Electronic Arts 2005 Annual Report Download - page 47

Board of Directors is granted an option to purchase 25,000 shares of common stock. Upon re-election to our
Board of Directors following each annual meeting of our stockholders, each non-employee Director is
automatically granted an additional option to purchase 10,000 shares of common stock. If a non-employee
Director has not served on our Board of Directors for a full year at the time of the annual meeting of our
stockholders, such Director will receive a pro-rated annual grant.
Options issued to outside Directors upon their initial election to the Board are exercisable as to 2% of the
shares on the date of grant and as to an additional 2% of the shares on the Ñrst day of each calendar month
after the date of grant so long as the outside Director continues as a member of the Board. The vesting
schedule for annual grants made to Directors upon their re-election to the Board is subject to the discretion of
the Compensation Committee.
In the event of our dissolution or liquidation or a ""change in control'' transaction, options granted to our non-
employee Directors under the Equity Plan will become 100% vested and exercisable in full.
In addition, our non-employee Directors may elect to receive all or a portion of their cash compensation in
shares of common stock. Directors making this election are entitled to receive shares having a value equal to
110% of the amount of the cash compensation foregone.
Stock Appreciation Rights
As proposed to be amended, the Compensation Committee would have the ability to grant stock appreciation
rights (a ""SAR'' or ""SARs'') as stand-alone awards or in addition to, or in tandem with, other awards under
the Equity Plan under such terms, conditions and restrictions as the Compensation Committee may
determine. A SAR is an award which provides the holder with the right to receive the appreciation in value of
Proxy Statement
a set number of shares of company stock over a set period of time. A SAR is similar to an option in that the
holder beneÑts from any increases in stock price above the exercise price set forth in the award agreement.
However, unlike an option, the holder is not required to pay an exercise price to exercise a SAR, but simply
receives the net amount of the increase in stock price in the form of cash or stock. The exercise price for a
SAR must be no less than 100% of the ""fair market value'' (as deÑned in the Equity Plan) of a share of
common stock at the time the SAR is granted. In addition, the Compensation Committee would have the
ability, at its discretion, to subject SARs to the achievement of one or more of the performance factors
described under the heading ""Performance Factors'' below.
Restricted Stock Awards
The Compensation Committee may grant restricted stock awards either in addition to, or in tandem with,
other awards under the Equity Plan under such terms, conditions and restrictions as the Compensation
Committee may determine. A restricted stock award is an oÅer by Electronic Arts to award shares of common
stock that are subject to restrictions established by the Compensation Committee. These restrictions may be
based upon completion by the award holder of a speciÑed number of years of service or by the attainment of
one or more of the performance factors described under the heading ""Performance Factors'' below. The
purchase price, if any, for each such award is determined by the Compensation Committee at the time of
grant. In the case of an award to a Ten Percent Stockholder, the purchase price must be 100% of fair market
value. The purchase price, if any, may be paid for in any of the forms of consideration listed in items under
""Exercise Price'' above, as are approved by the Compensation Committee at the time of grant.
Restricted Stock Units
The Compensation Committee may grant restricted stock unit awards either in addition to, or in tandem with,
other awards under the Equity Plan under such terms, conditions and restrictions as the Compensation
Committee may determine. A restricted stock unit award is similar to a restricted stock award (and, if the
amendments to the Equity Plan are approved, could be awarded subject to any or all of the performance goals
established by the Committee described below), except the stock is not delivered to the participant unless and
until all restrictions have terminated.
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