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EXHIBIT 10.4
PERFORMANCE PERIOD 2003-2005
[DIEBOLD LOGO]
PERFORMANCE SHARE AGREEMENT
WHEREAS, _____________ (hereinafter called the "Grantee") is a
key
associate of Diebold, Incorporated
(hereinafter called the "Corporation"); and
WHEREAS, the Board of Directors (the "Board"), pursuant to the
1991
Amended and Restated Equity and Performance
Incentive Plan of the Corporation
(the "1991 Plan"), which is attached as
Exhibit A to this Agreement encourages
executives of the Corporation to achieve
the Management Objectives established
by the Compensation and Organization
Committee of the Board of Directors (the
"Committee").
WHEREAS, the Committee adopted the Management Objectives for
the
Performance Period (as defined below) on
February 5, 2003.
NOW, THEREFORE, subject to the terms and conditions of the 1991
Plan
and the terms and conditions described
below, the Corporation hereby grants to
the Grantee as of February 5, 2003,
___________ Performance Shares, together
with the opportunity to earn up to an
additional 70% of such number of
Performance Shares for superior performance
as described herein.
1.
Definitions.
As used in this Agreement:
(a) A "Change in Control" shall be deemed to have occurred if any
of
the following events shall occur:
(i) The acquisition by any individual, entity or group (within
the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act
of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial
ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange
Act) of
15% of more of either: (A) the then-outstanding shares of
common
stock of
the Corporation (the "Corporation Common Stock") or (B) the
combined
voting power of the then-outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors
("Voting
Stock"); provided, however, that for purposes of this
subsection
(i), the
following acquisition shall
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not
constitute a Change in Control (1) any acquisition directly from
the
Corporation, (2) any acquisition by the Corporation, (3) any
acquisition
by any
employee benefit plan (or related trust) sponsored or maintained
by
the
Corporation or any Subsidiary of the Corporation, or (4) any
acquisition by any Person pursuant to a transaction which complies
with
clauses
(A), (B) and (C) of subsection (iii) of this Section 1(b); or
(ii) Individuals who, as to the date hereof, constitute the
Board
cease for any reason (other than death or disability) to
constitute
at least a
majority of the Board; provided, however, that any individual
becoming a
director subsequent to the date hereof whose election, or
nomination
for election by the Corporation's shareholders, was approved by
a vote of
at least a majority of the directors then comprising the
Incumbent
Board (either by a specific vote or by approval of the proxy
statement
of the Corporation in which such person is named as a nominee
for
director, without objection to such nomination) shall be considered
as
though
such individual were a member of the Incumbent Board, but
excluding
for this
purpose, any such individual whose initial assumption of office
occurs as
a result of an actual or threatened election contest (within
the
meaning of
Rule 14a-11 of the Exchange Act) with respect to the election
or removal
of directors or other actual or threatened solicitation of
proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of
the assets
of the Corporation (a "Business Combination"), in each case,
unless,
following such Business Combination, (A) all or substantially
all
of the
individuals and entities who were the beneficial owners,
respectively, of the Corporation Common Stock and Voting Stock
immediately
prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then-outstanding
shares of
common
stock and the combined voting power of the then-outstanding
voting
securities
entitled to vote generally in the election of directors, as the
case may
be, of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of
such
transaction owns the Corporation or all or substantially all of
the
Corporation's assets either directly or through one or more
subsidiaries)
in
substantially the same proportions relative to each other as
their
ownership,
immediately prior to such Business Combination, of the
Corporation Common Stock and Voting Stock of the Corporation , as
the case
may be,
(B) no Person (excluding any entity resulting from such
Business
Combination or any
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employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or such entity resulting from such Business
Combination)
beneficially owns, directly or indirectly, 15% or more of,
respectively,
the
then-outstanding shares of common stock of the entity resulting
from
such
Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except to
the
extent
that such ownership existed prior to the Business Combination
and
(C) at
least a majority of the members of the board of directors of
the
corporation resulting from such Business Combination were members
of the
Incumbent
Board at the time of the execution of the initial agreement, or
of the
action of the Board providing for such Business Combination; or
(iv) Approval by the shareholders of the Corporation of a
complete
liquidation or dissolution of the Corporation.
(b) "Growth in Earnings Per Share" or "EPS" means the compound
annual growth rate (CAGR) in reported
earnings per share, excluding
extraordinary items.
(c) "Management Objectives" means the Return on Total Capital,
Growth in Earning Per Share and Relative
Total Shareholder Return goals
established by the Board for the
Corporation for the Performance Period covered
by this Agreement as described in Section 2
of this Agreement.
(d) "Performance Period" means the period commencing January 1,
2003
and ending on December 31, 2005, except
that solely with respect to the Relative
Total Shareholder Return goal, the term
Performance Period shall mean February
1, 2003 through January 31, 2006.
(e) "Relative Total Shareholder Return" or "Relative TSR" means
the
return, including reinvested dividends,
shareholders earn from investing in
Company shares, relative to the return
earned from an investment in a benchmark
peer group index comprised of the 13
companies (including the Corporation) set
forth on Exhibit B.
(f) "Return on
Total Capital" or "ROTC" means the 3-year average of
net income before extraordinary items and
special charges divided by the average
total capital employed. Any debt incurred
in connection with an acquisition
consummated within the last 6 months of the
Performance Period shall be excluded
from the calculation. Calculations shall be
based on quarterly results, using
thirteen data points.
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(g) Capitalized terms used herein without definition shall have
the
meanings assigned to them in the 1991
Plan.
2.
Management
Objectives.
The Management Objectives for the Performance Period covered by
this
Agreement are set forth on Exhibit C. The
following applies with respect to the
Management Objectives.
(a) Each Management Objective shall be evaluated separately with
the
total award determined as the sum of the
amounts determined under each of the
three separate Management Objectives.
(b) Each Management Objective shall have an equal weighting.
(c) Notwithstanding that the number of Performance Shares earned
for
achievement of the maximum level of
performance of any individual Management
Objective can amount to 200% of the number
of Performance Shares earned for
achievement of the target level of
performance, in no event shall the Grantee be
entitled to receive more than 170% of the
Performance Shares granted hereunder.
3.
Grant of
Performance Shares.
The Corporation hereby grants to the Grantee the number of
Performance Shares specified above, which
may be earned by the Grantee during
the Performance Period as set forth in
Section 4 of this Agreement.
4.
Earned
Shares.
The Performance Shares granted hereby shall be earned based on
the
level of the Corporation's results with
respect to each of the Management
Objectives established for the Performance
Period covered by this Agreement. The
number of Performance Shares earned shall
be determined based on the level of
results of the Management Objectives as
shown in Exhibit C.
In no event shall any Performance Shares be earned if results
fall
below the threshold level of results for
each Management Objective. In addition,
no additional Performance Shares shall be
earned for results in excess of the
maximum level of results for any Management
Objective. If results for a
Management Objective shall have been
attained over the threshold level, but
under the target level, or over the
threshold level and under the
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maximum level, a proportionate number of
Performance Shares shall be earned, as
determined by mathematical interpolation
and rounded up to the nearest whole
percent.
Once determined, the percentage of Performance Shares earned
for
each Management Objective shall be used to
determine the aggregate percentage
earned. The percentages earned for all of
the Management Objectives so
calculated shall be added together and
multiplied by the number of Performance
Shares granted hereby to determine the
number of Performance Shares to be paid
out to the Grantee for the Performance
Period covered by this Agreement, subject
to the limit set forth in Section 2(c) of
this Agreement. For example, results
at the target level of Return on Total
Capital would result in an earned
percentage of 25%. Results at the target
level of Growth in Earning Per Share
would result in an earned percentage of
50%. With respect to Relative TSR, if
the Company ranks 1st out of 13 peer
companies, the percentage earned would be
50%. The total percentages added together
would be 125%. Since this percentage
is less than the 170% limit, the number of
Performance Shares granted hereby
would then be multiplied by 125%. Any
fractional share resulting from the
application of the total percentage would
be rounded up to the nearest whole
share.
5.
Payment of
Awards.
Payment shall be made in the form of the Corporation's Common
Shares, cash or a combination of Common
Shares and cash, as recommended by the
Committee in its sole discretion with
approval by the Board. Final awards shall
be paid, less applicable taxes, as soon as
practicable after the receipt of
audited financial statement
