Electronic Arts 2008 Annual Report Download - page 172

of a specified period of time. Upon vesting, the equivalent number of common shares are typically issued net
of required tax withholdings, if any. Restricted stock is issued and outstanding upon grant; however, restricted
stock award holders are restricted from selling the shares until they vest. Upon vesting, we will typically
withhold shares to satisfy tax withholding requirements. Restricted stock rights are subject to forfeiture and
transfer restrictions. Vesting for restricted stock rights is based on the holders’ continued employment with us.
If the vesting conditions are not met, unvested restricted stock rights will be forfeited. Generally, our restricted
stock rights vest according to one of the following vesting schedules:
• 100 percent after one year;
• Three-year vesting with 25 percent cliff vesting at the end of each of the first and second years, and
50 percent cliff vesting at the end of the third year;
• Four-year vesting with 25 percent cliff vesting at the end of each year; or
• 26 Month vesting with 50 percent cliff vesting after 13 months and 50 percent after 26 months.
The following table summarizes our restricted stock rights activity, including the restricted stock units and
notes payable in shares of common stock that we granted in connection with our acquisition of VGH, but
exclude performance-based restricted stock unit grants discussed below, for the fiscal year ended March 31,
2008:
Restricted Stock
Rights
(in thousands)
Weighted-
Average Grant
Date Fair Value
Balance as of March 31, 2007 ................................... 2,134 $52.62
Activity for the fiscal year ended March 31, 2008:
Granted
(1)
................................................. 5,293 52.06
Vested ................................................... (597) 52.46
Forfeited or cancelled ........................................ (486) 51.99
Balance as of March 31, 2008 ................................... 6,344 52.22
(1)
Includes (i) approximately 1,560,000 shares of common stock underlying service-based non-interest bear-
ing notes payable solely in shares of our common stock, which we issued in exchange for VGH stock
options and restricted stock to certain former VGH employees who became employees of EA following
the acquisition, (ii) 529,000 restricted stock units granted under the VGH Inducement Plan, and
(iii) 252,000 restricted stock units granted under the VGH 2005 Plan. The table above does not include
performance-based restricted stock units granted under the VGH Inducement Plan, which are discussed
below.
The weighted-average grant date fair value of restricted stock rights is based on the quoted market value of
our common stock on the date of grant. The weighted-average fair value of restricted stock rights granted
during fiscal years 2008, 2007 and 2006 was $52.06, $52.31 and $52.21, respectively. The total grant date fair
value of restricted stock rights that vested during fiscal year 2008 and 2007 was $31 million and $10 million,
respectively. There were no restricted stock rights that vested during fiscal year 2006.
Performance-Based Restricted Stock Units
Upon consummation of our acquisition of VGH, we granted approximately 691,000 performance-based
restricted stock units under the VGH Inducement Plan to certain former VGH employees who became
employees of EA following the acquisition. These performance-based restricted stock units vest contingent
upon the achievement of pre-determined performance-based milestones, which we expect to occur over a
period of up to approximately four years. If these performance-based milestones are not met, the restricted
stock units will not vest, in which case, any compensation expense we have recognized to date will be
reversed.
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