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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

 

 

Preliminary Copy – Subject to Completion, dated February 28, 2020

 

LOGO

5995 Mayfair Road

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

March [    ], 2020

Dear Shareholder:

The 2020 Annual Meeting of Shareholders of Diebold Nixdorf, Incorporated will be held on Friday, May 1, 2020 at 8:30 a.m. EDT. We have adopted a virtual format for our Annual Meeting this year in order to provide a consistent experience to all shareholders regardless of location. You will be able to attend and vote at the 2020 Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/DBD2020.

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, 2020, (3) approve, on an advisory basis, our named executive officer compensation, and (4) approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan.

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 2020 Proxy Statement and Annual Report for the year ended December 31, 2019, 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 March 2, 2020 are entitled to vote at the 2020 Annual Meeting. You may vote online prior to the meeting 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.

Details regarding how to attend the virtual meeting online are more fully described in the Proxy Statement. 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 you joining us at the virtual 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 May 1, 2020.

This Proxy Statement, along with our Annual Report for the year ended December 31, 2019, 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

 

 

Preliminary Copy

 

LOGO

5995 Mayfair Road

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

NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS

 

 

DATE:

May 1, 2020

 

TIME:

8:30 a.m. EDT

 

LOCATION:

Virtual Shareholders Meeting

www.virtualshareholdermeeting.com/

DBD2020

        

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, 2020;
   

3.

   To approve, on an advisory basis, our named executive officer compensation; and
   

4.

  

To approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive 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 March 2, 2020 will be entitled to vote at the 2020 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 Corporate Secretary

March [    ], 2020

(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.


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Preliminary Copy

DIEBOLD NIXDORF, INCORPORATED

5995 Mayfair Road

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

PROXY STATEMENT

2020 ANNUAL MEETING OF SHAREHOLDERS

TABLE OF CONTENTS

 

PROXY SUMMARY      1  

Meeting Information

     1  

Proposals For Your Vote and Board Recommendations

     1  

Key Leadership and Board Developments

     2  

Shareholder Engagement and Responsiveness

     2  

Environmental, Social and Governance (ESG) and Sustainability

     3  

Overview of Our Board Nominees

     4  

Participating in the Annual Meeting

     5  
VOTING INFORMATION      6  
CORPORATE GOVERNANCE      8  

Board Leadership Structure

     8  

Board and Director Assessments

     8  

Board Meetings and Executive Sessions

     8  

Board Risk Oversight

     9  

Board Committees and Composition

     9  

Corporate Governance Materials Available On Our Website

     12  

Director Independence

     12  

Related Person Transaction Policy

     12  

Communications With Directors

     13  

Code of Business Ethics

     13  

People and Compensation Committee Interlocks and Insider Participation

     13  

Director Orientation and Education

     13  
COMPENSATION OF DIRECTORS      14  

2019 Director Compensation

     15  

Director Stock Ownership Guidelines

     16  
IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES      17  

Shareholder Nominees

     18  

Majority Voting Policy

     19  
PROPOSAL 1: ELECTION OF DIRECTORS      20  

Board Recommendation

     20  

Our Director Nominees

     20  
BENEFICIAL OWNERSHIP      26  

Beneficial Ownership of Shares

     26  

Security Ownership of Directors and Management

     27  

Delinquent Section 16(a) Reports

     28  
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      29  

Board Recommendation

     29  

Audit and Non-Audit Fees

     29  

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

     30  

Recommendation of The Board

     30  
PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION      31  

Board Recommendation

     31  

Recommendation of The Board

     31  
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED 2017 EQUITY AND PERFORMANCE INCENTIVE PLAN      32  

Board Recommendation

     32  

Share Request Background

     32  

2017 Plan Highlights

     33  

Share Usage

     34  

Summary of Material Terms of the 2017 Plan

     35  

Tax Consequences to Participants

     39  

Tax Consequences to the Company or Subsidiary

     40  
 

 

 

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  TABLE OF CONTENTS  

 

  

 

 

 

Additional information regarding persons who are participants in this proxy solicitation is set forth in Appendix A to this Proxy Statement. The full text of the 2017 Equity and Performance Incentive Plan, as proposed to be amended to reflect the changes described in this Proxy Statement, is attached as Appendix B to this Proxy Statement.

 

 

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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 2020 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 [    ], 2020.

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

 

8:30 a.m. EDT, May 1, 2020

         

 

PLACE

 

Virtual Meeting

www.virtualshareholdermeeting.com/ DBD2020

*Please note*

 

         

 

RECORD DATE

 

Close of Business

on March 2, 2020

   
           
                                                         

PROPOSALS FOR YOUR VOTE AND BOARD RECOMMENDATIONS

 

 

 

  PROPOSAL    BOARD RECOMMENDATION   

PAGE REFERENCES

(FOR MORE DETAIL)

 

  1.  To elect eleven directors

  

FOR EACH

BOARD NOMINEE

     20  

  2.  To ratify the appointment of KPMG LLP as our independent registered public accounting firm

   FOR      29  

  3.  To approve, on an advisory basis, our named executive officer compensation

   FOR      31  

  4.  To approve an amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan

   FOR      32  

Information on voting mechanics, approval requirements and related matters can be found in the “Voting Information” and “Other Matters” sections starting on pages 6 and 82, respectively.

 

 

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  PROXY SUMMARY  

 

  

 

KEY LEADERSHIP AND BOARD DEVELOPMENTS

 

 

 

2019 saw our transformation continue to take effect in the marketplace as we executed on our DN Now transformation initiatives. During our first full year of DN Now, we met or exceeded every commitment we made and are on track for future targets. With this progress, our core business has a stronger foundation, yielding a more focused and efficient company.

Our transformation in 2019 also included key leadership developments. We added four new independent directors to our Board in 2019, and Ellen Costello, a director since 2018, assumed the chair role for the People and Compensation Committee. Arthur Anton, Reynolds Bish and Phillip Cox also took on new responsibilities as the chairs of the Finance, Technology and Board Governance Committees, respectively. These Board developments provided diverse skills and perspectives to our leadership in 2019. In addition, Jeffrey Rutherford transitioned to become our permanent Senior Vice President and Chief Financial Officer, and Elizabeth Patrick joined the Company as our new Senior Vice President and Chief People Officer. We also strengthened our senior leadership team with the additions of Julian Sparkes, Senior

Vice President and Chief Digital Officer, and Hermann Wimmer, Senior Vice President, Global Retail, in January 2019. Zeeshan Naqvi, Vice President, Treasurer, and James Barna, Vice President and Chief Accounting Officer, also joined us last year. Looking forward into 2020, we are pleased to include Lauren C. States as a new nominee for director this year. Ms. States is a dynamic leader who brings fresh perspectives to the board, particularly in light of her experience navigating the impact of transformative technologies.

Under the guidance of our new People and Compensation Committee chairperson and new Chief People Officer, 2019 also saw changes to the design of our compensation strategy to better align with our transformation initiatives by using metrics that support our multi-year transformation program. In particular, we paid close attention to feedback we received from shareholders and external advisors regarding our compensation program as further highlighted below and under “Compensation Discussion and Analysis.” While we believe our compensation program reflects the right incentive structure for our business at this time, we are committed to maintaining an active dialogue with shareholders throughout the remainder of 2020 on these critical issues in furtherance of our continuing efforts to create long-term shareholder value.

 

 

SHAREHOLDER ENGAGEMENT AND RESPONSIVENESS

 

 

We listened to shareholder and proxy advisor feedback following our disappointing 2019 say on pay vote, and we took the following actions. Please see page 45 for additional details about how we made changes to our compensation program in response to shareholder and proxy advisor feedback.

 

  

   Terminated   

  

   Eliminated   

  

   Increased
   the Quarterly Bonus Program    discretionary cash bonuses   

diversity of our Board nominees with respect to gender and perspectives

 

 

              

  

   Cancelled   

  

   Improved   

  

   Explained
   the Turnaround Bonus Program   

disclosure of talent management and retention successes

 

   how our compensation policies succeed in retaining talent
              
     

  

   Continued      
     

performance-based compensation that aligns with shareholders

 

     

 

 

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  PROXY SUMMARY  

 

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) AND SUSTAINABILITY

 

 

As a global company, we are committed to acting sustainably and making a positive impact on our society. Our sustainability program is comprised of three pillars, each of which forms a vital component of our operations around the world. These three pillars are: Sustainable Operations and Supply Chain, Environmental, Health and Safety, and Global Citizenship.

 

Sustainable Supply Chain and Operations    Environmental, Health and Safety    Global Citizenship

We continually assess our operations, processes and global supply chain to determine the environmental impact and implement improvements from greenhouse gas (GHG) emission controls to product lifecycle assessments (LCAs).

 

In our supply chain, we focus on using environmentally sustainable materials, which have a positive impact on our operational efficiency and also benefit our customers. We conduct due diligence on our supply chain to enhance transparency and identify the country and smelter or refiner of origin of the conflict minerals that may be used in our products. Suppliers must participate in Diebold Nixdorf’s due diligence processes, provide complete and accurate information when requested, and perform similar due diligence on their own supply chains.

 

Our new product line, the DN SeriesTM, highlights our focus on sustainable sourcing and design. For example, the DN SeriesTM 200 model:

 

Ø Is made of recycled and recyclable materials and is approximately 25% lighter than most traditional ATMs. This reduces CO2 emissions, both in the manufacturing, processing and transportation of components and terminals; and

 

Ø Uses state-of-the-art LED technology in its lighting systems and efficient electrical systems, which enables savings of approximately 25% in electricity consumption compared with traditional ATMs, a figure that rises to approximately 50% if the system is equipped with energy saving mode.

  

We are committed to providing our employees and visitors with a safe, environmentally-friendly workplace which protects against and limits injury or harm to the environment. We maintain global policies that support our commitment to these values, including:

 

Ø Environmental, Health and Safety Policy;

 

Ø Responsible Chemicals Management Policy;

 

Ø Waste Management Policy; and

 

Ø Physical and Environmental Security Policy.

  

We have two charitable giving groups, The Diebold Foundation and the Diebold Employee Charitable Fund. Our charitable giving philosophy requires that disbursements to non-profit organizations meet the following criteria:

 

Ø The charity’s mission aligns with our Company values, as expressed on our website under “Who We Are” and in our Code of Business Ethics;

 

Ø The organization’s work enhances the quality of life for people in need in the communities in which we operate and do business globally; and

 

Ø The organization encourages and supports our employees’ involvement.

 

The Diebold Foundation partners with charitable organizations such as United Way and Habitat for Humanity on community projects to help those in need. In addition, as part of our commitment to charitable giving that aligns with our business focus, for the past four years the Diebold Foundation has concentrated its efforts on improving financial literacy for underprivileged people and communities, working with the charity Operation Hope. These efforts provide consumers that live in rural locations or regions without the structures of a modern economy with access to and training regarding financial products and services. Together with Operation Hope, we are working to create a world where no one is excluded from the global financial system.

 

 

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  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 20-25.

 

    

                 COMMITTEE MEMBERSHIP                

  NAME AND OCCUPATION / CAREER HIGHLIGHTS    AGE    DIRECTOR
SINCE
   INDEPENDENT    AUDIT    BOARD
GOV.
   PEOPLE
& COMP.
   FIN.    TECH.

Arthur F. Anton

Chairman and Retired Chief Executive Officer, Swagelok Company

  

62

  

2019

  

Yes

  

·

        

Chair

  

Bruce H. Besanko

Retired Chief Financial Officer, Kohl’s Corporation

   61    2018    Yes    ·             ·

Reynolds C. Bish

Chief Executive Officer, Kofax Limited

   67    2019    Yes       ·    ·       Chair

Ellen M. Costello

Retired Chief Executive Officer, BMO Financial Corporation

   65    2018    Yes          Chair    ·   

Phillip R. Cox

President and Chief Executive Officer, Cox Financial Corporation

   72    2005    Yes       Chair    ·      

Dr. Alexander Dibelius

Managing Partner, CVC Capital Partners (Deutschland) GmbH

   60    2016    Yes          ·    ·   

Matthew Goldfarb

Partner, Investment Manager—North American Energy/Infrastructure Investments, Southport
Midstream Partners LLC, and Senior Director, Alvarez & Marsal

   48    2019    Yes          ·    ·   

Gary G. Greenfield

Non-executive Chairman of the Board, Diebold Nixdorf, Incorporated; Partner, Court Square Capital Partners

   65    2014    Yes                ·

Gerrard B. Schmid

President and Chief Executive Officer, Diebold Nixdorf, Incorporated

   51    2018    No               

Kent M. Stahl

Retired Partner, Chief Investment Strategist and Director of Investment Strategy and Risk Management, Wellington Management Company, LLP

   57    2019    Yes    ·    ·         

Lauren C. States

Retired Vice President, Strategy and Transformation, IBM Corporation

   63       Yes                         

 

*

If elected at the Annual Meeting, it is expected that Mr. Besanko will serve as chair of the Audit Committee.

 

 

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  PROXY SUMMARY  

 

 

LOGO

 

 

SNAPSHOT OF KEY QUALIFICATIONS AND SKILLS OF OUR NOMINEES

 

                                  
International                              8      
                                  
Technology/Innovation                              9      
                                  
Financial Services                              9      
                                  
Retail                              5      
                                  
Leadership                              11      
                                  
Corporate Governance                              10      
                                  
Audit/Finance                              10      
                                  
Gov’t Regulated Industries                              3      
                                  

PARTICIPATING IN THE ANNUAL MEETING

 

 

 

This year’s Annual Meeting will be accessible through the Internet. We have adopted a virtual format for our Annual Meeting to make participation accessible for shareholders from any geographic location with Internet connectivity. We have worked to offer the same participation opportunities as were provided at the in-person portion of our past meetings while further enhancing the online experience available to all shareholders regardless of their location. The accompanying proxy materials include instructions on how to participate in the meeting and how you may vote your common shares.

You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on March 2, 2020, the record date, or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/DBD2020, you must enter your 16-digit control number. Whether

or not you participate in the Annual Meeting, it is important that your shares be part of the voting process. You may log on to www.proxyvote.com and enter your control number.

This year’s shareholder question and answer session will include questions submitted in advance of the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your control number. We will post questions and answers if applicable to our business on our Investor Relations website after the meeting.

We encourage you to access the Annual Meeting before it begins. Online check-in will start shortly before the meeting on May 1, 2020. If you have difficulty accessing the meeting, please call 800-586-1548 (US) or 303-562-9288 (international). We will have technicians available to assist you.

 

 

 

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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 of the Board’s director nominees, 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, including if a director nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, the proxies may use the proxy to vote for a replacement nominee recommended by the Board whether or not any other nominations are properly made. While we have been notified that one of our shareholders intends to nominate himself for election as a director at the Annual Meeting, we have not otherwise received notice of any other matters that may be properly presented at the Annual Meeting. See page 18 for additional information regarding this potential shareholder nomination.

 

Q:

Who is entitled to vote at the Annual Meeting?

 

A:

Our record date for the 2020 Annual Meeting is March 2, 2020. Each shareholder of record of our common shares as of the close of business on March 2, 2020 is entitled to one vote for each common share held. As of the record date, there were [            ] 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 2020 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 2020 Annual Meeting by:

 

    Revoking your proxy by sending written notice or submitting a later dated, signed proxy before the 2020 Annual Meeting to our Corporate Secretary at the Company’s address above;

 

    Submitting a later dated, signed proxy before the start of the 2020 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 30, 2020; or

 

    Attending the 2020 Annual Meeting on the Internet, withdrawing your earlier proxy and voting at the Annual Meeting via the Internet.

 

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:

With respect to Proposal 1, generally the number of votes cast “for” the director-nominee’s election must exceed the number of votes cast “against” his or her election. However, if the Board determines that the number of nominees for director exceeds the number of directors to be elected, then the nominees receiving the greatest number of votes shall be elected. 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.

 

 

 

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  VOTING INFORMATION  

 

 

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.”

 

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.”

 

    

In an uncontested election, Proposal 2, the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2020, would be the only routine matter for which the brokerage firm who holds your shares could vote your shares on these proposals without your instructions. Accordingly, there should be no broker non-votes with respect to Proposal 2 if the election of directors is uncontested. Broker non-votes will have no effect on the outcome of Proposals 1, 3 and 4.

 

    

If the election of directors is contested at the Annual Meeting, NYSE rules do not permit brokerage firms to exercise discretionary authority regarding any of the proposals to be voted on at the Annual Meeting and such broker non-votes will have no effect on the outcomes of Proposals 1, 2, 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 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, if any, 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 of your proxy cards to ensure that all of 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.

 

 

 

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CORPORATE GOVERNANCE

 

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.

 

 

BOARD LEADERSHIP STRUCTURE

 

 

 

Our Board is committed to strong leadership and currently maintains separate roles of our 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 leads the Board and director assessment program, as noted below in “Board Committees and Composition.” In 2019, the Governance Committee enhanced its Board assessment process. Board members were asked to complete questionnaires and engaged in an extensive live question and answer session conducted by an independent outside counsel with expertise in corporate governance best practices. As in prior years, 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. When taken together, the assessment program provides a holistic review of the role, performance and function of the full Board, the Chairman and each director in relation to the Company’s needs, challenges and opportunities. Our Board and director assessments have helped to inform our recent refreshment efforts, including four new directors in 2019, three new directors in 2018 and one new Board nominee for director this year. The assessment results are shared with our Chairman, and applicable directors, committee members, and the full Board as appropriate, and action plans are prepared and executed as necessary.

 

 

BOARD MEETINGS AND EXECUTIVE SESSIONS

 

 

 

The Board held five regular meetings and one special meeting in person or telephonically during 2019. 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 2019.

In accordance with the NYSE’s corporate governance standards, our independent directors regularly meet in executive session without management present, generally following each regularly-scheduled Board meeting. In addition, on occasion, our independent directors will meet in executive session prior to the start of a Board meeting. Gary

Greenfield, the Chairman of our Board, presides over these meetings in executive session. The executive sessions of each Board committee are overseen by the respective committee chair.

While we do not have a formal policy regarding directors’ attendance at the Annual Meeting of Shareholders, it is expected that all directors attend the Annual Meeting unless there are extenuating circumstances for non-attendance. All directors standing for re-election who were serving as directors as of the 2019 annual meeting of shareholders attended the 2019 annual meeting.

 

 

 

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  CORPORATE GOVERNANCE  

 

 

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, and 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 People and 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 dialogue 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 Accounting Officer, Corporate Controller, Chief Legal Officer, Chief Ethics and Compliance Officer, Chief People Officer, and/or Vice President, Information Security, 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, enhances its ability to assess the various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for the Company. We also believe that our Board leadership structure complements our risk management structure because it allows our independent directors to exercise effective oversight of the actions of management in identifying risks and implementing effective risk management policies and controls.

 

 

BOARD COMMITTEES AND COMPOSITION

 

 

The Board’s current standing committees are the Audit Committee, Board Governance Committee, People and Compensation Committee, Finance Committee and Technology Committee. Each committee’s members and meetings during 2019 and functions are described below. The Board reviews committee membership, charters and responsibilities every year and will do so in 2020 following the Annual Meeting.

 

 

 AUDIT COMMITTEE*

    

 

Members:

 

Patrick W. Allender (Chair), Arthur F. Anton, Bruce H. Besanko, Dr. Dieter W. Düsedau and Kent M. Stahl

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically ten times during 2019, 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 80.

 

  

 

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 independent auditors and performance and controls of our internal audit department.

 

  Provides an avenue of communication among the independent auditors, management, the internal audit department and the Board.

 

Financial Experts:

 

The Board has determined that each of Messrs. Allender and Besanko 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).

 

 

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  CORPORATE GOVERNANCE  

 

  

 

 

 BOARD GOVERNANCE COMMITTEE

    

 

Members:

 

Phillip R. Cox (Chair), Reynolds C. Bish, Dr. Dieter W. Düsedau and Kent M. Stahl

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically seven times during 2019, and had informal communications with management at various other times during the year.

 

Contact:

 

bdgovchair@dieboldnixdorf.com

 

  

 

Primary Duties and Responsibilities:

 

  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 Board and committee assessments.

 

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

 

  Ensures Board oversight of our enterprise risk management process.

 

 

 

 PEOPLE AND COMPENSATION COMMITTEE

    

 

Members:

 

Ellen M. Costello (Chair), Reynolds C. Bish, Phillip R. Cox, Dr. Alexander Dibelius and Matthew Goldfarb

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically five times during 2019, 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 43.

  

 

Primary Duties and Responsibilities:

 

  Monitors and evaluates the general compensation philosophy of the Company.

 

  Administers our executive compensation program as well as our benefit plans for all employees with the goals of ensuring that (a) the benefits and compensation practices of the Company are competitive and sufficient to attract, motivate and retain quality professional staff and (b) the Company’s compensation programs adhere to a “pay for performance” philosophy.

 

  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.

 

  Oversees the development of executive succession plans and talent management policies and programs, as well as reviews measures of employee engagement and plans related to employee engagement and diversity initiatives.

 

  Reviews 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 People and Compensation Committee” below.

 

 

 

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  CORPORATE GOVERNANCE  

 

 

 

 FINANCE COMMITTEE

    

 

Members:

 

Arthur F. Anton (Chair), Patrick W. Allender, Ellen M. Costello, Dr. Alexander Dibelius and Matthew Goldfarb

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically ten times during 2019, 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 COMMITTEE

    

 

Members:

 

Reynolds C. Bish (Chair), Bruce H. Besanko and Gary G. Greenfield

 

All members of this committee qualify as independent.

 

Meetings:

 

This committee met in person or telephonically three times during 2019, and had informal communications with management at various other times during the year.

 

  

 

Primary Duties and Responsibilities:

 

  Provides oversight and guidance regarding the strategy and management of our information technology infrastructure and security.

 

  Provides oversight and guidance regarding our intellectual property, including our software portfolio and research and development activities.

 

 

 

 

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  CORPORATE GOVERNANCE  

 

  

 

CORPORATE GOVERNANCE MATERIALS AVAILABLE ON OUR WEBSITE

 

 

 

Copies of the following documents, among others, are available on our investor relations website (investors.dieboldnixdorf.com) in the Corporate Governance section under the Policies and Charters tab:

 

  Current Charters for our Audit, Board Governance, People and Compensation, Finance, and Technology Committees;

 

  Our Categorical Independence Standards for Directors;
  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.

For a discussion of our Insider Trading Policy, which prohibits hedging or pledging our stock by our directors, officers and employees, see “Compensation Discussion and Analysis—Insider Trading Policy” below.

 

 

DIRECTOR INDEPENDENCE

 

 

 

The Board determined that each of Patrick W. Allender, Arthur F. Anton, Bruce H. Besanko, Reynolds C. Bish, Ellen M. Costello, Phillip R. Cox, Dr. Alexander Dibelius, Dr. Dieter W. Düsedau, Matthew Goldfarb, Gary G. Greenfield, Kent M. Stahl and Lauren C. States 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. In addition, former directors Richard L. Crandall, Gale S. Fitzgerald and Alan J. Weber also met these independence standards at the time of their service in 2019. Gerrard B. Schmid does not meet these independence standards because he is employed by us as our President and CEO.

In making the independence determinations, the Board considered the following business or professional relationships and determined, in each instance, that the relationship was not material or did not impair the independence of the respective directors:

 

  Messrs. Crandall and Greenfield serve on the board of directors of Donnelley Financial Solutions, Inc., which provided SEC filing and printing services in 2019 related to our proxy statement for our 2019 annual meeting of shareholders for a fee of approximately $64,189.

 

  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 2019 for a fee of approximately $75,952.

 

  Ms. Costello serves on the board of directors of Citigroup, Inc., which is our customer and part of our lending syndicate. Ms. Costello recuses herself from all Board and committee discussions regarding Citigroup, Inc. and similarly recuses herself from any discussions regarding the Company that may arise during Citigroup, Inc. meetings.

 

  Ms. States serves on the board of directors of Webster Financial Corporation, which is our customer. If elected, Ms. States will recuse herself from all Board and committee discussions regarding Webster Financial Corporation and similarly will recuse herself from any discussions regarding the Company that may arise during Webster Financial Corporation meetings.

 

  Messrs. Crandall and Greenfield own equity interests (approximately 3% and less than 1%, respectively) in ACTV8, Inc., from which we license software used in certain of our products pursuant to which no fees were paid in 2019. Mr. Crandall also serves on the board of directors of ACTV8, Inc.

 

  Mr. Bish is the Chief Executive Officer of Kofax Limited. The Company purchased certain products from Kofax Deutschland AG, a subsidiary of Kofax Limited, in the amount of $929,000 in 2019. The Board determined that Mr. Bish did not have any indirect, material interest in these transactions.
 

 

RELATED PERSON TRANSACTION POLICY

 

 

 

Pursuant to our director independence standards, discussed above, and our Corporate Governance Guidelines, discussed below in “Director Qualifications,” 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 2019, we did not engage in any related person transaction(s) requiring disclosure under Item 404 of Regulation S-K.

 

 

 

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  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 People 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.

 

 

PEOPLE AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

 

 

The members of the People and Compensation Committee during the year ended December 31, 2019 were Reynolds C. Bish, Ellen M. Costello, Phillip R. Cox, Dr. Alexander Dibelius, Matthew Goldfarb, Gale S. Fitzgerald and Alan J. Weber. No member of the People and 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 People and Compensation Committee during 2019.

 

 

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 facilities to improve his or her understanding of our business and global products and solutions. In addition,

the orientation program 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.

 

 

 

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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 2019 remained the same as that paid in 2018. Accordingly, during 2019, our non-employee directors received an annual cash retainer of $75,000 for their service as directors. Our non-executive Chairman of the Board received an additional annual cash retainer of $100,000.

In addition to their annual cash retainers, each non-employee director may receive equity awards under our Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan (as

amended), 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 People and 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.” As such, in 2019, the Company awarded RSUs to each non-employee director which approximated $157,185 in value at the time of grant. Each award 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.

 

 

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

 

 

   

 

 

People and Compensation Committee

 

  

 

$

 

 

10,000

 

 

 

 

  

 

$

 

 

20,000

 

 

 

 

 

Board Governance Committee

 

  

 

$

 

 

7,500

 

 

 

 

  

 

$

 

 

15,000

 

 

 

 

 

Finance Committee

 

  

 

$

 

 

7,500

 

 

 

 

  

 

$

 

 

15,000

 

 

 

 

 

Technology Committee

 

  

 

$

 

 

7,500

 

 

 

 

  

 

$

 

 

15,000

 

 

 

 

 

The varying fee amounts are intended to reflect differing levels of responsibility and meeting requirements. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year 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, as amended.

 

 

 

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  COMPENSATION OF DIRECTORS  

 

 

2019 DIRECTOR COMPENSATION

 

 

The following table details the compensation of our non-employee directors for 2019:

 

  NAME

 

FEES EARNED

OR PAID IN

CASH1

($)

STOCK

AWARDS2

($)

ALL OTHER

COMPENSATION3

($)

TOTAL

($)

 

Patrick W. Allender

 

 

 

 

 

107,500

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

264,685

 

 

 

 

Arthur F. Anton

 

 

 

 

 

65,208

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

222,393

 

 

 

 

Bruce H. Besanko

 

 

 

 

 

95,000

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252,185

 

 

 

 

Reynolds C. Bish

 

 

 

 

 

68,542

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225,727

 

 

 

 

Ellen M. Costello

 

 

 

 

 

98,750

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

255,935

 

 

 

 

Phillip R. Cox

 

 

 

 

 

101,250

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

258,435

 

 

 

 

Richard L. Crandall4

 

 

 

 

 

32,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,500

 

 

 

 

Dr. Alexander Dibelius

 

 

 

 

 

92,500

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

249,685

 

 

 

 

Dr. Dieter W. Düsedau

 

 

 

 

 

95,000

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252,185

 

 

 

 

Gale S. Fitzgerald4

 

 

 

 

 

33,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,333

 

 

 

 

Matthew Goldfarb

 

 

 

 

 

61,667

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218,852

 

 

 

 

Gary G. Greenfield

 

 

 

 

 

182,500

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

339,685

 

 

 

 

Kent M. Stahl

 

 

 

 

 

63,333

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

220,518

 

 

 

 

Alan J. Weber5

 

 

 

 

 

75,000

 

 

 

 

 

 

 

157,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

232,185

 

 

 

 

1 

This column reports the amount of cash compensation earned in 2019 for Board and committee service, including Board retainer amounts discussed above and the committee fees earned in 2019. Mr. Anton joined the Audit Committee and Board Governance Committee in May 2019 and then moved from the Board Governance Committee to the Finance Committee, where he currently serves as chair, beginning in Q4. Mr. Besanko served on the Audit Committee and Finance Committee throughout Q1 and Q2, and then moved from the Finance Committee to the Technology Committee for Q3 and Q4. Mr. Bish joined the People and Compensation Committee and Technology Committee, where he currently serves as chair, in May 2019 and joined the Board Governance Committee beginning in Q4. Ms. Costello served on the Audit Committee and Finance Committee throughout Q1 and Q2 and then moved from the Audit Committee to the People and Compensation Committee, where she currently serves as chair, for Q3 and Q4. Mr. Cox served as chair of the People and Compensation Committee in Q1 and Q2 and served as the Board Governance Committee chair in Q3 and Q4. Mr. Crandall served on the Board Governance Committee and Technology Committee, where he served as chair, until his retirement. Ms. Fitzgerald served on the People and Compensation Committee and Board Governance Committee, where she served as chair, until her retirement. Mr. Goldfarb joined the People and Compensation Committee and Finance Committee in May 2019. Mr. Stahl joined the Audit Committee and Board Governance Committee in May 2019. Mr. Weber served on the People and Compensation Committee and Finance Committee, where he served as chair, until his retirement. The below table reflects the current committee membership and corresponding fees as of December 31, 2019.

 

  NAME

AUDIT

COMMITTEE

($)

BOARD

GOVERNANCE

COMMITTEE

($)

PEOPLE AND
COMPENSATION
COMMITTEE
($)

FINANCE

COMMITTEE

($)

TECHNOLOGY

COMMITTEE

($)

 

Patrick W. Allender

 

 

 

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

Arthur F. Anton

 

 

 

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

Bruce H. Besanko

 

 

 

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,500

 

 

 

 

Reynolds C. Bish

 

 

 

 

 

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

 

Ellen M. Costello

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

Phillip R. Cox

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Alexander Dibelius

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

Dr. Dieter W. Düsedau

 

 

 

 

 

12,500

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Matthew Goldfarb

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

Gary G. Greenfield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,500

 

 

 

 

Kent M. Stahl

 

 

 

 

 

12,500

 

 

 

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2019, as further described above. Each member of the board received 12,367 RSUs as of April 25, 2019, valued based on the closing price of our common shares on that date of $12.71.

 

 

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  COMPENSATION OF DIRECTORS  

 

  

 

3 

No dividend equivalents were paid in cash on shares deferred by our directors in 2019.

 

4 

Mr. Crandall and Ms. Fitzgerald did not stand for re-election to the Board at the Company’s 2019 annual meeting of shareholders and their terms ended on April 25, 2019.

 

5 

Mr. Weber resigned from the Board on July 24, 2019.

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 these ownership guidelines, or were on track to achieve the ownership guidelines within the next few years.

 

 

 

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IDENTIFYING AND EVALUATING

DIRECTOR-NOMINEES

 

We are pleased to include Lauren C. States as a new nominee for director this year. Ms. States, together with Messrs. Anton, Bish, Goldfarb and Stahl, who joined the Board at the 2019 annual meeting, and Ms. Costello and Mr. Besanko, who joined our Board during the course of 2018, reflect the ongoing efforts by our Board Governance Committee to identify talented nominees and directors that bring skills and strategic vision to the Company. We have also engaged with shareholders for their input and views regarding our Board succession planning.

The Board has determined to decrease the size of our Board to eleven members effective as of the date of the Annual Meeting. The Board views this number of directors as the correct balance of new perspectives with the experience and historical knowledge of the Company and its markets held by our continuing directors. The Board Governance Committee and the Board have determined that this is the appropriate size for our Board as we continue our director succession planning efforts, focusing on bringing the skills necessary to support our strategic initiatives and considering the overall diversity of our Board. The Board Governance Committee will continue to evaluate the Board size commensurate with evolving needs of the Company.

Patrick W. Allender and Dr. Dieter W. Düsedau are retiring from our Board at the Annual Meeting after 9 and 4 years, respectively, of service to the Company. We thank Mr. Allender and Dr. Düsedau for their service to the Company.

IDENTIFICATION AND EVALUATION OF DIRECTOR-NOMINEES

The Board Governance Committee considers many methods for identifying and evaluating director-nominees, plans for any anticipated vacancies and also regularly reviews the appropriate size of the Board. When vacancies arise or are anticipated, the Board Governance Committee considers various potential candidates. Candidates may come to the attention of the Board Governance Committee through current Board members, professional search firms, shareholders or other persons. This past year, the Company engaged a third-party search firm, Spencer Stuart, to assist the Board Governance Committee in identifying, evaluating and conducting due diligence on potential director nominees. The Company also sought prospective candidate profiles from Women Corporate Directors and The Chicago Network. As described below, the Board Governance Committee also considers properly submitted shareholder nominations for candidates for the Board. Following verification of the recommending shareholder’s status, recommendations are considered by the Board Governance Committee at a regularly scheduled meeting.

In evaluating director-nominees, including the re-election of continuing directors, the Board Governance Committee considers many factors in order to maintain and strengthen the talent and capabilities of the Board and the committees, consistent with our Corporate Governance Guidelines and other criteria established by the Board. While the Board Governance Committee does not have a formal diversity policy, its general goal is to create a well-balanced Board that combines broad business and industry experience with comprehensive diversity characteristics and professional viewpoints. Together, these considerations enable us to appropriately pursue our strategic objectives domestically and abroad.

Of particular interest in our current search were individuals with global public company experience as executives responsible for technology operations in companies undergoing transformation with a digital emphasis, focusing on individuals with experience in industries which have gone through technology-driven business model change or conversions from non-cloud to cloud based technology.

Qualifications for Board service have not otherwise been reduced to a checklist of specific standards or minimum qualifications, skills or qualities. Rather, the Board Governance Committee decides which nominees to recommend based on the facts and circumstances at the time. Applicable considerations for new nominees or for directors potentially standing for re-election include:

 

  whether the candidate has demonstrated a high level of performance in his or her service as a director of a public company, including with respect to the performance of our directors standing for re-election;

 

  achieving the appropriate balance of tenure on the Board, with value placed on both familiarity with the Company and on new perspectives;

 

  whether the expertise and contributions of existing Board members will assist the Company as it continues its turnaround efforts;

 

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

 

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

 

 

whether the candidate possesses the qualifications that are generally the basis for selection of candidates to the Board,

 

 

 

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  IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES  

 

  

 

   

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 director-nominees fits the general qualifications described above and brings valuable experience, skills and qualifications to the Board. Detailed information about each of our director nominee’s background, experience and qualifications is provided in Proposal 1: Election of Directors.

 

 

SHAREHOLDER NOMINEES

 

 

 

POLICY & PROCEDURE

The policy of the Board Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described above under “Identification and Evaluation of Director-Nominees.” In evaluating shareholder nominations, the Board Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth above.

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

 

  complete information as to the identity and qualifications of the proposed nominee, including name, address, present and prior business and/or professional affiliations, education and experience, particular fields of expertise, and a representation that the shareholder is a holder of record;

 

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

 

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

 

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

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

PROXY ACCESS

We have a proxy access provision as part of our Code of Regulations, which allows a shareholder, or a group of up to

20 shareholders in aggregate, owning 3% or more of our outstanding shares of common stock continuously for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our Code of Regulations.

2020 SHAREHOLDER NOMINEE

We have been timely notified by one of our shareholders, Mr. Patrick J. Lysobey, that he intends to nominate himself at the 2020 Annual Meeting for election to the Board pursuant to Article III, Section 4 of our Code of Regulations. We received a letter from Mr. Lysobey, dated November 4, 2019, notifying us of this intention and indicating that he does not intend to deliver a proxy statement in connection with his nomination. On January 21, 2020, Mr. Jonathan Leiken, our Senior Vice President, Chief Legal Officer and Corporate Secretary, sent Mr. Lysobey a letter acknowledging the Company’s receipt of Mr. Lysobey’s November 4, 2019 letter and notifying Mr. Lysobey that the Company will disclose the letter and information regarding his intentions regarding his nomination in this Proxy Statement. The Company has not had any further communications with Mr. Lysobey regarding his nomination prior to the filing of this Proxy Statement.

NOMINATION AGREEMENT WITH GAMCO

In 2019, we entered into a Nomination and Standstill Agreement with GAMCO Asset Management Inc. and its affiliates pursuant to which Arthur F. Anton and Matthew Goldfarb are each nominated for election at the Annual Meeting. Both Messrs. Anton and Goldfarb bring extensive experience and valuable perspectives to our Board. For additional information regarding the Nomination and Standstill Agreement, see our current report on Form 8-K filed on February 25, 2019, and for detailed information about each director nominee’s background, experience and qualifications, see Proposal 1: Election of Directors below.

 

 

 

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  IDENTIFYING AND EVALUATING DIRECTOR-NOMINEES  

 

 

MAJORITY VOTING POLICY

 

 

 

In light of our shareholders’ approval of the amendment to the Company’s Amended Articles of Incorporation to implement a majority voting standard in uncontested director elections, the Board adopted an amended majority voting policy, which provides that, in an uncontested election, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” election, which we refer to as a Majority Vote Against, is expected to tender his or her resignation following certification of the shareholder vote. The Board Governance Committee will then consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the Board Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Any director who tenders his or her resignation pursuant to this policy will not participate in the

Board Governance Committee recommendation or Board action regarding whether to accept or reject the tendered resignation.

However, if each member of the Board Governance Committee received a Majority Vote Against in the same election, then the Board will appoint a committee comprised solely of independent directors who did not receive a Majority Vote Against at that election to consider each tendered resignation offer and recommend to the Board whether to accept or reject each resignation. Further, if all of the directors received a Majority Vote Against in the same election, then the Board will appoint a committee comprised solely of independent directors to consider each tendered resignation offer and recommend to the Board whether to accept or reject each resignation.

 

 

 

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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 2020 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. In connection with this proposal, the size of the Board will be decreased to eleven members, effective as of the date of the Annual Meeting.

In connection with our Board succession efforts, we are pleased to be nominating one new director and ten continuing directors (whom were all previously elected by our shareholders at our 2019 annual meeting). All of our director-nominees, except for Gerrard B. Schmid, our President and CEO, are independent as defined by the corporate governance standards of the NYSE.

In the unlikely event that any of our director-nominees is not available for election when the election occurs for any reason, the Proxy Committee, at its option, may vote for substitute nominees recommended by the Board whether or not any other nominations are properly made at the Annual Meeting. Alternatively, the Board may reduce the number of director-nominees. The Board has no reason to believe that any of our director-nominees will be unavailable for election when the election occurs. Each nominee for election at the Annual Meeting, including each of our director nominees and Mr. Lysobey, has agreed to serve as a director if elected.

OUR DIRECTOR NOMINEES

 

 

 

 

 

 

  Arthur F. Anton

 

 

LOGO

 

 

  AGE: 62

 

  DIRECTOR SINCE: 2019

 

  COMMITTEES:

 Finance Committee (Chair)

 Audit Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Anton served as Chairman of the Board and Chief Executive Officer of the Swagelok Company, Solon, Ohio (a fluid systems technologies company), from 2017 until his retirement on December 31, 2019. Mr. Anton previously served as President and Chief Executive Officer from 2004-2017, President and Chief Operating Officer from 2001-2004, Executive Vice President from 2000-2001, and Chief Financial Officer from 1998-2000 of Swagelok. Prior to joining Swagelok in 1998, Mr. Anton was a Partner of Ernst & Young LLP (a professional services organization).

 

Mr. Anton is currently a director and chair of the audit committee of The Sherwin-Williams Company, Cleveland, Ohio (a paint coatings manufacturer), where he has served since 2006 and where he serves as Chair of the Audit Committee. Mr. Anton also is lead director of Olympic Steel, Bedford Heights, Ohio (a steel processing and distribution company), where he has served since 2009, and a director of University Hospitals Health System, Cleveland, Ohio (a large academic medical center), where he has served since 2005 and became Chairman in 2019. He was also appointed as a director of the Rock & Roll Hall of Fame, Cleveland, Ohio, in 2018 and is a former director of Forest City Realty Trust, Cleveland, Ohio (a diversified Real Estate Investment Trust), where he served from 2010-2018.

 

DIRECTOR QUALIFICATIONS:

Mr. Anton brings significant domestic and international manufacturing and distribution experience and financial expertise to our Board. In addition, as a former partner of Ernst & Young LLP and the former Chief Financial Officer of Swagelok, Mr. Anton has financial expertise and extensive financial experience that provides him with a unique perspective on our business and operations and valuable insight as the chair of our Finance Committee and member of our Audit Committee. Mr. Anton was identified as a director nominee by, and nominated pursuant to an agreement with, GAMCO Asset Management Inc. and its affiliates.

 

 

 

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  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

  Bruce H. Besanko

 

 

LOGO

 

  AGE: 61

 

  DIRECTOR SINCE: 2018

 

  COMMITTEES:

 Audit Committee

 Technology Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Besanko served as Chief Financial Officer of Kohl’s Corporation, Menomonee Falls, Wisconsin (a national retailer) from 2017 until his retirement in February 2020. Previously, Mr. Besanko spent four years with Supervalu Inc., Eden Prairie, Minnesota (a national food retailer and wholesaler), in executive roles, including Executive Vice President, Chief Operating Officer and Chief Financial Officer from 2016-2017, Executive Vice President and Chief Operating Officer from 2015-2016, and Executive Vice President and Chief Financial Officer from 2013-2015. From 2009-2013, he served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer for OfficeMax Inc., Naperville, Illinois (a national office supplies retailer).

 

In addition to his business experience, Mr. Besanko served 26 years in the U.S. Air Force where he rose to the rank of Lieutenant Colonel. Mr. Besanko is also currently a director of United Service Organizations of Illinois (a non-profit organization supporting military service members).

 

DIRECTOR QUALIFICATIONS:

Mr. Besanko’s leadership experience as an executive in the retail sector strengthens our Board’s proficiency in this area. In addition, with his background as chief financial officer of publicly held companies, he brings a SEC-level financial expert perspective to our Board as a member of our Audit and Technology Committees.

 

 

 

 

 

  Reynolds C. Bish

 

 

LOGO

 

  AGE: 67

 

  DIRECTOR SINCE: 2019

 

  COMMITTEES:

 Technology Committee (Chair)

 Board Governance Committee

 People and Compensation Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Bish has served as Chief Executive Officer and director of Kofax Limited, Irvine, California (a process automation software provider), since 2017. Previously, Mr. Bish was Vice President of Lexmark International, Inc., Lexington, Kentucky (a provider of printing and imaging products) from 2015-2017 and Chief Executive Officer of Kofax Limited from 2007-2015. From 1989-2005, he served as Chief Executive Officer and was the co-founder of Captiva Software Corporation (a provider of input management software and services).

 

Mr. Bish is also a former director of Guidance Software, Inc., Pasadena, California (a provider of digital forensic and endpoint security software), and was Chair of its Nominating and Governance Committee from 2016-2017. He also served as a director and Chair of the Audit Committee of Iomega Corporation (a provider of portable data storage products) from 2005-2008 and I-Many, Inc. (a provider of contract management software) from 2005-2009. Mr. Bish currently serves as a member of the board of trustees of The Pegasus School, Huntington Beach, California (a private independent grade school).

 

DIRECTOR QUALIFICATIONS:

Mr. Bish brings substantial experience in the technology sector to our Board, including as an executive in the enterprise software and services market, which strengthens the Board’s proficiency in these crucial areas.

 

 

 

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  PROPOSAL 1: ELECTION OF DIRECTORS  

 

  

 

 

 

  Ellen M. Costello

 

 

LOGO

 

  AGE: 65

 

  DIRECTOR SINCE: 2018

 

  COMMITTEES:

 People and Compensation Committee (Chair)

 Finance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Ms. Costello retired in July 2013 as Chief Executive Officer of BMO Financial Corporation and U.S. Country Head of BMO Financial Group (a global diversified financial services company headquartered in Toronto, Canada). Prior to taking on these roles in the firm’s Chicago office in 2011, she was Group Head of Personal and Commercial Banking for the U.S. and the Chief Executive Officer of BMO Harris Bank N.A. and BMO Financial Corporation from 2006-2011. Prior to this, she held a number of capital markets leadership roles in Canada, Asia and the U.S.

 

Ms. Costello currently is a director of Citigroup, Inc., New York, New York (a global diversified financial services company), where she has served since 2016 and where she serves as a member of the Audit Committee and the Risk Management Committee. She also serves as a director of Citigroup’s subsidiary, Citibank, N.A. In addition, Ms. Costello serves on the board of the Chicago Council on Global Affairs and is a member of its Audit and Finance committees. She is a former director of D+H Corporation (a global fintech company), where she served from 2014-2017 and was Chair of the Risk Committee and a member of the Audit Committee and the Human Resources and Compensation Committee. She also served as a director of BMO Financial Corporation’s Board, BMO’s independent U.S. Board of Directors, from 2006-2013.

 

DIRECTOR QUALIFICATIONS:

Ms. Costello’s broad experience as chief executive officer and director in the financial services and financial technologies industries provides our Board with experience relevant to many key aspects of our business. In addition, her extensive financial background and prior committee experience bring valuable insight to our People and Compensation and Finance Committees.

 

 

 

 

  Phillip R. Cox

 

 

LOGO

 

  AGE: 72

 

  DIRECTOR SINCE: 2005

 

  COMMITTEES:

 Board Governance Committee (Chair)

 People and Compensation Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

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

 

Mr. Cox currently is a director of Cincinnati Bell Inc., Cincinnati, Ohio (a telecommunications company), where he has served as a director since 1993 and as Chairman of the Board since 2003, and where he serves as a member of the Audit and Finance, Business Development, Compensation, and Governance and Nominating Committees and as the Chair of the Executive Committee. He also serves as a director of Touchstone Investments, Cincinnati, Ohio (a mutual fund company), where he has served since 1993 and where he has served as Chairman of the Board since 2008. Mr. Cox has been a director of TimkenSteel, Canton, Ohio (an engineered steel products company), since 2014 and serves as a member of the Audit and Compensation Committees. Prior to TimkenSteel becoming an independent company, Mr. Cox served as a director of The Timken Company, Canton, Ohio (an engineered steel products company), and was a member of the Audit Committee from 2004-2016, and Chair of the Finance Committee from 2004-2011.

 

DIRECTOR QUALIFICATIONS:

Mr. Cox’s 47 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 a member of our People and Compensation Committee, and his extensive experience serving on public company boards of directors provides the understanding necessary to serve as chair of our Board Governance Committee.

 

 

 

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  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

  Dr. Alexander Dibelius

 

 

LOGO

 

  AGE: 60

 

  DIRECTOR SINCE: 2016

 

  COMMITTEES:

 People and Compensation Committee

 Finance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Dr. Dibelius is Managing Partner of CVC Capital Partners (Deutschland) GmbH (a private equity advisor), in which capacity he has served since 2015. Previously, he served in a number of capacities at Goldman Sachs from 1993-2015, including Chairman of the Executive Board of Goldman Sachs AG (a financial services company) from 2002-2015, and Global Chairman of the Investment Banking Division of Goldman Sachs, Inc. from 2013-2015. Prior to this, he worked as a consultant for McKinsey & Co. (a global management consulting firm) where he was appointed partner in 1992. Before his career in business, Dr. Dibelius was a surgeon at the University Clinic of Freiburg.

 

Dr. Dibelius also is 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 leading the Diebold Nixdorf AG supervisory board provides an invaluable perspective to our Board.

 

 

 

 

  Matthew Goldfarb

 

 

LOGO

  AGE: 48

 

  DIRECTOR SINCE: 2019

 

  COMMITTEES:

 Finance Committee

 People and Compensation Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Goldfarb is a founding partner and managing member of Southport Midstream Partners LLC, Westport, Connecticut (a private-equity backed investment vehicle focused on energy infrastructure projects in North America) and, in September 2019, joined Alvarez & Marsal, New York, New York (a professional services firm) as a Senior Director. Previously, Mr. Goldfarb served as Chief Restructuring Officer and Acting Chief Executive Officer of Cline Mining Corporation, Toronto, Canada (a Canadian mining company), from 2013-2018, and was Chief Executive Officer of Xinergy Ltd. (a Central Appalachian coal producer) having previously served as its Vice Chairman and lead independent director from 2009-2013. Mr. Goldfarb was previously an investment professional with The Blackstone Group/GSO Capital Partners, Icahn Associates Corp. and Pirate Capital, LLC. Prior thereto, Mr. Goldfarb worked as an M&A lawyer at Schulte, Roth & Zabel.

 

In December 2013 and in contemplation of a financial restructuring, Mr. Goldfarb was retained by the Cline Mining Corporation Board of Directors, at the instruction of its senior lenders, to lead the financial restructuring and optimization of the mining assets of the TSX-listed issuer. CCAA insolvency proceedings and related Chapter 15 “recognition” proceedings relating to the “work-out” of Cline Mining Corporation were initiated in December 2014, and the company emerged therefrom in July 2015.

 

Mr. Goldfarb resigned as the Chief Executive Officer of Xinergy, Ltd. in November 2013. Xinergy, Ltd. filed for bankruptcy protection under Chapter 11 in July 2015 due to challenging market conditions given its exposure to metallurgical coal pricing.

 

Mr. Goldfarb is a former chairman of Sevcon, Inc. (a leader in electrification technologies for zero emission electric vehicles) where he served from 2016-2017, Midway Gold Corporation, Helena, Montana (an emerging gold producer), where he served from 2016-2017, The Pep Boys – Manny, Moe & Jack, Philadelphia, Pennsylvania (a full-service and tire automotive aftermarket chain), where he served from 2015-2016, Huntingdon Capital Corp. (an owner and operator of affordable business premises in markets across Canada) where he served from 2013-2014, Fisher Communications, Inc., Seattle, Washington (a media company), where he served from 2011-2013, CKE Restaurants, Inc., Carpinteria, California (the parent company of several restaurant chains), where he served from 2006-2010, and James River Coal Company, Richmond, Virginia (a coal producer), where he served in 2006.

 

DIRECTOR QUALIFICATIONS:

Mr. Goldfarb brings vast investing experience and experience with commercial and corporate law, as well as an extensive record of service on the boards of several public companies to our Board. Mr. Goldfarb was identified as a director nominee by, and nominated pursuant to an agreement with, GAMCO Asset Management Inc. and its affiliates.

 

 

 

 

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  PROPOSAL 1: ELECTION OF DIRECTORS  

 

  

 

 

 

  Gary G. Greenfield

 

 

LOGO

 

  AGE: 65

 

  DIRECTOR SINCE: 2014

 

  COMMITTEES:

 Chairman of the Board

 Technology 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 formerly served as Chairman, President and Chief Executive Officer of Avid Technology, Inc. (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. In addition, he is also a director of Ancile Solutions, Elkridge, Maryland (a learning and performance software company), Research Now SSI, Plano, Texas (an online sampling and data collection company), Dynata, Plano, Texas (a market research firm), and Encompass Digital Media, Atlanta, Georgia (a technology services business). 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.

 

DIRECTOR QUALIFICATIONS:

Mr. Greenfield’s proven senior executive experience in high technology industries, coupled with his exceptional ability to grow markets, both domestic and international, and develop products provides our Board with experience relevant to many key aspects of our business. Mr. Greenfield’s strong skills at developing company vision and strategies in the evolving software development field strengthen the proficiency of our Board in this area.

 

 

 

 

  Gerrard B. Schmid

 

 

LOGO

 

  AGE: 51

 

  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 previously Chief Executive Officer of D+H Corporation (a global fintech company) from 2012-2017 and was Chief Operating Officer from 2009-2012. Prior to that, he was President and CEO of D+H’s Filogix business unit (a mortgage and real estate technology service provider) from 2007-2009. Prior to that, he held senior executive roles in banking in the UK and Canada. Prior to this, he spent several years at McKinsey and Company focused on financial services and technology.

 

Mr. Schmid is currently a member of the Advisory Board of Difenda, Toronto, Canada (a cyber security company).

 

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.

 

 

 

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  PROPOSAL 1: ELECTION OF DIRECTORS  

 

 

 

 

  Kent M. Stahl

 

 

LOGO

 

  AGE: 57

 

  DIRECTOR SINCE: 2019

 

  COMMITTEES:

 Audit Committee

 Board Governance Committee

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Mr. Stahl, CFA, is a retired Partner from Wellington Management Company, LLP, Boston, Massachusetts (an investment management firm), where he was Chief Investment Strategist and Director of Investment Strategy and Risk Management from 1998-2018. In this capacity, Mr. Stahl was a portfolio manager and fiduciary on over $25 billion in assets for a variety of institutional clients and insurance companies. He also spearheaded the firm’s investment oversight processes and was a member of the firm’s Operating Committee. Previously, Mr. Stahl worked at NCR Corporation, Atlanta, Georgia (an information technology company), where he led the corporate finance and pension investment groups from 1990-1998.

 

Mr. Stahl is a member of the advisory board of Longfellow Investment Advisors, the investment advisory board for The Ohio State University Endowment, and the investment advisory board of the Dogwood Healthcare Trust.

 

DIRECTOR QUALIFICATIONS:

Mr. Stahl brings over twenty years of experience in evaluating investments and risk, growing and managing businesses, and advising institutional clients on strategy and trends to our Board.

 

 

 

 

  Lauren C. States

 

 

LOGO

 

  AGE: 63

 

  DIRECTOR NOMINEE

  

 

PRINCIPAL OCCUPATION, PROFESSIONAL AND BOARD EXPERIENCE:

Ms. States retired in 2014 from the IBM Corporation, Armonk, New York (an information technology company), after a career of more than 36 years. Prior to her retirement, she served as Vice President, Strategy and Transformation for IBM’s Software Group and was a member of the Growth and Transformation senior leadership team. From 2008-2013, she was a leader in the company’s transformation to cloud computing and served as Chief Technology Officer in the corporate strategy function. Over her career, she has served in a broad variety of roles including technology, strategy, transformation, sales and talent development.

 

Ms. States currently is a director of Clean Harbors, Inc., Norwell, Massachusetts (an environmental, energy and industrial services company), where she has served since 2016 and where she serves as a member of the Audit Committee and the Environmental, Health and Safety Committee. She also serves as a director of Webster Financial Corporation, Waterbury, Connecticut (a bank holding company and financial holding company), where she has served since 2016 and where she serves as a member of the Nominating and Corporate Governance Committee and the Risk Committee. In addition, Ms. States serves as a director for Code Nation and as trustee for International House, New York, and Mercy High School, Middletown, Connecticut.

 

DIRECTOR QUALIFICATIONS:

Ms. States’ experience as former Chief Technology Officer of a global public company and her broad background in technology, sales, strategy and transformation provides the Board with strong executive and technology experience. Ms. States also has a CERT Certificate in Cybersecurity Oversight, issued by the NACD and Carnegie Mellon University. Ms. States was identified as a director nominee by Spencer Stuart, the advisor engaged by the Board Governance Committee to assist with identifying board nominees.

 

 

 

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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, 2019, 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

 

      

 

11,602,6361

 

 

 

      

 

14.97

 

%

 

 

Common Shares

  

 

The Vanguard Group

100 Vanguard Blvd.

Malvern, Pennsylvania 19355

 

      

 

8,800,6492

 

 

 

      

 

11.36

 

%

 

 

Common Shares

  

 

GAMCO Investors, Inc., et al.

One Corporate Center

Rye, New York 10580

 

      

 

7,061,3573

 

 

 

      

 

9.11

 

%

 

 

1 

Information regarding share ownership was obtained from the Schedule 13G/A filed on February 4, 2020 by BlackRock, Inc. BlackRock, Inc. has sole voting power over 11,452,805 of our common shares and sole dispositive power over 11,602,636 of our common shares. BlackRock, Inc. is the parent company of the following subsidiaries that beneficially own our common shares: 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/A filed on February 12, 2020 by The Vanguard Group. The Vanguard Group has sole voting power over 121,154 of our common shares, shared voting power over 20,802 of our common shares, sole dispositive power over 8,670,054 of our common shares, and shared dispositive power over 130,595 of our common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, is the beneficial owner of 109,793 of our common shares or 0.14% 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 32,163 of our common shares or 0.04% of our common shares outstanding, as a result of its serving as investment manager of Australian investment offerings.

 

3 

Information regarding share ownership was obtained from the Schedule 13D/A filed jointly by GAMCO Investors, Inc., et al., on August 9, 2019. The entities of GAMCO Investors, Inc., et al., that hold our common shares reported their beneficial ownership as follows: (i) Gabelli Funds, LLC has sole voting and dispositive power over 1,174,200 of our common shares; (ii) GAMCO Asset Management Inc. has sole voting power over 4,973,156 of our common shares and sole dispositive power over 5,438,156 of our common shares; (iii) MJG Associates, Inc. has sole voting and dispositive power over 31,800 of our common shares; (iv) GGCP, Inc. has sole voting and dispositive power over 5,000 of our common shares; (v) Mario J. Gabelli has sole voting and dispositive power over 5,000 of our common shares; (vi) Gabelli & Company Investment Advisers, Inc. has sole voting and dispositive power over 2,500 of our common shares; and (vii) Teton Advisors, Inc. has sole voting and dispositive power over 404,701 of our common shares.

 

 

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  BENEFICIAL OWNERSHIP  

 

 

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 27, 2020.

 

  DIRECTORS AND NOMINEES:   

 

COMMON SHARES

BENEFICIALLY

OWNED1

  

 

STOCK OPTIONS

EXERCISABLE

WITHIN 60 DAYS

 

PERCENT  

OF CLASS  

 

Patrick W. Allender

 

    

 

 

 

 

73,8092     

 

 

 

 

    

 

 

 

 

 

 

          

 

   

 

 

 

 

*

 

 

     

 

 

Arthur F. Anton

 

    

 

 

 

 

86,982      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Bruce H. Besanko

 

    

 

 

 

 

18,159      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Reynolds C. Bish

 

    

 

 

 

 

12,367      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Ellen M. Costello

 

    

 

 

 

 

24,0001     

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Phillip R. Cox

 

    

 

 

 

 

21,4591     

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Dr. Alexander Dibelius

 

    

 

 

 

 

22,930      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Dr. Dieter W. Düsedau

 

    

 

 

 

 

22,930      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Matthew Goldfarb

 

    

 

 

 

 

42,367      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Gary G. Greenfield

 

    

 

 

 

 

56,059      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Kent M. Stahl

 

    

 

 

 

 

1     

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Lauren C. States

 

    

 

 

 

 

—      

 

 

 

 

    

 

 

 

 

 

 

 

   

 

 

 

 

*

 

 

 

 

Named Executive Officers:

 

             

 

Gerrard B. Schmid

President and Chief Executive Officer

 

    

 

 

 

 

159,5913,4   

 

 

 

 

    

 

 

 

 

365,197

 

 

 

   

 

 

 

 

*

 

 

 

 

Jeffrey Rutherford

Senior Vice President and Chief Financial Officer

 

    

 

 

 

 

90,1253     

 

 

 

 

    

 

 

 

 

22,857

 

 

 

   

 

 

 

 

*

 

 

 

 

Dr. Ulrich Näher

Senior Vice President, Systems

 

    

 

 

 

 

118,6683     

 

 

 

 

    

 

 

 

 

85,637

 

 

 

   

 

 

 

 

*

 

 

 

 

Olaf Heyden

Senior Vice President, Services

 

    

 

 

 

 

103,6683,5   

 

 

 

 

    

 

 

 

 

85,637

 

 

 

   

 

 

 

 

*

 

 

 

 

Alan L. Kerr

Senior Vice President, Software and Chief Revenue Officer

 

    

 

 

 

 

59,4293     

 

 

 

 

    

 

 

 

 

129,122

 

 

 

   

 

 

 

 

*

 

 

 

 

All Current Directors and Current Executive Officers as a Group (19)

 

    

 

 

 

 

975,629     

 

 

 

 

    

 

 

 

 

814,873

 

 

 

   

 

 

 

 

2.29

 

 

%

 

 

*

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: Ms. Costello, 24,523; Mr. Cox, 20,550; and Mr. Stahl, 12,367.

 

2 

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

 

3 

Beneficial ownership excludes unvested RSUs that will not vest within 60 days of February 27, 2020. The number of unvested RSUs held is: Mr. Schmid, 419,265; Mr. Rutherford, 133,018; Dr. Näher, 96,819; Mr. Heyden, 96,819; and Mr. Kerr, 63,993.

 

4

Amount includes 10,000 shares owned by spouse.

 

5

Amount includes 1,000 shares owned by spouse.

 

 

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  BENEFICIAL OWNERSHIP  

 

  

 

DELINQUENT SECTION 16(a) REPORTS

 

 

 

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, 2019, our directors, executive officers and greater than 10% shareholders timely filed all reports they were required to file under Section 16(a), with the exception of four Form 4s that were unintentionally filed late on behalf of: (1) our director Mr. Goldfarb in May 2019 for the acquisition of 12,367 RSUs; (2) our director Mr. Stahl in May 2019 for the acquisition of 12,367 RSUs; and (3) our officer Dr. Näher in February 2019 for two acquisitions of 13,000 shares each.

 

 

 

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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, 2020. 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 2020 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 2019 and 2018.

 

    

 

2019

 

    

 

2018

 

 

 

Audit Fees1

 

  

 

$

 

 

9,443,000

 

 

 

 

  

 

$

 

 

9,581,000

 

 

 

 

 

Tax Fees2

 

  

 

$

 

 

216,000

 

 

 

 

  

 

$

 

 

451,000

 

 

 

 

 

Audit-Related Fees3

 

  

 

$

 

 

32,000

 

 

 

 

  

 

 

 

 

 

 

 

 

 

All Other Fees4

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

Total

 

  

 

$

 

 

9,691,000

 

 

 

 

  

 

$

 

 

10,032,000

 

 

 

 

 

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 

Audit-Related Fees consist of fees billed for professional services rendered for assurance services in connection with other requirements outside of statutory and regulatory filings.

 

4 

All Other Fees consist of fees billed for those services not captured in the audit, audit-related and tax categories. There were no other fees in 2019 or 2018.

 

 

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

 

  

 

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.

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 the Chair of the Audit Committee when expedition of services is necessary, provided that the Chair 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.

 

 

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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 People and 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 2020 Annual Meeting, the next such vote will occur at our 2021 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 People and 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.

 

 

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PROPOSAL 4: APPROVAL OF AN

AMENDMENT TO THE DIEBOLD NIXDORF,

INCORPORATED 2017 EQUITY AND

PERFORMANCE INCENTIVE PLAN

BOARD RECOMMENDATION

 

 

 

 

  

 

  

FOR Proposal 4

 

 

We are asking our shareholders to approve an amendment to our 2017 Equity and Performance Incentive Plan, as amended (which we refer to as the 2017 Plan). The amendment was adopted by our Board on February 26, 2020 based on the recommendation of our People and Compensation Committee and subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the amendment would authorize an additional 1,910,000 shares of common stock, $1.25 par value per share, of the Company (which we refer to in this Proposal 4 as common shares) for issuance under the 2017 Plan effective May 1, 2020. The amendment would not make any other changes to the 2017 Plan.

The 2017 Plan serves as a critical component of the overall compensation package that we offer our employees and non-employee Board members. Increasing the number of shares issuable under the 2017 Plan is necessary in order to allow us to continue to utilize equity awards to retain and attract the services of key individuals essential to our long-term growth and financial success and to further align their

interests with those of our shareholders. We rely on equity awards to incentivize current and potential employees and non-employee Board members and believe that such awards are necessary for us to remain competitive in retaining and attracting highly qualified individuals upon whom, in large measure, our future growth and success depend.

Volatility in our stock price since 2018, which led to a more rapid depletion of shares available under the 2017 Plan than anticipated, has caused us to implement certain cash-based incentive compensation structures this past year in order to appropriately compensate key employees. If this Proposal 4 is not approved, we anticipate that we will continue to rely on cash-based incentive compensation and not be able to provide equity-based compensation to our employees and non-employee directors as is customary for public companies. Furthermore, we do not believe that cash-based incentives have the same long-term retention value or serve to align employees’ interests with those of our shareholders as well as a program that includes an appropriate mix of equity incentives.

 

 

SHARE REQUEST BACKGROUND

 

 

 

Our shareholders originally approved the 2017 Plan at the 2017 Annual Meeting of Shareholders; at that time, the 2017 Plan initially authorized the issuance of an aggregate of 4,941,117 common shares under the plan. At the 2018 Annual Meeting of Shareholders, our shareholders approved certain amendments to the 2017 Plan, including the authorization of an additional 1,150,000 common shares for issuance under the 2017 Plan and certain adjustments to reflect tax law changes. At the 2019 annual meeting of shareholders, our shareholders approved an amendment to the 2017 Plan authorizing an additional 3,000,000 common shares for issuance under the 2017 Plan. As of February 20, 2020, 2,995,066 common shares

remain available for grants under the 2017 Plan. With the proposed 1,910,000 share increase, 4,905,066 will be available for issuance under the 2017 Plan, which represents approximately 6.3% of our 77,531,582 shares outstanding as of February 20, 2020. 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.

 

 

 

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The affirmative vote of a majority of our common shares represented and voting at the Annual Meeting is required to approve the amendment 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 change described above, is attached as Appendix B to this Proxy Statement. The following description is not complete and is qualified in its entirety by reference to that exhibit.

 

 

2017 PLAN HIGHLIGHTS

 

 

 

The 2017 Plan authorizes the People and 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 no longer 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 20, 2020, approximately 700 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.

 

 

 

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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 was 3.53% for 2019, 4.49% for 2018, and 4.27% for 2017, and our three-year average burn rate for 2017 through 2019 was 4.09%.
  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 2019, our overhang was 14.1%.

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 20, 2020. As of that date, there were 77,531,582 of our common shares outstanding. We replaced the 1991 Plan with the 2017 Plan at the 2017 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 equity 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

 

  

 

3,634,040 shares or 4.7%
of our outstanding shares

 

 

Outstanding stock options under the 1991 Plan and 2017 Plan

 

  

 

2,546,320 shares or 3.3% of our outstanding shares

 

 

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

 

  

 

$14.57

 

 

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

 

  

 

6,180,360 shares or 7.97% of our outstanding shares

 

 

Total shares available for future awards under the 2017 Plan

 

  

 

2,995,066

 

 

Current overhang percentage based on total number of shares subject to outstanding awards under the 1991 Plan and 2017 Plan

 

  

 

11.83%

 

 

Additional shares requested under amendment to the 2017 Plan

 

  

 

1,910,000

 

 

Potential dilution of 1,910,000 additional shares as a percentage of outstanding shares

 

  

 

2.46%

 

 

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

 

 

  

 

11,085,426 shares or 14.30%

 

 

Based on the closing price on the NYSE for our common shares on February 20, 2020, of $8.54 per share, the aggregate market value as of that date of the 1,910,000 additional common shares requested for issuance under the amended 2017 Plan was $16,311,400.

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, 2018, 2019, and 2020, we also granted awards (including performance-based awards) covering 134,869 shares, 2,806,998 shares, 2,708,544 shares and 1,105,493 shares, respectively, under the 2017 Plan. For information with respect to awards granted under the 2017 Plan, see “Existing Plan Benefits to Named Executive Officers and Others” below.

In determining the number of shares to request for approval by our shareholders pursuant to the amendment, our

management team worked with advisors and the People and Compensation Committee to evaluate a number of factors including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating this proposal. We are also mindful of the ratio of our stock-based compensation to our performance over time.

If the amendment to the 2017 Plan is approved, we intend to utilize the increased amount of shares authorized under the 2017 Plan to continue our practice of incentivizing key individuals through annual equity grants. As noted in “2017 Plan Highlights” and elsewhere below, our People and 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.

 

 

 

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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 11,001,117 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 shares 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 11,001,117; 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 People and 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 People and Compensation Committee’s authority under the 2017 Plan to vest awards earlier, as the People and 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 22,000 people) and our non-employee directors (currently 11 people) may be selected by the People and Compensation Committee to receive benefits under the 2017 Plan. We refer to those individuals selected as “participants.” The basis for participation in the 2017 Plan is selection for participation by the People and Compensation Committee (or its proper delegate) in its discretion.

Options: An option entitles the participant to purchase a common share at the exercise price. The People and 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 People and 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, 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 People and Compensation Committee. No option will be exercisable more than 10 years from the date of grant.

 

 

 

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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 People and 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 People and 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 People and 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 People and 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 People and 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 People and Compensation Committee specifies and are consistent with the 2017 Plan. The grant will constitute a transfer of ownership and, unless otherwise determined by the People and 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 People and 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

People and Compensation Committee specifies and are consistent with the 2017 Plan. At the discretion of the People and 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 People and 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 People and Compensation Committee will certify achievement levels of performance prior to the payment of any shares or units. At the discretion of the People and 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 People and 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 People and Compensation Committee the right to elect among those alternatives.

Other Share-Based Awards: The People and Compensation Committee may, from time to time, grant other share-based awards not otherwise described above but in all cases consistent with the terms and conditions of the 2017 Plan. Each such award will be expressed in terms of common shares or units based on common shares and will be evidenced by an award agreement that specifies the number of common shares or units granted, any conditions related to the award, and any other terms and conditions that the People and 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 People and Compensation Committee.

 

 

 

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Management Objectives and Goals: The 2017 Plan requires that the People and 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 People and Compensation Committee deems appropriate.

The People and Compensation Committee will use the management objectives to set management goals for a set performance period. The People and 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 People and 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 People and Compensation Committee may in its discretion modify such management goals or the minimum acceptable level of achievement, in whole or in part, as the People and Compensation Committee deems appropriate and equitable.

Administration: The Board delegates authority to administer the 2017 Plan to the People and Compensation Committee or any other committee so designated by the Board. Unless otherwise determined by the Board, the People and Compensation Committee will consist of two or more non-employee directors. The People and 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 People and Compensation Committee is authorized to interpret the 2017 Plan and related agreements and other documents. The People and 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 People and 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 People and 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 People and 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 People and 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 People and 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 awards under the 2017 Plan, and the prices per share applicable to outstanding options and SARs, are subject to adjustment in the event of stock dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations, liquidations, issuances of rights or warrants, and similar events. In the event of any such transaction or event, the People and 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 People and Compensation Committee may also make or provide for such adjustments in the numbers of shares authorized for issuance under the 2017 Plan as the People and Compensation Committee may determine appropriate to reflect any transaction or event described above.

Change in Control: Under the 2017 Plan, a “Change in Control” generally means the occurrence of any of the following events:

 

 

 

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(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 the 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 People and 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 People and 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 People and 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 People and 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.

 

 

 

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TAX CONSEQUENCES TO PARTICIPANTS

 

 

 

The following is a brief summary of some of the U.S. federal income tax consequences of certain awards under the 2017 Plan based on U.S. federal income tax laws in effect for taxable years beginning on and after January 1, 2020. 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 (instead of dividend income) 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.

 

 

 

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

 

  

 

TAX CONSEQUENCES TO THE COMPANY OR SUBSIDIARY

 

 

 

To the extent that a participant recognizes ordinary income in the circumstances described above, we or our subsidiary for which the participant performs services will be entitled to a corresponding income tax deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1 million limitation on certain executive compensation to our 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 (TCJA) generally eliminated the “performance-based” compensation exception under Section 162(m), and expanded the $1 million per Covered Employee annual limitation on deductibility to a larger group of named executive officers. In addition, the TCJA also provides that any employee who was a Covered Employee in taxable years beginning on and after January 1, 2017, will continue to be a Covered Employee for all subsequent taxable years (including taxable years after his or her death). As a 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, has eliminated 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 amendment 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 2020 fiscal year or in future periods due to the discretionary nature of the 2017 Plan, we did award our annual equity grants for fiscal 2020 on January 30, 2020.

The following table sets forth with respect to each named executive officer listed in the Summary Compensation Table on page 65 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 20, 2020 (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.

 

 

 

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

 

 

  NAME AND POSITION

 

 

 

 

 

 

ESTIMATED POSSIBLE PAYOUTS UNDER

EQUITY INCENTIVE PLAN AWARDS1

   

ALL

OTHER

STOCK

AWARDS:

NUMBER

OF SHARES

OF STOCK

OR UNITS2

(#)

 

   

ALL OTHER

OPTION

AWARDS:

NUMBER

OF

SECURITIES

UNDERLYING

OPTIONS3

(#)

 

   

EXERCISE

OR

BASE

PRICE OF

OPTION

AWARDS

($/SH)

 

 
 

THRESHOLD

(#)

 

   

TARGET

(#)

 

   

MAX.

(#)

 

 

Gerrard B. Schmid

President and Chief Executive Officer

                            676,814       4.49  
 

 

 

 

 

 

 

 

 

 

 

 

 

 

253,907

 

 

 

13.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,678

 

 

 

13.98

 

 

 

 

 

 

 

 

 

 

 

 

506,297

 

 

 

 

 

 

 

 

 

 

 

 

56,059

 

 

 

 

     

Jeffrey Rutherford

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,572

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,898

 

 

 

11.96

 

 

 

 

 

 

 

 

 

 

 

 

178,344

 

 

 

 

 

 

 

Dr. Ulrich Näher

Senior Vice President, Systems

                            47,407       4.08  
 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,614

 

 

 

11.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,278

 

 

 

18.75

 

 

 

 

 

 

 

 

 

 

 

 

139,890

 

 

 

 

 

 

 

 

 

12,574

 

 

 

25,147

 

 

 

50,294

 

 

 

 

 

 

 

 

 

 

Olaf Heyden

Senior Vice President, Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,407

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,614

 

 

 

11.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,278

 

 

 

18.75

 

 

 

 

 

 

 

 

 

 

 

 

139,890

 

 

 

 

 

 

 

 

 

12,574

 

 

 

25,147

 

 

 

50,294

 

 

 

 

 

 

 

 

 

 

Alan L. Kerr

Senior Vice President, Software and Chief Revenue Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,000

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,227

 

 

 

18.75

 

 

 

 

 

 

 

 

 

 

 

 

102,740

 

 

 

 

 

 

 

 

 

9,646

 

 

 

19,292

 

 

 

38,584

 

 

 

 

 

 

 

 

 

 

All current executive officers as a group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252,101

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

676,814

 

 

 

4.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,261

 

 

 

11.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,965

 

 

 

12.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

253,907

 

 

 

13.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,678

 

 

 

13.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108,300

 

 

 

18.75

 

 

 

 

 

 

 

 

 

 

 

 

1,234,533

 

 

 

 

 

 

 

 

 

44,975

 

 

 

146,008

 

 

 

179,898

 

 

 

 

 

 

 

 

 

 

All current non-employee directors as a group

 

 

 

 

 

 

 

 

 

    229,445 4   

 

 

 

 

 

All employees, excluding current executive officers, as a group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180,096

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,114

 

 

 

11.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

235,660

 

 

 

18.75

 

 

 

 

 

 

 

 

 

 

 

 

1,972,763

 

 

 

 

 

 

 

 

 

274,419

 

 

 

548,838

 

 

 

1,097,676

 

 

 

 

 

 

 

 

 

 

 

1 

These columns present information about performance-based shares awarded during 2017, 2018 and 2019 pursuant to the 2017 Plan. The payout of these performance-based shares will be determined based on the achievement of specific metrics calculated over a three-year performance period.

 

2 

This column presents information about RSUs awards from 2017 to 2020 pursuant to the 2017 Plan.

 

 

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  PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE DIEBOLD NIXDORF, INCORPORATED  2017 EQUITY AND PERFORMANCE INCENTIVE 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.

 

4 

This includes 12,367 RSUs for each current non-employee director in 2019 and the following amounts of RSUs in 2018: each of Messrs. Allender, Cox and Greenfield, Drs. Dibelius and Düsedau, 15,092; Mr. Besanko, 5,792; and Ms. Costello, 12,156. No other director nominees have received awards under the 2017 Plan.

EQUITY COMPENSATION PLAN INFORMATION

 

 

The following table reflects information as of December 31, 2019 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

   

 

2,379,062      

 

 

 

   

 

$14.89      

 

 

 

   

 

N/A              

 

 

 

 

Restricted stock units

   

 

2,155,722      

 

 

 

   

 

N/A      

 

 

 

   

 

N/A              

 

 

 

 

Performance shares

   

 

2,251,021      

 

 

 

   

 

N/A      

 

 

 

   

 

N/A              

 

 

 

 

Non-employee director deferred shares

   

 

30,700       

 

 

 

   

 

N/A      

 

 

 

   

 

N/A              

 

 

 

 

Deferred compensation

   

 

815      

 

 

 

   

 

N/A      

 

 

 

   

 

N/A              

 

 

 

                       

 

Total

   

 

6,817,320      

 

 

 

   

 

$14.89      

 

 

 

   

 

4,100,000              

 

 

 

In column (A), performance shares are included, and as a result the aggregate reported number may overstate actual dilution. In column (B), the weighted-average exercise price is only applicable to stock options. In column (C), the number of securities remaining available for future issuance for stock options, restricted stock units, performance shares and non-employee director deferred shares is approved in total and not individually.

VOTE REQUIRED TO APPROVE THE AMENDMENT TO THE 2017 PLAN

 

 

 

A favorable vote of the majority of votes cast on the matter is necessary for approval of the amendment to the 2017 Plan. Abstentions are considered votes cast on the proposal, and 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 amendment to the 2017 Plan is

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 amendment to the Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan.

 

 

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EXECUTIVE COMPENSATION MATTERS

PEOPLE AND COMPENSATION COMMITTEE REPORT

 

 

 

The People and 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, 2019 and this Proxy Statement.

The foregoing report was submitted by the People and 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 People and Compensation Committee:

Ellen M. Costello, Chair

Reynolds C. Bish

Phillip R. Cox

Dr. Alexander Dibelius

Matthew Goldfarb

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Our People and 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 and recommendations for Board approval for our NEOs in 2019.

Following the 2018 year of transition as the Company hired a new CEO, appointed a new Board chairperson and refreshed the Board with two new independent directors, we continued to evaluate and ensure that we had the appropriate mix of experience among our Board members and senior leadership. In 2019, we added four new Board members and made changes to our committee compositions to further drive Company priorities and initiatives which create value for shareholders. Notably, Ellen Costello (a new Board member from 2018) became chairperson of our People and

Compensation Committee in April. We also benefitted in 2019 from increased continuity at the highest levels of our organization, and each of our NEOs has now been at the Company for over one year. Mr. Jeffrey Rutherford, who joined the Company as Interim Chief Financial Officer on October 1, 2018, was appointed Senior Vice President and Chief Financial Officer on January 3, 2019. Our compensation policies and incentives, some of which were implemented to retain and recruit talent specifically in challenging circumstances, proved effective. We retained each of our NEOs and added key talent, including a new Chief People Officer, to the executive ranks.

We have engaged with our shareholders and proxy advisory firms throughout the year to discuss the Company’s performance and compensation programs. We have reported that feedback to our People and Compensation Committee and Board, and to the extent possible and in the best interests of our shareholders, our compensation program design and disclosure in this proxy statement have been driven by that feedback.

 

 

  NAMED EXECUTIVE OFFICER    TITLE

 

Gerrard B. Schmid

 

  

 

President and Chief Executive Officer

 

 

Jeffrey Rutherford

 

  

 

Senior Vice President and Chief Financial Officer

 

 

Dr. Ulrich Näher

 

  

 

Senior Vice President, Systems

 

 

Olaf Heyden

 

  

 

Senior Vice President, Services

 

 

Alan L. Kerr1

 

  

 

Senior Vice President, Software and Chief Revenue Officer

 

 

1 

Mr. Kerr has announced his plan to retire in June 2020.

 

 

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  EXECUTIVE COMPENSATION MATTERS  

 

  

 

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

 

     PAGE    
EXECUTIVE SUMMARY      44  

Year In Review

     44  

Extensive Shareholder Engagement and Meaningful Response

     45  

Our Compensation Strategy is Designed to Align With Our Transformation Strategy

     45  

Regular Total Direct Compensation Mix

     47  

2019 NEO Target Compensation Structure

     47  

2019 Payouts Reflect Meaningful Progress in Advancing Our Transformation Program

     48  

Our 2019 Compensation and Talent Management Programs Retained Key Talent

     48  

Executive Compensation Best Practices

     49  
COMPENSATION DECISION PROCESS      50  

Role of the People and Compensation Committee

     50  

Role of the Independent Compensation Consultant

     50  

Role of Management

     50  

Role of Peer Companies and Competitive Market Data

     50  

Timing of Compensation Decisions

     51  

Determination of CEO Compensation

     51  
2019 COMPENSATION ELEMENTS      52  

Base Salary

     53  
     PAGE    

Annual Cash Bonus Plan

     53  

Long-Term Incentives—2019 Annual Grants

     57  

Quarterly Bonus Program

     59  

Long-Term Incentives—Completed Performance Cycles

     60  

Long-Term Incentives—2017 Performance-Based Synergy Grant

     60  

Long-Term Incentives—2017 Performance-Based Cash Incentive Awards

     61  

Benefits and Perquisites

     61  

Deferred Compensation

     62  

Retirement

     62  

Perquisites and Fringe Benefits

     62  

Change in Control Protection

     62  

Severance Protection

     63  
EMPLOYMENT AGREEMENTS      63  
OTHER COMPENSATION POLICIES      63  

Clawback Policy

     63  

Insider Trading Policy

     64  

Company-Imposed Black-Out Periods

     64  

Stock Ownership Guidelines

     64  

Tax Reform and Limitations on Deductibility of Compensation

     64  
 

 

EXECUTIVE SUMMARY

 

 

 

YEAR IN REVIEW

2019 was a good year for the Company as we executed on DN Now transformation initiatives and delivered financial results that were in line or better than our expectations. During our first full year of DN Now, we met or exceeded on every commitment we made and are on track for future targets. A few highlights:

 

  We delivered full year adjusted EBITDA of $401 million, representing a 25% increase over 2018.

 

  Full year free cash flow increased by approximately $256 million, reflecting our companywide focus on driving both operating and net working capital efficiencies.

 

  We reduced our leverage ratio by more than a full turn, ending 2019 at 4.4 times.

 

  We generated revenue of $4.4 billion which was within the range of our initial outlook, despite approximately $150 million from foreign currency headwinds.

 

  For our banking customers, we enhanced our differentiation by launching our next-generation platform called DN Series, the most loT-enabled platform on the market, and in the
   

retail segment, we increased our retail self-checkout shipments by more than 50% in 2019.

In addition to these achievements, we successfully amended and extended approximately $700 million of our revolving credit facility and term loan A which provides the Company with both the time and liquidity needed to achieve our 2021 DN Now targets. We also completed the squeeze-out of Diebold Nixdorf AG minority shareholders.

On the governance side and leadership side, we added four new independent directors to our Board in 2019, and Ellen Costello, a director since 2018, assumed the chair role for the People and Compensation Committee. Jeffrey Rutherford transitioned to our permanent Senior Vice President and Chief Financial Officer, and Elizabeth Patrick joined the Company as our new Senior Vice President and Chief People Officer. We also strengthened our senior leadership team with the additions of Julian Sparkes, Senior Vice President and Chief Digital Officer, and Hermann Wimmer, Senior Vice President, Global Retail in January 2019.

 

 

 

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  EXECUTIVE COMPENSATION MATTERS  

 

 

EXTENSIVE SHAREHOLDER ENGAGEMENT AND MEANINGFUL RESPONSE

At our 2019 annual meeting of shareholders, our say-on-pay proposal received approximately 46% support from our shareholders. After receiving such strong support in the prior year (over 90%), our Committee was disappointed with this outcome and determined to better understand the factors that drove these results by soliciting input and feedback from our shareholders and proxy advisory firms. Our Board and People and Compensation Committee, as well as members of management, have engaged with shareholders throughout the year to discuss their views. Our goal is to return as quickly as possible to the historical level of shareholder support for our executive compensation program, which averaged 86% of the votes cast over the past three years.

Following the annual meeting and in direct response to this say on pay result, the Investor Relations, Human Resources and Legal teams created a comprehensive shareholder engagement strategy and began to execute on that strategy. We invited shareholders collectively owning approximately 68% of our shares to discuss Company performance, executive compensation, our Board membership and any other topics of interest to them. Shareholders representing approximately 32% of our shares as well as proxy advisory firms ISS and Glass Lewis responded to our outreach and engaged with us, providing the following feedback related to our executive compensation program:

 

   
FEEDBACK WE HEARD   HOW WE RESPONDED
 
PRIORITY FEEDBACK
   
Discretionary cash awards, such as the Quarterly Bonus Program, were viewed unfavorably and not sufficiently linked to a pay-for-performance culture.   In direct response to investor discussions, the Committee terminated this program in April 2019 and determined not to provide any further discretionary cash awards to NEOs in 2019.
   
Increase diversity on the Board, specifically at least two female directors.   We have nominated Lauren C. States to the Board. If she is elected by our shareholders, we will have two female directors, increasing the diversity of the Board.
 
ADDITIONAL TOPICAL FEEDBACK
   
Support for our performance-based annual incentive plan and long-term incentive compensation plans as long as they align with shareholders and value creation.   Continued the use of performance-based compensation in alignment with shareholders through equity grants and value creation through performance metrics that measure free cash flow, operating profit and adjusted EBITDA that, in our view, create value for our shareholders. All enterprise leadership compensation programs are now aligned to Company goals.
   
Improve disclosure related to our talent management and retention programs.   We improved our discussion of our talent management and retention programs with more complete disclosure regarding the impact of our talent management programs on page 48.
   
Explain specifically how our compensation programs succeed in retaining talent.   We explain how our compensation programs ensure stability of management and create value on page 48.
   
Return to full equity awards for long-term incentive compensation grants as soon as possible.   We have proposed an increase of the shares available under our 2017 Plan at Proposal 4, with the goal of returning to full equity long-term incentive compensation as soon as possible.

 

The People and Compensation Committee believes the changes implemented in 2019 are directly responsive to feedback from shareholders and reflect the right incentive structure for our business at this time. The Committee considers all feedback received as part of our ongoing communications with shareholders. Our new Committee chairperson has continued to take a critical look at compensation structure and has committed, along with the Company, to maintaining an active dialogue through 2020.

OUR COMPENSATION STRATEGY IS DESIGNED TO ALIGN WITH OUR TRANSFORMATION STRATEGY

Under the guidance of our new Committee chairperson and new Chief People Officer, our executive pay program is specifically designed to:

 

  Use metrics that are balanced and support our multi-year transformation program;

 

  Focus on performance metrics that align executives with the creation of long-term shareholder value through performance-based compensation;
 

 

 

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  EXECUTIVE COMPENSATION MATTERS  

 

  

 

  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.

We generally target total compensation opportunity at or near the size-adjusted 50th percentile of our compensation peer group. The NEOs may be above or below the 50th percentile based on their experience, performance, potential, and impact on shareholder value. As our strategy and business operations evolve, we make adjustments in our compensation strategy to support those goals and objectives, aligning closely with delivering value to our shareholders. In 2019, we made the following adjustments to our past practices:

 

  In response to shareholder feedback, we eliminated the Quarterly Bonus Program in April 2019 and did not provide any Turnaround Bonuses or any other discretionary bonus compensation in 2019;

 

  We increased the percentage of stock options granted to our CEO from 15% to 25% of his long-term incentive compensation
 

mix, and set an exercise price for those options that was 10% higher than the market price on the grant date (“premium-priced options”);

 

  We decreased the percentage of time-based RSUs granted to our CEO from 35% to 25% to put additional CEO compensation at risk relative to our share performance and in direct alignment with our shareholders;

 

  Due to the limited number of shares of common stock available under our shareholder-approved equity incentive plan, we decreased the percentage of options provided to our other NEOs from 15% to 10%, and increased the number of RSUs proportionately;

 

  In April 2019, the People and Compensation Committee reviewed our CEO’s compensation opportunity against peers and, in order to bring his total compensation opportunity in line with the 50th percentile, the Committee approved an annual long-term incentive target of 625%; and

 

  Due to the limited number of shares of common stock available under our shareholder-approved equity incentive plan in February 2019, we adopted a long-term performance-based cash incentive award program (the “Performance Cash Award Program”) and made these performance-based cash award grants to NEOs in lieu of the performance-based share awards that the Company has given in prior years.
 

 

Apart from the Quarterly Bonus Program, our 2019 target compensation structure for NEOs is as follows:

 

 

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Table of Contents
 

 

  EXECUTIVE COMPENSATION MATTERS  

 

 

REGULAR TOTAL DIRECT COMPENSATION MIX

The graphics below represent the percentages of fixed and at risk compensation for our NEOs.

 

 

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2019 NEO TARGET COMPENSATION STRUCTURE

There were no base salary increases for the NEOs in 2019 and the long-term incentive opportunity did not increase for any NEO except the CEO. The People and Compensation Committee approved the following compensation structure after a review of individual performance and competitive market data:

 

 

Mr. Schmid: Base salary of $950,000, no change in target bonus opportunity, and long-term incentive opportunity approved at 625% of base salary at target to align targeted total compensation with the competitive 50th percentile.

 

 

Mr. Rutherford: Transitioned to full-time position in early 2019 with a base salary of $600,000, an annual target bonus opportunity of 100% of base salary and a long-term incentive opportunity of 200% of base salary at target.

 

 

Dr. Näher: Base salary of 484,100. No change in target bonus or long-term incentive opportunity.

 

 

Mr. Heyden: Base salary of 484,100. No change in target bonus or long-term incentive opportunity.

 

 

Mr. Kerr: Base salary of $525,000. No change in target bonus or long-term incentive opportunity.

 

  NAME    SALARY   

TARGET BONUS

(% OF SALARY)

  

TARGET LTI

(% OF SALARY) 

Gerrard B. Schmid

  

$950,000

  

140%

  

625%

Jeffrey Rutherford

  

$600,000

  

100%

  

200%

Dr. Ulrich Näher

  

484,1001

  

100%

  

150%

Olaf Heyden

  

484,1001

  

100%

  

150%

Alan L. Kerr

  

$525,000

  

100%

  

150%

 

  1 

USD equivalent is $542,240 based on the average exchange rate for 2019.

 

 

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Table of Contents

 

  EXECUTIVE COMPENSATION MATTERS  

 

  

 

2019 PAYOUTS REFLECT MEANINGFUL PROGRESS IN ADVANCING OUR TRANSFORMATION PROGRAM

Our 2019 program design and pay outcomes reflect the rigor of our pay-for-performance program and incentives aligned to achieve our DN Now transformation. The below summarizes the 2019 payouts against the pre-established metrics set by our People and Compensation Committee.

 

 

   PAY COMPONENT

 

  

 

OUTCOME

 

2019 Annual Cash Bonus Plan

  

The Company exceeded target for the non-GAAP operating profit and exceeded maximum achievement for the free cash flow metric. The Company also exceeded adjusted EBITDA and DN Now metrics specific to the CEO. Payouts in the range of 126% to 152% for the NEOs, with variation due to achievement of individual performance (individual details on pages 54-55).

2017 Performance-Based Shares

  

No payout. Our three-year relative TSR ranking for the completed 2017-2019 performance share grant was below the 30th percentile threshold requirement against the S&P 400 Midcap Index companies.

2017 Performance-Based Synergy Grants (related to Wincor Nixdorf acquisition)

  

The synergy cost savings exceeded the maximum achievement above $240 million for the three-year performance. Since 50% of this award was accelerated due to performance in 2018, the remaining aggregate amount of $540,256 paid out to Messrs. Heyden and Kerr and Dr. Näher for 2019.

2017 Performance-Based Cash Awards (related to Wincor Nixdorf acquisition)

  

Based on achievement of a share price of $10.05 for the performance period that ended March 25, 2019, these awards vested above threshold, resulting in a payout to each of Dr. Näher and Mr. Heyden of $523,755.

Quarterly Bonus Plan

  

Based on achievement of DN Now initiatives in the first quarter of 2019, each NEO received a payment for his performance in first quarter 2019. See page 60 for the individual amounts. The aggregate payout to the NEOs in 2019 was $1,184,805. This program was eliminated based on shareholder feedback after the first quarter.

 

OUR 2019 COMPENSATION AND TALENT MANAGEMENT PROGRAMS RETAINED KEY TALENT

We are committed to creating a high performing pay for performance culture at all levels of the organization supported by our holistic compensation and talent management philosophies. By using competitive compensation, leadership and employee development, and a growing sense of DN employee culture, we drive to recruit, develop, and retain the best talent in our industry. Effectively managing our cash flow and improving our financial health during our transformation has created challenges in balancing our financial goals with these human capital management objectives. These efforts required significant planning, collaboration and execution among the leadership team. As a result, we implemented programs designed to keep employees incentivized and engaged while achieving our Company goals.

The Quarterly Bonus Program and Turnaround Bonuses were designed to accelerate the achievement of the DN Now initiatives and to incentivize near-term completion on a quarterly basis during a critical time in our history. While both programs, created in the fourth quarter 2018 following the liquidity crisis and in support of our transformation efforts, have since been terminated, these actions were important steps to retain and motivate key leaders of the Company. We believe these bonuses, in part, helped us achieve continuity in

our leadership team by retaining our critical top leaders, as well as aided us in securing our Chief Financial Officer on a permanent basis.

After a year of solid accomplishments, we are entering the second year of our transformation with solid plans and determination. Continued execution of the DN Now transformation program in 2020 and beyond is critical to building upon our improved financial performance, as well as our commitment to attracting, retaining, and rewarding employees for their performance and commitment to our Company. In support of our human capital management objectives, initiatives are underway globally to:

 

  Drive a pay-for-performance culture by using both our 2020 Annual Cash Bonus Plan supported entirely by financial performance of the Company and modified based on individual performance;