UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934
(Amendment No. )
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Diebold Nixdorf, Incorporated
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5995 Mayfair Road
P. O. Box 3077• North Canton, Ohio 44720-8077
March 13, 201714, 2018
Dear Shareholder:
The 20172018 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held at the Courtyard Marriott, 4375 Metro Circle NW, North Canton, Ohio 44720, on Wednesday, April 26, 201725, 2018 at 11:30 a.m. EDT.
As described in the accompanying Notice and Proxy Statement, at the Annual Meeting, you will be asked to (1) elect thirteeneleven directors, (2) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2017,2018, (3) approve, on an advisory basis, our named executive officer compensation, and (4) approve amendments to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, (5) approve an amendment to our Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections, (6) approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections, and (7) cast an advisory vote on the frequency of the shareholder advisory vote on named executive officer compensation.Plan.
We are pleased to continue to take advantage of the Securities and Exchange Commission rules allowing us to furnish proxy materials to shareholders on the Internet. We believe that these rules provide you with proxy materials more quickly and reduce the environmental impact of our Annual Meeting. Accordingly, we are mailing to shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review our 20172018 Proxy Statement and Annual Report for the year ended December 31, 2016,2017, and to vote online or by telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions for requesting these materials on the Notice of Internet Availability of Proxy Materials.
All holders of record of Diebold Nixdorf, Incorporated common shares at the close of business on February 27, 201726, 2018 are entitled to vote at the 20172018 Annual Meeting. You may vote online at www.proxyvote.com. If you received a paper copy of the proxy card by mail, you may also vote by signing, dating and mailing the proxy card promptly in the return envelope or by calling a toll-free number.
If you are planning to attend the meeting, directions to the meeting location are included on the back page. If you are unable to attend the meeting, you may listen to a replay that will be available on our website at http://www.dieboldnixdorf.com. The replay may be accessed on our website soon after the meeting and shall remain available for up to three months.
We look forward to seeing those of you who will be attending the meeting.
Sincerely,
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Chairman of the Board
|  | GERRARD B. SCHMID President and Chief Executive Officer
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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held on April 26, 2017.25, 2018.
This Proxy Statement, along with our Annual Report for the year ended December 31, 2016,2017, including exhibits,
are available free of charge atwww.proxyvote.com (you will need to reference the16-digit control number
found on your proxy card or Notice of Internet Availability of Proxy Materials in order to vote).
5995 Mayfair Road
P. O. Box 3077• North Canton, Ohio 44720-8077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 26, 2017
11:30 a.m. EDT
Dear Shareholder:
The 2017 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held at the Courtyard Marriott, 4375 Metro Circle NW, North Canton, Ohio 44720, on Wednesday, April 26, 2017 at 11:30 a.m. EDT, for the following purposes:SHAREHOLDERS
DATE: April 25, 2018 TIME: 11:30 a.m. EDT LOCATION: Courtyard Marriott 4375 Metro Circle NW North Canton, Ohio 44720 | ITEMS TO BE DISCUSSED: | |||||
1. | To elect | |||||
| 2. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, |
3.
To approve, on an advisory basis, our named executive officer compensation; and |
| 4. | To approve amendments to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive |
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Your attention is directed to the attached Proxy Statement, which fully describes these items.
Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
Holders of record of Diebold Nixdorf, Incorporated common shares at the close of business on February 27, 201726, 2018 will be entitled to vote at the 20172018 Annual Meeting.
The enclosed proxy card is solicited, and the persons named therein have been designated, by Diebold Nixdorf’s Board of Directors.
By Order of the Board of Directors | ||
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Jonathan B. Leiken | ||
Senior Vice President, Chief Legal Officer and Secretary |
March 13, 201714, 2018
(approximate mailing date)
You are requested to cooperate in assuring a quorum by voting online at www.proxyvote.com
or, if you received a paper copy of the proxy materials, by filling in, signing and dating the
enclosed proxy and promptly mailing it in the return envelope.
5995 Mayfair Road
P.O. Box 3077•North Canton, Ohio 44720-8077
20172018 ANNUAL MEETING OF SHAREHOLDERS
| PROXY SUMMARY | 1 | |||
| VOTING INFORMATION | 5 | |||
| CORPORATE GOVERNANCE | ||||
| 7 | |||
7 | ||||
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| COMPENSATION OF DIRECTORS | ||||
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| CONSIDERATION OF DIRECTOR-NOMINEES | ||||
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Board Diversity, Director Qualifications and Corporate Governance Guidelines | 17 | |||
| PROPOSAL 1: ELECTION OF DIRECTORS | ||||
 | i |
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TABLE OF CONTENTS
(continued)
| EXECUTIVE COMPENSATION MATTERS | ||||
42 | ||||
42 | ||||
63 | ||||
| SHAREHOLDERS SHARING THE SAME ADDRESS | ||||
| EXPENSES OF SOLICITATION | ||||
| SHAREHOLDER PROPOSALS | ||||
| OTHER MATTERS | ||||
| ii | | 2018 PROXY STATEMENT | |
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This Proxy Statement is furnished to shareholders of Diebold Nixdorf, Incorporated (“Diebold Nixdorf,” the “Company,” “we,” “our,” and “us”) in connection with the solicitation by the Board of Directors of proxies to be used at our 20172018 Annual Meeting of Shareholders, and any postponements or adjournments of the meeting.
These proxy materials are being sent to our shareholders on or about March 13, 2017.14, 2018.
This proxy summary is intended to provide an overview of the information you can find elsewhere in this Proxy Statement. As this is only a summary, we encourage you to read the Proxy Statement in its entirety for more information about these topics before voting.
MEETING INFORMATION
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TIME AND DATE 11:30 a.m. EDT, April | ||||||||||||||||||||
| PLACE Courtyard Marriott 4375 Metro Circle NW North Canton, Ohio 44720 | RECORD DATE Close of Business on February 26, 2018 | ||||||||||||||||||
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PROPOSALS FOR YOUR VOTE AND BOARD RECOMMENDATIONS
| BOARD RECOMMENDATION |
PAGE REFERENCES ( | ||||
1. To elect | FOR EACH NOMINEE |
| 18-24 | |||
2. To ratify the appointment of KPMG LLP as our independent registered publicaccounting firm | FOR |
| 28 | |||
3. To approve, on an advisory basis, our named executive officer compensation | FOR |
| 30, 42-84 | |||
4. To approve amendments to the Diebold Nixdorf, Incorporated 2017 Equity andPerformance Incentive Plan | FOR |
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| Overview of Our Board Nominees | ||||||||||||||||
You are being asked to vote to elect each of the following nominees to our Board of Directors. The tables that follow provide summary information about our nominees, and detailed information about each director’s background, skills and expertise can be found in Proposal 1: Election of Directors on pages 19-26.
Information about our Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee, and Technology Strategy and Innovation Committee can be found on pages 9-11.
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| Committee Membership | ||||||||||||||||
| Name and Occupation / Career Highlights | Age | Director Since | Independent | Audit | Board Gov. | Comp. | Fin. | TS&I | ||||||||
Patrick W. Allender Retired Executive Vice President, Chief Financial Officer and Secretary, Danaher Corporation |
70 |
2011 |
Yes |
Chair |
• | |||||||||||
Phillip R. Cox President and Chief Executive Officer, Cox Financial Corporation |
69 |
2005 |
Yes |
• |
Chair | |||||||||||
Richard L. Crandall Managing Partner, Aspen Venture LLC; Executive Chairman, Pelstar LLC |
73 |
1996 |
Yes |
• |
Chair | |||||||||||
Dr. Alexander Dibelius Managing Partner, CVC Capital Partners (Deutschland) GmbH |
57 |
2016 |
Yes |
• |
• | |||||||||||
Dr. Dieter W. Düsedau Physicist and Former Director (Senior Partner), McKinsey & Co. |
58 |
2016 |
Yes |
• |
• | |||||||||||
Gale S. Fitzgerald Retired President and Director, TranSpend, Inc. |
66 |
1999 |
Yes |
• |
Chair | |||||||||||
Gary G. Greenfield Partner, Court Square Capital Partners |
62 |
2014 |
Yes |
• |
• | |||||||||||
Andreas W. Mattes Chief Executive Officer, Diebold Nixdorf, Incorporated |
55 |
2013 |
No | |||||||||||||
Robert S. Prather, Jr. President and Chief Executive Officer, Heartland Media, LLC |
72 |
2013 |
Yes |
• |
• | |||||||||||
Rajesh K. Soin Chairman of the Board and Chief Executive Officer, Soin, LLC |
69 |
2012 |
Yes |
• |
• | |||||||||||
Henry D. G. Wallace Non-executive Chairman of the Board, Diebold Nixdorf, Incorporated |
71 |
2003 |
Yes | |||||||||||||
Alan J. Weber Chief Executive Officer, Weber Group LLC |
68 |
2005 |
Yes |
• |
Chair | |||||||||||
Dr. Jürgen Wunram Senior Vice President and Chief Operating Officer, Diebold Nixdorf, Incorporated |
58 |
2017 |
No | |||||||||||||
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 | 2018 PROXY STATEMENT | | 1 |
PROXY SUMMARY |
BUSINESS PERFORMANCE AND STRATEGIC INITIATIVES
This was a foundational year for Diebold Nixdorf as we laid the groundwork for our transformation and made progress towards becoming the global leader in Connected Commerce. We also encountered certain challenges in 2017 which impacted our financial results, including market headwinds, the softening of demand for banking systems, and a slower pace of deployment for large and complex customer projects. As a result of these challenges, we did not achieve certain financial performance metrics of our long-term equity incentives and annual cash bonus plan for 2017.
The Company had notable achievements in 2017 as well. We serve in a highly dynamic market supported by fast-paced payment technologies and changing consumer behavior and expectations. To position ourselves to best meet these demands, we accelerated our post-acquisition integration and synergy efforts, streamlined our global manufacturing
operations and simplified our solutions portfolios. In 2017, we also enhanced our global leadership position particularly in ATM software, now powering the ATM networks of many of the largest financial institutions in the world. Specifically, we introduced Vynamic® which is the first of its kind,end-to-end connected commerce software portfolio which secures transactions at every stage between the consumer and the retail or banking institution.
Our Connected Commerce strategy seeks to continually enhance the consumer experience at banking and retail locations through the smart integration of hardware, software and services. In addition, since mobile solutions are growing in importance for retail and banking customers, we have formed a strategic alliance with Kony to leverage their industry-leading mobile development application platform (MDAP) and acquired Moxx to offer managed mobility services.
CORPORATE GOVERNANCE UPDATES AND SHAREHOLDER OUTREACH
Henry D.G. Wallace and Robert S. Prather are retiring from our Board at the Annual Meeting, having both reached the retirement age set in our Board governance policy. We thank Messrs. Wallace and Prather sincerely for their years of service to the Company. Mr. Wallace also stepped down as Chairman of the Board on December 31, 2017, allowing for the orderly transition to his successor as Chair, Gary G. Greenfield. Mr. Greenfield has extensive experience in high technology industries, and that experience, coupled with his experience in evolving markets will be instrumental in leading the Board. Mr. Greenfield and a search committee chaired by Director Alan Weber led the search for our newly appointed President and Chief Executive Officer, Gerrard Schmid, who also joined our Board in February. Following the Annual Meeting and subject to the election by our shareholders, the Board will have eleven members. The Governance Committee and Board have determined that this is the appropriate size of
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.
Finally, in 2017 we continued our extensive shareholder outreach and engagement. While our advisory vote on the executive compensation program received high support at the 2017 Annual Meeting, we remain focused on engagement with our stakeholders to align our compensation programs with the integration and transformation goals of the Company. We continue to design our compensation practices and enhance our disclosures based on our shareholder input and feedback. We will continue to engage with shareholders and pursue executive compensation strategies that align our strategic goals and incentivize our executives.
| 2 | | 2018 PROXY STATEMENT | |
PROXY SUMMARY |
OVERVIEW OF OUR BOARD NOMINEES
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You are being asked to vote to elect each of the following nominees to our Board of Directors. The tables that follow provide summary information about our nominees, and detailed information about each director nominee’s background, skills and expertise can be found in Proposal 1: Election of Directors on pages18-24.
Information about our Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee, and Technology Strategy and Innovation Committee can be found on pages9-10.
COMMITTEE MEMBERSHIP | ||||||||||||||||
NAME AND OCCUPATION / CAREER HIGHLIGHTS
| AGE
| DIRECTOR SINCE
| INDEPENDENT
| AUDIT
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BOARD GOV.
| COMP.
| FIN.
| TS&I
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Patrick W. Allender Retired Executive Vice President, Chief Financial Officer and Secretary, Danaher Corporation | 71 | 2011 | Yes | Chair | · | |||||||||||
Phillip R. Cox President and Chief Executive Officer, Cox Financial Corporation | 70 | 2005 | Yes | · | Chair | |||||||||||
Richard L. Crandall Managing Partner, Aspen Venture LLC; Executive Chairman, Pelstar LLC | 74 | 1996 | Yes | · | Chair | |||||||||||
Dr. Alexander Dibelius Managing Partner, CVC Capital Partners (Deutschland) GmbH | 58 | 2016 | Yes | · | · | |||||||||||
Dr. Dieter W. Düsedau Physicist and Former Director (Senior Partner), McKinsey & Co. | 59 | 2016 | Yes | · | · | |||||||||||
Gale S. Fitzgerald Retired President and Director, TranSpend, Inc. | 67 | 1999 | Yes | · | Chair | |||||||||||
Gary G. Greenfield Non-executive Chairman of the Board, Diebold Nixdorf, Incorporated; Partner, Court Square Capital Partners | 63 | 2014 | Yes | · | · | |||||||||||
Gerrard B. Schmid President and Chief Executive Officer, Diebold Nixdorf, Incorporated | 49 | 2018 | No | |||||||||||||
Rajesh K. Soin Chairman of the Board and Chief Executive Officer, Soin, LLC | 70 | 2012 | Yes | · | · | |||||||||||
Alan J. Weber Chief Executive Officer, Weber Group LLC | 69 | 2005 | Yes | · | Chair | |||||||||||
Dr. Juergen Wunram Senior Vice President and Chief Operating Officer, Diebold Nixdorf, Incorporated | 59 | 2017 | No | |||||||||||||
| 2018 PROXY STATEMENT | | 3 |
PROXY SUMMARY |
SNAPSHOT OF KEY QUALIFICATIONS AND SKILLS OF OUR NOMINEES | ||||||||||||||||||||||||
| International | 7 | |||||||||||||||||||||||
| Technology/Innovation | 6 | |||||||||||||||||||||||
| Financial Services | 8 | |||||||||||||||||||||||
| Retail | 4 | |||||||||||||||||||||||
| Leadership | 11 | |||||||||||||||||||||||
| Corporate Governance | 8 | |||||||||||||||||||||||
| Audit/Finance | 7 | |||||||||||||||||||||||
| Gov’t Regulated Industries | 4 | |||||||||||||||||||||||
Director Tenure 0 to 5 Years 6 to 15 Years Over 15 Years See pages15-16 for more information on our considerations of a director nominee and additional detail regarding the key qualifications and skills of our 2018 nominees. Information about our directors’ compensation and share ownership is provided on pages13-14,26-27. SNAPSHOT OF KEY QUALIFICATIONS AND SKILLS OF OUR NOMINEES International Technology/Innovation Financial Services Leadership Corporate Governance Audit/Finance Gov’t Regulated Industries 1 2 3 4 5 6 7 8 9 10 11
| 4 | | 2018 PROXY STATEMENT | |
| Q: | What items will be voted on at the Annual Meeting and how does the Board recommend I vote? |
| A: | You are being asked to vote on the proposals outlined above in the proxy summary on page 1. The Board recommends a vote FOR each nominee, and FOR each of Proposals 2, 3 |
| Q. | What happens if other matters are properly presented at the Annual Meeting? |
| A. | If a permissible proposal other than the listed proposals is presented at the Annual Meeting, your proxy gives authority to the individuals named in the proxy to vote on any such proposal in accordance with their best judgment. We have not received notice of other matters that may be properly presented at the Annual Meeting. |
| Q: | Who is entitled to vote at the Annual Meeting? |
| A: | Our record date for the |
| Q: | How do I vote? |
| A: | If you were a shareholder on the record date and you held shares in your own name, you have three ways to vote and submit your proxy before the |
By mail – mail—You may vote by completing, signing and returning the proxy card that you will receive in the mail;
By Internet – Internet—We encourage you to vote and submit your proxy online atwww.proxyvote.com. Even if you request and receive a paper copy of the proxy materials, you may vote online by going towww.proxyvote.com and entering your control number, which is a 16 digit number located in a box on your proxy card that you can also receive in the mail, if requested; or
By telephone – telephone—You may vote and submit your proxy by calling1-800-690-6903 and providing your control number, which is a16-digit number located in a box on your proxy card that you can also receive in the mail, if requested.
If you complete and submit a proxy card, the persons named as proxies on your proxy card, which we refer to as the Proxy Committee, will vote the shares represented by your proxy in accordance with your instructions. If you submit your proxy card but do not indicate your voting preferences, the Proxy Committee will vote according to the recommendation of the Board.
If you complete and submit a proxy card, the persons named as proxies on your proxy card, which we refer to as |
| the Proxy Committee, will vote the shares represented by your proxy in accordance with your instructions. If you submit your proxy card but do not indicate your voting preferences, the Proxy Committee will vote according to the recommendation of the Board. |
| Q: | Can I change my vote after I have voted? |
| A: | You may change your vote at any time before your proxy is voted at the |
Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 20172018 Annual Meeting to our Corporate Secretary at the Company’s address above;
Submitting a later dated, signed proxy before the start of the 20172018 Annual Meeting;
If you have voted by the Internet or by telephone, you may vote again over the Internet or by telephone up until 11:59 p.m. EDT on April 25, 2017;24, 2018; or
Attending the 20172018 Annual Meeting, withdrawing your earlier proxy and voting in person.
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In order to cumulate votes for the election of a director, a shareholder must give written notice to ournon-executive Chairman, any Vice President or our Corporate Secretary no later than 11:29 a.m. EDT on April 24, 2017 that the shareholder desires that the voting for the election of directors be cumulative, and if an announcement of such notice is made upon convening the Annual Meeting by the Chairman or Corporate Secretary of the meeting, or by or on behalf of the shareholder giving the notice, each shareholder will have cumulative voting. As of March 10, 2017 we have not received any notice that a shareholder desires to invoke cumulative voting for the election of directors.
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| Q: | How many votes are required to adopt each proposal? |
| A: | For Proposal 1, the |
| Q: | What is the Majority Voting Policy? |
| A: | Our Board of Directors has adopted a policy that any director-nominee who is elected but receives a greater number of votes |
| 2018 PROXY STATEMENT | | 5 |
VOTING INFORMATION |
| Q: | What is a “brokernon-vote”? |
| A: | If your shares are held in the name of a brokerage firm, your shares may be voted even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under the New York Stock Exchange, or NYSE, rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters. When a proposal is not a routine matter under NYSE rules and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is referred to as a “brokernon-vote.” |
Proposal 2, the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2017,2018, is the only routine matter for which the brokerage firm who holds your shares can vote your shares on these proposals without your instructions. Accordingly, there should be no brokernon-votes with respect to Proposal 2. Brokernon-votes will have no effect on the outcome of Proposals 1, 3 4, and 7. For proposals 5 and 6, brokernon-votes will have the same effect as shares voted against.4.
| Q: | How many shares must be present to constitute a quorum and conduct the Annual Meeting? |
| A: | A quorum is necessary to hold the Annual Meeting. A majority of the outstanding shares present or represented by proxy constitutes a quorum for the purpose of adopting a proposal at the Annual Meeting. If you are present and vote in person at the Annual Meeting, or vote on the Internet, by telephone or by submitting a properly executed proxy card, you will be considered part of the quorum. Brokernon-votes will not be part of the voting power present, but will be counted to determine whether or not a quorum is present. |
| Q: | What happens if I abstain? |
| A: | For all proposals except Proposal 4, a share voted “abstain” with respect to any proposal is considered as |
| present and entitled to vote with respect to the proposal, but is not considered a vote cast with respect to the proposal. For Proposal 4, abstentions are considered votes cast for purposes of shareholder approval of an amendment to an equity plan. |
| Q: | Why did I receive aone-page notice in the mail regarding Internet availability of proxy materials instead of a full set of proxy materials? |
| A: | Under rules adopted by the Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending you a Notice of Internet Availability of Proxy Materials. The instructions found in the Notice explain that all shareholders will have the ability to access the proxy materials onwww.proxyvote.com or request to receive a printed copy of the proxy materials. You may also request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual |
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| Q: | What shares are included on my proxy card or Notice of Internet Availability of Proxy Materials? |
| A: | The number of shares printed on your proxy card(s) represents all your shares under a particular registration. Receipt of more than one proxy card or Notice of Internet Availability of Proxy Materials means that certain of your shares are registered differently and are in more than one account. If you receive more than one proxy card, sign and return all your proxy cards to ensure that all your shares are voted. If you receive more than one Notice, reference the distinct16-digit control number on each Notice when voting by Internet. |
| 6 | | 2018 PROXY STATEMENT | |
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Corporate Governance Highlights – Proxy Access Adoption
Our Board continuesis committed to evaluate ourstrong corporate governance arrangementsprinciples and practices to best serve our shareholders. One notable actionensure that we have recently taken is thatthe Board most effectively and efficiently serves in its oversight obligations. This section provides an overview of the organization of the Board, its Committees, responsibilities and other related topics and initiatives.
Henry D.G. Wallace and Robert S. Prather are retiring from our Board has adoptedat the Annual Meeting, having both reached the retirement age set in our Board governance policy. Mr. Wallace also stepped down as Chairman of the Board on December 31, 2017, allowing for the orderly transition to his successor as Chair, Gary G. Greenfield. We thank Messrs.
Wallace and Prather for their service to the Company. Although Mr. Crandall also reached retirement age, the Board Governance Committee and the Board determined that a proxy access provision as partwaiver of the policy was warranted in order to maintain Mr. Crandall’s unique expertise in the cybersecurity field on the Board. Following the Annual Meeting and subject to the election by our shareholders, the Board will have eleven members. The Board Governance Committee and Board have determined that this is the appropriate size of our CodeBoard 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 Regulations in February 2017. This new provision (described in more detail on page 17) provides shareholders with the right to nominate candidates for election to our Board and have their nominees included in our proxy statement.Board.
Board Leadership StructureBOARD LEADERSHIP STRUCTURE
Our Board is committed to strong leadership and currently maintains separate roles of our Chief Executive Officer, or CEO, and our Chairman of the Board. We believe this structure is effective for our current circumstances and a good governance practice. The Board does not have a specific policy with respect to separating or combining these roles, or
whether the Chairman should be an employee ornon-employee director, and will continue to periodically review our leadership structure in light of corporate governance standards, market practices and our specific circumstances and needs.
Board and Director AssessmentsBOARD AND DIRECTOR ASSESSMENTS
The Board Governance Committee oversees the Board and director assessment program, as noted below in “Board Committees and Composition.” When taken together, the following assessment program provides a holistic review of the role, performance and function of the full Board, the Chairman and each director in relation to the Company’s needs, challenges and opportunities. The assessment program includes a full board self-assessment, committee assessments, a chairman assessment and individual director
assessments. The full board self-assessment includes comprehensive questions designed to provide a holisticanall-inclusive evaluation of the performance of the Board in light of our needs.needs and strategies. The committee, chairman, and individual director assessments are more specifically tailored. The assessment results are shared with theour Chairman, applicable directors, committee members, and the full Board, and appropriate action plans are prepared and executed.
Board Meetings and Executive SessionsBOARD MEETINGS AND EXECUTIVE SESSIONS
The Board held five regular meetings and twoone special meeting in person or telephonically during 2016, along with frequent telephonic updates around strategic transactions.2017. All of our current directors attended 75% or more of the aggregate of all meetings of the Board and the Board committees on which they served during 2016.2017.
In accordance with the NYSE’s corporate governance standards, our independent directors regularly meet in executive session without management present, generally
following each regularly-scheduled Board meeting. In addition, on occasion, our independent directors will meet in executive session prior to the start of a Board meeting. Gary Greenfield, the Chairman of our Board, presides over these meetings in executive session. In 2017, Henry D.G. Wallace presided over these executive sessions in his capacity as Chairman of the Board. The executive sessions of each Board Committee are overseen by the respective committee chair.
| 2018 PROXY STATEMENT | | 7 |
CORPORATE GOVERNANCE |
While we do not have a formal policy regarding directors’ attendance at the Annual Meeting of Shareholders, it is expected that all directors attend the 2017 Annual Meeting unless there are extenuating circumstances fornon-attendance. AllWith the exception of Dr. Alexander Dibelius, who had a previously
scheduled obligation taking place at the same time, all directors standing forre-election who were serving as directors as of the 2016 Annual Meeting2017 annual meeting of Shareholders, with the exception of Henry D. G. Wallace,shareholders attended the 2016 Annual Meeting.2017 annual meeting.
Board Risk OversightBOARD RISK OVERSIGHT
The Board and the Board committees collectively play an active role in overseeing management of our risks and in helping establish an appropriate risk tolerance. The Board oversees our risk strategy and effectiveness; however, management is responsible for identifying risks inherent in our business, as well as implementing and supervisingday-to-day risk management. Accordingly, the Board and the appropriate committees receive regular reports from our senior management on areas of material risk to us, including operational, financial, strategic, compliance, cybersecurity, competitive, reputational, legal and regulatory risks. The Board also meets with senior management as part of each Board meeting, and more frequently as needed, to discuss strategic planning, including the key risks inherent in our short- and long-term strategies. Senior management then provides the Board with periodic updates throughout the year with respect to these strategic initiatives and the impact and management of these key risks.
-8-
In addition, each Board committee is responsible for evaluating certain risks within its area of responsibility and overseeing the management of such risks. The entire Board is then informed about such risks and management’s response to each risk through regular committee reports delivered by the Committee Chairs. Our Compensation Committee
performs an annual compensation risk assessment, and we believe that our compensation practices are not reasonably likely to have a material adverse effect on the Company.
We also have robust internal dialog among our operations, finance, compliance, treasury, tax, legal and internal audit departments, among others, whenever a potential risk arises. These discussions are escalated to our President and Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Security Officer, Corporate Controller, Chief Legal Officer, Chief Ethics and Compliance Officer, Chief Human Resources Officer, Chief CommunicationsPeople Officer, and/or Vice President, Internal Audit and other Vice Presidents of our various divisions and regions, as appropriate, with open lines of communication among them, the various committees of the Board and the entire Board.
We believe that the Board’s approach and continued evaluation of its risk oversight, as described above, optimize its ability to assess the various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for the Company. We also believe that our Board leadership structure complements our risk management structure because it allows our independent directors to exercise effective oversight of the actions of management in identifying risks and implementing effective risk management policies and controls.
| 8 | | 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE |
Board Committees and CompositionBOARD COMMITTEES AND COMPOSITION
The Board’s current standing committees are the Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee and Technology Strategy and Innovation Committee. Each committee’s members and meetings during 20162017 and functions are described below.
| ||
Members:
Patrick W. Allender (Chair), Dr. Dieter W. Düsedau, Gale S. Fitzgerald and Robert S. Prather, Jr.
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically eleven times during
Contact:
auditchair@dieboldnixdorf.com
Committee Report: See page
| Primary Duties and Responsibilities:
• Monitors the adequacy of our financial reporting process and systems of internal controls regarding finance, accounting and ethics and compliance.
• Monitors the independence and performance of our outside auditors and performance and controls of our internal audit department.
• Provides an avenue of communication among the outside auditors, management, the internal audit department and the Board.
Financial Experts:
The Board has determined that Mr. Allender is an audit committee financial expert within the meaning of such term under Item 407(d)(5) of RegulationS-K.
|
| * | This committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 |
-9-
| ||
Members:
Gale S. Fitzgerald (Chair), Phillip R. Cox, Richard L. Crandall and Dr. Alexander Dibelius
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically five times during
Contact:
bdgovchair@dieboldnixdorf.com | Primary Duties and Responsibilities:
• Insures Board oversight of our enterprise risk management process.
• Reviews qualifications of potential director candidates.
• Makes recommendations to the Board to fill vacancies or consider the appropriate size of the Board.
• Makes recommendations regarding corporate governance principles, Board committee composition, and the directors’ compensation for their services on the Board and on Board committees.
• Leads and oversees all of the Board and Committee assessments.
• Oversees director orientation and education, as described in “Director Orientation and
|
| 2018 PROXY STATEMENT | | 9 |
CORPORATE GOVERNANCE |
| ||
Members:
Phillip R. Cox (Chair), Dr. Dieter W. Düsedau, Rajesh K. Soin and Alan J. Weber
All members of this committee qualify as independent.
This committee met in person or telephonically five times during
Contact:
compchair@dieboldnixdorf.com
Committee Report: See page | Primary Duties and Responsibilities:
• Administers our executive compensation program.
• Oversees our equity plans (including reviewing and approving equity grants to executive officers).
• Annually reviews and approves all pay decisions relating to executive officers.
• Determines and measures achievement of corporate and individual goals, as applicable, by our executive officers under our short- (annual) and long-term incentive plans, and makes recommendations to the Board for ratification of such achievements.
• Reviews the management succession plan and proposed changes to any of our benefit plans, such as retirement plans, deferred compensation plans and 401(k) plans.
• For additional discussion of the committee’s role, processes and procedures in connection with executive compensation, see “Compensation Discussion and
|
-10-
| ||
Members:
Alan J. Weber (Chair), Patrick W. Allender, Dr. Alexander Dibelius, Gary G. Greenfield and Robert S. Prather, Jr.
All members of this committee qualify as independent.
Meetings:
This committee met in person or telephonically | Primary Duties and Responsibilities:
• Makes recommendations to the Board with respect to material or other significant transactions.
• Oversees the Company’s borrowing structures and credit facilities.
• Establishes investment policies, including asset allocation, for our cash, short-term securities and retirement plan assets and oversees the management of those assets.
• Reviews our financial exposure and liabilities, including the use of derivatives and other risk management techniques.
• Makes recommendations to the Board related to customer financing activities and funding plans for our Company.
|
| ||
Members:
Richard L. Crandall (Chair), Gary G. Greenfield and Rajesh K. Soin
All members of this committee qualify as independent.
Meetings: This committee | Primary Duties and
• Assists the Board in its oversight of our investment in software and services technology and intellectual property.
• Evaluates our global technology and innovation strategies and initiatives, including their impact on our performance and competitive position.
• Evaluates management proposals for strategic software and technology investments, divestitures, and acquisitions.
• Provides clarification and validation to the Board on the direction of our
|
| 10 | | 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE |
Corporate Governance Materials Available on Our WebsiteCORPORATE GOVERNANCE MATERIALS AVAILABLE ON OUR WEBSITE
Copies of the following documents, among others, are available on our website (www.dieboldnixdorf.com) in the Corporate Governance portion of the Investor Relations section under the Company tab:
Current Charters for our Audit, Board Governance, Compensation, Finance, and Technology Strategy and Innovation Committees;
Our Corporate Governance Guidelines; and
Our Code of Business Ethics.
Information on our website is not, and will not be deemed to be, a part of or incorporated into this Proxy Statement.
Director IndependenceDIRECTOR INDEPENDENCE
The Board determined that each of Patrick W. Allender, Phillip R. Cox, Richard L. Crandall, Dr. Alexander Dibelius, Dr. Dieter W. Düseadau,sedau, Gale S. Fitzgerald, Gary G. Greenfield, Robert S. Prather, Jr., Rajesh K. Soin, Henry D. G. Wallace and Alan J. Weber has no material relationship with the Company (either directly or as a
-11-
partner, shareholder or officer of an organization that has a relationship with us) and is independent under our director independence standards, the NYSE director independence standards, and the SEC independence requirements, as applicable and as currently in effect. Andreas W. MattesGerrard Schmid and Dr. JürgenJuergen Wunram do not meet these independence standards because they are employed by us as our CEOPresident and COO,Chief Executive Officer and our Senior Vice President and Chief Operating Officer, respectively.
In making the independence determinations, the Board considered the following:
Messrs. Crandall and Greenfield serve on the board of directors of Donnelley Financial Solutions, Inc., which provided SEC filing and printing services in 20162017 related to our acquisition of Wincor Nixdorf (including the tender offer registration and related disclosures in the United States and Germany), the filing and printing services related to the Company’s amended credit facilities and notes offering completed in 2016 in support of the business combination transaction, and our proxy statement for our 2016 annual meeting2017 Annual Meeting of shareholders for a fee of approximately $1,839,094. The Board determined that the provision of services by Donnelley Financial Solutions, Inc. and Messrs. Crandall and Greenfield’s service on the Donnelley Financial Solutions, Inc. board did not create a material relationship or impair the independence of Messrs. Crandall and Greenfield.
Shareholders for a fee of $54,870. The Board determined that the provision of services by Donnelley Financial Solutions, Inc. and Messrs. Crandall and Greenfield’s service on the Donnelley Financial Solutions, Inc. board did not create a material relationship or impair the independence of Messrs. Crandall and Greenfield. |
Mr. Crandall owns the Enterprise Software CEO Roundtable and our former CEO, Mr.Andreas Mattes, was a member of that Roundtable in 2016 and will also be a member in 2017. The standard annual fees, which were paid by the Company, were $9,500 for 2016.2017. The Board determined that the Roundtable’s receipt of a membership fee from the Company did not create a material relationship or impair the independence of Mr. Crandall.
Mr. Weber serves on the board of directors of Broadridge Financial Solutions, Inc., which provided processing, mailing and tabulation services for our proxy statement in 20162017 for a fee of approximately $107,000.$112,753. The Board determined that the provision of these services and Mr. Weber’s board membership did not create a material relationship or impair the independence of Mr. Weber.
Related Person Transaction PolicyRELATED PERSON TRANSACTION POLICY
Pursuant to our director independence standards, discussed above, and our Corporate Governance Guidelines, discussed below in “Board Diversity, Director Qualifications and Corporate Governance Guidelines,” we do not engage in transactions withnon-employee directors or their affiliates if a transaction would cause an independent director to no longer be deemed independent, would present the appearance of a conflict of interest or is otherwise prohibited by law, rule or regulation. This includes, directly or indirectly, any extension, maintenance or renewal of an extension of credit to any of our directors.
This prohibition also includes significant business dealings with directors or their affiliates, charitable contributions that would require disclosure in our proxy statement under the rules of the NYSE, and consulting contracts with, or other indirect forms of compensation to, a director. Any waiver of this policy may be made only by the Board and must be promptly disclosed to our shareholders.
In 2016,2017, we did not engage in any related person transaction(s) requiring disclosure under Item 404 of RegulationS-K.
| 2018 PROXY STATEMENT | | 11 |
CORPORATE GOVERNANCE |
Communications with DirectorsCOMMUNICATIONS WITH DIRECTORS
The Company’s Board of Directors provides a process for shareholders to send communications to the Board. Shareholders and interested parties may communicate with our Audit, Board Governance and Compensation Committee Chairs by sending an email to the address provided in the applicable committee description above or with ournon-employee directors as a group by sending an email tononmanagementdirectors@dieboldnixdorf.com.
Communications may also be directed in writing to such person or group at Diebold Nixdorf, Incorporated, Attention:
Corporate Secretary, 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077. The independent members of the Board have approved a process for handling communications we receive that are addressed tonon-employee members of the Board. Under that process, the Corporate Secretary will review all such communications and determine whether communications require immediate attention. The Corporate Secretary will forward communications, or a summary of communications, to the appropriate director or directors.
-12-
All of our directors, executive officers and employees are required to comply with certain policies and protocols concerning business ethics and conduct as provided in our Code of Business Ethics. The Code of Business Ethics ties our core values to the ethical principles that must guide our business decisions. The Code of Business Ethics also provides clear information on the resources available for directors, executive officers and employees to ask questions and report unethical behavior. All members of the Board have received training specific to the Code of Business Ethics.
The Code of Business Ethics applies to us, including all of our domestic and international affiliates and subsidiaries. The Code of Business Ethics describes certain responsibilities that our directors, executive officers and employees have to the Company, to each other and to our global partners and communities. It covers many topics, including compliance with
laws, including the Foreign Corrupt Practices Act and relevant global anti-corruption laws, conflicts of interest, intellectual property and the protection of competitive and confidential information, as well as maintaining a respectful andnon-retaliatory workplace. The Code of Business Ethics also includes and links to our Conflicts of Interest Policy, which further details the requirements for our officers, directors and employees to avoid and disclose potential conflicts, including those that may result from related party transactions. In addition, our employees are required to report any conduct that they believe in good faith to be a violation of the Code of Business Ethics. Our Audit Committee has procedures to receive, retain and treat complaints regarding accounting, internal financial controls or auditing matters, and to allow for the confidential and anonymous submission of concerns regarding questionable practices or potential violations of our policies, including the Code of Business Ethics.
Compensation Committee Interlocks and Insider ParticipationCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December 31, 20162017 were Phillip R. Cox, Dr. Dieter W. Düsedau, Rajesh K. Soin, and Alan J. Weber and Henry D. G. Wallace (who served through October 2016).Weber. No member of the Compensation Committee has had any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of certain relationships and related person
transactions. No officer or employee of the Company has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director of the Company or member of the Compensation Committee during 2016.2017.
Director Orientation and EducationDIRECTOR ORIENTATION AND EDUCATION
All new directors participate in a director orientation program. The Board Governance Committee oversees this introduction and orientation process whereduring which the new director meets with key senior management personnel and takes a tour through our global solutions center to improve his or her understanding of our business and global products and
solutions. In addition, the orientation process educates the new director on his or her obligations as a director, the history of the Company, our strategic plans, significant financial matters, core values, including ethics and compliance programs (and also including our Code of Business Ethics), corporate governance practices and other key policies and practices.
| 12 | | 2018 PROXY STATEMENT | |
-13-
The following director compensation is determined by the Board at the recommendation of the Board Governance Committee. With respect tonon-employee directors, it is our goal to provide directors with fair and competitive compensation, while ensuring that their compensation is closely aligned with shareholder interests.
The annual retainer received by the directors during 2016 remained the same as that paid in 2015. Accordingly, during 2016, ournon-employee directors received an annual retainer ofduring 2017 was increased from $65,000 forto $75,000 following their service as directors.re-election in April 2017. Ournon-executive Chairman of the Board received an additional annual retainer of $100,000.
In addition to their annual retainers, ournon-employee directors also received the following annual committee fees for their participation as members or as Chairs of one or more Board committees:
| Member | Chair |
MEMBER
|
CHAIR
| |||||||||||||
Audit Committee | $ | 12,500 | $ | 25,000 |
|
$12,500
|
|
|
$25,000
|
| ||||||
Compensation Committee | $ | 10,000 | $ | 20,000 |
|
$10,000
|
|
|
$20,000
|
| ||||||
Board Governance Committee | $ | 7,500 | $ | 15,000 |
|
$ 7,500
|
|
|
$15,000
|
| ||||||
Finance Committee | $ | 7,500 | $ | 15,000 |
|
$ 7,500
|
|
|
$15,000
|
| ||||||
Technology Strategy and Innovation Committee | $ | 7,500 | $ | 15,000 |
|
$ 7,500
|
|
|
$15,000
|
| ||||||
The varying fee amounts are intended to reflect differing levels of responsibility, meeting requirements and fiduciary duties. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year arepro-rated for his or her period of actual service. A director may elect to defer receipt of all or a portion of his or her compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
In addition to cash compensation, eachnon-employee director may receive equity awards under our Amended and Restated 1991Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, as amended and restated on February 12, 2014, which we refer to as the 19912017 Plan. We aim to provide a balanced mix of cash and equity compensation to our directors that targets the directors’ total pay at the median of a peer
group of companies in similar industries and of comparable size and revenue. This peer group is the same one used by our Compensation Committee for benchmarking executive compensation, which is discussed in more detail below in “Role ofPeer Companies and Competitive Market Data” under “Compensation Discussion and Analysis.”
With the exception of Drs. Dibelius and Düsedau, in 2016,In 2017, eachnon-employee director was awarded 4,504 deferred common shares,a grant of 5,164 RSUs, subject to aone-year vesting condition.period. Each award approximated $124,000$150,000 in value and provides for dividend equivalent payments in cash during the restricted period. Ournon-employee directors have received deferred common shares awards since 2007. We believe these awards strengthen the directors’ ties to shareholder interests by aligning their long-term economic interests and that these awards provide effective ways to help our directors build stock ownership.
| 2018 PROXY STATEMENT | | 13 |
COMPENSATION OF DIRECTORS |
-14-
The following table details the compensation of ournon-employee directors for 2016:2017:
| Name | Fees Earned ($) | Stock ($) | All Other Compensation3 ($) | Total ($) | ||||||||||||||||||||||||
| NAME | FEES EARNED OR PAID IN CASH1 ($) | STOCK AWARDS2 ($) | ALL OTHER COMPENSATION3 ($) | TOTAL ($) | ||||||||||||||||||||||||
Patrick W. Allender | 97,500 | 123,500 | 16,211 | 237,211 |
|
104,167
|
|
|
148,723
|
|
|
8,824
|
|
|
261,714
|
| ||||||||||||
Phillip R. Cox | 92,500 | 123,500 | 23,836 | 239,836 |
|
99,167
|
|
|
148,723
|
|
|
10,220
|
|
|
258,110
|
| ||||||||||||
Richard L. Crandall | 87,500 | 123,500 | 24,172 | 235,172 |
|
94,167
|
|
|
148,723
|
|
|
10,812
|
|
|
253,702
|
| ||||||||||||
Dr. Alexander Dibelius | 30,000 | — | — | 30,000 |
|
86,667
|
|
|
148,723
|
|
|
1,549
|
|
|
236,939
|
| ||||||||||||
Dr. Dieter W. Düsedau | 32,813 | — | — | 32,813 |
|
94,167
|
|
|
148,723
|
|
|
1,549
|
|
|
244,439
|
| ||||||||||||
Gale S. Fitzgerald | 92,500 | 123,500 | 25,836 | 241,836 |
| 99,167
|
|
|
148,723
|
|
| 12,824
|
|
|
260,714
|
| ||||||||||||
Gary G. Greenfield | 80,000 | 123,500 | 4,056 | 207,556 |
|
86,667
|
|
|
148,723
|
|
|
2,450
|
|
|
237,840
|
| ||||||||||||
Robert S. Prather, Jr. | 85,000 | 123,500 | 10,484 | 218,984 |
|
91,667
|
|
|
148,723
|
|
|
6,444
|
|
|
246,834
|
| ||||||||||||
Rajesh K. Soin | 82,500 | 123,500 | 11,227 | 217,227 |
|
89,167
|
|
|
148,723
|
|
|
4,980
|
|
|
242,870
|
| ||||||||||||
Henry D. G. Wallace | 182,500 | 123,500 | 27,857 | 333,857 |
|
171,667
|
|
|
148,723
|
|
|
13,664
|
|
|
334,054
|
| ||||||||||||
Alan J. Weber | 91,250 | 123,500 | 23,451 | 237,576 |
|
96,667
|
|
|
148,723
|
|
|
10,060
|
|
|
255,450
|
| ||||||||||||
| 1 | This column reports the amount of cash compensation earned in |
| Name | Audit ($) | Board Governance ($) | Compensation Committee ($) | Finance Committee ($) | Technology ($) | ||||||||||||||||||||||||||||||
| NAME | AUDIT COMMITTEE ($) | BOARD GOVERNANCE COMMITTEE ($) | COMPENSATION COMMITTEE ($) | FINANCE COMMITTEE ($) | TECHNOLOGY STRATEGY & INNOVATION COMMITTEE ($) | ||||||||||||||||||||||||||||||
Patrick W. Allender | 25,000 | — | — | 7,500 | — |
|
25,000
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| |||||||||||||||
Phillip R. Cox | — | 7,500 | 20,000 | — | — |
|
—
|
|
|
7,500
|
|
|
20,000
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Richard L. Crandall | — | 7,500 | — | — | 15,000 |
|
—
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
15,000
|
| |||||||||||||||
Dr. Alexander Dibelius | — | 2,813 | — | 2,813 | — |
|
—
|
|
|
7,500
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| |||||||||||||||
Dr. Dieter W. Düsedau | 4,688 | — | 3,750 | — | — |
|
12,500
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Gale S. Fitzgerald | 12,500 | 15,000 | — | — | — |
|
12,500
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Gary G. Greenfield | — | — | — | 7,500 | 7,500 |
|
—
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
7,500
|
| |||||||||||||||
Robert S. Prather, Jr. | 12,500 | — | — | 7,500 | — |
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| |||||||||||||||
Rajesh K. Soin | — | — | 10,000 | — | 7,500 |
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
7,500
|
| |||||||||||||||
Henry D. G. Wallace | — | 7,500 | 10,000 | — | — |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Alan J. Weber | 6,250 | — | 5,000 | 15,000 | — |
|
—
|
|
|
—
|
|
|
10,000
|
|
| 15,000
|
|
|
—
|
| |||||||||||||||
| 2 | This column represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718 for |
| 3 | This column represents dividend equivalents paid in cash on shares deferred by our directors. |
| 14 | | 2018 PROXY STATEMENT | |
COMPENSATION OF DIRECTORS |
-15-
Director Stock Ownership Guidelines
The Board has adopted stock ownership guidelines in 2013 to align with the practices of our peer group (discussed further below under “Role ofPeer Companies and Competitive Market Data” under “Compensation Discussion and Analysis”). Eachnon-employee director is expected to own common shares of the Company valued at least five times the annual retainer, and the directors are not permitted to sell any vested shares prior to meeting this ownership level. We count the deferred
shares held by the directors for purposes of these guidelines, which are intended to build stock ownership amongnon-employee directors and ensure that their long-term economic interests are aligned with those of other shareholders. The majority of our directors have exceeded the ownership guidelines, while our directors who were appointed most recently are on track to achieve the ownership guidelines within the next few years.
| 2018 PROXY STATEMENT | | 15 |
-16-
CONSIDERATION OF DIRECTOR-NOMINEES
The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating shareholder nominations, the
Compensation Committee
$10,000
$20,000
Board Governance Committee seeks to achieve a balance
$ 7,500
$15,000
Finance Committee
$ 7,500
$15,000
Technology Strategy and Innovation Committee
$ 7,500
$15,000
The varying fee amounts are intended to reflect differing levels of responsibility, meeting requirements and fiduciary duties. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year arepro-rated for his or her period of actual service. A director may elect to defer receipt of all or a portion of his or her compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
In addition to cash compensation, eachnon-employee director may receive equity awards under our Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, which we refer to as the 2017 Plan. We aim to provide a balanced mix of cash and equity compensation to our directors that targets the directors’ total pay at the median of a peer
group of companies in similar industries and of comparable size and revenue. This peer group is the same one used by our Compensation Committee for benchmarking executive compensation, which is discussed in more detail below in “Role of Peer Companies and Competitive Market Data” under “Compensation Discussion and Analysis.”
In 2017, eachnon-employee director was awarded a grant of 5,164 RSUs, subject to aone-year vesting period. Each award approximated $150,000 in value and provides for dividend equivalent payments in cash during the restricted period. We believe these awards strengthen the directors’ ties to shareholder interests by aligning their long-term economic interests and that these awards provide effective ways to help our directors build stock ownership.
| 2018 PROXY STATEMENT | | 13 |
COMPENSATION OF DIRECTORS |
The following table details the compensation of ournon-employee directors for 2017:
| NAME | FEES EARNED OR PAID IN CASH1 ($) | STOCK AWARDS2 ($) | ALL OTHER COMPENSATION3 ($) | TOTAL ($) | ||||||||||||||||
Patrick W. Allender
|
|
104,167
|
|
|
148,723
|
|
|
8,824
|
|
|
261,714
|
| ||||||||
Phillip R. Cox
|
|
99,167
|
|
|
148,723
|
|
|
10,220
|
|
|
258,110
|
| ||||||||
Richard L. Crandall
|
|
94,167
|
|
|
148,723
|
|
|
10,812
|
|
|
253,702
|
| ||||||||
Dr. Alexander Dibelius
|
|
86,667
|
|
|
148,723
|
|
|
1,549
|
|
|
236,939
|
| ||||||||
Dr. Dieter W. Düsedau
|
|
94,167
|
|
|
148,723
|
|
|
1,549
|
|
|
244,439
|
| ||||||||
Gale S. Fitzgerald
|
| 99,167
|
|
|
148,723
|
|
| 12,824
|
|
|
260,714
|
| ||||||||
Gary G. Greenfield
|
|
86,667
|
|
|
148,723
|
|
|
2,450
|
|
|
237,840
|
| ||||||||
Robert S. Prather, Jr.
|
|
91,667
|
|
|
148,723
|
|
|
6,444
|
|
|
246,834
|
| ||||||||
Rajesh K. Soin
|
|
89,167
|
|
|
148,723
|
|
|
4,980
|
|
|
242,870
|
| ||||||||
Henry D. G. Wallace
|
|
171,667
|
|
|
148,723
|
|
|
13,664
|
|
|
334,054
|
| ||||||||
Alan J. Weber
|
|
96,667
|
|
|
148,723
|
|
|
10,060
|
|
|
255,450
|
| ||||||||
| 1 | This column reports the amount of
|
| NAME | AUDIT COMMITTEE ($) | BOARD GOVERNANCE COMMITTEE ($) | COMPENSATION COMMITTEE ($) | FINANCE COMMITTEE ($) | TECHNOLOGY STRATEGY & INNOVATION COMMITTEE ($) | ||||||||||||||||||||
Patrick W. Allender
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Phillip R. Cox
|
|
—
|
|
|
7,500
|
|
|
20,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Richard L. Crandall
|
|
—
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
15,000
|
| ||||||||||
Dr. Alexander Dibelius
|
|
—
|
|
|
7,500
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Dr. Dieter W. Düsedau
|
|
12,500
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Gale S. Fitzgerald
|
|
12,500
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Gary G. Greenfield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
7,500
|
| ||||||||||
Robert S. Prather, Jr.
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Rajesh K. Soin
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
7,500
|
| ||||||||||
Henry D. G. Wallace
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Alan J. Weber
|
|
—
|
|
|
—
|
|
|
10,000
|
|
| 15,000
|
|
|
—
|
| ||||||||||
complete information as
| 3 | This column represents dividend equivalents paid in cash on shares deferred by our directors. |
| 14 | | 2018 PROXY STATEMENT | |
whether the Board Governance Committee is currently looking to fill a new position created by an expansion of the number of directors, or a vacancy that may exist or is anticipated on the Board;
|
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. The majority of our directors have exceeded the ownership guidelines, while our directors who were appointed most recently are on track to achieve the ownership guidelines within the next few years.
|
|
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.
|
| |
-19-
|
| |
-20-
|
| |
-21-
|
| |||||||
The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “ Compensation Committee |
| $10,000 |
|
| $20,000
|
| ||
-22-
Board Governance Committee
|
| $ 7,500 |
|
| $15,000
|
| ||
Finance Committee
|
| $ 7,500 |
|
| ||||
-23-
|
| |||||||
|
| |||||||
Technology Strategy and Innovation Committee
|
| $ 7,500 | $15,000 | |||||
The varying fee amounts are intended to reflect differing levels of responsibility, meeting requirements and fiduciary duties. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year arepro-rated for his or her period of actual service. A director may elect to defer receipt of all or a portion of his or her compensation pursuant to the Deferred Compensation Plan No. 2 for Directors.
In addition to cash compensation, eachnon-employee director may receive equity awards under our Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, which we refer to as the 2017 Plan. We aim to provide a balanced mix of cash and equity compensation to our directors that targets the directors’ total pay at the median of a peer
group of companies in similar industries and of comparable size and revenue. This peer group is the same one used by our Compensation Committee for benchmarking executive compensation, which is discussed in more detail below in “Role of Peer Companies and Competitive Market Data” under “Compensation Discussion and Analysis.”
In 2017, eachnon-employee director was awarded a grant of 5,164 RSUs, subject to aone-year vesting period. Each award approximated $150,000 in value and provides for dividend equivalent payments in cash during the restricted period. We believe these awards strengthen the directors’ ties to shareholder interests by aligning their long-term economic interests and that these awards provide effective ways to help our directors build stock ownership.
| 2018 PROXY STATEMENT | | 13 |
COMPENSATION OF DIRECTORS |
The following table details the compensation of ournon-employee directors for 2017:
| NAME | FEES EARNED OR PAID IN CASH1 ($) | STOCK AWARDS2 ($) | ALL OTHER COMPENSATION3 ($) | TOTAL ($) | ||||||||||||||||
Patrick W. Allender
|
|
104,167
|
|
|
148,723
|
|
|
8,824
|
|
|
261,714
|
| ||||||||
Phillip R. Cox
|
|
99,167
|
|
|
148,723
|
|
|
10,220
|
|
|
258,110
|
| ||||||||
Richard L. Crandall
|
|
94,167
|
|
|
148,723
|
|
|
10,812
|
|
|
253,702
|
| ||||||||
Dr. Alexander Dibelius
|
|
86,667
|
|
|
148,723
|
|
|
1,549
|
|
|
236,939
|
| ||||||||
Dr. Dieter W. Düsedau
|
|
94,167
|
|
|
148,723
|
|
|
1,549
|
|
|
244,439
|
| ||||||||
Gale S. Fitzgerald
|
| 99,167
|
|
|
148,723
|
|
| 12,824
|
|
|
260,714
|
| ||||||||
Gary G. Greenfield
|
|
86,667
|
|
|
148,723
|
|
|
2,450
|
|
|
237,840
|
| ||||||||
Robert S. Prather, Jr.
|
|
91,667
|
|
|
148,723
|
|
|
6,444
|
|
|
246,834
|
| ||||||||
Rajesh K. Soin
|
|
89,167
|
|
|
148,723
|
|
|
4,980
|
|
|
242,870
|
| ||||||||
Henry D. G. Wallace
|
|
171,667
|
|
|
148,723
|
|
|
13,664
|
|
|
334,054
|
| ||||||||
Alan J. Weber
|
|
96,667
|
|
|
148,723
|
|
|
10,060
|
|
|
255,450
|
| ||||||||
| 1 | This column reports the amount of cash compensation earned in 2017 for Board and committee service, including Board |
| NAME | AUDIT COMMITTEE ($) | BOARD GOVERNANCE COMMITTEE ($) | COMPENSATION COMMITTEE ($) | FINANCE COMMITTEE ($) | TECHNOLOGY STRATEGY & INNOVATION COMMITTEE ($) | ||||||||||||||||||||
Patrick W. Allender
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Phillip R. Cox
|
|
—
|
|
|
7,500
|
|
|
20,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Richard L. Crandall
|
|
—
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
15,000
|
| ||||||||||
Dr. Alexander Dibelius
|
|
—
|
|
|
7,500
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Dr. Dieter W. Düsedau
|
|
12,500
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
| ||||||||||
Gale S. Fitzgerald
|
|
12,500
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Gary G. Greenfield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
7,500
|
| ||||||||||
Robert S. Prather, Jr.
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
7,500
|
|
|
—
|
| ||||||||||
Rajesh K. Soin
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
7,500
|
| ||||||||||
Henry D. G. Wallace
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
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 2017, as further described above. Each director received 5,164 RSUs as of April 26, 2017, valued based on the closing price of our common shares on that date of $28.80. |
| 3 | This column represents dividend equivalents paid in cash on shares deferred by our directors. |
| 14 | | 2018 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. The majority of our directors have exceeded the ownership guidelines, while our directors who were appointed most recently are on track to achieve the ownership guidelines within the next few years.
| 2018 PROXY STATEMENT | | 15 |
CONSIDERATION OF DIRECTOR-NOMINEES
The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating shareholder nominations, the Board Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under “Board Diversity, Director Qualifications and Corporate Governance Guidelines.”
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:
education and experience, particular fields of expertise, and a representation that the shareholder is a holder of record; |
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.
IDENTIFYING AND EVALUATING NOMINEES FOR DIRECTORS
The Board Governance Committee considers many methods for identifying and evaluating director-nominees. The Board Governance Committee plans for any anticipated retirements or 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. See “Board Diversity, Qualifications and Corporate Governance Guidelines” below. Candidates may come to the attention of the Board Governance Committee through current Board members, professional search firms, shareholders or other persons. The Company has engaged a third-party search
firm, Korn Ferry, to assist the Board Governance Committee on an ongoing basis in identifying, evaluating and conducting due diligence on potential director nominees.
As described above, the Board Governance Committee considers properly submitted shareholder nominations for candidates for the Board. Following verification of the recommending shareholder’s status, recommendations are considered by the Board Governance Committee at a regularly scheduled meeting.
In February 2017, the Board adopted a proxy access provision as part of our Code of Regulations, which allows a shareholder, or a group of up to 20 shareholders in aggregate, owning 3% or more of our outstanding shares of common stock continuously for at least three years to nominate and
include in our annual meeting proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our Code of Regulations.
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
| 16 | | 2018 PROXY STATEMENT | |
CONSIDERATION OF DIRECTOR-NOMINEES |
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.
BOARD DIVERSITY, DIRECTOR QUALIFICATIONS AND CORPORATE GOVERNANCE GUIDELINES
In evaluating director-nominees, the Board Governance Committee considers many factors in order to strengthen the talent and capabilities of the Board and the committees, consistent with our Corporate Governance Guidelines and other criteria established by the Board. While the Board Governance Committee does not have a formal diversity policy, its general goal is to create a well-balanced Board that combines broad business and industry experience with comprehensive diversity characteristics and professional viewpoints. Together, these considerations enable us to appropriately pursue our strategic objectives domestically and abroad.
Qualifications for Board service have not been reduced to a checklist of specific standards or minimum qualifications, skills or qualities. Rather, the Board Governance Committee decides which nominees to recommend based on the facts and circumstances at the time. Applicable considerations include:
by contributing a variety of experiences, backgrounds, qualifications, technical expertise and other characteristics; and |
Final approval of any candidate is determined by the full Board. In addition, the performance and contributions of each incumbent director are assessed as part of the Board’s annual assessment program, as discussed above in “Board and Director Assessments.”
The Board Governance Committee believes that each of our directors fits the general qualifications described above and brings valuable experience, skills and qualifications to the Board. Accordingly, each of our current Board members (other than Mr. Prather and Mr. Wallace, whose terms will expire at the Annual Meeting) is nominated for election at the Annual Meeting. Detailed information about each director nominee’s background, experience and qualifications is provided in Proposal 1: Election of Directors.
Although Mr. Crandall has reached the retirement age under our current Board retirement policy, the Board Governance Committee and the Board have waived the retirement age for him as permitted under our Corporate Governance Guidelines. Mr. Crandall’s significant cybersecurity expertise continues to be an invaluable resource to the Company. The Board also felt that Mr. Crandall’s long-standing experience with the Company provided continuity on the Board as two directors retire.
| 2018 PROXY STATEMENT | | 17 |
PROPOSAL 1: ELECTION OF DIRECTORS
BOARD RECOMMENDATION
✓ | FOR the election of each of our director nominees |
The Board recommends that its eleven nominees for director be elected at the 2018 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 eleven nominees. At its April 2018 meeting, the Board plans to fix the number of directors at eleven. As such, proxies cannot be voted for a greater number of persons than the number of nominees named herein.
All of the director-nominees, except for Gerrard Schmid, our President and Chief Executive Officer, and Dr. Juergen Wunram, our Senior Vice President and Chief Operating Officer, 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 were previously elected by our shareholders, except for Mr. Schmid who was appointed to the Board in connection with being named our President and Chief Executive Officer on February 21, 2018.
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:71 DIRECTOR SINCE2011 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 Corporate Governance 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 Nominating and Corporate 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 and a member of our Finance Committee. | |
| 18 | | 2018 PROXY STATEMENT | |
PROPOSAL 1: ELECTION OF DIRECTORS |
Phillip R. Cox | ||
AGE:70 DIRECTOR SINCE2005 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 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 from 2004-2011. DIRECTOR QUALIFICATIONS: Mr. Cox’s 45 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. | |
| 2018 PROXY STATEMENT | | 19 |
PROPOSAL 1: ELECTION OF DIRECTORS |
Richard L. Crandall | ||
AGE:74 DIRECTOR SINCE1996 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 and chairs the Cyber Committee of the Board of the National Cybersecurity Center, Colorado Springs, Colorado (a public/private research and education partnership for cybersecurity), 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 20 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. | |
| 20 | | 2018 PROXY STATEMENT | |
PROPOSAL 1: ELECTION OF DIRECTORS |
Dr. Alexander Dibelius | ||
AGE:58 DIRECTOR SINCE2016 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 2015. Previously, he served in a number of capacities at Goldman Sachs from 1993 until 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. | |
Dr. Dieter W. Düsedau | ||
AGE:59 DIRECTOR SINCE2016 COMMITTEES: • Audit Committee • Compensation Committee | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Dr. Düsedau is a physicist and formerly a Director (Senior Partner) of McKinsey & Co. (a global management consulting firm) from 1988-2014, 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 the supervisory board of Kontron AG (an embedded computing technology company). DIRECTOR QUALIFICATIONS: Dr. Düsedau’s experience as a senior partner of a top management consulting firm, and his years of experience leading its strategy practice and telecommunications, IT, and media industry sectors, provide helpful insight and strengthen our Board’s proficiencies in these areas. He also brings significant transactional experience to our Board, and his historical knowledge from and continued service on the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board. | |
| 2018 PROXY STATEMENT | | 21 |
PROPOSAL 1: ELECTION OF DIRECTORS |
Gale S. Fitzgerald | ||
AGE:67 DIRECTOR SINCE1999 COMMITTEES: • Board Governance Committee (Chair) • Audit Committee | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: 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. 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 as Chairperson of our Board Governance Committee and a member of our Audit Committee. | |
Gary G. Greenfield | ||
AGE:63 DIRECTOR SINCE2014 COMMITTEES: • Chairman of the Board • Finance Committee • Technology Strategy and Innovation Committee | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Greenfield is thenon-executive Chairman of the Board of Diebold Nixdorf, Incorporated, in which capacity he has served since January 1, 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. 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. | |
| 22 | | 2018 PROXY STATEMENT | |
PROPOSAL 1: ELECTION OF DIRECTORS |
Gerrard B. Schmid | ||
AGE:49 DIRECTOR SINCE2018 President and Chief Executive Officer | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Schmid is the President and Chief Executive Officer of Diebold Nixdorf, Incorporated and has served in this capacity since February 2018. He was Chief Executive Officer of D+H Corporation (a global fintech company), from 2012-2017 and was President and CEO of D+H’s Filogix business unit (a mortgage and real estate technology service provider) from 2007-2012. 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 vital component of our Board discussions. | |
Rajesh K. Soin | ||
AGE:70 DIRECTOR SINCE2012 COMMITTEES: • Compensation Committee • Technology Strategy and Innovation Committee | PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Mr. Soin is Chairman of the Board and Chief Executive Officer of Soin, LLC, West Carrollton, Ohio (an investment holding company), and has held those positions since 1998. He served as Chairman of the Board and Chief Executive Officer of MTC Technologies, Inc. (a military defense systems company), from 2002-2008.
DIRECTOR QUALIFICATIONS: Mr. Soin’s experience as an entrepreneur is a tremendous asset. Mr. Soin has extensive experience in India, where we continue to focus on growth in its emerging market, and his engineering and software development background brings additional technical expertise to our Board. Further, Mr. Soin’s significant government contracting experience as the founder and Chairman of MTC Technologies Inc., a NASDAQ listed company before being acquired by BAE Systems, provides additional perspective in helping us grow our security business. | |
-24-
| 2018 PROXY STATEMENT | | 23 |
|
|
Mr. Wallace 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 August 2013.
Mr. Wallace currently is a director of Lear Corporation, Southfield, Michigan (an automotive components company), where he has served as a director since 2005 and asnon-executive Chairman of the Board since August 2010. Mr. Wallace 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, Inc., New York, New York (a financial guarantee insurance holding company) from 2004 until March 2013.
Director Qualifications:
Mr. Wallace’s experience in various senior leadership positions, including Chief Financial Officer of Ford Motor Company and President and Chief Executive Officer of Mazda Motor Corporation, bring a broad understanding of managing a global business. Further, Mr. Wallace’s financial expertise, extensive experience in Europe, Latin America and Asia, and his demonstrated leadership on the boards of several publicly traded companies, is a tremendous asset to our Board 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.
Alan J. Weber | ||
•Finance Committee (Chair) •Compensation Committee |
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: 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 insurance services company, brings extensive financial expertise to our Finance Committee.
| |
-25-
| ||
AGE:59
Chief Operating Officer |
PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE: Dr.
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
| |
| 24 | | 2018 PROXY STATEMENT | |
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, 2016,2017, 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 | |||||||||
Common Shares | BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 10.23 | % | |||||||||
Common Shares | SouthernSun Asset Management, LLC 175 Toyota Plaza, Suite 800 Memphis, TN 38103 | 6,974,7592 | 9.18 | % | ||||||||
Common Shares | Atlantic Investment Management, Inc. 666 Fifth Avenue New York, New York 10103 | 6,100,0003 | 8.03 | % | ||||||||
Common Shares | The Vanguard Group 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 8.01 | % | |||||||||
Common Shares | GAMCO Investors, Inc., et al. One Corporate Center Rye, New York 10580 | 5,659,9975 | 7.45 | % | ||||||||
|
| |||||||||||
| 1 | Information regarding share ownership was obtained from the Schedule 13G/A filed on January |
| 2 | Information regarding share ownership was obtained from the Schedule 13G filed on February 14, 2018 by SouthernSun Asset Management, LLC. SouthernSun Asset Management, LLC has sole voting power over 6,477,919 of our common shares and sole dispositive power over 6,974,759 of our common shares. |
| 3 | Information regarding share ownership was obtained from the Schedule 13D/A filed on March 7, 2018 by Atlantic Investment Management, Inc. Atlantic Investment Management, Inc. has sole voting power over 5,248,987 of our common shares and sole dispositive power over 6,100,000 of our common shares. Atlantic Investment Management, Inc. serves as the investment advisor and has sole voting power over 5,248,987 of our common shares and sole dispositive power over all of our common shares owned by the following parties: (i) AJR International Master Fund, Ltd., a British Virgin Islands company, owns 401,355 of our common shares; (ii) Cambrian Master Fund, Ltd., a British Virgin Islands company, owns 3,000,225 of our common shares; (iii) Cambrian Global Master Fund, Ltd., a British Virgin Islands company, owns 1,205,552 of our common shares; and (iv) 1,492,838 of our common shares are held in one or more other accounts. |
| 4 | Information regarding share ownership was obtained from the Schedule 13G/A filed on February 9, |
Information regarding share ownership was obtained from the Schedule 13D/A filed jointly by GAMCO Investors Inc., et al, on November 22, 2016. The entities of GAMCO Investors Inc., et al., that hold our common shares reported their beneficial ownership as follows: (i) Gabelli Funds, LLC has sole voting and dispositive power over 1,703,500 of our common shares; (ii) GAMCO Asset Management Inc. has sole voting power over 3,657,097 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 |
| 2018 PROXY STATEMENT | | 25 |
| 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. |
|
-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.
26, 2018. 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 | ||||||||||||||||||||
| DIRECTORS AND NOMINEES: |
COMMON SHARES BENEFICIALLY OWNED1 |
STOCK OPTIONS EXERCISABLE | PERCENT OF CLASS | ||||||||||||||||||||||
Patrick W. Allender | 3,162 | — | * | — | — |
|
3,162
|
|
|
—
|
|
|
*
|
| |||||||||||
Phillip R. Cox | 4,504 | — | * | — | — |
|
5,164
|
|
|
—
|
|
|
*
|
| |||||||||||
Richard L. Crandall | 17,289 | — | * | — | — |
|
22,453
|
|
|
—
|
|
|
*
|
| |||||||||||
Dr. Alexander Dibelius | — | — | — | — | — |
|
5,164
|
|
|
—
|
|
|
*
|
| |||||||||||
Dr. Dieter W. Düsedau | — | — | — | — | — |
|
—
|
|
|
—
|
|
|
*
|
| |||||||||||
Gale S. Fitzgerald | 9,251 | — | * | — | — |
|
18,251
|
|
|
—
|
|
|
*
|
| |||||||||||
Gary G. Greenfield | 11,200 | — | * | — | — |
|
16,364
|
|
|
—
|
|
|
*
|
| |||||||||||
Robert S. Prather, Jr. | 3,162 | — | * | — | — | ||||||||||||||||||||
Robert S. Prather
|
|
20,564
|
2
|
|
—
|
|
|
*
|
| ||||||||||||||||
Gerrard B. Schmid
|
|
—
|
3
|
|
—
|
|
|
*
|
| ||||||||||||||||
Rajesh K. Soin | 14,200 | — | * | — | — |
|
19,364
|
|
|
—
|
|
|
*
|
| |||||||||||
Henry D. G. Wallace | 3,662 | — | * | — | — | ||||||||||||||||||||
Henry D.G. Wallace
|
|
49,114
|
2
|
|
—
|
|
|
*
|
| ||||||||||||||||
Alan J. Weber | 12,700 | — | * | — | — |
|
17,864
|
|
|
—
|
|
|
*
|
| |||||||||||
Named Executive Officers: | |||||||||||||||||||||||||
Andreas W. Mattes Chief Executive Officer | 207,590 | 452,847 | * | — | — | ||||||||||||||||||||
Dr. Juergen Wunram
|
|
4,913
|
3
|
|
25,118
|
|
|
*
|
| ||||||||||||||||
Christopher A. Chapman Senior Vice President and Chief Financial Officer | 47,7832 | 82,791 | * | — | — |
|
30,773
|
3,4
|
|
137,864
|
|
|
*
|
| |||||||||||
Eckard Heidloff President | — | — | * | ** | — | ||||||||||||||||||||
Andreas W. Mattes5
|
|
207,078
|
|
|
852,848
|
|
|
1.38
|
%
| ||||||||||||||||
Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary | 31,985 | 22,457 | * | — | — | | 14,921 | 3 |
|
53,409
|
|
|
*
|
| |||||||||||
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 | ** | — | ||||||||||||||||||||
Dr. Ulrich Näher
|
|
3,919
|
3
|
|
16,550
|
|
|
*
|
| ||||||||||||||||
Olaf Heyden
|
|
3,919
|
3
|
|
16,550
|
|
|
*
|
| ||||||||||||||||
Eckard Heidloff5
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||
All Current Directors and Current Executive Officers as a Group(18)
|
|
253,984
|
|
|
310,608
|
|
|
*
|
| ||||||||||||||||
| * | Less than 1% |
| 1 |
|
Director amounts do not include shares deferred by ournon-employee directors under the Deferred Compensation Plan No. 2 for Directors. |
| 2 | Includes all shares deferred under the Deferred Compensation Plan |
| 26 | | 2018 PROXY STATEMENT | |
BENEFICIAL OWNERSHIP |
| 3 | Beneficial ownership excludes unvested RSUs that will not vest |
-28-
| 4 | 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 Messrs. Mattes and Heidloff on their respective separation dates from the Company. |
Section 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, 2016,2017, 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 one Form 4 that was unintentionally filed late on behalf of our director Mr. Cox in May 2016 for the sale of 3,534 of our common shares..
| 2018 PROXY STATEMENT | | 27 |
-29-
APPOINTMENT OF OUR INDEPENDENT
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD RECOMMENDATION
|
|
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, 2018. 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 2018 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 20162017 and 2015.2016.
| 2016 | 2015 | |||||||||||
|
2017
|
2016
| ||||||||||
Audit Fees1 | $7,490,000 | $4,624,000 |
$
|
7,792,000
|
|
$
|
7,490,000
|
| ||||
Audit-Related Fees | — | — |
|
—
|
|
|
—
|
| ||||
Tax Fees2 | 344,000 | $193,000 |
$
|
1,045,000
|
|
$
|
344,000
|
| ||||
All Other Fees3 | 718,000 | — |
$
|
1,024,000
|
|
$
|
718,000
|
| ||||
| ||||||||||||
Total | $8,552,000 | $4,817,000 |
$
|
9,861,000
|
|
$
|
8,552,000
|
| ||||
| ||||||||||||
| 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. |
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.
| 28 | | 2018 PROXY STATEMENT | |
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR 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 BoardRECOMMENDATION OF THE BOARD
The Board recommends a voteFOR the approval of this Proposal 2.
-30-
| 2018 PROXY STATEMENT | | 29 |
PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS,
BASIS, OF OUR NAMED EXECUTIVE OFFICER
COMPENSATION
BOARD RECOMMENDATION
|
|
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 2018 Annual Meeting, the next such vote will occur at our 2019 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 BoardRECOMMENDATION OF THE BOARD
The Board recommends a voteFOR the approval of this Proposal 3.
-31-
| 30 | | 2018 PROXY STATEMENT | |
PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED
2017 EQUITY AND PERFORMANCE INCENTIVE PLAN
BOARD RECOMMENDATION
|
|
We are asking our shareholders to approve amendments to our 2017 Equity and Performance Incentive Plan (which we refer to as the 2017 Plan). The amendments were adopted by our Board on February 1, 2018 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 amendments would authorize an additional 1,150,000 common shares for issuance under the 2017 Plan
effective April 25, 2018. The amendments also update the 2017 Plan to reflect certain changes in law due to the Tax Cuts and Jobs Act of 2017, which, among other things, eliminated the deductibility of performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code), for awards made after November 2, 2017. The amendments would not make any other changes to the 2017 Plan.
Our shareholders originally approved the 2017 Plan at the 2017 Annual Meeting of Shareholders; the 2017 Plan authorized the issuance of an aggregate of 4,941,117 common shares under the plan. As of February 20, 2017, 1,541,93426, 2018, 2,278,584 common shares remain available for grants under the 19912017 Plan. If our shareholders approveWith the proposed 1,150,000 share increase, approximately 3,428,584 will be available for issuance under the 2017 Plan, no future awards will be granted underwhich represents approximately 4.5% of our 75,943,793 shares outstanding as of February 26, 2018. 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. AwardsPlan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for the next year. Therefore, if Proposal 4 is not approved by our shareholders, we believe our ability to attract, motivate and retain the talent we need to compete in our industry would be seriously and negatively impacted and this could affect our long-term success.
The 2017 Plan serves as a critical component of the overall compensation package that we offer our employees andnon-employee Board members. We believe that increasing the number of shares issuable under the 1991 Plan that are forfeited or expire without being exercised, paid or delivered will not be available for awards under the 2017 Plan. If the 2017 Plan is 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 with regard to retaining and attracting highly qualified individuals upon whom, in large measure, our future growth and success depend. While one alternative to using equity awards would be to significantly increase cash compensation, we do not approved, thenbelieve this would be practical or advisable at this time. Any significant increase in cash compensation in lieu of equity awards would reduce the 1991 Plan will continuecash otherwise available for operations and investment in accordance with its terms as previously approved byour business. Furthermore, we do not believe a more cash-oriented program would have the same long-term retention value or serve to align employees’ interests to those of our shareholders until its expiration.as well as a program that includes equity.
The affirmative vote of a majority of the shares of our common stock represented and voting at the Annual Meeting is required to approve the amendments 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 changes 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.
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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 not 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 26, 2018, 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.
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Detrimental Activity and Clawback: The 2017 Plan contains provisions that subject all awards under it to the terms of any recoupment or clawback policy required by law or applicable stock exchange requirement or adopted and in effect at the Company. The 2017 Plan also provides that in the event a participant participates in detrimental activity, as defined in the 2017 Plan, we have the right to have awarded shares returned.
Flexibility to Qualify for Section 162(m) Performance-Based Compensation Tax Treatment: The 2017 Plan provides us with the flexibility, when the Compensation Committee deems that to be in our best interests, to grant awards intended to qualify for the performance-based compensation exemption from the limitation on corporate tax deductions in Section 162(m) of the Code.
Minimum Vesting Period:The 2017 Plan requires that nearly all awards granted under it be subject to aone-year minimum vesting period.
Management Objectives and Goals: The 2017 Plan updates and expands the performance criteria and methodology (which we refer to as management objectives) used to develop performance goals for awarding performance-based awards, including those intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code.
No Discounted Options or Stock Appreciation Rights:The 2017 Plan prohibits the grant of options or stock appreciation rights with an exercise price less than the fair market value of our common shares on the grant date.
No Repricing of Options or Stock Appreciation Rights:The 2017 Plan generally prohibits the repricing of options or stock appreciation rights (outside of certain corporate transactions or adjustment events described in the 2017 Plan) without shareholder approval.
Change in Control Definition: In 2015, we revised and conformed the definition that we use for “change in control” across our executive change in control agreements. The 2017 Plan includes this definition of “change in control” so that our agreements and this 2017 Plan provide for consistency and uniformity in the event of a change in control.
Independent Committee Administration:Awards to our named executive officers under the 2017 Plan will be granted by a committee composed entirely of independent directors.
Term of the 2017 Plan:No awards may be granted under the 2017 Plan more than ten years from the date of initial shareholder approval.approval of the plan.
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We are committed to sound equity compensation practices because we recognize that equity compensation awards dilute shareholder equity. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of shareholder interests. For purposes of evaluating our equity compensation program, shareholders may wish to consider two metrics: historical burn rate and overhang.
Historical burn rate: Our historical burn rate is equal to the number of shares subject to equity awards granted during a period, in proportion to our outstanding shares. Our burn rate for 20162017 was 2.28%4.27%, and our three-year average burn rate for 20142015 through 20162017 was 2.38%3.04%.
Overhang: Our overhang is the number of shares subject to unvested equity awards outstanding atyear-end plus the number of shares available for future grants of equity awards in proportion to our shares outstanding atyear-end. As of the end of 2016, our overhang was 10.58%.
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number of shares available for future grants of equity awards in proportion to our shares outstanding atyear-end. As of the end of 2017, our overhang was 14.46%. |
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, 2017.26, 2018. As of that date, there were approximately 75,347,46875,943,852 of our common shares outstanding. IfWe replaced the 1991 Plan with the 2017 Plan is approved, weat last year’s 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 | 6,001,492 shares or of our outstanding shares | |
Outstanding stock options under the 1991 Plan and 2017 Plan | 2,642,526 shares or our outstanding shares | |
Weighted average exercise price of outstanding options under the 1991 Plan and 2017 Plan | $ | |
Weighted average remaining term of outstanding options under the 1991 Plan and 2017 Plan | 8 years | |
Total shares subject to outstanding awards under the 1991 Plan and 2017 Plan | 8,644,018 shares or our outstanding shares | |
Total shares available for future awards under the 1991 Plan and 2017 Plan | 2,278,584 | |
Current overhang percentage based on total number of shares subject to outstanding awards under the 1991 Plan and 2017 Plan | 14.38% | |
Additional shares requested under amendment to the 2017 Plan | 1,150,000 | |
Potential dilution of | 1.51% | |
Total potential fully-diluted overhang under the 1991 Plan and the | 12,072,602 shares or |
Based on the closing price on the NYSE for our common shares on February 20, 2017,26, 2018, of $30.10$15.40 per share, the aggregate market value as of that date of the 4,941,1171,150,000 additional common shares requested for issuance under the amended 2017 Plan was $148,727,622.$17,710,000.
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 we also granted 134,869 shares 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,amendments, 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 our proposal forthis proposal. We have also considered shareholder feedback in determining an appropriate number of shares to seek to add to the 2017 Plan.Plan, and are mindful of the ratio of our stock-based compensation to our performance over time.
If the amendments to the 2017 Plan isare 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,one year, based on our historic grant rates and the approximate current stock price, but could
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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;
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in payment for other share-based awards; or
in payment of dividend equivalents paid with respect to awards made under the 2017 Plan
will not exceed in the aggregate 4,941,1176,091,117 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 share underlying the award will be available for future grant. Common shares covered by an award are not counted as used unless and until they are issued or transferred. In the event that withholding tax liabilities arising from an award other than an option or stock appreciation right are satisfied by the tendering of common shares or by the withholding of common shares by us, the common shares so tendered or withheld shall be added to the common shares available for awards under the 2017 Plan. For the avoidance of doubt, the following will not again become available for issuance under the 2017 Plan: (i) any common shares withheld in respect of taxes upon settlement of an option or stock appreciation right, (ii) any common shares tendered or withheld to pay an exercise price, (iii) any common shares subject to a stock appreciation right that are not issued in connection with its stock settlement on exercise thereof, and (iv) any common shares reacquired by us on the open market or otherwise using cash proceeds.
Unless terminated earlier by the Board, the 2017 Plan will be in effect until all shares subject to it have been purchased or acquired. In no event will any award under the 2017 Plan be granted on or after the tenth anniversary of its effective date.
Limits on Awards:The 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;6,091,117; 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 1,2001,000 people) and ournon-employee directors (approximately 11(9 people) may be selected by the Board to receive benefits under the 2017 Plan. We refer to those individuals selected as “participants.”
Options: An option entitles the participant to purchase a common share at the exercise price. The Compensation Committee may grant incentive stock options,non-qualified stock options, or a combination of both, but incentive stock options cannot be granted tonon-employees. Dividends or dividend equivalents are not payable on options. Each option will be evidenced by an award agreement that specifies the number of common shares covered by the option, the exercise price and term of the option, any conditions to the exercise and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The exercise price
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for an option will not be less than 100% of the common shares’ fair market value on the date of grant (or,
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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 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
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of performance achieved at the end of the performance period. Each performance share or performance unit award will be evidenced by an award agreement that specifies the number of performance shares or performance units, the performance objectives (which may include management goals), the performance period applicable to the award, and any other terms and conditions that the Compensation Committee specifies and are consistent with the 2017 Plan. The amount payable may be paid in cash, common shares or a combination of both, and the award agreement may so specify or grant to the participant or retain to the Compensation Committee the right to elect among those alternative. For purposes of qualifying a grant of performance shares or performance units as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee may set restrictions based on the achievement of management goals.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,
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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:
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The Compensation Committee will use the management objectives to set “management goals” for a set performance period. The Compensation Committee may provide that an evaluation of the management goals shall include or exclude any of the following items: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (4) any reorganization and restructuring programs; (5) acquisitions or divestitures; (6) unusual nonrecurring or extraordinary items identified in our audited financial statements, including footnotes or in management’s discussion and analysis in our annual report; (7) foreign exchange gains and losses; (8) changes in our fiscal year; and (9) any other specific unusual or nonrecurring events, or objectively determinable category thereof. In the case of an award intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, any such item will be prescribed in a form and at a time that meets the requirements of Section 162(m) of the Code.
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.
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Administration: The Board delegates authority to administer the 2017 Plan to the Compensation Committee or any other committee so designated by the Board. Unless otherwise determined by the Board, the Compensation Committee will consist of two or morenon-employee directors who are also “outside directors” within the meaning of Section 162(m) of the Code.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, and the prices per share applicable thereto, are subject to adjustment in the event of stock dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations, liquidations, issuances of rights or warrants, and similar events. In the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the 2017 Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require the surrender of all awards so replaced. The Compensation Committee may also make or provide for such adjustments in the numbers of shares authorized for issuance under the 2017 Plan as the Compensation Committee may determine appropriate to reflect any transaction or event described above.
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Change in Control: Under the 2017 Plan, a “Change in Control” generally means the occurrence of any of the following events: (1) when any person, entity or group acquires beneficial ownership of 30% or more of our outstanding common shares or voting power of our stock entitled to vote to elect directors, subject to limited exceptions described in the 2017 Plan; (2) a turnover of a majority of the incumbent Board members as of the date of the 2017 Plan, subject to limited exceptions described in the 2017 Plan; (3) consummation of certain corporate transactions or a sale or other disposition of all or substantially all of our assets, subject to limited exceptions described in the 2017 Plan; or (4) when our shareholders approve a complete liquidation or dissolution of the Company.
Tax Withholding: To the extent that we are required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a participant or other person under this 2017 Plan, and the amounts available to us for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to us for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the
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Compensation Committee) may include relinquishment of a portion of such benefit. Participants must also make such arrangements as we may require for the payment of any withholding tax obligations that may arise in connection with the disposition of shares acquired upon the exercise of option rights. In no event, however, may we accept common shares for the payment of taxes in excess of required tax withholding rates. However, in the discretion of the Compensation Committee, a participant or such other person may surrender common shares owned for more than six months to satisfy any tax obligations resulting from any such transaction.
Detrimental Activity: Any award agreement may provide that if a participant, either during employment by us or any of our subsidiaries or within a specified period after termination of such employment, engages in any “Detrimental Activity” (as defined in the 2017 Plan), and the Compensation Committee so finds, upon notice of such finding, the participant must unless otherwise provided in the award agreement:
| (A) | Return to us, in exchange for payment by us of any amount actually paid therefor by the participant, all |
| (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.
| 2018 PROXY STATEMENT | | 37 |
PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
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 on January 1, 2017.2018. This summary, which is presented for the information of shareholders considering how to vote on this Proposal 4 and not for 2017 Plan participants, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes, and Code Section 409A taxes), state, local or foreign tax consequences.
Non-qualified Stock Options: In general, (i) no income will be recognized by a participant at the time anon-qualified option right is granted; (ii) at the time of exercise of anon-qualified option right, ordinary income will be recognized by the optionee in an amount equal to the difference between the option price paid for the shares and the fair market value of the shares, if unrestricted, on the date of exercise; and (iii) at the time of sale of shares acquired pursuant to the exercise of anon-qualified option right, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.
Incentive Stock Options: No income generally will be recognized by a participant upon the grant or exercise of an incentive stock option (ISO). The exercise of an ISO, however, may result in alternative minimum tax liability. If common shares are issued to the optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of such shares is made by the participant within two years after the date of grant or within one year after the transfer of such shares to the participant, then upon sale of such shares, any amount realized in excess of the option price will be taxed to the participant as a long-term capital gain and any loss sustained will be a long-term capital loss.
If common shares acquired upon the exercise of an ISO are disposed of prior to the expiration of either holding period described above, the participant generally will recognize ordinary income in the year of disqualifying disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the option price paid for such shares. Any
further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
Stock Appreciation Rights (SARs): No income will be recognized by a participant in connection with the grant of a SAR. When 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 that is taxable as ordinary income to the participant.
Restricted Stock Units (RSUs): TheGenerally, 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
| 38 | | 2018 PROXY STATEMENT | |
PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
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 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 new tax law also provides that any named executive officer 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 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, eliminates 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 amendments 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 2018 fiscal year or in future periods due to the discretionary nature of the 2017 Plan, we did award our annual equity grants for fiscal 2018 on February 1, 2018. The largest portion of our equity grants are typically made during this annual February
grant process, and if the proposed increase in shares available under the 2017 Plan had been in effect in February 2018, we believe that the awards granted to our executive officers and employees would not have been different. We also made broad-based awards to certain employees during 2017 under the 2017 Plan.
| 2018 PROXY STATEMENT | | 39 |
PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
The following table sets forth with respect to each named executive officer listed in the Summary Compensation Table on page 63 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 26, 2018 (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.
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. (#)
| ||||||||||||||||||||||||||||
Dr. Juergen Wunram
Senior Vice President and Chief Operating Officer |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,953
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
26,717
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
19,084
|
|
|
38,167
|
|
|
76,334
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Christopher A. Chapman Senior Vice President and Chief Financial Officer |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,572
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
23,007
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
16,434
|
|
|
32,867
|
|
|
65,734
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Jonathan B. Leiken Senior Vice President, Chief Legal Officer and Secretary |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,517
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
| �� —
|
|
|
14,254
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
10,182
|
|
|
20,363
|
|
|
40,726
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Dr. Ulrich Näher Senior Vice President, Systems |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,278
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
17,603
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
12,574
|
|
|
25,147
|
|
|
50,294
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Olaf Heyden Senior Vice President, Services |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,278
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
17,603
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
12,574
|
|
|
25,147
|
|
|
50,294
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
All current executive officers as a group |
|
—
|
|
|
—
|
|
|
—
|
|
|
193,825
|
|
|
18.75
|
| |||||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
112,688
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
80,492
|
|
|
160,983
|
|
|
321,966
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
All currentnon-employee directors as a group
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,804
|
|
|
—
|
|
|
—
|
| ||||||||||||
All employees, excluding current executive officers, as a group
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153,920
|
|
|
18.75
|
| ||||||||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
966,160
|
|
|
—
|
|
|
—
|
| |||||||||||||
|
237,583
|
|
|
475,165
|
|
|
950,330
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
| 1 | These columns present information about performance-based shares awarded during 2017 and 2018 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 and 2018 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. |
| 40 | | 2018 PROXY STATEMENT | |
PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN |
EQUITY COMPENSATION PLAN INFORMATION
The following table reflects information as of December 31, 20162017 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
|
NUMBER OF SECURITIES REMAINING AVAILABLE FOR UNDER EQUITY PLANS (EXCLUDING SECURITIES REFLECTED
| |||||||||||||||||||||
Equity compensation plans approved by security holders | ||||||||||||||||||||||||
Stock options | 1,689,172 | $31.98 | N/A |
| 2,294,781
|
|
| $29.68
|
|
| N/A
|
| ||||||||||||
Restricted stock units | 1,154,015 | N/A | N/A |
| 1,278,959
|
|
| N/A
|
|
| N/A
|
| ||||||||||||
Performance shares | 1,241,403 | N/A | N/A |
| 2,500,734
|
|
| N/A
|
|
| N/A
|
| ||||||||||||
Non-employee director deferred shares | 125,800 | N/A | N/A |
| 125,800
|
|
| 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 |
| 6,201,089
|
|
| $29.68
|
|
| 4,800,000
|
| ||||||||||||
| ||||||||||||||||||||||||
In column (b), the weighted-average exercise price is only applicable to 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 AMENDMENTS TO THE 2017 PlanPLAN
A favorable vote of the majority of votes cast on the matter is necessary for approval of the amendments 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 amendments to the 2017 Plan is passed.are 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 amendments 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.
-43-
PROPOSAL 5: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO IMPLEMENT A MAJORITY VOTING STANDARD IN UNCONTESTED DIRECTOR ELECTIONS
|
|
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.
-45-
PROPOSAL 6: APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING IN DIRECTOR ELECTIONS
| 2018 PROXY STATEMENT | | 41 |
Board
Recommendation:
☑FOR
Proposal 6
Under this Proposal 6, we are asking our shareholders to approve an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections. Under Ohio law, because our Amended Articles of Incorporation currently do not address cumulative voting, our shareholders can cumulate votes in director elections at any meeting held for that purpose, whether or not the election is contested and subject to proper notice. Cumulative voting enables a shareholder to cumulate his or her voting power by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by the shareholder, or distributing those votes among two or more candidates as the shareholder sees fit. Thus, with cumulative voting, a shareholder can cast all of his, her or its votes “for” one candidate or a small group of candidates, instead of voting either “for” or “withheld” on each candidate.
Consequently, a candidate may be elected even if he or she was not supported by the holders of a majority of our shares. For example, because thirteen directors are to be elected at the Annual Meeting, a shareholder holding approximately 6% of our outstanding common shares, by merely cumulating and casting votes for a single director candidate, could elect one director in a contested election, even if the candidate is not supported by nearly 94% of shareholders, based on 75,347,468 common shares outstanding on February 20, 2017 and assuming approximately 80% of the outstanding common shares are voted at the Annual Meeting.
As discussed above in Proposal 5, we are asking shareholders to implement a majority voting policy in uncontested director elections. Unlike cumulative voting, this majority voting policy seeks to hold Directors accountable to the holders of amajority of the shares voting. Our Board of Directors believes that cumulative voting is inconsistent with the objective of accountability, as it potentially allows a shareholder that holds significantly less than a majority of shares to elect one or more Directors. Our intent is that a majority voting standard, together with proxy access, will give all shareholders, including minority shareholders, the opportunity to express their opinions and actively participate in elections, while limiting the ability of a minority shareholder to have a disproportionate influence on director elections.
In addition, cumulative voting and majority voting are procedurally incompatible, and attempting to combine them in the same election of directors could create confusion and uncertainty in the director election process. If, for example, both majority voting and cumulative voting applied in the same election of directors, it would be very possible that a number of directors could receive more “against” votes than “for” votes, causing the Board to have multiple vacancies.
In February 2017, our Board took the positive step of providing our long-term shareholders with the right to nominate a limited number of director candidates and to have those nominees included in our proxy statement and proxy card for the annual meeting of shareholders, subject to the processes and requirements stated in our newly adopted proxy access provision stated in our Code of Regulations. The proxy access provision is summarized on page 17 of this proxy statement. As our Board considered the adoption of proxy access, the Board also recognized that the existing right of our shareholders to cumulate their votes in the election of directors could create a disproportionate amount of influence for the shareholders that may nominate directors under our new proxy access provision. While we have historically maintained cumulative voting as a mechanism for shareholders with less than a majority of shares to influence Director elections, the Board believes that this right is no longer appropriate in light of our proxy access procedure.
For these reasons, the Board determined that it is appropriate to eliminate cumulative voting in connection with amending the Company’s Amended Articles of Incorporation to adopt a majority voting standard. Accordingly, on March 3, 2017, the Board adopted resolutions approving and recommending to shareholders the adoption of an amendment to the Company’s Amended Articles of Incorporation to eliminate cumulative voting in director elections, subject to approval of Proposal 5.
-46-
The actual text of the proposed amendment to the Company’s Amended Articles of Incorporation is attached to this Proxy Statement asAppendix B. The amendment to the Amended Articles of Incorporation will become effective upon filing a Certificate of Amendment with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval), subject to approval of Proposal 5.
Shareholder Approval
The affirmative vote of shares representingtwo-thirds of our common shares outstanding and entitled to vote at the Annual Meeting is required to approve the proposed amendment. Abstentions and brokernon-votes will have the same effect as votes cast against this Proposal 6.
As noted above, if this Proposal 6 is approved by our shareholders at the Annual Meeting, it will be implemented only if Proposal 5 is also approved. Accordingly, even if this Proposal 6 is approved by our shareholders at the Annual Meeting, it will not be implemented unless Proposal 5 is also approved by our shareholders at the Annual Meeting.
Recommendation of the Board
The Board recommends a voteFOR the approval of this Proposal 6.
-47-
PROPOSAL 7: ADVISORY VOTE ON THE FREQUENCY OF THE SHAREHOLDER ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
|
|
We believethat say-on-pay votes should be conducted every year so that our shareholders are provided with the opportunity to frequently express their views on our executive compensation programs and practices. The Compensation Committee values the opinions expressed by shareholders insay-on-pay votes and considers the outcome of these votes in making decisions on named executive officer compensation.
The frequency of the shareholder advisory vote on named executive officer compensation receiving the greatest number of votes (every year, every two years or every three years) will be considered the frequency recommended by shareholders.
Recommendation of the Board
The Board recommends that shareholders vote to hold future shareholder advisory voteson say-on-pay 1 YEAR. Shareholders are not voting to approve or disapprove the Board’s recommendation. Shareholders may choose among the four choices (1 year, 2 years, 3 years or abstain) set forth above.
-48-
EXECUTIVE COMPENSATION MATTERS
The Compensation Committee has reviewed and discussed with management the following “Compensation“Compensation Discussion and Analysis”Analysis” section of this proxy statement.Proxy Statement. Based on our review and discussions, we recommendrecommended to the Board that the “Compensation“Compensation Discussion and Analysis”Analysis” be included in (or incorporated by reference as applicable) in our Annual Report on Form10-K for the year ended December 31, 20162017 and this proxy statement.Proxy Statement.
The foregoing report was submitted by the Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act.
Phillip R. Cox, Chair
Dr. Dieter Düsedau
Rajesh K. Soin
Alan J. Weber
Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Committee, or the Committee, has oversight responsibility for the development and administration of our executive compensation policies and programs. This “Compensation Discussion and Analysis” describes the material components of our executive pay program for our Named Executive Officers,named executive officers, or the NEOs, identified below, and explains how and why the Committee arrived at specific compensation policies and decisions for our NEOs in 2016.2017.
This past year, two of our NEOs departed. Andreas W. Mattes stepped down as our President and Chief Executive Officer on December 13, 2017, and Eckard Heidloff resigned from his position as President effective March 31, 2017. Both received payments in accordance with their respective separation
agreements which are summarized on page 76 of this Proxy Statement. Accordingly, certain tables and Dr. Jürgen Wunram both joined our company following our combination with Wincor Nixdorfdisclosures in August 2016. Because the acquisition occurred in the middle of the year,thisCompensation Discussion and Analysis will exclude Messrs. Mattes and Heidloff because the domination and profit and loss transfer agreement with Diebold Nixdorf AG (f/k/a Wincor Nixdorf)their compensation was not effective until February 2017, the compensation with respect to these NEOs was largely determined by the Supervisory Boardterms of Wincor Nixdorf (which is similar totheir agreements, rather than the board of directors for a U. S. company) prior to the acquisition. In addition, each of these NEOs had service agreements, summarized in this proxy statement on page 76-77, that contained contractual provisions related to their compensationCompensation Committee’s determination following ouryear-end performance results.
Mr. Christopher A. Chapman, our Senior Vice President and continued in effect following the acquisition. Although Mr. Heidloff has resigned effective March 31, 2017, we anticipate thatChief Financial Officer, and Dr. Wunram’s compensation structure will be similar to the other NEOs for 2017.
Therefore, with the exceptionJuergen Wunram, our Senior Vice President and Chief Operating Officer, served as InterimCo-Presidents andCo-CEOs of the 2016 Q5 VTI award discussed below,Office of the Committee did not make decisions with respectChief Executive from December 13, 2017 to February 21, 2018. Mr. Heidloff’s or Dr. Wunram’s 2016 compensation,Gerrard Schmid joined the Company as President and this Compensation Discussion and Analysis should be read in that context.Chief Executive Officer on February 21, 2018.
Dr. Juergen Wunram* | Senior Vice President and Chief | |
Christopher A. | Senior Vice President and Chief Financial Officer | |
Andreas W. Mattes | Former President and Chief Executive Officer | |
Jonathan B. Leiken | Senior Vice President, Chief Legal Officer and Secretary | |
Dr. | Senior Vice President, | |
Olaf Heyden | Senior Vice President, |
Eckard Heidloff |
Former President |
Dr. Wunram |
| 42 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
|
-49-
To assist shareholders in finding important information, this “Compensation Discussion and Analysis” is organized as follows:
| EXECUTIVE SUMMARY | 43 | |||
43 | ||||
43 | ||||
45 | ||||
46 | ||||
| 48 | |||
49 | ||||
2017 NEO Compensation | 49 | |||
Determination of CEO and InterimCo-Presidents’ andCo-CEOs’ Compensation | 52 | |||
Annual Cash Bonus | ||||
| PAGE | ||||
| 56 | ||||
| 56 | ||||
Long-Term | ||||
| 56 | ||||
Long-Term | 57 | |||
| ||||
-50-
Executive Summary2017 COMPANY HIGHLIGHTS
In 2016 we transformedDuring 2017, Diebold Nixdorf launched the companyDN2020 integration and laidtransformation program and realized more than $100 million of cost savings during the foundation for our future. We acquired Wincor Nixdorf to improve our business portfolio, broaden our scale, expand our leadership in services and software, and increase our capacity to innovate and collaborate with customers. We also divested our North America Electronic Security business and launched two new strategic alliances in China. These strategic achievements have had a profound impact on us, as we have doubled the size of our company and have significantly enhanced our mix of revenue.
year. We continue to make progress on our integration, including compensation program adjustments and our cost synergy efforts are geared towards thedecisions to drive realization of scale effects inthose goals as quickly and efficiently as possible this past year. We rationalized the hardware businessmanufacturing footprint from a capacity of approximately 180,000 ATMs per year to approximately 100,000 ATMs per year and streamlining ourconsolidated approximately 25% of service parts depots across the globe. We introduced new mobility management services and workforce composition. Our sales team is fully aligned around our goals, quotaswon a number of retail contracts to modernize checkout solutions and account plans. We have made extensive changes to realign our sales organization to be closer to our customers, and we are investing in training so our sales executives can be best in class consultants to our customers on their digital journey.implement omni-channel retailing.
In the governance and compensation space, we expanded our Board to include two directors from the Wincor Nixdorf board of directors as well as our newly appointed COO more recently. We have engaged in extensive shareholder outreach around executive compensation matters, particularly given the complexity of the
compensation arrangements following the Wincor Nixdorf acquisition. Those discussions are detailed below. Finally, our Board took the positive step of adopting “proxy access” in our Code of Regulations in recognition of the growing trend to allow long-term shareholders to nominate a limited number of directors and to have those nominees included in our proxy statement and proxy card for the shareholders’ annual meeting. We are pleased to be in line with this best practice in corporate governance.
20162017Say-on-PaySAY-ON-PAY Vote and Shareholder EngagementVOTE AND SHAREHOLDER ENGAGEMENT
At our 2016 Annual Meeting2017 annual meeting of Shareholders,shareholders, the advisory vote to approve the executive compensation program for our NEOs received solid support (70.9%(95.9% of votes cast), but representedrepresenting a declinesignificant increase from previous years. Managementthe prior year. We value the input of our shareholders and the Committee were disappointed by this result. In response, we broadened our shareholder outreach effortsare committed to includemaintaining a dialogue with portfolio managers, corporate governance and executive compensation professionals from our largest shareholders. We sought to obtain their feedback, understand their positions, and consider necessary and appropriate actions for the future on our executive compensation plans and disclosures.
Weprofessionals. In 2017, we contacted shareholders which collectively represented approximately halfrepresenting more than 60% of the Company’sour outstanding shares. Employees from the company’sour Human Resources, Investor Relations and Legal departments had extensive and meaningful dialogue with 10 shareholders who collectively representingowned approximately 30%48% of our outstanding shares. The remaining shareholders we contacted indicated a meeting was not needed at this time. We also held meetings with two leading
| 2018 PROXY STATEMENT | | 43 |
EXECUTIVE COMPENSATION MATTERS |
proxy advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., to understand their views.
Shareholders and the proxy advisory firms notedprovided varying levels of concernfeedback related topay-for-performance alignment, incentive metrics, the clarity with which we discloseof our programs, anddisclosure, the impact of the Wincor Nixdorf acquisition and integration on our future executive compensation structure. AllWe considered this feedback, is being consideredas well as the results of last year’sSay-on-Pay proposal, for our future executive compensation program as we developcontinue to prioritize our efforts on delivering on our long-term strategic goals and bringing value to our shareholders. For example, the appropriate structure following the major acquisition of Wincor Nixdorf. In the spirit of immediate“Compensation Discussion and continuous governance improvements, for this year’s CD&A the CommitteeAnalysis” disclosure was enhanced to make our compensation process clearer and more transparent, as discussed with shareholders. Our discussions focused on shareholder feedback related to disclosure clarity and transparency because these attributes are consistent with our corporate culture and business strategy. We focused on clear and transparent disclosure with regard to a number of key issues to enhance our shareholders’ understanding of our programs including, but not limited to,pre-acquisition incentives for legacy compensation programs and achievements related to the integration of Wincor Nixdorf, executives, performance goal disclosures for completed performance cycles and actual achievement against those goals, and actual compensation earned vs.versus approved targets. Such discussions also addressed certain governance topics around director succession and diversity initiatives of the Committee’s original approved targets.Board, as well as the structure and governance items related the 2017 Plan.
In addition to these outreach efforts, management met with fund managers who collectively held about 70%more than 75% of Diebold Nixdorf’s actively-managed shares during 2016.2017. Our recurring annual investor outreach activities are
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robust, and includenon-deal road shows, analyst meetings, investor conference presentations, phone calls andon-site investor meetings at our headquarters in North Canton, Ohio. We also communicate with shareholders and other stakeholders through our annual reports and SEC filings, proxy statements, press releases, news media and our dieboldnixdorf.com website. We hold conference calls and webcasts for our quarterly earnings releases and other major corporate events which are open to all investors. These calls are available live and materials are also are archived on our website.
We view anon-going, constructive dialogue with our shareholders as critically important to ensuring that our disclosure provides the necessary transparency for them to make proper investment decisions. Engagement with our shareholders helps us better understand how they view the company, their expectations for our performance, and identify issues that may affect our strategies, corporate governance, valuation and other aspects of our operations.
| 44 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
Executive Compensation Best PracticesEXECUTIVE COMPENSATION BEST PRACTICES
We maintain “best practice” executive compensation governance standards. Some of our following guidelines and policies are described in more detail below under “Other Compensation PoliciesPolicies”” or elsewhere in this “Compensation Discussion and Analysis”:
WHAT WE DO |
WHAT WE DON’T DO/DON’T ALLOW | |||||||
| Set stock ownership guidelines for executives and directors. |  | No hedging or pledging of our stock by executives or directors. | |||||
|
Prescribe an annual limit on equity compensation for | | No dividends paid on unearned performance-based shares. | |||||
|
Review tally sheets for | | Nochange-in-control severance multiple in excess of two times salary and target cash bonus. | |||||
| Disclose performance goals for incentive payments. | | No excise taxgross-ups upon a change in control. | |||||
| Set maximum payout caps on our annual and long-term incentives. | |
| |||||
| Nore-pricing or cash buyout of underwater stock options. | |||||||
| Pay for performance with | |
| |||||
| No enhanced retirement formulas. | |||||||
| Provide a minimum vesting period of at least one year for at least 95% of our equity awards. | | No market timing with granting of equity awards. | |||||
| Cap performance share payments if three-year shareholder return is negative, regardless of our ranking. | |
| |||||
| Limit perquisites and other benefits, and do not include income taxgross-ups (except for relocation expenses). | |
| |||||
| Hire an independent consultant reporting directly to the Committee. | |||||||
| Through the Committee’s independent consultant, engage in an ongoing assessment of our compensation practices against the market, our competition, and other applicable metrics. | |||||||
| Incorporate general cash severance andchange-in-control provisions that are consistent with market practice, including double-trigger requirements for certainchange-in-control protection. | |||||||
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|
| |||||
 |
| |||||
|
Perform an | |||||
| Enforce strict insider trading policies, incentive plan clawback policies, andblack-out periods for executives and directors. | |||||
| 2018 PROXY STATEMENT | | 45 |
EXECUTIVE COMPENSATION MATTERS |
Our Compensation StrategyOUR COMPENSATION STRATEGY
Our executive pay program is specifically designed to:
Focus on performance metrics that align executives with the creation relative of long-term shareholder value through performance-based compensation, including the direct utilization of relative total shareholder return, or TSR;
Use metrics that are balanced and support our multi-year integration and transformation programs called DN2020;
Encourage decision-making in alignment with our business strategies, with goal-setting based on a philosophy of continuous improvement, commitment to becoming a “top tier” performer and supporting our longer-term business transformation strategy;
Reflect industry standards, offer globally competitive program design and pay opportunities, and balance our need for talent with our need to maintain reasonable compensation costs; and
Attract, motivate, and retain executive talent willing to commit to building long-term shareholder value.
Our 20162017 executive compensation structure consists of three primary components: base salary, annual cash bonus, and long-term equity incentives. Within the long-term incentive (LTI) component, we utilize a mix of programs for senior leadership. OurIn 2017, as discussed later in this Proxy Statement, we madeone-time performance-based synergy grants to incentivize accelerated cost savings following the Wincor Nixdorf transaction. We also provided legacy Wincor Nixdorf employees, including those who are NEOs, with aone-time offer to receive performance-based cash incentive awards contingent upon cancellation of their outstanding Wincor Nixdorf stock options. Without the employee’s agreement to cancel the outstanding Wincor Nixdorf stock options, they would remain in place and be payable based on the Wincor Nixdorf stock price until the stock options expire or lapse. These grants do not represent new value, but rather an exchange of value of the Wincor Nixdorf option grants for new grants under our annual cash bonus plan to align incentives of the newly combined business. These awards are described in more detail below under“Long-Term Incentives—Performance-Based Cash Incentive Awards.” Apart from these uniqueone-time grants, our target compensation structure for senior leadership is as follows:
As provided in more detail below, we generally target total compensation opportunity at or near thesize-adjusted 50th50th percentile of our compensation peer group (for more detail on our peer group, see “Role of Peer Companies and Competitive Market Data” below). The NEOs may be above or below the 50th50th percentile based on their experience, performance, potential, and impact on shareholder value. As explained above, we will implement this compensation structure and opportunity for the executives that joined us from Wincor Nixdorf in 2017. Our compensation structure will continue to evolve in support of our strategic plan, DN2020.
| 46 | | 2018 PROXY STATEMENT | |
-53-Total Compensation Opportunity Base Salary Annual Cash Bonus Long-Term Equity Incentives 50% Performance-Based Shares 30% Stock Options 20% Restricted Stock Units
EXECUTIVE COMPENSATION MATTERS |
The following table summarizes key elements of our 20162017 executive compensation program:
ELEMENT |
PRIMARY PURPOSE |
KEY CHARACTERISTICS | ||
Base Salary | To compensate the executive fairly and competitively
| Fixed compensation component. | ||
Annual Cash Bonus | To motivate and reward organizational and individual achievement of annual strategic financial and individual objectives.
Our plan is intended to appropriately motivate the behaviors and performance results needed to accomplish our strategic transformation. | Variable compensation component. The
Corporate Goals Corporatenon-GAAP Operating Profit (50%) Corporate Free Cash Flow (30%)
Individual Business Goals Key Initiatives
Performance Gate: A minimum level of corporatenon-GAAP Operating Profit performance is required to earn any bonus.
| ||
Long-Term Equity Incentives (LTI) | To align executives’ and shareholders’ interests, to reinforce long-term value creation, and to provide a balanced portfolio oflong-term incentive opportunity. | Variable compensation component. Reviewed and granted annually. | ||
Performance-Based Shares | To motivate the appropriate behaviors to provide superior TSR and strong operational performance over the long term. | Cumulative three-year TSR relative to S&P 400Mid-Cap Index companies. | ||
For Mr. Mattes, 50% based on the above TSR and 50% based on synergy metrics explained below. | ||||
Stock Options | To motivate the appropriate behaviors to increase shareholder value above the exercise price. | Stock price growth above the exercise price. Subject to three-year ratable vesting. | ||
Restricted Stock Units (RSUs) | To motivate the appropriate behaviors to increase shareholder value and promote a base-level of executive retention. | Stock price growth. Subject to three-year ratable vesting. | ||
Performance-Based Synergy Grants | To incentivize the accelerated achievement of cost reductions and scale efficiencies made possible by our business combination with Wincor Nixdorf. | One-time variable compensation based on level of achievement of synergy savings, including realized cost reductions, elimination of cost and scale efficiencies; implemented in response to comments received during 2016 shareholder outreach campaign. Our CEO was excluded from thisone-time grant. | ||
Performance-Based Cash Incentive Awards | To align the legacy Wincor Nixdorf employees with achieving our company-wide goals. | One-time variable compensation component based on our stock price; grant was contingent on cancellation of Wincor Nixdorf outstanding options; represents an exchange of existing value to align management incentives for the newly combined business. | ||
Health/Welfare Plan and Retirement Benefits | To provide competitive benefits promoting employee health and productivity and support financial security. | Fixed compensation component. | ||
Limited Perquisites and Other Benefits |
| |||
To provide limitedbusiness-related benefits, where appropriate.
| Fixed compensation component. | |||
Change-in-Control Protection | To retain executives and provide management continuity in event of actual or threatenedchange-in-control and to bridge future employment if terminated following achange-in-control of the Company.
| Fixed compensation component; only paid in the event the executive’s employment is terminated following achange-in-control of the Company. | ||
Severance Protection | To bridge future employment if terminated other than “for cause.” | Fixed compensation component; only paid in the event the executive’s employment is terminated other than “for cause.” | ||
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2016 NEO Compensation Highlights - Target Compensation Structure
| 2018 PROXY STATEMENT | | 47 |
EXECUTIVE COMPENSATION MATTERS
|
|
2017 NEO COMPENSATION HIGHLIGHTS—TARGET COMPENSATION STRUCTURE
PAY COMPONENT | SUMMARY | |||
Target Total Compensation Opportunity | Based on a review of individual performance and competitive market data, the Committee approved the following annual total compensation structure for
• Dr. Wunram: Increased base salary from€500,000 to€535,000 and increased long-term incentive opportunity from 100% of salary to 200% of salary in order to align the compensation with the competitive US market for the newly combined business and to maintain internal equity for management of the combined business. No change to target bonus. • Mr. Chapman: Increased base salary from $500,000 to $575,000 to move total compensation opportunity closer to 50th percentile. No change in target bonus orlong-term incentive opportunity. • Mr. Mattes: No change
• Mr.
• Dr. Näher: Increased base salary from€430,000 to€470,000 and increased long-term incentive opportunity
• Mr. Heyden: Increased base salary from€430,000 to€470,000 and increased long-term incentive opportunity from 100% of salary to 150% of salary in
• Our 2017 long-term incentive value mix | |||
|
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In summary, the NEOs had the following total compensation structure for 2016:2017:
| Name | Salary | Target Bonus (% of Salary) | Target LTI (% of Salary) | |||||||||||||||||||||||||||
NAME
| SALARY
|
TARGET BONUS (% OF SALARY)
|
TARGET LTI (% OF SALARY)
| |||||||||||||||||||||||||||
Dr. Juergen Wunram
|
€
|
535,000
|
|
|
100
|
%
|
| 200
| %
| |||||||||||||||||||||
Christopher A. Chapman
| $
| 575,000
|
|
| 100
| %
|
| 200
| %
| |||||||||||||||||||||
Andreas W. Mattes | $ | 937,500 | 140 | % | 450 | % | $
| 937,500
|
|
| 140
| %
|
| 500
| %
| |||||||||||||||
Christopher A. Chapman | $ | 500,000 | 100 | % | 200 | % | ||||||||||||||||||||||||
Jonathan B. Leiken
| $
| 475,000
|
|
| 100
| %
|
| 150
| %
| |||||||||||||||||||||
Dr. Ulrich Näher
| €
| 470,000
|
|
| 100
| %
|
| 150
| %
| |||||||||||||||||||||
Olaf Heyden
| €
| 470,000
|
|
| 100
| %
|
| 150
| %
| |||||||||||||||||||||
Eckard Heidloff | € | 700,000 | 100 | % | 100 | % | €
| 700,000
|
|
| 100
| %
|
| 100
| %
| |||||||||||||||
Jonathan B. Leiken | $ | 440,000 | 100 | % | 100 | % | ||||||||||||||||||||||||
Dr. Jürgen Wunram | € | 500,000 | 100 | % | 100 | % | ||||||||||||||||||||||||
Stefan E. Merz | $ | 400,000 | 100 | % | 100 | % | ||||||||||||||||||||||||
| 48 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
Total Target Compensation MixCOMPENSATION PAY MIX
|
|
“At Risk” Compensation
 |
 | ||
20162017 NEO Compensation Highlights—Actual Earned CompensationCOMPENSATION HIGHLIGHTS—ACTUAL EARNED COMPENSATION
The below table represents the Committee’s view of the compensation actually earned and paid to the NEOs in 2016. As explained earlier,2017. Due to their departures during the fiscal year 2017, we are not presenting this information with respect to Mr.Messrs. Heidloff and Dr. Wunram.Mattes.
| Earned vs. Targeted Compensation—2016* | ||||||||||||||||||||||
| Name | Annual Salary | Bonus | Long Term Incentive | Transformation Grant | Total Earned Compensation | % of Target Compensation Received | ||||||||||||||||
Andreas W. Mattes | $ | 937,500 | $ | 585,000 | $ | 2,316,859 | $891,277 | $4,730,636 | 67% | |||||||||||||
Christopher A. Chapman | $ | 500,000 | $ | 331,500 | $158,076 | $60,489 | $1,050,065 | 67% | ||||||||||||||
Jonathan B. Leiken | $ | 440,000 | $ | 324,720 | $120,790 | $101,410 | $986,919 | 89% | ||||||||||||||
Stefan E. Merz | $ | 400,000 | $ | 295,200 | $170,754 | $93,425 | $959,379 | 72% | ||||||||||||||
EARNED VS. TARGETED COMPENSATION—2017*
| |||||||||||||||||||||||||
NAME
| ANNUAL SALARY
| BONUS
| LONG TERM INCENTIVE
| TOTAL EARNED COMPENSATION
|
% OF TARGET COMPENSATION RECEIVED
| ||||||||||||||||||||
Dr. Juergen Wunram**
| €
| 535,000
|
| €
| 214,000
|
| $
| 53,891
|
| $
| 887,251
|
|
| 39
| %
| ||||||||||
Christopher A. Chapman
| $
| 575,000
|
| $
| 230,000
|
| $
| 327,155
|
| $
| 1,132,155
|
|
| 49
| %
| ||||||||||
Jonathan B. Leiken
| $
| 475,000
|
| $
| 190,000
|
| $
| 271,489
|
| $
| 936,489
|
|
| 56
| %
| ||||||||||
Dr. Ulrich Näher**
| €
| 470,000
|
| €
| 188,000
|
| $
| 35,502
|
| $
| 767,612
|
|
| 44
| %
| ||||||||||
Olaf Heyden**
| €
| 470,000
|
| €
| 188,000
|
| $
| 35,502
|
| $
| 767,612
|
|
| 44
| %
| ||||||||||
| * | This chart compares earned compensation in |
| ** | “Total Earned Compensation” calculated using the |
| 2018 PROXY STATEMENT | | 49 |
-56-LTI Target 68% Salary 13% Target Bonus 19% LTI Target 44% Salary 28% Target Bonus 28% Fixed 13% At Risk 87% Fixed 28% At Risk 72%
EXECUTIVE COMPENSATION MATTERS |
The following incentive compensation payouts for 20162017 performance were approved, each discussed further in “20162017 Compensation Elements” below:
Pay Component
| Comments
| |||||||||
Based on the Committee’s assessment of the Annual Cash Bonus Plan goals, including both financial and individual performance (against personalized Key Initiatives), and the Committee’s assessment of the 2016 Q5 VTI award goals, the Committee approved the following cash bonus payments:
| ||||||||||
| Name | Earned Bonus | % of Target | ||||||||
Andreas W. Mattes | $585,000 | 45% | ||||||||
Christopher A. Chapman | $331,500 | 66% | ||||||||
Eckard Heidloff | $187,103* | 100% | ||||||||
Jonathan B. Leiken | $324,720 | 74% | ||||||||
Dr. Jürgen Wunram | $133,645* | 100% | ||||||||
| Annual Cash Bonus and 2016 Q5 VTI | Stefan E. Merz | $295,200 | 74% | |||||||
* Paid in Euros and converted to U.S. dollars for this table using the exchange rate on the date that the Committee approved the performance achieved and payout amount.
Financial targets were approved by the Committee in the first quarter of 2016.
At the February 2017 Committee meeting, the Committee approved the following:
• Financial targets: Above threshold achievement for thenon-GAAP operating profit but no payout based on the Committee’s assessment of facts and performance as presented by management; above threshold achievement for the free cash flow target, excluding certain transaction-related expenses (achieved $177 million on $175 million threshold) resulting in 46% payout on that portion of the award. • Individual business initiatives: Varies by individual. The Committee’s final performance assessment is discussed in more detail in the Annual Cash Bonus Plan section of “2016 Compensation Elements” below. • The 2016 Q5 VTI awards for Mr. Heidloff and Dr. Wunram paid out at target, based on achievement of target levels of EBITDA and net income:
| ||||||||||
| Name | Earned Q5 Award* | % of Target | ||||||||
Eckard Heidloff | €175,000 | 100% | ||||||||
Dr. Jürgen Wunram | €125,000 | 100% | ||||||||
* Actual awards earned converted to U.S. dollars based on the February 7, 2017 exchange rate were $187,103 and $133,645, respectively.
| ||||||||||
PAY COMPONENT
|
COMMENTS
| |||||||||
Annual Cash Bonus |
Based on the Committee’s assessment of the Annual Cash Bonus Plan goals, including both financial and individual performance (against personalized Key Initiatives), the Committee approved the following cash bonus payments:
| |||||||||
NAME
| EARNED BONUS
| % OF TARGET
| ||||||||
Dr. Juergen Wunram
|
€214,000
|
40%
| ||||||||
Christopher A. Chapman
|
$230,000
|
40%
| ||||||||
Jonathan B. Leiken
|
$190,000
|
40%
| ||||||||
Dr. Ulrich Näher
|
€188,000
|
40%
| ||||||||
Olaf Heyden
|
€188,000
|
40%
| ||||||||
Financial targets were approved by the Committee in the first quarter of 2017. At the February 2018 Committee meeting, the Committee approved the following: • Financial targets: Below threshold achievement for thenon-GAAP operating profit and free cash flow • Individual business initiatives: Achievement at maximum. The Committee’s final performance assessment is discussed in more detail in the Annual Cash Bonus Plan section of “2017 Compensation Elements” below. |
LTI Completed Performance Periods Performance-Based Shares | At the February 2018 Committee meeting, the Committee approved the following for the completed 2015-2017 performance share grant: • Payout of 40.7% of target, based on achieving $859.5 million of three-year cumulativenon-GAAP adjusted EBITDA, or 81.4% of the target. Our three-year TSR ranking was below the 30th percentile threshold requirement against the S&P 400 Midcap Index companies and so there was no payout on that portion of the award. | |
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Pay Component
| Comments
| |||||||||
The following 15/16 Annual VTI payments were made to Mr. Heidloff and Dr. Wunram based on the Supervisory Board’s adoption of the Wincor Nixdorf financial statements for the 15/16 fiscal year:
| ||||||||||
| Name | Earned Bonus* | % of Target | ||||||||
Eckard Heidloff | $1,477,862 | 200% | ||||||||
Dr. Jürgen Wunram | $1,055,616 | 200% | ||||||||
15/16 Annual VTI | * Paid in Euros and converted to U.S. dollars for this table using the exchange rate on November 23, 2016, the date that the Supervisory Board approved the findings of the auditor’s audit.
The 15/16 Annual VTI award payouts were based on: • Above maximum performance for the Wincor Nixdorf 15/16 EBITDA goal (achieved €260.14 million of 15/16 EBITDA versus a €222.69 million maximum goal), resulting in 200% payout on that portion of the award. • Above maximum performance for the Wincor Nixdorf 15/16 net income goal (achieved €146.47 million of 15/16 net income versus a €92.43 million maximum goal), resulting in 200% payout on that portion of the award.
| |||||||||
LTI Completed Performance Periods
Performance-Based Shares |
At the February 2017 Committee meeting, the Committee approved the following:
2014-2016 Performance Share Grant • No payout • Our three-year TSR ranking is below the 35th percentile threshold requirement against both the custom peer group and the S&P 400 Midcap Index companies
2015-2016 Performance-Based Deferred Share Grant for Mr. Mattes • Payout at target • Ourtwo-year cumulativenon-GAAP EBITDA for the period was $477 million, exceeding the target
2016 Tranche of Performance-Based Transformation Grant • Payout at 98% of target • We achieved $177 million of free cash flow, exceeding threshold of $162 million and slightly below target of $180 million | |||||||||
-58-
Compensation Decision ProcessROLE OF THE COMPENSATION COMMITTEE
Role of the Compensation Committee
The Committee is responsible to our Board for oversight of our executive compensation program. The Committee consists of independent directors and is responsible for the review and approval of all aspects of our program. Among its duties, the Committee is responsible for:
Reviewing and assessing competitive market data from the independent compensation consultant, discussed below;
Reviewing and approving incentive goals, objectives and compensation recommendations for the NEOs;
Evaluating the competitiveness of each executive’s total compensation package; and
Approving any changes to the total compensation package for the NEOs including, but not limited to, base salary, annual cash bonus, LTI award opportunities and payouts, and retention programs.
annual cash bonus, LTI award opportunities and payouts, and retention programs. |
Following review and discussion, the Committee submits recommendations to the Board for ratification. The Committee is supported in its work by the Chief Human ResourcesPeople Officer and staff and an independent compensation consultant, discussed in “Role of the Independent Compensation Consultant” below. For additional information regarding the Committee’s duties and responsibilities, see “Compensation Committee” above. The Committee did not make compensation decisions for Mr. Heidloff or Dr. Wunram in 2016; please see the introduction to thisCompensation Discussion and Analysis for further explanation.
Role of the Independent Compensation ConsultantROLE OF THE INDEPENDENT COMPENSATION CONSULTANT
The Committee retains an independent compensation consultant, Aon Hewitt, in accordance with the Committee’s charter. The consultant reports directly to the Committee. The Committee retains sole authority to hire or terminate Aon
| 50 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
Hewitt, approve its compensation, determine the nature and scope of services, and evaluate performance. A representative of Aon Hewitt attends Committee meetings, as requested, and communicates with the Committee Chair between meetings. The Committee makes all final decisions.
Aon Hewitt’s specific compensation consultation roles include, but are not limited to, the following:
Advising the Committee on executive compensation trends and regulatory developments;
Providing a total compensation study for executives against the companies in our peer group and recommendations for executive pay;
Providing advice to the Committee on governance best practices, as well as any other areas of concern or risk;
Serving as a resource to the Committee Chair for meeting agendas and supporting materials in advance of each meeting;
| • | Reviewing and commenting on proxy disclosure items, including the “Compensation Discussion and Analysis;” |
From time to time, reviewing and providing compensation recommendations fornon-employee directors to the Board Governance Committee.
In 2016,2017, the professional fees for the executive compensation services were approximately $305,000.$260,000. In addition to Aon Hewitt’s executive compensation services for the Committee, management retained Aon Hewitt for unrelated services, including brokerage services for insurance products. Professional fees for these unrelated services were approximately $539,000$665,000 in 2016.2017. The Board and Committee considered and approved these additional brokerage services, which were awarded following a competitive process. We have separate relationships with each of the service teams, and the executive compensation service team does not perform any other services on behalf of the Company. Following consideration and review, the Committee determined that these unrelated services did not impact the independence of Aon Hewitt. The Committee is aware that a significant level of fees for unrelated services could create a conflict of interest and will assess viable alternatives.
-59-
The Committee assessed the independence of Aon Hewitt, as required under NYSE listing rules. The Committee also considered and assessed all relevant factors, including but not limited to those set forth inSection240.10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to Aon Hewitt. Based on this
review, the Committee determined there are no conflicts of interest raised by the work performed by Aon Hewitt.
Role of ManagementROLE OF MANAGEMENT
Our Chief Human ResourcesPeople Officer serves as management’s primary contact with the Committee and attends all Committee meetings. For executives other than the CEO position, our CEO and Chief Human ResourcesPeople Officer make pay recommendations to the Committee based on market pay comparisons and an analysis of each executives’executive’s individual performance. No member of our management team, including the CEO, has a role in making pay recommendations to the Committee for his or her own position.
Role of Peer Companies and Competitive Market DataROLE OF PEER COMPANIES AND COMPETITIVE MARKET DATA
Annually, the Committee reviews competitive total compensation market data provided by Aon Hewitt. To assess competitive pay levels, the Committee first annually reviews and approves our peer group composition. The following peer group criteria are considered:
Company size: Approximately 0.4 to 2.5 times Diebold’sDiebold Nixdorf’s annual revenues, with a secondary reference being market capitalization of approximately 0.2 to 5 times Diebold’sDiebold Nixdorf’s market capitalization;
Direct competitors for business and management talent;
Companies covered by the investment analysts that track Diebold;
Companies that include Diebold Nixdorf in their compensation peer group; and
Global companies that emphasize integrated service solutions, and focus on manufacturing and hardware/software design manufacture, and service products for their customers.
In December 2015, Aon Hewitt conducted a total compensation study to assist with 2016 compensation decisions. The Committee approved the following 25 companies for the compensation peer group:
| ||||
|
EXECUTIVE COMPENSATION MATTERS |
In February 2017, the Committee reviewed competitive pay data prepared by Aon Hewitt to assist with 2017 compensation decisions. During the fall of 2016, the Committee approved the following peer companies:
Alliance Data Systems Corp. | Harris Corp. | Netapp Inc. | ||||
Benchmark Electronics Inc. | Juniper Networks, Inc. | Pitney-Bowes Inc. | ||||
Computer Sciences | Lexmark International Inc. | |||||
Unisys Corp. | ||||||
Convergys Corp. | Logitech International | |||||
| SA | ||||||
| Western Union Company (The) | |||||
DST Systems | Motorola Solutions, Inc. | Zebra Technologies Corp. | ||||
Global Payments Inc. | NCR Corp. | |||||
Note: Compensation market values were stress tested to determine the impact, if any, of companies with larger market capitalization. The impact was immaterial.
Note: In our 2016 pay study used to assist with 2017 pay decisions, we refined the peer group by excluding some companies with high market capitalization.
The average and median annualized revenues for the peer companies were $3.5B$4.7B and $2.9B,$3.7B, respectively, atwhen the time ofCommittee approved the December 2015 study. Diebold’speer group. The projected annual revenues for the newly combined business were approximately $3.1B$5B, which was used to developsize-adjusted market values through regression analysis for each study position.analysis. Thesize-adjusted 50th
-60-
50thpercentile for total compensation is a key reference point for the Committee. For executive positions where peer company proxy data is not available, Aon Hewitt utilized published and private compensation survey sources.
Timing of Compensation DecisionsTIMING OF COMPENSATION DECISIONS
Pay recommendations for our executives, including the NEOs, are typically made by the Committee at its first scheduled meeting of the year, normally held in late January or early February. This meeting is normally held around the same time we report our fourth quarter andyear-end financial results for the preceding fiscal year and provide our financial guidance for the upcoming year. This timing allows the Committee to have a complete financial performance picture prior to making compensation decisions.
Decisions with respect to prior year performance, performance for other relevant periods and any resulting award payouts, as well as annual equity awards, base salary increases and target performance levels for the current year and beyond, are also typically made at this meeting. Equity awards approved by the Committee at this meeting are generally dated as of the date of the Board meeting held the following day. As such, the Committee does not time the grants of options or any other equity incentives to the release of materialnon-public information.
The exceptions to this timing are awards to executives who are promoted or hired from outside the Company during the year. These executives may receive salary increases or equity awards effective or dated, as applicable, as of the date of their promotion or hire.
Determination ofDETERMINATION OF CEO CompensationAND INTERIMCO-PRESIDENTS’ ANDCO-CEOS’ COMPENSATION
At the February Committee meeting, in executive session without management present, the Committee reviews and evaluates CEO performance and determines achievement level for the prior fiscal year. The Committee also reviews competitive compensation data for the peer companies. The Committee presents pay recommendations for the CEO to the independent members of the Board. During executive session, the Board conducts its own review and evaluation of the CEO’s performance taking into consideration the recommendations of the Committee.
In light of Mr. Chapman’s and Dr. Wunram’s service as InterimCo-Presidents andCo-CEOs, the Board reviewed the performance of these NEOs in executive session and made determinations as to compensation for the interim service at that time. Each of Mr. Chapman and Dr. Wunram received a stipend of $10,000 per month for each month (or portion thereof) that they served as InterimCo-Presidents andCo-CEOs. The Committee approved this compensation structure with the assistance of Aon Hewitt’s research of competitive market practice for similar situations and management’s assessment of the proper internal alignment.
2016 Compensation Elements2017 COMPENSATION ELEMENTS
Base salary compensates the executive fairly and competitively for the responsibility level of the position. The Committee reviews the salaries of our executive officers annually against
competitive market data. Salary adjustments result primarily from a combination of competitive market data, individual and company performance, internal equity considerations, promotions, and the executive’s specific responsibilities.
| 52 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
For 2016,2017, the Committee reviewed competitive market data and individual performance assessments for the NEOs and approved the following values at the February 20162017 Committee meeting:
| Name | 2015 Salary | 2016 Salary | ||
Andreas W. Mattes
| $937,500
| $937,500
| ||
Christopher A. Chapman
| $450,000*
| $500,000
| ||
Jonathan B. Leiken
| $400,000
| $440,000
| ||
Stefan E. Merz
| $400,000*
| $400,000
|
|
NAME
| 2016 SALARY
| 2017 SALARY
| ||||||
Dr. Juergen Wunram
|
€
|
500,000
|
|
€
|
535,000
|
| ||
Christopher A. Chapman
|
$
|
500,000
|
|
$
|
575,000
|
| ||
Andreas W. Mattes
|
$
|
937,500
|
|
$
|
937,500
|
| ||
Jonathan B. Leiken
|
$
|
440,000
|
|
$
|
475,000
|
| ||
Dr. Ulrich Näher
|
€
|
430,000
|
|
€
|
470,000
|
| ||
Olaf Heyden
|
€
|
430,000
|
|
€
|
470,000
|
| ||
Eckard Heidloff
|
€
|
700,000
|
|
€
|
700,000
|
| ||
The rationale for approved 20162017 compensation actions is summarized in the table “20162017 NEO Compensation Highlights – Highlights—Target Compensation Structure.” Increases reflect adjustments made to NEO salaries to bring salary levels more in line with the market 50th percentile.
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Annual base salaries for Mr. Heidloff and Dr. Wunram during 2015 and 2016 under their service agreements with Wincor Nixdorf, which were in place prior to the acquisition, were as follows:
| ||||
|
|
Annual Cash Bonus Plan – Messrs. Mattes, Chapman, Leiken and MerzANNUAL CASH BONUS PLAN
Messrs. Mattes, Chapman, Leiken and MerzThe NEOs were eligible to earn cash incentives for 20162017 under our Annual Cash Bonus Plan, which was approved by shareholders in 2015. Performance measures include corporate, business unit and individual performance againstpre-determined performance objectives approved by the Committee at the beginning of the fiscal year.
Target opportunities: Individual NEO targets (as a percent of base salary) are approved by the Committee at the beginning of the fiscal year. Actual cash bonuses may range from 0% to 200% of target (generally 40% of target is earned at threshold performance, 100% of target is earned asat target performance, and 200% of target is earned at maximum performance).
For 2016,2017, the Committee reviewed competitive market data and individual performance assessments for the following NEOs and approved the following target bonus levels in February 2016:2017:
| Name | Target Incentive (% of Salary) | Threshold Incentive ($) | Target Incentive ($) | Maximum Incentive ($) | Target Incentive as a % of Target Total Comp Opportunity | ||||||||||||||||||||||||||||||
NAME
| TARGET INCENTIVE (% OF
| THRESHOLD INCENTIVE
| TARGET INCENTIVE
| MAXIMUM INCENTIVE
| TARGET INCENTIVE AS A % OF TARGET
| ||||||||||||||||||||||||||||||
Dr. Juergen Wunram
|
|
100
|
%
|
€
|
214,000
|
|
€
|
535,000
|
|
€
|
1,070,000
|
|
|
25
|
%
| ||||||||||||||||||||
Christopher A. Chapman
|
|
100
|
%
|
$
|
230,000
|
|
$
|
575,000
|
|
$
|
1,150,000
|
|
|
25
|
%
| ||||||||||||||||||||
Andreas W. Mattes
|
140%
|
$562,500
|
$1,312,500
|
$2,625,000
|
20%
|
|
140
|
%
|
$
|
562,500
|
|
$
|
1,312,500
|
|
$
|
2,625,000
|
|
|
19
|
%
| |||||||||||||||
Christopher A. Chapman
|
100%
|
$200,000
|
$500,000
|
$1,000,000
|
25%
| ||||||||||||||||||||||||||||||
Jonathan B. Leiken
|
100%
|
$176,000
|
$440,000
|
$880,000
|
33%
|
|
100
|
%
|
$
|
190,000
|
|
$
|
475,000
|
|
$
|
950,000
|
|
|
29
|
%
| |||||||||||||||
Stefan E. Merz
|
100%
|
$160,000
|
$400,000
|
$800,000
|
33%
| ||||||||||||||||||||||||||||||
Dr. Ulrich Näher
|
|
100
|
%
|
€
|
188,000
|
|
€
|
470,000
|
|
€
|
940,000
|
|
|
29
|
%
| ||||||||||||||||||||
Olaf Heyden
|
|
100
|
%
|
€
|
188,000
|
|
€
|
470,000
|
|
€
|
940,000
|
|
|
29
|
%
| ||||||||||||||||||||
Eckard Heidloff
|
|
100
|
%
|
€
|
280,000
|
|
€
|
700,000
|
|
€
|
1,400,000
|
|
|
33
|
%
| ||||||||||||||||||||
| 2018 PROXY STATEMENT | | 53 |
EXECUTIVE COMPENSATION MATTERS |
Financial performance metrics: For 2016, to support the third year of our multi-year business transformation related to Diebold 2.0,2017, the Committee approved Corporatenon-GAAP Operating Profit (OP) and Corporate Free Cash Flow excluding certain transaction-related expenses (FCF) as the financial performance metrics and Key Business Initiatives specific to each NEO as the individual performance metrics. The Committee also approved a minimum performance level requirement for OP of $125M,$200M, below which no bonuses would be paid, regardless of the performance level attained for FCF, Corporate OP or individual Key Business Initiatives. Although Neithernon-GAAP OP nor FCF was achieved at or above threshold, the Committee determined thatand so there was no payout was earned following considerationpayment for this portion of the facts and performance presented by management. Management viewed the technical achievement of above-threshold non-GAAP OP metric to be anomalous in a transformative year involving combined financials from two legacy corporations, and therefore recommended to the Committee no pay out on the operating profit metric. Management took this position due to disappointing results in key areas that ultimately support the company’s operating profit goal, such as the North America segment.award.
| Annual Cash Bonus Plan for NEOs | ||||||||||||||
| Performance Measure | Organizational Level | Weighting | Threshold1 (40% | Target1 (100% | Max1 (200% payout) | Actual Achieved | Payout as % of Target | |||||||
OP
|
Corporate
|
40%
|
$140
|
$170
|
$200
|
$159
|
0%
| |||||||
FCF
|
Corporate
|
30%
|
$175
|
$195
|
$215
|
$177
|
46%
| |||||||
Key Initiatives
|
Individual
|
30%
|
varies
|
varies
|
varies
|
varies
|
varies
| |||||||
ANNUAL CASH BONUS PLAN FOR NEOs
| |||||||||||||||||||||||||||||||||||
PERFORMANCE MEASURE
| ORGANIZATIONAL LEVEL
| WEIGHTING
| THRESHOLD1 (40% PAYOUT)
| TARGET1 (100% PAYOUT)
| MAX1 (200% PAYOUT)
| ACTUAL ACHIEVED
| PAYOUT AS
| ||||||||||||||||||||||||||||
OP
|
| Corporate
|
|
| 50
| %
|
| $285M
|
|
| $355M
|
|
| $425M
|
|
| $224M
|
|
| 0
| %
| ||||||||||||||
FCF
|
| Corporate
|
|
| 30
| %
|
| $ 80M
|
|
| $100M
|
|
| $120M
|
|
| $(32M)
|
|
| 0
| %
| ||||||||||||||
Key Business Initiatives
|
| Individual
|
|
| 20
| %
|
| varies
|
|
| varies
|
|
| varies
|
|
| varies
|
|
| varies
|
| ||||||||||||||
| 1 | Payment opportunities are extrapolated between threshold, target, and maximum |
-62-
Key Business Initiative performance metrics: For 2016,2017, the Committee approved Key Business Initiatives specific to each NEO. The Committee increased the weighting from 20% to 30% in 2016 to enhance focus on critical efforts needed to drive financial performance, such as the transformative portfolio changes. Similar to the Committee’s assessment of financial performance, the Committee’s assessment of Key Business Initiative performance generally excludesnon-recurring/extraordinary items.
NAME | KEY BUSINESS INITIATIVE CATEGORIES (20% WEIGHTING)1 | |
Dr. Juergen Wunram | • Deliver on specific financial commitments
•
•
Management integration related to retail and AEVI segments | |
Christopher A. Chapman | • Deliver on specific financial commitments • Capital allocation strategies • Information technology initiatives • Working capital optimization | |
Jonathan B. Leiken | • Ethics and compliance enhancements • Successful completion of specific strategic projects
•
| |
|
| |
Olaf Heyden | • • Achievement of | |
Dr. Ulrich Näher | •
•
• • Deliver effective leadership across systems line of business |
| 1 | We did not include Mr. Mattes’ Key Business Initiatives because his employment and separation agreements governed the terms for his 2017 annual cash bonus payment. Please refer to “Payments and Benefits in Connection with Mr. Mattes’ Separation” for that discussion. |
| 54 | | 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION MATTERS |
The Committee reviewed Key Business Initiative performance assessments prepared by Mr. Mattes for each of the NEOs, and separately, during executive session,NEOs.
Each NEO listed below performed well above their stated objectives for the Committee reviewed Mr. Mattes’ performance against his Key Business Initiatives.
The Committee acknowledged the tremendous effort and work that the above NEOs invested in accomplishing the largest transaction in the history of the Company – the acquisition of Wincor Nixdorf. That transaction presented financing, legal, strategic and regulatory hurdles to overcome in order to move the Company into the future, and each of the individuals had the accomplishment of various aspects of this transaction as part of theiryear. Key Business Initiatives varied by NEO, but the Board’s over-arching objective for 2016. In addition, we executed on strategic projects to divestthe newly combined management team was the successful integration of global personnel and business strategies. After thorough review of individual performance achievement and our global scorecard for the combined entity for the year, the Committee approved maximum payouts for this portion of the electronic security business and to negotiate and enter into a joint venture with Inspur in China. We also successfully concluded the monitorship that the Company had been under after completing compliance and ethics enhancements. In sum, the Committee felt that each of the above NEOs had met and, in some cases, exceeded their Key Business Initiative performance goals for 2016. The amount earned, including as a percentage of target, is listed below.Annual Cash Bonus Plan.
Key Business Initiative PerformanceKEY BUSINESS INITIATIVE PERFORMANCE
| Name | Amount Earned | % of Target | ||
Andreas W. Mattes
|
$393,750
|
100%
| ||
Christopher A. Chapman
|
$262,500
|
175%
| ||
Jonathan B. Leiken
|
$264,000
|
200%
| ||
Stefan E. Merz
|
$240,000
|
200%
|
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NAME | AMOUNT EARNED | ||||
Dr. Juergen Wunram | € | 214,000 | |||
Christopher A. Chapman | $ | 230,000 | |||
Jonathan B. Leiken | $ | 190,000 | |||
Dr. Ulrich Näher | € | 188,000 | |||
Olaf Heyden | € | 188,000 | |||
20162017 Actual Bonuses Earned: Based on the Committee’s assessment of financial and individual performance according to the tables above, the following summarizes actual bonuses earned:
| Name | 2016 Actual Bonus | 2016 Target Bonus | Actual as % of Target | |||
Andreas W. Mattes
|
$585,000
|
$1,312,500
|
45%
| |||
Christopher A. Chapman
|
$331,500
|
$500,000
|
66%
| |||
Jonathan B. Leiken
|
$324,720
|
$440,000
|
74%
| |||
Stefan E. Merz
|
$295,200
|
$400,000
|
74%
|
Cash Incentive Compensation—Mr. Heidloff and Dr. Wunram
15/16 VTI Awards (pre-acquisition arrangement): Mr. Heidloff and Dr. Wunram’s annual short-term incentive awards were related to Wincor Nixdorf’s fiscal year (October 1, 2015—September 31, 2016) and tied to EBITDA and net income performance metrics. The targets to be applied as the basis to calculate these awards were set by the Supervisory Board in September 2015, and these awards were paid in December 2016 following adoption by the Supervisory Board of Wincor Nixdorf’s financial statements.
Target 15/16 VTI award opportunities were as follows under their respective service agreement:*
NAME
| 2017 ACTUAL BONUS
| 2017 TARGET BONUS
| ACTUAL AS % OF TARGET
| ||||||||||||
Dr. Juergen Wunram
| €
| 214,000
|
| €
| 535,000
|
|
| 40
| %
| ||||||
Christopher A. Chapman
| $
| 230,000
|
| $
| 575,000
|
|
| 40
| %
| ||||||
Jonathan B. Leiken
| $
| 190,000
|
| $
| 475,000
|
|
| 40
| %
| ||||||
Dr. Ulrich Näher
| €
| 188,000
|
| €
| 470,000
|
|
| 40
| %
| ||||||
Olaf Heyden
| €
| 188,000
|
| €
| 470,000
|
|
| 40
| %
| ||||||
|
|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
Financial performance metrics for the 15/16 Annual VTI awards were as follows:
Performance Measure
| Weighting
| Threshold1 (25%
| Target1 (100%
| Interim (175%
| Max1
| Actual
| Payout as
| |||||||||
Wincor Nixdorf 15/16 EBITDA | 50% | €137.04 | €171.30 | €205.56 | €222.69 | €260.14 | 200% | |||||||||
Wincor Nixdorf 15/16 Net Income |
50% |
€56.88 |
€71.10 |
€85.32 |
€92.43 |
€146.47 |
200% |
|
Based on the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes actual 15/16 Annual VTI awards earned:
|
|
|
| |||
|
|
|
| |||
|
|
|
|
|
-64-
2016 Q5 VTI Awards: Following our acquisition, Mr. Heidloff and Dr. Wunram each received a pro rata cash incentive award based on performance for the quarter ended December 31, 2016. The Committee and Supervisory Board believed these awards were useful to incentivize performance during our fourth quarter immediately following the acquisition. In addition, because Wincor Nixdorf’syear-end was September 30, 2016, this award helped align compensation during this “extra” quarter.
Target 2016 Q5 VTI award opportunities were set by the Committee and Supervisory Board as follows:
|
|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
Financial performance metrics for the 2016 Q5 VTI awards were as follows:
Performance Measure
| Weighting
| Threshold1 (25%
| Target1 (100%
| Interim
| Max1
| Actual
| Payout as
| |||||||||
Diebold Nixdorf EBITDA |
50% |
50.40 |
63 |
75.6 |
81.9 |
63 |
100% | |||||||||
Diebold Nixdorf Net Income | 50% | 25.6 | 32 | 38.4 | 41.6 | 32 | 100% |
|
Based on the Supervisory Board’s assessment of financial performance according to the tables above, the following summarizes actual 2016 Q5 VTI awards earned:
|
|
|
| |||
|
|
|
| |||
|
|
|
|
|
Long-Term Incentives—2016 Regular Annual Grants (Messrs. Mattes, Chapman, Leiken and Merz)LONG-TERM INCENTIVES—2017 REGULAR ANNUAL GRANTS
Our regular annual LTI grants to NEOs include a value mix of performance-based shares (50%), stock options (30%), and RSUs (20%), as discussed above inin“20162017 NEO Compensation Highlights—Target Compensation Structure.” These awards are subject to our other compensation policies generally, such as our Clawback Policy, as discussed in “Other Compensation Policies” below.
To determine annual grant levels for theour NEOs, the Committee considers competitive market data, individual performance, potential future contributions to our business, internal equity, and management’s recommendations. The Committee approves long-term incentive grants at its first regular meeting of the regular February Committee meeting,year, and actual grants are generally made effective on the day of the February Board Meeting. The Committee adjusted target LTI for some of the NEOs to be competitive at the 50th percentile for the larger newly-combined organization.
-65-
| 2018 PROXY STATEMENT | | 55 |
