Electronic Arts 2006 Annual Report Download - page 56

rights have been made to date under the Equity Plan. A participant may hold more than one award
granted under the Equity Plan.
Administration
The Equity Plan is administered by our Compensation Committee. All of the members of the
Compensation Committee are ""non-employee'' and ""independent directors'' under applicable federal
securities laws and the NASDAQ National Market listing requirements and ""outside directors'' as deÑned
under applicable federal tax laws. The Compensation Committee has the authority to construe and
interpret the Equity Plan, grant awards and make all other determinations necessary or advisable for the
administration of the Equity Plan. The members of the Compensation Committee receive no compensation
for administering the Equity Plan other than their compensation for being Board and Committee members.
The Company bears all expenses in connection with administration of the Equity Plan and has agreed to
indemnify members of the Compensation Committee in connection with their administration of the Equity
Plan. The Compensation Committee may delegate to one or more oÇcers of the Company the authority to
grant Awards under the Equity Plan to participants who are not executives of the Company.
Stock Options
Stock options granted under the Equity Plan may be either incentive stock options or nonqualiÑed stock
options. The exercise period of stock options is determined by the Compensation Committee but, in no
event, may stock options be exercisable more than ten years from the date they are granted. The Equity
Plan provides the Compensation Committee with the ability, at its discretion, to grant performance-based
options subject to the achievement of one or more of the performance factors described under the heading
""Performance Factors'' below.
Exercise Price; No Repricings
The Compensation Committee determines the exercise price of each option granted under the Equity Plan.
The option exercise price for each incentive and nonqualiÑed stock option share 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
stock option is granted. In the case of an incentive stock option granted to a stockholder that owns more
than 10% of the total combined voting power of all classes of stock of EA or any parent or subsidiary of
EA (a ""Ten Percent Stockholder''), the exercise price for each such incentive stock option must be no
less than 110% of the fair market value of a share of common stock at the time the incentive stock option
is granted. Pursuant to an amendment to the Equity Plan approved by the Board of Directors in February
2002, the exercise price of outstanding options issued under the Equity Plan may not be reduced without
stockholder approval.
The exercise price of options and purchase price of shares granted under the Equity Plan may be paid as
approved by the Compensation Committee at the time of grant: (a) in cash (by check); (b) by
cancellation of indebtedness of the Company to the award holder; (c) by surrender of shares that either:
(1) have been owned by the award holder for more than six (6) months and have been paid for within the
meaning of SEC Rule 144; or (2) were obtained by the award holder in the public market; (d) by waiver
of compensation due or accrued for services rendered; (e) with respect only to purchases upon exercise of
an option, and provided that a public market for the Company's stock exists: (1) subject to applicable
laws, by a ""same-day sale'' commitment from the optionee and a National Association of Securities
Dealers, Inc. (""NASD'') broker; or (2) by a ""margin'' commitment from the optionee and an NASD
broker; (f) by withholding from the shares to be issued upon exercise of an award that number of shares
having a fair market value equal to the minimum amount required to satisfy the exercise price or purchase
price; (g) by any combination of the foregoing; or (h) such other consideration and method of payment
for issuance of shares to the extent permitted by applicable laws.
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