<PAGE> 1
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- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.______)
Filed by the Registrant /X/
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))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
DIEBOLD, INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: _____________________________________________________
/X/ 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: _________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
DIEBOLD, INCORPORATED
5995 MAYFAIR ROAD
P.O. BOX 3077 - NORTH CANTON, OHIO 44720-8077
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 3, 1996
------------------
TO THE SHAREHOLDERS:
THE ANNUAL MEETING OF SHAREHOLDERS OF THE CORPORATION WILL BE HELD AT THE
DIEBOLD EDUCATION CENTER AT STARK TECHNICAL COLLEGE, 5801 DRESSLER ROAD, N.W.,
CANTON, OHIO 44720, ON APRIL 3, 1996 AT 10:00 A.M., LOCAL TIME, FOR THE
FOLLOWING PURPOSES:
1. To elect Directors;
2. To consider and act on a proposal to amend the Articles of Incorporation
to increase the authorized number of Common Shares, $1.25 par value,
from 50,000,000 to 125,000,000;
3. To vote upon ratification of the appointment by the Board of Directors
of KPMG Peat Marwick LLP as independent auditors for the year 1996; and
4. To consider such other matters as may properly come before the meeting
or any adjournment thereof.
The enclosed proxy card is solicited, and the persons named therein have
been designated, by the Board of Directors of the Corporation.
Holders of record of the Common Shares at the close of business on March 1,
1996 will be entitled to vote at the meeting.
Your attention is directed to the attached proxy statement.
By Order of the Board of Directors
CHAREE FRANCIS-VOGELSANG
Vice President and Secretary
March 8, 1996
(approximate mailing date)
YOU ARE EARNESTLY REQUESTED TO COOPERATE IN ASSURING A QUORUM
BY FILLING IN, SIGNING AND DATING THE ENCLOSED PROXY AND
PROMPTLY MAILING IT IN THE RETURN ENVELOPE.
<PAGE> 3
DIEBOLD, INCORPORATED
5995 MAYFAIR ROAD
P.O. BOX 3077 - NORTH CANTON, OHIO 44720-8077
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF SHAREHOLDERS, APRIL 3, 1996
This proxy statement is furnished to shareholders of Diebold, Incorporated
(the "Corporation") in connection with the solicitation by the Board of
Directors of proxies to be used at the 1996 annual meeting of shareholders to be
held on April 3, 1996, at 10:00 a.m., local time, or any adjournments thereof,
for the purpose of considering and acting upon the matters referred to in the
preceding notice of annual meeting and more fully discussed below. This proxy
statement was first mailed to shareholders on or about March 8, 1996. Shares
represented by a properly executed proxy will be voted as indicated on the
proxy. Shareholders may revoke the authority granted by their proxies at any
time before the exercise of the powers conferred thereby by notice in writing
delivered to the Secretary of the Corporation; by submitting a subsequently
dated proxy; or by attending the meeting, withdrawing the proxy and voting in
person.
On March 1, 1996, the record date for the meeting, the outstanding voting
securities of the Corporation consisted of 45,869,037 Common Shares, $1.25 par
value per share, all of one class. Each shareholder of record as of the close of
business on March 1, 1996 will be entitled to one vote for each Common Share
held on that date. All discussions of outstanding Common Shares in this proxy
statement have been adjusted to reflect the 3-for-2 stock split distributed on
February 23, 1996 to shareholders of record as of February 9, 1996.
If notice in writing shall have been given by a shareholder to the
President, any Vice President or Secretary at least forty-eight hours prior to
the time fixed for holding the meeting that the shareholder desires that the
voting for the election of directors shall be cumulative, and if an announcement
of the giving of such notice is made upon convening of the meeting by the
Chairman or Secretary or by or on behalf of the shareholder giving such notice,
each shareholder will have cumulative voting rights. In cumulative voting, each
shareholder may cast a number of votes equal to the number of shares owned
multiplied by the number of directors to be elected and the votes may be cast
for one nominee only or distributed among the nominees. In the event that voting
at the annual meeting is to be cumulative, the persons designated on the proxy
will cumulate the votes in accordance with their discretion. The results of
shareholder voting at the annual meeting will be tabulated by the inspectors of
elections appointed for the annual meeting. The Corporation intends to treat
properly executed proxies that are marked "abstain" as present for purposes of
determining whether a quorum has been achieved at the annual meeting. The
director-nominees receiving the greatest number of votes will be elected. Votes
withheld in respect
<PAGE> 4
of the election of directors will not be counted in determining the outcome of
that vote. Abstentions in respect of the proposal to amend the Articles of
Incorporation to increase the authorized shares or in respect of the proposal to
ratify the appointment of the independent auditors will have the same effect as
votes against those proposals. The Corporation does not anticipate receiving any
broker non-votes at the annual meeting in light of the nature of the matters to
be acted upon at the annual meeting; however, any broker non-votes received in
respect of the proposal to amend the Articles of Incorporation will have the
same effect as votes against that proposal, and any broker non-votes received in
respect of the appointment of auditors will not affect the voting on that
proposal.
BENEFICIAL OWNERSHIP OF SHARES
To the knowledge of the Corporation, no person beneficially owned more than
5 percent of the outstanding Common Shares as of December 31, 1995, except for
the shareholders listed below. The information provided below is derived from
Schedules 13G filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------------- ------------- --------
<S> <C> <C>
FMR Corp., Edward C. Johnson 3d 4,021,688(a) 8.78
and Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109-3614
The Prudential Insurance Company of 3,948,862(b)(c) 8.60
America ("Prudential")
Prudential Plaza
Newark, New Jersey 07102-3777
Jennison Associates Capital Corp. 3,927,863(c) 8.58
("Jennison")
466 Lexington Avenue
New York, New York 10017
</TABLE>
- ---------------
(a) Edward C. Johnson 3d is the Chairman of FMR Corp. and Abigail P. Johnson is
a Director of FMR Corp. Fidelity Management & Research Company ("Fidelity
Research"), in its capacity as an investment advisor to several investment
companies, and as a result of acting as sub-advisor to Fidelity American
Special Situations Trust ("FASST"), and Fidelity Management Trust Company
("Fidelity Trust"), in its capacity as an investment manager of several
institutional accounts, beneficially own 3,450,750 shares (7.54%) and
554,438 shares
2
<PAGE> 5
(1.21%), respectively. Fidelity Research and Fidelity Trust are each
wholly-owned subsidiaries of FMR Corp. Fidelity International Limited
("Fidelity International"), in its capacity as an investment advisor to
various investment companies and certain institutional investors,
beneficially owns 31,875 shares (0.07%), which includes 15,375 shares
(0.03%) owned by FASST. FMR Corp. does not aggregate shares owned by
Fidelity International for purposes of its Schedule 13G, but nonetheless
reports shares owned by Fidelity International on a voluntary basis. FMR
Corp., Edward C. Johnson 3d, and certain related funds each claim to have
sole investment power with respect to 3,435,375 shares (7.49%) owned by such
funds. The sole voting power of such shares resides in the respective Board
of Trustees for each of the various funds. FMR Corp. has sole voting power
with respect to 547,913 shares (1.19%) and sole investment power with
respect to 4,021,688 shares (8.78%). Fidelity International has sole
investment power and sole voting power with respect to 16,500 shares
(0.04%). Fidelity International, FMR Corp. and FASST each claim to have sole
investment power and sole voting power with respect to the 15,375 shares
(0.03%) held by FASST.
(b) Prudential has sole investment power and sole voting power as to 349,013
shares (0.76%), shared investment power as to 3,599,850 shares (7.84%) and
shared voting power as to 2,748,375 shares (6.00%).
(c) Jennison has sole voting power as to 342,188 shares (0.75%), shared voting
power as to 2,734,200 shares (5.96%) and shared investment power as to
3,927,863 shares (8.56%). On February 13, 1996, representatives of Jennison
informed the Corporation that Jennison is a wholly-owned subsidiary of
Prudential. Accordingly, the Corporation believes the shares reported with
respect to Jennison may be included in the shares reported for Prudential.
ELECTION OF DIRECTORS
The Board of Directors recommends that nine nominees for director be
elected at the annual meeting, each to hold office for a term of one year from
the date of the annual meeting, and 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 nine nominees, who are Louis V. Bockius III,
Daniel T. Carroll, Donald R. Gant, L. Lindsey Halstead, Phillip B. Lassiter,
John N. Lauer, Robert W. Mahoney, William F. Massy, and W. R. Timken, Jr. All
nominees are presently members of the Board of Directors.
If for any reason any nominees are not available for election when the
election occurs, the designated proxies, at their option, may vote for
substitute nominees recommended by the Board of Directors. Alternatively, the
Board of Directors may reduce the number of nominees. The Board of Directors has
no reason to believe that any nominee will be unavailable for election when the
election occurs.
3
<PAGE> 6
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows the beneficial ownership of Common Shares of the
Corporation, including those shares of which an individual has a right to
acquire ownership, e.g., through exercise of stock options under the Amended and
Extended 1972 Stock Option Plan (the "1972 Plan") and the 1991 Equity and
Performance Incentive Plan (the "1991 Plan"), within the meaning of Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, for each director-
nominee, including the chief executive officer and the other four most highly
compensated executive officers ("named executive officers") and for such persons
and the other executive officers as a group as of February 10, 1996. Ownership
is also reported as of December 31, 1995 for shares in the 401(k) Savings Plan
over which the individual has voting power, together with shares held in the
Dividend Reinvestment Plan.
<TABLE>
<CAPTION>
NAME, AGE,
PRINCIPAL OCCUPATION COMMON
OR EMPLOYMENT, SHARES PERCENT
PRESENT AND DURING DIRECTOR BENEFICIALLY OF OTHER
LAST FIVE YEARS SINCE OWNED1 CLASS DIRECTORSHIPS
- ------------------------------------ -------------- ------ -----------------------
<S> <C> <C> <C> <C>
DIRECTOR-NOMINEES:
LOUIS V. BOCKIUS III -- 60 1978 210,986(2,3) 0.46 United National Bank &
Chairman, Bocko Trust Co.
Incorporated,
North Canton, Ohio
Plastic Injection Molding
DANIEL T. CARROLL -- 69 1980 15,342(6) 0.03 A.M.Castle & Co.,
Chairman and President American Woodmark
The Carroll Group, Inc. Corporation,
Ann Arbor, Michigan Aon Corporation,
Management Consulting Comshare, Inc.,
DeSoto, Inc.,
Oshkosh Truck
Corporation, Wolverine
World Wide, Inc.
Woodhead Industries,
Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, AGE,
PRINCIPAL OCCUPATION COMMON
OR EMPLOYMENT, SHARES PERCENT
PRESENT AND DURING DIRECTOR BENEFICIALLY OF OTHER
LAST FIVE YEARS SINCE OWNED1 CLASS DIRECTORSHIPS
- ---------------------------- ------ -------------- ------ -----------------------
<S> <C> <C> <C> <C>
DONALD R. GANT -- 67 1977 23,351(2,4) 0.05 ABC Rail Products
Limited Partner Corporation,
The Goldman Sachs Group, Stride Rite Corp.
L.P., New York, New York
Prior -- General Partner,
Goldman, Sachs & Co.
New York, New York
Investment Banker
L. LINDSEY HALSTEAD -- 65 1993 6,185 0.01 None
Retired
Prior -- Chairman of the
Board, Ford of Europe
Automotive Industry
PHILLIP B. LASSITER -- 52 1995 2,343 0.00 AMBAC Inc., HCIA
Chairman of the Board, Inc.
President and
Chief Executive Officer
AMBAC Inc.
New York, New York
Financial Guarantee
Insurance Holding Company
Prior -- Group Executive
Citibank, N.A.
JOHN N. LAUER -- 57 1992 6,334 0.01 BorsodChem, R.T.,
Retired, Private Investor Menasha Corporation
Prior -- President and
Chief Operating Officer
The BFGoodrich Company
Akron, Ohio
Chemical and Aerospace
Company
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME, AGE,
PRINCIPAL OCCUPATION COMMON
OR EMPLOYMENT, SHARES PERCENT
PRESENT AND DURING DIRECTOR BENEFICIALLY OF OTHER
LAST FIVE YEARS SINCE OWNED1 CLASS DIRECTORSHIPS
- ------------------------------------ -------------- ------ -----------------------
<S> <C> <C> <C> <C>
ROBERT W. MAHONEY -- 59 1983 107,336(6) 0.23 The Sherwin-Williams
Chairman of the Board, Company, The Timken
President and Chief Company
Executive
Officer, Diebold,
Incorporated, Canton, Ohio
Prior -- Chairman of the
Board and Chief Executive
Officer, Diebold,
Incorporated, Canton, Ohio
WILLIAM F. MASSY -- 61 1984 11,435 0.02 None
Professor of Education and
Business Administration,
Emeritus
Prior -- Director, Stanford
Institute for Higher
Education Research and
Professor of
Education and Business
Administration,
Stanford University,
Stanford, California
W. R. TIMKEN, JR. -- 57 1986 128,676(2,5) 0.28 Louisiana Land and
Chairman of the Board, Exploration Company,
The Timken Company, The Timken Company,
Canton, Ohio, Trinova Corporation
Manufacturer of Tapered
Roller Bearings and
Specialty Alloy Steel
OTHER NAMED EXECUTIVE
OFFICERS:
WILLIAM T. BLAIR -- 47,508(2,6) 0.10 --
GERALD F. MORRIS -- 32,896(6) 0.07 --
GREGG A. SEARLE -- 35,508(2,6) 0.07 --
ALBEN W. WARF -- 32,830(6) 0.07 --
All Directors and Executive -- 904,923(2,3,4,5,6) 1.97 --
Officers (25) as a Group
</TABLE>
6
<PAGE> 9
- ---------------
1 Messrs. Mahoney, Blair, Morris, Searle and Warf have stock options issued
under the 1972 Plan and/or the 1991 Plan for 9,375, 10,500, 3,750, 3,750,
2,250 shares respectively that are exercisable within 60 days following
February 10, 1996. For all Directors and Executive Officers as a Group, the
number of stock options issued under the 1972 Plan that are exercisable within
60 days following February 10, 1996 is 23,963. Under the 1991 Plan, Messrs.
Bockius, Carroll, Gant, Halstead, Lassiter, Lauer, Massy and Timken each have
stock options to acquire 13,198, 8,856, 13,918, 1,687, 843, 2,530, 5,062 and
1,687 shares, respectively, within 60 days following February 10, 1996. For
all Directors and Executive Officers as a Group, the number of shares that are
exercisable within 60 days following February 10, 1996 under the 1991 Plan is
95,946. The shares subject to the stock options described in this footnote are
included in the above table.
2 Includes shares registered as custodian or trustee for minors, shares held in
trust or shares otherwise beneficially owned.
3 Includes 52,509 shares (0.11%) in which Mr. Bockius has sole voting power and
shared investment power. Mr. Bockius disclaims any beneficial ownership of
these shares.
4 Includes 5,638 shares (0.01%) in which Mr. Gant disclaims any beneficial
ownership.
5 Includes 89,844 shares (0.20%) in which Mr. Timken has shared voting power and
shared investment power. Mr. Timken disclaims any beneficial ownership of
these shares as well as 2,737 shares owned by his wife.
6 Includes shares held in his or her name under the 401(k) Savings Plan over
which he or she has voting power, and/or shares held in the Dividend
Reinvestment Plan. The shares for Mr. Mahoney do not include 14,175 shares
which were earned out by him under a performance share award but which were
deferred.
SECTION 16(A) REPORTING DELINQUENCIES
To the Corporation's knowledge, based solely on review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, during the year ended December 31, 1995 all Section
16(a) filing requirements for directors and executive officers were complied
with.
DIRECTOR COMMITTEES AND COMPENSATION
The members of the Audit Committee are Louis V. Bockius III, Daniel T.
Carroll, L. Lindsey Halstead and W. R. Timken, Jr., Chairman. The committee met
three times during 1995 in formal session and had various communications between
themselves and the independent auditors informally at various times during the
year. The functions performed by the committee include recommending to the Board
of Directors the independent auditors for the upcoming year and meeting
regularly and separately with both the independent auditors and the
Corporation's internal auditors to (a) discuss their respective audit plans
prior to the commencement of the audit, (b) discuss progress and findings on an
interim basis, (c) review audit findings of the
7
<PAGE> 10
independent auditors after completion of examination and final discussions with
internal auditors on results of their reviews, and (d) inquire as to the
legality and propriety of the operations of the Corporation, including the steps
taken to comply with the Corporation's business conduct policies.
The members of the Board Membership Committee are Donald R. Gant, Chairman;
L. Lindsey Halstead, Robert W. Mahoney and W. R. Timken, Jr. The committee met
two times during 1995. The committee's functions include reviewing the
qualifications of potential director candidates and making recommendations to
the Board of Directors to fill vacancies or to expand the size of the Board,
when appropriate. The committee also makes recommendations as to the composition
of the various committees of the Board and as to the compensation paid to the
directors for their services on the Board and on the committees. The committee
will consider nominees recommended by shareholders upon written submission of
pertinent data to the attention of the Corporate Secretary. Such data should
include 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 field or fields
of expertise, an indication of the nominee's consent, and reasons why, in the
opinion of the recommending shareholder, the proposed nominee is qualified and
suited to be a director of the Corporation as well as what particular
contributions to the success of the Corporation such person could be expected to
make.
The members of the Compensation and Organization Committee are Donald R.
Gant, Phillip B. Lassiter, John N. Lauer and William F. Massy, Chairman. The
committee met three times during 1995. The committee's functions are described
below under "Compensation and Organization Committee Report on Executive
Compensation."
The members of the Executive Committee are Louis V. Bockius III, John N.
Lauer, Chairman, and Robert W. Mahoney. The committee did not hold any formal
meetings in 1995. The functions of the committee were carried out by telephone
or written correspondence. The committee's functions include reviewing the
management and operation of the business of the Corporation between meetings of
the Board of Directors.
The members of the Investment Committee are Daniel T. Carroll, Chairman;
Phillip B. Lassiter and William F. Massy. The committee met four times in 1995.
The committee's functions include establishing the investment policy including
asset allocation for the Corporation's cash, short-term securities and
retirement plan assets, overseeing the management of those assets, ratifying
fund managers recommended by management and reviewing at least annually the
investment performance of the Corporation's retirement plans and 401(k) Savings
Plans to assure adequate and competitive returns.
In 1995 the Board of Directors held six meetings. All directors attended
more than 75% of the aggregate of all meetings of the Board and the Board
committees on which they served during the year.
8
<PAGE> 11
Non-employee directors are compensated for their services as directors at
the rate of $20,000 per annum. Non-employee directors who are members of the
Audit Committee, Board Membership Committee, Compensation and Organization
Committee, Executive Committee and Investment Committee are compensated for
their services at the rate of $3,000 per annum per committee. In addition, each
chairman of a committee receives $1,000 per annum, and each member of a
committee who attends a meeting of a committee receives a fee of $1,000. A
director may elect to defer receipt of all or a portion of his or her
compensation pursuant to the 1985 Deferred Compensation Plan for Directors. Each
non-employee director also receives an annual grant of stock options to purchase
3,375 Common Shares at an exercise price representing 100% of the market price
of the Common Shares as of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Organization Committee are Donald R.
Gant, Phillip B. Lassiter, John N. Lauer and William F. Massy, Chairman. In 1995
Goldman, Sachs & Co. performed investment advisory services for the Corporation
or its subsidiaries. In the ordinary course of business, Goldman, Sachs & Co.
may be called upon in the future to provide similar or other services for the
Corporation. Donald R. Gant is a limited partner of The Goldman Sachs Group, L.
P. of which Goldman, Sachs & Co. is its primary affiliate. Mr. Gant formerly
served as a director and officer for two of the Corporation's subsidiaries, but
did not receive any additional compensation for serving in these capacities.
EXECUTIVE COMPENSATION
The following table provides information relating to the annual and
long-term compensation for the years ended 1995, 1994 and 1993 for the named
executive officers of the Corporation. The amounts shown include compensation
for services in all capacities that were provided to the Corporation including
any amounts which may have been deferred.
9
<PAGE> 12
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS(1)
----------------------------------- ----------- --------
OTHER(2) SECURITIES ALL
ANNUAL UNDERLYING OTHER(2)
NAME AND COMPEN- OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION SARS PAYOUTS SATION
- ------------------------- ----- -------- -------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ROBERT W. MAHONEY 1995 $422,917 $348,075 $11,949 37,500 $775,188 $ 8,496
Chairman of the Board, 1994 400,000 246,500 22,625 0 478,406 8,309
President and Chief 1993 378,000 236,000 8,211 0 508,249 8,410
Executive Officer
WILLIAM T. BLAIR 1995 261,458 156,475 8,524 15,000 516,792 8,533
Executive Vice 1994 235,375 112,500 18,758 0 296,156 7,803
President 1993 210,667 115,164 6,268 0 273,384 7,837
GERALD F. MORRIS 1995 256,875 155,555 6,994 15,000 535,276 12,679
Executive Vice 1994 241,875 110,000 17,715 0 307,564 9,669
President and Chief 1993 219,104 120,444 5,712 0 285,485 7,113
Financial Officer
GREGG A. SEARLE(3) 1995 256,875 146,545 8,004 15,000 516,792 6,650
Executive Vice 1994 241,875 100,000 17,313 0 284,783 6,376
President 1993 199,792 128,966 5,994 0 240,660 5,453
ALBEN W. WARF(3) 1995 215,000 135,470 6,077 9,000 347,591 7,638
Senior Vice President, 1994 182,920 90,000 15,462 0 206,921 6,925
Electronic Systems 1993 165,792 79,841 6,079 0 212,992 4,501
Development and
Manufacturing
- ---------------
<FN>
1 The payouts reported for 1995 were based upon a management objective of
cumulative earnings for the performance period of January 1, 1993 through
December 31, 1995. The performance objective was met at the maximum amount,
and the payout was in the form of a combination of cash and Common Shares.
2 The amounts reported for 1995 for Other Annual Compensation consist of amounts
reimbursed to the named executive officers for tax liability on the following
items: use of a Corporation automobile or cash in lieu thereof and
supplemental executive life insurance. The All Other Compensation column
presents amounts representing the dollar value of insurance premiums paid by
the Corporation for the benefit of the executive and amounts contributed for
1995 under the Corporation's 401(k) Savings Plan, respectively as follows: Mr.
Mahoney ($2,379, $6,117); Mr. Blair ($2,387, $6,146); Mr. Morris ($801,
$6,216); Mr. Searle ($548, $6,102); Mr. Warf ($968, $6,670). The All Other
Compensation column also includes an amount of $5,662 for preferential
interest earned by Mr. Morris on compensation that he deferred in 1995.
3 Also includes compensation received as an officer of InterBold, a joint
venture of the Corporation and the IBM Corporation. No such compensation was
received in 1995.
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
The Corporation has entered into agreements with each of the named
executive officers, and certain other executives, providing that in the event of
any change in control of the Corporation through the acquisition of 20 percent
or more of the outstanding voting securities of the Corporation, certain changes
in the composition of the Corporation's Board of Directors, or by merger or
consolidation of the Corporation into, or sale of substantially all of its
assets to, another
10
<PAGE> 13
corporation, such persons would continue their employment with the Corporation
in their present positions for a term of three years following such change in
control. During such term of employment, each of the named executive officers
would be entitled to receive base compensation and to continue to participate in
incentive and employee benefit plans at levels no less favorable to him or her
than prior to commencement of the term. In the event of the termination of such
person's employment under certain circumstances after a change in control of the
Corporation, such person would be entitled to receive a payment in the amount of
approximately twice such person's prior base salary and to continue to
participate in certain employee benefit plans for up to two years. None of the
agreements will become operative until a change in control of the Corporation
has occurred, prior to which time the Corporation and such persons each reserve
the right at any time, with or without cause, to terminate his or her employment
relationship. The Corporation has established trusts to secure, among other
things, the payment of amounts that may become payable pursuant to these
agreements and to reimburse such persons for expenses incurred in attempting to
enforce the Corporation's obligations pursuant to these agreements and certain
other arrangements. These trusts will be funded only in connection with or in
anticipation of a change in control of the Corporation.
During 1995, William T. Blair agreed to stay on past his intended
retirement date for one additional year. Accordingly, the Corporation agreed to
provide him with an additional eighteen months of credit for purposes of the
unfunded non-qualified supplemental retirement plan. As a result, his projected
net benefit under such plan will be increased by $1,885 per month.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock option grants
for the year 1995 for the named executive officers of the Corporation. No stock
appreciation rights were granted to the named executive officers or other
optionees during 1995.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
---------------------------------------- ASSUMED ANNUAL
NUMBER OF % OF RATES OF STOCK PRICE
SECURITIES TOTAL APPRECIATION
UNDERLYING OPTIONS/SARS EXERCISE FOR OPTION TERM(1)
OPTIONS/SARS GRANTED TO OR BASE ----------------------------------
GRANTED(2) EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- -------------------- ------------ ------------ -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Mahoney 37,500 18 23.67 4/4/05 558,144 1,414,446
William T. Blair 15,000 7 23.67 4/4/05 223,258 565,779
Gerald F. Morris 15,000 7 23.67 4/4/05 223,258 565,779
Gregg A. Searle 15,000 7 23.67 4/4/05 223,258 565,779
Alben W. Warf 9,000 4 23.67 4/4/05 133,955 339,467
</TABLE>
- ---------------
1 The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts shown
are for the assumed rates of appreciation only, do not constitute projections
of future stock price performance, and may not necessarily be realized. Actual
gains, if
11
<PAGE> 14
any, on stock option exercises depend on the future performance of the
Corporation's Common Shares, continued employment of the optionee through the
term of the option, and other factors.
2 All option grants were new and not granted in connection with an option
repricing transaction. The term of the options is ten years, and vesting
occurs at the rate of 25% annually beginning one year from the date of grant,
or immediately in the event of a change in control.
3 The exercise or base price per share represents the fair market value of the
Corporation's Common Shares as of the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information relating to stock option exercises
for the year 1995 and exercisable and unexercisable stock options at December
31, 1995 for the named executive officers of the Corporation. No stock
appreciation rights were awarded to such individuals during the last fiscal
year, and no stock appreciation rights were exercised or remained unexercised
during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
(#) ($)
------------ ------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Robert W. Mahoney 0 0 37,500* 496,875*
William T. Blair 0 0 15,000* 198,750*
6,750** 178,947**
Gerald F. Morris 0 0 15,000* 198,750*
Gregg A. Searle 0 0 15,000* 198,750*
Alben W. Warf 0 0 9,000* 119,250*
<FN>
- ---------------
* unexercisable
** exercisable
</TABLE>
12
<PAGE> 15
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table provides information relating to the long-term
incentive awards that were made in the year 1995 under the 1991 Plan for the
named executive officers.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK PRICE-BASED
NUMBER OF OR OTHER PLANS
SHARES, UNITS PERIOD UNTIL NUMBER OF SHARES
OR OTHER MATURATION OR ----------------------------
NAME RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------- ------------- ---------------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Robert W. Mahoney 14,175 1/1/95-12/31/97 3,545 14,175 21,263
William T. Blair 9,788 1/1/95-12/31/97 2,448 9,788 14,682
Gerald F. Morris 9,788 1/1/95-12/31/97 2,448 9,788 14,682
Gregg A. Searle 9,788 1/1/95-12/31/97 2,448 9,788 14,682
Alben W. Warf 6,357 1/1/95-12/31/97 1,592 6,357 9,536
</TABLE>
- ---------------
The table above presents information about performance shares awarded during the
year pursuant to the 1991 Plan. Each performance share that is earned out
entitles the holder to the then current value of one Common Share. Payouts of
awards are tied to achievement of management objectives based upon specified
cumulative levels of earnings for each performance period. The target amount
will be earned for a performance period if the Corporation achieves 100% of the
targeted earnings rate. No amount is payable unless the threshold amount, which
is fixed at 94.5% of targeted earnings, is exceeded. The maximum award amount
will be earned if the Corporation achieves 105.5% of the targeted earnings rate.
Payouts may be made in the form of Common Shares, cash or a combination of
Common Shares and cash as recommended by the Compensation and Organization
Committee and approved by the Board of Directors. The awards provide for
adjustments for extraordinary items upon recommendation of the Compensation and
Organization Committee and approval by the Board of Directors.
RETIREMENT BENEFITS
The named executive officers and the other executive officers, including
officers of InterBold, are eligible to participate in a qualified
non-contributory defined benefit retirement plan ("Retirement Plan"). In
addition, the named executive officers, and the other executive officers
participate in an unfunded non-qualified supplemental retirement plan
("Supplemental Plan").
The following table sets forth the estimated annual benefits for both the
Retirement Plan and the Supplemental Plan upon retirement at age 62 to the
executive officers who elect to retire and receive an annuity. The benefit
amounts shown in this table are in addition to any benefits to which the
participant might be entitled under the Social Security Act, and assume that the
Supplemental Plan and the Social Security Act continue unchanged and that
one-half of each participant's anticipated Social Security benefit is $6,036 per
year at age 62.
13
<PAGE> 16
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL BENEFIT PAYABLE AT AGE 62
HIGHEST 5 YEAR ----------------------------------------
AVERAGE W-2 15 OR
COMPENSATION 5 YEARS 10 YEARS MORE YEARS
AT AGE 62 OF SERVICE OF SERVICE OF SERVICE
- ---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
$ 300,000.............................. $ 58,964 $123,964 $188,964
500,000.............................. 102,297 210,631 318,964
700,000.............................. 145,631 297,297 448,964
900,000.............................. 188,964 383,964 578,964
1,100,000.............................. 232,297 470,631 708,964
1,300,000.............................. 275,631 557,297 838,964
1,500,000.............................. 318,964 643,964 968,964
</TABLE>
Benefit levels under the Retirement Plan are based on years of service
(subject to a maximum of 30 years), final average compensation (which is an
average of the Salary and Bonus as reflected in the Summary Compensation Table
paid for the highest five consecutive of the last ten calendar years prior to
retirement), and the participant's individually covered compensation based on
year of birth under the Social Security Act. The Supplemental Plan provides a
supplemental monthly retirement benefit so that a participant's total retirement
benefit from the Retirement Plan and the Supplemental Plan, plus one-half of the
participant's anticipated Social Security benefit, equals 65% (prorated for less
than 15 years of service) of the participant's final average compensation
received from the Corporation and InterBold, as applicable, during the highest
five consecutive years of the last ten calendar years of employment.
Compensation is defined for this purpose as salary plus bonus accrued for each
such calendar year. For a participant who is employed by the Corporation or
InterBold, as applicable, for less than 5 full calendar years, the average would
be based on the participant's compensation for his or her entire employment
period. The Supplemental Plan benefits are payable at age 62 on a joint &
survivor basis, if married, and a single life basis, if single at retirement. In
no case will less than 5 years of benefit be paid to the participant, his or her
spouse and/or beneficiary, as applicable. Benefits are also available to
participants electing early retirement at age 60 (on a reduced basis) who die or
become disabled while employed, or whose employment is involuntarily terminated
after completing 15 years of service. Reduced benefits (computed at a 55% of
final average compensation, rather than 65%) are also available to a participant
who voluntarily terminates employment after completing 15 years service. Accrued
benefits under the Supplemental Plan are fully vested and are required to be
maintained in the event of a change in control of the Corporation.
As of December 31, 1995, the number of years of service for the named
executive officers is as follows: Mr. Mahoney, 13.6 years; Mr. Blair, 7 years;
Mr. Morris, 5.1 years; Mr. Searle, 5.4 years; and Mr. Warf, 14.3 years.
14
<PAGE> 17
COMPENSATION AND ORGANIZATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Organization Committee (the "Committee") is composed
entirely of non-employee directors. The Committee's principal functions are to
establish base salary levels, to determine and measure achievement of corporate
and individual goals for the named executive officers and other executive
officers under the Annual Incentive Plan, and to select the participants,
measure achievement of objectives and determine the awards under the 1991 Equity
and Performance Incentive Plan (the "1991 Plan"). In addition, the Committee
reviews any proposed changes to any benefit plans of the Corporation such as
retirement plans and 401(k) Savings Plans. The Committee's recommendations are
subject to the approval of the Board of Directors. In prior years, the Committee
also administered and reviewed the retirement plan investments for the
Corporation's retirement plans. In 1995, these responsibilities were reassigned
to the Investment Committee, which is a new committee of the Board of Directors.
The Committee believes that the compensation for the named executive
officers and the other executive officers should tie individual compensation to
the performance of the Corporation. From time to time, the Committee reviews
studies prepared by independent compensation consultants and meets with them to
review such studies when necessary. In 1994, the Committee and/or the Chairman
of the Committee met several times with an outside consultant to perform a
complete re-evaluation of the executive compensation program. This re-evaluation
included a review of compensation policies of companies similar to the
Corporation in size and industry and included those companies with which the
Corporation competes for talented executives. Due to the unique character of the
Corporation's business, the companies selected for this purpose would not
necessarily include any of those companies reflected in the Corporation's
performance graph. The survey data used for review of compensation policies are
based upon companies that are similar in size and lines of business as the
Corporation. The studies reviewed surveyed many companies but did not identify
any by name. Some or all of the companies in the peer group used in the
performance graph may have been included in the compensation studies used by the
Corporation, based on the reported lines of business and market capitalization
reflected in the surveys. The Committee received the final results from the
consultant in early 1995, and incorporated the appropriate recommendations in
its final review of 1994 compensation. In addition, during 1995 the Committee
received information periodically on compensation policies from the consultant.
The Committee used the results of this information as well as the results from
the re-evaluation of the executive compensation program as a basis for review
and recommendation for compensation approved for the executive officers in 1995.
The Committee believes its present compensation programs are competitive with
those offered by companies similar to the Corporation. In general, the Committee
believes that the base salary should be set below median, and the total
compensation should be at or above the median when the Corporation meets or
exceeds its expectations and below when it does not. The Committee believes that
total compensation should have a greater proportion variable and dependent on
the overall performance of the Corporation.
15
<PAGE> 18
The Corporation has three basic elements in the compensation for its
executive officers. These elements are (a) base salary compensation, (b) annual
incentive compensation and (c) long-term incentive compensation. These elements
of compensation recognize both individual and corporate performance. Annual
incentive compensation provides incentive compensation which optimizes rewards
for performance over a shorter period of performance while long-term incentive
compensation optimizes rewards for performance over a longer term with an
achievement of cumulative earnings usually over a three-year period. In
addition, stock option grants result in a reward when the market value
appreciates in relation to the option price.
BASE SALARY COMPENSATION
The base salary for all executive officers is reviewed annually, and the
Committee's review process continues throughout the year. This review includes
an analysis of past and expected future performance of the executive officers,
as well as the responsibilities and qualifications of the executive officers
individually and the performance of the Corporation in comparison with companies
similar to the Corporation. The base salaries established for 1995 were
consistent with the Committee's compensation policy, noted above, of generally
setting base salary below median.
ANNUAL INCENTIVE COMPENSATION
The Annual Incentive Plan ("Incentive Plan") recognizes the performance of
the named executive officers, other executive officers and key managers who
contribute to the Corporation's success. These participants have the greatest
impact on the profitability of the Corporation. In general, the participants
with the most significant responsibility have the greatest proportion of their
cash compensation tied to the Incentive Plan. The performance criteria, which
are described in more detail below, reflect a combination of corporate operating
profit, net of minority interest, and specific individual goals and objectives.
At the beginning of each year, the Committee establishes annual performance
goals for the Corporation which are based on operating profit, net of minority
interest. The performance goals include threshold, midpoint and maximum amounts
for achievement, with the midpoint being 100%. The Committee established the
threshold level for 1995 at a level that required the Corporation to exceed the
operating profit achieved in 1994 before any payout could occur. At the same
time, the Committee reviewed, amended and approved individual personal
performance goals and objectives for the named executive officers. The Incentive
Plan is generally weighted 50% on the Corporation achieving its operating profit
goal, and 50% on the achievement of the individual goals and objectives. No
Incentive Plan compensation is paid if the Corporation does not achieve at least
the threshold amount of its operating profit goal even though an individual may
have achieved his or her personal goals and objectives. At the end of each year,
the Committee reviews the performance of the Corporation and achievement of the
personal goals and objectives for the named executive officers and other
executive officers. The Committee then reviews its
16
<PAGE> 19
findings and recommendations with the Board of Directors. In 1995, the
Corporation met its performance goals at slightly less than the maximum amount,
the individual goals of the executive officers were generally met at slightly
less than the maximum amount, and the executive officers received Annual
Incentive Compensation accordingly.
LONG-TERM INCENTIVE COMPENSATION
The 1991 Plan affords flexibility in the types of awards that can be made
for a long-term period. In particular, certain awards tie the individual's
performance to the performance of the Corporation. Since 1991, the Committee has
recommended the granting of longer-term incentive awards in the form of
performance share grants. The Committee believes this form of award motivates
the executive officers to perform on a long-term basis, which furthers the goals
of the Corporation and increases shareholder value. In certain instances, stock
options have been granted to certain other executive officers.
In 1995 the Committee recommended performance share grants for the named
executive officers, and certain of the other executive officers for the
three-year performance period of January 1, 1995 through December 31, 1997.
Prior to recommending the grants, the Committee reviewed the performance,
together with the responsibilities, of the executive officers. The performance
share grants were generally determined by the level of responsibilities and the
performance of the executive officers. These executive officers have the
greatest impact on the profitability of the Corporation. The management
objective for this performance period will be measured for the entire
performance period on a cumulative basis. There will be no earnout unless the
earnings goal is achieved for the three-year performance period. Payout of any
awards will be based upon achievement of a threshold amount of 94.5% of the
management objective and the maximum payout will be earned if 105.5% of the
management objective is achieved. These grants also provide for an adjustment
due to extraordinary items at the discretion of the Committee and subject to the
approval of the Board of Directors. The Committee believes these awards motivate
individual performance and increase shareholder value because achievement of
corporate financial goals on a cumulative basis over an extended period must be
met before any earnout occurs. The Committee believes that an example of this
expected result is shown in the most recent earnout for the three-year
cumulative performance period of January 1, 1993 through December 31, 1995. The
Committee had recommended and the Board of Directors had approved a very
challenging objective for this performance period. Management performed well and
as a result, the earnout was at the maximum amount. The payout was in the form
of a combination of cash and Common Shares.
Performance share grants have generally been issued as the principal form
of equity incentive for the Corporation's executive officers during the last
five years. No restricted share awards were made in 1995 to the named executive
officers. However, restricted share awards were made in 1995 to certain other
executive officers who were not previously awarded performance share grants,
17
<PAGE> 20
but were included in such grants when the program was expanded in 1993. These
awards in 1995 were made on the basis of their 1993-94 performance against their
goals and objectives. The restricted share awards will provide an equivalent
compensation program for these executive officers until they achieve their
earnout of performance shares under the relevant performance period. All rights
to the restricted share awards are forfeited if the executive officer terminates
employment voluntarily or in the event of termination for cause before the end
of a three-year period.
In addition, during 1995 the Committee recommended, and the Board of
Directors approved, stock option grants to the named executive officers. Stock
options were also granted to certain other executive officers in 1995. The
option awards reflect conclusions presented in the report by the outside
compensation consultant, which indicated that the combination of annual
incentive compensation and performance share awards were well below median at
the level of the top five executives. The report also concluded that reliance on
performance shares as the sole long-term incentive did not provide upside
leverage to recognize excellent performance. Further, the compensation
consultant informed the Committee that any increase in long-term incentive
compensation should be tied to the stock price. The number of shares granted to
the named executive officers was based upon the recommendations of the
compensation consultant. In making its recommendations, the consultant
considered target total compensation for peer companies of the Corporation as
well as the Black-Scholes value of option grants. The peer companies selected
for this purpose would not necessarily include any of those companies reflected
in the Corporation's performance graph. This is due to the unique character of
the Corporation's business. Some or all of the companies in the peer group used
in the performance graph may have been included in the compensation studies
provided by the consultant based on the reported lines of business and market
capitalization.
The Committee believes that the addition of stock options provides an
essential competitive component in the executive compensation program. Also, the
Committee believes that stock options align the interests of the named executive
officers with those of the Corporation's shareholders since no benefit inures to
the named executive officers unless stock price appreciation occurs over a
period of years. Information on the stock options granted to the named executive
officers is included in the table entitled Option/SAR Grants in Last Fiscal
Year.
CHIEF EXECUTIVE OFFICER COMPENSATION
The chief executive officer, a named executive officer, participates in the
three elements of compensation previously discussed for the other executive
officers.
In setting the base salary compensation for the chief executive officer for
1995, the Committee considered a number of factors. These included an evaluation
of his experience and performance in relation to the performance of the
Corporation. As stated previously, the Committee believes that individual
compensation should be tied to the performance of the
18
<PAGE> 21
Corporation so that a higher portion of total compensation is attributable to
incentive compensation.
In addition to the Corporation's performance goal based on operating
profit, the chief executive officer's individual performance relating to annual
incentive compensation for 1995 was measured by achievement of specific personal
goals and objectives. In 1995 he earned annual incentive compensation slightly
less than the maximum amount. He received this amount because the Corporation's
financial results during the year met the principal predetermined goals,
including earnings per share, operating profit, return on equity and operating
expenses, and because he met or exceeded expectations in specified non-financial
areas. Other specific goals and objectives established for the chief executive
officer included revenues, order levels and new business development.
With respect to long-term incentive compensation, the chief executive
officer was granted a performance share grant in 1995 covering the performance
period of January 1, 1995 through December 31, 1997. As stated previously, any
earnout of shares will be based upon achievement of a threshold amount of 94.5%
of the management objective and the maximum payout will be earned if 105.5% of
the management objective is achieved. The estimated payout for the chief
executive officer is 3,545 shares at threshold, 14,175 shares at target and
21,263 shares at maximum. For the performance period of January 1, 1993 through
December 31, 1995, the chief executive officer earned 21,263 shares, which was
the maximum amount. The payout was in the form of a combination of cash and
Common Shares. In addition, in 1995 the chief executive officer was granted a
stock option for 37,500 shares at $23.67 per share, which represented the fair
market value at the date of grant. Additional information on his stock option is
included in the table entitled Option/SAR Grants in Last Fiscal Year. The
Committee believes the chief executive officer's compensation is commensurate
with his experience, his performance and the performance of the Corporation.
COMPLIANCE WITH FEDERAL TAX LEGISLATION
Federal tax legislation enacted in 1993 generally precludes the Corporation
and other public companies from taking a tax deduction for compensation in
excess of $1 million which is not performance-based and is paid, or otherwise
taxable, to the named executive officers. The Committee has reviewed this
federal tax legislation several times. Certain awards were made prior to
February 18, 1993 and are not covered by the new legislation. The compensation
under the Corporation's existing programs was not affected by the new limitation
during 1995. However, since compensation that will be paid in 1996 and later
years may be affected by the new limitation, the Committee established a policy
in 1995 that any amounts affected by the limitation would be automatically
deferred until the limitation no longer applies.
The foregoing report on 1995 executive compensation was submitted by the
Compensation and Organization Committee of the Corporation's Board of Directors
and shall not be deemed to
19
<PAGE> 22
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission (the "Commission") or subject to Regulation 14A promulgated by the
Commission or Section 18 of the Securities Exchange Act of 1934. The names of
the directors who serve on the Compensation and Organization Committee are set
forth below:
William F. Massy, Chairman
Donald R. Gant
Phillip B. Lassiter
John N. Lauer
20
<PAGE> 23
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative shareholder return, which includes the reinvestment of cash
dividends, of the Corporation's Common Shares with the cumulative total return
of the S&P Composite-500 Stock Index and a self-constructed peer group. The peer
group consists of Hubbell Inc. and Thomas & Betts Corp. (electrical products
companies) and Harris Corp., SCI Systems Inc. and Varian Associates (diversified
electronic products companies). The peer group was selected based on similarity
to the Corporation's line of business and similar market capitalization. The
comparison covers the five-year period starting December 31, 1990 and ended
December 31, 1995. The comparisons in this graph are required by rules
promulgated by the Commission and are not intended to forecast future
performance of the Corporation's Common Shares.
[Artwork Here]
<TABLE>
<CAPTION>
Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Diebold Inc $100 $143 $185 $283 $296 $407
- ---------------------------------------------------------------------------------------------------------------
S&P 500(R) $100 $130 $140 $155 $157 $215
- ---------------------------------------------------------------------------------------------------------------
Self-constructed peer
group $100 $130 $159 $180 $191 $253
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 24
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF COMMON SHARES
The Corporation's Articles of Incorporation presently authorize the
issuance of 50,000,000 Common Shares. The Board of Directors recommends an
increase in the number of authorized Common Shares from the 50,000,000 currently
authorized to 125,000,000 Common Shares.
As of December 31, 1995, 45,808,227 Common Shares were issued and
outstanding not including Treasury shares. Also, as of that date, 114,593 Common
Shares were reserved for issuance upon the exercise of stock options granted
under the 1972 Plan, 1,068,744 Common Shares were reserved for issuance upon the
exercise of stock options or other awards under the 1991 Plan and 569,484 Common
Shares were reserved for future awards under the 1991 Plan. The balance of the
Common Shares available for issuance on that date was 2,353,501 shares.
The Board of Directors last requested an increase in the authorized Common
Shares in 1992. Since that time the Corporation has distributed three-for-two
stock dividends on three occasions, in February 1993, February 1994 and February
1996. The Board of Directors has determined that it would be advisable to have
additional authorized Common Shares that would be available for issuance from
time to time. Additional authorized Common Shares could enable the Corporation
to take advantage of business opportunities that may arise or could be used for
other corporate purposes such as stock dividends or stock splits. At the present
time, the Board of Directors has no plans, agreements, arrangements or
commitments for the issuance of additional shares other than pursuant to the
Corporation's existing incentive plans, the Rights Agreement, dated as of
February 10, 1989, by and between the Corporation and Ameritrust Company
National Association, and the Purchase Agreement dated November 14, 1994 by and
between the Corporation and Daily-Med, Inc. for the purchase of common stock of
MedSelect Systems, Inc. Pursuant to this agreement, Daily-Med, Inc. will have
the opportunity to earn an immaterial number of Common Shares of the Corporation
if certain revenue targets are achieved. The Corporation will be able to fulfill
its commitment to issue those shares to Daily-Med, Inc. whether or not the
proposal to amend the Articles of Incorporation is approved.
Holders of Common Shares do not have pre-emptive rights with respect to the
issuance of additional shares by the Corporation. Thus, the issuance of
additional shares could dilute the percentage ownership of shareholders of the
Corporation. The issuance of additional shares may be authorized by the Board of
Directors without further action of shareholders, except as may be required by
law or by the rules of the New York Stock Exchange. Under the present provisions
of Ohio law, the approval of shareholders would be required in connection with
certain mergers, acquisitions or business combinations involving the issuance of
one-sixth or more of the Corporation's outstanding voting shares.
The proposal to increase the authorized number of Common Shares could be
viewed to have an anti-takeover effect. Authorized but unissued and unreserved
Common Shares could be used by
22
<PAGE> 25
the Board of Directors to make more difficult a change in control of the
Corporation. In certain circumstances, such shares could be used to dilute the
stock ownership of a person or entity seeking to obtain control of the
Corporation. These shares could also be sold in a private placement to a
purchaser or purchasers who might oppose a change in control of the Corporation.
The Corporation is not aware of any pending or proposed effort to affect the
control of the Corporation or to change management. Furthermore, neither
management of the Corporation nor the Board of Directors views the proposal in
this perspective, and the Corporation currently has no intention of issuing
Common Shares for such purposes.
Approval of the proposed amendment to the Articles of Incorporation
requires the affirmative vote of the holders of two-thirds of the outstanding
Common Shares.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE ARTICLES
OF INCORPORATION.
23
<PAGE> 26
RATIFICATION OF APPOINTMENT OF AUDITORS
BY THE BOARD OF DIRECTORS
KPMG Peat Marwick LLP acted as the Corporation's independent auditors
during the past fiscal year, and has so acted since 1965.
On the recommendation of the Audit Committee and the Board of Directors,
and subject to ratification by the shareholders, the Board of Directors
appointed KPMG Peat Marwick LLP to examine the accounts and other records of the
Corporation for the fiscal year ending December 31, 1996. The Board of Directors
will present to the annual meeting a proposal that such appointment be ratified.
Should the shareholders fail to ratify the appointment, the Board of Directors
will reconsider its selection.
KPMG Peat Marwick LLP has no financial interest, direct or indirect, in the
Corporation or any subsidiary.
A representative of KPMG Peat Marwick LLP is expected to be present at the
annual meeting to make a statement if he or she desires to do so and to respond
to appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
AUDITORS.
EXPENSES OF SOLICITATION
The cost of soliciting the proxies will be borne by the Corporation. In
addition to solicitation by mail, some of the Corporation's directors, officers
and employee associates, without extra remuneration, may conduct additional
solicitations by telephone, facsimile and personal interviews. The Corporation
will also enlist, at its own cost, the assistance of banks, bankers and
brokerage houses in additional solicitations of proxies and proxy
authorizations, particularly from those of their clients or customers whose
shares are not registered in the clients' or customers' own names. Brokers,
bankers, etc., will be reimbursed for out-of-pocket and reasonable clerical
expenses incurred in obtaining instructions from beneficial owners of the Common
Shares. It is estimated that the expense of such special solicitation will be
nominal. In addition, Georgeson & Co., Inc., New York, New York, has been
retained to assist in the solicitation of proxies for an estimated fee of
$7,000.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1997 annual
meeting of shareholders must be received by the Secretary of the Corporation no
later than November 9, 1996 for consideration for inclusion in the proxy
statement and form of proxy for that meeting.
24
<PAGE> 27
OTHER MATTERS
The Corporation is not aware of any matters to be presented at the annual
meeting other than the matters set forth herein. Should any other matters be
presented for a vote of the shareholders, the proxy in the enclosed form confers
discretionary voting authority upon the persons voting such proxy. In accordance
with the provisions of the General Corporation Law of the State of Ohio, the
Board of Directors has appointed inspectors of elections to act at the annual
meeting.
By Order of the Board of Directors
CHAREE FRANCIS-VOGELSANG
Vice President and Secretary
Canton, Ohio
March 8, 1996
THE ANNUAL REPORT OF DIEBOLD, INCORPORATED FOR THE YEAR ENDED
DECEMBER 31, 1995, WAS MAILED TO ALL SHAREHOLDERS ON OR ABOUT
MARCH 8, 1996.
25
<PAGE> 28
[Campus Map]
From Cleveland and Akron: Take I-77 South to Exit 111 (Portage Road). Turn right
on Portage to Frank Avenue. Turn left on Frank Avenue to the Stark Technical
College Campus. Follow the signs to the Diebold Education Center.
From Canton: Take I-77 North to Exit 111 (Portage Road). Turn left on Portage to
Frank Avenue. Turn left on Frank Avenue to the Stark Technical College Campus.
Follow the signs to the Diebold Education Center.
<PAGE> 29
DIEBOLD, INCORPORATED
5995 MAYFAIR ROAD
P
R P.O. BOX 3077, NORTH CANTON, OHIO 44720-8077
O
X THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y The undersigned hereby appoints Robert W. Mahoney, William T. Blair,
Gerald F. Morris and Gregg A. Searle, and each of them, as Proxies,
with full power of substitution to represent and to vote all the
Common Shares of Diebold, Incorporated held of record by the
undersigned on March 1, 1996, at the annual meeting of shareholders
which will be held on April 3, 1996 or at any adjournment thereof, as
follows:
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
L. V. Bockius III, D. T. Carroll, D. R. Gant, L. L. _________________________________
Halstead, P. B. Lassiter, J. N. Lauer, R. W. Mahoney, W. _________________________________
F. Massy and W. R. Timken, Jr. _________________________________
_________________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 30
<TABLE>
<C> <S> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. To amend the / / / / / /
Directors Articles of
(see reverse) Incorpora-
tion to
For, except vote withheld from the increase the
following nominee(s): authorized number
____________________________________ of Common
Shares, $1.25 par
value, from 50,000,000
to 125,000,000
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
3. To Ratify / / / / / /
the Appointment of KPMG
Peat Marwick LLP as
Independent Auditors
for the year 1996.
</TABLE>
Change
of / /
Address
SIGNATURE(S)_______________________________________ DATE_____________
SIGNATURE(S)_______________________________________ DATE_____________
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 31
CONFIDENTIAL VOTING INSTRUCTIONS
To Key Trust Company of Ohio, NA, Trustee for the Diebold,
Incorporated 401(K) Savings Plan ("SP")
The undersigned, as a participant in the SP, hereby directs the
Trustee to vote in person or by proxy, with the powers the
undersigned would possess if personally present, to vote all Common
Shares of the undersigned in Diebold, Incorporated (and to exercise
all other shareholder rights and powers) at the annual meeting of
its shareholders to be held on April 3, 1996, and at any
adjournments thereof, upon all matters that may properly come before
the meeting, including the matters identified on the reverse side of
this consent card and described in the proxy statement furnished
herewith, subject to any directions indicated on the reverse side of
this consent card.
ELECTION OF DIRECTORS, NOMINEES:
L. V. BOCKIUS III, D. T. CARROLL, D. R. GANT, L. L. HALSTEAD, P. B.
LASSITER, J. N. LAUER, R. W. MAHONEY, W. F. MASSY AND W. R. TIMKEN, JR.
IF NO INSTRUCTIONS ARE GIVEN ON THE REVERSE SIDE THE TRUSTEE WILL
VOTE SHARES IN ITS SOLE DISCRETION.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS
CONSENT CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
DIEBOLD, INCORPORATED
401(K) SAVINGS PLAN, C/O KEYCORP SHAREHOLDER SERVICES, INC.
CORPORATE TRUST DIVISION
P.O. BOX 979782, CLEVELAND, OHIO 44197-9783
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 32
<TABLE>
<C> <S>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C>
1. Election of / / / / 2. To amend the / / / / / /
Directors Articles of
(see reverse) Incorpora-
tion to
For, except vote withheld from the increase the
following nominee(s): authorized number
____________________________________ of Common Shares, $1.25 par
value, from
50,000,000 to
125,000,000
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
3. To Ratify / / / / / /
the Appointment
of KPMG Peat
Marwick LLP as
Independent Auditors
for the year 1996.
</TABLE>
SIGNATURE(S)______________________________________ DATE__________________
NOTE: Please sign exactly as name appears hereon.
- --------------------------------------------------------------------------------
DETACH CARD
