REYNOLDS & REYNOLDS CO, PRE 14A, 1996-12-09

REYNOLDS & REYNOLDS CO
PRE 14A, 1996-12-09
MANIFOLD BUSINESS FORMS

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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

THE REYNOLDS AND REYNOLDS COMPANY
(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] No fee required.
[ ] 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:

(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:

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[LOGO]

THE REYNOLDS AND REYNOLDS COMPANY
115 SOUTH LUDLOW STREET, DAYTON, OHIO 45402

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 13, 1997

To the Shareholders of
THE REYNOLDS AND REYNOLDS COMPANY

The Annual Meeting of the Shareholders ("Meeting") of The Reynolds and
Reynolds Company, an Ohio corporation, will be held in the Frederick C. Smith
Auditorium located in the David H. Ponitz Sinclair Center, Building 12, on the
Sinclair Community College campus, 444 West Third Street, Dayton, Ohio 45402, on
Thursday, February 13, 1997, at 11:00 a.m., Eastern Standard Time.

The items of business are:

1. A proposal to elect five (5) Directors;

2. A proposal to amend the Amended Articles of Incorporation
to increase the number of authorized Class A Common and Class B
Common Shares;

3. A proposal to amend the Amended Articles of Incorporation
to reclassify all Class A Common and Class B Common Shares to
"no par value" shares;

4. A proposal to appoint Deloitte & Touche LLP as independent
auditors for the company; and

such other matters as may properly be brought before the Meeting or any
adjournment(s) thereof.

Shareholders of record at the close of business on December 20, 1996,
are entitled to vote at the Meeting or any adjournment(s) thereof.

Your attention is called to the accompanying Proxy Card and Proxy
Statement.

A copy of the company's Annual Report for its fiscal year ended
September 30, 1996, is enclosed. It is not deemed to be part of the official
Proxy soliciting material. If any shareholder fails to receive a copy of the
Annual Report, one may be obtained by writing to the Secretary of the company.

BY ORDER OF THE BOARD OF DIRECTORS
Adam M. Lutynski, Secretary
Dayton, Ohio
January 6, 1997

ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD
AND MAIL IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
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PROXY STATEMENT FOR

ANNUAL MEETING OF SHAREHOLDERS

THE REYNOLDS AND REYNOLDS COMPANY
115 South Ludlow Street, Dayton, Ohio 45402

TO BE HELD FEBRUARY 13, 1997

THIS PROXY STATEMENT IS ARRANGED IN THE FOLLOWING ORDER:
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION ............................................................................ 3
DESCRIPTION OF CAPITAL STOCK ................................................................... 3
VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .................................. 4
ELECTION OF DIRECTORS .......................................................................... (PROPOSAL I) 5
Board Committees, Meetings, Compensation and Indemnification of Directors .............. 7
EXECUTIVE COMPENSATION ......................................................................... 9
Summary Compensation Table ............................................................. 9
Option/SAR Grants in Last Fiscal Year .................................................. 10
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value ....... 10
Long-Term Incentive Plan -- Awards in Last Fiscal Year ................................. 11
Pension Plan Table ..................................................................... 11
Employment Agreements .................................................................. 12
Performance Graph ...................................................................... 14
Report of the Compensation Committee of the Board of Directors on Executive Compensation 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................................................. 17
APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES............................................. (PROPOSAL II) 17
RECLASSIFICATION OF ALL COMMON SHARES TO "NO PAR VALUE" ........................................ (PROPOSAL III)19
APPOINTMENT OF INDEPENDENT AUDITORS ............................................................ (PROPOSAL IV) 20
SHAREHOLDER PROPOSALS .......................................................................... 20
OTHER MATTERS................................................................................... 20
Amended Article Fourth, Section 1 of the Amended Articles of Incorporation ..................... EXHIBIT A
</TABLE>

2
<PAGE> 4
GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by The Reynolds and Reynolds Company ("company") for its Annual Meeting
of Shareholders ("Meeting"), February 13, 1997. This solicitation is being made
by mail. The company has retained Georgeson & Company Inc. to assist in its
proxy solicitation. Georgeson's fee will be $10,000 plus out-of-pocket expenses
incurred on the company's behalf. The company may also use its officers and
other employees to solicit proxies from shareholders, personally or by
telephone, facsimile or letter. The costs of this solicitation will be borne by
the company. If the company requests nominees and brokers to solicit their
principals and customers for their proxies, the company will reimburse such
nominees and brokers for their reasonable out-of-pocket expenses.

All shares represented by valid proxies received from this solicitation,
and not revoked, will be voted at the Meeting. If shareholder directions appear
on the Proxy Card, such shares will be voted according to those directions.
Unless contrary directions are given, all shares will be voted in favor of the
proposals and for the nominees for Director described in the accompanying Notice
of Meeting and this Proxy Statement and, in the discretion of the Appointed
Proxies, upon such other matters as may properly come before the Meeting. Any
proxy may be revoked by the shareholder at any time before the vote, by giving
written notice to the company at its address provided on page 1 of this Proxy
Statement or at the Meeting before any vote is taken.

Under Section 1701.55 of the Ohio Revised Code, a shareholder may
exercise cumulative voting rights in the election of Directors by giving written
notice of that desire to the President, a Vice President or the Secretary of the
company not fewer than 48 hours before the scheduled start of the Meeting. If an
announcement of the giving of such notice is made at the start of the Meeting by
the Chairman or Secretary, or by or on behalf of the shareholder giving such
notice, each shareholder shall have the right to cumulate his or her votes in
voting for Directors. In voting cumulatively, a shareholder may give one
candidate that number of votes determined by multiplying the number of his or
her shares by the number of Directors to be elected or may distribute that
number of votes among two or more candidates as he or she sees fit. If
cumulative voting is elected and no further instructions are given, the
Appointed Proxies shall, at their discretion, distribute the votes they cast
among the nominees.

The Board of Directors has fixed the close of business on December 20,
1996 as the Record Date for the determination of the shareholders entitled to
receive notice of, and to vote at, the Meeting or at any adjournment(s) thereof
despite any subsequent transfers of shares. The stock transfer books of the
company will not be closed.

DESCRIPTION OF CAPITAL STOCK

The company has two classes of authorized capital shares outstanding:
Class A Common Shares with a par value of $.625 ("Class A Shares") and Class B
Common Shares with a par value of $.03125 ("Class B Shares"). There are
120,000,000 Class A Shares authorized, of which 80,983,063 were issued and
outstanding on November 1, 1996, and 30,000,000 Class B Shares authorized, of
which 20,000,000 were issued and outstanding on that date. In addition, the
company has authorized 60,000,000 Preferred Shares ("Preferred Shares") with no
par value. As of November 1, 1996, no Preferred Shares were issued and
outstanding. Class A Shares are listed on the New York Stock Exchange. There is
no public market for Class B Shares.

Each holder of Class A Shares and Class B Shares is entitled to one vote
per share held of record. All shares vote as a single class except that, as
required by Ohio law, shareholders vote separately by classes in the case of
certain proposed amendments to the Amended Articles of Incorporation and
certain other specified transactions. Ohio law requires shareholders to vote
separately by class on Proposal III.

All properly cast votes, in person or by proxy, by shareholders of
record at the close of business on December 20, 1996 will be counted for
purposes of the proposals to be voted on at the Meeting. Abstentions and broker
non-votes will not be counted, and therefore will have no impact on the
plurality vote for Directors or the vote for the appointment of auditors
(Proposal IV). Because the votes to amend the Amended Articles of Incorporation
(Proposals II and III) require a specific percentage of issued and outstanding
shares, such abstentions and broker non-votes will consequently be the
equivalent of "no" votes in that context.

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No dividend may be declared or paid on either class unless a dividend
shall be simultaneously declared and paid on both classes. Any dividend declared
and paid on Class A Shares shall be in a per share amount of 20 times the
dividend simultaneously declared and paid on the Class B Shares. In the event of
the liquidation of the company, any distribution made with respect to the Class
A Shares shall be in a per share amount of 20 times the distribution made with
respect to each Class B Share. Neither class of shares has any preemptive
rights.

Each Class B Share may at any time, at the option of the holder thereof,
be converted into 1/20th of a Class A Share. Class B Shares surrendered for
conversion are canceled and may not be reissued. All outstanding Class B Shares
are subject to an agreement under which they may not, unless previously
converted into Class A Shares, be transferred to anyone except the wife,
children and grandchildren (including any trust of which they are the
beneficiaries) of Richard H. Grant, Jr., Chairman of the company's Steering
Committee.

VOTING SECURITIES OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>
===================================================================================================================
CLASS A CLASS B TOTAL VOTING
SHARES % SHARES % SHARES %
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<S> <C> <C> <C> <C> <C> <C>
Number of shares outstanding on
November 1, 1996, except as noted
below were: 80,983,063(1) 100.0 20,000,000 100.0 100,983,063(1) 100.0

The following are the only persons
known by the company to own
beneficially more than 5% of either
class of voting security on November
1, 1996:

Richard H. Grant, III 119,047(2) .15 20,000,000 100.0 20,119,047(2) 20.0
Director and Private Investor
800 Germantown Street
Dayton, Ohio 45407

American Express Financial Advisors 6,310,700(3) 7.80 6,310,700(3) 6.20
IDS Tower 10
Minneapolis, Minnesota 55440

A I M Capital Management, Inc. 4,247,400(4) 5.20 4,247,400(4) 4.20
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173

On November 1, 1996, the shares
beneficially owned by all executive
officers and Directors as a group (14
persons) were: 2,449,605(5) 3.0 20,000,000 100.0 22,449,605(5) 22.2
===================================================================================================================
</TABLE>

(1) Does not include 11,380,329 Class A Shares held in treasury.

(2) Richard H. Grant, III has sole voting and sole investment power with
regard to 98,828 Class A Shares held in his own name. The total includes
20,219 Class A Shares as to which Mr. Grant holds options exercisable
within 60 days. The amount excludes 12,776 Class A Shares held by Mrs.
Grant as to which Mr. Grant disclaims beneficial ownership. This amount
does not include 1,000,000 Class A Shares into which his 20,000,000
Class B Shares are convertible at a 20-to-1 ratio.

(3) As of November 1, 1996, American Express Financial Advisors and its
affiliates share dispositive power, and American Express Financial
Advisors and an affiliate share voting power, for the 6,310,700 shares.

(4) As of December 4, 1996, voting power for all 4,247,400 shares resides
with a management committee and dispositive power resides with the
respective managers of approximately thirteen funds among which the
shares are distributed.

(5) Includes 245,323 Class A Shares as to which such persons may exercise
options within the next 60 days.

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PROPOSAL I

ELECTION OF DIRECTORS

The Board of Directors of the company has fixed the number of Directors
to constitute the full Board at twelve and proposes that four Directors be
elected for a three-year term expiring in 2000 and one Director be elected for a
one-year term expiring in 1998.

There are currently eleven Directors; four whose terms expire in 1997,
three whose terms expire in 1998, and four whose terms expire in 1999. The Board
has recommended and nominated CLEVE L. KILLINGSWORTH, JR., DALE L. MEDFORD,
GAYLE B. PRICE, JR., AND KENNETH W. THIELE each for a three-year term and ROBERT
C. NEVIN for a one-year term.

The enclosed Proxy will be voted FOR electing the five nominees unless a
specification is made to withhold such vote. Since the number of Directors has
been fixed at twelve, the election of five Directors for new terms shall, in
accordance with the company's Consolidated Code of Regulations, be decided by
plurality vote.

If any nominee shall cease to be a candidate for election for any
reason, the Proxy will be voted for a substitute nominee designated by the Board
of Directors and for the other nominees. The Board of Directors currently has no
reason to believe that any nominee will not remain a candidate for election as a
Director or will be unwilling to serve as a Director if elected.

Following is certain information about the new nominee, each nominee-
incumbent and those Directors whose terms of office will continue after the
Meeting.

NOMINEES FOR TERMS EXPIRING IN 2000

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION AND FIVE YEAR EMPLOYMENT HISTORY SINCE CLASS A(1)
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<S> <C> <C> <C> <C>
Cleve L. Killingsworth, Jr. 44 President, Kaiser Permanente's Mid-Atlantic States Region ---- 0
since March 1996; President of Kaiser Permanente's Ohio
Region from August 1994 to March 1996; prior thereto,
Senior Vice President of health care operation for Blue
Cross and Blue Shield of Rochester since January 1986.
Kaiser Permanente, a non-profit group practice health plan,
is the country's largest health maintenance organization.

Dale L. Medford 46 Vice President, Corporate Finance and Chief Financial 1991 149,346(2)
Officer.

Gayle B. Price, Jr. 66 Chairman and Chief Executive Officer, Price Brothers 1976 10,179(3)
Company, manufacturer of concrete construction materials.

Kenneth W. Thiele 80 Private Investor. 1975 8,579(4)
</TABLE>

NOMINEE FOR TERM EXPIRING IN 1998

(Table continued on following page)

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DIRECTORS WHOSE TERMS EXPIRE IN 1999

Richard H. Grant, III 57 Private Investor since October 1994; prior thereto, Senior 1960 119,047(7)
Vice President, International, Computer Systems Division
of The Reynolds and Reynolds Company.

David R. Holmes 56 Chairman of the Board, President and Chief Executive 1987 578,824(9)
Officer.(8)

Martin D. Walker 64 Chairman and Chief Executive Officer of M. A. Hanna 1991 8,579(11)
Company, an international specialty chemicals company.(10)
</TABLE>

DIRECTORS WHOSE TERMS EXPIRE IN 1998

Richard H. Grant, Jr. 83 Chairman of the Steering Committee. 1939 1,016,238(13)

Allan Z. Loren 58 Executive Vice President and Chief Information Officer of 1996 0
American Express Company since May 1994; President and
CEO of Galileo International (a global computer reservation
system company owned by 11 airlines) from January 1993
to May 1994; President and CEO of Covia Partnership
(computer reservation system company) from January 1991
to January 1993 at which time Covia and Galileo
merged.(14)
</TABLE>

(1) Shares owned beneficially on November 1, 1996.

All shares are held with sole voting and sole investment power unless
otherwise indicated. The individual holdings of each Director equal less
than 1% of the issued and outstanding Class A or Class B Shares, except
for Richard H. Grant, Jr. and Richard H. Grant, III whose holdings are
specifically described in Footnotes 7 and 13 below and, in the case of
Richard H. Grant, III, the table under VOTING SECURITIES OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT on page 4.

Richard H. Grant, III is the son of Richard H. Grant, Jr., and they may
be deemed to be "control persons" with respect to the company; however,
each disclaims any beneficial ownership of the Class A Shares or Class B
Shares held by the other.

(2) Mr. Medford has sole voting and sole investment power with regard to
89,906 shares held in his own name, and shared voting and shared
investment power with regard to 10,400 shares held jointly with his
spouse. The total includes 49,040 Class A Shares as to which Mr. Medford
holds options exercisable within 60 days.

(3) Mr. Price has sole voting and sole investment power with regard to 9,600
Class A Shares held in his own name. The total includes 579 Class A
Shares as to which Mr. Price holds options exercisable within 60 days.

(4) Mr. Thiele has sole voting and sole investment power with regard to
8,000 Class A Shares held in his own name. The total includes 579 Class
A Shares as to which Mr. Thiele holds options exercisable within 60
days.

(5) Mr. Nevin has sole voting and sole investment power with regard to
121,628 Class A Shares held in his own name, 5,800 Class A Shares in the
name of his daughter, and 5,800 Class A Shares held in the name of his
son. The total includes 41,980 Class A Shares as to which Mr. Nevin
holds options exercisable within 60 days.

(Footnotes continued on following page)

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(6) Dr. Fry has sole voting and sole investment power with regard to 800
Class A Shares held in his own name. The total includes 579 Class A
Shares as to which Dr. Fry holds options exercisable within 60 days.

(7) See Note 2 to the table under VOTING SECURITIES OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT on page 4.

(8) Mr. Holmes also serves as a director of The Dayton Power & Light
Company.

(9) Mr. Holmes has sole voting and sole investment power with regard to
507,551 Class A Shares. The total includes 12,367 Class A Shares, 9,803
Class A Shares and 9,803 Class A Shares held in the names of his three
sons and 39,300 Class A Shares as to which Mr. Holmes holds options
exercisable within 60 days. This amount excludes 10,211 Class A Shares
held by Mrs. Holmes as to which Mr. Holmes disclaims beneficial
ownership.

(10) Mr. Walker also serves as a director of Textron, Inc., Comerica Inc. and
The Timken Company.

(11) Mr. Walker has sole voting and sole investment power with regard to
8,000 Class A Shares held in his own name. The total includes 579 Class
A Shares as to which Mr. Walker holds options exercisable within 60
days.

(12) Mr. Bausman has sole voting and sole investment power with regard to
112,996 Class A Shares held in his own name. The total includes 31,860
Class A Shares as to which Mr. Bausman holds options exercisable within
60 days.

(13) Richard H. Grant, Jr. has sole voting and sole investment power with
regard to 1,986 Class A Shares held in his own name. He also has sole
voting and sole investment power with regard to 1,014,252 Class A Shares
held in a trust for his benefit. This amount excludes 42,532 Class A
Shares held by Mrs. Grant as to which Mr. Grant disclaims beneficial
ownership.

(14) Mr. Loren also serves as a director of U.S. Cellular Corporation.

BOARD COMMITTEES, MEETINGS, COMPENSATION
AND INDEMNIFICATION OF DIRECTORS

The Board of Directors has established an Audit Committee, a
Compensation Committee, an Investment Committee and a Finance Committee.

The Audit Committee (Messrs. Fry (Chairman), Loren, Price and Walker)
meets with the company's independent public accountants, internal auditors,
Chief Executive Officer and financial management executives. This Committee also
reviews the scope and results of audits, as well as recommendations made by the
company's independent accountants, auditors and executives with respect to
internal and external accounting controls and specific accounting and financial
reporting issues. During the last fiscal year, this Committee met four times.

The Compensation Committee (Messrs. Walker (Chairman), Fry, Loren and
Price) formulates and oversees the company's various upper management incentive
compensation programs, reviews for budget purposes specific recommendations on
general compensation levels for upper management, establishes compensation for
key executive officers and supervises the company's stock option plans. During
the last fiscal year, this Committee met three times.

The Investment Committee (Messrs. Grant, Jr. (Chairman), Holmes, Medford
and Thiele) makes investment decisions for the company's retirement plans trust
fund. During the last fiscal year, this Committee met four times.

The Finance Committee (Messrs. Grant, Jr. (Chairman), Holmes and
Medford) oversees contributions to the company's retirement plans trust fund,
reviews company debt limits and cash position and recommends stock repurchases
and public stock offerings. During the last fiscal year, this Committee did not
meet.

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<PAGE> 9
The company does not have a standing nominating committee or other
similar committee.

During the fiscal year ended September 30, 1996, the Board of Directors
met five times. During the fiscal year, all Directors with the exception of Mr.
Loren attended 75% or more of the aggregate number of meetings of the Board of
Directors and meetings of committees of which they were members. Mr. Loren
attended 44.4% of the aggregate number of meetings he was eligible to attend.

Non-employee Directors receive an annual fee of $22,500 plus $1,000 for
each Board of Directors Meeting attended. In addition, on October 1 of each year
non-employee Directors receive options to purchase that number of Class A Shares
which represent a fair market value of $40,000 (adjusted annually for increases
in the consumer price index). Non-employee Directors who serve on a committee
receive an additional $500 for each committee meeting attended. Committee
Chairmen receive an additional $1,500 per year. No Director who is an employee
of the company receives any compensation for services as a Director or committee
member.

The company has entered into agreements (the "Indemnification
Agreements") with each Director of the company providing for contractual
protection of certain rights of indemnification from the company.

The Indemnification Agreements provide for indemnification of Directors
to the fullest extent permitted by law. They cover any and all fees, expenses,
judgments, fines, penalties and amounts paid in settlement incurred in
connection with the fact that such Director is or was a Director, officer,
employee, agent or fiduciary of the company or is or was serving at the request
of the company as the company's representative with respect to another entity.
Indemnification would not be available, however, if it is determined that such
indemnification is not permitted under applicable law and such determination is
not successfully challenged before a court. A Director would also not be
entitled to indemnification in connection with a proceeding initiated by such
Director prior to a Change in Control (as defined in the Indemnification
Agreements) unless such proceeding was authorized or consented to by the
company's Board of Directors.

The Indemnification Agreements provide for the prompt advancement of all
expenses incurred in connection with any proceeding and obligate the Director to
reimburse the company for all amounts so advanced if it is subsequently
determined, as provided in the Indemnification Agreements, that the Director is
not entitled to indemnification.

If it is determined that the Director would not be permitted to be
indemnified under applicable law (and, therefore, is not entitled to
indemnification under the Indemnification Agreements), the Indemnification
Agreements provide that the Director may disagree with such determination and
seek a judicial resolution of that right to indemnification. The Indemnification
Agreements provide that, subject to applicable law, the Director challenging
such determination is entitled to indemnification for, and advancement of, all
fees and expenses incurred in any proceeding seeking a determination of
eligibility for indemnification under the Indemnification Agreements, the
company's Amended Articles of Incorporation, the company's Consolidated Code of
Regulations or any Director's liability insurance policy.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTING CLEVE L.
KILLINGSWORTH, JR., DALE L. MEDFORD, GAYLE B. PRICE, JR., AND KENNETH W.
THIELE EACH FOR A TERM OF THREE (3) YEARS, AND ROBERT C. NEVIN FOR A
TERM OF ONE (1) YEAR.

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EXECUTIVE COMPENSATION

The following tables and narrative text discuss the compensation paid to
the company's Chief Executive Officer and the company's four other most highly
compensated executive officers during the fiscal year ended September 30, 1996,
and the two prior fiscal years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------ --------------------------
NAME AND OPTION LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARDS (#)(1) PAYOUTS ($) COMPENSATION ($)(2)
- ----------------------- ---- ---------- --------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
David R. Holmes 1996 466,575 487,095 439,600 466,575 38,232
Chairman of the Board, 1995 452,975 362,380 53,280 452,975 34,460
President and Chief 1994 439,250 351,400 624,320 409,229 24,394
Executive Officer

Robert C. Nevin 1996 286,463 302,985 18,480 229,170 36,977
President, Business 1995 278,120 221,757 24,720 222,496 32,950
Systems Division 1994 269,750 194,980 345,040 201,050 28,401

Joseph N. Bausman 1996 286,463 258,298 18,480 229,170 25,777
President, Automotive 1995 278,120 214,152 24,720 222,496 23,080
Systems Division 1994 269,750 215,800 345,040 201,050 16,914

Dale L. Medford 1996 218,003 216,689 11,520 152,602 13,936
Vice President 1995 211,657 158,744 15,360 148,161 12,820
Corporate Finance and 1994 205,250 153,938 228,240 133,856 11,915
Chief Financial Officer

H. John Proud 1996 221,250 131,667 13,920 177,000 11,380
President, Healthcare 1995 194,815 146,113 11,040 141,908 10,508
Systems Division
</TABLE>

(1) Option Awards reflect the company's September, 1996, two-for-one stock
split.

(2) The 1996 amounts disclosed in this column include:

<TABLE>
<CAPTION>
ABOVE MARKET
DEFINED IMPUTED INTEREST INTEREST ON TOTAL
CONTRIBUTION ON SPLIT DOLLAR DEFERRED OTHER
NAME PLANS ($) LIFE INSURANCE ($)(1) COMPENSATION ($)(2) COMPENSATION ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David R. Holmes 2,697 23,815 11,720 38,232
Robert C. Nevin 2,475 20,254 14,248 36,977
Joseph N. Bausman 2,475 16,202 7,100 25,777
Dale L. Medford 2,697 8,053 3,186 13,936
H. John Proud 2,697 8,683 0 11,380
</TABLE>

(1) The life insurance component is provided on a split dollar basis
with each participant paying the term equivalent premium and the
company paying the remainder of the premium. At termination of
the policy, all premium payments made by the company are
reimbursed. Interest was imputed on the amount receivable from
the participant at the company's short-term investment rate.

(Footnotes continued on following page)

<PAGE> 11
(2) The named executives (except Mr. Proud) entered into Deferred
Compensation Agreements with the company whereby income was
deferred for four years in order to provide individual
retirement benefits at age 65 of up to $100,000 per year for a
fixed term of 15 years. The deferrals were completed as of
September 30, 1989. Benefits payable are reduced for early
retirement and lump sum distributions are available at the
participant's discretion. The amounts presented represent the
above market interest earned on the funds deferred and were
calculated assuming a 15 year payment stream at age 65.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
--------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR
NUMBER OF EMPLOYEES IN EXERCISE OR OPTION TERM
OPTIONS FISCAL YEAR BASE PRICE EXPIRATION --------------------------
NAME GRANTED(2) (%) ($/SHARE)(2) DATE 5%($) 10%($)
- ----------------- ---------- ------------ ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David R. Holmes 439,600 44.5193 17.25 10/02/05 4,768,971 12,085,508
Robert C. Nevin 18,480 1.8715 17.25 10/02/05 200,499 508,053
Joseph N. Bausman 18,480 1.8715 17.25 10/02/05 200,499 508,053
Dale L. Medford 11,520 1.1667 17.25 10/02/05 124,974 316,709
H. John Proud 13,920 1.4097 17.25 10/02/05 151,010 382,689
</TABLE>

(1) No Stock Appreciation Rights (SARs) were awarded in the 1996 fiscal year.

(2) Grants were made on October 2, 1995, with the exercise price equal to the
fair market value ($17.25) on that date. Options vest 25% annually
beginning October 2, 1996, except for 400,000 of Mr. Holmes' options
which vest 100% on October 1, 2000. The number of shares and option price
reflect the September, 1996, stock split.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FY-END FY-END
ON REALIZED EXERCISABLE/ EXERCISABLE/
EXERCISE VALUE UNEXERCISABLE UNEXERCISABLE
NAME (#)(1) ($) (#) ($)
- ----------------- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
David R. Holmes 39,400 313,913 0 / 1,071,720 0 / 12,680,415
Robert C. Nevin 39,768 726,676 23,740 / 367,180 385,436 / 4,941,577
Joseph N. Bausman 0 0 13,620 / 367,180 207,578 / 4,941,577
Dale L. Medford 5,802 93,059 37,760 / 242,160 721,095 / 3,259,800
H. John Proud 0 0 9,600 / 168,920 150,844 / 2,248,945
</TABLE>

(1) The number of shares reflects the September, 1996, stock split.

10
<PAGE> 12
LONG-TERM INCENTIVE PLAN -- AWARDS
IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
PERFORMANCE OR -------------------------------
OTHER OTHER PERIOD THRESHOLD TARGET MAXIMUM
NAME RIGHTS UNTIL PAYOUT ($) ($) ($)
- ----------------- ------ -------------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
David R. Holmes (1) (1) 0 233,288 466,576
Robert C. Nevin (1) (1) 0 114,585 229,170
Joseph N. Bausman (1) (1) 0 114,585 229,170
Dale L. Medford (1) (1) 0 76,301 152,602
H. John Proud (1) (1) 0 88,500 177,000
</TABLE>

(1) Participants in the Intermediate Plan (including Mr. Holmes who
participates in his own substantially similar plan), which is considered
a long-term incentive plan, are determined strictly by grade level
within the company. No formal awards are made and there are no vested
rights. Annual amounts are paid to participants with the amount of the
award dependent upon the company's three year average return on equity.
The periods considered in the calculation are the most recent fiscal
year and the preceding two years. The potential annual payout amounts
reported here were calculated using fiscal year 1996 salaries. The
payout for fiscal year 1996 is included in the LTIP Payout column of the
Summary Compensation Table. Additional information on the Intermediate
Plan appears on page 17.

PENSION PLAN TABLE (1)

<TABLE>
<CAPTION>
YEARS OF SERVICE (2)
--------------------------------------------------------
REMUNERATION 10 15 20 25 30
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 45,000 $ 67,500 $ 90,000 $112,500 $135,000
400,000 60,000 90,000 120,000 150,000 180,000
500,000 75,000 112,500 150,000 187,500 225,000
600,000 90,000 135,000 180,000 225,000 270,000
700,000 105,000 157,500 210,000 262,500 315,000
800,000 120,000 180,000 240,000 300,000 360,000
900,000 135,000 202,500 270,000 337,500 405,000
1,000,000 150,000 225,000 300,000 375,000 450,000
1,100,000 165,000 247,500 330,000 412,500 495,000
1,200,000 180,000 270,000 360,000 450,000 540,000
1,300,000 195,000 292,500 390,000 487,500 585,000
1,400,000 210,000 315,000 420,000 525,000 630,000
1,500,000 225,000 337,500 450,000 562,500 675,000
1,600,000 240,000 360,000 480,000 600,000 720,000
1,700,000 255,000 382,500 510,000 637,500 765,000
1,800,000 270,000 405,000 540,000 675,000 810,000
</TABLE>

(1) This table sets forth the annual retirement benefits payable under the
company's qualified pension plan and the non-qualified Supplemental
Retirement Plan ("Supplemental Plan") upon retirement at age 65 based on
an employee's final average annual compensation. Compensation as defined
in the Plans includes Salary, Bonus and Long-Term Incentive Plan
payments. The qualified pension benefits are reduced by 1.67% of monthly
primary Social Security benefits multiplied by years of credited service
up to a maximum of 30 years. The Supplemental Plan provides benefits to
participants who would lose benefits because of legislative limits
imposed on qualified plans or because of their participation in the
company's Non-Qualified Deferred Compensation Plan. Additional benefits
provided under the Supplemental Plan for participants with employment
agreements are not included in the table but are discussed below with
employment agreements. Participation in the Supplemental Plan requires
approval by the Board. Optional payment forms of actuarial equivalence
are also available.

(Footnotes continued on following page)

11
<PAGE> 13
(2) Respective years of service as of September 30, 1996, for the persons
named in the Summary Compensation Table are: Mr. Holmes, 11; Mr. Nevin,
10; Mr. Bausman, 31; Mr. Medford, 22; and Mr. Proud, 25.

In addition to the plans discussed above, the company also provides
compensation or death benefits generally payable over 10 years, beginning
at the earlier of retirement or death of the employee. The compensation
benefit is equal to either 100%, 150% or 200% of the current year's total
cash compensation depending upon the respective officer's grade level.
The company generally insures against its obligations through the
purchase of life insurance policies on the lives of such officers.

EMPLOYMENT AGREEMENTS

Effective October 1, 1995, Mr. Holmes entered into an amended and
restated agreement by which he agrees to remain employed by the company as its
President and Chief Executive Officer until October 3, 2000, at an annual base
salary of $436,300 which may not be reduced without his consent or resolution by
arbitration. This base salary may be increased from time to time consistent with
the recommendations of the Compensation Committee and as approved by the Board
of Directors. The retirement benefit at age 59 is 65% of final average annual
compensation. The age 55 early retirement benefit is 61% of final average annual
compensation which thereafter increases by an additional 1% of final average
annual compensation for each additional twelve month period of employment,
including retirement after age 59.

Mr. Holmes' agreement also provides for special grants of non-qualified
stock options on October 1, 1995 and October 1, 1996, of 400,000 shares and
200,000 shares, respectively. (Reflects the September 3, 1996, two-for-one stock
split.) Both grants are at fair market value on the date of the grant. These
grants are in addition to the customary annual awards made under the company's
stock option plan in which Mr. Holmes is a participant.

Messrs. Bausman, Nevin and Proud have Employment Agreements by which
they each agree to remain employed by the company until, respectively, May 31,
2000, September 30, 1997, and September 1, 1999, at respective annual base
salaries of $280,160, $252,000 and $210,000 which may not be reduced without the
individual's consent or resolution by arbitration. These base salaries may be
increased from time to time consistent with the recommendations of the
Compensation Committee and as approved by the Board of Directors.

Age 65 retirement benefits for Messrs. Bausman and Nevin are 65% of
final average annual compensation. Early retirement benefits for them are 55% of
final average annual compensation (reduced by 1/15 for each year of service, as
defined in the company's pension plan, less than 15) if they retire after
reaching age 55 and before reaching age 58. If they elect early retirement after
reaching age 58, their respective annual retirement benefits shall be 55% of
final average annual compensation plus 1% for each additional twelve-month
period of service after age 58, but before reaching age 65, with no reduction if
their respective years of service are fewer than 15. Mr. Proud's retirement
benefits are those provided under the company-sponsored qualified and
non-qualified programs in which he participates.

The Employment Agreements of Messrs. Holmes, Nevin and Bausman also
provide for certain disability and death benefits, including retirement benefits
as described above in case of permanent disability. The Agreements also provide
for continued medical coverage of the surviving spouses for a period which ends
at the earlier of the spouse's death or 42 months after the employee's death.
During the terms of the Agreements and for two years after the respective
terminations of them, or the cessation of payments made under them (whichever is
later), each employee shall not compete directly or indirectly with the company.
Mr. Proud's coverage in the case of death or disability is that provided under
the company-sponsored programs in which he participates. However, if Mr. Proud's
Agreement is not renewed, his non-competition restriction shall continue for
only one year.

12
<PAGE> 14
All four Agreements generally provide that if the employee is discharged
by the company before the expiration date other than for cause (as defined in
the Agreements), or if the company fails to renew the Agreements other than for
cause, the employee shall be entitled to receive (i) payments equal to the
employee's Annual Compensation Value (as defined in the Agreements), reduced by
70% of compensation from subsequent employment (reduction does not apply to Mr.
Proud) (a) for two years from the date of termination of employment with respect
to discharge before the expiration of the Agreements, or (b) for one year from
the expiration of the Agreements in the case of non-renewal; (ii) credit for
certain amounts of additional service under the Supplemental Plan (iii)
continuing coverage under company-sponsored medical benefits programs ending at
the earlier of employee's securing other employment or two years from
termination; (iv) reimbursement of up to $20,000 in out-placement fees; and (v)
required payments under the employee's (except for Mr. Proud) Deferred
Compensation Agreement.

These Employment Agreements also contain provisions which may require the
company to fund an escrow immediately in the event of a "change in control" (as
defined in such Agreements) of the company. Funding is required upon the
occurrence of any "escrow funding event," as defined in such Agreements. The
company estimates that if Messrs. Holmes, Nevin, Bausman and Proud had been
terminated on November 1, 1996, following a change in control of the company,
the total severance payments by the company to the officers under their
Agreements would have been $9,877,501. If such termination were to occur, the
non-competition restrictions in the respective Employment Agreements are void
and non-binding.

These Employment Agreements also provide that: (i) the employee will be
entitled to receive the escrowed amount upon a Change in Control Termination
that occurs within 24 months of a change in control; (ii) the employee will
receive an additional 24 months of service credit under the Supplemental Plan
following a Change in Control Termination; (iii) the payments to be made upon a
Change in Control Termination include a payment equal to three times the
employee's annual salary in effect at the date of termination or immediately
prior to the change in control (whichever is higher) and his average bonus with
respect to the three calendar years preceding the year in which his termination
of employment occurs; (iv) if the total amount of any payments payable to the
employee upon the termination of the employee's employment or upon a change in
control (whether or not pursuant to the severance provisions) would be subject
to an excise tax as "parachute payments" pursuant to Sections 280G and 4999 of
the Internal Revenue Code of 1986, the amount of the severance payments under
the severance provisions will be reduced to avoid such excise tax, but only if
the net effect of such reduction is to increase the net after tax income to the
executive; and (v) the amount paid into escrow shall be the amount described in
clause (iii) as may be limited pursuant to clause (iv) and for periodic
adjustment of such amount. Mr. Bausman's Employment Agreement further provides
that (i) if he voluntarily terminates his employment or is discharged by the
company prior to his attainment of age 55, he will be entitled to receive under
the Supplemental Plan a portion of his age 55 benefit prorated to reflect his
service with the company after November 9, 1987, in excess of his vested Pension
Plan benefit and the Officer's Life Insurance and Compensation Program benefits;
and (ii) upon a Change in Control Termination prior to the date he attains age
55, he will be entitled to receive, commencing at age 55, retirement benefits
equal to 55% of his Final Average Compensation.

13
<PAGE> 15
PERFORMANCE GRAPH
FISCAL YEARS 1992 THROUGH 1996

Comparison of Five Year Cumulative Total Return Among The Reynolds and Reynolds
Company, S&P 500 Index and a Composite of Two Indices

================================================================================

<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Reynolds S&P 500 Peer Group
<S> <C> <C> <C>
9/91 100 100 100
9/92 175 111 101
9/93 318 125 124
9/94 412 130 146
9/95 572 169 209
9/96 880 203 264

</TABLE>

Illustrates the value of $100 invested at Sept. 30, 1991 assuming
reinvestment of dividends.

================================================================================

The graph compares the cumulative total shareholder return on a $100 investment
in the company's Class A Shares for the last five fiscal years with the
cumulative total return on $100 invested in each of (i) the S&P 500 Index and
(ii) a composite of two indices. The composite index is comprised of the S&P
Computer Software and Services Index and a self-constructed business forms index
and is adjusted each year to reflect the percent of the company's business
segments' revenues represented by each index. The company selected the following
business forms companies for its self-constructed index: American Business
Products, Inc., Ennis Business Forms, Inc., Moore, Ltd., New England Business
Services, Inc., Standard Register Company and Wallace Computer Services, Inc.
Duplex Products Inc. ("Duplex") previously reported in the self-constructed
business forms index was excluded for all years presented as Duplex was acquired
by the company in May 1996. The graph assumes all investments were made at
market value on September 30, 1991, and the reinvestment of all dividends.

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

COMMITTEE

The Compensation Committee of the Board of Directors consists entirely of
nonemployee, independent Directors. The Committee reviews, recommends and
approves changes to the company's compensation policies and programs applicable
to the company's officers and senior personnel.

14
<PAGE> 16
COMPENSATION POLICY AND OBJECTIVES

Our primary goal as members of the Compensation Committee is unchanged
from last year: to assure that the compensation provided to executives is linked
to the company's business strategies and objectives, thereby aligning the
financial interests of senior management with those of the shareholders. Beyond
that, our priorities are to assure that the executive compensation programs
enable the company to attract, retain and motivate the high caliber executives
required for the success of the business. These objectives are achieved through
a variety of compensation programs, summarized below, which support both the
current and long-term performance of the business.

BASE SALARY

Base salaries for executive officers are determined by evaluating the
responsibilities of the position and comparing it with other executive positions
in the marketplace. From time to time the company's compensation consultant
surveys senior executive salaries from a representative sampling (approximately
20) of companies in the computer services and business forms industries. The
company's pay grade levels are then set at approximately the competitive
mid-range. Each of the executive officers is assigned a pay grade based on that
competitive marketplace data. Individual salaries may then vary somewhat below
or above the mid-range, based upon the individual's performance and contribution
to company success, tenure on the job and internal equity. Annual salary
adjustments are determined by individual performance within an officer salary
increase budget approved by the Committee. Base salary levels for executive
officers increased an average of 4% effective January 1, 1996. The provisions of
this paragraph apply to all executives except those whose employment agreements
may contain terms which vary from these provisions. See pages 12-13 of this
Proxy Statement.

ANNUAL INCENTIVES

At the Annual Meeting of Shareholders on February 15, 1996, a significant
majority of shareholders approved a separate performance-based, incentive plan
("CEO Plan") for the company's Chief Executive Officer ("CEO"), the terms of
which are substantially similar to the annual and intermediate compensation
plans for the other officers. The purpose of this separate CEO Plan was to
qualify all CEO compensation in excess of $1 million for deductibility under the
applicable provisions of the Internal Revenue Code.

Officers have an opportunity to earn annual bonuses ("Annual Plan") based
on performance against financial targets established by the Committee. Since
1987, the company has used corporate return on equity ("ROE") as its primary
measure of corporate performance. During fiscal 1996, the Committee introduced
growth in sales and growth in earnings as additional measures for determining
annual bonuses. ROE is weighted more heavily (75%) than the growth components
(25%) in determining annual bonuses. Also, the ROE performance level which must
be achieved before any bonus is paid was raised as was the maximum bonus
achievable. At the divisional level, other measures of performance for the
annual bonus include sales, operating income and return on net assets. In
addition, the Committee approves adjustments to the bonus formula as may be
necessary from time to time to insure against unmerited windfalls or penalties
due to accounting changes or other non-operating factors. Over time, the company
believes it has found that linking executive pay principally to corporate ROE
directly ties the executive's interests and rewards to those of the shareholder.
Under the structure of the Annual Plan in effect for fiscal 1996, no bonus is
paid until a threshold corporate ROE of 10% is achieved; maximum payout requires
a combination of a 28% ROE and a 15% growth factor in sales and earnings. The
annual bonus payout can range between 0% of annual salary to 90% of annual
salary. For fiscal 1996, because the company achieved a 26.6% ROE and healthy
growth of both sales and earnings (which varied by division), the annual bonus
payout for the executive officers (including Mr. Holmes under his substantially
similar but separate plan) averaged 77.4% of annual salary.

Another annual incentive plan is the personal performance bonus. This
plan is designed to reward all officers for the achievement of financial and
non-financial goals which are agreed upon by the officer and the officer's
superior. In the case of Mr. Holmes, his annual goals are agreed upon by this
Committee in consultation with Mr. Holmes. Examples of financial goals have been
ROE, sales, return on net assets and operating income. Examples of non-financial
goals have been market share growth, total quality measures, customer
satisfaction and the strengthening of a key organizational process. With the
exception of Mr. Holmes and the three division

15
<PAGE> 17
presidents, whose personal performance bonuses are determined by the
Compensation Committee during its year-end review, all other executive officers
have their personal performance bonus determined during year-end evaluations by
the respective individual to whom they report. Depending on an individual's
performance against goals, this bonus can range between 0% to 20% of annual
salary. For fiscal 1996 this personal performance bonus for the named executive
officers ranged from 15% to 20% of annual salary.

LONG-TERM INCENTIVES

STOCK OPTIONS

To further align the interests of shareholders and management, the
company grants incentive stock options annually to approximately 300 officer and
director-level employees. The number of shares awarded is driven by a pay grade
level formula which is established and reviewed from time to time by the
Compensation Committee. The Committee assigns a percentage to each pay grade
level. That percentage is multiplied by the salary mid-point for that grade
level and the result is divided by the fair market value of the company's stock
on October 1. For all officers during fiscal year 1996, the percentage of annual
salary used in determining stock option grants ranged from 40% to 125%. The
exercise price is the fair market value of the stock on the date of the grant.
The options, which have a ten year life, are not exercisable during the first
year after the grant. Thereafter, on each of the first four anniversaries of the
grant, twenty-five percent of the options become exercisable.

Such stock options provide incentive for the creation of shareholder
value, since the full benefit of the compensation package cannot be realized
unless an appreciation in the price of the company's common shares occurs over a
specified number of years.

STOCK OWNERSHIP GUIDELINES
(Share information reflects September, 1996, two-for-one stock split)

During fiscal year 1994, the Compensation Committee established suggested
stock ownership guidelines for all officers of the company. These guidelines
specify an appropriate level of ownership of company stock as a multiple of the
officer's annual base salary. These multiples range from a high of 4.25 times
annual salary (in the case of Mr. Holmes) to a low of 1.5 times annual salary.
The Committee thought it appropriate to permit the officers to achieve these
ownership guidelines over a ten year period in increments of 10% per year. To
encourage the officers to make steady progress toward meeting the guidelines,
the Committee determined that if an officer owns a quantity of shares sufficient
to meet the ownership guidelines for that year the officer would be granted
options on 20% more shares in addition to the officer's standard stock option
grant for that year. If, for example, the standard stock option grant for that
year were one hundred shares, the officer would receive options on twenty
additional shares of stock for having met the guidelines for that year. As of
September 1, 1996, stock ownership among the fifty officers stood at
approximately 1,710,300 shares representing a market value of approximately
$42.5 million. The Committee believes that these guidelines will have the
positive effect of further aligning the interests of the officer group with
those of all shareholders.

INTERMEDIATE INCENTIVE COMPENSATION

Certain senior officers, including all named executive officers (except
Mr. Holmes), also participate in an Intermediate Incentive Compensation Plan.
This plan, which is paid annually, is based on a three-year average return on
equity, and is designed to focus and reward senior management on producing
consistent longer-term financial results. For fiscal 1996 the payout from the
CEO Plan (for Mr. Holmes) and from the Intermediate Incentive Compensation Plan
for the other named executive officers ranged from 70% to 100% of annual salary.

CEO COMPENSATION
(Share information reflects September, 1996, two-for-one stock split)

Mr. Holmes has served as Chairman, President and Chief Executive Officer
since August 1990, and President and Chief Executive Officer since January 1989.
The Performance Graph on page 14 illustrates the company's accomplishments
during much of this period. In fiscal 1996 the company achieved record revenues
and earnings and exceeded a 26% ROE. Shareholders realized a 52% increase in
share value during the year. Mr.

16
<PAGE> 18
Holmes' 1996 compensation of $1,458,477 (as shown in the Summary Compensation
Table on page 9) included a market-priced base salary of $466,575. Under the CEO
Plan he is eligible for annual and intermediate incentive compensation the
performance standards of which are substantially similar to those in the annual
and intermediate compensation plans for other named executive officers. The
Committee awarded a personal performance bonus of $93,315 to Mr. Holmes
following its year-end evaluation. On October 2, 1995, the Committee awarded Mr.
Holmes an annual stock option grant for 39,600 Class A Shares which was based on
the formula (explained above) applicable to his position. In addition Mr. Holmes
received a grant of 400,000 non-qualified stock options pursuant to the terms of
his Employment Agreement described on pages 12 and 13.

SUMMARY

The Committee believes that a high caliber, motivated management team is
critical to sustained business success.

As in prior years, in 1996 a significant portion (approximately 66%) of
the total compensation potential for the named executive officers was "at risk"
and payable based on individual and corporate performance-based variables that
will motivate and focus management on those issues that drive the success of the
company. The Committee intends to continue its performance-based pay policy
which links executive rewards to shareholder returns.

THE COMPENSATION COMMITTEE

Dr. David E. Fry
Allan Z. Loren
Gayle B. Price, Jr.
Martin D. Walker, Chairman

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No Executive Officer or Director is or has been indebted to the company
during the last fiscal year in excess of $60,000.

PROPOSAL II
INCREASE IN THE NUMBER OF AUTHORIZED CLASS A
AND CLASS B COMMON SHARES

The Board of Directors proposes that Article Fourth, Section 1 of the
Amended Articles of Incorporation of The Reynolds and Reynolds Company -
Restatement Effective February 9, 1995 ("Amended Articles of Incorporation") be
amended to increase the number of authorized Class A Shares (par value $.625)
from 120,000,000 to 240,000,000 (an increase of 120,000,000) and to increase the
number of authorized Class B Shares (par value $.03125) from 30,000,000 to
40,000,000 (an increase of 10,000,000).

BACKGROUND ON INCREASE IN AUTHORIZED SHARES

On August 6, 1996, the Board of Directors declared a two-for-one stock
split which was paid to shareholders on September 17, 1996. Payment of that
dividend required 46,181,896 Class A Shares and 10,000,000 Class B Shares which
significantly reduced the number of authorized shares available for general
corporate purposes.

17
<PAGE> 19

As of November 1, 1996, there were 92,363,392 Class A Shares issued and
outstanding. An additional 10,258,426 Class A Shares were reserved for issuance
on the exercise of outstanding stock options and the conversion of the
outstanding Class B Shares. As a result, there now remain only 17,378,182
authorized Class A Shares available for future issuance for general corporate
purposes. That amount is insufficient to accomplish another two-for-one stock
split and limits the flexibility of the Board to issue Class A Shares for other
general corporate purposes, including acquisitions.

Also as of November 1, 1996, there were 20,000,000 Class B Shares
issued and outstanding with only 10,000,000 authorized Class B Shares remaining.
Similarly, that amount is insufficient to accomplish another two-for-one stock
split.

RESULT OF APPROVAL - INCREASE IN AUTHORIZED SHARES

Approval of the proposed increase by 120,000,000 in the number of
authorized Class A Shares will mean that 137,378,182 Class A Shares will be
available for future issuance by the Board in the exercise of its sound
discretion for general corporate purposes. Those purposes include, by way of
example, stock splits or stock dividends, possible future acquisitions, the
Stock Option Plan - 1995, the 1996 Shares Plan (the broad based stock option
plan for all full time employees) or, if deemed advisable, issuances and sales
in order to raise additional corporate funds. The company has no present plans
for any such issuances to raise additional funds.

Approval of the proposed increase by 10,000,000 in the number of
authorized Class B Shares will mean that 20,000,000 Class B Shares will be
available for future stock splits for the sole Class B shareholder, Richard H.
Grant, III, a Director of the company.

The Board of Directors recommends 120,000,000 as the amount of the
increase in the number of authorized Class A Shares to assist the company's
long-range planning and to avoid the need to return to shareholders frequently
for authorizations of additional shares.

Except for the approximate $350,000 filing fee payable to the Ohio
Secretary of State in connection with the increased number of authorized
Shares, the company will incur no substantial expenses or costs related to this
increase in authorized Shares. The Board of Directors does not intend to
infringe upon or detract from the usual prerogatives of the company's
shareholders with respect to shareholder approval of future issuances of the
additional Shares as described below.

Except for the Class A Shares which will be reserved under the terms of
the Stock Option Plan - 1995 and the 1996 Shares Plan, there are no present
plans, understandings or agreements with respect to the issuances of any
additional Class A Shares or Class B Shares for which authorization is being
sought. However, the company from time to time conducts preliminary
investigations and discussions which might lead to the issuance of Class A
Shares for the acquisition of other businesses. Management does not intend to
seek any further shareholder approval before issuing any additional Class A
Shares in future transactions unless such approval is required by law, by the
company's Amended Articles of Incorporation or Consolidated Code of Regulations,
or by the rules of any stock exchange upon which the stock of the company may be
listed. A possible dilution in the equity ownership of the present shareholders
may result if and when the additional Class A Shares are issued. The holders of
Class A Shares have no preemptive rights.

The full text of the proposed amendment to Article Fourth, Section 1 of
the Amended Articles of Incorporation appears as Exhibit A (Part I) to the Proxy
Statement. The affirmative vote of the holders of at least two-thirds of the
total number of outstanding Class A and Class B Shares, voting as one class,
will be necessary for the approval of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDING THE AMENDED ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED CLASS A AND CLASS B
COMMON SHARES.

<PAGE> 20
PROPOSAL III
RECLASSIFICATION OF CLASS A AND CLASS B COMMON
SHARES TO "NO PAR VALUE" SHARES

The Board of Directors proposes that Article Fourth, Section 1 of the
Amended Articles of Incorporation of The Reynolds and Reynolds Company -
Restatement Effective February 9, 1995 ("Amended Articles of Incorporation") be
amended to reclassify all Class A Shares (par value $.625) and all Class B
Shares (par value $.03125) to "no par value" shares.

BACKGROUND ON CHANGE FROM PAR VALUE SHARES TO NO PAR VALUE SHARES

In November, 1992, February, 1994 and August, 1996 the Board of
Directors declared two-for-one splits of the Class A and Class B Shares. Because
only the shareholders may amend the Amended Articles of Incorporation of the
company, those splits occurred without the customary adjustment to the
respective par values of the Class A and Class B Shares. Had those splits been
approved by the shareholders with an accompanying amendment to the Articles of
Incorporation to adjust par value, the current par value of a Class A Share
would be $0.078125 or less than eight cents per share and the current par value
of a Class B Share would be $0.0039 or less than four-tenths of one cent.

The company's balance sheet was adjusted to record these three splits
(without the adjustment of the per share par value) by a variety of transfers
among the capital accounts. The transfers are purely academic and result in
needlessly confusing the presentation of the capital accounts. The underlying
equity of any shareholder was not affected.

The Board of Directors believes that a change to Class A Shares (no par
value) and Class B Shares (no par value) will increase its flexibility to
authorize future stock splits when appropriate and will permit the combination
of the disparate common stock capital accounts into two simple and
straightforward accounts: "Class A Shares (no par value)" and "Class B Shares
(no par value)."

RESULT OF APPROVAL - RECLASSIFICATION FROM PAR VALUE SHARES TO NO PAR VALUE
SHARES

Approval of the reclassification from par value Shares to no par value
Shares will simplify the presentation of the capital accounts on the company's
balance sheet and will enhance the flexibility of the Board of Directors to
authorize stock splits. There will be no reduction in the capital of the company
or the underlying equity of any shareholder and there will be no impact
(positive or negative) on the company's earnings.

The full text of the proposed amendment to Article Fourth, Section 1 of
the Amended Articles of Incorporation appears as Exhibit A (Part II) to the
Proxy Statement. The affirmative vote of the holders of at least two-thirds of
the total number of outstanding Class A and Class B Shares, voting as separate
classes, will be necessary for the approval of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDING THE AMENDED ARTICLES
OF INCORPORATION TO RECLASSIFY ALL CLASS A AND CLASS B COMMON SHARES TO
"NO PAR VALUE" SHARES.

<PAGE> 21
PROPOSAL IV
APPOINTMENT OF INDEPENDENT AUDITORS

The Audit Committee of the Board of Directors recommends that Deloitte &
Touche LLP be appointed as independent auditors of the company for one year.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will have the opportunity to make statements if they so
desire and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPOINTMENT OF DELOITTE & TOUCHE
LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.

SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the company by September 8, 1997,
for inclusion in the company's Proxy Statement and Proxy relating to the 1998
Annual Meeting of Shareholders.

Shareholder nominations of persons to be elected to the Board of
Directors at the February 12, 1998 Annual Meeting must be delivered to or mailed
and received at the principal executive offices of the company no earlier than
November 12, 1997, and no later than December 12, 1997.

OTHER MATTERS

Management does not intend to present to the Meeting any matters other
than those described above. It does not know of anything that will be presented
by other parties. However, if any other matters shall properly come before the
Meeting, the Appointed Proxies intend to vote on such matters according to their
discretion and best judgment.

BY ORDER OF THE BOARD OF DIRECTORS

ADAM M. LUTYNSKI, SECRETARY

Dayton, Ohio
January 6, 1997

20
<PAGE> 22
EXHIBIT A

(PART I)
(Assuming passage of Proposal II)

Amendment to Article Fourth, Section 1 of the Amended Articles of
Incorporation

FOURTH: SECTION 1. Authorized Capital Stock.

The total number of shares of capital stock that the Corporation
is authorized to issue is 340,000,000, divided into three classes
as follows:

(i) 240,000,000 Class A Common Shares, (par value $.625)
(hereafter referred to as "Class A Common Shares");

(ii) 40,000,000 Class B Common Shares, (par value $.03125)
(hereafter referred to as "Class B Common Shares" and referred
collectively with the Class A Common Shares as "Common Shares");
and

(iii) 60,000,000 Preferred Shares, no par value (hereafter
referred to as "Preferred Shares").

(PART II)
(Assuming passage of Proposals II and III)

Amendment to Article Fourth, Section 1 of the Amended Articles of
Incorporation

FOURTH: SECTION 1. Authorized Capital Stock.

The total number of shares of capital stock that the Corporation
is authorized to issue is 340,000,000, divided into three classes
as follows:

(i) 240,000,000 Class A Common Shares, no par value (hereafter
referred to as "Class A Common Shares");

(ii) 40,000,000 Class B Common Shares, no par value (hereafter
referred to as "Class B Common Shares" and referred collectively
with the Class A Common Shares as "Common Shares"); and

(iii) 60,000,000 Preferred Shares, no par value (hereafter
referred to as "Preferred Shares").

NOTE: If Proposal II (Increase in Authorized Shares) is defeated and Proposal
III (Reclassification to No Par Value Shares) is adopted Article FOURTH, Section
1 will read as follows:

<PAGE> 1

FOURTH: SECTION 1. Authorized Capital Stock.

The total number of shares of capital stock that the Corporation
is authorized to issue is 210,000,000, divided into three classes
as follows:

(i) 120,000,000 Class A Common Shares, no par value (hereafter
referred to as "Class A Common Shares");

(ii) 30,000,000 Class B Common Shares, no par value (hereafter
referred to as "Class B Common Shares" and referred collectively
with the Class A Common Shares as "Common Shares"); and

(iii) 60,000,000 Preferred Shares, no par value (hereafter
referred to as "Preferred Shares").