8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report
(Date of earliest event reported)
May 25, 2011

QUALITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	001-12537	95-2888568
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification Number)

18111 Von Karman, Suite 700
Irvine, California 92612
(Address of Principal Executive Offices)

(949) 255-2600
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-10.1

EX-10.2

EX-10.3

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Officer and Director Compensation

     On May 25, 2011, the Compensation Committee of Quality Systems, Inc. (the “Company”) approved:

• the 2012 Compensation Program for the Company’s key personnel, including its named executive officers, for the fiscal year ending March 31, 2012. The 2012 Compensation Program includes new cash salary levels and both non-equity and equity incentive compensation components for the Company’s named executive officers, and is described in Exhibit 10.1 to this Form 8-K which is incorporated herein by reference.

• cash and equity bonus determinations under the Company’s 2011 Compensation Program for the fiscal year ended March 31, 2011. The bonus determinations for the Company’s chief executive officer, chief financial officer and named executive officers are described in Exhibit 10.2 to this Form 8-K which is incorporated herein by reference.

     On May 25, 2011, the Compensation Committee recommended to the Company’s Board of Directors (the “Board”) and the Board subsequently approved the 2012 Director Compensation Program which goes into effect the date of the Company’s next annual shareholders’ meeting. The 2012 Director Compensation Program is described in Exhibit 10.3 to this Form 8-K which is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
	10.1	Description of 2012 Compensation Program.
	10.2	Cash and Equity Bonus Determinations under 2011 Compensation Program.
	10.3	2012 Director Compensation Program.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 1, 2011

QUALITY SYSTEMS, INC.
By:	/s/ James J. Sullivan
James J. Sullivan
Executive Vice President, General Counsel and Secretary

EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K

Exhibit No.		Description
	10.1	Description of 2012 Compensation Program.
	10.2	Cash and Equity Bonus Determinations under 2011 Compensation Program.
	10.3	2012 Director Compensation Program.

EX-10.1

Exhibit 10.1

Description of 2012 Compensation Program

Cash Salary — Executive Officers

     The following cash salary and bonus amounts have been approved by the Compensation Committee for the Company’s Named Executive Officers. Fiscal year salary and cash bonus amounts are listed below and are subject to the below Notes section. There are potential cash and equity bonuses that include performance targets based on core revenue and EPS growth in fiscal 2012:

Name	Increase Date	FY2012 Salary ($)
Pat Cline	April 1, 2011	850,000
Steve Plochocki	August 16, 2011	550,000
Scott Decker	November 24, 2011	371,000
Paul Holt	July 23, 2011	330,000

Potential Cash Bonus — Executive Officers

     The following is a table of the potential cash bonus that may be paid to the following executives officers based on their obtaining the objectives during fiscal year 2012 contained in the below criteria.

     The portion of the bonuses related to operating results are based on the Company’s results for FY2012.

     Revenue and EPS targets do not include any possible FY2012 acquisitions (either revenue or expense).

Name	Potential Cash Bonus Amount
Pat Cline	100% of Salary
Steve Plochocki	50% of Salary
Scott Decker	50% of Salary
Paul Holt	50% of Salary

Potential Cash Bonus Criteria — Executive Officers (excluding Pat Cline)

Organic Revenue and EPS Growth Criteria — each allocated 50% of the total possible bonus:

Organic Revenue / EPS Growth	% of Criteria Amount
0	0%
10%	12.5%
12.5%	25%
15%	37.5%
17.5%	50%
20%	60%
22.5%	70%
25%	80%
27.5%	90%
30%	100%

     The percentage shown in the right hand column is awarded when the stated level is reached as a step function. Full percentage Revenue and EPS increases must be achieved to reach each bonus level.

     The amount of cash bonus granted will be a percentage based on the same % earned according to an average of the Revenue and EPS growth criteria above, e.g., for Scott Decker a 25% increase in Revenue with a 20% growth in EPS would result in an award of (80% + 60%)/2 = 70% of $185,500 (50% of his $371,000 salary), which would be $129,850 granted for FY 2012.

Potential Cash Bonus Criteria for Pat Cline

     Revenue Growth Criteria — allocated 50% of the total possible bonus:

Increase in Revenue %	% of Criteria Amount
2.5 — 12.5:		33.33
12.5 — 25.0		33.33 - 100

     EPS Growth Criteria — allocated 50% of the total possible bonus:

Increase in EPS %	% of Criteria Amount
2.5 — 12.5:		33.33
12.5 — 25.0		33.33 - 100

          The bonus compensation will scale proportionately between 12.5% and 25% based on core revenue and EPS increases. The percentage shown in the right hand column is awarded based on the level reached, e.g. an 18.75% increase in each of Revenue and EPS would result in 50% of the 66.67% additional bonus, which would be $266,667 for fiscal year 2012.

Potential Equity Awards

     In addition to the cash bonus for executives, an equity incentive bonus is established for fiscal year ending March 31, 2012.

     The awards will be made after the 2012 fiscal year-end based in part on the CEO’s recommendation to the compensation committee and input from the executive officer in charge of each of the respective divisions.

     Revenue and EPS targets do not include any possible FY2012 acquisitions (either revenue or expense).

     Option exercise prices will be the closing price of the Company’s shares on the date of grant. The options will vest in 5 equal annual installments commencing one year after the date of grant and have an 8 year expiration.

	Potential
Individual or Group	Options
Pat Cline		45,000
Steve Plochocki		25,000
Paul Holt		15,000
Scott Decker		15,000

It is understood that the quantity of shares listed above will adjust pro-rata with any stock splits that may occur after the plan is approved.

Potential Equity Award Criteria — Executive Officers (excluding Pat Cline)

Organic Revenue and EPS Growth Criteria — each allocated 50% of the total possible bonus:

     Organic EPS Growth Criteria — allocated 50% of the total possible equity bonus:

Organic Revenue / EPS Growth	% of Criteria Amount
0		0%
10%		12.5%
12.5%		25%
15%		37.5%
17.5%		50%
20%		60%
22.5%		70%

Organic Revenue / EPS Growth	% of Criteria Amount
25%		80%
27.5%		90%
30%		100%

     The percentage shown in the right hand column is awarded when the stated level is reached as a step function. Full percentage Revenue and EPS increases must be achieved to reach each bonus level.

     The number of option shares granted will be a percentage based on the same % earned according to an average of the Revenue and EPS growth criteria above, e.g., for Scott Decker a 25% increase in Revenue with a 20% growth in EPS would result in an award of (80% + 60%)/2 = 70% of the 15,000 option shares, which would be 10,500 option shares granted for FY 2012.

Potential Equity Award Criteria for Pat Cline

The number of option shares granted will be a percentage based on the same % as the cash bonus earned according to the EPS (only) growth criteria for Pat Cline above, e.g. an 18.75% increase in EPS would result in an award of 15,000 option shares or a total of 30,000 option shares granted for FY2012.

Other Terms and Requirements for all Executive Officer’s Cash and Equity Bonuses

1.	Must be in good standing as a full time employee of QSI at least 2 weeks beyond the release of the 2012 earnings report.
2.	No compensated outside work without the Board’s prior written approval.
3.	Execution of a confidential information / non-compete agreement.
4.	Determination of amounts and payment of all bonuses is discretionary and shall only be as approved by the Compensation Committee based on, among other things, audited financial statements.

EX-10.2

Exhibit 10.2

Cash and Equity Bonus Determinations under 2011 Compensation Program
(pending final audited financials)

Name	Cash Bonus Earned ($)		Equity Bonus Earned (options)
Steve Plochocki	$	156,750		12,000
Pat Cline	$	628,571		34,914
Paul Holt	$	93,000		6,000
Scott Decker	$	105,000		9,000

EX-10.3

Exhibit 10.3

QSI Directors’ Compensation for FY2012

	Tier 0		Tier 1		Tier 2		Tier 3
	Employee		Independent		Nominating and Compensation		Audit Committee and
	Director		Director		Committee Chairman		Board Chairman
Base Compensation	$	0	$	80,000	$	92,500	$	100,000
Restricted Stock Units		0		1,000		1,250		1,250

     Notes:

1.	In preparing this Board of Directors compensation structure, the Compensation Committee reviewed various data about current practices in light of the Company’s specific situation. Such data included information provided by compensation consultants, company industry comparisons, and various best practices sources including board-related publications.
2.	Meeting attendance is expected to be at or near a 100% level.
3.	Pay Tiers: Tier 0 is for Directors who are full-time employees, Tier 1 is for Directors who do not chair committees, Tier 2 is for Nominating and Compensation Committee Chairmen, and Tier 3 is for Audit Committee and Board Chairman. Chairmen of other committees are paid at the highest tier otherwise eligible, according to the specifically named functions above. All Directors are only paid at one tier, which is their highest eligible tier.
4.	Each Director is to be awarded units of restricted common stock upon election or re-election to the Board. The restricted stock units will be issued according to the standard form of the Company’s approved Restricted Stock Unit Agreement and will carry a restriction requiring that they vest in 2 equal installments over 2 consecutive years with the vesting dates being the annual meeting dates of the shareholders following the Director’s election or re-election. The vesting of the restricted stock units granted to a Director accelerates if a Director is terminated early or not re-elected to the Board. Restricted stock units shall be granted on a pro-rata basis for Directors elected to serve less than a full year. No voting or dividend rights apply to the shares represented by the restricted stock units until such shares are issued. It is understood that the quantity of shares represented by the restricted stock units listed above will adjust pro-rata with any stock splits that may occur after the plan is approved.
5.	All Directors must acquire a minimum of 1,000 shares of the Company’s Common Stock on the open market, which must be retained as long as they are a director. New Directors have 9 months in which to acquire such Common Stock.
6.	Base compensation shall be paid quarterly. Directors shall be paid at the highest eligible tier according to their roles, but not on multiple tiers.