qsii-def14a_20180814.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by Registrant

Filed by a Party other than the Registrant

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Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

QUALITY SYSTEMS, INC.

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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QUALITY SYSTEMS, INC.

18111 Von Karman Avenue, Suite 800

Irvine, California 92612

________________

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 14, 2018

To the Shareholders of Quality Systems, Inc.:

The annual meeting of shareholders of Quality Systems, Inc., known to our clients as NextGen Healthcare, will be held at the Marriott Hotel located at 18000 Von Karman Avenue, Irvine, California 92612 on August 14, 2018, at 9:00 a.m. Pacific Time, for the following purposes:

 

 

1.

Proposal 1:  To elect nine persons to serve as directors of our company until the 2019 annual meeting of shareholders. Our nominees for election to our Board of Directors (“ Board ”) are named in the attached proxy statement, which is a part of this notice;

 

2.

Proposal 2:  To conduct an advisory vote to approve the compensation for our named executive officers (i.e., “Say-on-Pay”);

 

3.

Proposal 3:  To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2019; and

 

4.

To transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

All shareholders are cordially invited to attend the annual meeting in person. Only shareholders of record at the close of business on June 18, 2018, are entitled to notice of and to vote at the annual meeting and at any adjournments or postponements of the annual meeting.

Whether or not you plan to attend the annual meeting, please complete and sign the enclosed proxy card and return it in the enclosed addressed envelope. Your promptness in returning the proxy card will assist in the expeditious and orderly processing of the proxy and will assure that you are represented at the annual meeting even if you cannot attend the meeting in person. You may also vote by telephone or internet by following the instructions on the proxy card. If you return your proxy card or vote by telephone or internet, you may nevertheless attend the annual meeting and vote your shares in person. Shareholders whose shares are held in the name of a broker or other nominee and who desire to vote in person at the meeting should bring with them a legal proxy.

OUR BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL OF OUR DIRECTOR NOMINEES NAMED ON THE ENCLOSED PROXY CARD. OUR BOARD ALSO RECOMMENDS A VOTE “FOR” PROPOSAL 2, AND A VOTE “FOR” PROPOSAL 3.

 

By Order of the Board of Directors,

QUALITY SYSTEMS, INC.

 

 

 

Jeffrey D. Linton

Executive Vice President, General Counsel and Secretary

Irvine, California

June 29, 2018

 

 


 

TABLE OF CONTENTS

 

 

 

 

Page

SOLICITATION OF PROXIES

 

1

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

 

1

OUTSTANDING SHARES AND VOTING RIGHTS

 

2

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

 

4

PROPOSAL NO. 1: ELECTION OF DIRECTORS

 

5

NON-DIRECTOR EXECUTIVE OFFICERS

 

8

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

10

EQUITY COMPENSATION PLAN INFORMATION

 

11

EXECUTIVE AND DIRECTOR COMPENSATION AND RELATED INFORMATION

 

12

 

Compensation Discussion and Analysis

 

12

 

Summary Compensation Table for Fiscal Year Ended March 31, 2018

 

23

 

Grants of Plan-Based Awards for Fiscal Year Ended March 31, 2018

 

24

 

Outstanding Equity Awards at Fiscal Year Ended March 31, 2018

 

25

 

Option Exercises and Stock Vested During Fiscal Year Ended March 31, 2018

 

26

 

Pension Benefits

 

26

 

Nonqualified Deferred Compensation for Fiscal Year Ended March 31, 2018

 

27

 

Potential Payments Upon Termination of Employment or Change-in-Control

 

27

 

Director Compensation for Fiscal Year Ended March 31, 2018

 

31

 

Compensation Committee Interlocks and Insider Participation

 

33

 

Compensation Committee Report

 

33

 

CEO Pay Ratio

 

33

INFORMATION ABOUT OUR BOARD OF DIRECTORS, BOARD COMMITTEES AND RELATED MATTERS

 

34

 

Board of Directors

 

34

 

Board Committees and Charters

 

35

 

Related Matters

 

37

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

38

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

38

 

Review, Approval or Ratification of Transactions with Related Persons

 

38

 

Related Person Transactions

 

39

PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY ON PAY”)

 

40

PROPOSAL NO. 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

42

 

Audit and Non-Audit Fees

 

42

 

Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services

 

42

ANNUAL REPORT AND AVAILABLE INFORMATION

 

43

PROPOSALS OF SHAREHOLDERS

 

43

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

 

43

OTHER MATTERS

 

44

 

18111 Von Karman Avenue, Suite 800

Irvine, California 92612

______________

 

 

 

 


 

QUALITY SYSTEMS, INC.

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 14, 2018

 

PROXY STATEMENT

 

SOLICITATION OF PROXIES

The accompanying proxy is solicited by the Board of Directors (“Board”) of Quality Systems, Inc., known to our clients as NextGen Healthcare (“Quality Systems,” “NextGen Healthcare,” the “Company,” “us,” “we” or “our”) for use at our annual meeting of shareholders to be held at the Marriott Hotel located at 18000 Von Karman Avenue, Irvine, California 92612, on August 14, 2018, at 9:00 a.m. Pacific Time, and at any and all adjournments and postponements thereof. All shares represented by each properly submitted and unrevoked proxy received in advance of the annual meeting will be voted in the manner specified therein.

Any shareholder has the power to revoke the shareholder’s proxy at any time before it is voted. A proxy may be revoked by delivering a written notice of revocation to our Secretary prior to or at the annual meeting, by voting again on the internet or by telephone (only your latest internet or telephone proxy submitted prior to 11:59 P.M. Eastern Time on August 13, 2018 will be counted), by submitting to our Secretary, prior to or at the annual meeting, a later dated proxy card executed by the person executing the prior proxy, or by attendance at the annual meeting and voting in person by the person submitting the prior proxy.

Any shareholder who holds shares in street name and desires to vote in person at the annual meeting should inform the shareholder’s broker of that desire and request a legal proxy from the broker. The shareholder will need to bring the legal proxy to the annual meeting along with valid picture identification such as a driver’s license or passport, in addition to documentation indicating share ownership. If the shareholder does not receive the legal proxy in time, then the shareholder should bring to the annual meeting the shareholder’s most recent brokerage account statement showing that the shareholder owned Quality Systems, Inc. common stock as of the record date. Upon submission of proper identification and ownership documentation, we should be able to verify ownership of common stock and admit the shareholder to the annual meeting; however, the shareholder will not be able to vote at the annual meeting without a legal proxy. Shareholders are advised that if they own shares in street name and request a legal proxy, any previously executed proxy will be revoked, and the shareholder’s vote will not be counted unless the shareholder appears at the annual meeting and votes in person or legally appoints another proxy to vote on its behalf.

We will bear all expenses in connection with the solicitation of proxies. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock. Our directors, officers and employees may solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.

This proxy statement, the accompanying proxy card and our 2018 annual report are being made available to our shareholders on or about June 29, 2018.

 

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on August 14, 2018.

This proxy statement, the notice of our 2018 annual meeting of shareholders and the Company’s 2018 annual report to shareholders are available on our website at http://investor.qsii.com/annual-report-and-proxy.

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OUTSTANDING SHARES AND VOTING RIGHTS

Only holders of record of the 64,185,586 shares of our common stock outstanding at the close of business on the record date, June 18, 2018, are entitled to notice of and to vote at the annual meeting or any adjournments or postponements thereof. A majority of the outstanding shares, represented in person or by proxy, will constitute a quorum for the transaction of business. All properly submitted and unrevoked proxies will be counted in determining the presence of a quorum, including those providing for abstention or withholding of authority and those submitted by brokers voting without beneficial owner instruction and exercising a non-vote on certain matters.

Each shareholder will be entitled to one vote, in person or by proxy, for each share of common stock held on the record date. However, under our Bylaws and California law, if any shareholder gives notice at the annual meeting, prior to the voting, of an intention to cumulate the shareholder’s votes in the election of directors, then all shareholders entitled to vote at the annual meeting may cumulate their votes in the election of directors. Cumulative voting means that a shareholder has the right to give any one candidate who has been properly placed in nomination a number of votes equal to the number of directors to be elected multiplied by the number of shares the shareholder is entitled to vote, or to distribute such votes on the same principle among as many properly nominated candidates (up to the number of persons to be elected) as the shareholder may wish. If cumulative voting applies at the annual meeting, the cumulative number of votes a shareholder may cast in director elections will be equal to the number of shares held by such shareholder on the record date multiplied by nine (the number of directors to be elected at the annual meeting).

Whether the election of directors is by plurality vote or cumulative voting with respect to Proposal No. 1, the nine director nominees who receive the highest number of affirmative votes will be elected; abstentions and broker non-votes will have no effect on this proposal. See “Additional Information on the Mechanics of Cumulative Voting” below for more information on the operation of cumulative voting. In circumstances where there is a contested election and/or one or more of our shareholders demand that cumulative voting apply to the election of directors, our Board will provide instruction to the proxy holders to vote the proxies solicited hereby in such manner as to provide for the election of the maximum number of our director nominees (for whom authority is not otherwise specifically withheld) including, but not limited to, the prioritization of such nominees to whom such votes may be allocated. We have not received notice that any of our shareholders currently intends to invoke cumulative voting. In addition, because the Board has not nominated more than nine director nominees for election at the annual meeting, and because the deadline for the submission of director nominees for the 2018 annual meeting has passed, we believe it is less likely that cumulative voting will be invoked at the 2018 annual meeting.

Approval of Proposal No. 2, an advisory vote to approve the compensation of our named executive officers (i.e., “Say on Pay”), will be considered approved if the vote constitutes both: (i) the affirmative vote of a majority of common stock present in person or represented by proxy and voting on the proposal and (ii) the affirmative vote of a majority of the quorum. For purposes of this proposal, abstentions and broker non-votes will not affect the outcome under clause (i), which recognizes only actual votes for or against the proposal. Abstentions and broker non-votes may affect the outcome under clause (ii) because abstentions and broker non-votes are counted for purposes of determining the quorum and have the effect of a vote against the proposal.

Approval of Proposal No. 3, the ratification of the appointment of our independent registered public accounting firm, is not required. However, this proposal will be considered approved if the vote constitutes both: (i) the affirmative vote of a majority of common stock present in person or represented by proxy and voting on the proposal and (ii) the affirmative vote of a majority of the quorum. For purposes of this proposal, abstentions and broker non-votes will not affect the outcome under clause (i), which recognizes only actual votes for or against the proposal. Abstentions and broker non-votes may affect the outcome under clause (ii) because abstentions and broker non-votes are counted for purposes of determining the quorum and have the effect of a vote against the proposal.

Additional Information on the Mechanics of Cumulative Voting

In the event cumulative voting applies, all shareholders will have the right to cumulate their votes in the election of directors. Cumulative voting means that each shareholder may cumulate such shareholder’s voting power for the election by distributing a number of votes, determined by multiplying the number of shares held by the shareholder as of the record date by nine (the number of directors to be elected at the annual meeting). Such shareholder may distribute all of the votes to one individual director nominee, or distribute such votes among any two or more director nominees, as the shareholder chooses. If you do not specifically instruct otherwise, the proxy being solicited by our Board will confer upon the proxy holders the authority, in the event that cumulative voting applies, to cumulate votes at the instruction and discretion of our Board or any committee thereof so as to provide for the election of the maximum number of our director nominees (for whom authority is not otherwise specifically withheld) including, but not limited to, the prioritization of such nominees to whom such votes may be allocated. Using its authority, the Board may vote your shares for fewer than nine nominees.

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If you elect to grant us your proxy and do not specifically instruct otherwise, you are authorizing the proxy holders to vote your shares in accordance with the discretion and at the instruction of the Board, including to cumulate your votes in favor of certain nominees (rather than allocating votes equally among the nominees) and to determine the specific allocation of votes to individual nominees. You may withhold your authority to vote for one or more nominees, in which case the Board will retain discretion to allocate your votes among our other nominees unless you specifically instruct otherwise. Under no circumstances may the proxy holders cast your votes for any nominee from whom you have withheld authority to vote.

For example, a proxy marked “FOR ALL EXCEPT” may only be voted for those of our director nominees for whom you have not otherwise specifically withheld authority to vote, a proxy marked “WITHHOLD ALL” may not be voted for any of our director nominees, and a proxy marked “FOR ALL” may be voted for all of our director nominees. In exercising its discretion with respect to cumulating votes, our Board may instruct, in its sole judgment, the proxy holders to cumulate and cast the votes represented by your proxy for any of our director nominees for whom you have not otherwise withheld authority. For example, if you grant a proxy with respect to shares representing 900 cumulative votes, and mark “FOR ALL EXCEPT” one of our director nominees, the Board may instruct the proxy holders to cast the 900 votes for any or all of our eight other director nominees; of those eight other director nominees, moreover, the Board may allocate the 900 votes among them as it determines, such that each of those other director nominees may receive unequal portions of the 900 votes or none at all.

In the event cumulative voting applies, unless you specifically instruct otherwise, the Board will instruct the proxy holders to cast the votes as to which voting authority has been granted so as to provide for the election of the maximum number of our director nominees, and will provide instructions as to the order of priority of the Board candidates in the event that fewer than all of our Board candidates are elected. The Board has not yet made any determination as to the order of priority of candidates to which it would allocate votes in the event cumulative voting applies, and expects to make this determination, if necessary, at the annual meeting. Accordingly, if you grant a proxy to us and have not specifically instructed otherwise, your shares will be voted for our director nominees at the discretion of the Board with respect to all of your shares (except that the Board will not be able to vote your shares for a candidate from whom you have withheld authority to vote). If you wish to exercise your own discretion as to allocation of votes among nominees, and you are a record holder of shares, you will be able to do so by attending the meeting and voting in person, by appointing another person as your representative to vote on your behalf at the meeting, or by providing us with specific instructions as to how to allocate your votes.

A holder of record who wishes to invoke cumulative voting must submit a proxy card by mail, check the box indicating the exercise of cumulative voting and hand mark the number of votes such holder wishes to allocate to each particular nominee next to the name of such nominee on the enclosed proxy card. A holder of record who wishes to provide vote allocation instructions, in the event that cumulative voting applies, must submit a proxy card by mail and should hand mark the number of votes such holder wishes to allocate to any particular nominee next to the name of such nominee on the enclosed proxy card. If you provide vote allocation instructions for less than all of the votes that you are entitled to cast, the proxy holders will retain discretionary authority to cast your remaining votes pursuant to the instructions of the Board, except for any nominee for whom you have withheld authority by marking the “FOR ALL EXCEPT” box. If you wish to grant the proxy holders discretionary authority to allocate votes among all our nominees you may check the “FOR ALL” box, but you are not required to do so. The proxy holders will retain discretionary authority to allocate votes among all our nominees except where you provide a specific instruction by hand marking the number of votes to be allocated or by marking the “FOR ALL EXCEPT” box.

Any shareholder who holds shares in street name and desires to specifically allocate votes among nominees, in the event cumulative voting applies, may do so by either informing the shareholder’s broker, banker or other custodian of the shareholder’s desire to attend the annual meeting, and requesting a legal proxy to attend the meeting, or by providing the broker, banker or other custodian with instructions as to how to allocate votes among nominees, which can then be delivered to the Company. Because each broker, banker or custodian has its own procedures and requirements, a shareholder holding shares in street name who wishes to allocate votes to specific nominees should contact its broker, banker or other custodian for specific instructions on how to obtain a legal proxy or provide vote allocation instructions.

We have not received notice that any of our shareholders currently intends to invoke cumulative voting. In addition, because the Board has not nominated more than nine director nominees for election at the annual meeting, and because the deadline for the submission of director nominees for the 2018 annual meeting has passed, we believe it is less likely that cumulative voting will be invoked at the 2018 annual meeting; however, in the event cumulative voting is invoked, the foregoing mechanics will apply.

Please note you will not be able to submit vote allocation instructions for director elections if you grant a proxy by telephone or the internet.

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CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Statements made in this proxy statement that are not historical in nature, or that state our or our management’s intentions, hopes, beliefs, expectations or predictions of the future, may constitute “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements can often be identified by the use of forward-looking language, such as “could,” “should,” “will,” “will be,” “will lead,” “will assist,” “intended,” “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,” “plan,” or “estimate” or variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance. These forward-looking statements may include, without limitation, discussions of our product development plans, business strategies, future operations, financial condition and prospects, developments in and the impacts of government regulation and legislation and market factors influencing our results.

Forward-looking statements involve risks, uncertainties and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risk factors discussed under “Risk Factors” in our Annual Report on Form 10-K for fiscal year ended March 31, 2018, as well as factors discussed elsewhere in this and other reports and documents we file with the SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time unless required by law. Interested persons are urged to review the risks described under “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal year ended March 31, 2018, as well as in our other public disclosures and filings with the SEC.

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ELECTION OF DIRECTORS

(Proposal No. 1)

Proposal No. 1 concerns the election of the following director nominees: John R. “Rusty” Frantz, Craig A. Barbarosh, George H. Bristol, Julie D. Klapstein, James C. Malone, Jeffrey H. Margolis, Morris Panner, Sheldon Razin and Lance E. Rosenzweig. The Nominating and Governance Committee has nominated each of these individuals for election as a director. Each of our director nominees has consented to being named in this proxy statement and has agreed to serve as a director if elected. Directors are elected at each annual meeting of shareholders and hold office until the next annual meeting or until their respective successors are duly elected and qualified. Each of our director nominees currently serves on the Board and was elected by the shareholders at the 2017 annual meeting of shareholders.

Certain information with respect to our nine director nominees is set forth below. Although we anticipate that each nominee will be available to serve as a director, if any nominee becomes unavailable to serve, the proxies will be voted for another person as may be or has been designated by our Board.

Unless the authority to vote for one or more of our director nominees has been withheld in a shareholder’s proxy or specific instructions to vote otherwise have been given, the persons named in the proxy as proxy holders intend to vote at the annual meeting “For” the election of each nominee presented below. In the event cumulative voting applies to the election of the directors, our Board will provide instruction to such proxy holders to vote the proxies solicited hereby in such manner as to provide for the election of the maximum number of our director nominees (for whom authority is not otherwise specifically withheld and to the extent no specific instructions otherwise are given) including, but not limited to, the prioritization of such nominees to whom such votes may be allocated.

At the annual meeting, in the event cumulative voting applies, unless you specifically instruct otherwise, the Board will instruct the proxy holders to cast the votes as to which voting authority has been granted so as to provide for the election of the maximum number of our director nominees, and will provide instructions as to the order of priority of the Board candidates in the event that fewer than all of our Board candidates are elected. The Board has not yet made any determination as to the order of priority of candidates to which it would allocate votes in the event cumulative voting applies, and expects to make this determination, if necessary, at the annual meeting.

In the election of directors, assuming a quorum is present, the nine nominees receiving the highest number of votes cast at the meeting will be elected directors.

All properly submitted and unrevoked proxies will be counted for purposes of determining whether a quorum is present, including those providing for abstention or withholding of authority and those submitted by brokers voting without beneficial owner instruction and exercising a non-vote on certain matters.

Based on definitions of independence established by The Nasdaq Stock Market (“Nasdaq”), SEC rules and regulations, guidelines established in our Bylaws, and the determinations of our Nominating and Governance Committee and our Board, Messrs. Barbarosh, Bristol, Malone, Margolis, Panner, Razin and Rosenzweig and Ms. Klapstein are independent. Mr. Frantz is a member of our management team and is a non-independent director.

The Nasdaq independence definition includes a series of objective tests, such as that the director or director nominee is not and has not been for the past three years an employee of the Company and has not engaged in various types of business dealings with the Company. In addition, as further required by the Nasdaq rules, our Board has made a subjective determination as to each independent director and director nominee that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment of such director or director nominee in carrying out his or her responsibilities as a director. In making these determinations, our Board reviewed and discussed information provided by our directors, director nominees and management with regard to each director’s and director nominee’s business and personal activities as they may relate to our management and us. The independent members of our Board meet periodically in executive session without management.

OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” EACH OF THE DIRECTOR NOMINEES NAMED BELOW AND LISTED ON THE PROXY CARD.

John R. “Rusty” Frantz, age 51, was appointed our President and Chief Executive Officer effective July 1, 2015. Previously, he served as Senior Vice President and General Manager, Global Dispensing Division, of CareFusion Corp., a San Diego-based global corporation serving the health care industry, providing products and services that assist hospitals in improving the safety and quality of care, from 2011 until March 2015, when CareFusion was acquired by Becton, Dickinson and Company. He also served from 2010 to 2011 as Vice President, Research and Development for CareFusion’s Pyxis business unit, from 2008 to 2010 as General Manager of CareFusion’s Pyxis Perioperative Solutions, and from 2007 to 2008 as CareFusion’s Vice President, Marketing, Supply Technologies. Prior to his employment with CareFusion, Mr. Frantz served as Vice President, Marketing, at Cerfidia Solutions, Vice President, Marketing and Product Management, at Amphire Solutions, Co-Founder and Vice President, Engineering, at OutPurchase, and held various other management positions in the

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health care industry. Mr. Frantz holds a Master of Science degree in engineering from Stanford University and a Bachelor of Science degree in engineering from the Maine Maritime Academy. Mr. Frantz’s position as our President and Chief Executive Officer, as well as his prior executive experience with other companies, provides our Board with the perspective of a person with significant executive management and healthcare information technology industry experience who is involved in the Company’s day to day activities.

Craig A. Barbarosh, age 50, is a director and has served as our Vice Chairman of the Board since November 2015. Mr. Barbarosh is a partner at the international law firm of Katten Muchin Rosenman LLP, a position he has held since June 2012. From January 1999 until June 2012, Mr. Barbarosh was a partner of the international law firm of Pillsbury Winthrop Shaw Pittman LLP. Mr. Barbarosh is a nationally recognized restructuring expert. He served in several leadership positions while a partner at Pillsbury including serving on the firm’s Board of Directors, as the Chair of the firm’s Board’s Strategy Committee, as a co-leader of the firm’s national Insolvency & Restructuring practice section and as the Managing Partner of the firm’s Orange County office. At Katten, Mr. Barbarosh served as a member of the firm’s Executive and Operating Committee from June 2012 through June 2016 and currently serves on the firm’s Board of Directors. Mr. Barbarosh received a Juris Doctorate from the University of the Pacific, McGeorge School of Law in 1992, with distinction, and a Bachelor of Arts in Business Economics from the University of California at Santa Barbara in 1989. Mr. Barbarosh received certificates from Harvard Business School for completing executive education courses on Private Equity and Venture Capital (2007), Financial Analysis for Business Evaluation (2010) and Effective Corporate Boards (2015). Mr. Barbarosh is also a frequent speaker and author on restructuring and governance topics. Mr. Barbarosh, as a practicing attorney specializing in the area of financial and operational restructuring and related mergers and acquisitions, provides our Board with experienced guidance on similar transactions involving our company. Mr. Barbarosh is also a director of Sabra Health Care REIT, Inc. (Nasdaq: SBRA) where he is the Chair of the Audit Committee and a member of the Compensation Committee, and a director of Aratana Therapeutics, Inc. (Nasdaq: PETX) where he is a member of the Compensation Committee.  Mr. Barbarosh previously served on the board of BioPharmX, Inc., (NYSE: BPMX) where he was the Chair of the Nominating and Governance Committee and a member of the Audit and Compensation Committees. Mr. Barbarosh has been a director since 2009.

George H. Bristol, age 69, is a director. Mr. Bristol is a Managing Director of Janas Associates, a corporate financial advisor, a position he has held since 2010. From August 2006 until March 2010 he served as Managing Director-Corporate Finance of Crowell Weedon & Co. From November 2002 until August 2006, he was a member and Chief Financial Officer of Vantis Capital Management, LLC, a registered investment advisor which managed the Vantis hedge funds totaling over $1.4 billion from November 2002. Prior to Vantis, he was an investment banker with several firms including Ernst & Young, Paine Webber, Prudential Securities and Dean Witter. He is a graduate of the University of Michigan and Harvard Business School. Mr. Bristol’s experience at Janas, WealthIntel, and Vantis, and his various corporate finance positions, provide our Board with insight from someone with direct responsibility for strategic and transactional financial matters. Mr. Bristol has been a director since 2008.

Julie D. Klapstein, age 63, is a director. Ms. Klapstein was the founding Chief Executive Officer of Availity, LLC, one of the nation’s largest health information networks optimizing the automated delivery of critical business and clinical information among healthcare stakeholders. Ms. Klapstein served as Availity’s Chief Executive Officer and board member from 2001 to 2011. She was the interim Chief Executive Officer at Medical Reimbursements of America, Inc., a private company, from February 2017 to June 2017. Ms. Klapstein’s more than thirty years of experience in the healthcare information technology industry include executive roles at Phycom, Inc. (President and Chief Executive Officer from 1996 to 2001), Sunquest Information Systems (Executive Vice President), Siemens Medical Systems Turnkey Systems Division, and GTE Health Systems. Ms. Klapstein is a director of Amedisys Inc., a public company, since April 2016, where she serves on the Compensation, Governance, and Quality committees. She also currently serves on the board of directors for several private companies and organizations, including eSolutions, Inc., which specializes in revenue cycle management solutions; Dominion Diagnostics, LLC, which specializes in laboratory services; Bottom Line Systems, which specializes in underpayments and denials for hospitals; and the Grand Canyon Association, which is the official nonprofit partner of the Grand Canyon National Park. Ms. Klapstein previously was a director for two public companies, Annie’s Homegrown/Annies, Inc. from January 2012 to September 2014, where she served on the Governance, Compensation, and Audit committees, and Standard Register Inc. from April 2011 to November 2014, where she served on the Governance, Compensation, and Audit committees. She also has been a director for multiple private companies. Ms. Klapstein earned her bachelor’s degree from Portland State University in Portland, Oregon. Ms. Klapstein will bring to our board extensive knowledge of the healthcare industry, relevant executive and management experience, and public company board experience. Ms. Klapstein has been a director since 2017.

James C. Malone, age 69, is a director. Mr. Malone has more than 35 years of financial leadership experience, having held the Chief Financial Officer position at several global healthcare companies. Currently, Mr. Malone is the Executive Vice President and Chief Financial Officer of XIFIN, Inc. a financial cloud computing company dedicated to optimizing the economics of healthcare, since February 2015. Mr. Malone served as the Chief Financial Officer and Executive Vice President of American Well Inc., a software technology and services company that brings healthcare into the

6


 

homes and workplaces of patients, from September 2010 to January 2015. He served as Chief Financial Officer of Misys PLC, a multinational software company, from June 2007 to January 2009 and served as its Executive Vice President until January 2009. He joined Misys from The TriZetto Group, Inc., a provider of healthcare IT solutions and services to payers and providers, where he served as Chief Financial Officer from March 2004 to June 2007, Vice President of Finance from January 2004 until his appointment as Chief Financial Officer, Executive Vice President of Finance from January 2006 to June 2007, Senior Vice President of Finance from January 2004 until January 2006 and also served as its Principal Accounting Officer. Prior to this, he served as Chief Financial Officer, Senior Vice President and Chief Administrative Officer of IMS Health Inc., a provider of information, services and technology for the healthcare industry. He served as Senior Vice President and Controller of Cognizant Corporation from 1995 to 1997. Mr. Malone also held management positions at Dun & Bradstreet, Reuben H. Donnelley, and Siemens AG and served as audit manager at Price Waterhouse. He also served as an executive director of Misys PLC from June 2007 to January 2009 and served as director of Allscripts Healthcare Solutions, Inc. (alternate name, Allscripts-Misys Healthcare Solutions, Inc.), which provides practice management and electronic health record technology to healthcare providers, from October 2008 to January 2009. He also served as a director of Cognizant Technology Solutions, Inc. Mr. Malone received his BS in Accounting from St. Francis College in 1973 and attended Pace University for graduate work in tax. He received his Certified Public Accountant certification from the State of New York in 1975. Mr. Malone’s qualifications as a director include his experience as a Chief Financial Officer in the technology industry (including in the health care technology sector) and his experience as an executive officer and director of various companies. Mr. Malone has been a director since 2013.

Jeffrey H. Margolis, age 55, is a director and has served as our Chairman of the Board since November 2015. Currently, Mr. Margolis is chairman and CEO of Welltok, Inc., a healthcare consumer engagement and software-as-a-service enterprise. Mr. Margolis is Chairman Emeritus of TriZetto Corporation, a recognized leader of in the provision of health information technology for payers and providers and the originator of the industry-vertical SaaS model, where he served as the founding CEO beginning in 1997, served as Chairman and CEO until 2010 (publically traded on NASDAQ from October 1999 - August 2008), and continued as Chairman until October 2011. Mr. Margolis also served as Senior Executive Advisor to the Oliver Wyman Health Innovation Center, an organization that identifies and disseminates ideas and best practices that aim to transform healthcare, during 2012 and 2013. From 1989 to 1997, Mr. Margolis served as Senior Vice President and Chief Information Officer of FHP International Corp. and its predecessors, a publicly-traded company that focused on the delivery of managed group and individual health care insurance and hospital and ambulatory-based clinical services along with a broad array of healthcare ancillary services. Earlier in his career, Mr. Margolis served in various positions with Andersen Consulting including his final position as Manager, Healthcare Consulting. Mr. Margolis currently serves on the board of directors of Alignment Healthcare, Inc., a private, for-profit population health management entity, and TriNetX, Inc., a private, for-profit data and software-as-a-service entity that supports clinical trials. He has previously served on a variety of other for-profit boards. He also has served on a number of not-for-profit boards of directors. Mr. Margolis is currently a director of Hoag Hospital in Newport Beach, California. He is a member of the board of governors at Cedars-Sinai in Los Angeles, California and is on the Advisory Boards of the University of California at Irvine’s Center for Healthcare Management & Policy and Center for Digital Transformation. A published author on topics of healthcare information technology and systems, Mr. Margolis earned a bachelor’s degree in business administration/management information systems with high honors from the University of Illinois in 1984, and holds CPA certificates (currently inactive) in Colorado and Illinois. Mr. Margolis has been a director since 2014.

Morris Panner, age 55, is a director. Mr. Panner is a long tenured executive with expertise in both healthcare software companies, including SaaS capabilities, and the law. Currently, Mr. Panner is the Chief Executive Officer of Ambra Health (formerly DICOM Grid), a cloud-based healthcare software company that manages diagnostic imaging and related healthcare data. Prior to joining Ambra Health in September 2011, Mr. Panner was the Chief Executive Officer of Townflier, Inc. and related affiliates that provide group communications services, from May 2010 to August 2011. Previously, from April 2000 to May 2010, he was Chief Executive Officer of OpenAir, Inc., a SaaS project management company, which he led from start-up to its successful acquisition by NetSuite Inc., a provider of an integrated web-based business software suite, in 2008. Following the acquisition, Panner led the OpenAir division of NetSuite, during which time he oversaw the acquisition and integration of OpenAir’s nearest competitor, QuickArrow, Inc., as well as the expansion of OpenAir internationally. Mr. Panner served as Chairman of the Board of the Software Division of the Software and Information Industry Association and currently serves as a board member. Mr. Panner is a lawyer who served as an Assistant United States Attorney, the Resident Legal Advisor in Bogota, Columbia for the U.S. Department of Justice and as the Principal, Deputy Chief of the Narcotics and Dangerous Drug Section of the U.S. Department of Justice. He currently serves on the board of directors of Unanet Technologies, Inc., a software development company specializing in services automation solutions for project-based companies, where he has served since 2012, and on the board of Drug Strategies, a nonprofit research institution on issues of drug addiction and treatment. Mr. Panner was previously a director of the Washington Office on Latin America, a not-for-profit organization, from 2003 to 2009. Mr. Panner graduated from Yale College with a BA in History in 1984 and from the Harvard Law School with a JD in 1988. Mr. Panner’s qualifications as a director include his executive experience at software companies, including at health care software companies, and his legal training. Mr. Panner has been a director since 2013.

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Sheldon Razin, age 80, is a director and our Chairman Emeritus. He is the founder of our company and served as our Chairman of the Board from our incorporation in 1974 until his retirement as Chairman and his appointment as Chairman Emeritus in November 2015. Throughout his tenure as our Chairman, Mr. Razin has received several awards recognizing his service and contributions as a director. Mr. Razin’s honors at the national level include: winner in the Software Category of TechAmerica’s 52nd Annual Innovator Awards in 2010 and Chairman of the Year in the 2009 American Business Awards. He was also honored as a Director of the Year in Orange County’s 16th Annual Forum for Corporate Directors Awards in 2011, as the 2009 Ernst & Young Entrepreneur of the Year in the Healthcare Category for the Orange County and Desert Cities region and as a Finalist at the national level, and with the Excellence in Entrepreneurship Award from the Orange County Business Journal in 2009. Mr. Razin served as our Chief Executive Officer from 1974 until April 2000. Since our incorporation until April 2000, he also served as our President, except for the period from August 1990 to August 1991. Additionally, Mr. Razin served as our Treasurer from our incorporation until October 1982. Prior to founding our company, he held various technical and managerial positions with Rockwell International Corporation and was a founder of our predecessor, Quality Systems, a sole proprietorship engaged in the development of software for commercial and space applications and in management consulting work. Mr. Razin holds a B.S. degree in Mathematics from the Massachusetts Institute of Technology. Mr. Razin, as our founder, brings valuable knowledge to our Board regarding our history, operations, technology and marketplace. As evidenced by his awards, he has been and continues to be a technology and healthcare visionary as well as an outstanding entrepreneur whose insights and guidance are invaluable to Quality Systems. Mr. Razin has been a director since 1974.

Lance E. Rosenzweig, age 55, is a director. Mr. Rosenzweig currently serves as a director of Boingo Wireless. From January 2015 through December 2016, Mr. Rosenzweig served as Operating Executive of Marlin Operations Group, which works with Marlin Equity Partners, a global investment firm focused on providing corporate parents, shareholders and other stakeholders with tailored solutions that meet their business and liquidity needs. Previously, Mr. Rosenzweig served as Chief Executive Officer and President, Global Markets for Aegis USA, Inc., a leading business process outsourcing company with over 18,000 employees that services major corporations in the healthcare, financial services and other industries, from 2013 through the company’s sale to Teleperformance for $610 million in 2014. Mr. Rosenzweig served as the founder and Chief Executive Officer of LibertadCard, Inc., a provider of pre-paid debit and remit cards, since the company's inception in 2010 until November 2013. Mr. Rosenzweig has also co-founded and served as Chairman of the Board of PeopleSupport, Inc., a business process outsourcing company with over 8,000 employees and operations in the US, the Philippines and Costa Rica, since its inception in 1998, and as PeopleSupport’s Chief Executive Officer from 2002 through the company’s sale in 2008 for $250 million. Under Mr. Rosenzweig’s leadership as CEO, PeopleSupport went public in an IPO, was ranked by Fortune as the 9th fastest growing small public company in the U.S. and was named employer of the year in the Philippines. From 1993 to 1997, Mr. 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, Mr. 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. Mr. Rosenzweig has a BS in Industrial Engineering and an MBA with honors every term, both from Northwestern University. Mr. Rosenzweig brings significant experience in international operations and successful offshore ventures. Mr. Rosenzweig has been a director since 2012.

NON-DIRECTOR EXECUTIVE OFFICERS

James R. Arnold, Jr., age 61, was appointed our Executive Vice President and Chief Financial Officer in March of 2016. Prior to joining the Company, Mr. Arnold served as Chief Financial Officer and Executive Board member of Kofax Ltd., a publicly traded software company, from June 2010 to May 2015, where Mr. Arnold participated in and facilitated the strategic process that resulted in the sale of Kofax Ltd.’s enterprise software division. From 2004 to 2009, Mr. Arnold was Senior Vice President at Nuance Communications, Inc., a publicly traded software company, where he also served as Chief Financial Officer from 2004 to 2008. Previously, Mr. Arnold held numerous other senior-level finance positions at technology companies, to include roles as Vice President Corporate Controller at Cadence Design Systems, Inc., Chief Financial Officer at Informix Software, Inc., and Corporate Controller at Centura Software Corporation. Additionally, from 2003 to 2010 he served as a director and chair of the audit committee at Selectica, Inc., where he also was co-chairman of the board in 2010. Earlier in his career, Mr. Arnold provided consulting and auditing services to companies in diverse industries while at Price Waterhouse LLP. Mr. Arnold holds a Bachelor of Business Administration degree in Finance from Delta State University in Oxford Mississippi, and a Master’s degree in Business Administration from Loyola University in New Orleans, Louisiana.

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David A. Metcalfe, age 55, was appointed our Executive Vice President and Chief Technology Officer in February 2016. Prior to joining the Company, Mr. Metcalfe served as Vice President of R&D at Becton, Dickinson & Company, a leading worldwide medical technology company, from March 2015 to January 2016. Previously, Mr. Metcalfe was Vice President of Product Development at CareFusion Corp., a global medical technology company servicing the critical care market, from September 2012 to March 2015, at which time CareFusion was acquired by Becton, Dickinson & Company. From 2008 to 2012, Mr. Metcalfe was Vice President of Development for Allscripts Healthcare Solutions, a provider of healthcare information technology solutions. Earlier in his career, Mr. Metcalfe held numerous other senior-level development positions at technology companies. Mr. Metcalfe holds a Bachelor of Science in Instrumentation and Control Engineering from Teesside University in Middlesbrough, England.

Scott E. Bostick, age 54, was appointed our Executive Vice President and Chief Operating Officer in April of 2017. Previously Mr. Bostick was our Chief Client Officer since March 2016. Prior to joining the Company, Mr. Bostick spent six years in a range of roles at CareFusion Corp., most recently as Senior Vice President of Americas Commercial Operations, prior to CareFusion’s acquisition by Becton, Dickinson and Company in March 2015. Earlier at CareFusion, he was Senior Vice President, U.S. Strategic Sales, and Senior Vice President and General Manager of CareFusion’s Pyxis medical dispensing division. Before CareFusion, Mr. Bostick spent nearly 10 years at Cardinal Health in a variety of positions. He holds a Bachelor of Science degree from the University of Florida, and participated in an executive education program at Boston University.

Jeffrey D. Linton, age 55, became our Executive Vice President, General Counsel and Secretary in December of 2017. Prior to joining the Company, Mr. Linton served as General Counsel and Secretary of Applied Proteomics, Inc. from November 2016 to November 2017.  Previously, Mr. Linton was Senior Vice President, General Counsel and Secretary of Sequenom, Inc. from September 2014 to October 2016.  Before joining Sequenom, Mr. Linton was Senior Vice President and General Counsel at Beckman Coulter, Inc. from July 2011 to September 2014 and, prior to that, was Vice President, Deputy General Counsel from September 2008 to July 2011. Before joining Beckman Coulter, Mr. Linton was President of the research products and services division of Serologicals Corporation, a company that developed, manufactured and sold life science research products and technologies, diagnostic kits and drug discovery services. Before that role, he served as Vice President, Law, Corporate Business Development and Public Affairs at Serologicals from October 2000 to April 2003. He has held various other positions in law, government and public affairs and human resources. Mr. Linton earned a B.A., magna cum laude, from Butler University and a J.D., cum laude, from the University of Notre Dame Law School.

9


 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as otherwise indicated in the related footnotes, the following table sets forth information with respect to the beneficial ownership of our common stock as of the record date, June 18, 2018, by:

 

each of our directors and director nominees;

 

each of our named executive officers (“NEOs”);

 

each person known by us to beneficially own more than 5% of the outstanding shares of our common stock; and

 

all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to the securities. To our knowledge, unless indicated by footnote, and subject to community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Except as indicated in the footnotes to the table below, shares of common stock underlying options, if any, that currently are exercisable or are scheduled to become exercisable for shares of common stock within 60 days after the date of the table are deemed to be outstanding in calculating the percentage ownership of each listed person or group but are not deemed to be outstanding as to any other person or group. Percentage of beneficial ownership is based on 64,185,586 shares of common stock outstanding as of the record date, June 18, 2018.

Unless otherwise indicated, the address of each of the beneficial owners named in the table is c/o Quality Systems, Inc., 18111 Von Karman Avenue, Suite 800, Irvine, California 92612. Messrs. Barbarosh, Bristol, Frantz, Malone, Margolis, Panner, Razin, Rosenzweig and Ms. Klapstein are current directors and director nominees of our Company. Our NEOs for our fiscal year 2018 are Messrs. Frantz, Arnold, Metcalfe, Bostick and Linton. Our executive officers as of the record date, June 18, 2018, are Messrs. Frantz, Arnold, Metcalfe, Bostick and Linton.

 

 

 

 

 

 

 

 

 

Name of Beneficial Owner

 

Number of Shares

of Common Stock Beneficially Owned

 

Percent of

Common Stock Beneficially Owned

Sheldon Razin

 

10,237,374

 

 

 

15.9%

Craig A. Barbarosh

 

62,593

 

 

 

*

George H. Bristol

 

55,847

 

 

 

*

Julie D. Klapstein

 

9,189

 

 

 

*

James C. Malone

 

40,603

 

 

 

*

Jeffrey H. Margolis

 

63,457

 

 

 

*

Morris Panner

 

39,128

 

 

 

*

Lance E. Rosenzweig

 

43,046

 

 

 

*

Rusty Frantz

 

391,844

 

(1)  

 

*

James R. Arnold, Jr.

 

337,156

 

(2)  

 

*

David A. Metcalfe

 

146,813

 

(3)  

 

*

Scott E. Bostick

 

159,313

 

(4)  

 

*

Jeffrey D. Linton

 

 

(5)  

 

*

Ahmed Hussein

 

5,687,696

 

(6)  

 

8.9%

Blackrock, Inc.

 

6,748,087

 

(7)  

 

10.5%

Brown Capital Management, LLC

 

5,144,829

 

(8)  

 

8.0%

The Vanguard Group

 

5,023,808

 

(9)  

 

7.8%

The Brown Capital Management Small Company Fund

 

4,321,657

 

(8)  

 

6.7%

All directors, director nominees and executive officers as a group

 

11,586,363

 

(10)  

 

17.9%

 

*

Represents less than 1.0%.

(1)

Includes 280,000 shares underlying options.

(2)

Includes 125,000 shares underlying options.

(3)

Includes 100,000 shares underlying options.

(4)

Includes 112,500 shares underlying options.

(5)

Mr. Linton was appointed Executive Vice President, General Counsel and Secretary effective December 4, 2017 and received a signing grant of 135,000 stock options, none of which were vested as of the record date.

(6)

This information is derived from the most recent available information, a Form 4 filed by Ahmed Hussein on August 27, 2012. According to the Form 4, Mr. Hussein has beneficial ownership of 5,687,696 shares. Mr. Hussein is a former director of the Company who resigned on May 14, 2013.

(7)

This information is derived from a Schedule 13G/A filed by Blackrock, Inc. on January 19, 2018. According to the Schedule 13G/A, Blackrock, Inc. had sole power to vote 6,597,259 shares, sole power to dispose of 6,748,087 shares, and no shared power to vote or dispose of shares. The address for Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.

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(8)

This information is derived from a Schedule 13G/A filed by Brown Capital Management LLC as primary filer on February 14, 2018. Brown Capital Management, LLC beneficially owned 9,466,486 shares.  Within those shares are 4,321,657 shares beneficially owned by The Brown Capital Management Small Company Fund, a registered investment company, which is managed by Brown Capital Management, LLC. According to the Schedule 13G/A, Brown Capital Management LLC had sole power to vote 5,573,751 shares, sole power to dispose of 9,466,486 shares and no shared power to vote or dispose of shares. The Brown Capital Management Small Company Fund,  had sole power to vote 4,321,657 shares, sole power to dispose of 4,321,657 shares and no shared power to vote or dispose of shares. The address for Brown Capital Management LLC and The Brown Capital Management Small Company Fund is 1201 N. Calvert Street, Baltimore, MD 21202.

(9)

This information is derived from a Schedule 13G filed by The Vanguard Group on February 12, 2018. According to the Schedule 13G/A, The Vanguard Group had sole power to vote 86,166 shares, shared power to vote 9,000 shares, sole power to dispose of 4,933,142 shares, and shared power to dispose of 90,666 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.

(10)

Includes 617,500 shares underlying options.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about our common stock that may be issued upon the exercise of options under all of our equity compensation plans as of March 31, 2018.

 

Plan Category

 

Number of Securities

to be issued upon

exercise of

outstanding options

(a)

 

 

 

Weighted-average

exercise price of

outstanding options,

warrants and rights

(b)

 

 

Number of Securities

remaining available for

future issuance under

equity compensation

(excluding Securities

reflected in column (a))

(c)

 

 

Equity compensation plans approved by security holders

 

 

3,670,170

 

(1)

 

$

15.51

 

 

 

8,571,286

 

(2)

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

3,670,170

 

(1)

 

$

15.51

 

 

 

8,571,286

 

(2)

 

(1)

Represents shares of common stock underlying options outstanding under our Amended 2015 Equity Incentive Plan.

(2)

Represents shares of common stock available for issuance under options or awards that may be issued under our Amended 2015 Equity Incentive Plan. The material features of this plan is described in Note 13 to the Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018 filed with the SEC on May 24, 2018.

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EXECUTIVE AND DIRECTOR COMPENSATION AND RELATED INFORMATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis section describes our executive compensation programs for our named executive officers, or “NEOs”, for our fiscal year 2018 (which began on April 1, 2017 and ended on March 31, 2018). These NEOs were:

 

John R. “Rusty” Frantz -- President and Chief Executive Officer, appointed July 2015

 

James R. Arnold -- Executive Vice President and Chief Executive Officer, appointed March 2016

 

David A. Metcalfe -- Executive Vice President and Chief Technology Officer, appointed February 2016

 

Scott E. Bostick -- Executive Vice President and Chief Operating Officer, appointed April 2017 (previously served as Chief Client Officer since March 2016)

 

Jeffrey D. Linton -- Executive Vice President, General Counsel and Secretary, appointed December 2017

Executive Summary

Quality Systems, Inc., known to our clients as NextGen Healthcare, provides a range of software, services, and analytics solutions to medical and dental group practices.  Our portfolio delivers foundational capabilities to empower physician success, enrich the patient care experience, and enable the transition to value-based healthcare. We compete for executive talent with a broad range of companies that are leaders in the software and healthcare information technology industries. Our compensation program is intended to:

 

align management’s interests with the interests of our shareholders;

 

reward strong Company financial performance;

 

provide responsible and balanced incentives; and

 

allow us to attract and retain effective executive leadership.

Accomplishments Achieved by Executive Team During Fiscal Year 2018

The Company is in the process of evolving into a more nimble, client-focused organization and this process is being led by a substantially new management team. Our Chief Executive Officer, Chief Financial Officer, and Chief Technology Officer joined the Company within the past several years, and our current Chief Operating Officer and General Counsel were each appointed during fiscal year 2018.  

In fiscal year 2018, our executive team continued to implement changes designed to more effectively support the execution of our new business strategy. We continued our reorganization effort in fiscal year 2018 as part of a planned multi-year improvement program, which is being implemented by the substantially new leadership team and is not yet complete. We intend to continually evaluate our strategic direction over the long term and make adjustments as appropriate.

The new strategic direction to date has simplified our usability for customers, broadened our solution set, and increased the visibility of our platform. In addition, under the leadership of our executive team, during fiscal year 2018 we successfully completed and integrated several key acquisitions that enable the Company to expand its client solutions offerings.

We believe our executive team made substantial progress in fiscal year 2018 and will continue to build a Company that enables more efficient, integrated, and client-centered delivery of holistic solutions, ultimately leading to improved growth, profit, and long-term shareholder value.

Shareholder Support for our Compensation Decisions; Evolution of Compensation Program

In the Company’s previous fiscal year (i.e., fiscal year 2017, which began on April 1, 2016 and ended on March 31, 2017), the Compensation Committee revised the design and philosophy of our executive compensation program so that it is better tailored to the composition of our current leadership team and more closely aligns with the Company’s strategy and market trends.  At our 2017 annual meeting of shareholders, approximately 66% of the shares represented and voting on the “say-on-pay” proposal voted in favor of the compensation of our fiscal year 2017 NEOs. This vote represents a departure from the significantly higher levels of shareholder support in prior years, but most of the change from prior years was due to concentrated ownership among our small group of registered retail shareholders (and we believe due to a single large retail shareholder in particular). Notwithstanding the retail shareholder vote, 84% of our institutional shareholders voted in favor of the compensation of our fiscal year 2017 NEOs.  In response, the Compensation Committee engaged in outreach to our most significant retail shareholder to ascertain the shareholder’s views about our executive compensation program and to explain our executive compensation philosophy.  The Compensation Committee determined to consider the shareholder’s views, while also viewing the high level of say-on-pay vote support from our institutional shareholders as reflecting the soundness of the program’s amounts and underlying pay-for-performance design.

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For fiscal year 2018, the Compensation Committee increased base salaries for our NEOs by 3% over fiscal year 2017 levels, consistent with the budgeted salary increases for our other employees. This resulted in salaries for our NEOs that were at or below the median of our Peer Group companies. For fiscal year 2018, the Compensation Committee maintained our NEOs’ target cash bonuses as a percentage of base salaries at the same levels as for fiscal year 2017. The Compensation Committee continued placing heightened emphasis on equity compensation, specifically on stock options, in fiscal year 2018 because options reward only creation of additional shareholder value by the executive team. Nevertheless, the grant date fair value of fiscal year 2018 equity awards, as disclosed in the Summary Compensation Table of this proxy statement, was below the median of our Peer Group companies for all NEOs.

The Compensation Committee has determined to revise its earlier practice of making executive officer equity awards in the first half of each calendar year, to instead making such awards in the latter part of each calendar year.  This shift in equity award timing to later in the fiscal year enables the Compensation Committee to make award decisions based on a clearer sense of the Company’s and the NEOs’ performance throughout the fiscal year and to allow increased opportunities for performance feedback throughout the year.

In fiscal year 2018, the Compensation Committee granted our NEOs equity awards in the form of stock options, awarded in October 2017.  We believe stock options are naturally performance-based because they provide value to the recipient only if the Company’s stock price appreciates and that this value creation requirement to earn any reward aligns with the executive team’s process for transforming the business.

The total compensation of the Company’s CEO in fiscal year 2018, as reported in the Summary Compensation Table of this proxy statement, was 12% lower than in fiscal year 2017.  For fiscal year 2018, the total direct compensation for all of our NEOs was below the median of total direct compensation for the Peer Group companies. Our NEOs’ actual total direct compensation value was below the Peer Group’s median total direct compensation by between 10% and 30%. Our CEO’s reported fiscal year 2018 actual total direct compensation was 20% below the median total direct compensation level of the Peer Group companies. Further, all of our NEOs had salary levels near the Peer Group median, and our CEO’s salary was below the median of Peer Group CEO salaries.

We believe a significant portion of our NEOs’ compensation should be variable, at risk and tied directly to measurable performance. Consistent with these principles, a material portion of our NEOs’ compensation is in the form of performance-based incentives that are earned upon the attainment of pre-established financial goals.

Our Fiscal Year 2018 Performance Measures

Performance Measures for Cash Incentive Bonus

Under our 2018 Executive Compensation Program, each of our NEOs was eligible for a cash incentive bonus based on two performance measures: (i) Revenue for fiscal year 2018, and (ii) Non-GAAP EPS for fiscal year 2018. These annual performance metrics are the same measures of financial performance that the Company reports to its shareholders on a quarterly basis, and the same measures on which the Company provides forward-looking financial guidance, except that all revenues, expenses and dilutive shares associated with acquisitions or divestitures that close during the fiscal year are not included in the calculation of these performance measures for purposes of executive compensation. These performance measures recognize success on execution of our business plan, which we believe will create long-term value for our shareholders. For these reasons, we believe these are appropriate performance measures for our executive cash incentive bonus plan at this time.

Our Fiscal Year 2018 Performance and How Our Performance Links to Pay

Fiscal year 2018 presented new financial and operational challenges as the Company prepared in the immediate term for the opportunity to generate increasing long term revenue growth and operating margin. Cash incentives that could be earned in fiscal year 2018 were paid according to formula-based outcomes, with no discretion applied to the results against the pre-established goals. Our Revenue for fiscal year 2018 was $529.9 million, compared with $509.6 million for fiscal year 2017. Our Non-GAAP EPS for fiscal year 2018 was $0.74, compared to $0.82 for fiscal year 2017, as management implemented the Board-approved plan to invest at a higher level so that the Company can pursue new booking opportunities that may not result in increased revenue and earnings until fiscal year 2019 and beyond.  Based on the results of the cash incentive bonus performance measures, our NEOs earned formulaic cash bonuses equal to 95.5% of their respective bonus target amounts based on performance versus the Revenue and Non-GAAP EPS measures, as described more fully below under the section “2018 Executive Compensation Program Terms and Results – Cash Incentive Bonus.”

13


 

Equity as a Key Component of Compensation

Equity-based compensation aligns the interests of our management team with those of our shareholders by encouraging long-term performance. Multi-year vesting schedules create incentives for our officers to sustain performance over the long term and to encourage retention as the Company executes its new business strategy. Under the 2018 Executive Compensation Program, stock options, which were awarded to our NEOs in October 2017, vest in four equal, annual installments commencing on the first anniversary of the grant date, subject to continued employment with the Company.

Balanced Pay Opportunities

The Compensation Committee evaluates our compensation programs annually to ensure they provide balanced and reasonable pay opportunities. In designing our compensation programs, our Compensation Committee is guided by the following compensation principles:

 

Compensation value at or below the peer group median. The total compensation values presented in the Summary Compensation Table in this proxy statement for our NEOs are all below the median by a minimum of 10%, with our CEO’s total compensation levels roughly 20% below the median of the Peer Group companies reviewed in fiscal year 2018. We believe this below-median compensation value constitutes a restrained compensation philosophy for our NEOs in the midst of effecting a corporate transformation.

 

Selective use of employment agreements and severance arrangements. Only our President and Chief Executive Officer, Mr. Frantz, has an employment agreement. Our NEOs are subject to change of control severance agreements that provide severance payments and other benefits in connection with a change of control of the Company, but only if the NEO is terminated by the Company without “cause”, or terminates his or her employment for “good reason” within the two month period before or 18 month period after a “change in control” of the Company. Also, our form equity award documents that apply generally to all employees, including our executive officers, contain double-trigger equity acceleration provisions that govern in the event of a qualifying termination in a change of control. Messrs. Frantz and Arnold were granted certain restricted stock awards that provide for partial accelerated vesting upon a qualifying termination not in connection with a change of control.

 

No perquisites; no tax gross-ups.  We do not provide any meaningful perquisites to our NEOs, other than pooled use of a corporate van and gym membership reimbursement, as well as an allowance to our Chief Financial Officer for a corporate apartment that is shared with another member of our leadership team, as detailed in the Summary Compensation Table. We do not provide tax gross-ups to our NEOs in connection with perquisites or benefits.  

 

No corporate aircraft.  We do not provide a corporate aircraft for personal travel of any of our NEOs.

 

Executive stock ownership policy.  We have an executive stock ownership policy designed to align our NEOs’ long-term interests with those of our shareholders and to discourage excessive risk taking. The policy requires our CEO to achieve a stock ownership level of six times base salary, while the other NEOs must achieve stock ownership levels of two times base salary. Executive officers who have not achieved the ownership requirements within five years are required to hold 100% of their after-tax profit shares acquired upon option exercises or following the vesting of other shares until they are in compliance.

 

Executive compensation recovery policy (“clawback”).  Our incentive recoupment policy provides that all incentive compensation awarded to our NEOs may be recovered in the event of a financial restatement or intentional misconduct by the NEO.

Commitment to Strong Governance Standards

We are committed to adopting and maintaining good corporate governance standards with respect to our compensation programs, procedures and practices. As such, our Company’s and Compensation Committee’s practices include the following:

 

Independent compensation committee. Our Compensation Committee designs and oversees our executive compensation programs. The Compensation Committee is comprised entirely of independent directors.

 

Annual say-on-pay advisory vote.  Since 2011, we have held annual say-on-pay advisory votes in accordance with good governance practices and to maintain accountability to our shareholders.

 

Performance goals. A material portion of our NEOs’ compensation is in the form of performance-based annual cash and equity incentives that are earned upon the attainment of pre-established financial goals. These goals are tied directly to the Company’s measurable performance and designed to align the interests of our executives with those of our shareholders.

14


 

 

Risk oversight. Our Compensation Committee oversees and periodically assesses the risks associated with our compensation structure, programs and practices to ensure they do not encourage excessive risk-taking.

 

Authority to engage independent consultants. Our Compensation Committee has the authority to engage its own independent compensation consultants, legal counsel or other advisers to assist in designing and assessing our executive compensation programs and pay practices. For fiscal year 2018, our Compensation Committee engaged Frederic W. Cook & Co., Inc. as its independent compensation consultant.

 

Prohibition on speculative trading. Board members, officers and employees are generally prohibited under the Company’s insider trading policy from engaging in short-term or speculative transactions in our Company’s shares.

Compensation Details

Compensation Philosophy, Objectives and Components

This section discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by executive officers and places in perspective the data presented in the tables and narratives that follow.

The Compensation Committee regularly assesses the Company’s compensation philosophy as well as target and actual compensation. The Compensation Committee is comprised solely of independent directors and has responsibility for overseeing the Company’s overall compensation programs, designing and managing our executive compensation programs and making recommendations to the Board concerning compensation matters for our employees and directors. The Compensation Committee attempts to create compensation paid to our executive officers that is responsible, balanced, performance-based, and competitive. Our executive compensation program is designed to reward achievement of specific performance goals. By rewarding strong management performance in the achievement of these established goals, our executive compensation program helps to ensure that management’s interests are aligned with our shareholders’ interests, with the ultimate objective of improving shareholder value.

Our Compensation Committee designs compensation packages for our executive officers that include equity-based compensation as a key component. Our Compensation Committee believes that this use of equity-based compensation serves to further align the interests of our executive officers with those of our shareholders by encouraging long-term performance. Our Compensation Committee also strives to enable us to recruit, retain and develop effective executive talent by creating compensation opportunities that are fair in light of the Company’s performance and market position.

The Compensation Committee holds meetings following the end of the fiscal year without any members of management present to deliberate on and approve executive officer bonuses earned under the prior fiscal year’s compensation program and approve the compensation program for the next fiscal year. During the process, the Compensation Committee discusses the performance of the executive officers as well as market and industry data on compensation metrics and best practices.

The Compensation Committee assesses our Company-wide compensation structure, programs and practices to help ensure that our compensation programs do not incentivize excessive risk taking. Pursuant to this assessment, the Compensation Committee believes that the market level, the balance of cash and equity compensation, and the performance measures used in our compensation programs are effective and do not encourage excessive risk taking.

The Compensation Committee has the authority, in its sole discretion, to retain or obtain the advice of an independent compensation consultant, legal counsel or other advisers to assist in carrying out the Compensation Committee’s duties and responsibilities. Prior to selecting a compensation adviser, the Compensation Committee assesses whether work performed or advice rendered by such compensation adviser would raise any conflicts of interest. From time to time, the Compensation Committee has engaged independent compensation consultants to advise it on matters of Board and executive compensation. In each case, the Compensation Committee has utilized these compensation consultants to compile and present peer-group compensation data to the Compensation Committee. For fiscal year 2018, our Compensation Committee engaged Frederic W. Cook & Co., Inc. as its independent compensation consultant, and there were no conflicts of interest with respect to this adviser. The Compensation Committee also consults publicly available compensation data from time to time as part of its executive compensation decisions.

Key components of the 2018 Executive Compensation Program were base salary in the form of cash, a cash incentive bonus program, and equity awards in the form of stock options. In addition, Mr. Frantz remained eligible to earn shares from a prior grant made before fiscal year 2018 under a legacy multi-year performance share plan dating to fiscal 2016, pursuant to which restricted shares could be earned based on the Company’s average daily closing stock price during the thirty day calendar period following the end of fiscal year 2018. Mr. Frantz did not earn any shares under this performance share plan because the stock price hurdles were not met.

15


 

The Compensation Committee views the various components of compensation as related, but distinct, and believes that a significant percentage of total compensation should be allocated to performance incentives. The Compensation Committee determines the appropriate level for each compensation component based in part, but not exclusively, on performance, internal equity, stability and other considerations the Compensation Committee deems relevant. The Compensation Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. All NEOs were provided actual total compensation value in fiscal year 2018 that was below the median target total compensation levels of the Peer Group companies referenced by the Compensation Committee.

The Compensation Committee provides NEOs with base salaries to compensate them for services rendered during the fiscal year. The use of base salaries provides stable compensation to officers, allows us to attract high caliber executive talent and provides a base upon which officers may be rewarded for individual performance. Base salaries for NEOs are determined based on positions and responsibilities using market data and considering individual performance, company-wide performance, future contribution potential, peer compensation levels and internal equity issues. The weight given to each of these factors can vary from individual to individual and from period to period. The Compensation Committee does not allocate specific, predetermined weighting to individual factors. Base salaries are intended to be set at levels that, in combination with other forms of compensation, offer the potential to attract, retain, and motivate qualified individuals. Base salaries are targeted to be moderate yet competitive. Base salaries for the NEOs in fiscal year 2018 were near the Peer Group median, and our CEO’s base salary was below the Peer Group median.

When evaluating the future contribution potential of an executive officer, the Compensation Committee considers, as particularly meaningful, the executive officer’s historic contributions to our earnings per share and revenue, particularly in light of the highly competitive industry in which we operate. Consideration is also given to the executive officer’s anticipated contributions to our future success. To a lesser extent, the Compensation Committee takes note, on an informal basis, of the competitive rates of pay in the corporate community, generally, and the relative standing of our compensatory practices in a peer group of similarly sized business software and healthcare information technology companies. The composition of this peer group is based on revenue, market capitalization, number of employees and other available data. For fiscal year 2018, this peer group (“Peer Group”) included the following companies:

Peer Group  

 

ACI Worldwide, Inc.

 

Advisory Board Company

 

Allscripts Healthcare Solutions, Inc.

 

Aspen Technology, Inc.

 

AthenaHealth, Inc.

 

Blackbaud, Inc.

 

Callidus Software Inc.

 

Castlight Health, Inc.

 

CommVault Systems, Inc.

 

Computer Programs & Systems, Inc.

 

Ellie Mae, Inc.

 

Fair Isaac Corporation

 

HMS Holdings Corp.

 

Jive Software, Inc.

 

Manhattan Associates Inc.

 

MicroStrategy Incorporated

 

Omnicell, Inc.

 

Progress Software Corporation

The Peer Group companies were in the same size revenue and employee range as our Company at the time data were reviewed for fiscal year 2018 compensation decisions, with the Peer Group companies’ revenue ranging between approximately 0.2 times and 3.2 times our Company’s revenue when the data were used in October 2017 for equity compensation decisions.  The largest company in the Peer Group, Allscripts, had revenue of approximately $1.66 billion,

16


 

which was 3.2 times our Company’s revenue at the time and is one of our direct competitors for customers and talent in the healthcare information technology space. The next largest Peer Group company, AthenaHealth, had revenue of 2.2 times our trailing four quarters revenue of $518 million in October 2017.

The Compensation Committee does not rely on benchmark data and does not target a specific percentile, although all of our NEOs were provided actual fiscal year 2018 total compensation value (as reported in the Summary Compensation Table in this proxy statement and consisting of salary, actual bonus, and the grant date fair value of all equity awards granted in fiscal year 2018) that is below the median of the target total direct compensation disclosed by the Peer Group companies, with the CEO 20% below the peer group median.

2018 Executive Compensation Program Terms and Results

Based on the principles described above under the caption “Compensation Philosophy, Objectives and Components,” in May 2017 our Compensation Committee approved the cash base salary and cash incentive compensation components of the 2018 Executive Compensation Program. In October 2017, approximately mid-way through our 2018 fiscal year, our Compensation Committee approved stock option awards for our NEOs.  We anticipate continuing this timing pattern for our fiscal year 2019 executive equity awards, which we anticipate making around October 2018.

Base Compensation - Cash

Salary levels are considered annually as part of our Compensation Committee’s performance review process. Fiscal year 2018 salaries were increased by 3% from fiscal year 2017 levels, consistent with the budgeted increase for our other employees, and based on the Compensation Committee’s assessment of the Company’s competitiveness for executive talent, organizational structure, market trends, and the interplay of the base salary component with other features and components of our overall executive compensation program, as follows:

 

John R. Frantz - $618,000

 

James R. Arnold - $412,000

 

David A. Metcalfe - $412,000

 

Scott E. Bostick - $412,000

 

Jeffrey D. Linton – $350,000 (1)

 

 

(1)

Mr. Linton was appointed as the Company’s Executive Vice President, General Counsel and Secretary on December 4, 2017. His base salary was established by the Compensation Committee at the time of his hire.

Cash Incentive Bonuses

The following table sets forth the potential cash incentive bonuses payable to each of our NEOs under the 2018 Executive Compensation Program. The NEOs’ target cash bonus opportunity levels were set at the same level as for 2017, with Mr. Linton’s target bonus level set at the same level as the other NEOs (excluding the CEO) for internal equity.

 

Name

 

Target Cash Bonus

as % of Base Salary

 

 

Potential Cash

Bonus Amount

 

 

Rusty Frantz

 

 

100

%

 

$

618,000

 

 

James R. Arnold

 

 

60

%

 

 

247,200

 

 

David A. Metcalfe

 

 

60

%

 

 

247,200

 

 

Scott E. Bostick

 

 

60

%

 

 

247,200

 

 

Jeffrey D. Linton

 

 

60

%

 

52,500

 

(1)

 

(1)

The annualized amount ($210,000) has been prorated for the number of full months Mr. Linton was employed during the fiscal year following his appointment as Executive Vice President, General Counsel and Secretary on December 4, 2017.

Under the 2018 Executive Compensation Program, the cash incentive bonus performance measures are Revenue and Non-GAAP Earnings Per Share (“Non-GAAP EPS”). These performance measures are the same measures of financial performance that the Company reports to its shareholders on a quarterly basis, and the same measures on which the Company provides forward-looking financial guidance, except that all revenues, expenses and dilutive shares associated with acquisitions or divestitures closed after the 2018 Executive Compensation Program was fully approved and before the end of the fiscal year are not included in the calculation of these performance measures for executive compensation purposes. These performance measures recognize both long-term value creation and short-term success on execution of our business plan. For these reasons, we believe these are appropriate performance measures for our executive cash incentive bonus plan.

17


 

Non-GAAP EPS is a non-GAAP performance measure. A reconciliation of this performance measure to its most directly comparable financial measures prepared in accordance with GAAP is provided below. A presentation of our reconciliation of non-GAAP performance measures with their most directly comparable GAAP financial measures is also available in our fiscal year 2018 earnings release issued on May 24, 2018 and attached as an exhibit to our current report on Form 8-K filed with the SEC on May 24, 2018.

Reconciliation of Non-GAAP Earnings Per Share Performance Measure with GAAP Financial Measures

(in thousands, except per share data)

 

 

Fiscal Year Ended March 31,

 

 

2018

 

 

2017

 

Income (loss) before provision for income taxes - GAAP

$

(410

)

 

$

23,609

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition and disposition costs, net

 

1,908

 

 

 

6,523

 

Amortization of acquired intangible assets

 

23,380

 

 

 

22,461

 

Amortization of deferred debt issuance costs

 

1,610

 

 

 

1,076

 

Restructuring costs

 

611

 

 

 

7,078

 

Securities litigation defense costs and settlement, net of insurance

 

20,700

 

 

 

1,798

 

Share-based compensation

 

12,196

 

 

 

7,497

 

Impairment of assets

 

3,757

 

 

 

 

Other non-run-rate expenses

 

263

 

 

 

3,009

 

Total adjustments to GAAP income before provision for income taxes:

 

64,425

 

 

 

49,442

 

Income before provision for income taxes - Non-GAAP

 

64,015

 

 

 

73,051

 

Provision for income taxes

 

19,525

 

 

 

22,281

 

Net income - Non-GAAP

$

44,490

 

 

$

50,770

 

Diluted net income per share - Non-GAAP

$

0.70

 

 

$

0.82

 

Weighted-average shares outstanding (diluted):

 

63,440

 

 

 

62,010

 

 

Non-GAAP (Generally Accepted Accounting Principles) financial measures are provided only as supplemental information. Investors should consider these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. These non-GAAP measures are not in accordance with or a substitute for U.S. GAAP. Pursuant to the requirements of Regulation G, we have provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying financial tables. Other companies may calculate non-GAAP measures differently than we do, which limits comparability between companies. We believe that our presentation of non-GAAP diluted earnings per share provides useful supplemental information to investors and management regarding our financial condition and results. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. We calculate non-GAAP diluted earnings per share by excluding net acquisition costs, amortization of acquired intangible assets, amortization of deferred debt issuance costs, restructuring costs, net securities litigation defense costs and settlement, share-based compensation, and other non-run-rate expenses from GAAP income before provision for income taxes. We utilize a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations.

The normalized non-GAAP tax rate applied to fiscal years 2018 and 2017 is 30.5%. The determination of this rate is based on the consideration of both historic and projected financial results. We have not adjusted our non-GAAP tax rate for fiscal year 2018 following the enactment of the new tax reform legislation on December 22, 2017. We may adjust our non-GAAP tax rate in fiscal 2019 as additional information becomes available and further analysis is completed based on the expected long-term impact of the tax reform legislation in conjunction with any other significant events that occur that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.

In the fiscal year 2018 program, for each of our executive officers, (i) 50% of the potential cash incentive bonus is based on the Revenue performance measure, and (ii) 50% of the potential cash incentive bonus is based on the Non-GAAP EPS performance measure. Under the Revenue performance measure for fiscal year 2018, the cash incentive bonus plan was calibrated to pay 90% of each executive officer’s bonus target for 100% achievement of the fiscal year 2018 Revenue target, which was $524.7 million. The Compensation Committee determined this to be an appropriate Revenue target based on the management team’s budget as the Company’s transformation strategy continues and the Company pursues an evolving revenue profile. The plan pays 100% of target for achieving $0.77 in Non-GAAP EPS, which is viewed as highly challenging as the Company shifts its business mix and invests in future growth opportunities.

18


 

The table below depicts the percentage of the potential cash bonus for each level of Revenue and Non-GAAP EPS achievement. The total cash incentive bonus percentage to be awarded is identified by where the Revenue number on the vertical y-axis intersects with the Non-GAAP EPS number on the horizontal x-axis.

 

Non-GAAP EPS (50% Weighting)

 

Non-GAAP EPS

<$0.67

$0.67

$0.68

$0.69

$0.70

$0.71

$0.72

$0.73

$0.74

$0.75

$0.76

$0.77

$0.78

$0.79

$0.80

$0.81

$0.82

$0.83

$0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rev. (50% Weight.)

%Goal

<87.0%

87.0%

88.3%

89.6%

90.9%

92.2%

93.5%

94.8%

96.1%

97.4%

98.7%

100.0%

101.3%

102.6%

103.9%

105.2%

106.5%

107.8%

109.1%

Rev.($M)

%Goal

Payout

0.0%

20.0%

33.0%

46.0%

59.0%

72.0%

85.0%

88.0%

91.0%

94.0%

97.0%

100.0%

107.1%

114.3%

121.4%

128.6%

135.7%

142.9%

150.0%

$540.4

102.0%

150.0%

75.0%

85.0%

91.5%

98.0%

104.5%

111.0%

117.5%

119.0%

120.5%

122.0%

123.5%

125.0%

128.6%

132.1%

135.7%

139.3%

142.9%

146.4%

150.0%

$540.0

101.9%

147.9%

73.9%

83.9%

90.4%

96.9%

103.4%

109.9%

116.4%

117.9%

119.4%

120.9%

122.4%

123.9%

127.5%

131.1%

134.7%

138.2%

141.8%

145.4%

148.9%

$539.0

101.7%

143.1%

71.6%

81.6%

88.1%

94.6%

101.1%

107.6%

114.1%

115.6%

117.1%

118.6%

120.1%

121.6%

125.1%

128.7%

132.3%

135.9%

139.4%

143.0%

146.6%

$538.0

101.5%

138.4%

69.2%

79.2%

85.7%

92.2%

98.7%

105.2%

111.7%

113.2%

114.7%

116.2%

117.7%

119.2%

122.8%

126.3%

129.9%

133.5%

137.0%

140.6%

144.2%

$537.0

101.3%

133.6%

66.8%

76.8%

83.3%

89.8%

96.3%

102.8%

109.3%

110.8%

112.3%

113.8%

115.3%

116.8%

120.4%

123.9%

127.5%

131.1%

134.7%

138.2%

141.8%

$536.0

101.1%

128.8%

64.4%

74.4%

80.9%

87.4%

93.9%

100.4%

106.9%

108.4%

109.9%

111.4%

112.9%

114.4%

118.0%

121.6%

125.1%

128.7%

132.3%

135.8%

139.4%

$535.0

101.0%

124.1%

62.0%

72.0%

78.5%

85.0%

91.5%

98.0%

104.5%

106.0%

107.5%

109.0%

110.5%

112.0%

115.6%

119.2%

122.8%

126.3%

129.9%

133.5%

137.0%

$534.0

100.8%

119.3%

59.7%

69.7%

76.2%

82.7%

89.2%

95.7%

102.2%

103.7%

105.2%

106.7%

108.2%

109.7%

113.2%

116.8%

120.4%

123.9%

127.5%

131.1%

134.7%

$533.0

100.6%

114.5%

57.3%

67.3%

73.8%

80.3%

86.8%

93.3%

99.8%

101.3%

102.8%

104.3%

105.8%

107.3%

110.8%

114.4%

118.0%

121.6%

125.1%

128.7%

132.3%

$532.0

100.4%

109.8%

54.9%

64.9%

71.4%

77.9%

84.4%

90.9%

97.4%

98.9%

100.4%

101.9%

103.4%

104.9%

108.5%

112.0%

115.6%

119.2%

122.7%

126.3%

129.9%

$531.0

100.2%

105.0%

52.5%

62.5%

69.0%

75.5%

82.0%

88.5%

95.0%

96.5%

98.0%

99.5%

101.0%

102.5%

106.1%

109.7%

113.2%

116.8%

120.4%

123.9%

127.5%

$530.0

100.0%

100.3%

50.1%

60.1%

66.6%

73.1%

79.6%

86.1%

92.6%

94.1%

95.6%

97.1%

98.6%

100.1%

103.7%

107.3%

110.8%

114.4%

118.0%

121.6%

125.1%

$529.9

100.0%

100.0%

50.0%

60.0%

66.5%

73.0%

79.5%

86.0%

92.5%

94.0%

95.5%

97.0%

98.5%

100.0%

103.6%

107.1%

110.7%

114.3%

117.9%

121.4%

125.0%

$529.0

99.8%

98.2%

49.1%

59.1%

65.6%

72.1%

78.6%

85.1%

91.6%

93.1%

94.6%

96.1%

97.6%

99.1%

102.7%

106.2%

109.8%

113.4%

117.0%

120.5%

124.1%

$528.0

99.6%

96.3%

48.1%

58.1%

64.6%

71.1%

77.6%

84.1%

90.6%

92.1%

93.6%

95.1%

96.6%

98.1%

101.7%

105.3%

108.9%

112.4%

116.0%

119.6%

123.1%

$527.0

99.4%

94.4%

47.2%

57.2%

63.7%

70.2%

76.7%

83.2%

89.7%

91.2%

92.7%

94.2%

95.7%

97.2%

100.8%

104.3%

107.9%

111.5%

115.0%

118.6%

122.2%

$526.0

99.3%

92.5%

46.2%

56.2%

62.7%

69.2%

75.7%

82.2%

88.7%

90.2%

91.7%

93.2%

94.7%

96.2%

99.8%

103.4%

107.0%

110.5%

114.1%

117.7%

121.2%

$525.0

99.1%

90.6%

45.3%

55.3%

61.8%

68.3%

74.8%

81.3%

87.8%

89.3%

90.8%

92.3%

93.8%

95.3%

98.9%

102.4%

106.0%

109.6%

113.1%

116.7%

120.3%

$524.7

99.0%

90.0%

45.0%

55.0%

61.5%

68.0%

74.5%

81.0%

87.5%

89.0%

90.5%

92.0%

93.5%

95.0%

98.6%

102.1%

105.7%

109.3%

112.9%

116.4%

120.0%

$524.0

98.9%

88.7%

44.3%

54.3%

60.8%

67.3%

73.8%

80.3%

86.8%

88.3%

89.8%

91.3%

92.8%

94.3%

97.9%

101.5%

105.0%

108.6%

112.2%

115.8%

119.3%

$523.0

98.7%

86.8%

43.4%

53.4%

59.9%

66.4%

72.9%

79.4%

85.9%

87.4%

88.9%

90.4%

91.9%

93.4%

97.0%

100.5%

104.1%

107.7%

111.2%

114.8%

118.4%

$522.0

98.5%

84.9%

42.4%

52.4%

58.9%

65.4%

71.9%

78.4%

84.9%

86.4%

87.9%

89.4%

90.9%

92.4%

96.0%

99.6%

103.1%

106.7%

110.3%

113.9%

117.4%

$521.0

98.3%

82.9%

41.5%

51.5%

58.0%

64.5%

71.0%

77.5%

84.0%

85.5%

87.0%

88.5%

90.0%

91.5%

95.0%

98.6%

102.2%

105.8%

109.3%

112.9%

116.5%

$520.0

98.1%

81.0%

40.5%

50.5%

57.0%

63.5%

70.0%

76.5%

83.0%

84.5%

86.0%

87.5%

89.0%

90.5%

94.1%

97.7%

101.2%

104.8%

108.4%

111.9%

115.5%

$519.5

98.0%

80.0%

40.0%

50.0%

56.5%

63.0%

69.5%

76.0%

82.5%

84.0%

85.5%

87.0%

88.5%

90.0%

93.6%

97.1%

100.7%

104.3%

107.9%

  111.4%

115.0%

$519.0

97.9%

77.4%

38.7%

48.7%

55.2%

61.7%

68.2%

74.7%

81.2%

82.7%

84.2%

85.7%

87.2%

88.7%

92.3%

95.8%

99.4%

103.0%

   106.6%

110.1%

113.7%

$518.0

97.7%

71.7%

35.8%

45.8%

52.3%

58.8%

65.3%

71.8%

78.3%

79.8%

81.3%

82.8%

84.3%

85.8%

89.4%

93.0%

96.6%

100.1%

  103.7%

107.3%

110.8%

$517.0

97.6%

66.0%

33.0%

43.0%

49.5%

56.0%

62.5%

69.0%

75.5%

77.0%

78.5%

80.0%

81.5%

83.0%

86.6%

90.1%

93.7%

97.3%

100.8%

104.4%

108.0%

$516.0

97.4%

60.3%

30.1%

40.1%

46.6%

53.1%

59.6%

66.1%

72.6%

74.1%

75.6%

77.1%

78.6%

80.1%

83.7%

87.3%

90.8%

94.4%

98.0%  

101.6%

105.1%

$515.0

97.2%

54.5%

27.3%

37.3%

43.8%

50.3%

56.8%

63.3%

69.8%

71.3%

72.8%

74.3%

75.8%

77.3%

80.8%

84.4%

88.0%

91.6%

95.1%  

98.7%

102.3%

$514.0

97.0%

48.8%

24.4%

34.4%

40.9%

47.4%

53.9%

60.4%

66.9%

68.4%

69.9%

71.4%

72.9%

74.4%

78.0%

81.6%

85.1%

88.7%

92.3%

95.8%

99.4%

$513.0

96.8%

43.1%

21.6%

31.6%

38.1%

44.6%

51.1%

57.6%

64.1%

65.6%

67.1%

68.6%

70.1%

71.6%

75.1%

78.7%

82.3%

85.8%

89.4%

93.0%

96.6%

$512.0

96.6%

37.4%

18.7%

28.7%

35.2%

41.7%

48.2%

54.7%

61.2%

62.7%

64.2%

65.7%

67.2%

68.7%

72.3%

75.8%

79.4%

83.0%

86.6%

90.1%

93.7%

$511.0

96.4%

31.7%

15.8%

25.8%

32.3%

38.8%

45.3%

51.8%

58.3%

59.8%

61.3%

62.8%

64.3%

65.8%

69.4%

73.0%

76.5%

80.1%

83.7%

87.3%

90.8%

$510.0

96.2%

26.0%

13.0%

23.0%

29.5%

36.0%

42.5%

49.0%

55.5%

57.0%

58.5%

60.0%

61.5%

63.0%

66.5%

70.1%

73.7%

77.3%

80.8%

84.4%

88.0%

$509.0

96.0%

20.0%

10.0%

20.0%

26.5%

33.0%

39.5%

46.0%

52.5%

54.0%

55.5%

57.0%

58.5%

60.0%

63.6%

67.1%

70.7%

74.3%

77.9%

81.4%

85.0%

<$509.0

<96.0%

0.0%

0.0%

10.0%

16.5%

23.0%

29.5%

36.0%

42.5%

44.0%

45.5%

47.0%

48.5%

50.0%

53.6%

57.1%

60.7%

64.3%

67.9%

71.4%

75.0%

 

 

Upper and lower ends of performance:       

 

FY18 Goal:

Revenue = $529.9M

Non-GAAP EPS = $0.77

 

 

19


 

 

For purposes of the 2018 Executive Compensation Program, our cash incentive bonus performance measures obtained the following results: Revenue was $529.9 million and Non-GAAP EPS was $0.74. Accordingly, pursuant to the table above, the Revenue performance measure applied at the $529.9 level in the table’s left-most column achieved a payout level of 100.0%, and the Non-GAAP EPS performance measure applied at the $0.74 level in the table’s top row achieved a payout level of 91.0%. Based on the combined achievements of the performance measures, the NEOs earned cash incentive bonus payments at 95.5% of the applicable target levels. On May 22, 2018, based on our results for the 2018 fiscal year and the terms of the 2018 Executive Compensation Program, our Compensation Committee authorized the award of the cash incentive bonus payments under the 2018 Executive Compensation Program at 95.5% of target. The amounts of the cash incentive bonuses earned were below the target amounts and were paid formulaically according to the pre-established bonus schedule, with no discretion applied.  These cash incentive bonus outcomes are set forth in the table below.

 

Name

 

Target Cash Bonus

 

 

Cash Bonus Earned

 

Rusty Frantz

 

$

618,000

 

 

$

590,190

 

James R. Arnold

 

 

247,200

 

 

 

236,076

 

David A. Metcalfe

 

 

247,200

 

 

 

236,076

 

Scott E. Bostick

 

 

247,200

 

 

 

236,076

 

Jeffrey D. Linton (1)

 

 

52,500

 

 

 

50,137

 

 

(1)

Represents prorated amount based on number of full months employed during the fiscal year.  Mr. Linton became the Company’s Executive Vice President, General Counsel and Secretary effective December 4, 2017.

Stock Options

Under the 2018 Executive Compensation Program, Messrs. Frantz, Arnold, Metcalfe and Bostick were provided a grant of options to purchase the Company’s common stock on October 31, 2017, with an exercise price equal to the closing price on the grant date of $14.07. Mr. Linton was provided a new-hire grant of 135,000 options, with an exercise price equal to the closing price on the grant date of $14.38, effective upon his appointment to the Company on December 4, 2017.  The options that were granted vest in four equal, annual consecutive installments subject to continued employment with the Company, beginning on the first anniversary of the initial grant date, and will expire eight years after their grant. The options were issued pursuant to the Company’s Amended 2015 Equity Incentive Plan and standard form of option award agreement. The grant date fair value of the option awards for our NEOs in fiscal year 2018, as reported in the Summary Compensation Table of this proxy, was below the Peer Group’s median.  The number of stock options granted to each NEO under the 2018 Executive Compensation Program is set forth in the table below:

 

Name

 

Options

 

 

Rusty Frantz

 

 

460,000

 

 

James R. Arnold

 

 

175,000

 

 

David A. Metcalfe

 

 

140,000

 

 

Scott E. Bostick

 

 

140,000

 

 

Jeffrey D. Linton

 

135,000

 

(1)

 

(1)

Amount represents Mr. Linton’s new hire grant upon his appointment as the Company’s Executive Vice President, General Counsel and Secretary on December 4, 2017.

20


 

Compensation Features Outside of 2018 Executive Compensation Program

Performance Stock Awards (“PSAs”) Made in December 2016

On December 29, 2016, Messrs. Frantz, Arnold, Metcalfe, and Bostick were granted performance stock awards (“PSAs”) that have both time-based and stock price performance-based vesting requirements. The PSAs vest in four, equal 25% increments over four years, starting on the first anniversary of the grant date, subject to continued employment with the Company. However, no vesting occurs unless the Company’s stock has sustained a pre-established performance requirement during the performance period, even if the time-based vesting requirements are met.  The performance requirement consisted of achievement of at least a $15 per share simple average closing price of the Company’s common stock on Nasdaq over a period of 120 consecutive calendar days.  Once the performance requirement has been met for a given vesting year, the PSAs vest only as to the number of shares for which the NEO has already satisfied the time-based vesting requirement and subject to continued employment with the Company. Because the performance requirement was achieved during the first vesting period, the initial 25% of the PSAs vested.  The amount of PSAs shown in the table below vested for the applicable NEOs on December 29, 2017.

 

Name

 

Total Performance Stock

Awards (“PSAs) Granted

on December 29, 2016

 

 

PSAs First Year Vesting

on December 29, 2017

 

Rusty Frantz

 

 

35,000

 

 

 

8,750

 

James R. Arnold

 

 

28,000

 

 

 

7,000

 

David A. Metcalfe

 

 

18,083

 

 

 

4,521

 

Scott E. Bostick

 

 

18,083

 

 

 

4,521

 

 

Legacy Performance Equity Incentive Plan - Restricted Shares Under Prior Multi-Year Legacy Plan (Not Part of Fiscal Year 2018 Executive Compensation Program)

Under a legacy multi-year performance equity incentive arrangement implemented as part of the fiscal year 2016 executive compensation program, Mr. Frantz was eligible to receive up to 60,000 restricted shares of common stock if the Company met certain average 30 day trading price targets for the thirty day period following the end of fiscal year 2018 (i.e., the 30 day period beginning on April 1, 2018 and ending on April 30, 2018). This performance equity incentive plan continued in effect through fiscal year 2018 for Mr. Frantz, who was grandfathered into the program, but was not part of the 2018 Executive Compensation Program. No other NEOs besides Mr. Frantz were eligible for this program for fiscal year 2018, the program’s final year.  The minimum average 30 day trading price for the period required to earn any shares under this program was $32. The average 30 day trading price for the thirty calendar day period ended April 30, 2018 was $13.74. Accordingly, no shares were earned by Mr. Frantz for the fiscal year 2018 period of this program, and all potential share awards for this period were forfeited.  This legacy program has now fully expired and will have no effect for future years.

Other Benefits

We have a 401(k) plan available to substantially all of our employees. Participating employees may defer each year up to the limit set in the Internal Revenue Code of 1986, as amended (the “Code”). The annual company contribution is determined by a formula set by our Board and may include matching and/or discretionary contributions. Matching contributions for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table for Fiscal Year Ended March 31, 2018.

We have a deferred compensation plan available for the benefit of officers and employees who qualify for inclusion. The plan is described below in connection with the Nonqualified Deferred Compensation Table for Fiscal Year ended March 31, 2018.

These retirement plans may be amended or discontinued at the discretion of our Board.

Perquisites and Other Personal Benefits

We do not provide any meaningful perquisites to our NEOs, other than gym membership reimbursement, pooled use of a corporate van, and a corporate apartment allowance for our Chief Financial Officer who shares the apartment with another member of our senior leadership team, as detailed in the Summary Compensation Table for Fiscal Year Ended March 31, 2018. We do not provide tax gross-ups to our NEOs in connection with perquisites or benefits.

21


 

Executive Stock Ownership Policy

In early fiscal year 2018, we improved our executive stock ownership policy to better align our executive officers’ long-term interests with those of our shareholders and to discourage excessive risk taking. Previously, our policy required executive officers to acquire 25% of their base salary value in shares. The revised policy requires all executive officers to acquire within five years, and retain for the full duration of their tenure as executive officers, shares of the Company’s common stock with a value of at least six times annual base salary for our Chief Executive Officer and two times annual base salary for our other executive officers. Executive officers who have not achieved the policy requirements within five years are required to hold all of their after-tax profit shares acquired upon option exercises or other share vestings until they achieve compliance.

Insider Trading Policy

We have an insider trading policy that prohibits Board members, officers and employees from transacting in our Company's shares while in the possession of material nonpublic information.  Our policy also generally prohibits these individuals from engaging in short-term or speculative transactions in our Company’s shares, including short sales, publicly traded options, hedging transactions, holding Company shares in a margin account, pledging Company shares as collateral and standing and limit orders.

Clawback Policy for Compensation Recovery     

In order to better align our officers’ long-term interests with those of our Company and our shareholders, we have an executive compensation recovery policy that claws back cash and equity incentive compensation awarded to an executive officer if the result of a performance measure upon which such award was based is subsequently restated or otherwise adjusted in a manner that would reduce the size of the award. If the result of a performance measure was considered in determining the award, but the award was not made on a formulaic basis, the Compensation Committee will determine the appropriate amount of the recovery. In addition, the Compensation Committee has the authority to recover cash and equity incentive compensation if an executive officer engaged in intentional misconduct that contributed to an award of incentive compensation that was greater than would have been awarded in the absence of such misconduct.

Tax and Accounting Implications

Deductibility of Executive Compensation

Section 162(m) of the Code disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year to its “covered employees.” Prior to the Tax Cuts and Jobs Act of 2017, covered employees generally consisted of a corporation’s chief executive officer and each of its other three highest compensated officers, other than its chief financial officer, and remuneration that qualified as “performance-based compensation” within the meaning of the Code was exempt from this $1.0 million deduction limitation. As part of the Tax Cuts and Jobs Act of 2017, the ability to rely on this exemption was, with certain limited exceptions, eliminated; in addition, the determination of the covered employees was generally expanded. In light of the repeal of the performance-based compensation exception to Section 162(m) of the Code, we may not be able to take a deduction for any compensation in excess of $1.0 million that is paid to a covered employee.

Accounting for Stock-Based Compensation

We account for stock-based payments in accordance with Accounting Standard Codification Topic 718, Compensation-Stock Compensation. For further information regarding our accounting for stock-based payments, refer to Note 13 to the Financial Statements contained in our Form 10-K for the fiscal year ended March 31, 2018.

22


 

Summary Compensation Table for Fiscal Year Ended March 31, 2018

The following table provides certain summary information concerning the compensation for the fiscal years ended March 31, 2018, 2017 and 2016 for the individuals who served as our principal executive officer (i.e., Mr. Frantz), our principal financial officer (i.e., Mr. Arnold), and the three other most highly compensated executive officers whose total compensation exceeded $100,000 during fiscal year 2018 and who were serving as executive officers at the end of fiscal year 2018 (i.e., Mr. Metcalfe, Mr. Bostick, and Mr. Linton) (collectively, the “NEOs”). No executive officers that would have otherwise been includable in the table on the basis of total compensation for fiscal year 2018 have been excluded by reason of their termination of employment or change in officer status during that year.

 

Name and Title

 

Fiscal

Year

 

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards

($) (1)

 

 

Option

Awards

($) (1)

 

 

Non-Equity

Incentive Plan

Compensation

($) (2)

 

 

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($) (3)

 

 

All Other

Compensation

($) (4)

 

 

Total

($)

 

Rusty Frantz

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President and

Chief Executive

 

 

2018

 

 

 

629,545

 

 

 

 

 

 

 

 

 

2,469,740

 

 

 

590,190

 

 

 

10,335

 

 

 

53,029

 

 

 

3,752,839

 

Officer

 

 

2017

 

 

 

600,008

 

 

 

 

 

 

1,226,961

 

 

 

1,967,000

 

 

 

420,000

 

 

 

8,363

 

 

 

34,785

 

 

 

4,257,117

 

 

 

 

2016

 

 

 

450,006

 

 

 

 

 

 

315,250

 

 

 

384,000

 

 

 

236,250

 

 

 

 

 

 

1,537

 

 

 

1,387,043

 

James R. Arnold, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice President and

 

 

2018

 

 

 

412,005

 

 

 

 

 

 

 

 

 

939,575

 

 

 

236,076

 

 

 

 

 

 

63,142

 

 

 

1,650,798

 

Chief Financial Officer (5)

 

 

2017

 

 

 

400,005

 

 

 

 

 

 

981,569

 

 

 

 

 

 

168,000

 

 

 

 

 

 

52,585

 

 

 

1,602,159

 

 

 

 

2016

 

 

 

33,333

 

 

 

 

 

 

1,134,120

 

 

 

1,280,000

 

 

 

14,000

 

 

 

 

 

 

4,269

 

 

 

2,465,722

 

David A. Metcalfe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice President and

 

 

2018

 

 

 

412,005

 

 

 

 

 

 

 

 

 

751,660

 

 

 

236,076

 

 

 

 

 

 

54,589

 

 

 

1,454,330

 

Chief Technology Officer (6)

 

 

2017

 

 

 

400,005

 

 

 

 

 

 

633,922

 

 

 

 

 

 

192,000

 

 

 

 

 

 

29,641

 

 

 

1,255,568

 

 

 

 

2016

 

 

 

66,667

 

 

 

190,000

 

 

 

 

 

 

930,000

 

 

 

28,000

 

 

 

 

 

 

2,037

 

 

 

1,216,704

 

Scott E. Bostick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice President and

 

 

2018

 

 

 

412,005

 

 

 

100,000

 

 

 

 

 

 

751,660

 

 

 

236,076

 

 

 

 

 

 

55,975

 

 

 

1,555,716

 

Chief Operating Officer (7)

 

2017

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

*