Electronic Arts 2007 Annual Report Download - page 172

granted during fiscal year 2005. The total grant date fair value of restricted stock rights that vested during
fiscal year 2007 was $10 million. There were no restricted stock rights that vested during fiscal years 2006
and 2005.
At our Annual Meeting of Stockholders, held on July 27, 2006, our stockholders approved amendments to the
Equity Plan to (1) 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 — from 4 million to
15 million shares, and (2) to limit the number of shares subject to options surrendered and cancelled in the
Exchange Program that will again become 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.
Exchange Program
At our Annual Meeting of Stockholders, held on July 27, 2006, our stockholders approved a voluntary
program (the “Exchange Program”) to permit our eligible employees to exchange certain outstanding stock
options that were significantly “underwater” (that is, the exercise price is greater than the trading price of our
common stock) for a lesser number of shares of restricted stock rights to be granted under the Equity Plan.
The Exchange Program commenced on August 16, 2006 and ended on September 15, 2006.
The Exchange Program was open to all of our employees who were employed by us on August 16, 2006 and
were still employed on the date on which the tendered options were cancelled and restricted stock rights were
granted except (1) our “named executive officers” identified in our 2006 Annual Proxy Statement, (2) members
of our Board of Directors, and (3) employees who resided in China, Belgium and Denmark, due to restrictions
arising under the local laws of those countries.
Option grants that had an exercise price per share equal to or greater than the “threshold price” were
considered “eligible options”. The threshold price was $61.66, which represented 125 percent of the five-
business day average closing price of our common stock prior to August 16, 2006, as reported on the
NASDAQ Global Select Market, which was $49.324. Due to local tax law restrictions, certain options granted
to United Kingdom employees were not eligible for exchange. Excluded from the offer were any option grants
for fewer than five shares.
Eligible options exchanged under the program were cancelled in exchange for restricted stock rights following
the expiration of the offer. For restricted stock rights issued in exchange for unvested options, compensation
expense is recorded based on the grant-date fair value of the options tendered over their remaining original
vesting period of those options. Restricted stock rights issued in connection with the Exchange Program vest
over a period of up to three years.
The Exchange Program resulted in options to purchase approximately 1,779,000 shares of our common stock
being exchanged for approximately 445,000 shares of restricted stock rights. In connection with the Exchange
Program, a net total of 1,334,000 shares of common stock were returned to the Equity Plan for future
issuance.
Employee Stock Purchase Plan
Since September 1991, we have offered our employees the ability to participate in an employee stock purchase
plan. Pursuant to our current plan, the 2000 Employee Stock Purchase Plan (“ESPP”), eligible employees may
authorize payroll deductions of up to 10 percent of their compensation to purchase shares at 85 percent of the
lower of the fair market value of the common stock on the date of commencement of the offering or on the
last day of each six-month purchase period.
At our Annual Meeting of Stockholders, held on July 27, 2006, our stockholders approved an amendment to
the ESPP to increase the number of shares authorized under the ESPP by 1.5 million. As of March 31, 2007,
we had 3 million shares of common stock reserved for future issuance under the ESPP.
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