<PAGE>


                                                                  Exhibit 10.16

                           ART TECHNOLOGY GROUP, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT
                     GRANTED UNDER THE AMENDED AND RESTATED
                             1996 STOCK OPTION PLAN


1.   GRANT OF OPTION.

     This agreement evidences the grant by Art Technology Group, Inc., a
Delaware corporation (the "COMPANY"), on October 23, 2001 (the "GRANT DATE")
to Paul G. Shorthose, an employee of the Company (the "PARTICIPANT"), of an
option to purchase, in whole or in part, on the terms provided herein and in
the Company's 1996 Amended and Restated Stock Option Plan (the "PLAN"), a
total of 450,000 shares (the "SHARES") of common stock, $0.01 par value per
share, of the Company ("COMMON STOCK") at $1.31 per Share. Unless earlier
terminated, this option shall expire on October 23, 2011 (the "FINAL EXERCISE
DATE").

     It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the
"CODE"). Except as otherwise indicated by the context, the term
"PARTICIPANT", as used in this option, shall be deemed to include any person
who acquires the right to exercise this option validly under its terms.

2.   VESTING SCHEDULE.

     50,000 Shares subject to this option shall be fully exercisable on the
Grant Date. In addition, subject to Section 4 below, this option will become
exercisable ("VEST") as to an additional 100,000 Shares on the first
anniversary of the Grant Date and as to an additional 25,000 Shares at the
end of each successive three-month period following the first anniversary of
the Grant Date until the fourth anniversary of the Grant Date.

     The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
Shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan.

3.   EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.

     (a) FORM OF EXERCISE. This option may be exercised by the Participant's
delivery of a notice to the Company or the Company's agent or designee,
specifying the number of Shares to be purchased and payment in full in the
manner provided in the Plan. The Participant may purchase fewer than the
number of Shares covered hereby, provided that no partial exercise of this
option may be for any fractional Share or for fewer than ten whole Shares.


<PAGE>


     (b) CONTINUOUS RELATIONSHIP WITH THE COMPANY REQUIRED. Except as
otherwise provided in this agreement, this option may not be exercised unless
the Participant, at the time he exercises this option, is, and has been at
all times since the Grant Date, an employee or officer of, or consultant or
advisor to, the Company or any parent or subsidiary of the Company as defined
in Section 424(e) or (f) of the Code (an "ELIGIBLE PARTICIPANT").

     (c) TERMINATION OF RELATIONSHIP WITH THE COMPANY. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided
in paragraphs (d) and (e) below, the right to exercise this option shall
terminate three months after such cessation (but in no event after the Final
Exercise Date), PROVIDED THAT, except as provided in Section 4 below, this
option shall be exercisable only to the extent that the Participant was
entitled to exercise this option on the date of such cessation.
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company, the right to exercise t;his option shall terminate immediately upon
written notice to the Participant from the Company describing such violation.

     (d) EXERCISABLE PERIOD UPON DEATH OR DISABILITY. If the Participant dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Final Exercise Date while he is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of
one year following the date of death or disability of the Participant, by the
Participant (or in the case of death by an authorized transferee), PROVIDED
THAT this option shall be exercisable only to the extent that this option was
exercisable by the Participant on the date of his death or disability, and
further provided that this option shall not be exercisable after the Final
Exercise Date.

     (e) DISCHARGE FOR CAUSE. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for "cause" (as defined below), the right
to exercise this option shall terminate immediately upon the effective date
of such discharge. "CAUSE" shall mean willful misconduct by the Participant
or willful failure by the Participant to perform his responsibilities to the
Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be
conclusive. The Participant shall be considered to have been discharged for
Cause if the Company determines, within 30 days after the Participant's
resignation, that discharge for cause was warranted.

4.   CHARGE IN CONTROL; EMPLOYMENT STATUS

     (a) CHANGE IN CONTROL EVENT. Upon the occurrence of a Change in Control
Event (as defined below) the vesting schedule described in Section 2 shall
be accelerated so that all Shares shall immediately become vested. A "CHANGE
IN CONTROL EVENT" shall mean:

         (i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of 1934, as
amended ("EXCHANGE ACT")), other than Jeet Singh or Joseph T. Chung (a
"PERSON") of beneficial ownership of any capital stock of the Company if,
after such acquisition, such Person beneficially owns (within the meaning of

                                      -2-


<PAGE>



Rule 13d-3 promulgated under the Exchange Act) 20% or more of either (x) the
then-outstanding shares of Common Stock of the Company (the "OUTSTANDING
COMPANY COMMON STOCK") or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
PROVIDED, HOWEVER, that for the purchases of this subsection (i), the
following acquisitions shall not constitute a Change in Control Event: (A)
any acquisition directly from the Company (excluding an acquisition pursuant
to the exercise, conversion or exchange of any security exercisable for,
convertible into or exchangeable for Common Stock or voting securities of the
Company, unless the Person exercising, converting or exchanging such security
acquired such security directly from the Company or an underwriter or agent
of the Company), (B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company, or (C) any acquisition by any corporation pursuant to a
Business Combination (as defined below) which complies with clauses (x) and
(y) of subsection (iii) of this definition; or

         (ii) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, applicable, the Board of Directors of
a successor corporation to the Company), where the term "CONTINUING DIRECTOR"
means at any date a member of the Board (x) who was a member of the Board on
the Grant Date or (y) who was nominated or elected subsequent to such date by
at least a majority of the directors who were Continuing Directors at the
time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; PROVIDED,
HOWEVER, that there shall be excluded from this clause (y) any individual
whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents,
by or on behalf of a person other than the Board; or

         (iii) the consummation of a merger, consolidation, reorganization
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the Company (a
"BUSINESS COMBINATION"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of
Common Stock and the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company's assets
either directly or through one or more subsidiaries) (such resulting or
acquiring corporation is referred to therein as the "ACQUIRING CORPORATION")
in substantially the same proportions as their ownership of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, respectively,
immediately prior to such Business Combination and (y) no Person (excluding
the Acquiring Corporation or any employee benefit plan (or related trust)
maintained or sponsored by the Company or by the Acquiring Corporation)
beneficially owns, directly or indirectly, 20% or more of the
then-outstanding shares of common stock of the Acquiring Corporation, or of
the combined voting power of the then-outstanding


                                      -3-


<PAGE>


securities of such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior to the
Business Combination).

     (b) EMPLOYMENT STATUS. If, during the period commencing on the Grant
Date and ending on the fourth anniversary thereof, the Company shall
terminate the Participant's employment as Chief Executive Officer of the
Company other than for Cause, death or disability (within the meaning of
Section 22(e)(3) of the Code) or the Participant shall terminate his
employment as Chief Executive Officer for Good Reason (as defined below)
(the date of such event referred to herein as the "TERMINATION DATE"), the
vesting schedule described in Section 2 shall be accelerated in part so that
one-half of the number of Shares unvested on the Termination Date shall
immediately become vested. Subject to Section 3(b), the remaining one-half of
such number of Shares shall continue to become vested in accordance with the
original vesting schedule set forth in Section 2, with one-half of the number
of Shares that would otherwise have become vested on each subsequent vesting
date in accordance with the original schedule set forth in Section 2 becoming
vested on each subsequent vesting date. Notwithstanding the foregoing, if the
Termination Date occurs prior to October 23, 2002, the acceleration of vesting
described in this Section 4(b) shall not commence until October 23, 2002.
"GOOD REASON" shall mean (a) a material reduction in the Grant Date, (b) a
reduction in the Participant's annual base salary as in effect on the Grant
Date or (c) a change by the Company in the location at which the Participant
performs his principal duties as Chief Executive Officer to a new location
that is outside a radius of 30 miles from 25 First Street, Cambridge,
Massachusetts.

5.   WITHHOLDING.

     No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision
satisfactory to the Company for payment of, any federal, state or local
withholding taxes required by law to be withheld in respect of this option.

6.   NONTRANSFERABILITY OF OPTION.

     This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law,
except by will, the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in Section 414(p) of the Code,
and, during the lifetime of the Participant, this option shall be exercisable
only by the Participant.

     This option is subject to the provisions of the Plan, a copy of which is
furnished by the Participant with this option.

7.   ADJUSTMENT PROVISIONS.

     (a) GENERAL. If, through, or as a result of, any merger, consolidation,
sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, (i) the outstanding
shares of Common Stock are increased or decreases or are exchanged for a
different number or


                                      -4-

<PAGE>


kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common Stock
or other securities, the Participant shall, with respect to this option or
any unexercised portion hereof, be entitled to the rights and benefits, and
be subject to the limitations, set forth in Section 15(a) of the Plan.

     (b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this
Section 7 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be issued pursuant to this option on account
of any such adjustments.

8.   MISCELLANEOUS.

     (a) NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment or other relationship of the
Participant of the period within which this option may be exercised.

     (b) RIGHTS AS A SHAREHOLDER. The Participant shall have no rights as a
shareholder with respect to any Shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends
or non-cash distributions with respect to such Shares) unless and until a
certificate representing such Shares is duly issued and delivered to the
Participant. No adjustment shall be made for dividends or other rights for
which the record date is prior to the date such stock certificate is issued.

     (c) GOVERNING LAW. This option shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

     IN WITNESS WHEREOF, the company has caused this option to be executed by
its duly authorized officer. This option shall take effect as a sealed
instrument.

                                       ART TECHNOLOGY GROUP, INC.



Dated: 10/23/01                        By: /s/ Joe Chung
      -------------------                 ---------------------------
                                       Name:  Joe Chung
                                             -------------------------
                                       Title: Chairman
                                             ------------------------




                                       -5-


<PAGE>


                           PARTICIPANT'S ACCEPTANCE

     The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of
a copy of the Company's 1996 Amended and Restated Stock Option Plan.

                                       PARTICIPANT:



                                       /s/ Paul Shorthose
                                       ------------------------------
                                       Paul G. Shorthose
                                       Address:
                                               ----------------------

                                               ----------------------




                                       -6-



<PAGE>


<TABLE>
<CAPTION>
450,000 SHARES TOTAL        YEAR 1
50,000 VEST IMMEDIATELY        Q1       Q2       Q3       Q4
<S>                         <C>      <C>      <C>      <C>           <C>
QUARTERLY VEST                   0      0          0   100,000       ASSUMING CEO HIRED WITHIN YEAR 1
CUMULATIVE VEST                  0      0          0   100,000       Total vested would be:
                                                                     150,000 + 50% of 300,000 (150,000) = 300,000 options vested


                            YEAR 2                                   YEAR 2
                               Q1       Q2       Q3       Q4            Q1       Q2       Q3       Q4
QUARTERLY VEST               25,000   25,000   25,000   25,000        12,500   12,500   12,500   12,500
CUMULATIVE VEST             125,000  150,000  175,000  200,000                 25,000   37,500   50,000


                            YEAR 3                                   YEAR 3
                               Q1       Q2       Q3       Q4            Q1       Q2       Q3       Q4
QUARTERLY VEST               25,000   25,000   25,000   25,000        12,500   12,500   12,500   12,500
CUMULATIVE VEST             225,000  250,000  275,000  300,000        62,500   75,000   87,500  100,000


                            YEAR 4                                   YEAR 4
                               Q1       Q2       Q3       Q4            Q1       Q2       Q3       Q4
QUARTERLY VEST               25,000   25,000   25,000   25,000        12,500   12,500   12,500   12,500
CUMULATIVE VEST             325,000  350,000  375,000  400,000       112,500  125,000  137,500  150,000

</TABLE>