<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:
/X/ 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 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):
/X/ $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:____________________________
/ / 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:__________________________________________
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<PAGE> 2
PRELIMINARY
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 45,862,554 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 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.
<PAGE> 4
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>
The Prudential Insurance Company of
America ("Prudential")
Prudential Plaza
Newark, New Jersey 07102-3777 3,948,862(a)(c) 8.60
FMR Corp. and Edward C. Johnson 3d (b)
82 Devonshire Street
Boston, Massachusetts 02109-3614
Jennison Associates Capital Corp.
("Jennison")
466 Lexington Avenue
New York, New York 10017 3,927,863(c) 8.58
<FN>
(a) 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%).
(b) (Information to be added when Schedule 13G is received.)
(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.
</TABLE>
2
<PAGE> 5
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.
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.
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE,
PRINCIPAL OCCUPATION COMMON
OR EMPLOYMENT, SHARES PERCENT
PRESENT AND DURING DIRECTOR BENEFICIALLY OF OTHER
LAST FIVE YEARS SINCE OWNED(1) CLASS DIRECTORSHIPS
--------------- ----- ----- ----- -------------
DIRECTOR-NOMINEES:
<S> <C> <C> <C> <C>
Louis V. Bockius III--60 1978 210,985(2,3) 0.46 United National Bank & Trust Co.
Chairman, Bocko
Incorporated, North Canton,
Ohio, Plastic Injection
Molding
Daniel T. Carroll--69 1980 15,341(6) 0.03 A.M.Castle & Co., American Woodmark
Chairman and President Corporation, Aon Corporation,
The Carroll Group, Inc. Comshare, Inc., DeSoto, Inc.,
Ann Arbor, Michigan Oshkosh Trust Corporation, Wolverine
Management Consulting World Wide, Inc., Woodhead
Industries, Inc.
Donald R. Gant--67 1977 23,350(2,4) 0.05 ABC Rail Products Corporation,
Limited Partner Stride Rite Corp.
The Goldman Sachs
Group, L.P.
New York, New York
Prior -- General Partner,
Goldman, Sachs & Co.
New York, New York
Investment Banker
L. Lindsey Halstead--65 1993 6,184 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 Inc.
Chairman of the Board,
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 6,333 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>
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 OWNED(1) CLASS DIRECTORSHIPS
--------------- ----- ----- ----- -------------
<S> <C> <C> <C> <C>
Robert W. Mahoney--59 1983 107,336(6) 0.26 The Sherwin-Williams Company,
Chairman of the Board, The Timken Company
President and Chief
Executive Officer,
Diebold, Incorporated,
Canton, Ohio
Prior -- Chairman of the Board
and Chief Executive
Officer, Diebold,
Incorporated, Canton,
Ohio
William F. Massy--61 1984 11,434 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 128,675(2,5) 0.28 Louisiana Land and Exploration
Chairman of the Board, Company, The Timken Company,
The Timken Company, Trinova Corporation
Canton, Ohio,
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 Officers
(25) as a Group -- 904,914(2,3,4,5,6) 1.97 --
</TABLE>
5
<PAGE> 8
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 23,961. Under the 1991 Plan, Messrs. Bockius, Carroll, Gant,
Halstead, Lassiter, Lauer, Massy and Timken each have stock options to
acquire 13,917, 8,855, 13,917, 1,686, 843, 2,529, 5,061 and 1,686
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 95,939. 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 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
6
<PAGE> 9
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.
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 table which follows 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.
7
<PAGE> 10
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS(1)
------------------- ------ -------
OTHER(2) SECURITIES
ANNUAL UNDERLYING ALL 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
Group Vice President 1994 182,920 90,000 15,462 0 206,921 6,925
Self-Service Systems 1993 165,792 79,841 6,079 0 212,992 4,501
<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 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
8
<PAGE> 11
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 $1,885 per month.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock option
grants for the year 1995 for the named executive officers of the Corporation.
No stock appreciation rights were granted to the named executive officers or
other optionees during 1995.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- -------------------------------------------------------------------------------------------------------------
NUMBER OF % OF
SECURITIES TOTAL
UNDER- OPTIONS/
LYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED(2) IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/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
<FN>
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
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.
</TABLE>
9
<PAGE> 12
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>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The table below 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
PERFORMANCE PAYOUTS UNDER NON-STOCK
NUMBER OF OR OTHER PRICE-BASED 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").
10
<PAGE> 13
The table below 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 $5,832
per year at age 62.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST 5 ANNUAL BENEFIT PAYABLE AT AGE 62
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.
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
11
<PAGE> 14
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.
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
12
<PAGE> 15
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 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, 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
13
<PAGE> 16
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 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
14
<PAGE> 17
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 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
15
<PAGE> 18
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.
<TABLE>
- --------------------------------------------------------------------------------------------------------------
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>
16
<PAGE> 19
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, 45,804,999 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 by and
between the Corporation and Daily-Med, Inc. for the purchase of common stock of
MedSelect Systems, Inc.
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 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.
17
<PAGE> 20
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.
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.
18
<PAGE> 21
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.
19
<PAGE> 22
PRELIMINARY
DIEBOLD, INCORPORATED
P 5995 MAYFAIR ROAD
R P.O.BOX 3077, NORTH CANTON, OHIO 44720-8077
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
The undersigned hereby appoints Robert W. Mahoney, William T. Blair, Gerald
X 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
Y 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:
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.)
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
- --------------------------------------------------------------------------------
X Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
votes as in this
example
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. To amend the Articles [ ] [ ] [ ]
Directors of Incorporation to
(see reverse) increase the authorized
number of Common Shares,
$1.25 par value, from
50,000,000 to 125,000,000
For, except vote withheld
from the following nominee(s):
______________________________________________
FOR AGAINST ABSTAIN
3. To Ratify the [ ] [ ] [ ]
Appointment of
KPMG Peat Marwick Change
LLP as Independent of [ ]
Auditors for the Address
year 1996.
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.
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