Electronic Arts 2007 Annual Report Download - page 32

PROPOSAL 4. APPROVAL OF THE ELECTRONIC ARTS INC. EXECUTIVE BONUS PLAN
In May 2007, the Board unanimously approved, subject to stockholder approval, the Electronic Arts Inc.
Executive Bonus Plan (the “Executive Bonus Plan”) and directed that the Executive Bonus Plan be submitted
to our stockholders at the Annual Meeting. Stockholder approval of the Executive Bonus Plan will allow
bonuses paid under it to be considered “performance-based compensation” within the meaning of Sec-
tion 162(m) of the Code and therefore fully deductible by Electronic Arts for federal income tax purposes.
The Board believes that it is in the best interests of Electronic Arts and its stockholders to ensure that bonuses
paid to covered employees (as defined in Section 162(m)) who are participants are fully deductible by
Electronic Arts for federal income tax purposes. For purposes of Section 162(m), a covered employee is any
employee of ours if, as of the close of our taxable year, such employee is our principal executive officer (or an
individual acting in such a capacity) or if the total compensation of such employee for that taxable year is
required to be reported to our stockholders under applicable securities rules by reason of such employee being
among the three highest compensated officers for the taxable year (other than our principal executive officer or
the principal financial officer). Accordingly, Electronic Arts has structured the Executive Bonus Plan to satisfy
the requirements of Section 162(m) of the Code for “performance-based” compensation.
Stockholders are requested to approve the adoption of the Executive Bonus Plan. If the Executive Bonus Plan
is approved by the stockholders, compensation paid by Electronic Arts pursuant to the Executive Bonus Plan,
beginning with our 2008 fiscal year, to covered employees will not be subject to the corporate compensation
deduction limits set forth in Section 162(m) of the Code. If the Executive Bonus Plan is not approved by our
stockholders, it will not become effective.
Summary of the Executive Bonus Plan
The following paragraphs provide a summary of the principal features of the Executive Bonus Plan. The
Executive Bonus Plan is attached to this proxy statement as Appendix C. This summary is qualified in its
entirety by the Executive Bonus Plan.
Purpose. The purpose of the Executive Bonus Plan is to provide eligible employees with incentive
compensation based upon the level of achievement of financial, business and other performance criteria. It is
intended that bonuses awarded under the Executive Bonus Plan to covered employees will qualify as
deductible “performance-based compensation” within the meaning of Section 162(m) of the Code.
Eligibility. Eligible participants in the Executive Bonus Plan are senior executives of Electronic Arts or of an
affiliate who are chosen solely at the discretion of the Compensation Committee. It is expected that
participation in the Executive Bonus Plan will generally be limited to our CEO and those executives who
directly report to our CEO.
Administration. The Executive Bonus Plan will be administered by our Compensation Committee (or a
subcommittee thereof), which is comprised solely of two or more “outside” directors (within the meaning of
Section 162(m)). The Compensation Committee has the authority, in its discretion, to make any and all
decisions regarding the administration of the Executive Bonus Plan, including selecting employees eligible to
receive awards, establishing performance goals and maximum bonus awards for each participant, construing
and interpreting the terms of the Executive Bonus Plan and bonuses awarded thereunder, decreasing, paying or
declining to pay bonuses under the Executive Bonus Plan, and establishing additional terms, conditions, rules,
or procedures for the administration of the Executive Bonus Plan. All determinations of the Compensation
Committee that are not inconsistent with the Executive Bonus Plan will be final and binding on all persons.
Establishment of Bonuses. Each performance period, the Compensation Committee will select the individu-
als to participate in the Executive Bonus Plan, assign each participant a maximum award level and establish
the performance goal or goals that must be achieved before an award actually will be paid to the participant.
Bonuses are payable in cash.
Performance Goals. Under the Executive Bonus Plan, participants will be eligible to receive cash awards
based upon the attainment and certification of certain performance goals established by the Compensation
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Proxy Statement