Dear Fellow Stockholders:
I am writing to you on behalf of the Compensation Committee (the Committee) of the Board of Directors of NextGen Healthcare, Inc.
(NextGen Healthcare, or the Company), with respect to our upcoming Annual Meeting of Stockholders, to be held on August 17, 2022 at 9:00 a.m. Pacific time at 18101 Von Karman Ave, Suite 200, Irvine, CA
92612 (the Annual Meeting).
On July 12, 2022, the Company filed with the SEC and mailed to its stockholders of record as of
July 6, 2022 a proxy statement (the Proxy Statement) describing the matters to be voted on at the Annual Meeting. This letter should be read in conjunction with the Proxy Statement.
A Vote For the Companys Say-on-Pay Proposal and For the Election of Committee Members is Warranted
Proxy advisory firm Institutional Shareholder Services (ISS) has recommended a vote against the Companys say-on-pay proposal and, correspondingly, in connection with the director proposal, against the members of the Committee (i.e., Craig A. Barbarosh, Julie D.
Klapstein and Geraldine McGinty). The stated reason for this recommendation was incomplete disclosure of engagement with shareholders following a say-on-pay vote below
50% last year. In making its recommendations, ISS acknowledges the Companys stockholder engagement efforts during fiscal year 2022, which included director participation, and the positive changes made to the Companys executive and
director pay programs in response to such outreach, but notes that, because the Company did not disclose specific stockholder feedback, it is unable to ascertain whether the changes to the pay program adequately address stockholder concern. As a
result, ISS assumes that the Committee demonstrated only limited responsiveness to stockholder concerns, as excerpted below:
The
Company engaged with shareholders following the low say-on-pay vote result and implemented certain positive changes to the pay program. However, the company did not
disclose the specific shareholder feedback, making it difficult to ascertain whether the changes to the pay program adequately address shareholder concerns. As such, the compensation committee demonstrated only limited responsiveness to shareholder
concerns.
In response to ISSs comments and adverse recommendations on the
say-on-pay proposal and the director election proposal with respect to the members of the Committee, we have prepared this supplement to (i) provide additional
disclosure concerning the specific stockholder feedback we received in connection with our fiscal year 2022 engagement efforts; and (ii) affirm and clarify that the executive and director pay program changes made by the Committee were in direct
response to the feedback we solicited and received from our stockholders. We were pleased that ISS deemed all other components of its pay-for-performance evaluation
low concern and appreciate the opportunity presented by ISS to further highlight our robust stockholder engagement efforts and responsiveness to stockholder feedback.
Consideration of Say-On-Pay Advisory Vote and Stockholder Outreach
At our annual meeting of stockholders in October 2021, approximately 41.5% of the votes cast were cast in favor of the say-on-pay vote. This was significantly lower than the average support of approximately 97.5% of the votes cast in the previous three years and occurred in the context of a proxy contest launched by our
founder and largest stockholder (a greater than 15% holder). The proxy contest generated many additional filings with unsubstantiated communication against the Company and its Board, with subsequent rebuttals. Some of the allegations against
included criticism of the Companys compensation programs that was inaccurate in an effort to influence shareholders. The Company and its Board prevailed by a significant margin in the proxy contest. The lower-than-normal vote outcome was
partially the result of this background that was not related directly to compensation.
Throughout fiscal year 2022, as described in our Proxy Statement,
we undertook a stockholder outreach campaign with both active and passive institutional investors within the top 50 stockholder base. As of early September 2021, this base held approximately 84% of the Companys shares outstanding. Passive
stockholders accounted for approximately 53% of the top 50 stockholders. We held meetings with stockholders that controlled approximately 32 million shares, or 69% of our target group. In each meeting, Company participation typically included a
member of the board, our CEO, CFO and Chief Growth and Strategy officer. A more targeted group of Company representatives then engaged in continued dialogue with certain of our active stockholders. In these meetings, we were grateful to receive
valuable feedback on both the strengths of our executive compensation program and areas for improvement.