Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On February 21, 2018, Diebold Nixdorf, Incorporated (the
Company) announced that its Board of Directors had appointed Gerrard Schmid as the Companys President and Chief Executive Officer and also appointed him to the Board of Directors, both effective immediately. Mr. Schmid will
become the Companys principal executive officer after the Company files its Annual Report on Form
10-K
for the fiscal year ended December 31, 2017 with the Securities and Exchange Commission.
Mr. Schmid, age 49, served since 2012 as Chief Executive Officer and a director of D+H Corporation (D+H), a Canadian company
that operates as a global payments and lending technology provider. D+H was publicly listed on the Toronto Stock Exchange until its merger with Misys in 2017. Additionally, Mr. Schmid served on the boards of directors of D+H USA Corporation
from 2015 until 2017 and D&H India Ltd. from 2015 until 2017. Since 2017, Mr. Schmid has served as a member of the advisory boards of Difenda, a privately-held Canadian company specializing in cyber-security, and Ryzio, a privately-held
Canadian company providing mental health services.
In connection with his election as the Companys President and Chief Executive
Officer, on February 21, 2018, the Company and Mr. Schmid agreed to an offer letter (the Offer Letter) pursuant to which Mr. Schmid will receive an annual base salary of at least $950,000 and will be eligible for annual
incentive awards and long-term incentive plan awards as determined by the Company. For 2018, the Board set his initial annual cash incentive award target at $1,330,000, which represents 140% of his base salary. Any payout under this incentive award
shall be determined by the Board based on the achievement of certain performance goals.
The Board also granted Mr. Schmid options,
performance share units and restricted stock units as a material inducement to his hiring. Pursuant to the terms the CEO Inducement Award Agreement, dated February 21, 2018 (the Award Agreement), Mr. Schmid received (i) 192,049
options with an exercise price of $15.35 per share and which will vest in three equal installments on the first, second, and third anniversary of the grant date; (ii) 155,636 performance share units, which will be earned, if at all, based on the
target level of achievement of established performance metrics during the three-year performance period from the grant date; and (iii) 108,945 restricted stock units, which will vest in three equal installments on the first, second, and third
anniversaries of the grant date. This inducement award was approved by all of the Companys independent directors and was made outside of the terms of the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, in reliance on
the exemption under the NYSE Listed Company Manual Rule 303A.08. Once vested, equity grants will not be subject to forfeiture unless Mr. Schmid is terminated for certain activities constituting cause (as defined in the Award Agreement). In the
event Mr. Schmids employment is terminated by the Company without cause or he resigns for good reason (as defined in the Award Agreement) within three years after a change in control, he will be entitled to 100% accelerated vesting of all
such outstanding equity interests, with performance awards earned at the greater of target or actual performance as of the date of termination.
Mr. Schmids severance benefits will be governed by the Companys current Senior
Leadership Severance Plan (the SLSP), which provides coverage to executives who are involuntarily terminated without cause or who terminate their employment for good reason (as defined in the SLSP), in each case separate from a
change-in-control
and subject to a general release of claims and acknowledgement of the executives confidentiality,
non-competition
and other applicable obligations. This policy generally provides for (1) a lump sum payment equal to two times base salary in effect on the date of termination and target bonus opportunity
under the Companys Annual Cash Bonus Plan in the year of termination, (2) a lump sum
pro-rata
payment of the bonus under our Annual Cash Bonus Plan, based upon the time employed in the year of
termination and actual full-year performance results, (3) continued participation in all of our employee health and welfare benefit plans for the shorter of (i) two years and (ii) the date Mr. Schmid receives equivalent coverage
from a subsequent employer, (4) all outstanding unvested options immediately vest and generally remain exercisable for a period of twelve months (or the earlier scheduled expiration) following the date of termination, (5) all outstanding
restricted stock units vest
pro-rata
based upon the time employed in the year of termination relative to the vesting period of the restricted stock units,
(6) pro-rata
performance-based share amounts based upon the time employed in the year of termination relative to the performance period, to the extent such awards are earned, payable when such awards are
generally paid to others; and (7) professional outplacement services for up to two years. With respect to Mr. Schmid, good reason as defined in the SLSP shall also include a change in title, authority, duties or
responsibilities or the assignment of any duties that are inconsistent with his position.
The Company also entered into a Change in
Control Agreement, dated February 21, 2018 (Change in Control Agreement) with Mr. Schmid consistent with the Companys existing program. Any benefits under the Change in Control Agreement are paid only following both
(1) a
change-in-control
(as defined in the Change in Control Agreement) and (2) a termination of Mr. Schmids employment without cause by the
Company, or by him with good reason (as such terms are defined in the Change in Control Agreement) in the three-year period following a
change-in-control.
Under such
circumstances, Mr. Schmid may be eligible for (i) a lump sum payment equal to two times base salary and target cash bonus, (ii) the acceleration of outstanding equity awards, (iii) payment of outstanding performance awards at the
greater of target or actual performance, (iv) two years of continued participation in the Companys health and welfare benefit plans, and (v) a lump sum payment in an amount equal to the additional benefits Mr. Schmid would have
accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan for one additional year of service, provided he was fully vested prior to termination, including pro rata payment of his annual
incentive award at the greater of target or actual performance.
There are no arrangements or undertakings between Mr. Schmid and any
other persons pursuant to which he was selected to serve as the Companys President and Chief Executive Officer and as member of the Board, nor are there any family relationships between Mr. Schmid and any of the Companys directors
or executive officers. Mr. Schmid has no material interest in any transactions, relationships or arrangements with the Company that would require disclosure under Item 404(a) of Regulation
S-K
promulgated
under the Securities Exchange Act of 1934, as amended.
The foregoing descriptions of the Offer Letter, Award Agreement and Change in
Control Agreement do not purport to be complete, and are qualified in their entirety by reference to the full text of the Offer Letter, Award Agreement and Change in Control Agreement, copies of which is filed as Exhibits 10.1, 10.2 and 10.3 hereto
and are incorporated herein by reference.