WEBMETHODS INC 4

4 · WEBMETHODS INC · Filed Oct 4, 2006

Form 4

Period: 2006-10-02

Director

Transactions

Award
Common Stock (Phantom Shares)
2006-10-02$7.70/sh+994.485$7,658→ 7,628.091 total

Holdings

Common Stock
(indirect: By Trust)
46,582
Stock Option (right to buy)
Exercise: $6.04From: 1999-12-17Exp: 2009-11-17→ Common Stock (9,198 underlying)
9,198
Common Stock (Deferred Shares)
10,745.891
Stock Option (right to buy)
Exercise: $8.85From: 2002-09-28Exp: 2012-08-28→ Common Stock (15,000 underlying)
15,000

Footnotes (6)

[F1]Indirect Beneficial Ownership by Oneida Trust.
[F2]Each Deferred Share represents a contingent right to receive one share of Common Stock. The Deferred Shares vest on the first anniversary of the date of grant. Vested shares are deliverable when the reporting person's service on the Board of Directors terminates.
[F3]Pursuant to the webMethods, Inc. Deferred Compensation Plan for Directors (the "Plan"), the reporting person has elected to defer receipt of his retainer and fees for attending Board and Committee meetings and receive shares of common stock valued by the quotient of the amount of Director retainer and fees accrued during the previous quarter divided by the fair market value of webMethods?s common stock, as calculated in accordance with the Plan. The Phantom Shares will be paid to the Reporting Person in the form of common stock, as soon as practicable after the earlier of the Reporting Person?s termination of service as a director or the termination of the Plan.
[F4]Beneficial ownership of 6633.606 of the 7628.091 Phantom Shares was reported on Table II of the Reporting Person's previous Form 4 filing.
[F5]Option vests ratably over 36 months following option grant date.
[F6]Option vests ratably over twelve months following option grant date.

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