Electronic Arts 2008 Annual Report Download - page 47

• An option to purchase 275,000 shares, which will vest in full on April 1, 2010; and
• An option to purchase 275,000 shares, which will vest in full on April 1, 2012.
Services Agreement with Former Chief Financial Officer
In March 2008, we entered into an agreement with Mr. Jenson concerning his departure from the Company.
The material terms of Mr. Jenson’s ongoing employment during this transition period were as follows:
• after a new Chief Financial Officer was appointed, he will remain an employee of the Company through
September 30, 2008, unless he commenced employment with a new employer or until the occurrence of
certain other conditions;
• he will continue to receive his current salary and the other standard benefits available to executive
officers in similar positions, including coverage under the Company’s health, life insurance, and
disability plans and eligibility to participate in the Company’s Section 401(k) plan; and
• he will remain eligible to participate in the Company’s discretionary bonus program for fiscal year
2008 at his current bonus target level (75% of base salary), subject to his being employed by the
Company at the time annual bonus payments are made to other executive officers.
Fiscal 2009 Compensation Program Changes
During fiscal 2008, based on the results of the Committee’s comprehensive review of our executive
compensation program and taking into consideration the recommendations of Ms. Toledano and Mr. Riccitiello,
the Committee approved changes to the program. The Committee believes that the restructured program,
which is effective in fiscal 2009, will better support the ongoing reorganization of our business. These
changes, which are designed to ensure that our executive officers’ total direct compensation (the sum of base
salary, annual cash bonus payments, and equity awards) is competitive and tied to performance, will result in
two significant changes to our executive compensation program.
First, the Discretionary Bonus Program (renamed the “Annual Bonus Plan”) in which executive officers
participate, has been updated. Actual bonus payouts will be determined based on (i) the Company’s
performance as a whole, (ii) in certain cases where appropriate, the performance of an executive’s individual
business unit, and (iii) the executive’s individual performance. The achievement of the objectives for each
component will be determined independently based on the actual level of performance and results achieved for
each objective. The component relating to the Company’s performance as a whole will be based on the
achievement of a combination of the Company’s fiscal 2009 non-GAAP revenue and non-GAAP earnings per
share. We also have implemented another bonus program for fiscal 2009, the Label Incentive Program. The
Label Incentive Program is intended primarily for members of our label development teams. The Label
Incentive Program rewards development employees based on the profitability of their labels, studios, and the
products on which they work.
Second, to further strengthen the link between our executive compensation program and our operating
performance, our executive officers, including the Named Executive Officers, were granted performance-based
RSUs. These performance-based RSUs are designed to vest in three equal amounts, with the vesting of each
amount being contingent upon our achievement of one of three progressively higher non-GAAP net income
targets, the highest of which corresponds to our long-term non-GAAP financial income objectives for fiscal
2011. These performance-based RSUs were granted to our executive officers in lieu of the annual stock option
grants they would have otherwise been eligible to receive in fiscal 2009 and fiscal 2010 had we not
implemented the performance-based RSU program. Consistent with our compensation philosophy, certain of
these executive officers were also granted service-based RSUs vesting over a four-year period. The size of
these service-based RSU grants corresponded to 30% of the total equity award value for fiscal 2009 that each
executive officer would have received had we continued to grant stock options (instead of the performance-
based RSUs). We believe this combination of performance-based and service-based RSUs will motivate our
executive officers to help us achieve our long-term business objectives and, secondarily, will serve to
strengthen our retention of these individuals.
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