Stock Option Opposed

Lawndale Capital Management Inc. and affiliates raised their stake in Quality Systems Inc. to 9.5% from 8.4% and said they opposed the software company’s employee stock option plan because it could dilute existing shares.

Lawndale and its affiliates disclosed their position in a report filed Tuesday with the Securities and Exchange Commission. The investors also said they plan to continue contacting Quality Systems’ management and board directors regarding ways to “maximize shareholder value.”

Those options could include changes in the composition of the board, the integration of the company’s businesses and the enactment of the planned stock buyback plan, the filing said. Tustin-based Quality Systems makes software for management of medical and dental practices.

The Lawndale group’s most recent transactions occurred between July 29 and Aug. 24, when it bought and sold shares for $5.38 to $6.44 apiece. Lawndale and affiliates now hold 595,000 shares in Quality Systems, the filing said.

Quality Systems shares fell 25 cents to $5.13. Quality Systems shares have fallen more than 54% since reaching $11.25 on June 11.