UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

SCHEDULE 14A 

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)

Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐

Check the appropriate box:

National Research Corporation

(Name of Registrant as Specified In Its Charter) 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

National Research Corporation

D/B/A NRC Health

NOTICE OF ANNUALSPECIAL MEETING OF SHAREHOLDERS

To Be Held MayNovember 9, 2017[●],2017

To the Shareholders of

National Research Corporation:

NOTICE IS HEREBY GIVEN that the Annuala Special Meeting of Shareholders of National Research Corporation (the “Company,” “we,” “us” or “our”) will be held on Tuesday, May 9,[●], November [●], 2017, at 3:00 P.M.[●], local time, at the Embassy Suites hotelour corporate offices located at 1040 P1245 Q Street, Lincoln Nebraska 68508, for the following purposes:

1.     To elect two directorsapprove an amendment to hold office until the 2020 annual meetingCompany’s Amended and Restated Articles of shareholdersIncorporation to effect a reverse stock split of our class B common stock, with such split being exempted from the application of any provision in our Amended and until their successors are duly electedRestated Articles of Incorporation to the contrary, including, without limitation, Section B(4) of Article 2 (the “Reverse Split”), at a ratio of 1-for-1,764,560 and qualified.the repurchase of the resulting fractional shares held by each holder of class B common stock with less than one share of class B common stock after the Reverse Split.

2.     To ratifyapprove an amendment to the appointmentCompany’s Amended and Restated Articles of KPMG LLP asIncorporation to effect a forward stock split of the remaining class B common stock, with such split being exempted from the application of any provision in our independent registered public accounting firm for 2017.Amended and Restated Articles of Incorporation to the contrary, including, without limitation, Section B(4) of Article 2 (the “Forward Split” and collectively with the Reverse Split and the repurchase of the resulting fractional shares, the “Proposed Transaction”), at a ratio of 1,764,560-for-1 immediately following the Reverse Split.

3.As a result of the      To conduct an advisory voteProposed Transaction, (a) each shareholder owning less than one share of class B common stock after the Reverse Split will receive $53.44 in cash, without interest, for each class B common share owned by such shareholder immediately prior to approve the compensationReverse Split and will no longer be a holder of class B common stock, and (b) the sole remaining holder of one or more shares of class B common stock after the Reverse Split, Michael D. Hays, our founder, chief executive officer and a director, will continue to hold class B common stock equal to the number of shares of class B common stock he held immediately prior to the effective date of the Reverse Split. The Proposed Transaction is designed to eliminate the current public market trading confusion relating to the Company’s two classes of common stock (the class A common stock and class B common stock) and to provide a timely and cost-effective liquidity event for the holders of our named executive officersclass B common stock, other than Mr. Hays. Mr. Hays agreed to not have his shares of class B common stock be cashed out in the Reverse Split so the Company could maintain a moderate debt burden as disclosed ina result of the Proposed Transaction. Forms of the proposed amendments to the Company’s Amended and Restated Articles of Incorporation to effect the Reverse Split and the Forward Split are attached as Appendix A and Appendix B, respectively, to the accompanying proxy statement. Although both the Reverse Split and the Forward Split will be voted on separately, the Company will not implement either the Reverse Split or the Forward Split unless both are approved by the Company’s shareholders and the Board of Directors gives final approval to implement them.

4.The Company      To conduct an advisory vote on’s Board of Directors has carefully considered and unanimously determined that the frequencyProposed Transaction is advisable, fair to and in the best interests of the advisory shareholderCompany’s shareholders, and recommends that the Company’s shareholders vote on“FOR” the compensation of our named executive officers.Reverse Split and“FOR”the Forward Split.

5.     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 MarchOctober 14,[●], 2017, 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 card for the meeting and a proxy statement are enclosed herewith.

Lincoln, Nebraska

April 3,October [●], 2017

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on May 9, 2017November [●], 2017. The National Research Corporation notice of meeting, proxy statement and proxy card for the 2017Special Annual Meeting of Shareholders and,as well asa Schedule 13E-3 filed by the 20Company on 16[●], 2017, Annual Report to Shareholders are available at https://www.rdgir.com/national-research-corporation.

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.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE PROPOSED TRANSACTION, PASSED UPON THE MERITS OR FAIRNESS OF THE PROPOSED TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

National Research Corporation

D/B/A NRC Health

1245 Q Street

Lincoln, Nebraska 68508

PROXY STATEMENT

FORFOR

ANNUALSPECIAL MEETING OF SHAREHOLDERS

To Be Held May 9, 2017November [●], 2017

This proxy statement is being furnished to shareholders by the Board of Directors (the “Board”) of National Research Corporation, doing business as NRC Health (the “Company”“Company,” “we,” “us” or “our”), beginning on or about April 3,October [●], 2017, in connection with a solicitation of proxies by the Board for use at the AnnualSpecial Meeting of Shareholders to be held on Tuesday, May 9,[●], November [●], 2017, at 3:00 P.M.[●], local time, at the Embassy Suites hotelour corporate offices located at 1040 P1245 Q Street, Lincoln Nebraska 68508, and all adjournments or postponements thereof (the “Annual“Special Meeting”), for the purposes set forth in the attached Notice of AnnualSpecial Meeting of Shareholders.

Execution of a proxy given in response to this solicitation will not affect a shareholder’s right to attend the AnnualSpecial Meeting and to vote in person. Presence at the AnnualSpecial 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 card, 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 as follows:

Other than the election of two directors, the ratificationapproval of the appointment of KPMG LLP as our independent registered public accounting firm for 2017, the advisory vote to approve the compensation of our named executive officersReverse Split and the advisory vote on the frequency of the advisory shareholder vote on the compensation of our named executive officers,Forward Split, the Board has no knowledge of any matters to be presented for action by the shareholders at the AnnualSpecial Meeting.

Only holders of record of the Company’s class A common stock and class B common stock (sometimes referred to collectively as the “Common Stock”) at the close of business on March 14,October [●], 2017 (the “Record Date”) are entitled to vote at the AnnualSpecial Meeting. On that date, the Company had outstanding and entitled to vote: (a) 20,913,343[●] shares of class A common stock, each of which is entitled to one-one-hundredth (1/100^th) of one vote per share, with an aggregate of 209,133.43[●] votes; and (b) 3,543,463[●] shares of class B common stock, each of which is entitled to one vote per share, with an aggregate of 3,543,463[●] votes. The presence of a majority of the votes entitled to be cast by each “voting group” shall constitute a quorum for the purpose of transacting business at the AnnualSpecial Meeting. See the section entitled “Meeting and Voting Information— Voting Groups; Required Votes; Quorum; Abstentions; Broker Non-Votes” for additional information about the voting groups entitled to vote at the Special Meeting. Abstentions and broker non-votes will be counted as present in determining whether there is a quorum.quorum of each voting group.

Although both the Reverse Split and the Forward Split will be voted on separately, the Company will not implement either the Reverse Split or the Forward Split unless both are approved by all required votes of the Company’s shareholders and the Board gives final approval to implement them.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE PROPOSED TRANSACTION, PASSED UPON THE MERITS OR FAIRNESS OF THE PROPOSED TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

ELECTIONTABLE OF CONTENTS

SUMMARY TERM SHEET

The following is a summary of the material terms of the Proposed Transaction, which terms are described in greater detail elsewhere in this proxy statement. You are urged to read carefully the remainder of this proxy statement for a more complete description of all material information regarding the Proposed Transaction. We have included section references to direct you to a more complete description of the topics described in this summary.

The Company

The Company is a Wisconsin corporation headquartered in Lincoln, Nebraska. ’s By-Laws provide that the directors shall beThe Company’s outstanding stock is divided into threetwo classes with staggered terms of three years each. At the Annual Meeting, the shareholders will elect two directors to hold office until the 2020 annual meeting of shareholders and until their successors are duly elected and qualified. Unless shareholders otherwise specify, the shares represented by the proxies received will be voted in favor of the election as directors of the two persons named as nominees herein. The Board has no reason to believe that the listed nominees will be unable or unwilling to serve as directors if elected.  However, in the event that any nominee should be unable to serve or for good cause will not serve, the shares represented by proxies received will be voted for another nominee selected by the Board. Each director will be elected by a plurality of the votes cast at the Annual Meeting (assuming a quorum is present). Consequently, any shares not voted at the Annual Meeting, whether due to abstentions, broker non-votes or otherwise, will have no impact on the election of the directors. Votes will be tabulated by an inspector of elections appointed by the Board. Shares of the Company’scommon stock: class A common stock and class B common stock, voteboth of which are currently traded on the NASDAQ Global Market (“Nasdaq”) under the symbols “NRCIA” and “NRCIB,” respectively. Please see the section of this proxy statement entitled “Information About the Company” for a more detailed discussion of the Company and its business.

The Proposed Transaction

Our Board, which is comprised of four independent directors in addition to Michael D. Hays, our founder, majority shareholder and chief executive officer (sometimes referred to herein as “Mr. Hays”), has reviewed and recommended, and has unanimously approved, a 1-for-1,764,560 Reverse Split of our class B common stock, followed immediately by a 1,764,560-for-1 Forward Split of the class B common stock. To be effective, the Proposed Transaction must be duly approved by holders of our outstanding class A common stock, class B common stock, and class A common stock and class B common stock together as a single class, voting at a meeting at which a quorum of each such “voting group” is present in person or by proxy. Mr. Hays and the Michael and Karen Hays Grandchildren’s Trust dated March 9, 2009 (the “Grandchildren’s Trust”), which individually or collectively hold a majority of our class A common stock and class B common stock, have informed us that they intend to be present for and vote in favor of the Proposed Transaction (both the Reverse Split and the Forward Split). In addition, our other executive officers and directors have indicated to us that they intend to vote in favor of the Proposed Transaction. Accordingly, the Proposed Transaction is expected to be approved. The Proposed Transaction is conditioned upon the closing of financing to fund the Proposed Transaction. Please see the section entitled “Additional Information Regarding the Proposed Transaction – Source and Amount of Funds and Expenses” beginning on page 39 for a more detailed discussion of the electioncredit facilities with which we expect to partially fund the costs of directors.the Proposed Transaction.

The Proposed Transaction will consist of the following sets forthsteps:

Please see the section entitled “Proposals – Reverse Split and Forward Split – Summary and Structure” beginning on page 15 for a more detailed discussion of the Proposed Transaction.

Purpose of the Proposed Transaction

The Proposed Transaction is designed to eliminate the current public market trading confusion relating to the Company’s two classes of common stock (the class A common stock and class B common stock) and to provide a timely and cost-effective liquidity event for the holders of our class B common stock, other than Mr. Hays. We also expect that the liquidity of our class A common stock will be positively affected by the Proposed Transaction over time due to the elimination of the confusion in the public market regarding our dual class structure.

The Proposed Transaction will delist the class B common stock from trading on Nasdaq and deregister and suspend our reporting obligations with respect to the class B common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result of the Proposed Transaction, our class B common stock will no longer be quoted on Nasdaq. Our class A common stock, however, will continue to be traded on Nasdaq and we will continue to have reporting obligations under the Exchange Act. The Board has concluded that the Proposed Transaction is fair to, and in the best interests of, all of our shareholders, including those being cashed out pursuant to the terms of the Proposed Transaction.

In 2013, the Board approved, and the shareholders adopted, a recapitalization plan (the “2013 Recapitalization “) pursuant to which we (i) established two classes of common stock, each of which is currently publicly traded on Nasdaq, consisting of a new class of common stock with 1/100^th of a vote per share and with the right to receive 1/6^th of the dividend, if any, paid on the other class of common stock, designated as class A common stock, and a new class of common stock with one vote per share and with the right to receive six times the dividend, if any, paid on the other class of common stock, designated as class B common stock, (ii) issued a dividend of three shares of class A common stock for each share of our then-existing common stock and (iii) reclassified each share of the then existing common stock as one-half of one share of class B common stock. The reasoning and desired effects of the 2013 Recapitalization included increasing liquidity of our publicly traded shares and expanding our institutional ownership base, enhancing shareholder value, and increasing flexibility for us and our shareholders.

Since the 2013 Recapitalization was implemented, however, we have received negative commentary from shareholders concerning our dual class common stock structure, especially the disconnect in valuation of the two classes of common stock given the 6-to-1 dividend differential and the “equal status” provision of our Articles whereby both the class A common stock and the class B common stock receive equal consideration in the event of certain information,extraordinary transactions, such as a sale of March 14, 2017, about the Board’s nomineesCompany. In addition, there has been a lack of comparable research coverage for election ateach of the Annual Meetingtwo classes and minimal trading in the class B common stock. Accordingly, we and our shareholders have not realized certain benefits that were anticipated in implementing the 2013 Recapitalization, such as increased liquidity of our publicly traded shares.

Our reasons for proposing the Proposed Transaction include:

Please see the sections entitled “Special Factors – Purpose of the Proposed Transaction” beginning on page 16 and “Special Factors – Reasons for the Proposed Transaction” beginning on page 21 for a more detailed description of the purpose of and reasons for the Proposed Transaction.

Effects of the Reverse Split

As a result of the Reverse Split:

Please see the section entitled “Special Factors – Effects of the Proposed Transaction” beginning on page 23 for a more detailed description of the effects of the Reverse Split.

Effects of the Forward Split

Please see the section entitled “Special Factors – Effects of the Proposed Transaction” beginning on page 23 for a more detailed description of the effects of the Forward Split.

Interests of Officers, Directors and Affiliates of the Company

As of the Record Date, Mr. Hays, our founder, chief executive officer and a director, owned approximately 26% of our class A common stock and 1,973,205 shares, or approximately 56%, of our class B common stock, and that collectively constituted approximately 54% of the Company’s total voting power. As a result, Mr. Hays is our controlling shareholder. Mr. Hays has participated in Board discussions relating to the approval of the Proposed Transaction. However, the independent directors, who constitute four of our five directors, met separately, without Mr. Hays, six times to discuss the Proposed Transaction and they also fully participated in the Board meetings and deliberations with Mr. Hays. Each independent director approved the terms and conditions of the Proposed Transaction.

As of the Record Date, the Grandchildren’s Trust, which was originally established by and received all of its shares of Common Stock from Mr. Hays, owned approximately 28% of our class A common stock and 125,355 shares, or approximately 3.5%, of our class B common stock, and that collectively constituted approximately 5% of the Company’s total voting power. In connection with, but incidental to, the Proposed Transaction, Mr. Hays and the Grandchildren’s Trust will effect a stock swap pursuant to which the Grandchildren’s Trust will receive 208,645 shares of class B common stock from Mr. Hays in return for the Grandchildren’s Trust transferring to Mr. Hays an equivalent value amount of shares of class A common stock (the “Swap”). The Swap is being effected in order to provide the Grandchildren’s Trust with a liquidity event in connection with the Proposed Transaction on the same basis as all other holders of class B common stock (except Mr. Hays), and will result in the Grandchildren’s Trust receiving a larger payment from the Company in the Reverse Split since it will own 208,645 more shares of class B common stock after the Swap that will be cashed out in the Reverse Split.

In light of the elimination of all shares of class B common stock in the Proposed Transaction (other than the shares that will continue to be held by Mr. Hays), the Compensation Committee of the Board, which is comprised solely of three independent directors, determined that it was in the best interests of the Company whose termand its shareholders to eliminate all equity awards tied to the class B common stock. See the section entitled “Special Factors— Background of the Proposed Transaction” beginning on page 17 for further discussion of the Board’s deliberation with respect to outstanding equity awards tied to our class B common stock. Accordingly, all outstanding options to purchase class B common stock and restricted shares of class B common stock, will, continue afterimmediately prior to the Annual Meeting.Effective Date of the Proposed Transaction, vest in full and be paid out as if they were cashed out pursuant to the Reverse Split. As a result, all of our directors and executive officers, as well as all other Company associates (i.e., employees) with existing equity awards tied to the class B common stock, including Mr. Hays, will receive a payment from us in connection with the Proposed Transaction to cash out their class B common stock equity awards.

Please see the sections entitled “Special Factors — Fairness of the Proposed Transaction — Procedural Fairness” beginning on page 34 and “Additional Information Regarding the Proposed Transaction — Special Interests of the Affiliated Persons” beginning on page 36.

NomineesFairness of the Proposed Transaction

The Board has unanimously approved the Proposed Transaction. The independent members of the Board, as well as the full Board including Mr. Hays acting as a director, has determined that the Proposed Transaction and the price to be paid for Election at the Annual Meetingfractional shares resulting from the Reverse Split are substantively and procedurally fair to and in the best interest of us and our unaffiliated shareholders (including both unaffiliated shareholders who will remain holders of our class A common stock and those whose entire interest will be cashed out).

Terms expiring atThe independent members of the 2020 Annual MeetingBoard, as well as the full Board including Mr. Hays acting as a director, considered various factors regarding the substantive fairness of the Proposed Transaction to us and our unaffiliated shareholders, including the following:

The independent members of the Board, as well as the full Board including Mr. Hays acting as a director, also considered various factors regarding the procedural fairness of the Proposed Transaction to us and our unaffiliated shareholders, including the following:

In determining that the Proposed Transaction is procedurally fair to the Company and unaffiliated shareholders, the Board did not retain a representative or advisor on behalf of the unaffiliated shareholders since the Board concluded that the procedural safeguards described above were already sufficient safeguards without the expense of retaining an external representative or advisor, particularly since unaffiliated and affiliated shareholders would be treated the same in the Proposed Transaction. In addition, the Board determined not to condition approval of the Proposed Transaction on approval by a majority of our unaffiliated shareholders because the Board concluded any such vote would not provide meaningful additional protection to those unaffiliated shareholders. The Board also considered that, as of the Record Date, approximately [●]% of our outstanding class B common stock is held by non-affiliates, and allowing a minority of investors to make a determination with respect to the Proposed Transaction alone would not be in the best interests of the Company and the shareholders. The Board was also concerned that shareholders representing disproportionately few shares could unduly influence the vote, especially if minority shareholder participation in the voting were limited.

Please see the section entitled “Special Factors — Fairness of the Proposed Transaction” beginning on page 31 for a more detailed analysis regarding the fairness of the Proposed Transaction.

JoAnn M. MartinVote, 62, has served as a directors Required for Approval of the Company since June 2001. Ms. Martin was elected President and Chief Executive Officer of Ameritas Life Insurance Corp., an insurance and financial services company, in July 2005. From April 2003 to July 2005, she served Ameritas Life Insurance Corp. as President and Chief Operating Officer. Prior thereto, Ms. Martin served as Senior Vice President and Chief Financial Officer of Ameritas for more thanProposed Transaction at the last five years. In April 2009, Ms. Martin was elected President and Chief Executive Officer of Ameritas Holding Company and Ameritas Mutual Holding Company (previously named UNIFI Mutual Holding Company), where she had served as Executive Vice President and Chief Financial Officer for more than the last five years. Ms. Martin has served as an officer of Ameritas and/or its affiliates since 1988. Ms. Martin also serves as a director of Ameritas Life Insurance Corp. Separate Accounts (since 2003). Ms. Martin’s financial background as a certified public accountant and as the former Chief Financial Officer and current President and Chief Executive Officer of a mutual insurance holding company, as well as her past leadership experiences as a director of the Omaha Branch of the Federal Reserve Bank of Kansas City and other organizations, led to the conclusion that she should serve as a director of the Company.Special Meeting

Barbara J. MowryUnder Wisconsin law and the Company, 69, has served’s Articles, the following three “voting groups” must approve both the Reverse Split and the Forward Split: (1) the holders of the class A common stock and the class B common stock, voting together as a directorsingle class; (2) the holders of the Company since May 2014. Ms. Mowry founded,class A common stock, voting separately as an independent voting group; and (3) the holders of the class B common stock, voting separately as an independent voting group. Assuming a quorum of each voting group is currentlypresent at the Chief Executive OfficerSpecial Meeting, the number of GoreCreek Advisors,votes cast within the voting group for approval of each of the Reverse Split and the Forward Split must exceed the number of votes cast against it.

As a management consulting firm. Priorresult of his stock holdings, Mr. Hays has the power to founding GoreCreek Advisors, Ms. Mowry served as Senior Vice President - Data Integrationapprove, on behalf of Oracle Corporation, an industry leading software, hardwareboth the holders of the class B common stock and services company, from January 2010 through March 2011,the holders of the class A and as President and Chief Executive Officer of Silver Creek Systems, Inc., a data quality solutions software company, from January 2003 to December 2009. Ms. Mowry servedclass B common stock, voting together as a director of Axion Health (from 2012 to 2014)group, both the Reverse Split and the Federal Reserve BankForward Split without the affirmative vote of Kansas City (from 2012any other shareholder. In addition, Mr. Hays and the Grandchildren’s Trust, as a result of their collective stock holdings, have the power to 2014) where she was Chairapprove, on behalf of the Board from 2013 to 2014. Ms. Mowry also serves as a directorholders of several not-for-profit organizations, including the Kauffman Foundation (since 2013),class A common stock, both the University of Minnesota Executive Committee, Carlson School of ManagementReverse Split and the BoardForward Split without the affirmative vote of Overseers (since 2004), the Colorado Innovation Network (since 2013)any other shareholder. Mr. Hays and the National Association of Corporate Directors Colorado Chapter where she is a Leadership Fellow. Ms. Mowry previously served as a director of Gaiam, Inc. (from 1999Grandchildren’s Trust have indicated to 2013), Real Goods Solar, Inc. (from 2008us that they intend to 2013)vote “FOR” both the Reverse Split and the Denver BranchForward Split. Please see the sections entitled “Principal Shareholders” beginning on page 55, “Special Factors — Effects of the Federal Reserve BankProposed Transaction — Effect on Affiliated Holders of Kansas City (from 2008 to 2011). Ms. Mowry’s financial background as a former President1,764,560 or More Shares of Class B Common Stock and Chief Executive OfficerRemaining Holders of several companies, a former member ofClass A Common Stock and Class B Common Stock Generally” beginning on page 28 and “Additional Information Regarding the audit and compensation committees of the boards of directors of Gaiam, Inc. and Real Goods Solar, Inc. and as the current Chief Executive Officer of GoreCreek Advisors, led to the conclusion that she should serve as a director of the Company.Proposed Transaction — Shareholder Approval” beginning on page 37.

THE BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE “FOR” SUCH NOMINEES. SHARES OF THE COMPANYEff’S COMMON STOCK REPRESENTED BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED “FOR” SUCH NOMINEES.ectiveness of the Proposed Transaction

Directors We anticipate that the Reverse Split and the Forward Split will be effected as soon as practicable on or after the date of the Special Meeting. Please see the sections entitled “Additional Information Regarding the Proposed Transaction — Effective Date” beginning on page 37 and “Additional Information Regarding the Proposed Transaction – Payment for Fractional Shares” beginning on page 38.

Financing for the Reverse Split

Please see the section entitled “Additional Information Regarding the Proposed Transaction – Source and Amount of Funds and Expenses” beginning on page 39 for a more detailed discussion of the Credit Facilities and the estimated expenses of the Proposed Transaction.

Dissenters’ Rights

Under Wisconsin law, no appraisal or dissenters’ rights are available to shareholders in connection with the Proposed Transaction. Please see the section entitled “Additional Information Regarding the Proposed Transaction — Unavailability of Appraisal or Dissenters’ Rights” beginning on page 38 for a more detailed discussion of the foregoing.

Tax Information

You should be aware of and consider the potential United States federal income tax consequences of the Proposed Transaction. The tax consequences for a shareholder are governed by a number of complex rules, but, generally, a shareholder that receives cash in exchange for shares of class B common stock as a result of the Proposed Transaction will recognize a gain or loss for United States federal income tax purposes. Please see the section entitled “Additional Information Regarding the Proposed Transaction — Material U.S. Federal Income Tax Consequences” beginning on page 41 for further information.

Other Matters

Pursuant to our By-Laws, no matters may be brought before the Special Meeting other than as set forth in the attached Notice of Special Meeting of Shareholders.

QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTION
AND THE SPECIAL MEETING

If you hold your shares in your own name as a holder of record, you may instruct the proxy holders how to vote your shares by completing, signing and dating the enclosed proxy card where indicated and by mailing or otherwise returning the card to us before the Special Meeting. This proxy statement, including Appendix A and Appendix B hereto, the proxy card and any other proxy solicitations materials will be available on the Internet at https://www.rdgir.com/national-research-corporation. The proxy holders will vote your shares in accordance with your instructions. If you sign and return a proxy card without giving specific voting instructions, your shares will be voted ‘FOR” the Reverse Split and “FOR” the Forward Split. Of course, you may also choose to attend the meeting and vote your shares in person.

If a broker, bank or other nominee holds your shares and you vote by proxy, you may later revoke your proxy instructions by informing the broker, bank or other nominee in accordance with that entity’s procedures.

PROPOSALS — REVERSE SPLIT AND FORWARD SPLIT

Board Recommendation

The Board has authorized and recommends that you approve the Proposed Transaction, which consists of both (1) an amendment to the Company’s Articles to effect the 1-for-1,764,560 Reverse Split of our class B common stock and waive the application to such Reverse Split of any provision in our Articles to the contrary, including, without limitation, Section B(4) of Article 2, following which we will repurchase the resulting fractional shares held by each shareholder with less than one share of class B common stock after the Reverse Split, and (2) an amendment to the Company’s Articles to effect a 1,764,560-for-1 Forward Split of the class B common stock and waive the application to such Forward Split of any provision in our Articles to the contrary, including, without limitation, Section B(4) of Article 2, immediately following the Reverse Split. As a result of the Proposed Transaction: (a) each shareholder owning fewer than 1,764,560 shares of outstanding class B common stock immediately before the Reverse Split will receive $53.44 in cash, without interest, for each share of class B common stock owned by such shareholder immediately prior to the Reverse Split and will no longer be a holder of class B common stock; and (b) the sole remaining holder of one or more shares of class B common stock after the Reverse Split, Michael D. Hays, our founder, chief executive officer and a director, will continue to hold class B common stock equal to the number of class B common stock he held immediately prior to the effective date of the Reverse Split. The Proposed Transaction is designed to eliminate the current public market trading confusion relating to the Company’s two classes of common stock (the class A common stock and class B common stock) and to provide a liquidity event for the holders of our class B common stock, other than Mr. Hays, without a significant discount to its trading price. Mr. Hays agreed to not have his shares of class B common stock be cashed out in the Reverse Split so the Company could maintain a moderate debt burden as a result of the Proposed Transaction.

The Board has unanimously determined that the Proposed Transaction (both the Reverse Split and the Forward Split) is in the best interests of the Company and is fair to the Company’s shareholders, including those who would not retain their interest in class B common stock of the Company after the Proposed Transaction.

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” APPROVAL OF THE REVERSE SPLIT AND “FOR” APPROVAL OF THE FORWARD SPLIT.

The Board reserves the right to abandon or delay the implementation of the Proposed Transaction even if the shareholders approve the Reverse Split and the Forward Split. Please see the section entitled “Special Factors — How the Board Will Determine Whether to Effect the Proposed Transaction” for a more detailed discussion of the foregoing.

Summary and Structure

The Proposed Transaction consists of two steps. First, the Company will conduct a 1-for-1,764,560 Reverse Split of the class B common stock. In the Reverse Split: (a) each lot of 1,764,560 shares of class B common stock held by a shareholder of the Company prior to the Reverse Split will be converted into one whole share of class B common stock after the Reverse Split; and (b) any shares of class B common stock held by a shareholder owning fewer than 1,764,560 shares will not be converted into a whole share and, instead, will be cancelled and exchanged for a cash payment equal to the number of shares of class B common stock held immediately prior to the Effective Date multiplied by the Cash-Out Price of $53.44, without interest. After the Reverse Split is completed, it will be followed immediately by a 1,764,560-for-1 Forward Split of the class B common stock, which will convert each whole share of class B common stock outstanding after the Reverse Split back into 1,764,560 shares of class B common stock. The Proposed Transaction is intended to take effect on the Effective Date (i.e., the date the State of Wisconsin accepts for filing Articles of Amendment to our Articles to effect the Reverse Split and the Forward Split, or any later date that we may specify in the Articles of Amendment to our Articles). Forms of the proposed amendments to our Articles to effect the Reverse Split and the Forward Split are attached to this proxy statement as Appendix A and Appendix B, respectively, and are incorporated herein by reference. Although both the Reverse Split and the Forward Split will be voted on separately, the Company will not implement either the Reverse Split or the Forward Split unless both are approved by shareholders and the Board gives final approval to implement them.

Shareholders will receive payment for their shares of class B common stock that are exchanged for cash in lieu of issuing fractional shares in accordance with the procedures described in the section entitled “Additional Information Regarding the Proposed Transaction — Payment for Fractional Shares.”

The following three “voting groups” must approve the Proposed Transaction (both the Reverse Split and the Forward Split): (1) the holders of the class A common stock and the class B common stock, voting together as a single class; (2) the holders of the class A common stock, voting separately as an independent voting group; and (3) the holders of the class B common stock, voting separately as an independent voting group. Assuming a quorum of each voting group is present at the Special Meeting, the number of votes cast within the voting group for approval of each of the Reverse Split and the Forward Split must exceed the number of votes cast against it.

After the Record Date, but prior to the Effective Date, Michael D. Hays and the Grandchildren’s Trust will effect a Swap pursuant to which the Grandchildren’s Trust will receive 208,645 shares of class B common stock from Mr. Hays in return for the Grandchildren’s Trust transferring to Mr. Hays an equivalent value amount of shares of class A common stock. The Swap is being effected in order to provide the Grandchildren’s Trust with a liquidity event in connection with the Proposed Transaction on the same basis as the other holders of class B common stock (except Mr. Hays). Mr. Hays will not receive any cash payment as a result of the Reverse Split, but his class B common stock options will, along with all other holders of the same and of restricted shares of class B common stock, immediately prior to the Effective Date of the Proposed Transaction, vest in full and be paid out as if they were cashed out in connection with the Proposed Transaction, which will result in a payment of approximately $208,000 to Mr. Hays. Please see the section entitled “Additional Information Regarding the Proposed Transaction — Special Interests of the Affiliated Persons” for additional information.

The executive officers, directors and affiliates of the Company, who, as of the Record Date, together (a) beneficially own approximately [●]% of the class A common stock entitled to vote at the Special Meeting and approximately [●]% of the class B common stock entitled to vote at the Special Meeting, and (b) have approximately [●]% of the Company’s total voting power entitled to vote at the Special Meeting, have indicated that they intend to vote in favor of each of the Reverse Split and the Forward Split.

In connection with the Proposed Transaction, we have filed, as required by the Exchange Act, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the “Schedule 13E-3”) with the Securities and Exchange Commission (“SEC”). Please see the section entitled “Available Information.”

SPECIAL FACTORS

Purpose of the Proposed Transaction

The Proposed Transaction is designed to eliminate the current public market trading confusion relating to the Company’s two classes of common stock (the class A common stock and class B common stock) and to provide a timely and cost-effective liquidity event for the holders of our class B common stock, other than Mr. Hays. We also expect that the liquidity of our class A common stock will be positively affected by the Proposed Transaction over time due to the elimination of the confusion in the public market regarding our dual class structure.

The Proposed Transaction will delist the class B common stock from trading on Nasdaq and deregister and suspend our reporting obligations with respect to the class B common stock under the Exchange Act. As a result of the Proposed Transaction, our class B common stock will no longer be quoted on Nasdaq. Our class A common stock, however, will continue to be traded on Nasdaq and we will continue to have reporting obligations under the Exchange Act. The Board has concluded that the Proposed Transaction is fair to, and in the best interests of, all of our shareholders, including those being cashed out pursuant to the terms of the Proposed Transaction.

In 2013, the Board approved, and the shareholders adopted, the 2013 Recapitalization, pursuant to which we (i) established two classes of common stock, each of which is currently publicly traded on Nasdaq, consisting of a new class of common stock with 1/100^th of a vote per share and with the right to receive 1/6^th of the dividend, if any, paid on the other class of common stock, designated as class A common stock, and a new class of common stock with one vote per share and with the right to receive six times the dividend, if any, paid on the other class of common stock, designated as class B common stock, (ii) issued a dividend of three shares of class A common stock for each share of our then-existing common stock, and (iii) reclassified each share of our then-existing common stock as one-half of one share of class B common stock. The reasoning and desired effects of the 2013 Recapitalization included increasing liquidity of our traded shares and expanding our institutional ownership base, enhancing shareholder value, and increasing flexibility for us and our shareholders. Since the 2013 Recapitalization was implemented, however, we have received negative commentary from shareholders concerning our dual class common stock structure, especially the disconnect in valuation of the two classes of common stock given the 6-to-1 dividend differential and the “equal status” provision of our Articles whereby both the class A common stock and the class B common stock receive equal consideration in the event of certain extraordinary transactions, such as a sale of the Company. In addition, there has been a lack of comparable research coverage for each of the two classes and minimal trading in the class B common stock. Accordingly, we and our shareholders have not realized certain benefits that were anticipated in implementing the 2013 Recapitalization, such as increased liquidity of our publicly traded shares.

The Board has determined that the 2013 Recapitalization has resulted in shareholder dissatisfaction regarding our dual class common stock structure and has not had the desired effect of enhancing the trading volumes in our class A common stock and class B common stock to acceptable levels. After considering various alternatives, the Board decided that pursuing the Proposed Transaction would strike the most desirable balance among addressing shareholder concerns, recognizing that the majority shareholder did not support a sale of the Company, and maintaining an appropriate capital structure and level of indebtedness. For this reason, we propose to undertake the Proposed Transaction for the purpose of reducing the number of record shareholders of our class B common stock to one so that we can terminate registration of our class B common stock under the Exchange Act and delist our class B common stock from Nasdaq. As a result, shares of our class B common stock would no longer be quoted on Nasdaq and trades in such shares would only be possible through privately negotiated transactions. Our class A common stock is not and will not be directly affected by the Proposed Transaction. The class A common stock will continue to be traded on Nasdaq and we will continue to have reporting obligations under the Exchange Act.

See the section below entitled “– Reasons for the Proposed Transaction” for additional information about our reasons for proceeding with the Proposed Transaction at this time.

Background of the Proposed Transaction

Because certain desired effects of the 2013 Recapitalization were not ultimately realized, in late 2015, the Board began to discuss methods to address illiquidity in our two classes of publicly traded common stock and confusion in the public market over our dual class common stock structure. With the Board’s support, Mr. Hays led an evaluation of various alternatives that would address these concerns.

In October 2015, at a regularly scheduled Board update call, the Board discussed certain communications from institutional shareholders, whereby such shareholders expressed concern and confusion over our dual class common stock structure. In response, between October 2015 and January 2017, the Board discussed and explored various alternative transactions to address illiquidity in our two classes of publicly traded common stock and confusion in the public market over our dual class common stock structure. Please see the section below entitled “– Strategic Alternatives Considered By the Board” for a detailed description of the alternatives that the Board considered.

In January 2017, we began discussions with FNB regarding the potential financing of a transaction, with the structure of such transaction remaining under consideration by the Board.

In late February 2017, our class A common stock and class B common stock both began to experience a period of steady increase in quoted price per share.

During March, April and May 2017, the Board continued discussions with FNB regarding the terms and conditions of a possible credit facility to fund a potential transaction. During this time, with the quoted stock price per share of both the class A common stock and the class B common stock continuing on an upward trajectory, the Board began to focus on pursuing a transaction that would affect only one class of our common stock, and potentially less than the entire class of such class of common stock, with the goal of maintaining a moderate debt burden for the Company as a result of any such transaction.

In late April and early May of 2017, Mr. Hays and the Board engaged in further discussions which focused on (i) the alternative forms such a transaction could take, (ii) the treatment of shares held by affiliated shareholders, including Mr. Hays, the Grandchildren’s Trust and certain other family affiliated entities and (iii) whether such affiliated shareholders would be excluded from the transaction or issued alternative consideration (for example, issuing notes to be repaid at a later date in lieu of cash payment). During this timeframe, Mr. Hays considered, and ultimately indicated, that he would be willing to be excluded from the Reverse Split and hold illiquid shares as long as the Forward Split was implemented.

On May 25, 2017, the independent members of the Board (without Mr. Hays) convened with Foley & Lardner LLP, the Company’s long-standing outside corporate and securities counsel (“Foley”), to discuss the process the Board would be required to undertake in order to pursue a potential transaction, including whether to form a special committee to evaluate such a potential transaction. After extended discussion, the independent members of the Board concluded there were already sufficient procedural safeguards in place, including, but not limited to, the fact that four of the five members of the Board are independent directors. Please see the section below entitled “– Fairness of the Proposed Transaction – Procedural Fairness” for additional information.

On June 12, 2017, the independent members of the Board convened (without Mr. Hays) and, on June 14, 2017, the full Board convened with Foley to discuss the impact that a potential transaction intended to cash out all unaffiliated holders of our class B common stock would have on the relative voting power and ratable economic interests of our shareholders, as well as various other aspects of a potential transaction.

In early July 2017, we began to negotiate the terms and conditions of a commitment letter and term sheet pursuant to which FNB would commit to provide a credit facility in connection with a potential transaction. Discussions with FNB regarding the Commitment Letter continued throughout July and early August and focused on the relative amounts of the proposed facilities and maintaining customary flexibility to pursue future transactions.

On July 6, 2017, the Board discussed a proposed reverse/forward stock split of the class B common stock at to-be-determined split ratios with the goals of reducing or eliminating public market trading confusion surrounding the two publicly traded classes of our common stock, providing a liquidity event for the non-affiliated holders of class B common stock and achieving those objectives without encumbering our operations or growth prospects with an excessive debt burden. The proposal was a reverse stock split of the class B common stock to cash out all holders (other than Mr. Hays), followed by a forward stock split of the remaining shares held by Mr. Hays to return him to his pre-reverse stock split share ownership of the class B common stock. The Board discussed the proposal including, without limitation, (i) the potential benefits and risks, (ii) the pro forma capital structure, cash flows, and earnings per share accretion, (iii) the pro forma covenant compliance, (iv) the potential impact on our current dividend rates, (v) the proposed timeline for the transaction, (vi) the expected costs to the Company of cashing out fractional shares of the class B common stock in a reverse stock split, (vii) hiring an advisor to assist with valuation alternatives, (viii) shareholder approval requirements for the proposed transaction, (ix) the fiduciary duties of the Board in connection with such a transaction, and (x) potential advantages and disadvantages of the proposed transaction compared to the status quo and the alternative transactions previously considered.

On July 7, 2017, the independent members of the Board (without Mr. Hays) convened with Foley to further discuss the proposal and the matters discussed at the July 6, 2017 Board meeting (as set forth in the immediately preceding paragraph).

On July 15, 2017, the independent members of the Board (with Mr. Hays participating only in the information gathering portion of the meeting) convened with Foley to discuss whether approval by a majority of our unaffiliated shareholders should be used in connection with the Proposed Transaction. After extended discussion, the independent members of the Board concluded any such vote would not provide meaningful additional protection to those unaffiliated shareholders, as shareholders representing disproportionately few shares could unduly influence such a vote, and that allowing a minority of investors to make a determination with respect to the Proposed Transaction alone would not be in the best interests of the Company and our shareholders. Please see the section below entitled “– Fairness of the Proposed Transaction – Procedural Fairness” for additional information. In addition, the independent members of the Board discussed potential fair value considerations for the Cash-Out Price and decided to engage the firm of Emory & Co. to assist with exploring possible alternatives to, and establishing a methodology for determining, the fair value of the class B common stock and, therefore, the Cash-Out Price. The independent members of the Board also considered whether we should make any future commitment to cash out or purchase the post-Proposed Transaction remaining shares of class B common stock held by Mr. Hays and decided against making such a commitment in connection with the Proposed Transaction.

On July 23, 2017, Emory & Co. made a presentation to the independent members of the Board (without Mr. Hays) regarding the Proposed Transaction, the provisions of our Articles relating to the relative rights of the class A and class B common stock and possible alternatives for determining the fair value of the shares of class B common stock to be cashed out pursuant to the Reverse Split. Emory & Co. identified the following valuation alternatives, among others: (i) the closing price of the class B common stock on the day the transaction is announced; (ii) the average of the high and low class B common stock prices on the day of announcement; (iii) the volume weighted average price of the class B common stock on the day of announcement; (iv) the highest trading price of the class B common stock over the previous 52 weeks; (v) an average (weighted average or otherwise) of the sales or closing prices of the class B common stock for a to-be-determined number of recent trading days, in order to give the holders of the class B common stock the benefit of the recent upward trajectory of the quoted price of the class B common stock while also considering fairness to the holders of class A common stock whose shares will not be directly affected by the proposed transaction; (vi) a hybrid of any of the foregoing methods, such as the greater of one or the other; (vii) a discount to recent trading prices or average price of the class B common stock; and (viii) a premium to recent trading prices or average price of the class B common stock. At this meeting, the independent members of the Board requested additional information from Foley regarding the effect that the Proposed Transaction would have on options to purchase class B common stock and restricted shares of class B common stock under our equity incentive plans. The independent members of the Board also discussed whether, in connection with the Proposed Transaction, we should suspend the payment of cash dividends on the class B common stock and the class A common stock for a period of time in order to focus on paying down the indebtedness we would incur to fund the transaction and/or to restore our cash reserves following the Proposed Transaction.

On July 29, 2017, the independent members of the Board (without Mr. Hays) discussed the approvals necessary to effect the Proposed Transaction and the process that would be undertaken by the Company, the Board and the shareholders if the Board recommended the Proposed Transaction. At this meeting, the independent members of the Board also discussed the potential split ratios for the Reverse Split and the Forward Split and the effects that setting such split ratios may have on the transaction and future operational flexibility, including the amount of indebtedness we would need to incur under various scenarios. The independent members of the Board further discussed whether we should change or keep in place our current dividend rates in connection with the Proposed Transaction. Finally, the independent members of the Board discussed whether to accelerate the vesting and cash-out the outstanding stock options and restricted shares tied to the class B common stock as if they were cashed out pursuant to the Reverse Split or to replace those equity awards with class A common stock awards, and the effect of both on associate retention.

On August 1, 2017, we released earnings for the quarter ended June 30, 2017, which reflected increases of 9% and 26% in revenue and net income, respectively, as well as approximately $31.6 million in cash on hand.

Also on August 1, 2017, the Board convened with Foley to further discuss the potential split ratios for the Reverse Split and the Forward Split, the possible accelerated vesting and cashing out of the class B common stock equity awards and whether to change our dividend rates in connection with the Proposed Transaction.

On August 5, 2017, the Board convened with Foley to continue to discuss the potential split ratios for the Reverse Split and the Forward Split and the effects that setting such split ratios may have on the Proposed Transaction and future operational flexibility, including the amount of indebtedness we would need to incur under various scenarios. The Board also continued to discuss accelerated vesting and cashing out of the class B common stock equity awards, as well as the availability of class A common stock under our equity incentive plans. In addition, the Board discussed the reimbursement of certain personal expenses Mr. Hays incurred in connection with exploring strategic alternatives for the Company, including the Proposed Transaction. Finally, the Board discussed whether to increase the number of shares of class A common stock we are authorized to repurchase in light of the Proposed Transaction.

On August 11, 2017, the Audit Committee of the Board convened to review certain expenses incurred by Mr. Hays in connection with exploring strategic alternatives for the Company, including the Proposed Transaction. Based on their review, the Audit Committee approved reimbursing Mr. Hays for approximately $538,000 of such expenses he had personally incurred.

              On August 21, 2017, the Board discussed the Proposed Transaction and the potential split ratios for the Reverse Split and the Forward Split and the effects that setting such split ratios may have on the transaction and our future operational flexibility, including the amount of indebtedness we would need to incur under various scenarios.  The Board further discussed whether we should change or keep in place our current dividend rates in connection with the Proposed Transaction and whether to accelerate the vesting and cash-out the outstanding stock options and restricted shares tied to the class B common stock as if they were cashed out pursuant to the Reverse Split.

On September 15, 2017, the Board and the Compensation Committee of the Board discussed and approved the Proposed Transaction and related matters, including, among other things, the following: (i) setting the ratios for the Reverse Split and the Forward Split and determining the Cash-Out Price for fractional shares of class B common stock following the Reverse Split; (ii) formally presenting the Proposed Transaction to our shareholders for approval at a Special Meeting; (iii) accelerating the vesting of outstanding options to purchase class B common stock and restricted shares of class B common stock and approving the payout of such class B common stock equity awards as if they were cashed out pursuant to the Reverse Split; (iv) approving the Commitment Letter and the borrowing proposed thereunder pursuant to the Credit Facilities; (v) amending the NRC 2006 Equity Incentive Plan and the NRC 2004 Non-Employee Director Stock Plan to remove the class B common stock thereunder; (vi) amending the existing stock repurchase program to remove the class B common stock thereunder; (vii) delisting and deregistering the class B common stock following effectiveness of the Proposed Transaction; and (viii) approving the filing of all required or necessary applications, notices, or other documents with the SEC, Nasdaq, and the State of Wisconsin in connection with the Proposed Transaction. The Board also indicated its current intent to maintain the payment of cash dividends on the Common Stock (with the payment and amount of future dividends, if any, at the discretion of the Board) but to delay the record and payment date for the third quarter dividend until after the Proposed Transaction is consummated. The Board did not make any commitments with respect to future transactions involving the class B common stock still outstanding following the Proposed Transaction.

Reasons for the Proposed Transaction

Because certain desired effects of the 2013 Recapitalization were not ultimately realized, the Board, in consultation with Mr. Hays, began to explore possible transactions to increase liquidity for our shareholders and reduce confusion in the public market surrounding our dual class common stock structure. After discussing various possible alternative transactions, as described below in the section entitled “– Strategic Alternatives Considered By the Board,” the Board has concluded that the Proposed Transaction is fair to, and in the best interests of, all of our shareholders, including those being cashed out pursuant to the terms of the Proposed Transaction. The following discussion of factors considered by the Board is not intended to be exhaustive, but includes the material factors considered by the Board in deciding to proceed with the Proposed Transaction. In light of the variety of factors considered, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their respective determinations and recommendations.

Respond to Shareholder Concerns Surrounding Our Dual Class Common Stock Structure

Our Articles contain an “equal status” provision pursuant to which both the class A common stock and the class B common stock receive equal consideration in the event of certain extraordinary transactions, such as a sale of the Company. Our Articles also provide that the shares of class B common stock receives six times the dividends paid on the class A common stock. These provisions, which are somewhat contradictory from a valuation perspective, have resulted in negative commentary from certain of our large shareholders and a disconnect between the market prices of our two classes of publicly traded common stock. In addition, the class A common stock and the class B common stock are both thinly traded with highly concentrated ownership. The Proposed Transaction is expected to reduce or eliminate any confusion in the public market regarding our dual class common stock structure and the relative trading values of the class A common stock and class B common stock. Potential interested investors will no longer have to evaluate their investment decision based on a comparison between the class A common stock and class B common stock. Accordingly, the Board expects the Proposed Transaction will increase the liquidity and diversify the ownership of the class A common stock over time.

Provide Holders of Class B Common Stock with a Liquidity Event While the Class B Common Stock is Trading At or Near An All-Time High

As a result of the Proposed Transaction, holders of less than one share of our class B common stock after giving effect to the Reverse Split will receive cash in exchange for such fractional shares. We will pay to each of these shareholders $53.44 in cash, without interest, for each share of class B common stock held by such shareholders immediately before giving effect to the Reverse Split. Such Cash-Out Price represents approximately 94% of the all-time high closing price for the class B common stock, a premium of approximately 5.3% to the 90-day volume weighted average price of the class B commom stock, and is likely more than any shareholder would be able to obtain by selling their class B common stock holdings into the public market based on the current trading market. We believe this provides holders of less than 1,764,560 shares of class B common stock (before giving effect to the Reverse Split) with a cost-effective way to cash out their investment without experiencing a negative impact of illiquidity on the market price or paying transaction costs such as brokerage fees or service fees. Although such cashed out holders will no longer be holders of our class B common stock, if they desire to maintain an ownership interest in us and to participate in our future earnings or growth, they will have the opportunity to use the cash received pursuant to the Proposed Transaction to invest, subject to availability, in our class A common stock.

Maintain a Moderate Debt Burden and the Flexibility to Fund Future Growth Initiatives and Proposed Transactions and Continue Current Dividends

Structuring the Proposed Transaction so that all current holders of the class B common stock (other than Mr. Hays) will be cashed out as a result of the Reverse Split allows us to achieve our objectives of addressing shareholder concerns with our current dual class common stock structure while maintaining a moderately leveraged capital structure that we expect will allow for future flexibility to fund growth initiatives, continue with our current dividends and fund future business acquisitions and repurchases of class A common stock pursuant to our repurchase program, all as the Board may determine.

Class A Common Stock Earnings Per Share Accretion

We expect that, following the Proposed Transaction, holders of class A common stock will experience substantial accretion to earnings per share of class A common stock. We expect the Proposed Transaction will result in pro forma earnings per share accretion of 24.1% for the class A common stock for the six months ending June 30, 2017. Additionally, holders of class A common stock following the Proposed Transaction will experience a greater percentage of participation in any future dividends, as compared with the existing dual class common stock structure. As a result of the Proposed Transaction, class A common stock will represent 66.4% of any potential dividends from 49.6% before the Proposed Transaction. Please see also the section entitled “Financial Information – Pro Forma Consolidated Financial Statements (Unaudited)” for more information on the anticipated pro forma effect of the Proposed Transaction and the Credit Facilities on our historical financial information.

Increased Liquidity Due to Concentration of Trading and Value Accretion in Class A Common Stock

We expect the Proposed Transaction will decrease uncertainty in the public market as to how to invest in the Company. Shareholders will no longer need to decide between holding class A common stock and class B common stock or attempt to maintain proportionate holdings of each. As a result, the Board expects the Proposed Transaction will increase the liquidity, diversify the ownership and grow the value of the class A common stock over time.

Michael D. Hays Has Agreed to Hold Delisted and Deregistered Class B Common Stock

As the Board discussed and explored various alternative transactions to address negative commentary from shareholders concerning our dual class common stock structure, Mr. Hays indicated that he would be willing to not have his shares of class B common stock be cashed out in the Reverse Split and hold illiquid shares so long as the Forward Split was implemented. This allowed us to address these shareholder concerns while maintaining a moderate debt burden as a result of the Proposed Transaction. The Board viewed the exclusion of Mr. Hays’ shares of class B common stock from the Proposed Transaction as having offsetting benefits and detriments for Mr. Hays. While as result of such exclusion, Mr. Hays will continue to participate in any growth in value through class B common stock, such class B common stock held following the Proposed Transaction will continue to be subject to the “equal status” provision of our Articles, essentially capping the value per share of the class B common stock in any distribution of property, merger, consolidation, purchase or acquisition of property or stock, asset transfer, division, share exchange, recapitalization, reorganization, or similar corporate transaction at the value per share received by holders of class A common stock. Similarly, while Mr. Hays will experience a relative increase in voting power of combined class A common stock and class B common stock due to his continued holdings of class B common stock, Mr. Hays already was able to exercise a controlling influence over our business and the power to elect our directors due to his existing holdings of class A common stock and class B common stock.

Effects of the Proposed Transaction

Rights, Preferences, and Limitations

Our outstanding stock is divided into two classes of common stock: class A common stock and class B common stock, both of which are currently publicly traded. The class B common stock has one vote per share on all matters and the class A common stock has one one-hundredth (1/100^th) of one vote per share. As of the Record Date, the class B common stock constituted approximately [●]% of our total voting power. As a result, holders of class B common stock are able to, and following the effectiveness of the Proposed Transaction, will continue to be able to, exercise a controlling influence over our business, have the power to elect our directors and indirectly control business decisions, such as whether to issue additional shares, declare and pay dividends or enter into significant corporate transactions. A majority of the class B common stock is owned by, and following the effectiveness of the Proposed Transaction, will continue to be owned by Mr. Hays. The liquidation rights and rights upon the consummation of certain extraordinary transactions are the same for the holders of class A common stock and class B common stock. Other than share distributions and liquidation rights, the amount of any dividend or other distribution payable on each share of class A common stock is equal to one-sixth (1/6^th) of the amount of any such dividend or other distribution payable on each share of class B common stock. The Proposed Transaction does not change the rights associated with our class A common stock or class B common stock. The rights of the holders of class A common stock to be treated equally in the Reverse Split and the Forward Split under our Articles, including, without limitation, Section B(4) of Article 2 of our Articles, will be waived pursuant to the amendments to our Articles giving effect to the Reverse Split and the Forward Split.

If the Proposed Transaction is approved, the interests of the sole remaining holder of our class B common stock, after giving effect to the Proposed Transaction, and the holders of our class A common stock will not change. The repurchased fractional shares would be retired.

If the Proposed Transaction is effected, holders of fewer than 1,764,560 shares of class B common stock before giving effect to the Reverse Split would receive payment of the Cash-Out Price of $53.44 for each share of class B common stock held prior to the Reverse Split and will no longer be holders of class B common stock. If such holders do not hold our class A common stock, they will no longer have any equity interest in the Company in will not participate in our future earnings or growth.

Appraisal or Dissenters’ Rights

Under Wisconsin law, no appraisal or dissenters’ rights exist with respect to the Proposed Transaction.

Benefits

The Proposed Transaction is expected to result in certain benefits to us, our shareholders cashed out as a result of the Proposed Transaction, and our continued shareholders following the Proposed Transaction (including holders of our class A common stock and the remaining holder of our class B common stock after effecting the Reverse Split), including without limitation the following. Such expectations are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated.

Detriments

The Proposed Transaction is expected to result in certain detriments to us, our shareholders cashed out as a result of the Proposed Transaction and our continued shareholders following the Proposed Transaction (including holders of our class A common stock and the remaining holder of our class B common stock after effecting the Reverse Split), including without limitation the following. Such expectations are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated.

Reduction in the Number of Holders of Class B Common Stock

We expect that, as a result of the Proposed Transaction, the number of holders of record of the class B common stock, as defined by Exchange Act rules, will be reduced to one (Mr. Hays).

Termination of Class B Common Stock Exchange Act Registration

Shares of class B common stock are currently registered under the Exchange Act. Applicable rules permit such registration to be terminated upon application to the SEC if there are fewer than 300 holders of record of the class B common stock. We intend to terminate the registration of the class B common stock under the Exchange Act as soon as practicable after the Proposed Transaction, if approved, is effected.

Delisting from Nasdaq and Effect on Market for Class B Common Stock

We intend to delist the class B common stock from Nasdaq immediately upon effecting the Proposed Transaction. Following such delisting, the class B common stock will no longer be quoted on Nasdaq and trades in such shares would only be possible through privately negotiated transactions. There can be no assurance that any trading will occur in the class B common stock after we terminate the listing of the class B common stock on Nasdaq.

Effect on the Company

We estimate that the Proposed Transaction would reduce the number of outstanding shares of class B common stock by approximately 1,775,684 shares (approximately 50.2% of the current outstanding class B shares) with a cash requirement to us (including expenses) of approximately $102.175 million. Please see the section entitled “Additional Information Regarding the Proposed Transaction – Source and Amount of Funds and Expenses” for a detailed discussion of the expected costs of the Proposed Transaction. The repurchased fractional shares would be retired. The Proposed Transaction would also reduce the number of holders of the class B common stock to one (Mr. Hays).

In connection with the Proposed Transaction, we intend to enter into the Credit Facilities. Please see the section entitled “Additional Information Regarding the Proposed Transaction – Source and Amount of Funds and Expenses” for a description of material terms of the proposed Credit Facilities. Our entry into the Credit Facilities is conditioned on this Proposed Transaction being approved and effected. Please see also the section entitled “Financial Information – Pro Forma Consolidated Financial Statements (Unaudited)” for more information on the anticipated pro forma effect of the Proposed Transaction and the Credit Facilities on our historical financial information.

The directors and officers of the Company immediately prior to the Proposed Transaction will remain the directors and officers of the Company immediately following the effectiveness of the Proposed Transaction. In connection with the Proposed Transaction, we will accelerate the vesting of the outstanding options to purchase class B common stock and restricted shares of class B common stock and such class B common stock equity awards will be paid out as if they were cashed out pursuant to the Reverse Split. This will account for approximately $7.5 million of the expected costs of the Proposed Transaction. Please see the section entitled “Additional Information Regarding the Proposed Transaction – Source and Amount of Funds and Expenses” for more information on the expected costs of the Proposed Transaction.

Effects on Affiliated and Unaffiliated Holders of Fewer than 1,764,560 Shares of Class B Common Stock

Following the Proposed Transaction, holders of fewer than 1,764,560 shares of class B common stock before giving effect to the Reverse Split would receive payment of the Cash-Out Price of $53.44 for each share of class B common stock held prior to the Reverse Split. If such persons are not holders of our class A common stock, they would cease to be shareholders of the Company and will no longer participate in any of our future earnings or growth. They would have no further interest in the Company with respect to any cashed out shares and would only have a right to receive cash for such shares. We believe this provides such holders with a cost-effective way to cash out their investment without experiencing a negative impact of illiquidity on the market price or paying transaction costs such as brokerage fees or service fees. However, the Proposed Transaction will require holders of fewer than 1,764,560 shares of class B common stock before giving effect to the Reverse Split to involuntarily surrender their shares of class B common stock in exchange for cash, rather than selecting the timing of and price received for disposing of their shares of our class B common stock. Holders of our class B common stock in certificated form who are cashed out in the Proposed Transaction will receive a letter of transmittal as soon as practicable after the Proposed Transaction is consummated with instructions on how to surrender existing certificates in exchange for cash payment. Holders of our class B common stock in electronic, book-entry form who are cashed out in the Proposed Transaction will receive their cash payment directly from our transfer agent, without having to take any action.

We intend to permit those who hold our class B common stock in street name through a nominee (such as a bank or broker) to be treated in the Proposed Transaction in the same manner as holders of class B common stock whose shares are registered in their names and will instruct nominees to effect the Proposed Transaction for their beneficial holders. However, nominees may have different procedures and those who hold class B common stock in street name should contact their nominees to instruct the nominee as to how the beneficial shareholder wishes to proceed. The Proposed Transaction structure will focus on the number of shares held by record holders. We and our transfer agent will not have the necessary information to compare the record holdings of any shareholder with “street name” holdings in a brokerage account. In addition, we will lack the information to compare holdings across multiple brokerage firms. If you are in this situation, we recommend that you consolidate your holdings into one brokerage account or record holder position prior to the Effective Date.

The Proposed Transaction may be taxable for cashed out holders of our class B common stock. Please see the section entitled “Additional Information Regarding the Proposed Transaction – Material U.S. Federal Income Tax Consequences” for further information.

Effect on Unaffiliated Holders of 1,764,560 or More Shares of Class B Common Stock

Currently, there are no unaffiliated holders of 1,764,560 or more shares of class B common stock. Accordingly, we do not expect any unaffiliated holders of class B common stock to remain after giving effect to the Proposed Transaction.

Effect on Holders of Class A Common Stock

Our class A common stock is not and will not be directly affected by the Proposed Transaction. The class A common stock will continue to be traded on Nasdaq and we will continue to have reporting obligations under the Exchange Act with respect to our class A common stock. The Proposed Transaction will have no impact on the number of shares of class A common stock outstanding. Holders of class A common stock prior to the Proposed Transaction will continue to have an equity interest in the Company and, therefore, will continue to participate in our future earnings. The percentage of our future earnings, cash flows and shareholders’ equity attributable to our class A common stock, as opposed to our class B common stock, will increase compared to the current percentage. This increase is expected to positively impact holders of our class A common stock. The rights of the holders of class A common stock to be treated equally in the Reverse Split and the Forward Split under our Articles, including, without limitation, Section B(4) of Article 2 of our Articles, will be waived pursuant to the amendments to our Articles giving effect to the Reverse Split and the Forward Split.

Please see the sections entitled “– Effects of the Proposed Transaction – Effect on Affiliated Holders of 1,764,560 or More Shares of Class B Common Stock and Remaining Holders of Class A Common Stock and Class B Common Stock Generally” below, and “– Effects of the Proposed Transaction – Rights, Preferences, and Limitations” above, for further information on how the Proposed Transaction is expected to impact holders of class A common stock.

Effect on Affiliated Holders of 1,764,560 or More Shares of Class B Common Stock and Remaining Holders of Class A Common Stock and Class B Common Stock Generally

We expect that only Mr. Hays will continue to hold shares of class B common stock immediately after the Proposed Transaction and the percentage of ownership of the class B common stock Mr. Hays holds would increase from approximately 56% of the outstanding shares of class B common stock to 100% of the outstanding shares of class B common stock.

The Proposed Transaction will result in an increase in the interest of Mr. Hays in our net book value and net earnings (losses), relative to the remaining holders of class A common stock following the Proposed Transaction, as shown in the following table (shown using the two-class earnings per share method):