Electronic Arts 2009 Annual Report Download - page 69

Proxy Statement
exchange for a new option or stock appreciation right having a lower exercise price. The Compensation
Committee may also, subject to approval by the Company’s stockholders, at any time buy a previously granted
award with payment in cash, shares (including restricted stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
Outside Directors
Our non-employee directors are entitled to receive automatic annual grants of options to purchase shares of our
common stock under the Equity Plan. Each non-employee director who first becomes a member of the Board of
Directors is granted an option to purchase 17,500 shares of common stock and 2,500 restricted stock units. Upon
re-election to our Board of Directors following each annual meeting of our stockholders, each non-employee
director is automatically granted an additional option to purchase 8,400 shares of common stock and 1,200
restricted stock units. If a non-employee director has not served on our Board of Directors for a full year at the
time of the annual meeting of our stockholders, such director will receive a pro-rated annual grant.
Options issued to outside directors upon their initial election to the Board are exercisable as to 2% of the shares
on the date of grant and as to an additional 2% of the shares on the first day of each calendar month after the date
of grant so long as the outside director continues as a member of the Board. The vesting schedule for all
restricted stock units and annual stock option grants made to directors upon their re-election to the Board is
subject to the discretion of the Compensation Committee.
In the event of our dissolution or liquidation or a “change of control” transaction, options granted to our
non-employee directors under the Equity Plan will become 100% vested and exercisable in full.
In addition, our non-employee directors may elect to receive all or a portion of their cash compensation in shares
of common stock. Directors making this election are entitled to receive shares having a value equal to 110% of
the amount of the cash compensation foregone.
Stock Appreciation Rights
The Compensation Committee, or a committee to which it has delegated the appropriate authority, may grant
stock appreciation rights (a “SAR” or “SARs”) as stand-alone awards or in addition to, or in tandem with, other
awards under the Equity Plan under such terms, conditions and restrictions as the Compensation Committee, or a
committee to which it has delegated the appropriate authority, may determine; provided, however, that no SAR
will be exercisable after the expiration of ten (10) years from the date the SAR is granted. A SAR is an award
which provides the holder with the right to receive the appreciation in value of a set number of shares of
company stock or cash over a set period of time. A SAR is similar to an option in that the holder benefits from
any increases in stock price above the exercise price set forth in the award agreement. However, unlike an option,
the holder is not required to pay an exercise price to exercise a SAR, but simply receives the net amount of the
increase in stock price in the form of cash or stock. The exercise price for a SAR must be no less than 100% of
the “fair market value” (as defined in the Equity Plan) of a share of common stock at the time the SAR is
granted. In addition, the Compensation Committee, or a committee to which it has delegated the appropriate
authority, may, at its discretion, subject SARs to the achievement of one or more of the performance factors
described under the heading “Performance Factors” below.
Restricted Stock Awards
The Compensation Committee may grant restricted stock awards either in addition to, or in tandem with, other
awards under the Equity Plan under such terms, conditions and restrictions as the Compensation Committee may
determine. A restricted stock award is an offer by Electronic Arts to award shares of common stock that are
subject to restrictions established by the Compensation Committee. These restrictions may be based upon
completion by the award holder of a specified number of years of service or by the attainment of one or more of
the performance factors described under the heading “Performance Factors” below. The purchase price, if any,
for each such award is determined by the Compensation Committee at the time of grant. In the case of an award
to a Ten Percent Stockholder, the purchase price must be 100% of fair market value. The purchase price, if any,
may be paid for in any of the forms of consideration listed in items under “Exercise Price” above, as are
approved by the Compensation Committee at the time of grant.
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