<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SCS/Compute, Inc.
-----------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2)
of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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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:
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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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date filed:
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<PAGE> 2
SCS/COMPUTE, INC.
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 1995
The Annual Meeting of the stockholders of SCS/Compute, Inc. (the "Company")
will be held at the Hyatt Regency, 1 St. Louis Union Station, St. Louis,
Missouri, 63103, on Wednesday, June 7, 1995 at 10:00 a.m. central daylight time
for the following purposes:
1. To elect one director for a term expiring in 1998.
2. To consider and act upon a proposal to ratify the appointment of Price
Waterhouse as independent auditors of the Company for the fiscal year
ending January 31, 1996; and
3. To transact such other business as may properly come before the meeting.
Only stockholders of record as of the close of business on May 3, 1995 will
be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED BUSINESS REPLY ENVELOPE. IF YOU
LATER FIND THAT YOU CAN BE PRESENT OR FOR ANY OTHER REASON DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE THE VOTING.
Charles G. Wilson
Secretary
May 10, 1995
<PAGE> 3
SCS/COMPUTE, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The enclosed form of proxy is solicited by and on behalf of the Board of
Directors of SCS/Compute, Inc. (the "Company") for use at the Annual Meeting of
stockholders to be held on June 7, 1995 at the Hyatt Regency, 1 St. Louis Union
Station, St. Louis, Missouri, 63103, at 10:00 a.m. central daylight time and at
any adjournments thereof. The stockholder giving the proxy has the power to
revoke it any time before it is exercised by notice in writing to the Secretary
of the Company, 12444 Powerscourt Drive, Suite 400, St. Louis, Missouri 63131;
by properly submitting to the Company a duly executed proxy bearing a later
date; or by attending the meeting and voting in person. The proxy will be
voted as specified by the stockholder in the spaces provided therefor, or if no
specification is made, it will be voted for the election of the nominee named
herein as a director and for the proposal to ratify the appointment of Price
Waterhouse as independent auditors of the Company for the fiscal year ending
January 31, 1996.
The mailing address of the principal executive offices of the Company is
12444 Powerscourt Drive, Suite 400, St. Louis, Missouri 63131. This proxy
statement and the accompanying proxy card are first being mailed to the
stockholders of the Company on or about May 10, 1995.
VOTING AND SECURITIES OF PRINCIPAL STOCKHOLDERS,
EXECUTIVE OFFICERS AND DIRECTORS
Only stockholders of record at the close of business on May 3, 1995 are
entitled to notice of, and to vote at, the 1995 Annual Meeting and any
adjournments thereof. On May 3, 1995, the Company had outstanding 2,563,977
shares of Common Stock. Each outstanding share is entitled to one vote on all
matters put to shareholder vote. The Board knows of no matters other than the
election of a director and the ratification of independent accountants to be
presented for consideration at the Annual Meeting. If any other matters
properly come before the meeting, the proxies solicited hereby will be voted on
such matters in accordance with the judgment of the persons voting such
proxies. Because the Common Stock is entitled to vote on all matters at the
1995 Annual Meeting, a majority of the outstanding shares of Common Stock
present in person or by proxy will constitute a quorum for the transaction of
business at the 1995 Annual Meeting. Votes cast by proxy or in person at the
1995 Annual Meeting will be tabulated by the inspectors of election appointed
by the Board for the meeting.
Shares which are entitled to vote but which are not voted at the direction
of the beneficial owner ("abstentions") and shares represented by proxies or
ballots which are marked "withhold authority" with respect to the election of
the nominee for election as a director will be counted for the purpose of
determining whether there is a quorum for the transaction of business at the
1995 Annual Meeting.
Abstentions may be specified on Proposal 2 to ratify the appointment of
independent auditors, but not the election of directors. However, marking the
proxy to withhold votes for the nominee for election as a director has the
practical effect of an abstention.
The affirmative vote of a plurality of the shares represented at the meeting
is required to elect directors. "Plurality" means that the nominee who receives
the largest number of votes cast is elected as the Class II director.
Consequently, any shares represented at the 1995 Annual Meeting, but not voted
for any reason, have no impact on the election of directors.
2
<PAGE> 4
The affirmative vote of a majority of the shares represented at the meeting
is required to ratify the appointment of the independent auditors. Votes
withheld by brokers in the absence of instructions from street-name holders
("broker non-votes") will not be counted with respect to, and will have no
effect on, whether the stockholders approve the proposal. Abstentions,
however, are counted in determining whether the stockholders have approved the
proposal and, thus, have the effect of a vote against the proposal.
The following table and accompanying footnotes set forth information as of
May 3, 1995 regarding all persons known to the Company to be the beneficial
owners of more than five percent of the Common Stock of the Company. Also set
forth is information regarding beneficial ownership of the Common Stock of the
Company by the executive officers listed in the Summary Compensation Table
under the caption "Executive Compensation" and by all executive officers and
directors of the Company as a group. Except as noted below, the owners have
sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES PERCENTAGE
----------------------------------------------------------------------------------------------
<S> <C> <C>
Robert W. Nolan, Sr. 1,137,170 (1) 43.70%
12444 Powerscourt Dr., Suite 400
St. Louis, Missouri 63131
Nationwide Financial Services, Inc. 188,100 (2) 7.34%
One Nationwide Plaza
Columbus, Ohio 43216
Principal Mutual Life Insurance Company (3) (3)
55 High Street
Des Moines, IA 50392-0800
Charles G. Wilson 37,917 (4) 1.47%
Theodore W. Schroeder 11,667 (5) (6)
Robert W. Nolan, Jr. 15,967 (7) (6)
All executive officers and
directors as a group (6 persons) 1,203,821 (8) 45.74%
----------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Includes 38,000 shares which Mr. Nolan, Sr. has exercisable options to
purchase. Includes 16,600 shares held by Mr. Nolan, Sr.'s wife as trustee
under various trusts for their children over which Mr. Nolan, Sr. is deemed to
share voting and investing power but, with respect to which Mr. Nolan, Sr.
disclaims beneficial ownership.
(2) Based on information contained in Amendment No. 2 to Schedule 13D filed
March 12, 1990. Nationwide Financial Services, Inc. is the registered
investment advisor to the record owners of these shares, Nationwide Separate
Account Trust - Common Stock Fund, and Nationwide Investing Foundation -
Nationwide Growth Fund which owns 43,100 and 145,000 shares, respectively.
Each such other entity, and Nationwide Financial Services, Inc., disclaims
beneficial ownership of the shares owned of record as described above.
(3) On April 30, 1994, the Company converted $3.5 million in outstanding
principal balance on its senior secured note with the Principal Mutual Life
Insurance Company (the "Principal") to 100,000 shares of its Series A
Cumulative Preferred Stock (the "Preferred Shares"). The Preferred Shares
carry liquidation and dividend preference over Common Stock, are redeemable at
a premium by the Company until July 1, 1999, and are convertible at any time by
the Principal into 33% of the then outstanding shares of the Company's common
stock. No redemption or conversion has occurred since the issuance of the
Preferred Shares.
3
<PAGE> 5
(4) Includes 16,250 shares owned by Mr. Wilson and his wife over which he
shares voting and investment power. Includes 5,000 shares owned by Mr.
Wilson's minor children under the Missouri Uniform Gifts to Minors Act.
Includes 16,667 shares which Mr. Wilson has exercisable options to purchase.
(5) Includes 6,667 shares which Mr. Schroeder has exercisable options to
purchase. Mr. Schroeder and his wife share voting and investment power over
these shares.
(6) Percentage of shares is less than 1% of the total shares issued and
outstanding.
(7) Includes 6,667 shares which Mr. Nolan, Jr. has exercisable options to
purchase. Includes 2,000 shares owned by Mr. Nolan, Jr. and his wife over
which he shares voting and investment power.
(8) In addition to those shares designated as beneficially owned by the
directors and executive officers named in the table above, the amount includes
1,000 shares owned by Robert A. Chlebowski and 100 shares owned by Dr. Irwin M.
Jarett. Mr. Chlebowski and Dr. Jarett are directors who are not employees of
the Company.
PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of the Company provide for a classified Board of Directors with
the Board divided into three classes with terms of three years each expiring at
the Annual Meeting of stockholders in succeeding years. Class I consists of
two Directorships and Classes II and III each consist of one Directorship. As
set forth below, the stockholders will vote on the election of one individual
to serve as the Class II Director for a term of three years.
There are currently four (4) members of the Board of Directors. Mr. Robert
W. Nolan, Sr. and Mr. Robert A. Chlebowski are Class I Directors. Mr. Nolan,
Sr. has been a Class I Director since his election to the Board in 1981. Mr.
Chlebowski was appointed to fill the vacant Class I Director position in July
1993. Mr. Chlebowski serves as an "independent director" of the Company, or
stated differently, a director who is not an employee of the Company. The
Class II Director position is filled by Dr. Irwin M. Jarett. Dr. Jarett was
appointed to fill the vacant Class II position in October 1993, and also serves
as an "independent director." Robert W. Nolan, Jr. is the Class III Director,
and has served in this position since March 1993.
Nasdaq by-laws require that listed companies maintain audit committees
comprised of at least two independent directors. As described above, Mr.
Chlebowski and Dr. Jarett both serve as independent directors of the Company,
and are also members of the Board's Audit Committee.
In the election of directors, each stockholder is entitled to one vote per
share held. Stockholders do not have cumulative voting rights.
The persons named in the enclosed form of proxy intend to vote such proxy
"FOR" the election of the nominee named below as a Class II director of the
Company to serve a term expiring at the 1998 Annual Meeting of stockholders,
unless the stockholder indicates on the form of proxy that the vote should be
withheld or unless the stockholder indicates contrary directions. The Board of
Directors has no reason to doubt the availability of the nominee, and the
nominee has indicated his willingness to serve if elected. If the nominee
declines or is unable to serve, the Company intends that, in the discretion of
the Board of Directors, either the size of the Board of Directors shall be
reduced or the proxies will vote for a substitute nominee designated by the
Board of Directors. The table and paragraph below set forth certain
information about the nominee for the Class II director position:
4
<PAGE> 6
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK AS OF
TERM EXPIRING MAY 3, 1995
AT THE ANNUAL --------------------------------
MEETING OF NUMBER OF
NAME AND AGE CLASS STOCKHOLDERS SHARES PERCENTAGE
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. Irwin M. Jarett, age 65 II 1998 100 (1)
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See Note 8 To "Voting and Securities of Principal Stockholders, Executive
Officers and Directors."
Dr. Irwin M. Jarett earned a Ph.D. in Accounting and Management from
Louisiana State University and is co-founder and Chief Executive Officer of
Graphic M*I*S, LP ("GMIS"), a Chicago-based software development and system
consulting firm, a position he has held since 1984. He is an internationally
known authority in computer graphics with 37 years of experience in accounting,
computers and information systems consulting, and is the author of Financial
Reporting Using Computer Graphics published in 1993 by John Wiley and Sons.
Dr. Jarett was appointed as an independent director of the Company on October
7, 1993, and has served in that capacity since that time.
The table and paragraphs below set forth certain information about the
directors continuing in office:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK AS OF
MAY 3, 1995
---------------------------------------
CURRENT TERM NUMBER OF
NAME AND AGE EXPIRES IN SHARES PERCENTAGE
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert W. Nolan, Sr., age 51 1997 1,137,170 (1) 43.70%
Robert A. Chlebowski, age 46 1997 1,000 (2) (3)
Robert W. Nolan, Jr., age 29 1996 15,967 (4) (3)
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) See Note 1 To "Voting and Securities of Principal Stockholders, Executive
Officers and Directors."
(2) See Note 8 To "Voting and Securities of Principal Stockholders, Executive
Officers and Directors."
(3) Percentage of shares is less than 1% of the total shares issued and
outstanding.
(4) See Note 7 To "Voting and Securities of Principal Stockholders, Executive
Officers and Directors."
Robert W. Nolan, Sr., a certified public accountant and co-founder of the
Company, has served as a director of the Company since its formation in
February 1981. Since April 1990, Mr. Nolan, Sr. has served as the Chairman of
the Board of Directors. He is also serving as the Company's Chief Executive
Officer, a position he has held since September 1989. In 1992, Mr. Nolan, Sr.
resumed the duties of President, the position he had previously held from 1981
to 1990.
Robert A. Chlebowski is the President of St. Louis Leasing Corporation, a
computer leasing concern, a position he has held since 1986. He was named St.
Louis' Entrepreneur of the Year in 1992 by Ernst & Young, Merrill Lynch and
Inc. Magazine. He began his career in the leasing industry as a regional
marketing representative in 1978 for OPM Leasing. Mr. Chlebowski was appointed
as an independent director of the Company on July 1, 1993, and has served in
that capacity since then. He is also a director of Innovative Controls
Systems, Inc. and Event Technologies.
5
<PAGE> 7
Robert W. Nolan, Jr. has been employed by the Company since 1987. He served
in various marketing and sales positions from 1987 to 1989. He was named
Director of Eastern Division Operations in 1990, and was appointed Vice
President of Operations in May 1991 and Vice President of Product Development
in January 1993. He became a Director of the Company in March of 1993 and has
served in that capacity since then. Mr. Nolan, Jr. is the son of Mr. Nolan,
Sr.
MEETINGS AND COMMITTEES
During the fiscal year ended January 31, 1995 ("fiscal 1994"), the Board of
Directors held eight meetings, including both regularly scheduled meetings and
special meetings.
The Company has a standing Audit Committee. Mr. Robert A. Chlebowski and
Dr. Irwin M. Jarett serve as members of the Audit Committee, with Dr. Jarett
serving as chairman. The Audit Committee held one meeting during fiscal 1994.
Each year the Audit Committee recommends the appointment of a firm of
independent public accountants to act as independent auditor for the Company
during the coming year. In making this recommendation, the Audit Committee
reviews the nature of services rendered or to be rendered to the Company by the
independent public accountants. The Audit Committee also reviews with
representatives of the independent public accountants the auditing arrangements
and scope of their examination of the accounting records, the results of those
audits, their fees, and any problems identified by the independent public
accountants regarding internal accounting controls together with their
recommendations.
The Company has a standing Compensation Committee. Messrs. Nolan, Sr.,
Chlebowski and Dr. Jarett are members of the Compensation Committee, with Mr.
Chlebowski serving as chairman. The Compensation Committee held two meetings
during fiscal 1994. The Compensation Committee makes recommendations to the
Board of Directors about the salaries of the officers (including those who are
employee directors) and reviews the salaries of other key employees. The
Compensation Committee is the Administrator of the Company's Stock Option Plan
and in that capacity, grants stock options to officers and other key employees
which then are submitted to the Board of Directors for ratification. The
Compensation Committee also grants bonuses, subject to approval by the Board of
Directors, and reviews or recommends to the Board of Directors any proposed
plan or program that would benefit primarily the officers or other key
employees.
The Company does not have a nominating committee. The entire Board of
Directors performs the function of a nominating committee. The Board of
Directors will accept recommendations for nominations as directors from
stockholders. Stockholders wishing to propose such nominees for consideration
should write to Charles G. Wilson, Secretary, at the principal executive
offices of the Company.
6
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows information concerning the annual and long-term
compensation for services in all capacities to the Company for the past three
fiscal years paid to the chief executive officer and the other executive
officers of the Company whose total annual salary and bonus for fiscal 1994
exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS COMPENSATION (2)
- - -------------------------------------------------------------------------------------------------------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert W. Nolan, Sr. 1994 $250,008 $ 78,523 $19,335 24,000 $ 1,806
Chairman, President and 1993 250,008 0 19,000 0 1,841
Chief Executive Officer 1992 227,083 0 29,080 36,000 2,927
Charles G. Wilson 1994 127,917 27,579 0 20,000 1,530
Executive Vice President, 1993 125,000 0 0 0 1,400
Secretary and Treasurer 1992 118,750 0 5,400 0 2,507
Theodore W. Schroeder 1994 118,747 36,829 0 20,000 573
Vice President 1993 109,992 0 0 0 574
Sales & Marketing 1992 (3) 50,413 0 0 0 126
Robert W. Nolan, Jr. 1994 86,250 27,579 0 20,000 589
V. P. Operations and 1993 74,000 0 0 0 523
Product Development 1992 69,000 0 0 0 992
- - -------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Includes monthly auto allowance paid as follows: Mr. Nolan, Sr., $8,100 in
1992; Mr. Wilson, $5,400 in 1992. Includes professional fees associated with
personal tax planning and compliance paid by the Company on behalf of Mr.
Nolan, Sr., $19,335 in 1994, $19,000 in 1993 and $20,980 in 1992.
(2) In fiscal 1994, includes Company matching contributions to the SCS/Compute,
Inc. 401(k) Plan as follows: Mr. Nolan, Sr., $915; Mr. Wilson, $913; Mr. Nolan,
Jr., $180. In fiscal year 1994, includes life insurance premiums paid under
the Company's employee benefit plans as follows: Mr. Nolan, Sr., $891; Mr.
Wilson, $617; Mr. Schroeder, $573; Mr. Nolan, Jr., $409.
(3) Mr. Schroeder joined the Company on August 17, 1992.
7
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The table below shows information concerning the grants of stock options
pursuant to the SCS/Compute, Inc. Stock Option Plan (the Plan) during fiscal
1994 to the named executive officers. No Stock Appreciation Rights have ever
been granted by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - ------------------------------------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT ANNUAL RATES OF
SECURITIES OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS EXERCISE OR FOR OPTION TERM **
OPTIONS GRANTED BASE ------------------
GRANTED TO EMPLOYEES PRICE EXPIRATION 5 % 10 %
NAME (#) * IN FISCAL YEAR ($/SH) DATE ($) ($)
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Nolan, Sr. 24,000 28.57% $ 2.80 5/16/99 $18,566 $41,026
Charles G. Wilson 20,000 23.81% 2.80 5/16/99 15,472 34,189
Theodore W. Schroeder 20,000 23.81% 2.80 5/16/99 15,472 34,189
Robert W. Nolan, Jr. 20,000 23.81% 2.80 5/16/99 15,472 34,189
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
* The options granted to the above executive officers were the only
options granted under the Plan during the year. The options granted become
exercisable on May 16, 1995, May 16, 1996, and May 16, 1997 in equal
increments.
** The dollar amounts under these columns are the results of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission, and
therefore are not intended to forecast possible future appreciation, if any, of
the stock price of the Company. The Company did not use an alternative formula
for a grant date valuation, as the Company is not aware of any formula which
will determine with reasonable accuracy a present value based on future unknown
factors.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table below shows information concerning the fiscal year-end value of
unexercised stock options on January 31, 1995 held by each of the named
executive officers. No stock options were exercised during the year ended
January 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END (#)* FISCAL YEAR END ($)**
----------------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Nolan, Sr. 30,000 30,000 $ 0 $ 0
Charles G. Wilson 10,000 20,000 1,250 0
Theodore W. Schroeder 0 20,000 0 0
Robert W. Nolan, Jr. 0 20,000 0 0
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
* Under the terms of the Company's Stock Option Plan, the Compensation
Committee retains discretion, subject to plan limits, to modify the terms of
outstanding options and to reprice the options.
** Represents the difference between the closing price of the Company's
Common Stock on January 31, 1995 as reported on the NASDAQ SmallCap Market and
the exercise price of the options, multiplied by the number of underlying
securities. No options held by Messrs. Nolan, Sr., Schroeder or Nolan, Jr.,
were in-the-money on January 31, 1995.
8
<PAGE> 10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
SCS/Compute, Inc. believes that executive compensation should be linked to
individual and Company performance, and the value delivered to shareholders.
The Company has developed an incentive pay program which provides competitive
compensation for its executive officers and other key employees, with both
short-term and long-term compensation based on Company performance and related
shareholder value.
During fiscal 1992, the Company employed TPF&C, a Towers Perrin Company, to
make a study on executive compensation and present the results of their study
to the Compensation Committee. The TPF&C report was examined, and the Committee
attempted to identify software competitors similar to SCS/Compute, Inc. and
determine the range and nature of compensation provided to management of those
companies. Based thereon, a compensation package was specifically designed for
Robert W. Nolan, Sr. and was adopted effective July 1, 1992. At the time of
adoption of Mr. Nolan, Sr.'s compensation package, the Compensation Committee
consisted of two independent directors and Mr. Nolan, Sr. Mr. Nolan, Sr.
abstained from voting on the adoption of his compensation package. Based upon
the recognition of net losses by the Company in fiscal years 1992 and 1993, Mr.
Nolan Sr. has not received a salary increase since the adoption of his
compensation package.
The Committee believes that stock options are an effective long-term award
instrument because they focus management's attention on total stockholder
return through share price appreciation. To this end, the Committee
recommended, and the Board approved, the grant of stock options to the
executive officers of the Company during the year ended January 31, 1995 (see
"Option Grants in Last Fiscal Year"). Options were granted to each executive
officer based upon individual and company performance during the fiscal year
ended January 31, 1995 as of the date of grant.
In order to retain and motivate key employees, the Company's Board of
Directors adopted an Incentive Compensation Plan (the "Incentive Plan") on July
14, 1986. The Incentive Plan is designed to provide additional performance
incentives to the Company's executive officers. Under the Incentive Plan
effective for fiscal 1994, each participant was eligible to receive a bonus
based upon a percentage of the pre-tax, pre-executive bonus profits of the
Company. Amounts earned under the Incentive Plan for the year ended January 31,
1995 are included under the caption "Bonus" in the Summary Compensation Table.
COMPENSATION COMMITTEE
April 26, 1995 Robert A. Chlebowski, Chairman
Dr. Irwin M. Jarett
Robert W. Nolan, Sr.
9
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal 1994, Robert W. Nolan, Sr., Chairman of the Board of
Directors, President and Chief Executive Officer of the Company served on the
Compensation Committee of the Board of Directors.
At May 3, 1995, the Company had advances due from Mr. Nolan, Sr. totaling
$130,974, consisting of a salary advance of $75,000, and other outstanding
advances of $55,974 to companies that were owned by Mr. Nolan, Sr. Mr. Nolan,
Sr. has executed a promissory note in favor of the Company for the outstanding
advances bearing interest at the applicable federal rate maturing on May 15,
1996.
In November 1994, Mr. Nolan, Sr. accepted an invitation to sit on the Board
of Directors of St. Louis Leasing Corporation. Mr. Chlebowski, who is the
chairman of the Company's Compensation Committee, is the president of St. Louis
Leasing Corporation. The Board of Directors of St. Louis Leasing Corporation
is responsible for setting the compensation package for Mr. Chlebowski.
During fiscal year 1993, the Company entered into a three-year agreement
with GMIS, whereby software developed by GMIS was merged with software
developed by the Company and jointly marketed. Dr. Jarett, a director of the
Company, is co-founder and Chief Executive Officer of GMIS. During fiscal
1994, the Company paid to GMIS $70,984 pursuant to the terms of the contract.
The Board of Directors of the Company has determined that the contract is
immaterial to the Company, Dr. Jarett, and GMIS, and therefore, does not
interfere with Dr. Jarett's ability to serve as an independent director of the
Company.
On January 31, 1994, the Company established an unsecured $1,000,000
line-of-credit bearing an interest rate of 11.75% per annum and maturing on
June 1, 1994 with St. Louis Leasing Corporation. The president of St. Louis
Leasing Corporation, Robert A. Chlebowski, is also a director of the Company.
As of January 31, 1994 the Company had outstanding draws on the line-of-credit
of $250,000, which increased to $950,000 by April 21, 1994. The Company repaid
the line of credit, including $18,539 in interest expense, by May 6, 1994. On
that date, the Company obtained a new unsecured demand line-of-credit from
St. Louis Leasing Corporation for $1,000,000 at an interest rate of 9.0% per
annum maturing on June 1, 1995. As of April 30, 1995, no draws had been made
on the new line-of-credit.
10
<PAGE> 12
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a table comparing the cumulative total shareholder return
on the Company's Common Stock, based on the market price of the Common Stock,
with the cumulative total return of companies on the NASDAQ Stock Market Index
of U.S. Companies and the cumulative total return of companies on the NASDAQ
Computer & Data Processing Services Stocks Index.
<TABLE>
<CAPTION>
NASDAQ
Measurement Period SCS/Compute, Inc. NASDAQ U.S. Computer & DP
------------------ ---------------- ----------- -------------
<S> <C> <C> <C>
1/31/90 $ 100 $ 100 $ 100
1/31/91 33 104 137
1/31/92 88 158 236
1/31/93 83 179 249
1/31/94 46 204 266
1/31/95 35 195 300
</TABLE>
Assumes $100 invested on January 31, 1990 in SCS/Compute, Inc., NASDAQ
Index, and NASDAQ Computer and Data Processing Index. No dividends have been
paid on the Common Stock during the five year period covered by the
SCS/Compute, Inc. Stock Price Performance table.
DIRECTOR COMPENSATION
Each member of the Board of Directors who is not a Company employee receives
$1,500 per quarter for his services as a director and $600 for each Board of
Directors meeting attended. Additionally, such persons receive $300 for each
committee meeting attended which is not on the same day as a Board meeting and
$120 for each committee meeting attended which is on the same day as a Board
meeting. The Company pays the travel expenses of directors who are required to
travel to Board and Committee meetings.
11
<PAGE> 13
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Price Waterhouse ("PW") as independent auditors of the Company for
the fiscal year ending January 31, 1996.
The Board of Directors will present for stockholder vote a resolution at the
Annual Meeting that its appointment of PW as independent auditors of the
Company for the fiscal year ending January 31, 1996 be ratified.
Although this appointment is not required to be submitted to a vote of the
stockholders, the Board believes it appropriate as a matter of policy to
request that the stockholders ratify the appointment of PW as principal
independent auditors. If the stockholders should not ratify PW as independent
auditors, the Audit Committee will investigate the reasons for stockholder
rejection and the Board will reconsider the appointment.
PW was engaged as the Company's independent auditors on November 14, 1991.
A representative of PW will be at the Annual Meeting, will have the opportunity
to make a statement, and will be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the appointment of Price
Waterhouse as independent auditors.
STOCKHOLDER PROPOSALS
The Company must receive any stockholder proposals intended to be presented
at the 1996 Annual Meeting of stockholders no later than January 11, 1996 at
the Company's principal executive offices at 12444 Powerscourt Drive, Suite
400, St. Louis, Missouri 63131.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before the
meeting. If any other matters properly come before the meeting, the proxies
will be voted on such matters in accordance with the judgment of the persons
named as proxies therein, or their substitutes, present and acting at the
meeting.
The solicitation of proxies is being made primarily by the use of the mails.
The cost of preparing and mailing this proxy statement and the accompanying
material, and the cost of any supplementary solicitations, which may be made by
mail, telephone, telefax, or personally by officers and employees of the
Company who would not receive additional compensation therefore, will be borne
by the Company.
May 10, 1995
12
<PAGE> 14
<TABLE>
<S><C>
SCS/COMPUTE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
ON JUNE 7, 1995
The undersigned hereby appoints ROBERT W. NOLAN, Sr., ROBERT W. NOLAN, Jr., and CHARLES G. WILSON, and each of them, with or
without the others, proxies, of the undersigned with full power of substitution, to vote as designated below, all shares of
stock of SCS/Compute, Inc. (the "Corporation") that the undersigned signatory hereof is entitled to vote at the Annual Meeting
of Stockholders of the Corporation to be held at the Hyatt Regency, 1 St. Louis Union Station, St. Louis, Missouri, 63103, on
Wednesday, June 7, 1995, at 10:00 A.M. central daylight time, and all adjournments thereof, all in accordance with and as more
fully described in the Notice and accompanying Proxy Statement for such meeting, receipt of which is hereby acknowledged.
1. Election of a Director
Election of one director of the second class to hold office for a term of three (3) years expiring in 1998 or until his
successor has been duly elected and qualified.
FOR the nominee listed below / / WITHHOLD AUTHORITY / /
to vote for the nominee listed below
Dr. Irwin M. Jarett
2. To ratify the appointment of Price Waterhouse as independent auditors of the Corporation for the fiscal year ending
January 31, 1996.
FOR / / AGAINST / / ABSTAIN / /
(Continued, and to be signed on other side)
3. In their discretion, upon any other business which may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDERS(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE LISTED AND "FOR" ITEM 2. THIS PROXY MAY BE
REVOKED PRIOR TO ITS EXERCISE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark, date and mail promptly in the enclosed envelope.
Sign Here ____________________________________________
(please sign exactly as name appears hereon)
Sign ____________________________________________
(executors, administrators, trustees, etc.,
should so indicate when signing)
____________________________________________
Date ____________________________________________
</TABLE>
