NRC HEALTH 10-K

Item 9A. Controls and Procedures   Evaluation of Disclosure Controls and Procedures   In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2020. Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, 2020.   Management ’ s Report on Internal Control over Financial Reporting   Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies of procedures may deteriorate.   Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting using the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.   The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, a copy of which is included in this Annual Report on Form 10-K.   Changes in Internal Control over Financial Reporting   There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.   Item 9B. Other Information   We have no other information to report pursuant to this item.   53 Table of Contents   PART III   Item 10. Directors, Executive Officers and Corporate Governance   The information required by this Item with respect to directors, executive officers and Section 16 compliance is included under the captions “Election of Directors,” “Corporate Governance – Committees”, “Information About Our Executive Officers” and “Delinquent Section 16(a) Reports,” respectively, in our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders (“Proxy Statement”) and is hereby incorporated herein by reference. The information required by this Item with respect to audit committees and audit committee financial experts is included under the caption “Corporate Governance” in the Proxy Statement and is incorporated herein by reference.   We have adopted a Code of Business Conduct and Ethics that applies to all of our associates, including our Chief Executive Officer and Chief Financial Officer and other persons performing similar functions. We have posted a copy of the Code of Business Conduct and Ethics on our website at www.nrchealth.com, and such Code of Business Conduct and Ethics is available, in print, without charge, to any shareholder who requests it from our Secretary. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Code of Business Conduct and Ethics by posting such information on our website at www.nrchealth.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this report.   Item 11.   Executive Compensation   The information required by this Item is included under the captions “Compensation Discussion and Analysis,” “2020 Summary Compensation Table,” “Grants of Plan-Based Awards in 2020,” “Outstanding Equity Awards at December 31, 2020,” “2020 Director Compensation,” “Compensation Committee Report,” “Corporate Governance-Transactions with Related Persons,” “Compensation Committee Interlocks and Insider Participation” and “CEO Pay Ratio” in the Proxy Statement and is hereby incorporated herein by reference.   Item 12. Security Ownership of Certain Beneficial Owners and Management and Related   Shareholder Matters   The information required by this Item with respect to security ownership of certain beneficial owners and management is included under the caption “Principal Shareholders” in the Proxy Statement and is hereby incorporated by reference.   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, 2020.   Plan Category Common Shares   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)     600,571     $ 25.31       1,610,219  (2) Equity compensation plans not approved by security holders     --       --       --   Total     600,571     $ 25.31       1,610,219       (1) Includes our 2006 Equity Incentive Plan, 2004 Director Plan, and the 2001 Equity Incentive Plan.   (2) Under the 2006 Equity Incentive Plan, we had authority to award up to 331,874 additional shares of restricted Common Stock provided that the total of such shares awarded may not exceed the total number of shares remaining available for issuance under the 2006 Equity Incentive Plan, which totaled 779,800 shares of Common Stock as of December 31, 2020. The Director Plan provides for granting options for 3,000,000 shares of Common Stock. Option awards through December 31, 2020 totaled 2,169,581 shares of Common Stock. No future awards are available under the 2001 Equity Incentive Plan due to its expiration.    54 Table of Contents   Item 13. Certain Relationships and Related Transactions, and Director Independence   The information required by this Item is included under the caption “Corporate Governance” in the Proxy Statement and is hereby incorporated by reference.   Item 14. Principal Accountant Fees and Services   The information required by this Item is included under the caption “Miscellaneous — Independent Registered Public Accounting Firm” in the Proxy Statement and is hereby incorporated by reference.   55 Table of Contents   PART IV   Item 15. Exhibits, Financial Statement Schedules   1. Consolidated financial statements. The consolidated financial statements listed in the accompanying index to the consolidated financial statements are filed as part of this Annual Report on Form 10-K.   2. Financial statement schedules. All financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements and the related notes thereto.   3. Exhibits. The exhibits listed in the exhibit index below are filed as part of this Annual Report on Form 10-K.   EXHIBIT INDEX   Exhibit Number Exhibit Description     (3.1) Amended and Restated Articles of Incorporation of National Research Corporation, effective as of 5:01 pm, CT, on April 17, 2018 [Incorporated by reference to Exhibit 3.3 to National Research Corporation ’ s Current Report on Form 8-K dated April 16, 2018 and filed on April 20, 2018 (File No. 001-35929)]       (3.2) By-Laws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.1 to National Research Corporation ’ s Current Report on Form 8-K dated May 14, 2020 and filed on May 15, 2020 (File No. 001-35929)]     (4.1) Amended and Restated Articles of Incorporation of National Research Corporation, effective as of 5:01 pm, CT, on April 17, 2018 [Incorporated by reference to Exhibit 3.3 to National Research Corporation ’ s Current Report on Form 8-K dated April 16, 2018 and filed on April 20, 2018 (File No. 001-35929)]       (4.2) By-Laws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.1 to National Research Corporation ’ s Current Report on Form 8-K dated May 14, 2020 and filed on May 15, 2020 (File No. 001-35929)]     (4.3) Description of the Securities of the Registrant [Incorporated by reference to Exhibit 4.3 to National Research Corporation ’ s Annual Report on Form 10-K for the year ended December 31, 2019 and filed on March 6, 2020 (File No. 001-35929)]     (10.1) Amended and Restated Credit Agreement dated May 28, 2020, between National Research Corporation and First National Bank of Omaha [Incorporated by reference to Exhibit 10.1 to National Research Corporation ’ s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and filed on August 7, 2020 (File No. 001-35929)]     (10.2)* National Research Corporation 2004 Non-Employee Director Stock Plan, as amended [Incorporated by reference to Appendix A to National Research Corporation ’ s Proxy Statement for the 2018 Annual Meeting of Shareholders filed on April 27, 2018 (File No. 001-35929)]     (10.3)* Form of Nonqualified Stock Option Agreement (for new associates) used in connection with the National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Exhibit 4.4 to National Research Corporation ’ s Registration Statement on Form S-8 (Registration No. 333-120530) filed on November 16, 2004]     (10.4)* Form of Nonqualified Stock Option Agreement (for officers) used in connection with the National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Exhibit 4.5 to National Research Corporation ’ s Registration Statement on Form S-8 (Registration No. 333-120530) filed on November 16, 2004]     (10.5)* Form of Restricted Stock Agreement for executive officers used in connection with the National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Exhibit 10.2 to National Research Corporation ’ s Current Report on Form 8-K dated March 19, 2005 and filed on March 23, 2005 (File No. 000-29466)]   56 Table of Contents   Exhibit Number Exhibit Description   (10.6)* Form of Restricted Stock Agreement (one year vesting) used in connection with the National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Exhibit 4.6 to National Research Corporation ’ s Registration Statement on Form S-8 (Registration No. 333-120530) filed on November 16, 2004]   (10.7)* Form of Restricted Stock Agreement (five year vesting) used in connection with the National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Exhibit 4.7 to National Research Corporation ’ s Registration Statement on Form S-8 (Registration No. 333-120530) filed on November 16, 2004]     (10.8)* Form of Nonqualified Stock Option Agreement used in connection with the National Research Corporation 2006 Equity Incentive Plan [Incorporated by reference to Exhibit (10.14) to National Research Corporation ’ s Annual Report on Form 10-K for the year ended December 31, 2006 and filed on April 2, 2007 (File No. 000-29466)]     (10.9)* Form of Restricted Stock Agreement used in connection with the National Research Corporation 2006 Equity Incentive Plan   [Incorporated by reference to Exhibit (10.15) to National Research Corporation ’ s Annual Report on Form 10-K for the year ended December 31, 2006 and filed on April 2, 2007 (File No. 000-29466)]     (10.10)* National Research Corporation 2001 Equity Incentive Plan [Incorporated by reference to Appendix A to National Research Corporation ’ s Proxy Statement for the 2002 Annual Meeting of Shareholders filed on April 3, 2002 (File No. 000-29466)]]     (10.11)* National Research Corporation 2006 Equity Incentive Plan, [Incorporated by reference to Appendix A to National Research Corporation ’ s Proxy Statement for the 2006 Annual Meeting of Shareholders filed on April 3, 2006 (File No. 000-29466)]     (10.12)* Form of Grant used in connection with the National Research Corporation 2004 Non-Employee Director Stock Plan, as amended [Incorporated by reference to Exhibit 10.2 to National Research Corporation ’ s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and filed on August 7, 2020 (File No. 001-35929)]     (21)** Subsidiary of National Research Corporation     (23)** Consent of Independent Registered Public Accounting Firm     (31.1)** Certification of the Chief Executive Officer pursuant to Section   302 of the Sarbanes-Oxley Act of 2002     (31.2)** Certification of the Chief Financial Officer pursuant to Section   302 of the Sarbanes-Oxley Act of 2002     (32)** Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002         (101)** Financial statements from the Annual Report on Form 10-K of National Research Corporation for the year ended December 31, 2020, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, (vi) the Notes to the Consolidated Financial Statements, and (vii) document and entity information.   (104)** Cover Page Interactive Data File (formatted in the Inline XBRL and contained in Exhibit 101).   * A management contract or compensatory plan or arrangement.   ** Filed herewith.   Item 16. Form 10-K Summary   None.   57 Table of Contents   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS       Page in this Form 10-K     Report of Independent Registered Public Accounting Firm 27     Consolidated Balance Sheets as of December 31, 2020 and 2019 29     Consolidated Statements of Income for the Three Years Ended December 31, 2020 30     Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 2020 31     Consolidated Statements of Shareholders ’  Equity for the Three Years Ended December 31, 2020 32     Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2020 33     Notes to Consolidated Financial Statements 34     All other financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements and notes thereto.   58 Table of Contents   SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 5th day of March 2021.     NATIONAL RESEARCH CORPORATION             By: /s/ Michael D. Hays       Michael D. Hays       Chief Executive Officer and President     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.     Signature   Title   Date           /s/ Michael D. Hays   Chief Executive Officer, President and Director   March 5, 2021 Michael D. Hays   (Principal Executive Officer)                         /s/ Kevin R. Karas   Senior Vice President Finance, Chief Financial   March 5, 2021 Kevin R. Karas   Officer, Treasurer and Secretary (Principal         Financial and Accounting Officer)               /s/ Donald M. Berwick   Director   March 5, 2021 Donald M. Berwick                   /s/ JoAnn M. Martin   Director   March 5, 2021 JoAnn M. Martin                   /s/ John N. Nunnelly   Director   March 5, 2021 John N. Nunnelly           59