Electronic Arts 2005 Annual Report Download - page 37

immediately vest in connection with certain changes in control or ownership of the Company, unless the
successor company assumes or replaces those options. In February 2001, prior to becoming an executive
oÇcer of EA, Dr. Florin entered into an agreement with us setting forth the terms and conditions of his
employment. The agreement contained standard terms and conditions generally applicable at that time to all
full-time employees in the UK. In addition, the agreement provided for: (i) Dr. Florin's salary at the time
(which has been superseded by subsequent salary increases not reÖected in the agreement); (ii) use of a
company car and a fuel allowance (in accordance with company policy, this beneÑt is generally available to all
senior employees and members of management resident in the UK); (iii) a notice of termination of
employment period of six months plus one week for each year of employment with EA, up to a maximum of
twelve additional weeks; and (iv) a six-month non-solicitation period following the termination of Dr. Florin's
employment during which he is prohibited from enticing away from us any member of our senior management
or our sales and development staÅ.
The following is the Report of the Compensation Committee describing the compensation policies applicable
to EA's executive oÇcers. This information shall not be deemed to be ""soliciting material'' or to be ""Ñled''
with the Securities and Exchange Commission nor shall this information be incorporated by reference into any
future Ñling under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that EA speciÑcally incorporates it by reference into a Ñling.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Responsibilities and Composition of the Compensation Committee
In February 2003, the Board of Directors adopted the Compensation Committee's charter, which reÖects the
Proxy Statement
Committee's responsibilities and which provides that all members must be ""independent'', as deÑned in
applicable regulations and listing standards. During Ñscal 2005, the Compensation Committee consisted of
M. Richard Asher, William J. Byron and Robert W. Pittman. None of these members is a current or past
employee of EA or any of its subsidiaries, nor are any of them eligible to participate in any of the executive
compensation programs of the Company except through automatic formulaic grants pursuant to either the
2000 Equity Incentive Plan or Directors' Plan. In addition, each meets the deÑnition of ""Outside Director'' for
the purposes of administering the compensation programs to meet the tax deductibility criteria under
Section 162(m) of the Internal Revenue Code, and the deÑnition of ""independent director'' under applicable
Nasdaq Marketplace rules.
The Compensation Committee reviews and approves the compensation philosophy and programs for EA's
executives. In Ñscal 2005, the Compensation Committee reviewed and approved the salaries, bonuses and
equity compensation of each of EA's executive oÇcers, other than the Chief Executive OÇcer whose salary,
bonus and equity compensation were reviewed by the Compensation Committee and approved by the
independent members of the Board of Directors after discussing the Compensation Committee's recommen-
dation. The Compensation Committee also administers the Company's equity compensation plans and the
bonus plan for executive oÇcers and all signiÑcant or non-standard equity grants for other employees. During
Ñscal 2005, the Compensation Committee engaged in extensive reviews of long-term incentive compensation
strategies in light of potential stock option expensing, responsible dilution management, and a desire to
continue to eÅectively attract, motivate and retain key talent. During the course of these reviews, the
Compensation Committee evaluated the merits of several alternatives for delivering long-term incentives.
The Compensation Committee meets at scheduled times throughout the year and also takes action by written
consent, often after informal telephone discussions amongst the members of the Committee. The Compensa-
tion Committee met seven times in Ñscal 2005. The Company's Human Resources and Legal Departments
support the Committee in its work. In addition, the Compensation Committee has the authority to engage the
services of outside advisors. During Ñscal 2005, the Compensation Committee engaged an independent
compensation consulting Ñrm as an advisor and resource to assist the Committee in its review of the
compensation for executive oÇcers and other elements of the Company's total compensation strategy.
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