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 23, 2012

QUALITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

(d) Appointment of Director

On May 24, 2012, the Board of Directors (the “Board”) of Quality Systems, Inc. (the “Company”) appointed Mr. Lance Rosenzweig to fill a vacancy on the Board. Mr. Rosenzweig has also been appointed to serve on the Transaction Committee of the Board.

As a non-employee director, Mr. Rosenzweig will participate in the Company’s 2012 Director Compensation Program and will enter into a restricted stock unit agreement with the Company, which will be substantially consistent with the Company’s form of Restricted Stock Unit Agreement. Mr. Rosenzweig will receive a pro-ration of the annual director compensation based on the number of months he will serve until the Company’s 2012 Annual Shareholders’ Meeting. If Mr. Rosenzweig is re-elected by the shareholders at the 2012 Annual Shareholders’ Meeting, he will participate in the Company’s 2013 Director Compensation Program described in Exhibit 10.3 to this Form 8-K, which is incorporated herein by reference. The Company will enter into an indemnification agreement with Mr. Rosenzweig, which will be substantially consistent with the Company’s form of Second Amended and Restated Indemnification Agreement. The 2012 Director Compensation Program is filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 1, 2011, and is incorporated herein by reference. The form of Restricted Stock Unit Agreement is filed with the SEC as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 15, 2011, and is incorporated herein by reference. The form of Second Amended and Restated Indemnification Agreement is filed with the SEC as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 2, 2010, and is incorporated herein by reference.

Rosenzweig is founder and chief executive officer of 24/7 Card, a provider of pre-paid debit and remit cards. Prior to founding 24/7 Card in 2010, Rosenzweig founded and served as chairman of the board of PeopleSupport, Inc., a business process outsourcing company with operations in the Philippines and Costa Rica, since its inception in 1998. He also served as PeopleSupport’s chief executive officer from March 2002 until the company’s sale in 2008. From 1993 to 1997, Rosenzweig was a founder, chairman of the board and president of Newcastle Group, a privately held plastics manufacturing company. He was also a founder of Unisite, a privately held wireless cell site management company. Prior to 1993, Rosenzweig was a divisional vice president at GE Capital; a vice president in the investment banking group of Dean Witter (now Morgan Stanley); a vice president in the investment banking group of Capel Court Pacific, an Australian investment banking firm; and a corporate planning manager of Jefferson Smurfit Group, a multinational packaging company. Rosenzweig, 49, has a Master’s degree in business administration from Northwestern University’s Kellogg School of Management and a Bachelor of Science degree in industrial engineering, with Tau Beta Pi honors, from Northwestern University.

There are no transactions between Mr. Rosenzweig and the Company that would be reportable under Item 404(a) of Regulation S-K.

A copy of the press release announcing Mr. Rosenzweig’s appointment and the quarterly dividend is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

(e) Officer and Director Compensation

On May 23, 2012, the Compensation Committee of the Company approved:

• the 2013 Compensation Program for the Company’s key personnel, including its named executive officers, for the fiscal year ending March 31, 2013. The 2013 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; and

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• cash and equity bonus determinations under the Company’s 2012 Compensation Program for the fiscal year ended March 31, 2012. 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 24, 2012, the Compensation Committee recommended to the Board, and the Board subsequently approved, the 2013 Director Compensation Program which goes into effect on the date of the Company’s 2012 Annual Shareholders’ Meeting. The 2013 Director Compensation Program is described in Exhibit 10.3 to this Form 8-K which is incorporated herein by reference.

Item 8.01 Other Events.

Quarterly Dividend

On May 24, 2012, the Board declared a quarterly cash dividend of $0.175 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of June 15, 2012 with an anticipated distribution date on or about July 3, 2012. The $0.175 dividend is consistent with the Company’s current policy to pay a regular dividend on the Company’s outstanding shares of common stock each fiscal quarter subject to the Board’s review and approval.

A copy of the press release announcing Mr. Rosenzweig’s appointment and the quarterly dividend is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Description of 2013 Compensation Program
10.2	Cash and Equity Bonus Determinations under 2012 Compensation Program
10.3	2013 Director Compensation Program
99.1	Press Release dated May 30, 2012 of Quality Systems, Inc.

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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: May 30, 2012

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

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EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K

Exhibit No.	Description
10.1	Description of 2013 Compensation Program
10.2	Cash and Equity Bonus Determinations under 2012 Compensation Program
10.3	2013 Director Compensation Program
99.1	Press Release dated May 30, 2012 of Quality Systems, Inc.

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EX-10.1

Exhibit 10.1

Description of 2012 Compensation Program

Cash Salary – Executive Officers

The following table sets forth the cash salary for each of the Company’s Named Executive Officers as approved by the Compensation Committee, effective on the date of increase set forth below.

Name	Effective Date of Increase	Fiscal Year 2013 Salary
Steven Plochocki	August 16, 2012	$575,000
Scott Decker	November 24, 2012	$405,000
Paul Holt	July 23, 2012	$345,000
Monte Sandler	March 16, 2012	$318,000
Donn Neufeld	June 1, 2012	$312,000

Potential Cash Bonus – Executive Officers

The following table sets forth the potential cash bonus payable to each of the Company’s Named Executive Officers based on their attainment during fiscal year 2013 of certain revenue, income and EPS targets as described below.

Name	Potential Cash Bonus Amount
Steven Plochocki	$287,500
Scott Decker	$202,500
Paul Holt	$172,500
Monte Sandler	$159,000
Donn Neufeld	$156,000

Potential Cash Bonus Criteria – Named Executive Officers

For each of Steve Plochocki and Paul Holt, (i) 50% of the cash bonus will be based on the percentage increase, if any, of the Company’s consolidated revenues reported for the 2013 fiscal year over the Company’s consolidated revenues reported for the previous fiscal year (“QSI Consolidated Revenue Growth”) and (ii) 50% of the cash bonus will be based on the percentage increase, if any, of the Company’s fully diluted earnings per share reported for the 2013 fiscal year over the Company’s fully diluted earnings per share reported for the previous fiscal year (“QSI Consolidated EPS Growth”). For each Named Executive Officer in charge of one of the Company’s Divisions (i.e., Scott Decker, Donn Neufeld and Monte Sandler), (i) 37.5% of the bonus will be based on QSI Consolidated Revenue Growth; (ii) 37.5% of the bonus will be based on QSI Consolidated EPS Growth; (iii) 12.5% of the bonus will be based on the percentage increase, if any, of such Division’s revenues for the 2013 fiscal year over the Division’s revenues for the previous fiscal year (“Divisional Revenue Growth”); and (iv) 12.5% of the bonus will be based on the percentage increase, if any, of such Division’s operating income for the 2013 fiscal year over the Division’s operating income for the previous fiscal year (“Divisional Operating Income Growth”). The percentage of the potential cash bonus for each level of QSI Consolidated Revenue Growth, QSI Consolidated EPS Growth, Divisional Revenue Growth and Divisional Operating Income Growth are set forth below:

QSI Consolidated Revenue Growth / QSI Consolidated EPS Growth	% of Potential Cash Bonus Earned
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%

Divisional Revenue Growth / Divisional Operating Income Growth	% of Potential Cash Bonus Earned
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%

In order to receive the percentage award shown in the right hand column, the full amount of the minimum target amount in the left hand column must be achieved. Accordingly, there will be no partial credit, proration, or extrapolation between levels. Notwithstanding anything herein to the contrary, all revenues and expenses associated with acquisitions closed during fiscal year 2013 will be eliminated from revenues and expenses used to calculate bonus amounts.

To illustrate the calculation of the cash bonus, assume that during fiscal year 2013 (i) QSI Consolidated Revenue Growth was 26%; (ii) QSI Consolidated EPS Growth was 22%; (iii) Divisional Revenue Growth for the Ambulatory Division was 28%; and (iv) Divisional Operating Income Growth for the Ambulatory Division was 23%. Based on this example, Scott Decker’s cash bonus for fiscal year 2013 would be calculated as follows:

Target Example for Scott Decker	% of Potential Cash Bonus Earned
QSI Consolidated Revenue Growth = 26%	30.00% (80% x 37.5%)
QSI Consolidated EPS Growth = 22%	22.50% (60% x 37.5%)
Divisional Revenue Growth (Ambulatory) = 28%	11.25% (90% x 12.5%)
Divisional Operating Income Growth (Ambulatory) = 23%	8.75% (70% x 12.5%)
Total Percentage of Target Achieved	72.5% (30.00% + 22.50% + 11.25 + 8.75%)

The total cash bonus for Scott Decker for fiscal year 2013 results would therefore be $146,812.50 ($202,500 x 72.5%).

Potential Equity Awards – Executive Officers

In addition to the cash bonus described above, each of the Company’s Named Executive Officers will be eligible to receive a potential equity award for the fiscal year ending March 31, 2013.

Each of the Company’s Named Executive Officers will be entitled to receive a stock option grant to purchase a number of shares of the Company’s Common Stock equal to the product of (i) the total potential shares listed for such executive on the table below, multiplied by (ii) the same percentage used for calculating such executive’s cash bonus award:

Name	Potential Option
Steven Plochocki	50,000
Scott Decker	30,000
Paul Holt	30,000
Monte Sandler	30,000
Donn Neufeld	30,000

Based on the example above, Scott Decker would receive a stock option grant for a total of 21,750 shares (30,000 x 72.50%).

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

Terms and Requirements of Cash and Equity Bonus Awards payable to all Executive Officers

1. Must be in good standing as a full time employee of QSI (or a wholly owned affiliate thereof) at least 2 weeks beyond the public release of the Company’s 2013 financial results.

2. No compensated outside work without the Board’s prior written approval.

3. Execution of a confidential information and 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 and subject to the Company’s standing compensatory policies (i.e., the Company’s Clawback Policy), as such policies may be amended by the Company or applicable law.

5. QSI Consolidated Revenue Growth, QSI Consolidated EPS Growth, Divisional Revenue Growth and Divisional Operating Income Growth targets will not include any revenues or expenses associated with acquisitions closed during fiscal year 2013.

6. The exercise price of any options granted under the potential equity award program described above 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 will have an 8-year term.

EX-10.2

Exhibit 10.2

Cash and Equity Bonus Determinations under 2012 Compensation Program

Name	Cash Bonus Earned ($)	Equity Bonus Earned (options)
Steven Plochocki	151,250	27,500
Scott Decker	102,025	16,500
Paul Holt	90,750	16,500
Monte Sandler	79,750	16,500
Donn Neufeld	82,500	16,500

EX-10.3

Exhibit 10.3

2013 Director Compensation Program

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

Notes:

1. Meeting attendance is expected to be at or near a 100% level.

2. 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 Chairpersons, and Tier 3 is for Audit Committee and Board Chairpersons. A Chairperson of any other committee will be paid at the highest tier otherwise eligible, according to the specifically named functions above. All Directors are only paid at one tier (and not multiple tiers), which is their highest eligible tier.

3. Each Director is to be awarded shares of restricted common stock upon election or re-election to the Board. The restricted stock will be issued according to the standard form of the Company’s approved Restricted Stock 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 granted to a Director accelerates if a Director is terminated early or not re-elected to the Board. Restricted stock 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 restricted stock until such shares are issued. It is understood that the quantity of shares represented by the restricted stock listed above will adjust pro-rata with any stock splits that may occur after the plan is approved.

4. All Directors must own a minimum of 2,000 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.

5. Base compensation shall be paid quarterly.

EX-99.1

Exhibit 99.1

For Further Information, Contact:
Quality Systems, Inc.	Susan J. Lewis
18111 Von Karman Avenue, Suite 700	Phone: (303) 804-0494
Irvine, CA 92612	slewis@qsii.com
Phone: (949) 255-2600
Paul Holt, CFO, pholt@qsii.com

FOR IMMEDIATE RELEASE

    MAY 30, 2012

QUALITY SYSTEMS, INC. DECLARES QUARTERLY DIVIDEND

AND NAMES LANCE ROSENZWEIG TO ITS BOARD OF DIRECTORS

IRVINE, Calif. … May 30, 2012 …Quality Systems, Inc. (NASDAQ:QSII) announced today that its board of directors declared a quarterly cash dividend of Seventeen and One-Half Cents ($0.175) per share on the Company’s outstanding shares of Common Stock, payable to shareholders of record as of June 15, 2012 with an anticipated distribution date of July 3, 2012. The $0.175 per share cash dividend is consistent with the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of Common Stock, subject to the review and approval of the board of directors.

In other news, Quality Systems also announced today the appointment of Lance Rosenzweig to its board of directors. Rosenzweig’s appointment fills a vacancy on the board of directors and completes the board of directors with nine members.

Rosenzweig is founder and chief executive officer of 24/7 Card, a provider of pre-paid debit and remit cards. Prior to founding 24/7 Card in 2010, Rosenzweig founded and served as chairman of the board of PeopleSupport, Inc., a business process outsourcing company with operations in the Philippines and Costa Rica, since its inception in 1998. He also served as PeopleSupport’s chief executive officer from March 2002 until the company’s sale in 2008. From 1993 to 1997, Rosenzweig was a founder, chairman of the board and president of Newcastle Group, a privately held plastics manufacturing company. He was also a founder of Unisite, a privately held wireless cell site management company, acquired by American Tower in 2000 for more than $200 million. Prior to 1993, Rosenzweig was a divisional vice president at GE Capital; a vice president in the investment banking group of Dean Witter (now Morgan Stanley); a vice president in the investment banking group of Capel Court Pacific, an Australian investment banking firm; and, a corporate planning manager of Jefferson Smurfit Group, a multinational packaging company.

“We welcome Lance to our board of directors,” said Sheldon Razin, chairman of the board of Quality Systems. “Lance brings significant experience in international operations and successful offshore ventures. As we continue to pursue our growth strategies, we look forward to the counsel, guidance and business acumen he will bring to the company.”

“I am pleased to join the Quality Systems board, and believe that my years of experience founding and running companies, coupled with my international business knowledge, will bode well for this rapidly growing organization. I look forward to the contributions I will make as a board member to help the company further solidify its leadership position in the healthcare information technology sector, both here as well as internationally,” noted Rosenzweig.

Rosenzweig, 49, has a Master’s degree in business administration from Northwestern University’s Kellogg School of Management and a Bachelor of Science degree in industrial engineering, with Tau Beta Pi honors, from Northwestern University.

About Quality Systems, Inc.

Irvine, Calif.-based Quality Systems, Inc. and its NextGen Healthcare subsidiary develop and market computer-based practice management, electronic health records and revenue cycle management applications as well as connectivity products and services for medical and dental group practices and small hospitals. Visit www.qsii.com and www.nextgen.com for additional information.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements within the meaning of the federal securities laws, including but not limited to, statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue, net income and earnings per share). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements are set forth in Part I, Item A of our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2012, including but not limited to: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company’s ability or inability to attract and retain qualified personnel; possible regulation of the Company’s software by the U.S. Food and Drug Administration; changes of accounting estimates and assumptions used to prepare the prior periods’ financial statements; and general economic conditions. A significant portion of the Company’s quarterly sales of software product licenses and computer hardware is concluded in the last month of a fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company’s revenues and operating results are very difficult to forecast. A major portion of the Company’s costs and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company’s period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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