National
Research Corporation
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held May 7, 2010
To the
Shareholders of
National
Research Corporation:
NOTICE IS HEREBY GIVEN
that
the Annual Meeting of Shareholders of National Research Corporation will be held
on Friday, May 7, 2010, at 9:00 A.M., local time, at our corporate offices
located at 1245 Q Street, Lincoln, Nebraska 68508, for the following
purposes:
1. To
elect two directors to hold office until the 2013 Annual Meeting of Shareholders
and until their successors are duly elected and qualified.
2. To
approve amendments to the National Research Corporation 2004 Non-Employee
Director Stock Plan.
3. To
consider and act upon such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The close
of business on March 12, 2010, has been fixed as the record date for the
determination of shareholders entitled to notice of, and to vote at, the meeting
and any adjournment or postponement thereof.
A proxy
for the meeting and a proxy statement are enclosed herewith.
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By
Order of the Board of Directors
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NATIONAL
RESEARCH CORPORATION
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|
|
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Patrick
E. Beans
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Secretary
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Lincoln,
Nebraska
April 6,
2010
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
To Be Held on May 7, 2010. The National Research Corporation proxy
statement for the 2010 Annual Meeting of Shareholders and the 2009 Annual Report
to Shareholders are available at
http://www.nationalresearch.com/InvestorRelations/tabid/54/Default.aspx.
YOUR
VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY AS
YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
National
Research Corporation
1245
Q Street
Lincoln,
Nebraska 68508
PROXY
STATEMENT
For
ANNUAL
MEETING OF SHAREHOLDERS
To
Be Held May 7, 2010
This
proxy statement is being furnished to shareholders by the Board of Directors
(the “Board”) of National Research Corporation (the “Company”) beginning on or
about April 6, 2010, in connection with a solicitation of proxies by the
Board for use at the Annual Meeting of Shareholders to be held on Friday, May 7,
2010, at 9:00 A.M., local time, at the Company’s corporate offices located at
1245 Q Street, Lincoln, Nebraska 68508, and all adjournments or postponements
thereof (the “Annual Meeting”) for the purposes set forth in the attached Notice
of Annual Meeting of Shareholders.
Execution
of a proxy given in response to this solicitation will not affect a
shareholder’s right to attend the Annual Meeting and to vote in
person. Presence at the Annual Meeting of a shareholder who has
signed a proxy does not in itself revoke a proxy. Any shareholder
giving a proxy may revoke it at any time before it is exercised by giving notice
thereof to the Company in writing or in open meeting.
A proxy,
in the enclosed form, which is properly executed, duly returned to the Company
and not revoked, will be voted in accordance with the instructions contained
therein. The shares represented by executed but unmarked proxies will
be voted FOR the two persons nominated for election as directors referred to
herein, FOR the amendments to the National Research Corporation 2004
Non-Employee Director Stock Plan (the “2004 Director Plan”) and on such other
business or matters which may properly come before the Annual Meeting in
accordance with the best judgment of the persons named as proxies in the
enclosed form of proxy. Other than the election of two directors and
the amendments to the 2004 Director Plan, the Board has no knowledge of any
matters to be presented for action by the shareholders at the Annual
Meeting.
Only
holders of record of the Company’s common stock, $.001 par value per share (the
“Common Stock”), at the close of business on March 12, 2010, are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 6,657,600 shares of Common Stock, each of which
is entitled to one vote per share.
ELECTION
OF DIRECTORS
The
Company’s By-Laws provide that the directors shall be divided into three
classes, with staggered terms of three years each. At the Annual
Meeting, the shareholders will elect two directors to hold office until the 2013
Annual Meeting of Shareholders and until their successors are duly elected and
qualified. Unless shareholders otherwise specify, the shares
represented by the proxies received will be voted in favor of the election as
directors of the two persons named as nominees herein. The Board has
no reason to believe that the listed nominees will be unable or unwilling to
serve as directors if elected. However, in the event that any nominee
should be unable to serve or for good cause will not serve, the shares
represented by proxies received will be voted for another nominee selected by
the Board. Each director will be elected by a plurality of the votes
cast at the Annual Meeting (assuming a quorum is
present). Consequently, any shares not voted at the Annual Meeting,
whether due to abstentions, broker non-votes or otherwise, will have no impact
on the election of the directors. Votes will be tabulated by an
inspector of elections appointed by the Board.
The
following sets forth certain information, as of March 12, 2010, about the
Board’s nominees for election at the Annual Meeting and each director of the
Company whose term will continue after the Annual Meeting.
Nominees
for Election at the Annual Meeting
Terms
expiring at the 2013 Annual Meeting
Patrick E. Beans
, 52, has
served as Vice President, Treasurer, Chief Financial Officer, Secretary and a
director of the Company since 1997, and as the principal financial officer since
he joined the Company in August 1994. From June 1993 until joining
the Company, Mr. Beans was the finance director for the Central Interstate
Low-Level Radioactive Waste Commission, a five-state compact developing a
low-level radioactive waste disposal plan. From 1979 to 1988 and from
June 1992 to June 1993, he practiced as a certified public
accountant. Mr. Beans’ background as a former certified public
account and finance director, as well as his experience in leadership positions
with the Company, led to the conclusion that he should serve as a director of
the Company.
Gail L. Warden
, 71, has served
as a director of the Company since January 2005. Mr. Warden is
currently President Emeritus of Detroit-based Henry Ford Health System, where he
served as President and Chief Executive Officer from 1988 until
2003. Prior to this role, Mr. Warden served as President and Chief
Executive Officer of Group Health Cooperative of Puget Sound, as well as
Executive Vice President of the American Hospital Association. Mr.
Warden serves as Chairman to several national healthcare committees and as a
board member to many other healthcare related committees and
institutions. Mr. Warden’s extensive experience in the healthcare
industry and the many leadership roles he has held with healthcare enterprises,
including serving as the president and chief executive officer of a large
integrated health system for 15 years, and industry organizations led to the
conclusion that he should serve as a director of the Company.
THE
BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS DIRECTORS AND URGES EACH
SHAREHOLDER TO VOTE “FOR” SUCH NOMINEES. SHARES OF COMMON STOCK
REPRESENTED BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED “FOR” SUCH
NOMINEES.
Directors
Continuing in Office
Terms
expiring at the 2011 Annual Meeting
JoAnn M. Martin
,
55, has served as a
director of the Company since June 2001. Ms. Martin was elected
President and Chief Executive Officer of Ameritas Life Insurance Corp., an
insurance and financial services company, in July 2005. From April
2003 to July 2005, she served Ameritas Life Insurance Corp. as President and
Chief Operating Officer. Prior thereto, Ms. Martin served as Senior
Vice President and Chief Financial Officer of Ameritas for more than the last
five years. In April 2009, Ms. Martin was elected President and Chief
Executive Officer of Ameritas Holding Company and UNIFI Mutual Holding Company
(previously named Ameritas Acacia Mutual Holding Company), where she had served
as Executive Vice President and Chief Financial Officer for more than the last
five years. Ms. Martin has served as an officer of Ameritas and/or
its affiliates since 1988. Ms. Martin also serves as a director of
Ameritas Life Insurance Corp. Separate Account LLVL (since 2003), Ameritas Life
Insurance Corp. Separate Account LLVA (since 2003), Calvert Asset Management
Company (since 2007), the Lincoln Chamber Economic Development Corp. and the
Omaha Branch of the Federal Reserve Bank of Kansas City. Ms. Martin’s
financial background as a former certified public accountant and as the former
Chief Financial Officer and current President and Chief Executive Officer of a
large mutual insurance company, as well as her leadership experiences as a
director of the Omaha Branch of the Federal Reserve Bank of Kansas City and
numerous other organizations, led to the conclusion that she should serve as a
director of the Company.
Paul C. Schorr III
, 73, has
served as a director of the Company since February 1998. Mr. Schorr
has been the President and Chief Executive Officer of ComCor Holding Inc., an
electrical contractor specializing in construction consulting services, since
1987. Mr. Schorr also has served as a director of Ameritas Life
Insurance Corp. for more than the last five years and was a director of Western
Sizzlin Corp. until 2006. Mr. Schorr’s background as an owner and
manager of what the Company believes is one of the largest electrical
contractors in the United States and his experiences as a director of several
other entities led to the conclusion that he should serve as a director of the
Company.
Terms
expiring at the 2012 Annual Meeting
Michael D. Hays
,
55, has served as Chief
Executive Officer and a director since he founded the Company in
1981. He was appointed to the additional role of President of the
Company in July 2008, a position in which he also served from 1981 to
2004. Prior to founding the Company, Mr. Hays served for seven years
as a Vice President and a director of SRI Research Center, Inc. (n/k/a the
Gallup Organization). Mr. Hays’ background as founder of the Company,
and his long and successful tenure as Chief Executive Officer and a director,
led to the conclusion that he should serve as a director of the
Company.
John N. Nunnelly
,
57, has served as a
director of the Company since December 1997. Mr. Nunnelly has been Vice
President of Strategic Planning at McKesson Corporation, a leader in the
healthcare information industry, since April 2005. Mr. Nunnelly
served in various other positions during his 24 year tenure with McKesson,
including Group President of Resource Management and Home Health Solutions, Vice
President and General Manager of the Amherst Product Group and Vice President of
Sales-Decision Support. Mr. Nunnelly currently serves as an adjunct
professor at the University of Massachusetts, teaching information technology in
the School of Nursing. During Mr. Nunnelly’s long and successful
career with a leading company in the healthcare information industry, he has led
several business groups, including one with over $360 million in annual revenue,
and been involved in managing a number of mergers and
acquisitions. These experiences and Mr. Nunnelly’s expertise as a
professional and educator in the field of healthcare information technology led
to the conclusion that he should serve as a director of the
Company.
CORPORATE
GOVERNANCE
Independent
Directors and Annual Meeting Attendance
Of the
six directors currently serving on the Board of Directors, the Board has
determined that JoAnn M. Martin, John N. Nunnelly, Paul C. Schorr III and Gail
L. Warden are “independent directors” as that term is defined in the listing
standards of The NASDAQ Stock Market.
Directors
are expected to attend the Company’s Annual Meeting of Shareholders each
year. Each of the directors attended the Company’s 2009 Annual
Meeting
.
Currently,
the Company does not have a chairman and the Board does not have a policy on
whether the roles of chief executive officer and chairman should be
separate. The Board has, however, designated Ms. Martin as lead
director. The Board believes its current leadership structure is
appropriate at this time since it establishes the Company’s chief
executive officer as the primary executive leader with one vision and eliminates
ambiguity as to who has primary responsibility for the Company’s
performance.
The lead
director is an independent director who is appointed by the independent
directors and who works closely with the chief executive officer. In
addition to serving as the principal liaison between the independent directors
and the chief executive officer in matters relating to the Board as a whole, the
primary responsibilities of the lead director are as follows:
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·
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Preside
at all meetings of the Board at which the chief executive officer is not
present, including any executive sessions of the independent directors,
and establish agendas for such executive sessions in consultation with the
other directors and the chief executive
officer;
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·
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Advise
the chief executive officer as to the quality, quantity, and timeliness of
the flow of information from management that is necessary for the
independent directors to effectively perform their
duties;
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·
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Have
the authority to call meetings of the independent directors as
appropriate; and
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·
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Be
available to act as the spokesperson for the Company if the chief
executive officer is unable to act as the
spokesperson.
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Committees
The Board
held four meetings in 2009. During 2009, each of the directors
attended all of the meetings of the Board for which he or she was a director in
2009 and at least 75% of the total number of meetings held by all committees of
the Board on which such director served during 2009.
The Board
has a standing Audit Committee, Compensation Committee and Nominating
Committee. Each of these committees has the responsibilities set
forth in formal written charters adopted by the Board. The Company
makes available on its website located at
www.nationalresearch.com
copies of each of these charters free of charge.
The Audit
Committee’s primary function is to assist the Board in fulfilling its oversight
responsibilities by overseeing the Company’s systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; the Company’s accounting and financial reporting
processes; and the audits of the financial statements of the
Company. The Audit Committee presently consists of Paul C. Schorr III
(Chairperson), JoAnn M. Martin, John N. Nunnelly and Gail L. Warden, each of
whom meets the independence standards of the NASDAQ Stock Market and the
Securities and Exchange Commission for audit committee members. The
Board has determined that JoAnn M. Martin qualifies as an “audit committee
financial expert,” as that term is defined by the Securities and Exchange
Commission, because she has the requisite attributes through, among other
things, education and experience as a president, chief financial officer and
certified public accountant. The Audit Committee held six meetings in
2009.
The
Compensation Committee determines compensation programs for the Company’s
executive officers, reviews management’s recommendations as to the compensation
to be paid to other key personnel and administers the Company’s equity-based
compensation plans. John N. Nunnelly (Chairperson), JoAnn M. Martin,
Paul C. Schorr III and Gail L. Warden are the current members of the
Compensation Committee. The Compensation Committee held four meetings
in 2009. In 2007, management of the Company engaged Buck Consultants,
a nationally recognized compensation consultant, for the Company’s review of its
compensation and benefits programs. The Company’s management
instructed Buck Consultants to benchmark the base salary, total cash
compensation and total direct compensation that the Company offers to the
executive officers named in the Summary Compensation Table. The
Company’s management also worked with Buck Consultants to update the group of
companies that the Company had used for benchmarking purposes during its last
major review of its compensation and benefit programs in 2003 to ensure that the
companies included in the group have revenue that is comparable to the Company’s
and a similar industry and market focus.
The
Nominating Committee presently consists of JoAnn M. Martin (Chairperson), John
N. Nunnelly, Paul C. Schorr III and Gail L. Warden, each of whom meets the
independence standards of The NASDAQ Stock Market for nominating committee
members. The Nominating Committee’s primary functions are
to: (1) recommend persons to be selected by the Board as nominees for
election as directors and (2) recommend persons to be elected to fill any
vacancies on the Board. The Nominating Committee held no meetings in
2009.
Board
Oversight of Risk
The full
Board is responsible for the oversight of the Company’s operational and
strategic risk management process. The Board relies on its Audit
Committee to address significant financial risk exposures facing the Company and
the steps management has taken to monitor, control and report such exposures,
with appropriate reporting of these risks to be made to the full
Board. The Board relies on its Compensation Committee to address
significant risk exposures facing the Company with respect to compensation, with
appropriate reporting of these risks to be made to the full
Board. The Board’s role in the Company’s risk oversight has not
affected the Board’s leadership structure.
Nominations
of Directors
The
Nominating Committee will consider persons recommended by shareholders to become
nominees for election as directors. Recommendations for consideration
by the Nominating Committee should be sent to the Secretary of the Company in
writing together with appropriate biographical information concerning each
proposed nominee. The Company’s By-laws also set forth certain
requirements for shareholders wishing to nominate director candidates directly
for consideration by the shareholders. With respect to an election of
directors to be held at an annual meeting, a shareholder must, among other
things, give notice of an intent to make such a nomination to the Secretary of
the Company not less than 60 days or more than 90 days prior to the second
Wednesday in the month of April.
In
identifying and evaluating nominees for director, the Nominating Committee seeks
to ensure that the Board possesses, in the aggregate, the strategic, managerial
and financial skills and experience necessary to fulfill its duties and to
achieve its objectives, and seeks to ensure that the Board is comprised of
directors who have broad and diverse backgrounds, possessing knowledge in areas
that are of importance to the Company. The Nominating Committee looks
at each nominee on a case-by-case basis regardless of who recommended the
nominee. In looking at the qualifications of each candidate to
determine if their election would further the goals described above, the
Nominating Committee takes into account all factors it considers appropriate,
which may include strength of character, mature judgment, career specialization,
relevant technical skills or financial acumen, diversity of viewpoint and
industry knowledge. In addition, the Board and the Nominating
Committee believe that the following specific qualities and skills are necessary
for all directors to possess:
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·
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A
director must display high personal and professional ethics, integrity and
values.
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·
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A
director must have the ability to exercise sound business
judgment.
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A
director must be accomplished in his or her respective field, with broad
experience at the administrative and/or policy-making level in business,
government, education, technology or public
interest.
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·
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A
director must have relevant expertise and experience, and be able to offer
advice and guidance based on that expertise and
experience.
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·
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A
director must be independent of any particular constituency, be able to
represent all shareholders of the Company and be committed to enhancing
long-term shareholder value.
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·
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A
director must have sufficient time available to devote to activities of
the Board of Directors and to enhance his or her knowledge of the
Company’s business.
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The Board
also believes the following qualities or skills are necessary for one or more
directors to possess:
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·
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At
least one independent director must have the requisite experience and
expertise to be designated as an “audit committee financial expert,” as
defined by applicable rules of the Securities and Exchange Commission, and
have past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable
experience or background which results in the member’s financial
sophistication, as required by the rules of
NASDAQ.
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·
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One
or more of the directors generally must be active or former executive
officers of public or private companies or leaders of major complex
organizations, including commercial, scientific, government, educational
and other similar institutions.
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As noted
above, in identifying and evaluating nominees for director, the Nominating
Committee seeks to ensure that, among other things, the Board is comprised of
directors who have broad and diverse backgrounds, because the Board believes
that directors should be selected so that the Board is a diverse
body. The Nominating Committee implements this policy by considering
how potential directors’ backgrounds would contribute to the diversity of the
Board.
Transactions
with Related Persons
Except as
disclosed in this section, we had no transactions during 2009, and none are
currently proposed, in which we were a participant and in which any related
person had a direct or indirect material interest. Our Board has
adopted policies and procedures regarding related person
transactions. For purposes of these policies and
procedures:
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A
“related person” means any of our directors, executive officers, nominees
for director, any holder of 5% or more of the Common Stock or any of their
immediate family members; and
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·
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A
“related person transaction” generally is a transaction (including any
indebtedness or a guarantee of indebtedness) in which we were or are to be
a participant and the amount involved exceeds $120,000, and in which a
related person had or will have a direct or indirect material
interest.
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Each of
our executive officers, directors or nominees for director is required to
disclose to the Audit Committee certain information relating to related person
transactions for review, approval or ratification by the Audit
Committee. Disclosure to the Audit Committee should occur before, if
possible, or as soon as practicable after the related person transaction is
effected, but in any event as soon as practicable after the executive officer,
director or nominee for director becomes aware of the related person
transaction. The Audit Committee’s decision whether or not to approve
or ratify a related person transaction is to be made in light of the Audit
Committee’s determination that consummation of the transaction is not or was not
contrary to our best interests. Any related person transaction must
be disclosed to the full Board.
Ms.
Martin serves as President and Chief Executive Officer of Ameritas Life
Insurance Corp. In connection with the Company’s regular assessment
of its insurance-based associate benefits and the costs associated therewith
conducted by an independent insurance broker, in 2007 the Company began
purchasing dental insurance for certain of its associates from Ameritas Life
Insurance Corp. and, in 2009, the Company also began purchasing vision insurance
for certain of its associates from Ameritas Life Insurance Corp. The
total value of these purchases, which were conducted in arms’ length
transactions and approved by the Audit Committee pursuant to our related person
transaction policies and procedures, was less than $120,000 in
2009.
Communications
with the Board of Directors
Shareholders
may communicate with the Board by writing to National Research Corporation,
Board of Directors (or, at the shareholder’s option, to a specific director),
c/o Patrick E. Beans, Secretary, 1245 Q Street, Lincoln, Nebraska
68508. The Secretary will ensure that the communication is delivered
to the Board or the specified director, as the case may be.
REPORT
OF THE AUDIT COMMITTEE
In
accordance with its written charter, the Audit Committee’s primary function is
to assist the Board in fulfilling its oversight responsibilities by overseeing
the Company’s systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established; the
Company’s accounting and financial reporting processes; and the audits of the
financial statements of the Company.
In
fulfilling its responsibilities, the Audit Committee has reviewed and discussed
the audited financial statements contained in the 2009 Annual Report on Form
10-K with the Company’s management and independent registered public accounting
firm. Management is responsible for the financial statements and the
reporting process, including the system of internal controls. The
independent registered public accounting firm is responsible for expressing an
opinion on the audited financial statements n conformity with U.S. generally
accepted accounting principles.
The Audit
Committee discussed with the independent registered public accounting firm
matters required to be discussed by AU Section 380 of the Public Company
Accounting Oversight Board, as amended. In addition, the Company’s
independent registered public accounting firm provided to the Audit Committee
the written disclosures and the letter required by applicable requirements of
the Public Company Accounting Oversight Board regarding the independent
registered public accounting firm’s communications with the Audit Committee
concerning independence, and the Audit Committee discussed with the independent
registered public accounting firm the firm’s independence. The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent registered public accounting firm on a case-by-case
basis. The Audit Committee has considered whether the provision of
the services relating to the
Audit-Related Fees
,
Tax Fees
and
All Other Fees
set forth in
“Miscellaneous – Independent Registered Public Accounting Firm” was compatible
with maintaining the independence of the independent registered public
accounting firm and determined that such services did not adversely affect the
independence of the firm.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board (and the Board has approved) that the audited financial
statements be included in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, for filing with the Securities and Exchange
Commission.
This
report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, and shall not otherwise be deemed filed under such Acts.
AUDIT
COMMITTEE
Paul C.
Schorr III, Chairperson
JoAnn M.
Martin
John N.
Nunnelly
Gail L.
Warden
PRINCIPAL
SHAREHOLDERS
Management
and Directors
The
following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 12, 2010, by: (1) each director and
director nominee; (2) each of the executive officers named in the Summary
Compensation Table; and (3) all of the directors, director nominees and
executive officers (including the executive officers named in the Summary
Compensation Table) as a group. Except as otherwise indicated in the
footnotes, each of the holders listed below has sole voting and investment power
over the shares beneficially owned. As of March 12, 2010, there
were 6,657,600 shares of Common Stock outstanding.
Name of Beneficial Owner
|
|
Shares of
Common Stock
Beneficially Owned
|
|
|
Percent of
Common Stock
Beneficially Owned
|
|
Michael
D. Hays
(1)
|
|
|
1,782,377
|
(2)(3)
|
|
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26.7
|
%
|
Patrick
E. Beans
|
|
|
137,661
|
(3)(4)
|
|
|
2.1
|
%
|
JoAnn
M. Martin
|
|
|
76,500
|
(3)
|
|
|
1.1
|
%
|
Jona
S. Raasch
|
|
|
62,809
|
(3)
|
|
|
*
|
|
Gail
L. Warden
|
|
|
60,000
|
(3)
|
|
|
*
|
|
Paul
C. Schorr III
|
|
|
51,577
|
(3)
|
|
|
*
|
|
John
N. Nunnelly
|
|
|
43,800
|
(3)
|
|
|
*
|
|
All
directors, nominees and executive officers as a group (
seven
persons)
|
|
|
2,214,724
|
(3)
|
|
|
31.7
|
%
|
(1)
|
The
address of Mr. Hays is 1245 Q Street, Lincoln, Nebraska
68508.
|
(2)
|
Includes
1,600,000 shares pledged as security and 325 shares held by Mr. Hays’
wife. Does not include 500,000 shares transferred to the Trust
created under the Michael D. Hays 2009 Two-Year GRAT Agreement dated March
9, 2009, or 2,500,000 shares transferred to the Trust created under the
Karen S. Hays 2010 Two-Year GRAT Agreement dated February 8, 2010, and the
Trust created under the Michael D. Hays 2010 Two-Year GRAT Agreement dated
February 8, 2010, all or a portion of which will be returned to Mr. Hays
over the next two years. Mr. Hays disclaims beneficial
ownership of the 325 shares held by his
wife.
|
(3)
|
Includes
shares of Common Stock that may be purchased under stock options which are
currently exercisable or exercisable within 60 days of March 12, 2010, as
follows: Mr. Hays, 18,298 shares; Mr. Beans, 26,005 shares; Ms.
Martin, 72,000 shares; Ms. Raasch, 62,809 shares; Mr. Warden, 60,000
shares; Mr. Schorr, 48,000 shares; Mr. Nunnelly, 36,000 shares; and all
directors, nominees and executive officers as a group, 323,112
shares.
|
(4)
|
Includes
1,500 shares held by Mr. Beans as custodian for his minor children and
64,559 shares owned by eight trusts for which Mr. Beans is the sole
trustee.
|
Other
Beneficial Owners
The
following table sets forth certain information regarding beneficial ownership by
the only other persons known to the Company to own more than 5% of the
outstanding Common Stock.
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
|
|
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Name and Address of
|
|
Voting Power
|
|
|
Investment Power
|
|
|
|
|
|
|
|
Beneficial Owner
|
|
Sole
|
|
|
Shared
|
|
|
Sole
|
|
|
Shared
|
|
|
Aggregate
|
|
|
% of Class
|
|
Trust created under
the Michael D. Hays 2009 Two-Year GRAT Agreement dated March 9,
2009
(1)
|
|
|
500,000
|
|
|
|
0
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
500,000
|
|
|
|
7.5
|
%
|
Trusts created under
the Karen S. Hays 2010 Two-Year GRAT Agreement dated February 8, 2010
and the Michael D. Hays 2010 Two-Year GRAT Agreement dated
February 8, 2010
(2)
|
|
|
2,500,000
|
|
|
|
0
|
|
|
|
2,500,000
|
|
|
|
0
|
|
|
|
2,500,000
|
|
|
|
37.6
|
%
|
(1)
|
On
March 31, 2009, Michael D. Hays transferred 500,000 shares to the Trust
created under the Michael D. Hays 2009 Two-Year GRAT Agreement dated March
9, 2009, all or a portion of which will be returned to Mr. Hays over the
next year. Jeffery T. Peetz currently serves as the Special
Holdings Direction Adviser to the Trust. The address of the
Trust is c/o Nemours Building, 1007 Orange Street, Suite 1450, Wilmington,
DE. 19801.
|
(2)
|
On
February 12, 2010, Michael D. Hays and his wife transferred an aggregate
of 2,500,000 shares to the Trust created under the Karen S. Hays 2010
Two-Year GRAT Agreement dated February 8, 2010, and the Trust created
under the Michael D. Hays 2010 Two-Year GRAT Agreement dated February 8,
2010, all or a portion of which will be returned to them over the next two
years. Jeffery T. Peetz currently serves as the Special
Holdings Direction Adviser to the Trusts. The address of the
Trusts is c/o Nemours Building, 1007 Orange Street, Suite 1450,
Wilmington, DE. 19801.
|
COMPENSATION
DISCUSSION AND ANALYSIS
The
following discussion and analysis relates to the compensation of the individuals
named in the Summary Compensation Table, a group we refer to as our “named
executive officers.” In this discussion, the terms “we,” “our,” “us”
or similar terms refer to the Company.
Overview
of Executive Compensation Philosophy
We
recognize the importance of maintaining sound principles for the development and
administration of our executive compensation and benefit
programs. Specifically, we design our executive compensation and
benefit programs to advance the following core principles:
|
·
|
We
strive to compensate our executive officers at competitive levels to
ensure that we attract and retain a highly competent, committed management
team.
|
|
·
|
We
provide our executive officers with the opportunity to earn competitive
pay as measured against comparable
companies.
|
|
·
|
We
link our executive officers’ compensation, particularly annual cash
bonuses, to established Company financial performance
goals.
|
We
believe that a focus on these principles will benefit us and, ultimately, our
shareholders in the long term by ensuring that we can attract and retain
highly-qualified executive officers who are committed to our long-term
success.
Role
of the Compensation Committee
The Board
appoints the Compensation Committee, which consists entirely of directors who
are “outside directors” for purposes of Section 162(m) of the Internal Revenue
Code and “non-employee directors” for purposes of the Securities Exchange Act of
1934. The following individuals are members of the Compensation
Committee:
|
·
|
John
N. Nunnelly (Chairperson)
|
The
Compensation Committee determines compensation programs for our executive
officers, reviews management’s recommendations as to the compensation to be paid
to other key personnel and administers our equity-based compensation
plans. Periodically, the Compensation Committee reviews and
determines our compensation and benefit programs, with the objective of ensuring
the executive compensation and benefits programs are consistent with our
compensation philosophy. At the time of such reviews, our management
has engaged a nationally recognized compensation consultant.
For our
most recent review of our compensation and benefit programs in 2007, our
management engaged Buck Consultants, a nationally recognized compensation
consultant. Our management instructed Buck Consultants to benchmark
the base salary, total cash compensation and total direct compensation that we
offer our named executive officers. Buck Consultants worked with our
management to update the group of companies that we had used during our last
major review of our compensation and benefit programs in 2003 to ensure that the
companies included in the group have revenue that is comparable to ours and a
similar industry and market focus.
Buck
Consultants and our management selected companies based on one or more of the
following characteristics:
|
·
|
A
Global Industry Classification Standard code the same or similar to
ours;
|
|
·
|
A
business model similar to ours;
|
|
·
|
Stable
financial performance over recent
periods;
|
|
·
|
Annual
revenue approximating $20 million to $150 million;
and
|
|
·
|
Directly
competitive with us, regardless of revenue
comparability.
|
The
companies selected for our review of compensation in 2007 were the
following:
|
·
|
Opinion
Research Corporation
|
·
|
BrandPartners
Group Inc.
|
|
|
|
|
|
|
·
|
The
Advisory Board Company
|
·
|
Guideline,
Inc.
|
|
|
|
|
|
|
·
|
Forrester
Research, Inc.
|
·
|
Netsmart
Technologies Inc.
|
|
|
|
|
|
|
·
|
Greenfield
Online, Inc.
|
·
|
Mediware
Information Systems, Inc.
|
|
|
|
|
|
|
·
|
Phase
Forward Incorporated
|
·
|
Rainmaker
Systems, Inc.
|
|
|
|
|
|
|
·
|
Landauer,
Inc.
|
·
|
The
Management Network Group, Inc.
|
|
|
|
|
|
|
·
|
NetRatings,
Inc.
|
·
|
HealthStream,
Inc.
|
|
|
|
|
|
|
·
|
Keynote
Systems, Inc.
|
·
|
Insightful
Corporation
|
|
|
|
|
|
|
·
|
Vitria
Technology, Inc.
|
·
|
Health
Grades,
Inc.
|
We refer
to these companies as “comparable companies.” In determining
compensation levels for our named executive officers in 2007, our Compensation
Committee reviewed the comparable company data to the extent the data reflected
positions similar to those held by our named executive officers. Our
Compensation Committee considered these data and other information provided by
Buck Consultants to assess our competitive position with respect to the
following components of compensation:
|
·
|
Annual
cash incentive compensation; and
|
|
·
|
Long-term
equity incentive compensation.
|
The
objective of the Compensation Committee is to establish base salary at a
competitive level compared with comparable companies to attract and retain
highly-qualified executive officers. We consider base salary to be at
a “competitive level” if it is within 20% above or below the median level paid
by comparable companies to similarly situated executives. The
Compensation Committee also considers individual performance, level of
responsibility, skills and experience, and internal comparisons among executive
officers in determining base salary levels. Based on this comparable
information and other information, the Compensation Committee resets executive
salary levels at the time of each significant compensation review, which levels
are then generally adjusted only to reflect changes in responsibilities or
comparable company data.
The
Compensation Committee administers our annual cash incentive program and
long-term equity incentive plans, and approves all awards made under the program
and plans. For annual and long-term incentives, the Compensation
Committee considers internal comparisons and other existing compensation awards
or arrangements in making compensation decisions and
recommendations. In its decision-making process, the Compensation
Committee receives and considers the recommendations of our Chief Executive
Officer as to executive compensation programs for all of the other
officers. The Compensation Committee makes its decisions regarding
general program adjustments to future base salaries, annual incentives and
long-term incentives concurrently with its assessment of the executive officers’
performance. Adjustments generally become effective in January of
each year.
In
fulfilling its objectives as described above, the Compensation Committee took
the following steps in 2009:
|
·
|
Considered
the comparative company data provided in 2007 by Buck
Consultants;
|
|
·
|
Reviewed
the performance of our Chief Executive Officer and determined his total
compensation;
|
|
·
|
Reviewed
the performance of our other executive officers and other key associates
(i.e., employees) with assistance from our Chief Executive Officer;
and
|
|
·
|
Determined
total compensation for our named executive officers based on the 2007
compensation review, recommendations by our Chief Executive Officer (as to
the other officers) and changes in officer
responsibilities.
|
Total
Compensation
We intend
to continue our strategy of compensating our executive officers at competitive
levels through programs that emphasize performance-based incentive compensation
in the form of cash and equity-based awards. To that end, we have
structured total executive compensation to ensure that there is an appropriate
balance between a focus on our long-term versus short-term
performance. We believe that the total compensation paid or awarded
to the executive officers during 2009 was consistent with our financial
performance and the individual performance of each of our executive
officers. We also believe that this total compensation was reasonable
in its totality and is consistent with our compensation philosophies described
above.
CEO
Compensation
The
Compensation Committee reviews annually the salary and total compensation levels
of Michael D. Hays, our Chief Executive Officer. Based on the
comparative company data that Buck Consultants provided as part of our
compensation review completed in 2007, Mr. Hays’ salary and overall compensation
are significantly below the median level paid to chief executive officers of
comparable companies. Due to Mr. Hays’ large holding of our stock and
his desire to materially align his compensation with the interests of our other
shareholders, he requested that his base salary and targeted overall
compensation remain unchanged. The Compensation Committee has not
proposed an increase in his salary or overall compensation since
2005.
Elements
of Compensation
Base
Salary
The
objective of the Compensation Committee is to establish base salary at a
competitive level compared with comparable companies, with the exception of Mr.
Hays’ salary as noted above. The Compensation Committee also
considers individual performance, level of responsibility, skills and
experience, and internal comparisons among executive officers in determining
base salary levels. Within the framework of offering competitive base
salaries, we attempt to minimize base salary increases in order to limit our
exposure if we do not meet our objectives for financial growth under our
incentive compensation program. Based on comparable company
information and the other factors noted above, the Compensation Committee resets
executive salary levels at the time of each significant compensation review,
which are then generally adjusted only to reflect changes in
responsibilities. For 2009, the annual base salaries of our named
executives did not change. In 2009, base salaries paid to our named
executive officers represented the following percentages of their total
compensation.
Base Salary as a Percentage
of Total Compensation
Michael
D. Hays
|
|
|
50
|
%
|
Patrick
E. Beans
|
|
|
50
|
%
|
Jona
S. Raasch
|
|
|
76
|
%
|
Annual
Cash Incentive
Our
executive officers are eligible for annual cash incentive awards under our
incentive compensation program. Please note that, while we may refer
to annual cash incentive awards as bonuses in this discussion, the award amounts
are reported in the Summary Compensation Table under the column titled
“Non-Equity Incentive Plan Compensation” pursuant to the Securities and Exchange
Commission’s regulations.
We intend
for our incentive compensation program to provide an incentive to meet and
exceed our financial goals, and to promote a superior level of
performance. Within the overall context of our pay philosophy and
culture, the program:
|
·
|
Provides
competitive levels of total cash
compensation;
|
|
·
|
Aligns
pay with organizational
performance;
|
|
·
|
Focuses
executive attention on key business metrics;
and
|
|
·
|
Provides
a significant incentive for achieving and exceeding performance
goals.
|
Under our
incentive compensation program, the Compensation Committee establishes
performance objectives, which, for 2009, emphasized growth, for our named
executive officers at the beginning of each year. For Messrs. Hays
and Beans, the Compensation Committee used our overall revenue and net income as
performance measures for 2009 because the Compensation Committee believes these
are key measures of our ability to deliver value to our shareholders for which
Messrs. Hays and Beans have primary responsibility. The Compensation
Committee weighted the two performance measures equally in determining bonus
payouts. The Compensation Committee structured the incentive
compensation program so that Messrs. Hays and Beans would receive a bonus based
on the percentage of growth in overall revenue and net income in 2009 over 2008,
starting from “dollar one” of such growth and capped at 200% of base
salary.
Consistent
with past years, the Compensation Committee structured the incentive
compensation program for Messrs. Hays and Beans to require performance
representing growth in revenue or net income for any payout to be
received. The Compensation Committee structured the incentive
compensation program to permit smaller payouts to be earned for any growth in
revenue and net income, rather than, as in previous years, requiring threshold
performance representing substantial improvement in these measures, because it
believed that providing an incentive to achieve growth in these measures would
provide a more effective incentive to the executive officers in 2009 than a
higher, and potentially unattainable, threshold.
For Messrs. Hays and Beans, the
Compensation Committee determined that the bonuses under the incentive
compensation program would be equal to the following (subject to a maximum of
200% of base salary): the product of the executive officer’s base salary (i)
multiplied by the sum of the percentage year over year increase, if any, in
overall revenue plus the percentage year over year increase, if any, in overall
net income (ii) multiplied by 2.5.
The
Compensation Committee used the revenue and operating income of The Governance
Institute, one of our divisions, as the performance measures for Ms. Raasch’s
annual cash incentive award for 2009 because she is primarily responsible for
the financial performance of The Governance Institute. The
Compensation Committee structured the incentive compensation program so that Ms.
Raasch would receive a bonus based on the percentage of growth in The Governance
Institute’s revenue and operating income in 2009 over 2008, starting from
“dollar one” of such growth and capped at 200% of base
salary. In addition, due to the challenging economic conditions
and low visibility concerning financial performance for 2009 at the time the
award was granted, the Compensation Committee also provided that Ms. Raasch
would receive a bonus equal to 50% of her base salary if The Governance
Institute’s 2009 revenue and operating income matched its 2008
levels.
For Ms.
Raasch, the Compensation Committee determined that the bonus under the incentive
compensation program would be equal to the following (subject to a maximum of
200% of base salary): the product of Ms. Raasch’s base salary (i)
multiplied by the sum of the percentage year over year increase, if any, in The
Governance Institute’s overall revenue plus the percentage year over year
increase, if any, in The Governance Institute’s overall operating income (ii)
multiplied by 1.25.
In determining the
potential bonus amounts for our named executive officers described above, the
Compensation Committee considered the comparative company data and Buck
Consultant’s recommendations resulting from the 2007 compensation review, and
concluded that that payouts determined by these formulas were likely to produce
results consistent with our past practice of setting annual target payouts at
50% of base salary, and would continue to provide competitive compensation
consistent with our goals for annual incentive awards.
The
following table shows amounts actually earned by our named executive officers
for 2009, along with the percentages of their total compensation these amounts
represent.
|
|
2009
Actual Bonus
|
|
|
|
|
|
|
Percentage
of
|
|
|
2009
Actual
|
|
|
|
Total Compensation
|
|
|
Bonus Amounts
|
|
|
|
|
|
|
|
|
Michael
D. Hays
|
|
|
34
|
%
|
|
$
|
86,314
|
|
Patrick
E. Beans
|
|
|
34
|
%
|
|
$
|
118,563
|
|
Jona
S. Raasch
|
|
|
0
|
%
|
|
$
|
0
|
|
Long-Term
Equity Incentive
To
provide an additional performance incentive for our executive officers and other
key management personnel, our executive compensation package includes stock
options and restricted stock grants. Under our 2001 Equity Incentive
Plan and 2006 Equity Incentive Plan, the Compensation Committee also has the
authority to grant other equity-based awards, including stock appreciation
rights and performance shares. The general purpose of our current
equity-based plans is to promote the achievement of our long-range strategic
goals and enhance shareholder value. We grant stock options with a
per-share exercise price of 100% of the fair market value of a share of our
common stock on the date of grant so that the value of the option will be
dependent on the future market value of the common stock. We believe
this helps to align the economic interests of our key management personnel with
the interests of our shareholders. To encourage our key management
personnel to continue in employment with us, we generally grant restricted stock
under the 2006 Equity Incentive Plan subject to a five-year restriction
period.
The
Compensation Committee considered the comparative company data and Buck
Consultant’s recommendations resulting from the 2007 compensation review, and
concluded that our practice of setting annual target equity awards for our
executive officers at 50% of their respective then-current base salaries
continues to provide competitive compensation consistent with our goals for
equity awards. The Compensation Committee generally grants options to
purchase shares of our common stock effective on a date in the first week of
January. Accordingly, on January 5, 2009, the Compensation Committee
granted options to each of our named executive officers approximately equal in
value to 50% of their respective then-current base salaries. To
determine the number of options equal to 50% of an executive officer’s base
salary, the Compensation Committee divided the annual target equity award amount
by the closing price per share of our common stock on the date of grant, and
multiplied the resulting quotient by three. This method of calculating the
number of options to grant to our named executive officers resulted in a
slightly lower number of options than the Black-Scholes method would have
indicated. As a result, our grants to our named executive officers
had a grant date fair value of somewhat less than 50% of our named executive
officers’ respective base salaries. The number of options granted to
our named executive officers is shown in the Grants of Plan-Based Awards
Table.
Our
Compensation Committee may condition awards on the achievement of various
performance goals, including the following:
|
·
|
Return
on equity;
|
·
|
Pre-tax
profits;
|
|
|
|
|
|
|
·
|
Return
on investment;
|
·
|
Net
earnings;
|
|
|
|
|
|
|
·
|
Return
on net assets;
|
·
|
Net
earnings per share;
|
|
|
|
|
|
|
·
|
Shareholder
value added;
|
·
|
Market
price for our common stock;
|
|
|
|
|
|
|
·
|
Earnings
from operations;
|
·
|
Total
shareholder return; and
|
|
|
|
|
|
|
|
|
·
|
Working
capital as a percent of net cash provided by operating
activities
|
In
conjunction with selecting the applicable performance goal or goals, the
Compensation Committee will also fix the relevant performance level or levels
(e.g., a 15% return on equity) that must be achieved with respect to the goal or
goals in order for key associates to earn performance shares. For
2009, no awards were conditioned on such performance goals.
Other
Benefits
To assist
our associates in preparing financially for retirement, we maintain a 401(k)
plan for all associates over 21 years of age, including our executive
officers. Pursuant to the 401(k) plan, we match 25% of the first 6%
of compensation contributed by our associates up to allowable Internal Revenue
Service limitations. We also maintain group life, health, dental and
vision insurance programs for all of our salaried employees, and our named
executive officers are eligible to participate in these programs on the same
basis as all other eligible employees.
Agreements
with Officers
We do not
have employment, retention, severance, change of control or similar agreements
with any of our executive officers. While we enter into award
agreements with our executive officers and other participants under our
long-term equity award plans, these agreements and plans do not provide for
acceleration of vesting or other benefits upon a change of control or
termination.
2009
SUMMARY COMPENSATION TABLE
Set forth
below is information regarding compensation earned by or paid or awarded to the
following of our executive officers during 2009: (1) Michael D. Hays,
our Chief Executive Officer and President; (2) Jona S. Raasch, President of the
Governance Institute, a division of National Research Corporation; and (3)
Patrick E. Beans, our Vice President, Treasurer, Chief Financial Officer and
Secretary. We have no other executive officers, as defined in Rule
3b-7 of the Securities Exchange Act of 1934, whose total compensation exceeded
$100,000 during 2009. The identification of such named executive
officers is determined based on the individual’s total compensation for 2009, as
reported below in the Summary Compensation Table, other than amounts reported as
above-market earnings on deferred compensation and the actuarial increase in
pension benefit accruals.
The
following table sets forth for our named executive officers with respect to
2009, 2008 and 2007: (1) the dollar value of base salary earned during the year;
(2) the aggregate grant date fair value of option awards granted during the
year, computed in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718, Compensation-Stock Compensation
(“FASB ASC Topic 718”); (3) the dollar value of earnings for services pursuant
to awards granted during the year under non-equity incentive plans; (4) all
other compensation for the year; and (5) the dollar value of total compensation
for the year.
Name and
Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Option
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
All Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hays
|
|
2009
|
|
$
|
127,400
|
|
|
|
—
|
|
|
$
|
38,006
|
|
|
$
|
86,314
|
|
|
$
|
2,125
|
|
|
$
|
253,845
|
|
Chief Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
and President
|
|
2008
|
|
$
|
127,400
|
|
|
|
—
|
|
|
$
|
43,122
|
|
|
$
|
20,888
|
|
|
$
|
1,836
|
|
|
$
|
193,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
127,400
|
|
|
|
—
|
|
|
$
|
59,160
|
|
|
$
|
21,101
|
|
|
$
|
2,381
|
|
|
$
|
210,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
E. Beans
|
|
2009
|
|
$
|
175,000
|
|
|
|
—
|
|
|
$
|
52,204
|
|
|
$
|
118,563
|
|
|
$
|
2,919
|
|
|
$
|
348,686
|
|
Vice
President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer,
Chief
|
|
2008
|
|
$
|
175,000
|
|
|
|
—
|
|
|
$
|
59,238
|
|
|
$
|
28,694
|
|
|
$
|
3,003
|
|
|
$
|
265,935
|
|
Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
Secretary
|
|
2007
|
|
$
|
167,159
|
|
|
|
—
|
|
|
$
|
69,773
|
|
|
$
|
24,887
|
|
|
$
|
3,036
|
|
|
$
|
264,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jona
S. Raasch
|
|
2009
|
|
$
|
173,000
|
|
|
|
—
|
|
|
$
|
51,608
|
|
|
|
—
|
|
|
$
|
2,614
|
|
|
$
|
227,222
|
|
President
of The
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Governance
Institute, a
|
|
2008
|
|
$
|
173,000
|
|
|
$
|
150,000
|
(3)
|
|
$
|
58,556
|
|
|
$
|
19,408
|
|
|
$
|
52,925
|
|
|
$
|
453,889
|
|
division
of National
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
Corporation
|
|
2007
|
|
$
|
158,000
|
|
|
|
—
|
|
|
$
|
73,370
|
|
|
$
|
65,328
|
|
|
$
|
3,038
|
|
|
$
|
299,736
|
|
|
(1)
|
Represents
the aggregate grant date fair value of option awards granted during the
year, computed in accordance with FASB ASC Topic 718. See Note
8 to the Company’s Consolidated Financial Statements included in its
Annual Report on Form 10-K for the years ended December 31, 2009, and
December 31, 2008, for a discussion of assumptions made in the valuation
of share-based compensation.
|
|
(2)
|
Represents
amount of Company 401(k) matching
contribution.
|
|
(
3
)
|
Represents
a discretionary bonus granted in connection with Ms. Raasch’s relocation
to San Diego, California.
|
GRANTS
OF PLAN-BASED AWARDS IN 2009
We
maintain the 2006 Equity Incentive Plan and the 2001 Equity Incentive Plan
pursuant to which grants may be made to our executive officers. The
following table sets forth information regarding all such incentive plan awards
that were made to the named executive officers in 2009. No equity
incentive awards were granted to the named executive officers in
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
No. of
|
|
|
Exercise
or
|
|
|
Grant
Date Fair
|
|
|
|
|
|
Estimated
Possible Payouts Under Non
-
|
|
|
Securities
|
|
|
Base
Price
|
|
|
Value
of Stock
|
|
|
|
|
|
Equity Incentive Plan Awards
(1)
|
|
|
Underlying
|
|
|
of
Option
|
|
|
and
Option
|
|
Name
|
|
Grant Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options
(2)
|
|
|
Awards
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hays
|
|
1/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
6,703
|
|
|
$
|
28.51
|
|
|
$
|
38,006
|
|
|
|
|
|
|
-
|
(3)
|
|
$
|
41,405
|
|
|
$
|
254,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
E. Beans
|
|
1/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,207
|
|
|
$
|
28.51
|
|
|
$
|
52,204
|
|
|
|
|
|
|
-
|
(3)
|
|
$
|
56,875
|
|
|
$
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jona
S. Raasch
|
|
1/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,102
|
|
|
$
|
28.51
|
|
|
$
|
51,608
|
|
|
|
|
|
$
|
86,500
|
(4)
|
|
$
|
216,907
|
|
|
$
|
346,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________
(1)
|
These
amounts represent only potential payments under the 2009 incentive plan
awards; the actual amounts received (if any) are shown in the Summary
Compensation Table above. Since targets were not set for 2009,
the target amounts shown are representative amounts based on the previous
year’s performance in accordance with the rules of the
SEC.
|
(2)
|
The
stock option awards were granted under the 2006 Equity Incentive
Plan.
|
(3)
|
There
were no thresholds for payments under these 2009 incentive plan awards;
payments below target would be made for any year-over-year increase in any
of the applicable performance
measures.
|
(4)
|
As
described above under “Compensation Discussion and Analysis–Elements of
Compensation–Annual Cash Incentive,” Ms. Raasch would have received the
full target bonus amount if The Governance Institute’s 2009 revenue and
operating income matched its 2008
levels.
|
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2009
The
following table sets forth information on outstanding option and stock awards
held by the named executive officers at December 31, 2009, including the number
of shares underlying both exercisable and unexercisable portions of each stock
option, as well as the exercise price and expiration date of each outstanding
option.
Option Awards
|
|
Name
|
|
No. of Securities
Underlying
Unexercised
Options
(
Exercisable)
|
|
|
No. of Securities
Underlying
Unexercised
Options
(Unexercisable)
|
|
|
Option
Exercise
Price
|
|
Option
Expiration Date
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hays
|
|
|
18,298
|
(1)
|
|
|
-
|
|
|
$
|
16.10
|
|
01/05/14
|
|
|
|
-
|
|
|
|
11,078
|
(2)
|
|
$
|
17.25
|
|
01/05/16
|
|
|
|
-
|
|
|
|
8,356
|
(3)
|
|
$
|
22.87
|
|
01/05/17
|
|
|
|
-
|
|
|
|
7,211
|
(4)
|
|
$
|
26.50
|
|
01/04/18
|
|
|
|
-
|
|
|
|
6,703
|
(5)
|
|
$
|
28.51
|
|
01/05/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
E. Beans
|
|
|
12,121
|
(1)
|
|
|
-
|
|
|
$
|
16.10
|
|
01/05/14
|
|
|
|
-
|
|
|
|
13,884
|
(6)
|
|
$
|
15.46
|
|
01/05/15
|
|
|
|
-
|
|
|
|
13,066
|
(2)
|
|
$
|
17.25
|
|
01/05/16
|
|
|
|
-
|
|
|
|
9,855
|
(3)
|
|
$
|
22.87
|
|
01/05/17
|
|
|
|
-
|
|
|
|
9,906
|
(4)
|
|
$
|
26.50
|
|
01/04/18
|
|
|
|
-
|
|
|
|
9,207
|
(5)
|
|
$
|
28.51
|
|
01/05/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jona
S. Raasch
|
|
|
34,091
|
(7)
|
|
|
-
|
|
|
$
|
11.00
|
|
06/26/13
|
|
|
|
13,388
|
(1)
|
|
|
-
|
|
|
$
|
16.10
|
|
01/05/14
|
|
|
|
-
|
|
|
|
15,330
|
(6)
|
|
$
|
15.46
|
|
01/05/15
|
|
|
|
-
|
|
|
|
13,739
|
(2)
|
|
$
|
17.25
|
|
01/05/16
|
|
|
|
-
|
|
|
|
10,363
|
(3)
|
|
$
|
22.87
|
|
01/05/17
|
|
|
|
-
|
|
|
|
9,792
|
(4)
|
|
$
|
26.50
|
|
01/04/18
|
|
|
|
-
|
|
|
|
9,102
|
(5)
|
|
$
|
28.51
|
|
01/05/19
|
|
(1)
|
Options
vest in full on the fifth anniversary of the grant date. These
options vested on January 5, 2009.
|
|
(2)
|
Options
vest in full on the fifth anniversary of the grant date. These
options will vest on January 5,
2011.
|
|
(3)
|
Options
vest in full on the fifth anniversary of the grant date. These
options will vest on January 5,
2012.
|
|
(4)
|
Options
vest in full on the fifth anniversary of the grant date. These
options will vest on January 4,
2013.
|
|
(5)
|
Options
vest in full on the fifth anniversary of the grant date. These
options will vest on January 4,
2014.
|
|
(6)
|
Options
vest in full on the fifth anniversary of the grant date. These
options will vest on January 5,
2010.
|
|
(7)
|
Options
vested in full on June 26, 2008.
|
No stock
options were exercised during 2009 by the Company’s named executive officers,
and no restricted stock vested.
Risk
Assessment of Compensation Policies and Practices
The Board
relies on the Compensation Committee to address risk exposures facing the
Company with respect to compensation, with appropriate reporting of these risks
to be made to the full Board. The Committee, as part of its periodic
review of compensation and benefit programs, assesses the potential risks
arising from the Company’s compensation policies and practices and considers
safeguards against incentives to take excessive risks.
2009
DIRECTOR COMPENSATION
Directors
who are executive officers of the Company receive no compensation for service as
members of either the Board or committees thereof. Directors who are
not executive officers of the Company receive an annual retainer of $10,000 and
a fee of $500 for each committee meeting attended which is not held on the same
date as a Board meeting. Additionally, directors are reimbursed for
out-of-pocket expenses associated with attending meetings of the Board and
committees thereof. In 2007, Ms. Martin was appointed our lead
director. She receives $500 for each meeting with our chief executive
officer. In 2009, no such meetings were held.
Pursuant
to the 2004 Director Plan as proposed to be amended, each director who is not an
associate (
i.e.
, employee) of
the Company receives an annual grant of an option to purchase 12,000 shares of
our common stock on the date of each Annual Meeting of
Shareholders. The options have an exercise price equal to the fair
market value of the common stock on the date of grant and vest one year after
the grant date. In 2009, the options were granted subject to approval
of the amendments to the 2004 Director Plan (proposed below) by the Company’s
shareholders at the Annual Meeting.
The
following table sets forth information regarding the compensation received by
each of the Company’s directors during 2009:
Name
|
|
Fees
Earned or
Paid in Cash
|
|
|
Option Awards
(1)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
JoAnn
M. Martin
|
|
$
|
11,000
|
|
|
$
|
69,360
|
|
|
$
|
80,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
N. Nunnelly
|
|
$
|
11,500
|
|
|
$
|
69,360
|
|
|
$
|
80,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
C. Schorr III
|
|
$
|
11,500
|
|
|
$
|
69,360
|
|
|
$
|
80,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gail
L. Warden
|
|
$
|
11,500
|
|
|
$
|
69,360
|
|
|
$
|
80,860
|
|
_______________________
|
(1)
|
Represents
the aggregate grant date fair value of option awards granted during the
year, computed in accordance with FASB ASC Topic 718. See Note
7 to the Company’s Consolidated Financial Statements included in its
Annual Report on Form 10-K for the years ended December 31, 2009, and
December 31, 2008, for a discussion of assumptions made in the valuation
of share-based compensation. As of December 31, 2009, the
outstanding option awards for each director were as
follows: Ms. Martin – 72,000; Mr. Nunnelly – 36,000; Mr. Schorr
– 48,000; Mr. Warden – 60,000.
|
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the preceding Compensation
Discussion and Analysis with management and, based on such review and
discussion, has recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Company’s proxy
statement.
John N.
Nunnelly, Chairperson
JoAnn M.
Martin
Paul C.
Schorr III
Gail L.
Warden
APPROVAL
OF AMENDMENTS TO THE NATIONAL RESEARCH CORPORATION 2004 NON-EMPLOYEE DIRECTOR
STOCK PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE PURSUANT TO STOCK OPTION AWARDS AND TO CONFORM TO THE FINAL REGULATIONS
PROMULGATED UNDER SECTION 409A OF THE INTERNAL REVENUE CODE
The
Company is requesting that the shareholders approve amendments to the 2004
Director Plan to increase the number of shares of common stock authorized for
issuance under the Plan from 250,000 to 550,000 and to conform the terms of the
2004 Director Plan to the final regulations promulgated by the Internal Revenue
Service under Section 409A of the Internal Revenue Code. The proposed
amendments will provide the Company with greater flexibility in structuring a
competitive equity compensation program for its non-employee directors and allow
the Company to continue to attract and retain qualified and experienced
individuals to serve as non-employee directors.
General
The
Company currently has in effect the 2004 Director Plan. To allow for
additional stock option awards to be made by the Company and to conform the
terms of the Plan to the final regulations promulgated by the Internal Revenue
Service under Section 409A of the Internal Revenue Code, the Board has
unanimously approved amendments to the 2004 Director Plan contingent upon
shareholder approval of the 2004 Director Plan at the Annual Meeting. The
following summary description of the 2004 Director Plan as amended by such
amendments is qualified in its entirety by reference to the full text of the
2004 Director Plan, as amended, which is attached to this proxy statement as
Appendix A.
Purpose
The
purpose of the 2004 Director Plan is to promote the best interests of the
Company and its shareholders by providing a means to attract and retain
competent independent directors and to provide opportunities for additional
stock ownership by such directors which will further increase their proprietary
interest in the Company and, consequently, their identification with the
interests of the shareholders of the Company.
Administration
and Eligibility
The 2004
Director Plan shall be administered by the Compensation Committee of the Board
(the “Committee”), subject to review by the Board. The Committee may adopt
such rules and regulations for carrying out the 2004 Director Plan as it may
deem proper and in the best interests of the Company. The interpretation by the
Board of any provision of the 2004 Director Plan or any related documents shall
be final.
Each
member of the Board who is not an employee of the Company or any subsidiary of
the Company shall be eligible to receive shares of Common Stock under the 2004
Director Plan. The Company currently has four non-employee
directors.
Awards
Under the 2004 Director Plan; Available Shares
The 2004
Director Plan provides for automatic and discretionary grants of non-qualified
options to non-employee directors of the Company. The 2004 Director Plan
prior to the amendments provides that up to a total of 250,000 shares of Common
Stock (subject to adjustment as described below) may be issued in connection
with awards under the 2004 Director Plan; currently there are no shares
remaining available for future grants. The proposed amendments would
increase the number of shares that may be issued in connection with awards under
the 2004 Director Plan by 300,000, to a total of 550,000.
Terms
of Awards
The 2004
Director Plan provides that each non-employee director (if he or she continues
to serve in such capacity) will, on the day of the Annual Meeting and each
subsequent annual meeting of shareholders, automatically be granted an option to
purchase 12,000 shares of Common Stock (subject to adjustment as described
below). The 2004 Director Plan also provides that the Committee or the
Board may make discretionary grants of non-qualified options under the 2004
Director Plan. The options granted to non-employee directors under the
2004 Director Plan become fully exercisable one year after the date of grant.
However, if a non-employee director ceases to be a director of the Company by
reason of death within one year after the date of grant, then the options shall
immediately vest and become exercisable in full. Non-employee directors
will be entitled to receive the automatic grants under the 2004 Director Plan as
described above only for so long as the 2004 Director Plan remains in effect and
a sufficient number of shares are available for the granting of such options
thereunder.
The
option price per share of any option granted to a non-employee director must be
100% of the “fair market value” of a share of Common Stock on the date of grant
of such option. The fair market value of a share on the date of grant to
the non-employee director will be the last sale price per share for the Common
Stock on the NASDAQ Stock Market on the grant date or, if no trading occurred on
the grant date, then the fair market value per share will be determined with
reference to the last preceding date on which there was such a
sale. The proposed amendments to the 2004 Director Plan would further
provide that neither the Committee nor any other person may decrease the
exercise price of any option granted under the 2004 Director Plan or take any
action that would result in a deemed decrease of the exercise price after the
date of grant, except in limited circumstances and in compliance with the
requirements of Section 409A of the Internal Revenue Code.
If a
non-employee director ceases to be a director of the Company for any reason,
other than the death of the director, then all unvested options shall
immediately terminate. All vested options will terminate on the earlier of
(a) ten years after the date of grant or (b) three years after the non-employee
director ceases to be a director of the Company. Options granted to
non-employee directors may be exercised under the 2004 Director Plan by payment
in full of the exercise price, either in cash or in whole or in part by
tendering previously acquired shares of Common Stock having a fair market value
on the date of exercise equal to the option exercise price.
Adjustments
In the
event of any change in the Common Stock by reason of a declaration of a stock
dividend (other than a stock dividend declared in lieu of an ordinary cash
dividend), stock split, spin-off, merger, consolidation, recapitalization or
split-up, combination or exchange of shares, or otherwise, the aggregate number
of shares available under the 2004 Director Plan, the number of shares to be
issued pursuant to the automatic grant provisions under the 2004 Director Plan,
the number and kind of shares subject to outstanding options and the exercise
price of outstanding options shall be appropriately adjusted in order to prevent
dilution or enlargement of the benefits intended to be made available under the
2004 Director Plan.
Limitations
on Transferability
Except to
the extent allowed by the Board or the Committee, options granted under the 2004
Director Plan may not be transferred other than by will or the laws of descent
and distribution.
Amendment
Subject
to shareholder approval in certain circumstances and applicable law, the Board
may amend the 2004 Director Plan at any time or from time to time in any manner
that it may deem appropriate.
Effective
Date and Termination
The
amendments to the 2004 Director Plan will be effective on the day of their
adoption by the Board, May 8, 2009, subject to the approval of the amendments to
the 2004 Director Plan by the shareholders of the Company at the Annual Meeting.
Any and all grants made under the 2004 Director Plan prior to such
shareholder approval are subject to such shareholder approval. The 2004
Director Plan will terminate on such date as may be determined by the
Board.
Withholding
The
Company may defer making payments under the 2004 Director Plan until
satisfactory arrangements have been made for the payment of any federal, state
or local income taxes required to be withheld with respect to such payment or
delivery. Each non-employee director may irrevocably elect to have the
Company withhold shares of Common Stock having an aggregate value equal to the
amount required to be withheld. The value of fractional shares remaining
after payment of the withholding taxes will be paid to the non-employee director
in cash. Shares so withheld will be valued at fair market value on the
regular business day immediately preceding the date such shares would otherwise
be transferred under the 2004 Director Plan.
Certain
Federal Income Tax Consequences
The grant
of a non-qualified stock option under the 2004 Director Plan creates no income
tax consequences to a non-employee director or the Company. A non-employee
director who is granted a non-qualified stock option will generally recognize
ordinary income at the time of exercise for each underlying share of Common
Stock in an amount equal to the excess of the fair market value of the Common
Stock at such time over the exercise price. The Company will generally be
entitled to a deduction in the same amount and at the same time as ordinary
income is recognized by the non-employee director. A subsequent
disposition of the Common Stock will generally give rise to capital gain or loss
to the extent the amount realized from the disposition differs from the tax
basis, i.e., the fair market value of the Common Stock on the date of exercise.
This capital gain or loss will be a long-term or short-term capital gain
or loss depending upon the length of time the Common Stock is held prior to the
disposition.
New
Plan Benefits
During
2009, non-qualified options to purchase 12,000 shares of Common Stock were
granted by the Company to each of the non-employee directors so serving on May
8, 2010, subject to shareholder approval of the proposed amendments to the 2004
Director Plan at the Annual Meeting. The options have a per share exercise
price of $27.23. In 2010 and future years, the Company will grant each
non-employee director options to purchase 12,000 shares of Common Stock.
The Company currently cannot determine the amount, if any, of
discretionary stock options the Company may grant to non-employee directors in
the future. Such determinations will be made from time to time by the
Board or the Committee in the future.
No
executive officers or other employees of the Company are eligible to receive
awards under the 2004 Director Plan. See “—Administration and
Eligibility.”
On March
12, 2010, the closing price per share of Common Stock on the NASDAQ Stock
Market was $24.12.
Vote
Required
The
affirmative vote of the holders of a majority of the shares of Common Stock
represented and voted at the Annual Meeting with respect to the 2004 Director
Plan (assuming a quorum is present) is required to approve the amendments to the
2004 Director Plan. Any shares of Common Stock not voted at the Annual
Meeting with respect to the amendments to the 2004 Director Plan (whether as a
result of broker non-votes, abstentions or otherwise) will have no impact on the
vote.
Securities
Authorized for Issuance under Equity Compensation Plans
The
following table sets forth information as of December 31, 2009, with respect to
shares of Common Stock that may be issued under the Company’s existing equity
compensation plans. The table does not include employee benefit plans
intended to meet the qualification requirements of Section 401(a) of the
Internal Revenue Code. All equity compensation plans are described
more fully in Note 8 to the Company’s consolidated financial statements included
in its Annual Report on Form 10-K for the year ended December 31,
2009.
Plan Category
|
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options
|
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
|
Number of Securities
Remaining Available
for Future
Issuance Under
Equity Compensation
Plans Excluding
Securities Reflected
in Column (a)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by security holders
(1)
|
|
|
554,822
|
|
|
$
|
21.80
|
|
|
|
505,474
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
23,000
|
|
|
$
|
27.23
|
|
|
|
277,000
|
(3)
|
|
|
|
577,822
|
|
|
$
|
22.06
|
|
|
|
782,474
|
|
|
(1)
|
Includes
the Company’s 2006 Equity Incentive Plan, 2001 Equity Incentive Plan, and
2004 Director Plan.
|
|
(2)
|
Includes
up to 78,417 and 427,057 shares of Common Stock that can be issued under
the 2001 Equity Incentive Plan and Company’s 2006 Equity Incentive Plan,
respectively. As of December 31, 2009, the Company had
authority to award up to 161,854 additional shares of restricted Common
Stock to participants under the 2001 Equity Incentive Plan, provided that
the total of such shares awarded may not exceed the total number of shares
remaining available for issuance under the 2001 Equity Incentive
Plan. Under the 2006 Equity Incentive Plan, the Company had
authority to award up to 167,885 additional shares of restricted Common
Stock to participants under the 2006 Equity Incentive Plan, provided that
the total of such shares awarded may not exceed the total number of shares
remaining available for issuance under the 2006 Equity Incentive
Plan. No additional shares of Common Stock other than those
reflected in column (a), were available for issuance under the 2004
Director Plan.
|
|
(3)
|
As
of December 31, 2009, the Company had authority to award up to 277,000
additional shares of Common Stock to participants under the 2004 Directors
Plan, subject to approval by the Company’s shareholders at the Annual
Meeting of the amendment to the plan adopted on May 7, 2009 by the Board
to increase the number of shares of common stock authorized for issuance
under the plan from 250,000 to 550,000 shares. The Board
conditioned the amendment on the approval of the Company’s shareholders at
the Annual Meeting. The grants of options to directors in 2009
were also made subject to such
approval.
|
THE
BOARD RECOMMENDS A VOTE “FOR” THE AMENDMENTS TO THE 2004 DIRECTOR
PLAN. SHARES OF THE COMPANY’S COMMON STOCK REPRESENTED AT THE ANNUAL
MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED “FOR” THE AMENDMENTS TO
THE 2004 DIRECTOR PLAN.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors,
executive officers and any owner of greater than 10% of the Company’s Common
Stock to file reports with the Securities and Exchange Commission concerning
their ownership of the Company’s Common Stock. Based solely upon
information provided to the Company by individual directors and executive
officers, the Company believes that, during the fiscal year ended December 31,
2009, all of its directors and executive officers and owners of greater than 10%
of the Company’s Common Stock complied with the Section 16(a) filing
requirements.
MISCELLANEOUS
Independent
Registered Public Accounting Firm
KPMG LLP
acted as the independent registered public accounting firm for the Company in
2009 and it is anticipated that such firm will be similarly appointed to act in
2010. The Audit Committee is solely responsible for the selection,
retention, oversight and, when appropriate, termination of the Company’s
independent registered public accounting firm. Representatives of
KPMG LLP are expected to be present at the Annual Meeting with the opportunity
to make a statement if they so desire. Such representatives are also
expected to be available to respond to appropriate questions.
The fees
to KPMG LLP for the fiscal years ended December 31, 2009 and 2008 were as
follows:
|
|
2009
|
|
|
2008
|
|
Audit
Fees
(1)
|
|
$
|
217,760
|
|
|
$
|
176,835
|
|
Audit-Related
Fees
(2)
|
|
|
—
|
|
|
|
1,960
|
|
Tax
Fees
(3)
|
|
|
35,554
|
|
|
|
15,334
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
253,314
|
|
|
$
|
194,129
|
|
|
(1)
|
Audit
of annual financial statements and review of financial statements included
in Forms 10-Q.
|
|
(2
)
|
Due
diligence, accounting consultations and review of Form 8-K/A related to an
acquisition.
|
|
(3)
|
Tax
consultations and tax return preparation including out-of-pocket
expenses.
|
The Audit
Committee has established pre-approval policies and procedures with respect to
audit and permitted non-audit services to be provided by its independent
registered public accounting firm. Pursuant to these policies and
procedures, the Audit Committee may form, and delegate authority to,
subcommittees consisting of one or more members when appropriate to grant such
pre-approvals, provided that decisions of such subcommittee to grant
pre-approvals are presented to the full Audit Committee at its next scheduled
meeting. The Audit Committee’s pre-approval policies do not permit
the delegation of the Audit Committee’s responsibilities to
management. During 2009, no fees to the independent registered public
accounting firm were approved pursuant to the de minimis exception under the
Securities and Exchange Commission’s rules.
Shareholder
Proposals
Proposals
that shareholders of the Company intend to present at and have included in the
Company’s proxy statement for the 2011 Annual Meeting pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”), must be
received by the Company by the close of business on December 7,
2010. In addition, a shareholder who otherwise intends to present
business at the 2010 Annual Meeting (including nominating persons for election
as directors) must comply with the requirements set forth in the Company’s
By-Laws. Among other things, to bring business before an annual
meeting, a shareholder must give written notice thereof, complying with the
By-Laws, to the Secretary of the Company not less than 60 days and not more than
90 days prior to the second Wednesday in the month of April (subject to certain
exceptions if the Annual Meeting is advanced or delayed a certain number of
days). Under the By-Laws, if the Company does not receive notice of a
shareholder proposal submitted otherwise than pursuant to Rule 14a-8 (
i.e.
, proposals
shareholders intend to present at the 2011 Annual Meeting but do not intend to
include in the Company’s proxy statement for such meeting) prior to February 12,
2011, then the notice will be considered untimely and the Company will not be
required to present such proposal at the 2011 Annual Meeting. If the
Board chooses to present such proposal at the 2011 Annual Meeting, then the
persons named in proxies solicited by the Board for the 2011 Annual Meeting may
exercise discretionary voting power with respect to such proposal.
Other
Matters
The cost
of soliciting proxies will be borne by the Company. In addition to
soliciting proxies by mail, proxies may be solicited personally and by telephone
by certain officers and regular associates of the Company. The
Company will reimburse brokers and other nominees for their reasonable expenses
in communicating with the persons for whom they hold Common
Stock.
Pursuant
to the rules of the Securities and Exchange Commission, services that deliver
the Company’s communications to shareholders that hold their stock through a
bank, broker or other holder of record may deliver to multiple shareholders
sharing the same address a single copy of the Company’s annual report to
shareholders and proxy statement. Upon written or oral request, the
Company will promptly deliver a separate copy of the annual report to
shareholders and/or proxy statement to any shareholder at a shared address to
which a single copy of each document was delivered. Shareholders may
notify the Company of their requests by calling or writing Patrick E. Beans,
Secretary, National Research Corporation, 1245 Q Street, Lincoln, Nebraska
68508.
|
By
Order of the Board of Directors
|
|
NATIONAL
RESEARCH CORPORATION
|
|
|
|
Patrick
E. Beans
|
|
Secretary
|
April 6,
2009