Electronic Arts 2009 Annual Report Download - page 41

Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes our executive compensation program for fiscal 2009. We
use this program to attract, motivate, reward, and retain the key individuals that lead our business.
This discussion describes our executive compensation program and addresses how we made compensation
decisions in fiscal 2009 for our:
• Chief Executive Officer, John S. Riccitiello,
• Executive Vice President, Chief Financial Officer, Eric F. Brown,
• Former Executive Vice President, Chief Financial and Administrative Officer, Warren C. Jenson,
• President, EA Games, Frank D. Gibeau,
• President, EA SPORTS, Peter Moore, and
• President, Global Publishing Organization & Chief Operating Officer, John F. Pleasants.
Collectively, these individuals (excluding Mr. Jenson) are referred to in this discussion as the “Named Executive
Officers”. The compensation of the Named Executive Officers is set forth in the compensation tables that follow
this Compensation Discussion and Analysis.
Mr. Jenson served as our Chief Financial Officer for a brief period during fiscal 2009 until Mr. Brown joined the
Company on April 14, 2008. In March 2008, we entered into an agreement with Mr. Jenson pursuant to which he
remained an employee of EA after he ceased serving as our Chief Financial Officer through September 30, 2008.
Mr. Jenson continued to receive his then-current base salary and the other standard benefits available to
executive officers in similar positions, including coverage under our health, life insurance, and disability plans
and eligibility to participate in our Section 401(k) plan and fiscal 2008 annual bonus plan. Mr. Jenson did not
participate in any annual bonus plan or receive any equity awards in fiscal 2009.
Fiscal Year 2009 Overview
We began fiscal 2009 with a redesigned executive compensation program that was intended to reward individual
and company performance based upon the achievement of certain pre-established operating objectives and our
projected fiscal 2009 financial plan. As part of the fiscal 2009 executive compensation program redesign, we
modified our annual cash bonus program to emphasize (i) the Company’s overall performance as a whole,
measured against a target equivalent to the high end of the fiscal 2009 net revenue and earnings per share
guidance range we provided in early fiscal 2009, (ii) in certain cases, the performance of an executive’s specific
business unit, and (iii) an executive’s individual performance. In addition, to strengthen the link between our
executive compensation program and our operating performance, we granted our executive officers performance-
based restricted stock units (“Performance-Based RSUs”) in May 2008 that were tied to the achievement of
certain non-GAAP net income targets. At the time the Performance-Based RSUs were granted, the highest of
these targets corresponded to our fiscal 2011 corporate financial objectives, which we publicly disclosed in
February 2008.
During the quarter ending December 31, 2008, we achieved sales below expectations due to a combination of
factors, including lower than expected sales of our games in the quarter and the extremely challenging global
economic environment. In light of these results, Company management implemented a significant cost reduction
plan that includes a narrowing of our product portfolio, a reduction in our worldwide workforce of approximately
11%, or 1,100 employees, the closure of 10 facilities, and reductions in other variable costs and capital
expenditures. Our fiscal 2009 results also caused us to fund our 2009 target bonus program at significantly below
target bonus levels and we decided not to provide merit salary increases for our employees in fiscal 2010.
Further, we experienced a deep decline in the price of our common stock in our third fiscal quarter of 2009,
which has caused most of our outstanding employee stock options to be significantly underwater.
In light of these macro-economic and company-specific circumstances, including our cost reduction efforts and
workforce reductions, Company management and the Compensation Committee believed that it was important to
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