Electronic Arts 2009 Annual Report Download - page 32

• the expected volatility of our stock, and
• risk-free interest rates.
Since these factors cannot be predicted with any certainty at this time and will not be known until the Exchange
Date, we cannot predict the exact amount of the non-cash compensation charge that will result from the
Exchange Program. In the event that any of the restricted stock units are forfeited prior to their vesting due to
termination of employment, the compensation expense recognized for the forfeited restricted stock units will be
reversed and will not be recognized.
Additional Equity Grants
The Compensation Committee believes that the Exchange Program alone will not necessarily provide a
sufficiently strong retention incentive for certain key employees. Therefore, in addition to proposing adoption of
the Exchange Program, the Committee intends to review the equity holdings of certain of our key employees,
which will include our Named Executive Officers, in the fall of 2009 to ensure that the equity component of the
total compensation package continues to provide a sufficiently strong incentive for certain key employees. The
Committee may decide at that time to provide additional equity grants to certain individuals, which may include
our Named Executive Officers, if deemed warranted based on a number of factors, including performance and an
evaluation of the value of the equity holdings of these key employees relative to internal comparisons and
external competitive practices at that time. These equity awards, if granted, will partially offset the reduction in
overhang achieved by the Exchange Program. Stockholder approval is not required for granting these equity
awards and thus, they are not part of Proposal 2.
New Plan Benefits
Because the decision of eligible employees to participate in the Exchange Program is completely voluntary, we
are not able to predict how many employees will elect to participate, how many options of any class described in
the table above under the heading “Description of Exchange Program — Exchange Ratios” will be surrendered
for exchange or the number of restricted stock units that may be issued. As noted above, members of our Board
of Directors and our Named Executive Officers are not eligible to participate in the Exchange Program.
Effect on Stockholders
We are not able to predict the impact the Exchange Program will have on our stockholders because we are unable
to predict how many employees will exchange their Eligible Options. The Exchange Program was designed to
provide renewed incentives and motivate the eligible employees to continue to create stockholder value and
reduce the number of shares currently subject to outstanding options, thereby avoiding the dilution in ownership
that normally results from supplemental grants of new stock options or other awards. As explained above, the net
reduction in shares subject to outstanding equity awards resulting from the Exchange Program could vary
depending on factors such as the level of participation by our employees in the Exchange Program. The reduction
in overhang may also be partially offset by the grant of additional equity grants.
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 on this proposal.
Our Board of Directors believes that the proposed Exchange Program will strengthen incentives for employees
currently holding underwater stock options to remain with our company and to contribute to our growth and
success.
The Board recommends a vote FOR approval of the Exchange Program.
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