DEF 14A 1 d469626ddef14a.htm DEF 14A DEF 14A
Table of Contents

 

 

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 Exchange Act of 1934

(Amendment No.    )

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Under § 240.14a-12

Diebold Nixdorf, Incorporated

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


Table of Contents

LOGO


Table of Contents

 

 

 

LOGO

 

5995 Mayfair Road

P. O. Box 3077 North Canton, Ohio 44720-8077

March 14, 2018

Dear Shareholder:

The 2018 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 25, 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 eleven directors, (2) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 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.

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 2018 Proxy Statement and Annual Report for the year ended December 31, 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 26, 2018 are entitled to vote at the 2018 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,

 

LOGO   

GARY G. GREENFIELD

 

Chairman of the Board

 

LOGO

  LOGO   

GERRARD B. SCHMID

 

President and Chief Executive Officer

 

LOGO

 

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of Shareholders to be held on April 25, 2018.

This Proxy Statement, along with our Annual Report for the year ended December 31, 2017, including exhibits,

are available free of charge at www.proxyvote.com (you will need to reference the 16-digit control number

found on your proxy card or Notice of Internet Availability of Proxy Materials in order to vote).


Table of Contents

 

 

 

LOGO

 

5995 Mayfair Road

P. O. Box 3077 North Canton, Ohio 44720-8077

NOTICE OF ANNUAL MEETING OF

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 eleven directors;

 

    2.   

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2018;

 

   

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 Plan.

 

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 26, 2018 will be entitled to vote at the 2018 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

 

LOGO  

       LOGO

 

      Jonathan B. Leiken

      Senior Vice President, Chief Legal Officer and Secretary

 

March 14, 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.


Table of Contents

 

 

DIEBOLD NIXDORF, INCORPORATED

5995 Mayfair Road

P.O. Box 3077 North Canton, Ohio 44720-8077

PROXY STATEMENT

2018 ANNUAL MEETING OF SHAREHOLDERS

TABLE OF CONTENTS

 

PROXY SUMMARY      1  
VOTING INFORMATION      5  
CORPORATE GOVERNANCE      7  

 

Recent Developments

  

 

 

 

7

 

 

 

Board Leadership Structure

  

 

 

 

7

 

 

 

Board and Director Assessments

  

 

 

 

7

 

 

 

Board Meetings and Executive Sessions

  

 

 

 

7

 

 

 

Board Risk Oversight

  

 

 

 

8

 

 

 

Board Committees and Composition

  

 

 

 

9

 

 

 

Corporate Governance Materials Available on Our Website

  

 

 

 

11

 

 

 

Director Independence

  

 

 

 

11

 

 

 

Related Person Transaction Policy

  

 

 

 

11

 

 

 

Communications with Directors

  

 

 

 

12

 

 

 

Code of Business Ethics

  

 

 

 

12

 

 

 

Compensation Committee Interlocks and Insider Participation

  

 

 

 

12

 

 

 

Director Orientation and Education

  

 

 

 

12

 

 

COMPENSATION OF DIRECTORS      13  

 

2017 Director Compensation

  

 

 

 

14

 

 

 

Director Stock Ownership Guidelines

  

 

 

 

15

 

 

CONSIDERATION OF DIRECTOR-NOMINEES      16  

 

Shareholder Nominees

  

 

 

 

16

 

 

 

Identifying and Evaluating Nominees for Directors

  

 

 

 

16

 

 

 

Proxy Access

  

 

 

 

16

 

 

 

Majority Voting Policy

  

 

 

 

16

 

 

 

Board Diversity, Director Qualifications and Corporate Governance Guidelines

  

 

 

 

17

 

 

PROPOSAL 1: ELECTION OF DIRECTORS      18  
BENEFICIAL OWNERSHIP      25  

 

Beneficial Ownership of Shares

  

 

 

 

25

 

 

 

Security Ownership of Directors and Management

  

 

 

 

26

 

 

 

Section  16(a) Beneficial Ownership Reporting Compliance

  

 

 

 

27

 

 

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      28  

 

Audit and Non-Audit Fees

  

 

 

 

28

 

 

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm

  

 

 

 

28

 

 

 

Recommendation of the Board

  

 

 

 

29

 

 

PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION      30  

 

Recommendation of the Board

  

 

 

 

30

 

 

PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN      31  

 

Share Request Background

  

 

 

 

31

 

 

 

2017 Plan Highlights

  

 

 

 

32

 

 

 

Share Usage

  

 

 

 

33

 

 

 

Summary of Material Terms of the 2017 Plan

  

 

 

 

34

 

 

 

Tax Consequences to Participants

  

 

 

 

38

 

 

 

Tax Consequences to the Company or Subsidiary

  

 

 

 

38

 

 

 

Registration with the SEC

  

 

 

 

39

 

 

 

Existing Plan Benefits to Named Executive Officers and Others

  

 

 

 

39

 

 

 

Equity Compensation Plan Information

  

 

 

 

41

 

 

 

Vote Required to Approve the Amendments to the 2017 Plan

  

 

 

 

41

 

 

 

Recommendation of the Board

  

 

 

 

41

 

 

 

 

 

LOGO    2018 PROXY STATEMENT  |     i


Table of Contents

 

  TABLE OF CONTENTS  

 

  

 

EXECUTIVE COMPENSATION MATTERS      42  

 

Compensation Committee Report

  

 

 

 

42

 

 

 

Compensation Discussion and Analysis

  

 

 

 

42

 

 

 

Executive Compensation Tables

  

 

 

 

63

 

 

 

Potential Payments Upon Termination or Change in Control

  

 

 

 

75

 

 

REPORT OF AUDIT COMMITTEE      85  
 

 

 

ii     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

 

PROXY SUMMARY

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 2018 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 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

 

 

 

                                     
   

 

TIME AND DATE

 

11:30 a.m. EDT, April 25, 2018

         

 

PLACE

 

Courtyard Marriott

4375 Metro Circle NW

North Canton, Ohio 44720

 

         

 

RECORD DATE

 

Close of Business

on February 26, 2018

   
                                     

PROPOSALS FOR YOUR VOTE AND BOARD RECOMMENDATIONS

 

 

 

  PROPOSAL

 

  

BOARD RECOMMENDATION

 

  

 

PAGE REFERENCES

(FOR MORE DETAIL)

 

 

  1.  To elect eleven directors

 

  

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

 

    

 

31-41          

 

 

 

Information on voting mechanics, approval requirements and related matters can be found in the “Voting Information” and “Other Matters” sections starting on pages 5 and 87, respectively.

 

 

LOGO    2018 PROXY STATEMENT  |     1


Table of Contents

 

  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    LOGO


Table of Contents
 

 

  PROXY SUMMARY  

 

 

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 nominee’s background, skills and expertise can be found in Proposal 1: Election of Directors on pages 18-24.

Information about our Audit Committee, Board Governance Committee, Compensation Committee, Finance Committee, and Technology Strategy and Innovation Committee can be found on pages 9-10.

 

    

            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

   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                         

 

 

LOGO    2018 PROXY STATEMENT  |     3


Table of Contents

 

  PROXY SUMMARY  

 

  

 

 

LOGO

 

 

 

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 pages 15-16 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 pages 13-14, 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    LOGO


Table of Contents

 

 

VOTING INFORMATION

 

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 and 4.

 

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 2018 Annual Meeting is February 26, 2018. Each shareholder of record of our common shares as of the close of business on February 26, 2018 is entitled to one vote for each common share held. As of the record date, there were 75,943,793 common shares outstanding and entitled to vote at the Annual Meeting.

 

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 2018 Annual Meeting:

 

    By mail—You may vote by completing, signing and returning the proxy card that you will receive in the mail;

 

    By Internet—We encourage you to vote and submit your proxy online at www.proxyvote.com. Even if you request and receive a paper copy of the proxy materials, you may vote online by going to www.proxyvote.com and entering your control number, which is a 16 digit number located in a box on your proxy card that you can also receive in the mail, if requested; or

 

    By telephone—You may vote and submit your proxy by calling 1-800-690-6903 and providing 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.

 

     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 2018 Annual Meeting by:

 

    Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 2018 Annual Meeting to our Corporate Secretary at the Company’s address above;

 

    Submitting a later dated, signed proxy before the start of the 2018 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 24, 2018; or

 

    Attending the 2018 Annual Meeting, withdrawing your earlier proxy and voting in person.

 

Q: Can I cumulate my votes for the election of directors?

 

A: No. At the 2017 Annual Meeting, our Shareholders approved an amendment to our Amended Articles of Incorporation to eliminate cumulative voting in director elections.

 

Q: How many votes are required to adopt each proposal?

 

A: For Proposal 1, the number of votes cast “for” the director-nominee’s election must exceed the number of votes cast “against” his or her election. For each of Proposals 2, 3, and 4, the affirmative vote of the holders of a majority of the votes cast, whether in person or by proxy, is required for approval. The results of the voting at the meeting will be tabulated by the inspectors of election appointed for the Annual Meeting.

 

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 “against” his or her election than votes “for” his or her election, in an election that is not a contested election, is expected to tender his or her resignation following certification of the shareholder vote, as described in greater detail below under “Majority Voting Policy.”
 

 

 

LOGO    2018 PROXY STATEMENT  |     5


Table of Contents

 

  VOTING INFORMATION  

 

  

 

Q: What is a “broker non-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 “broker non-vote.”

Proposal 2, the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 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 broker non-votes with respect to Proposal 2. Broker non-votes will have no effect on the outcome of Proposals 1, 3 and 4.

 

Q: How many shares must be present to constitute a quorum and conduct the Annual Meeting?

 

A: A quorum is necessary to hold the Annual Meeting. A majority of the outstanding shares present or represented by proxy constitutes a quorum for the purpose of adopting a proposal at the Annual Meeting. If you are present and vote in person at the Annual Meeting, or vote on the Internet, by telephone or by submitting a properly executed proxy card, you will be considered part of the quorum. Broker non-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. Accordingly, abstentions will have no effect on Proposal 1, the election of directors, and will not be counted for determining the outcome of Proposals 2 and 3.

 

Q: Why did I receive a one-page notice in the mail regarding Internet availability of proxy materials instead of a full set of proxy materials?

 

A: Under rules adopted by the Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending you a Notice of Internet Availability of Proxy Materials. The instructions found in the Notice explain that all shareholders will have the ability to access the proxy materials on www.proxyvote.com or request to receive a printed copy of the proxy materials. You may also request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual Meeting materials.

 

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 distinct 16-digit control number on each Notice when voting by Internet.
 

 

 

6     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

 

CORPORATE GOVERNANCE

RECENT DEVELOPMENTS

 

 

 

Our Board is committed to strong corporate governance principles and practices to ensure that the 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 at 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 waiver 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 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.

 

 

BOARD 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 or non-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 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 an all-inclusive evaluation of the performance of the Board in light of our needs and strategies. The committee, chairman, and individual director assessments are more specifically tailored. The assessment results are shared with our Chairman, applicable directors, committee members, and the full Board, and appropriate action plans are prepared and executed.

 

 

BOARD MEETINGS AND EXECUTIVE SESSIONS

 

 

 

The Board held five regular meetings and one special meeting in person or telephonically during 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 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     7


Table of Contents

 

  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 Annual Meeting unless there are extenuating circumstances for non-attendance. With the exception of Dr. Alexander Dibelius, who had a previously

scheduled obligation taking place at the same time, all directors standing for re-election who were serving as directors as of the 2017 annual meeting of shareholders attended the 2017 annual meeting.

 

 

BOARD 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 supervising day-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.

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 People 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    LOGO


Table of Contents
 

 

  CORPORATE GOVERNANCE  

 

 

BOARD 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 2017 and functions are described below.

 

 

 AUDIT COMMITTEE*

    

 

Members:

 

Patrick W. Allender (Chair), Dr. Dieter W. Düsedau, Gale S. Fitzgerald and Robert S. Prather, Jr.

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically eleven times during 2017, and had informal communications with management, as well as with our independent auditors, at various other times during the year.

 

Contact:

 

auditchair@dieboldnixdorf.com

 

Committee Report: See page 85.

 

  

 

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 Regulation S-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 (the Exchange Act).

 

 

 BOARD GOVERNANCE COMMITTEE

    

 

Members:

 

Gale S. Fitzgerald (Chair), Phillip R. Cox, Richard L. Crandall and Dr. Alexander Dibelius

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically five times during 2017, and had informal communications with management at various other times during the year.

 

Contact:

 

bdgovchair@dieboldnixdorf.com

 

  

 

Primary Duties and Responsibilities:

 

  Insures Board oversight of our enterprise risk management process.

 

  Reviews qualifications of potential director candidates.

 

  Makes recommendations to the Board to fill vacancies or consider the appropriate size of the Board.

 

  Makes recommendations regarding corporate governance principles, Board committee composition, and the directors’ compensation for their services on the Board and on Board committees.

 

  Leads and oversees all of the Board and Committee assessments.

 

  Oversees director orientation and education, as described in “Director Orientation and Education” below.

 

 

 

LOGO    2018 PROXY STATEMENT  |     9


Table of Contents

 

  CORPORATE GOVERNANCE  

 

  

 

 

 

 COMPENSATION COMMITTEE

    

 

Members:

 

Phillip R. Cox (Chair), Dr. Dieter W. Düsedau, Rajesh K. Soin and Alan J. Weber

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically five times during 2017, and had informal communications with management, as well as the committee’s independent compensation consultant, at various other times during the year.

 

Contact:

 

compchair@dieboldnixdorf.com

 

Committee Report: See page 42.

  

 

Primary Duties and Responsibilities:

 

  Administers our executive compensation program.

 

  Oversees our equity plans (including reviewing and approving equity grants to executive officers).

 

  Annually reviews and approves all pay decisions relating to executive officers.

 

  Determines and measures achievement of corporate and individual goals, as applicable, by our executive officers under our short- (annual) and long-term incentive plans, and makes recommendations to the Board for ratification of such achievements.

 

  Reviews the management succession plan and proposed changes to any of our benefit plans, such as retirement plans, deferred compensation plans and 401(k) plans.

 

  For additional discussion of the committee’s role, processes and procedures in connection with executive compensation, see “Compensation Discussion and Analysis—Role of the Compensation Committee” below.

 

 

 

 FINANCE COMMITTEE

    

 

Members:

 

Alan J. Weber (Chair), Patrick W. Allender, Dr. Alexander Dibelius, Gary G. Greenfield and Robert S. Prather, Jr.

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically six times in 2017, and had informal communications with management at various other times during the year.

  

 

Primary Duties and Responsibilities:

 

  Makes recommendations to the Board with respect to material or other significant transactions.

 

  Oversees the Company’s borrowing structures and credit facilities.

 

  Establishes investment policies, including asset allocation, for our cash, short-term securities and retirement plan assets and oversees the management of those assets.

 

  Reviews our financial exposure and liabilities, including the use of derivatives and other risk management techniques.

 

  Makes recommendations to the Board related to customer financing activities and funding plans for our Company.

 

 

 

 TECHNOLOGY STRATEGY AND INNOVATION COMMITTEE

    

 

Members:

 

Richard L. Crandall (Chair), Gary G. Greenfield and Rajesh K. Soin

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically two times in 2017 and had informal communications with management at various other times during the year.

  

 

Primary Duties and Responsibilities:

 

  Assists the Board in its oversight of our investment in software and services technology and intellectual property.

 

  Evaluates our global technology and innovation strategies and initiatives, including their impact on our performance and competitive position.

 

  Evaluates management proposals for strategic software and technology investments, divestitures, and acquisitions.

 

  Provides clarification and validation to the Board on the direction of our Company as it relates to technology and innovation.

 

 

 

10     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  CORPORATE GOVERNANCE  

 

 

CORPORATE 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 Director Independence Standards;

 

  Our Corporate Governance Guidelines; and

 

  Our Code of Business Ethics.

Information on our website is not, and will not be deemed to be, a part of or incorporated into this Proxy Statement.

 

 

DIRECTOR INDEPENDENCE

 

 

 

The Board determined that each of Patrick W. Allender, Phillip R. Cox, Richard L. Crandall, Dr. Alexander Dibelius, Dr. Dieter W. Düsedau, 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 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. Gerrard Schmid and Dr. Juergen Wunram do not meet these independence standards because they are employed by us as our President and 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 2017 related to our proxy statement for our 2017 Annual Meeting of
   

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, Andreas Mattes, was a member of that Roundtable in 2017. The standard annual fees, which were paid by the Company, were $9,500 for 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 2017 for a fee of $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 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 with non-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 2017, we did not engage in any related person transaction(s) requiring disclosure under Item 404 of Regulation S-K.

 

 

 

LOGO    2018 PROXY STATEMENT  |     11


Table of Contents

 

  CORPORATE GOVERNANCE  

 

  

 

COMMUNICATIONS WITH DIRECTORS

 

 

 

The Company’s Board of Directors provides a process for shareholders to send communications to the Board. Shareholders and interested parties may communicate with our Audit, Board Governance and Compensation Committee Chairs by sending an email to the address provided in the applicable committee description above or with our non-employee directors as a group by sending an email to nonmanagementdirectors@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 to non-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.

 

 

CODE OF BUSINESS ETHICS

 

 

 

All of our directors, executive officers and employees are required to comply with certain policies and protocols concerning business ethics and conduct as provided in our Code of Business Ethics. 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 and non-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 PARTICIPATION

 

 

 

The members of the Compensation Committee during the year ended December 31, 2017 were Phillip R. Cox, Dr. Dieter W. Düsedau, Rajesh K. Soin, and Alan J. 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 2017.

 

 

DIRECTOR ORIENTATION AND EDUCATION

 

 

 

All new directors participate in a director orientation program. The Board Governance Committee oversees this introduction and orientation process during 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    LOGO


Table of Contents

 

 

COMPENSATION OF DIRECTORS

 

The following director compensation is determined by the Board at the recommendation of the Board Governance Committee. With respect to non-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 our non-employee directors during 2017 was increased from $65,000 to $75,000 following their re-election in April 2017. Our non-executive Chairman of the Board received an additional annual retainer of $100,000.

 

 

In addition to their annual retainers, our non-employee directors also received the following annual committee fees for their participation as members or as Chairs of one or more Board committees:

 

    

 

MEMBER

 

    

 

    CHAIR    

 

 

 

Audit Committee

 

  

 

 

 

 

$12,500

 

 

 

 

  

 

 

 

 

$25,000

 

 

   

 

 

Compensation Committee

 

  

 

 

 

 

$10,000

 

 

 

 

  

 

 

 

 

$20,000

 

 

 

 

 

Board Governance Committee

 

  

 

 

 

 

$  7,500

 

 

 

 

  

 

 

 

 

$15,000

 

 

 

 

 

Finance Committee

 

  

 

 

 

 

$  7,500

 

 

 

 

  

 

 

 

 

$15,000

 

 

 

 

 

Technology Strategy and Innovation Committee

 

  

 

 

 

 

$  7,500

 

 

 

 

  

 

 

 

 

$15,000

 

 

 

 

 

The varying fee amounts are intended to reflect differing levels of responsibility, meeting requirements and fiduciary duties. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year are pro-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, each non-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, each non-employee director was awarded a grant of 5,164 RSUs, subject to a one-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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     13


Table of Contents

 

  COMPENSATION OF DIRECTORS  

 

  

 

2017 DIRECTOR COMPENSATION

 

 

The following table details the compensation of our non-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 retainer amounts discussed above and the following committee fees earned in 2017.

 

  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 our non-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    LOGO


Table of Contents
 

 

  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”). Each non-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 among non-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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     15


Table of Contents

 

 

CONSIDERATION OF DIRECTOR-NOMINEES

SHAREHOLDER NOMINEES

 

 

 

The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating shareholder nominations, the Board Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under “Board Diversity, Director Qualifications and Corporate Governance Guidelines.”

The Board Governance Committee will consider any shareholder nominations for director that are properly proposed and meet the requirements set out in our Code of Regulations, which include but are not limited to:

 

  complete information as to the identity and qualifications of the proposed nominee, including name, address, present and prior business and/or professional affiliations,
   

education and experience, particular fields of expertise, and a representation that the shareholder is a holder of record;

 

  an indication of the nominee’s consent to serve as a director of the Company if elected;

 

  why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a director of the Company; and

 

  whether the shareholder intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares entitled to vote that are required to elect a nominee.

Shareholder nominations should be addressed to Diebold Nixdorf, Incorporated, Attention: Corporate Secretary, 5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077. For important additional information related to proposal requirements, see “Shareholder Proposals” below.

 

 

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.

 

 

PROXY ACCESS

 

 

 

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.

 

 

MAJORITY VOTING POLICY

 

 

 

In light of our shareholders’ approval of the amendment to the Company’s Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections, the Board adopted an amended majority voting policy, which

provides that, in an uncontested election, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” election, which we refer to as a Majority Vote Against, is expected to tender his or her

 

 

 

16     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  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:

 

  whether the Board Governance Committee is currently looking to fill a new position created by an expansion of the number of directors, or a vacancy that may exist or is anticipated on the Board;

 

  whether the current composition of the Board is consistent with the criteria described in our Corporate Governance Guidelines;

 

  whether the candidate possesses the qualifications that are generally the basis for selection of candidates to the Board, including the candidate’s applicable experience and skill set in order to support the current and future needs of the Company;

 

  whether the candidate possesses additional diversity qualifications in order to enhance the function of the Board
   

by contributing a variety of experiences, backgrounds, qualifications, technical expertise and other characteristics; and

 

  whether the candidate would be considered independent under the rules of the SEC, NYSE and our standards with respect to director independence.

Final approval of any candidate is determined by the full Board. In addition, the performance and contributions of each incumbent director are assessed as part of the Board’s annual assessment program, as discussed above in “Board and Director Assessments.”

The Board Governance Committee believes that each of 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     17


Table of Contents

 

 

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

 

 

LOGO

 

 

 

  AGE: 71

 

  DIRECTOR SINCE 2011

 

  COMMITTEES:

 Audit Committee (Chair)

 Finance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Allender retired in February 2007 as Executive Vice President, Chief Financial Officer and Secretary for Danaher Corporation, Washington, D.C. (a diversified manufacturing company).

 

He currently is a director of Brady Corporation, Milwaukee, Wisconsin (an identification solutions company), where he has served since 2007 and where he serves as Chair of the Finance Committee and as a member of the Audit and 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    LOGO


Table of Contents
 

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

 

  Phillip R. Cox

 

 

LOGO

 

 

 

  AGE: 70

 

  DIRECTOR SINCE 2005

 

  COMMITTEES:

  Compensation Committee (Chair)

  Board Governance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Cox has served as President and Chief Executive Officer of Cox Financial Corporation, Cincinnati, Ohio (a financial planning and wealth management services firm) since 1972.

 

Mr. Cox currently is a director of Cincinnati Bell Inc., Cincinnati, Ohio (a telecommunications company), where he has served as a director since 1993 and as Chairman of the Board since 2003, and where he serves as a member of the Audit and Finance, Compensation, and Governance and Nominating Committees 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     19


Table of Contents

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

  

 

 

 

 

  Richard L. Crandall

 

 

LOGO

 

 

 

  AGE: 74

 

  DIRECTOR SINCE 1996

 

  COMMITTEES:

 Technology Strategy and Innovation Committee (Chair)

 Board Governance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Crandall is Managing Partner of Aspen Venture LLC, Aspen, Colorado (a venture capital and private equity firm), in which role he has served since 2001, and Executive Chairman of Pelstar LLC, Chicago, Illinois (a medical equipment manufacturing and sales company), in which role he has served since 2007. He is also the Chairman of the Enterprise Software Roundtable, Aspen, Colorado (a CEO roundtable for the software industry), and has served in that capacity since 1995.

 

Mr. Crandall currently is the Chairperson of the Board and a member of the Corporate Responsibility and Governance Committee of Donnelley Financial Solutions, Inc., Chicago, Illinois (a financial communications and data services company). Mr. Crandall formerly was a director of R.R. Donnelley & Sons Company, Chicago, Illinois (an interactive communications provider), where he served from 2012-2016 and was a member of the Governance, Responsibility and Technology Committee. In addition, Mr. Crandall is a director and member of the Governance Committee 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    LOGO


Table of Contents
 

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

 

  Dr. Alexander Dibelius

 

 

LOGO

 

 

 

  AGE: 58

 

  DIRECTOR SINCE 2016

 

  COMMITTEES:

 Board Governance Committee

 Finance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Dr. Dibelius is Managing Partner of CVC Capital Partners (Deutschland) GmbH (a private equity advisor), in which capacity he has served since 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

 

 

LOGO

 

 

  AGE: 59

 

  DIRECTOR SINCE 2016

 

  COMMITTEES:

 Audit Committee

 Compensation Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Dr. Düsedau is a physicist and formerly a Director (Senior Partner) of McKinsey & Co. (a global management consulting firm) from 1988-2014, 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     21


Table of Contents

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

  

 

 

 

 

  Gale S. Fitzgerald

 

 

LOGO

 

 

 

  AGE: 67

 

  DIRECTOR SINCE 1999

 

  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

 

 

LOGO

 

 

 

  AGE: 63

 

  DIRECTOR SINCE 2014

 

  COMMITTEES:

  Chairman of the Board

  Finance Committee

  Technology Strategy and Innovation Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Greenfield is the non-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    LOGO


Table of Contents
 

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

 

  Gerrard B. Schmid

 

 

LOGO

 

 

 

  AGE: 49

 

  DIRECTOR SINCE 2018

 

  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’s day-to-day leadership provides him with intimate knowledge of our operations, which are a vital component of our Board discussions.

 

 

 

 

  Rajesh K. Soin

 

 

LOGO

 

 

  AGE: 70

 

  DIRECTOR SINCE 2012

 

  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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     23


Table of Contents

 

  PROPOSAL 1: ELECTION OF DIRECTORS  

 

  

 

 

 

 

  Alan J. Weber

 

 

LOGO

 

 

 

  AGE: 69

 

  DIRECTOR SINCE 2005

 

  COMMITTEES:

 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 of KGS-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.

 

 

 

 

  Dr. Juergen Wunram

 

 

LOGO

 

 

  AGE: 59

 

  DIRECTOR SINCE 2017

 

  Senior Vice President and

  Chief Operating Officer

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Dr. Juergen Wunram is Senior Vice President and Chief Operating Officer of Diebold Nixdorf, Incorporated, and has served in that capacity since February 16, 2017. He also acted as our Interim Co-President and Co-CEO from December 2017 to February 2018. Prior to this, he served as our Company’s Senior Vice President and Chief Integration Officer. Dr. Wunram also currently serves as Chief Executive Officer and President of Diebold Nixdorf AG, a position he has held since April 1, 2017. He previously served as the Chief Financial Officer of Diebold Nixdorf AG from 2007-2017 and has been a member of the management board of Diebold Nixdorf AG since 2007.

 

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 GmbH, as well as IT, security, quality and indirect procurement, provide him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, his role as CEO of Diebold Nixdorf AG provides an invaluable perspective to our Board.

 

 

 

24     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

 

BENEFICIAL OWNERSHIP

BENEFICIAL OWNERSHIP OF SHARES

 

 

To our knowledge, no person beneficially owned more than five percent of our outstanding common shares as of December 31, 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

 

      

 

7,767,6261

 

 

      

 

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

 

      

 

6,083,9884

 

 

      

 

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 19, 2018 by BlackRock, Inc. BlackRock, Inc. has sole voting power over 7,613,771 of our common shares and sole dispositive power over 7,767,626 of our common shares. BlackRock, Inc. is the parent company of the following subsidiaries that beneficially own our common shares: BlackRock Life Limited, BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, and BlackRock Investment Management, LLC. BlackRock Fund Advisors is the only BlackRock, Inc. subsidiary whose interest in our common shares is more than 5% of our common shares outstanding.

 

2  Information regarding share ownership was obtained from the Schedule 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, 2018 by The Vanguard Group. The Vanguard Group has sole voting power over 148,537 of our common shares, shared voting power over 8,402 of our common shares, sole dispositive power over 5,933,659 of our common shares, and shared dispositive power over 150,329 of our common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 141,927 of our common shares or .15% of our common shares outstanding, as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 15,012 of our common shares or .01% of our common shares outstanding, as a result of its serving as investment manager of Australian investment offerings.

 

5 

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

 

 

LOGO    2018 PROXY STATEMENT  |     25


Table of Contents

 

  BENEFICIAL OWNERSHIP  

 

  

 

  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.

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) within the meaning of Rule 13d-3(d)(1) under the Exchange Act, by (1) each director and nominee, (2) each of our named executive officers, and (3) all directors and executive officers as a group as of February 26, 2018. Ownership is also reported as of that 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.

 

  DIRECTORS AND NOMINEES:   

 

COMMON SHARES

BENEFICIALLY

OWNED1

 

 

STOCK OPTIONS

EXERCISABLE
WITHIN 60 DAYS

  

PERCENT

  OF CLASS  

 

Patrick W. Allender

 

    

 

 

 

 

3,162

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Phillip R. Cox

 

    

 

 

 

 

5,164

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Richard L. Crandall

 

    

 

 

 

 

22,453

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Dr. Alexander Dibelius

 

    

 

 

 

 

5,164

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Dr. Dieter W. Düsedau

 

    

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Gale S. Fitzgerald

 

    

 

 

 

 

18,251

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Gary G. Greenfield

 

    

 

 

 

 

16,364

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Robert S. Prather

 

    

 

 

 

 

20,564

 

 

2 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Gerrard B. Schmid

 

    

 

 

 

 

 

 

3 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Rajesh K. Soin

 

    

 

 

 

 

19,364

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Henry D.G. Wallace

 

    

 

 

 

 

49,114

 

 

2 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Alan J. Weber

 

    

 

 

 

 

17,864

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

*

 

 

 

 

Named Executive Officers:

 

             

 

Dr. Juergen Wunram
Senior Vice President and Chief Operating Officer

 

    

 

 

 

 

4,913

 

 

3 

 

   

 

 

 

 

25,118

 

 

 

    

 

 

 

 

*

 

 

 

 

Christopher A. Chapman
Senior Vice President and Chief Financial Officer

 

    

 

 

 

 

30,773

 

 

3,4 

 

   

 

 

 

 

137,864

 

 

 

    

 

 

 

 

*

 

 

 

 

Andreas W. Mattes5
Former Chief Executive Officer and President

 

    

 

 

 

 

 

207,078

 

 

 

 

 

   

 

 

 

 

852,848

 

 

 

    

 

 

 

 

1.38

 

 

%

 

 

Jonathan B. Leiken
Senior Vice President, Chief Legal Officer and Secretary

 

      
14,921
3 
   

 

 

 

 

53,409

 

 

 

    

 

 

 

 

*

 

 

 

 

Dr. Ulrich Näher
Senior Vice President, Systems

 

    

 

 

 

 

3,919

 

 

3 

 

   

 

 

 

 

16,550

 

 

 

    

 

 

 

 

*

 

 

 

 

Olaf Heyden
Senior Vice President, Services

 

    

 

 

 

 

3,919

 

 

3 

 

   

 

 

 

 

16,550

 

 

 

    

 

 

 

 

*

 

 

 

 

Eckard Heidloff5
Former President

 

    

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

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 our non-employee directors under the Deferred Compensation Plan No. 2 for Directors. The amounts of such deferred shares are: Mr. Allender, 23,352; Mr. Cox, 20,550; Mr. Crandall, 20,900; Dr. Düsedau, 5,164; Ms. Fitzgerald, 33,352; Mr. Soin, 7,450; and Mr. Weber, 20,150.

 

2  Includes all shares deferred under the Deferred Compensation Plan No. 2 for Directors which are scheduled to be released upon the end of their service as a director of the board.

 

 

26     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  BENEFICIAL OWNERSHIP  

 

 

 

3  Beneficial ownership excludes unvested RSUs that will not vest within 60 days of February 26, 2018. The number of unvested RSUs held is: Dr. Wunram, 32,544; Mr. Chapman, 38,056; Mr. Leiken, 28,994; Dr. Näher, 21,443; Mr. Heyden, 21,443; and Mr. Schmid, 108,945.

 

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, 2017, our directors, executive officers and greater than 10% shareholders timely filed all reports they were required to file under Section 16(a).

 

 

 

LOGO    2018 PROXY STATEMENT  |     27


Table of Contents

 

 

PROPOSAL 2: RATIFICATION OF

APPOINTMENT OF OUR INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

BOARD RECOMMENDATION

 

 

 

  

 

  

FOR Proposal 2

 

 

The Audit Committee has again appointed KPMG LLP, our independent registered public accounting firm since 1965, to examine our accounts and other records for the year ending December 31, 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 AND NON-AUDIT FEES

 

The following table shows the aggregate fees billed to us for the annual audit and the review of the interim financial statements and other services provided by KPMG LLP for fiscal 2017 and 2016.

 

    

 

2017

 

    

 

2016

 

 

 

Audit Fees1

 

  

 

$

 

 

7,792,000

 

 

 

 

  

 

$

 

 

7,490,000

 

 

 

 

 

Audit-Related Fees

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

Tax Fees2

 

  

 

$

 

 

1,045,000

 

 

 

 

  

 

$

 

 

344,000

 

 

 

 

 

All Other Fees3

 

  

 

$

 

 

1,024,000

 

 

 

 

  

 

$

 

 

718,000

 

 

 

 

 

Total

 

  

 

$

 

 

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. These fees include services provided by KPMG LLP in connection with the Company’s revenue recognition standard readiness efforts.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent registered public accounting firm.

 

 

28     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  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 any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegated pre-approval authority to Patrick W. Allender, Chair of the Audit Committee, when expedition of services is necessary, provided that Mr. Allender must report any decisions to pre-approve to the full Audit Committee at its next scheduled meeting. All of the fees included under the categories “Audit-Related Fees,” “Tax Fees” and “All Other Fees” above were pre-approved by the Audit Committee. None of these fees were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC.

RECOMMENDATION OF THE BOARD

 

 

The Board recommends a vote FOR the approval of this Proposal 2.

 

 

LOGO    2018 PROXY STATEMENT  |     29


Table of Contents

 

 

PROPOSAL 3: APPROVAL, ON AN ADVISORY

BASIS, OF OUR NAMED EXECUTIVE OFFICER

COMPENSATION

BOARD RECOMMENDATION

 

 

 

 

  

 

  

FOR Proposal 3

 

 

In this Proposal 3, as required by Section 14A of the Exchange Act and pursuant to Rule 14a-21(a) promulgated thereunder, we are providing our shareholders the opportunity to cast an advisory (non-binding) vote to approve the compensation paid to our 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 vote FOR the following resolution:

“RESOLVED, that the compensation of our named executive officers as disclosed pursuant to the compensation rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby APPROVED.”

 

RECOMMENDATION OF THE BOARD

 

 

The Board recommends a vote FOR the approval of this Proposal 3.

 

 

30     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

 

PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN

BOARD RECOMMENDATION

 

 

 

 

  

 

  

FOR Proposal 4

 

 

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.

 

 

SHARE REQUEST BACKGROUND

 

 

 

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 26, 2018, 2,278,584 common shares remain available for grants under the 2017 Plan. With the proposed 1,150,000 share increase, approximately 3,428,584 will be available for issuance under the 2017 Plan, which represents approximately 4.5% of our 75,943,793 shares outstanding as of February 26, 2018. Absent an increase in the number of authorized shares under the 2017 Plan, 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 and non-employee Board members. We believe that increasing the number of shares issuable under the 2017 Plan is necessary in order to allow us to continue to utilize equity awards to retain and attract the services of key individuals essential to our long-term growth and financial success and to further align their interests with those of our shareholders. We rely on equity awards to incentivize current and potential employees

and non-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 believe this would be practical or advisable at this time. Any significant increase in cash compensation in lieu of equity awards would reduce the cash otherwise available for operations and investment in our 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 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 and non-employee directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the 2017 Plan.

The material features and provisions of the 2017 Plan are summarized below. The full text of the 2017 Plan, as proposed to be amended to reflect the changes described above, is attached as Appendix A to this Proxy Statement. The following description is not complete and is qualified in its entirety by reference to that exhibit.

 

 

 

LOGO    2018 PROXY STATEMENT  |     31


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017  EQUITY AND PERFORMANCE INCENTIVE PLAN   

 

  

 

2017 PLAN 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, performance-based shares, performance units, dividend equivalents and other share-based awards for the purpose of providing our non-employee directors, officers and other employees (and those of our subsidiaries) with incentives and rewards for performance.

We believe our future success depends in part on our ability to attract, motivate and retain high quality employees and non-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 our non-employee directors, officers and other employees.

As discussed in the “Compensation Discussion and Analysis” section, the use of our common shares as part of our compensation program fosters a pay-for-performance culture that is an important element of our overall compensation philosophy. We believe that equity compensation motivates non-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 our non-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-

based awards will be deferred until and paid contingent upon the level of achievement of the applicable management performance goals.

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.

Minimum Vesting Period: The 2017 Plan requires that nearly all awards granted under it be subject to a one-year minimum vesting period.

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 of the plan.

 

 

 

32     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF,  INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

SHARE USAGE

 

 

 

We are committed to sound equity compensation practices because we recognize that equity compensation awards dilute shareholder equity. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of shareholder interests. For purposes of evaluating our equity compensation program, shareholders may wish to consider two metrics: historical burn rate and overhang.

 

  Historical burn rate: Our historical burn rate is equal to the number of shares subject to equity awards granted during a period, in proportion to our outstanding shares. Our burn rate for 2017 was 4.27%, and our three-year average burn rate for 2015 through 2017 was 3.04%.

 

  Overhang: Our overhang is the number of shares subject to unvested equity awards outstanding at year-end plus the
   

number of shares available for future grants of equity awards in proportion to our shares outstanding at year-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 Performance Incentive Plan, as amended (which we refer to as the 1991 Plan) is below. The information is as of February 26, 2018. As of that date, there were 75,943,852 of our common shares outstanding. We replaced the 1991 Plan with the 2017 Plan at last year’s annual meeting. No additional awards will be made under the 1991 Plan, and therefore the table below reflects that no shares are available for future issuance under the 1991 Plan. The 2017 Plan is the sole compensation plan 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 7.90%

of our outstanding shares

 

 

Outstanding stock options under the 1991 Plan and 2017 Plan

 

  

 

2,642,526 shares or 3.48% of

our outstanding shares

 

 

Weighted average exercise price of outstanding options under the 1991 Plan and 2017 Plan

 

  

 

$27.30

 

 

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 11.38% of

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 1,150,000 additional shares as a percentage of outstanding shares

 

  

 

1.51%

 

 

Total potential fully-diluted overhang under the 1991 Plan and the 2017 Plan, as amended pursuant to this proposal

 

  

 

12,072,602 shares or 15.9%.

 

 

Based on the closing price on the NYSE for our common shares on February 26, 2018, of $15.40 per share, the aggregate market value as of that date of the 1,150,000 additional common shares requested for issuance under the amended 2017 Plan was $17,710,000.

In 2015, 2016 and 2017, we granted awards (including performance-based awards) under the 1991 Plan covering 1,563,000 shares, 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 by our shareholders pursuant to the amendments, our

management team worked with advisors and the Compensation Committee to evaluate a number of factors including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating this proposal. We have also considered shareholder feedback in determining an appropriate number of shares to seek to add to the 2017 Plan, and are mindful of the ratio of our stock-based compensation to our performance over time.

If the amendments to the 2017 Plan are 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 one year, based on our historic grant rates and the approximate current stock price, but could

 

 

 

LOGO    2018 PROXY STATEMENT  |     33


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017  EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

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 retains full discretion under the 2017 Plan to determine the number and amount of awards to

be granted under the 2017 Plan, subject to the terms of the 2017 Plan, and future benefits that may be received by participants under the 2017 Plan are not determinable at this time.

 

 

SUMMARY OF MATERIAL TERMS OF THE 2017 PLAN

 

 

 

Shares Available Under the 2017 Plan: Subject to adjustment as provided in the 2017 Plan 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;

 

  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 6,091,117 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: Assuming adoption of Proposal 4, the following limits apply to awards under the 2017 Plan (subject to limited permitted adjustment under the 2017 Plan):

 

  Aggregate number of common shares issued upon exercise of incentive stock options shall not exceed 6,091,117; and

 

  With respect to non-employee directors, the aggregate dollar value of awards granted to any non-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’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 1,000 people) and our non-employee directors (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 to non-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 for an option will not be less than 100% of the common shares’ fair market value on the date of grant (or,

 

 

 

34     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF,  INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

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 a 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 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.

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.

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 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 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,

 

 

 

LOGO    2018 PROXY STATEMENT  |     35


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017  EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

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.

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. 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.

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.

Generally, 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.

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 more non-employee 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 of Rule 16b-3.

 

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 under Rule 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.

 

 

 

36     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF,  INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

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 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 common shares that the participant has not disposed of that were offered pursuant to the 2017 Plan within a specified period prior to the date of the commencement of such detrimental activity, and

 

(B) With respect to any common shares so acquired that the participant has disposed of, pay to us in cash the difference between:

 

  (i) Any amount actually paid therefor by the participant pursuant to the 2017 Plan, and
  (ii) The market value per share of the common shares on the date of such acquisition.

To the extent that such amounts are not paid to us, we may set off the amounts so payable to us against any amounts (but only to the extent that such amount would not be considered “non-qualified deferred compensation” under Section 409A of the Code) that may be owing from time to time by us or one of our subsidiaries to the participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason.

Clawback: Any award under the 2017 Plan that is subject to recovery under any law, government regulation or stock exchange listing requirement (or any policy adopted by us pursuant to those requirements or pursuant to direction of the Board, including our current clawback policy) will be subject to clawback and deduction as required or permitted by law, regulation, listing requirement or policy.

No Repricing Without Shareholder Approval: Subject to certain tax-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 common 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     37


Table of Contents

 

  PROPOSAL 4: APPROVAL OF AMENDMENTS TO THE DIEBOLD NIXDORF, INCORPORATED 2017  EQUITY AND PERFORMANCE INCENTIVE PLAN  

 

  

 

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, 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 a non-qualified option right is granted; (ii) at the time of exercise of a non-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 a non-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 a 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): Generally, the recipient of an RSU award will not recognize income on the grant date. When any part of an RSU award is paid (in the case of cash) or delivered (in the case of unrestricted common shares), the participant will have taxable ordinary income on such date of receipt in an amount equal to the cash 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 the earn-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

 

 

 

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    LOGO


Table of Contents

 

  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 covered employees under Section 162(m) of the Code (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 proxy 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 for any compensation paid to its expanded number of Covered Employees in excess of $1 million per Covered Employee, including compensation relating to awards under the 2017 Plan. The 2017 Plan, as amended, eliminates certain provisions to reflect this change in law.

 

 

REGISTRATION WITH THE SEC

 

 

 

We intend to file a Registration Statement on Form S-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.

 

 

EXISTING 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.

 

 

 

LOGO    2018 PROXY STATEMENT  |     39


Table of Contents

 

  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, (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 current non-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 option re-pricing transaction, and the terms of the stock options have not been materially modified.

 

 

40     |  2018 PROXY STATEMENT    LOGO


Table of Contents

 

  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, 2017 and pertains to our 1991 Plan 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)

 

 

 

Equity compensation plans approved by security holders

 

     

 

Stock options

 

   

 

2,294,781      

 

 

 

   

 

$29.68          

 

 

 

   

 

N/A              

 

 

 

 

Restricted stock units

 

   

 

1,278,959      

 

 

 

   

 

N/A          

 

 

 

   

 

N/A              

 

 

 

 

Performance shares

 

   

 

2,500,734      

 

 

 

   

 

N/A          

 

 

 

   

 

N/A              

 

 

 

 

Non-employee director deferred shares

 

   

 

125,800      

 

 

 

   

 

N/A          

 

 

 

   

 

N/A              

 

 

 

 

Deferred compensation

 

   

 

815      

 

 

 

   

 

N/A          

 

 

 

   

 

N/A              

 

 

 

 

Total

 

   

 

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 and non-employee director deferred shares is approved in total and not individually.

VOTE REQUIRED TO APPROVE THE AMENDMENTS TO THE 2017 PLAN

 

 

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 therefore will have the effect of a vote “against” the proposal. Broker non-votes will not be counted for determining whether the proposal is passed. If the amendments to the 2017 Plan 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 BOARD

 

 

The Board recommends a vote FOR the approval of the amendments to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan.

 

 

LOGO    2018 PROXY STATEMENT  |     41


Table of Contents

 

 

EXECUTIVE COMPENSATION MATTERS

COMPENSATION COMMITTEE REPORT

 

 

 

The Compensation Committee has reviewed and discussed with management the following “Compensation Discussion and Analysis” section of this Proxy Statement. Based on our review and discussions, we recommended to the Board that the “Compensation Discussion and Analysis” be included (or incorporated by reference as applicable) in our Annual Report on Form 10-K for the year ended December 31, 2017 and this Proxy Statement.

The foregoing report was submitted by the Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act.

The Compensation Committee:

Phillip R. Cox, Chair

Dr. Dieter Düsedau

Rajesh K. Soin

Alan J. Weber

 

 

COMPENSATION 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, or the NEOs, identified below, and explains how and why the Committee arrived at specific compensation policies and decisions for our NEOs in 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 disclosures in this Compensation Discussion and Analysis will exclude Messrs. Mattes and Heidloff because their compensation was determined by the terms of their agreements, rather than the Compensation Committee’s determination following our year-end performance results.

Mr. Christopher A. Chapman, our Senior Vice President and Chief Financial Officer, and Dr. Juergen Wunram, our Senior Vice President and Chief Operating Officer, served as Interim Co-Presidents and Co-CEOs of the Office of the Chief Executive from December 13, 2017 to February 21, 2018. Mr. Gerrard Schmid joined the Company as President and Chief Executive Officer on February 21, 2018.

 

 

  NAME    TITLE

 

Dr. Juergen Wunram*

 

  

 

Senior Vice President and Chief Operating Officer

 

 

Christopher A. Chapman*

 

  

 

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. Ulrich Näher

 

  

 

Senior Vice President, Systems

 

 

Olaf Heyden

 

  

 

Senior Vice President, Services

 

 

Eckard Heidloff

 

  

 

Former President

 

 

* Dr. Wunram and Mr. Chapman served as Interim Co-Presidents and Co-CEOs until February 21, 2018.

 

 

42     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

To assist shareholders in finding important information, this “Compensation Discussion and Analysis” is organized as follows:

 

     PAGE  
EXECUTIVE SUMMARY      43  

 

2017 Company Highlights

  

 

 

 

43

 

 

 

2017 Say-on-Pay Vote and Shareholder Engagement

  

 

 

 

43

 

 

 

Executive Compensation Best Practices

  

 

 

 

45

 

 

 

Our Compensation Strategy

  

 

 

 

46

 

 

 

2017 NEO Compensation Highlights – Target Compensation Structure

  

 

 

 

48

 

 

 

Compensation Pay Mix

  

 

 

 

49

 

 

 

2017 NEO Compensation Highlights – Actual Earned Compensation

  

 

 

 

49

 

 

COMPENSATION DECISION PROCESS      50  

 

Role of the Compensation Committee

     50  

 

Role of the Independent Compensation Consultant

     50  

 

Role of Management

     51  

 

Role of Peer Companies and Competitive Market Data

     51  

 

Timing of Compensation Decisions

     52  

 

Determination of CEO and Interim Co-Presidents’ and Co-CEOs’ Compensation

     52  
2017 COMPENSATION ELEMENTS      52  

 

Base Salary

     52  

 

Annual Cash Bonus Plan

     53  

 

Target Opportunities

     53  

 

Financial Performance Metrics

     54  

 

Key Business Initiative Performance Metrics

     54  

 

2017 Actual Bonuses Earned

     55  
     PAGE  

 

Long-Term Incentives – 2017 Regular Annual Grants

     55  

 

Performance-based Shares (50%)

     56  

 

Stock Options (30%)

     56  

 

RSUs (20%)

     56  

 

Long-Term Incentives – Additional RSU Grants to Messrs. Chapman and Leiken

     56  

 

Long-Term Incentives – Performance-Based Synergy Grants

     56  

 

Long-Term Incentives – Performance-Based Cash Incentive Awards

     57  

 

Long-Term Incentives – Completed Performance Cycles

     58  

 

Benefits and Perquisites

     58  

 

Deferred Compensation

     59  

 

Retirement

     59  

 

Perquisites and Fringe Benefits

     59  

 

Change-in-Control Protection

     60  

 

Severance Protection

     60  
EMPLOYMENT AGREEMENTS      61  
OTHER COMPENSATION POLICIES      61  

 

Clawback Policy

     61  

 

Insider Trading Policy

     61  

 

Company-Imposed Black-Out Periods

     61  

 

Stock Ownership Guidelines

     62  

 

Tax Reform and Limitations on Deductibility of Compensation

     62  
 

 

EXECUTIVE SUMMARY

 

 

 

2017 COMPANY HIGHLIGHTS

During 2017, Diebold Nixdorf launched the DN2020 integration and transformation program and realized more than $100 million of cost savings during the year. We continue to make progress on our integration, including compensation program adjustments and decisions to drive realization of those goals as quickly and efficiently as possible this past year. We rationalized the manufacturing footprint from a capacity of approximately 180,000 ATMs per year to approximately 100,000 ATMs per year and consolidated approximately 25% of service parts depots across the globe. We introduced new mobility management services and won a number of retail contracts to modernize checkout solutions and implement omni-channel retailing.

In the governance and compensation space, 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.

2017 SAY-ON-PAY VOTE AND SHAREHOLDER ENGAGEMENT

At our 2017 annual meeting of shareholders, the advisory vote to approve the executive compensation program for our NEOs received solid support (95.9% of votes cast), representing a significant increase from the prior year. We value the input of our shareholders and are committed to maintaining a dialogue with portfolio managers, corporate governance and executive compensation professionals. In 2017, we contacted shareholders collectively representing more than 60% of our outstanding shares. Employees from our Human Resources, Investor Relations and Legal departments had extensive and meaningful dialogue with shareholders who collectively owned approximately 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

 

 

 

LOGO    2018 PROXY STATEMENT  |     43


Table of Contents

 

  EXECUTIVE COMPENSATION MATTERS  

 

  

 

proxy advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., to understand their views.

Shareholders and the proxy advisory firms provided varying levels of feedback related to pay-for-performance alignment, incentive metrics, the clarity of our disclosure, the impact of the Wincor Nixdorf acquisition and integration on our future executive compensation structure. We considered this feedback, as well as the results of last year’s Say-on-Pay proposal, for our executive compensation program as we continue to prioritize our efforts on delivering on our long-term strategic goals and bringing value to our shareholders. For example, the “Compensation Discussion and Analysis” disclosure was enhanced to make our compensation process clearer and more transparent, as discussed with shareholders. Our discussions focused on a number of key issues including, but not limited to, compensation programs and achievements related to the integration of Wincor Nixdorf, performance goal disclosures and actual achievement against those goals, and compensation earned versus approved targets. Such discussions also addressed certain governance topics around director succession and diversity initiatives of the 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 more than 75% of Diebold Nixdorf’s actively-managed shares during 2017. Our recurring investor outreach activities are robust, and include non-deal road shows, analyst meetings, investor conference presentations, phone calls and on-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 archived on our website.

We view an on-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    LOGO


Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

EXECUTIVE COMPENSATION BEST PRACTICES

We maintain “best practice” executive compensation governance standards. Some of our following guidelines and policies are described in more detail below under “Other Compensation Policies” or elsewhere in this “Compensation Discussion and Analysis”:

 

   

 

WHAT WE DO

 

     

 

WHAT WE DON’T DO/DON’T ALLOW

 

 

LOGO

 

 

 

Set stock ownership guidelines for executives and directors.

 

 

 

     LOGO     

 

 

 

No hedging or pledging of our stock by executives or directors.

 

 

LOGO

 

 

 

Prescribe an annual limit on equity compensation for our directors.

 

 

 

     LOGO     

 

 

 

No dividends paid on unearned performance-based shares.

 

 

LOGO

 

 

 

Review tally sheets for executives.

 

 

 

     LOGO     

 

 

 

No change-in-control severance multiple in excess of two times salary and target cash bonus.

 

 

LOGO

 

 

 

Disclose performance goals for incentive payments.

 

 

 

     LOGO     

 

 

 

No excise tax gross-ups upon a change in control.

 

 

LOGO

 

 

 

Set maximum payout caps on our annual and long-term incentives.

 

 

 

     LOGO     

 

 

 

No re-pricing or cash buyout of underwater stock options.

 

 

LOGO

 

 

 

Pay for performance with 87% of our Chief Executive Officer’s target total pay opportunity being performance-based “at risk” compensation.

 

 

 

     LOGO     

 

 

 

No enhanced retirement formulas.

 

 

LOGO

 

 

 

Provide a minimum vesting period of at least one year for at least 95% of our equity awards.

 

 

 

     LOGO     

 

 

 

No market timing with granting of equity awards.

 

 

LOGO

 

 

 

Cap performance share payments if three-year shareholder return is negative, regardless of our ranking.

 

   

 

LOGO

 

 

 

Limit perquisites and other benefits, and do not include income tax gross-ups (except for relocation expenses).

 

   

 

LOGO

 

 

 

Hire an independent consultant reporting directly to the Committee.

 

   

 

LOGO

 

 

 

Through the Committee’s independent consultant, engage in an ongoing assessment of our compensation practices against the market, our competition, and other applicable metrics.

 

   

 

LOGO

 

 

 

Incorporate general cash severance and change-in-control provisions that are consistent with market practice, including double-trigger requirements for certain change-in-control protection.

 

   

 

LOGO

 

 

 

Perform an annual compensation risk assessment.

 

   

 

LOGO

 

 

 

Enforce strict insider trading policies, incentive plan clawback policies, and black-out periods for executives and directors.

 

       

 

 

LOGO    2018 PROXY STATEMENT  |     45


Table of Contents

 

  EXECUTIVE COMPENSATION MATTERS  

 

  

 

OUR COMPENSATION STRATEGY

Our executive pay program is specifically designed to:

 

  Focus on performance metrics that align executives with the creation relative of long-term shareholder value through performance-based compensation, including the direct utilization of relative total shareholder return, or rTSR;

 

  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 2017 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. In 2017, as discussed later in this Proxy Statement, we made one-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 a one-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 unique one-time grants, our target compensation structure for senior leadership is as follows:

 

 

LOGO

As provided in more detail below, we generally target total compensation opportunity at or near the size-adjusted 50th percentile of our compensation peer group (for more detail on our peer group, see “Role of Peer Companies and Competitive Market Data” below). The NEOs may be above or below the 50th percentile based on their experience, performance, potential, and impact on shareholder value. Our compensation structure will continue to evolve in support of our strategic plan, DN2020.

 

 

46     |  2018 PROXY STATEMENT    LOGO

Total Compensation Opportunity Base Salary Annual Cash Bonus Long-Term Equity Incentives 50% Performance-Based Shares 30% Stock Options 20% Restricted Stock Units


Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

The following table summarizes key elements of our 2017 executive compensation program:

 

 

ELEMENT

 

 

PRIMARY PURPOSE

 

 

KEY CHARACTERISTICS

Base Salary

 

To compensate the executive fairly and competitively
for the responsibility level of the position.

 

  Fixed compensation component.

Annual Cash Bonus

 

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 2017 primary performance components are:

 

Corporate Goals (80%)

Corporate non-GAAP Operating Profit (50%)

Corporate Free Cash Flow (30%)

 

Individual Business Goals (20%)

Key Initiatives

 

Performance Gate: A minimum level of corporate non-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 of long-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 400 Mid-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 this one-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 limited business-related benefits, where appropriate.

 

  Fixed compensation component.

Change-in-Control Protection

 

 

To retain executives and provide management continuity in event of actual or threatened change-in-control and to bridge future employment if terminated following a change-in-control of the Company.

 

  Fixed compensation component; only paid in the event the executive’s employment is terminated following a change-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.”

 

 

LOGO    2018 PROXY STATEMENT  |     47


Table of Contents

 

  EXECUTIVE COMPENSATION MATTERS  

 

  

 

2017 NEO COMPENSATION HIGHLIGHTSTARGET 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 2017. Each element is discussed in detail in “2017 Compensation Elements.” The mix of pay elements is consistent with similar roles at our peer companies.

 

  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 or long-term incentive opportunity.

 

  Mr. Mattes: No change in base salary or target bonus (as a percent of salary). Long-term incentive opportunity was increased from 450% of salary to 500% of salary to enhance long-term orientation and maintain a 50th percentile target total compensation opportunity.

 

  Mr. Leiken: Increased base salary from $440,000 to $475,000 and increased long-term incentive opportunity from 100% of salary to 150% 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.

 

  Dr. Näher: Increased base salary from 430,000 to 470,000 and increased long-term incentive opportunity from 100% of salary to 150% 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. 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 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.

 

  Our 2017 long-term incentive value mix was 50% performance-based shares, 30% stock options, and 20% RSUs.

In summary, the NEOs had the following total compensation structure for 2017:

 

  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

 

%

 

      

 

500

 

%

 

 

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

 

%

 

 

 

48     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

COMPENSATION PAY MIX

 

 

 

LOGO    LOGO

2017 NEO COMPENSATION HIGHLIGHTS—ACTUAL EARNED COMPENSATION

The below table represents the Committee’s view of the compensation actually earned and paid to the NEOs in 2017. Due to their departures during the fiscal year 2017, we are not presenting this information with respect to Messrs. Heidloff and Mattes.

 

 

 

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 2017 vs. the intended target at grant date. It includes earned and targeted values for 2017 base salary, 2017 annual bonus, and long-term incentives with scheduled vesting in 2017.

 

** “Total Earned Compensation” calculated using the exchange rate for Euros to U.S. dollars in effect on the grant date of 1.07048 for the bonus and the average exchange rate for 2017 of 1.12949 for the base salary.

 

 

LOGO    2018 PROXY STATEMENT  |     49

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%


Table of Contents

 

  EXECUTIVE COMPENSATION MATTERS  

 

  

 

The following incentive compensation payouts for 2017 performance were approved, each discussed further in “2017 Compensation Elements” below:

 

  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 the non-GAAP operating profit and free cash flow
target. No payout for these portions of the awards.

 

  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 cumulative non-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.

COMPENSATION DECISION PROCESS

 

 

 

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.

Following review and discussion, the Committee submits recommendations to the Board for ratification. The Committee is supported in its work by the Chief People 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.

ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

The Committee retains an independent compensation consultant, Aon Hewitt, in accordance with the Committee’s charter. The consultant reports directly to the Committee. The Committee retains sole authority to hire or terminate Aon

 

 

 

50     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  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;”

 

  Performs an annual compensation risk assessment;

 

  Advising the Committee on management’s pay recommendations; and

 

  From time to time, reviewing and providing compensation recommendations for non-employee directors to the Board Governance Committee.

In 2017, the professional fees for the executive compensation services were approximately $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 $665,000 in 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.

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 in Section 240.10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to Aon Hewitt. Based on this

review, the Committee determined there are no conflicts of interest raised by the work performed by Aon Hewitt.

ROLE OF MANAGEMENT

Our Chief People 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 People Officer make pay recommendations to the Committee based on market pay comparisons and an analysis of each executive’s individual performance. No member of our management team, including the CEO, has a role in making pay recommendations to the Committee for his or her own position.

ROLE OF PEER COMPANIES AND COMPETITIVE MARKET DATA

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 Nixdorf’s annual revenues, with a secondary reference being market capitalization of approximately 0.2 to 5 times Diebold Nixdorf’s market capitalization, with exceptions reviewed as needed;

 

  Direct competitors for business and management talent;

 

  Companies covered by the investment analysts that track Diebold Nixdorf;

 

  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 and development.
 

 

 

LOGO    2018 PROXY STATEMENT  |     51


Table of Contents

 

  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.

 

The average and median annualized revenues for the peer companies were $4.7B and $3.7B, respectively, when the Committee approved the peer group. The projected annual revenues for the newly combined business were approximately $5B, which was used to develop size-adjusted market values through regression analysis. The size-adjusted 50th percentile for total compensation is a key reference point for the Committee. For executive positions where peer company proxy data is not available, Aon Hewitt utilized published and private compensation survey sources.

TIMING OF COMPENSATION DECISIONS

Pay recommendations for our executives, including the NEOs, are typically made by the Committee at its first scheduled meeting of the year, normally held in late January or early February. This meeting is normally held around the same time we report our fourth quarter and year-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 material non-public information.

The exceptions to this timing are awards to executives who are promoted or hired from outside the Company during the year. These executives may receive salary increases or equity awards effective or dated, as applicable, as of the date of their promotion or hire.

DETERMINATION OF CEO AND INTERIM CO-PRESIDENTS’ AND CO-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 Interim Co-Presidents and Co-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 Interim Co-Presidents and Co-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.

 

 

2017 COMPENSATION ELEMENTS

 

 

 

BASE SALARY

Base salary compensates the executive fairly and competitively for the responsibility level of the position. The Committee reviews the salaries of our executive officers annually against

competitive market data. Salary adjustments result primarily from a combination of competitive market data, individual and company performance, internal equity considerations, promotions, and the executive’s specific responsibilities.

 

 

 

52     |  2018 PROXY STATEMENT    LOGO


Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

For 2017, the Committee reviewed competitive market data and individual performance assessments for the NEOs and approved the following values at the February 2017 Committee meeting:

 

 

  NAME

 

  

2016 SALARY

 

    

2017 SALARY   

 

 

 

Dr. Juergen Wunram

 

  

 

          

 

 

500,000          

 

 

 

 

  

 

          

 

 

535,000