| Small & Micro cap project

National Research Corporation (NRC) : Sign of Moat, Owner-operator & notable compensation structure

by | Nov 10, 2019

National Research Corporation (NRC)

M.Cap: $1.4 billion

The company is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience, while also increasing patient engagement and customer loyalty for healthcare organizations.

Sign of Moat

Subscription-based revenue

The Company derives 89% of total revenue from renewable annual subscription-based service agreements with its customers.


1) Owner-operator – no salary hike since 2005, very low compensation package

Michael D. Hays has served as CEO and director since he founded the company in 1981.

  • His base salary is $127K, which has remained the same since 2005 as per his request.
  • Over the years Mr. Hays, for estate planning purposes, gifted and/or transferred almost all of his directly owned shares to two trusts for the benefit of his family, The K/I/E Trust under an agreement dated October 24, 2018, and the Amandla MK Trust. As of February 25, 2019, approximately 50% of the outstanding common stock was owned by the trusts.
  • Hays’ salary and overall compensation are significantly below the median level paid to chief executive officers of comparable companies.

2) Salary – with the exception of the top three executives, all salaries are less than $100K

  • During 2018, the company had no other executive officers (except top three executives), as defined in Rule 3b-7 of the Securities Exchange Act of 1934, whose total compensation exceeded $100,000. 
  • The median of the annual total compensation of all associates of the company was reasonably estimated to be $61,485.
  • The company claims that it has historically attempted to minimize base salary increases in order to limit its exposure if it does not meet its objectives for financial growth under its incentive compensation program. Consistent with this practice, the committee has left the base salaries of Mr. Hays (CEO), Mr. Karas (CFO) and Mr. Jackson (President) unchanged since 2016.
  • The ratio of the annual total compensation of CEO to the median of the annual total compensation of all other associates is estimated to be 4.71 to 1.

3) Others

The company does not provide many details – retention rate and break-up of clients are not available. In fact, the 10-K is just 55 pages.


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