Quest Software 10-K 2009
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Amendment No. 1)
For the Fiscal Year Ended December 31, 2008
For the Transition Period from to .
Commission File No. 000-26937
QUEST SOFTWARE, INC.
(Exact Name of Registrant as Specified in its Charter)
Registrants Telephone Number, Including Area Code: (949) 754-8000
Securities Registered Pursuant to Section 12(b) of the Act:
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ¨ No x
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $1.1 billion as of June 30, 2008, based upon the closing sale price reported for that date on The Nasdaq Global Select Market.
As of February 17, 2009, 94,662,223 shares of the Registrants common stock were outstanding.
Documents Incorporated by Reference
Portions of the Registrants Definitive Proxy Statement, to be delivered to shareholders in connection with the Registrants 2009 Annual Meeting of Shareholders, are incorporated by reference into Part III of this Report.
TABLE OF CONTENTS
This Amendment No. 1 on Form 10-K/A (the Amendment) amends our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission (the SEC) on February 25, 2009 (the Annual Report). The sole purpose of this Amendment is to provide additional information concerning the settlement agreement that our Executive Chairman, Vincent C. Smith, entered into with the SEC on March 12, 2009 (the Settlement Agreement). This additional information has been added to Mr. Smiths biographical sketch in Part III, Item 10 below under the caption Executive Officers. Information regarding the Settlement Agreement in principle was previously disclosed in our Current Report on Form 8-K filed on December 2, 2008 and in Part I, Item 3, Legal Proceedings, of our Annual Report. However, a discussion of the Settlement Agreement was inadvertently omitted in our definitive proxy statement filed on April 30, 2009 and incorporated by reference into Part III, Item 10 of our Annual Report. We are filing this Amendment in response to a comment letter from the SEC dated August 13, 2009 directing us to disclose the Settlement Agreement in Part III, Item 10 of an amendment to our Annual Report. This Amendment does not reflect events occurring after the original filing of our Annual Report or modify or update those disclosures, except to reflect the aforementioned revisions to Mr. Smiths biographical sketch in Part III, Item 10 concerning the Settlement Agreement.
Item 10. Directors, Executive Officers and Corporate Governance
Listed below are Quests seven directors. Our Board of Directors appointed Douglas F. Garn to fill a vacancy on October 7, 2008, and Mr. Garn has been nominated for election at the Annual Meeting. Each of our other current directors has been nominated for re-election at the Annual Meeting.
Our Board of Directors and management are committed to utilizing good corporate governance practices to ensure we are managed for the long-term benefit of our stockholders. We have in place a variety of policies and practices to promote good corporate governance. Consistent with our Corporate Governance Guidelines, a majority of our Board of Directors is independent in accordance with NASDAQ and NYSE listing standards, and all members of our Audit Committee, our Compensation Committee, and our Nominating and Corporate Governance Committee also meet NASDAQ and NYSE guidelines for independence. We have also established:
The Nominating and Corporate Governance Committee of our Board of Directors is responsible for establishing and reviewing the Corporate Governance Guidelines from time to time and reporting and making recommendations to the Board concerning corporate governance matters. Among the matters addressed by our Corporate Governance Guidelines are:
Copies of our Corporate Governance Guidelines and Code of Business Conduct and Ethics can be found on the Corporate Governance page of our Investor Relations web site located at http://www.quest.com/investor_relations/.
Board of Directors and Committees
During 2008, the Board met thirteen times. Each of our directors attended at least 75% of the aggregate number of all meetings of the Board and each of the committees upon which such director served and which were held during the period of time that such person served on the Board or such committee.
We have three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of these committees has a written charter approved by our Board of Directors, copies of which can be found on the Corporate Governance page of our Investor Relations web site located at http://www.quest.com/investor_relations/. The current members of each committee are identified in the table below.
Audit Committee. The primary purpose of the Audit Committee is oversight of the quality and integrity of the accounting, auditing, internal control and financial reporting practices of Quest, including the appointment, oversight and compensation of Quests independent registered public accounting firm. Our Audit Committee held six meetings in 2008.
Compensation Committee. The Compensation Committee reviews and approves the compensation and benefits for our CEO and other executive officers and administers our 1999 Stock Incentive Plan, 2001 Stock Incentive Plan and 2008 Stock Incentive Plan. Our Compensation Committee met six times in 2008.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee (the Nominating Committee) oversees all aspects of our corporate governance functions on behalf of the Board and makes recommendations to the Board regarding corporate governance issues, including:
Our Nominating Committee did not have any formal meetings in 2008.
The Board has determined that each of Messrs. Dirks, Klausmeyer, Lane, Nieto and Sallaberry is independent under the criteria established by NASDAQ and the NYSE, and that each of Messrs. Dirks and Klausmeyer is an audit committee financial expert.
Communications with the Board
Stockholders may communicate with the Board or any of the directors by sending written communications addressed to the Board or any of the directors, c/o Corporate Secretary, Quest Software, Inc., 5 Polaris Way, Aliso Viejo, California 92656. All communications are compiled by the Corporate Secretary and forwarded to the Board or the individual director(s) accordingly.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, including our principal executive officer, principal financial officer, and principal accounting officer. A copy of our Code of Ethics was filed as Exhibit 14.1 to our Annual Report on Form 10-K for the year ended December 31, 2008 and is also posted on the Corporate Governance page of our Investor Relations web site located at http://www.quest.com/investor_relations/. We intend to satisfy the disclosure requirements regarding amendments to, or waivers from, the Code of Ethics by either providing such information on a Form 8-K filed with the Securities and Exchange Commission or by posting such information on the Corporate Governance page of our Investor Relations web site described in the preceding sentence. Information contained on our website is not part of this Proxy Statement.
Director Attendance at Annual Meetings
Directors are encouraged to attend annual meetings of the Companys stockholders. Our annual meeting in 2008 was attended by one incumbent director.
Nominations for Director
The policy of the Nominating Committee is to consider stockholder recommendations for candidates for membership on the Board. Stockholder recommendations for nominations should be delivered to our Corporate Secretary as follows:
Quest Software, Inc.
5 Polaris Way
Aliso Viejo, CA 92656
Stockholder recommendations should set forth, among other matters: (i) the name, age and business address of the nominee; (ii) the principal occupation or employment of the nominee; (iii) the number of shares of Quest capital stock owned by the nominee; and (iv) other information relating to the nominee that is required to be disclosed in solicitations for proxies for election of directors under applicable rules and regulations of the Commission.
The Nominating Committee utilizes a variety of methods for identifying and evaluating nominees for director. In the event that vacancies on the Board arise, the Nominating Committee considers potential candidates for director, which may come to the attention of the Nominating Committee through current directors, professional search firms, stockholders or other persons. As described above, the Nominating Committee considers properly submitted stockholder recommendations for nomination to the Board in the same manner as it evaluates other nominees. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the Nominating Committee. Materials
provided by a stockholder for consideration of a nominee for director are forwarded to the Nominating Committee for evaluation. In evaluating such nominations, the Nominating Committee seeks to achieve the appropriate balance of industry and business knowledge and experience in light of the function and needs of the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than ten percent of our common stock, to file reports of initial ownership of our securities and changes in such ownership with the Securities and Exchange Commission. Executive officers, directors and greater than ten percent stockholders also are required to furnish Quest with copies of all Section 16(a) forms they file. Based solely upon a review of the copies of such forms furnished to the Company or written representations that no Forms 4 or 5 were required, the Company believes that, during 2008, its officers, directors and greater than ten percent beneficial owners complied with all applicable Section 16(a) filing requirements, except that Messrs. Garn and Dirks each filed one late report on Form 4 covering one transaction.
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this Form 10-K/A.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.