SCHEDULE 14A
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:
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Preliminary Proxy Statement |
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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 ss. 240.14a-11(c) or ss. 240.14a-12 |
NATIONAL RESEARCH CORPORATION
|
(Name of Registrant as Specified in its Charter)
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|
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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of each class of securities to which transaction applies: |
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Aggregate
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Per
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Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined): |
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Proposed
maximum aggregate value of transaction: |
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Fee
paid previously with preliminary materials. |
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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
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NATIONAL RESEARCH
CORPORATION
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
To Be Held May 5, 2005
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 Thursday, May 5, 2005, 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 2008 annual meeting
of shareholders and until their successors are duly elected and
qualified.
2.
To act upon a proposal to approve 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 21, 2005 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.
|
By
Order of the Board of Directors NATIONAL RESEARCH CORPORATION
/s/ Patrick E. Beans
Patrick
E. Beans Secretary |
Lincoln, Nebraska
April 4, 2005
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 5, 2005
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 4, 2005 in connection with a solicitation of proxies by the Board for use
at the annual meeting of shareholders to be held on Thursday, May 5, 2005, at 9:00 A.M.,
local time, at the Companys 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 shareholders
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 proposal to approve 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 proposal to
approve 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 Companys common stock, $.001 par value per share (the
Common Stock), at the close of business on March 21, 2005 are entitled to vote
at the Annual Meeting. On that date, the Company had outstanding and entitled to vote
7,187,334 shares of Common Stock, each of which is entitled to one vote per share.
ELECTION OF DIRECTORS
The
Companys 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 2008 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 either 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 15, 2005, about the Boards
nominees for election at the Annual Meeting and each director of the Company whose term
will continue after the Annual Meeting.
Nominee for Election
at the Annual Meeting
Terms expiring at
the 2008 Annual Meeting
JoAnn
M. Martin, 50, has served as a director of the Company since June 2001. Ms. Martin has
served as President and Chief Operating Officer of Ameritas Life Insurance Corp., an
insurance and financial services company, since April 2003. Prior thereto, Ms. Martin
served as Senior Vice President and Chief Financial Officer of Ameritas for more than the
last five years. Ms. Martin has served as an officer of Ameritas and/or its affiliates
since 1988. Ms. Martin is also a director of the Saint Elizabeth Regional Medical Center,
the Lincoln Chamber of Commerce and the Nebraska Society of CPAs Foundation.
Paul
C. Schorr III, 68, 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 is also a director and the chairman of the board of Western
Sizzlin Corp. and a director of Ameritas Life Insurance Corp.
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 2006 Annual Meeting
Michael
D. Hays, 50, has served as Chief Executive Officer and a director of the Company since
he founded the Company in 1981. From 1981 until 2004, Mr. Hays also served as the
President of the Company. Prior to 1981, Mr. Hays served for seven years as a Vice
President and a director of SRI Research Center, Inc. (n/k/a the Gallup Organization).
John
N. Nunnelly, 52, has served as a director of the Company since December 1997. Mr.
Nunnelly has been the Group President, New Business and Specialty Sales, of McKesson
Provider Technologies, a leader in the healthcare information industry, since April 2004.
Mr. Nunnelly has served in various other positions during his 23 year tenure with
McKesson, including Group Vice President of the Resource Management and Home Health
Solutions Divisions, Vice President and General Manager of the Amherst Product Group and
Vice President of Sales-Decision Support.
Terms expiring at
the 2007 Annual Meeting
Patrick
E. Beans, 47, has served as Vice President, Treasurer, Chief Financial Officer and
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.
2
Gail
L. Warden, 66, 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. In addition, Mr. Warden
serves as a director of Comerica Incorporated, a financial services company.
BOARD OF DIRECTORS
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 Companys annual meeting of shareholders each year. All
five directors who were directors at the time of the Companys 2004 Annual Meeting
attended the meeting.
Committees
The
Board held four meetings in 2004. Each person who served as a director during 2004
attended all of the meetings of the Board and the meetings held by all committees of the
Board on which such director served during 2004.
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 Committees primary function is to assist the Board in fulfilling its oversight
responsibilities by overseeing the Companys systems of internal controls regarding
finance, accounting, legal compliance and ethics that management and the Board have
established; the Companys 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 and John N. Nunnelly, 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 seven meetings
in 2004.
The
Compensation Committee reviews and recommends to the Board the compensation structure for
the Companys directors, officers and other managerial personnel, including salary
rates, participation in incentive compensation and benefit plans, fringe benefits,
non-cash perquisites and other forms of compensation, and administers the National
Research Corporation 1997 Equity Incentive Plan (the 1997 Equity Incentive
Plan), under which no additional awards may be granted, the National Research
Corporation 2001 Equity Incentive Plan (the 2001 Equity Incentive Plan), the
National Research Corporation Director Stock Plan (the Prior Director Plan)
and the 2004 Director Plan. JoAnn M. Martin (Chairperson), John N. Nunnelly and
Paul C. Schorr III are the current members of the Compensation Committee. The
Compensation Committee held four meetings in 2004.
3
The
Nominating Committee consists of John N. Nunnelly (Chairperson), JoAnn M. Martin and Paul
C. Schorr III, each of whom meets the independence standards of the Nasdaq Stock Market
for nominating committee members. The Nominating Committees 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 one meeting in 2004.
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 Companys 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 of Directors 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:
|
|
A
director must display high personal and professional ethics, integrity and values. |
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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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|
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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|
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. |
|
|
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 Companys business. |
4
The
Board also believes the following qualities or skills are necessary for one or more
directors to possess:
|
|
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 members financial
sophistication, as required by the rules of Nasdaq. |
|
|
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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|
Directors
must be selected so that the Board is a diverse body. |
Communications with the
Board of Directors
Shareholders
may communicate with the Board by writing to National Research Corporation, Board of
Directors (or, at the shareholders 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.
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 is held. Additionally,
directors are reimbursed for out-of-pocket expenses associated with attending meetings of
the Board and committees thereof.
Pursuant
to the Prior Director Plan, each director who is not an associate (i.e., employee)
of the Company receives an annual grant of an option to purchase 1,000 shares of 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.
If
shareholders approve the 2004 Director Plan at the Annual Meeting, the Prior Director Plan
will be amended so that no additional options will be granted to non-employee directors
thereunder and, in lieu thereof, the non-employee directors will automatically be granted
options under the 2004 Director Plan. See Approval of the 2004 Non-Employee
Directors Stock PlanTerms of Awards.
5
REPORT OF THE AUDIT
COMMITTEE
In
accordance with its written charter, the Audit Committees primary function is to
assist the Board in fulfilling its oversight responsibilities by overseeing the
Companys systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established; the Companys
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 2004 Annual Report on Form 10-K with the
Companys management and independent auditors. Management is responsible for the
financial statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for expressing an opinion on the conformity of
those audited financial statements with accounting principles generally accepted in the
United States.
The
Audit Committee discussed with the independent auditors matters required to be discussed
by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended. In addition, the Companys independent auditors
provided to the Audit Committee the written disclosures required by the Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and the Audit Committee discussed with the independent auditors their
independence. The Audit Committee pre-approves all audit and permissible non-audit
services provided by the independent auditors on a case-by-case basis. The Audit Committee
has considered whether the provision of 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 independent auditors and determined
that such services did not adversely affect the independence of the independent auditors.
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 Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2004, for filing with the SEC.
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
6
PRINCIPAL SHAREHOLDERS
Management and Directors
The
following table sets forth certain information regarding the beneficial ownership of
Common Stock as of March 15, 2005 by: (i) each director and director nominee; (ii) each of
the executive officers named in the Summary Compensation Table set forth below; and (iii)
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 15, 2005, there were
7,186,556 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) |
|
|
| 4,839,465 |
|
| 67.3 |
% |
Patrick E. Beans | | |
| 82,603 |
(2)(6) |
| 1.1 |
% |
Jona S. Raasch | | |
| 76,575 |
(3)(6) |
| 1.1 |
% |
Joseph W. Carmichael | | |
| 13,464 |
(4)(6) |
| * |
|
John N. Nunnelly | | |
| 11,800 |
(6) |
| * |
|
Paul C. Schorr III | | |
| 10,000 |
(5)(6) |
| * |
|
JoAnn M. Martin | | |
| 5,500 |
(6) |
| * |
|
Gail L. Warden | | |
| -- |
|
| -- |
|
All directors, nominees and executive | | |
officers as a group (8 persons) | | |
| 5,039,507 |
(6) |
| 69.7 |
% |
(1) |
The
address of Michael D. Hays is 1245 Q Street, Lincoln, Nebraska 68508. |
(2) |
Includes
1,500 shares held by Mr. Beans as custodian for his minor children and
38,045 shares owned by four trusts for which Mr. Beans is the sole
trustee. |
(3) |
Includes
50 shares owned by Ms. Raaschs minor children. |
(4) |
Includes
11 shares held by Mr. Carmichael as a result of his membership in an
investment club. |
(5) |
Includes
3,000 shares owned by The Schorr Family Company, Inc., which Mr. Schorr
manages. |
(6) |
Includes
shares of Common Stock that may be purchased under stock options which
are currently exercisable or exercisable within 60 days of March 15,
2005, as follows: Mr. Beans, 6,429 shares; Ms. Raasch, 10,435 shares;
Mr. Carmichael, 10,714 shares; Mr. Nunnelly, 7,000 shares; Mr.
Schorr, 7,000 shares; Ms. Martin, 3,000 shares; and all directors,
nominees and executive officers as a group, 44,578 shares. |
7
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.
The beneficial ownership information set forth below has been reported in filings made by
the beneficial owners with the Securities and Exchange Commission.
Amount and Nature of
Beneficial Ownership
Name and Address of |
Voting Power
|
|
Investment Power
|
|
|
Percent |
Beneficial Owner
|
Sole
|
|
Shared
|
|
Sole
|
|
Shared
|
|
Aggregate
|
|
of Class
|
J. Carlo Cannell (1) |
|
|
| -0- |
|
| 599,000 |
|
| -0- |
|
| 599,000 |
|
| 599,000 |
|
| 8.3 |
% |
Cannell Capital LLC | | |
150 California Street, | | |
Fifth Floor | | |
San Francisco, CA 94111 | | |
| |
|
(1) |
Represents
a joint filing by Cannell Capital LLC and the following affiliates of
Cannell Capital LLC: J. Carlo Cannell (owner and manager of Cannell
Capital LLC); The Anegada Fund Limited; The Cuttyhunk Fund Limited; Tonga
Partners, L.P.; GS Cannell Portfolio, LLC; and Pleiades Investment
Partners, L.P. |
8
EXECUTIVE COMPENSATION
Summary Compensation
Information
The
following table sets forth certain information concerning the compensation earned in each
of the last three fiscal years by the Companys Chief Executive Officer and each of
the Companys three other most highly compensated executive officers whose total cash
compensation exceeded $100,000 in the fiscal year ended December 31, 2004. The persons
named in the table are sometimes referred to herein as the named executive
officers.
Summary Compensation
Table
|
|
|
Long-Term Compensation |
|
|
|
Annual Compensation |
Awards
|
Payouts
|
|
|
|
Securities |
Long-Term |
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Other Annual Compensation ($)(1)
|
Underlying Stock Options(#)
|
Incentive Compensation Payouts($)
|
All Other Compensation ($)
|
Michael D. Hays |
|
|
2004 |
|
|
$ | 196,400 |
|
$ | 30,689 |
|
| -- |
|
| 18,298 |
|
| -- |
|
| -- |
|
Chief Executive Officer | | |
2003 | | |
| 161,150 |
|
| 29,094 |
|
| -- |
|
| 38,182 |
|
| -- |
|
$ | 1,523 |
(2) |
| | |
2002 | | |
| 140,000 |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| 1,523 |
|
Jona S. Raasch | | |
2004 | | |
$ | 143,700 |
|
$ | 22,453 |
|
| -- |
|
| 13,388 |
|
| -- |
|
| -- |
|
Vice President and Chief | | |
2003 | | |
| 132,012 |
|
| 25,975 |
|
| -- |
|
| 34,091 |
|
| -- |
|
| -- |
|
Operations Officer | | |
2002 | | |
| 125,000 |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
Joseph W. Carmichael | | |
2004 | | |
$ | 135,600 |
|
$ | 21,189 |
|
| -- |
|
| 12,634 |
|
| -- |
|
| -- |
|
President | | |
2003 | | |
| 125,850 |
|
| 24,940 |
|
| -- |
|
| 32,727 |
|
| -- |
|
| -- |
|
| | |
2002 | | |
| 120,000 |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
Patrick E. Beans | | |
2004 | | |
$ | 130,100 |
|
$ | 20,329 |
|
| -- |
|
| 12,121 |
|
| -- |
|
| -- |
|
Vice President, Treasurer, | | |
2003 | | |
| 120,663 |
|
| 41,150 |
|
| -- |
|
| 31,364 |
|
| -- |
|
| -- |
|
Chief Financial Officer and | | |
2002 | | |
| 115,000 |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
Secretary | | |
(1) |
Certain
personal benefits provided by the Company to the named executive officers are
not included in the table. The aggregate amount of such personal benefits for
each named executive officer in each year reflected in the table did not exceed
the lesser of $50,000 or 10% of the sum of such officers salary and bonus
in each respective year. |
(2) |
Premiums
for disability insurance paid by the Company for the benefit of Mr. Hays. |
Stock Options
The
Company has in effect the 2001 Equity Incentive Plan, pursuant to which options to
purchase Common Stock may be granted to associates (i.e., employees) of the
Company, including officers and associate-directors, and the 1997 Equity Incentive Plan,
pursuant to which no additional stock options may be granted.
The
following table presents certain information as to grants of stock options made during
2004 to the named executive officers.
9
Option Grants in 2004
Individual Grants
|
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
for Option Term(2)
|
Name
|
Number of
Securities
Underlying
Options
Granted (#)(1)
|
Percent of
Total Options
Granted to
Employees
in 2004
|
Exercise
or Base
Price
($/share)
|
Expiration
Date
|
At 5%
Annual
Growth Rate
|
At 10% Annual
Growth Rate
|
Michael D. Hays |
|
|
| 18,298 |
|
| 13.4 |
% |
$ | 16.10 |
|
| 01/05/2014 |
|
$ | 185,271 |
|
$ | 469,513 |
|
|
|
|
|
|
|
|
Jona S. Raasch | | |
| 13,388 |
|
| 9.8 |
% |
| 16.10 |
|
| 01/05/2014 |
|
| 135,556 |
|
| 343,526 |
|
|
|
|
|
|
|
|
Joseph W. Carmichael | | |
| 12,634 |
|
| 9.3 |
% |
| 16.10 |
|
| 01/05/2014 |
|
| 127,922 |
|
| 324,179 |
|
|
|
|
|
|
|
|
Patrick E. Beans | | |
| 12,121 |
|
| 8.9 |
% |
| 16.10 |
|
| 01/05/2014 |
|
| 122,728 |
|
| 311,016 |
|
(1) |
The
options reflected in the table (which are nonstatutory options for purposes
of the Internal Revenue Code) will each become fully exercisable five
years from its date of grant. |
(2) |
This
presentation is intended to disclose the potential value which would accrue
to the optionee if the options were exercised the day before they
would expire and if the per share value had appreciated at the
compounded annual rate indicated in each column. The assumed rates of
appreciation of 5% and 10% are prescribed by the rules of the
Securities and Exchange Commission regarding disclosure of executive
compensation. The assumed annual rates of appreciation are not
intended to forecast possible future appreciation, if any, with respect
to the price of the Common Stock. |
The
following table sets forth information regarding the exercise of stock options by the
named executive officers during 2004 and the year-end value of unexercised options held by
such persons.
Aggregated Option
Exercises in 2004
Fiscal Year and Fiscal Year-End Option Values
|
Shares
Acquired
on |
Value
Realized |
Number of Securities
Underlying Unexercised
Options at Fiscal Year-End
|
Value of Unexercised
In-the-Money Options
at Fiscal Year-End($)(1)
|
|
Exercise(#)
|
($)(1)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
Michael D. Hays |
|
|
| -- |
|
$ | -- |
|
| -- |
|
| 56,480 |
|
$ | -- |
|
$ | 197,552 |
|
Jona S. Raasch | | |
| 7,500 |
|
| 94,875 |
|
| 10,435 |
|
| 47,479 |
|
| 108,524 |
|
| 176,238 |
|
Joseph W. Carmichael | | |
| -- |
|
| -- |
|
| 10,714 |
|
| 45,361 |
|
| 128,032 |
|
| 169,176 |
|
Patrick E. Beans | | |
| 11,250 |
|
| 142,320 |
|
| 6,429 |
|
| 43,485 |
|
| 58,825 |
|
| 162,131 |
|
(1) |
The
dollar values are calculated by determining the difference between the fair
market value of the underlying Common Stock and the exercise price of the
options at exercise or fiscal year-end, respectively. |
10
Report on Executive
Compensation
The
Compensation Committee of the Board is responsible for all aspects of the Companys
compensation package offered to its corporate officers, including the named executive
officers. The following report was prepared by members of the Compensation Committee.
The
Companys executive compensation program is designed to promote a strong, direct
relationship between performance (on both a Company and individual level) and compensation
and to base compensation on the Companys quarterly, annual and long-term performance
goals by rewarding above-average corporate performance and recognizing individual
initiative and achievement. The Company has developed an overall compensation strategy and
specific compensation plans that are intended to be effective tools for fostering the
creation of shareholder value and the execution of the Companys business plan. The
overall objectives of this strategy are to make executive compensation generally
competitive, with a substantial portion of such compensation contingent upon Company and
individual performance, and to encourage equity ownership by the Companys executive
officers so that their interests are closely aligned with the interests of shareholders.
During
2003, the Company retained a nationally-recognized compensation consultant to advise it
with respect to compensation issues. The first step in the overall review of executive
compensation was an analysis of the duties and responsibilities of each Company executive.
Subsequently, the Companys consultant compared the compensation for each Company
executive with general market data for individuals with comparable job responsibilities.
The Companys consultant summarized its conclusions on Company executive compensation
in a report finalized in April, 2003. The results of this study have provided, and will
continue to provide in 2005, the framework for determining compensation for executives of
the Company.
The
key elements of the Companys executive compensation program consist of base salary,
annual cash incentive and long-term equity incentive plan, which, based on the
Companys consultants recommendations and the Compensation Committees
judgment, approximate, depending on the attainment of certain revenue and profitability
levels, the following percentages of aggregate compensation: base salary, 50%; annual cash
incentive, 25%; and long-term equity incentive plan, 25%; respectively. A general
description of the elements of the Companys compensation program, including the
bases for the compensation awarded to the Companys Chief Executive Officer for 2004,
are discussed below.
Base
Salary. Base salaries are initially determined by evaluating the responsibilities of
the position, the experience and contributions of the individual and the salaries for
comparable positions in the competitive marketplace. Base salary levels for the
Companys executive officers are generally positioned within the range for comparable
positions in companies of similar size offering similar services. While the Company
believes it offers competitive base salaries, the Company attempts to keep executive base
salary increases as low as possible in order to limit the Companys exposure if
performance targets are not met.
Annual
Cash Incentive. The Companys executive officers are eligible for annual cash
incentive awards under the Companys incentive compensation program. Under this
program, Company and individual performance objectives are established at the beginning of
each year. Company performance objectives are based on the Company obtaining certain
levels of revenues and/or net profits. Individual performance objectives are oriented to
long-term objectives of the Company, with stated goals and activities to achieve those
objectives specified for each individual.
11
Long-Term
Equity Incentive Plan. The 2001 Equity Incentive Plan is designed to encourage and
create ownership of Common Stock by key executives, thereby promoting a close identity of
interests between the Companys management and its shareholders. The 2001 Equity
Incentive Plan is also designed to motivate and reward executives for long-term strategic
management and the enhancement of shareholder value. The Compensation Committee has
determined that stock option grants to the Companys associates, including key
executive officers, are consistent with the Companys best interest and the
Companys overall compensation program.
Stock
options are granted with an exercise price equal to the market value of the Common Stock
on the date of grant. Vesting schedules are designed to encourage the creation of
shareholder value over the long-term since the full benefit of the compensation package
cannot be realized unless stock price appreciation occurs over a number of years and the
executive remains in the Companys employ.
The
Compensation Committee has granted stock options to key executive officers. See above
under Stock Options.
Chief
Executive Officer Compensation. During 2004, the Companys Chief Executive
Officer, Michael D. Hays, was paid a salary of $196,400, was awarded $30,689 of cash
incentives and was granted options to purchase 18,298 shares of the Companys common
stock as part of the 2001 Equity Incentive Plan. In evaluating Mr. Hays performance
during 2004, the Compensation Committee considered the Companys overall financial
performance and the achievement of long-term objectives of the Company.
Section
162 (m) Limitation. The Company anticipates that all 2005 compensation to executives
will be fully deductible under Section 162(m) of the Internal Revenue Code. Therefore, the
Company determined that a policy with respect to qualifying compensation paid to executive
officers for deductibility is not necessary.
NATIONAL RESEARCH
CORPORATION
COMPENSATION COMMITTEE
JoAnn M. Martin,
Chairperson
John N. Nunnelly
Paul C. Schorr III
12
PERFORMANCE INFORMATION
The
following graph compares on a cumulative basis changes since December 31, 1999 in (a) the
total shareholder return on the Common Stock with (b) the total return on the Nasdaq Stock
Market (U.S.) Index and (c) the total return on the Russell 2000 Index. Such changes have
been measured by dividing (a) the sum of (i) the amount of dividends for the measurement
period, assuming dividend reinvestment, and (ii) the difference between the price per
share at the end of and the beginning of the measurement period, by (b) the price per
share at the beginning of the measurement period. The graph assumes $100 was invested on
December 31, 1999 in Common Stock, the Nasdaq Stock Market (U.S.) Index and the Russell
2000 Index.
The
Russell 2000 Index is an index of companies with market capitalizations similar to the
Company. The Company has selected this index because, at this time, the Company does not
believe it can reasonably identify a peer group for comparison. The Company believes that
an index of companies with similar market capitalizations provides a reasonable basis for
comparing total shareholder returns.
COMPARISON OF 5 YEAR
CUMULATIVE TOTAL RETURN*
AMONG NATIONAL RESEARCH CORPORATION, THE NASDAQ STOCK
MARKET (U.S.) INDEX
AND THE RUSSELL 2000 INDEX
|
|
|
|
|
|
|
|
December 31,
1999
|
December 31,
2000
|
December 31,
2001
|
December 31,
2002
|
December 31,
2003
|
December 31,
2004
|
NATIONAL RESEARCH CORPORATION |
|
|
| 100.00 |
|
| 100.00 |
|
| 156.50 |
|
| 235.70 |
|
| 402.75 |
|
| 403.75 |
|
|
NASDAQ STOCK MARKET (U.S.) INDEX | | |
| 100.00 |
|
| 72.62 |
|
| 50.23 |
|
| 29.12 |
|
| 44.24 |
|
| 47.16 |
|
|
RUSSELL 2000 INDEX | | |
| 100.00 |
|
| 96.98 |
|
| 99.39 |
|
| 79.03 |
|
| 116.38 |
|
| 137.71 |
|
|
13
APPROVAL OF THE 2004
NON-EMPLOYEE DIRECTOR STOCK PLAN
General
The
Company currently has in effect the Prior Director Plan. To allow for additional stock
option awards to be made by the Company, the Board has unanimously adopted 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 is qualified in its
entirety by reference to the full text of the 2004 Director Plan 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 provides that up
to a total of 250,000 shares of Common Stock (subject to adjustment as described below)
are available for granting of awards under the 2004 Director Plan.
Terms of Awards
The
2004 Director Plan provides for an automatic grant to each non-employee director on
May 21, 2004 of an option to purchase 11,000 shares of Common Stock, subject to
shareholder approval of the 2004 Director Plan at the Annual Meeting. The 2004 Director
Plan further 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 option 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. In the event the 2004 Director Plan is approved
by shareholders at the Annual Meeting, no additional options will be granted to the
non-employee directors under the Prior Director Plan.
14
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.
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
2004 Director Plan will be effective on the day of its adoption by the Board, May 21,
2004, subject to the approval of 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.
15
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
2004, non-qualified options to purchase 11,000 shares of Common Stock were granted by the
Company to each of the three non-employee directors so serving on May 21, 2004. The
options have a per share exercise price of $16.05. In 2005 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 15, 2005, the closing price per share of Common Stock on the Nasdaq National Market
was $14.00.
16
Equity Compensation Plan
Information
The
following table sets forth information with respect to compensation plans under which
equity securities of the Company are authorized for issuance as of December 31, 2004.
Plan Category
|
Number of securities
to be issued upon
the exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in the first column)
|
Equity compensation plans |
|
|
| |
|
| |
|
| |
|
approved by security holders (1) | | |
| 384,775 |
|
$ | 12.24 |
|
| 195,042 |
|
Equity compensation plans not | | |
approved by security holders | | |
| -- |
|
| -- |
|
| -- |
|
|
| |
| |
| |
Total | | |
| 384,775 |
|
$ | 12.24 |
|
| 195,042 |
|
|
| |
| |
| |
(1) |
Includes
the Companys 2001 Equity Incentive Plan, 1997 Equity Plan and
Prior Director Plan. |
(2) |
Includes
up to 174,523 shares of restricted Common Stock that can be issued under
the Companys 2001 Equity Incentive Plan. |
Votes 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 2004 Director Plan. Any shares of Common Stock not
voted at the Annual Meeting with respect to the 2004 Director Plan (whether as a result of
broker non-votes or otherwise, except abstentions) will have no impact on the vote. Shares
of Common Stock as to which holders abstain from voting will be treated as votes against
the 2004 Director Plan.
THE
BOARD RECOMMENDS A VOTE FOR THE 2004 DIRECTOR PLAN. SHARES OF THE
COMPANYS COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED FOR THE 2004 DIRECTOR PLAN.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Companys directors and
executive officers to file reports concerning their ownership of Company equity securities
with the Securities and Exchange Commission and the Company. 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, 2004, all of its directors and
executive officers complied with the Section 16(a) filing requirements, except that Jona
S. Raasch, the Companys Vice President and Chief Operations Officer, did not timely
file a Form 4 that was due on June 1, 2004.
17
MISCELLANEOUS
Independent Registered
Public Accounting Firm
KPMG
LLP acted as the independent registered public accounting firm for the Company in 2004 and
it is anticipated that such firm will be similarly appointed to act in 2005. The Audit
Committee is solely responsible for the selection, retention, oversight and, when
appropriate, termination of the Companys 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, 2004 and 2003 were as follows:
|
2004
|
|
2003
|
|
Audit Fees (1) |
|
|
$ | 80,500 |
|
$ | 70,300 |
|
Audit-Related Fees (2) | | |
| 5,570 |
|
| 15,965 |
|
Tax Fees (3) | | |
| 22,798 |
|
| 19,433 |
|
All Other Fees | | |
| -- |
|
| -- |
|
|
| |
| |
Total | | |
$ | 108,868 |
|
$ | 105,698 |
|
|
| |
| |
(1) |
Audit
of annual financial statements and review of financial statements included in
Forms 10-Q. |
(2) |
Due
diligence and accounting consultations. |
(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 Committees pre-approval policies do not permit the delegation of
the Audit Committees responsibilities to management. During 2004, no fees to the
independent registered public accounting firm were approved pursuant to the de minimis
exception under the Securities and Exchange Commissions rules.
Shareholder Proposals
Proposals
that shareholders of the Company intend to present at and have included in the
Companys proxy statement for the 2006 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 5, 2005. In addition, a shareholder
who otherwise intends to present business at the 2006 annual meeting (including nominating
persons for election as directors) must comply with the requirements set forth in the
Companys 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 2006 annual meeting but do
not intend to include in the Companys proxy statement for such meeting) prior to
February 11, 2006, then the notice will be considered untimely and the Company will
not be required to present such proposal at the 2006 annual meeting. If the Board chooses
to present such proposal at the 2006 annual meeting, then the persons named in proxies
solicited by the Board for the 2006 annual meeting may exercise discretionary voting power
with respect to such proposal.
18
Certain Transactions
Mr. Warden
serves as a director of the Picker Institute. During 2004, the Company advanced
to the Picker Institute $300,000 to fund designated research projects, which as
of the date of this proxy statement have not yet commenced. In addition, the
Company is a party to a support services agreement with the Picker Institute
under which the Company conducts the annual Picker Institute International
Symposiums. Under the support services agreement, the Picker Institute receives
a portion of the gross receipts of each symposium, which amounted to $15,000 in
2004. In addition, the Company is a party to an agreement with the Picker
Institute under which the Company markets certain products under the Picker
Institute Symposium Educational Products name. Under this agreement, the Picker
Institute receives a portion of the net receipts from the sales of such
products, which amounted to approximately $12,000 in 2004.
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
Companys 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 Companys 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
/s/ Patrick E. Beans
Patrick
E. Beans Secretary |
April 4, 2005
19
APPENDIX A
NATIONAL RESEARCH
CORPORATION
2004 NON-EMPLOYEE DIRECTOR
STOCK PLAN
1.
Purpose. The purpose of the National Research Corporation 2004
Non-Employee Director Stock Plan (the Plan) is to promote
the best interests of National Research Corporation (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.
2.
Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the Committee),
subject to review by the Board of Directors (the Board).
The Committee may adopt such rules and regulations for carrying out
the Plan as it may deem proper and in the best interests of the
Company. The interpretation by the Board of any provision of the Plan
or any related documents shall be final.
3.
Stock Subject to the Plan. Subject to adjustment in accordance with the
provisions of Section 7, the total number of shares of common stock,
$.001 par value, of the Company (Common Stock) available
for issuance under the Plan shall be 250,000. Shares of Common Stock
to be delivered under the Plan shall be made available from presently
authorized but unissued Common Stock or authorized and issued shares
of Common Stock reacquired and held as treasury shares, or a
combination thereof. In no event shall the Company be required to
issue fractional shares of Common Stock under the Plan. Whenever
under the terms of the Plan a fractional share of Common Stock would
otherwise be required to be issued, there shall be paid in lieu
thereof one full share of Common Stock.
4.
Eligible Directors. Each member of the Board who is not an employee of
the Company or any subsidiary of the Company (each an Outside
Director) shall be eligible to receive shares of Common Stock
under the Plan.
5.
Director Grants.
|
a.
Initial Grant. On May 21, 2004, each Outside Director shall automatically
be granted a one-time nonqualified stock option to purchase 11,000
shares of Common Stock (the Initial Grant Date);
provided, however, that in the event the shareholders of the Company
fail to approve the Plan at the 2005 annual meeting of shareholders,
the options granted pursuant to this Section 5(a) shall be deemed to
be null and void.
|
|
b.
Annual Grants. On the date of the Companys 2005 annual meeting of
shareholders and thereafter on the date of each succeeding annual
meeting of shareholders of the Company (the Annual Grant Date),
an Outside Director, if reelected or retained as an Outside Director
at such meeting, shall automatically be granted a nonqualified stock
option to purchase 12,000 shares of Common Stock.
|
|
c.
Discretionary Grants. The Committee and/or the Board is hereby authorized
to grant at any time (the Discretionary Grant Date) such
additional nonqualified stock options to the Outside Directors as it
deems desirable, in its sole discretion; provided, however, that in
the event the Committee and/or the Board grants any such additional
options prior to shareholder approval of the Plan at the 2005 annual
meeting of shareholders and the shareholders fail to approve the Plan
at such meeting, the options granted pursuant to this Section 5(c)
shall be deemed to be null and void. The terms Initial Grant
Date, Annual Grant Date and Discretionary
Grant Date shall be hereinafter collectively referred to as the
Grant Date.
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A-1
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d.
Option Terms. The exercise price of each option granted under the Plan
shall be the Fair Market Value (as defined below) of a share of
Common Stock on the Grant Date, which shall be payable at the time of
exercise in cash, previously acquired shares of Common Stock valued
at their Fair Market Value or such other forms or combinations of
forms as the Board or the Committee may approve. The term Fair
Market Value as used herein shall mean the last sale price of
the Common Stock as reported on The Nasdaq Stock Market on the Grant
Date, or if no such sale shall have been made on that day, on the last
preceding day on which there was such a sale.
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An
option may be exercised in whole or in part, from time to time commencing one year after
the Grant Date (the Vesting Date), subject to the following limitations:
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i.
If an Outside Directors status as an Outside Director of the Company
terminates because of death prior to the Vesting Date, the option shall
become immediately exercisable in full and may be exercised for a period
of three years after the date of death.
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ii.
If for any reason other than death an Outside Director ceases to be an
Outside Director of the Company prior to the Vesting Date, the option
shall be canceled as of the date of such termination.
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iii.
If an Outside Director ceases to be an Outside Director of the Company for
any reason after the Vesting Date, the option shall expire ten years after
the Grant Date or if earlier, three years after termination of Outside
Director status.
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6.
Restrictions on Transfer. Options granted under the Plan shall not be
transferable other than by will or the laws of descent and distribution,
except that an Outside Director may, to the extent allowed by the Board or
the Committee, and in a manner specified by the Board or the Committee,
(a) designate in writing a beneficiary to exercise the option after the
Outside Directors death or (b) transfer any option.
7.
Adjustment Provisions. 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 Plan, the number of shares to be issued pursuant to Section 5(b)
hereof, 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 Plan.
8.
Amendment of Plan. The Board shall have the right to amend the Plan at
any time or from time to time in any manner that it may deem appropriate.
A-2
9.
Withholding. The Company may defer making payments under the 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 Outside Director shall be entitled to
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 shall be paid to the Outside Director in cash. Shares so withheld
shall be valued at Fair Market Value on the regular business day
immediately preceding the date such shares would otherwise be transferred
hereunder.
10.
Documentation of Awards. Awards made under the Plan shall be evidenced by
written agreements or such other appropriate documentation as the Board or
the Committee may prescribe. The Board and/or the Committee need not
require the execution of any instrument or acknowledgement of notice of an
award under the Plan, in which case acceptance of such award by the
respective Outside Director will constitute agreement to the terms of the
award.
11.
Governing Law. The Plan, all awards hereunder, and all determinations
made and actions taken pursuant to the Plan shall be governed by the
internal laws of the State of Wisconsin and applicable federal law.
12.
Effective Date and Termination of the Plan. The Plan shall be effective
on the day of its adoption by the Board, May 21, 2004, subject to the
approval of the Plan by the shareholders of the Company within twelve
months of the effective date, and any and all grants made under the Plan
prior to such approval shall be subject to such approval. The Plan shall
terminate on such date as may be determined by the Board.
A-3
V PLEASE SIGN, DATE
AND RETURN USING THE ENVELOPE PROVIDED V
NATIONAL RESEARCH
CORPORATION
2005 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints
Michael D. Hays and Patrick E. Beans, and each of them, as Proxies with the power of
substitution (to act jointly or if only one acts then by that one) and hereby
authorizes them to represent and to vote as designated below all of the shares of
Common Stock of National Research Corporation held of record by the undersigned on
March 21, 2005, at the annual meeting of shareholders to be held on May 5, 2005, or
any adjournment or postponement thereof.
This proxy when properly executed
will be voted in the manner directed herein by the undersigned shareholder. If no
direction is made, this proxy will be voted "FOR" the election of the Board's nominees.
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1. |
ELECTION OF DIRECTORS: |
1. |
JoAnn M. Martin |
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(Terms expiring at the 2008 Annual Meeting) |
2. |
Paul C. Schorr III |
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[_] |
FOR the nominees listed |
[_] |
WITHHOLD AUTHORITY |
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above (except as specified below). |
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to vote for the nominees listed above. |
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(Instructions:
To withhold authority to vote for any indicated nominee(s), write the name(s) of
the nominee(s) in the box provided to the right.) |
2. |
APPROVAL
OF THE NATIONAL RESEARCH CORPORATION 2004 NON-EMPLOYEE DIRECTOR STOCK PLAN. |
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. |
IN
THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING. |
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Check appropriate box
Indicate changes below:
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Date _________________, 2005 |
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Address Change? [_] |
Name Change? [_] |
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[_] Please check this box if you plan to attend
the Annual Meeting. Number of persons
attending: _____.
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__________________________________________________
(Registered Owner)
__________________________________________________
(Registered Owner if held jointly) |
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Signature(s)
in Box Please sign exactly as name
appears hereon. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person. |