SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
NATIONAL RESEARCH CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
NATIONAL RESEARCH CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 26, 2001
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, April 26, 2001, at 10:00 A.M.,
local time, at our corporate offices located at 1245 "Q" Street, Lincoln,
Nebraska 68508, for the following purposes:
1. To elect one director to hold office until the 2004 annual meeting
of shareholders and until his successor is duly elected and qualified.
2. 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 9, 2001 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
Patrick E. Beans
Secretary
Lincoln, Nebraska
March 29, 2001
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 April 26, 2001
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 March 29, 2001 in connection with a solicitation of
proxies by the Board for use at the annual meeting of shareholders to be held on
Thursday, April 26, 2001, at 10:00 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 person nominated for election as a director
referred to herein 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 one
director, 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 9, 2001 are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 7,039,998 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 one director to hold office until the 2004 annual
meeting of shareholders and until his successor is duly elected and qualified.
Unless shareholders otherwise specify, the shares represented by the proxies
received will be voted in favor of the election as director of the person named
as a nominee herein. The Board has no reason to believe that the listed nominee
will be unable or unwilling to serve as a director if elected. However, in the
event that the 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. The 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 one director. Votes will be tabulated by an inspector of
elections appointed by the Board.
The following sets forth certain information, as of March 9, 2001,
about the Board's nominee 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
Term expiring at the 2004 Annual Meeting
Patrick E. Beans, 43, has served as Vice President, Treasurer and Chief
Financial Officer of the Company since August 1997, as a director since October
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.
THE BOARD RECOMMENDS THE FOREGOING NOMINEE FOR ELECTION AS DIRECTOR AND URGES
EACH SHAREHOLDER TO VOTE "FOR" SUCH NOMINEE. SHARES OF COMMON STOCK REPRESENTED
BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR" SUCH NOMINEE.
Directors Continuing in Office
Term expiring at the 2002 Annual Meeting
Paul C. Schorr, III, 64, 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 of Austins Steaks
& Saloon, Inc. and Ameritas Life Insurance Corp.
Terms expiring at the 2003 Annual Meeting
Michael D. Hays, 46, has served as President and Chief Executive
Officer and as a director since he founded the Company in 1981. Prior thereto,
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, 48, has served as a director of the Company since
December 1997. Mr. Nunnelly has been the Group President, Financial and
Administrative Solutions Division of the Information Technology Business of
McKessonHBOC, a leader in the healthcare information industry, since January
1999. Mr. Nunnelly previously served as the Senior Vice President and General
Manager for three business units (Amherst Product Group, the Managed Care Group
and the Springfield Company Group) of McKessonHBOC since 1988, and has also
served McKessonHBOC in various other positions during his seventeen year tenure
with the firm, most recently, National Vice President of Sales.
-2-
BOARD OF DIRECTORS
General
The Board has standing Audit and Compensation Committees. The Audit
Committee's primary duties and responsibilities are to: (1) serve as an
independent and objective party to monitor the Company's financial reporting
process and internal control system; (2) review and appraise the audit efforts
of the Company's independent auditors; and (3) provide an open avenue of
communication among the independent auditors, financial and senior management,
and the Board. The Audit Committee presently consists of John N. Nunnelly
(Chairman) and Paul C. Schorr, III, each of whom is independent as defined in
Rule 4200(A)(15) of the listing standards of the National Association of
Securities Dealers, Inc. The Audit Committee held three meetings in 2000.
The Compensation Committee reviews and recommends to the Board the
compensation structure for the Company's 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 "Equity Incentive Plan") and the National Research
Corporation Director Stock Plan (the "Director Plan"). Paul C. Schorr, III
(Chairman) and John N. Nunnelly are the current members of the Compensation
Committee. The Compensation Committee held four meetings in 2000.
The Board has no standing nominating committee. The Board selects the
director nominees to stand for election at the Company's annual meetings of
shareholders and to fill vacancies occurring on the Board. The Board will
consider nominees recommended by shareholders, but has no established procedures
which shareholders must follow to make a recommendation. The Company's By-Laws
also provide for shareholder nominations of candidates for election as
directors. These provisions require such nominations to be made pursuant to
timely notice (as specified in the By-Laws) in writing to the Secretary of the
Company. The shareholder's notice must contain information relating to the
nominee which is required to be disclosed by the Company's By-Laws and the
Securities Exchange Act of 1934.
The Board held four meetings in 2000. Each director attended all of the
meetings of the Board and all of the meetings held by all committees of the
Board on which such director served during the year.
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.
Additionally, directors are reimbursed for out-of-pocket expenses associated
with attending meetings of the Board and committees thereof.
Pursuant to the Director Plan, each director who is not an 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.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing
independent, objective oversight of the Company's accounting functions and
internal controls. The Audit Committee acts under a written charter first
adopted and approved by the Board in April 2000. A copy of the Audit Committee
Charter is attached to this Proxy Statement as Appendix A.
This year the Audit Committee reviewed the Audit Committee Charter and
made a number of changes to reflect the new Audit Committee standards set forth
in Securities and Exchange Commission ("SEC") and Nasdaq regulations. Generally,
these charges reflect increased specificity in the Audit Committee Charter
rather than changes in the Audit Committee's practices.
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board. In fulfilling its responsibilities, the Audit Committee
has reviewed and discussed the audited financial statements contained in the
2000 Annual Report on Form 10-K with the Company's 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 Company's
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 considered whether
the independent auditors' provision of non-audit services is compatible with
maintaining the independent auditors' independence. The fees to the independent
auditors for 2000 were as follows:
Audit Fees $43,690
Financial Information Services
Design and Implementation Fees --
All Other Fees 20,392
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, 2000, 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
John N. Nunnelly, Chairman
Paul C. Schorr, III
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 9, 2001 by: (i) each director
and nominee; (ii) each of the executive officers named in the Summary
Compensation Table set forth below; (iii) all of the directors, nominees and
executive officers (including the executive officers named in the Summary
Compensation Table) as a group; and (iv) each person or other entity known by
the Company to own beneficially more than 5% of the Common Stock. Except as
otherwise indicated in the footnotes, each of the holders listed below has sole
voting and investment power over the shares beneficially owned.
Shares of Percent of
Common Stock Common Stock
Name of Beneficial Owner Beneficially Owned Beneficially Owned
------------------------ ------------------ ------------------
Michael D. Hays(1)....................... 4,857,535 69.0%
Jona S. Raasch........................... 71,040(2)(5) *
Patrick E. Beans......................... 59,900(3)(5) *
Paul C. Schorr, III...................... 12,000(4)(5) *
John N. Nunnelly......................... 7,800(5) *
All directors, nominees and executive
officers as a group (5 persons).......... 5,008,275(5) 71.1%
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* Denotes less than 1%.
(1) The address of Michael D. Hays is 1245 "Q" Street, Lincoln, Nebraska
68508.
(2) Includes 1,000 shares owned by Ms. Raasch's husband, 1,350 shares held
by Ms. Raasch as power of attorney for her father and 100 shares owned
by Ms. Raasch's minor children.
(3) Includes 1,500 shares held by Mr. Beans as custodian for his minor
children and 19,975 shares owned by four trusts for which Mr. Beans is
the sole trustee.
(4) Includes 1,000 shares owned by The Schorr Family Company, Inc., which
Mr. Schorr manages, and 8,000 shares owned by Mr. Schorr's wife.
(5) Includes shares of Common Stock that may be purchased under currently
exercisable stock options, as follows: Ms. Raasch, 2,500 shares; Mr.
Beans, 3,750 shares; Mr. Schorr, 3,000 shares; Mr. Nunnelly, 3,000
shares; and all directors, nominees and executive officers as a group,
12,250 shares.
-5-
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information concerning the
compensation earned in each of the last two fiscal years by the Company's Chief
Executive Officer and each of the Company's two other most highly compensated
executive officers whose total cash compensation exceeded $100,000 in the fiscal
year ended December 31, 2000. The persons named in the table are sometimes
referred to herein as the "named executive officers."
Summary Compensation Table
Long-Term Compensation
Awards Payouts
------ -------
Annual Compensation Securities Long-Term
Other Annual Underlying Incentive All Other
Name and Compensation Stock Compensation Compensation
Principal Position Year Salary($) Bonus($) ($)(1) Options(#) Payouts($) ($)
------------------ ---- --------- -------- ------------ ---------- ------------ ------------
Michael D. Hays 2000 $140,000 $43,750 -- -- -- $1,523(2)
President and Chief 1999 140,000 -- -- -- -- 1,523
Executive Officer 1998 140,000 -- -- -- -- 1,523
Jona S. Raasch 2000 120,000 37,500 -- -- -- --
Vice President and Chief 1999 120,000 -- -- 7,500 -- --
Operations Officer 1998 115,997 30,000 -- -- -- --
Patrick E. Beans 2000 100,000 28,125 -- -- -- --
Vice President, Treasurer 1999 100,000 -- -- 11,250 -- --
and Chief Financial Officer 1998 98,853 22,500 -- -- -- --
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(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 $50,000 or 10% of the sum of such officer's salary and bonus in each respective year.
(2) Premiums for disability insurance paid by the Company for the benefit of Mr. Hays.
Stock Options
The Company has in effect the Equity Incentive Plan pursuant to which
options to purchase Common Stock may be granted to employees of the Company,
including officers and employee-directors. No named executive officer was
granted options in 2000.
The following table sets forth information regarding the exercise of
stock options by the named executive officers during 2000 and the year-end value
of unexercised options held by such persons. Mr. Hays did not hold any options
to acquire Common Stock as of December 31, 2000 and is accordingly not reflected
in the table.
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Aggregated Option Exercises in 2000
Fiscal Year and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal In-the-Money Options
Acquired on Value Year-End(#) at Fiscal Year-End($)(1)
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
Jona S. Raasch........ -- -- 2,500 5,000 -- (2)
Patrick E. Beans...... -- -- 3,750 7,500 -- (2)
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(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.
(2) Not applicable. The fair market value of the underlying Common Stock at fiscal year-end was equal to the
exercise price of the options.
Report on Executive Compensation
The Compensation Committee of the Board is responsible for all aspects
of the Company's compensation package offered to its corporate officers,
including the named executive officers. The following report was prepared by
members of the Compensation Committee.
The Company's 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 Company's
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 an effective tool for fostering the creation of
shareholder value and the execution of the Company's 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
Company's executive officers so that their interests are closely aligned with
the interests of shareholders.
During 1996, 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 Company's
consultant compared the compensation for each Company executive with general
market data for individuals with comparable job responsibilities. The Company's
consultant summarized its conclusions on Company executive compensation in a
report finalized in late 1997. The results of this study have provided, and will
continue to provide in 2001, the framework for determining compensation for
executives of the Company.
The key elements of the Company's executive compensation program
consist of base salary, annual bonus and stock options, which, based on the
Company's consultant's recommendations, approximate 50%, 25% and 25%,
respectively, of aggregate compensation. A general description of
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the elements of the Company's compensation program, including the bases for the
compensation awarded to the Company's Chief Executive Officer for 2000, 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 Company's executive officers are
generally positioned at the midpoint of 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 Company's exposure if
performance targets are not met.
Annual Bonus. The Company's executive officers are eligible for annual
cash bonus awards under the Company's 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 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.
Stock Options. The 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 Company's management and its shareholders. The
Equity Incentive Plan is 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 Company's
employees, including key executive officers, are consistent with the Company's
best interest and the Company's 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
Company's employ.
The Compensation Committee did not grant any stock options to executive
officers in 2000 because the executive officers did not meet their individual
performance goals for 1999. See above under "--Stock Options." The Compensation
Committee does not intend to grant stock options to key executive officers in
2001 based upon individual performance criteria for 2000.
Chief Executive Officer Compensation. During 2000, the Company's Chief
Executive Officer, Michael D. Hays, was paid a salary of $140,000 and was
awarded a bonus of $43,750. In evaluating Mr. Hays' performance during 2000, the
Compensation Committee considered the Company's overall financial performance
and the achievement of long-term objectives of the Company.
Section 162 (m) Limitation. The Company anticipates that all 2001
compensation to executives will be fully deductible under Section 162(m) of the
Internal Revenue Code. Therefore, the Company
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determined that a policy with respect to qualifying compensation paid to
executive officers for deductibility is not necessary.
NATIONAL RESEARCH CORPORATION
COMPENSATION COMMITTEE
Paul C. Schorr, III, Chairman
John N. Nunnelly
PERFORMANCE INFORMATION
The following graph compares on a cumulative basis changes since
October 10, 1997 (the date on which the Common Stock was first publicly traded)
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
October 10, 1997 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.
[GRAPHIC OMITTED]
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October 10, December 31, December 31, December 31, December 31,
1997 1997 1998 1999 2000
- --------------------------------------------------------------------------------------------------------------
NATIONAL RESEARCH CORPORATION $100 $44.17 $31.67 $26.67 $26.67
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NASDAQ STOCK MARKET (U.S.) INDEX 100 90.52 127.65 237.23 142.73
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RUSSELL 2000 INDEX 100 96.46 94.01 113.99 99.64
- --------------------------------------------------------------------------------------------------------------
-9-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's 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, 2000 all of its directors and
executive officers complied with the Section 16(a) filing requirements.
MISCELLANEOUS
Independent Auditors
KPMG LLP acted as the independent auditors for the Company in 2000 and
it is anticipated that such firm will be similarly appointed to act in 2001.
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.
Shareholder Proposals
Proposals which shareholders of the Company intend to present at and
have included in the Company's proxy statement for the 2002 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
November 29, 2001. In addition, a shareholder who otherwise intends to present
business at the 2002 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 2002 annual meeting but do not intend to include in the
Company's proxy statement for such meeting) prior to February 9, 2002, then the
notice will be considered untimely and the Company will not be required to
present such proposal at the 2002 annual meeting. If the Board chooses to
present such proposal at the 2002 annual meeting, then the persons named in
proxies solicited by the Board for the 2002 annual meeting may exercise
discretionary voting power with respect to such proposal.
-10-
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 employees 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.
By Order of the Board of Directors
NATIONAL RESEARCH CORPORATION
Patrick E. Beans
Secretary
March 29, 2001
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APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the
Corporation to any governmental body or the public; the Corporation's
systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established; and
the Corporation's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Corporation's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants.
Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of two or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
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III. MEETINGS
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants, if requested, in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be
discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Documents/Reports Review
------------------------
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion or review
rendered by the independent accountants.
3. Review the 10-Q prior to its filing or prior to the release of
earnings. The Chair of the Committee may represent the entire
Committee for purposes of this review.
Independent Accountants
-----------------------
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and
discuss with the accountants all significant relationships the
accountants have with the Corporation to determine the accountants'
independence.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
Financial Reporting Processes
-----------------------------
6. In consultation with the independent accountants, review the integrity
of the organization's financial reporting processes.
7. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
8. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants and management.
-13-
V. CONTINUOUS ACTIVITIES - GENERAL
1. Provide an open avenue of communication between the independent
auditor and the Board of Directors.
2. Meet two times per year or more frequently as circumstances require.
The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.
3. Confirm and assure the independence of the independent auditor (at
April meeting).
4. Inquire of management and the independent auditor about significant
risks or exposures and assess the steps management has taken to
minimize such risk.
5. Consider and review with management and the independent auditor.
a. Significant findings during the year, including the Status of
Previous Audit Recommendations (at April meeting).
b. Any difficulties encountered in the course of audit work
including any restrictions on the scope of activities or access
to required information.
c. Any changes required in the planned scope of the Audit plan.
6. Meet periodically with the independent auditor and management in
separate executive sessions to discuss any matters that the Committee
or these groups believe should be discussed privately with the Audit
Committee. Meetings will be set to occur at least twice a year, one
during the annual meeting and another around the mid-year meeting.
7. Instruct the independent auditor that the Board of Directors, as the
members' representative, is the auditor's client.
VI. CONTINUOUS ACTIVITIES - RE: REPORTING SPECIFIC POLICIES
1. Advise financial management and the independent auditor they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
2. Provide that financial management and the independent auditor discuss
with the audit committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be adopted by
the Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
3. Inquire as to the auditor's views about whether management's choices
of accounting principles are conservative, moderate, or aggressive
from the perspective of income, asset, and liability recognition, and
whether those principles are common practices or are minority
practices.
-14-
4. Determine, as regards new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by management.
5. Assure that the auditor's reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure
practices.
VII. SCHEDULED ACTIVITIES
1. Recommend the selection of the independent auditor for approval by the
Board of Directors, approve the compensation of the independent
auditor, and review and approve the discharge of the independent
auditor.
2. Review with the independent auditor the audit scope and plan of the
independent auditor.
3. Review with management and the independent auditor the results of
annual audits and related comments deemed appropriate including:
a. Any significant changes required in the independent auditor's
audit plans.
b. Any difficulties or disputes with management encountered during
the course of the audit.
c. Other matters related to the conduct of the audit which are to be
communicated to the Audit Committee under Generally Accepted
Auditing Standards.
4. Arrange for the independent auditor to be available to the full Board
of Directors at least annually to help provide a basis for the
committee to recommend to the Board the appointment of the auditor.
5. Review and update the Committee's Charter annually.
-15-
NATIONAL RESEARCH CORPORATION
2001 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 9, 2001, at the annual
meeting of shareholders to be held on April 26, 2001, 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 nominee.
* PLEASE DETACH BELOW, SIGN, DATE AND RETURN USING THE ENVELOPE PROVIDED *
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NATIONAL RESEARCH CORPORATION 2001 ANNUAL MEETING
1. ELECTION OF DIRECTOR: 1 - Patrick E. Beans |_| FOR the nominee listed |_| WITHHOLD AUTHORITY
(Term expiring at the 2004 Annual Meeting) to the left (except as to vote for the nominee
specified below). listed to the left.
------------------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, write the
number of the nominee in the box provided to the right.) ---->
------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
Check appropriate box Date ___________________, 2001 NO. OF SHARES
Indicate changes below: ------------------------------------------------
Address Change? |_| Name Change? |_|
|_| Please check this box
if you plan to attend
the Annual Meeting.
Number of persons
attending: _____. ------------------------------------------------
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.