Electronic Arts 2009 Annual Report Download - page 52

provisions of our employee stock option plans, an optionee generally has three months following his or her
termination of employment to exercise his or her stock options that had vested as of his or her termination date.
After three months, these options expire. For an optionee whose length of service to the Company plus age
equals 60, and whose length of service is at least 10 years, this special retirement provision extends this post-
termination exercise period up to 60 months following termination of employment (but in no event beyond the
original term of the stock option).
Stock Ownership Requirements
In fiscal 2004, the Board implemented stock ownership requirements for all of our executive officers who are
subject to Section 16 of the Securities Exchange Act of 1934. These requirements are based on multiples of the
executive officer’s base salary, and range from one to six times an individual’s annual base salary depending on
his or her level within the Company. In some cases, these requirements are phased in on the basis of the
executive officer’s tenure.
The Committee monitors these stock ownership requirements and believes that they further align the interests of
our executive officers with those of our stockholders. As of March 31, 2009, each of our executive officers,
including the Named Executive Officers, had either met his or her then-applicable ownership requirements or had
not yet reached the date on which he or she is required to meet his or her ownership requirement.
Stock Trading Policy
We have adopted a policy designed to promote compliance by all of our employees with both federal and state
insider trading laws. Under this policy, certain employees (including all of our executive officers) who regularly
have access to material, non-public information about the Company are prohibited from buying or selling shares
of the Company’s common stock during periods when the Company’s trading window is closed (unless such
transactions are made pursuant to a pre-approved Exchange Act Rule 10b5-1 trading plan). When the trading
window is open, these employees (including all of our executive officers) are prohibited from buying or selling
shares of the Company’s common stock while in possession of material, non-public information about the
Company and must request a trading clearance from our General Counsel prior to engaging in a trading
transaction (unless such transaction is made pursuant to a pre-approved Exchange Act Rule 10b5-1 trading plan).
In addition, we believe it is improper and inappropriate for any of our employees to engage in any transaction
designed to result in a benefit from a decline in the trading price of the Company’s common stock. As such, our
directors, executive officers, and other employees may not engage in short sales of shares of the Company’s
common stock under any circumstances, including trading in puts and calls that increase in value from a decline
in the trading price of our stock.
Tax and Accounting Policies
Section 162(m)
Section 162(m) of the Internal Revenue Code limits the ability of a public company to deduct the remuneration
of its chief executive officer and each of the next three most highly compensated executive officers other than its
chief financial officer (the “covered employees”) in excess of $1 million, except for certain compensation which
qualifies as “performance-based compensation”. Under this exception, certain types of compensation are
deductible by the Company without regard to the $1 million limitation if certain conditions are satisfied and the
plan or arrangement is approved by stockholders. We have endeavored to structure our executive compensation
plans and arrangements to maximize deductibility under Section 162(m) with minimal sacrifices of flexibility
and impact on corporate objectives. The Executive Bonus Plan is designed to operate consistent with this
strategy, though no bonuses were funded and paid under this plan in fiscal 2009. Discretionary bonuses paid
under the Annual Bonus Plan in fiscal 2009 do not qualify as “performance-based compensation” within the
meaning of Section 162(m).
Further, the Committee has structured our use of stock options in a manner intended to ensure deductibility of the
amounts realized upon an option exercise. While the Committee has the ability to grant performance-based RSUs
that qualify for the “performance-based compensation” exception to Section 162(m), the Performance-Based
RSUs granted in May 2008 do not qualify as “performance-based compensation” within the meaning of
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