Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2011

Weighted-Average Assumptions For Option Awards Granted


	Three Months Ended September 30						Nine Months Ended September 30
	2011			2010 ⁽¹⁾			2011			2010 ⁽¹⁾
Expected volatility		34.8	%		34.8	%		34.4	%		35.5	%
Expected term (in years)		6.0			5.6			5.8			5.9
Risk-free interest rate		1.0	%		1.7	%		1.4	%		2.1	%
Expected dividend yield		None			None			None			None

Summary Activity Of Employee Stock Options


	Number of Shares (in thousands)			Weighted-Average Exercise Price (per share)		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands) ⁽¹⁾
Outstanding at December 31, 2010		13,130		$	16.93
Granted		6,264		$	19.65
Exercised		(1,625	)	$	18.13
Canceled/forfeited/expired		(1,110	)	$	21.92

Outstanding at September 30, 2011		16,659		$	17.50		7.64	$	16,873

Vested or expected to vest at September 30, 2011		15,135		$	17.43		7.22	$	16,690

Exercisable at September 30, 2011		5,750		$	14.96		4.50	$	15,067

(1)	These amounts represent the difference between the exercise price and $15.88, the closing price of Quest Software, Inc. stock on September 30, 2011 as reported on the NASDAQ National Market, for all options outstanding that have an exercise price currently below the closing price.

Summary Activity Of RSU Awards


	Number of Shares			Weighted-Average Grant Date Fair Value (per share)
Nonvested at January 1, 2011		787,798		$	14.99
Granted		—		$	—
Vested		(388,151	)	$	14.38
Forfeited		(59,396	)	$	15.58

Nonvested at September 30, 2011⁽¹⁾		340,251		$	15.59

(1)	322,998 of these shares are expected to vest.

Classification Of Stock-Based Compensation Expense


	Three Months Ended September 30				Nine Months Ended September 30
	2011		2010		2011		2010
Cost of services	$	244	$	329	$	798	$	711
Sales and marketing		1,653		1,991		5,444		4,352
Research and development		1,679		2,336		5,445		5,346
General and administrative		1,938		1,700		6,733		5,117

Total stock-based compensation		5,514		6,356		18,420		15,526
Tax benefit associated with stock-based compensation expense ⁽¹⁾		2,134		2,460		7,129		6,009

Reduction of net income	$	3,380	$	3,896	$	11,291	$	9,517

(1)	The recognized tax benefit related to share-based compensation expense is estimated to be 38.7% for the three months and nine months ended September 30, 2011 and 2010. This approximates the blended Federal and State statutory tax rate after the benefit for state taxes.

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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- Definition

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

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