<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)(1) 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:
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(4) Date filed:
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<PAGE> 2
[D.R.A. LOGO]
DATA RESEARCH ASSOCIATES, INC.
January 7, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 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 16,
2000, 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.
/s/ Michael J. Mellinger
Michael J. Mellinger
President and Chief Executive Officer
<PAGE> 3
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<PAGE> 4
DATA RESEARCH ASSOCIATES, INC.
1276 North Warson Road
St. Louis, Missouri 63132
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
St. Louis, Missouri
January 7, 2000
The Annual Meeting of Shareholders of Data Research Associates, Inc.,
will be held on Wednesday, February 16, 2000, 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 and
one Class C director to serve for two years;
2. Transacting such other business as may properly come before the
meeting.
Shareholders of record at the close of business on December 17, 1999,
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 1999 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
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<PAGE> 6
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 16, 2000, 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 7,
2000.
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 17, 1999,
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 persons named
in the enclosed form of proxy, to-wit, Michael J. Mellinger and Katharine W.
Biggs, or the one of them who acts, will vote:
(1) FOR the election of the nominated directors: 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 2003
and until their successors have been duly elected and qualified; and Marilyn
Gell Mason named herein as nominee for Class C director of the Company to hold
office until the annual meeting of the Company's shareholders in 2002 and until
her successor has been duly elected and qualified;
(2) according to the proxy's judgment on the transaction of such other
business as may properly come before the meeting or any adjournments thereof.
<PAGE> 7
Should the nominees named herein for election as directors become
unavailable for any reason, it is intended that the persons named in the proxy
will vote for the election of such other persons in their stead as may be
designated by the Board of Directors. The Board of Directors is not aware of any
reason that might cause the nominees to be unavailable.
VOTING SECURITIES, VOTING RIGHTS
AND PRINCIPAL SECURITY HOLDERS
On December 17, 1999, there were 4,860,025 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 a
director.
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 the 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
the 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 17, 1999, 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, 1,866,947(1) 38.3%
Chairman of the
Board, President and
Chief Executive Officer
of the Company
1276 North Warson Road
St. Louis, Missouri 63132
F. Gilbert Bickel III, 757,450(2) 15.6%
a Director
1630 S. Lindbergh Blvd.
St. Louis, Missouri 63131
Schwartz Investment Counsel, Inc. 316,700(3) 6.5%
3707 West Maple Road
Bloomfield Hills, Michigan 48301
</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 Schwartz Investment Counsel, Inc. Of these
shares, Schwartz Investment Counsel, Inc. has sole voting power over
306,700 shares and shared voting power over 10,000 shares.
-3-
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
On December 17, 1999, the following represented beneficial ownership of
Common Stock by the nominees for election as 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 757,450(1) 15.6%
Carole Cotton 18,300(2) *
Donald P. Gallop 21,521(3) *
Marilyn Gell Mason 1,000 *
Michael J. Mellinger 1,866,947(4) 38.3%
Howard L. Wood 21,521(2) *
Katharine W. Biggs 19,510(5) *
Joseph M. Bonwich(6) 7,816(7) *
All Current Directors
and Executive Officers as a
Group (7 individuals) 2,706,249(8) 55.1%
</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> 10
(3) Includes 9,000 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 3,875 shares of
Common Stock.
(6) Mr. Bonwich resigned as a vice president on November 23, 1999, which
was subsequent to the fiscal year to which this proxy statement
relates.
(7) Includes the equivalent of 778 shares held in the Company's 401(k)
Plan, and currently exercisable options to acquire 2,750 shares of
common stock.
(8) Includes currently exercisable options to acquire 48,875 shares of
Common Stock. Does not include 7,816 shares owned by Mr. Bonwich.
-5-
<PAGE> 11
PROPOSAL 1 - ELECTION OF TWO CLASS B DIRECTORS
AND ONE CLASS C DIRECTOR
INFORMATION ABOUT THE NOMINEE 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 2001 and 2002, 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 2003.
During fiscal 1999, the Company amended its By-laws to increase the number of
directors of the Company from five to six, which created a vacancy on the Board
of Directors. The Board of Directors elected Marilyn Gell Mason to fill such
vacancy and to serve as a Class C director until the next annual meeting of
shareholders and has nominated Ms. Mason for the remainder of the Class C term
which expires at the annual shareholders meeting in 2002. 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 B NOMINEES--
Carole Cotton 53 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.
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C> <C>
Donald P. Gallop(1) 67 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.
CLASS C NOMINEE--
Marilyn Gell Mason 55 Consultant to libraries and providers of library 1999
systems since April 1999. Director of the
Cleveland Public Library 1986 to April 1999.
CLASS C DIRECTOR--
Howard L. Wood 60 Consultant to Charter Communications, Inc. of 1992
which he was formerly Vice-Chairman from
1993 to November 1999. Co-founder and
Director of Charter Communications, Inc.
CLASS A DIRECTORS--
F. Gilbert Bickel III 55 Vice President since April 1988 of Merrill 1979
Lynch, Pierce, Fenner & Smith, Incorporated,
a full-service brokerage firm. Director of
Summit Marketing Group, Inc.
Michael J. Mellinger 50 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>
- --------------
(1) See "Compensation Committee Interlocks and Insider Participation" for
further information.
-7-
<PAGE> 13
INFORMATION CONCERNING BOARD OF DIRECTORS
During fiscal 1999, 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 Mesdames Cotton and Mason and Messrs. Bickel, Gallop and Wood, and
a standing Compensation Committee consisting of Mesdames Cotton and Mason 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 1999, two Audit Committee
meetings and one Compensation Committee meeting 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 $65,167 were paid during fiscal 1999. Additionally, non-employee
directors participate in the Company's Director Stock Option Plan. Historically,
such non-employee directors have each received annually options to acquire 3,000
shares of the Company's common stock, exercisable in accordance with the terms
of the Company's Director Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
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, 1999, and is expected to
provide legal services to the Company in the future.
-8-
<PAGE> 14
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended September
30, 1999, 1998 and 1997, 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 $100,000 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------
ANNUAL COMPENSATION AWARDS
------- -- ------------------------------ --- -------------------
OTHER ANNUAL SECURITIES ALL OTHER
BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) OPTIONS/SARS(#) ($)(2)(3)
- --------------------------- ---- --------- ------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
MICHAEL J. MELLINGER 1999 413,000 -0- -- 3,000 2,000
CHAIRMAN OF THE BOARD, 1998 408,000 -0- -- 3,000 1,500
PRESIDENT, AND CHIEF 1997 400,000 -0- -- 3,000 1,500
EXECUTIVE OFFICER
KATHARINE W. BIGGS 1999 139,013 -0- -- 10,000 2,540
VICE PRESIDENT, 1998 122,440 -0- -- 10,000 2,040
CHIEF FINANCIAL 1997 120,000 -0- -- 2,000 1,710
OFFICER AND TREASURER
JOSEPH M. BONWICH(4) 1999 108,500 -0- -- 5,000 2,180
VICE PRESIDENT 1998 107,100 5,000 -- 10,000 2,661
1997 105,000 10,000 -- 2,000 2,040
</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 did not receive any bonuses for the years
ended September 30, 1999, 1998 and 1997. 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
1999, 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) Includes matching Company contributions to the Company's 401(k) Profit
Sharing Plan of $2,000 each for Mr. Mellinger, Ms. Biggs and Mr.
Bonwich and matching Company contributions to the Company's Stock
Purchase Plan of $540 for Ms. Biggs and $180 for Mr. Bonwich.
(4) Mr. Bonwich resigned as a vice president on November 23, 1999.
-9-
<PAGE> 15
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE
APPRECIATION FOR OPTION TERM(4)
---------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 0% 5% 10%
NAME # FISCAL YEAR ($/SH) (3) DATE ($) ($) ($)
---- -- -- ------------ ---------- --- ----- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mellinger 3,000(1) 4.0% 12.313 11/12/02 -0- 7,961 14,689
Katharine W. Biggs 10,000(2) 12.0% 12.313 01/01/04 -0- 26,535 57,145
Joseph M. Bonwich 5,000(2) 6.0% 12.313 01/01/04 -0- 13,268 28,572
</TABLE>
- -------------------------------
(1) The option listed was granted on November 12, 1998, to Mr. Mellinger in
his capacity as director of the Company under the Company's Director
Stock Option Plan and became fully exercisable six months after the date
of grant.
(2) The option listed was granted on November 12, 1998, to each vice
president under the Company's 1992 Stock Option Plan and becomes
exercisable the next January 1 after the second anniversary of the
grant.
(3) Exercise or base price is equal to the closing sales price as reported
on the Nasdaq Stock Market (NASDAQ National Market System) on the date
of grant.
(4) The dollar amounts under these columns result from calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the price of the Company's Common Stock.
-10-
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Mellinger -0- -0- 9,000/0 0/0
Katharine W. Biggs -0- -0- 3,875/20,000 0/0
Joseph M. Bonwich 1,400 3,850 3,350/15,000 1,238/0
</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 ended September 30, 1999, the bonus
was to be in the amount of 7.5% of the increase in the Company'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.
-11-
<PAGE> 17
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and is responsible for developing and
approving the Company's compensation program for the Chief Executive Officer and
the other executive officers of the Company. The Committee also administers the
Data Research Associates, Inc. 1992 Stock Option Plan ("the 1992 Plan"). The
overall objectives of the Company's executive compensation program are to
provide total compensation that will attract and retain highly qualified
executives and to link executive compensation to corporate performance.
The Company's executive compensation policies include the following:
-Compensation levels should be competitive with other software and
technology companies of comparable size;
-Compensation should be directly related to the Company's achievement
of both short and long-term corporate performance goals and to the
individual executive's contribution to achieving those goals;
-Ownership of the Company's Common Stock provides a link between
executives and shareholders by creating incentives for the executives
to achieve the long-term goal of creating shareholder value.
.
The Committee feels that it can best reach its objectives through a
compensation package that includes three elements: (1) base salary; (2) annual
cash bonuses; and (3) long-term incentives in the form of stock options. The
Chief Executive Officer, Michael J. Mellinger, makes recommendations to the
Committee on all elements of the compensation package for the executive officers
other than himself.
BASE SALARIES
In order to attract and retain executives, the Company strives to offer
competitive salaries and employee benefits, including its Employee Stock
Purchase Plan, 401(k) Profit Sharing Plan, health care plans and other employee
benefit programs. The Committee sets base salary levels for executives based on
the responsibilities of the position held and the experience of the individual,
and by reference to a self-selected group of software and technology companies
of comparable size and to the Company's competitors, when such information is
available. The Committee also consults published studies of executive
compensation in publicly held companies.
-12-
<PAGE> 18
Base salaries are adjusted annually based on the Social Security
Administration's cost-of-living adjustment (COLA) calculation. Base salaries are
also reviewed annually with regard to the Company's performance for the year and
the responsibilities of the individual executive.
Under the terms of the Employment Agreement, Mr. Mellinger's base salary for
the fiscal year ended September 30, 1997, the first year of the Employment
Agreement, was set at $400,000. The Employment Agreement provides that the
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 as
deemed relevant by the Board of Directors of the Company.
In determining Mr. Mellinger's base salary for fiscal 1999, the Committee
took into consideration that although total revenues for fiscal 1998 declined
from the prior year, two of the three sources from which the Company's revenues
are derived, software and services, increased from fiscal 1997. The Committee
also recognized that many of the selections and contract awards achieved by the
Company during fiscal 1998 did not translate into revenues or earnings during
that fiscal year. Based upon these factors, Mr. Mellinger's base salary for
fiscal 1999 was set at $413,000, an increase of 1.2% over fiscal 1998.
ANNUAL BONUSES
For fiscal 1999, the Committee determined bonuses for the Company's
executives, including Mr. Mellinger, based on formulas determined at the
beginning of fiscal 1999 which provided for each officer to receive a bonus
linked to an increase in corporate earnings. Since corporate earnings in fiscal
1999 decreased from earnings in fiscal 1998, the Committee did not award a bonus
to Mr. Mellinger or the Company's other executives.
STOCK OPTIONS
Since its initial public offering in 1992, the Board of Directors of the
Company has realized the importance of providing executives and other key
employees incentives to maximize the Company's financial performance and align
their interests with those of the Company's shareholders. Through 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 to acquire shares of Common
Stock. The Company matches a portion of the employee's deferral.
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<PAGE> 19
In fiscal 1999 the Committee granted options under the 1992 Plan to each of the
executive officers (excluding the Chief Executive Officer). In determining how
many options should be granted to each officer, the Committee considered the
entire compensation package of each officer and the recommendation of Mr.
Mellinger.
Respectfully submitted,
COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS OF DATA RESEARCH
ASSOCIATES, INC.
CAROLE COTTON
DONALD P. GALLOP
MARILYN GELL MASON
-14-
<PAGE> 20
,
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: 09/1994 09/1995 09/1996 09/1997 09/1998 09/1999
- ------ ---------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
______ - Data Research Associates, Inc. 100.0 156.8 218.9 235.8 228.6 142.2
..._ . * Nasdaq Stock Market (US Companies) 100.0 138.1 163.8 225.0 228.8 371.5
- ------ /\ Nasdaq Computer and Data Processing 100.0 160.2 198.7 268.9 349.0 585.9
Stocks SIC 7370-7379 US & Foreign
</TABLE>
Notes:
A. The lines represent monthly index levels derived 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 09/30/1994.
-15-
<PAGE> 21
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 1999, 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 1999.
-16-
<PAGE> 22
RELATIONSHIP WITH INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent
auditors for the fiscal year ended September 30, 1999, 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, 2000.
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 1999 accompanies this
notice.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 2001
Annual Meeting of Shareholders must be received by the Company not later than
September 9, 2000, for inclusion in the Company's 2001 Proxy Statement and form
of proxy relating to such meeting.
In addition, pursuant to the Company's bylaws, if a shareholder wishes
to bring a proposal before the annual meeting outside the proxy inclusion
process discussed above but does not provide written notice of the proposal to
the Company at least 60 days before the date of the annual meeting of
shareholders, such notice will be untimely and any proxies received by the Board
of Directors from the shareholders will be voted by the Company's designated
proxies in their discretion on such matter, regardless of whether specific
authority to vote on such matter has been received from the shareholder
submitting such proxies. Accordingly, any shareholder who wishes to submit a
proposal at the 2001 Annual Meeting of Shareholders and also wishes to avoid, in
certain instances, the possibility of discretionary voting by the Company's
proxies on such matter must give written notice to the Secretary of the Company
on or before the sixtieth day prior to such annual meeting, which date will be
December 16, 2000.
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 persons named in the solicited
proxy to vote the proxy on such matters in accordance with their judgment.
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<PAGE> 23
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 1999 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING RELATED FINANCIAL
STATEMENT SCHEDULE) 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 7, 2000
-18-
<PAGE> 24
Data Research Associates, Inc.
This proxy is solicited by the Board of Directors for
The 2000 Annual Meeting of Shareholders
The undersigned hereby apppoint(s) Michael J. Mellinger and Katharine W. Biggs,
and each of them, with full power to act alone, the true and lawful attorneys-in
- -fact and proxies of the undersigned, with full power of substitution, and
hereby authorize(s) them and each of them, to represent the undersigned and to
vote all shares of common stock that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Data Research Associates, Inc. to be held on
Wednesday, February 16, 2000, 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, on the following proposals and any other matters coming
before said meeting.
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 nominated directors under proposal l 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)
<PAGE> 25
Data Research Associates, Inc.
DATA RESEARCH ASSOCIATES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
Directors recommend a vote FOR
1. Election of Nominated Directors: For Withhold For All
Class B Nominee(s): Carole A. Cotton All All Except
Donald P. Gallop
Class C Nominee: Marilyn Gell Mason
--------------------------------
(Except Nominee(s) written above)
2. In the proxy's 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 7, 2000, and the
Annual Report of the Company for fiscal 1999.
DATED:, 2000
Signature(s):
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.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
