The SEC said the company told investors that Fraser worked "virtually for free" from 2002 to 2005, and after an employee warned of potential fraud charges, continued to "materially understate" the perks Fraser received.
The SEC also charged current CEO Harry Herington, former chief financial officer Eric Bur and current CFO Stephen Kovzan for allowing the expenses to go through.
The company, Fraser, Herington and Bur all agreed to settle charges, paying a combined $2.8 million without admitting or denying the allegations. The litigation against Kovzan is still ongoing.
"We have determined that it is in the best interests of the company to settle this matter so that we can continue to concentrate our full attention and energy on the bright future we see for NIC," said Herington in a statement.
The company for two years running has been named one of the "100 Best Small Companies in America" by Forbes.
A spokesperson with the FEC declined to comment on the matter. NIC also manages the official websites for the states of Colorado, Texas and Virginia, among others, as well as a website for the Department of Transportation's Federal Motor Carrier Safety Administration. A spokesperson for the administration could not be immediately reached.