<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)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
DATA RESEARCH ASSOCIATES, INC.
January 2, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 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 11,
1998, 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
DATA RESEARCH ASSOCIATES, INC.
1276 North Warson Road
St. Louis, Missouri 63132
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
St. Louis, Missouri
January 2, 1998
The Annual Meeting of Shareholders of Data Research Associates, Inc.,
will be held on Wednesday, February 11, 1998, 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 A directors, to serve for three years;
2. Transacting such other business as may properly come
before the meeting.
Shareholders of record at the close of business on December 18, 1997,
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 1997 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> 4
DATA RESEARCH ASSOCIATES, INC.
1276 North Warson Road
St. Louis, Missouri 63132
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 11, 1998, 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 2, 1998.
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 18, 1997,
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 Michael J. Mellinger and F. Gilbert Bickel
III named herein as nominees for Class A directors of the Company to hold
office until the annual meeting of the Company's shareholders in 2001 and until
their successors have been duly elected and qualified;
(2) 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> 5
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 18, 1997, there were 5,542,670 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 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 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
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 18, 1997, 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> 6
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------- ----------------------- --------
<S> <C> <C>
Michael J. Mellinger, 1,865,647(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, 794,450(2) 14.3%
a Director
607 S. Lindbergh Blvd.
St. Louis, Missouri 63131
Schwartz Investment Counsel, Inc. 447,500(3) 8.1%
3707 West Maple Road
Bloomfield Hills, Michigan 48301
Fidelity Management & Research 319,500(3) 5.8%
One Federal Street
Boston, Massachusetts 02109
- -------------------------
</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) Information derived from Nasdaq Online.
-3-
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
On December 18, 1997, the following represented beneficial ownership
of Common Stock by the nominees for election as Class A 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 794,450(1) 14.3%
Carole Cotton 15,300(2) *
Donald P. Gallop 18,404(3) *
Michael J. Mellinger 1,865,647(4) 33.7%
Howard L. Wood 18,404(2) *
Katharine W. Biggs 16,632(5) *
Joseph M. Bonwich 9,110(6) *
All Current Directors
and Executive Officers as a
Group (7 individuals) 2,737,263(7) 49.3%
- -------------------------
</TABLE>
*Represents less than 1% of the class.
(1) See Note (2) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
(2) Includes currently exercisable options to acquire 9,000 shares of
Common Stock.
-4-
<PAGE> 8
(3) Includes 6,000 shares held in the name of Gallop, Johnson &
Neuman, L.C., the law firm of which Mr. Gallop is Chairman, and
currently exercisable options to acquire 9,000 shares of Common
Stock.
(4) See Note (1) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
(5) Includes currently exercisable options to acquire 3,375 shares of
Common Stock.
(6) Includes 2,550 shares held in joint tenancy with William T.
and Joanne T. Bonwich, parents of Mr. Bonwich, the equivalent of 609
shares held in the Company's 401(k) Plan, and currently exercisable
options to acquire 2,750 shares of Common Stock.
(7) Includes currently exercisable options to acquire 51,125 shares of
Common Stock.
-5-
<PAGE> 9
PROPOSAL 1 - ELECTION OF CLASS A 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 C and Class A
directors expire in 1999 and 2000, respectively. The Board of Directors has
nominated F. Gilbert Bickel III and Michael J. Mellinger, who are the current
Class A directors, for a term expiring at the annual shareholders meeting in
2001. The following table lists the principal occupation of each 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 A NOMINEES--
Gilbert Bickel III 53 Vice President since April 1988 of Merrill 1979
Lynch, Pierce, Fenner & Smith, Incorporated,
a full-service brokerage firm. Treasurer of
the Company from 1984 to April 1992;
Director of St. John's Bancshares, Inc. and
Front Office Technologies, Inc.
Michael J. Mellinger 48 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.
</TABLE>
-6-
<PAGE> 10
<TABLE>
<S> <C> <C> <C>
CLASS B DIRECTORS--
Carole Cotton(1) 51 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 and produces national
conferences 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) 65 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.
CLASS C DIRECTOR--
Howard L. Wood 58 Vice Chairman and Director, since November 1992
1992, of Charter Communications, Inc., a
multiple system cable television operator.
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 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> 11
INFORMATION CONCERNING BOARD OF DIRECTORS
During fiscal 1997, 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 and 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 1997, 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 $61,000 were paid during fiscal 1997.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal year 1997, the Company paid $34,500 to CCA Consulting,
Inc., which provided the Company with two studies of the information technology
market in K-12 and higher 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> 12
Donald P. Gallop, a director of the Company, is Chairman of the law
firm of Gallop, Johnson & Neuman, L.C. which provided legal services to the
Company during the fiscal year ended September 30, 1997, 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, 1997, 1996 and 1995, concerning annual and long-term compensation
for services rendered to the Company and its subsidiaries by the Company's
Chief Executive Officer and up to 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 1997 400,000 -0- -- 3,000 1,500
CHAIRMAN OF THE BOARD, 1996 277,956 255,230 -- 3,000 1,500
PRESIDENT, AND CHIEF 1995 269,860 196,450 -- 3,000 1,500
EXECUTIVE OFFICER
KATHARINE W. BIGGS 1997 120,000 -0- -- 2,000 1,710
VICE PRESIDENT, 1996 105,000 31,649 -- 1,875 1,680
CHIEF FINANCIAL 1995 92,700 33,639 -- 1,500 1,635
OFFICER AND TREASURER
JOSEPH M. BONWICH(6) 1997 105,000 10,000 -- 2,000 2,040
VICE PRESIDENT 1996 90,000 25,825 -- 750 2,040
1995 -- -- -- -- --
</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 0%, 3.5%,
and 3.4% of the Company's income before income tax for the years ended
September 30, 1997, 1996 and 1995. See "Employment Agreement" below
regarding Mr. Mellinger's employment agreement with respect to his
future bonuses, if any.
(2) The named executive officers received certain perquisites during
fiscal 1997, 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.
-9-
<PAGE> 13
(4) Includes matching Company contributions to the Company's 401(k) Profit
Sharing Plan of $1,500 each for Mr. Mellinger, Ms. Biggs and Mr.
Bonwich and matching Company contributions to the Company's Stock
Purchase Plan of $210 for Ms. Biggs and $540 for Mr. Bonwich.
(6) Mr. Bonwich became an executive officer during fiscal 1996.
-10-
<PAGE> 14
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR(1)
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(5)
-----------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 0% 5% 10%
NAME # FISCAL YEAR ($/SH)(4) DATE ($) ($) ($)
---- ------ ----------- --------- ----- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mellinger 3,000(2) 15.0% 13.625 11/21/00 -0- 8,820 18,960
Katharine W. Biggs 2,000(3) 10.0% 13.625 11/21/01 -0- 7,520 16,640
Joseph M. Bonwich 2,000(3) 10.0% 13.625 11/21/01 -0- 7,520 16,640
</TABLE>
____________________________________
(1) This table and the table on page 12 have been adjusted for the 1996
stock dividend.
(2) The option listed was granted on November 21, 1996, to Mr. Mellinger in
his capacity as director of the Company under the Company's
Director Stock Option Plan and became fully exercisable six
months after the date of grant.
(3) The option listed was granted on November 21, 1996, to each vice
president under the Company's 1992 Stock Option Plan and becomes fully
exercisable two years after the date of grant.
(4) Exercise or base price is equal to the closing sales price as reported
on the Nasdaq Stock Market (NASDAQ National Market System) on the date of
grant.
(5) The dollar amounts under these columns result from calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible
future appreciation, if any, of the price of the Company's Common Stock.
-11-
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FY-END (#) AT FY-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/ EXERCISABLE/
---- --------------- ------------ UNEXERCISABLE UNEXERCISABLE
------------- -------------
<S> <C> <C> <C> <C>
Michael J. Mellinger 3,000 14,438 12,000/0 59,391/0
Katharine W. Biggs -0- -0- 1,500/3,875 11,907/11,203
Joseph M. Bonwich -0- -0- 2,750/2,000 5,557/15,776
</TABLE>
EMPLOYMENT AGREEMENT
The Company is a party to an employment agreement with Mr. Mellinger,
which agreement expires September 30, 2002 (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
$400,000 (the "Base Compensation"), as may be increased each fiscal year by the
Board of Directors and payable no less frequently than monthly. For fiscal
1997 and thereafter, Mr. Mellinger's bonus, if any, shall be determined in
accordance with the terms of a formula (the "Bonus Formula") to be determined
for each fiscal year by the Compensation Committee. For the fiscal year
ending September 30, 1997, the bonus will be in the amount of 10% of the
increase in Employer's income before income taxes and bonuses for such fiscal
year compared to the prior fiscal year, determined by the Company's independent
auditors in accordance with generally accepted accounting principles,
consistently applied, and payable within ninety (90) days of the end of such
fiscal year. 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> 16
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:
<TABLE>
<S><C>
- - 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.
</TABLE>
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> 17
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, which 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, 1997, was set at $400,000 which reflects
a raise of 43.9%. 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 1997, the
Compensation Committee recognized that 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
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.
ANNUAL BONUSES
For fiscal 1997, 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 1997. Total bonuses paid to these officers equaled less
than one quarter of 1% of the Company's income before income taxes.
In determining whether or not to pay Mr. Mellinger a bonus, the
Compensation Committee considered the Company's financial performance and its
progress toward meeting other non-financial goals during fiscal 1997. Although
the Company realized record earnings for the eleventh consecutive year,
financial performance fell short of the Company's goal of growth in revenues,
earnings and earnings per share. The Committee recognizes that during fiscal
1997 the Company released DRA Web2, a powerful retrieval device that
incorporates the object-oriented technology of the Company's
-14-
<PAGE> 18
new Taos product line, but experienced some slowdowns in other areas of product
development due primarily to staff changes throughout the year. Based upon
these factors, the Compensation Committee recommended and the Board of
Directors concurred that Mr. Mellinger not be awarded a bonus for fiscal 1997.
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 1997 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> 19
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.
[GRAPH]
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<PAGE> 20
TRANSACTIONS WITH MANAGEMENT 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 1997, 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.
Management of the Company believes that the terms and conditions of the
above-described transactions and those described under the heading "Compensation
Committee Interlocks and Insider Participation" 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 1997.
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<PAGE> 21
RELATIONSHIP WITH INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors
for the fiscal year ended September 30, 1997, 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, 1998.
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.
ANNUAL REPORT
The Annual Report of the Company for fiscal 1997 accompanies this notice.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 1999
annual meeting of shareholders must be received by the Company not later than
September 4, 1998, for inclusion in the Company's 1999 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.
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<PAGE> 22
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 1997 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 2, 1998
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<PAGE> 23
DATA RESEARCH ASSOCIATES, INC.
This proxy is solicited by the Board of Directors for
the 1998 Annual Meeting of Shareholders
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 11, 1998, 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 Statement of the
Company dated, January 2, 1998:
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 A DIRECTORS UNDER PROPOSAL 1 AND IN
THE DISCRETION OF THE PROXY WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
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Directors recommend a vote FOR
1. Election of Class A Directors: For Withhold For All
Nominees: Michael J. Mellinger All All Except
F. Gilbert Bickel III / / / / / /
---------------------------------
(Except Nominee(s) written above)
2. In his discretion 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 2, 1998 and the Annual Report
of the Company for fiscal 1997.
Dated: , 1998
---------------------------------
Signature(s)
-----------------------------------------------
- -----------------------------------------------------------
Please sign name(s) exactly as it appears on the 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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
