Electronic Arts 2006 Annual Report Download - page 57

Outside Directors
Our non-employee directors are entitled to receive automatic annual grants of options to purchase shares
of our common stock under the Equity Plan. Each non-employee director who Ñrst becomes a member of
the 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
The Compensation Committee may grant stock appreciation rights (a ""SAR'' or ""SARs'') as stand-alone
Proxy Statement
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 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 may, at its discretion, 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
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