Electronic Arts 2007 Annual Report Download - page 42

Benchmarking of Compensation
In fiscal 2006 and 2007, at the direction of the Compensation Committee, EA’s Human Resources Department
gathered executive compensation data from nationally recognized surveys and provided a comprehensive
analysis of this data to the Compensation Committee and its independent compensation consulting firm. The
factors used to determine the participants in the survey included industry type, annual revenues, industry
growth rate and geography. Companies included in this data were from technology (primarily software
developers), entertainment and selected packaged goods companies as reference points. We deemed additional
companies included in the survey group to be relevant because they compete with us for executive talent.
The peer group of companies included:
• Activision
• Adobe
• Autodesk
• CACI International
•CMGI
• Dreamworks Animation
• eBay
• Google
• Hasbro
• Intuit
• Liberty Media Corp
• Mattel
• Perot Systems
• Scripps EW
• Symantec
• Synopsys
• Take Two Interactive
• THQ
• Univision Communications
• WebMD
• Yahoo
Our executive level positions, including Chief Executive Officer, were compared to similar survey positions
and competitive market compensation levels to determine base salary ranges, target incentives and target total
cash compensation. Our Human Resources Department participated in comprehensive surveys such as the
IPAS Technology Survey and the Radford High Tech Executive Compensation Survey to assist in determining
appropriate equity compensation levels. This competitive market data was reviewed by the Human Resources
Department with our CEO for each benchmark executive-level position, and with the Compensation Commit-
tee for the CEO and other key executives. The Compensation Committee also considers each executive’s
responsibility level and EA’s fiscal year performance compared to pre-determined objectives and potential
performance targets for the subsequent year.
Base Salary
We believe that a competitive base salary is the essential foundation to providing a compelling total
compensation package for our executives. In reviewing executive base salaries, the Compensation Committee
considered each executive’s performance over the last year as reported by the Chief Executive Officer and the
Executive Vice President of Human Resources, each executive’s responsibility level, and the third quartile
(50th to 75th percentile) of base salaries reported in the competitive market compensation surveys noted
above. We target salaries to fall within the third quartile to reflect the minimum salary levels necessary to
attract, motivate and retain highly qualified executives while also allowing flexibility to recognize executives
such as those with additional responsibilities or skills which are critical to the success of the company. For
fiscal 2007, those eligible executives, including the Named Executive Officers, received an increase to their
base salary during the Committee’s February 2006 compensation review. Annual salary increases for EA’s
executives were, at 3.5% in aggregate, approximately the same on a percentage basis as annual salary
increases received by the overall non-executive employee population.
For fiscal 2008, those eligible executives, including the Named Executive Officers, received a salary increase
during the Committee’s May 2007 compensation review. Employee salary increases, including those for
executives, were pro-rated to account for the additional time between the last annual review on February 15,
2006 and the new annual review date of June 1, 2007. The salary increases for EA’s executives were, at 4.6%
in aggregate, approximately the same on a percentage basis as salary increases received by the overall non-
executive employee population.
Incentive Bonus
We use cash incentives to deliver competitive total cash compensation that is linked to annual financial
and individual executive performance. For fiscal 2007, the Compensation Committee reviewed and approved
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Proxy Statement