Electronic Arts 2007 Annual Report Download - page 33

Committee over the applicable performance period. The performance goals that may be selected by the
Compensation Committee include one or more of the following: cash flow (including operating cash flows or
free cash flow), revenue (on an absolute basis or adjusted for currency effects), gross margin, operating
expenses or operating expenses as a percentage of revenue, earnings (which may include earnings before
interest and taxes, earnings before taxes, and net earnings, and may be determined in accordance with GAAP
or revised to reflect any or all non-GAAP adjustments), earnings per share (on a GAAP or non GAAP basis),
growth in any of the foregoing measures, stock price, return on equity or average stockholders’ equity, total
stockholder return, growth in stockholder value relative to the moving average of the S&P 500 Index or
another index, return on capital, return on assets or net assets, return on investment, economic value added,
operating income, operating profit, controllable operating profit, or net operating profit, net profit, net income,
operating margin, cash conversion cycle, market share, contract awards or backlog, overhead or other expense
reduction, credit rating, strategic plan development and implementation, succession plan development and
implementation, improvement in workforce diversity, customer indicators, new product invention or innovation,
attainment of research and development milestones, improvements in productivity, attainment of objective
operating goals and employee metrics.
The performance goals may be measured either on an absolute basis or relative to a pre-established target, to a
previous period’s results, or to a designated comparison group and may differ for each participant. For
example, the Compensation Committee may appropriately adjust any evaluation of performance under a
performance goal to exclude any of the following events that occurs during a performance period: the effects
of currency fluctuations; any or all adjustments that are reflected in the calculation of non-GAAP earnings as
presented in any Electronic Arts press release or Form 8-K filing relating to an earnings announcement; asset
write-downs; litigation or claim judgments or settlements; the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported results; accruals for reorganization and
restructuring programs; and any other extraordinary or non-operational items. Additionally, the Compensation
Committee may decide to ignore the effect of mergers or acquisitions in their evaluation of performance goals.
The Compensation Committee will establish the performance goals with respect to each participant in writing
not later than 90 days after the commencement of the period of service to which the performance goals relate,
provided that the outcome of the performance goals is substantially uncertain at the time of their establish-
ment. A performance period shall generally be a fiscal year, but may also be any such other period of time as
determined in the sole and absolute discretion of the Compensation Committee.
Determination of Bonuses. As soon as practicable after the end of each performance period, the Compensa-
tion Committee will certify in writing the extent to which the pre-established performance goals actually were
achieved and the amount of the bonus to be paid. The Compensation Committee reserves the discretion to
reduce or eliminate any actual award under the Bonus Plan. The payment of a cash bonus under the Executive
Bonus Plan requires that the participant be actively employed when the bonus is paid. The Compensation
Committee, however, may make exceptions to the general rule that a participant must be actively employed
when a cash bonus is payable in the case of retirement, death or disability, or in the event of a change in
control. Additionally, if a participant incurs a change in status that results in him or her being ineligible to
participate in this Plan during a performance period, he or she may receive a pro-rated bonus (as determined
at the end of the performance period to which such bonus relates). The method in which a bonus is pro-rated
is determined in the sole discretion of the Compensation Committee.
Payment of Bonuses. All awards will be paid in cash as soon as is practicable after the Compensation
Committee has certified that the applicable performance goals have been achieved, determined the bonus
amounts, and authorized the payment of the corresponding bonuses, but in no event later than 21⁄2months after
the end of the calendar year in which the applicable performance period ends. Receipt of a bonus may be
deferred, however, to the extent a participant has made a timely election to defer payment and pursuant to the
terms and conditions of the Electronic Arts Inc. Deferred Compensation Plan or any successor plan and in
compliance with Section 409A of the Code.
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