Shareholders of Irvine-based Quality Systems Inc. are set to meet Wednesday in the wake of a contentious proxy fight between the medical software maker and a major shareholder.
Ahmed Hussein, an Egyptian businessman and investor who owns some 18% of Quality, is running along for a board seat along with fellow dissidents.
Management’s slate is headed by Sheldon Razin, Quality’s chairman, cofounder and other dominant shareholder.
The dispute between Hussein and Razin appears to be over compensation for directors and management.
Hussein argues that compensation for the managers and directors approved by its current board during the past year are excessive in light of Quality’s size,it has about $90 million in yearly sales,and earnings.
Razin and his slate, including Chief Executive Louis Silverman, contend the company’s compensation has been lean and that corporate governance principles that Hussein set in place upon becoming a Quality director in 1999 are too harsh.
The battle comes amid a doubling in Quality’s stock price this year. The company has a market value of $870 million.
The fight between the two sides has sharpened in recent weeks.
Last week, Quality claimed a small victory when it said that Institutional Shareholder Services Inc., an influential shareholder adviser, recommended voting in favor of management’s director slate and proposals.
Institutional Shareholder Services said it didn’t believe Hussein’s concerns warranted the election of a three-member dissident slate to the board.
The latest shot came Monday, when Hussein, in a release, took exception with Glass Lewis & Co. LLC, a San Francisco-based proxy advisory firm that issued a press release about the Quality contest.
Hussein’s release said he didn’t say, “that all the current board members, other than himself, were handpicked by Sheldon Razin” nor did he say that “each current director is controlled by Mr. Razin and therefore cannot be considered independent.”
Hussein said he issued his own release “because he believes the issues he has raised in his proxy are of significant importance to shareholders and he wants to ensure that shareholders are not misled by inaccurate statements of third parties.”
