UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

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SIEBEL SYSTEMS, INC.
Siebel Systems, Inc.

(Name of Registrant as Specified In Its Charter)

______________________________________________________

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2207 Bridgepointe Parkway

San Mateo, California 94404

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 23, 20048, 2005

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Siebel Systems, Inc., a Delaware corporation. The meeting will be held on Wednesday, June 23, 20048, 2005 at 11:00 a.m. Pacific Time,time, at the San Francisco Airport Marriott Hotel at 1770 South Amphlett Boulevard, San Mateo, California 94402,1800 Old Bayshore Highway, Burlingame, CA 94010, for the following purposes:

1. To elect four directors to hold office until the 2007 Annual Meeting of Stockholders.

1.

To elect three directors to hold office until the 2008 Annual Meeting of Stockholders.

2. To ratify the selection of KPMG LLP as our independent auditors for the year ending December 31, 2004.

2.

To ratify the selection of KPMG LLP as our independent auditors for the year ending December 31, 2005.

3. To conduct any other business, including, if presented by its proponent, the stockholder proposal appearing on pages 15 through 16 of the proxy statement accompanying this notice, as may be properly brought before the meeting.

These items of business are more fully described in the proxy statement accompanying this notice.

The record date for the annual meeting is April 29, 2004.18, 2005. Only stockholders of record at the close of business on that date may vote at the annual meeting or any adjournment thereof.

San Mateo, California
May 21, 2004

April 29, 2005

You are cordially invited to attend the annual meeting in person. Whether or not you expect to attend the meeting in person, please vote over the telephone or the Internet as instructed in these materials, or complete, date, sign and return the enclosed proxy card, as promptly as possible in order to ensure we receive your vote. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person prior to the close of voting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.

2207 Bridgepointe Parkway

San Mateo, CA 94404

PROXY STATEMENT

FOR THE 20042005 ANNUAL MEETING OF STOCKHOLDERS

JUNE 23, 20048, 2005

QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING

Why am I receiving these materials?

We sent you this proxy statement and the enclosed proxy card because the Board of Directors of Siebel Systems is soliciting your proxy to vote at the 20042005 Annual Meeting of Stockholders. You may vote over the telephone or the Internet as further described below, or you may complete, date, sign and return the enclosed proxy card. You are also invited to attend the annual meeting in person, although you do not need to attend the annual meeting to vote your shares.

We intend to mail this proxy statement and accompanying proxy card on or about May 21, 20042, 2005 to all stockholders of record entitled to vote at the annual meeting. Unless otherwise indicated, the discussions relating to the procedures for voting stock are applicable to holders of our common stock. Holders of exchangeable shares of Siebel Janna Arrangement, Inc. should refer to the enclosed information sheet for further instructions on the procedures for exercising the votes associated with those exchangeable shares.

Can I receive materials for future annual meetings online?

Yes, and we strongly encourage you to do so. In an effort to ensure that you receive materials quickly and efficiently, help reduce our printing and postage costs and reduce paper mailed to your home, we offer you the convenience of viewing materials related to our annual meetings online. With your consent, we will stop sending to you future paper copies of these documents. If you are a holder of record, you may elect to receive future communications over the Internet by following the instructions included on your proxy card. If you are a beneficial holder, we have established an open enrollment page on our website where you may register to receive future communications over the Internet. To participate, follow the instructions atwww.icsdelivery.com/siebel/index.html or select the Electronic Enrollment option on the Investor Relations page on our website atwww.siebel.com/investor.

Your election to view these documents over the Internet will remain in effect until you elect otherwise. If you choose to view future proxy statements and annual reports over the Internet, before the next annual meeting you will receive an email with instructions on how to view those materials and vote.

Will you be webcasting the annual meeting?

Yes. To access the webcast of the annual meeting, go to the Investor Relations page on our website,www.siebel.com/investor, and follow the directions provided. Please note that information on, or that can be accessed through, our website, other than our proxy statement, form of proxy and annual report on Form 10-K, is not part of the proxy soliciting materials, is not deemed "filed"“filed” with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended.

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Will I be able to listen to a replay of the annual meeting?

Yes, we will retain and post an audio-only replay of the webcast on ourthe Investor Relations page on our website atwww.siebel.com/investor for one week following the annual meeting.

Who can vote at the annual meeting?

Only stockholders of record at the close of business on April 29, 200418, 2005 will be entitled to vote at the annual meeting. On the record date, there were 502,582,090515,285,789 shares of common stock and one share of Series A1 Preferred Stock outstanding and entitled to vote.

How many votes do I have?

Each holder of common stock will be entitled to one vote for each share held on all matters to be voted upon at the annual meeting. The holder of record of the Series A1 Preferred Stock on such date will be entitled to the number of votes equal to the number of exchangeable shares of Siebel Janna Arrangement, Inc. outstanding on such date (other than exchangeable shares outstanding in the name of Siebel Systems or any of its affiliates). At the close of business on April 29, 2004,18, 2005, there were 1,416,1701,363,431 exchangeable shares outstanding (other than exchangeable shares outstanding in the name of Siebel Systems or any of its affiliates). The holders of record of common stock and the holders of exchangeable shares (acting through, or pursuant to a proxy granted by, Computershare Trust Company of Canada, acting as trustee) will vote together as a single class on all matters to be voted upon at the annual meeting.

We are entitled to redeem or call the exchangeable shares on or after November 30, 2005. In addition, we may redeem or call the exchangeable shares upon the occurrence of certain other limited events, including if there are less than 500,000 exchangeable shares outstanding (excluding those held by Siebel Systems or any of its affiliates). Upon redemption or call, the exchangeable shares will be converted into shares of our common stock at a rate of one share of common stock for each exchangeable share held. It is our current intention to call the exchangeable shares as soon as we are permitted to do so.

What am I voting on?

There are threetwo matters scheduled for a vote:

• Election of fourthree directors to hold office until the 20072008 Annual Meeting of Stockholders (please refer to page 6)7);
and
• Ratification of the selection of KPMG LLP as our independent auditors for the year ending December 31, 2004 (please refer to page 13); and
• If presented by its proponent, a stockholder proposal requesting that our Board of Directors adopt a policy that the cost of future employee and director stock options be recognized in our annual income statement2005 (please refer to page 15).

In addition, you are entitled to vote on any other matters that are properly brought before the annual meeting.

What are the recommendations of Siebel Systems'Systems’ Board of Directors?

Our Board of Directors:

• Recommends a vote For the election of the four directors nominated to hold office until the 2007 Annual Meeting of Stockholders;

•

Recommends a vote For the election of the three directors nominated to hold office until the 2008 Annual Meeting of Stockholders; and

•

Recommends a vote For ratification of the selection of KPMG LLP as our independent auditors for the year ending December 31, 2005.

• Recommends a vote For ratification of the appointment of KPMG LLP as our independent auditors for the year ending December 31, 2004; and
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• Recommends a vote ofAbstainon the stockholder proposal requesting that our Board of Directors adopt a policy that the cost of future employee and director stock options be recognized in our annual income statement.

How do I vote?

For the election of members of our Board of Directors, you may either vote "For"“For” all the nominees to the Board of Directors or you may withhold your vote for any nominee you specify. For each of the other matters to be voted on, you may vote "For"“For” or "Against"“Against” or abstain from voting. Votes will be counted by the inspector of elections appointed for the annual meeting. The procedures for voting are as follows:

Holders of Common Stock

Voting by Proxy Prior to the Annual Meeting

Whether or not you plan to attend the annual meeting, we urge you to vote by proxy prior to the meeting to ensure your vote is counted. The deadline for voting prior to the annual meeting is 11:59 p.m., Pacific TimeEastern time on June 22, 2004.7, 2005. We strongly encourage you to vote your shares by telephone or over the Internet prior to the annual meeting, as further described below. Voting by telephone or over the Internet will assist in ensuring that your vote is timely recorded and in reducing the costs related to the return of paper proxies.

• If you have elected to receive your annual meeting materials over the Internet, please vote your shares over the Internet by following the instructions indicated in the email communication that you receive.
• If you have not yet elected to receive your annual meeting materials over the Internet, you may vote your shares by telephone or over the Internet by following the instructions included on your proxy card. We strongly encourage you to vote your shares by telephone or over the Internet. Alternatively, you may vote your shares by promptly returning your completed, signed and dated proxy card in the envelope provided.
• Please vote only one of the above ways. If you vote more than one way, the vote received later in time will revoke your earlier vote and be the only vote counted.

Voting During the Annual Meeting

• If you hold shares directly in your name, you may vote during the annual meeting in person prior to the close of voting.
• If your shares are not issued directly in your name and are held in an account at a brokerage firm, bank, dealer or other similar organization, in order to vote during the annual meeting you must request and obtain a new, valid proxy card from such organization prior to the meeting (please contact them for further information). Once you have obtained and properly completed this new proxy card, you may vote in person prior to the close of voting.

Holders of Exchangeable Shares

Holders of exchangeable shares should refer to the enclosed information sheet for instructions on how to vote their exchangeable shares. At the close of business on April 29, 2004,18, 2005, Computershare Trust Company of Canada (the "Trustee"“Trustee”) held the one outstanding share of Series A1 Preferred Stock pursuant to a Voting and Exchange Trust Agreement among Siebel Systems, Siebel Janna Arrangement, Inc., a Canadian subsidiary of Siebel Systems, and the Trustee. Under that agreement, each holder of exchangeable shares issued by Siebel Janna Arrangement, Inc. (other than Siebel Systems or any of its affiliates) is entitled to (i) direct the Trustee in voting the exchangeable shares held by them or (ii) either attend the annual meeting and vote or have another person attend and vote on their behalf. Voting instructions for holders of exchangeable shares must be received no later than 5:00 p.m. Eastern Time on June 21, 2004.6, 2005.

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What if I return a proxy card but do not make specific choices?

If we receive a signed and dated proxy card and the proxy card does not specify how your shares are to be to voted, your shares will be voted "For"“For” the election of all fourthree nominees for director "For"and “For” the ratification of the selection of KPMG LLP as our independent auditors for the year ending December 31, 2004, and "Abstain" on the stockholder proposal (Proposal 3).2005. If any other matter is properly presented at the annual meeting, your proxy (one(i.e., one of the individuals named on your proxy card) will vote your shares using his best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to the Siebel proxy materials, our directors, officers, other employees and any other solicitors that we may retain may also solicit proxies personally, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We will provide copies of our solicitation materials to banks, brokerage houses, fiduciaries and custodians that hold beneficially owned shares of our common stock for distribution to such beneficial owners. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one proxy card or more than one email instructing me to vote?

If you receive more than one proxy cardorcard or more than one email instructing you to vote, your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and returneach proxy card, and respond toeach email, to ensure that all of your shares are voted. In addition, if you are still receiving paper materials, we encourage you to register for electronic delivery of our proxy materials (as noted above) so that you may receive your voting instructions electronically in the future.

What does it mean if multiple members of my household are stockholders but we only received one set of proxy materials?

If you hold shares in street name, in accordance with a notice sent to certain brokers, banks, dealers or other agents, we are sending only one annual report on Form 10-K and proxy statement to an address unless we received contrary instructions from any stockholder at that address. This practice, known as "householding,"“householding,” is designed to reduce our printing and postage costs. If you hold shares in your name rather than in street name and you would like to receive only one annual report on Form 10-K and proxy statement for your household, please contact Mellon Investor Services LLC, our transfer agent, at (800) 522-6645, or via the Internet atwww.melloninvestor.com.

However, if any stockholder residing in your household wishes to receive a separate annual report on Form 10-K or proxy statement for future annual meetings, they may call our Investor Relations department at (650) 477-5000 or write to Investor Relations at investor.relations@siebel.com or 2207 Bridgepointe Parkway, San Mateo, California 94404. Please see the "Householding“Householding of Proxy Materials"Materials” section at the end of this proxy statement.

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Can I change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the close of voting at the annual meeting. You may revoke your proxy in any one of four ways:

• Prior to the annual meeting, you may:
• submit another properly completed proxy card with a later date by following the return instructions on the proxy card;
• submit another proxy by telephone or the Internet after you have already provided an earlier proxy (please refer to "How“How do I vote?"” above for instructions on how to do so); or
• send a written notice that you are revoking your proxy to our Corporate Secretary at our principal offices at 2207 Bridgepointe Parkway, San Mateo, California 94404.
• During the annual meeting, you may vote in person prior to the close of voting. Simply attending the annual meeting will not, by itself, revoke your proxy.

What is the quorum requirement?

A quorum of stockholders (at least a majority of the outstanding common stock and exchangeable shares represented by proxy or in person at the annual meeting) is necessary to hold a valid annual meeting. On the record date, there were an aggregate of 503,998,260516,649,220 shares of common stock and exchangeable shares outstanding. Thus, 251,999,131258,324,611 shares must be represented by proxy or present in person at the annual meeting to have a quorum. The inspector of elections will determine whether or not a quorum is present.

Your shares will be counted towards the quorum only if you submit a valid vote in accordance with the procedures set forth in "How“How do I vote?"” above. Abstentions and broker non-votes will also be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the annual meeting may adjourn the annual meeting to another date.

How many votes are needed to approve each proposal?

• For Proposal 1, the election of directors, the fourthree nominees receiving the most "For"“For” votes will be elected.
• To be approved, ProposalsProposal 2 and 3 must receive a "For"“For” vote from the majority of shares attending the annual meeting andor represented by proxy, and entitled to vote.

Shares include our common stock and the exchangeable shares, other than exchangeable shares held by Siebel Systems or any of its affiliates, voting together as a single class, present in person (or by remote communication) or represented by proxy and entitled to vote at the annual meeting.

What effect do "withhold"“withhold” votes, abstentions and "broker non-votes"“broker non-votes” have on the outcome of the proposal?

For Proposal 1, "withhold"“withhold” votes are not treated as shares present and entitled to vote, and so have no effect on the outcome of the proposal. For ProposalsProposal 2, and 3, abstentions are treated as shares present and entitled to vote, so an abstention has the same effect as a vote "Against" a“Against” the proposal.

A broker non-vote occurs when a broker or bank cannot vote for a proposal because the broker or bank did not receive instructions from the beneficial owner on how to vote and does not have discretionary authority to vote on the beneficial owner'sowner’s behalf in the absence of instructions. Broker non-votes are counted as present for the purpose of determining the existence of a quorum, but are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved a proposal. They therefore have no effect on the outcome of a proposal.

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How can I find out the results of the voting?

Preliminary voting results may be announced at the annual meeting. Final voting results will be published in our quarterly report on Form 10-Q for the second quarter of 2004.2005.

When are stockholder proposals due for next year'syear’s annual meeting?

The deadline for submitting a stockholder proposal or director nomination for inclusion in our proxy statement and form of proxy for our 20052006 Annual Meeting of Stockholders is January 21, 2005.2, 2006. Between February 23, 20058, 2006 and March 25, 2005,10, 2006, you may also submit a proposal or director nomination for the 20052006 Annual Meeting of Stockholders that may be considered at such meeting but not included in the proxy statement or form of proxy. Please submit all proposals in writing to our Corporate Secretary at 2207 Bridgepointe Parkway, San Mateo, California 94404. You should also review our Bylaws, which are filed with the Securities and Exchange Commission, for additional requirements about advance notice of stockholder proposals and director nominations.

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PROPOSAL 1

ELECTION OF DIRECTORS

Our Amended and Restated Certificate of Incorporation and Bylaws provide that our Board of Directors shall be divided into three classes. Each class consists, as nearly as practicable, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board of Directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a class (including a vacancy created by an increase in the number of directors) shall serve for the remainder of the term of the class of directors in which the vacancy occurred, and until the director'sdirector’s successor is elected and qualified.

The Board of Directors is authorized to have up to ten members, and is presently composed of 10eight members. Proxies cannot be voted for a greater number of persons than the number of nominees named. There are fourthree directors in the class whose term of office expires in 2004.2005. Our Nominating and Corporate Governance Committee reviewed the qualifications of each of the nominees for election to this class, and unanimously recommended that each nominee be submitted for election to the Board of Directors. The Board of Directors unanimously approved such recommendation (each(with each of the nominees abstainedabstaining with respect to his directorship). TwoAll three of the four nominees Messrs. Schwab and Shaheen, are currently members of the Board of Directors who were previously elected by the stockholders. The other two nominees, Messrs. Hartz and White, were well known to several members of our Board of Directors, and were recommended by Mr. Siebel for evaluation by the Nominating and Corporate Governance Committee, which carefully considered each candidate and recommended both for appointment to the Board of Directors. If elected at the annual meeting, each of these fourthree nominees will serve until the 20072008 Annual Meeting of Stockholders and until his successor is elected and has qualified, or until the director'sdirector’s death, resignation or removal. It is our policy to encourage directors to attend the annual meetings. FourFive of our directors attended the 20032004 Annual Meeting of Stockholders.

Directors will be elected by a plurality of the votes properly cast in person or by proxy. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the fourthree nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as management may propose. Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve.

DIRECTORS

The following is a brief biography, as of May 4, 2004,April 15, 2005, of each nominee to be elected at the annual meeting:

Nominees for Election for a Three-year Term Expiring at the 20072008 Annual Meeting of Stockholders

C. Scott Hartz,age 58, has served as a Director of Siebel Systems since July 2003. From 1995 to January 2002, Mr. Hartz served as Chief Executive Officer of PwC Consulting, one of the world's largest consulting organizations, where he held various positions since 1970. Mr. Hartz serves on the board of directors of Erie Indemnity Company, a provider of management services to the member companies of the Erie Insurance Group, is a managing partner of Spire Capital Group LLC, where he focuses on the commercialization of early-stage technologies from universities and government and private research institutions, and is the CEO of The Hartz Group Inc., a management consulting company. He also serves on The Wharton School's Graduate Executive Board and Lehigh University's Business School Advisory Board, and is a member of the World Affairs Council. Mr. Hartz was named one of Consulting Magazine's "Top 10 Most Influential Consultants" in 1999 and 2000. Mr. Hartz received a B.S. degree in Economics from Lehigh University and an M.B.A. from The Wharton School at the University of Pennsylvania.

Charles R. Schwab, age 66, has served as a Director of Siebel Systems since October 1994. Since 1987, Mr. Schwab has been the Chairman of The Charles Schwab Corporation, a brokerage firm that he founded in 1971. Mr. Schwab also served as The Charles Schwab Corporation's Co-Chief Executive Officer from 1997 to 2003 and as its Chief Executive Officer from 1987 until 1997. Mr. Schwab also serves as a director of Gap, Inc. Mr. Schwab received a B.A. in Economics from Stanford University and an M.B.A. from the Graduate School of Business at Stanford University.

George T. Shaheen,age 59,has served as a Director of Siebel Systems since October 1995. From September 1999 until April 2001, Mr. Shaheen served as President, Chief Executive Officer and Chairman of the Board of Directors of Webvan Group, Inc. From 1989 to September 1999, Mr. Shaheen was the Managing Partner and Chief Executive Officer of Andersen Consulting (now Accenture). Mr. Shaheen was a partner of Andersen Consulting from 1977 to September 1999 and held various other positions at Andersen Consulting from 1967 to 1977. Mr. Shaheen currently serves on the board of directors of several privately held companies and on the Advisory Board of the Marcus & Millichap Company. Mr. Shaheen is a member of the Board of Advisors for the Northwestern University J.L. Kellogg Graduate School of Business. Mr. Shaheen received a B.S. in Marketing and an M.B.A. from Bradley University.

John W. White, age 65, has served as a Director of Siebel Systems since April 2004. From February 1994 until October 1998, Mr. White served as Vice President and Chief Information Officer for Compaq Computer Corporation. Before joining Compaq, from 1973 to 1994, Mr. White served in various management and technical roles at Texas Instruments, including 13 years as Vice President and Chief Information Officer and five years as President of its Information Technology Group. Mr. White is a member of the board of directors of Citrix Systems, Inc., MetaSolv, Inc. and several privately held companies. Mr. White received a B.S. in Mathematics and Physics from Central Missouri State University and an M.S. in Mathematics from the University of Kansas.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTEFOR EACH NAMED NOMINEE.

The following is a brief biography, as of May 4, 2004, of each director whose term will continue after the annual meeting:

Directors Continuing in Office until the 2005 Annual Meeting of Stockholders

Thomas M. Siebel, age 51,has served as our Chairman since our inception in July 1993, and served as our Chief Executive Officer from inception until May 4, 2004. From July 1993 until May 1999, Mr. Siebel also served as our President.

James C. Gaither, age 66,67, has served as a Director of Siebel Systems since February 1994. From February 1994 to April 1998, Mr. Gaither served as Secretary of Siebel Systems. Since July 2000, Mr. Gaither has been a Managing Director of Sutter Hill Ventures, a Silicon Valley based venture capital firm. From 1971 to 2000, Mr. Gaither was a Partner of, and from 2000 to 2003 served as Senior Counsel to, the law firm Cooley Godward LLP. Prior to beginning his law practice with the firm in 1969, he served as law clerk to The Honorable Earl Warren, Chief Justice of the United States; Special Assistant to the Assistant Attorney General in the U.S. Department of Justice; and Staff Assistant to the President of the United States, Lyndon Johnson. Mr. Gaither is a former president of the Board of Trustees at Stanford University and is a former member of the Board of Trustees of the RAND Corporation and The James Irvine Foundation. He is currently on the board of The William and Flora

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Hewlett Foundation and Chairman of the Board of The Carnegie Endowment for International Peace. Mr. Gaither is a member of the board of directors of nVidia Corporation and Levi Strauss & Co. Mr. Gaither received a B.A. in Economics from Princeton University and a J.D. from Stanford University.University Law School.

Marc F. Racicot, age 55,56, has served as a Director of Siebel Systems since April 2001. Since February 2001, Mr. Racicot has been a Partner of the law firm Bracewell & Giuliani L.L.P. (formerly Bracewell & Patterson L.L.P.). From 2002 until July 2003, Mr. Racicot served as the Chairman of the Republican National Committee. From 1993 until January 2001, Mr. Racicot served as the Governor of the State of Montana and from 1989 until 1993 he served as its Attorney General. Prior to being elected Attorney General in 1989, Mr. Racicot was an Assistant Attorney General and Special Prosecutor for the State of Montana. Mr. Racicot began his legal career as a prosecutor in the United States Army in West Germany, eventually becoming the Chief Prosecutor for the largest geographic military jurisdiction in Europe. While serving as an Army JAG Officer, he taught business and criminal law for the University of Maryland. Mr. Racicot servesserved as the Chairman of the Bush-Cheney '04‘04 re-election campaign and iscampaign. Mr. Racicot currently serves on the Boardboard of Directorsdirectors of Burlington Northern Santa Fe Corporation and Mass Mutual Financial Group. He is also on the board of directors for Jobs for America'sAmerica’s Graduates and The Corporation for National and Community Service, The James B. Hunt, Jr. Institute for Educational Leadership and Policy and the National Consensus Council, as well as the Board of Visitors for the University of Montana School of Law. Mr. Racicot received a B.A. in English from Carroll College and a J.D. from The University of Montana School of Law.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

A VOTEFOR EACH NAMED NOMINEE.

The following is a brief biography, as of April 15, 2005, of each director whose term will continue after the annual meeting:

Directors Continuing in Office until the 2006 Annual Meeting of Stockholders

Patricia A. House, age 50,has been with Siebel Systems since our inception in July 1993 and has served as our Vice Chairman, Co-Founder and Vice President, Strategic Planning since January 2001. From February 1996 to January 2001, she served as our Co-Founder and Executive Vice President, and from July 1993 to February 1996, as our Co-Founder and Senior Vice President, Marketing. Ms. House currently serves on the board of directors of Levi Strauss & Co.Co and BDNA Corporation. Ms. House received a B.A. in Education from Western Michigan University.

J. Michael Lawrie, age 50, has served as a Director of Siebel Systems since May 3, 2004 and as our Chief Executive Officer since May 4, 2004. Prior to joining Siebel Systems, Mr. Lawrie served in various positions at IBM Corporation for over 26 years. From July 2001 to May 2004, Mr. Lawrie served as a Senior Vice President and Group Executive at IBM, where he was responsible for IBM's worldwide sales and distribution activities. Mr. Lawrie served as IBM's General Manager, Europe Middle East Africa from 1998 to June 2001 and held various sales, marketing, development and financial management positions from 1977 to 1998. Mr. Lawrie is a member of the U.S. Advisory Board of NTT DoCoMo, Inc., and a member of the Board of Trustees of Ohio University. Mr. Lawrie received a B.A. in History from Ohio University and an M.B.A. from Drexel University.

Eric E. Schmidt, Ph.D.,age 49,has served as a Director of Siebel Systems since May 1996. Since July 2001, Dr. Schmidt has been the Chief Executive Officer and Chairman of the Executive Committee of Google, Inc., a provider of Internet search technology, since July 2001 and April 2004, respectively, and from March 2001 to April 2004 also served as the Chairman of Google'sGoogle’s board of directors. From April 1997 to November 2001, Dr. Schmidt served as the Chairman of the board of directors of Novell, Inc., a computer networking company, and from April 1997 to July 2001 also served as Chief Executive Officer of Novell. From 1983 until 1997, Dr. Schmidt held various positions at Sun Microsystems, Inc., including Chief Technology Officer; Corporate Executive Officer; President, Sun Technology Enterprises; Vice President, General Systems Group; and Vice President and General Manager, Software Products division. Prior to joining Sun Microsystems, Inc., Dr. Schmidt was a member of the research staff at the Computer Science Lab at Xerox Palo Alto Research Center (PARC). He also held positions at Bell Laboratories and Zilog, Inc. Dr. Schmidt received a B.S. in Electrical Engineering from Princeton University, and an M.S. in Electrical Engineering and a Ph.D. in Computer Science from the University of California at Berkeley.

Information Regarding

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Directors Continuing in Office until the 2007 Annual Meeting of Stockholders

C. Scott Hartz,age 59, has served as a Director of Siebel Systems since July 2003. From 1995 to January 2002, Mr. Hartz served as Chief Executive Officer of PwC Consulting, one of the world’s largest consulting organizations, where he held various positions since 1970. Mr. Hartz serves on the board of directors of Erie Indemnity Company, a provider of management services to the member companies of the Erie Insurance Group, is a Managing Director of SCIUS Capital Group, LLC, where he focuses on the commercialization of early-stage technologies from universities and government and private research institutions, and is the CEO of The Hartz Group Inc., a management consulting company. He also serves on The Wharton School’s Graduate Executive Board and Lehigh University’s Business School Advisory Board. Mr. Hartz received a B.S. degree in Economics from Lehigh University and an M.B.A. from The Wharton School at the University of Pennsylvania.

George T. Shaheen, age 60, has served as a Director of Siebel Systems since October 1995 and as our Chief Executive Officer since April 13, 2005. From September 1999 until April 2001, Mr. Shaheen served as President, Chief Executive Officer and Chairman of the board of directors of Webvan Group, Inc. From 1989 to September 1999, Mr. Shaheen was the Managing Partner and Chief Executive Officer of Andersen Consulting (now Accenture). Mr. Shaheen was a partner of Andersen Consulting from 1977 to September 1999 and held various other positions at Andersen Consulting from 1967 to 1977. Mr. Shaheen currently serves on the board of directors of Network Appliance, Inc., several privately held companies and the Advisory Board of Directors,the Marcus & Millichap Company. Mr. Shaheen is a member of the Board Committeesof Advisors for the Northwestern University J.L. Kellogg Graduate School of Management. Mr. Shaheen received a B.S. in Marketing and Meetingsan M.B.A. from Bradley University.

John W. White, age 66, has served as a Director of Siebel Systems since April 2004. From February 1994 until October 1998, Mr. White served as Vice President and Chief Information Officer for Compaq Computer Corporation. Before joining Compaq, from 1973 to 1994, Mr. White served in various management and technical roles at Texas Instruments, including 13 years as Vice President and Chief Information Officer and five years as President of its Information Technology Group. Mr. White is a member of the board of directors of Citrix Systems, Inc., MetaSolv, Inc. and several privately held companies. Mr. White received a B.S. in Mathematics and Physics from Central Missouri State University and an M.S. in Mathematics from the University of Kansas.

INFORMATION REGARDINGOUR BOARDOF DIRECTORS, CODEOF ETHICS, BOARD COMMITTEESAND MEETINGS

All of the members of our Board of Directors qualify as "independent"“independent” as defined under the listing standards of theThe Nasdaq NationalStock Market, except for Ms. House and Messrs. Siebel and Lawrie.Shaheen and Ms. House.

CODEOF ETHICS

We have adopted the Siebel Systems, Inc. Code of Conduct, with which every employee who works for us is expected to comply. The Code of Conduct is publicly available on our website under Investor Information at the following URL:http://www.siebel.com/about/investor_information/corporate_governance/.

If any substantive amendments are made to the Code of Conduct or if we grant any waiver from a provision of the Code of Conduct to our Board members or executive officers, we will disclose the nature of the amendment or waiver on our website or as required by applicable laws, rules and regulations. Any such waiver may be authorized only by our Board of Directors or an authorized committee thereof.

COMMITTEESOFTHE BOARDOF DIRECTORS

The Board of Directors has appointed an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. Each member of the Audit Committee,

9

Compensation Committee and Nominating and Corporate Governance Committee meets the applicable laws and regulations regarding "independence"“independence” and each member is free of any relationship that would interfere with his individual exercise of independent judgment. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities.

During 2003, the Board met six times and acted by unanimous written consent four times.

The primary responsibilities and functions of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Executive Committee are as follows:

Audit Committee

Our

As of April 11, 2005, our Audit Committee currently consistsconsisted of Messrs. Gaither, Hartz and Shaheen (Chairman)., Gaither and Hartz. Mr. Shaheen resigned his position on the Audit Committee effective as of April 12, 2005, the date of his appointment as our Chief Executive Officer. Mr. White was elected as a member and Mr. Hartz was appointed as Chairman of the Audit Committee effective April 12, 2005. The Audit Committee assists the Board of Directors in its oversight of the integrity of our financial statements; our compliance with legal and regulatory requirements; our independent auditor'sauditors’ qualifications; and performance of our internal audit function and independent auditors. The Audit Committee has the authority to discuss with management and the independent auditorauditors the periodic financial statements, earnings guidance and press releases, our risk assessment and management policies, any audit problems or difficulties and management'smanagement’s response thereto; resolve financial reporting conflicts and disagreements between management and the independent auditors; determine the engagement and compensation of the independent auditors; approve the retention of the independent auditors to perform any proposed permissible non-audit services; monitor the rotation of partners of the independent auditors on the engagement team as required by law; review our financial reporting and accounting standards and principles and significant changes thereto; review and approve internal audit staff functions and our internal system of financial controlsinternal control and the results of internal audits; review the auditors'independent auditors’ report on our financial statements and annually review all relationships between the independent auditorauditors and us; prepare and review the Audit Committee report included in our proxy statement filed with the Securities and Exchange Commission; set hiring policies of employees or former employees of our independent auditor;auditors; review and investigate any matters pertaining to the integrity of management including conflicts of interest, related-party transactions or adherence to standards of business conduct as required by our internal policies and the law; and establish procedures for the handling of complaints regarding accounting, internal accounting controls or auditing matters.

Messrs.

Mr. Hartz and Shaheen areis an audit committee financial expertsexpert (as currently defined under SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002) and all members of the Audit Committee are independent (as independence is defined in Rules 4350(d)(2)(A)(i) and (ii) of the NASD listing standards).

The Audit Committee met fourteen10 times during 2003 and acted by unanimous written consent once.2004. The Audit Committee has adopted a written charter, which is publicly available on our website under Investor InformationRelations at the following URL:www.siebel.com/downloads/about/pdf/audit_committee_charter.pdf.

Compensation Committee

Our Compensation Committee currently consists of Messrs. SchmidtWhite (Chairman), Schwab and Racicot.Racicot, and Dr. Schmidt. The Compensation Committee carries out the Board'sBoard’s overall responsibility related to executive compensation; assists the Board of Directors in developing and evaluating executive candidates and the development of executive succession plans; reviews and approves the evaluation process and compensation structure of our officers and other senior management; evaluates the performance and approves the compensation of our senior executive officers; reviews and approves the compensation and other terms of employment of our CEO; maintains regular contact with our Board of Directors and executive officers; and prepares and reviews the Compensation Committee report included in the proxy statement. The compensation committee also has full power and authority to administer our incentive compensation and other stock-based plans, bonus plans, pension and profit sharing plans and other compensation-related plans.

10

The Compensation Committee met twiceonce during 20032004 and acted by unanimous written consent eight times. The Compensation Committee has adopted a written charter, which is publicly available on our website under Investor InformationRelations at:www.siebel.com/downloads/about/pdf/compensation_committee_charter.pdf.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee currently consists of Messrs. Gaither (Chairman), and Racicot, and Dr. Schmidt. The Nominating and Corporate Governance Committee oversees all aspects of our corporate governance functions on behalf of the Board; identifies, reviews and evaluates candidates to serve as members of the Board; reviews committee structure and recommends directors to serve as committee members; makes recommendations to the Board of Directors regarding corporate governance issues; develops, recommends and oversees a periodic self-evaluation process for the Board of Directors and its committees; and makes other recommendations to the Board of Directors regarding affairs relating to theits members, of the Board, including director compensation and benefits.

The Nominating and Corporate Governance Committee strives to select individuals as director nominees who have the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who will be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of theour stockholders. The Committee will also consider any other factor which it deems relevant, including but not limited to geographical diversity, in selecting individuals as director nominees. The Committee reviews and recommends committee slates annually and recommends additional committee members to fill vacancies as needed.

Stockholders who wish to communicate with the Board of Directors or any of its members regarding nominations of directors or other matters may do so by sending written communications addressed to the Corporate Secretary at our principal offices, 2207 Bridgepointe Parkway, San Mateo, California 94404. All stockholder communications that are received for the attention of the Board of Directors will be compiled by the Corporate Secretary and submitted to the Nominating and Corporate Governance Committee on a periodic basis. Nominations of directors or other matters put forth by our stockholders will be reviewed by the Nominating and Corporate Governance Committee, who will determine whether these matters should be presented to the Board. The Nominating and Corporate Governance Committee will give serious consideration to all such matters and make its determination on matters to be presented to the Board of Directors in accordance with its charter and applicable laws.laws and regulations.

The Nominating and Corporate Governance Committee met twiceonce during 2003 and acted by unanimous written consent once.2004. The Nominating and Corporate Governance Committee has adopted a written charter, which is publicly available on our website under Investor InformationRelations at the following URL:www.siebel.com/downloads/about/pdf/nom_corp_gov_com.pdf.

Executive Committee

Our Executive Committee was formed in April 2004 and consists of Messrs. Gaither (Chairman), Siebel and Lawrie. The Executive Committee assists the Board by exercising the full power and authority of the Board between Board meetings and while the Board is not in session, to the extent permitted by applicable law. The Executive Committee has adopted a written charter, which is publicly available on our website under Investor Information at the following URL:www.siebel.com/downloads/about/pdf/executive_committee_charter.pdf.

We believe that the composition of our Audit Committee,Compensation Committee and Nominating and Corporate Governance Committee meet the requirements for independence under, and the functioning of each such committee complies with, applicable requirements of the Sarbanes-Oxley Act of 2002, theThe Nasdaq NationalStock Market and SEC rules and regulations. We intend to comply with future requirements to the extent they become applicable to us.

Executive Committee

Our Executive Committee was formed in April 2004 and currently consists of Messrs. Gaither (Chairman), Shaheen and Siebel and Ms. House. The Executive Committee assists the Board of Directors by exercising the full power and authority of the Board of Directors between Board meetings and while the Board of Directors is not in session, to the extent permitted by applicable law.

The Executive Committee acted by unanimous written consent once during 2004 and met informally several times. The Executive Committee has adopted a written charter, which is publicly available on our website under Investor Relations at the following URL:www.siebel.com/downloads/about/pdf/executive_committee_charter.pdf.

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BOARDAND COMMITTEE MEETINGSAND ATTENDANCE

During 2003, all2004, the Board of Directors met five times and acted by unanimous written consent one time. Independent directors of the Board of Directors met twice during 2004. All directors attended at least 75% of the meetings of the Board of Directors, and of the committees on which theyhe or she served, which were held during the period for which they werehe or she was a director or committee member, except Mr. Schwab, who attended more than 75% of the Board meetings and 60% of the Audit Committee meetings.director.

Report of the Audit Committee of the Board of DirectorsREPORTOFTHE AUDIT COMMITTEEOFTHE BOARDOF DIRECTORS¹

In accordance with its written charter, which was approved in its current form by the Board of Directors on December 31, 2003, the Audit Committee assists the Board of Directors in, among other things, monitoring the financial reporting process, including the effectiveness of the related system of internal controls,control, and the independence and performance of internal and externalindependent auditors. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis.

Our

The Audit Committee consists of three directors, who are all "independent"“independent” based upon the independence standards required under applicable laws, rules and regulations, including the rules of The Nasdaq Stock Market, Inc. TwoMarket. As of December 31, 2004, two of the three directors arewere audit committee financial experts (as is currently defined under the SECSecurities and Exchange Commission rules implementing Section 407 of the Sarbanes-Oxley Act of 2002)². Management is responsible for the financial reporting process, the preparation of consolidated financial statements in accordance with accounting principles generally accepted accounting principles,in the United States, the system of internal controls,control, and the procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The independent auditors areregistered public accounting firm is responsible for performing an independent audit of theour consolidated financial statements and our system of internal control in accordance with generally accepted auditingthe standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing a reportreports thereon. The Audit Committee'sCommittee’s responsibility is to monitor and review these processes and procedures. Accordingly, the Audit Committee reviews the results and scope of the auditaudits and other services provided by the independent auditors and reviews all financial statements and the accounting policies followed by Siebel Systems prior to the issuance of the financial statements with both management and the independent auditors. The Audit Committee and the Board of Directors have ultimatethe authority and responsibility to select, evaluate and, when appropriate, replace our independent auditors.

The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent auditors. The Audit Committee serves an oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee'sCommittee’s members in business, financial and accounting matters. The Audit Committee relies, without independent verification, on the information provided by Siebel Systems and on the representations made by management that the financial statements have been prepared with integrity and objectivity and on the representations of management and the opinion of the independent auditors that such financial statements have been prepared in conformity with accounting principles generally accepted accounting principles.in the United States.

12

Among other matters, the Audit Committee monitors the activities and performance of our internal and externalindependent auditors, including the audit scope, externalindependent audit fees, auditor independence matters, the PCAOB’s report on their inspection of our independent auditors (i.e., under Section 104 of the Sarbanes-Oxley Act of 2002), and the extent to which the independent auditors may be retained to perform non-audit services. The Audit Committee has approved the engagement of KPMG LLP, our independent auditors, to perform certain permitted tax-related and other non-audit services for us. However, the Audit Committee resolved that each such engagement must be approved in advance by the Audit Committee or its appointed delegate. See page 1315 for the fees paid to KPMG LLP for services in fiscal year 2003.2003 and 2004.

The Audit Committee has an annual agenda that includes reviewing our financial statements, internal controlscontrol and audit matters. During 2004 management completed the documentation, testing and evaluation of the effectiveness of our internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and KPMG LLP at regularly scheduled Audit Committee meetings. At the conclusion of the process, management provided the Audit Committee with a report on the effectiveness of our internal control over financial reporting. The Audit Committee also reviewed the report of management contained in our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission, as well as the reports of KPMG LLP, our independent registered public accounting firm (included in our Annual Report on Form 10-K). These reports related to KPMG LLP’s audit of (i) the consolidated financial statements, (ii) management’s assessment of the effectiveness of our internal control over financial reporting and (iii) the effectiveness of our internal control over financial reporting. The Audit Committee continues to oversee our efforts related to our internal control over financial reporting and management’s preparations for the evaluation in 2005.

In addition, the Audit Committee meets each quarter with management and the internal and independent auditors to review our interim financial results before the publication of earnings releases, discuss the results of examinations by the internal and independent auditors, and discuss various topics and events that may have significant financial impact or are the subject of discussions between management and the independent auditors. During 2003,2004 the Audit Committee separately met with the internal and independent auditors, with and without management, to discuss the results of their examinations and their observations and recommendations regarding our internal controls.control.

The Audit Committee has reviewed and discussed the audited financial statements for 20032004 with management, the internal auditors and the independent auditors. The Audit Committee has also reviewed the selection, application and disclosure of our critical accounting policies with management and the independent auditors. The Audit Committee has also discussed with the independent auditors the matters required to be discussed by SAS 61, as amended, "Communication“Communication with Audit Committees."Committees” and PCAOB Auditing Standard No. 2, “An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.”

The Audit Committee has received the written disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1, "Independence“Independence Discussions with Audit Committees."” Additionally, the Audit Committee has discussed with KPMG LLP any relationships that may have an impact on their objectivity and independence and satisfied itself as to the auditor'sauditors’ independence. The audit committeeAudit Committee also reviewed the amount of fees paid to KPMG LLP for audit and non-audit services and considered whether the provision of non-audit services by KPMG LLP is compatible with maintaining KPMG LLP'sLLP’s independence.

With respect to our annual report on Form 10-K for the year ended December 31, 2003,2004, the Audit Committee met with members of senior management to review the quarterly and annual certifications provided by the CEO and CFO under the Sarbanes-Oxley Act of 2002, the rules and regulations of the Securities and

13

Exchange Commission and the overall quarterly and annual certification process. Our officers reviewed each of the Sarbanes-Oxley certification requirements concerning internal controlscontrol and any fraud, whether or not material, involving management or other employees with a significant role in internal controls.control.

Based on the above mentioned review, the review of the audited consolidated financial statements and the various discussions noted above, and subject to the limitations on the Audit Committee'sCommittee’s role and responsibilities described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our annual report on Form 10-K for the year ended December 31, 2003,2004, for filing with the Securities and Exchange Commission.

Audit Committee

George T. Shaheen, Chairman
as of December 31, 2004³

James C. Gaither

C. Scott Hartz

_______________

14

PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

Our Audit Committee and Board havehas selected KPMG LLP as the independent registered public accounting firm to perform our independent auditorsaudit for the year ending December 31, 20042005 and havehas further directed that management submit the selection of independent auditors for ratification by the stockholders at the annual meeting. KPMG LLP has audited our financial statements since our inception in 1993. Representatives of KPMG LLP are expected to be present at the annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Our Audit Committee charter requires stockholder ratification of the selection of KPMG LLP as our independent auditors. If the stockholders do not ratify the selection, we will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee, in its discretion and in compliance with its charter, may replace the independent auditors at any time.

The affirmative vote of the majority of common stock and exchangeable shares attending the annual meeting andor represented by proxy, and entitled to vote will be required to ratify the selection of KPMG LLP.

Fees Paid to Independent Auditors

FEES PAIDTO INDEPENDENT AUDITORS

The following is a summary of fees, all of which were approved by the Audit Committee, billed by KPMG LLP for audit and other professional services during 20022003 and 2003:2004:

                                                                                  2002
 
  
2003
  
2004
AUDIT FEES:
  
 
 
  
 
 
Audit and Review—Consists of fees billed for audit of consolidated financial statements and review of interim financial statements
  
$
1,537,000
  
$
2,180,000
Statutory Audits—Consists of fees billed in relation to required statutory audits of foreign subsidiaries
  
 
500,000
  
 
602,000
SEC Compliance—Consists of fees billed for assistance with our SEC filings
  
 
 
(included
in above)
  
 
 
(included
in above)
 
  
  
Total Audit Fees
  
 
2,037,000
  
 
2,782,000
 
  
  
AUDIT-RELATED FEES:
  
 
 
  
 
 
Consists of fees billed in relation to due diligence related to mergers and acquisitions, internal control reviews and consultation concerning financial accounting and reporting standards (including Sarbanes-Oxley compliance)
  
 
50,000
  
 
—
 
  
  
TAX FEES:
  
 
 
  
 
 
Tax Compliance—Consists of fees billed in relation to preparation and review of income tax returns
  
 
492,000
  
 
695,000
General Tax Advice—Consists of fees billed in relation to advice on tax matters
  
 
507,000
  
 
272,000
Tax Planning and Business Strategy Consulting—Consists of tax planning and business strategy consulting services
  
 
—
  
 
—
 
  
  
Total Tax Fees
  
 
999,000
  
 
967,000
 
  
  
ALL OTHER FEES:
  
 
 
  
 
 
Other Product and Service Fees
  
 
—
  
 
—
 
  
  
TOTAL ALL FEES
  
$
3,086,000
  
$
3,749,000
 
  
  
15
“Total Audit Fees” in 2004 were $2,782,000, an increase of $745,000 over 2003, -------------------   ---------------------
Audit Fees:                                                                                                          
  Audit Review and Preparation--Consists“Total All Fees” were $3,749,000, an increase of $663,000 over 2003, primarily due to additional audit fees billed forincurred as a result of KPMG LLP’s audit of consolidated financial statements and review of
    interim financial statements.......................................   $        1,169,000    $          1,537,000
  Statutory Audits--Consists of fees billed in relation to
    required statutory audits of foreign subsidiaries..................              447,000                 500,000
  SEC Compliance--Consists of fees billed for assistance
    with our SEC filings...............................................   (included in above)     (included in above)
                                                                          -------------------   ---------------------
       Total Audit Fees................................................            1,616,000               2,037,000
                                                                          -------------------   ---------------------

Audit-Related Fees:                                                    
  Consists of fees billed in relation to due diligence related to
    mergers and acquisitions, internal control reviews and
    consultation concerningover financial accounting and reporting standards (including Sarbanes-Oxley compliance)...................                   --                  50,000
                                                                          -------------------   ---------------------

Tax Fees:                                                              
  Tax Compliance--Consists of fees billed in relation to
    preparation and review of income tax returns.......................              219,000                 492,000
  General Tax Matters--Consists of fees billed in relation to
    tax matters, especially review of tax audits.......................              263,000                 507,000
  Tax Planning and Business Strategy Consulting--Consists
    of tax planning and business strategy consulting services..........                   --                      --
                                                                          -------------------   ---------------------
       Total Tax Fees..................................................              482,000                 999,000
                                                                          -------------------   ---------------------

All Other Fees:                                                        
  Other Product and Service Fees.......................................                   --                      --
                                                                          -------------------   ---------------------
       Total All Fees..................................................   $        2,098,000    $          3,086,000
                                                                          ===================   =====================

As set forth in the table above, consistent with Audit Committee policy, we did not engage KPMG LLP to provide services relating to tax planning or business strategy consulting in 2002 or 2003, and we do not expect to engage them for such services in the future. The "Audit-Related Fees" of $50,000 were related solely to services provided in connection with the Company's efforts to comply with the internal controls provisions ofas required by Section 404 of the Sarbanes-Oxley Act of 2002.

Please note that the increase in non-audit fees between 2002 and 2003 is attributable primarily to special events including (i) our 2002 and 2003 restructurings, which required additional tax compliance advice, and (ii) several ongoing income and payroll tax audits arising in the U.S. and abroad, which required additional tax audit work. Please see Notes 2 and 10, respectively, to our financial statements set forth in our annual report on Form 10-K for the year ended December 31, 2003 for more information on these items. In response to general stockholder concerns regarding the engagement of audit firms for non-audit services, we intend to establish additional relationships with advisors other than KPMG LLP to perform non-audit services in the future, and therefore expect to significantly reduce KPMG's non-audit services in 2004 and future years.

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of our independent auditors. In 2003, the Audit Committee established its current policy regarding pre-approval of all audit and permissible non-audit services provided by our independent auditors. This policy mandates that:that (i) a quarterly budget for both audit and non-audit services be provided to the Audit Committee and (ii) no auditor engagements for non-audit services may be entered into without pre-approval of the Audit Committee or its designee. The policy also prohibits our auditors from performing services that are prohibited pursuant to Section 201 of the Sarbanes Oxley Act of 2002, which includes services such as bookkeeping services, financial systems consulting services and internal audit services. In addition, as set forth in the table above and consistent with Audit Committee policy, we did not engage KPMG LLP to provide services relating to tax planning or business strategy consulting in 2003 or 2004, and we do not expect to engage them for such services in the future.

The Audit Committee has determined that the rendering by KPMG LLP of the professional services (i.e., audit-related and tax) described in the above table is compatible with maintaining the auditors'auditors’ independence. During 2003,2004, all of the hours expended on our audit by KPMG LLP were provided by KPMG LLP'sLLP’s full-time, permanent employees.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

A VOTEFOR PROPOSAL 2.

STOCKHOLDER PROPOSAL

One of our stockholders has requested that we include the following proposal and supporting statement in this proxy statement, and if properly presented by the proponent, this proposal will be voted on at the annual meeting. The stockholder proposal and supporting statement are quoted verbatim below.

The affirmative vote of the majority of outstanding common stock and exchangeable shares represented by proxy or in person at the annual meeting and entitled to vote will be required to approve Proposal 3.16

PROPOSAL 3

EXPENSING OF STOCK OPTIONS

The United Brotherhood of Carpenters Pension Fund ("UBC"), 101 Constitution Ave., N.W., Washington, D.C. 20001, beneficial owner of 8,200 shares, or less than 0.002% of our outstanding common stock and exchangeable shares, has submitted the following proposal:

Stock Option Expensing Proposal

Supporting Statement

SIEBEL SYSTEMS' STATEMENT REGARDING PROPOSAL 3

We follow U.S. generally accepted accounting principles ("GAAP") with respect to the reporting of stock options, and we will continue to do so. Under GAAP, companies can choose between applying Statement of Financial Accounting Standard ("SFAS") No. 123, as amended by SFAS No. 148 (collectively, "SFAS 123") and Accounting Principles Board No. 25 ("APB 25"). These accounting rules provide different ways of treating the value of stock options at the time of award. We, like many other companies, comply with GAAP by following APB 25. Under APB 25, we record the intrinsic value of options as an expense on our income statement. Under APB 25, if options are granted at market price, no expense is recorded. This fact notwithstanding, we also provide footnote disclosure of our earnings per share ("EPS") and net income as if SFAS 123 had been applied. (See "Stock-Based Compensation" set forth in Note 1 to our Consolidated Financial Statements, entitled "Summary of Significant Accounting Policies," in our 2003 Annual Report of Form 10-K.) Finally, we present both basic and fully diluted EPS on the face of our financials.

If we were to start expensing stock options immediately, the only available accounting rules would be those prescribed by SFAS 123, which require the use of fair value to report stock option expense. However, the Financial Accounting Standards Board ("FASB") is currently finalizing new rules that will replace SFAS 123, and these new rules are expected to require companies to expense stock options starting in 2005. We will fully comply with the new rules once they are published. Notably, it is widely expected that these new rules will be different than SFAS 123. Differences between the two rules could include the tax accounting for stock options, the pattern and timing of recording each stock option's expense, accounting for option plan modifications and share cancellations.

Given that these new rules are not final, we believe that expensing stock options in 2004 using SFAS 123 and then changing to the FASB's new rules in 2005 would confuse users of our financial statements. Stockholders would be required to analyze 2003 results using APB 25 rules, 2004 results using SFAS 123 rules, and 2005 results using the new option expensing rules.

In sum, given the changes under consideration by the FASB, we believe it is both proper and prudent to await the official pronouncement of the FASB before moving forward and changing our formal accounting method on this subject. That said, the Board recognizes that stock option expensing is an important issue, and will consider it further regardless of the stockholder vote on Proposal 3.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE OFABSTAIN ON PROPOSAL 3.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our outstanding common stock and exchangeable shares as of March 31, 20042005 by: (i) each director; (ii) each Named Executive Officer (as defined under "Executive“Executive Compensation -– Compensation of Executive Officers"Officers” below); (iii) all of our executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our common stock:

                                           Amount and
                                           Nature of
                                           Beneficial    Percent
Name and Address of Beneficial Owner (1)  Ownership (2)  of Class
- ----------------------------------------  ------------  -----------
Thomas M. Siebel (3)....................   57,348,475       10.99 %
Patricia A. House (4)...................    8,585,894        1.68 %
R. David Schmaier (5)...................    2,092,170           *
Kenneth A. Goldman (6)..................    2,039,034           *
Edward Y. Abbo (7)......................      702,758           *
Steven M. Mankoff (8)...................    1,461,522           *
Eric E. Schmidt, Ph.D. (9)..............    1,487,208           *
Charles R. Schwab (10)..................    2,672,510           *
George T. Shaheen (11)..................    1,566,280           *
James C. Gaither (12)...................      664,856           *
Marc F. Racicot (13)....................       38,000           *
C. Scott Hartz..........................        2,000           *
All directors and executive officers as
  a group (19 persons) (14).............   80,514,163       14.91 %

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of Siebel Systems. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2003,2004, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with, except that a Form 4 was filed late on behalf of each of Messrs. Edward Y. AbboGaither, Lawrie, Racicot, Shaheen and Herbert D. Hunt eachWhite, Dr. Schmidt, and former directors Charles R. Schwab and A. Michael Spence, and a Form 3 was filed his initial reportlate on behalf of ownership late.Mr. White and Mark Sunday, our Senior Vice President, Information Technology and Chief Information Officer.

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EXECUTIVE COMPENSATION

Compensation of Directors

OurCOMPENSATIONOF DIRECTORS

Historically, our directors dohave not currently receivereceived any cash compensation for service on the Board of Directors or any committee thereof, but arehave been eligible for reimbursement for certain expenses incurred in attending Board of Directors’ and committee meetings. Historically, our non-employee directors have received discretionary periodic stock option grants under the 1996 Equity Incentive Plan (the "1996 Plan"“1996 Plan”) for service on our Board.Board of Directors. In May 2003, after considering the criteria relating to awarding stock options and general market conditions, our Board of Directors approved the following formal guidelines relating to the grant of stock options to our non-employee directors:

• Initial Grants--EachGrants—Each new non-employee director will be granted an option to purchase 80,000 shares of our common stock as soon as practicable following such director'sdirector’s appointment to the Board.
Board of Directors.
• Annual Grants--EachGrants—Each non-employee director who has served on the Board of Directors for more than six months will be granted an option to purchase 20,000 shares of our common stock in January of each year.

Please note that in 2005 each non-employee director who had served on the Board of Directors for more than six months received compensation equivalent to the fair value of a stock option to purchase 20,000 shares of our common stock, allocated 50% in cash and 50% in shares of restricted stock, as more fully described below.

We do not intend for stock options granted to non-employee directors to qualify as incentive stock options under the Internal Revenue Code. We believe that these option grant guidelines will motivate and reward our non-employee directors for their service in a manner that is consistent with good corporate practice and the independence requirements of theThe Nasdaq NationalStock Market applicable to members of boards of directors and compensation committees. Notwithstanding the foregoing guidelines, from time to time, including prior to any stock option grant made to any non-employee director, the Compensation Committee of the Board of Directors will review the appropriateness and adequacy of these compensation guidelines, taking into consideration actual performance by us and the non-employee director and such other factors and circumstances as deemed necessary and appropriate, and exercising such other power and authority as may be permitted or required under the 1996 Plan.

Directors who are also our employees are eligible to receive options under the 1996 Plan and may also qualify for participation in our 2003 Employee Stock Purchase Plan, which was adopted by the Board in May 2003 and approved by stockholders in June 2003, and our 401(k) Plan.

During 2003,2004, we granted 20,000 stock options with an exercise price of $15.39 to each of James C. Gaither, Marc F. Racicot, Eric E. Schmidt, George T. Shaheen and former director Charles R. Schwab. The fair value of each of these stock options on the date of grant was approximately $106,000, or $5.31 per share, as determined using the Black-Scholes option valuation model. In addition, we granted 80,000 stock options with an exercise price of $9.12$12.15 per share to C. Scott HartzJohn W. White upon his appointment to ourthe Board and 20,000of Directors. The fair value of these stock options with an exercise priceon the date of $8.66grant was approximately $351,000, or $4.39 per share, to Marc F. Racicot in recognition of his performance as a member of our Board. determined using the Black-Scholes option valuation model.

The exercise price per share of each of the stock options granted to our Board members during 2004 was equal to the fair market value of our common stock on the date of grant, (basedas defined in the 1996 Plan. Each of these stock options vests 20% on the closing sales price reported on the Nasdaq Stock Market on the date immediately preceding the dateone-year anniversary of grant). On the date of grant the stock options issued to Messrs. Hartz and Racicot had fair valuesat a rate of $267,200, or $3.34 per option share, and $62,800, or $3.14 per option share, respectively, as determined using the Black-Scholes option valuation model. At the one year anniversary of each grant, 20% of the shares subject to such grant vest and become exercisable, with the remaining shares vesting thereafter in 16 equal quarterly installments upon the director's completion of5% for each quarter of service on the Board. Thethereafter, and have a term of these option grants is six years.

Compensation

On January 31, 2005, the Nominating and Corporate Governance Committee of Executive Officersour Board of Directors approved 2005 compensation for our non-employee directors such that each non-employee director would receive compensation equivalent to the fair value of a stock option to purchase 20,000 shares of our common stock (based on the Black-Scholes valuation model and the fair market value of our common stock on the date of grant, as defined in the 1996 Plan) to be allocated as follows: 50% in cash and 50% in shares of restricted stock

19

that vest in full on January 31, 2006. Accordingly, in the first quarter of 2005 we awarded each of James C. Gaither, C. Scott Hartz, Marc F. Racicot, Eric E. Schmidt, George T. Shaheen and John W. White compensation of $32,500 in cash and 3,750 shares of restricted stock that will vest in full on January 31, 2006 in consideration for their service as a director in 2005.

COMPENSATIONOF EXECUTIVE OFFICERS

Summary Compensation Table

The following table provides information for 2001, 2002, 2003 and 20032004 regarding the compensation awarded or paid to, or earned by, our CEO, Chairman and former CEO, and each of our four other most highly compensated executive officers as of December 31, 2003.2004. We refer to these individuals elsewhere in this proxy statement as "Named“Named Executive Officers."

                                                                                                            Long-term
                                                                                                           Compensation
                                                                                                             Awards
                                                                                                           -----------        All
                                                                           Annual Compensation             Securities        Other
                                                             --------------------------------------------  Underlying       Compen-
    Officer Name                     Position                 Year    Salary (1)     Bonus      Other (2)  Options (#)     sation (4)
- ---------------------   -----------------------------------  ------  -----------  -----------  ----------  -----------   -----------
Thomas M. Siebel        Chairman and CEO (5)                  2003   $        1   $1,250,000   $      --           --    $       --
                                                              2002            1           --          --           --            --
                                                              2001            1           --          --    7,950,000 (3)        --

R. David Schmaier       Executive Vice President              2003      500,000    1,000,000          --      300,000            --
                                                              2002      400,000      500,000          --           --            --
                                                              2001      429,167           --          --    1,330,000            --

Kenneth A. Goldman      Senior Vice President, Finance        2003      400,000      425,000          --      250,000            --
                          and Administration and              2002      320,000      200,000          --           --      2,755,000
                          Chief Financial Officer             2001      343,333           --          --    2,170,000            --

Edward Y. Abbo          Senior Vice President, Technology     2003      300,000      500,000          --      250,000            --
                          and Chief Technology Officer        2002      200,000      250,000          --           --        370,000
                                                              2001      214,583           --          --      290,000            --

Steven M. Mankoff       Senior Vice President,                2003      300,000      500,000          --      250,000            --
                           Technical Services                 2002      200,000      250,000          --           --        370,000
                                                              2001      214,583           --          --      640,000            --

1. The salaries of certain of our executives were reduced by 20% in April 2001 as part of our cost control initiatives. Effective January 1, 2003, the salaries of these executives were returned to the levels prior to the reduction in April 2001. In addition, the salary of Mr. Siebel was reduced to $1 at his request in January 2001 as part of our cost control initiatives, and remained at that level for the next three years. Effective January 1, 2004, Mr. Siebel's salary was restored to $1,000,000.

2. In accordance with SEC rules, other annual compensation in the form of perquisites and other personal benefits has been omitted where the aggregate amount of such perquisites and other personal benefits constitutes less than the lower of $50,000 or 10% of the total annual salary and bonus for the Named Executive Officer for the fiscal year.

3. This stock option grant was cancelled in full, at the request of Mr. Siebel, in January 2003.

4. Amounts set forth under "All Other Compensation" represent 316,350, 42,180 and 42,180 shares of our common stock issued to Mr. Goldman, Mr. Abbo and Mr. Mankoff, respectively, as part of the consideration received in connection with the 2002 tender offer to repurchase certain stock options with exercise prices greater than $40 per share.

”

Certain of these shares were subject to a holding period of up to four years. During the holding period, these officers are prohibited from selling, transferring, making a short sale, granting any option to purchase or entering into any hedging transaction with the same economic effect as the sale of such shares during the holding period. As of December 31, 2003, Mr. Goldman, Mr. Abbo and Mr. Mankoff have a total of 180,978, 21,449 and 21,449 shares of our common stock, respectively, which remain subject to the holding period.

5. Officer Name		Position		Annual Compensation													Long-term Compensation Awards					All Other Compen- sation(9)
   																	Restricted Stock Unit Awards ($)(8)			Securities Underlying Options (#)
   				Year		Salary(3)				Bonus				Other(7)
   Thomas M. Siebel		Chairman (1)		2004 2003 2002		$	562,500 1 1	(4)		$	505,208 1,250,000 —	(4)		$	—   —   —		$	—   —   —		—   —   —		$	—   —   —
   J. Michael Lawrie		Chief Executive Officer (1)		2004 2003 2002			666,667 —   —				1,250,000 —   —	(5)			152,891 —   —			3,633,000 —   —		2,000,000 —   —			—   —   —
   R. David Schmaier		Executive Vice President		2004 2003 2002			500,000 500,000 400,000				350,000 1,000,000 500,000				—   —   —			—   —   —		100,000 300,000 —			—   —   —
   Kenneth A. Goldman		Senior Vice President, Finance and Administration and Chief Financial Officer		2004 2003 2002			400,000 400,000 320,000				300,000 425,000 200,000				—   —   —			—   —   —		100,000 250,000 —			—   —   2,775,000
   Edward Y. Abbo		Senior Vice President, Technology and Chief Technology Officer		2004 2003 2002			300,000 300,000 200,000				350,000 500,000 250,000				—   —   —			—   —   —		100,000 250,000 —			—   —   370,000
   Neil M. Weston		Senior Vice President and General Manager, EMEA Sales (2)		2004 2003 2002			309,053 —   —				421,570 —   —	(6)			—   —   —			—   —   —		500,000 —   —			—   —   —

   ---

   (1)

   Mr. Siebel recommended to the Board of Directors, and the Board agreed, that the roles of Chairman and Chief Executive Officer would be separated effective May 4, 2004, on which date J. Michael Lawrie was appointed as our new Chief Executive Officer. Mr. Lawrie resigned as Chief Executive Officer and as a director on April 12, 2005. In connection with his resignation, Mr. Lawrie received certain severance payments which are more fully described below under “Employment, Severance and Change of Control Agreements—J. Michael Lawrie Separation and Consulting Agreement.”

   (2)

   Mr. Weston commenced his employment with us on January 1, 2004.

   (3)

   Salary includes amounts earned in the year reflected, but paid in the following year or deferred. The salaries of certain of our executives were reduced by 20% in April 2001 as part of our cost control initiatives. Effective January 1, 2003, the salaries of these executives were returned to the levels prior to the reduction in April 2001. Mr. Siebel’s salary and bonus was reduced to $1 at his request in January 2001 as part of our cost control initiatives, and remained at that level for the next three years.

   (4)

   Effective January 1, 2004, Mr. Siebel’s salary was restored to $1,000,000, and effective June 1, 2004 his salary was reset at $250,000 to reflect his role as Chairman. Of the total bonus amount awarded to Mr. Siebel, $322,917 was based on his service from January 1, 2004 to May 31, 2004, and $182,291 was based on his service from June 1, 2004 to December 31, 2004. At Mr. Siebel’s request, the gross amount of his 2004 bonus and salary has been donated to charity.

   Mr. Siebel recommended to the Board, and the Board agreed, that the roles of Chairman and Chief Executive Officer would be separated effective May 4, 2004, on which date J. Michael Lawrie was appointed as our new Chief Executive Officer.

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STOCK OPTION

21

STOCK-BASED COMPENSATION GRANTS AND EXERCISES

Stock Option Grants in

OVERVIEW

Our stock-based compensation program consists primarily of two plans: the Year Ended December 31, 2003

We grant stock options to our executive officers and directors under theSiebel Systems, Inc. 1996 Equity Incentive Plan (the “1996 Plan”), which is scheduled to terminate on May 16, 2006. 13, 2006, and the Siebel Systems, Inc. 1998 Equity Incentive Plan (the “1998 Plan” and together with the 1996 Plan, the “Plans”). Stock options granted to executive officers, key employees and non-employee members of our Board of Directors are made under the 1996 Plan and stock options granted to non-officer employees are made under the 1998 Plan. Our Board of Directors and stockholders have approved the 1996 Plan, and our Board of Directors has approved the 1998 Plan.

As of December 31, 2003,2004, stock options to purchase a total of 51.951.5 million shares were outstanding under the 1996 Plan, and stock options to purchase 71.567.6 million shares remained available for grant under thisthat plan. We grant options to our other employees under the 1998 Equity Incentive Plan (the "1998 Plan"). As of December 31, 2003,2004, stock options to purchase a total of 90.980.4 million shares were outstanding under the 1998 Plan, and options to purchase 120.8128.4 million shares remained available for grant under thisthat plan.

On May 5, 2004, we amended the Plans to allow us to issue restricted stock units (“RSUs”). RSUs are similar to restricted stock in that they are issued for no, or nominal, consideration. However, the holder is generally not entitled to the underlying shares of common stock until the RSU vests.

All stock optionequity grants are made after a review by, and with the approval of, the Compensation Committee of the Board of Directors or the full Board of Directors or, for director equity grants, the Nominating and Corporate Governance Committee of the Board of Directors. All members of our Compensation Committee are independent directors, as defined in the applicable rules for issuers traded on The Nasdaq Stock Market. Substantially all of our employees participate in one of the above plans, thereby providing us the ability to meet our goal of long-term retention of our employees.Plans. Stock options granted under these plansPlans expire no later thanbetween five and ten years from the grant date (2003 grants expire six years from grant date) and typically vest over one to five years. Please refer to the "Report“Report of the Compensation Committee of the Board of Directors on Executive Compensation"Compensation” appearing in this proxy statement for further information concerning our policies and the Compensation Committee'sCommittee’s policies regarding the use of equity grants.

On January 5, 2005, the Compensation Committee of our Board of Directors established a performance stock options.program for 2005 (the “Performance Stock Plan”), pursuant to which our executive officers and select other employees were granted RSUs under the Plans. Shares granted under the Performance Stock Plan will vest upon achievement of all or a specified portion of certain defined objective financial performance goals, or if the goals are not met, on the fourth anniversary of the grant date. Specifically, the Compensation Committee has approved the following four performance goals for 2005 and 2006:

The revenue-based targets set forth above will be adjusted upward to incorporate any revenue from companies acquired during the relevant year (excluding the acquisition of edocs, Inc. in 2005) and the operating margin-based targets will be adjusted for the impact of any acquisitions and certain unusual charges (e.g., stock-based compensation, restructuring expenses, etc.).

These performance goals have been established for vesting purposes only and in no way are intended to estimate the actual levels of revenue or operating margin that we expect to achieve. Accordingly, these goals should not be interpreted to update or supersede our previously disclosed guidance on revenue and operating margins or any guidance that we may provide in the future. Rather, these performance goals are meant to incentivize our employees to outperform our publicly disclosed guidance.

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For each goal that is fully achieved, vesting will be accelerated for 25% of the total shares granted, such that half of such accelerated shares will vest on January 31 of the year in which the Compensation Committee determines that a goal has been met and the remaining half will vest on January 31 of the following year.

On January 5, 2005, the Compensation Committee adopted a similar performance-based plan for 2005 through which stock options, rather than RSUs, will be issued for employees not covered by the Performance Stock Plan.

RESTRICTED STOCK UNIT GRANTSINTHE YEAR ENDED DECEMBER 31, 2004

On May 5, 2004, we granted Mr. Lawrie an RSU for 350,000 shares of our common stock in connection with his commencement of employment. The fair value of the RSU was $3,633,000 on the date of grant. Upon Mr. Lawrie’s resignation as Chief Executive Officer on April 12, 2005, the 200,000 shares that remained unvested under his RSU (150,000 shares had previously vested pursuant to the normal vesting schedule) immediately vested in full. As of April 12, 2005, the fair value of the RSU was $3,076,500.

During 2004 we granted additional RSUs for an aggregate of 145,000 shares of our common stock to various officers upon commencement of their employment. As of December 31, 2004, RSUs for a total of 332,500 shares of our common stock were unvested and remained outstanding.

STOCK OPTION GRANTSINTHE YEAR ENDED DECEMBER 31, 2004

In order to maintain the proper balance between the need to attract and retain employees and minimize the dilution to our stockholders, we took several significant and substantial steps during 2002, 2003 and 20032004 to reduce the number of stock options outstanding from the levels outstanding as of December 31, 2001. These actions included:

• In September 2002, we cancelled 28.1 million stock options in connection with a repurchase of certain outstanding employee stock options.

• In January 2003, at the request of our Chairman and then CEO Thomas M. Siebel, we cancelled approximately 26 million shares subject to stock options held by Mr. Siebel, including all options granted to him from October 1998 through October 2001. Mr. Siebel received no consideration for the cancellation of these options. The total fair value (using the Black-Scholes option valuation model) of the approximately 26 million stock option shares cancelled was approximately $56.1 million at the time of cancellation.

• We significantly reduced levels and terms of stock option grants to our employees and benefited from forfeitures of stock options by terminated employees.

We believe that our actions, particularly the reduced stock option grant guidelines, will continue to align the interests of our employees and management with the interests of our stockholders.

23

As a result of these and other actions, stock options outstanding decreased by 61.7 million shares during 2002, and 41.6 million shares during 2003 and 11.2 million during 2004 (an aggregate of 103.3114.5 million shares, or 42%46%, since December 31, 2001). Further, as the following table indicates, as a result of these and other actions several key metrics, including stock options outstanding relative to shares outstanding ("Stock Option Overhang") decreased as followsand measures of dilution to stockholders, have improved in each of the last three years (in thousands, except percentages):

                                                                            Shares of
                                                                             Common        Stock       Stock
                                                                              Stock       Options      Option
                                                                           Outstanding  Outstanding   Overhang
                                                                           ----------- ------------ ------------
December 31, 2001........................................................    466,950      247,204           53 %
                                                                           =========== ============ ============
December 31, 2002........................................................    486,428      185,473           38 %
                                                                           =========== ============ ============
December 31, 2003........................................................    498,305      143,903           29 %
                                                                           =========== ============ ============

During 2003,

The following table sets forth certain information regarding stock options forfeited by employees upon termination exceeded new stock options granted by 4.9 million shares, resulting in a decrease in net Dilution Percentage (as defined below) to stockholders of 1%. For the purposes of the foregoing, "Dilution Percentage" is calculated as new stock options granted during the year, net of stock options forfeited by employees terminating employment, divided by the total outstanding shares of common stock at the beginning of the year. As described above, the Dilution Percentage for 2003 only reflects forfeitures by employees upon termination and, accordingly, does not reflect the voluntary cancellation of stock options of our CEO discussed above.

Only 4.6% of the total options granted to employees in 2003 were granted to the Named Executive Officers as set forth in the table below:

                                                                              Potential Realizable Value
                         Number of     Percent of                             at Assumed Annual Rates of
                         Securities   Total Options                            Stock Price Appreciation     Aggregate
                         Underlying    Granted to    Exercise or                for the Option Term (4)   Black-Scholes
                          Options      Employees     Base Price   Expiration  --------------------------  Value on Date
     Officer Name       Granted (1)    in 2003 (2)  ($/Share)(3)    Date           5%            10%       of Grant (5)
- ----------------------  ------------  ------------- ------------ -----------  ------------  ------------  -------------
Thomas M. Siebel                 --           -- %  $        --          --   $        --   $        --   $       --
R. David Schmaier           300,000         1.32 %  $      8.66  04/30/2009   $   883,568   $ 2,004,515   $  942,000
Kenneth A. Goldman          250,000         1.10 %  $      8.66  04/30/2009   $   736,307   $ 1,670,430   $  785,000
Edward Y. Abbo              250,000         1.10 %  $      8.66  04/30/2009   $   736,307   $ 1,670,430   $  785,000
Steven M. Mankoff           250,000         1.10 %  $      8.66  04/30/2009   $   736,307   $ 1,670,430   $  785,000

1. Options vest 20% on May 1, 2004, and at a rate of 5% for each quarter of service thereafter, and have a term of six years.

2. Based on an aggregate of 22.8 million shares subject to options granted to employees pursuant to our 1996 and 1998 Plans during 2003, including grants to the Named Executive Officers.2004:

3. Officer Name		Number of Securities Underlying Options Granted			Percent of Total Options Granted to Employees in 2004(4)			Exercise or Base Price ($/Share)(5)			Expiration Date		Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for the Option Term (6)						Aggregate Black- Scholes Value on Date of Grant (7)
   													5%			10%
   Thomas M. Siebel		—			—	%			—		—		$	—			—			—
   J. Michael Lawrie(1)		2,000,000	(2)		16.67	%		$	10.38		05/04/2010		$	7,060,385		$	16,017,606		$	7,503,600
   R. David Schmaier		100,000	(2)		0.83	%		$	10.38		05/04/2010		$	353,019		$	800,880		$	361,500
   Kenneth A. Goldman		100,000	(2)		0.83	%		$	10.38		05/04/2010		$	353,019		$	800,880		$	361,500
   Edward Y. Abbo		100,000	(2)		0.83	%		$	10.38		05/04/2010		$	353,019		$	800,880		$	361,500
   Neil M. Weston		500,000	(3)		4.17	%		$	13.95		02/08/2010		$	2,372,167		$	5,381,638		$	2,406,050

   ---

   (1)

   Mr. Lawrie commenced employment with us on May 3, 2004 and was appointed as our CEO effective May 4, 2004. Mr. Lawrie resigned as CEO and as a director on April 12, 2005.

   (2)

   Stock options vest 20% on the one-year anniversary from May 5, 2004 and at a rate of 5% for each quarter of service thereafter, and have a term of six years.

   (3)

   Mr. Weston commenced employment on January 1, 2004. Stock options vest 20% on the one-year anniversary from January 1, 2004 and at a rate of 5% for each quarter of service thereafter, and have a term of six years.

   (4)

   Based on an aggregate of 12.0 million shares subject to stock options granted to employees pursuant to the Plans during 2004, including grants to the Named Executive Officers.

   (5)

   Under all stock option plans, the stock option exercise price is equal to the fair market value on the date of grant, as defined in such plans.

   (6)

   The potential realizable value is calculated based on the term of the option at the time of grant. Stock price appreciation of 5% and 10% is assumed pursuant to rules promulgated by the SEC and does not represent our prediction of our stock price performance or the actual value of the stock options.

   (7)

   Represents the aggregate fair value of the stock options on the date of grant (ranging from $3.62 to $4.81 per share), as calculated using the Black-Scholes option valuation model. The fair value does not represent our prediction of our stock price performance, and historically has had little to no relationship to the value that is actually realized.

   Under all stock option plans, the stock option exercise price is equal to the fair market value on the date of grant.

24

4. The potential realizable value is calculated based on the term of the option at the time of grant. Stock price appreciation of 5% and 10% is assumed pursuant to rules promulgated by the SEC and does not represent our prediction of our stock price performance or the actual value of the stock options.

5. Represents the aggregate fair value of the stock options on the date of grant ($3.14 per share), as calculated using the Black-Scholes option valuation model. The fair value does not represent our prediction of our stock price performance, and historically has had no relationship whatsoever to the value that is actually realized.

The following summarizes the distribution and dilutive impact of the stock options held by our Named Executive Officers as of December 31, 2001, 2002 and 2003:

                                                                                    Year Ended December 31,
                                                                           -------------------------------------
                                                                              2001        2002, 2003 ----------- ------------ ------------
Stock options held by Named Executive Officers as a percentage of:                                               
  Total options outstanding..............................................       23.8 %       29.3 %       18.7 %
                                                                           =========== ============ ============
  Outstanding shares of common stock.....................................       12.6 %       11.2 %        5.4 %
                                                                           =========== ============ ============

Aggregated Stock Option Exercises for the Year Ended DecemberAGGREGATED STOCK OPTION EXERCISESFORTHE YEAR ENDED DECEMBER 31, 2003, and Stock Option Values as of December2004,AND STOCK OPTION VALUESASOF DECEMBER 31, 20032004

The following table sets forth for each of the Named Executive Officers the shares acquired and the value realized on each exercise of stock options during 20032004 and the number and value of securities underlying unexercised options held by the Named Executive Officers as of December 31, 2003:2004:

                                                            Number of
                                                      Securities Underlying         Value of Unexercised
                                                      Unexercised Options at       In-the-Money Options at
                           Shares                      December 31, 2003 (2)        December 31, 2003 (3)
                        Acquired on      Value       --------------------------  ----------------------------
     Officer Name         Exercise    Realized (1)   Exercisable  Unexercisable   Exercisable   Unexercisable
- ----------------------  ------------  -----------    ------------ -------------  -------------  -------------  
Thomas M. Siebel                 --   $       --      18,486,135       199,999   $205,259,888   $  2,202,739
R. David Schmaier           257,143   $2,820,659       1,582,860     1,340,000   $  6,399,567   $  3,414,841
Kenneth A. Goldman               --   $       --       1,420,000     1,450,000   $         --   $  1,315,000
Edward Y. Abbo                   --   $       --         516,200       440,000   $  3,845,518   $  1,675,550
Steven M. Mankoff                --   $       --         826,800       590,000   $  4,803,794   $  1,315,000

1. Based on the fair market value of our common stock on the exercise date, minus the exercise price, multiplied by the number of shares exercised.

Officer Name		Shares Acquired on Exercise		Value Realized(2)			Number of Securities Underlying Unexercised Options at December 31, 2004(3)				Value of Unexercised In-the-Money Options at December 31, 2004(4)
							Exercisable		Unexercisable		Exercisable			Unexercisable
Thomas M. Siebel		—		$	—		18,686,134		—		$	143,369,187		$	—
J. Michael Lawrie (1)		—		$	—		—		2,000,000		$	—		$	220,000
R. David Schmaier		292,856		$	2,585,732		1,855,718		874,286		$	3,353,598		$	542,571
Kenneth A. Goldman		—		$	—		2,075,000		895,000		$	137,250		$	331,250
Edward Y. Abbo		146,200		$	1,405,919		535,000		375,000		$	1,643,850		$	331,250
Neil M. Weston		—		$	—		75,000		425,000		$	—		$	—

---

(1)

Mr. Lawrie commenced employment with us on May 3, 2004 and was appointed as our CEO effective May 4, 2004. Mr. Lawrie resigned as CEO and as a director on April 12, 2005.

(2)

Based on the fair market value of our common stock on the exercise date, minus the exercise price, multiplied by the number of shares exercised.

(3)

Represents the total number of shares of our common stock subject to stock options held by the Named Executive Officers as of December 31, 2004.

(4)

Based on the fair market value of our common stock as of December 31, 2004 ($10.49 per share), minus the exercise price, multiplied by the number of shares underlying the stock options.

2. Represents the total number of shares of our common stock subject to stock options held by the Named Executive Officers as of December 31, 2003.

3. Based on the fair market value of our common stock as of December 31, 2003 ($13.92 per share), minus the exercise price, multiplied by the number of shares underlying the stock options.

EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS

We do not

Our CEO, certain of our officers and select employees have anyaccepted offers of employment with us that provide for certain severance benefits and acceleration of equity compensation in the event of termination or a change of control.

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Mr. Shaheen commenced service as our Chief Executive Officer on April 13, 2005. Per the terms of his offer letter with us, Mr. Shaheen is entitled to receive the following severance payments in the event he is terminated without cause or in the event of a change in control agreements(all as defined in his offer letter):

In addition, per the terms of his offer letter with us, Mr. Weston is entitled to one month’s written notice during his first four years of service with us. After the completion of the fourth year of service, the notice period will increase by one week for every year, up to a maximum of 12 weeks’ written notice. We may also provide pay in lieu of notice.

J. Michael Lawrie Separation and Consulting Agreement

Mr. Lawrie resigned as Chief Executive Officer and as a director on April 12, 2005. In connection with his resignation, we entered into a Separation and Consulting Agreement (the “Agreement”) with Mr. Lawrie dated April 15, 2005. Pursuant to the Agreement and consistent with the severance terms of his offer letter, we made a cash payment of $4,500,000 to Mr. Lawrie, which represents his base salary and targeted annual cash bonus for two years. This payment also serves as a one-time advance payment for consulting services for two years from the date of separation. During the consulting period, Mr. Lawrie cannot participate in the ownership, management, operation, control or financing of certain of our competitors. Upon Mr. Lawrie’s resignation, the 200,000 shares that remained unvested under his RSU for 350,000 shares of common stock (150,000 shares had previously vested pursuant to the normal vesting schedule), and 800,000 shares of his outstanding stock option to purchase shares of our common stock, immediately vested in full. As of April 12, 2005, the fair value of his RSU was $3,076,500. The market price of our common stock was less than the exercise price of his stock options, and the value of those stock options under the Black-Scholes option valuation model was approximately $700,000. Under the Agreement, Mr. Lawrie also will be permitted to keep laptop computer equipment, receive nominal amounts to pay for DSL or cable connectivity and for associated residence set-up fees, and receive technical support for such set-up. He will also receive a cash payment for the balance of his unused vacation time, will be entitled to receive any Named Executive Officer.amounts accrued under our Nonqualified Deferred Compensation Plan as soon as practicable after October 12, 2005, will be eligible for continued group health benefits through the Consolidated Omnibus Budget Reconciliation Act of 1995 (“COBRA”) and our current group insurance policies, and will be reimbursed for any costs of continuing such benefits for a one year period following separation. Cash and RSU amounts payable as described above will be reduced by applicable withholding taxes. Pursuant to the Agreement, Mr. Lawrie provided us and our affiliates with a general liability release of claims.

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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION

Compensation Governance

Our Board of Directors has delegated to the Compensation Committee of the Board of Directors (the "Committee"“Committee”) the power and authority to review, modify and approve the overall compensation strategy and policies for Siebel Systems. As of the last fiscal year, our Committee consisted of Drs. Eric E. Schmidt and A. Michael Spence and Mr. Marc F. Racicot. Effective March 1, 2004, Dr. Spence resigned fromAccordingly, the Committee and Mr. Charles R. Schwab was appointedis responsible to the Committee.Board of Directors and to our stockholders for approving compensation awarded to all of our executive officers, including the Named Executive Officers. The Committee is currently comprised of three non-employee directors: Dr.John W. White (Chairman), Marc F. Racicot and Eric E. Schmidt, and Messrs. Schwab and Racicot.Ph.D. The Committee operates under a written charter adopted by the Board of Directors and is responsible for, among other things:things, (i) reviewing and approving corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management, based upon our business needs and consistent with the interests of our stockholders; (ii) administering our executive compensation plans, programs and policies; (iii) monitoring corporate performance and its relationship to compensation of executive officers; and (iv) making appropriate recommendations to the Board concerning matters of executive compensation.

Compensation Philosophy

The policiesphilosophy of the Committee with respect to compensation of executive officers, including ourthe CEO, areis to provide compensation sufficient to attract, motivate and retain executives of outstanding ability and potential. potential, and to link compensation with the achievement of annual and long-term individual and company performance goals. We include equity as a component of total compensation because we believe that equity-based compensation aligns the long-term interests of our executive officers with those of our stockholders. Our compensation practices are designed to be stockholder-friendly, and in some cases, such as our new practice that to the extent practicable new equity compensation granted in 2005 to continuing employees include performance-based vesting, were developed in conjunction with key stockholders.

To emphasize sustained performance of our executive officers, the Committee has adopted policies to align executive compensation with the creation of stockholder value as measured in the equity markets. These policies are implemented using a mix of the following key elements:

• We pay base salaries that are generally competitive with other leading high technology companies of comparable revenues with which we compete for personnel. To ensure that our salaries are sufficient to attract and retain highly qualified executives and other key employees, we regularly compare salaries with those of our competitors (including using independent compensation consultants and surveys) and set salary parameters based on this review.

• We pay cash bonuses based on the achievement of specific operating goals and discretionarily based on high levels of individual performance.

• We provide our executive officers and key employees with equity-based incentives pursuant to our 1996 Equity Incentive Plan, 1998 Equity Incentive Plan and Employee Stock Purchase Plan in order to motivate them to achieve our long-term goals and to align their interests with those of our non-employee stockholders.

Compensation Process

We believe that compensation decisions are complex and best made after a deliberate review of company and individual performance, and industry compensation levels. Accordingly, in early 2004, various independent

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executive compensation surveys, which were customized to provide a comparison of compensation of executives at comparable high technology companies with which we compete for executive talent, were commissioned and reviewed. In addition, an independent compensation consultant was retained to review the competitiveness of the compensation of our CEO. The purpose of this information gathering was to ensure that our executive compensation policies remain aligned with the goal of enhancing stockholder value through compensation programs that attract, motivate and retain executives of outstanding ability and potential. All of this information, as well as individual and company performance, and the proposed compensation for each of our executive officers, was reviewed, analyzed and discussed in depth by the Committee, taking into account all key components of total compensation (including salary, bonus, equity and long-term incentive compensation, accumulated realized and unrealized stock option and restricted stock gains, the dollar value to the executive and the cost to us of all perquisites and other personal benefits, and the payout obligations under severance and change-in-control scenarios). The Committee members were afforded the opportunity to review this information and ask questions in advance of and between Committee meetings.

Executive Officer Compensation

Our executive officers receive annual compensation programs to serve(excluding employee benefits) comprised of base salary and incentive compensation, which in turn is comprised of a cash bonus and equity awards (largely in the best interests of our stockholders. These actions included:

• The salaries of executives with the title of Senior Vice President and above were maintained in 2002 at levels which had been reduced by 20% in April 2001. Effective January 1, 2003, the salaries of these executives were returned to the levels prior to the reduction in April 2001.

• The salary of our CEO has been maintained at an annual salary of $1 for 2001, 2002 and 2003.

• In 2002, we adjusted our compensation structure to reduce the guidelines regarding the numberform of stock options, issued to our employees.

• In September 2002, we completed the Option Repurchase, under which approximately 28.1 million shares underlying employeebut also including restricted stock options were cancelled in exchange for commonand/or restricted stock or cash.units).

• In January 2003, we cancelled for no consideration approximately 26.0 million shares subject to stock options held by our Chairman, Thomas M. Siebel, at his request. These stock options represented all options that had been granted to Mr. Siebel during the past four years, including all options granted to him from October 1998 through October 2001 (the date of his last option grant). The total fair value (using the Black-Scholes option valuation model) of the approximately 26 million stock option shares cancelled was approximately $56.1 million at the time of cancellation.

• Since March 2003, all of our stock options have been granted with terms of six years. Prior to that time, our stock option grants generally had terms of ten years.

Cash Compensation

Base Salary

The Committee recognizes the importance of maintaining compensation practices and levels of compensation competitive with other leading high technology companies with which we compete for personnel. Base salary represents the fixed component of the executive compensation program. Our philosophy regarding base salaries is to be at or above the comparable industry median. Base salary levels are established based on an annual review of published executive salary levels atcompensation surveys relating to high technology companies with comparable revenues, and on the basis of individual and company performance. The industry group index shown on the Performance Measurement Comparison Graph included in this proxy statement includes many of the larger software companies included in our compensation survey.surveys. Periodic increases in base salary are the result of individual contributions evaluated against established annual and long-term performance objectives and an annual salary survey of high technology companies with comparable revenues. The base salaries for our Named Executive Officers are set forth above under “Executive Compensation—Compensation of Executive Officers.”

Incentive Compensation

In accordance with our compensation philosophy, we analyzed several qualitative and quantitative factors when awarding incentive compensation for 2004. Among other factors, we reviewed our achievements, financial performance, financial ratios and market share, among other things. We reviewed company and individual performance, both on an absolute basis and against pre-established performance goals, and we reviewed survey data regarding comparable high technology companies for purposes of monitoring executive compensation levels in relation to similar jobs in the marketplace.

Cash Bonuses

Cash bonus awards are designed to reward our executives and other senior managers for assisting us in achieving our operational goals through exemplary individual performance. Bonuses, if any, are linked to both the achievement of specified individual and corporate goals as well as a review of personal performance, which is determined at the discretion of the Committee.

In January 2004, Our total cash compensation (salary and bonus) on average is targeted at or above the industry averages. The Committee reviewed Siebel Systems' corporate performance goals. These goals were comprised of five broad objectives: (i) operate a cash-positive, profitable business, including the restructuring of our operations; (ii) maintain and improve customer satisfaction levels; (iii) maintain and improve our market leadership; (iv) maintain our product leadership in business applications software, including releasing the latest version of our products and the introduction of Siebel CRM OnDemand, our hosted software service; and (v) continuedetermined to develop solutions for our customers that lower the total cost of integrating software applications.

In reviewing our 2003 performance goals, the Committee noted that revenue levels stabilized in mid 2003 and returned to sequential quarterly growth in the second half of 2003 and cost controls resulted in the further reduction of expenses in 2003. In particular, the Committee noted that we (i) achieved positivegrant cash flows from operations in 2003 of $188.0 million, (ii) redeemed our $300.0 million convertible subordinated debentures for $307.1 million, eliminating substantially all of our long-term debt and approximately $16.5 million of annual interest expense, (iii) achieved our targeted operating margin of 15% during the fourth quarter of 2003, in advance of expectations, (iv) maintained our customer satisfaction levels, (v) maintained our market share at comparable levels with those achieved in 2002 in the majority of product categories in which we operate, and (vi) continued our technology leadership in the customer relationship management market with the release of Siebel 7.5.3 in the third quarter of 2003 and the introduction of Siebel CRM OnDemand, our hosted software service, in the fourth quarter of 2003.

In February 2004, the Committee reviewed the 2003 corporate performance goals and determined that all of the goals had been achieved. Based on such achievement, the Committee awarded bonuses to its executive officers at amounts equal to or exceeding targeted bonus levels. Bonuses for our executive officers ranged from 85%in recognition of their performance in 2004 and in accordance with industry benchmarks for the job function. The cash bonuses awarded to 200%our Named Executive Officers are set forth under “Executive Compensation—Compensation of 2003 base compensation paid to such executive officers.Executive Officers.”

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Equity Compensation

Our 1996 Equity Incentive Plan, 1998 Equity Incentive Plan and Employee Stock Purchase Plan have been established to provide all of our employees, including executive officers, with an opportunity to share, along with our stockholders, in our long-term performance. The Committee strongly believes that a primary goal of theour compensation program should be to provide key employees who have significant responsibility for our management, growth and future success with an opportunity to increase their ownership of Siebel Systems. The interests of stockholders, executives and employees should thereby be closely aligned. Executives areThe goal of the Committee historically has been to provide equity compensation for executive officers that equals or exceeds levels at comparable companies. However, during 2002 and 2003, we reduced our option grant guidelines such that equity compensation is competitive with that provided by high technology companies with comparable revenues. In addition, we maintained our option grant guidelines for existing employees (including our executive officers) at levels designed to correlate with each employee’s individual performance.

Historically, executive officers have been eligible to receive stock options at the discretion of the Committee, giving executives the right to purchase shares of our common stock in the future at a price equal to fair market value at the date of grant. All such grants must be exercised according to the provisions of our 1996 Equity Incentive Plan or 1998 Equity Incentive Plan, as applicable.Plan. Outstanding options held by executive officers typically vest over a period of one to five years and expire sixfive to ten years from the date of grant.

As total cash

In early 2004, we began basing executive equity grants on our performance milestones. Specifically, we structured our 2004 equity grants to Named Executive Officers such that the vesting of 20% of all option shares granted to them in 2004 were performance-based (i.e., they accelerate upon the achievement of certain performance milestones). In early 2005, as part of our ongoing commitment to establishing equity compensation practices that further align the interests of our employees with those of our stockholders, we restructured our equity compensation company-wide such that to the extent practicable new equity compensation granted to continuing employees, including executive officers, includes performance-based vesting. Specifically, on January 5, 2005, we established a performance stock program for 2005 (the “Performance Stock Plan”), pursuant to which our executive officers is targeted to be competitive with high technology companies with comparable revenue, we have usedand select other employees were granted restricted stock units (“RSUs”) under the Plans. Shares granted under the Performance Stock Plan will vest upon achievement of all or a specified portion of certain defined objective financial performance goals, or if the goals are not met, on the fourth anniversary of the grant date. A similar performance-based plan for 2005 through which stock options, to incentivize, attractrather than RSUs, were issued was also adopted on January 5, 2005 for employees not covered by the Performance Stock Plan. Additional information regarding the Performance Stock Plan is set forth above under “Stock-Based Compensation Grants and motivate our executive officers. The goal of the Committee historically has been to provide equity compensation for executive officers, including the Chief Executive Officer, which equals or exceeds levels at comparable companies. However, during 2002 and 2003, we reduced our option grant guidelines such that equity compensation is competitive with that provided by high technology companies with comparable revenue. In addition, we maintained our option grant guidelines for existing employees (including our executive officers) at levels designed to correlate directly with each employee's individual performance. Exercises.”

After considering the criteria described above relating to awarding stock optionsequity compensation and general market conditions,in recognition of their performance and future potential with us, in early 2004 the Committee determined to grant stock options to all of our executive officers, other than our then CEO, in 2003 in recognition of their performance and future potential with us. TheseThomas M. Siebel (who requested that he not be granted any stock options). The options granted to our executive officers vest over a five-year period and expire six years from the date of grant. See "StockThe stock options granted to our Named Executive Officers are set forth above under “Stock Option Grants in the Year Ended December 31, 2003" for a summary of stock options granted to our Named Executive Officers.2003.”

Section 162(m) of the Internal Revenue Code (the "Code"“Code”) limits us to a deduction for federal income tax purposes of no more than $1 million of compensation paid to certain named executive officers in a taxable year. Compensation above $1 million may be deducted if it is "performance-based compensation"“performance-based compensation” within the meaning of the Code. The Committee intends to satisfy the requirements for "performance-based compensation"“performance-based compensation” with respect to compensation awarded to our Named Executive Officers whenever possible and to the extent then practicable.

Chief Executive Officer Compensation

The Committee uses the philosophy, process and procedures described above in setting the annual salary, bonus and stock optionequity awards for our CEO.

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Until May 3, 2004, Thomas M. Siebel, our Chairman, and formerCEO.was also our CEO. At his request, during 2003, we maintained Mr. Siebel's reducedSiebel’s base salary level ofin 2001, 2002 and 2003 was set at $1. As discussed above,Similarly, at Mr. Siebel’s request, the Committee determineddid not grant any stock options or other equity compensation to Mr. Siebel in 2002, 2003 or 2004. In early 2004, an independent compensation consultant was retained to review the compensation of our CEO. Based on this and the other executive compensation surveys, effective January 1, 2004 the Committee set Mr. Siebel’s base salary at $1,000,000, and his bonus target at 125% of his base salary. Mr. Siebel later recommended to the Board, and the Board agreed, that the 2003 corporate performance goals had been achieved. The Committee concluded thatroles of Chairman and CEO would be separated effective May 4, 2004, on which date J. Michael Lawrie was appointed as our new Chief Executive Officer. Effective June 1, 2004, Mr. Siebel’s salary was reset at $250,000 to reflect his role as Chairman, and his bonus target remained at 125% of his base salary. For his services in 2004, as Chairman and as CEO, Mr. Siebel was a very significant contributorreceived $562,500 in accomplishing these objectivessalary, and accordingly, the Committee awarded Mr. Siebel a bonus of $1.25 million.$505,208. At Mr. Siebel'sSiebel’s request, the gross amount of his 2004 bonus and salary has been donated to charity. Also at Mr. Siebel’s request, the Committee did not grantaward him any optionsequity compensation.

On May 4, 2004, J. Michael Lawrie was appointed our CEO. Consistent with Mr. Siebel’s compensation as CEO, and based on the surveys referenced above, Mr. Lawrie’s base salary was set at $1,000,000 and his target bonus was set at 125% of his base salary. In 2004, Mr. Lawrie received $666,667 in salary. Per the terms of his offer letter with us, Mr. Lawrie was guaranteed and received a bonus for his services in 2004 of 125% of his full 2004 salary, or $1,250,000. The primary purpose of this guarantee was to offset certain variable compensation forgone by Mr. Lawrie when he left his former employer to join us. Further, after consideration of the survey data referenced above, the Committee awarded Mr. Lawrie a stock option to purchase 2,000,000 shares of our common stock and an RSU for 350,000 shares of our common stock.

Mr. Lawrie also received perquisites of (i) $75,339 of income imputed to Mr. SiebelLawrie in 2003. Additionally,connection with his use of our corporate aircraft for commuting purposes and personal use; (ii) a payment of $49,068 to pay the taxes on the income imputed to him in January 2003, atconnection with his use of our corporate aircraft for commuting purposes; (iii) attorneys fees of $19,684 incurred by Mr. Siebel's request, we cancelled approximately 26 million stock option shares heldLawrie and reimbursed by him for no consideration, as further described above. These stock options represented all options that had been granted to Mr. Siebel from October 1998 through October 2001 (the dateus in connection with the preparation, negotiation and execution of his last stock option grant). The total fair value (using the Black-Scholes option valuation model)offer letter and; (iv) fees of $8,800 paid by us to a country club for Mr. Lawrie’s use of the 26.0 million stock option shares cancelled was approximately $56.1 million atclub under our corporate membership. Mr. Lawrie resigned as Chief Executive Officer and as a director on April 12, 2005. The terms of Mr. Lawrie’s severance arrangements are described under “Employment, Severance and Change of Control Agreements—J. Michael Lawrie Separation and Consulting Agreement.”

Internal Pay Equity

The Committee also evaluates the time“internal pay equity” among our executives. This review includes an evaluation of cancellation.the relationship of compensation among different levels of management, including the relationship of the CEO’s compensation to the compensation of the other executive officers, and includes all key components of total compensation. The Committee believes that the relative differences between the compensation of the CEO and the other executive officers, and among the other executive officers, are appropriate.

Summary

The Committee’s Conclusions

The Committee believes that the total compensation of our executivesexecutive officers, including our CEO, is reasonable, appropriate and competitive with the executive compensation programs provided by other leading softwarehigh technology companies with which we compete for executives and employees.executive talent. The Committee believes its compensation strategy, principlesphilosophy, process and practices result in a compensation program tied to stockholder returnsvalue and linked to the achievement of our annual and longer-termlong-term financial and operational results on behalf of our stockholders.

Compensation Committee

John W. White, Chairman

Marc F. Racicot

Eric E. Schmidt Chairman
Marc F. Racicot
Charles R. Schwab

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our Compensation Committee are Messrs. White (Chairman) and Racicot, and Dr. Schmidt and Messrs. Schwab and Racicot.Schmidt. No member of this Committee was at any time during the year ended December 31, 2003,2004, or at any other time, an officer or employee of Siebel Systems. None of our executive officers has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our BoardBoard.

See "Certain“Certain Relationships and Related Transactions"Transactions” for a description of any transactions between Siebel Systems, members of the Compensation Committee and/or entities affiliated with members of the Compensation Committee.

UPDATE ON CORPORATE GOVERNANCE AND EXECUTIVE COMPENSATION INITIATIVES

As part of our ongoing commitment to aligningalign our corporate governance and executive compensation practices and policies with the stated interests of our stockholders, in 2004 we intend to instituteinstituted several new corporate governance and executive compensation initiatives, and in 2004,2005 we have further instituted, or intend to institute, several other corporate governance and executive compensation initiatives, including the following:

Performance-Based Executive Equity Grants

We intend

On January 5, 2005, the Compensation Committee of our Board of Directors established a performance stock program for 2005 (the “Performance Stock Plan”), pursuant to basewhich our executive officers and select other employees were granted restricted stock units (“RSUs”) under the Plans. Shares granted under the Performance Stock Plan will vest upon achievement of all or a specified portion of certain defined objective financial performance goals, or if the goals are not met, on the fourth anniversary of the grant date. Specifically, the Compensation Committee approved the following four performance goals for 2005 and 2006:

The revenue-based targets set forth above will be adjusted upward to incorporate any revenue from companies acquired during the relevant year (excluding the acquisition of edocs, Inc. in 2005) and the operating margin-based targets will be adjusted for the impact of any acquisitions and certain unusual charges (e.g., stock-based compensation, restructuring expenses, etc.).

These performance goals have been established for vesting purposes only and in no way are intended to estimate the actual levels of revenue or operating margin that we expect to achieve. Accordingly, these goals should not be interpreted to update or supersede our 2004 executive equity grantspreviously disclosed guidance on companyrevenue and operating margins or any guidance that we may provide in the future. Rather, these performance milestones. Specifically, we intendgoals are meant to structureincentivize our 2004 equity grantsemployees to Named Executive Officersoutperform our publicly disclosed guidance.

For each goal that is fully achieved, vesting will be accelerated for 25% of the total shares granted, such that the vesting of 20% of all option shares granted to Named Executive Officers in 2004 will be performance-based, such that they will accelerate upon the achievement of certain performance milestones. While we have not yet determined the parametershalf of such milestones, our intent is to tie such milestones to important quantitative metrics such asaccelerated shares will vest on January 31 of the Company's operating margin or revenue growthyear in 2004, measured over two or more quarters. If this approach is positivewhich the Compensation Committee determines that a goal has been met and effective, and doesthe remaining half will vest on January 31 of the following year. A similar performance-based plan for 2005 through which stock options, rather than RSUs, were issued was also adopted on January 5, 2005 for employees not adversely affect our business, and provided that option accounting or other laws or regulations do not change in a manner that would make this approach impracticable or detrimental incovered by the future, we plan to increase this measure to cover 50% of all option shares we grant to Named Executive Officers in 2005.Performance Stock Plan.

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Equity Run Rates

We believe it is important to issue an amount of employee equity grants that is consistent with our growth objectives and drives stockholder value. We also believe it is important that we give our stockholders a sense of our equity grant plans by publicly communicating our expected annual net dilution from employee equity grants. Accordingly, it is our intention that our target annual net Dilution Percentage be in the range of twoone to fourthree percent. However, this range could vary, potentially significantly, based on a variety of factors, including but not limited to our merger and acquisition activities, growth rates, executive hires, industry and market conditions, the competitive environment and the regulatory environment.

Option Repricing

While we believe that stock options are a critical cornerstone of our ability to recruit and motivate employees, we have a strong bias against repricing existing options. We have not repriced options in the past, and have no current intention to do so in the future. Absent any unforeseen circumstances, even though we reserve the right to reprice options, we do not anticipate that our bias against doing so will change.

Board Checks and Balances

In order to further strengthen our existing system of checks and balances, Mr. Siebel recommended to the Board, and the Board agreed, that the roles of Chairman and Chief Executive Officer would be separated effective May 4, 2004, on which date J. Michael Lawrie was appointed as our new Chief Executive Officer. We remain committed to the separation of these offices, and following Mr. Lawrie’s resignation as Chief Executive Officer on April 12, 2005, Mr. George T. Shaheen was appointed as our new Chief Executive Officer. Mr. Siebel continues as our Chairman of the Board. From time to time, we may also consider the adoption of other measures of creating additional diversification of corporate responsibilities.

Board and Committee Self EvaluationEvaluations

In addition, in order to facilitate our Board'sBoard’s and our Board Committees’ understanding of itstheir past performance, and itsto facilitate the identification of opportunities to enhance itstheir future performance, our Board intends to formalize ahas formalized and instituted an evaluation process that would allowenables each Board member to evaluate and comment upon the Board's performance. This process is expected to focus onBoard’s performance, as well as the Board's andperformance of the various Board Committees' performance as a whole, rather thanCommittees.

We are committed to continually improving our corporate governance practices. Please see the performance of individual Board or Committee members.

Stockholder Rights Plan

In 2003 we adopted a stockholder rights plan to protect the economic interestsCorporate Governance section of our stockholders. We planwebsite for further improvements to give stockholders an even more direct voice inour corporate governance practices throughout the future regarding this issue. Accordingly, if we decide to renew our stockholder rights plan following its expiration, we intend to first obtain stockholder approval.year at www.siebel.com/crm-company/investor_information/corporate_governance/index.shtm.⁴

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PERFORMANCE MEASUREMENT COMPARISON

This section is not "soliciting“soliciting material,"” is not deemed "filed"“filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

The following graph shows the total stockholder return of an investment of $100 in cash on December 31, 19981999 for (i) our common stock; (ii) the Nasdaq Computer & Data Processing Index; and (iii) the S&P 500 Index. All values assume reinvestment of the full amount of all dividends and are calculated as of December 31 of each year:

                                            Cumulative Total Return
                             ------------------------------------------------------
                                                                 Nasdaq Computer
            Measurement           Siebel
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG SIEBEL SYSTEMS, INC., THE S&P 500 and Data
              Period          Systems, Inc. (1)    Index (2)    Processing Index (2)
         -----------------   ------------------  ------------   -------------------
            12/31/1998                 $100.00       $100.00               $100.00
            06/30/1999                  195.40        112.38                125.44
            12/31/1999                  495.03        121.04                219.99
            06/30/2000                  963.91        120.53                177.31
            12/31/2000                  797.05        110.02                101.25
            06/29/2001                  552.78        102.66                 96.18
            12/31/2001                  329.78         96.95                 81.54
            06/28/2002                  167.60         84.19                 59.79
            12/31/2002                   87.22         75.52                 56.23
            06/28/2003                  111.77         84.40                 63.55
            12/31/2003                  164.07         97.18                 74.08

________________________

1. Assumes that $100.00 was invested on December 31, 1998, in our common stock, after giving effect to a 2-for-1 split of our common stock in each of November 1999 and September 2000, and at the closing sales price for our common stock on that date. No cash dividends have been declared on our common stock. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

2. Assumes that $100.00 was invested on December 31, 1998, in each index and that all dividends were reinvested. The Nasdaq ComputerAND THE NASDAQ COMPUTER & Data Processing Index is calculated by the Center for Research in Securities Prices. The S&P 500 Index is calculated by Standard & Poor's, a division of the McGraw-Hill Companies, Inc.DATA PROCESSING INDEX⁽¹⁾⁽²⁾

From our initial public offering in June 1996 to December 31, 2003,2004, the price of our common stock has increased from $1.06 to $13.92$10.49 per share as of December 31, 2003,2004, an increase of approximately 1,200%890%.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We previously entered into a sublease agreement and a time-sharing agreement with First Virtual Air, LLC (“First Virtual”), a company wholly-ownedwholly owned by our Chairman, Thomas M. Siebel, our Chairman, makesSiebel. Under these agreements, First Virtual made an aircraft that it leases available to us for business use. Through a sublease agreement between us and First Virtual Air, we incur certainWe incurred the costs associated with operatingthe operation and maintainingmaintenance of the aircraft, and we contractcontracted with third parties to perform the services related to this operation and maintenance. To the extent that Mr. Siebel usesused the aircraft for personal use, he has agreed to reimbursereimbursed us for theour operating and maintenance costs incurred by us related to such personal use. During 2003,At Mr. Siebel’s request, in October 2004 we terminated the sublease agreement and the time-sharing agreement and entered into a new time-sharing agreement whereby First Virtual Airincurs all costs associated with the operation and maintenance of the aircraft. We are permitted to use the aircraft for business travel on a time-sharing basis, and we reimburse First Virtual for their operating and maintenance costs relating to our use of the aircraft for business travel, if any. In 2004, through the date of termination of the earlier agreements, First Virtual reimbursed us for $345,000$276,099 of our operating and maintenance costs related to Mr. Siebel'sSiebel’s personal use of the aircraft. First Virtual also reimbursed us for certain excise taxes, insurance and equipment in the amount of $147,517 in 2004. We reimbursed First Virtual for $9,483 of their operating and maintenance costs related to our use of the aircraft for business travel under the new time-sharing agreement.

During 2003,2004, we leased two corporate aircraft and owned one aircraft. We operate and maintain these aircraft, contracting with third parties to perform the services related to this operation and maintenance. On a limited basis, certain of our officers have usedmay use these aircraft for personal use, and we report the standard industry fare level for all personal travel as income for these officers. We have also entered intohave an arrangement pursuant to which Mr. Siebel may use thethese aircraft for personal use, provided that he reimburses us for the operating costs, valued at fair market rates as determined by applicable rules, associated with this personal use. During 2003,2004, Mr. Siebel reimbursed us for $55,000$61,429 of our operating costs related to his nominal personal use of two of these aircraft.

Entities affiliated with Mr. Siebel lease office space at our principal offices, 2207 Bridgepointe Parkway, San Mateo, California 94404. During 2003,2004, Mr. Siebel reimbursed us $74,600$74,250 for the use of this office space.

We leased an apartment owned by Mr. Siebel at 2 Boulevard Suchet, Paris, France for certain business-related use associated with our European Executive-in-Residence program. This program was established in 1999 and providesprovided for members of our executive management team to relocate to Europe on a rotating basis in order to establish closer relationships with our European customers and partners. The lease rate for 20032004 was €1 per year. We have reflected the fair value of our use of this apartment, estimated at approximately $235,000,$261,000, as rent expense and addition to equity in the accompanyingour consolidated financial statements. In addition, during 2003 we reimbursed Mr. Siebel a total of $107,000 for rent owed by us as of December 31, 2002. Mr. Siebel did not use this apartment for any purpose during 2003.2004. We have terminated the European Executive-in-Residence program, and accordingly, in April 2005 we terminated our lease of this apartment.

We believe that the foregoing transactions were on terms no less favorable than could be obtained from unaffiliated third parties.

In 1996, Siebel Systems and Mr. Siebel were sued by a former employee. The lawsuit contained several causes of action that we believe were frivolous - frivolous—especially those filed against Mr. Siebel in his individual capacity as then Chief Executive Officer. We have a longstanding practice of vigorously defending ourselves and our officers against any and all frivolous claims, and this case was no exception. After receiving a favorable jury verdict in this case, a malicious prosecution lawsuit was filed against the plaintiff'splaintiff’s attorneys on behalf of Mr. Siebel. On May 6, 2004, the Court of Appeal ruled in Mr. Siebel'sSiebel’s favor, overturning a previous summary judgment ruling and reinstating the malicious prosecution lawsuit. The defendants petitioned the California Supreme Court for review of the appellate decision and the Supreme Court granted the Petition. Opening and Answer Briefs have been filed and we anticipate a hearing in front of the Supreme Court later this year. During 2003,2004, we incurred fees totaling approximately $143,000$147,090 in this matter. We believe that our principled strategy of seeking any and all means of redress to protect ourselves and our officers from meritless or malicious lawsuits has been highly beneficial to us, since we believe it has had and continues to have a strong deterrent effect on other potential plaintiffs and their attorneys who may be considering frivolous actions against us and our officers.

34

We are in the process of selling our portfolio of private equity securities to several third parties in a series of separate transactions. As part of this process, on March 31, 2005, we sold all of the shares of Satmetrix, Inc., a Delaware corporation (“Satmetrix”), held by us to Sutter Hill Ventures, A California Limited Partnership (“Sutter Hill Ventures”), for an aggregate purchase price of $3,300,000. James C. Gaither, a member of our Board of Directors, is a Managing Director of Sutter Hill Ventures and a member of the Board of Directors of Satmetrix. The purchase price paid by Sutter Hill Ventures was higher than the two previous offers we recently received from unaffiliated third parties in connection with their offers to purchase our portfolio of private equity securities.

We have entered into indemnity agreements with certain employees, officers and directors that provide, among other things, that we will indemnify such employee, officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as an employee, officer, director or other agent of Siebel Systems, and otherwise to the full extent permitted under Delaware law and our Bylaws.

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as "householding,"“householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are our stockholders will be "householding"“householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be "householding"“householding” communications to your address, "householding"“householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in "householding"“householding” and would prefer to receive a separate proxy statement and annual report on Form 10-K, please notify your broker, direct your written request to Siebel Systems, Inc., Investor Relations, 2207 Bridgepointe Parkway, San Mateo, California 94404, or investor.relations@siebel.com or contact Investor Relations at (650) 477-5000. Stockholders who currently receive multiple copies of the proxy statement and/or annual report on Form 10-K at their address and would like to request "householding"“householding” of their communications should contact their broker.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the annual meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.

May 21, 2004

April 29, 2005

A copy of our annual report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 20032004 is available without charge upon written request to: Corporate Secretary, Siebel Systems, Inc., 2207 Bridgepointe Parkway, San Mateo, California 94404.

35

APPENDIX A

SIEBEL SYSTEMS, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

The Audit Committee of the Board of Directors of Siebel Systems, Inc. (the "Committee") shall consist of a minimum of three directors. Members of the Committee shall be appointed by the Board of Directors upon the recommendation of the Nominating and Corporate Governance Committee and may be removed by the Board of Directors in its discretion. All members of the Committee shall be independent directors under the standard adopted by the Nasdaq National Market ("Nasdaq"). All members shall have sufficient financial experience and ability to enable them to discharge their responsibilities and at least one member shall be a financial expert.

The purpose of the Committee shall be to assist the Board of Directors in its oversight of the integrity of the financial statements of the Company, of the Company's compliance with legal and regulatory requirements, of the independence and qualifications of the independent auditor, and of the performance of the Company's internal audit function and independent auditors. The independent auditors shall report directly to the Committee.

In furtherance of this purpose, the Committee shall have the following authority and responsibilities:

The Committee shall meet separately at least quarterly with management, with the corporate audit staff and also with the Company's independent auditors.

The Committee shall have authority to retain such outside counsel, experts and other advisors as the Committee may deem appropriate in its sole discretion. The Committee shall have sole authority to approve related fees and retention terms.

The Company shall provide for appropriate funding, as determined by the Committee, for payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties and compensation to (a) the Company's independent auditors for the purpose of rendering or issuing an audit report and (b) to any outside advisors employed by the Committee pursuant to this Charter.

The Committee shall report its recommendations to the Board of Directors after each Committee meeting.

SIEBEL SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 23, 20048, 2005

The undersigned hereby appoints Thomas M. Siebel, J. Michael LawrieGeorge T. Shaheen and Kenneth A. Goldman and each of them, as attorneys-in-fact and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Siebel Systems, Inc. that the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Siebel Systems, Inc., to be held at the San Francisco Airport Marriott Hotel at 1770 South Amphlett Boulevard, San Mateo, California 944021800 Old Bayshore Highway, Burlingame, CA 94010 on Wednesday, June 23, 20048, 2005 at 11:00 a.m. Pacific time (and at any and all postponements, continuations and adjournments thereof), with all powers that the undersigned would possess if present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTEDFOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, ANDABSTAIN ON PROPOSAL 3, AS MORE SPECIFICALLY

DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.

(Continued and to be signed on other side)

Address Change/Comments (Mark the corresponding box on the reverse side)

FOLD AND DETACH HERE
Please mark

You can now access your vote as indicated in this exampleýSiebel Systems, Inc. account online.

Access your Siebel Systems, Inc. stockholder account online via Investor ServiceDirect ® (ISD).

Mellon Investor Services LLC, Transfer Agent for Siebel Systems, Inc., now makes it easy and convenient to get current information on your stockholder account.

• View account status

• View payment history for dividends

• View certificate history

• Make address changes

• View book-entry information

• Obtain a duplicate 1099 tax form

• Establish/change your PIN

Visit us on the web at http://www.melloninvestor.com

For Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time

Investor ServiceDirect ® is a registered trademark of Mellon Investor Services LLC

Mark Here for Address Change or Comments

PLEASE SEE REVERSE SIDE

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR PROPOSAL 1.

PROPOSAL 1: To elect fourthree directors to hold office until the 20072008 Annual Meeting of Stockholders.

NOMINEES: (01) C. Scott Hartz, (02) Charles R. Schwab, (03) George T. Shaheen, (04)John W. White

TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE'S NAME BELOW:

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR

PROPOSAL 2.

FOR AGAINST ABSTAIN

PROPOSAL 2: To ratify the selection of KPMG LLP as our independent auditors for the year ending December 31, 2004.

THE BOARD OF DIRECTORS RECOMMENDS ATO WITHHOLD AUTHORITY TO VOTE OFABSTAIN ON PROPOSAL 3.FOR ANY NOMINEE(S), WRITE SUCH NOMINEE’S NAME BELOW:

PROPOSAL 3: To vote on the stockholder proposal requesting that the Board of Directors adopt a policy of expensing the cost of future employeeChoose MLinkSM for fast, easy and director stock options in our annual income statement.

ELECTRONIC DELIVERY: Consenting to receive all future annual meeting materials and shareholder communications electronically is simple and fast. Enroll today atwww.melloninvestor.com/ISD for secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and other important shareholder correspondence.more. Simply log on to Investor ServiceDirect® at www.melloninvestor.com/isd where step-by-step instructions will prompt you through enrollment.

PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.

SIGNATURE(S)___________________________________________________ DATED ______________, 2004
Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each person should sign. Executors, administrators, trustees, guardians and attorneys-in-fact should add their titles. If signer is a corporation, please give full corporate name and have a duly authorized officer sign, stating title. If signer is a partnership, please sign in partnership name by a duly authorized person.

-Dated: , 2005

SIGNATURE(S)

             SIGNATURE(S)

PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.

IN THE ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.

? Detach here from proxy voting card -card. ?

Vote by Internet or Telephone or Mail

24 Hours a Day, 7 Days a Week

Internet and telephone voting is available untilthrough 11:59 p.m., PacificPM Eastern Time on June 22, 2004.7, 2005.

Your telephoneInternet or Internettelephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.

If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.

You can view the annual reportAnnual Report on Form 10-K and proxy statementProxy Statement on the Internetinternet at: http://www.siebel.com.www.siebel.com

VOTING INSTRUCTION CARD
DIRECTION GIVEN BY REGISTERED HOLDERS OF
EXCHANGEABLE SHARES OF SIEBEL JANNA ARRANGEMENT, INC.
FOR THE JUNE 23, 2004 ANNUAL MEETING OF
STOCKHOLDERS OF SIEBEL SYSTEMS, INC.

The undersigned, having read the Notice of Annual Meeting of Stockholders (the "Annual Meeting") of Siebel Systems, Inc., a Delaware corporation, to be held at the Marriott Hotel at 1770 South Amphlett Boulevard, San Mateo, California 94402 on Wednesday, June 23, 2004, at 11:00 a.m., Pacific time, the Proxy Statement dated May 21, 2004 and the accompanying Notice to Holders of Exchangeable Shares of Siebel Janna Arrangement, Inc., receipt of each is hereby acknowledged, does hereby instruct and direct Computershare Trust Company of Canada (the "Trustee") pursuant to the provisions of the Voting and Exchange Trust Agreement, dated as of November 14, 2000 and First Supplemental Trust Agreement to the Voting and Exchange Trust Agreement, dated October 18, 2002 (together, the "Trust Agreement"), among Siebel Systems, Inc., Siebel Janna Arrangement, Inc. and the Trustee, as follows:

(PLEASE NOTE: IF NO DIRECTION IS MADE AND YOU SIGN BELOW, THE TRUSTEE IS HEREBY AUTHORIZED AND DIRECTED TO VOTE FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, AND ABSTAIN ON PROPOSAL 3, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT AND AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING TO VOTE IN ITS DISCRETION.)

(Please select one of A or B)

A.  ¨ Exercise or cause to be exercised, whether by proxy given by the Trustee to a representative of Siebel Systems, Inc. or otherwise, the undersigned's voting rights at the Annual Meeting, or any postponement or adjournment thereof, as follows:

(Please complete the following only if you have selected Alternative A)

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR PROPOSAL 1.

PROPOSAL 1: To elect four directors to hold office until the 2007 Annual Meeting of Stockholders.

NOMINEES: (01) C. Scott Hartz, (02) Charles R. Schwab, (03) George T. Shaheen, (04)John W. White

TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE'S NAME BELOW:

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR PROPOSAL 2.

PROPOSAL 2: To ratify the selection of KPMG LLP as our independent auditors for the year ending December 31, 2004.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE OFABSTAIN ON PROPOSAL 3.

PROPOSAL 3: To vote on the stockholder proposal requesting that the Board of Directors adopt a policy of expensing the cost of future employee and director stock options in our annual income statement.

(If you have selected Alternative A, please go directly to the signature line on this page.)

B.¨ Deliver a proxy card to ___________________________ to act for and on behalf of the undersigned at the Annual Meeting with respect to all the exchangeable shares of Siebel Janna Arrangement, Inc. held by the undersigned on the record date for the Annual Meeting with all the powers that the undersigned would possess if present and acting thereat including the power to exercise the undersigned's voting rights at the Annual Meeting or any postponement or adjournment thereof.

Executed on this _____ day of _____________, 2004.

NOTES:

NOTICE TO HOLDERS OF EXCHANGEABLE SHARES

Our records show that, as of April 29, 2004,18, 2005, the record date for the determination of holders of exchangeable shares, you owned exchangeable shares of Siebel Janna Arrangement, Inc., an Ontario corporation. The exchangeable shares provide you with economic and voting rights which are, as nearly as practicable, equivalent to those of holders of shares of common stock of Siebel Systems, Inc., a Delaware corporation (the "Company"“Company”), the U.S. parent of Siebel Janna Arrangement, Inc., including the right to attend and vote at meetings of the common stockholders of the Company. The Company will be holding its Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”) on June 23, 2004, to:8, 2005, to (1) elect fourthree directors to hold office until the 20072008 Annual Meeting of Stockholders;Stockholders and (2) ratify the appointmentselection of KPMG LLP as the Company'sCompany’s independent auditors for the year ending December 31, 2004; and (3) vote on the stockholder proposal requesting that the Board adopt a policy of expensing the cost of future employee and director stock options in our annual income statement.2005.

At such Annual Meeting you will have voting rights, as described below, equal to the number of exchangeable shares you hold. You are permitted to instruct Computershare Trust Company of Canada, the Trustee under the Voting and Exchange Trust Agreement among the Company, Siebel Janna Arrangement, Inc. and the Trustee, as supplemented, as to how the Trustee is to vote your exchangeable shares at the Annual Meeting. If you do not give voting instructions, the Trustee will not be entitled to exercise the voting rights attached to your exchangeable shares. Alternatively, you may instruct the Trustee to give you or a person designated by you a proxy to exercise the voting rights attached to your exchangeable shares during the meeting. The Trustee will then deposit this proxy with the Company. If you do not instruct the Trustee to give you or your designee a proxy, you or the person designated by you will not be entitled to vote during the meeting. The proxy should be signed by the person whose name appears on the voting instruction form provided to the Trustee. Signed proxies received from persons named in a properly completed voting instruction form prior to the close of voting will be counted.

To instruct the Trustee as to how you wish to exercise your voting rights, you must complete, sign, date and return the enclosed Voting Instruction Card to the Trustee by 5:00 p.m., Toronto time, on June 21, 20046, 2005 or if the Annual Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjourned Annual Meeting. A return envelope (which is postage prepaid if mailed in Canada) is enclosed for that purpose. Whether or not you expect to attend the annual meeting,Annual Meeting, please sign, date and return the Voting Instruction Card in the envelope provided to ensure that your exchangeable shares will be represented at the Annual Meeting.

You have the right to revoke any instructions to the Trustee by giving written notice of revocation to the Trustee or by executing and delivering to the Trustee a later-dated Voting Instruction Card. No notice of revocation or later-dated Voting Instruction Card, however, will be effective unless received by the Trustee prior to 5:00 p.m., Toronto time, on June 21, 20046, 2005 or if the Annual Meeting is adjourned, 48 hours (excluding Saturdays and holidays) before any adjourned Annual Meeting.

Non-Registered Holders

Only registered holders of exchangeable shares of Siebel Janna Arrangement, Inc. are permitted to instruct the Trustee as to how to vote their exchangeable shares at the Annual Meeting or to attend and vote at the Annual Meeting by proxy as described above. You may be a beneficial owner of exchangeable shares (a "Non-Registered Holder"“Non-Registered Holder”) if your exchangeable shares are registered either:

The Company has distributed copies of the Notice of Annual Meeting, the Proxy Statement dated May 21, 2004April 29, 2005 and the Notice to Holders of Exchangeable StockholdersShares (collectively, the "Meeting Materials"“Meeting Materials”) to Intermediaries who are required to forward these Meeting Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. If you are a Non-Registered Holder who has not waived the right to receive Meeting Materials you will be given either:

The purpose of these procedures is to permit you, as a Non-Registered Holder, to direct the voting of the exchangeable shares you beneficially own or to attend and vote at the Annual Meeting. Non-Registered Holders should carefully follow the instructions of their Intermediaries and their service companies.

A Non-Registered Holder may revoke a Voting Instruction Card or a voting instruction form given to an Intermediary at any time by written notice to the Intermediary, except that an Intermediary is not required to act on a revocation of a Voting Instruction Card or a voting instruction form that is not received by the Intermediary at least seven calendar days prior to the Annual Meeting.

Information relating to the Company

Exchangeable shares are exchangeable on a one-for-one basis for shares of common stock of the Company and, among other things, you, as a holder of exchangeable shares, are entitled to receive dividends from Siebel Janna Arrangement, Inc. payable at the same time as and equivalent to, on a per-share basis, any dividends paid by the Company to holders of its shares of common stock. As a result of the economic and voting equivalency between the exchangeable shares and shares of common stock of the Company, you, as a holder of exchangeable shares, will have a participating interest determined by reference to the Company and not Siebel Janna Arrangement, Inc. (i.e., the value of exchangeable shares is dependent on the assets and operations of the Company and not Siebel Janna Arrangement, Inc.). Accordingly, it is information relating to the Company that is relevant to you, and enclosed in this package is the Company'sCompany’s Proxy Statement for the Annual Meeting of Stockholders to be held on June 23, 2004,8, 2005, which you should read carefully.

San Mateo, California
May 21, 2004

April 29, 2005

VOTING INSTRUCTION CARD

DIRECTION GIVEN BY REGISTERED HOLDERS OF

EXCHANGEABLE SHARES OF SIEBEL JANNA ARRANGEMENT, INC.

FOR THE JUNE 8, 2005 ANNUAL MEETING OF

STOCKHOLDERS OF SIEBEL SYSTEMS, INC.

The undersigned, having read the Notice of Annual Meeting of Stockholders (the “Annual Meeting”) of Siebel Systems, Inc., a Delaware corporation, to be held at the San Francisco Airport Marriott at 1800 Old Bayshore Highway, Burlingame, CA 94010 on Wednesday, June 8, 2005, at 11:00 a.m., Pacific time, the Proxy Statement dated April 29, 2005 and the accompanying Notice to Holders of Exchangeable Shares of Siebel Janna Arrangement, Inc., receipt of each is hereby acknowledged, does hereby instruct and direct Computershare Trust Company of Canada (the “Trustee”) pursuant to the provisions of the Voting and Exchange Trust Agreement, dated as of November 14, 2000 and First Supplemental Trust Agreement to the Voting and Exchange Trust Agreement, dated October 18, 2002 (together, the “Trust Agreement”), among Siebel Systems, Inc., Siebel Janna Arrangement, Inc. and the Trustee, as follows:

(PLEASE NOTE: IF NO DIRECTION IS MADE AND YOU SIGN BELOW, THE TRUSTEE IS HEREBY AUTHORIZED AND DIRECTED TO VOTE FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT AND AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING TO VOTE IN ITS DISCRETION.)

(Please select one of A or B)

(Please complete the following only if you have selected Alternative A)

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR PROPOSAL 1.

PROPOSAL 1:  To elect three directors to hold office until the 2008 Annual Meeting of Stockholders.

¨ FOR all nominees listed below (except as indicated to the contrary below)

¨ WITHHOLD AUTHORITY to vote for all nominees listed below

NOMINEES:  (01) Thomas M. Siebel, (02) James C. Gaither, (03) Marc F. Racicot

TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE’S NAME BELOW:

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR PROPOSAL 2.

PROPOSAL 2:  To ratify the selection of KPMG LLP as our independent auditors for the year ending December 31, 2005.

¨ FOR

¨ AGAINST

¨ ABSTAIN

(If you have selected Alternative A, please go directly to the signature line on this page.)

Executed on thisday of, 2005.

Signature:

Print Name:

Signature:

Print Name:

NOTES: