Electronic Arts 2009 Annual Report Download - page 30

Percentage of the
Eligible Option Vested
Upon Surrender
Applicable Vesting Period of Restricted
Stock Units Issued in the Option
Exchange (approximate)
Vesting Schedule of Restricted Stock
Units Issued in the Option Exchange
Fully-vested .................... OneYear 100% annually
More than 50% vested but less than
fully-vested .................. TwoYears 50% annually
Less than 50% vested* ........... Three Years 33
1
⁄ 3 % annually
* Options granted within the 12 month period prior to the commencement of the Exchange Program will not be
eligible to participate.
A participant in the Exchange Program will generally forfeit any restricted stock units received that remain
unvested at the time his or her employment with us terminates for any reason.
Other Material Terms and Conditions of Restricted Stock Units. Restricted stock units issued in the Exchange
Program will be granted pursuant to the Equity Plan and will be subject to its terms. Each restricted stock unit issued
to a participant in the Exchange Program represents a right to receive one share of our common stock on a fixed
settlement date, which occurs following the date on which the restricted stock unit vests based on continued
employment. A participant is not required to pay any monetary consideration to receive shares of our common stock
upon settlement of restricted stock units. Employees participating in the Exchange Program generally will recognize
taxable income in connection with their restricted stock units no later than the vesting of the award, although the
applicable tax laws may vary from country to country. For our U.S. employees and many of our non-U.S.
employees, this income is subject to income and employment or social tax withholding. We generally intend to
satisfy our tax withholding obligations by deducting from the shares of common stock that would otherwise be
released to employees upon the vesting of restricted stock or issued in settlement of restricted stock units a number
of whole shares having a fair market value that does not exceed by more than the value of a fractional share the
applicable minimum statutory withholding requirements, unless local law renders this method of withholding
infeasible or impractical in which case we may decide to satisfy our withholding obligations by other means.
Potential Modification to Exchange Program. The terms of the Exchange Program will be described in an
Offer to Exchange that will be filed with the SEC. Although we do not anticipate that the SEC would require us
to materially modify the program’s terms, it is possible that we will need to alter the terms of the Exchange
Program to comply with comments from the SEC. Changes in the terms of the Exchange Program may also be
required for tax purposes for participants in the United States as the tax treatment of the Exchange Program is not
entirely certain. The Compensation Committee will retain the discretion to make any necessary or desirable
changes to the terms of the Exchange Program and may determine not to implement the Exchange Program even
if stockholder approval of the Exchange Program and the amendments to the Equity Plan are obtained. In
addition, the Compensation Committee/Board reserves the right to amend, postpone, or cancel the Exchange
Program once it has commenced.
Modification to the Exchange Program in Certain Non-U.S. Jurisdictions
We intend to make the Exchange Program available to our employees who are located outside of the United
States, where permitted by local law. We may exclude employees in a few non-U.S. jurisdictions from the
Exchange Program if local tax or other laws would make their participation infeasible or impractical. In addition,
it is possible that we may need to make modifications to the terms offered to employees in countries outside the
U.S. to comply with local requirements, or for tax or accounting reasons. We may decide to grant restricted stock
awards (instead of restricted stock units) or new stock option awards in exchange for surrendered Eligible
Options, to the extent this can mitigate adverse tax or compliance consequences to the employees. For example,
in Canada, an option-for-restricted stock unit exchange is subject to taxation on the date the options are cancelled
in exchange for the newly issued restricted stock units and again at vesting of the restricted stock units, which
may lead to double taxation of the restricted stock units. By contrast, restricted stock awards will be taxed only at
the time of the exchange, but not at subsequent vesting of the award. Therefore, in Canada, we intend to issue
restricted stock awards in exchange for surrendered Eligible Options held by employees in Canada.
A restricted stock award is an award of shares of common stock that remains subject to forfeiture upon
termination of employment until it has vested following a specified period of employment. A recipient of a
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