Directors Nominated for Quality Systems

(Dow Jones)

An investment company with a 10% stake in Quality Systems Inc. is nominating two directors, including a shareholder rights' activist, in a move to make the Tustin company's board more independent, according to a regulatory report filed Thursday.

Lawndale Capital Management, a San Francisco asset management firm, nominated Dale Hanson, who rattled boardrooms in the 1980s when he was chief executive of California Public Employees Retirement System. The other board nominee is Kelly J. McCrann, chief executive of Professional Dental Associates, a dental practice management company.

Shareholder Ahmed Hussein, who owns 18% of Quality Systems' stock, also is expected to nominate directors at the annual meeting Sept. 17.

Both Hussein and Lawndale have been pushing Quality Systems' board to become more independent since late last year, when the health-care software company rejected an acquisition bid.

They are concerned that Quality Systems Chief Executive Sheldon Razin rejected the offer without consulting the board and that he exerts too much control. The board includes Razin's wife as well as an employee and several longtime board members.

Hanson has a history of shaking up companies' management structures. His appearance at annual meetings often spelled trouble for an entrenched group of executives.

While he was at the pension giant, Hanson led the charge to pressure corporate boards to be more accountable to shareholders and less beholden to management, targeting companies such as General Motors Corp., IBM Corp. and Lockheed Martin Corp. Hanson is now chief executive of American Partners Capital Group, a San Diego private investment firm.

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