Electronic Arts 2007 Annual Report Download - page 40

COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
Our success as a global leader in the interactive entertainment industry depends heavily on attracting,
motivating and retaining the best executive talent available from many diverse industries and backgrounds.
Likewise, our leading position within the interactive entertainment industry makes us a prime target for
recruiting of executives and key creative talent. Our compensation philosophy, designed to attract, motivate
and retain the best executive talent, relies on two basic principles. First, a significant portion of each
executive’s compensation should be in the form of equity to align the executive’s interests with those of EA’s
stockholders. Second, a significant portion of each executive’s cash compensation should be performance-
based and “at risk” — varying from year to year depending on EA’s financial and operational performance and
on the individual meeting financial and other performance measures. Consistent with this philosophy, we
regularly consider and implement creative new methods of using our compensation programs to successfully
recruit new, and retain existing, talent into the organization while maintaining parity with compensation of
current key executives.
AUTHORITY FOR EXECUTIVE COMPENSATION DECISIONS
Compensation Committee
The Compensation Committee is charged with establishing EA’s compensation philosophy and strategy for our
senior officers. Consistent with this purpose, the Committee has adopted a “pay-for-performance” philosophy
designed to ensure that each executive officer’s compensation will reflect the performance of both EA and the
executive officer.
The Committee’s scope of authority includes the oversight and review of all compensation, equity and
employee benefit plans and programs. For fiscal 2007, the Compensation Committee reviewed and approved
the salaries, bonuses and equity compensation of each of our executive officers, other than the Chief Executive
Officer whose salary, bonus and equity compensation were reviewed by the Compensation Committee and
approved by the independent members of the Board of Directors after discussing the Compensation
Committee’s recommendation. The Compensation Committee also administers our equity compensation plans
and the bonus plan for executive officers and all significant or non-standard equity grants for other employees.
The Compensation Committee has delegated limited authority for determining and approving equity grants for
non-executive employees, consisting of pre-defined size limits and vesting schedules, to a committee consisting
of our CEO and our Executive Vice President in charge of Human Resources, which we refer to as the
“Management Committee”. The Management Committee is generally responsible for all equity grants to
employees below the Senior Vice President level, up to an annual grant limit of stock options to purchase
30,000 shares or 10,000 restricted stock units (“RSU Awards”), using vesting schedules previously approved
by the Compensation Committee. The Management Committee reports on its activities to the Compensation
Committee on at least an annual basis.
Compensation Consultant
The Compensation Committee has the authority to engage the services of outside advisors. During fiscal 2007,
the Compensation Committee engaged Compensia, Inc., as an independent advisor to assist the Committee in
its review of the compensation for executive officers and other elements of our total compensation strategy.
Compensia also advised and counseled the Committee regarding updated executive compensation disclosure
requirements and its related responsibilities. Compensia works directly with the Committee Chair and
Committee members and sends all invoices, including descriptions of services rendered, to the Committee
Chair for review and payment approval. Compensia performed no work for company management during
fiscal 2007. Our management also engages separate consulting services in the preparation and recommendation
of executive compensation levels to the Committee. In fiscal 2007, management retained Aon/Radford
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Proxy Statement