Electronic Arts 2009 Annual Report Download - page 51

Proxy Statement
• full and immediate vesting of all outstanding and unvested equity awards (other than certain portions of
performance-based awards, which may be subject to acceleration depending on the specific terms of such
awards, as described below).
The cash severance payment that Mr. Riccitiello, company-level presidents (including the presidents of our labels
and our president of publishing), and executive vice presidents (including Mr. Brown, our Chief Financial
Officer) are entitled to receive upon a qualifying termination of employment under the CoC Plan is equal to
150% of the sum of that executive’s annual base salary and target annual bonus or incentive opportunity. We
believe that this level of severance benefits will assist us in recruiting talented individuals to join and remain a
part of our management team.
Upon a change of control of the Company, an executive may be subject to certain excise taxes imposed under
Section 280G of the Internal Revenue Code (“Section 280G”). The CoC Plan does not provide for any additional
payments (for example, tax gross-ups or reimbursements) in the event that the benefits under the CoC Plan and
other arrangements offered by the Company or its affiliates cause an executive to owe an excise tax under
Section 280G. However, the CoC Plan provides that, if an executive would receive a greater net after-tax benefit
by having CoC Plan benefits reduced to an amount that would avoid the imposition of the Section 280G excise
tax, his or her cash severance payment will be reduced accordingly.
As a condition to each executive’s right to receive the benefits provided under the CoC Plan, the executive is
required to execute a waiver of claims against the Company and will be bound by the terms of a non-solicitation
agreement prohibiting the executive, for a one-year period following his or her termination of employment, from
soliciting our employees to leave the Company.
Performance-Based RSUs — Treatment Upon Change of Control
In the event of a change of control of the Company (as defined in the Performance-Based RSU award
agreement), the Performance-Based RSUs discussed above shall be converted into time-based RSUs, vesting
on June 30, 2013 subject to two exceptions. If the recipient’s employment is terminated without cause by the
Company or is terminated for good reason by the recipient (as such terms are defined in the Performance-Based
RSU award agreement), within one year of the change of control event, the RSUs will vest upon the termination
date of the recipient’s employment and if, during the two months immediately preceding a change of control, the
recipient’s employment is terminated by the Company without cause, and such termination is made in connection
with the change of control, as determined by the Compensation Committee in its sole discretion, then the RSUs
will vest on the date of the change of control event. The Committee feels that these terms allow the recipients of
the RSUs to focus on the Company’s business and keep their interests aligned with the Company’s in the event of
a potential change of control.
Severance Plan
We maintain an ERISA-governed severance plan (the “Severance Plan”) that applies to (a) all of our U.S.-based
employees whose jobs are terminated due to a reduction in force and (b) any other employee we select to
participate in the plan upon his or her termination of employment. Under the Severance Plan, eligible employees
may receive a cash severance payment equal to two weeks of pay, with any additional payments to be determined
solely at our discretion. In addition, under the Severance Plan, we will pay the premiums for continued health
benefits, if such benefits are continued pursuant to COBRA, for a time period equal to the number of weeks of
cash severance paid.
Any severance arrangements with our executive officers, including the Named Executive Officers, whether paid
pursuant to the Severance Plan or otherwise, require the prior approval of the Committee. In the event of a
change of control of the Company, the cash severance payment payable under the Severance Plan may be
reduced, in whole or in part, by any amount paid under the CoC Plan.
Treatment of Stock Options Upon Retirement
In May 2004, we implemented a special retirement provision in connection with the exercise of outstanding
vested stock options following a qualifying termination of employment. All stock option grants made after April
2004 to employees, including the Named Executive Officers, contain this provision. Under the standard
43