Exhibit 10.13
Aruba Networks, Inc.
Outside Director Compensation Policy
(Effective as of February 24, 2011)
          Aruba Networks, Inc. (the “Company”) believes that compensation of its
Directors, including granting equity compensation, represents a powerful tool to
attract, retain and reward Directors who are not Employees of the Company
(“Outside Directors”) and to align the interests of our Outside Directors with
those of our stockholders. This Outside Director Compensation Policy (the
“Policy”) is intended to formalize the Company’s policy regarding grants of
equity compensation to its Outside Directors.
Equity Compensation

  1.   Definitions.

  (a)   General. Unless otherwise defined herein, capitalized terms used in this
Policy will have the meaning given such terms in the Company’s 2007 Equity
Incentive Plan (the “2007 Plan”).     (b)   Additional Definitions. As used
herein, the following definitions will apply:

  i.   “Audit Committee” means the Audit Committee of the Board.     ii.  
“Compensation Committee” means the Compensation Committee of the Board.     iii.
  “Corporate Governance and Nominating Committee” means the Corporate Governance
and Nominating Committee of the Board.     iv.   “Value” means (i) with respect
to any Restricted Stock Units pursuant to any Award granted pursuant to this
Policy, the product of (A) the Fair Market Value of one Share on the grant date
of such Award and (B) the aggregate number of Restricted Stock Units pursuant to
such Award, and (ii) with respect to any Option granted pursuant to an Award
granted pursuant to this Policy, the value of such Option, determined by using
the Black-Scholes option valuation methodology, on the grant date of such Award.

  2.   Board Service.

  (a)   General. Outside Directors will be entitled to receive all types of
Awards (except Incentive Stock Options) under the 2007 Plan, including
discretionary Awards not covered under this Policy. All grants of Awards to
Outside Directors pursuant to Sections 2(d) through 2(h) of this Policy will be
automatic and nondiscretionary, except as otherwise provided herein, and will be
made in accordance with the following provisions:     (b)   Type of Option.
Options granted pursuant to this Policy will be Nonstatutory Stock Options and,
except as otherwise provided herein, will be subject to the other terms and
conditions of the 2007 Plan.

 

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  (c)   No Discretion. No person will have any discretion to select which
Outside Directors will be granted Awards under this Policy or to determine the
number of Shares to be covered by such Awards (except as provided in Section
2(k) below and Section 15 of the 2007 Plan).     (d)   Initial Award. Each
person who first becomes an Outside Director following February 24, 2011 will be
automatically granted (i) an Option to purchase 50,000 Shares (the “Initial
Option Award”) and (ii) 10,000 Restricted Stock Units (the “Initial RSU Award”
and, together with the Initial Option Award, the “Initial Award”) on or about
the date on which such person first becomes an Outside Director, whether through
election by the stockholders of the Company or appointment by the Board to fill
a vacancy; provided, however, that an Inside Director who ceases to be an Inside
Director, but who remains a Director, will not receive an Initial Award.     (e)
  Annual Award. Each Outside Director will be automatically granted an Option
and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $230,000 (an “Annual Award”) on each date of the annual
meeting of the stockholders of the Company beginning in 2011, if as of such
date, he or she will have served on the Board for at least the preceding six
(6) months.     (f)   Committee Chair Awards. On each date of the annual meeting
of the stockholders of the Company beginning in 2011, (i) any Outside Director
who is then serving as Chairman of the Audit Committee will be automatically
granted an Option and/or Restricted Stock Units, as determined under
Section 2(i), with an aggregate Value of $20,000, (ii) any Outside Director who
is then serving as Chairman of the Compensation Committee will be automatically
granted an Option and/or Restricted Stock Units, as determined under
Section 2(i), with an aggregate Value of $12,000, (iii) any Outside Director who
is then serving as Chairman of the Corporate Governance and Nominating Committee
will be automatically granted an Option and/or Restricted Stock Units, as
determined under Section 2(i), with an aggregate Value of $6,000, and (iv) any
Outside Director who is then serving as Chairman of any standing committee of
the Board (other than the Audit Committee, the Compensation Committee or the
Corporate Governance and Nominating Committee) will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $6,000. An Outside Director shall be entitled to more than
one Award pursuant to this Section 2(f) (a “Committee Chair Award”) to the
extent that on the date of any applicable annual meeting of the stockholders of
the Company, he or she is the Chairman of more than one standing committee of
the Board. Each Committee Chair Award granted pursuant to this Section 2(f)
shall be in addition to any other Award(s) to which the Outside Director may be
entitled under any other section of this Policy.     (g)   Committee Member
Award. On each date of the annual meeting of the stockholders of the Company
beginning in 2011, (i) any Outside Director who is then serving as a
non-Chairman member of the Audit Committee will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $10,000, (ii) any Outside Director who is then serving as a
non-Chairman member of the Compensation Committee will be automatically granted
an Option and/or Restricted Stock Units, as determined under Section 2(i), with
an aggregate Value of $8,000, (iii) any Outside Director who is then serving as
a non-Chairman member of the Corporate Governance and Nominating Committee will
be automatically granted an Option and/or Restricted Stock Units, as determined
under Section 2(i), with an aggregate Value of $6,000, and (iv) any Outside
Director who is then serving as a non-Chairman member of any standing committee
of the Board (other than the Audit Committee, the Compensation Committee or the
Corporate Governance and Nominating Committee) will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $6,000.

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      An Outside Director shall be entitled to more than one Award pursuant to
this Section 2(g) (a “Committee Member Award”) to the extent that on the date of
any applicable annual meeting of the stockholders of the Company, he or she is a
non-Chairman member of more than one standing committee of the Board. Each
Committee Member Award granted pursuant to this Section 2(g) shall be in
addition to any other Award(s) to which the Outside Director may be entitled
under any other section of this Policy.     (h)   Lead Independent Director
Award. On each date of the annual meeting of the stockholders of the Company
beginning in 2011, any Outside Director who is then serving as Lead Independent
Director will be automatically granted an Option and/or Restricted Stock Units,
as determined under Section 2(i), with an aggregate Value of $10,000. Each Award
granted pursuant to this Section 2(h) (a “Lead Independent Director Award”)
shall be in addition to any other Award(s) to which the Outside Director may be
entitled under any other section of this Policy.     (i)   Number of Option
Shares and Restricted Stock Units for Value-Based Director Awards. The number of
Shares subject to Options and/or number of Restricted Stock Units pursuant to
any Annual Award, any Committee Chair Award, any Committee Member Award and any
Lead Independent Director Award (each, a “Value-Based Director Award”) shall be
determined such that:

  i.   40% of the aggregate Value of the applicable Value-Based Director Award
will be granted in the form of Restricted Stock Units (a “40% Value RSU Award”);
and     ii.   60% of the aggregate Value of the applicable Value-Based Director
Award will be granted in the form of either Restricted Stock Units (a “60% Value
RSU Award”) or an Option (a “60% Value Option Award”), at the election (or
deemed election) of the applicable recipient Director as described below.

      Any determination as to the Value of any Option and/or Restricted Stock
Units pursuant to any Award granted in accordance with this Policy will be made
by the Administrator in its sole discretion.         On or before the day
immediately preceding the date of the annual meeting of the stockholders of the
Company or such earlier deadline as may be established by the Administrator in
its discretion (the “Submission Deadline”), an individual who will be granted
any Value-Based Director Award on the date of such annual meeting may elect to
receive 60% of the aggregate Value of such Value-Based Director Award in the
form of either Restricted Stock Units or an Option, as provided above. Any such
election must be submitted to the Secretary of the Company or his or her
authorized designee in the form and manner specified by the Secretary or
designee, and shall become irrevocable effective as of the applicable Submission
Deadline. An individual who will be granted any Value-Based Director Award but
fails to make such election with respect thereto on or prior to the applicable
Submission Deadline shall automatically be deemed for purposes of this Section
2(i) to have elected to receive 60% of the aggregate Value of such Value-Based
Director Award in the form of an Option instead of Restricted Stock Units. For
the avoidance of doubt, if an individual will be granted two or more Value-Based
Director Awards on the same day pursuant to this Policy but fails to make
elections with respect to all of such Awards on or prior to the applicable
Submission Deadline, such individual shall automatically be deemed for purposes
of this Section 2(i) to have elected to receive a 60% Value Option Award,
instead of a 60% Value RSU Award, for each such Award for which such individual
failed to timely make an election.

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  (j)   Terms. Each Award granted pursuant to this Policy shall be governed by
the terms of the 2007 Plan and be evidenced by an agreement in such form as the
Administrator shall determine and the terms of each Award granted pursuant to
this Policy will be as follows:

  i.   The term of each Option granted in accordance with the Policy, including
each Initial Option Award and each 60% Value Option Award, will be seven
(7) years.     ii.   The exercise price per Share of each Option granted
pursuant to this Policy, including each Initial Option Award and each 60% Value
Option Award, will equal 100% of the Fair Market Value of one Share on the grant
date for such Option.     iii.   Subject to Section 15 of the 2007 Plan, each
Initial Option Award will vest and become exercisable as to 1/48th of the shares
subject to the Initial Option Award on each monthly anniversary of the Initial
Option Award grant date (or on the last day of the month, if there is no
corresponding date), provided that the Participant continues to serve as a
Director through each such date.     iv.   Subject to Section 15 of the 2007
Plan, each Initial RSU Award will vest in equal annual installments over a
4-year period from the Initial RSU Award vesting commencement date, provided
that the Participant continues to serve as a Director through each such date.  
  v.   Subject to Section 15 of the 2007 Plan, each 40% Value RSU Award will
vest in full in one installment at the end of a 1-year period from the 40% Value
RSU Award vesting commencement date, provided that the Participant continues to
serve as a Director through the end of such 1-year period; provided, however,
that prior to the end of such 1-year period, upon the death of the Participant,
the Disability of the Participant, the voluntary resignation of the Participant
as a Director or the Company’s termination of the Participant’s status as a
Director (other than for “Cause” as such term is defined in the applicable Award
Agreement), such 40% Value RSU Award will automatically vest to the extent
necessary such that the total number of Restricted Stock Units then vested under
such 40% Value RSU Award equals the product (rounded upward to the nearest whole
number) equal to (1) the total number of Restricted Stock Units subject to such
40% Value RSU Award and (2) a fraction, the numerator of which is the number of
days after the vesting commencement date of such 40% Value RSU Award through and
including the date of such death, Disability, resignation or termination, and
the denominator of which is the total number of days in such 1-year period
associated with such 40% Value RSU Award.     vi.   Subject to Section 15 of the
2007 Plan, each 60% Value RSU Award will vest in equal annual installments over
a 4-year period from the 60% Value RSU Award vesting commencement date, provided
that the Participant continues to serve as a Director through each such date.  
  vii.   Subject to Section 15 of the 2007 Plan, each 60% Value Option Award
will vest and become exercisable as to 1/48th of the shares subject to the Value
Option Award on each monthly anniversary of the Value Option Award grant date
(or on the last day of the month, if there is no corresponding date), provided
that the Participant continues to serve as a Director through each such date.  
  viii.   Vested Restricted Stock Units will be paid in Shares as soon as
practicable after vesting, but in each such case within the period ending no
later than the later of (i) the end of the calendar year that includes the
vesting date or (ii) the date that is the fifteenth (15th) day

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      of the third (3rd) month following the vesting date. In no event will the
Participant be permitted, directly or indirectly, to specify the taxable year of
payment of any Restricted Stock Units payable under this Policy.

  ix.   Each Award Agreement evidencing the grant of any Restricted Stock Units
pursuant to this Policy shall provide the Participant with an automatic “sell to
cover” election that complies with the requirements of Rule 10b5-1(c)(1)(i)(B)
under the Exchange Act, such that upon the vesting of all or any portion of such
Restricted Stock Units, a portion of the total Shares received by the
Participant upon such vesting will be automatically sold to pay the minimum
income and any other applicable taxes required to be withheld with respect to
such total Shares. The proceeds from such sale will be used to satisfy the
Participant’s tax withholding obligations (and any associated broker or other
fees) arising with respect to such total Shares and any proceeds from such sale
in excess of the tax withholding obligation (and any associated broker or other
fees) will be remitted to the Participant pursuant to such procedures as the
Administrator in its discretion may specify from time to time. In order to make
such election, a Participant will be required to make certain representations
and warranties to the Company as the Administrator determines in its sole
discretion are necessary or appropriate to comply with applicable securities
laws.

  (k)   Amendments. The Administrator in its discretion may change the number of
Shares subject to Options and/or number of Restricted Stock Units (or cash
payments in lieu thereof) pursuant to the Initial Awards, Annual Awards,
Committee Chair Awards, Committee Member Awards and Lead Independent Director
Awards.         Notwithstanding anything to the contrary contained in this
Policy, with respect to any 40% Value RSU Award, the Compensation Committee in
its sole discretion (if the Compensation Committee is the Administrator) or the
Administrator at the direction of the Compensation Committee in its sole
discretion (if the Compensation Committee is not the Administrator), may, on the
date of grant for such 40% Value RSU Award, substitute cash for all of the
Restricted Stock Units pursuant to such 40% Value RSU Award, such that such 40%
Value RSU Award consists of only cash. Any such substitution will be made at the
rate of an amount of cash equal to the Fair Market Value of one Share, on the
applicable grant date, for one Restricted Stock Unit. For the avoidance of
doubt, any cash so substituted for any Restricted Stock Unit will be subject to
the same vesting arrangements that would otherwise have been applicable to such
Restricted Stock Unit (including any vesting acceleration provisions). Cash
payments made pursuant to this section will be paid as soon as practicable after
vesting, but in each such case within the period ending no later than the later
of (i) the end of the calendar year that includes the vesting date or (ii) the
date that is the fifteenth (15th) day of the third (3rd) month following the
vesting date. In no event will the Participant be permitted, directly or
indirectly, to specify the taxable year of payment of any cash award payable
under this Policy.

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