National Research Corporation Sued Over Seemingly Shady Stock Transaction

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National Research Corporation and five members of its board of directors have been accused of approving a stock transaction that will force stockholders out of the value of their shares and award an overwhelming majority of voting rights to the company’s CEO, Michael D. Hays.

The company allegedly announced it was planning to initiate a 1-for-1,764,560 reverse stock split of its Class B common stock, which would force all Class B stockholders except for Hays to cash out their shares for a “wholly inadequate” price. The transaction, according to the complaint, would effectively result in Hays controlling 92 percent of the voting rights in the company, despite only owning 33 percent of its economic interests.

The suit further argues that the defendants performed no financial analyses to determine the Class B stock value, which the suit claims is “egregiously improper and unfair.” The proposed transaction, according to the plaintiff, will cheat stockholders out of the future value of their shares in the company while “solidifying Hays’ iron grip” over its decisions.