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Dell Comes to Terms on Smith’s Exit From Quest

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Quest Software Inc. Chief Executive Vincent “Vinny” Smith will stay on with Dell Inc. in a short-term consulting role after its $2.4 billion acquisition of his Aliso Viejo-based software company closes.

Smith recently reached an agreement with the computer maker after months of tough negotiations, according to sources with the knowledge of the discussions.

Smith will get an $8.6 million bonus and another $83,000 a month to provide “general consulting services” to Dell from the closing date of the transaction through March 2013.

The financial terms of the agreement are thought to offset the value of stock options that were held by Smith and cancelled as part of the deal. He owns more than 30% of Quest’s shares, a stake that’s valued at about $800 million in the sale.


Smith signed a confidentiality agreement as part of his consulting contract, according to Securities and Exchange Commission filings. He is prohibited from soliciting Dell employees, consultants, subsidiaries or affiliates for one-year following his departure from the company.

He also is prohibited from taking “harmful” actions against Quest, Dell or their customers, clients, vendors, or employees, through the media or in public, according to the filing.

Smith and other Quest executives had balked at signing non-compete agreements of up to five years in previous negotiations, according to informed sources.

Quest makes software that helps manage and improve other business products from various companies, including Washington-based Microsoft Corp., IBM Corp. of New York, and Redwood Shores-based Oracle Corp.

• Headquarters: Round Rock, Texas

• Business: Computers, software

• Founded: 1984

• Ticker symbol: DELL (Nasdaq)

• Fiscal 2011 revenue: $62.07 billion

• Recent earnings: $732 million for August quarter

• Market value: About $16.6 billion

• Notable: Approval of $2.4 billion buy of Aliso Viejo-based Quest Software pending

$5B Mark

Dell has said it plans to use the company as the foundation to grow software sales past the $5 billion mark in the coming years as it diversifies its product offerings beyond computers.

That segment has seen sluggish sales the last few years amid the proliferation of tablets and smart phones.

Round Rock, Texas-based Dell, the world’s third-largest computer maker, won a months-long bidding war to acquire Quest that was announced in July.

The deal, which gained shareholder approval last month, is subject to customary closing conditions, and expected to finalize in coming weeks.

Ranking, Employees

Quest was Orange County’s third-biggest software maker with $857 million in sales in 2011.

It has almost 3,900 workers, 600 of them in Orange County.

Dell officials have declined to discuss any matters related to the integration until the Quest transaction closes.

The Quest buy is Dell’s second-largest to date. The company acquired Texas-based IT provider Perot Systems for $3.9 billion in 2009.

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