Electronic Arts 2008 Annual Report Download - page 31

subject to a full value stock award (i.e., restricted stock or restricted stock units) would reduce the number
of shares available for issuance by 1.82 shares. This change will provide us with greater flexibility to utilize
the shares remaining available for issuance under the Equity Plan as either stock options, stock appreciation
rights, restricted stock or restricted stock units. We believe it is essential to maintain a flexible equity
incentive compensation program for new and existing employees, officers and directors in order to maximize
our ability to recruit, retain and motivate key employees.
•Add additional performance measures for use in granting performance-based equity under the Equity
Plan.
In May 2007, the Board unanimously approved, subject to stockholder approval, the Electronic Arts Inc.
Executive Bonus Plan (the “Executive Bonus Plan”). The Executive Bonus Plan was subsequently approved
by the stockholders at the 2007 Annual Meeting of Stockholders. The Executive Bonus Plan allows cash
bonuses paid under it to be considered “performance-based compensation” within the meaning of Sec-
tion 162(m) of the Code and therefore fully deductible by Electronic Arts for federal income tax purposes.
We are proposing to amend the Equity Plan to add additional performance measures to the list of
performance measures for use in granting performance-based equity under the Equity Plan. The additional
performance measures to be added under the Equity Plan include profit before tax and other performance
factors consistent with the performance factors available under the Executive Bonus Plan. This amendment
will allow us to apply consistent performance measures to all forms of performance-based compensation,
including performance-based equity compensation.
•Extend the term of the Equity Plan for an additional ten years.
The Equity Plan currently has a ten-year term and is set to expire in March 2010. Rather than adopt a new
equity incentive plan prior to the expiration of the Equity Plan, we believe it is more efficient to simply
extend the current term for an additional ten years. The ten-year term was initially included in the Equity
Plan to help meet the requirements for granting incentive stock options (“ISOs”) under the Code. To date,
we have not granted ISOs under the Equity Plan nor do we expect to grant ISOs in the future. While we will
retain the ability to grant ISOs under the Equity Plan, we will be restricted from doing so if we do not
receive stockholder approval to amend the Equity Plan at least once every ten years.
Plan Benefits
Except for the automatic stock option and restricted stock units grants to non-employee directors, the amount
and timing of awards granted under the Equity Plan are determined in the sole discretion of the administrator
and therefore cannot be determined in advance. The future awards that would be received under the Equity
Plan by executive officers and other employees are discretionary and are therefore not determinable at this
time.
Required Vote and Board of Directors’ Recommendation
Approval of this proposal requires the affirmative vote of a majority of the voting shares present at the meeting
in person or by proxy and voting for or against the proposal.
The Board recommends a vote FOR the amendments to the 2000 Equity Incentive Plan.
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