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O.C. BUSINESS PLUS

Quality Systems Director Quits Amid CEO Dispute

July 14, 1999|JONATHAN GAW | TIMES STAFF WRITER

A director of Tustin-based Quality Systems Inc. resigned Tuesday, citing sharp disagreements with the company's founder and chief executive.

The resignation of Don Cook, who was appointed to the board of directors in September, comes as Sheldon Razin, the founder, president, chairman and chief executive of the health-care information systems developer, has publicly fought with large shareholders over the company's direction and performance.

Several investors have urged Razin, who founded the company in 1974 and, with his wife, Janet, is the largest shareholder of the firm, to loosen his grip and allow more outsiders to guide decisions.

Razin "has done a lot to build this company over the years, but lately a lot of the decisions have not been very good and the performance has not been good," said Cook, a consultant on health-care information systems. "But it's a public company and it should be run like one."

Company officials could not be reached for comment late Tuesday.

The last straw for Cook came last week when the board was asked to vote on what he described as a "far-reaching bylaw amendment" regarding the indemnification of company officers and directors. The board members, meeting via telephone, were asked to vote on the proposal after having it read to them once, Cook said.

The proposal passed 6 to 1, with Cook being the sole dissenter, he said.

Cook also cited the "combative" relationship Razin has had with investors, particularly with regard to shareholder proposals that Razin had tried to exclude from the company's proxy.

Last month, the Securities and Exchange Commission ruled that Quality Systems' proxy had to include those proposals, which would require changes to the makeup of the board of directors.

The company's annual shareholder meeting is Sept. 17.

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