Electronic Arts 2005 Annual Report Download - page 48

Performance Factors
If the amendments to the Equity Plan are approved, the Compensation Committee would have the ability to
grant in its sole discretion performance-based stock options, stock appreciation rights, restricted stock and
restricted stock unit awards with vesting and/or exercisability conditioned on one or more of the following
permissible performance factors, to be measured over a speciÑed performance period that may be as short as a
quarter or as long as Ñve years (unless tied to a speciÑc and objective milestone or event), to the extent
applicable on an absolute basis or relative to a pre-established target: (a) net revenue; (b) earnings before
interest, income taxes, depreciation and amortization; (c) operating income; (d) operating margin; (e) net
income; (f) earnings per share; (g) total stockholder return; (h) the Company's stock price; (i) growth in
stockholder value relative to a pre-determined index; (j) return on equity; (k) return on invested capital;
(l) operating cash Öow; (m) free cash Öow; (n) economic value added; and (o) individual conÑdential
business objectives. In addition, the Committee would, in its sole discretion, have the ability, in recognition of
unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules,
to provide for one or more equitable adjustments (based on objective standards) to the performance factors to
preserve the Committee's original intent regarding the performance factors at the time of the initial award
grant.
Mergers, Consolidations, Change of Control
Except for automatic grants to non-employee Directors, in the event of a merger, consolidation, dissolution or
liquidation of EA, the sale of substantially all of its assets or any other similar corporate transaction, the
successor corporation may assume, replace or substitute equivalent awards in exchange for those granted
under the Equity Plan or provide substantially similar consideration, shares or other property as was provided
to our stockholders (after taking into account the provisions of the awards). In the event that the successor
corporation does not assume, replace or substitute awards, such awards will accelerate and all options will
become exercisable in full prior to the consummation of the transaction at the time and upon the conditions as
the Compensation Committee determines. Any awards not exercised prior to the consummation of the
transaction will terminate.
Transferability
Incentive stock options granted under the Equity Plan are not transferable other than by means of a
distribution upon the optionee's death. NonqualiÑed stock options, restricted stock and restricted stock unit
awards, and, if approved, stock appreciation rights are or would be subject to similar restrictions on transfer
unless otherwise determined by the Compensation Committee and except that nonqualiÑed stock options may
be transferred to family members and trusts or foundations controlled by, or primarily beneÑting, family
members of the optionee.
Term of the Equity Plan
Unless terminated earlier as provided in the Equity Plan, the Equity Plan expires in 2010, ten (10) years from
the date it was adopted by the Board of Directors.
United States Federal Income Tax Information
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATE-
MENT OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THE COM-
PANY AND PARTICIPANTS UNDER THE EQUITY PLAN. THE FEDERAL TAX LAWS MAY
CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PAR-
TICIPANT WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. IN ADDI-
TION, THE INTERNAL REVENUE SERVICE COULD, AT ANY TIME, TAKE A POSITION
CONTRARY TO THE INFORMATION DESCRIBED IN THE FOLLOWING SUMMARY. ANY
TAX EFFECTS THAT ACCRUE TO FOREIGN PARTICIPANTS AS A RESULT OF PARTICIPAT-
ING IN THE EQUITY PLAN ARE GOVERNED BY THE TAX LAWS OF THE COUNTRIES IN
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