<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 0)
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 Materials Pursuant to Section 240.14a-11(c) or Section
240.14-a12
BARRA, INC.
(Name of Registrant as Specified in its Charter)
BARRA, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per until 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:
------------------------------------------------------------
<PAGE>
BARRA, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 20, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of BARRA,
Inc., a California corporation (the "Company"), will be held at 2100 Milvia
Street, Berkeley, California 94704, on Thursday, July 31, 1997, at 2:00 p.m.
local time, for the following purposes:
1. To elect directors to serve for the ensuing year and until their successors
are duly elected and qualified. Management's slate of directors is
A. George Battle, John F. Casey, M. Blair Hull, Norman J. Laboe, Ronald J.
Lanstein and Andrew Rudd.
2. To amend the BARRA, Inc. Stock Option Plan to increase the number of shares
of the Corporation's Common Stock reserved for issuance thereunder by seven
hundred thousand (700,000) shares, to a total of two million nine hundred
thousand (2,900,000).
3. To ratify the adoption of the BARRA, Inc. Directors Option Plan and the
authorization of one hundred thousand (100,000) shares of the Company's
Common Stock for issuance thereunder.
4. To ratify the selection of Deloitte & Touche LLP as independent auditors of
the Company for the fiscal year ended March 31, 1998.
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only shareholders of record at the close of business on June 2, 1997 are
entitled to notice of and to vote at the meeting. The transfer books will not
be closed.
All shareholders are cordially invited to attend the meeting in person. Whether
or not you plan to attend the meeting, please mark, sign and date the enclosed
proxy and return it as promptly as possible in the envelope enclosed for that
purpose to assure representation of your shares and a quorum at the meeting.
Any shareholder attending the meeting may vote in person even if such
shareholder has returned a proxy.
By Order of the Board of Directors
/s/ Andrew Rudd
- --------------------
Andrew Rudd
Andrew Rudd
Chairman of the Board and Chief Executive Officer
Berkeley, California
June 20, 1997
<PAGE>
BARRA, INC.
2100 MILVIA STREET
BERKELEY, CALIFORNIA 94704
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of BARRA, Inc., a California
corporation (the "Company" or "BARRA"), for use at the Annual Meeting of
Shareholders to be held Thursday, July 31, 1997 at 2:00 p.m., local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the principal executive offices of BARRA, located at 2100 Milvia
Street, Berkeley, California 94704. The telephone number at that address is
(510) 548-5442.
These proxy solicitation materials were mailed on or about June 27, 1997 to all
shareholders entitled to vote at the Annual Meeting.
RECORD DATE
Shareholders of record at the close of business on June 2, 1997 are entitled to
notice of, and to vote at, the Annual Meeting. At the record date, 8,442,905
shares of the Company's Common Stock, no par value, were issued and outstanding.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation may revoke such proxy at
any time before its use by delivering to the Company a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
VOTING
The shares represented by the proxies received will be voted as you direct. If
you give no direction, the shares will be voted as recommended by the Board of
Directors.
Every shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder may select, up to the number of directors
to be elected. However, no shareholder shall be entitled to cumulate votes
unless the name of the candidate or candidates for whom such votes are proposed
to be cast has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the Annual Meeting
prior to the voting of the intention to cumulate the shareholder's votes. On
all other matters, each share of Common Stock has one vote.
If a shareholder abstains from voting as to any matter, or if a broker returns a
"non-vote" proxy as to any matter (indicating a lack of authority to vote on
such matter), then the shares held by such shareholder or broker will be deemed
present at the meeting for purposes of determining a quorum but will not be
counted for purposes of calculating the vote with respect to such matter.
Notwithstanding the foregoing, because shareholder approval under California law
requires the affirmative vote of at least a majority of that number of shares
needed to constitute a quorum, in certain instances an abstention or broker
non-vote can have the same effect as a negative vote.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials sent to shareholders. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or facsimile. Except as described above, the Company
does not currently intend to solicit proxies other than by mail.
<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended to be considered at the 1998 Annual Meeting of
Shareholders must be received by the Company no later than March 1, 1998. Such
proposals may be included in next year's proxy statement if they comply with
certain rules and regulations promulgated by the Securities and Exchange
Commission ("SEC").
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws provide that the Board of Directors shall be comprised of
between four (4) and seven (7) persons, with the exact number to be fixed by the
Board of Directors or shareholders. The currently authorized number of
directors is six (6). A board of six (6) directors is to be elected at the
Annual Meeting. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the six (6) nominees named below, all of whom are
currently directors of the Company.
The Company is not aware of any nominee who will be unable or will decline to
serve as a director. In the event that any such nominee is unable or declines
to serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner in accordance with cumulative voting as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. The six (6) candidates receiving the highest number of affirmative
votes of the shares voting at the Annual Meeting will be elected directors of
the Company. The term of office of each person elected as a director will
continue until the next Annual Meeting of Shareholders or until such time as his
successor has been duly elected and qualified.
The names of the Company's nominees for director and certain information about
them are set forth below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Nominee Age Principal Occupation Director Since
- --------------- --- -------------------- ---------------
A. George Battle(1)(2) 53 Senior Fellow, Aspen Institute and Retired Managing 1996
Partner of Market Development, Andersen Consulting
John F. Casey 54 President and Chief Executive Officer of Rogers, Casey 1996
& Associates, Inc. ("RogersCasey")
M. Blair Hull(1)(2)(3) 54 Managing Principal of Hull Trading Company, L.L.C. 1992
Norman J. Laboe(3) 58 Of Counsel to Mackenzie & Albritton 1986
Ronald J. Lanstein(1)(2) 63 Vice Chairman of the Board of BARRA 1986
Andrew Rudd(3) 47 Chairman of the Board and Chief Executive Officer 1986
of BARRA
</TABLE>
- ------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Nominating Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE SLATE OF
DIRECTORS PROPOSED BY THE BOARD OF DIRECTORS.
BUSINESS EXPERIENCE OF THE DIRECTORS
A. GEORGE BATTLE became a director of the Company in May 1996. Mr. Battle
joined the Company's Audit Committee and Compensation Committee in July 1996.
Mr. Battle served from 1968 until his retirement in June 1995 in various roles
of increasing responsibility with Andersen Consulting. At the time of his
retirement from Andersen Consulting, Mr. Battle was Managing Partner of Market
Development. He was also a member of Andersen Consulting's Executive Committee,
Global Management Council and Partner Income Committee. Prior to his position
as Managing Partner of Market Development, he served as Managing Partner of
North American Planning and Operations. Mr. Battle holds a B.A. in Economics
with highest distinction from Dartmouth College and an M.B.A. from the Stanford
Business School where he held McCarthy and
2
<PAGE>
University Fellowships. He is currently a Senior Fellow at the Aspen Institute
and a member of the boards of directors of PeopleSoft, Inc. and Fair Isaac
Company.
JOHN F. CASEY became a director of the Company following its acquisition of
RogersCasey in July 1996. Mr. Casey has been associated with RogersCasey, an
investment consulting and special assets advisory firm, since its inception in
1976. Mr. Casey has also served as President and Chief Executive Officer of
RogersCasey since 1989. Prior to founding RogersCasey, he worked at Dreher
Rogers & Associates, was founder of investment manager research at Paine,
Webber, Jackson & Curtis and served as Director and manager of research at
Callan Associates. Mr. Casey holds a B.A. from Milton College.
M. BLAIR HULL has been a member of the Board of Directors of the Company since
July 1992. Mr. Hull also joined the Company's Audit Committee and Compensation
Committee in July 1992, and its Nominating Committee in April 1993. Mr. Hull is
the founder and Managing Principal of Hull Trading Company, L.L.C. Mr. Hull is
a member of the Illinois Institute of Technology's Financial Markets and Trading
Board of Advisors and is a member of the Advisory Committee of the Financial
Markets Research Center at Vanderbilt University. Mr. Hull became a market
maker and member of the Pacific Stock Exchange in 1977 and has been a member of
the CBOE since 1980. Mr. Hull also serves on the Board of Directors of P.C.
Quote, Inc., Options Clearing Corporation and the Cincinnati Stock Exchange.
Mr. Hull holds an M.B.A. from Santa Clara University.
NORMAN J. LABOE has served as a Director of the Company since September 1986 and
as a member of the Company's Nominating Committee since April 1993. He also
served on the Company's Audit Committee from February 1992 to July 1996. Since
April 1994, Mr. Laboe has been of counsel to the law firm of Mackenzie &
Albritton, where he specializes in corporate, securities and intellectual
property matters. From 1971 to April 1994, Mr. Laboe was a partner in the law
firm of Graham & James in San Francisco, California. Mr. Laboe graduated from
the University of Minnesota with degrees in business administration and law.
RONALD J. LANSTEIN has been associated with the Company and its predecessors
since 1978. Mr. Lanstein became Vice Chairman of the Company's Board of
Directors on November 16, 1993. Prior to that and until his retirement in
December 1993, Mr. Lanstein served as the Chief Financial Officer and a Vice
President of the Company. Mr. Lanstein has also served as a member of the
Company's Board of Directors since 1986, as a member of the Company's Audit
Committee since February 1992 and as a member of the Company's Compensation
Committee since January 1994. Mr. Lanstein holds an M.A. in Economics from the
University of California, Berkeley.
ANDREW RUDD has been associated with the Company and its predecessors since
1975. Dr. Rudd has served as the Chief Executive Officer of the Company and its
predecessors since 1984, as a member of the Board of Directors of the Company
since 1986 and as its Chairman since 1992. Dr. Rudd served on the Company's
Compensation Committee from July 1992 to January 1994 and on its Nominating
Committee since April 1993. Dr. Rudd also served as President of the Company
and its predecessors from 1984 to 1992. Between 1977 and 1982, Dr. Rudd was a
professor of finance and operations research at Cornell University in Ithaca,
New York. He holds a Ph.D. in Operations Research from the University of
California, Berkeley.
There are no family relationships among any of the directors or executive
officers of the Company. The members of the Board of Directors who are not
employees of the Company are reimbursed for expenses incurred in traveling to
meetings and receive $2,000 for each scheduled quarterly meeting and $500 for
each special meeting of the Board of Directors and its committees as
compensation for their services as directors.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held seven (7) meetings during the fiscal
year ended March 31, 1997. The Board of Directors has an Audit Committee, a
Compensation Committee and a Nominating Committee. During the fiscal year ended
March 31, 1997, each director attended or participated in 75% or more of the
aggregate of (i) all meetings of the Board of Directors held during the period
in which such director served and (ii) all meetings of committees of the Board
on which such director served.
The Audit Committee of the Board of Directors currently consists of Messrs.
Battle, Hull and Lanstein. The Audit Committee recommends the engagement of
independent auditors, consults with the independent auditors regarding the scope
of annual
3
<PAGE>
audits and reviews the Company's system of internal accounting controls. The
Audit Committee met one (1) time during the fiscal year ended March 31, 1997.
The Compensation Committee of the Board of Directors currently consists of
Messrs. Battle, Hull and Lanstein. The Compensation Committee ratifies the
compensation paid by the Company to its executive officers, administers and
grants options to purchase the Company's Common Stock ("Options") pursuant to
the BARRA Stock Option Plan (the "Option Plan") and administers the BARRA 1996
Employee Stock Purchase Plan (the "ESPP") and the Rogers, Casey & Associates,
Inc. 1992 Stock Option Plan (the "RCA Plan"). The Compensation Committee met
four (4) times during the fiscal year ended March 31, 1997.
The Board of Directors has established a Nominating Committee to review and
recommend candidates for election to the Board of Directors. The Nominating
Committee consists of Messrs. Hull, Laboe and Rudd, but is not currently an
active committee and did not meet during the fiscal year ended March 31, 1997.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP BY MANAGEMENT
The following table sets forth certain information known to the Company relating
to the beneficial ownership of the Company's Common Stock by (i) each person who
is known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each executive officer named in the
tables set forth under "Executive Compensation," (iii) each director, and (iv)
all executive officers and directors as a group, as of June 2, 1997:
<TABLE>
<CAPTION>
Number of
Name Address Shares Owned(1) Percent(2)
- ---- ------- --------------- ----------
<S> <C> <C> <C>
Andrew Rudd(3) c/o BARRA, Inc. 1,899,800 22.35%
2100 Milvia Street
Berkeley, California 94704
Edward D. Baker(4) 395 Hampton Road 705,300 8.35%
Piedmont, California 94611
Fidelity Management & 82 Devonshire Street 535,200 6.34%
Research Company and Boston, MA 02109
Fidelity Management
Trust Company(5)
Ronald J. Lanstein(6) N/A 380,500 4.51%
C.E. Beckers(7) N/A 341,600 4.03%
Kamal Duggirala(8) N/A 329,600 3.89%
John F. Casey(9) N/A 251,322 2.98%
Ronald N. Kahn(10) N/A 68,920 *
James D. Kirsner(11) N/A 64,360 *
Robert L. Honeycutt(12) N/A 35,220 *
A. George Battle(13) N/A 16,500 *
M. Blair Hull N/A 10,000 *
Norman J. Laboe N/A 5,000 *
All executive officers and N/A 3,692,581 42.15%
directors as a group
(14 persons)(14)
</TABLE>
- --------------------------
* Less than 1.0%.
(1) Except as indicated in the chart and its related footnotes and pursuant to
applicable community property laws, the Company believes that all persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock beneficially owned by them.
4
<PAGE>
(2) Percentage of shares of Common Stock beneficially owned is based on a
total of 8,442,905 shares of Common Stock outstanding as of June 2,
1997 plus securities deemed outstanding pursuant to the Option Plan
that are currently exercisable or that will become exercisable within
60 days of June 2, 1997 for the percentage computed for each person or
group listed in the table. There are no options to purchase Common
Stock pursuant to the ESPP or the RCA Plan that are held by any person
or group listed in the table and that will become exercisable within
60 days of June 2, 1997.
(3) Of the 1,899,800 shares of Common Stock beneficially owned by Dr. Rudd,
1,753,800 shares are held of record by Dr. Rudd, 8,500 shares are held
by Dr. Rudd and his wife in joint tenancy with right of survivorship,
57,000 shares are issuable pursuant to the exercise of Options granted
pursuant to the Option Plan that are currently exercisable or that will
become exercisable within 60 days after June 2, 1997, 48,200 shares are
held in the Cann 1997 Trust, dated January 10, 1997, which was formed
for the benefit of Dr. Rudd's four children with Dr. Rudd's brother and
brother-in-law as trustees, and 32,300 shares are held in trust under
the California Uniform Transfers to Minors Act for Dr. Rudd's four
children. Dr. Rudd has disclaimed beneficial ownership of the 80,500
shares held in trust for his children.
(4) Includes 8,000 shares issuable pursuant to the exercise of Options
granted to Mr. Baker pursuant to the Option Plan that are currently
exercisable or that will become exercisable within 60 days after June
2, 1997.
(5) Includes an aggregate of 368,100 shares of Common Stock beneficially
owned by Fidelity Management & Research Company ("Fidelity Research"),
a wholly-owned subsidiary of FMR Corp. ("FMR"). Fidelity Research
holds 346,700 shares as a result of serving as an investment advisor
to various registered investment companies and funds (the "Fidelity
Funds") and 21,400 shares as sub-advisor to Fidelity American Special
Situations Trust ("FASST"). Another 167,100 shares are beneficially
owned by Fidelity Management Trust Company ("Fidelity Trust"), also a
wholly-owned subsidiary of FMR, as a result of serving as investment
manager of certain institutional accounts. FMR Corp. (through its
control of Fidelity Research and Fidelity Trust) has the sole power to
dispose of (but not to vote or direct the voting of) the 346,700 shares
held by the Fidelity Funds and the sole power to vote and dispose of
the 21,400 shares held by FASST and the 167,100 shares in institutional
accounts managed by Fidelity Trust.
(6) All of the shares of Common Stock attributed to Mr. Lanstein are held
of record by him with his wife in joint tenancy with right of
survivorship.
(7) Of the 341,600 shares of Common Stock beneficially owned by Dr.
Beckers, 305,000 are held of record by Dr. Beckers and his wife in
joint tenancy with right of survivorship and 36,600 shares are issuable
pursuant to the exercise of Options granted to Dr. Beckers pursuant to
the Option Plan that are currently exercisable or that will become
exercisable within 60 days after June 2, 1997.
(8) Of the 329,600 shares of Common Stock beneficially owned by Mr.
Duggirala, 70,000 shares are held of record by Mr. Duggirala, 235,000
shares are held by Mr. Duggirala and his wife in joint tenancy with
right of survivorship, and 24,600 shares are issuable pursuant to the
exercise of Options granted pursuant to the Option Plan that are
currently exercisable or that will become exercisable within 60 days
after June 2, 1997.
(9) Of the 251,322 shares of Common Stock held of record and beneficially
owned by Mr. Casey, 50,000 shares have been pledged by Mr. Casey as
security (the "Pledge") for a loan made to him by Royal Bank of Canada
("RBC"). The Pledge is part of an arrangement between Mr. Casey and
RBC, which provides him with liquidity without giving up title or the
voting rights to the 50,000 shares. The 50,000 shares are subject to a
Cashless European Style Collar Option, which expires on January 15,1999
and which involved the purchase by Mr. Casey of a protective put option
on the 50,000 shares with a strike price of $26.7351 per share and the
sale by him of a call option on the 50,000 shares with a strike price
of $32.25144 per share, which fully offset the premium due on the put
option.
(10) Of the 68,920 shares of Common Stock beneficially owned by Dr. Kahn,
20,000 shares are held of record by Dr. Kahn, 48,720 shares are
issuable pursuant to the exercise of Options granted to Dr. Kahn
pursuant to the Option Plan that are currently exercisable or that
will become exercisable within 60 days after June 2, 1997, and 200
shares are held in trust under the California Uniform Transfers to
Minors Act for Dr. Kahn's two children. Dr. Kahn has disclaimed
beneficial ownership of the shares held in trust for his children.
(11) Of the 64,360 shares of Common Stock beneficially owned by Mr. Kirsner,
30,000 shares are held by The Kirsner Family Trust, UTA, dated May 24,
1993, with Mr. Kirsner and his wife as trustees, and 34,360 shares are
issuable
5
<PAGE>
pursuant to the exercise of Options granted to Mr. Kirsner pursuant to
the Option Plan that are currently exercisable or that will become
exercisable within 60 days after June 2, 1997.
(12) All of the 35,220 shares of Common Stock held by Mr. Honeycutt are
issuable pursuant to the exercise of Options granted to Mr. Honeycutt
pursuant to the Option Plan that are currently exercisable or that will
become exercisable within 60 days after June 2, 1997.
(13) Of the 16,500 shares of Common Stock beneficially owned by Mr. Battle,
16,000 are held of record by Mr. Battle and 500 shares are held in the
Daniel KW Battle Trust, which was formed in 1996 for the benefit of
Mr. Battle's son with Mr. Battle as trustee. Mr. Battle has
disclaimed beneficial ownership of the shares held in trust for his
son.
(14) Includes 316,660 shares issuable pursuant to the exercise of Options
granted pursuant to the Option Plan that are currently exercisable or
that will become exercisable within 60 days after June 2, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent beneficial owners are required
by SEC regulation to furnish the Company with copies of all reports they file
under Section 16(a).
To the Company's knowledge, based solely on its review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than ten percent beneficial owners
were complied with during the fiscal year ended March 31, 1997, except that:
(a) one (1) Initial Statement of Beneficial Ownership on Form 3 was filed late
reporting the ownership of 251,322 shares of Common Stock of the Company
beneficially owned by John F. Casey, when he became a director of the Company;
and (b) one (1) Statement of Change in Beneficial Ownership on Form 4 was filed
late reporting the Pledge of 50,000 shares of Common Stock of the Company on
February 13, 1997 by John F. Casey, President and Chief Executive Officer of
RogersCasey and a director of the Company.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning compensation
paid or accrued by the Company to or on behalf of the Company's Chief Executive
Officer and each of the five (5) other most highly compensated executive
officers (collectively, the "Named Officers") of the Company (determined as of
the end of the last fiscal year), during the fiscal years ended March 31, 1995,
1996 and 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------------------------------------- ------------
OTHER - SHARES
NAME AND ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)(2)
- ------------------ ---- --------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Andrew Rudd 1997 225,000 525,000 N/A
Chairman and Chief 1996 225,000 375,000 N/A 15,000
Executive Officer 1995 225,000 250,000 N/A 85,000
C.E. Beckers(3) 1997 188,234 375,000 N/A
President of BARRA 1996 185,920 275,000 N/A 10,000
International, Ltd. 1995 166,250 200,000 N/A 27,000
Kamal Duggirala 1997 175,000 375,000 N/A
President 1996 168,750 250,000 N/A 35,000
1995 144,167 150,000 N/A 12,000
James D. Kirsner 1997 152,500 232,500 N/A
Chief Financial Officer 1996 148,125 150,000 N/A 5,900
1995 132,500 83,500 N/A 35,000
Robert L. Honeycutt 1997 155,000 220,000 N/A 15,000
Chief Operating Officer 1996 151,250 150,000 N/A 5,900
1995 136,250 80,000 N/A 12,800
Ronald N. Kahn 1997 175,000 200,000 N/A 15,000
Vice President and 1996 166,250 120,000 N/A 4,700
Director of Research 1995 136,250 80,000 N/A 10,100
</TABLE>
- ----------------
(1) Includes amounts deferred under the Company's 401(k) Plan.
(2) All "Options" granted to date under the Option Plan are non-statutory
options.
(3) A portion of Dr. Beckers' cash compensation is not paid in U.S. Dollars.
For this Compensation Table, that portion of Dr. Beckers' cash compensation has
been converted into U.S. Dollars at applicable month-end exchange rates.
7
<PAGE>
STOCK OPTION GRANT
The table set forth below contains information concerning grants of Options to
the Named Officers during the fiscal year ended March 31, 1997:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
--------------------------------------------------------- -----------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise
Options Employees in Price(3) Expiration
Name Granted(#)(2) Fiscal Year ($/Share) Date 5%($) 10%($)
- ---- ------------- ----------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Andrew Rudd -- -- -- -- -- --
C.E. Beckers -- -- -- -- -- --
Kamal Duggirala -- -- -- -- -- --
James D. Kirsner -- -- -- -- -- --
Robert L. Honeycutt(4) 15,000 4.34 26.75 02/01/07 252,431 639,761
Ronald N. Kahn(4) 15,000 4.34 26.75 02/01/07 252,431 639,761
</TABLE>
- --------------------------------
(1) Gains are reported net of the Option exercise price but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation of 5% and 10% only. Actual gains, if any, on Option exercises
are dependent on future performance of the Common Stock, as well as the
optionee's continued employment through the vesting period.
(2) The Options each become exercisable in five equal annual installments
beginning on the first anniversary of the date of the grant. All Options
expire ten years and a day from the date of grant.
(3) The exercise price of each Option is based upon the midpoint between the
bid and ask prices of the Company's Common Stock as quoted on The Nasdaq
National Market System ("NASDAQ") on the date of the grant, or if NASDAQ is
closed on the date of grant, the next day that NASDAQ is open, or if no
such prices are quoted on NASDAQ on the date of grant, on the last
preceding date on which such prices were quoted on NASDAQ ("FMV"). All
Options granted to Named Officers were granted with an exercise price of
100% of FMV.
(4) During the fiscal year ended March 31, 1997, Messrs. Honeycutt and Kahn
were only granted Options on January 31, 1997.
8
<PAGE>
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table provides information with respect to the Named Officers
concerning the exercise of Options during the last fiscal year and unexercised
Options held as of March 31, 1997 (the end of the Company's last fiscal year):
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year End(#) Year End($)(1)
---------------------------- ----------------------------
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew Rudd -- -- 37,000 63,000 740,363 1,227,450
C.E. Beckers -- -- 25,100 32,400 481,450 620,800
Kamal Duggirala -- -- 18,100 39,400 303,700 584,800
James D. Kirsner -- -- 30,180 35,720 597,287 697,475
Robert L. Honeycutt 8,500 203,250 28,980 41,520 548,724 500,804
Ronald N. Kahn 2,000 48,000 45,580 33,220 825,686 348,097
</TABLE>
- --------------------------
(1) Based on the closing price of a share of Common Stock of $27.00 as reported
on NASDAQ on such date less the exercise price.
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND OTHER TRANSACTIONS
During the fiscal year ended March 31, 1997, the Compensation Committee of the
Board of Directors was comprised of Messrs. Battle, Hull and Lanstein, who are
each members of the Company's Board of Directors and who are not current
executive officers of the Company.
During the fiscal year ended March 31, 1997, actions concerning executive
compensation were deliberated and taken by the entire Board of Directors of the
Company, as well as by the Compensation Committee. Of the Company's executive
officers during the fiscal year ended March 31, 1997, Dr. Rudd and Mr. Casey
participated, as members of the Board of Directors, in deliberations by the
Board of Directors concerning certain executive compensation for the fiscal year
ended March 31, 1997.
On April 15, 1994, Norman J. Laboe, a director of the Company, became of counsel
to the law firm of Mackenzie & Albritton, which received an aggregate of
$148,633 in fees and expenses from the Company during the fiscal year ended
March 31, 1997 and which has also been retained by the Company during the
current fiscal year. Prior to that Mr. Laboe was a partner of Graham & James,
which was and is currently retained by the Company.
M. Blair Hull, a director of the Company, is the Managing Principal of Hull
Trading Company LLC ("Hull Trading"). During the fiscal year ended March 31,
1997, BARRA and its affiliates received an aggregate of approximately $75,000 in
revenue from certain proprietary software and related data licensed to Hull
Trading.
In addition, on January 31, 1997, Messrs. Laboe and Hull (along with A. George
Battle and Ronald J. Lanstein, the other members of the Board of Directors who
are not employees of the Company or its subsidiaries) were each granted Options
to purchase 5,000 shares of Common Stock at an exercise price of $26.75 (100% of
FMV). The Options each become exercisable in five equal annual installments
beginning on the first anniversary date of the grant. All Options expire ten
years and a day from the date of grant.
On July 24, 1996, BARRA consummated a definitive Agreement of Merger and Plan of
Reorganization (the "RCA Merger Agreement") with RogersCasey. Pursuant to the
RCA Merger Agreement, BARRA issued 481,364 shares of its Common Stock and
options for the purchase of 30,257 shares of its Common Stock pursuant to the
RCA Plan in return for all of the issued and outstanding capital stock of
RogersCasey. On July 25, 1996, BARRA increased the size of its Board of
Directors from five (5) to six (6) and elected John F. Casey to fill the newly
created position, pursuant to an understanding between BARRA and RogersCasey.
RogersCasey pays approximately $4,000 per year in premiums on a life insurance
policy for Mr. Casey. The death benefit on that policy is $1,000,000 and is
payable to Mr. Casey's wife.
9
<PAGE>
During the fiscal year ended March 31, 1997, BARRA and its affiliates received
an aggregate of approximately $750,000 in revenue from certain proprietary
software and related data licensed to and certain consulting services provided
to Fidelity Research, and its affiliate Fidelity Investment Services, Ltd.
REPORT OF THE COMPENSATION COMMITTEE AND
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is currently comprised of three (3) members of the Board of
Directors and is responsible for evaluating the Company's executive compensation
philosophies and monitoring and approving base salary and incentive compensation
programs for executive management, including Option Plan awards and payouts
under the Company's annual cash bonus plan. In general, a committee of the
Company's senior management (the "Management Committee") provides
recommendations to the Compensation Committee regarding: (a) the aggregate
amount to be awarded under the Company's annual bonus program; (b) the base
salaries and bonuses for all executive officers other than the Chief Executive
Officer; and (c) Option Plan awards for all employees. These recommendations
are based upon the compensation philosophies articulated below, which have been
adopted by the Compensation Committee. For the fiscal year ended March 31,
1997, the Management Committee was comprised of the Company's Chief Executive
Officer, President, Chief Operating Officer and Chief Financial Officer and the
President of BARRA International, Ltd., the Company's wholly-owned subsidiary.
All determinations regarding the base salary and bonus of the Company's Chief
Executive Officer are made by the Compensation Committee and approved by the
Board of Directors. The overall amount to be awarded under BARRA's annual bonus
program is also ratified by the Company's Board of Directors.
The Company's compensation philosophy continues to recognize that there is a
strong link between executive compensation, the value received by shareholders
and the need to maintain a compensation program which will enable the Company to
attract, retain, incent and reward executive officers who are likely to
contribute to the long term success of BARRA. That philosophy involves the
following three forms of compensation:
1. BASE SALARIES. The base salaries of all of BARRA's executive officers,
including its Chief Executive Officer, are established on the basis of the
qualifications and experience of the individual executive. Historically, the
base salaries of BARRA executives have been kept below the levels of salaries
for comparable positions with other entities with the annual bonus program
providing the necessary equalizing factor. Most executive salaries have not
been adjusted during the past fiscal year and the executive base salaries remain
below market levels. Base salaries are reviewed annually and adjustments, if
any, are effective in July.
2. MANAGEMENT BONUS PROGRAM. The Company's annual bonus plan has historically
provided substantial rewards for individual executive officers and, along with
such executives' base salary, has been designed so that each individual
officer's overall compensation is competitive and commensurate with individual
qualitative performance and the value returned to the Company and its
shareholders as a result of such performance. In general, short-term cash
incentives are based on the Company's performance targets, business unit or
departmental performance and individual performance. The awards made for the
fiscal year ended March 31, 1997 to the Company's executive officers reflect
that: (a) the Company's consolidated after tax net income for fiscal 1997
increased 97% over the net income of the previous year; (b) the after tax return
on beginning shareholders' equity for fiscal 1997 was 39% and (c) the price of
the Company's Common Stock increased from $18.875 per share at March 31, 1996 to
$27.000 per share at March 31, 1997, an increase of 43%.
3. STOCK OPTION AWARDS. Long-term incentives in the form of Option Plan
awards recognize on-going contributions by the Company's senior and middle
management to augmenting BARRA's value. Accordingly, these awards are primarily
based upon executive position within the Company and relative base salary, but
also depend upon sustained levels of performance over time.
BOARD OF DIRECTORS
A. George Battle* John F. Casey M. Blair Hull*
Norman J. Laboe Ronald J. Lanstein* Andrew Rudd
- ------------------------
* Member of the Compensation Committee
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph indicating cumulative monthly return* (determined at
the end of each month) for the period commencing October 1, 1991 (the date of
the Company's initial public offering) and ending March 31, 1997 on $100
invested alternatively in the Company's Common Stock, the Frank Russell 2000
Index and the Nasdaq Computer & Data Processing Index on October 1, 1991.
PERFORMANCE COMPARISON
BARRA VS. NASDAQ COMPUTER & DATA PROCESSING SERVICES
AND VS. FRANK RUSSELL 2000
OCTOBER 1991 THROUGH MARCH 1997
[GRAPH]
- -----------------
*Total return assumes reinvestment of dividends.
PROPOSAL NO. 2 - AMENDMENT TO THE STOCK OPTION PLAN TO
AUTHORIZE THE ISSUANCE OF AN ADDITIONAL 700,000 SHARES THEREUNDER
At the Annual Meeting, the shareholders will be asked to approve an amendment to
the Option Plan to increase the number of shares of Common Stock reserved for
issuance by 700,000 shares, to a total of 2,900,000 shares (including shares
previously issued upon the exercise of Options granted under the Option Plan).
Management believes that the availability of additional Options is necessary to
enable the Company to continue to provide its employees with equity ownership as
an incentive to contribute to the Company's success. The Board has approved
this increase, subject to shareholder approval.
SUMMARY OF OPTION PLAN
The Option Plan currently provides for the issuance of 2,200,000 shares of
Common Stock upon the exercise of Options granted thereunder. As of June 2,
1997, Options for 1,682,040 shares were outstanding at a weighted average
exercise price of $11.85 per share, and Options for 190,560 shares had been
exercised. The closing price of the Company's Common Stock reported on The
Nasdaq National Market System on June 2, 1997 was $29.75 per share. Set forth
below is a summary of the principal features of the Option Plan, as proposed to
be amended.
11
<PAGE>
PURPOSE
The purpose of the Option Plan is to advance the interests of the Company and
its shareholders by giving employees, non-employee directors and consultants a
proprietary interest in the success of the Company, thus providing them with an
additional incentive to contribute toward the Company's success.
ADMINISTRATION
The Option Plan may be administered by the Board, or by a committee appointed by
the Board and consisting of at least two members of the Board (the "Plan
Committee"). The Option Plan is currently being administered by the
Compensation Committee of the Board. The interpretation and construction of any
provision of the Option Plan by the Board or Plan Committee is deemed to be
final and conclusive.
ELIGIBILITY
The Option Plan provides that Options may be granted to employees (including
officers and employee directors), non-employee directors and consultants of or
to the Company and its subsidiaries. The Board or Plan Committee selects the
participants and determines the number of shares to be subject to each Option.
At June 2, 1997, Options were held by approximately 151 of the Company's
approximately 515 employees. At June 2, 1997, Options were held by all
non-employee directors of the Company. The Company receives no consideration
from optionees at the time grants are made under the Option Plan.
The Option Plan does not provide for a maximum or minimum number of shares of
Common Stock which may be granted under the Option Plan to any one employee or
other eligible participant; provided, however, that the value of the shares
subject to all incentive stock options ("ISOs") held by an optionee that become
exercisable for the first time during any calendar year cannot exceed $100,000
(determined as of the date of grant).
TERMS OF OPTIONS
Each Option is evidenced by a stock option agreement between the Company and the
person to whom such Option is granted, which sets forth the terms and conditions
of the Option. The following terms and conditions generally apply to all
Options, unless the relevant stock option agreement provides otherwise:
EXERCISE OF OPTIONS. The Board or Plan Committee determines when Options
granted under the Option Plan may be exercisable. To exercise an Option, an
optionee must give written notice of exercise to the Company specifying the
number of full shares of Common Stock to be purchased (which may not be less
than ten (10) shares) and must tender payment to the Company of the purchase
price. The purchase price of shares purchased upon exercise of an Option may be
paid by any of the following means, or by any combination thereof: (i) cash;
(ii) check; or (iii) such other lawful means as the Board or Plan Committee may
approve at the time the Option is granted, including a promissory note or shares
of the Company's Common Stock.
EXERCISE PRICE. The exercise price of Options granted under the Option Plan is
determined by the Board or Plan Committee and must not be less than (i) the fair
market value of the Common Stock on the date the Option is granted in the case
of ISOs or (ii) 85% percent of such fair market value in the case of
non-statutory stock options ("NSOs"). Where the participant owns stock
representing more than ten percent (10%) of the total combined voting power of
the Company's outstanding capital stock, the exercise price for a Option must
not be less than 110% of such fair market value.
TERMINATION OF EMPLOYMENT. If an optionee's employment or other service with
the Company or its subsidiary terminates for any reason other than permanent and
total disability or death, Options under the Option Plan may be exercised not
later than ninety (90) days (or such other period of time as is determined by
the Board or Plan Committee) after such termination, but may be exercised only
to the extent the Options were exercisable on the date of termination, subject
to the condition that no Option may be exercised after expiration of its term.
DISABILITY. If an optionee should become permanently and totally disabled while
employed by or engaged in other service for the Company or its subsidiary, or
within ninety (90) days after termination of employment or other service, and
such employment or other service was not interrupted from the date of the Option
grant through the date of disability or termination, Options may be exercised at
any time within one (1) year following the date of disability, but only to the
extent the Options were exercisable on the date of termination or disability,
whichever occurs first, subject to the condition that no Option may be exercised
after expiration of its term.
12
<PAGE>
DEATH. If an optionee should die while employed by or engaged in other service
to the Company or its subsidiary, or within ninety (90) days after termination
of employment or other service, and such employment or other service was not
interrupted from the date of the Option grant through the date of death or
termination, Options may be exercised at any time within one (1) year following
the date of death, but only to the extent the Options were exercisable on the
date of termination or death, whichever occurs first, subject to the condition
that no Option may be exercised after expiration of its term.
TERMINATION OF OPTIONS. Unless the Board or Plan Committee determines
otherwise, each NSO granted under the Option Plan expires ten (10) years and one
(1) day after the date of grant, and each ISO expires ten (10) years after the
date of grant. Notwithstanding the foregoing, in the case of any participant
who owns stock possessing more than ten percent (10%) of the total combined
voting power of the Company's outstanding capital stock, the term of any Option
granted to such participant shall not exceed five (5) years.
NONTRANSFERABILITY OF OPTIONS. An Option is not transferable by the optionee
other than by will or the laws of descent and distribution or, in the case of a
NSO, pursuant to a qualified domestic relations order within the meaning of
Section_414(p) of the Code and is exercisable during his or her lifetime only by
him or her, or in the event of his or her death, by a person who acquires the
right to exercise the Option by bequest or inheritance or by reason of the death
of the optionee.
OTHER PROVISIONS. The option agreement may contain such other terms, provisions
and conditions not inconsistent with the Option Plan as may be determined by the
Board or Plan Committee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the Company's capital structure (whether by reason
of any recapitalization, stock dividend, stock split, combination of shares or
other similar change in corporate structure), appropriate adjustments shall be
made in the number of shares subject to each Option and the per share exercise
price therefor. Unless otherwise determined by the Board, upon the dissolution
or liquidation of the Company or upon any merger or consolidation in which the
Company is not the surviving entity, the Options granted under the Option Plan
shall terminate, but each optionee shall be given at least ten (10) days' notice
of such event, and the exercisability of each outstanding Option shall be
accelerated so that the optionee may, within such period, exercise up to the
entire unexercised portion of the Option.
AMENDMENT AND TERMINATION OF THE OPTION PLAN
The Board of Directors may amend the Option Plan at any time or from time to
time or may terminate it without the approval of the shareholders; provided,
however, that shareholder approval is required for any amendment that increases
the maximum number of shares for which Options may be granted, changes the
standards of eligibility, or materially increases the benefits which may accrue
to participants under the Option Plan. However, no such action by the Board of
Directors or shareholders may alter or impair any Option previously granted
under the Option Plan without the consent of the optionee. In any event the
Option Plan shall terminate on July 29, 2001.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING INFORMATION IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY
STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND OPTIONEES OF
PARTICIPATION IN THE OPTION PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR EACH OPTIONEE WILL DEPEND UPON HIS
OR HER INDIVIDUAL CIRCUMSTANCES.
INCENTIVE STOCK OPTIONS.
When an Option granted under the Option Plan qualifies as an ISO, the optionee
does not recognize income for federal income tax purposes upon the grant or
exercise of the ISO (unless the alternative minimum tax applies as discussed
below). Upon a sale of the shares (assuming that the sale occurs no sooner than
two years after the grant of the Option and one year after the receipt of the
shares by the optionee), any gain or loss will be treated as long-term capital
gain or loss for federal income tax purposes.
In order for an Option to qualify as an ISO, it must be exercised while the
optionee is an employee of the Company or of a parent or subsidiary of the
Company, or within ninety (90) days after the optionee ceases to be an employee
for any reason
13
<PAGE>
other than death, in which case there is no statutory limitation, or permanent
and total disability, in which case the exercise may occur within one year after
termination of employment.
The favorable federal income tax consequences described above will not apply to
the extent the optionee disposes of the shares acquired within one year of the
date of exercise or within two years of the date of grant of the Option
(hereinafter a "disqualifying disposition"). A disqualifying disposition does
not include the disposition of shares acquired upon exercise of an Option after
the employee's death and, under certain circumstances, the disposition of shares
(acquired by exercising an ISO) by an insolvent individual to a trustee,
receiver or other similar fiduciary in an insolvency proceeding.
In the event of a disqualifying disposition, the optionee generally will
recognize ordinary income in the year of disposition equal to the amount by
which the fair market value of the stock at the date of exercise exceeds the
Option exercise price. Any additional gain will be long-term or short-term
gain, depending on how long the optionee has held the stock. The income
recognized on a disqualifying disposition will be added to the optionee's tax
basis for determining gain or loss with respect to a subsequent sale of his or
her stock.
ALTERNATIVE MINIMUM TAX.
The excess of the stock's fair market value over the Option exercise price of an
ISO, which is generally not subject to tax at the time of exercise, is treated
as an item of income in determining an individual taxpayer's alternative minimum
tax liability. It is advisable for all optionees holding ISOs to attempt to
forecast their income tax liabilities before deciding when to exercise ISOs, or
even whether to receive stock compensation in the form of ISOs. The alternative
minimum tax risk can make ISOs unappealing if the potential spread on exercise
of the Option in any particular year will be substantial.
NON-STATUTORY STOCK OPTIONS.
Options granted under the Option Plan that do not qualify as ISOs are considered
NSOs and will not qualify for any special tax benefits to the optionee. Because
the Company's stock Options are not deemed to have a readily ascertainable
value, an optionee will not recognize any taxable income at the time an NSO is
granted. However, upon exercise of an NSO, the optionee generally must include
in income as compensation an amount equal to the difference between the fair
market value of the shares on the date of exercise and the optionee's exercise
price. The included amount will be treated as ordinary income by the optionee
and will be subject to withholding by the Company for each optionee who is also
an employee of the Company. Upon resale of the shares by the optionee, any
subsequent appreciation or depreciation in the value of the shares will treated
as capital gain or loss.
TAX TREATMENT OF THE COMPANY.
The Company generally will be allowed a tax deduction to the extent and in the
year that compensation income is recognized by the optionee upon the exercise of
NSOs, provided the Company has withheld income taxes in accordance with the law.
The Company receives no deduction in connection with the exercise of an ISO. In
the event of a disqualifying disposition of an ISO, however, the Company will be
allowed a deduction for the amount of income recognized by the optionee with
respect to his or her exercise for the tax year of the Company in which the
disqualifying disposition occurs. Notwithstanding the foregoing, as amended in
1993, the Code limits the tax deduction for expenses in connection with
remuneration of the Company's Chief Executive Officer and its four other most
highly compensated executive officers during any fiscal year to the extent the
remuneration of any such person exceeds $1,000,000 for such fiscal year.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")
The Company believes that the Option Plan is not subject to any of the
provisions of ERISA.
14
<PAGE>
OPTION PLAN BENEFITS
The following table sets forth, for each of the persons or groups listed, the
number of shares of Options granted under the Option Plan during the fiscal year
ended March_31, 1997 to: (1) each person identified as a Named Officer; (2)
current executive officers, as a group, (3) all current directors who are not
executive officers, as a group; (4) each nominee for election as a director; (5)
each associate of any of such directors, executive officers or nominees; (6)
each other person who received five percent of the Options granted in the fiscal
year ended March 31, 1997 under the Option Plan; and (7) all employees,
including all current officers who are not executive officers, as a group.
<TABLE>
<CAPTION>
Percent of Total
Exercise Number Options Granted
Name Title Price Per Share($)(1) of Shares(#)(2) in Fiscal 1997(%)
- ---- ----- --------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Andrew Rudd Chairman, Chief Executive -- 0 0.00
Officer and Director
C.E. Beckers President of BARRA -- 0 0.00
International, Ltd.
Kamal Duggirala President -- 0 0.00
James D. Kirsner Chief Financial Officer -- 0 0.00
Robert L. Honeycutt Chief Operating Officer 26.750 15,000 4.34
Ronald N. Kahn Vice President and Director 26.750 15,000 4.34
of Research
All executive officers as a N/A 26.750 45,000 13.01
group (10 persons)
All directors who are not N/A 26.750 20,000 5.78
executive officers as a
group (4 persons)
All employees, including N/A 20.375 155,000 44.80
all officers who are not 27.500 8,000 2.31
executive officers, as a 26.750 118,000 34.10
group (approximately ------- -----
494 persons) 281,000 81.21
</TABLE>
- --------------------------------
(1) All Options granted were granted with an exercise price of 100% of FMV.
(2) The Options each become exercisable in five equal annual installments
beginning on the first anniversary of the date of the grant. All Options
are NSOs and expire ten years and a day from the date of grant.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at the Annual Meeting is required
for the approval of the amendments to the Option Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO APPROVE THE
AMENDMENTS TO THE OPTION PLAN.
PROPOSAL NO. 3 --- RATIFICATION OF BARRA, INC. DIRECTORS OPTION PLAN
AND AUTHORIZATION OF 100,000 SHARES FOR ISSUANCE THEREUNDER
At the Annual Meeting, the shareholders will be asked to approve the adoption of
the BARRA, Inc. Directors Option Plan (the "Directors Plan") and the reservation
of 100,000 shares of Common Stock for issuance thereunder. The Directors Plan
was adopted by the Board on April 24, 1997 subject to shareholder approval.
15
<PAGE>
SUMMARY OF THE DIRECTORS PLAN
Set forth below is a summary of the principal provisions of the Directors Plan.
PURPOSE
The purpose of the Directors Plan is to give directors of the Company an
opportunity to acquire an equity interest in the Company and to further align
their interests with the interests of the Company's shareholders. The Company
believes that adoption of a specific plan to permit its directors to receive
options to purchase Common Stock of the Company is important to the Company's
ability to attract and retain well-qualified directors.
ADMINISTRATION
The Directors Plan will be administered by a Committee consisting solely of not
less than two "Outside Directors" as defined in the Directors Plan (the
"Committee"). The interpretation by the Committee of any of the provisions of
the Directors Plan or any option granted under the Directors Plan ("Directors
Options") will be final and conclusive.
ELIGIBILITY
The Directors Plan permits the Company to grant NSOs to purchase shares of
Common Stock of the Company in accordance with a fixed formula (described below)
to non-employee directors of the Company. In addition, the Directors Plan
allows discretionary grants of ISOs to employee directors and NSOs to all
directors. There are currently four non-employee directors and two employee
directors. The Company receives no consideration from optionees at the time
Directors Options are granted under the Directors Plan.
TERMS OF OPTIONS
STOCK SUBJECT TO OPTIONS. The stock subject to Directors Options under the
Directors Plan consists of shares of the Company's authorized but unissued
Common Stock. The aggregate number of shares that may be issued pursuant to the
Directors Plan will initially be 100,000 shares, subject to adjustment as
provided in the Directors Plan. In the event that any outstanding Directors
Option under the Directors Plan expires or terminates for any reason without
being exercised in whole or in part, the shares of Common Stock allocable to the
unexercised portion of such Directors Option will be available again for the
grant of Directors Options under the Directors Plan.
FORMULA FOR OPTION GRANTS. NSO grants will be made automatically to
non-employee directors under the Directors Plan in accordance with a
nondiscretionary formula. Following the adoption of the Directors Plan by the
Board of Directors and subject to shareholder approval, each current eligible
director has received NSO grants for 5,000 shares and each person who
subsequently becomes a non-employee director and is eligible to participate in
the Directors Plan will receive a grant of 10,000 shares upon first becoming a
non-employee director (collectively, "Initial Grant"). In addition, on each
anniversary of an Initial Grant, if the optionee is still a non-employee member
of the Board of Directors, the optionee will receive NSO grants for an
additional 2,000 shares (collectively, "Succeeding Grants"). In addition, ISOs
may be granted to employee directors and NSOs may be granted to all directors
under the Directors Plan at the discretion of the Committee ("Discretionary
Grants").
EXERCISE PRICE AND PAYMENT OF EXERCISE PRICE. The exercise price for all NSO
and all ISOs will be the fair market value of the Company's Common Stock at the
time the Directors Option is granted, except that the price shall be 110% of
fair market value for any director who owns stock comprising more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation. Payment for the shares purchased upon exercise of a Directors
Option may be made (a) in cash or by check; (b) by surrender of shares of Common
Stock of the Company that have been owned and paid for by the optionee for more
than six (6) months or were obtained by the optionee in the open public market,
having a fair market value equal to the exercise price of the Directors Option;
(c) by waiver of compensation due or accrued to the optionee for services
rendered; (d) through a "same day sale" commitment from the optionee and a
dealer of the National Association of Securities Dealers ("NASD"); (e) through a
"margin" commitment from the optionee and an NASD dealer; or (f) by any
combination of the foregoing.
VESTING AND TERM OF OPTION GRANTS. Options granted under the Directors Plan
will become exercisable as they vest. NSOs granted pursuant to Initial Grants
will vest over a period of five years at a rate of twenty percent (20%) on the
anniversary dates of the grant so long as the optionee is continuously a
director of the Company. NSOs granted pursuant to Succeeding Grants will be
immediately vested. ISOs will vest according to a vesting schedule determined
by the Committee; provided
16
<PAGE>
however, that the rate of vesting shall be no longer than twenty percent (20%)
per year over five years from the date of grant. Each Directors Option will
have a term of ten (10) years from the date of grant, but will terminate earlier
if the optionee ceases to be a director.
TERMINATION OF SERVICE. If the optionee's service as a director of the Company
is terminated for any reason, including death and disability, Directors Options
under the Director Plan, to the extent vested and exercisable on the termination
date, may be exercised not later than ninety (90) days (or such other period of
time as is determined by the Committee) after termination date. Unless
otherwise determined at the discretion of the Board, all Directors Options
granted under the Director Plan that are not vested and exercisable on the date
of termination, shall automatically terminate.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
Pursuant to the terms of the Directors Plan, the aggregate number of shares that
may be issued pursuant to the Directors Plan and the shares subject to
outstanding Directors Options (but not the numbers of shares subject to any
future Initial Grants or Succeeding Grants) shall be subject to automatic pro
rata adjustment as to the number and price of shares, in the event of changes in
the outstanding Common Stock by reason of stock dividends, stock splits, reverse
stock splits, reclassifications, recapitalizations, reorganizations and other
relevant changes in capitalization. In the event of a merger, consolidation,
dissolution or liquidation of the Company, the sale of substantially all of the
assets of the Company or any other similar corporate transaction, the vesting of
all Directors Options granted pursuant to the Directors Plan will accelerate and
the Directors Options will become exercisable in full.
AMENDMENT AND TERMINATION OF THE DIRECTORS PLAN
Generally, the Board may terminate or amend the Directors Plan at any time.
However, the Board may not among other matters, without stockholder approval,
increase the total number of shares of Common Stock available for issuance under
the Directors Plan or change the class of persons eligible to receive Directors
Options. In addition, no amendment of the Directors Plan or of any outstanding
Directors Option may adversely affect any outstanding Directors Option without
the written consent of the optionee.
TERM OF THE DIRECTORS PLAN
Options may be granted pursuant to the Directors Plan from time to time until
ten years from the date the Directors Plan was adopted by the Board, which will
be April 24, 2007.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING INFORMATION IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY
STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND OPTIONEES OF
PARTICIPATION IN THE DIRECTORS PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR EACH OPTIONEE WILL DEPEND UPON HIS
OR HER INDIVIDUAL CIRCUMSTANCES.
INCENTIVE STOCK OPTIONS.
When an Directors Option granted under the Directors Plan qualifies as an ISO,
the optionee does not recognize income for federal income tax purposes upon the
grant or exercise of the ISO (unless the alternative minimum tax applies as
discussed below). Upon a sale of the shares (assuming that the sale occurs no
sooner than two years after the grant of the Directors Option and one year after
the receipt of the shares by the optionee), any gain or loss will be treated as
long-term capital gain or loss for federal income tax purposes.
In order for a Directors Option to qualify as an ISO, it must be exercised while
the optionee is an employee of the Company or of a parent or subsidiary of the
Company, or within ninety (90) days after the optionee ceases to be an employee
for any reason other than death, in which case there is no statutory limitation,
or permanent and total disability, in which case the exercise may occur within
one year after termination of employment.
The favorable federal income tax consequences described above will not apply to
the extent the optionee disposes of the shares acquired within one year of the
date of exercise or within two years of the date of grant of the Directors
Option (hereinafter a "disqualifying disposition"). A disqualifying disposition
does not include the disposition of shares acquired upon exercise of a Directors
Option after the employee's death and, under certain circumstances, the
disposition of shares
17
<PAGE>
(acquired by exercising an ISO) by an insolvent individual to a trustee,
receiver or other similar fiduciary in an insolvency proceeding.
In the event of a disqualifying disposition, the optionee generally will
recognize ordinary income in the year of disposition equal to the amount by
which the fair market value of the stock at the date of exercise exceeds the
option exercise price. Any additional gain will be long-term or short-term
gain, depending on how long the optionee has held the stock. The income
recognized on a disqualifying disposition will be added to the optionee's tax
basis for determining gain or loss with respect to a subsequent sale of his or
her stock.
ALTERNATIVE MINIMUM TAX.
The excess of the stock's fair market value over the option exercise price of an
ISO, which is generally not subject to tax at the time of exercise, is treated
as an item of income in determining an individual taxpayer's alternative minimum
tax liability. It is advisable for all optionees holding ISOs to attempt to
forecast their income tax liabilities before deciding when to exercise ISOs, or
even whether to receive stock compensation in the form of ISOs. The alternative
minimum tax risk can make ISOs unappealing if the potential spread on exercise
of the option in any particular year will be substantial.
NON-STATUTORY STOCK OPTIONS.
Options granted under the Option Plan that do not qualify as ISOs are considered
NSOs and will not qualify for any special tax benefits to the optionee. Because
the Company's Directors Options are not deemed to have a readily ascertainable
value, an optionee will not recognize any taxable income at the time an NSO is
granted. However, upon exercise of an NSO, the optionee generally must include
in income as compensation an amount equal to the difference between the fair
market value of the shares on the date of exercise and the optionee's exercise
price. The included amount will be treated as ordinary income by the optionee
and will be subject to withholding by the Company for each optionee who is also
an employee of the Company. Upon resale of the shares by the optionee, any
subsequent appreciation or depreciation in the value of the shares will treated
as capital gain or loss.
TAX TREATMENT OF THE COMPANY.
The Company generally will be allowed a tax deduction to the extent and in the
year that compensation income is recognized by the optionee upon the exercise of
NSOs, provided the Company has withheld income taxes in accordance with the law.
The Company receives no deduction in connection with the exercise of an ISO. In
the event of a disqualifying disposition of an ISO, however, the Company will be
allowed a deduction for the amount of income recognized by the optionee with
respect to his or her exercise for the tax year of the Company in which the
disqualifying disposition occurs. Notwithstanding the foregoing, the Internal
Revenue Code of 1986, as amended (the "Code"), limits the tax deduction for
expenses in connection with remuneration of the Company's Chief Executive
Officer and its four other most highly compensated executive officers during any
fiscal year to the extent the remuneration of any such person exceeds $1,000,000
for such fiscal year.
ERISA
The Company believes that the Directors Plan is not subject to any of the
provisions of ERISA.
18
<PAGE>
DIRECTORS PLAN BENEFITS
The following table sets forth, for each of the persons or groups listed, the
number of shares of Directors Options granted under the Directors Plan
("Directors Options") to: (1) each person identified as a Named Officer;
(2) current executive officers, as a group, (3) all current directors who are
not executive officers, as a group; (4) each nominee for election as a director;
(5) each associate of any of such directors, executive officers or nominees;
(6) each other person who received or is to receive five percent of the
Directors Options pursuant to the Directors Plan; and (7) all employees,
including all current officers who are not executive officers, as a group, as of
June 2, 1997.
<TABLE>
<CAPTION>
Percent of Total
Exercise Number Directors Options
Name Title Price Per Share($) of Shares(#) Granted to Date(%)
- ---- ----- ------------------ ------------ ------------------
<S> <C> <C> <C> <C>
Ronald J. Lanstein(1) Vice Chairman and Non- $25.00(2) 5,000(3) 25.00
Employee Director
A. George Battle(1) Non-Employee Director $25.00(2) 5,000(3) 25.00
M. Blair Hull(1) Non-Employee Director $25.00(2) 5,000(3) 25.00
Norman J. Laboe(1) Non-Employee Director $25.00(2) 5,000(3) 25.00
All directors who are not N/A $25.00(2) 20,000(3) 100.00
executive officers as a
group (4 persons)(1)
Andrew Rudd Chairman, Chief Executive -- 0 0.00
Officer and Director
C.E. Beckers President of BARRA -- 0 0.00
International, Ltd.
Kamal Duggirala President -- 0 0.00
James D. Kirsner Chief Financial Officer -- 0 0.00
Robert L. Honeycutt Chief Operating Officer -- 0 0.00
Ronald N. Kahn Vice President and Director -- 0 0.00
of Research
John F. Casey President and Chief Executive -- 0 0.00
Officer of RogersCasey and
Director
All executive officers as a N/A -- 0 0.00
group (10 persons)
All employees, including N/A -- 0 0.00
all officers who are not
executive officers, as a
group (approximately
505 persons)
</TABLE>
- --------------------------------
(1) In addition to the Directors Options disclosed above, on January 31, 1997,
Messrs. Battle, Hull, Laboe and Lanstein (constituting all of the non-
employee directors of the Company), were each granted Options under the Option
Plan to purchase 5,000 shares of Common Stock at an exercise price of $26.75
(100% of FMV). The Options each become exercisable in five equal annual
installments beginning on the first anniversary date of the grant. All Options
expire ten years and a day from the date of grant.
(2) All Directors Options granted were granted with an exercise price of 100%
of FMV.
(3) The Directors Options each become exercisable in five equal annual
installments beginning on the first anniversary of the date of the grant.
All Directors Options are NSOs and expire ten years and a day from the date
of grant.
19
<PAGE>
VOTE REQUIRED
The approval of the Directors Plan requires the affirmative vote of the majority
of shares of Common Stock present in person or represented by a proxy at the
Annual Meeting and entitled to vote thereon. The Company's directors have an
interest in approval of this Proposal No. 3, in that the non-employee directors
have received Directors Options pursuant to the Directors Plan and that the non-
employee directors will and all other directors may receive additional Directors
Option grants if the Directors Plan is approved.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE DIRECTORS PLAN.
PROPOSAL NO. 4 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending March 31, 1998. The
selection of the independent auditors will be submitted to the shareholders for
ratification at the Annual Meeting. In the event that ratification by the
shareholders of the selection of Deloitte & Touche LLP as the Company's
independent auditors is not obtained, the Board of Directors will reconsider
such selection. Deloitte & Touche LLP has audited the Company's financial
statements since 1986. Its representatives are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE.
CERTAIN FINANCIAL INFORMATION
The following information is presented in Part II of the Company's Annual Report
on Form 10-K and is incorporated by this reference into this Proxy Statement:
(a) Management's Discussion and Analysis of Financial Condition and Results of
Operations, (b) complete consolidated Balance Sheets as of March 31, 1997 and
1996, related consolidated Statements of Income, Shareholders Equity and Cash
Flows for each of the three years in the period ended March 31, 1997 and notes
thereto, and (c) the report of Deloitte & Touche LLP regarding the complete
consolidated Financial Statements.
Each statement made in this Proxy Statement containing any form of the words
"expect," "believe," or "future" is a forward-looking statement that may involve
a number of risk factors and uncertainties. Among other factors that could
cause actual results to differ materially are the following: changes in the
Code or ERISA and business conditions and other changes in the Company's
industry that could effect the value of the Company's stock. Further
information and potential risk factors that could affect the Company's financial
results are included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1997.
OTHER BUSINESS
The Company currently knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Andrew Rudd
- -----------------------
Andrew Rudd
Andrew Rudd
Chairman of the Board and Chief Executive Officer
June 20, 1997
20
<PAGE>
BARRA, INC. - PROXY
ANNUAL MEETING
JULY 31, 1997
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Andrew Rudd, Ronald J. Lanstein and Norman J.
Laboe, or any of them, each with full power of substitution, the lawful
attorneys and proxies of the undersigned to vote all of the shares of Common
Stock of BARRA, Inc. which the undersigned shall be entitled to vote at the
Annual Meeting of the Shareholders to be held at BARRA Inc., 2100 Milvia Street,
Berkeley, CA 94704, on Thursday, July 31, 1997 at 2:00 p.m., local time, and at
any adjournments and postponements thereof, with all the powers the undersigned
would possess if personally present, upon matters noted below. The shares
represented by this Proxy shall be voted as follows:
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
1. To elect as Directors of BARRA, Inc. the nominees listed below:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
to vote for all the nominees
listed below
A. George Battle, John F. Casey, M. Blair Hull, Norman J. Laboe, Ronald J.
Lanstein, Andrew Rudd
Note: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name. Unless the authority to vote for all the
foregoing nominees is withheld, this Proxy will be deemed to confer
authority for every nominee whose name is not struck.
2. To amend the BARRA, Inc. Stock Option Plan to increase the number of
shares of BARRA, Inc. Common Stock reserved for issuance thereunder by
seven hundred thousand (700,000) shares, to a total of two million nine
hundred thousand (2,900,000) shares.
FOR / / AGAINST / / ABSTAIN / /
3. To ratify the adoption of the BARRA, Inc. Directors Plan and
authorization of one hundred thousand (100,000) shares of BARRA, Inc.
Common Stock for insurance thereunder.
FOR / / AGAINST / / ABSTAIN / /
4. To ratify the appointment of Deloitte & Touche as the Independent
Auditors of BARRA, Inc. for the fiscal year ending March 31, 1998.
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any postponement
or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER OF BARRA, INC. UNLESS OTHERWISE
SPECIFIED, THE SHARES SUBJECT TO THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, 3 AND 4. THE BOARD OF DIRECTORS OF BARRA, INC. RECOMMENDS A VOTE "FOR"
PROPOSALS 1, 2, 3 AND 4.
I/We do / / or do not / /
expect to attend the annual meeting at BARRA, Inc., 2100
Milvia Street, Berkeley, CA 94704, on Thursday, July 31,
1997 at 2:00 p.m., local time.
NOTE: Signature(s) should agree with name on stock
certificate(s) as printed thereon. Executors,
administrators, trustees and other fiduciaries should
so indicate when signing. If more than one fiduciary,
all should sign. ALL JOINT OWNERS MUST SIGN.
Signature(s)___________________________________Date____________________________
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
