EXHIBIT 10.38

ARIBA BONUS PLAN

EXECUTIVE OFFICERS

1. Effective Date and Term. This Plan was adopted by the Compensation Committee
(the “Committee”) of the Board of Directors of Ariba, Inc. (the “Company”) on
November 3, 2006. It is effective for fiscal year 2007 and thereafter will
continue to apply until it is amended or terminated by the Committee. The Plan
supersedes all prior bonus plans applicable to individuals who are deemed to be
“officers” of the Company for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended (the “Executive Officers”). Any other bonus plan
applicable to Executive Officers previously approved by the Committee is hereby
terminated.

2. Administration. The Committee administers the Plan and adopts rules and
regulations to implement the Plan. The decisions of the Committee are final and
binding on all parties who have an interest in the Plan.

3. Eligibility. Participation in the Plan is limited to Executive Officers.
Participation in the Plan is effective on the day the participant starts in a
bonus-eligible job. Participants must be employed in a bonus-eligible position
before the first day of the last month of the fiscal half-year to be eligible to
participate in the Plan for that fiscal half-year. Bonus payments will be
prorated for participants who become eligible after the start of a fiscal
half-year or for participants who are on a leave of absence or sabbatical for
all or part of a fiscal half-year. A participant may be removed from the Plan at
any time and for any reason, at the Company’s discretion, regardless of whether
he or she remains an officer or employee of the Company.

4. Determination of Amounts. The Plan may provide a semi-annual cash bonus that
is paid based on the achievement of pre-determined Company performance
objectives and individual performance factors. The amount of each participant’s
semi-annual bonus is determined as follows:

(a) An annual target bonus amount is assigned to the participant by the
Committee as soon as reasonably practicable after the beginning of a fiscal year
or, if later, at the time of his or her hiring. The annual target bonus amount
may be modified from time to time thereafter by the Committee. The semi-annual
target bonus amount is equal to 50% of the annual target bonus amount.

(b) Except in the case of the Chief Commercial Officer, one-half of the actual
semi-annual bonus is determined on the basis of the Company’s semi-annual
non-GAAP net income score and one-half is determined on the basis of the
Company’s semi-annual revenue score. “Non-GAAP net income” means after-tax
income excluding (i) restructuring-related expense, (ii) amortization of
acquired core technology and in-process R&D, (iii) amortization of goodwill and
intangibles and (iv) amortization of stock-based compensation.

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(c) As soon as reasonably practicable after the beginning of a fiscal year, the
Committee determines for each fiscal half-year in that year the levels of
non-GAAP net income and revenue that will be required for non-GAAP net income
and revenue scores of 0.50, 0.75, 1.00 and 2.00. If the level of non-GAAP net
income or revenue is less than the level required for a 0.50 score, the score
will be zero. If the level of non-GAAP net income or revenue is greater than the
amount required for a 2.00 score, the score will be 2.00. If the amount of
non-GAAP net income or revenue falls between the amounts required for a 0.50
score and a 0.75 score, between the amounts required for a 0.75 score and a 1.00
score or between the amounts required for a 1.00 score and a 2.00 score, then
straight-line interpolation will be used.

(d) When the actual amount of non-GAAP net income for a fiscal half-year has
been determined, the non-GAAP net income score is calculated. Likewise, when the
actual amount of revenue for a fiscal half-year has been determined, the revenue
score is calculated. The weighted-average score for the fiscal half-year equals
one-half of the non-GAAP net income score plus one-half of the revenue score.
This weighted-average score is multiplied by each participant’s semi-annual
target bonus amount. The result is the participant’s tentative semi-annual
bonus, based on financial measures (the “Tentative Bonus”).

(e) After the close of each fiscal half-year, the Committee at its discretion
may increase or reduce any Tentative Bonus, based on criteria other than
non-GAAP net income and revenue (including individual performance).

(f) All calculations for the second fiscal half-year are performed on a
cumulative full-year basis. The bonus calculated on that basis is then reduced
by the semi-annual bonus already paid for the first fiscal half-year.

(g) In the case of the Chief Commercial Officer, the Company’s semi-annual
bookings score is added to the other two scores described above. The semi-annual
bookings score has a weight of 25%, the non-GAAP net income score has a weight
of 50%, and the revenue score has a weight of 25%. As soon as reasonably
practicable after the beginning of the fiscal year, the Committee determines for
each fiscal half-year in that year the amount of bookings that will be required
for bookings scores of 0.50, 0.75, 1.00 and 2.00. If the amount of bookings is
less than the amount required for a 0.50 score, the score will be zero. If the
amount of bookings is greater than the amount required for a 2.00 score, the
score will be 2.00. If the amount of bookings falls between the amounts required
for a 0.50 score and a 0.75 score, between the amounts required for a 0.75 score
and a 1.00 score or between the amounts required for a 1.00 score and a 2.00
score, then straight-line interpolation will be used. All other provisions of
the Plan apply to the Chief Commercial Officer in the same manner as to the
other Executive Officers.

 

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(h) The Committee may adjust the amount of the Company’s semi-annual non-GAAP
net income or semi-annual revenue, or both, to exclude extraordinary expenses or
benefits.

5. Payment of Bonuses. Payment of the semi-annual cash bonus (if any) is
targeted for May 31 and November 30. Adjustments to this payment schedule may be
made as business conditions require.

6. Employment Requirement. Unless a Severance Agreement between a participant
and the Company provides otherwise, the participant must be employed by the
Company at the time of the bonus payment to receive the semi-annual cash bonus.

7. Modification or Termination of the Plan. The Committee reserves the right to
modify, suspend or terminate this Plan at any time. Should an acquisition or
significant business initiative change the operating plan, this Plan may be
modified or a new plan may go into effect at the start of the fiscal half-year
following this event.

8. Benefits Unfunded. No amounts awarded or accrued under this Plan will be
funded, set aside or otherwise segregated prior to payment. The obligation to
pay the bonuses awarded hereunder will at all times be an unfunded and unsecured
obligation of the Company. Plan participants will have the status of general
creditors and must look solely to the general assets of the Company for the
payment of their bonus awards.

9. Benefits Nontransferable. No Plan participant will have the right to
alienate, pledge or encumber his or her interest in this Plan, and such interest
will not (to the extent permitted by law) be subject in any way to the claims of
the participant’s creditors or to attachment, execution or other process of law.

10. No Employment Rights. No action of the Company in establishing the Plan, no
action taken under the Plan by the Committee and no provision of the Plan itself
will be construed to grant any person the right to remain in the employ of the
Company or its subsidiaries for any period of specific duration. Rather, each
employee is employed “at will,” which means that either the employee or the
Company may terminate the employment relationship at any time and for any
reason, with or without cause.

 

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