FISCAL YEAR 2010 MANAGEMENT BONUS PLAN

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 targets ¹ , as described below. At the end of each fiscal quarter, both the revenue target and operating income target ¹ 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 below ² ), 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 target ¹ , or vice versa, then bonuses, if any, will be available only at the level at which both the revenue target and operating income target ¹ 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