluntarily without “good reason” or terminates involuntarily with “cause” (as those terms may be defined in various agreements), he 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 “20162018 Pension and Retirement Benefits” above. For Mr. Chapman, 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 and the nonqualified defined contribution plan values shown reflect the vested balances in the 401(k) Restoration SERP. If termination is involuntary with
cause, only the portion of the 401(k) Restoration Plan benefit derived from employee contributions and qualified defined benefit plan vested benefit are payable to the NEO. The 401(k) Restoration SERP balances are not payable until the NEO attains age 55.
Under the terms of Mr. Mattes’ employment agreement, he is be entitled to receive 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 or Voluntary With Good ReasonINVOLUNTARY WITHOUT CAUSE OR VOLUNTARY WITH GOOD REASON
If a NEO is involuntarily terminated without cause, he is entitled to the following (subject to a general release of claims and acknowledgment of the executive’s confidentiality,non-competition and other applicable obligations):
A lump sum payment equal to two times (for Messrs. Mattes and Chapman)Mr. Schmid) and one andone-half times (for Messrs. Merz andMr. Leiken) base salary in effect on the date of termination and target bonus opportunity under our Annual Cash Bonus Plan in the year of termination;
78 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
opportunity under our Annual Cash Bonus Plan in the year of termination; |
Continued participation in all of our employee health and welfare benefit plans for the shorter of (i) two years (for Messrs. Mattes and Chapman)Mr. Schmid) or one andone-half years (for Messrs. Merz andMr. Leiken), and (ii) the date such NEO receives equivalent coverage from a subsequent employer;
All outstanding unvested options immediately vest and 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;
• | A Qualified Retirement Plan benefit using the plan provisions as described in “ |
Professional outplacement services for up to two years; and
For Mr. Mattes, a lump sum payment of accrued vacation pay and unreimbursed business expenses.
The Pension Restoration 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 otherwise qualifies for a normal, early or deferred vested SERP benefit at termination.
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For Mr. Chapman, 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 Merz, the nonqualified defined contribution plan values shown reflect the vested balances in the 401(k) Restoration 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 Senior Leadership Severance Policy,Plan, 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;
Our failure to obtain in writing the obligation to perform or be bound by the terms of the Senior Leadership Severance PolicyPlan 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 Senior Leadership 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 RetirementPAYMENTS 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 is entitled to the following:
All outstanding unvested options and RSUs issued prior to 2017 immediately vest if the NEO had attained the age of 65 and completed five or more years of continuous employment;
Pro-rata performance-based share amounts (except amounts granted under the Transformation Grant), based upon the time employed in the year of termination relativefor awards prior to the performance period, to the extent such awards are earned, payable when such awards are generally paid to others2017 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 2016, Mr. Chapman did
The amountsamount shown for Messrs. Mattes,Mr. Leiken and Merz also includeincludes the value of theirhis vested nonqualified defined contribution balance in the 401(k) Restoration SERP. Retirement eligibility is age 55 under the 401(k) Restoration SERP.
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Payments Made Upon Death or DisabilityPAYMENTS MADE UPON DEATH OR DISABILITY
In the event of the death of a NEO, (other than Mr. Mattes, whose treatment is summarized below), the NEO or his estate or beneficiaries receives:
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 (i) target performance for Mr. Schmid or (ii) actual full-year performance results;
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EXECUTIVE COMPENSATION MATTERS |
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
Benefits 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.above.
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, 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 the shorter of (i) two years and (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 reducedactuarially-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 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 Restoration SERP are payable at the later of the executive’s early retirement date or date of death. 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 terminated employment on the date of death and survived to his 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) Restoration SERP pays 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 Restoration 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, 2016.2018. For the Qualified Retirement Plan 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 usingMP-2016MP-2018 and the assumptions noted under “Present Value of Accumulated Benefits” above.
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 Upon a Termination Following aChange-in-ControlPAYMENTS UPON A TERMINATION FOLLOWING A CHANGE IN CONTROL
Pursuant to thechange-in-control change in control agreements described previously, as well as Mr. Mattes’ employment agreement, following achange-in-control change 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). change in control. If, within that time period, an NEO’s employment is terminated without cause or if the NEO terminates his employment 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 and target cash bonus;
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 (and, under Mr. Mattes’ employment agreement, assuming individual performance at target levels;
Two years of continued participation in our employee health and welfare benefit plans; and
A lump sum payment in an amount equal to 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 change 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
80 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
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 servicestarget or actual level of achievement for up to two years.
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For all of these agreements, achange-in-control change in control is deemed to occur upon any of the following events (subject to limited exceptions described in such agreements):
Acquisition by any individual, group or entity of beneficial ownership of thirty percent or more of our outstanding shares;
The incumbent board ceases, for any reason other than death or disability, to constitute at least a majority of the Board, with any individual whose nomination and election was approved by at least a majority vote of the incumbent directors considered as though a member of the incumbent board, and excluding for these purposes any individual whose initial assumption of office occurs as a result of 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 change in control agreements, a voluntary termination by a NEO upon achange-in-control change in control will be deemed for good reason upon the occurrence of any of the following events:
Failure to elect,re-elect or otherwise maintain the NEO in the offices or positions held prior to thechange-in-control;
A material reduction in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position held by the NEO, or a reduction in aggregate compensation or employee benefit plans;
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 change in control agreements; or
We relocate and require the NEO to change his principal location of work to any location which is in excess of 50 miles from his previous location of work, or requires the NEO to travel significantly more than was previously required; or
miles from his previous location of work, or requires the NEO to travel significantly more than was previously required; or |
Any material breach of the agreement.
For the “good reason” definition under Mr. Mattes’ agreement, please see the discussion under “Involuntary Without Cause or Voluntary With Good Reason” above.
For purposes of calculating the retirement benefits payable when achange-in-control change in control occurs with termination, each NEO actively employed as of December 31, 20162018 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 “ |
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) Restoration which includes 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”Tables 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 change in control with termination.
For the 401(k) Restoration SERP, thechange-in-control change 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 thechange-in-control provisions, except for Mr. Chapman, who does not participate in the 401(k) Restoration SERP.
Effect of SectionEFFECT OF SECTION 409A on Timing of PaymentsON 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.
Potential Termination Payments under Service Agreements—POTENTIAL TERMINATION PAYMENTS UNDER SERVICE AGREEMENTS—DR. NÄHER AND MR. HEYDEN
Dr. Näher’s and Mr. Heidloff and Dr. Wunram
Mr. Heidloff and Dr. Wunram’sHeyden’s existing service agreements and offer letters govern payments made upon death, disability, retirement, or termination. Mr. Heidloff and Dr. WunramThey are also eligible for certain benefits under the Wincor Nixdorf pension plan should their service terminate.
VOLUNTARY WITHOUT GOOD REASON OR INVOLUNTARY WITH CAUSE
If the service agreement is terminated by the Company for cause, Dr. Näher and Mr. Heyden are generally entitled to base salary earned through the date of termination, along with
2019 PROXY STATEMENT | | 81 |
EXECUTIVE COMPENSATION MATTERS |
any amounts provided under the Wincor Pension Plan, and shall forfeit any outstanding DN Performance Awards in their entirety. If Dr. Näher and Mr. Heyden voluntarily resign without good reason, they are generally entitled to base salary through the date of termination, along with amounts provided under the Wincor Pension Plan, and do not forfeit any outstanding DN Performance Awards.
INVOLUNTARY WITHOUT CAUSE OR VOLUNTARY WITH GOOD REASON
Pursuant to their offer letters, Dr. Näher and Mr. Heyden participate in our Senior Leadership Severance Plan. If Dr. Näher or Mr. Heyden is involuntarily terminated without cause or he voluntarily terminates his employment for cause or for good reason (as defined in the applicable service and award agreements), he is entitled to the following, in addition to payments under his pension (subject to a general release of claims and acknowledgment of the executive’s confidentiality,non-competition and other applicable obligations):
PAYMENTS MADE UPON RETIREMENT
Upon retirement, Dr. Näher and Mr. Heidloff and Dr. WunramHeyden will receive certain benefits under the Wincor Pension Plan pursuant to
their service agreements as discussed above in the “Benefitsthe“Benefits and Prerequisites”Prerequisites” section. Dr. Näher and Mr. Heidloff and Dr. WunramHeyden are entitled to the pension payments upon reaching the age of 60. However, if Dr. Näher or Mr. Heidloff or Dr. Wunram remainsHeyden remain on the WincorDiebold Nixdorf AG 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 stockIn the event of retirement, Dr. Näher and Mr. Heyden are also entitled to the following:
PAYMENTS MADE UPON DEATH
In the event of the death, certain beneficiaries of eitherDr. Näher or Mr. Heidloff or Dr. Wunram, his widow and minor childrenHeyden are entitled to continued payment of remunerationhis base salary for 6six months fromand certain payments under the end of the month in which Mr. Heidloff or Dr. Wunram died.Wincor Pension Scheme. They are also entitled to the following:
82 | | 2019 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS |
PAYMENTS MADE UPON DISABILITY
Should Dr. Näher or Mr. Heidloff or Dr. WunramHeyden become unable to work due to illness or another reason for which they are not responsible,disability, he is entitled to receive his fixed remunerationbase salary for a period that is the earlier of 18up to eighteen 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.Company. After 18eighteen months, the companyCompany may terminate Mr. Heidloff or Dr. Wunram’shis service agreement and theyhe will receive pension benefits, even if they havehe has not reached the age of 60. Any stock options do not lapse but may be exercised untilDr. Näher and Mr. Heyden are also entitled to the endfollowing:
the year of termination and actual full-year performance results; |
POST-TERMINATION PAYMENTS TABLES
Because Dr. Wunram and Mr. Heidloff and Dr. Wunram’s service agreements contain a numberChapman’s separations from the Company occurred prior to December 31, 2018, they are not included in the tables below. Mr. Rutherford was an independent contractor of provisions relatingthe Company as of December 31, 2018, so he was not entitled to their resignation,any payments upon 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 causechange in control 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:that time.
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 Tables
Name | Voluntary ($) | Involuntary ($) | Retirement ($) | Death ($) | Disability ($) | Change in Control w/ Termination ($) | ||||||||||||||||||||||||||||||||||||||||||||||
Andreas W. Mattes | ||||||||||||||||||||||||||||||||||||||||||||||||||||
NAME
| VOLUNTARY W/O GOOD REASON ($)
| INVOLUNTARY W/CAUSE ($)
|
INVOLUNTARY W/O CAUSE OR VOLUNTARY W/ GOOD REASON ($)
| RETIREMENT ($)
| DEATH ($)
| DISABILITY ($)
| CHANGE IN CONTROL W/ TERMINATION ($)
| |||||||||||||||||||||||||||||||||||||||||||||
Gerrard B. Schmid | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Salary/Bonus | - | 5,085,000 | - | 1,312,500 | 1,312,500 | 5,085,000 |
| — |
|
| — |
|
| 4,560,000 |
|
| — |
|
| 1,330,000 |
|
| 1,330,000 |
|
| 4,560,000 |
| |||||||||||||||||||||||||
Stock options | - | - | - | - | - | - |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||
Performance shares1 | - | 5,096,857 | - | 5,096,857 | 5,096,857 | 5,096,857 | ||||||||||||||||||||||||||||||||||||||||||||||
Performance-based shares1 |
| — |
|
| — |
|
| 129,178 |
|
| — |
|
| 129,178 |
|
| 129,178 |
|
| 387,534 |
| |||||||||||||||||||||||||||||||
RSUs | - | 1,166,691 | - | 2,092,732 | 2,092,732 | 2,092,732 |
| — |
|
| — |
|
| 74,996 |
|
| — |
|
| 271,273 |
|
| 271,273 |
|
| 271,273 |
| |||||||||||||||||||||||||
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 |
| — |
|
| — |
|
| 47,826 |
|
| — |
|
| — |
|
| — |
|
| 32,826 |
| |||||||||||||||||||||||||
Total:
| 554,1585 |
| — |
|
| — |
|
| 4,812,000 |
|
| — |
|
| 1,730,451 |
|
| 1,730,451 |
|
| 5,251,6334 |
| ||||||||||||||||||||||||||||||
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 |
| — |
|
| — |
|
| 1,530,000 |
|
| — |
|
| — |
|
| — |
|
| 2,040,000 |
| |||||||||||||||||||||||||
Stock options | - | - | - | - | - | - |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||
Performance shares1 | - | 253,680 | - | 253,680 | 253,680 | 441,156 | ||||||||||||||||||||||||||||||||||||||||||||||
Performance-based shares1 |
| — |
|
| — |
|
| 80,525 |
|
| — |
|
| 80,525 |
|
| 80,525 |
|
| 136,138 |
| |||||||||||||||||||||||||||||||
RSUs | - | 140,111 | - | 398,904 | 398,904 | 398,904 |
| — |
|
| — |
|
| 37,639 |
|
| — |
|
| 72,195 |
|
| 72,195 |
|
| 72,195 |
| |||||||||||||||||||||||||
Pension Plans and SERP Benefits2 | 29,118 | 29,118 | 29,118 | 29,118 | 29,118 | 53,918 |
| 67,531 |
|
| 45,819 |
|
| 67,531 |
|
| 67,531 |
|
| 67,531 |
|
| 67,531 |
|
| 72,427 |
| |||||||||||||||||||||||||
Other Benefits3 | - | 44,971 | - | - | - | 41,641 |
| — |
|
| — |
|
| 32,948 |
|
| — |
|
| — |
|
| — |
|
| 23,931 |
| |||||||||||||||||||||||||
Total:
| 29,118 | 2,112,599 | 29,118 | 1,121,702 | 1,121,702 |
| 3,020,3394
|
|
| 67,531 |
|
| 45,819 |
|
| 1,748,643 |
|
| 67,531 |
|
| 220,251 |
|
| 220,251 |
|
| 2,344,6914 |
| |||||||||||||||||||||||
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 all outstanding performance-based awards, we have assumed that the payouts of the awards will be made at target levels. In reality, the payouts may be lower or higher depending upon the actual level of performance achieved in the future. |
2 | The Pension Plans and SERP Benefits amount represents the total value to the NEO under our defined benefit and defined contribution plans, excluding the Qualified 401(k) |
2019 PROXY STATEMENT | | 83 |
EXECUTIVE COMPENSATION MATTERS |
3 | “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, which the NEO was eligible to receive as of December 31, |
4 | These payments would be subject (in whole or in part) to an excise tax imposed by Section 280G of the Code. In accordance with the NEO’s change in control or employment agreement, we will reduce certain of these payments to the extent necessary so that no portion of the total payment is subject to the excise tax, but 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. |
|
|
-90-
As discussed above, Dr. Näher’s and Mr. Heidloff and Dr. Wunram’sHeyden’s respective service agreements govern their severance payments. These agreements do not provide change in control protection for Mr. Heidloff or Dr. Wunram.protection. Amounts presented in the table below assume a hypothetical termination event as of December 31, 2016 and may vary2018. All amounts were converted from Euros to U.S. dollars using 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.”exchange rate on December 31, 2018, which was 1.14555.
NAME | VOLUNTARY W/O GOOD REASON | INVOLUNTARY W/CAUSE ($) | INVOLUNTARY W/GOOD REASON ($) | RETIREMENT ($) | DEATH ($) | DISABILITY ($) | ||||||||||||||||||
Dr. Ulrich Näher | ||||||||||||||||||||||||
Severance |
| — |
|
| — |
|
| 1,738,135 |
|
| — |
|
| 277,280 |
|
| 831,841 |
| ||||||
Stock options |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||
Performance-based Shares1 |
| — |
|
| — |
|
| 67,078 |
|
| — |
|
| 67,078 |
|
| 67,078 |
| ||||||
RSUs |
| — |
|
| — |
|
| 19,351 |
|
| — |
|
| 53,393 |
|
| 53,393 |
| ||||||
DN Performance Awards2 |
| 2,393,947 |
|
| — |
|
| 2,393,947 |
|
| 2,393,947 |
|
| 2,011,848 |
|
| 2,011,848 |
| ||||||
Pension Plan Benefits3 |
| 254,312 |
|
| 254,312 |
|
| 254,312 |
|
| 254,312 |
|
| 254,312 |
|
| 254,312 |
| ||||||
Other Benefits4 |
| — |
|
| — |
|
| 35,056 |
|
| — |
|
| — |
|
| — |
| ||||||
Total: |
| 2,648,259 |
|
| 254,312 |
|
| 4,507,879 |
|
| 2,648,259 |
|
| 2,663,911 |
|
| 3,218,472 |
| ||||||
Olaf Heyden | ||||||||||||||||||||||||
Severance |
| — |
|
| — |
|
| 1,738,135 |
|
| — |
|
| 277,280 |
|
| 831,841 |
| ||||||
Stock options |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||
Performance-based Shares1 |
| 62,6165 |
|
| — |
|
| 108,8225 |
|
| 62,6165 |
|
| 108,8225 |
|
| 108,8225 |
| ||||||
RSUs |
| 43,8315 |
|
| — |
|
| 49,8655 |
|
| 43,8315 |
|
| 53,393 |
|
| 53,393 |
| ||||||
DN Performance Awards2 |
| 2,393,947 |
|
| — |
|
| 2,393,947 |
|
| 2,393,947 |
|
| 2,011,848 |
|
| 2,011,848 |
| ||||||
Pension Plan Benefits3 |
| 365,430 |
|
| 365,430 |
|
| 365,430 |
|
| 365,430 |
|
| 365,430 |
|
| 365,430 |
| ||||||
Other Benefits4 |
| — |
|
| — |
|
| 35,272 |
|
| — |
|
| — |
|
| — |
| ||||||
Total: |
| 2,865,824 |
|
| 365,430 |
|
| 4,691,471 |
|
| 2,865,824 |
|
| 2,816,773 |
|
| 3,371,334 |
|
| 1 |
|
|
|
|
|
| |||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
|
|
2 | For all outstanding DN Performance Awards, we have assumed that the payouts of the awards will be made at target levels. |
The pension plan benefits amount represents the total value to Dr. Näher and Mr. |
4 | “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, which the NEO was eligible to receive as of December 31, 2018. |
5 | Includes awards granted under the 2017 Plan that continue to vest as if Mr. Heyden had remained employed during the applicable vesting performance period given Mr. Heyden’s attainment of age 55 and 5 years of continued service with the Company. |
84 | | 2019 PROXY STATEMENT |
-91-
The Audit Committee is currently comprised of Patrick W. Allender Chair,(Chair), Bruce H. Besanko, Ellen Costello, and Dr. Dieter W. Düsedau, Gale S. Fitzgerald, and Robert S. Prather, Jr.sedau. 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 website athttp://www.dieboldnixdorf.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, 2016.2018. The Audit Committee has also discussed with our independent registered public accounting firm the matters required to be discussed pursuant to AS No. 1301 “Communications with Audit Committees,” issued 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 BoardPCAOB 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, 20162018 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.
The Audit Committee:
Patrick W. Allender, Chair
Bruce H. Besanko
Ellen M. Costello
Dieter W. Düsedau
Gale S. Fitzgerald
Robert S. Prather, Jr.
2019 PROXY STATEMENT | | 85 |
-92-
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, 2016,2018, this Proxy 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)490-4000.490-4000 if you wish to receive a separate copy.
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.
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 has been retained to assist in the solicitation of proxies for an estimated fee of $20,000.
We must receive by November 13, 201716, 2019 any proposal of a shareholder intended to be presented at our 20182020 Annual Meeting of Shareholders and to be included in our proxy, notice of meeting and proxy statement related to the 20182020 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 regarding the nominations of directors, which a shareholder intends to present at our 20182020 Annual Meeting must be received by us at our principal executive office on or between October 14, 201717, 2019 and November 13, 201716, 2019 (or, if the 20182020 Annual Meeting is held more than 30 days prior to or after April 26, 2018,25, 2020, not later than the close of business on the later of the 180th180th day prior to the 20182020 Annual Meeting or the 10th10th day following the day on which public announcement of the date of the 20182020 Annual
Meeting is first made), or such proposals will be considered untimely under the advance notice provisions of our Code of Regulations. Othernon-Rule14a-8 proposals must be received by us at our principal executive office on or between December 13, 201716, 2019 and January 12, 201815, 2020 (or, if the 20182020 Annual Meeting is held more than 30 days prior to or after April 26, 2018,25, 2020, not later than the close of business on the later of the 90th day prior to the 20182020 Annual Meeting or the 10th day following the day on which public announcement of the date of the 20182020 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 Code of Regulations. Our proxy related to the 20182020 Annual Meeting will give discretionary authority to the Proxy Committee to vote with respect to allnon-Rule14a-8 proposals properly brought before the 20182020 Annual Meeting.
86 | | 2019 PROXY STATEMENT |
-93-
We are not aware of any matters to be presented at the 20172019 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 20172019 Annual Meeting.
For information on how to obtain directions to be able to attend the 20172019 Annual Meeting and vote in person, please see the directions at the end of this Proxy 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 Corporate Secretary |
Canton, Ohio
March 15, 2019
| ||||
| 2019 PROXY STATEMENT | | 87 |
-94-
APPENDIX A
DIEBOLD NIXDORF, INCORPORATED
2017 EQUITY AND PERFORMANCE INCENTIVE PLAN
AMENDED , 2019
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 16.1,15.1, 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, a Performance Share or a 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 of the Company.
2.5 “Business Combination” has the meaning provided in Section 2.6(c) of this Plan.
A-1 |
2.6 “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 ofRule 13d-3 promulgated under the Exchange Act) of 30%thirty percent (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 directorsDirectors (“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 (C) of subsection (c) of this Section 2.5;2.6; 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%fifty percent (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%thirty percent (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
A-2 |
(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.
2.62.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time.
2.72.8 “Committee” has the meaning provided in Section 15.114.1 of this Plan.
2.82.9 “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 XIIXI of this Plan.
2.92.10 “Covered EmployeeCompany Common Stock” means a Participant who is, or is determined by the Board to be likely to become, a “covered employee” withinhas the meaning provided in Section 2.6(a) of Section 162(m) of the Code (or any successor provision).
-A-2-
2.102.11 “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.forth therein.
2.112.12 “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.
2.122.13 “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 one (1) year period following the termination of the 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 (2) 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.
A-3 |
(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 the Participant’s 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.
2.132.14 “Director” means a director of the Company.
2.142.15 “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)provision);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.
2.152.16 “EBIT” has the meaning provided in Section 2.24(c) of this Plan.
2.17 “EBITDA” has the meaning provided in Section 2.24(c) of this Plan.
2.18 “Effective Date” has the meaning provided in Section 1.3 of this Plan.
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2.162.19 “Employee” means an employee of the Company or any of its Subsidiaries, including an employee who is an officer or a Director.
2.172.20 “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.
2.182.21 “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.
2.192.22 “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
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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.
2.202.23 “Free Standing Rights” has the meaning provided in Section 5.1 of this Plan.
2.212.24 “Government Agency” has the meaning provided in Section 2.13(c) of this Plan.
2.25 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option under Section 422 of the Code or any successor provision.
2.222.26 “Incumbent Board” has the meaning provided in Section 2.52.6(b) of this Plan.
2.232.27 “Management Goals” means, for a Performance Period, the one or more goals established by the Committee, which, for any Award shall be based only upon the Management Objectives.
(a) The Committee may provide that any evaluation of Management Goals shall include or exclude any of the following items: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (iv) any reorganization and restructuring programs; (v) acquisitions or divestitures; (vi) 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; (vii) foreign exchange gains and losses; (viii) change in the Company’s fiscal year; and (ix) any other specific unusual or nonrecurring events, or objectively determinable category thereof.
(b) 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.
2.28 “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
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(“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;
(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.
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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.
2.262.29 “Non-Employee Director” means a Director who is a“non-employee director” within the meaning of Rule16b-3.
2.272.30 “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.
2.282.31 “Option” means an Incentive Stock Option or aNon-qualified Stock Option granted pursuant to Article IV of this Plan.
2.292.32 “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.
2.312.33 “Participant” means an Employee or Director who has been granted an Award under this Plan.
2.322.34 “Performance Period” means the one (1) 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.
2.332.35 “Performance Share” means a bookkeeping entry that records the equivalent of one (1) Common Share awarded pursuant to Article VIII of this Plan.
2.342.36 “Performance Unit” means a bookkeeping entry that records a unit equivalent to $1.25 awarded pursuant to Article VIII of this Plan.
2.352.37 “Person” has the meaning provided in Section 2.6(a) of this Plan.
2.38 “Related Rights” has the meaning provided in Section 5.1 of this Plan.
2.362.39 “Restricted Period” has the meaning provided in Section 6.1 of this Plan.
2.372.40 “Restricted Shares” means Common Shares granted or sold pursuant to Article VI of this Plan.
2.382.41 “Restricted Stock Unit” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Article VII of this Plan.
2.392.42 “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
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2.43 “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.
2.412.44 “Stock Appreciation Right” means a right granted pursuant to Article V of this Plan.
2.422.45 “Subsidiary” means a 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 interestinterests 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.
2.432.46 “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.
2.442.47 “Voting SharesStock” 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 XIIXI of this Plan, the number of Common Shares that may be issued or transferred under this Plan shall not exceed in the aggregate 4,941,1179,091,117 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.
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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 XIIXI 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.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 NonqualifiedNon-qualified 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 4,941,1179,091,117 Common Shares may be granted under this Plan.
(e)(b) Non-Employee Director Limit.Limit. The aggregate dollar value of Awards granted to anynon-Employee Director in any calendar year shall not exceed $750,000.Seven Hundred and Fifty Thousand Dollars ($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%five percent (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 (1) 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 the exercise of the Option, and such other terms and conditions as the Committee, in its discretion, determines and as are consistent with this Plan.
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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 5five (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)(f) other consideration and method of payment to the extent permitted by applicable law and approved by the Committee; or (f)(g) 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 SectionArticle IV shall vest sooner than 12twelve (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.
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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)(f) other consideration and method of payment to the extent permitted by applicable law and approved by the Committee; or (f)(g) 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 SectionArticle V shall vest sooner than 12twelve (12) months from the Date of Grant.
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5.7Maximum Term. No Stock Appreciation Right shall be exercisable more than 10ten (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.
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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 SectionArticle VI shall vest sooner than 12twelve (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 (1) 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 however 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
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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 SectionArticle VII shall vest sooner than 12twelve (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 certifydetermine 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 SectionArticle VIII shall have a Performance Period of less than 12twelve (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.
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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 SectionArticle IX shall vest sooner than 12twelve (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)TRANSFERABILITY
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.
11.210.2 Further 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 AwardAwards 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.
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ARTICLE XIIXI
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.XI.
ARTICLE XIIIXII
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, 2016, in excess of 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 6six (6) months to satisfy any tax obligations resulting from any such transaction.
ARTICLE XIII
SUBSIDIARIES ANDNON-US JURISDICTIONS
13.1 Participation 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
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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.
13.2 Employees 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 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 XIV
SUBSIDIARIES ANDNON-US JURISDICTIONSADMINISTRATION
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 15.114.1 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).
15.214.2 Committee Requirements. Except as otherwise determined by the Board, the Committee shall consist solely of two (2) 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 ofSection16b-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 (2) 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(1) 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
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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 (2) or moreNon-Employee Directors who are also Outside Directors.
15.314.3 Interpretation. 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.
15.414.4 Company’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) Anyany amount actually paid therefor by the Participant pursuant to this Plan, and
(ii) Thethe 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.
15.514.5 Clawback. 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).
15.614.6 Compliance 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.
15.714.7 Fractional 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.
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ARTICLE XVIXV
AMENDMENT AND TERMINATION
16.115.1 Amendment 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.
16.215.2 Deferrals. 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.
16.315.3 Conditions. 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.
16.415.4 Special 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 otherOther 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 or Share-Based Awards, or may waive any other limitation or requirement under any such award.Award.
16.515.5 Change in Exercise Price Prohibited. Except in connection with a corporate transaction or event described in Article XIIXI 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.
16.6
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15.6 No 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.
16.715.7 Incentive 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 XVIIXVI
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 the Cleveland Marriott at Key Tower
1360 West Mall Drive, Cleveland, Ohio 44114
From Akron-Canton Regional Airport
Take Interstate 77 North to the East 14th Street Exit. Turn slight left onto Euclid Avenue. Take the third right onto East 9th Street. Turn left onto Saint Clair Avenue. Take the third left onto West Mall Drive. The hotel is located on the right.
From Youngstown (East)
Take Interstate 680 North to the Ohio Turnpike (80 West). Proceed on the Ohio Turnpike to Exit 187 (Interstate 480 West). Continue on Interstate 480 West to Exit20A-B (Interstate 77 North). Continue on Interstate 77 North to the East 14th Street Exit. Turn slight left onto Euclid Avenue. Take the third right onto East 9th Street. Turn left onto Saint Clair Avenue. Take the third left onto West Mall Drive. The hotel is located on the right.
From Cleveland Hopkins International Airport
Take Ohio Route 237 North toward Interstate 71 North. Take Interstate 71 North to Interstate 90 East. Continue on Interstate 90 East to Exit 172A (East 9th Street). Turn left onto Rockwell Avenue. Take the second right onto West Mall Drive. The hotel is located on the left.
From Columbus (West)
Take Interstate 71 North to Interstate 90 East. Continue on Interstate 90 East to Exit 171 (US 422/OH Route 14 West). Turn right onto South Roadway/US 20 East. Take the first left onto EastRoadway/US-20 West. Take the first right onto Superior Avenue. Take the first left onto East 3rd Street. Turn left onto Rockwell Avenue. Take the first right onto West Mall Drive. The hotel is located on the left.
DIEBOLD NIXDORF, INCORPORATED 5995 MAYFAIR ROAD P.O. BOX 3077 NORTH CANTON, OH 44720-8077 |
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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. | ||||
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DIEBOLD NIXDORF, INCORPORATED |
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The Board of Directors recommends you vote FOR each of the following nominees: | ||||||||||||||||||||||||||||||||||||||
1. | Election of Directors | For | Against | |||||||||||||||||||||||||||||||||||
Nominees: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||
1a. Patrick W. Allender | ☐ | ☐ | 1l. Kent M. Stahl | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||
1b. Arthur F. Anton | ☐ | ☐ | ☐ | 1m. Alan J. Weber | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1c. Bruce H. Besanko | ☐ | ☐ | ☐ | The Board of Directors recommends you vote FOR proposals 2-4: | ||||||||||||||||||||||||||||||||||
1d. Reynolds C. Bish | ☐ | ☐ | 2. 3. 4. | |||||||||||||||||||||||||||||||||||
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019 To approve, on an advisory basis, named executive officer compensation To approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan | ☐ ☐ ☐ | ☐ ☐ ☐ | ☐ ☐ ☐ | |||||||||||||||||||||||||||||||||||
1e. Ellen M. Costello | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1f. Phillip R. Cox | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1g. Dr. Alexander Dibelius | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1h. Dr. Dieter W. Düsedau | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1i. Matthew Goldfarb | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1j. Gary G. Greenfield | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||
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. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
V.1.1
PLEASE VOTE TODAY
SEE REVERSE SIDE
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-P87032E64176-P18037
DIEBOLD NIXDORF, INCORPORATED
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints
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
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 proxy card. In its discretion, the Proxy Committee is authorized to vote upon such other business as may properly come before the meeting.
Continued and to be signed on reverse side
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V.1.1