Electronic Arts 2007 Annual Report Download - page 41

Consulting (to provide data, analyze and recommend executive compensation changes) and Frederic W.
Cook & Co. (to assist management and the Compensation Committee with a review of compensation levels
for members of the Board of Directors).
Role of Company Management in Establishing Executive Compensation
Certain of our executives are involved in the development and recommendation of executive compensation
levels to the Committee and/or the Board.
Our Executive Vice President of Human Resources is responsible for conducting the analysis of market trends,
providing documentation of individual executive performance, and creating initial recommendations of
executive salary adjustments, potential cash bonus awards, and potential stock awards. She oversees the
preparation of the Committee’s meeting materials, works with the Committee Chair to set the meeting agenda,
and attends all Committee Meetings.
Our Chief Executive Officer reviews and provides input to all executive compensation recommendations
(except his own) prior to and during review by the Committee.
Compensation Committee Activity
The Compensation Committee meets at scheduled times throughout the year and also takes action by written
consent, often after informal telephone discussions amongst the members of the Committee. The Committee
met five times in fiscal 2007, four of which were regularly scheduled quarterly meetings and once in a special
session to consider our stock option exchange proposal to stockholders (the “Exchange Program”) and to
review and approve a targeted retention stock option and restricted stock unit grant program (“Retention
Award Program”). For its regular meetings, the Committee maintains a calendar to help guide the meeting
agendas and to ensure fulfillment of all responsibilities outlined in its charter. In fiscal 2007, the calendar
included a comprehensive review of EA’s total rewards programs, review of compensation levels for members
of our Board of Directors, review and approval of all executive offers and promotions, review and approval of
fiscal 2006 cash bonuses, review and approval of the August 2006 retention grant recommendations, a review
of all actions taken by management using authority delegated by the Committee, and a review of the new
disclosure rules related to executive compensation.
Also of note in fiscal 2007, the Committee approved a move from twice monthly stock option grant dates to
once per month for administrative efficiency. Previously, we had granted new hire and promotional stock
options to non-executive employees on the 1st and 16th (or the next business day after the 1st or the 16th, as
the case may be) of each month following the event and had granted restricted stock units on the 16th (or the
next business day thereafter) of each month following the event. Grants to executive officers had been tied to
the actual hire or promotion date of the executive and were, in all cases, approved by the Committee in
advance of the grant date. Except as described in the next sentence, following the move to a single monthly
grant date, all new hire and promotional grants, including executive grants, have been and will continue to be
made on the 16th of each month (or the next business day thereafter). The sole exception to this policy related
to the new hire grants we made to Mr. Riccitiello, which were approved in February 2007 for grant on the
second trading day following the public release of our earnings results for fiscal 2007.
KEY ELEMENTS OF OUR COMPENSATION PROGRAMS
The Compensation Committee awards executive compensation in three components: base salary, cash incentive
bonus and equity incentives.
In fiscal 2007, the Compensation Committee approved a new annual merit increase effective date of June 1
(other than equity grants, which will be made on June 16th, or the first business day thereafter, as described
above) for all executive officers. This date is the same for all EA employees, and was selected to allow
adequate review and consideration of the company’s full fiscal year performance when determining compen-
sation awards. Previously, annual merit increases and equity grants were made on March 1 of each year and
cash incentive bonuses were paid in May.
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