SCHEDULE 14A
(Rule 14a - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
File by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement Confidential, For use of the
Commission Only (as permitted by
Rule 14a-6(e) (2)
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
DYNAMICS RESEARCH CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules
14a-6(I)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: March 20, 1998
DYNAMICS RESEARCH CORPORATION
60 Frontage Road
Andover, Massachusetts 01810
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 28, 1998
To the Stockholders:
The Annual Meeting of the stockholders of Dynamics Research
Corporation will be held at 3:30 p.m. on Tuesday, April 28, 1998 on the
33rd Floor of The State Street Bank and Trust Building, 225 Franklin
Street, Boston, Massachusetts, for the following purposes:
1. To fix the number of directors for the ensuing year and to
elect the Class II Directors,
2. To approve an amendment to the Corporation's Articles of
Organization to increase the number of shares of authorized Common
Stock from 15,000,000 to 30,000,000 shares.
3. To consider and act upon such other matters as may properly come
before the meeting.
Notice is hereby given of an amendment to the By-Laws of the
Corporation as described in the attached Proxy Statement.
Only stockholders of record at the close of business on March 20,
1998 will be entitled to receive notice of and to vote at the meeting.
By order of the Board of Directors,
John L. Wilkinson
Clerk
March 27, 1998
__________________
IMPORTANT
All stockholders are urged to complete and mail the enclosed proxy
promptly whether or not you plan to attend the meeting in person. The
enclosed envelope requires no postage if mailed in the U.S.A. or Canada.
Stockholders attending the meeting may revoke their proxies and
personally vote on all matters which are considered. It is important
that your shares be voted.
DYNAMICS RESEARCH CORPORATION
60 Frontage Road
Andover, Massachusetts 01810
_________________
PROXY STATEMENT
_________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1998
_________________
GENERAL
The accompanying proxy is solicited by the Board of Directors of
Dynamics Research Corporation (the "Company") to be voted at the 1998
Annual Meeting of Stockholders.
Proxies in the accompanying form will be voted as specified by the
stockholders. If no specification is made, the proxy will be voted for
the election of the Class II directors unless authority to vote has
been withheld. A proxy may only be revoked by written revocation
received by the Clerk of the Company prior to the exercise thereof.
Stockholders of record at the close of business on March 20, 1998
are entitled to notice of and to vote at the Annual Meeting. There were
XXXX shares of Common Stock, $.10 par value, outstanding as of that
date, each entitled to one vote.
This proxy statement and enclosed proxy are being mailed to
stockholders on or about the date of the Notice of Annual Meeting.
The cost of solicitation of proxies will be borne by the Company.
Employees of the Company may also solicit proxies by mail, telephone or
personal interview.
Proposal 1
ELECTION OF DIRECTORS
Under Massachusetts law, the Board of Directors of the Company is
classified into three classes, as nearly equal in number as possible,
with the term of office of one class expiring each year. The enclosed
proxy will be voted to elect the persons named below, unless otherwise
instructed, as the Class II directors for terms of three years expiring
at the 2001 Annual Meeting of Stockholders or until their respective
successors are elected and qualified. If either nominee should become
unavailable, proxies will be voted for a substitute nominee designated
by management or to fix the number of directors at a lesser number,
unless instructions are given to the contrary. The current Board has no
reason to expect that the nominees will become unavailable to serve.
Year First Elected
Name Age Principal Occupation A Director
Nominees for Election as Class II Directors-
Terms Expiring in 2001
Francis J. Aguilar 65 Professor of Business
Administration, Emeritus, 1987
Harvard University
Graduate School of Business
Administration
John S. Anderegg, Jr. 74 Chairman of the Company 1955
Continuing Class I Directors - Terms Expiring in 2000
Martin V. Joyce, Jr. Vice President &
Corporate Officer, 1997
A.T. Kearney, Inc.
General James P. Mullins 69 Executive Consultant 1991
(U.S.A.F., retired)
Continuing Class III Directors - Term Expiring in 1999
Kenneth F. Kames 62 Vice President, 1997
The Gillette Company
Albert Rand 71 President and Chief Executive 1984
Officer of the Company
The principal occupation of the above nominees and continuing
directors has been that set forth above throughout the past five years
except for Mr. Joyce who served as President, New Ventures Division of
Blue Cross & Blue Shield of Massachusetts from 1991 to 1994.
Mr. Joyce and Mr. Kames became directors upon election by action of
the board.
Dr. Aguilar is also a Director of Bowater, Inc. and Burr-Brown
Corporation. Mr. Anderegg is a Director of Ivy and MacKenzie Mutual
Funds, Burr-Brown Corporation and Metritape, Inc.
Board Meetings and Committees
The Board of Directors held six meetings during 1997.
The Audit Committee consisting of Dr. Aguilar, General Mullins, and
Mr. Joyce reviews with the independent auditors the financial statements
and reports issued by the Company, reviews the Company's internal
accounting procedures, controls and programs and makes recommendations
to the Board of Directors on the engagement of the independent
auditors. The Audit Committee held two meeting during 1997.
The Compensation Committee consisting of Dr. Aguilar and General
Mullins administers the 1993 Equity Incentive Plan, including the
granting of options and other awards under that plan, reviews the
compensation policies of the Company and approves the compensation of
the officers. The Compensation Committee held one meetings during 1997.
The Company does not have a standing nominating committee.
Proposal 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED COMMON STOCK FROM 15,000,000 to 30,000,000 SHARES
On December 2, 1997, the Board of Directors voted, subject to
approval by the stockholders, to amend Article Three of the Company's
Restated Articles of Organization (the "Articles of Organization") to
increase the authorized number of shares of Common Stock, $.10 par
value, from 15,000,000 to 30,000,000 shares (the "Amendment").
On March 20, 1998, the Company had ____________ shares of Common
Stock outstanding, and ____________shares reserved for issuance upon
exercise of stock options. The Board of Directors believes that it is
desirable to have available a substantial number of authorized but
unissued shares of Common Stock which may be issued from time to time,
without further action by the stockholders, to provide for stock splits
or stock dividends, stock options and other equity incentives, to be
able to take advantage of acquisition opportunities, to meet future
capital needs, and for other general corporate purposes.
Any issuance of additional shares of Common Stock would have the
effect of reducing the percentage voting interests of previously
outstanding Common Stock. Shares of authorized but unissued Common
Stock may be issued from time to time by the Board of Directors without
further stockholder action unless such action is required by the laws of
the State of Massachusetts, under which the Company is incorporated, the
Company's Articles of Organization, or the rules of the NASDAQ National
Market System ("NASDAQ"). NASDAQ currently has a qualification
requirement, the effect of which is to require that a listed company
obtain prior stockholder approval when issuing shares of authorized but
unissued Common Stock in certain transactions in an amount greater than
20% of its then outstanding Common Stock.
In addition to the foregoing uses for authorized but unissued
stock, additional authorized but unissued shares of Common Stock might
be used in the context of a defense against or response to possible or
threatened hostile takeovers.
The holders of Common Stock do not have preemptive rights to
subscribe to shares of Common Stock or other securities issued by the
Company. The issue of additional authorized shares of Common Stock may
dilute the voting power and equity interest of present stockholders. It
is not possible to predict in advance whether the issue of additional
shares will have a dilutive effect on earnings per share as it depends
on the specific events associated with a particular transaction.
If the stockholders approve the Amendment, it will become effective
upon the filing of a Certificate of Amendment with the Secretary of
State of Massachusetts, which is expected to take place promptly after
the stockholders' meeting. The Amendment does not alter or change the
powers, preferences, or special rights of the holders of shares of
Common Stock or any other class of stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
PRINCIPAL STOCKHOLDERS
Common Stock Ownership of Certain Beneficial Owners and Management
As of March 20, 1998, the following table shows the beneficial
ownership of Common Stock of the Company by all persons or groups
known by the Company to be the beneficial owners of more that 5% of its
outstanding stock, based on filings with the Securities and Exchange
Commission, all directors, the executive officers listed in the Summary
Compensation Table and all directors and executive officers as a group:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
John S. Anderegg, Jr............. 770,909(1) 12.7
c/o Dynamics Research Corporation
60 Frontage Road
Andover, MA 01810
Albert Rand..................... 275,076(2) 5.0
c/o Dynamics Research Corporation
60 Frontage Road
Andover, MA 01810
Francis J. Aguilar ............. 25,998(3) *
Martin V. Joyce, Jr. ........... 0 *
Kenneth F. Kames................ 0 *
James P. Mullins................ 8,766(4) *
John L. Wilkinson............... 11,307(5) *
Douglas R. Potter............... 38,977(6) *
DFA Investment Dimensions
Group, Inc..................... 487,801(7) 7.8
c/o Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
All directors and executive
officers as a group (8 persons) 1,131,033(8) 18.9
________
*Less than 1% of the outstanding shares of Common Stock.
Each of the above had sole voting and investment powers except as
otherwise indicated.
(1) Includes 48,584 shares held by Mr. Anderegg as custodian for his
children, 72,353 shares held in the estate of Mrs. Anderegg, of
which Mr. Anderegg is executor, and 20,491 shares owned by one of Mr.
Anderegg's children who resides with him, as to all of which he disclaims
beneficial ownership.
(2) Includes 113,500 shares which Mr. Rand has the right to acquire
on exercise of stock options that are currently exercisable or will be
exercisable within 60 days of March 6, 1998.
(3) Includes 9,716 shares held in a pension plan of which Dr. Aguilar has
sole voting and investment powers. Includes options to purchase 6,566 shares
which are currently exercisable or will be exercisable within 60 days of
March 6, 1998.
(4) Includes options to purchase 6,566 shares which are currently
exercisible or will be exercisable within 60 days of March 6, 1998.
(5) Includes options to purchase 6,600 shares which are currently
exercisable or will be exercisable within 60 days of March 6, 1998.
(6) Includes options to purchase 37,767 shares which are currently
exercisable or will be exercisable within 60 days of March 6, 1998.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 487,801 shares
of Dynamics Research Corporation stock as of December 31, 1997, all of which
shares are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. services
as investment manager. Dimensional disclaims beneficial ownership of all
such shares. Dimensional Fund Advisors has the power to dispose of these
shares and shares the power to vote 134,454 of these shares.
(8) Includes options to purchase 170,999 shares which are exercisable
within 60 days of March 6, 1998.
COMPENSATION AND RELATED MATTERS
Compensation of Directors
Directors who are not employees of the Company receive an annual
fee of $20,000 for serving as directors. No additional compensation is paid
to those directors who serve on a committee of the Board of Directors.
The Company has a Deferred Compensation Plan under which non-
employee directors may elect to defer their directors fees. Amounts
deferred for each participant are credited to a separate account, and
interest at the lowest rate at which the Company borrowed money during
each quarter or, if there was no such borrowing, at the prime rate, is
credited to such account quarterly. The balance in a participant's
account is payable in a lump sum or in installments when the participant
ceases to be a director. Dr. Aguilar deferred his 1997 director fees.
Interest accrued for 1997 on such fees was $8,286.
The 1995 Stock Option Plan for Non-Employee Directors provides for
an annual grant to each director who is not an employee of the Company
of an option to purchase 1,000 shares of Common Stock and an initial
grant of 5,000 shares, each at an exercise price equal to fair market
value on the date of grant. All options granted under this plan become
exercisable in three equal installments on each of the first, second
and third anniversaries of the date of grant.
Executive Compensation
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the
President and Chief Executive Officer and each of the Company's other
highly compensated executive officers (the "named executives") during or
with respect to 1997, 1996, and 1995.
Annual Long Term
Compensation Compensation
Name and Other Shares All Other
Principal Annual Underlying Compensation
Position Year Salary($) Bonus($) Compensation($) Options(#) ($) (1)
Albert Rand 1997 260,000 2,375
President 1996 235,000 2,375
& C.E.O. 1995 235,000 27,500 2,250
John S.
Anderegg,Jr. 1997 195,000 2,375
Chairman 1996 195,000 2,375
1995 195,000 2,250
Douglas R.
Potter 1997 162,000 20,000 2,375
V.P.of 1996 150,000 22,000 2,250
Finance 1995 135,000 15,000 11,000 2,250
& C.F.O
John L.
Wilkinson 1997 142,000 2,126
V.P. of 1996 135,000 2,025
Human 1995 126,000 12,000 6,600 2,070
Resources
(1) Consists of employer's match for the 401 (K) plan.
Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
The following table presents the value of unexercised options held
by the named executives at fiscal year-end. John S. Anderegg, Jr. did
not hold any options during 1997.
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Options Exercised in 1997 12/31/97(#) 12/31/97($)(1)
Shares Acquired Value Exercisable/(E) Exercisable/(E)
Name on Exercise (#) Realized($) Unexercisable(U) Unexercisable(U)
Albert Rand 45,753 113,879 150,103 E 1,070,179 E
9,167 U 49,373 U
Douglas R. Potter -- -- 26,766 E 195,748 E
18,334 U 111,677 U
John L. Wilkinson 4 ,392 31,359 4,400 E 35,200 E
2,200 U 17,600 U
(1) Based on market value at 12/31/97 of $11.75 per share less
respective exercise prices.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Board of Directors administers
the Company's executive compensation program. The committee is composed
of Dr. Aguilar and General Mullins, both of whom are independent non-
employee directors and who have no "interlocking" relationships as
defined by the Securities and Exchange Commission. The Committee meets
formally and consults informally during the year. The Committee is
responsible for recommending to the Board of Directors the compensation
of all the officers of the Company and for reviewing the design and
effectiveness of executive compensation policies. All awards of stock
options and restricted stock to the Company's employees are made by the
Committee.
Compensation Philosophy and Objectives
The Company's executive compensation program consists of base
salary, potential cash bonus incentives and long-term incentives in the
form of stock options. Its objectives are four-fold:
Provide base compensation that enables the Company to attract and
retain key executives.
Provide executive officers with total direct remuneration which is
competitive with similarly sized companies for comparable performance.
Reward executives for outstanding achievements which clearly
benefit the Company.
Align the interest of the Company's executives with the long-term
interests of shareholders.
The executive compensation program provides an overall level of
compensation opportunity which the Compensation Committee believes is
competitive with other companies of comparable size and complexity.
Actual compensation will vary with annual and long-term Company
performance, as well as individual performance and longevity, and hence
may be greater or less than actual compensation at other companies. The
Committee uses its discretion to establish executive compensation at
levels which in its judgment are warranted by external or internal
factors as well as an executive's individual circumstances. In arriving
at what it considers appropriate levels and components of compensation,
the Compensation Committee utilizes industry compensation data provided
by nationally recognized compensation information sources.
Executive Compensation Program Components
The particular elements of the compensation program are discussed
more fully below:
Base Salary. The Committee maintains base salary levels for
executives that, based on its analysis of pertinent compensation data,
are competitive with other companies of comparable size and complexity.
Base salaries of executives are determined by the potential impact
of the individual on the Company and its performance, salaries paid by
other companies for comparable positions, individual performance against
goals and the overall performance of the Company.
Cash Bonuses. The Compensation Committee may approve discretionary
cash bonuses as a means of rewarding executives (and other employees)
for significant Company and individual performance. These cash awards
are not based on a specific formula; rather, they are intended to be
compensation in recognition of outstanding accomplishments that result
in clearly quantitative or qualitative benefit to the Company.
Long-Term Incentives. Long-term incentives are provided in the form
of stock options. The Committee and the Board of Directors believe
that management's ownership of a significant equity interest in the
Company aligns the long-term interests of management and shareholders
and is an important incentive and contributing factor toward building
shareholder value. Stock options, therefore, are granted at the market
value of the common stock on date of grant. The value received by the
executive from a stock option granted depends on increases in the market
price of the Company's common stock during the term of the option.
Consequently, the value of the compensation is proportionate to
increases in shareholder value. Grants of stock options are made by
the Compensation Committee in its discretion based both upon the
executive's actual contribution to the Company's current performance and
his expected contribution toward meeting the Company's long-term
financial/strategic goals.
CEO Compensation
Mr. Rand's base salary increased to $260,000 in 1997. In
determining Mr. Rand's compensation for 1997, the Committee took into
consideration the above described compensation philosophy, the Company's
financial performance, and progress toward achieving strategic goals of
growth and broadening of the Company's business. The Committee also
considered information with respect to chief executive compensation for
companies of comparable size in similar industries.
The Compensation Committee
of the Board of Directors:
Francis J. Aguilar
James P. Mullins
Performance Comparison
The following graph illustrates the return that would have been
realized (assuming reinvestment of dividends) by an investor who
invested $100 on December 28, 1991 in each of (i) the Company's Common
Stock, (ii) the NASDAQ Stock Market - Composite U.S. Index and (iii) a
Peer Group of companies as listed below:
Dynamics
Research NASDAQ Peer
Corporation Composite Group
1992........... 100 100 100
1993........... 112 115 105
1994........... 73 112 119
1995........... 225 159 178
1996........... 245 195 265
1997........... 343 240 277
Companies in Self- Determined Peer Group:
Analysis & Technology Inc. CACI International Inc.
Comarco Inc. Geodynamics Corp.
Perceptronics Inc Nichols Research Corp.
Severance Agreements
The Company has severance agreements with Messrs. Anderegg and
Rand. Under these agreements, the Company agrees to pay severance
benefits to each such executive if his employment is terminated for any
reason other than for cause (as defined in the agreements) or if the
executive terminates his employment as a result of a specified
justification, within two years following a change of control of the
Company. A change in control includes the acquisition of 20% or more of
the combined voting power of the Company's then-outstanding securities,
other changes in control of a kind required to be reported by certain
regulatory authorities, and certain changes in membership of the Board
of Directors. Under the agreements, the executive is entitled to a
severance payment equal to 299% of his average annual base salary and
bonus for the two calendar years immediately prior to a change in
control. In addition, the executive is entitled to certain other
benefits, including the acceleration of the exercisability of
outstanding stock options, continued participation for up to three years
in life, accident, medical, health and other similar plans and programs
in which the executive participated prior to the change in control, and
the payment by the Company of any legal fees and expenses incurred as a
result of such termination of employment. At the option of the
executive, the payments or benefits payable under the agreement may be
decreased to the extent necessary to avoid any excise taxes payable as a
result of the severance benefits. Such severance payments would not be
reduced for compensation received by the executive from any new
employment.
Indemnification Agreements
The Company has indemnification agreements with each of its
directors. Each indemnification agreement entitles the director to be
indemnified by the Company for any liabilities and expenses incurred in
connection with the defense or disposition of any legal claim or action
brought or threatened against him or her by reason of (i) being or
having been a director of the Company or (ii) serving or having served
at the Company's request as a director of another organization or in
any capacity with respect to an employee benefit plan. The
indemnification agreement also requires the Company to advance payment
for any expenses incurred by a director in connection with such an
action. However, a director will not receive indemnification under the
agreement if he or she is found not to have acted in good faith in the
reasonable belief that his or her actions were in the best interest of
the Company. The indemnification provided under the indemnification
agreement is required whether or not an action is brought asserting that
the director seeking indemnification acted unlawfully or acted to create
an improper personal benefit, unless the director is actually found not
to have acted in good faith in the reasonable belief that his or her
actions were in the best interests of the Company. The rights under
the indemnification agreement are in addition to any rights of
indemnification the director may have under the Company's Articles of
Incorporation or By-laws or otherwise and are not subject to any
limitations which may be contained in the Company's Articles of
Incorporation or By-laws.
Consulting Agreement
The Company has a post-employment consulting agreement with Albert
Rand. The agreement is for a term of five years and begins on the date
of his retirement. Compensation under this agreement is $60,000 annually.
Pension Plan
The following table sets forth the annual benefits payable as a
life annuity which would be payable under the Company's noncontributory
defined benefit Pension Plan at normal retirement at age 65 to
participants having the years of service and average annual earnings as
indicated in the table, assuming all such participants attained age 65
in 1997:
ESTIMATED ANNUAL BENEFIT FOR YEAR 1997
Average Estimated Annual Benefit
Annual For Indicated Years of Service
Earnings 15 20 25 30 or more
$100,000 $17,133 $22,844 $28,555 $34,266
$125,000 $22,133 $29,511 $36,888 $44,266
$150,000 $27,133 $36,177 $45,221 $54,266
$160,000* $29,133 $38,844 $48,555 $58,265
Frozen Benefit - Accrued through 12/31/93*
$175,000 $32,133 $42,844 $53,544 $64,265
$200,000 $37,133 $49,510 $61,888 $74,265
$225,000 $42,132 $56,177 $70,221 $84,265
$235,840 $44,300 $59,067 $73,834 $88,601
*Maximum Plan Compensation for 1997 is $160,000.
Employees are entitled to the greater of: benefit accrued through
12/31/93 (calculated on prior years wage caps) or benefit based on the
new $160,000 wage cap.
As of March 6, 1998, Messrs. Anderegg, Rand, Wilkinson and Potter
had 41, 38, 16 and 4 years of service, respectively, for purposes of
the Pension Plan.
All employees of the Company, who complete a year of service,
including the individuals named in the compensation table above, are eligible
to earn benefits under the Pension Plan. Upon retirement the benefits under
the Pension Plan vary depending upon the participant's age at retirement,
years of service with the Company and average annual earnings for the five
consecutive highest years of service in the ten years prior to
termination. The amount of annual retirement benefits is determined by
a formula which applies years of service to a basic defined benefit,
which, in the case of a participant with at least 30 years of service,
is .683% of the average of the 5 highest consecutive years of
compensation in the last 10 years worked plus .65% of such average
annual earnings which exceed Social Security Covered Compensation, but
not less than (a) $60 multiplied by his or her years of service or (b)
the benefit which had accrued as of December 31, 1987 under the
Company's prior retirement program. Compensation reflects the amounts
shown under salary in the Summary Compensation Table. The Pension Plan
limits the compensation taken into account for purposes of determining
the benefit under the Pension Plan to the maximum permissible under the
Internal Revenue Code, which for 1997 was $160,000. Social Security
Covered Compensation means the dollar amount which represents the
average of the maximum wages subject to Social Security tax for each
year of the participant's working career. The benefits under the
Pension Plan are payable in various annuity forms and are subject to
maximum limits in certain circumstances.
The Company has entered into a supplemental retirement Pension
Agreement with Albert Rand that calls for monthly payment of $4,760
beginning on the sixth anniversary of his retirement.
QUORUM, REQUIRED VOTES, AND METHOD OF TABULATION
Consistent with state law and under the Company's by-laws, a
majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to
such matter. Votes cast by proxy or in person at the Annual Meeting
will be counted by persons appointed by the Company to act as election
inspectors for the meeting.
The nominees for election as Class II directors at the Annual
Meeting who receive the greatest number of votes properly cast for the
election of directors will be elected directors.
The election inspectors will count the total number of votes cast
"for" election of each director for purposes of determining whether
sufficient affirmative votes have been cast. The election inspectors
will count shares represented by proxies that withhold authority to vote
for a nominee for election as a director or that reflect abstentions and
"broker non-votes" (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners and
(ii) the broker or nominee does not have the discretionary authority to
vote on a particular matter) only as shares that are present and
entitled to vote on the matter for purposes of determining a quorum, but
neither abstentions nor broker non-votes have any effect on the outcome
on voting on the matter.
Proposal 2, as described above, must receive the affirmative vote
of a majority of the outstanding Common Stock, and accordingly
abstentions and broker non-votes will have the effect of a vote against
Proposal 2.
AUDIT MATTERS
Upon the recommendation of the Audit Committee, the Board of
Directors has selected Arthur Andersen LLP, certified public
accountants, as auditors for the Company for the fiscal year ending
December 31, 1998. Arthur Andersen LLP has served as the Company's
independent auditors since 1957. A representative of Arthur Andersen
LLP is expected to be present at the Annual Meeting with the opportunity
to make a statement if he or she desires to do so and to respond to
appropriate questions.
OTHER INFORMATION
Stockholder Proposals for Fiscal 1998 Annual Meeting
Proposals of stockholders submitted for consideration at the next
annual meeting of stockholders must be received by the Company no later
than November 13, 1998 in order to be considered for inclusion in the
Company's proxy materials for that meeting.
Other Business
The Board of Directors does not know of any business which will
be presented to the Annual Meeting other than that referred to in the
accompanying notice. If other business properly comes before the Annual
Meeting, it is intended that the proxies will be voted in the judgment
of the persons voting the proxies unless specific instructions to the
contrary are given.
Form 10-K and Annual Report to Stockholders
A copy of the Company's annual report Form 10-K filed with the
Securities and Exchange Commission is available to stockholders without
charge by writing to the Treasurer's office, Dynamics Research
Corporation, 60 Frontage Road, Andover, Massachusetts 01810-5498. A
copy of the Company's Annual Report accompanies this Proxy Statement.
By the Order of the Board of Directors
John L. Wilkinson
Clerk
Andover, Massachusetts
March 27, 1998
