Electronic Arts 2006 Annual Report Download - page 61
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Tax Treatment of the Company
The Company generally will be entitled to a deduction in connection with the exercise of a NQSO or a
SAR by a participant, or the receipt by the participant of restricted stock or restricted stock unit award, to
the extent that the participant recognizes ordinary income and the Company properly reports such income
to the Internal Revenue Service (the ""IRS''). The Company will be entitled to a deduction in connection
with the disposition of ISO Shares only to the extent that the participant recognizes ordinary income on a
disqualifying disposition of the ISO Shares, provided that the Company properly reports such income to
the IRS.
ERISA
The Equity Plan is not subject to any of the provisions of the Employee Retirement Income Security Act
of 1974 and is not qualiÑed under Section 401(a) of the Code.
Outstanding Options Under the Equity Plan
As of March 31, 2006, 16,648,892 shares had been issued pursuant to exercises of stock options under the
Equity Plan by award recipients, 6,824 persons held NQSOs under the Equity Plan to purchase an
aggregate of 32,680,850 shares of common stock, with a weighted average exercise price of $44.28 per
share, 2,284 persons held restricted stock units to acquire 645,910 shares, and there were 17,424,348 shares
of common stock available for future awards under the Equity Plan. An aggregate of 67,400,000 shares of
the Company's authorized common stock have been reserved for issuance under the Equity Plan.
Proposed Amendments to the Equity Plan
Proxy Statement
At the 2006 Annual Meeting, stockholders will be asked to approve amendments to the Equity Plan as
follows:
‚ Increase by 11 million shares the limit on the total number of shares underlying awards of
restricted stock and restricted stock units that may be granted under the Equity Plan Ì from
4 million to 15 million; and
‚ Provided that the stockholders approve Proposal 2 (""Approval of The Exchange Program'') set
forth in the proxy statement prepared in connection with our 2006 Annual Meeting of Stockholders,
we will amend the Equity Plan to limit the number of shares subject to options surrendered and
cancelled in the Exchange Program that will be available for issuance under the Equity Plan to
7 million plus the number of shares necessary for the issuance of the restricted stock rights to be
granted in connection with the Exchange Program.
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