Electronic Arts 2009 Annual Report Download - page 48

encouraging equity ownership by executive officers and aligning their interests with the interests of our
stockholders, whereas RSUs strengthen the retention of key employees. The Committee also reviews the
estimated total pool of stock options and RSU awards to be granted to executive officers and other employees to
ensure that share use remains in line with internal targets.
Performance-Based RSUs
On May 15, 2008, the Board, upon the recommendation of the Committee, approved grants of Performance-
Based RSUs to certain executive officers, including the Named Executive Officers. The Performance-Based
RSUs are intended to strengthen the link between the compensation the Company offers its executive officers
and the Company’s achievement of its long-term financial objectives. These Performance-Based RSUs were
expected to be granted to the Company’s executive officers in lieu of annual stock option grants they would have
otherwise been eligible to receive in fiscal 2009 and fiscal 2010.
The Performance-Based RSUs vest in three equal amounts, with the vesting of each amount being contingent
upon the Company’s achievement of one of three progressively higher adjusted non-GAAP net income targets
(as measured on a trailing-four-quarter basis). These targets range from approximately two to three times the
Company’s non-GAAP net income for fiscal 2008. Upon vesting, each Performance-Based RSU will be
converted into one share of the Company’s common stock. To the extent that the Company does not achieve one
or more of the non-GAAP net income targets by June 30, 2013, the portion of the award that would have vested
upon the achievement of the applicable target will be cancelled.
The Performance-Based RSUs were originally designed to vest, if at all, during a performance period of May
2008 through June 30, 2011. During the fourth quarter of fiscal 2009, Company management and the Committee
re-evaluated the objectives of the Performance-Based RSU program in light of changing market conditions and
the Company’s performance, and determined that the Performance-Based RSU’s had lost much of their value as
retention and motivational tools. As a result of that evaluation, the Committee made the decision to extend the
performance period during which the Performance-Based RSUs may vest for an additional two years through
June 30, 2013. Due to the modification of the performance period, the Performance-Based RSUs will not qualify
as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code.
The Performance-Based RSUs were awarded based on established guidelines per position level as follows:
Named Executive Officer Performance-Based RSU Grants
Mr. Riccitiello ....................................................... 200,000
Mr. Brown .......................................................... 100,000
Mr. Gibeau, Mr. Moore, Mr. Pleasants ................................... 125,000
Time-Based RSUs
Consistent with our compensation philosophy, during June 2008 certain of these executive officers were also
granted time-based RSUs vesting ratably on an annual basis over a four-year period. The intention at the time
was to design the size of these time-based RSU grants so that they would correspond 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). This combination of performance-based and time-based RSUs
was intended to motivate our executive officers to help us achieve our long-term business objectives and to
strengthen our retention of these individuals.
Time-Based RSUs are also provided based on established guidelines per position level. Mr. Gibeau and
Mr. Moore each were awarded grants in the amount of 12,500 shares in June 2008.
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