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):

August 14, 2018

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 800

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:

☐ 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

Election of Directors

On August 14, 2018, Quality Systems, Inc. (the “Company”) held its 2018 Annual Meeting of Shareholders (the “Annual Meeting”).  At the Annual Meeting, the Company’s shareholders elected to the Company’s Board of Directors (the “Board”), effective immediately, the slate of nominees recommended by the Board and set forth in the Company’s proxy statement for the Annual Meeting.

Adoption of Director Compensation Program

On August 14, 2018, the Company’s Board approved the Company’s fiscal year 2019 Director Compensation Program, effective immediately.  This program was approved upon the recommendation of the Company’s Compensation Committee.  A description of the 2019 Director Compensation Program is filed as Exhibit 10.1 hereto and incorporated herein by reference.

Item 5.07    Submission of Matters to a Vote of Security Holders.

On August 14, 2018, the Company held the Annual Meeting. As of June 18, 2018, the record date for the Annual Meeting, 64,185,586 shares of common stock were outstanding and entitled to vote at the Annual Meeting.  At the Annual Meeting, 60,295,777 shares of common stock were present in person or represented by proxy.  The Company’s shareholders were asked to consider and vote on the following three proposals:

1) To elect nine persons to serve as directors of the Company;

2) To conduct an advisory vote to approve the compensation of the Company’s named executive officers (i.e., “Say-on-Pay”); and

3) To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2019.

The results of the shareholder votes are set forth below.

Proposal 1 – Election of Directors

The Company’s shareholders elected the following nominees to serve as directors of the Company for one year terms expiring at the Company’s 2019 Annual Meeting of Shareholders: Craig A. Barbarosh, George H. Bristol, Rusty Frantz, Julie D. Klapstein, James C. Malone, Jeffrey H. Margolis, Morris Panner, Sheldon Razin and Lance E. Rosenzweig. The tabulation of voting results for the election of directors is indicated below:  

Proposal No. 1	For	Withheld
Election of Directors
Craig A. Barbarosh	49,121,574	2,034,206
George H. Bristol	49,134,338	2,021,442
Rusty Frantz	50,586,357	569,423
Julie D. Klapstein	50,659,667	496,113
James C. Malone	50,640,406	515,374
Jeffrey H. Margolis	50,642,016	513,764
Morris Panner	48,427,872	2,727,908
Sheldon Razin	50,663,633	492,147
Lance E. Rosenzweig	50,657,634	498,146

There were 9,139,997 broker non-votes for Proposal No. 1.

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Proposal 2 – Say-on-Pay

The Company’s shareholders approved a resolution approving on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in the proxy statement for the Annual Meeting by the votes indicated below (i.e., “Say-on-Pay”):

Proposal No. 2	For	Against	Abstain	Broker Non-Votes
Advisory vote approving the compensation of the Company’s named executive officers	50,709,301	411,903	34,576	9,139,997

Proposal 3 – Appointment of Independent Registered Public Accounting Firm

The Company’s shareholders ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent auditors for the fiscal year ending March 31, 2019 by the votes indicated below:

Proposal No. 3	For	Against	Abstain
Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent public accountants for the fiscal year ending March 31, 2019	59,428,834	835,260	31,683

Item 9.01Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Description of 2019 Director Compensation Program

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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: August 16, 2018	QUALITY SYSTEMS, INC.
	By:	/s/ James R. Arnold
		James R. Arnold
		Chief Financial Officer

EX-10.1

Exhibit 10.1

Quality Systems, Inc. FY 2019 Director Compensation Plan

	Tier 0 Employee Director	Tier 1 Non-Employee Director (Base)	Tier 2 Nominating & Governance Committee Chairperson (Additional)	Tier 3 Compensation Committee Chairperson (Additional)	Tier 4 Audit Committee Chairperson (Additional)	Tier 5 Board Vice Chairperson (Additional)	Tier 6 Board Chairperson and Chairperson Emeritus (Additional)
Annual Cash Retainer  Compensation	$0	$90,000	$12,000	$15,000	$20,000	$35,000	$40,000
Value of Restricted Stock	$0	$145,000	--	--	--	$40,000	$40,000

FY 2019 Director Compensation Plan Terms:

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

2. In addition to annual cash retainer compensation, each non-employee director is to be paid a $2,000 cash fee each Nominating & Governance Committee, Compensation Committee and Audit Committee meeting attended.

3. Pay Tiers:  Tier 0 is for directors who are full-time employees of the Company. Tier 1 is the base compensation for non-employee directors. Tier 2 is additional compensation for the Nominating and Governance Committee Chairperson. Tier 3 is additional compensation for the Compensation Committee Chairperson. Tier 4 is additional compensation for the Audit Committee Chairperson. Tier 5 is additional compensation for the Board Vice Chairperson. Tier 6 is additional compensation for the Board Chairperson and Chairman Emeritus.

4. In addition to the Company’s standing committees (i.e., Nominating and Governance, Compensation, and Audit) that meet on a regularly scheduled basis, the Company has a Special Transaction Committee that meets only as needed.  Special Transaction Committee members receive no additional annual cash retainer compensation. The Special Transaction Committee chairperson receives a $5,000 cash fee per meeting attended, and other members receive a $3,000 cash fee per meeting attended.

5. Each director is to be awarded restricted shares of the Company’s common stock (“Restricted Stock”) upon the date of the director’s election or re-election to the Board and equivalent to the value amounts set forth in the table above. The shares of Restricted Stock will be valued at the price of the Company’s common stock at the close of trading on the date of the director’s election or re-election to the Board. The Restricted Stock will be issued according to the standard form of the Company’s approved Amended and Restated Stock Agreement and pursuant to the Company’s then-current Equity Incentive Plan and will carry a restriction requiring that the Restricted Stock vest on the date that is the earlier of (a) one year from the date of grant, or (b) the date of the Company’s next annual meeting of shareholders following the director’s election or re-election to the Board. Vesting of the Restricted Stock will be accelerated in the event of the director’s death or disability, or upon a change of control of the Company. The Restricted Stock will be granted on a pro-rata basis for directors appointed to serve less than a full year.

6. Each director must own a minimum number of shares of the Company’s common stock (to include common stock purchased on the open market, unvested Restricted Stock, and deferred shares) valued in an amount equal to at least four times the value of the director’s annual cash retainer compensation. Current directors must satisfy this ownership requirement within five years of adoption of the Company’s fiscal year 2017 Director Compensation Plan. New directors must satisfy this ownership requirement within five years of their election to the Board.

7. Base compensation shall be paid quarterly.