JUNE 2, 2010, 4:53 P.M. ET.

Diebold to Pay $25 Million Penalty

By MELISSA KORN

Automated teller machine maker Diebold Inc. agreed to pay $25 million to settle Securities and Exchange Commission charges alleging fraudulent accounting, and the company's former chief executive agreed to return some of his bonus awards.

The return of the bonus money marked an unusual case of a "clawback" under the 2002 Sarbanes-Oxley Act, which sought to deprive executives of certain compensation they received when their company misled investors.

Walden O'Dell, Diebold's chief executive from 1999 to 2005, agreed to reimburse the company $470,016 in cash bonuses, 30,000 shares of Diebold stock and options for 85,000 shares. Mr. O'Dell wasn't accused of involvement in the alleged accounting fraud.

It is only the second time the SEC has sought clawback from an executive who wasn't charged with personal involvement in wrongdoing, and the first such case to be settled. SEC officials have said the agency is stepping up efforts to seek punishment against individuals, not just companies.

The SEC brought civil charges against three current and former Diebold executives accused of involvement in the alleged accounting fraud. That case is continuing.

Diebold disclosed the SEC probe in March 2009. The company said in May 2009 that it had reached an agreement in principle with SEC staff, and booked a charge related to the $25 million settlement in the first quarter of 2009.

In the final settlement announced Wednesday, Diebold neither admitted nor denied the charges.

According to the SEC's complaint, Diebold manipulated its earnings from "at least" 2002 through 2007 to meet financial performance forecasts, and made material misstatements and omissions in dozens of SEC filings and press releases. The SEC alleged Diebold's actions misstated the company's reported pretax earnings by at least $127 million.

Mike Jacobsen, a Diebold spokesman, said the specific charges laid out by the SEC predate the company's existing leadership. "We are comfortable with our financial processes and our current management team in place," he said.

Diebold in early 2008 said it would restate more than four years of results and changed its revenue recognition policy after discussions with the SEC.

Diebold shares briefly fell after the SEC announcement but recovered to $29.08, up 88 cents or 3.1%, in 4 p.m. composite trading on the New York Stock Exchange.

Gil Lura, an analyst with Wedbush Morgan Securities, said some of the new details in the SEC complaint are "embarrassing" but the general picture of the accounting problems was already known from the restatements.

—Kara Scannell contributed to this article.
Write to Melissa Korn at melissa.korn@dowjones.com

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