Exhibit 10.12

 

DESCRIPTION OF COMPENSATION ARRANGEMENT FOR NON-EMPLOYEE DIRECTORS

 

Non-employee directors of Quest Software, Inc. receive an annual retainer of
$25,000 for serving on the board of directors, and are reimbursed for reasonable
expenses incurred by them in attending board and committee meetings. In
addition, the chairman of our Audit Committee receives an additional $10,000
annual fee, our Audit Committee Financial Expert receives an additional $15,000
annual fee, and other members of the Audit Committee receive an additional
$5,000 annual fee. The chairman of our Compensation Committee receives an
additional $5,000 annual fee, and each other member of the Compensation
Committee receives an additional $2,500 annual fee.

 

Non-employee directors are permitted to elect to receive the annual board and
committee fees described above in the form of stock options, in lieu of cash,
pursuant to the director fee option grant program in our 1999 Stock Incentive
Plan. Non-employee board members who have served on the board since the date of
the prior year’s annual meeting of shareholders, also receive option grants
pursuant to the provisions of the automatic option grant program under our 1999
Stock Incentive Plan.