Ann: MEETING: DIL: Diligent Board Member Services

• Release Date: 09/05/13 12:39
• Summary: MEETING: DIL: Diligent Board Member Services Preliminary Proxy Statement
• Price Sensitive: No
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DIL
09/05/2013 10:39
MEETING

REL: 1039 HRS Diligent Board Member Services INC (NS)

MEETING: DIL: Diligent Board Member Services Preliminary Proxy Statement

Diligent Board Member Services, Inc. (Diligent)

Company's Filing of Preliminary Proxy Statement (see attached Preliminary
Proxy Statement including the Independent Appraisal Report)

Today, May 9, 2013 the Company filed its preliminary proxy statement(1)  with
the U.S. Securities and Exchange Commission (the "SEC") in connection with
its 2013 Annual Meeting of Shareholders scheduled for 4 June 2013, New
Zealand local time (the "2013 AGM"). The proxy statement was filed with the
SEC in preliminary form in accordance with the requirements of the Securities
Exchange Act of 1934 ("Exchange Act"), which requires the Company to submit
proxy statements for non-routine matters to the SEC at least 10 calendar days
prior to the date definitive copies of such material are first sent or given
to security holders. The preliminary proxy statement had been provided to NZX
for its review and approval as required by the Listing Rules of the NZSX.
NZX has not approved the preliminary proxy statement filed with the SEC and
NZX's review may result in changes being made before the document is
finalized and distributed to the Company's shareholders.

Additional Information on the CEO Substitute Remuneration Proposal

At the 2013 AGM, the Company will seek shareholder approval for the
substitute cash and equity incentive compensation package to be issued to
Alessandro Sodi, the Company's Chief Executive Officer, in substitution for
certain equity awards held by Mr. Sodi that will be cancelled (the "CEO
Substitute Remuneration").  As described in greater detail in the preliminary
proxy statement, the CEO Substitute Remuneration consists of options to
purchase 1,600,000 shares of our common stock  at an exercise price equal to
the U.S. dollar equivalent of the closing price of our common stock(2) on the
NZSX on the last trading day immediately prior to the grant (the "Grant Date
Price") and the issuance of up to 2,500,000 shares of common stock subject to
performance and time vesting conditions.  In addition, the remuneration
package includes a cash performance award representing the amount by which
the Grant Date Price of 1,600,000 shares of our common stock exceeds the U.S.
$0.14 strike price of certain options currently held by Mr. Sodi which will
be cancelled, if shareholders approve the CEO Substitute Remuneration. If
the CEO Substitute Remuneration is approved, options to purchase 1,600,000
shares of our common stock with an exercise price of U.S. $ 0.14 and options
to purchase 2,500,000 shares of our common stock with an exercise price of
U.S. $0.82 currently held by Mr. Sodi will be cancelled.  The grant of the
new incentive awards and cancellation of the affected equity awards will take
place upon shareholder approval of the terms of the substitute incentive
compensation package and a new incentive plan, in accordance with the Listing
Rules of the NZSX and applicable U.S. requirements.  The preliminary proxy
statement contains further detail regarding the relevant proposals.

On 15 April 2013, the Company announced the terms of the CEO Substitute
Remuneration as well as estimates of the additional compensation expense of
the replacement awards, based on the then-current trading price of the
Company's common stock.  In the preliminary proxy statement, the Company has
updated its original disclosures based on the closing trading price of the
Company's common stock on the NZSX on 3 May 2013, NZ $6.95 per share.  Based
on this trading price, if the cancellations and replacement awards are
completed as intended, the Company estimates that the cumulative amount of
additional compensation expense would be approximately U.S. $6.7 million, for
a cumulative EPS impact of approximately U.S. $0.08 per share, or U.S. $0.05
per share on a fully diluted basis, based on the weighted average basic and
fully diluted shares outstanding at March 31, 2013.  The cumulative expense
will be recognized over the duration of the five year service period for the
awards, based on the value of the awards vesting in each year. The actual
amount of compensation expense will be determined with reference to actual
Grant Date Price, and may differ materially from the amounts set forth above.

In connection with filing the preliminary proxy statement, the Company has
reviewed the after-tax EPS impact of the CEO Substitute Remuneration,
assuming that such remuneration qualifies for the performance-based
compensation exemption to the deduction limitation under Section 162(m) of
the U.S. Internal Revenue Code, which the CEO Substitute Remuneration has
been designed to comply with, and is otherwise deductible by the Company.
Assuming that all incentive compensation is earned, and that the Company's
common shares were to trade at NZ $6.95 over the applicable service period
for the awards, the Company estimates that the cumulative after tax expense
will be approximately U.S. $4.0 million, for a cumulative EPS impact of
approximately U.S. $0.05 per share, or U.S. $0.03 per share on a fully
diluted basis, based on the weighted average basic and fully diluted shares
outstanding at March 31, 2013. The actual net of tax EPS impact of the CEO
Substitute Remuneration will be determined with reference to the actual Grant
Date Price, and the Company's tax position and tax rates at the time such
expense is recognized, and may differ materially from the estimated amounts
set forth above.

In addition, the Company estimates that the total cash tax savings in
connection with the CEO Substitute Remuneration, as compared to the cancelled
stock option awards, will be approximately U.S. $9.0 to $13.5 million over
the five year performance period (assuming that the Company's common share
price remains at least at NZ $6.95 per share over the five year service
period or alternatively grows by up to 15% per year, yielding a higher
compensation expense and a greater cash tax savings due to the amount of the
anticipated deduction).  Such estimate is based on the assumptions that the
Grant Date Price is equal to NZ $6.95, that all incentive compensation is
earned and is fully deductible to the Company, that the related options are
not exercised by Mr. Sodi prior to 2018.  The actual cash tax savings
realized by the Company, if any, may differ materially from the estimated
amounts set forth above.  If the Grant Date Price is equal to NZ $6.95, the
amount of the performance cash award included in the CEO Substitute
Remuneration will be approximately US $9.3 million.  The performance cash
award is subject to a performance condition and if earned, will become
payable in equal instalments in 2014, 2015 and 2016, subject to acceleration
in certain circumstances, as described in the preliminary proxy statement.

Investor inquiries:
Sonya Joyce
Phone: +64 4 894 6912
Media inquiries:
Geoff Senescall
Phone: +64 21 481 234

(1) A proxy statement is a disclosure document filed under U.S. securities
laws. It is filed with the U.S. Securities and Exchange Commission in
connection with the company's Annual Meeting and the request for shareholder
votes on the shareholder resolutions presented in the disclosure document.

(2) For clarification, the term "common stock" is the equivalent U.S.
terminology for the term "ordinary shares" used in New Zealand.

Forward Looking Statements

This document contains forward-looking statements within the meaning of the
safe harbor provisions of the Securities Litigation Reform Act of 1995. Terms
such as "expect," "believe," "continue," and "intend," as well as similar
comments, are forward-looking in nature. Important factors that could cause
actual results to differ materially from Diligent's expectations include: the
actual trading price of our common stock at the time of our 2013 AGM, which
will impact the accounting expense and anticipated tax savings relating to
the CEO Substitute Remuneration, whether the CEO Substitute Remuneration
qualifies for the performance based compensation exemption to the deduction
limitation under  Section 162(m) of the U.S. Internal Revenue Code, the
Company's U.S. tax position and tax rates, whether such incentive
compensation is in fact earned by Mr. Sodi, and the timing of any exercise of
awards by Mr. Sodi.  Please refer to Diligent's Annual Report on Form 10-K
for the fiscal year ended 31 December 2012 filed with the Securities and
Exchange Commission and NZX for further information regarding risk factors
which may impact on our forward-looking statements.
End CA:00236026 For:DIL    Type:MEETING    Time:2013-05-09 10:39:11