<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
[ ] Definitive Additional Materials RULE 14a-6(e)(2))
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 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] No fee required.
[ ] 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:
[ ] 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 16, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of the Corporation will be held at the
Diebold Education Center at Stark State College of Technology, 5801 Dressler
Road, N.W., Canton, Ohio 44720, on April 16, 1997 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 and restate the 1991 Equity
and Performance Incentive Plan;
3. To vote upon ratification of the appointment by the Board of Directors
of KPMG Peat Marwick LLP as independent auditors for the year 1997; 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 February
28, 1997 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 7, 1997
(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 16, 1997
This proxy statement is furnished to shareholders of Diebold, Incorporated
(the "Corporation") in connection with the solicitation by the Board of
Directors of proxies which will be used at the 1997 annual meeting of
shareholders on April 16, 1997, 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 7, 1997.
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 February 28, 1997, the record date for the meeting, the outstanding
voting securities of the Corporation consisted of 68,904,879 Common Shares,
$1.25 par value per share, all of one class. Each shareholder of record as of
the close of business on February 28, 1997 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 19, 1997 to shareholders of record as of February 7,
1997.
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, unless contrary instructions are
received on the enclosed proxy, it is presently intended that all votes
represented by properly executed proxies will be divided evenly among the
candidates nominated by the Board of Directors except that if voting in such
manner would not be effective to elect all such nominees, such votes will be
cumulated at the discretion of the Board of Directors so as to maximize the
number of such nominees elected. 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 but will not count any broker non-votes for
such purpose. 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 and restate the 1991 Equity and Performance Incentive Plan 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 and restate the
1991 Equity and Performance Incentive Plan and any broker non-votes received in
respect of the appointment of auditors will not affect the voting on either
proposal.
2
<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, 1996, except for
the shareholders listed below. The information provided below is derived from
Schedules 13G filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------- ----------------------- ----------------
<S> <C> <C>
FMR Corp., Edward C. Johnson 3d
and Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109-3614............... 5,851,556(a) 8.50
The Prudential Insurance Company of
America ("Prudential")
751 Broad Street
Newark, New Jersey 07102-3777.................. 4,732,631(b)(c) 6.88
Jennison Associates Capital Corp.
("Jennison")
466 Lexington Avenue
New York, New York 10017....................... 4,700,147(c) 6.83
</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 5,013,900 shares (7.28%) and
696,656 shares (1.01%), 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 169,013 shares (0.25%), which includes 28,013 shares
(0.04%) 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 4,985,888 shares (7.24%) 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 769,218 shares (1.12%) and sole investment power with
respect to 5,851,556 shares (8.50%). Fidelity International has sole
investment power and sole voting power with respect to 141,000 shares
(0.21%). Fidelity International, FMR Corp. and FASST each claim to have sole
investment power and sole voting power with respect to the 28,013 shares
(0.05%) held by FASST.
(b) Prudential has sole investment power and sole voting power as to 400,743
shares (0.58%), shared investment power as to 4,331,886 shares (6.29%) and
shared voting power as to 3,811,970 shares (5.54%).
(c) Jennison has sole voting power as to 372,731 shares (0.54%), shared voting
power as to 3,807,500 shares (5.53%) and shared investment power as to
4,700,147 shares (6.83%). On February 12, 1997, a representative 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.
3
<PAGE> 5
ELECTION OF DIRECTORS
The Board of Directors recommends that eleven 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 eleven nominees, who are Louis V. Bockius
III, Daniel T. Carroll, Richard L. Crandall, Donald R. Gant, L. Lindsey
Halstead, Phillip B. Lassiter, John N. Lauer, Robert W. Mahoney, William F.
Massy, Gregg A. Searle 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, 1997.
Ownership is also reported as of December 31, 1996 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 OWNED(1) CLASS DIRECTORSHIPS
- ----------------------------- -------- ------------ ------- ---------------------------
<S> <C> <C> <C> <C>
Director-Nominees:
Louis V. Bockius III -- 61 1978 249,443(2)(3) 0.36 United National Bank &
Chairman, Bocko, Inc. Trust Co.
North Canton, Ohio
Plastic Injection Molding
Daniel T. Carroll -- 70 1980 30,762(6) 0.05 A.M.Castle & Co., American
Chairman Woodmark Corporation, Aon
The Carroll Group, Inc. Corporation, Comshare,
Ann Arbor, Michigan Inc., Holmes Protection
Management Consulting Group, Inc., Oshkosh Truck
Corporation, Recombinant
BioCatalysis, Inc.,
Wolverine World Wide, Inc.,
Woodhead Industries, Inc.
Richard L. Crandall -- 53 1996 1,500 0.00 Comshare, Inc., Computer
Chairman of the Board Task Group, Inc.
Comshare, Inc.
Prior -- President and
Chief Executive Officer
Comshare, Inc.
Ann Arbor, Michigan
Software Producer
</TABLE>
4
<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
- ----------------------------- -------- ------------ ------- ---------------------------
<S> <C> <C> <C> <C>
Donald R. Gant -- 68 1977 41,432(2)(4) 0.06 ABC Rail Products
Limited Partner Corporation, Stride Rite
The Goldman Sachs Group, Corp.
L.P., New York, New York
Prior -- General Partner,
Goldman, Sachs & Co.
New York, New York
Investment Banker
L. Lindsey Halstead -- 66 1993 14,973 0.02 None
Retired
Prior -- Chairman of the
Board, Ford of Europe
Automotive Industry
Phillip B. Lassiter -- 53 1995 6,045 0.01 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 -- 58 1992 12,998 0.02 BorsodChem, R.T., Menasha
Retired, Private Investor Corporation
Prior -- President and
Chief Operating Officer,
The BFGoodrich Company
Akron, Ohio, Chemical
Aerospace Company
Robert W. Mahoney -- 60 1983 171,165(6) 0.25 The Sherwin-Williams
Chairman of the Board and Company, The Timken Company
Chief Executive Officer,
Diebold, Incorporated,
Canton, Ohio
Prior -- Chairman of the
Board, President and Chief
Executive Officer,
Diebold, Incorporated,
Canton, Ohio
</TABLE>
5
<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>
William F. Massy -- 62 1984 24,746 0.04 None
President, The Jackson Hole
Higher Education Group and
Professor of Education and
Business Administration,
Emeritus, Stanford
University, Stanford,
California
Prior -- Director, Stanford
Institute for Higher
Education Research and
Professor of Education and
Business Administration,
Stanford University,
Stanford, California
Gregg A. Searle -- 48 1996 54,773(2)(6) 0.08 Fabri-Centers of America,
President and Chief Inc.
Operating Officer, Diebold,
Incorporated, Canton, Ohio
Prior -- Executive Vice
President, Diebold,
Incorporated, Canton, Ohio
W. R. Timken, Jr. -- 58 1986 182,306(2)(5) 0.27 Louisiana Land and
Chairman of the Board, The Exploration Company, The
Timken Company, Timken Company, Trinova
Canton, Ohio, Corporation
Manufacturer of Tapered
Roller Bearings and
Specialty Alloy Steel
Other Named Executive
Officers:
William T. Blair -- 83,508(2)(6) 0.12 --
Gerald F. Morris -- 55,360(6) 0.08 --
Alben W. Warf -- 54,584(6) 0.08 --
All Directors and Executive -- 1,347,464(2)(3) 1.96 --
Officers (27) as a Group (4)(5)
(6)
</TABLE>
- ---------------
(1) Messrs. Mahoney, Searle, Blair, Morris and Warf have stock options issued
under the 1972 Plan and/or the 1991 Plan for 42,186, 16,875, 27,000, 16,875
and 10,125 shares respectively that are exercisable within 60 days following
February 10, 1997. 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, 1997 is 25,820. Under the 1991 Plan,
Messrs. Bockius, Carroll, Gant, Halstead, Lassiter, Lauer, Massy and Timken
each have stock options to acquire 20,878, 20,878, 20,878, 5,696, 3,795,
3,797, 15,187 and 3,797 shares, respectively, within 60 days following
February 10, 1997. For all directors and executive officers as a group, the
number of shares that are exercisable within 60 days following February 10,
1997 under the 1991 Plan is 259,838. 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.
6
<PAGE> 8
(3) Includes 41,805 shares (0.06%) in which Mr. Bockius has sole voting power
and shared investment power. Mr. Bockius disclaims any beneficial ownership
of these shares.
(4) Includes 7,269 shares (0.01%) in which Mr. Gant disclaims any beneficial
ownership.
(5) Includes 132,366 shares (0.19%) in which Mr. Timken has shared voting power
and shared investment power. Mr. Timken disclaims any beneficial ownership
of these shares as well as 3,055 shares owned by his spouse.
(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 and Mr. Searle do not include
40,399 and 12,472 shares respectively, which were earned out by them under
performance share awards which were deferred.
DIRECTOR COMMITTEES AND COMPENSATION
The members of the Audit Committee are Louis V. Bockius III, Daniel T.
Carroll, Richard L. Crandall, L. Lindsey Halstead and W. R. Timken, Jr.,
Chairman. The committee met three times during 1996 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
four times during 1996. 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 seven times during 1996. 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 1996. 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;
Richard L. Crandall, Phillip B. Lassiter and William F. Massy. The committee met
one time in 1996. 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
7
<PAGE> 9
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 1996 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
5,062 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 1996
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.
8
<PAGE> 10
EXECUTIVE COMPENSATION
The following table provides information relating to the annual and
long-term compensation for the years ended 1996, 1995 and 1994 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS(1)
--------------------------------- ---------- ----------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND COMPEN- UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(2) OPTIONS PAYOUTS SATION(2)
- ------------------------------ ---- -------- -------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Mahoney(3) 1996 $467,083 $498,750 $21,261 168,750 $1,214,649 $ 12,191
Chairman of the Board, 1995 422,917 348,075 11,949 56,250 775,188 8,496
and Chief Executive 1994 400,000 246,500 22,625 0 478,406 8,309
Officer
Gregg A. Searle(3),(4) 1996 281,667 259,960 15,373 82,500 838,709 7,073
President and Chief 1995 256,875 146,545 8,004 22,500 516,792 6,650
Operating Officer 1994 241,875 100,000 17,313 0 284,783 6,376
William T. Blair(3) 1996 282,500 206,770 16,760 22,500 838,709 9,080
Executive Vice 1995 261,458 156,475 8,524 22,500 516,792 8,533
President 1994 235,375 112,500 18,758 0 296,156 7,803
Gerald F. Morris 1996 272,500 205,800 16,201 22,500 838,709 18,141
Executive Vice 1995 256,875 155,555 6,994 22,500 535,276 12,679
President and Chief 1994 241,875 110,000 17,715 0 307,564 9,669
Financial Officer
Alben W. Warf(4) 1996 228,750 175,398 12,966 13,500 544,744 7,691
Senior Vice President, 1995 215,000 135,470 6,077 13,500 347,591 7,638
Electronic Systems 1994 182,920 90,000 15,462 0 206,921 6,925
Development and Manufacturing
</TABLE>
- ---------------
(1) The payouts reported for 1996 were based upon a management objective of
cumulative earnings for the performance period of January 1, 1994 through
December 31, 1996. 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 1996 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;
supplemental executive life insurance, and financial planning services. The
Other Annual Compensation column also includes preferential interest earned
and paid to Messrs. Mahoney, Blair and Morris on deferred compensation. 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 1996 under the Corporation's 401(k)
Savings Plan, respectively as follows: Mr. Mahoney ($3,794, $6,200); Mr.
Searle ($873, $6,200); Mr. Blair ($2,880, $6,200); Mr. Morris ($1,248,
$6,200); Mr. Warf ($1,491, $6,200). The All Other Compensation column also
includes an amount of $2,197 and $10,693 for preferential interest earned
but not paid in 1996 by Mr. Mahoney and Mr. Morris respectively on deferred
compensation.
(3) For the period January 1, 1996-October 31, 1996, Mr. Mahoney served as
Chairman of the Board, President and Chief Executive Officer and Mr. Searle
served as Executive Vice President. Mr. Blair retired on February 7, 1997
but remains on a consulting basis for a period ending December 31, 1997.
(4) 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 or 1996.
9
<PAGE> 11
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 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.
William T. Blair retired as Executive Vice President on February 7, 1997
after serving the Corporation for an additional year beyond his intended
retirement date. 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 $1,885 per month. The Corporation also retained Mr.
Blair as a consultant for a period ending December 31, 1997. Under such
agreement Mr. Blair may receive compensation and other benefits including
reasonable consulting fees and expenses for services provided to the Corporation
and credit for all of 1997 in calculating payouts under the Corporation's
Long-Term Incentive Plan for the performance period of January 1, 1995 through
December 31, 1997. In addition, Mr. Blair will continue to receive life
insurance coverage and remain eligible (subject to payment of monthly premiums)
for coverage under the Corporation's medical and dental plan.
10
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock option grants
for the year 1996 for the named executive officers of the Corporation. No stock
appreciation rights were granted to the named executive officers or other
optionees during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
NUMBER OF
SECURITIES % OF GRANT DATE VALUE(1)
UNDERLYING TOTAL OPTIONS -------------------------
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED (2) EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#) FISCAL YEAR ($/SH)(3) DATE VALUE ($)
- -------------------------------- ----------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Robert W. Mahoney............... 112,500(4) 22.5 37.96 10/14/01 873,000
56,250 11.3 24.19 1/25/06 278,250
Gregg A. Searle................. 60,000(4) 12.0 37.96 10/14/06 610,000
22,500 4.5 24.19 1/25/06 111,300
William T. Blair................ 22,500 4.5 24.19 1/25/06 111,300
Gerald F. Morris................ 22,500 4.5 24.19 1/25/06 111,300
Alben W. Warf................... 13,500 2.7 24.19 1/25/06 66,780
</TABLE>
- ---------------
(1) The Securities and Exchange Commission authorizes the use of variations of
the Black-Scholes option-pricing model for valuing executive stock options
in its rules on executive compensation disclosure. The Corporation utilizes
the Black-Scholes model to estimate the grant date present value of stock
option grants. The following assumptions were used in calculating the
Black-Scholes present value of the 1996 stock option grants: (a) an expected
option term of four years for options expiring on January 25, 2006 and
October 14, 2001 and an expected term of seven years for options expiring on
October 14, 2006; (b) an interest rate of 5.5%, which is the interest rate
for a zero-coupon U.S. government issue; (c) volatility of 0.21 calculated
using the quarter ending stock price for the equivalent period to the
expected option term prior to grant date; and (d) dividend yield of 2.2%,
the average dividends paid annually. There is no assurance that the value
actually realized by an executive will be at or near the estimated
Black-Scholes value. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised. The Corporation does not advocate or necessarily
agree that the Black-Scholes model can properly determine the value of an
option.
(2) All option grants were new and not granted in connection with an option
repricing transaction. Except as otherwise stated in footnote four, 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.
(4) The option granted on October 15, 1996 (expiring on October 14, 2001) to Mr.
Mahoney was for a term of five years with equal vesting on the second, third
and fourth anniversaries. The option granted to Mr. Searle on October 15,
1996 (expiring on October 14, 2006) was for a term of ten years with equal
vesting on the fifth, sixth and seventh anniversaries. The vesting
provisions of these options were amended on December 30, 1996 eliminating
certain threshold vesting requirements which would have otherwise resulted
in an adverse accounting treatment of these options. In addition,
accelerated vesting of these options (except in the event of a change in
control) was eliminated.
11
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information relating to stock option exercises
for the year 1996 and exercisable and unexercisable stock options at December
31, 1996 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 UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
(#) (#)
SHARES ---------------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------- ------------ ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Robert W. Mahoney............ 0 0 14,062* 367,575*
210,938** 2,544,787**
Gregg A. Searle.............. 0 0 5,625* 147,030*
99,375** 1,077,265**
William T. Blair............. 0 0 15,750* 501,196*
39,375** 839,865**
Gerald F. Morris............. 0 0 5,625* 147,030*
39,375** 839,865**
Alben W. Warf................ 0 0 3,375* 88,218*
23,625** 503,919**
</TABLE>
- ---------------
*exercisable
**unexercisable
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 1996 under the 1991 Plan for the
named executive officers.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE NON-STOCK PRICE-BASED PLANS
NUMBER OF OR OTHER PERIOD NUMBER OF SHARES
SHARES, UNITS UNTIL MATURATION --------------------------------
NAME OR OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------------- --------------- ---------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert W. Mahoney............ 21,263 1/1/96-12/31/98 5,317 21,263 31,895
Gregg A. Searle.............. 14,682 1/1/96-12/31/98 3,672 14,682 22,023
William T. Blair............. 14,682 1/1/96-12/31/98 3,672 14,682 22,023
Gerald F. Morris............. 14,682 1/1/96-12/31/98 3,672 14,682 22,023
Alben W. Warf................ 9,536 1/1/96-12/31/98 2,388 9,536 14,304
</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 91.2% of targeted earnings, is exceeded. The maximum award amount
will be earned if the Corporation achieves 109.4% 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.
12
<PAGE> 14
PENSION PLAN TABLE
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 $6,288 per
year at age 62.
<TABLE>
<CAPTION>
ANNUAL BENEFIT PAYABLE AT AGE 62
---------------------------------------
AVERAGE W-2 15 OR
COMPENSATION 5 YEARS 10 YEARS MORE YEARS
AT AGE 62 OF SERVICE OF SERVICE OF SERVICE
- ------------ ---------- ---------- ----------
<C> <C> <C> <C>
$ 300,000 ................................... $ 58,712 $123,712 $188,712
500,000 ................................... 102,045 210,379 318,712
700,000 ................................... 145,379 297,045 448,712
900,000 ................................... 188,712 383,712 578,712
1,100,000 ................................... 232,045 470,379 708,712
1,300,000 ................................... 275,379 557,045 838,712
1,500,000 ................................... 318,712 643,712 968,712
</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, 1996, the number of years of service for the named
executive officers is as follows: Mr. Mahoney, 14.6 years; Mr. Searle, 6.4
years; Mr. Blair, 8 years; Mr. Morris, 6.1 years; and Mr. Warf, 15.3 years.
13
<PAGE> 15
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.
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 1996, the Committee and/or the Chairman
of the Committee met several times with an outside consultant to review and
evaluate the executive compensation program with particular emphasis on the
long-term incentive elements of the program. This 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 to 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
used this information, as well as the results from the evaluation of the
executive compensation program, as a basis for review and recommendation for
compensation approved for the executive officers in 1996. The Committee believes
its present compensation programs are competitive with those offered by
companies similar to the Corporation. In general, this evaluation confirmed the
Committee's belief that the base salary should be set at or below median, and
that 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 also
believes that a significant proportion of total compensation should be variable
and dependent on the overall performance of the Corporation, and that this
objective can be achieved through appropriate design of long-term incentive
compensation.
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 based upon
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 1996 were
consistent with the Committee's compensation policy, noted above, of generally
setting base salary at or below median.
14
<PAGE> 16
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 and maximum amounts for
achievement. The Committee established the threshold level for 1996 at a level
that required the Corporation to exceed by seven percent the operating profit
achieved in 1995 before any payout could occur and with the maximum amount at 22
percent over 1995. 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 1996, the Corporation met its performance goals at the maximum
amount. In general, the individual goals of the executive officers were 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.
In 1996 the Committee recommended performance share grants for the named
executive officers, and the other executive officers for the three-year
performance period of January 1, 1996 through December 31, 1998. 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 91.2% of the management objective and the
maximum payout will be earned if 109.4% 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, 1994 through December 31, 1996. The Committee recommended and the
Board of Directors 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 six
years. No restricted share awards were made in 1996 to the named executive
officers. However, restricted share awards were made in 1996 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 1996. These awards
in 1996 were made on the basis of their 1995 performance
15
<PAGE> 17
against their goals and objectives. The restricted share awards were intended to
provide an equivalent compensation program for these executive officers until
they achieved 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 1996 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 1996. The
option awards reflect conclusions presented in an earlier 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 sufficient
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 the peer companies of the Corporation
as well as the value of option grants as determined by means of the
Black-Scholes option valuation method. 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 stock options provide 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 Grants in Last Fiscal Year.
STOCK OWNERSHIP GUIDELINES
As part of the evaluation in 1996 of the executive compensation program,
the Committee reviewed stock ownership guidelines. Based upon its review, the
Committee and the Board of Directors believe that it is important for each
executive officer to have a substantial investment in the Corporation as such
investment links an executive officer's interests with other shareholders. As a
result, based upon information provided by the executive compensation
consultant, guidelines have been established for the named executive officers
and other executive officers. These guidelines set forth a specific target level
of ownership based upon base salary. The target levels are 4 times for group
vice presidents and vice presidents, 6 times for executive vice presidents and
senior vice presidents, 8 times for the president and chief operating officer
and 10 times for the chairman of the board and chief executive officer. The
guidelines recommend that the executive officers reach their respective level
within three to five years. Periodic adjustments may be considered, and
discretion may be used in certain instances. It is expected that the target
levels will be achieved from stock that is obtained by the executive officers
through the various elements of the executive compensation program. The
Committee will review progress toward the target levels of ownership on an
annual basis.
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
1996, 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.
16
<PAGE> 18
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 1996 was measured by achievement of specific personal
goals and objectives. In 1996 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, incoming order levels, and
because he met or exceeded expectations in specified non-financial areas.
With respect to long-term incentive compensation, the chief executive
officer was granted a performance share grant in 1996 covering the performance
period of January 1, 1996 through December 31, 1998. As stated previously, any
earnout of shares will be based upon achievement of a threshold amount of 91.2%
of the management objective and the maximum payout will be earned if 109.4% of
the management objective is achieved. The estimated payout for the chief
executive officer is 5,317 shares at threshold, 21,263 shares at target and
31,895 shares at maximum. For the performance period of January 1, 1994 through
December 31, 1996, the chief executive officer earned 31,895 shares, which was
the maximum amount. The payout was in the form of a combination of cash and
Common Shares. In addition, in 1996 the chief executive officer was granted a
stock option for 56,250 shares at $24.19 per share, which represented the fair
market value at the date of grant.
As part of its evaluation of the executive compensation program, the
Committee also reviewed the plan of succession. On November 1, 1996 the chief
executive officer relinquished the positions of president and chief operating
officer. Previously he held these positions as well as his current position of
chairman of the board. This change in responsibilities permits the chief
executive officer to focus on strategic international and domestic issues,
including mergers, acquisitions and other matters while the president and chief
operating officer concentrates on the day-to-day issues of the Corporation's
global operations. To provide extra performance incentives for the chief
executive officer and the new president during the years prior to the chief
executive officer's retirement, additional stock options were granted to the
chief executive officer and to the president. The stock option granted to the
chief executive officer was for 112,500 shares at $37.96 per share and the stock
option granted to the president was for 60,000 shares at $37.96 per share. The
option price represented the fair market value at the date of grant. These
grants were over and above the awards of options and performance shares proposed
as part of the ongoing long-term incentive program. The number of shares granted
to the chief executive officer and president were based upon the recommendations
of the compensation consultant. In making its recommendations, the consultant
considered target total compensation for the peer companies of the Corporation
referred to above as well as the Black-Scholes value of option grants. The
number of shares covered by the grant to the chief executive officer represented
two times his 1996 annual grant. The number of shares granted to the president
represented two times his proposed annual grant for future years. Additional
information on stock options is included in the table entitled Option 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. The Committee believes an example of his
performance is reflected in his leadership of the Corporation in achieving
record earnings, income, orders and the milestone of $1 billion in revenue for
1996.
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 affected by the new limitation
during 1996. However, the Committee established a policy in 1995 that any
amounts affected by the limitation would be automatically deferred until the
limitation no longer applies. Therefore, such amounts for 1996 were
automatically deferred. In addition, the Committee recently re-evaluated this
legislation. As a result, the Committee recommended and the Board of Directors
adopted an amendment and restatement of the 1991 Plan to ensure that certain
awards qualify as performance-based compensation that is exempt from the new
17
<PAGE> 19
legislation. A proposal for the amendment and restatement is being submitted for
approval by shareholders at this annual meeting.
The foregoing report on 1996 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
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, 1991 and ended
December 31, 1996. 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.
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1991
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SELF-CONSTRUCTED
(FISCAL YEAR COVERED) DIEBOLD S&P 500(R) PEER GROUP
<S> <C> <C> <C>
DEC-91 100 100 100
DEC-92 129 108 123
DEC-93 198 118 139
DEC-94 207 120 147
DEC-95 284 165 195
DEC-96 492 203 249
</TABLE>
18
<PAGE> 20
APPROVAL OF THE AMENDED AND RESTATED
1991 EQUITY AND PERFORMANCE INCENTIVE PLAN
GENERAL
The Corporation desires to continue its policy of advancing the interests
and long-term success of the Corporation by encouraging stock ownership among
key employees and, correspondingly, increasing their personal involvement with
the future of the Corporation. The Diebold, Incorporated 1991 Equity and
Performance Incentive Plan (the "1991 Plan"), which was approved by shareholders
at the Corporation's 1991 annual meeting of shareholders, has afforded the
Corporation's Board of Directors (the "Board") and its Compensation and
Organization Committee (the "Committee") the ability to design compensatory
awards that are responsive to the Corporation's needs. In order to enhance the
Corporation's ability to attract and retain officers and key employees, the
Board of Directors adopted the 1991 Amended and Restated Equity and Performance
Incentive Plan (the "Amended Plan") on January 30, 1997, subject to approval by
the Corporation's shareholders at the 1997 annual meeting.
There are two principal reasons for amending and restating the 1991 Plan at
this time. The first is so that certain awards can continue to qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code (the "Code"). That section, which became law in 1993, generally
disallows a tax deduction for certain compensation over $1 million paid, or
otherwise taxable, to persons named in the Summary Compensation Table and
employed by the Corporation at the end of the applicable year. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. The other principal reason to amend and restate the 1991
Plan is to increase the number of shares available under the 1991 Plan as
described below.
In addition, several other changes were made to update and improve the 1991
Plan in compliance with revised Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
A summary of the proposed changes is set forth below, followed by a summary
description of the entire Amended Plan. The full text of the Amended Plan is
annexed to this Proxy Statement as Appendix A, and the following summaries are
qualified in their entirety by reference to Appendix A.
SUMMARY OF CHANGES
Compliance with Section 162(m) of the Code. The 1991 Plan was adopted
before the existence of Section 162(m) of the Code, and therefore was not
specifically designed to meet its requirements. Certain limits and other
requirements are included in the Amended Plan in order that awards of Option
Rights, Appreciation Rights, Performance Shares and Performance Units may
qualify as performance-based compensation for the purpose of Section 162(m).
Under the Amended Plan, (i) no participant may be granted Option Rights for more
than 200,000 Common Shares during any calendar year; (ii) no participant may be
granted more than 200,000 Appreciation Rights during any calendar year; and
(iii) during any calendar year, no participant may receive awards of Performance
Shares and Performance Units having an aggregate value as of their respective
dates of grant in excess of $3,000,000.
Another requirement of Section 162(m) is that the 1991 Plan and the
performance measures which must be attained to earn compensation under
performance-based awards must be disclosed to and approved by shareholders. As
described in detail below, for employees who are, or are determined by the Board
to be likely to become, "covered employees" within the meaning of Section 162(m)
of the Code ("Covered Employees"), the Amended Plan sets forth the performance
measures which must be attained in the case of Performance Shares and
Performance Units and which may, but need not be conditions to awards of Option
Rights, Appreciation Rights and Restricted Shares. If the requisite approval is
not obtained, the changes provided for in the Amended Plan will not be made.
Available Shares. The Amended Plan increases the number of Common Shares
available by 3,000,000 Common Shares. The Original Plan authorized the issuance
of an aggregate of 3,265,312 Common Shares. As
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<PAGE> 21
of February 28, 1997, 951,529 of these shares had been issued under the Plan,
2,019,063 Common Shares were subject to outstanding options and 294,720 Common
Shares were available for future awards.
Management Objectives. The Amended Plan provides that in order to earn
compensation under certain awards, participants must attain specified Management
Objectives (as described in more detail below) within a specified performance
period.
Awards to Non-Employee Directors. The Amended Plan eliminates the granting
of automatic formula awards of Option Rights to Non-Employee Directors. The
Board has authority under the Amended Plan to grant discretionary awards of
Option Rights or Restricted Shares to Non-Employee Directors. Such Option Rights
will be granted on terms and conditions similar to previously granted automatic
awards. A grant or sale of Restricted Shares will be on terms and conditions
consistent with the provisions of the Amended Plan governing awards of
Restricted Shares to other participants.
Administration and Amendments. The Amended Plan provides that the Board
may delegate part or all of its authority under the Amended Plan to a committee
(or a subcommittee thereof) so long as such committee (or subcommittee thereof)
is composed solely of at least three Non-Employee Directors within the meaning
of Rule 16b-3 of the Exchange Act ("Rule 16b-3"). The Board may also amend the
Amended Plan, in its discretion, at any time without shareholder approval except
where required by law or applicable rules and regulations of a national
securities exchange.
Transferability. Consistent with the recent changes in Rule 16b-3, the
Amended Plan provides that the Board may determine that any awards of Option
Rights or Appreciation Rights may be transferable or that any transfer
restrictions (in the case of Restricted Shares) may be removed. If the Board
does not so determine, awards will have the same transferability restrictions as
under the Plan prior to the adoption of the Amended Plan.
Change in Control. A definition of "Change in Control" has been included
in the Amended Plan, and the reference to a predecessor plan change in control
definition has been deleted.
SUMMARY OF THE AMENDED PLAN
Shares Available Under the Amended Plan. Subject to adjustment as provided
in the Amended Plan, the number of Common Shares that may be issued or
transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii)
as Restricted Shares and released from substantial risks of forfeiture thereof,
(iii) as Deferred Shares, (iv) in payment of Performance Shares or Performance
Units that have been earned, (v) as awards to Non-Employee Directors or (vi) in
payment of dividend equivalents paid with respect to awards made under the Plan
shall not exceed in the aggregate 6,265,313 shares (3,265,313 of which were
approved in 1991 and 3,000,000 of which are being added by this Amendment and
Restatement) plus any shares relating to awards that expire or are forfeited or
cancelled. Such shares may be shares of original issuance or treasury shares or
a combination of the foregoing. Upon the payment of any Option Price by the
transfer to the Corporation of Common Shares or upon satisfaction of any
withholding amount by means of transfer or relinquishment of Common Shares,
there shall be deemed to have been issued or transferred under the Amended Plan
only the net number of Common Shares actually issued or transferred by the
Corporation.
The aggregate number of Common Shares actually issued or transferred by the
Corporation upon the exercise of Incentive Stock Options ("ISO") shall not
exceed 6,265,313 shares. Further, no Participant shall be granted Option Rights
for more than 200,000 Common Shares during any calendar year, subject to
adjustments as provided in the Amended Plan. In no event shall any Participant
in any calendar year receive more than 200,000 Appreciation Rights, 200,000
Restricted Shares, 200,000 Deferred Shares or receive an award of Performance
Shares or Performance Units having an aggregate maximum value as of their
respective Dates of Grant in excess of $3,000,000, subject to adjustments as
provided in the Amended Plan.
Eligibility. Officers and key employees of the Corporation and its
subsidiaries may be selected by the Board to receive benefits under the Amended
Plan. In addition, Non-Employee Directors of the Corporation
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<PAGE> 22
will be eligible for non-discretionary grants of Option Rights as described
below under the heading "Awards of Option Rights to Non-Employee Directors."
Employees of InterBold will also be eligible to receive awards under the Amended
Plan. Payment for awards made by the Board to employees of InterBold will be
made directly from InterBold under the Amended Plan.
Option Rights. Option Rights may be granted which entitle the optionee to
purchase Common Shares at a price not less than 85 percent of market value at
the date of grant, except that the option price per share for any ISO shall not
be less than 100 percent of market value per share. The option price is payable
(i) in cash at the time of exercise; (ii) by the transfer to the Corporation of
nonforfeitable unrestricted Common Shares owned by the optionee having a value
at the time of exercise equal to the option price; (iii) by surrender of any
other award under the Amended Plan having a value at the time of exercise equal
to the option price; or (iv) a combination of such payment methods. The Amended
Plan would permit the exercise of Option Rights by means of the delivery of
previously owned Common Shares in partial satisfaction of the exercise price and
the successive re-delivery of the shares so obtained to satisfy the exercise
price of additional Option Rights until the grant has been fully exercised.
The Board has the authority to specify at the time Option Rights are
granted that Common Shares will not be accepted in payment of the option price
until they have been owned by the optionee for a specified period; however, the
Amended Plan does not require any such holding period and would permit immediate
sequential exchanges of Common Shares at the time of exercise of Option Rights.
Any grant of an Option Right may provide for deferred payment of the option
price from the proceeds of sale through a bank or broker of some or all of the
Common Shares to which the exercise relates.
Any grant may provide for the automatic grant of additional Option Rights
("Reload Option Rights") to an optionee upon the exercise of Option Rights using
Common Shares as payment. Any Reload Option Rights may cover up to the number of
Common Shares, Deferred Shares, Option Rights or Performance Shares (or the
number of Common Shares having a value equal to the value of any Performance
Units) surrendered to the Corporation upon exercise in payment of the option
price or to meet any withholding obligations. The Reload Option Rights may have
an option price that represents the same or greater percentage of the current
market value per share at the time of exercise of the Option Rights that the
option price of the Option Rights represented of the market value per share at
the time such Option Rights were granted. Depending on the limitations, if any,
imposed by the Board at the time of grant, Reload Option Rights with such a
discount feature would permit an optionee, by delivery of previously owned
Common Shares upon successive exercises of Reload Option Rights, to reduce or
eliminate the amounts payable upon original exercise of the Option Rights.
The Board may, at or after the date of grant of any Option Rights (other
than the grant of an ISO), provide for the payment of dividend equivalents to
the optionee on a current, deferred or contingent basis or may provide that such
equivalents be credited against the option price.
No Option Right shall be exercisable more than 10 years from the date of
grant. Each grant must specify the period of continuous employment with the
Corporation or any subsidiary that is necessary before the Option Rights will
become exercisable and may provide for the earlier exercise of such Option
Rights in the event of a Change in Control or other similar transaction or
event. Successive grants may be made to the same optionee whether or not Option
Rights previously granted remain unexercised. Any grant of Option Rights may
specify Management Objectives (as described below) that must be achieved as a
condition to exercise such rights.
Appreciation Rights. Appreciation Rights provide optionees an alternative
means of realizing the benefits of Option Rights. An Appreciation Right is a
right, exercisable by surrender of the related Option Right, to receive from the
Corporation an amount equal to 100 percent, or such lesser percentage as the
Board may determine, of the spread between the option price and the current
value of the Common Shares underlying the option. Any grant may specify that the
amount payable on exercise of an Appreciation Right may be paid by the
Corporation in cash, in Common Shares, or in any combination thereof, and may
either grant to the optionee or retain in the Board the right to elect among
those alternatives.
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<PAGE> 23
Any grant may specify that such Appreciation Right may be exercised only in
the event of a Change in Control or other similar transaction or event. Any
grant of Appreciation Rights may specify Management Objectives that must be
achieved as a condition to exercise such rights.
Restricted Shares. A grant of Restricted Shares involves the immediate
transfer by the Corporation to a participant of ownership of a specific number
of Common Shares in consideration of the performance of services. The
participant is entitled immediately to voting, dividend and other ownership
rights in such shares. The transfer may be made without additional consideration
or in consideration of a payment by the participant that is less than current
market value, as the Board may determine.
Restricted Shares must be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for at least 3 years. An example
would be a provision that the Restricted Shares would be forfeited if the
participant ceased to serve the Corporation as an officer or key employee during
a specified period of years. In order to enforce these forfeiture provisions,
the transferability of Restricted Shares will be prohibited or restricted in a
manner and to the extent prescribed by the Board for the period during which the
forfeiture provisions are to continue. The Board may provide for a shorter
period during which the forfeiture provisions are to apply in the event of a
Change in Control of the Corporation or other similar transaction or event.
Any grant of Restricted Shares may specify Management Objectives which, if
achieved, will result in termination or early termination of the restrictions
applicable to such shares. Any such grant must also specify in respect of such
specified Management Objectives, a minimum acceptable level of achievement and
must set forth a formula for determining the number of Restricted Shares on
which restrictions will terminate if performance is at or above the minimum
level, but below full achievement of the specified Management Objectives.
Deferred Shares. A grant of Deferred Shares constitutes an agreement by
the Corporation to deliver Common Shares to the participant in the future in
consideration of the performance of services, but subject to the fulfillment of
such conditions during the Deferral Period as the Board may specify. During the
Deferral Period, the participant has no right to transfer any rights under his
or her award and no right to vote such Shares, but the Board may, at or after
the date of grant, authorize the payment of dividend equivalents on such Shares
on either a current or deferred or contingent basis, either in cash or in
additional Common Shares. Awards of Deferred Shares may be made without
additional consideration or in consideration of a payment by such participant
that is less than the market value per share at the date of award.
Deferred Shares must be subject to a Deferral Period of at least 1 year, as
determined by the Board at the date of the award, except that the Board may
provide for a shorter Deferral Period in the event of a Change in Control or
other similar transaction or event.
Performance Shares and Performance Units. A Performance Share is the
equivalent of one Common Share and a Performance Unit is the equivalent of
$1.00. A participant may be granted any number of Performance Shares or
Performance Units, subject to the limitations set forth under Available Shares.
The participant will be given one or more Management Objectives to meet within a
specified period (the "Performance Period"). The specified Performance Period
shall be a period of time not less than one year, except in the case of a Change
in Control or other similar transaction or event, if the Board shall so
determine. A minimum level of acceptable achievement will also be established by
the Board. If by the end of the Performance Period, the participant has achieved
the specified Management Objectives, the participant will be deemed to have
fully earned the Performance Shares or Performance Units. If the participant has
not achieved the Management Objectives, but has attained or exceeded the
predetermined minimum level of acceptable achievement, the participant will be
deemed to have partly earned the Performance Shares or Performance Units in
accordance with a predetermined formula. To the extent earned, the Performance
Shares or Performance Units will be paid to the participant at the time and in
the manner determined by the Board in cash, Common Shares or any combination
thereof. The grant may provide for the payment of dividend equivalents thereon
in cash or in Common Shares on a current, defined or contingent basis.
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<PAGE> 24
Management Objectives. The Amended Plan requires that the Board establish
"Management Objectives" for purposes of Performance Shares and Performance
Units. When so determined by the Board, Option Rights, Appreciation Rights,
Restricted Shares and dividend credits may also specify Management Objectives.
Management Objectives may be described in terms of either Corporation-wide
objectives or objectives that are related to the performance of the individual
participant or subsidiary, division, department or function within the
Corporation or a subsidiary in which the participant is employed. Management
Objectives applicable to any award to a participant who is, or is determined by
the Board likely to become, a Covered Employee, shall be limited to specified
levels of or growth in (i) earnings; (ii) earnings per share; (iii) share price;
(iv) total shareholder return; (v) return on invested capital, equity or assets;
(vi) operating earnings; (vii) sales growth; and (viii) productivity
improvement. Except in the case of such a Covered Employee, if the Board
determines that a change in the business, operations, corporate structure or
capital structure of the Corporation, or the manner in which it conducts its
business, or other events or circumstances render the Management Objectives
unsuitable, the Board may modify such Management Objectives, in whole or in
part, as the Board deems appropriate and equitable.
Awards of Option Rights to Non-Employee Directors. The Board may, in its
discretion, authorize the granting to Non-Employee Directors of Option Rights
and may also authorize the grant or sale of Restricted Shares to Non-Employee
Directors. Non-Employee Directors are not eligible to receive any other awards
under the Amended Plan.
Each such Option Right will become exercisable to the extent of one-fourth
of the number of shares covered thereby in each of the four successive years
following the grant. However, in the event of a Change in Control of the
Corporation, the Option Rights would become immediately exercisable in full.
Each such Option Right granted under the Amended Plan will expire five years
from the date of the grant, unless subject to earlier termination pursuant to
the Amended Plan. Common Shares acquired upon the exercise of these Option
Rights may not be transferred for 1 year, except in the case of the director's
death, disability or other termination of service as a director.
In the event of the termination of service on the Board by the holder of
any such Option Rights, other than by reason of disability or death, the then
outstanding Option Rights of such holder may be exercised only to the extent
that they were exercisable on the date of such termination and will expire on
the earlier of their stated termination date or 90 days following the
termination of the holder's service on the Board. In the event of death or
disability, each of the then outstanding Option Rights of such holder may be
exercised until the earlier of 1 year after such death or disability or the
otherwise stated expiration date of the Option Rights.
If a Non-Employee Director subsequently becomes an employee of the
Corporation or a subsidiary while remaining a member of the Board, any Option
Rights held at that time will not be affected.
Option Rights may be exercised by a Non-Employee Director only by payment
in full of the Option Price. Such payment may be in cash, in Common Shares
previously owned by the director for more than 6 months, or a combination of
both.
Each grant or sale of Restricted Shares to Non-Employee Directors will be
upon terms and conditions as described above.
Administration and Amendments. The Amended Plan is to be administered by
the Board, except that the Board has the authority under the Plan to delegate
any or all of its powers under the Plan to a committee (or subcommittee thereof)
consisting of not less than three Non-Employee Directors within the meaning of
Rule 16b-3 and who are "outside directors" within the meaning of Section 162(m)
of the Code.
The Board is authorized to interpret the Amended Plan and related
agreements and other documents. The Board may make awards to employees under any
or a combination of all of the various categories of awards that are authorized
under the Amended Plan, or in its discretion, make no awards. The Board may
amend the Amended Plan from time to time without further approval by the
shareholders of the Corporation except where required by applicable law or the
rules and regulations of a national securities exchange. The
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<PAGE> 25
Corporation reserves authority to offer similar or dissimilar benefits in plans
that do not require shareholder approval.
The Board may provide for special terms for awards to participants who are
foreign nationals or who are employed by the Corporation or any of its
subsidiaries outside of the United States of America as the Board may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom.
Transferability. Except as otherwise determined by the Board, no Option
Right or Appreciation Right or other derivative security is transferable by an
optionee except, upon death, by will or the laws of descent and distribution.
If, however, the optionee is not a director or officer of the Corporation,
transfer may be made to a fully revocable trust of which the optionee is treated
as the owner for federal income tax purposes. Except as otherwise determined by
the Board, Option Rights and Appreciation Rights are exercisable during the
optionee's lifetime only by him or her.
The Board may specify at the Date of Grant that part or all of the Common
Shares that are (i) to be issued or transferred by the Corporation upon exercise
of Option Rights or Appreciation Rights, upon termination of the Deferral Period
applicable to Deferred Shares or upon payment under any grant of Performance
Shares or Performance Units or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 6 of the Amended
Plan, shall be subject to further restrictions on transfer.
Notwithstanding the above, the Board may provide for transferability of
awards under the Amended Plan if such provision would not disqualify the
exemption for other awards under Rule 16b-3 of the Exchange Act.
Adjustments. The maximum number of shares that may be issued and delivered
under the Amended Plan, the number of shares covered by outstanding Option
Rights and Appreciation Rights, and the prices per share applicable thereto, are
subject to adjustment in the event of stock dividends, stock splits,
combinations of shares, recapitalizations, mergers, consolidations, spin-offs,
reorganizations, liquidations, issuances of rights or warrants, and similar
events. In the event of any such transaction or event, the Board, in its
discretion, may provide in substitution for any or all outstanding awards under
the Amended Plan such alternative consideration as it, in faith, may determine
to be equitable in the circumstances and may require the surrender of all awards
so replaced. The Board may also make or provide for such adjustments in the
numbers of shares specified in Section 3 of the Amended Plan as the Board may
determine appropriate to reflect any transaction or event described above.
Change in Control. A definition of "Change in Control" has been
specifically included in the Amended Plan, which definition can be found in the
full text of the Amended Plan attached hereto as Appendix A. This definition is
the same one used throughout the term of the Plan, but until this amendment and
restatement, was referred to through a cross-reference to another benefit plan.
The Amended Plan eliminates any such cross-reference.
Amended Plan Benefits. It is not possible to determine specific amounts
that may be awarded in the future under the Amended Plan. However, as indicated
in the table below, the Board has made awards to certain executive officers
named in the Summary Compensation Table and certain other key employees during
fiscal 1996 and through February 28, 1997.
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NEW PLAN BENEFITS
1991 AMENDED AND RESTATED EQUITY AND PERFORMANCE INCENTIVE PLAN
<TABLE>
<CAPTION>
OPTION RIGHTS
--------------------- PERFORMANCE SHARES RESTRICTED SHARES
COMMON OPTION --------------------- --------------------
NAME AND POSITION SHARES PRICE ($) NUMBER VALUE ($) NUMBER VALUE ($)
- ------------------------------ ------- --------- ------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Mahoney............. 56,250 24.19 31,894 771,516 -- --
Chairman of the Board 112,500 37.96 22,000(1) 971,730
and Chief Executive Officer 56,250(1) 38.08
Gregg A. Searle............... 22,500 24.19 22,023 532,736 -- --
President and Chief 60,000 37.96 4,977(1) 189,524
Operating Officer 30,000(1) 38.08 18,000(1) 777,384
William T. Blair.............. 22,500 24.19 22,023 532,736 -- --
Executive Vice President 22,500(1) 38.08
Gerald F. Morris.............. 22,500 24.19 22,023 532,736 -- --
Executive Vice President 22,500(1) 38.08 14,682(1) 634,086
and Chief Financial Officer
Alben W. Warf................. 13,500 24.19 14,303 345,990 -- --
Senior Vice President, 13,500(1) 38.08 9,536(1) 411,841
Electronic Systems Development
and Manufacturing
Executive Group............... 139,500 24.19 105,637 2,555,359 4,500 108,855
6,750 25.33 77,850(1) 3,362,186 7,500 (1) 285,600
172,500(1) 38.08
Non-Executive 40,496 26.04 -- -- -- --
Director Group................ 5,062 36.04
Non-Executive 133,875 24.19 -- -- -- --
Officer Employee Group........ 750 25.25
1,500 34.13
109,650(1) 38.08
</TABLE>
- ---------------
(1) Reflects awards granted on January 30, 1997 and February 20, 1997. The
number of performance shares is at the maximum that can be earned out. These
awards to the named executive officers were made subject to shareholder
approval of the Amended Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the Amended Plan based on Federal
income tax laws in effect on January 1, 1997. This summary is not intended to be
complete and does not describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
NON-QUALIFIED STOCK OPTIONS. In general, (i) no income will be recognized
by an optionee at the time a non-qualified Option Right is granted; (ii) at the
time of exercise of a non-qualified Option Right, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (iii) at the time of sale of shares
acquired pursuant to the exercise of a non-qualified Option Right, appreciation
(or depreciation) in value of the shares after the date of exercise will be
treated as either short-term or long-term capital gain (or loss) depending on
how long the shares have been held.
INCENTIVE STOCK OPTIONS. No income generally will be recognized by an
optionee upon the grant or exercise of an ISO. If Common Shares are issued to
the optionee pursuant to the exercise of an ISO, and if no
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<PAGE> 27
disqualifying disposition of such shares is made by such optionee within two
years after the date of grant or within one year after the transfer of such
shares to the optionee, then upon sale of such shares, any amount realized in
excess of the option price will be taxed to the optionee as a long-term capital
gain and any loss sustained will be a long-term capital loss.
If Common Shares acquired upon the exercise of an ISO are disposed of prior
to the expiration of either holding period described above, the optionee
generally will recognize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of such shares at the time
of exercise (or, if less, the amount realized on the disposition of such shares
if a sale or exchange) over the option price paid for such shares. Any further
gain (or loss) realized by the participant generally will be taxed as short-term
or long-term capital gain (or loss) depending on the holding period.
APPRECIATION RIGHTS. No income will be recognized by a participant in
connection with the grant of a tandem Appreciation Right or a free-standing
Appreciation Right. When the Appreciation Right is exercised, the participant
normally will be required to include as taxable ordinary income in the year of
exercise an amount equal to the amount of cash received and the fair market
value of any unrestricted Common Shares received on the exercise.
RESTRICTED SHARES. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares (reduced by any amount paid by the participant for such
Restricted Shares) at such time as the shares are no longer subject to
forfeiture or restrictions on transfer for purposes of Section 83 of the Code
("Restrictions"). However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of transfer of the shares will have taxable
ordinary income on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to the Restrictions)
over the purchase price, if any, of such Restricted Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares that are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.
DEFERRED SHARES. No income generally will be recognized upon the award of
Deferred Shares. The recipient of a Deferred Share award generally will be
subject to tax at ordinary income rates on the fair market value of unrestricted
Common Shares on the date that such shares are transferred to the participant
under the award (reduced by any amount paid by the participant for such Deferred
Shares), and the capital gains/loss holding period for such shares will also
commence on such date.
PERFORMANCE SHARES AND PERFORMANCE UNITS. No income generally will be
recognized upon the grant of Performance Shares or Performance Units. Upon
payment in respect of the earn-out of Performance Shares or Performance Units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any nonrestricted Common Shares received.
SPECIAL RULES APPLICABLE TO OFFICERS AND DIRECTORS. In limited
circumstances where the sale of stock received as a result of a grant or award
could subject an officer or director to suit under Section 16(b) of the Exchange
Act, the tax consequences to the officer or director may differ from the tax
consequences described above. In these circumstances, unless a special election
under Section 83(b) of the Code has been made, the principal difference (in
cases where the officer or director would otherwise be currently taxed upon his
receipt of the stock) usually will be to postpone valuation and taxation of the
stock received so long as the sale of the stock received could subject the
officer or director to suit under Section 16(b) of the Exchange Act of 1934, but
no longer than six months.
TAX CONSEQUENCES TO THE CORPORATION OR SUBSIDIARY
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Corporation or subsidiary for which the
participant performs services will be entitled to a corresponding deduction
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and
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<PAGE> 28
necessary business expense, is not an "excess parachute payment" within the
meaning of Section 280G of the Code and is not disallowed by the $1 million
limitation on certain executive compensation under Section 162(m) of the Code.
VOTE REQUIRED TO APPROVE THE AMENDED AND RESTATED EQUITY AND PERFORMANCE
INCENTIVE PLAN
A favorable vote of the majority of votes cast on the matter is necessary
for approval of the Amended Plan, provided that the total vote cast represents
over 50% interest of all securities entitled to vote on the Amended Plan.
Abstentions will be counted as votes against such approval, but broker non-votes
will not be counted for determining whether the Amended Plan is passed.
On February 3, 1997, the Corporation announced that it intends to implement
a new stock option plan in recognition of the passing of $1 billion in revenue.
Awards under this plan will be one-time grants to employees of Option Rights to
purchase 100 Common Shares. No shareholder vote is required for approval of this
plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1991 AMENDED
AND RESTATED EQUITY AND PERFORMANCE INCENTIVE PLAN.
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, 1997. 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.
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PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1998 annual
meeting of shareholders must be received by the Secretary of the Corporation no
later than November 8, 1997 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 7, 1997
THE ANNUAL REPORT OF DIEBOLD, INCORPORATED FOR THE
YEAR ENDED DECEMBER 31, 1996, WAS MAILED TO ALL
SHAREHOLDERS ON OR ABOUT MARCH 7, 1997.
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APPENDIX A
DIEBOLD, INCORPORATED
1991 EQUITY AND PERFORMANCE INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF JANUARY 30, 1997)
1. PURPOSE. The purpose of the 1991 Amended and Restated Equity and
Performance Incentive Plan (the "Plan") is to attract and retain directors,
officers and key employees for Diebold, Incorporated (the "Corporation") and its
Subsidiaries and to provide to such persons incentives and rewards for superior
performance.
2. DEFINITIONS. As used in this Plan,
"Annual Meeting" means the annual meeting of shareholders of the
Corporation.
"Appreciation Right" means a right granted pursuant to Section 5 of
this Plan.
"Board" means the Board of Directors of the Corporation and, to the
extent of any delegation by the Board to a committee (or subcommittee
thereof) pursuant to Section 17 of this Plan, such committee (or
subcommittee thereof).
"Change in Control" shall have the meaning provided in Section 12 of
this Plan.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Common Shares" means shares of common stock, $1.25 par value per
share, of the Corporation or any security into which such Common Shares may
be changed by reason of any transaction or event of the type referred to in
Section 11 of this Plan.
"Covered Employee" means a Participant who is, or is determined by the
Board to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which a grant
of Option Rights, Appreciation Rights, Performance Shares or Performance
Units or a grant or sale of Restricted Shares or Deferred Shares shall
become effective (which date shall not be earlier than the date on which
the Board takes action with respect thereto) and shall also include the
date on which a grant of Option Rights to a Non-Employee Director becomes
effective pursuant to Section 9 of this Plan.
"Deferral Period" means the period of time during which Deferred
Shares are subject to deferral limitations under Section 7 of this Plan.
"Deferred Shares" means an award made pursuant to Section 7 of this
Plan of the right to receive Common Shares at the end of a specified
Deferral Period.
"Designated Subsidiary" means a Subsidiary that is (i) not a
corporation or (ii) a corporation in which at the time the Corporation owns
or controls, directly or indirectly, less than 80 percent of the total
combined voting power represented by all classes of stock issued by such
corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.
"Incentive Stock Options" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.
"Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have
received grants of Performance Shares or Performance Units or, when so
determined by the Board, Option Rights, Appreciation Rights, Restricted
Shares and dividend credits pursuant to this Plan. Management Objectives
may be described in terms of Corporation-wide objectives or objectives that
are related to the performance of the individual Participant or of the
Subsidiary, division, department, region or function within the Corporation
or Subsidiary in which the
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Participant is employed. The Management Objectives may be made relative to
the performance of other corporations. The Management Objectives applicable
to any award to a Covered Employee shall be based on specified levels of or
growth in one or more of the following criteria:
1. earnings;
2. earnings per share (earnings per share will be calculated without
regard to any change in accounting standards that may be required by
the Financial Accounting Standards Board after the goal is
established);
3. share price;
4. total shareholder return;
5. return on invested capital, equity, or assets;
6. operating earnings;
7. sales growth;
8. productivity improvement.
Except in the case of a Covered Employee, if the Board determines that
a change in the business, operations, corporate structure or capital
structure of the Corporation, or the manner in which it conducts its
business, or other events or circumstances render the Management Objectives
unsuitable, the Board may in its discretion modify such Management
Objectives or the related minimum acceptable level of achievement, in whole
or in part, as the Board deems appropriate and equitable.
"Market Value per Share" means, as of any particular date, the fair
market value of the Common Shares as determined by the Board.
"Non-Employee Director" means a Director of the Corporation who is not
an employee of the Corporation or any Subsidiary.
"Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
"Option Price" means the purchase price payable on exercise of an
Option Right.
"Option Right" means the right to purchase Common Shares upon exercise
of an option granted pursuant to Section 4 or Section 9 of this Plan.
"Participant" means a person who is selected by the Board to receive
benefits under this Plan and who is at the time an officer, or other key
employee of the Corporation or any one or more of its Subsidiaries, or who
has agreed to commence serving in any of such capacities within 90 days of
the Date of Grant, and shall also include each Non-Employee Director who
receives an award of Option Rights pursuant to Section 9 of this Plan;
provided, however, that for purposes of Sections 4, 5, 7 and 8 of this
Plan, Participant shall not include such Non-Employee Director.
"Performance Period" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of
this Plan within which the Management Objectives relating to such
Performance Share or Performance Unit are to be achieved.
"Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"Reload Option Rights" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
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"Restricted Shares" means Common Shares granted or sold pursuant to
Section 6 or Section 9 of this Plan as to which neither the substantial
risk of forfeiture nor the prohibition on transfers referred to in such
Section 6 has expired.
"Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from
time to time.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Spread" means the excess of the Market Value per Share of the Common
Shares on the date when an Appreciation Right is exercised, or on the date
when Option Rights are surrendered in payment of the Option Price of other
Option Rights, over the Option Price provided for in the related Option
Right.
"Subsidiary" means a corporation, company or other entity (i) more
than 50 percent of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority)
are, or (ii) which does not have outstanding shares or securities (as may
be the case in a partnership, joint venture or unincorporated association),
but more than 50 percent of whose ownership interest representing the right
generally to make decisions for such other entity is, now or hereafter,
owned or controlled, directly or indirectly, by the Corporation except that
for purposes of determining whether any person may be a Participant for
purposes of any grant of Incentive Stock Options, "Subsidiary" means any
corporation in which at the time the Corporation owns or controls, directly
or indirectly, more than 50 percent of the total combined voting power
represented by all classes of stock issued by such corporation.
"Voting Shares" means at any time, the then-outstanding securities
entitled to vote generally in the election of directors of the Corporation.
3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided
in Section 11 of this Plan, the number of Common Shares that may be issued or
transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii)
as Restricted Shares and released from substantial risks of forfeiture thereof,
(iii) as Deferred Shares, (iv) in payment of Performance Shares or Performance
Units that have been earned, (v) as awards to Non-Employee Directors or (vi) in
payment of dividend equivalents paid with respect to awards made under the Plan
shall not exceed in the aggregate 6,265,313 shares (3,265,313 of which were
approved in 1991 and 3,000,000 of which are being added by this Amendment and
Restatement) plus any shares relating to awards that expire or are forfeited or
cancelled. Such shares may be shares of original issuance or treasury shares or
a combination of the foregoing. Upon the payment of any Option Price by the
transfer to the Corporation of Common Shares or upon satisfaction of any
withholding amount by means of transfer or relinquishment of Common Shares,
there shall be deemed to have been issued or transferred under this Plan only
the net number of Common Shares actually issued or transferred by the
Corporation.
(b) Notwithstanding anything in this Section 3, or elsewhere in this Plan,
to the contrary, the aggregate number of Common Shares actually issued or
transferred by the Corporation upon the exercise of Incentive Stock Options
shall not exceed 6,265,313 shares. Further, no Participant shall be granted
Option Rights for more than 200,000 Common Shares during any calendar year,
subject to adjustments as provided in Section 11 of this Plan.
(c) Upon payment in cash of the benefit provided by any award granted under
this Plan, any shares that were covered by that award shall again be available
for issue or transfer hereunder.
(d) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive more than 200,000
Appreciation Rights, subject to adjustments as provided in Section 11 of this
Plan.
(e) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive more than 200,000
Restricted Shares or 200,000 Deferred Shares, subject to adjustments as provided
in Section 11 of this Plan.
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(f) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive an award of Performance
Shares or Performance Units having an aggregate maximum value as of their
respective Dates of Grant in excess of $3,000,000.
4. OPTION RIGHTS. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
options to purchase Common Shares. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:
(a) Each grant shall specify the number of Common Shares to which it
pertains subject to the limitations set forth in Section 3 of this Plan.
(b) Each grant shall specify an Option Price per share, which may be
equal to or more or less than (but not less than 85 percent of) the Market
Value per Share on the Date of Grant, except that the Option Price per
share for any Incentive Stock Option shall not be less than 100 percent of
the Market Value per Share on the Date of Grant.
(c) Each grant shall specify whether the Option Price shall be payable
(i) in cash or by check acceptable to the Corporation, (ii) by the actual
or constructive transfer to the Corporation of nonforfeitable, unrestricted
Common Shares owned by the Optionee (or other consideration authorized
pursuant to subsection (d) below) having a value at the time of exercise
equal to the total Option Price, or (iii) by a combination of such methods
of payment.
(d) The Board may determine, at or after the Date of Grant, that
payment of the Option Price of any option (other than an Incentive Stock
Option) may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are forfeitable or subject to
restrictions on transfer, Deferred Shares, Performance Shares (based, in
each case, on the Market Value per Share on the date of exercise), other
Option Rights (based on the Spread on the date of exercise) or Performance
Units. Unless otherwise determined by the Board at or after the Date of
Grant, whenever any Option Price is paid in whole or in part by means of
any of the forms of consideration specified in this paragraph, the Common
Shares received upon the exercise of the Option Rights shall be subject to
such risks of forfeiture or restrictions on transfer as may correspond to
any that apply to the consideration surrendered, but only to the extent of
(i) the number of shares or Performance Shares, (ii) the Spread of any
unexercisable portion of Option Rights, or (iii) the stated value of
Performance Units surrendered.
(e) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker on a date satisfactory
to the Corporation of some or all of the shares to which such exercise
relates.
(f) Any grant may, at or after the Date of Grant, provide for the
automatic grant of Reload Option Rights to an Optionee upon the exercise of
Option Rights (including Reload Option Rights) using Common Shares or other
consideration specified in paragraph (d) above. Reload Option Rights shall
cover up to the number of Common Shares, Deferred Shares, Option Rights or
Performance Shares (or the number of Common Shares having a value equal to
the value of any Performance Units) surrendered to the Corporation upon any
such exercise in payment of the Option Price or to meet any withholding
obligations. Reload Options may have an Option Price that is no less than
that which represents the same percentage of the Market Value per Share at
the time of exercise of the Option Rights that the per share Option Price
represented of the Market Value per Share at the time the Option Rights
being exercised were granted and shall be on such other terms as may be
specified by the Directors, which may be the same as or different from
those of the original Option Rights.
(g) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain
unexercised.
(h) Each grant shall specify the period or periods of continuous
service by the Optionee with the Corporation or any Subsidiary which is
necessary before the Option Rights or installments thereof will
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become exercisable and may provide for the earlier exercise of such Option
Rights in the event of a Change in Control or other similar transaction or
event.
(i) Any grant of Option Rights may specify Management Objectives that
must be achieved as a condition to the exercise of such rights.
(j) Option Rights granted under this Plan may be (i) options,
including, without limitation, Incentive Stock Options, that are intended
to qualify under particular provisions of the Code, (ii) options that are
not intended so to qualify, or (iii) combinations of the foregoing.
(k) The Board may, at or after the Date of Grant of any Option Rights
(other than Incentive Stock Options), provide for the payment of dividend
equivalents to the Optionee on either a current or deferred or contingent
basis or may provide that such equivalents shall be credited against the
Option Price.
(l) The exercise of an Option Right shall result in the cancellation
on a share-for-share basis of any related Appreciation Right authorized
under Section 5 of this Plan.
(m) No Option Right shall be exercisable more than 10 years from the
Date of Grant.
(n) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Corporation by an officer and delivered to the
Optionee and containing such terms and provisions, consistent with this
Plan, as the Board may approve.
5. APPRECIATION RIGHTS. The Board may also authorize the granting to any
Optionee of Appreciation Rights in respect of Option Rights granted hereunder at
any time prior to the exercise or termination of such related Option Rights;
provided, however, that an Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock
Option. An Appreciation Right shall be a right of the Optionee, exercisable by
surrender of the related Option Right, to receive from the Corporation an amount
determined by the Board, which shall be expressed as a percentage of the Spread
(not exceeding 100 percent) at the time of exercise. Each such grant may utilize
any or all of the authorizations, and shall be subject to all of the
requirements, contained in the following provisions:
(a) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Corporation in cash, in Common Shares
or in any combination thereof and may either grant to the Optionee or
retain in the Board the right to elect among those alternatives.
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Board at the
Date of Grant.
(c) Any grant may specify waiting periods before exercise and
permissible exercise dates or periods and shall provide that no
Appreciation Right may be exercised except at a time when the related
Option Right is also exercisable and at a time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right may be
exercised only in the event of a Change in Control or other similar
transaction or event.
(e) Each grant of Appreciation Rights shall be evidenced by a
notification executed on behalf of the Corporation by an officer and
delivered to and accepted by the Optionee, which notification shall
describe such Appreciation Rights, identify the related Option Rights,
state that such Appreciation Rights are subject to all the terms and
conditions of this Plan, and contain such other terms and provisions,
consistent with this Plan, as the Board may approve.
(f) Any grant of Appreciation Rights may specify Management Objectives
that must be achieved as a condition of the exercise of such rights.
6. RESTRICTED SHARES. The Board may also authorize the grant or sale to
Participants of Restricted Shares. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
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(a) Each such grant or sale shall constitute an immediate transfer of
the ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture
and restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the Restricted Shares
covered by such grant or sale shall be subject, except (if the Board shall
so determine) in the event of a Change in Control or other similar
transaction or event, for a period of not less than 3 years to be
determined by the Board at the Date of Grant, to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code.
(d) Each such grant or sale shall provide that during the period for
which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares shall be prohibited or restricted
in the manner and to the extent prescribed by the Board at the Date of
Grant (which restrictions may include, without limitation, rights of
repurchase or first refusal in the Corporation or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the
hands of any transferee).
(e) Any grant of Restricted Shares may specify Management Objectives
which, if achieved, will result in termination or early termination of the
restrictions applicable to such shares and each grant may specify in
respect of such specified Management Objectives, a minimum acceptable level
of achievement and shall set forth a formula for determining the number of
Restricted Shares on which restrictions will terminate if performance is at
or above the minimum level, but falls short of full achievement of the
specified Management Objectives.
(f) Any such grant or sale of Restricted Shares may require that any
or all dividends or other distributions paid thereon during the period of
such restrictions be automatically deferred and reinvested in additional
Restricted Shares, which may be subject to the same restrictions as the
underlying award.
(g) Each grant or sale of Restricted Shares shall be evidenced by an
agreement executed on behalf of the Corporation by any officer and
delivered to and accepted by the Participant and shall contain such terms
and provisions, consistent with this Plan, as the Board may approve. Unless
otherwise directed by the Board, all certificates representing Restricted
Shares shall be held in custody by the Corporation until all restrictions
thereon shall have lapsed, together with a stock power executed by the
Participant in whose name such certificates are registered, endorsed in
blank and covering such Shares.
7. DEFERRED SHARES. The Board may also authorize the granting or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or all
of the authorizations, and shall be subject to all of the requirements contained
in the following provisions:
(a) Each such grant or sale shall constitute the agreement by the
Corporation to deliver Common Shares to the Participant in the future in
consideration of the performance of services, but subject to the
fulfillment of such conditions during the Deferral Period as the Board may
specify.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall be subject, except (if the Board
shall so determine) in the event of a Change in Control or other similar
transaction or event, to a Deferral Period of not less than 3 years, as
determined by the Board at the Date of Grant.
(d) During the Deferral Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of
ownership in the Deferred Shares and shall have no right to vote them, but
the Board may, at or after the Date of Grant, authorize the payment of
dividend equivalents on such Shares on either a current or deferred or
contingent basis, either in cash or in additional Common Shares.
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(e) Each grant or sale of Deferred Shares shall be evidenced by an
agreement executed on behalf of the Corporation by any officer and
delivered to and accepted by the Participant and shall contain such terms
and provisions, consistent with this Plan, as the Board may approve.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Board may also authorize
the granting of Performance Shares and Performance Units that will become
payable to a Participant upon achievement of specified Management Objectives.
Each such grant may utilize any or all of the authorizations, and shall be
subject to all of the requirements, contained in the following provisions:
(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment shall be made in the case of a Covered
Employee.
(b) The Performance Period with respect to each Performance Share or
Performance Unit shall be such period of time (not less than 1 year, except
in the event of a Change in Control or other similar transaction or event,
if the Board shall so determine) commencing with the Date of Grant (as
shall be determined by the Board at the time of grant).
(c) Any grant of Performance Shares or Performance Units shall specify
Management Objectives which, if achieved, will result in payment or early
payment of the award, and each grant may specify in respect of such
specified Management Objectives a minimum acceptable level of achievement
and shall set forth a formula for determining the number of Performance
Shares or Performance Units that will be earned if performance is at or
above the minimum level, but falls short of full achievement of the
specified Management Objectives. The grant of Performance Shares or
Performance Units shall specify that, before the Performance Shares or
Performance Units shall be earned and paid, the Board must certify that the
Management Objectives have been satisfied.
(d) Each grant shall specify a minimum acceptable level of achievement
in respect of the specified Management Objectives below which no payment
will be made and shall set forth a formula for determining the amount of
payment to be made if performance is at or above such minimum but short of
full achievement of the Management Objectives.
(e) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units which have been earned. Any grant
may specify that the amount payable with respect thereto may be paid by the
Corporation in cash, in Common Shares or in any combination thereof and may
either grant to the Participant or retain in the Board the right to elect
among those alternatives.
(f) Any grant of Performance Shares may specify that the amount
payable with respect thereto may not exceed a maximum specified by the
Board at the Date of Grant. Any grant of Performance Units may specify that
the amount payable or the number of Common Shares issued with respect
thereto may not exceed maximums specified by the Board at the Date of
Grant.
(g) The Board may, at or after the Date of Grant of Performance
Shares, provide for the payment of dividend equivalents to the holder
thereof on either a current or deferred or contingent basis, either in cash
or in additional Common Shares.
(h) Each grant of Performance Shares or Performance Units shall be
evidenced by a notification executed on behalf of the Corporation by any
officer and delivered to and accepted by the Participant, which
notification shall state that such Performance Shares or Performance Units
are subject to all the terms and conditions of this Plan, and contain such
other terms and provisions, consistent with this Plan, as the Board may
approve.
9. AWARDS TO NON-EMPLOYEE DIRECTORS. The Board may, from time to time and
upon such terms and conditions as it may determine, authorize the granting to
Non-Employee Directors of options to purchase Common Shares and may also
authorize the grant or sale of Restricted Shares to Non-Employee Directors.
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(a) Each grant of Option Rights awarded pursuant to this Section 9
shall be evidenced by an agreement in such form as shall be approved by the
Board, and shall be subject to the following additional terms and
conditions:
(i) Each grant shall specify the number of Common Shares to which
it pertains subject to the limitations set forth in Section 3 of this
plan.
(ii) Each grant shall specify an Option Price per share, which may
be equal to or more or less than (but not less than 85 percent of) the
Market Value per Share on the Date of Grant.
(iii) Each such Option Right shall become exercisable to the extent
of one-fourth of the number of shares covered thereby 1 year after the
Date of Grant and to the extent of an additional one-fourth of such
shares after each of the next 3 successive years thereafter. Such option
rights shall become exercisable in full immediately in the event of a
Change in Control. Each such Option Right granted under the Plan shall
expire 5 years from the Date of Grant and shall be subject to earlier
termination as hereinafter provided.
(iv) In the event of the termination of service on the Board by the
holder of any such Option Rights, other than by reason of disability or
death as set forth in paragraph (d) hereof, the then outstanding Option
Rights of such holder may be exercised only to the extent that they were
exercisable on the date of such termination and shall expire 90 days
after such termination, or on their stated expiration date, whichever
occurs first.
(v) In the event of the death or disability of the holder of any
such Option Rights, each of the then outstanding Option Rights of such
holder may be exercised at any time within one year after such death or
disability, but in no event after the expiration date of the term of
such Option Rights.
(vi) If a Non-Employee Director subsequently becomes an employee of
the Corporation or a Subsidiary while remaining a member of the Board,
any Option Rights held under the Plan by such individual at the time of
such commencement of employment shall not be affected thereby.
(vii) Option Rights may be exercised by a Non-Employee Director
only upon payment to the Corporation in full of the Option Price of the
Common Shares to be delivered. Such payment shall be made in cash or in
Common Shares previously owned by the Optionee for more than six months,
or in a combination of cash and such Common Shares.
(viii) Common Shares acquired upon the exercise of these Option
Rights may not be transferred for 1 year except in the case of the
Director's death, disability or other termination of service as a
Director.
(b) Each grant or sale of Restricted Shares pursuant to this Section 9
shall be upon terms and conditions consistent with Section 6 of this Plan.
10. TRANSFERABILITY. (a) Except as otherwise determined by the Board, no
Option Right, Appreciation Right or other derivative security granted under the
Plan shall be transferable by an Optionee other than by will or the laws of
descent and distribution, except (in the case of a Participant who is not a
Director or officer of the Corporation) to a fully revocable trust of which the
Optionee is treated as the owner for federal income tax purposes. Except as
otherwise determined by the Board, Option Rights and Appreciation Rights shall
be exercisable during the Optionee's lifetime only by him or her or by his or
her guardian or legal representative. Notwithstanding the foregoing, the Board
in its sole discretion, may provide for transferability of particular awards
under this Plan so long as such provisions will not disqualify the exemption for
other awards under Rule 16b-3.
(b) The Board may specify at the Date of Grant that part or all of the
Common Shares that are (i) to be issued or transferred by the Corporation upon
the exercise of Option Rights or Appreciation Rights, upon the termination of
the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Shares or Performance Units or (ii) no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, shall be subject to further restrictions on transfer.
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11. ADJUSTMENTS. The Board may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Deferred Shares, and Performance Shares granted hereunder, in the prices
per share applicable to such Option Rights and Appreciation Rights and in the
kind of shares covered thereby, as the Board, in its sole discretion, exercised
in good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants or Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Corporation, or
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event, the Board, in its
discretion, may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Board may also make or provide for such
adjustments in the numbers of shares specified in Section 3 of this Plan and in
the number of Option Rights to be granted automatically pursuant to Section 9 of
this Plan as the Board in its sole discretion, exercised in good faith, may
determine is appropriate to reflect any transaction or event described in this
Section 11.
12. CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control"
shall mean if at any time any of the following events shall have occurred:
(a) The Corporation is merged or consolidated or reorganized into or
with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Shares immediately prior to such
transaction;
(b) The Corporation sells or otherwise transfers all or substantially
all of its assets to any other corporation or other legal person, less than
a majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such sale or transfer is
held in the aggregate by the holders of Voting Shares immediately prior to
such sale or transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the Voting Shares;
(d) The Corporation files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing
in response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of the Corporation has or
may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or
(e) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Directors of the
Corporation cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Corporation's
shareholders, of each Director of the Corporation first elected during such
period was approved by a vote of at least two-thirds of the Directors of
the Corporation then still in office who were Directors of the Corporation
at the beginning of any such period.
(f) Notwithstanding the foregoing provisions of Section 12(c) and (d)
above, a "Change in Control" shall not be deemed to have occurred for
purposes of this Plan (i) solely because (A) the Corporation, (B) a
Subsidiary or (C) any Corporation-sponsored employee stock ownership plan
or other employee benefit plan of the Corporation, either files or becomes
obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial
A-9
<PAGE> 39
ownership by it of shares of Voting Shares, whether in excess of 20% or
otherwise, or because the Corporation reports that a change of control of
the Corporation has or may have occurred or will or may occur in the future
by reason of such beneficial ownership or (ii) solely because of a change
in control of any Subsidiary.
(g) Notwithstanding the foregoing provisions of this Section 12, if
prior to any event described in paragraphs (a), (b), (c) or (d) of this
Section 12 instituted by any person who is not an officer or Director of
the Corporation, or prior to any disclosed proposal instituted by any
person who is not an officer or Director of the Corporation which could
lead to any such event, management proposes any restructuring of the
Corporation which ultimately leads to an event described in paragraphs (a),
(b), (c) or (d) of this Section 12 pursuant to such management proposal,
then a "Change in Control" shall not be deemed to have occurred for
purposes of this Plan.
13. FRACTIONAL SHARES. The Corporation shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement of fractions in cash.
14. WITHHOLDING TAXES. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes
required to be withheld, which arrangements (in the discretion of the Board) may
include relinquishment of a portion of such benefit. The Corporation and a
Participant or such other person may also make similar arrangements with respect
to the payment of any taxes with respect to which withholding is not required.
15. PARTICIPATION BY EMPLOYEES OF DESIGNATED SUBSIDIARIES. As a condition
to the effectiveness of any grant or award to be made hereunder to a Participant
who is an employee of a Designated Subsidiary, whether or not such Participant
is also employed by the Corporation or another Subsidiary, the Board may require
such Designated Subsidiary to agree to transfer to such employee (when, as and
if provided for under this Plan and any applicable agreement entered into with
any such employee pursuant to this Plan) the Common Shares that would otherwise
be delivered by the Corporation, upon receipt by such Designated Subsidiary of
any consideration then otherwise payable by such Participant to the Corporation.
Any such award shall be evidenced by an agreement between the Participant and
the Designated Subsidiary, in lieu of the Corporation, on terms consistent with
this Plan and approved by the Board and such Designated Subsidiary. All such
Common Shares so delivered by or to a Designated Subsidiary shall be treated as
if they had been delivered by or to the Corporation for purposes of Section 3 of
this Plan, and all references to the Corporation in this Plan shall be deemed to
refer to such Designated Subsidiary, except for purposes of the definition of
"Board" and except in other cases where the context otherwise requires.
16. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Board may provide for such special
terms for awards to Participants who are foreign nationals or who are employed
by the Corporation or any Subsidiary outside of the United States of America as
the Board may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom. Moreover, the Board may approve such
supplements to or amendments, restatements or alternative versions of this Plan
as it may consider necessary or appropriate for such purposes, without thereby
affecting the terms of this Plan as in effect for any other purpose, and the
Secretary or other appropriate officer of the Corporation may certify any such
document as having been approved and adopted in the same manner as this Plan. No
such special terms, supplements, amendments or restatements, however, shall
include any provisions that are inconsistent with the terms of this Plan as then
in effect unless this Plan could have been amended to eliminate such
inconsistency without further approval by the shareholders of the Corporation.
17. ADMINISTRATION OF THE PLAN. (a) This Plan shall be administered by the
Board, which may from time to time delegate all or any part of its authority
under this Plan to a committee of the Board (or subcommittee thereof),
consisting of not less than three Non-Employee Directors appointed by the Board
of Directors, each of whom shall be a "Non-Employee Director" within the meaning
of Rule 16b-3 and an
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<PAGE> 40
"outside director" within the meaning of Section 162(m) of the Code. A majority
of the committee (or subcommittee thereof) shall constitute a quorum, and the
action of the members of the committee (or subcommittee thereof) present at any
meeting at which a quorum is present, or acts unanimously approved in writing,
shall be the acts of the committee (or subcommittee thereof).
(b) The interpretation and construction by the Board of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares,
Performance Shares or Performance Units and any determination by the Board
pursuant to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. No member of the Board shall be liable
for any such action or determination made in good faith.
18. AMENDMENTS, ETC. (a) The Board may at any time and from time to time
amend the Plan in whole or in part; provided, however, that any amendment which
must be approved by the shareholders of the Corporation in order to comply with
applicable law or the rules of any national securities exchange upon which the
Common Shares are traded or quoted shall not be effective unless and until such
approval has been obtained. Presentation of the Plan or any amendment thereof
for shareholder approval shall not be construed to limit the Corporation's
authority to offer similar or dissimilar benefits in plans that do not require
shareholder approval.
(b) The Board also may permit Participants to elect to defer the issuance
of Common Shares or the settlement of awards in cash under the Plan pursuant to
such rules, procedures or programs as it may establish for purposes of this
Plan. The Board also may provide that deferred settlements include the payment
or crediting of dividend equivalents or interest on the deferral amounts.
(c) The Board may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the Participant of
his or her right to receive a cash bonus or other compensation otherwise payable
by the Corporation or a Subsidiary to the Participant.
(d) In case of termination of employment by reason of death, disability or
normal or early retirement, or in the case of hardship or other special
circumstances, of a Participant who holds an Option Right or Appreciation Right
not immediately exercisable in full, or any Restricted Shares as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, or any Deferred Shares as to which the Deferral Period has not been
completed, or any Performance Shares or Performance Units which have not been
fully earned, or who holds Common Shares subject to any transfer restriction
imposed pursuant to Section 10(b) of this Plan, the Board may, in its sole
discretion, accelerate the time at which such Option Right or Appreciation Right
may be exercised or the time at which such substantial risk of forfeiture or
prohibition or restriction on transfer will lapse or the time when such Deferral
Period will end or the time at which such Performance Shares or Performance
Units will be deemed to have been fully earned or the time when such transfer
restriction will terminate or may waive any other limitation or requirement
under any such award.
(e) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Corporation or any
Subsidiary, nor shall it interfere in any way with any right the Corporation or
any Subsidiary would otherwise have to terminate such Participant's employment
or other service at any time.
(f) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify as an Incentive Stock Option from qualifying
as such, that provision shall be null and void with respect to such Option
Right. Such provision, however, shall remain in effect for other Option Rights
and there shall be no further effect on any provision of this Plan.
19. TERMINATION. No grant (other than an automatic grant of Reload Option
Rights) shall be made under this Plan more than 10 years after the date on which
this Plan is first approved by the shareholders of the Corporation, but all
grants made on or prior to such date shall continue in effect thereafter subject
to the terms thereof and of this Plan.
A-11
<PAGE> 41
DIEBOLD, INCORPORATED
5995 MAYFAIR ROAD
P.O. BOX 3077, NORTH CANTON, OHIO 44720-8077
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned hereby appoints Robert W. Mahoney, Gregg A. Searle
X and Gerald F. Morris, and each of them, as Proxies, with full power
Y of substitution to represent and to vote all the Common Shares of
Diebold, Incorporated held of record by the undersigned on February
28, 1997, at the annual meeting of shareholders which will be held
on April 16, 1997 or at any adjournment thereof, as follows:
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
L. V. Bockius III, D. T. Carroll, R. L. Crandall, D. R. _________________________________
Gant, L. L. Halstead, P. B. Lassiter, J. N. Lauer, R. W. _________________________________
Mahoney, W. F. Massy, G. A. Searle 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
Campus Map
[MAP GRAPHIC]
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 State College
of Technology 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 State College of Technology
Campus. Follow the signs to the Diebold Education Center.
<PAGE> 42
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. To amend and [ ] [ ] [ ] 3. To Ratify the Appointment [ ] [ ] [ ]
Directors restate the of KPMG Peat Marwick
(see reverse) 1991 Equity LLP as Independent Audi-
and Performance tors for the year 1997.
Incentive Plan.
</TABLE>
For, except vote withheld from the following nominee(s):
_______________________________________________________
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> 43
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 16, 1997, 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, R. L. CRANDALL, D. R. GANT, L. L.
HALSTEAD, P. B. LASSITER, J. N. LAUER, R. W. MAHONEY, W. F. MASSY,
G. A. SEARLE 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 6477, CLEVELAND, OHIO 44197-9783
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
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 State College
of Technology 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 State College of Technology
Campus. Follow the signs to the Diebold Education Center.
<PAGE> 44
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. To amend and [ ] [ ] [ ] 3. To Ratify the [ ] [ ] [ ]
Directors restate the 1991 Appointment of KPMG
(see reverse) Equity and Peat Marwick LLP as
Performance Independent Auditors
Incentive Plan. for the year 1997.
</TABLE>
For, except vote withheld from the following nominee(s):
________________________________________________________
SIGNATURE(S) ______________________________________________ DATE ____________
NOTE: Please sign exactly as name appears hereon.
- --------------------------------------------------------------------------------
DETACH CARD
