The Board has adopted stock ownership guidelines to align with the practices of our peer group (discussed further below under “Role of Peer 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. In 2017, the majority of our directors exceeded these ownership guidelines, or were 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. Board
Recommendation:
☑FOR | | | | |  | | 2019 PROXY STATEMENT | | | 15 |
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: whether the candidate has demonstrated a high level of performance in his or her service as a director of a public company, including with respect to the performance of our directors standing forre-election; achieving the appropriate balance of tenure on the Board, with value placed on both familiarity with the Company and on new perspectives; the election of each of
our director nominees
| | | | | The Board recommends that its thirteen nominees for director be elected at the 2017 Annual Meeting, each to hold office for a term of one year from the date of the Annual Meeting or until the election and qualification of a successor. In the absence of contrary instruction, the Proxy Committee will vote the proxies for the election of the thirteen nominees.
All of the director-nominees, except for Andreas W. Mattes, our CEO, and Dr. Jürgen Wunram, our COO, are independent as defined by the corporate governance standards of the NYSE. All director-nominees are presently members of the Board. All of our nominees, with the exception of Drs. Dibelius, Düsedau, and Wunram, were previously elected by our shareholders. Drs. Dibelius, Düsedau and Wunram were appointed to our Board as a result of our acquisition of Wincor Nixdorf. Additionally, the appointments of Drs. Dibelius and Düsedau were specifically provided for under our Business Combination Agreement with Wincor Nixdorf.
| | 16 | | | 2019 PROXY STATEMENT | | |
| | | | | If for any reason any director-nominee is not available for election when the election occurs, the Proxy Committee, at its option, may vote for substitute nominees recommended
IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES |
whether the expertise and contributions of existing Board members will assist the Company as it continues its turnaround efforts; 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 and skill set in order to support the current and future needs of the Company; whether the candidate possesses additional diversity qualifications in order to enhance the function of the Board | | by the Board. Alternatively, the Board may reduce the numbercontributing a variety of director-nominees. The Board has no reason to believe that any director-nominee will be unavailable for election when the election occurs.experiences, backgrounds, qualifications, technical expertise and other characteristics; 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 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. SHAREHOLDER NOMINEES | | | Our Director Nominees | 
Patrick W. Allender
Age: 70
Director since 2011
Committees:
Audit Committee (Chair)
Finance Committee
| | Principal Occupation, Professional and Board Experience:
Mr. Allender retired in February 2007 as Executive Vice President, Chief Financial Officer and Secretary for Danaher Corporation, Washington, D.C. (a diversified manufacturing company).
He currently is a director of Brady Corporation, Milwaukee, Wisconsin (an identification solutions company), where he has served since 2007 and where he serves as Chair of the Finance Committee and as a member of the Audit and Nominating Committees. Mr. Allender also is a director of Colfax Corporation, Annapolis, Maryland (a diversified manufacturing company), where he has served since 2008 and where he serves as Chair of the Governance Committee and as a member of the Audit Committee.
Director Qualifications:
Mr. Allender’s 18 years as chief financial officer of a large publicly traded company with global operations provides our Board with valuable expertise in financial reporting and risk management. In addition, as a result of Mr. Allender’s public accounting background, including as audit partner of a major accounting firm, he is exceptionally qualified to serve as Chair of our Audit Committee.
|
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| | | Our Director Nominees | 
Phillip R. Cox
Age: 69
Director since 2005
Committees:
Compensation Committee (Chair)
Board Governance Committee
| | Principal Occupation, Professional and Board Experience:
Mr. Cox has served as President and Chief Executive Officer of Cox Financial Corporation, Cincinnati, Ohio (a financial planning and wealth management services firm) since 1972.
Mr. Cox currently is a director of Cincinnati Bell Inc., Cincinnati, Ohio (a telecommunications company), where he has served as a director since 1993 and as Chairman of the Board since 2003, and where he serves as a member of the Audit and Finance, Compensation, and Governance and Nominating Committees. He also serves as a director of Touchstone Investments, Cincinnati, Ohio (a mutual fund company), where he has served since 1993 and where he has served as Chairman of the Board since 2008. Mr. Cox also is a director of TimkenSteel, Canton, Ohio (an engineered steel products company) and serves as a member of the Audit and Compensation Committees. Prior to TimkenSteel becoming an independent company, Mr. Cox served as a director of The Timken Company, Canton, Ohio (an engineered steel products company), and was a member of the Audit Committee from 2004-2016, and Chair of the Finance Committee from 2004-2011.
Director Qualifications:
Mr. Cox’s 43 years of experience as a president and chief executive officer in the financial services industry, as well as his experience as a director on the boards of several government-regulated businesses, a global manufacturing company, and the Federal Reserve Bank of Cleveland, provides our Board with experience relevant to many key aspects of our business. Mr. Cox’s experience as a chief executive officer also imparts appropriate insight into executive compensation and succession planning issues that are ideal for the Chairman of our Compensation Committee, and his extensive experience serving on public company boards of directors provides the understanding necessary to serve on our Board Governance Committee.
|
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| | | Our Director Nominees | 
Richard L. Crandall
Age: 73
Director since 1996
Committees:
Technology Strategy and Innovation Committee (Chair)
Board Governance Committee
| | Principal Occupation, Professional and Board Experience:
Mr. Crandall is Managing Partner of Aspen Venture LLC, Aspen, Colorado (a venture capital and private equity firm), in which role he has served since 2001, and Executive Chairman of Pelstar LLC, Chicago, Illinois (a medical equipment manufacturing and sales company), in which role he has served since 2007. He is also the Chairman of the Enterprise Software Roundtable, Aspen, Colorado (a CEO roundtable for the software industry), and has served in that capacity since 1995.
Mr. Crandall currently is the Chairperson of the Board and a member of the Corporate Responsibility and Governance Committee of Donnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company). Mr. Crandall formerly was a director of R.R. Donnelley & Sons Company, Chicago, Illinois (an interactive communications provider), where he served from 2012-2016 and was a member of the Governance, Responsibility and Technology Committee. In addition, Mr. Crandall is a director and member of the Governance Committee of the National Cybersecurity Center, Colorado Springs, Colorado (a government advisory group), where he has served since 2016. Mr. Crandall formerly was a director of Novell, Inc. (an infrastructure software company) from 2003-2011, where he served as Chairman of the Board from 2008-2011. He also formerly was a director of Claymore Dividend & Income Fund, Lisle, Illinois (a management investment company) from 2004-2010 and of Platinum Energy Solutions, Houston, Texas (an energy services company) from 2012-2013.
Director Qualifications:
Mr. Crandall’s extensive experience as an entrepreneur, leader and board member with several companies in the information technology and technology fields, and in the financial industry, including serving as chairman of a $900 million global information technology business, brings diversity of thought and governance experience to our Board. Further, during his 19 years on our Board, Mr. Crandall has provided immeasurable assistance to our technology-driven businesses. Mr. Crandall’s background in the financial services industry also provides important financial and investment expertise, and his information technology experience provides perspective on cybersecurity, technology risks and technology-related strategies.
|
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| | | Our Director Nominees | 
Dr. Alexander Dibelius
Age: 57
Director since 2016
Committees:
Board Governance Committee
Finance Committee
| | Principal Occupation, Professional and Board Experience:
Dr. Dibelius is Managing Partner of CVC Capital Partners (Deutschland) GmbH (a private equity advisor), in which capacity he has served since September 2015. Previously, he was Chairman of the Executive Board of Goldman Sachs AG (a financial services company) from 2002 to 2014, having been with Goldman Sachs in various capacities from 1993 until 2015. Prior to this, he worked as a consultant for McKinsey & Co. (a global management consulting firm), where he was appointed partner in 1992. Before his career in business, Dr. Dibelius was a surgeon at the University Clinic of Freiburg.
Dr. Dibelius also is Chairman and a member of the supervisory board of Diebold Nixdorf AG (formerly, Wincor Nixdorf), a member of the supervisory board of KION Group AG, Wiesbaden (a fork lift manufacturing company), a member of the supervisory board of Douglas AG (a perfumery retail company) (as well as a member of the supervisory boards of Douglas GmbH, Düsseldorf, and Douglas Holding, Düsseldorf), a member of the supervisory board of Kirk Beauty Investments SA, Luxemburg, a member of the board of CVC Capital Partners Luxembourg SARL, Luxemburg, and a member of the shareholders’ committee of Tipico Group Ltd., Malta.
Director Qualifications:
Dr. Dibelius’ over twenty years of experience in the investment and merchant banking sectors and his management consulting experience bring important expertise and insight to our Board. His historical knowledge from, and continued service leading, the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board.
| | | | | | 
Dr. Dieter W. Düsedau
Age: 58
Director since 2016
Committees:
Audit Committee
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 above under “Identification and Evaluation 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 above under “Director Qualifications.” 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 “ Compensation Committee | | Principal Occupation, Professional and Board Experience:
$ | 10,000 | Dr. Düsedau is a physicist and formerly a Director (Senior Partner) of McKinsey & Co. (a global management consulting firm) from 1988 to 2014, based in Munich. He was leader of the German Strategy Practice and was the long-standing leader of McKinsey’s Telecoms, IT, and Media Sector in Germany. Prior to joining McKinsey, he worked at the Max Planck Institute, CERN (the European Organization for Nuclear Research), The University of Michigan, Ann Arbor, and M.I.T. on quantum field theories.
| | $ | Dr. Düsedau also is a member of the supervisory board of Diebold Nixdorf AG and a member of the supervisory board of Kontron AG (an embedded computing technology company).
20,000 Director Qualifications:
| Dr. Düsedau’s experience as a senior partner of a top management consulting firm, and his years of experience leading its strategy practice and telecommunications, IT, and media industry sectors, provide helpful insight and strengthen our Board’s proficiencies in these areas. He also brings significant transactional experience to our Board, and his historical knowledge from and continued service on the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board.
|
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| | | Our Director Nominees | 
Gale S. Fitzgerald
Age: 66
Director since 1999
Committees:
Board Governance Committee (Chair) Audit Committee
| | Principal Occupation, Professional and Board Experience:
$ | 7,500 | Ms. Fitzgerald retired in December 2008 as President and Director of TranSpend, Inc., Bernardsville, New Jersey (a total spend optimization firm).
| | $ | She currently is a director of Cross Country Healthcare, Inc., Boca Raton, Florida (a healthcare staffing company), where she has served since 2007 and where she serves as Chair of the Governance and Nominating Committee and a member of the Audit Committee. She is a former director of Health Net, Inc., Woodland Hills, California (a managed healthcare company), where she served from 2001-2016 and was Chair of the Finance Committee and a member of the Audit Committee.
15,000 Director Qualifications:
| Ms. Fitzgerald’s international experience as chief executive officer in the information technology industry, chief executive officer of a business unit of International Business Machines and the president and chief executive officer of two privately-held consulting companies brings a well-rounded and diverse perspective to our Board discussions and provides significant insight in critical areas that impact our Company, including information technology, supply chain management, procurement solutions, human resources and compensation, strategic planning and operations management. With over 20 years of multiple board and committee experiences, Ms. Fitzgerald provides valuable insight to our Board processes and deliberations, and she provides a unique point of view to our Board Governance and Audit Committees.
| | | | | | 
Gary G. Greenfield
Age: 62
Director since 2014
Committees:
Finance Committee | | Technology Strategy and Innovation Committee
$ | 7,500 | | | Principal Occupation, Professional and Board Experience:
Mr. Greenfield serves as a Partner for Court Square Capital Partners, New York, New York (a private equity company) and has served in that role since 2013. He was Chairman, CEO and President of Avid Technology, Inc., Burlington Massachusetts (a digital media and entertainment company) from 2007-2013.
Mr. Greenfield is currently a director of Donnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company), where he has served since October 2016 and is the Chairperson of the Compensation Committee and a member of the Audit Committee. He formerly was a director of Vocus, Inc., Beltsville, Maryland (a marketing and public relations software company), where he served as Chair of the Nominating and Governance Committee from 2008-2014, and of Epocrates, Inc., San Mateo, California (a company providing clinical content, practice tools and health industry engagement at the point of care), from 2011-2013.
Director Qualifications:
Mr. Greenfield’s proven senior executive experience in high technology industries, coupled with his exceptional ability to grow markets, both domestic and international, and develop products, provides our Board with experience relevant to many key aspects of our business. Mr. Greenfield’s strong skills at developing company vision and strategies in the evolving software development field strengthen the proficiency of our Board in this area.$
|
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| | | Our Director Nominees | 
Andreas W. Mattes
| Age: 55
Director since 2013
Chief Executive Officer
| | Principal Occupation, Professional and Board Experience:
Mr. Mattes is Chief Executive Officer of Diebold Nixdorf, Incorporated and has served in that capacity since 2013. He also served as our Company’s President from 2013-2016, and he currently serves on the supervisory board of Diebold Nixdorf AG. He was Senior Vice President, Global Strategic Partnerships, Violin Memory (a computer storage systems company) from 2011-2013, and was Senior Vice President and General Manager of Enterprise Services for the Americas, Hewlett-Packard Co. (a computer technologies company) from 2008-2011.
Director Qualifications:
As Chief Executive Officer of the Company, Mr. Mattes’day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions.
| | | | | | 
Robert S. Prather, Jr.
Age: 72
Director since 2013
Committees:
Audit Committee
Finance Committee
| | Principal Occupation, Professional and Board Experience:
Mr. Prather serves as the President and Chief Executive Officer of Heartland Media, LLC (a television broadcast company), and has served in that position since 2013. From 1992-2013 he was President and Chief Operating Officer of Gray Television, Inc. (a television broadcast company).
Mr. Prather currently serves as lead independent director of GAMCO Investors, Inc. (an asset management and financial services company). He also serves as a director of Ryman Hospitality Properties, Inc. (a real estate investment trust).
Director Qualifications:
Mr. Prather brings significant acumen to our Board as a result of his extensive, broad-based business background, and critical leadership and board roles in diverse industries. Particularly, Mr. Prather’s long-term experience within the financial and investment services market brings valuable insight to our Board. In addition, his knowledge and familiarity with the specific needs of companies within regulated industries further strengthens the proficiency of our Board in that area.
| | | | | | 
Rajesh K. Soin
Age: 69
Director since 2012
Committees:
Compensation Committee
Technology Strategy and Innovation Committee | | Principal Occupation, Professional
$ | 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 | | |
2018 DIRECTOR COMPENSATION 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 Board and committee service, including Board Experience:retainer amounts discussed above and the committee fees earned in 2018. Ms. Fitzgerald moved from the Audit Committee to the Compensation Committee in October. Ms. Fitzgerald was paid in advance of this move and received the amount due for service on the Audit Committee for the entire year. Mr. Besanko joined the Audit Committee in October. Ms. Costello joined the Audit Committee in June. In addition, Dr. Düsedau served on the Compensation Committee during Q1 and Q2 and then moved to the Board Governance Committee for Q3 and Q4. Dr. Dibelius served on the Board Governance Committee for Q1 and Q2 and then moved to the Compensation Committee for Q3 and Q4. Mr. Greenfield served on the Finance Committee for Q1 and Q2. The below table reflects the current committee membership and corresponding fees as of December 31, 2018. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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, or FASB, Accounting Standards Codification, or ASC, Topic 718 for RSUs granted to ournon-employee directors in 2018, as further described above. Mr. Allender, Mr. Cox, Mr. Crandall, Dr. Dibelius, Dr. Düsedau, Ms. Fitzgerald, Mr. Greenfield, Mr. Soin, and Mr. Weber each received 9,928 RSUs as of April 25, 2018, valued based on the closing price of our common shares on that date of $15.95. Ms. Costello received 12,156 RSUs as of June 21, 2018, valued based on the closing price of our common shares on that date of $13.10, and Mr. Besanko received 5,792 RSUs as of October 18, 2018, valued based on the closing price of our common shares on that date of $3.97. |
| 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 The Board has adopted stock ownership guidelines to align with the practices of our peer group (discussed further below under “Role of Peer 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. In 2017, the majority of our directors exceeded these ownership guidelines, or were 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 |
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: whether the candidate has demonstrated a high level of performance in his or her service as a director of a public company, including with respect to the performance of our directors standing forre-election; achieving the appropriate balance of tenure on the Board, with value placed on both familiarity with the Company and on new perspectives; | | | | | | 16 | | | 2019 PROXY STATEMENT | | |
| | | | | IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES |
whether the expertise and contributions of existing Board members will assist the Company as it continues its turnaround efforts; 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 and skill set in order to support the current and future needs of the Company; whether the candidate possesses additional diversity qualifications in order to enhance the function of the Board | | by contributing a variety of experiences, backgrounds, qualifications, technical expertise and other characteristics; 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 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. SHAREHOLDER 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 above under “Identification and Evaluation 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 above under “Director Qualifications.” 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. PROXY ACCESS We have a proxy access provision as part of our Code of Regulations, which allows a shareholder, or a group of up to 20 shareholders in aggregate, owning 3% or more of our outstanding shares of common stock continuously for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our Code of Regulations. NOMINATION AGREEMENT WITH GAMCO We recently entered into a Nomination and Standstill Agreement with GAMCO Asset Management Inc. and its affiliates pursuant to which Arthur F. Anton and Matthew Goldfarb are each nominated for election at the Annual Meeting. Both Messrs. Anton and Goldfarb bring extensive experience and valuable perspectives to our Board. For additional information regarding the Nomination and Standstill Agreement, see our current report on Form8-K filed on February 25, 2019, and for detailed information about each director nominee’s background, experience and qualifications, see Proposal 1: Election of Directors below. | | | | | | | 2019 PROXY STATEMENT | | | 17 |
| | | IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES | | |
MAJORITY VOTING POLICY In light of our shareholders’ approval of the amendment to the Company’s Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections, the Board adopted an amended majority voting policy, which provides that, in an uncontested election, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” election, which we refer to as a Majority Vote Against, is expected to tender his or her resignation following certification of the shareholder vote. The Board Governance Committee will then consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the Board Governance Committee’s recommendation within 90 days following certification of the shareholder 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 Vote Against in the same election, then the Board will appoint a committee comprised solely of independent directors who did not receive a Majority Vote Against 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 Vote Against 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. | | | | | | 18 | | | 2019 PROXY STATEMENT | | |
PROPOSAL 1: ELECTION OF DIRECTORS BOARD RECOMMENDATION | | | ✓ | | FOR the election of each of our director nominees |
The Board recommends that its thirteen nominees for director be elected at the 2019 Annual Meeting, each to hold office for a term of one year from the date of the Annual Meeting or until the election and qualification of a successor. In the absence of contrary instruction, the Proxy Committee will vote the proxies for the election of the thirteen nominees. In connection with this proposal, the size of the Board will be increased to thirteen members, effective as of the date of the Annual Meeting. In connection with our board succession efforts, we are pleased to be nominating four new directors, including two nominated by shareholders, and nine continuing directors (seven of whom were previously elected by our shareholders at our 2018 annual meeting). All of the director-nominees, except for Gerrard Schmid, our President and CEO, are independent as defined by the corporate governance standards of the NYSE. If for any reason any director-nominee is not available for election when the election occurs, the Proxy Committee, at its option, may vote for substitute nominees recommended by the Board. Alternatively, the Board may reduce the number of director-nominees. The Board has no reason to believe that any director-nominee will be unavailable for election when the election occurs. OUR DIRECTOR NOMINEES | | | Patrick W. Allender | 
AGE:72 DIRECTOR SINCE:2011 COMMITTEES: • Audit Committee (Chair) • Finance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. SoinAllender retired in February 2007 as Executive Vice President, Chief Financial Officer and Secretary for Danaher Corporation, Washington, D.C. (a diversified manufacturing company). He currently is Chairmana director of Brady Corporation, Milwaukee, Wisconsin (an identification solutions company), where he has served since 2007 and where he serves as Chair of the Finance Committee and as a member of the Audit and Corporate Governance Committees. Mr. Allender also is a director of Colfax Corporation, Annapolis Junction, Maryland (a diversified manufacturing company), where he has served since 2008 and where he serves as Chair of the Nominating and Corporate Governance Committee and as a member of the Audit Committee, and he is also a member of the Board of Governors of Washington College, Chestertown, Maryland. DIRECTOR QUALIFICATIONS: Mr. Allender’s 18 years as chief financial officer of a large publicly traded company with global operations provides our Board with valuable expertise in financial reporting and Chief Executive Officerrisk management. In addition, as a result of Soin, LLC, West Carrollton, Ohio (an investment holding company)Mr. Allender’s public accounting background, including as audit partner of a major accounting firm, he is exceptionally qualified to serve as Chair of our Audit Committee and a member of our Finance Committee. |
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| | | PROPOSAL 1: ELECTION OF DIRECTORS | | |
| | | Arthur F. Anton | 
AGE: 61 DIRECTOR NOMINEE | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Anton has held those positions since 1998. He served as Chairman of the Board and Chief Executive Officer of MTC Technologies, Inc.the Swagelok Company, Solon, Ohio (a military defensefluid systems technologies company), since 2017. Previously, Mr. Anton served as President and Chief Executive Officer from 2002-2008. Director Qualifications:2004-2017, President and Chief Operating Officer from 2001-2004, Executive Vice President from 2000-2001, and Chief Financial Officer from 1998-2000 of Swagelok, and is a former Partner of Ernst & Young LLP (a professional services organization).
Mr. Soin’s experienceAnton is currently a director of The Sherwin-Williams Company, Cleveland, Ohio (a paint coatings manufacturer), where he has served since 2006 and where he serves as an entrepreneurChair of the Audit Committee. Mr. Anton also is lead director of Olympic Steel, Bedford Heights, Ohio (a steel processing and distribution company), where he has served since 2009, and a director of University Hospitals Health System, Cleveland, Ohio (a large academic medical center), where he has served since 2005 and became Chairman in 2019. He was also appointed as a director of the Rock & Roll Hall of Fame, Cleveland, Ohio, in 2018 and is a tremendous asset. former director of Forest City Realty Trust, Cleveland, Ohio (a diversified Real Estate Investment Trust), where he served from 2010-2018. DIRECTOR QUALIFICATIONS: Mr. Soin has extensiveAnton brings significant domestic and international manufacturing and distribution experience in India, where we continue to focus on growth in its emerging market, and his engineering and software development background brings additional technicalfinancial expertise to our Board. Further,In addition, as a former partner of Ernst & Young LLP and the former Chief Financial Officer of Swagelok, Mr. Soin’s significant government contractingAnton has financial expertise and extensive financial experience that provides him with a unique perspective on our business and operations. Mr. Anton was identified as the foundera director nominee by, and Chairman of MTC Technologiesnominated pursuant to an agreement with, GAMCO Asset Management Inc., a NASDAQ listed company before being acquired by BAE Systems, provides additional perspective in helping us grow our security business. and its affiliates. |
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| | | Our Director NomineesBruce H. Besanko |  
Henry D. G. WallaceAGE: 60
Age:DIRECTOR SINCE: 2018
COMMITTEES: • Audit Committee • Finance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Besanko has served as Chief Financial Officer of Kohl’s Corporation, Menomonee Falls, Wisconsin (a national retailer), since 2017. Previously, Mr. Besanko spent four years with SUPERVALU Inc., Eden Prairie, Minnesota (a national food retailer), in financial leadership roles, including Executive Vice President, Chief Operating Officer and Chief Financial Officer from 2016-2017, Executive Vice President and Chief Operating Officer from 2015-2016, and Executive Vice President and Chief Financial Officer from 2013-2015. From 2009-2013, he served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer for OfficeMax Inc., Naperville, Illinois (a national office supplies retailer). In addition to his business experience, Mr. Besanko served 26 years in the U.S. Air Force where he rose to the rank of Lieutenant Colonel. Mr. Besanko is also currently a director of United Service Organizations of Illinois (anon-profit organization supporting military service members). DIRECTOR QUALIFICATIONS: Mr. Besanko’s leadership experience as an executive in the retail sector strengthens our Board’s proficiency in this area. In addition, with his background as chief financial officer of publicly held companies, he brings anotherSEC-level financial expert perspective to our Board as a member of our Audit and Finance Committees. |
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| | | | | PROPOSAL 1: ELECTION OF DIRECTORS |
| | | Reynolds C. Bish | 
AGE: 66 DIRECTOR NOMINEE | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Bish has served as Chief Executive Officer and director of Kofax Limited, Irvine, California (a process automation software provider), since 2017. Previously, Mr. Bish was Vice President of Lexmark International, Inc., Lexington, Kentucky (a provider of printing and imaging products) from 2015-2017 and Chief Executive Officer of Kofax Limited from 2007-2015. From 1989-2005, he served as Chief Executive Officer and was theco-founder of Captiva Software Corporation (a provider of input management software and services). Mr. Bish is a former director of Guidance Software, Inc., Pasadena, California (a provider of digital forensic and endpoint security software), and was Chair of its Nominating and Governance Committee from 2016-2017. He also served as a director and Chair of the Audit Committee of Iomega Corporation (a provider of portable data storage products) from 2005-2008 andI-Many, Inc. (a provider of contract management software) from 2005-2009. DIRECTOR QUALIFICATIONS: Mr. Bish brings substantial experience in the technology sector to our Board, including as an executive in the enterprise software and services market, which strengthens the Board’s proficiency in these crucial areas. Mr. Bish was identified as a director nominee by the Board Governance Committee. |
| | | Ellen M. Costello | 
AGE: 64 DIRECTOR SINCE: 2018 COMMITTEES: • Audit Committee • Finance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Ms. Costello retired in July 2013 as Chief Executive Officer of BMO Financial Corporation and U.S. Country Head of BMO Financial Group (a global diversified financial services company headquartered in Toronto, Canada). Prior to taking on these roles in the firm’s Chicago office in 2011, she was Group Head of Personal and Commercial Banking for the U.S. and the Chief Executive Officer of BMO Harris Bank N.A. and BMO Financial Corporation from 2006-2011. Prior to this, she held a number of capital markets leadership roles in Canada, Asia and the U.S. Ms. Costello currently is a director of Citigroup, Inc., New York, New York (a global diversified financial services company), where she has served since 2016 and where she serves as a member of the Audit Committee and the Risk Management Committee. She also serves as a director of Citigroup’s subsidiary, Citibank, N.A. In addition, Ms. Costello serves on the board of the Chicago Council on Global Affairs and is a member of its Audit and Finance committees. She is a former director of D+H Corporation (a global fintech company), where she served from 2014-2017 and was Chair of the Risk Committee and a member of the Audit Committee and the Human Resources and Compensation Committee. She also served as a director of BMO Financial Corporation’s Board, BMO’s independent U.S. Board of Directors, from2006-2013. DIRECTOR QUALIFICATIONS: Ms. Costello’s broad experience as chief executive officer and director in the financial services and financial technologies industries provides our Board with experience relevant to many key aspects of our business. In addition, her extensive financial background and prior committee experience bring valuable insight to our Audit and Finance Committees. |
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| | | PROPOSAL 1: ELECTION OF DIRECTORS | | |
| | | Phillip R. Cox | 
AGE: 71 Director since 2003DIRECTOR SINCE: 2005
COMMITTEES: • Compensation Committee (Chair) • Board Governance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Cox has served as President and Chief Executive Officer of Cox Financial Corporation, Cincinnati, Ohio (a financial planning and wealth management services firm), since 1972. Mr. Cox currently is a director of Cincinnati Bell Inc., Cincinnati, Ohio (a telecommunications company), where he has served as a director since 1993 and as Chairman of the Board since 2003, and where he serves as a member of the Audit and Finance, Business Development, Compensation, and Governance and Nominating Committees and as the Chair of the Executive Committee. He also serves as a director of Touchstone Investments, Cincinnati, Ohio (a mutual fund company), where he has served since 1993 and where he has served as Chairman of the Board since 2008. Mr. Cox has been a director of TimkenSteel, Canton, Ohio (an engineered steel products company), since 2014 and serves as a member of the Audit and Compensation Committees. Prior to TimkenSteel becoming an independent company, Mr. Cox served as a director of The Timken Company, Canton, Ohio (an engineered steel products company), and was a member of the Audit Committee from 2004-2016, and Chair of the Finance Committee from2004-2011. DIRECTOR QUALIFICATIONS: Mr. Cox’s 46 years of experience as a president and chief executive officer in the financial services industry, as well as his experience as a director on the boards of several government-regulated businesses, a global manufacturing company, and the Federal Reserve Bank of Cleveland, provides our Board with experience relevant to many key aspects of our business. Mr. Cox’s experience as a chief executive officer also imparts appropriate insight into executive compensation and succession planning issues that are ideal for the Chairman of our Compensation Committee, and his extensive experience serving on public company boards of directors provides the understanding necessary to serve on our Board Governance Committee. |
| | | Dr. Alexander Dibelius | 
AGE: 59 DIRECTOR SINCE: 2016 COMMITTEES: • Compensation Committee • Finance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Dr. Dibelius is Managing Partner of CVC Capital Partners (Deutschland) GmbH (a private equity advisor), in which capacity he has served since 2015. Previously, he served in a number of capacities at Goldman Sachs from 1993-2015, including Chairman of the Executive Board of Goldman Sachs AG (a financial services company) from 2002-2015, and Global Chairman of the Investment Banking Division of Goldman Sachs, Inc. from 2013-2015. Prior to this, he worked as a consultant for McKinsey & Co. (a global management consulting firm) where he was appointed partner in 1992. Before his career in business, Dr. Dibelius was a surgeon at the University Clinic of Freiburg. Dr. Dibelius also is Chairman and a member of the supervisory board of Diebold Nixdorf AG, a member of the supervisory board of KION Group AG, Wiesbaden (a fork lift manufacturing company), chairman of the board of Breitling SA, Switzerland (a luxury watch manufacturer), a member of the supervisory board of Douglas AG (a perfumery retail company) (as well as a member of the supervisory boards of Douglas GmbH, Düsseldorf, and Douglas Holding, Düsseldorf), a member of the supervisory board of Kirk Beauty Investments SA, Luxemburg, a member of the board of CVC Capital Partners Luxembourg SARL, Luxemburg, and a member of the shareholders’ committee of Tipico Group Ltd., Malta. DIRECTOR QUALIFICATIONS: Dr. Dibelius’ over twenty years of experience in the investment and merchant banking sectors and his management consulting experience bring important expertise and insight to our Board. His historical knowledge from, and continued service leading, the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board. |
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| | | | | PROPOSAL 1: ELECTION OF DIRECTORS |
| | | Dr. Dieter W. Düsedau | 
AGE: 60 DIRECTOR SINCE: 2016 COMMITTEES: • Audit Committee • Board Governance Committee | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Dr. Düsedau is a physicist and formerly a Director (Senior Partner) of McKinsey & Co. (a global management consulting firm) from 1988-2014, based in Munich. He was the leader of the German Strategy Practice and was the long-standing leader of McKinsey’s Telecoms, IT, and Media Sector in Germany. Prior to joining McKinsey, he worked at the Max Planck Institute, CERN (the European Organization for Nuclear Research), The University of Michigan, Ann Arbor, and M.I.T. on quantum field theories. Dr. Düsedau also is a member of the supervisory board of Diebold Nixdorf AG and a member of Kuratorium Deutsches Museum. In addition, in 2001, Dr. Düsedau founded startsocial e.V. (a business planning competition for social enterprises) and is currently Chairman of its supervisory board. He was also formerly a member of the supervisory board of Kontron AG (an embedded computing technology company) until it was merged into S&T Deutschland in 2017. DIRECTOR QUALIFICATIONS: Dr. Düsedau’s experience as a senior partner of a top management consulting firm, and his years of experience leading its strategy practice and telecommunications, IT, and media industry sectors, provide helpful insight and strengthen our Board’s proficiencies in these areas. He also brings significant transactional experience to our Board, and his historical knowledge from and continued service on the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board. |
| | | Matthew Goldfarb | 
AGE: 47 DIRECTOR NOMINEE | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Goldfarb is a founding partner and managing member of Southport Midstream Partners LLC, Westport, Connecticut (a private-equity backed investment vehicle focused on energy infrastructure projects in North America). Previously, Mr. Goldfarb served as Chief Restructuring Officer and Acting Chief Executive Officer of Cline Mining Corporation, Toronto, Canada (a Canadian mining company), from 2013-2018, and was Chief Executive Officer of Xinergy Ltd. (a Central Appalachian coal producer) having previously served as its Vice Chairman and lead independent director from 2009-2013. Mr. Goldfarb was previously an investment professional with The Blackstone Group/GSO Capital Partners, Icahn Associates Corp. and Pirate Capital, LLC. Prior thereto, Mr. Goldfarb worked as an M&A lawyer at Schulte, Roth & Zabel. In December 2013 and in contemplation of a financial restructuring, Mr. Goldfarb was retained by the Cline Mining Corporation Board of Directors, at the instruction of its senior lenders, to lead the financial restructuring and optimization of the mining assets of theTSX-listed issuer. CCAA insolvency proceedings and related Chapter 15 “recognition” proceedings relating to the“work-out” of Cline Mining Corporation were initiated in December 2014, and the company emerged therefrom in July 2015. Mr. Goldfarb resigned as the Chief Executive Officer of Xinergy, Ltd. in November 2013. Xinergy, Ltd. filed for bankruptcy protection under Chapter 11 in July 2015 due to challenging market conditions given its exposure to metallurgical coal pricing. Mr. Goldfarb is a former chairman of Sevcon, Inc. (a leader in electrification technologies for zero emission electric vehicles) where he served from 2016-2017, Midway Gold Corporation, Helena, Montana (an emerging gold producer), where he served from 2016-2017, The Pep Boys – Manny, Moe & Jack, Philadelphia, Pennsylvania (a full-service and tire automotive aftermarket chain), where he served from 2015-2016, Huntingdon Capital Corp. (an owner and operator of affordable business premises in markets across Canada) where he served from 2013-2014, Fisher Communications, Inc., Seattle, Washington (a media company), where he served from 2011-2013, CKE Restaurants, Inc., Carpinteria, California (the parent company of several restaurant chains), where he served from 2006-2010, and James River Coal Company, Richmond, Virginia (a coal producer), where he served in 2006. DIRECTOR QUALIFICATIONS: Mr. Goldfarb brings vast investing experience and experience with commercial and corporate law, as well as an extensive record of service on the boards of several public companies to our Board. Mr. Goldfarb was identified as a director nominee by, and nominated pursuant to an agreement with, GAMCO Asset Management Inc. and its affiliates. |
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| | | PROPOSAL 1: ELECTION OF DIRECTORS | | |
| | | Gary G. Greenfield | 
AGE: 64 DIRECTOR SINCE: 2014 COMMITTEES: •Chairman of the Board • Technology Strategy and Innovation Committee | | Principal Occupation, Professional and Board Experience:
PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. WallaceGreenfield is thenon-executive Chairman of the Board of Diebold Nixdorf, Incorporated, in which capacity he has served since August 2013. He was the Executive Chairman of our Board from January 2013 until August1, 2018. Mr. Greenfield serves as a Partner for Court Square Capital Partners, New York, New York (a private equity company), and has served in that role since 2013. Mr. WallaceGreenfield is currently is a director of Lear Corporation, Southfield, Michigan (an automotive componentsDonnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company), where he has served as a director since 2005October 2016 and asnon-executive Chairmanis the Chairperson of the Board since August 2010. Mr. WallaceCompensation Committee and a member of the Audit Committee. In addition, he is also served as director of Hayes Lemmerz International Inc. (a steel and aluminum wheels company) from 2003 until February 2012, and served as a director of Ambac Financial Group,Ancile Solutions, Elkridge, Maryland (a learning and performance software company) and Research Now SSI, Plano, Texas (an online sampling and data collection company). He formerly was a director of Vocus, Inc., New York, New YorkBeltsville, Maryland (a financial guarantee insurance holdingmarketing and public relations software company), where he served as Chair of the Nominating and Governance Committee from 2004 until March 2013.2008-2014. Director Qualifications:DIRECTOR QUALIFICATIONS:
Mr. Greenfield’s proven senior executive experience in high technology industries, coupled with his exceptional ability to grow markets, both domestic and international, and develop products provides our Board with experience relevant to many key aspects of our business. Mr. Greenfield’s strong skills at developing company vision and strategies in the evolving software development field strengthen the proficiency of our Board in this area. |
| | | Gerrard B. Schmid | 
AGE: 50 DIRECTOR SINCE: 2018 • President and Chief Executive Officer | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Wallace’s experience in various senior leadership positions, including Chief Financial Officer of Ford Motor Company andSchmid is the President and Chief Executive Officer of Mazda MotorDiebold Nixdorf, Incorporated and has served in this capacity since February 2018. He was previously Chief Executive Officer of D+H Corporation bring(a global fintech company) from 2012-2017 and was Chief Operating Officer from 2009-2012. Prior to that, he was President and CEO of D+H’s Filogix business unit (a mortgage and real estate technology service provider) from 2007-2009. Prior to that, he held senior executive roles in banking in the UK and Canada. Prior to this, he spent several years at McKinsey and Company focused on financial services and technology. Mr. Schmid is currently a broad understandingmember of managingthe Advisory Board of Difenda, Toronto, Canada (a cyber security company). DIRECTOR QUALIFICATIONS: As President and Chief Executive Officer of our Company, Mr. Schmid’sday-to-day leadership provides him with intimate knowledge of our operations, which are a global business. Further, Mr. Wallace’s financial expertise, extensive experience in Europe, Latin America and Asia, and his demonstrated leadership on the boardsvital component of several publicly traded companies, is a tremendous asset to our Board and makes him exceptionally qualified to serve as ournon-executive Chairman. In addition, with his background as a chief financial officer and his prior service as Chair of our Audit Committee in 2012, he brings anotherSEC-level financial expert perspective to our Board.discussions. |
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| | | | | PROPOSAL 1: ELECTION OF DIRECTORS |
| | | 
Kent M. Stahl | 
AGE: 56 DIRECTOR NOMINEE | | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Stahl, CFA, is a retired Partner from Wellington Management Company, LLP, Boston, Massachusetts (an investment management firm), where he was Chief Investment Strategist and Director of Investment Strategy and Risk Management from 1998-2018. In this capacity, Mr. Stahl was a portfolio manager and fiduciary on over $25 billion in assets for a variety of institutional clients and insurance companies. He also spearheaded the firm’s investment oversight processes and was a member of the firm’s Operating Committee. Previously, Mr. Stahl worked at NCR Corporation, Atlanta, Georgia (an information technology company), where he led the corporate finance and pension investment groups from 1990-1998. Mr. Stahl is a member of the advisory board of Longfellow Investment Advisors and the investment advisory board for The Ohio State University Endowment. DIRECTOR QUALIFICATIONS: Mr. Stahl brings over twenty years of experience in evaluating investments and risk, growing and managing businesses, and advising institutional clients on strategy and trends to our Board. Mr. Stahl was identified as a director nominee by Korn Ferry, the advisor engaged by the Board Governance Committee to assist with identifying board nominees. |
| | | Alan J. Weber | 
Age: 68AGE: 70
Director sinceDIRECTOR SINCE: 2005
Committees: COMMITTEES:
•Finance Committee (Chair) •Compensation Committee | | Principal Occupation, Professional and Board Experience:
PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Weber is the Chief Executive Officer of Weber Group LLC, Greenwich, Connecticut (an investment advisory firm). He was Chairman and Chief Executive Officer of US Trust, Inc. (a banking and trust company) from 2002-2005 and an Operating Partner of Arsenal Capital Partners, LLC, New York, New York (a private equity firm), from 2009-2013. Mr. Weber currently is a director of Broadridge Financial Solutions, Inc., Lake Success, New York (an investor communications, securities processing, and outsourcing company), where he has served since 2007 and where he serves as a member of the Audit Committee and as Chairman of the Compensation Committee. He is also Chairman ofKGS-Alpha Capital Markets, Inc. (a fixed income broker dealer), a director and Treasurer of DCTV (a charitable organization), and a director of Street Diligence LLC (a Fintech company). He also is a former director of Sandridge Energy, Inc., Oklahoma City, Oklahoma (an energy exploration and production company), where he served from 2013-2016 and was Chairman of the Nominating and Governance Committee. Director Qualifications:
DIRECTOR QUALIFICATIONS: Mr. Weber’s experience as a chief executive officer and chief financial officer in the financial industry, as well as his 27 years of experience at Citibank, including 10 years as an Executive Vice President, provides a tremendous depth of knowledge of our customers and our industry. Further, Mr. Weber’s experience as Chief Financial Officer of Aetna, Inc., an (an insurance services company,company) brings extensive financial expertise to our Finance Committee. |
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| | | | | Our Director Nominees | 
Dr. Jürgen Wunram
Age: 58
Director since 2017
| | Principal Occupation, Professional and Board Experience:
Dr. Jürgen Wunram is Chief Operating Officer of Diebold Nixdorf, Incorporated, and has served in that capacity since February 16, 2017. Prior to this, he served as our Company’s Senior Vice President and Chief Integration Officer. Dr. Wunram also currently serves as Chief Financial Officer, Chief Operating Officer and Deputy Chief Executive Officer and President of Diebold Nixdorf AG and has been appointed Chief Executive Officer of Diebold Nixdorf AG, effective April 1, 2017. He has served as the Chief Financial Officer, Chief Operating Officer, and as a member of the management board of Diebold Nixdorf AG since 2007 and was appointed Deputy Chief Executive Officer of Diebold Nixdorf AG in 2013.
Director Qualifications:
As Chief Operating Officer of the Company, Dr. Wunram’s responsibilities, which include integration, the Company’s EMEA and retail businesses, the Company’s subsidiary, AEVI International CmbH, as well as IT, security, quality and indirect procurement, provide him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, his role as CEO of Diebold Nixdorf AG provides an invaluable perspective to our Board.
2019 PROXY STATEMENT | | | 25 |
-26-BENEFICIAL OWNERSHIP
BENEFICIAL OWNERSHIP OF SHARES Beneficial Ownership of Shares
To our knowledge, no person beneficially owned more than five percent of our outstanding common shares as of December 31, 2016,2018, except for the shareholders listed below. The information provided below was derived from reports filed with the SEC by the beneficial owners on the dates indicated in the footnotes below. | | | | | | | | | | | Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of
Beneficial Ownership | | | Percent of
Class | | | | | | TITLE OF CLASS | | NAME AND ADDRESS OF BENEFICIAL OWNER | | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | | PERCENT OF CLASS | Common Shares | | BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | | | 7,779,754 | 1 | | | 10.40 | % | 11,339,2451 | | | | | 14.81 | % | Common Shares | | The Vanguard Group
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
| | | 5,903,065 | 2 | | | 7.85 | % | | | | | Common Shares
| | GAMCO Investors, Inc., et al. One Corporate Center Rye, New York 10580 | | | 5,659,997 | 3 | | | 7.54 | % | 7,767,3372 | | | | | 10.14 | % | Common Shares | | Atlantic Investment Management, Inc.
666 Fifth AvenueThe Vanguard Group
New York, New York 10103100 Vanguard Blvd.
| | | 3,854,761 | 4Malvern, Pennsylvania 19355 | | | 5.10 | 6,571,4903 | | | | | 8.58 | % | Common Shares | | Prescott Group Capital Management, L.L.C., et al. 1924 South Utica, Suite 1120 Tulsa, Oklahoma 74104-6529 | | | | 5,827,6794 | | | | | 7.61 | % | Common Shares | | Sapience Investments, LLC 520 Newport Center Drive, Suite 650 Newport Beach, California 92660 | | | | 5,685,8355 | | | | | 7.43 | % |
| 1 | Information regarding share ownership was obtained from the Schedule 13G/A filed on January 9, 201728, 2019 by BlackRock, Inc. BlackRock, Inc. has sole voting power over 7,633,58611,134,066 of our common shares and sole dispositive power over 7,779,75411,339,245 of our common shares. BlackRock, Inc. is the parent company of the following subsidiaries that beneficially own our common shares: BlackRock (Netherlands) B.V.;Life Limited, BlackRock Advisors, LLC;LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited;Limited, BlackRock Investment Management (Australia) Limited, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited;Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Institutional Trust Company, N.A.;AG, and BlackRock Investment Management, (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; and BlackRock Life Limited.LLC. BlackRock Fund Advisors is the only BlackRock, Inc. subsidiary whose interest in our common shares is more than 5% of our common shares outstanding. |
| 2 | Information regarding share ownership was obtained from the Schedule 13D/A filed jointly by GAMCO Investors, Inc., et al., on February 25, 2019. The entities of GAMCO Investors, Inc., et al., that hold our common shares reported their beneficial ownership as follows: (i) Gabelli Funds, LLC has sole voting and dispositive power over 1,175,500 of our common shares; (ii) GAMCO Asset Management Inc. has sole voting power over 5,470,936 of our common shares and sole dispositive power over 6,092,636 of our common shares; (iii) MJG Associates, Inc. has sole voting and dispositive power over 32,500 of our common shares; (iv) Gabelli Foundation, Inc. has sole voting and dispositive power over 34,000 of our common shares; (v) GGCP, Inc. has sole voting and dispositive power over 5,000 of our common shares; (vi) Mario J. Gabelli has sole voting and dispositive power over 7,000 of our common shares; (vii) Gabelli & Company Investment Advisors, Inc. has sole voting and dispositive power over 2,500 of our common shares; (viii) Teton Advisors, Inc. has sole voting and dispositive power over 417,701 of our common shares; and (ix) Associated Capital Group, Inc. has sole voting and dispositive power over 500 of our common shares. |
| 3 | Information regarding share ownership was obtained from the Schedule 13G/A filed on February 9, 201711, 2019 by The Vanguard Group. The Vanguard Group has sole voting power over 101,61372,973 of our common shares, shared voting power over 8,40220,802 of our common shares, sole dispositive power over 5,796,2216,483,986 of our common shares, and shared dispositive power over 106,84487,504 of our common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 98,44266,702 of our common shares or .13%.09% of our common shares outstanding, as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 11,57327,073 of our common shares or .01%.04% of our common shares outstanding, as a result of its serving as investment manager of Australian investment offerings. |
34 | Information regarding share ownership was obtained from the Schedule 13D/A13G filed jointly by GAMCO Investors Inc.Prescott Group Capital Management, L.L.C., et al,al., on November 22, 2016.February 11, 2019. The entities of GAMCO Investors Inc.Prescott Group Capital Management, L.L.C., et al., that hold our common shares reported their beneficial ownership as follows: (i) Gabelli Funds, LLCPrescott Group Capital Management, L.L.C. has sole voting and dispositive power over 1,703,5005,707,679 of our common shares; (ii) GAMCO Asset Management Inc.Prescott Group Aggressive Small Cap, L.P. has shared voting and dispositive power over 5,677,679 of our common shares; (iii) Prescott Group Aggressive Small Cap II, L.P. has shared voting and dispositive power over 5,677,679 of our common shares; and (iv) Phil Frohlich has sole voting and dispositive power over 5,827,679 of our common shares. |
| | | | | | 26 | | | 2019 PROXY STATEMENT | | |
| 5 | Information regarding share ownership was obtained from the Schedule 13G/A filed on February 13, 2019 by Sapience Investments, LLC. Sapience Investments, LLC has sole voting power over 3,657,0975,113,585 of our common shares and sole dispositive power over 3,867,697 of our common shares; (iii) MJG Associates, Inc. has sole voting and dispositive power over 4,500 of our common shares; (iv) Gabelli Foundation, Inc. has sole voting and dispositive power over 1,500 of our common shares;(v) MJG-IV Limited Partnership has sole voting and dispositive power over 5,000 of our common shares; (vi) GGCP, Inc. has sole voting and dispositive power over 16,000 of our common shares; (vii) GAMCO Investors, Inc. has sole voting and dispositive power over 200 of our common shares; and (viii) Mario J. Gabelli has sole voting and dispositive power over 61,600 of our common shares. |
4 | Information regarding share ownership was obtained from the Schedule 13D filed on December 13, 2016 by Atlantic Investment Management, Inc. Atlantic Investment Management, Inc. has sole voting and dispositive power over 3,854,7615,685,835 of our common shares. Atlantic Investment Management, Inc. serves as theThe common shares beneficially owned by Sapience Investments, LLC are owned by various investment advisor and has sole voting and dispositive power over alladvisory clients thereof, none of which individually hold more than 5% of our common shares owned by the following parties: (i) AJR International Master Fund, Ltd., a British Virgin Islands company, owns 428,249 of our common shares; (ii) Cambrian Master Fund, Ltd., a British Virgin Islands company, owns 2,443,229 of our common shares; (iii) Cambrian Global Master Fund, Ltd., a British Virgin Islands company, owns 749,286 of our common shares; and (iv) 233,997 of our common shares are held in one or more other accounts.outstanding.
|
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT -27-
Security Ownership of Directors and Management
The following table shows the beneficial ownership of the Company’s common shares, including those shares that individuals have a right to acquire (for example, through exercise of options under the 1991 Plan)options) within the meaning of Rule13d-3(d)(1) under the Exchange Act, by (1) each director-nominee,director and nominee, (2) each of our named executive officers, and (3) all director-nomineesdirectors and executive officers as a group as of February 27, 2017. 25, 2019. Ownership is also reported as of February 27, 2017that date for shares in the 401(k) Savings Plan over which the individual has voting power, together with shares held in our Employee Stock Purchase Plan. | | | | | | | | | | | | Director-Nominees: | | Common Shares
Beneficially
Owned1 | | Stock Options
Exercisable Within
60 Days | | Percent
of
Class | | Number of
shares of
Diebold
Nixdorf
AG
Beneficially
Owned | | Percent
of
Class | Patrick W. Allender | | 3,162 | | — | | * | | — | | — | Phillip R. Cox | | 4,504 | | — | | * | | — | | — | Richard L. Crandall | | 17,289 | | — | | * | | — | | — | Dr. Alexander Dibelius | | — | | — | | — | | — | | — | Dr. Dieter W. Düsedau | | — | | — | | — | | — | | — | Gale S. Fitzgerald | | 9,251 | | — | | * | | — | | — | Gary G. Greenfield | | 11,200 | | — | | * | | — | | — | Robert S. Prather, Jr. | | 3,162 | | — | | * | | — | | — | Rajesh K. Soin | | 14,200 | | — | | * | | — | | — | Henry D. G. Wallace | | 3,662 | | — | | * | | — | | — | Alan J. Weber | | 12,700 | | — | | * | | — | | — | Named Executive Officers: | | | | | | | | | | | Andreas W. Mattes Chief Executive Officer | | 207,590 | | 452,847 | | * | | — | | — | Christopher A. Chapman Senior Vice President and Chief Financial Officer | | 47,7832 | | 82,791 | | * | | — | | — | Eckard Heidloff President | | — | | — | | * | | ** | | — | Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary | | 31,985 | | 22,457 | | * | | — | | — | Dr. Jürgen Wunram Senior Vice President and Chief Operating Officer | | 8,740 | | — | | * | | ** | | — | Stefan E. Merz Senior Vice President, Corporate Strategy and Development | | 22,627 | | 35,577 | | * | | — | | — | | All Current Directors, Director-Nominees and Current Executive Officers as a Group (19) | | 410,203 | | 621,909 | | 1.37 | | ** | | — |
| | | | | | | | | | | | | | | | | DIRECTORS AND NOMINEES: | | COMMON SHARES BENEFICIALLY OWNED1 | | STOCK OPTIONS EXERCISABLE WITHIN 60 DAYS | | PERCENT OF CLASS | Patrick W. Allender | | | | 38,090 | | | | | — | | | | | * | | Arthur F. Anton | | | | — | | | | | — | | | | | * | | Bruce H. Besanko | | | | —3 | | | | | — | | | | | * | | Reynolds C. Bish | | | | — | | | | | — | | | | | * | | Ellen M. Costello | | | | —3 | | | | | — | | | | | * | | Phillip R. Cox | | | | 15,092 | | | | | — | | | | | * | | Richard L. Crandall | | | | 53,2812 | | | | | — | | | | | * | | Dr. Alexander Dibelius | | | | 3,614 | | | | | — | | | | | * | | Dr. Dieter W. Düsedau | | | | 3,614 | | | | | — | | | | | * | | Gale S. Fitzgerald | | | | 64,5312 | | | | | — | | | | | * | | Matthew Goldfarb | | | | — | | | | | — | | | | | * | | Gary G. Greenfield | | | | 26,292 | | | | | — | | | | | * | | Kent M. Stahl | | | | — | | | | | — | | | | | * | | Alan J. Weber | | | | 27,792 | | | | | — | | | | | * | | Named Executive Officers: | | | | | | | | | | | | | | | | Gerrard B. Schmid President and Chief Executive Officer | | | | 43,4753 | | | | | 64,016 | | | | | * | | Jeffrey Rutherford Senior Vice President and Chief Financial Officer | | | | —3 | | | | | — | | | | | * | | Dr. Juergen Wunram Former Senior Vice President and Chief Operating Officer | | | | 16,7313,5 | | | | | 65,554 | | | | | * | | Christopher A. Chapman Former Senior Vice President and Chief Financial Officer | | | | 34,7213,4,5 | | | | | 194,895 | | | | | * | | Dr. Ulrich Näher Senior Vice President, Products | | | | 37,5373 | | | | | 43,192 | | | | | * | | Olaf Heyden Senior Vice President, Services | | | | 11,5373 | | | | | 43,192 | | | | | * | | Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Corporate Secretary | | | | 26,5853 | | | | | 85,400 | | | | | * | | All Current Directors and Current Executive Officers as a Group (16) | | | | 377,980 | | | | | 327,378 | | | | | * | |
| | | | | | | **2019 PROXY STATEMENT | | | 27 |
| | | Ownership levels of the Diebold Nixdorf AG shares fall below the level that is required to be disclosed under German law. Mr. Heidloff and Dr. Wunram have authorized Diebold Nixdorf, Incorporated, through a power of attorney, to vote these Diebold Nixdorf AG shares on their behalf.
BENEFICIAL OWNERSHIP | | |
| 1 | Director amounts do not include shares deferred by ournon-employee directors under the Deferred Compensation Plan No. 2 for Directors. DirectorThe amounts inclusive of such deferred shares are: Mr. Allender, 23,352; Mr. Cox, 20,550; Dr. Dibelius, 9,928; Dr. Düsedau, 9,928; and Mr. Weber, 20,150. |
| 2 | Includes all shares deferred under the Deferred Compensation Plan and sharesNo. 2 for Directors which are scheduled to be released upon the end of their service as a director of the board. |
| 3 | Beneficial ownership excludes unvested RSUs that will not vest on April 21, 2017, are:within 60 days of February 25, 2019. The number of unvested RSUs held is: Mr. Allender 21,350;Besanko, 5,792; Ms. Costello, 12,156; Mr. Cox 25,054;Schmid, 434,373; Mr. Crandall 38,189; Ms. Fitzgerald 37,439;Rutherford, 135,978; Dr. Wunram, 20,726; Mr. Greenfield 11,200;Chapman, 37,423; Mr. Prather 15,400; Mr. Soin 21,650; Mr. Wallace 33,950;Leiken, 101,336; Dr. Näher, 107,665; and Mr. Weber 32,850.Heyden, 107,665. |
-28-
| 4 | 2 | Includes shares held in his/her name under the 401(k) Savings Plan over which he/she has voting power. |
| 5 | The amounts included in this beneficial ownership table are based on amounts held by Dr. Wunram and Mr. Chapman on their respective separation dates from the Company. |
Section 16(a) Beneficial Ownership Reporting ComplianceSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common shares, to file with the SEC reports of ownership of our securities on Form 3 and changes in reported ownership on Form 4 or Form 5, as applicable. Such directors, executive officers and greater than 10% shareholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely upon a review of the reports furnished to us, or written representations from reporting persons that all other reportable transactions were reported, we believe that during the year ended December 31, 2016,2018, our directors, executive officers and greater than 10% shareholders timely filed all reports they were required to file under Section 16(a), with the exception of onefour Form 44s that waswere unintentionally filed late on behalf of: (1) our former CEO and President Mr. Andreas W. Mattes in February 2018 for the disposition of 2,512 of our common shares; (2) our director Mr. CoxBesanko in May 2016October 2018 for the saleacquisition of 3,5345,792 RSUs; (3) our director Dr. Dibelius in February 2019 for the withholding of 1,550 RSUs for tax purposes; and (4) our common shares.director Dr. Düsedau in February 2019 for the withholding of 1,550 RSUs for tax purposes. | | | | | | 28 | | | 2019 PROXY STATEMENT | | |
-29-
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD RECOMMENDATION | | | Board
Recommendation: ✓
☑FOR
Proposal 2
| | The Audit Committee has again appointed KPMG LLP, our independent registered public accounting firm since 1965, to examine our accounts and other records for the year ending December 31, 2017. This appointment is being presented to you for ratification at the Annual Meeting. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection.FOR Proposal 2
KPMG LLP has no financial interest, direct or indirect, in us or any of our subsidiaries.
A representative of KPMG LLP is expected to be present at the 2017 Annual Meeting to make a statement if he or she desires and to respond to appropriate questions.
|
The Audit Committee has again appointed KPMG LLP, our independent registered public accounting firm since 1965, to examine our accounts and other records for the year ending December 31, 2019. This appointment is being presented to you for ratification at the Annual Meeting. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection. KPMG LLP has no financial interest, direct or indirect, in us or any of our subsidiaries. A representative of KPMG LLP is expected to be present at the 2019 Annual Meeting to make a statement if he or she desires and to respond to appropriate questions. Audit andAUDIT ANDNon-AuditNON-AUDIT FeesFEES
The following table shows the aggregate fees billed to us for the annual audit and the review of the interim financial statements and other services provided by KPMG LLP for fiscal 20162018 and 2015.2017. | | | | 2016 | | 2015 | | | | | | | | | | 2018 | | | 2017 | | Audit Fees1 | | $7,490,000 | | $4,624,000 | | $ | 9,581,000 | | | $ | 7,792,000 | | Audit-Related Fees | | — | | — | | Tax Fees2 | | 344,000 | | $193,000 | | $ | 451,000 | | | $ | 1,045,000 | | All Other Fees3 | | 718,000 | | — | | | — | | | $ | 1,024,000 | | | | Total | | $8,552,000 | | $4,817,000 | | $ | 10,032,000 | | | $ | 9,861,000 | | | |
| 1 | Audit Fees consist of fees billed for professional services rendered for the audit of our annual financial statements and the review of the interim financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings. |
| 2 | Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning, both domestic and international. These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning. |
| 3 | All Other Fees consist of fees billed for those services not captured in the audit, audit-related and tax categories. For 2016,In 2017, these fees correspond toinclude services provided by KPMG LLP as part of ourin connection with the Company’s revenue recognition standard readiness standard efforts. |
| | | | | | | 2019 PROXY STATEMENT | | | 29 |
| | | PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | |
Policy on Audit CommitteePOLICY ON AUDIT COMMITTEEPre-ApprovalPRE-APPROVAL of Audit and PermissibleOF AUDIT AND PERMISSIBLENon-AuditNON-AUDIT Services of Our Independent Registered Public Accounting FirmSERVICES OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy topre-approve all audit andnon-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.Pre-approval is generally provided for and anypre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegatedpre-approval authority to Patrick W. Allender, Chair of the Audit Committee, when expedition of services is necessary, provided that Mr. Allender must report any decisions topre-approve to the full Audit Committee at its next scheduled meeting. All of the fees included under the categories “Audit-Related Fees,” “Tax Fees” and “All Other Fees” above werepre-approved by the Audit Committee. None of these fees were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC. Recommendation of the Board
RECOMMENDATION OF THE BOARD The Board recommends a voteFOR the approval of this Proposal 2. -30-
| | | | | | 30 | | | 2019 PROXY STATEMENT | | |
PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS, BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION BOARD RECOMMENDATION | | | Board
Recommendation: ✓
☑FOR
Proposal 3
| | In thisFOR Proposal 3 as required by Section 14A of the Exchange Act and pursuant to Rule14a-21(a) promulgated thereunder, we are providing our shareholders the opportunity to cast an advisory(non-binding) vote to approve the compensation paid to our named executive officers, as disclosed in “Compensation Discussion and Analysis” and “Executive Compensation Matters” that follow the proposals, pursuant to the compensation rules of the SEC. While this vote is advisory, and thus not binding on us, the Board values the opinions of our shareholders and the Compensation Committee will review the results of the vote and expects to take them into consideration when making future decisions regarding named executive officer compensation. Under current Board policy, the shareholder vote for advisory approval of named executive officer compensation will occur annually. Subject to the results of Proposal 7 regarding the frequency of this advisory vote on executive compensation, we anticipate that the next such vote will occur at our 2018 Annual Meeting of Shareholders.
|
In this Proposal 3, as required by Section 14A of the Exchange Act and pursuant to Rule14a-21(a) promulgated thereunder, we are providing our shareholders the opportunity to cast an advisory(non-binding) vote to approve the compensation paid to our named executive officers, as disclosed in “Compensation Discussion and Analysis” and “Executive Compensation Matters” that follow the proposals, pursuant to the compensation rules of the SEC. While this vote is advisory, and thus not binding on us, the Board values the opinions of our shareholders and the Compensation Committee will review the results of the vote and expects to take them into consideration when making future decisions regarding named executive officer compensation. Under current Board policy, the shareholder vote for advisory approval of named executive officer compensation will occur annually. After the 2019 Annual Meeting, the next such vote will occur at our 2020 Annual Meeting of Shareholders. The “Compensation Discussion and Analysis” and “Executive Compensation Matters” sections of this Proxy Statement describe our executive compensation program and the decisions and rationale of our Compensation Committee. Our executive pay program is designed to enable us to attract, retain and motivate high quality executives who will provide us with dynamic leadership and are instrumental to our success. We emphasize performance-based variable pay through a mix of base salary, annual cash bonuses and long-term incentives and seek to provide total pay that is commensurate with our performance and competitive with our peer group. Accordingly, we are asking our shareholders to voteFOR the following resolution: “RESOLVED, that the compensation of our named executive officers as disclosed pursuant to the compensation rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby APPROVED.” Recommendation of the Board
RECOMMENDATION OF THE BOARD The Board recommends a voteFOR the approval of this Proposal 3. -31-
| | | | | | | 2019 PROXY STATEMENT | | | 31 |
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN BOARD RECOMMENDATION | | | Board
Recommendation: ✓
☑FOR
Proposal 4
| | We are asking our shareholders to approve the 2017 Equity and Performance Incentive Plan (which we refer to as the 2017 Plan), which was adopted by our Board on March 3, 2017 based on the recommendation of our Compensation Committee and subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the 2017 Plan will become effective on April 26, 2017 and replace our 1991 Equity and Performance Incentive Plan, as amended (which we refer to as the 1991 Plan). The 1991 Plan is the only equity plan that we have in place. Approval of the 2017 Plan by shareholders also will constitute approval of the material terms of the performance goals for performance-based compensation under the 2017 Plan for purposes of Section 162(m) of the Internal Revenue Code, or the Code.FOR Proposal 4
|
We are asking our shareholders to approve an amendment to our 2017 Equity and Performance Incentive Plan, as amended (which we refer to as the 2017 Plan). The amendment was adopted by our Board on March 13, 2019 based on the recommendation of our Compensation Committee and subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the amendment would authorize an additional 3,000,000 shares of common stock, $1.25 par value per share, of the Company (which we refer to in this Proposal 4 as common shares) for issuance under the 2017 Plan effective April 25, 2019. The amendment would not make any other changes to the 2017 Plan. The 2017 Plan serves as a critical component of the overall compensation package that we offer our employees andnon-employee Board members. Increasing the number of shares issuable under the 2017 Plan is necessary in order to allow us to continue to utilize equity awards to retain and attract the services of key individuals essential to our long-term growth and financial success and to further align their interests with those of our shareholders. We rely on equity awards to incentivize current and potential employees andnon-employee Board members and believe that such awards are necessary for us to remain competitive in retaining and attracting highly qualified individuals upon whom, in large measure, our future growth and success depend. Declines in our stock price in 2018, which led to a more rapid depletion of shares available under the 2017 Plan than anticipated, have caused us to implement certain cash-based incentive compensation structures this past year in order to appropriately compensate key employees. If this Proposal 4 is not approved, we anticipate that we will not be able to provide equity-based compensation to our employees andnon-employee Directors in accordance with our current compensation structure and as is customary for public companies. Furthermore, we do not believe that cash-based incentives have the same long-term retention value or serve to align employees’ interests with those of our shareholders as well as a program that includes an appropriate mix of equity incentives. SHARE REQUEST BACKGROUND Our shareholders originally approved the 2017 Plan at the 2017 Annual Meeting of Shareholders; at that time, the 2017 Plan initially authorized the issuance of an aggregate of 4,941,117 common shares under the plan. At the 2018 Annual Meeting of Shareholders, our shareholders approved certain amendments to the 2017 Plan, including the authorization of an additional 1,150,000 common shares for issuance under the 2017 Plan and certain adjustments to reflect tax law changes. As of February 20, 2017, 1,541,93425, 2019, 1,264,104 common shares remain available for grants under the 19912017 Plan. If our shareholders approveWith the proposed 3,000,000 share increase, 4,264,104 will be available for issuance under the 2017 Plan, no future awards will be granted underwhich represents approximately 5.6% of our 76,563,308 shares outstanding as of February 25, 2019. Absent an increase in the 1991 Plan after the datenumber of such approval. Awards previously granted under the 1991 Plan will remain outstanding in accordance with their terms, but none of the remainingauthorized shares authorized under the 1991 Plan will be transferred or used under the 2017 Plan. Awards underPlan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for the 1991 Plan that are forfeited or expire without being exercised, paid or delivered will not be available for awards under the 2017 Plan. If the 2017 Plannext year. Therefore, if Proposal 4 is not approved thenby our shareholders, we believe our ability to attract, motivate and retain the 1991 Plan will continuetalent we need to compete in accordance with its terms as previously approved by our shareholders until its expiration.industry would be seriously and negatively impacted and this could affect our long-term success. The affirmative vote of a majority of the shares of our common stockshares represented and voting at the Annual Meeting is required to approve the amendment to the 2017 Plan. Our executive officers andnon-employee directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the 2017 Plan. The more significantmaterial features and provisions of the 2017 Plan are summarized below. The summaryfull text of the 2017 Plan, as proposed to be amended to reflect the change described above, is attached asAppendix A to this Proxy Statement. The following description is not complete and is qualified in its entirety by the terms of the 2017 Plan, a copy of which is set forth asAppendix Areference to this Proxy Statement.that exhibit. | | | | | | 32 | | | 2019 PROXY STATEMENT | | |
| | | | | PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
2017 Plan HighlightsPLAN HIGHLIGHTS The 2017 Plan authorizes the Compensation Committee to provide equity-based compensation in the form of stock options, stock appreciation rights (tandem and free-standing), restricted shares, restricted stock units, performanceperformance-based shares, performance units, dividend equivalents and other share-based awards for the purpose of providing ournon-employee directors, officers and other employees (and those of our subsidiaries) with incentives and rewards for performance. We believe our future success depends in part on our ability to attract, motivate and retain high quality employees andnon-employee directors and that the ability to provide equity-based and incentive-based awards under the 2017 Plan is critical to achieving this success. We would be at a severe competitive disadvantage if we could notno longer use share-based awards to recruit and compensate ournon-employee directors, officers and other employees. TheAs discussed in the “Compensation Discussion and Analysis” section, the use of our common shares as part of our compensation program fosters apay-for-performance culture that is an important element of our overall compensation philosophy. We believe that equity compensation motivatesnon-employee directors and employees to create shareholder value because the value they realize from their equity compensation is based on our stock price performance. Equity compensation also aligns the compensation interests of ournon-employee directors and employees with the investment interests of our shareholders and promotes a focus on long-term value creation because our equity compensation awards can be subject to vesting and/or performance criteria. As of February 25, 2019, approximately 1,000 of our regular, full-time employees held outstanding equity awards.
Some of the key features of the 2017 Plan that reflect our commitment to effective management of equity and incentive compensation and our maintenance of sound governance practices in granting awards include: Performance-Based Awards: The 2017 Plan provides that the payment of dividend equivalents with respect to performance-basedperformance- based awards will be deferred until and paid contingent upon the level of achievement of the applicable management performance goals. -32-
Detrimental Activity and Clawback: The 2017 Plan contains provisions that subject all awards under it to the terms of any recoupment or clawback policy required by law or applicable stock exchange requirement or adopted and in effect at the Company. The 2017 Plan also provides that in the event a participant participates in detrimental activity, as defined in the 2017 Plan, we have the right to have awarded shares returned. Flexibility to Qualify for Section 162(m) Performance-Based Compensation Tax Treatment: The 2017 Plan provides us with the flexibility, when the Compensation Committee deems that to be in our best interests, to grant awards intended to qualify for the performance-based compensation exemption from the limitation on corporate tax deductions in Section 162(m) of the Code.
Minimum Vesting Period:The 2017 Plan requires that nearly all awards granted under it be subject to aone-year minimum vesting period. Management Objectives and Goals: The 2017 Plan updates and expands the performance criteria and methodology (which we refer to as management objectives) used to develop performance goals for awarding performance-based awards, including those intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code.
No Discounted Options or Stock Appreciation Rights:The 2017 Plan prohibits the grant of options or stock appreciation rights with an exercise price less than the fair market value of our common shares on the grant date. No Repricing of Options or Stock Appreciation Rights:The 2017 Plan generally prohibits the repricing of options or stock appreciation rights (outside of certain corporate transactions or adjustment events described in the 2017 Plan) without shareholder approval. Change in Control Definition: In 2015, we revised and conformed the definition that we use for “change in control” across our executive change in control agreements. The 2017 Plan includes this definition of “change in control” so that our agreements and this 2017 Plan provide for consistency and uniformity in the event of a change in control. Independent Committee Administration:Awards to our named executive officers under the 2017 Plan will be granted by a committee composed entirely of independent directors. Term of the 2017 Plan:No awards may be granted under the 2017 Plan more than ten years from the date of initial shareholder approval.approval of the plan. Share UsageSHARE USAGE
We are committed to sound equity compensation practices because we recognize that equity compensation awards dilute shareholder equity. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of shareholder interests. For purposes of evaluating our equity compensation program, shareholders may wish to consider two metrics: historical burn rate and overhang. Historical burn rate: Our historical burn rate is equal to the number of shares subject to equity awards granted during a period, in proportion to our outstanding shares. Our burn rate was 4.49% for 2018, 4.27% for 2017 and 2.28% for 2016, was 2.28%, and our three-year average burn rate for 20142016 through 20162018 was 2.38%3.69%. | | | | | | | 2019 PROXY STATEMENT | | | 33 |
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Overhang: Our overhang is the number of shares subject to unvested equity awards outstanding atyear-end plus the number of shares available for future grants of equity awards in proportion to our shares outstanding atyear-end. As of the end of 2016,2018, our overhang was 10.58%16.4%. -33-
More detail regarding the overhang and dilution associated with the current 2017 Plan, the 2017 Plan as proposed to be amended and our 1991 Equity and 2017 PlansPerformance Incentive Plan, as amended (which we refer to as the 1991 Plan) is below. The information is as of February 20, 2017.25, 2019. As of that date, there were approximately 75,347,46876,563,308 of our common shares outstanding. IfWe replaced the 1991 Plan with the 2017 Plan is approved, weat the 2017 annual meeting. No additional awards will not make any additional awardsbe made under the 1991 Plan, and therefore the table below table therefore assumesreflects that no shares are available for future issuance under the 1991 Plan. The 19912017 Plan is the only equitysole compensation plan we have in place currently.under which future awards can be made. | | | Outstanding full-value awards assuming that the outstanding awards achieve maximum performance under the 1991 Plan and 2017 Plan | | 4,107,4825,444,333 shares or 5.45%
7.1% of our outstanding shares | Outstanding stock options under the 1991 Plan and 2017 Plan | | 2,330,6053,423,864 shares or 3.09% 4.5% of our outstanding shares | Weighted average exercise price of outstanding options under the 1991 Plan and 2017 Plan | | $31.2427.05 | Weighted average remaining term of outstanding options under the 1991 Plan and 2017 Plan | | 87 years | Total shares subject to outstanding awards under the 1991 Plan and 2017 Plan | | 6,438,0878,868,197 shares or 8.54% 11.58% of our outstanding shares | Total shares available for future awards under the 19912017 Plan | | 01,264,104 | Current overhang percentage based on total number of shares subject to outstanding awards under the 1991 Plan and 2017 Plan | | 8.54%13.23% | Additional shares requested under amendment to the 2017 Plan | | 4,941,1173,000,000 | Potential dilution of 4,941,1173,000,000 additional shares as a percentage of outstanding shares | | 6.56%3.92% | Total potential fully-diluted overhang under the 1991 Plan and the proposed 2017 Plan, as amended pursuant to this proposal | | 11,379,20413,132,301 shares or 15.10%.17.16% |
Based on the closing price on the NYSE for our common shares on February 20, 2017,25, 2019, of $30.10$8.41 per share, the aggregate market value as of that date of the 4,941,1173,000,000 additional common shares requested for issuance under the amended 2017 Plan was $148,727,622.$25,230,000. In 2014, 2015, 2016 and 2016,2017, we granted awards (including performance-based awards) under the 1991 Plan covering 1,582,000 shares, 1,563,000 shares, and 1,717,000 shares, and 3,091,225 shares, respectively. In 2017, 2018 and 2019, we also granted awards (including performance-based awards) covering 134,869 shares, 2,806,998 shares and 2,336,101 shares, respectively, under the 2017 Plan.For information with respect to awards granted under the 2017 Plan, see “Existing Plan Benefits to Named Executive Officers and Others” below. In determining the number of shares to request for approval underby our shareholders pursuant to the 2017 Plan,amendment, our management team worked with Aon Hewitt, the Compensation Committee’s independent compensation consultant,advisors and the Compensation Committee to evaluate a number of factors including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating this proposal. We are also mindful of the ratio of our proposal for the 2017 Plan.stock-based compensation to our performance over time. If the amendment to the 2017 Plan is approved, we intend to utilize the increased amount of shares authorized under the 2017 Plan to continue our practice of incentivizing key individuals through annual equity grants. We anticipate that the shares requested in connection with the approval of the 2017 Plan will last for about 2 years, based on our historic grant rates and the approximate current stock price, but could last for a shorter period of time if actual practice does not match historic rates or our share price changes materially. As noted in “2017 Plan Highlights” and elsewhere below, our Compensation Committee would retainretains full discretion under the 2017 Plan to determine the number and amount of awards to be granted under the 2017 Plan, subject to the terms of the 2017 Plan, and future benefits that may be received by participants under the 2017 Plan are not determinable at this time. Summary of Material Terms of theSUMMARY OF MATERIAL TERMS OF THE 2017 PlanPLAN
Shares Available Under the 2017 Plan: Subject to adjustment as provided in the 2017 Plan and the approval of Proposal 4 by shareholders at the Annual Meeting, the number of common shares that may be issued or transferred: upon the exercise of options or stock appreciation rights; as restricted shares released from substantial risks of forfeiture; in payment of performance shares or performance units that have been earned; in payment for restricted stock units; -34-
in payment for other share-based awards; or in payment of dividend equivalents paid with respect to awards made under the 2017 Plan | | | | | | 34 | | | 2019 PROXY STATEMENT | | |
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will 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. If an award is canceled, expires, lapses or is forfeited or is settled in cash, the common shareshares underlying the award will be available for future grant. Common shares covered by an award are not counted as used unless and until they are issued or transferred. In the event that withholding tax liabilities arising from an award other than an option or stock appreciation right are satisfied by the tendering of common shares or by the withholding of common shares by us, the common shares so tendered or withheld shall be added to the common shares available for awards under the 2017 Plan. For the avoidance of doubt, the following will not again become available for issuance under the 2017 Plan: (i) any common shares withheld in respect of taxes upon settlement of an option or stock appreciation right, (ii) any common shares tendered or withheld to pay an exercise price, (iii) any common shares subject to a stock appreciation right that are not issued in connection with its stock settlement on exercise thereof, and (iv) any common shares reacquired by us on the open market or otherwise using cash proceeds. Unless terminated earlier by the Board, the 2017 Plan will be in effect until all shares subject to it have been purchased or acquired. In no event will any award under the 2017 Plan be granted on or after the tenth anniversary of its effective date. Limits on Awards:The Assuming adoption of Proposal 4, the following limits apply to awards under the 2017 Plan to each participant in a calendar year (subject to limited permitted adjustment under the 2017 Plan): Aggregate awards of options and Stock Appreciation Rights up to 4,000,000 common shares;
Aggregate of awards of performance-based awards that are “qualified performance-based compensation” under Section 162(m) of the Code, other than performance units, up to 2,500,000 common shares;
Aggregate dollar value of performance units up to $30,000,000, measured as of the date of grant;
Aggregate number of common shares issued upon exercise of incentive stock options shall not exceed 4,941,117;9,091,117; and With respect tonon-employee directors, the aggregate dollar value of awards granted to anynon-employee director shall not exceed $750,000 in a calendar year, measured as of the date of grant. Minimum Vesting Requirement: The Compensation Committee shall not award more than 5% of the aggregate number of common shares that become available for grant under the 2017 Plan pursuant to awards that are solely subject to a vesting or performance condition that provides for full vesting or completion of the performance period in less than one year following the grant date of the applicable award subject, in each case, to the Compensation Committee’s authority under the 2017 Plan to vest awards earlier, as the Committee deems appropriate, upon the occurrence of a Change in Control (as defined in the 2017 Plan), in the event of a Participant’sparticipant’s termination of employment or service or otherwise as permitted by the 2017 Plan. Eligibility: Our officers and employees (and those of our subsidiaries) (approximately 1,20023,000 people) and ournon-employee directors (approximately 11(currently 10 people) may be selected by the BoardCompensation Committee to receive benefits under the 2017 Plan. We refer to those individuals selected as “participants.” The basis for participation in the 2017 Plan is selection for participation by the Compensation Committee (or its proper delegate) in its discretion. Options: An option entitles the participant to purchase a common share at the exercise price. The Compensation Committee may grant incentive stock options,non-qualified stock options, or a combination of both, but incentive stock options cannot be granted tonon-employees. Dividends or dividend equivalents are not payable on options. Each option will be evidenced by an award agreement that specifies the number of common shares covered by the option, the exercise price and term of the option, any conditions to the exercise and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The exercise price -35-
for an option will not be less than 100% of the common shares’ fair market value on the date of grant (or, in the case of a 10% shareholder, 110% of the shares’ fair market value on the date of grant). The exercise price is payable in cash, check, common shares, consideration received under a broker-assisted cashless exercise program, by net exercise or any other combination or method of payment to the extent permitted by law and approved by the Compensation Committee. No option will be exercisable more than 10 years from the date of grant. Stock Appreciation Rights (SARs): A SAR is the right to the equivalent of the increase in value of a specified number of our common shares over a specified period of time. The Compensation Committee may grant SARs alone (which we refer to as a free standing right) or in tandem with an option granted under the 2017 Plan (which we refer to as a related right). Dividends or dividend equivalents are not payable on SARs. Each SAR will be evidenced by an award agreement that describes the SAR, the exercise price and term of the SAR, any conditions to the exercise, any related option and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The exercise price for a SAR will not be less than 100% of the common shares’ fair market value on the date of grant (or, in the case of a related right, the same exercise price as the related option). The exercise price is payable in cash, check, common shares, consideration received under a broker-assisted cashless exercise program, by net exercise or any other combination or method of payment to the extent permitted by law and approved by the Compensation Committee. The amount payable by us upon exercise of thea SAR shall be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain | | | | | | | 2019 PROXY STATEMENT | | | 35 |
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to the Compensation Committee the right to elect among those alternative.alternatives. No SAR will be exercisable more than 10 years from the date of grant. Restricted Shares: Restricted shares are common shares that are subject to forfeiture and may not be transferred by a participant until the restrictions established by the Compensation Committee have lapsed. Those restrictions may take the form of a period of continued employment, board service or achievement of certain performance criteria, for example. The award agreement for each grant of restricted shares will specify the restrictions, the number of restricted shares and any other terms and conditions the Compensation Committee specifies and are consistent with the 2017 Plan. The grant will constitute a transfer of ownership and, unless otherwise determined by the Compensation Committee, will entitle the participant to voting, dividend and other ownership rights during the restriction period. For purposes of qualifying a grant of restricted shares as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals. Restricted Stock Units (RSUs): An RSU is an award that is valued by reference to one common share. Payment of the value of the RSU will not be made until the restrictions established by the Compensation Committee have lapsed. Those restrictions may take the form of a period of continued employment, board service or achievement of certain performance criteria, for example. The award agreement for each RSU grant will specify the restrictions, the number of RSUs and any other terms and conditions the Compensation Committee specifies and are consistent with the 2017 Plan. At the discretion of the Compensation Committee, RSUs may be credited with dividend equivalents, provided that, with respect to RSUs that are subject to performance conditions, the dividend equivalents will be deferred and paid contingent on the level of performance achieved at the end of the performance period. The amount payable may be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternatives. For purposes of qualifying a grant of RSUs as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals. Performance Shares and Performance Units: Performance shares are shares that become payable upon the achievement of specified performance goals, which may include management goals. Performance units are valued by reference to $1.25 per unit and payable upon achievement of specified performance goals, which may include management goals. The grant may specify a minimum level of achievement of the performance or management goals and will include a formula for determining the number of shares or units earned at the end of the performance period. The Compensation Committee will certify achievement levels of performance prior to the payment of any shares or units. At the discretion of the Compensation Committee, performance shares or performance units may be credited with dividend equivalents, and in all cases, the dividend equivalents will be deferred and paid contingent on the level -36-
of performance achieved at the end of the performance period. Each performance share or performance unit award will be evidenced by an award agreement that specifies the number of performance shares or performance units, the performance objectives (which may include management goals), the performance period applicable to the award, and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The amount payable may be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternative. For purposes of qualifying a grant of performance shares or performance units as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.alternatives. Other Share-Based Awards:The Compensation Committee may, from time to time, grant other share-based awards not otherwise described above but in all cases consistent with the terms and conditions of the 2017 Plan. Each such award will be expressed in terms of common shares or units based on common shares and will be evidenced by an award agreement that specifies the number of common shares or units granted, any conditions related to the award, and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The amount payable may be paid in cash, common shares or a combination of both, as determined by the Compensation Committee. For purposes of qualifying a share-based grant as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals. Section 162(m) Qualified Awards: The Internal Revenue Code limits to $1 million per taxable year the deduction allowed for federal income tax purposes for compensation paid to the Chief Executive Officer and the next three most highly compensated executive officers (other than the Chief Financial Officer) of public companies (we refer to this as the Deduction Limit). The Deduction Limit applies to compensation that does not qualify for any of a limited number of exceptions. The Deduction Limit does not apply to compensation paid under a shareholder-approved plan that meets certain requirements for “qualified performance-based compensation.”
The 2017 Plan, if approved by shareholders, will provide the opportunity for the Compensation Committee to designate at the time of grant those awards (other than options and SARs) that are intended to qualify as “qualified performance-based compensation” under Section 162(m) and therefore maintain our ability to deduct that compensation expense. The 2017 Plan includes the necessary steps that the Compensation Committee must take with respect to awards so designated, including, with respect to management objectives and goals discussed below, the timing of the performance period, the certification of the achievement levels and other required procedures.
Management Objectives and Goals: The 2017 Plan requires that the Compensation Committee use “Management Objectives” for purposes of establishing “Management Goals” for a performance period for any performance-based award, including those that the Compensation Committee intends to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.award. Management objectives that will be used to establish management goals will be based on the attainment of specific levels of performance of the Company, a subsidiary, division, business unit, operational unit, department, region or function with the Company or subsidiary in which the participant is employed. The management objectives may also be used to establish management goals on an absolute or comparative basis with other companies or a published index, as the Compensation Committee deems appropriate. Management objectives applicable to any award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code shall be based on one or more of the following: | (A) | Sales, including (i) net sales, (ii) unit sales volume, and (iii) aggregate product price;
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| (B) | Share price, including (i) market price per share, and (ii) share price appreciation;
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| (C) | Earnings, including (i) earnings per share, reflecting dilution of shares, (ii) gross orpre-tax profits,(iii) post-tax profits, (iv) operating profit, (v) earnings net of or including dividends, (vi) earnings net of or including theafter-tax cost of capital, (vii) earnings before (or after) interest and taxes (“EBIT”), (viii) earnings per share from continuing operations, diluted or basic, (ix) earnings before (or after) interest, taxes, depreciation and amortization (“EBITDA”), (x)pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items, (xi) operating earnings, (xii) growth in earnings or growth in earnings per share, and (xiii) total earnings;
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| (D) | Return on equity, including (i) return on equity, (ii) return on invested capital, (iii) return or net return on assets, (iv) return on net assets, (v) return on gross sales, (vi) return on investment, (vii) return on capital, (viii) return on invested capital, (ix) return on committed capital, (x) financial return ratios, (xi) value of assets, and (xii) change in assets;
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| (E) | Cash flow(s), including (i) operating cash flow, (ii) net cash flow, (iii) free cash flow, and (iv) cash flow on investment;
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| (F) | Revenue, including (i) gross or net revenue, and (ii) changes in annual revenues;
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| (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;
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| (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;
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| (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;
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| (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;
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| (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
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| (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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The Compensation Committee will use the management objectives to set “management goals”management goals for a set performance period. The Compensation Committee may provide that an evaluation of the management goals shall include or exclude any of the following items: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (4) any reorganization and restructuring programs; (5) acquisitions or divestitures; (6) unusual nonrecurring or extraordinary items identified in our audited financial statements, including footnotes or in management’s discussion and analysis in our annual report; | | | | | | 36 | | | 2019 PROXY STATEMENT | | |
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(7) foreign exchange gains and losses; (8) changes in our fiscal year; and (9) any other specific unusual or nonrecurring events, or objectively determinable category thereof. In the case of an award intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, any such item will be prescribed in a form and at a time that meets the requirements of Section 162(m) of the Code. IfGenerally, if the Compensation Committee determines that a change in our business, operations, corporate structure or capital structure, or the manner in which we conduct our business, or other events or circumstances render the management goals unsuitable, the Compensation Committee may in its discretion modify such management goals or the minimum acceptable level of achievement, in whole or in part, as the Compensation Committee deems appropriate and equitable, except in the case of an award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code where such action would result in the loss of the otherwise available exemption under Section 162(m). In such case, the Compensation Committee may not make any modification of the management goals or minimum acceptable level of achievement.
equitable.-38-
Administration: The Board delegates authority to administer the 2017 Plan to the Compensation Committee or any other committee so designated by the Board. Unless otherwise determined by the Board, the Compensation Committee will consist of two or morenon-employee directors who are also “outside directors” within the meaning of Section 162(m) of the Code.directors. The Compensation Committee may further delegate its authority to make awards under the 2017 Plan, complying in the Board’s discretion with the requirements ofSection 16b-3Rule 16b-3. and/or Section 162(m) of the Code. The Compensation Committee is authorized to interpret the 2017 Plan and related agreements and other documents. The Compensation Committee may provide for special terms for awards to participants who are foreign nationals or who are employed by us or any of our subsidiaries outside of the United States of America as the Compensation Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom, in all cases consistent with the terms of the 2017 Plan. Transferability: Except as otherwise determined by the Compensation Committee, no option, SAR or other derivative security is transferable by a participant except, upon death, by will or the laws of descent and distribution. If, however, a participant is not a director or officer of ours, transfer may be made to a fully revocable trust of which the participant is treated as the owner for federal income tax purposes. Except as otherwise determined by the Compensation Committee, options and SARs are exercisable during the participant’s lifetime only by him or her or by his or her guardian or legal representative. The Compensation Committee may provide for transferability of options and SARs under the 2017 Plan if such provision would not disqualify the exemption for other awards underRule 16b-3 of the Exchange Act and so long as such transfer is not to any third-party entity, including financial institutions. The Compensation Committee may specify at the date of grant that part or all of the common shares that are (i) to be issued or transferred by us upon exercise of options or SARs or upon payment under any grant of performance shares, performance units, RSUs or other share-based awards or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer for restricted shares, shall be subject to further restrictions on transfer. Adjustments: The maximum number of shares that may be issued and delivered under the 2017 Plan, the number of shares covered by outstanding options and SARs,awards under the 2017 Plan, and the prices per share applicable thereto,to outstanding options and SARs, are subject to adjustment in the event of stock dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations, liquidations, issuances of rights or warrants, and similar events. In the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the 2017 Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require the surrender of all awards so replaced. The Compensation Committee may also make or provide for such adjustments in the numbers of shares authorized for issuance under the 2017 Plan as the Compensation Committee may determine appropriate to reflect any transaction or event described above. Change in Control: Under the 2017 Plan, a “Change in Control” generally means the occurrence of any of the following events: (1) when any person, entity or group acquires beneficial ownership of 30% or more of our outstanding common shares or voting power of our stock entitled to vote to elect directors, subject to limited exceptions described in the 2017 Plan; (2) a turnover of a majority of the incumbent Board members as of the date of the 2017 Plan, subject to limited exceptions described in the 2017 Plan; (3) consummation of certain corporate transactions or a sale or other disposition of all or substantially all of our assets, subject to limited exceptions described in the 2017 Plan; or (4) when our shareholders approve a complete liquidation or dissolution of the Company. Tax Withholding: To the extent that we are required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a participant or other person under thisthe 2017 Plan, and the amounts available to us for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to us for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the -39-
Compensation Committee) may include relinquishment of a portion of such benefit. Participants must also make such arrangements as we may require for the payment of any withholding tax obligations that may arise in connection with the disposition of shares acquired upon the exercise of option rights. In no event, however, may we accept common shares | | | | | | | 2019 PROXY STATEMENT | | | 37 |
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for the payment of taxes in excess of required tax withholding rates. However, in the discretion of the Compensation Committee, a participant or such other person may surrender common shares owned for more than six months to satisfy any tax obligations resulting from any such transaction. Detrimental Activity: Any award agreement may provide that if a participant, either during employment by us or any of our subsidiaries or within a specified period after termination of such employment, engages in any “Detrimental Activity” (as defined in the 2017 Plan), and the Compensation Committee so finds, upon notice of such finding, the participant must unless otherwise provided in the award agreement: | (A) | Return to us, in exchange for payment by us of any amount actually paid therefor by the participant, all shares of common shares that the participant has not disposed of that were offered pursuant to the plan2017 Plan within a specified period prior to the date of the commencement of such detrimental activity, and |
| (B) | With respect to any common shares so acquired that the participant has disposed of, pay to us in cash the difference between: |
| | (i) | Any amount actually paid therefor by the participant pursuant to the 2017 Plan, and |
| | (ii) | The market value per share of the common shares on the date of such acquisition. |
To the extent that such amounts are not paid to us, we may set off the amounts so payable to us against any amounts (but only to the extent that such amount would not be considered“non-qualified deferred compensation” under Section 409A of the Code) that may be owing from time to time by us or one of our subsidiaries to the participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason. Clawback:Any award under the 2017 Plan that is subject to recovery under any law, government regulation or stock exchange listing requirement (or any policy adopted by us pursuant to those requirements or pursuant to direction of the Board, including our current clawback policy) will be subject to clawback and deduction as required or permitted by the law, regulation, listing requirement or policy. No Repricing Without Shareholder Approval: Subject to certaintax-related exceptions described in the 2017 Plan, in the case of termination of employment by reason of death, disability or normal or early retirement, or in the case of hardship or other special circumstances, of a participant who holds awards that are unearned, unvested or unexercisable, the Compensation Committee may, in its sole discretion, accelerate the time at which such awards are earned, vest or become exercisable. However, except in connection with a corporate transaction or event as described above with respect to adjustments, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding options or SARs, or cancel outstanding options or SARs in exchange for cash, other awards or options or SARs with an exercise price that is less than the exercise price of the original option or SAR, without shareholder approval. Amendment and Termination: We may, by action of the Board, amend or terminate the 2017 Plan. Any amendment which must be approved by our shareholders in order to comply with applicable law or the national securities exchange upon which our commonscommon shares are traded will not be effective until such approval is obtained. Any amendment or termination of the 2017 Plan will not impair in any material way the rights and obligations of the participants under any award that is outstanding without the written consent of the participant. Governing Law: The 2017 Plan and all awards granted and actions taken thereunder will be governed by the internal substantive laws of the State of Ohio. New Plan Benefits: It is not possible to determine specific amounts that may be awarded in the future under the 2017 Plan because grants of awards under the 2017 Plan are discretionary. TAX CONSEQUENCES TO PARTICIPANTS -40-
Tax Consequences to Participants
The following is a brief summary of some of the U.S. federal income tax consequences of certain awards under the 2017 Plan based on U.S. federal income tax laws in effect for taxable years beginning on and after January 1, 2017.2019. This summary, which is presented for the information of shareholders considering how to vote on this Proposal 4 and not for 2017 Plan participants, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes, and Code Section 409A taxes), state, local or foreign tax consequences. Non-qualified Stock Options: In general, (i) no income will be recognized by a participant at the time anon-qualified option right is granted; (ii) at the time of exercise of anon-qualified option right, ordinary income will be recognized by the optionee in an amount equal to the difference between the option price paid for the shares and the fair market value of the shares, if unrestricted, on the date of exercise; and (iii) at the time of sale of shares acquired pursuant to the exercise of anon-qualified option right, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as | | | | | | 38 | | | 2019 PROXY STATEMENT | | |
| | | | | PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
either short-term or long-term capital gain (or loss) depending on how long the shares have been held. Incentive Stock Options: No income generally will be recognized by a participant upon the grant or exercise of an incentive stock option (ISO). The exercise of an ISO, however, may result in alternative minimum tax liability. If common shares are issued to the optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of such shares is made by the participant within two years after the date of grant or within one year after the transfer of such shares to the participant, then upon sale of such shares, any amount realized in excess of the option price will be taxed to the participant as a long-term capital gain and any loss sustained will be a long-term capital loss. If common shares acquired upon the exercise of an ISO are disposed of prior to the expiration of either holding period described above, the participant generally will recognize ordinary income in the year of disqualifying disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the option price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period. Stock Appreciation Rights (SARs): No income will be recognized by a participant in connection with the grant of a SAR. When thea SAR is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the fair market value of any unrestricted common shares received on the exercise. Restricted Shares: The recipient of restricted shares generally will be subject to tax at ordinary income rates on the fair market value of the restricted shares (reduced by any amount paid by the participant for such restricted shares) at such time as the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code. However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of transfer of the shares will have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions) over the purchase price, if any, of such restricted shares. If a Code Section 83(b) election has not been made, any dividends received with respect to restricted shares that are subject to the restrictions generally will be treated as compensation (instead of dividend income) that is taxable as ordinary income to the participant. Restricted Stock Units (RSUs): The Generally, the recipient of an RSU award will not recognize income on the grant date. When any part of an RSU award is paid (in the case of cash) or delivered (in the case of unrestricted common shares), the participant will have taxable ordinary income on such date of receipt in an amount equal to the case andcash or the fair market value of any unrestricted common shares received. Performance Shares and Performance Units: No income generally will be recognized by a participant upon the grant of performance shares or performance units. Upon payment in respect of theearn-out of performance shares or performance units, the participant will have taxable ordinary income on the date of receipt in an amount equal to the amount of cash received and the fair market value of any unrestricted common shares received. TAX CONSEQUENCES TO THE COMPANY OR SUBSIDIARY -41-
Tax Consequences to the Company or Subsidiary
To the extent that a participant recognizes ordinary income in the circumstances described above, we or our subsidiary for which the participant performs services will be entitled to a corresponding income tax deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1 million limitation on certain executive compensation to our four covered employees (namely, our Chief Executive Officer and our three other highest-paid executive officers other than our Chief Financial Officer) under Section 162(m) of the Code. CompensationCode (Section 162(m)). The 2017 Plan was designed to permit the Company to deduct performance-based compensation under Section 162(m). Historically, Section 162(m) limited the annual tax deductibility of compensation paid to certain named executive officers disclosed in our four covered employees is not subjectproxy statement (Covered Employees) to $1 million per Covered Employee, unless the compensation qualified as Section 162(m) “performance-based” compensation. For taxable years beginning on and after January 1, 2018, the Tax Cuts and Jobs Act of 2017 (TCJA) generally eliminated the “performance-based” compensation exception under Section 162(m), and expanded the $1 million per Covered Employee annual limitation on deductibility to a larger group of named executive officers. In addition, the TCJA also provides that any employee who was a Covered Employee in taxable years beginning on and after January 1, 2017, will continue to be a Covered Employee for all subsequent taxable years (including taxable years after his or her death). As a | | | | | | | 2019 PROXY STATEMENT | | | 39 |
| | | PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN | | |
result, the Company may no longer take an annual deduction limitation if it is “qualified performance-based compensation” within the meaningfor any compensation paid to its expanded number of Code Section 162(m); and once approved by our shareholders,Covered Employees in excess of $1 million per Covered Employee, including compensation relating to awards under the 2017 Plan. The 2017 Plan, will permit the grant of “qualified performance-based compensation” awardsas amended, has eliminated certain provisions to our four covered employees.reflect this change in law. Registration with theREGISTRATION WITH THE SEC
We intend to file a Registration Statement on FormS-8 relating to the issuance of additional common shares under the 2017 Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the amendment to the 2017 Plan by our shareholders. EquityEXISTING PLAN BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Although we cannot currently determine the benefits or number of shares subject to awards that may be granted to participants under the 2017 Plan during the remainder of the 2019 fiscal year or in future periods due to the discretionary nature of the 2017 Plan, we did award our annual equity grants for fiscal 2019 on January 29, 2019. We also made broad-based awards to certain employees during 2018 under the 2017 Plan. The following table sets forth with respect to each named executive officer listed in the Summary Compensation Table on page 66 and each group listed below (i) the number of common shares issuable pursuant to performance units granted under the 2017 Plan, Information(ii) the number of common shares issuable pursuant to stock options granted under the 2017 Plan and (iii) the number of common shares issuable pursuant to RSUs awarded under the 2017 Plan, in each case since the 2017 Plan’s inception on April 26, 2017 through February 25, 2019 (without regard to whether any grants were subsequently forfeited, terminated or canceled). It does not include any grants made during this same period under any other compensation plans. | | | | | | 40 | | | 2019 PROXY STATEMENT | | |
| | | | | PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
| | | | | | | | | | | | | | | | | | | | | | | | | NAME AND POSITION | | ESTIMATED POSSIBLE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS1 | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS2 (#) | | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS3 (#) | | | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | | | | THRESHOLD (#) | | | TARGET (#) | | | MAX. (#) | | Gerrard B. Schmid President and Chief Executive Officer | | | — | | | | — | | | | — | | | | — | | | | 676,814 | | | | 4.49 | | | | | — | | | | — | | | | — | | | | 370,043 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jeffrey Rutherford Senior Vice President and Chief Financial Officer | | | — | | | | — | | | | — | | | | — | | | | 68,572 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 135,978 | | | | — | | | | — | | Dr. Juergen Wunram Former Senior Vice President and Chief Operating Officer | | | — | | | | — | | | | — | | | | — | | | | 45,953 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | 26,717 | | | | — | | | | — | | | | | 19,084 | | | | 38,167 | | | | 76,334 | | | | — | | | | — | | | | — | | Christopher A. Chapman Former Senior Vice President and Chief Financial Officer | | | — | | | | — | | | | — | | | | — | | | | 39,572 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | 23,007 | | | | — | | | | — | | | | | 16,434 | | | | 32,867 | | | | 65,734 | | | | — | | | | — | | | | — | | Dr. Ulrich Näher Senior Vice President, Products | | | — | | | | — | | | | — | | | | — | | | | 30,278 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | — | | | | 47,407 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 111,612 | | | | — | | | | — | | | | | 12,574 | | | | 25,147 | | | | 50,294 | | | | — | | | | — | | | | — | | Olaf Heyden Senior Vice President, Services | | | — | | | | — | | | | — | | | | — | | | | 30,278 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | — | | | | 47,407 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 111,612 | | | | — | | | | — | | | | | 12,574 | | | | 25,147 | | | | 50,294 | | | | — | | | | — | | | | — | | Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Corporate Secretary | | | — | | | | — | | | | — | | | | — | | | | 24,517 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | — | | | | 43,715 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 100,940 | | | | — | | | | — | | | | | 10,182 | | | | 20,363 | | | | 40,726 | | | | — | | | | — | | | | — | | All current executive officers as a group | | | — | | | | — | | | | — | | | | — | | | | 108,300 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | — | | | | 676,814 | | | | 4.49 | | | | | — | | | | — | | | | — | | | | — | | | | 252,101 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 932,925 | | | | — | | | | — | | | | | 44,975 | | | | 89,949 | | | | 179,898 | | | | — | | | | — | | | | — | | All currentnon-employee directors as a group | | | — | | | | — | | | | — | | | | 138,684 | 4 | | | — | | | | — | | All employees, excluding current executive officers, as a group | | | — | | | | — | | | | — | | | | — | | | | 150,135 | | | | 18.75 | | | | | — | | | | — | | | | — | | | | — | | | | 180,096 | | | | 4.08 | | | | | — | | | | — | | | | — | | | | 1,458,202 | | | | — | | | | — | | | | | 238,902 | | | | 477,804 | | | | 955,608 | | | | — | | | | — | | | | — | |
| 1 | These columns present information about performance-based shares awarded during 2017, 2018 and 2019 pursuant to the 2017 Plan. The payout of these performance-based shares will be determined based on the achievement of specific metrics calculated over a three-year performance period. |
| 2 | This column presents information about RSUs awards during 2017, 2018 and 2019 pursuant to the 2017 Plan. |
| 3 | All stock option grants in this column are new and were not granted in connection with an optionre-pricing transaction, and the terms of the stock options have not been materially modified. |
| 4 | This includes the following amounts of RSUs for each current non-employee director: each of Messrs. Allender, Cox, Crandall, Greenfield, and Weber, Drs. Dibelius and Düsedau, and Ms. Fitzgerald, 15,092; Mr. Besanko, 5,792; and Ms. Costello, 12,156. No other director nominees have received awards under the 2017 Plan. |
| | | | | | | 2019 PROXY STATEMENT | | | 41 |
| | | PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN | | |
EQUITY COMPENSATION PLAN INFORMATION The following table reflects information as of December 31, 20162018 and pertains to our 1991 Plan which is the only equity plan we currently have in place:and our current 2017 Plan: | Plan Category | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a) | | Weighted-average exercise
price of outstanding options,
warrants and rights (b) | | Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) (c) | | | PLAN CATEGORY | | | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A) | | WEIGHTED-
AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND
RIGHTS (B) | | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED
IN COLUMN (A)) (C) | | Equity compensation plans approved by security holders | | | | | | | | | | | | | | Stock options | | 1,689,172 | | | $31.98 | | | N/A | | | | 2,506,902 | | | | $27.05 | | | | N/A | | Restricted stock units | | 1,154,015 | | | N/A | | | N/A | | | | 1,586,482 | | | | N/A | | | | N/A | | Performance shares | | 1,241,403 | | | N/A | | | N/A | | | | 2,958,118 | | | | N/A | | | | N/A | | Non-employee director deferred shares | | 125,800 | | | N/A | | | N/A | | | | 91,900 | | | | N/A | | | | N/A | | Deferred compensation | | 8,311 | | | N/A | | | N/A | | | | 815 | | | | N/A | | | | N/A | | | | | | | | | Total | | 4,218,701 | | | $31.98 | | | 4,100,000 | | | | 7,144,217 | | | | $27.05 | | | | 3,600,000 | | | | | | | | | | | | | | | | | |
In column (A), performance shares are included, and as a result the aggregate reported number may overstate actual dilution. In column (B), the weighted-average exercise price is only applicable to stock options. In column (C), the number of securities remaining available for future issuance for stock options, restricted stock units, performance shares andnon-employee director deferred shares is approved in total and not individually. Vote Required to Approve theVOTE REQUIRED TO APPROVE THE AMENDMENT TO THE 2017 PlanPLAN
A favorable vote of the majority of votes cast on the matter is necessary for approval of the amendment to the 2017 Plan. Abstentions are considered votes cast on the proposal, and brokertherefore will have the effect of a vote “against” the proposal. Brokernon-votes will not be counted for determining whether the proposal is passed. If the amendment to the 2017 Plan is passed. not approved by shareholders, the 2017 Plan will continue in effect under its current terms, and we will not have sufficient shares available to issue further grants of our common shares in future years beyond the remaining shares available for grants. Recommendation of the BoardRECOMMENDATION OF THE BOARD
The Board recommends a voteFOR the approval of the amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan. -42-
COMPANY PROPOSALS RELATING TO CORPORATE GOVERNANCE MATTERS
We are asking our shareholders to approve two corporate governance proposals that our Board of Directors believes are in the best interests of our shareholders and our Company. Before voting on either of these proposals, we urge you to carefully read and consider each proposal as described in detail on the followingpages 44-48 of this Proxy Statement.
Proposal 5 would amend our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections. This proposed majority voting standard would require that each director candidate receive more votes “for” than “against” to be elected in an uncontested election. Conversely, a director candidate who receives more votes “against” than “for” would not be elected in an uncontested election. We expect to continue the director resignation policy that is prescribed currently in the Board-adopted policy relating to majority voting. Our Board of Directors is proposing this majority voting standard to reinforce the Board of Director’s accountability to our shareholders.
Proposal 6 would amend our Amended Articles of Incorporation to eliminate cumulative voting in Director elections. Our Board of Directors is proposing to eliminate cumulative voting because it views cumulative voting as incompatible with the objectives of a majority voting standard, and because it views the elimination of cumulative voting as important to ensuring that a majority voting standard is properly and effectively implemented.
Our Board of Directors has determined that Proposals 5 and 6 together represent a carefully balanced and integrated approach designed to further provide shareholders with a net positive result by empowering and enhancing the voice of our shareholders in director elections. These proposals are designed to work together to promote an orderly director election process that respects and satisfies the will of a majority of our shareholders. Because these amendments are designed to work together, the implementation of each of Proposal 5 (the proposal to adopt an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections) and Proposal 6 (the proposal to adopt an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections) is conditioned on shareholder approval of both proposals. In other words, if either is not approved, then neither proposal will be implemented.
Each of Proposal 5 and 6 require the affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting. Consequently, it is important that you vote on these items.
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PROPOSAL 5: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO IMPLEMENT A MAJORITY VOTING STANDARD IN UNCONTESTED DIRECTOR ELECTIONS
| | | Board
Recommendation:
☑FOR
Proposal 5
| | Under this Proposal 5, we are asking our shareholders to adopt an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections. The implementation of this Proposal 5 is contingent upon the approval by our shareholders of Proposal 6 to eliminate cumulative voting. Consistent with our history of implementing policies to reinforce the accountability of our Board of Directors, in 2007 the Board adopted a majority voting policy, which provides that, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” election is expected to tender his or her resignation following certification of the shareholder vote. Our Governance Committee considers the resignation and makes a recommendation to the Board whether to accept or reject the resignation. Our Board is proposing the implementation of a majority voting standard in uncontested director elections to reflect our commitment to strong corporate governance.
|
Under the proposed majority voting standard, for a nominee to be elected to our Board of Directors in an uncontested election, the number of votes cast “for” the nominee’s election must exceed the number of votes cast “against” his or her election. Abstentions and brokernon-votes would not be considered votes “for” or “against” a nominee. An “uncontested election” means an election in which the number of director nominees does not exceed the number of directors to be elected. In all other director elections, which we refer to as contested elections, a plurality voting standard would apply.
Our Board has concluded that the adoption of the proposed majority voting standard in uncontested elections will give shareholders a greater voice in determining the composition of our Board. A majority voting standard will give a more meaningful effect to shareholder votes “against” a Director nominee by requiring a majority of shareholder votes for a nominee to obtain or retain a seat on our Board. The adoption of this standard in uncontested elections is intended to reinforce the accountability of our Board to our shareholders in uncontested director elections. If adopted by our shareholders at this Annual Meeting, the majority voting standard would apply to all future uncontested director elections.
Our Board further believes that a plurality voting standard should still apply in contested director elections. If the plurality voting standard did not apply in contested elections, it is possible that more nominees could be elected than the number of director seats up for election because the proposed majority voting standard simply compares the number of “for” votes with the number of “against” votes for each director nominee without regard to voting for other nominees. Accordingly, the proposed majority voting standard retains plurality voting in contested director elections to avoid such inconsistent results.
If this Proposal 5, along with Proposal 6 (eliminating cumulative voting), are both approved by our shareholders and implemented, we expect to retain our director resignation policy (as reflected in our current majority voting policy), conformed as necessary to reflect the provisions of these proposals. Under Ohio law and our Code of Regulations, as amended, an incumbent director who is notre-elected remains in office until his or her successor is elected, continuing as a “holdover” director. We expect our director resignation policy to continue to require an incumbent director who does not receive more votes “for” than “against” his or her election in an uncontested election to tender his or her resignation to our Board, which will decide whether to accept or reject the resignation based on the recommendation from our Governance Committee. This process is described in greater detail in the section of our Proxy Statement entitled “Majority Voting Policy.”
Under Ohio law, a plurality voting standard applies for director elections unless an Ohio company’s Articles of Incorporation state otherwise. Our Amended Articles of Incorporation do not address the voting standard for director elections, and so our current standard is plurality voting. For the reasons outlined above, the Board determined that it is appropriate to amend the Amended Articles of Incorporation to add a majority voting standard,
-44-
subject to our shareholders’ approval of Proposal 6. On March 3, 2017, our Governance Committee recommended, and our Board unanimously approved, resolutions approving and recommending to our shareholders the adoption of majority voting as stated in this Proposal 5.
The actual text of the proposed amendment to our Amended Articles of Incorporation is attached to this Proxy Statement asAppendix B. The amendment to the Amended Articles of Incorporation will become effective upon filing a Certificate of Amendment with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval), subject to approval of Proposal 6.
Shareholder Approval
The affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting is required to approve the proposed amendment. Abstentions and brokernon-votes will have the same effect as votes cast against this Proposal 5.
As noted above, if this Proposal 5 is approved by our shareholders at the Annual Meeting, it will be implemented only if Proposal 6 is also approved. Accordingly, even if this Proposal 5 is approved by our shareholders at the Annual Meeting, it will not be implemented unless Proposal 6 is also approved by our shareholders at the Annual Meeting.
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 5.
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PROPOSAL 6: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING IN DIRECTOR ELECTIONS
| | | | 42 | | | 2019 PROXY STATEMENT | | |
Board
Recommendation:
☑FOR
Proposal 6
| | Under this Proposal 6, we are asking our shareholders to approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections. Under Ohio law, because our Amended Articles of Incorporation currently do not address cumulative voting, our shareholders can cumulate votes in director elections at any meeting held for that purpose, whether or not the election is contested and subject to proper notice. Cumulative voting enables a shareholder to cumulate his or her voting power by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by the shareholder, or distributing those votes among two or more candidates as the shareholder sees fit. Thus, with cumulative voting, a shareholder can cast all of his, her or its votes “for” one candidate or a small group of candidates, instead of voting either “for” or “withheld” on each candidate.
|
