Ariba (ARBA)

Director Compensation

Members of the Board of Directors receive a retainer of $50,000 per year, paid in quarterly installments. The Company’s lead independent director (currently Robert E. Knowling, Jr.) receives an additional retainer of $10,000 per year, paid in quarterly installments. The chair of each committee of the Board of Directors receives an annual retainer of $5,000, except that the chair of the Audit Committee receives an annual retainer of $10,000, also paid in quarterly installments. Directors receive a fee of $2,500 for each meeting of the Board of Directors that they attend and a fee of $1,000 for each meeting of a committee of the Board of Directors that they attend. Directors may elect to convert from 50% to 100% of their cash compensation into shares of Common Stock or options to purchase such shares. The shares or options are granted automatically as of the last day of the quarter in which the cash compensation was earned. Cash is converted into shares based on the closing price of the Common Stock on the last trading day in the quarter and into options based on the option valuation method used by the Company in preparing its consolidated financial statements. The options have an exercise price equal to 100% of the closing price of the Common Stock on the last trading day in the quarter. The option term is 10 years, except that the options expire 12 months after the director’s service terminates for any reason. Shares or options received in lieu of cash compensation are fully vested.

Non-employee directors also receive grants of restricted shares of Common Stock under the 1999 Equity Incentive Plan. The Board of Directors has determined that each new non-employee director upon election to the Board of Directors will receive a one-time grant of restricted shares of Common Stock with a fair market value of $100,000 on the date of grant, provided that the director has never been employed by the Company. In addition, each continuing non-employee director will receive an annual grant of restricted shares of Common Stock with a fair market value of $100,000 on the date of grant, to be granted at the meeting of the Board of Directors held in conjunction with the annual meeting of stockholders (whether or not the director has been employed by the Company). However, a director will not receive an annual grant in the same calendar year in which he or she received the initial grant. Each initial and annual grant of restricted shares of Common Stock vest on the first permissible trading day that occurs after the first anniversary of the date of grant, provided that the recipient remains in the Company’s service on the vesting date, subject to full acceleration upon a change in control of the Company. Each non-employee director received the annual grant at the time of our 2006 annual meeting of stockholders.

Director Compensation

Members of the Company’s Board of Directors receive a retainer of $50,000 per year, paid in quarterly installments. The Company’s lead independent director (currently Robert E. Knowling, Jr.) receives an additional retainer of $10,000 per year, paid in quarterly installments. The chair of each committee of the Board of Directors receives an annual retainer of $5,000, also paid in quarterly installments, except that the chair of the Company’s Audit Committee receives an annual retainer of $10,000. Directors receive a fee of $2,500 for each meeting of the Board of Directors that they attend and a fee of $1,000 for each meeting of a committee of the Board of Directors that they attend. Directors may elect to convert from 50% to 100% of their cash compensation into shares of the Company’s Common Stock or options to purchase such shares. The shares or options are granted automatically as of the last day of the quarter in which the cash compensation was earned. Cash is converted into shares based on the closing price of the Company’s stock on the last trading day in the quarter and into options based on the option valuation method used by the Company in preparing its consolidated financial statements. The options have an exercise price equal to 100% of the closing price of the Company’s stock on the last trading day in the quarter. The option term is 10 years, except that the options expire 12 months after the director’s service terminates for any reason. Shares or options received in lieu of cash compensation are fully vested.

Prior to October 27, 2005, the compensation program for non-employee directors provided that non-employee directors receive automatic option grants under the 1999 Directors’ Stock Option Plan. Directors were also eligible to receive options and be issued shares of Common Stock under the 1999 Equity Incentive Plan. The Board of Directors had determined that each new non-employee director would receive an option to purchase 25,000 shares of Common Stock when he or she joined the Board of Directors, provided that the director had never been employed by the Company. In addition, at each annual meeting, each individual who continued serving as a non-employee director would receive an additional option to purchase 25,000 shares of Common Stock (whether or not the director had been employed by the Company). However, a director would not receive an annual grant in the same calendar year in which he or she received the initial grant. The exercise price per share for each option grant would be equal to the fair market value per share on the date of grant. Each initial grant would become exercisable for one-third of the shares after the director completed each of his or her first three years of service on the Board of Directors. The initial grants become exercisable for all shares if the Company is subject to a change in control. Each annual option grant was fully exercisable upon the date of grant. The initial and annual option grants each consisted of a combination of automatic grants under the 1999 Directors’ Stock Option Plan and discretionary grants under the 1999 Equity Incentive Plan, and the size of the discretionary grants was subject to change each year after review by the Compensation Committee. On January 24, 2005, Mr. Johnson was granted an option to purchase 12,500 shares of Common Stock under the 1999 Equity Incentive Plan and an option to purchase 12,500 shares of Common Stock under the 1999 Directors’ Stock Option Plan. On April 15, 2005, the Board terminated the 1999 Directors’ Stock Option Plan. On June 14, 2005, each of Messrs. Kashnow, Knowling, Monahan, Newkirk and Wallman was granted an option to purchase 25,000 shares of Common Stock under the 1999 Equity Incentive Plan.

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On October 27, 2005, the Board of Directors reviewed the compensation program for non-employee directors. The equity compensation component was changed so that non-employee directors will receive grants of restricted shares of Common Stock instead of options to purchase Common Stock. The Board of Directors determined that each new non-employee director upon election to the Board of Directors will receive a one-time grant of restricted shares of Common Stock with a fair market value of $100,000 on the date of grant, provided that the director has never been employed by the Company. In addition, each continuing non-employee director will receive an annual grant of restricted shares of Common Stock with a fair market value of $100,000 on the date of grant, to be granted at the meeting of the Board of Directors held in conjunction with the annual meeting of stockholders (whether or not the director has been employed by the Company). However, a director will not receive an annual grant in the same calendar year in which he or she received the initial grant. Each initial and annual grant of restricted shares of Common Stock will vest on the first permissible trading day that occurs after the first anniversary of the date of grant, provided that the recipient remains in the Company’s service on the vesting date, subject to full acceleration upon a change in control of the Company.

Director Compensation

Members of the Company’s Board of Directors receive a retainer of $50,000 per year, paid in quarterly installments. In addition, the chair of each committee of the Board of Directors receives an annual retainer of $3,500, also paid in quarterly installments. Directors are entitled to a fee of $2,500 for each meeting of the Board of Directors that they attend and a fee of $1,000 for each meeting of a committee of the Board of Directors that they attend. Directors may elect to convert from 50% to 100% of their cash compensation into shares of the Company’s Common Stock or options to purchase such shares. The shares or options are granted automatically as of the last day of the quarter in which the cash compensation was earned. Cash is converted into shares based on the closing price of the Company’s stock on the last trading day in the quarter and into options based on the option valuation method used by the Company in preparing the notes to its consolidated financial statements. The

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options have an exercise price equal to 100% of the closing price of the Company’s stock on the last trading day in the quarter. The option term is 10 years, except that the options expire 12 months after the director’s service terminates for any reason. Shares or options received in lieu of cash compensation are fully vested.

Non-employee directors receive automatic option grants under the 1999 Directors’ Stock Option Plan. Directors are also eligible to receive options and be issued shares of Common Stock under the 1999 Equity Incentive Plan. The Board of Directors has determined that each new non-employee director will receive an option to purchase 25,000 shares of Common Stock when he or she joins the Board of Directors, provided that the director has never been employed by the Company. In addition, at each annual meeting, each individual who will continue serving as a non-employee director will receive an additional option to purchase 25,000 shares of Common Stock (whether or not the director has been employed by the Company). However, a director will not receive an annual grant in the same calendar year in which he or she received the initial grant. The exercise price per share for each option grant will be equal to the fair market value per share on the date of grant. Each initial grant will become exercisable for one-third of the shares after the director completes each of his or her first three years of service on the Board of Directors. The initial grants become exercisable for all shares if the Company is subject to a change in control. Each annual option grant is fully exercisable upon the date of grant. The initial and annual option grants each consist of a combination of automatic grants under the 1999 Directors’ Stock Option Plan and discretionary grants under the 1999 Equity Incentive Plan, and the size of the discretionary grants is subject to change each year after review by the Compensation Committee. On June 28, 2004 each of Messrs. Kashnow, Knowling, Monahan and Wallman was granted an option to purchase 22,500 shares of Common Stock under the 1999 Equity Incentive Plan and an option to purchase 2,500 shares of Common Stock under the 1999 Directors’ Stock Option Plan.

Director Compensation

Members of the Company’s Board of Directors receive a retainer of $50,000 per year, paid in quarterly installments. In addition, the chair of each committee of the Board of Directors receives an annual retainer of $3,500, also paid in quarterly installments. Directors are entitled to a fee of $2,500 for each meeting of the Board of Directors that they attend and a fee of $1,000 for each meeting of a committee of the Board of Directors that they attend. Directors may elect to convert from 50% to 100% of their cash compensation into shares of the Company’s Common Stock or options to purchase such shares. The shares or options are granted automatically as of the last day of the quarter in which the cash compensation was earned. Cash is converted into shares based on the closing price of the Company’s stock on the last trading day in the quarter and into options based on the option valuation method used by the Company in preparing the notes to its consolidated financial statements. The options have an exercise price equal to 100% of the closing price of the Company’s stock on the last trading day in the quarter. The option term is 10 years, except that the options expire 12 months after the director’s service terminates for any reason. Shares or options received in lieu of cash compensation are fully vested.

Non-employee directors receive automatic option grants under the 1999 Directors’ Stock Option Plan. Directors are also eligible to receive options and be issued shares of Common Stock under the 1999 Equity Incentive Plan. The Board of Directors has determined that each new non-employee director will receive an option to purchase 25,000 shares of Common Stock when he or she joins the Board of Directors, provided that the director has never been employed by the Company. In addition, at each annual meeting, each individual who will continue serving as a non-employee director will receive an additional option to purchase 25,000 shares of Common Stock (whether or not the director has been employed by the Company). However, a director will not receive an annual grant in the same calendar year in which he or she received the initial grant. The exercise price per share for each option grant will be equal to the fair market value per share on the date of grant. Each initial grant will become exercisable for one-third of the shares after the director completes each of his or her first three years of service on the Board of Directors. The initial grants become exercisable for all shares if the Company is subject to a change in control. Each annual option grant is fully exercisable upon the date of grant. The initial and

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Table of Contents

annual option grants each consist of a combination of automatic grants under the 1999 Directors’ Stock Option Plan and discretionary grants under the 1999 Equity Incentive Plan, and the size of the discretionary grants is subject to change each year after review by the Compensation Committee. On June 28, 2004 each of Messrs. Kashnow, Knowling, Monahan and Wallman was granted an option to purchase 22,500 shares of Common Stock under the 1999 Equity Incentive Plan and an option to purchase 2,500 shares of Common Stock under the 1999 Directors’ Stock Option Plan.