Electronic Arts 2009 Annual Report Download - page 183

Annual Report
Potential dilution is computed by dividing the options in the related range of exercise prices by 323 million
shares of common stock, which were issued and outstanding as of March 31, 2009.
At our Annual Meeting of Stockholders, held on July 31, 2008, our stockholders approved amendments to the
Equity Plan to (a) increase the number of shares authorized for issuance under the Equity Plan by 2,185,000
shares, (b) replace the specific limitation on the number of shares that may be granted as restricted stock or
restricted stock unit awards with an alternate method of calculating the number of shares remaining available for
issuance under the Equity Plan, (c) add additional performance measurements for use in granting performance-
based equity under the Equity Plan, and (d) extend the term of the Equity Plan for an additional ten years.
Restricted Stock Units and Restricted Stock
We grant restricted stock units and restricted stock (collectively referred to as “restricted stock rights”) under our
Equity Plan to employees worldwide (except in certain countries where doing so is not feasible due to local legal
requirements). Restricted stock units entitle holders to receive shares of common stock at the end 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 at the end of 13 months and 50 percent cliff vesting at the
end of 26 months.
Each share of restricted stock or restricted stock unit grant reduces the number of shares available for grant by
1.82 shares under our Equity Plan. The following table summarizes our restricted stock rights activity, excluding
performance-based restricted stock unit grants discussed below, for the fiscal year ended March 31, 2009:
Restricted Stock
Rights
(in thousands)
Weighted-
Average Grant
Date Fair Value
Balance as of March 31, 2008 ......................................... 6,344 $52.22
Granted ........................................................ 3,780 32.42
Vested ......................................................... (1,732) 51.84
Forfeited or cancelled ............................................. (833) 48.98
Balance as of March 31, 2009 ......................................... 7,559 42.76
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 grant date fair value of restricted stock rights granted
during fiscal years 2009, 2008 and 2007 was $32.42, $52.06 and $52.31, respectively. The total grant date fair
value of restricted stock rights that vested during fiscal years 2009, 2008 and 2007 was $90 million, $31 million
and $10 million, respectively.
Performance-Based Restricted Stock Units
Our performance-based restricted stock units vest contingent upon the achievement of pre-determined
performance-based milestones. 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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