<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Data Research Associates, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Data Research Associates, Inc.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $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 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:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[DATA RESEARCH ASSOCIATES, INC. LOGO]
DATA RESEARCH ASSOCIATES, INC.
January 3, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Data Research Associates, Inc. to be held at The Ritz-Carlton
Hotel, 100 Carondelet Plaza, St. Louis, Missouri, on Wednesday, February 12,
1997, at 4:00 p.m. CST.
Details of the business to be conducted at the Annual Meeting are
given in the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend, please complete, sign, date and
return the enclosed proxy card in the envelope provided at your earliest
convenience. If you choose to attend the meeting, you may, of course, revoke
your proxy and personally cast your vote.
We look forward to seeing you at the Annual Meeting.
Michael J. Mellinger
Michael J. Mellinger
President and Chief Executive Officer
<PAGE> 3
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THIS PAGE INTENTIONALLY
LEFT BLANK
______________
<PAGE> 4
[DATA RESEARCH ASSOCIATES, INC. LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
St. Louis, Missouri
January 3, 1997
The Annual Meeting of Shareholders of Data Research Associates, Inc.,
will be held on Wednesday, February 12, 1997, at 4:00 p.m. CST at The
Ritz-Carlton Hotel, 100 Carondelet Plaza, St. Louis, Missouri 63105, for the
purposes of:
1. Electing two Class B directors, to serve for three years;
2. Considering and voting upon a proposal to approve an amendment
of the Company's Director Stock Option Plan to increase the number of shares
available for issuance thereunder from 75,000 (adjusted for the 1996 stock
dividend) to 175,000 and to amend the expiration date of the Plan from November
18, 1997, to November 18, 2002; and
3. Transacting such other business as may properly come before
the meeting.
Shareholders of record at the close of business on December 12, 1996,
will be entitled to vote at said meeting. A list of all shareholders entitled
to vote at the Annual Meeting, arranged in alphabetical order and showing the
address of and number of shares held by each shareholder, will be open at the
principal office of Data Research Associates, Inc. at 1276 North Warson Road,
St. Louis, Missouri 63132, during usual business hours, to the examination of
any shareholder for any purpose germane to the Annual Meeting for 10 days prior
to the date thereof.
A copy of the Annual Report for fiscal 1996 accompanies this notice.
By Order of the Board of Directors
POLLY C. MELLINGER
Secretary
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY. A RETURN ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 5
______________
THIS PAGE INTENTIONALLY
LEFT BLANK
______________
<PAGE> 6
[DATA RESEARCH ASSOCIATES, INC. LETTERHEAD]
PROXY STATEMENT
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Data
Research Associates, Inc. (the "Company"), for use at the Annual Meeting of the
Company's shareholders to be held at The Ritz-Carlton Hotel, 100 Carondelet
Plaza, St. Louis, Missouri 63105, on Wednesday, February 12, 1997, at 4:00 p.m.
CST and at any adjournments thereof. Whether or not you expect to attend the
meeting in person, please return your executed proxy in the enclosed envelope
and the shares represented thereby will be voted in accordance with your
wishes. The first mailing of proxies to shareholders will occur on or about
January 3, 1997.
REVOCABILITY OF PROXY
If, after sending in your proxy, you decide to vote in person or
desire to revoke your proxy for any other reason, you may do so by notifying
the Secretary of the Company in writing of such revocation at any time prior to
the voting of the proxy.
RECORD DATE
Shareholders of record at the close of business on December 12, 1996,
will be entitled to vote at the Annual Meeting.
ACTION TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the person named
in the enclosed form of proxy, to-wit, Michael J. Mellinger, will vote:
(1) FOR the election of Carole Cotton and Donald P. Gallop named
herein as nominees for Class B directors of the Company to hold office until
the annual meeting of the Company's shareholders in 2000 and until their
successors have been duly elected and qualified;
(2) FOR approval of an amendment of the Company's Director Stock
Option Plan to increase the number of shares available for issuance thereunder
from 75,000 to 175,000 and to change the expiration date of the Plan from
November 18, 1997, to November 18, 2002; and
(3) according to Mr. Mellinger's judgment on the transaction of
such other business as may properly come before the meeting or any adjournments
thereof.
<PAGE> 7
Should any nominee named herein for election as a director become
unavailable for any reason, it is intended that the person named in the proxy
will vote for the election of such other person in his or her stead as may be
designated by the Board of Directors. The Board of Directors is not aware of
any reason that might cause any nominee to be unavailable.
VOTING SECURITIES, VOTING RIGHTS
AND PRINCIPAL SECURITY HOLDERS
On December 12, 1996, there were 5,521,420 shares of Common Stock, of
the par value of $.01 per share ("Common Stock"), outstanding, which constitute
all of the outstanding shares of the Company. Each share is entitled to one
vote on all matters to come before the Annual Meeting, including the election
of directors.
A majority of the outstanding shares entitled to vote, represented in
person or by proxy, will constitute a quorum at the meeting. The affirmative
vote of a majority of the shares represented at the Annual Meeting and entitled
to vote on the subject matter is required to elect each director, to approve
the amendment to the Director Stock Option Plan and to act on any other matter
properly brought before the Annual Meeting. Shares represented by proxies that
are marked "withhold authority" with respect to the election of any person to
serve on the Board of Directors are deemed to be represented at the meeting as
to such matter and will be considered in determining whether the requisite
number of affirmative votes are cast on such matter. Accordingly, such proxies
will have the same effect as a vote against the nominee as to whom such
direction applies. With regard to the amendment and any other matters,
abstentions (including proxies which deny discretionary authority on any
matters properly brought before the meeting) will be counted as shares present
and entitled to vote and will have the same effect as a vote against the
amendment or any such other matters. Shares held in "street name" by brokers
but not voted by such brokers, for any reason, on a particular matter
(so-called "broker non-votes") will not be deemed present or represented at the
Annual Meeting for purpose of such matter and, therefore, will have no effect
even if such shares have been properly voted by such broker, in person or by
proxy, on one or more other matters brought before the Annual Meeting.
As of December 12, 1996, the following persons were known to the
Company who may, individually or as a group, be deemed to be the beneficial
owners, respectively, of more than 5% of the Common Stock, each of which
persons has sole voting and investment power over such Common Stock, except as
set forth in the footnotes hereto:
-2-
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------- ----------------------- --------
<S> <C> <C>
Michael J. Mellinger, 1,862,647(1) 33.7%
Chairman of the
Board, President and
Chief Executive Officer
of the Company
1276 North Warson Road
St. Louis, Missouri 63132
F. Gilbert Bickel III, 831,450(2) 15.1%
a Director
607 S. Lindbergh Blvd.
St. Louis, Missouri 63131
</TABLE>
- ---------------
(1) Includes 36,150 shares held by Polly C. Mellinger, wife of Mr.
Mellinger, as to which shares Mr. Mellinger disclaims beneficial
ownership, and currently exercisable options to acquire 9,000 shares
of Common Stock.
(2) Includes 75,000 shares held by Martha Bickel, wife of Mr. Bickel, as
to which shares Mr. Bickel disclaims beneficial ownership, and
currently exercisable options to acquire 9,000 shares of Common Stock.
-3-
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
On December 12, 1996, the following represented beneficial ownership
of Common Stock by the nominees for election as Class B directors, each of the
other current directors of the Company, each of the executive officers named in
the Summary Compensation Table (see "Executive Compensation" below) and all
current directors and executive officers of the Company as a group (each
director and officer having sole voting and investment power over the shares
listed opposite his or her name except as set forth in the footnotes hereto):
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ ----------------------- --------
<S> <C> <C>
F. Gilbert Bickel III 831,450(1) 15.1%
Carole Cotton 12,300(2) *
Donald P. Gallop 15,361(2) *
Michael J. Mellinger 1,862,647(3) 33.7%
Howard L. Wood 15,361(2) *
Katharine W. Biggs 14,136(4) *
Carl R. Grant 14,694(5) *
Thomas M. Rafferty 1,800(4) *
Joseph M. Bonwich 5,766(6) *
All Current Directors
and Executive Officers as a
Group (9 individuals) 2,774,915(7) 50.3%
</TABLE>
- ------------------------
*Represents less than 1% of the class.
(1) See Note (2) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
-4-
<PAGE> 10
(2) Includes currently exercisable options to acquire 9,000 shares of
Common Stock.
(3) See Note (1) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
(4) Includes currently exercisable options to acquire 1,500 shares of
Common Stock.
(5) Includes currently exercisable options to acquire 12,750 shares of
Common Stock.
(6) Includes 1,700 shares held in joint tenancy with William T. and Joanne
T. Bonwich, parents of Mr. Bonwich, the equivalent of 574 shares held
in the Company's 401(k) Plan, and currently exercisable options to
acquire 600 shares of Common Stock.
(7) Includes currently exercisable options to acquire 61,350 shares of
Common Stock.
-5-
<PAGE> 11
PROPOSAL 1 - ELECTION OF CLASS B DIRECTORS
INFORMATION ABOUT THE NOMINEES AND DIRECTORS
CONTINUING IN OFFICE
The Company's Amended and Restated By-laws currently provide for three
classes of directors, each class serving for a three-year term expiring one
year after expiration of the term of the preceding class, so that the term of
one class will expire each year. The terms of the current Class A and Class C
directors expire in 1998 and 1999, respectively. The Board of Directors has
nominated Carole Cotton and Donald P. Gallop, who are the current Class B
directors, for a term expiring at the annual shareholders meeting in 2000. The
following table lists the principal occupation of the nominees and the present
directors continuing in office for at least the last five years, his or her
present positions and offices with the Company, the year in which he or she
first was elected or appointed a director (each serving continuously since
first elected or appointed), his or her age and his or her directorships in any
company with a class of securities registered pursuant to Sections 12 or 15(d)
of the Securities Exchange Act of 1934 or in any company registered as an
investment company under the Investment Company Act of 1940.
<TABLE>
<CAPTION>
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
<S> <C> <C> <C>
CLASS B NOMINEES--
Carole Cotton(1) 50 President, since November 1990, of CCA 1992
Consulting Inc., a management consulting
and research firm which focuses exclusively
on the information technology market in
education. Such firm also publishes annual
syndicated studies on both the K-12 and Higher
Education markets. Ms. Cotton also provided
consulting services to the Company with such
firm's predecessors since 1986.
Donald P. Gallop(1) 64 Attorney-at-law and Chairman of the law 1992
firm of Gallop, Johnson & Neuman, L.C. for
more than the last five years; Director of Falcon
Products, Inc., and Magna Group, Inc.
</TABLE>
-6-
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
CLASS A DIRECTORS--
F. Gilbert Bickel III 52 Vice President of Merrill Lynch, Pierce, 1979
Fenner & Smith, Incorporated, a full service
brokerage firm, since April 1988; Treasurer of
the Company from 1984 to April 1992; Director
of St. John's Bancshares, Inc. and Front Office
Technologies, Inc.
Michael J. Mellinger 47 Chairman of the Board since April 1992 1975
and President and Chief Executive Officer
of the Company since 1975; Treasurer of
the Company from April 1992 to February 1995.
CLASS C DIRECTOR--
Howard L. Wood 57 Chairman of Management Committee and 1992
Director of Charter Communications, Inc., a
multiple system cable television operator, since
November 1992; Co-founder and Managing
Partner of Charter Communications Group, which
was formed in November 1992 for the purpose
of acquiring and managing cable television
properties; Chief Executive Officer of Cencom
Cable Associates, Inc., a provider of cable television
services from January 1989 to November 1992,
its President from July 1987 to November 1992,
its Chief Financial Officer from July 1987 to January 1989
and a director from July 1987 to November 1992.
</TABLE>
- ---------------
(1) See "Compensation Committee Interlocks and Insider Participation" for
further information.
-7-
<PAGE> 13
INFORMATION CONCERNING BOARD OF DIRECTORS
During fiscal 1996, four meetings of the Board of Directors were held.
During such fiscal year, each director attended 75% or more of the aggregate of
(i) the total number of meetings of the Board of Directors held during the
period for which he or she has been a director and (ii) the total number of
meetings held by all committees of the Board of Directors on which he or she
served during the period for which he or she served.
The Board of Directors of the Company has a standing Audit Committee
consisting of Ms. Cotton, Messrs. Bickel, Gallop and Wood and a standing
Compensation Committee consisting of Ms. Cotton and Mr. Gallop. The purpose of
the Audit Committee is to review the results and scope of the audit and
services provided by the Company's independent public accountants. The purpose
of the Compensation Committee is to act on behalf of the Board of Directors
with respect to the compensation of directors and executive officers. The
Compensation Committee also administers the Company's stock option and other
benefit plans. During fiscal 1996 two Audit Committee meetings and two
Compensation Committee meetings were held.
The Company has no standing nominating committee or other committee
performing a similar function.
DIRECTOR FEES
The Company pays an annual fee of $10,000 to directors who are not
employees of the Company. In addition, the Company pays non-employee directors
$1,000 for each Board of Directors meeting attended in person, $500 for each
telephonic Board meeting attended and $500 for each committee meeting attended.
The Company also reimburses directors for out-of-pocket expenses incurred in
connection with their attendance at Board and committee meetings. Directors'
fees of $66,000 were paid during fiscal 1996.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal year 1996, the Company paid $34,000 to CCA Consulting,
Inc., which provided the Company with two studies of the information technology
market in higher education and kindergarten through grade 12 education. Carole
Cotton, a director of the Company, is the President of CCA Consulting, Inc.,
which is expected to provide consulting services to the Company in the future.
-8-
<PAGE> 14
Donald P. Gallop, a director of the Company, is Chairman of the law
firm of Gallop, Johnson & Neuman, L.C. which has provided legal services to the
Company in prior years and is expected to provide legal services to the Company
in the future.
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended
September 30, 1996, 1995 and 1994, concerning annual and long-term compensation
for services rendered to the Company and its subsidiaries by the Company's
Chief Executive Officer and the four most highly compensated executive officers
of the Company whose total salary and bonuses exceeded $100,000 (the "named
executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------ ------------------
OTHER ANNUAL SECURITIES ALL OTHER
BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) (1) ($) ($)(2) OPTIONS/SARS(#)(3) ($)(2)(4)
- --------------------------- ---- --------- ------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
MICHAEL J. MELLINGER 1996 277,956 255,23 -- 3,000 1,500
CHAIRMAN OF THE BOARD, 1995 269,860 196,45 -- 3,000 1,500
PRESIDENT, AND CHIEF 1994 262,000 120,00 -- 3,000 1,500
EXECUTIVE OFFICER
KATHARINE W. BIGGS 1996 105,000 31,649 -- 1,875 1,680
VICE PRESIDENT, 1995 92,700 33,639 -- 1,500 1,635
CHIEF FINANCIAL 1994 90,000 10,639 -- -- 1,545
OFFICER AND TREASURER
CARL R. GRANT 1996 95,481 30,938 -- 1,875 1,860
VICE PRESIDENT 1995 92,700 22,660 -- 1,500 1,860
1994 90,000 20,916 -- -- 1,860
THOMAS M. RAFFERTY(5) 1996 123,600 40,825 -- 1,875 1,860
VICE PRESIDENT 1995 120,000 7,500 -- 1,500 90
1994 -- -- -- -- --
JOSEPH M. BONWICH(6) 1996 90,000 25,825 -- 750 2,040
VICE PRESIDENT 1995 -- -- -- -- --
1994 -- -- -- -- --
</TABLE>
(1) Executive officers of the Company, other than Mr. Mellinger, are
entitled to receive bonuses annually at the discretion of the Board of
Directors of the Company. Amounts are earned and accrued during the
fiscal years indicated, and are paid subsequent to the end of each
fiscal year. Mr. Mellinger received bonuses equivalent to 3.5%, 3.4%,
and 2.7% of the Company's income before income tax for the years ended
September 30, 1996, 1995 and 1994. See "Employment Agreement" below
regarding Mr. Mellinger's employment agreement with respect to his
future bonuses, if any.
-9-
<PAGE> 15
(2) The named executive officers received certain perquisites during
fiscal 1996, none of which in the aggregate exceeded the lesser of
$50,000 or 10% of such officer's total salary and bonus for such
fiscal year.
(3) The number of shares has been adjusted to reflect the stock dividend
paid on August 19, 1996.
(4) Includes matching Company contributions to the Company's 401(k) Profit
Sharing Plan of $1,500 each for Mr. Mellinger, Ms. Biggs, Mr. Grant,
Mr. Rafferty and Mr. Bonwich and matching Company contributions to the
Company's Stock Purchase Plan of $180 for Ms. Biggs, $360 each for Mr.
Grant and Mr. Rafferty and $540 for Mr. Bonwich.
(5) Individual became an executive officer during fiscal 1995.
(6) Individual became an executive officer during fiscal 1996.
-10-
<PAGE> 16
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(5)
-----------------------------------------------------------------------------------------
NUMBER OF
SECURITIE
S
UNDERLYIN
G % OF TOTAL EXERCISE
OPTIONS/ OPTIONS/SARS OR
SARS GRANTED TO BASE EXPIRATION
GRANTED EMPLOYEES IN PRICE ON 0% 5% 10%
NAME # FISCAL YEAR ($/SH) (4) DATE ($) ($) ($)
---- --- ------------ ----------- ---------- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mellinger 3,000(2) 16.0% 9.33 11/16/99 -0- 6,032 12,990
Katharine W. Biggs 1,875(3) 10.0% 9.33 11/16/00 -0- 4,833 10,680
Carl R. Grant 1,875(3) 10.0% 9.33 11/16/00 -0- 4,833 10,680
Thomas M. Rafferty 1,875(3) 10.0% 9.33 11/16/00 -0- 4,833 10,680
Joseph M. Bonwich 750(3) 4.0% 9.33 11/16/00 -0- 1,933 4,272
</TABLE>
- ---------------
(1) This table and the table on page 12 have been adjusted for the 1996
stock dividend.
(2) The option listed was granted on November 16, 1995, to Mr. Mellinger in
his capacity as director of the Company under the Company's
Director Stock Option Plan and became fully exercisable six months after
the date of grant.
(3) The option listed was granted on November 16, 1995, to each Vice
President under the Company's 1992 Stock Option Plan and becomes fully
exercisable two years after the date of grant.
(4) Exercise or base price is equal to the closing sales price as reported
on the Nasdaq Stock Market (NASDAQ National Market System) on the date of
grant.
(5) The dollar amounts under these columns result from calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the price of the Company's Common Stock.
-11-
<PAGE> 17
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION> NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Mellinger 3,000 22,260 9,000/0 51,510/0
Katharine W. Biggs 11,250 104,975 0/3,375 0/18,319
Carl R. Grant -0- -0- 11,250/3,375 99,375/18,319
Thomas M. Rafferty -0- -0- 0/3,375 0/18,319
Joseph M. Bonwich 701 4,620 0/2,750 0/17,127
</TABLE>
EMPLOYMENT AGREEMENT
The Company is a party to an employment agreement with Mr. Mellinger,
which agreement expires September 30, 1997 (the "Employment Agreement"), with
an automatic five-year renewal, unless terminated by Mr. Mellinger or the
Company upon the occurrence of certain events. Pursuant to the Employment
Agreement, Mr. Mellinger has agreed to serve as the President and Chief
Executive Officer of the Company in exchange for annual base compensation of
$240,000 (the "Base Compensation"), as may be increased each fiscal year by the
Board of Directors and payable no less frequently than monthly. For fiscal
1993 and thereafter, Mr. Mellinger's bonus, if any, shall be determined in
accordance with the terms of a bonus formula as determined by the Compensation
Committee. The Employment Agreement provides that Mr. Mellinger is entitled to
an additional bonus of (i) 150% of the Base Compensation in the event Mr.
Mellinger's employment with the Company is terminated for reasons other than
for cause, permanent disability or death or there occurs a significant
reduction in the position, duties or responsibilities of Mr. Mellinger
(collectively, "Termination") within one year following a "Change in Control"
(as defined in the Employment Agreement), (ii) 100% of Base Compensation if
Termination occurs within the second year following a Change in Control, and
(iii) 50% of Base Compensation if Termination occurs within the third year
following a Change in Control.
-12-
<PAGE> 18
COMPENSATION COMMITTEE REPORT
The Compensation Committee is committed to providing a comprehensive
compensation package designed to attract and retain superior executive
officers, instill a long-term commitment to the Company and insure that the
interests of management and the Company's shareholders are aligned. With this
in mind, the Compensation Committee's principal objective is to link executive
compensation to corporate performance. The Committee's compensation policies
include the following:
- - establishing compensation levels competitive with those of the
Company's competitors and other information systems integrators
and providers of information services software and networking
services;
- - balancing short-term and long-term goals and performance of both
the Company and individual executive officers;
- - limiting the cost of compensation to levels which are consistent
with the Company's financial performance; and
- - providing executive officers who demonstrate their commitment to
the Company with opportunities to build capital value through
stock options.
The Compensation Committee continues to monitor qualifying compensation paid to
the Company's executive officers with respect to its deductibility under
Section 162(m) of the Internal Revenue Code.
Given the Compensation Committee's policies, the executive officers'
compensation package primarily includes three elements: (1) base salary; (2)
annual cash bonuses; and (3) stock options.
BASE SALARIES
Base salaries for executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the relevant competitive marketplace for
executive management, including a comparison to a self-selected group of the
Company's competitors and other information systems integrators and providers
of information services software and networking services. The comparison group
in any given year may not be the same as in previous years, particularly as the
Company's competitors change and the library automation industry continues to
consolidate. When determining base salary, the Compensation Committee also
takes into account other aspects of the entire compensation package afforded by
the
-13-
<PAGE> 19
Company to the individual officer, which include Company matching contributions
under the 401(k) Profit Sharing Plan and the Stock Purchase Plan, and certain
perquisites.
Base salaries are reviewed annually and adjusted after consideration
of the Company's performance for the year and the individual executive's
contribution to that performance and achievement of individual performance
objectives. In reviewing individual performance of the executive officers
(other than the Chief Executive Officer), the Compensation Committee takes into
account the views of Michael J. Mellinger, President and Chief Executive
Officer, whose views typically are subjective, such as his expectation of
changes in the officer's functional responsibility.
Under the terms of the Employment Agreement, Mr. Mellinger's base
salary for the fiscal year ended September 30, 1992, was set at $240,000. The
Employment Agreement provides that the Compensation Committee may raise Mr.
Mellinger's base salary after considering his individual performance, the total
compensation paid to the chief executive officers of similar companies of
comparable size to the Company's and such other factors deemed relevant by the
Board of Directors of the Company.
In determining Mr. Mellinger's base salary for fiscal 1996, the
Compensation Committee recognized that during fiscal 1995 the Company realized
record revenues, earnings and earnings per share, marking the ninth consecutive
year of record earnings. In addition to its financial achievements the Company
upgraded its Internet provision capability and increased the number of its DRA
Net subscribers by 55%, including corporate and non-corporate library
institutions; introduced a suite of access products, including DRA Find, DRA
Web and DRA Kids, which complements its growing selection of available
databases; and expanded its worldwide operations to include subsidiaries in
Montreal, Canada and Paris, France.
Based on these results, the Compensation Committee set Mr. Mellinger's base
salary for fiscal 1996 at $277,956 which reflects a raise of 3.0% over fiscal
1995.
ANNUAL BONUSES
For fiscal 1996, the Compensation Committee determined bonuses for the
Company's executive officers (excluding the Chief Executive Officer) based on
formulas which provided for each officer to receive a bonus linked to
performance in his or her area of responsibility. Performance was measured
against both corporate and departmental goals that were established at the
beginning of fiscal 1996. Total bonuses paid to these officers equaled 1.8% of
the Company's income before income taxes.
In determining Mr. Mellinger's bonus, the Compensation Committee
considered the Company's financial performance and certain other non- financial
achievements during fiscal 1996. The Company realized record revenues,
earnings and earnings per share, marking the tenth consecutive year of record
earnings. In addition the Company signed thirty-five new contracts, the second
largest number in one fiscal year in the Company's history; held the rate of
growth of salary and general and administrative
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<PAGE> 20
expenses below the rate of growth of revenues; upgraded the Company's network
backbone to ATM (Asynchronous Transfer Mode); and increased staffing hours at
the St. Louis headquarters' customer support desk to twenty-four hours per day,
seven days per week. Based upon these achievements, the Compensation Committee
recommended and the Board of Directors authorized a bonus of $255,230, or 3.5%
of the Company's income before income taxes, for Mr. Mellinger for fiscal 1996.
STOCK OPTIONS
In connection with its initial public offering in July 1992, the
Company began providing forms of equity participation as a key part of its
overall compensation program designed to provide its executive officers and
other key employees with incentives to maximize the Company's long-term
financial performance and align their interests with those of the Company's
shareholders. Through the Data Research Associates, Inc. 1992 Stock Option
Plan (the "1992 Plan"), the Company has encouraged its executives to acquire
and hold the Company's Common Stock. Executive officers, along with all of the
Company's other employees, also are eligible to participate in the Data
Research Associates, Inc. Stock Purchase Plan, an ongoing stock acquisition
program under which an employee may defer a portion of his or her salary and
receive matching Company contributions to acquire shares of Common Stock.
In fiscal 1992, the Committee granted options to purchase Common Stock
under the 1992 Plan at an exercise price equal to the initial public offering
price to certain of its executive officers. In determining whether and how
many options should be granted, the Committee considered the seniority of and
the amount of Common Stock already held by each of the executive officers. In
fiscal 1996 the Compensation Committee granted options under the 1992 Plan
equally to each of the Company's executive officers (excluding the Chief
Executive Officer).
Respectfully submitted,
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS OF DATA RESEARCH ASSOCIATES,
INC.
CAROLE COTTON
DONALD P. GALLOP
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<PAGE> 21
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change
in the cumulative total shareholder return on the Company's Common Stock
against the cumulative total returns of the Center for Research in Security
Prices ("CRSP") Index for the Nasdaq Stock Market (U.S. Companies) and the CRSP
Index for Nasdaq Computer and Data Processing Stocks.
[LINE GRAPH]
Legend
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 09/30/91 09/30/92 09/30/93 09/30/94 094/29/95 09/30/96
-------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Data Research Associates, Inc. 110.7 192.9 132.1 207.1 289.3
Nasdaq Stock Market (US Companies) 92.0 103.1 135.0 136.1 188.0 223.1
Masdaq Computer and Data Processing Stocks 88.8 104.7 124.9 138.7 222.2 275.5
SIC 7370-7379 US & Foreign
</TABLE>
NOTES:
A. The lines represent monthly index dervied from compounded daily returns
that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 07/07/92.
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<PAGE> 22
TRANSACTIONS WITH ISSUER AND OTHERS
Pursuant to an equipment lease which expired on April 15, 1996, the
Company leased its office phone equipment from Davandy Management, Inc.
("Davandy"). Upon expiration of the lease the Company did not exercise its
option to purchase the equipment at fair market value but has continued to
lease the equipment on a month-to-month basis at a monthly rate of $1,640.
During fiscal 1996, Davandy received $19,680 in payments from the Company for
the use of such equipment. Michael J. Mellinger, the Company's President and
Chief Executive Officer, is the president and sole shareholder of Davandy.
During fiscal year 1996, the Company paid $34,000 to CCA Consulting,
Inc., which provided the Company with two studies of the information technology
market in higher education and kindergarten through grade 12 education. Carole
Cotton, a director of the Company, is the President of CCA Consulting, Inc.,
which is expected to provide consulting services to the Company in the future.
Donald P. Gallop, a director of the Company, is Chairman of the law firm
of Gallop, Johnson & Neuman, L.C. which has provided legal services to the
Company in prior years and is expected to provide legal services to the Company
in the future.
Management of the Company believes that the terms and conditions of the
above-described transactions were no less favorable to the Company than those
which would have been available to the Company in comparable transactions with
unaffiliated persons.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Such individuals are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. There are no known
failures to file any forms required under Section 16(a). Based on review of
the copies of such forms furnished to the Company, the Company believes that
such persons complied with all Section 16(a) filing requirements applicable to
them with respect to transactions during fiscal 1996.
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<PAGE> 23
PROPOSAL 2 - APPROVAL OF THE DATA RESEARCH ASSOCIATES, INC.
AMENDED DIRECTOR STOCK OPTION PLAN
On November 18, 1992, the Board of Directors adopted the Data Research
Associates, Inc. Director Stock Option Plan (the "Director Plan") for directors
of the Company. The Director Plan made 75,000 shares of Common Stock (adjusted
for the 1996 stock dividend) available for issuance thereunder. On November
21, 1996, the Board of Directors amended the Director Plan in order to increase
the number of shares of Common Stock available for issuance from 75,000 to
175,000 and to extend the expiration date of the Director Plan from November
18, 1997, to November 18, 2002 (the "Amendment"). The Board of Directors
directed that the Amendment be submitted to the shareholders of the Company for
their approval. Otherwise, the Director Plan and its terms and conditions
shall remain unchanged. The Amendment will become effective only if the
holders of at least a majority of the issued and outstanding shares of Common
Stock present at the Annual Meeting in person or by proxy vote for the approval
of the Amendment.
The Director Plan is intended to be a "formula award" plan under Rule
16b-3 and is administered by the Compensation Committee of the Board of
Directors of the Company. The Director Plan provides for the automatic grant,
on the date of the first regularly scheduled meeting of the Board of Directors
following the end of the Company's preceding fiscal year, of options to
purchase 3,000 shares of Common Stock (adjusted for the 1996 stock dividend) to
all directors of the Company, including members of the Compensation Committee,
advisory directors and directors emeritus, during each year of service rendered
by any such director during the term of the Director Plan. As indicated above,
a maximum of 75,000 shares of Common Stock currently may be issued pursuant to
options granted under the Director Plan and of that amount, only 15,000 shares
remain available for future grants of options. The Board believes that option
grants under the Director Plan will continue to be an important ingredient in
increasing the directors' proprietary interest in the business of the Company
and providing them with an increased personal interest in the continued success
and progress of the Company.
The Director Plan will expire on, and no options may be granted
thereunder, after November 18, 1997, subject to the right of the Board of
Directors to terminate such Director Plan at any time prior thereto. The Board
of Directors may amend the 1992 Plan at any time provided that it may amend the
Plan no more than once every six months.
An option enables the optionee to purchase shares of Common Stock at the
exercise price. The exercise price per share may not be less than the fair
market value of the Common Stock at the time the option is granted. The
purchase price may be paid in cash or, with the consent of the Compensation
Committee, stock of the Company. Options are exercisable in whole or in part
(except as may be provided in the agreement relating to such option),but in no
event is an option or any portion thereof exercisable until at least six months
after the date of grant. Once issued, such options are non-forfeitable from
and after the date of grant and until the expiration of the options. Options
granted under the Director Plan and all unexercised rights thereunder expire
automatically upon the earlier of (i) the date an optionee ceases to hold
office as a director of the Company for any reason other than
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<PAGE> 24
retirement, death or disability; (ii) the date which is three months following
the effective date of the optionee's retirement from service on the Board of
Directors of the Company; (iii) the date which is one year following the date
on which the optionee's service on the Board of Directors of the Company ceases
due to death or disability, and (iv) the date four (4) years after the date of
grant of the option. Options granted under the Director Plan are
nontransferable and subject to the terms and conditions of agreements entered
into between the directors receiving such options and the Company, in
accordance with and subject to the terms and conditions of the Director Plan.
No options have been granted with respect to the additional shares of
Common Stock to which the Amendment relates. The last reported sale price of
Common Stock on December 12, 1996, as reported on the NASDAQ National Market
System was $14.50.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the federal income tax consequences
of the awards which may be granted under the Director Plan. This discussion is
for purposes of general information only and does not address the specific
facts and circumstances that may apply to individual award recipients. All
persons who receive awards under the Director Plan should consult their own tax
advisor to determine the particular tax consequences to them of their awards.
Persons receiving nonqualified stock options under the Director Plan
will not recognize any income for federal income tax purposes upon the grant to
them of the options, nor will the Company receive any tax deduction at the time
of grant. Upon exercise of a nonqualified stock option, in cash or by
surrender of stock already owned, the difference between the fair market value
of the shares acquired at exercise and the purchase price paid therefor will be
treated as ordinary income received as additional compensation, subject to
federal income tax withholding and employment tax provisions, and the Company
will receive a corresponding tax deduction. Generally, subsequent disposition
of the option shares will result in recognition by the holder of capital gain
or loss.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT OF
THE DIRECTOR STOCK OPTION PLAN, WHICH IS ITEM 2 ON THE PROXY CARD.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent
auditors for the fiscal year ended September 30, 1996, and for a number of
years prior thereto, and the Board of Directors has selected this firm to serve
as independent auditors for the fiscal year ending September 30, 1997.
Representatives of Ernst & Young are expected to attend the Annual Meeting and
will have the opportunity to make statements and respond to appropriate
questions from shareholders.
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<PAGE> 25
ANNUAL REPORT
The Annual Report of the Company for fiscal 1996 accompanies this
notice.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 1998
annual meeting of shareholders must be received by the Company not later than
September 5, 1997, for inclusion in the Company's 1998 Proxy Statement and form
of proxy relating to such meeting.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the
Annual Meeting other than as set forth above. If other matters properly come
before the meeting, it is the intention of the person named in the solicited
proxy to vote the proxy on such matters in accordance with his judgment.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit the return of proxies by
telephone, telegram or personal interview and may request brokerage houses and
custodians, nominees and fiduciaries to forward soliciting material to their
principals and will agree to reimburse them for their reasonable out-of-pocket
expenses.
Shareholders are urged to mark, sign, date and send in their proxies
without delay.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 1996 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING RELATED FINANCIAL
STATEMENT SCHEDULES) IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE, UPON WRITTEN
REQUEST TO THE SECRETARY, DATA RESEARCH ASSOCIATES, INC., 1276 NORTH WARSON
ROAD, ST. LOUIS, MISSOURI 63132.
By Order of the Board of Directors
POLLY C. MELLINGER
Secretary
St. Louis, Missouri
January 3, 1997
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<PAGE> 26
<TABLE>
<S><C> The undersigned hereby appoints Michael J.
Mellinger the true and lawful attorney-in-fact,
agent and proxy of the undersigned to vote at
the Annual Meeting of Shareholders of Data
Research Associates, Inc. to be held on
Wednesday, February 12, 1997, commencing at 4:00
p.m. at The Ritz-Carlton Hotel, 100 Carondelet
Plaza, St. Louis, Missouri 63105 and at any and
all adjournments thereof, according to the
number of votes which the undersigned would
possess if personally present, for the purpose
of considering and taking action upon the
following as more fully set forth in the Proxy
DATA RESEARCH ASSOCIATES, INC. Statement of the Company dated January 3, 1997:
THIS PROXY IS SOLICITED DIRECTORS RECOMMEND A VOTE FOR
BY THE BOARD OF DIRECTORS 1.Election of Class B Directors:
FOR THE 1997 ANNUAL FOR nominee [ ] Carole Cotton [ ] Donald P. Gallop
MEETING OF SHAREHOLDERS WITHHOLD AUTHORITY to vote for nominee listed below
[ ] Carole Cotton [ ] Donald P. Gallop
PROXY 2.Approval of Amendment to Director Stock Option Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.In his discretion with respect to such other business
as may properly come before the meeting or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE CLASS B DIRECTORS UNDER PROPOSAL 1 AND FOR
PROPOSAL 2 AND IN THE DISCRETION OF THE PROXY WITH RESPECT TO SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned hereby acknowledges receipt of copies of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated January 3, 1997 and the
Annual Report of the Company for fiscal 1996.
_____________________________________________
Dated:_____________,1997
_____________________________________________
Please sign name(s) exactly as it appears on
this proxy. In the case of joint holders, all
should sign. Executors, administrators,
trustees and attorneys-in-fact should so
indicate when signing. If executed by a
corporation, this proxy should be signed by a
duly authorized officer. If executed by a
partnership, this proxy should be signed by an
authorized partner.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
