EX-10.02






Exhibit 10.02




FISCAL YEAR 2010 MANAGEMENT BONUS PLAN




A. CASH BONUS PLAN




All ArcSight, Inc. (the “Company”) executives who do not otherwise receive variable compensation
will be eligible to participate in this cash bonus plan. Each eligible executive’s actual
participation level will be determined by their individual performance.




The cash bonus available will be calculated quarterly based on a percentage of an executive’s base
salary upon the Company’s achievement of both revenue targets and operating income
targets1, as described below. At the end of each fiscal quarter, both the revenue
target and operating income target1 will be compared to actual quarterly performance.
The amount of the bonus payable, in the aggregate, with respect to each quarter is 50% of the bonus
amount payable based on the executive’s base salary at the performance level achieved (but the
maximum amount of such quarterly bonus payable in each quarter is 50% of the bonus amount payable
based on the percentage of the executive’s base salary at the target objective listed
below2), prorated for the period covered and for the participant’s tenure at the Company
during such period.3 It is anticipated that each quarterly bonus, if any, will be paid
to executives promptly following determination of actual quarterly performance relative to the
revenue target and operating income target for such quarter.




At the end of the fiscal year, the annual cash bonus available is calculated based upon the
Company’s annual performance relative to both annual revenue targets and operating income
targets.1 The annual cash bonus available, less the amounts paid in the first three
quarters or payable with respect to the fourth quarter, is then distributed to participants based
on individual achievements against objectives. For all cash bonuses awarded under this cash bonus
plan, in the event that the Company meets only a revenue target but not an operating income
target1, or vice versa, then bonuses, if any, will be available only at the level at
which both the revenue target and operating income target1 have been met. It is
anticipated that the annual cash bonus (and fourth quarter bonus), if any, will be paid to
executives promptly following the Compensation Committee’s review of actual quarterly performance
relative to the revenue target and operating income target for the year.




Notwithstanding the foregoing, in the event of a Corporate Transaction (as defined in the Company’s
2007 Equity Incentive Plan), each eligible executive shall receive a “true up” bonus payment
determined as if the maximum amount of the bonus available in any previously completed quarter of
the fiscal year was based on 100% of the maximum bonus amount payable based on such executive’s
percentage of base salary at the performance objective listed below that was actually achieved,
prorated for the period covered and for the participant’s tenure at the Company during such period,
payable immediately prior to the closing of such Corporate Transaction (i.e., each participant will
receive a bonus equal to the maximum percentage of base salary adjusted for such individual’s
actual achievements against his/her objectives as determined in connection with the distribution(s)
in prior quarters, if applicable, less the amount previously paid to such executive in such prior
quarters).4






 




			
	1	 	The operating income targets exclude
stock compensation expenses and amortization of intangibles, but include the
impact of any bonuses determined under the cash bonus plan.
	 
	2	 	I.e., at 100% of the revenue and operating
income target.
	 
	3	 	For example, if the Company achieves its
revenues and operating income at 100% or greater of target in the first
quarter, the Company’s CEO will receive a bonus for that quarter equal to 50% x
(70% x (CEO Annual Salary ÷ 4)).
	 
	4	 	For purposes of clarity, such “true up” will
include payment at levels above 100% of the revenue and operating income
targets, irrespective of the fact that the initial quarterly bonus payments
were limited to the bonus level at the target objective (i.e., at 100% of the
revenue and operating income target), subject to the same adjustment made for
each such executive’s performance relative to his or her individual objectives
as determined in connection with the original quarterly bonus payment.




 









 










1. Chief Executive Officer and President:




	 	 	 
	 	 	Performance Relative To Revenue Target and
	 	 	Operating Income Target at that Level of
	Percentage of Base	 	Revenue (in accordance with the
Company’s
	Salary	 	internal operating plan)
	0.00%

	 	<  95%
	52.50%

	 	3  95% and < 98%
	59.50%

	 	3 98% and < 100%
	70.00%

	 	3 100% and < 101%5
	80.00%

	 	3 101% and < 103%
	85.00%

	 	3 103% and < 105%
	90.00%

	 	3 105% and < 107%
	95.00%

	 	3 107% and < 110%
	100.00%

	 	3 110%






2. Chief Financial Officer, Chief Technology Officer and Senior Vice Presidents:




	 	 	 
	 	 	Performance Relative To Revenue Target and
	 	 	Operating Income Target at that Level of
	Percentage of Base	 	Revenue (in accordance with the Company’s
	Salary	 	internal operating plan)
	0.00%

	 	<  95%
	33.75%

	 	3 95% and < 98%
	38.25%

	 	3 98% and < 100%
	45.00%

	 	3 100% and < 101%5
	55.00%

	 	3 101% and < 103%
	65.00%

	 	3 103% and < 105%
	75.00%

	 	3 105% and < 107%
	85.00%

	 	3 107% and < 110%
	100.00%

	 	3 110%






3. Other Executives:




	 	 	 
	 	 	Performance Relative To Revenue Target and
	 	 	Operating Income Target at that Level of
	Percentage of Base	 	Revenue (in accordance with the Company’s
	Salary	 	internal operating plan)
	0.00%

	 	<  95%
	26.25%

	 	3  95% and < 98%
	29.75%

	 	3 98% and < 100%
	35.00%

	 	3 100% and < 101%5
	45.00%

	 	3 101% and < 103%
	55.00%

	 	3 103% and < 105%
	65.00%

	 	3 105% and < 107%
	75.00%

	 	3 107% and < 110%
	100.00%

	 	3 110%








 




			
	5	 	The target objective (i.e., at 100% of
the revenue and operating income target).




 









 










B. EQUITY BONUS PLAN




Company executives will be eligible to participate in an equity pool of shares of common stock (in
the form of options). The size of the equity pool will be determined by the Compensation Committee
in connection with the fiscal year-end review, based on the number of executives participating, the
cumulative achievement of quarterly revenue and operating margin targets within the fiscal year and
other factors. The Compensation Committee will determine the maximum number of shares to be
allocated to the Company’s Chief Executive Officer and then the Compensation Committee, with input
from the Company’s Chief Executive Officer, will determine the allocation of the remainder of the
shares among the rest of the executive team. Options will vest according to standard vesting terms
over four years.