Electronic Arts 2009 Annual Report Download - page 73
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Proxy Statement
Internal Revenue Code Section 409A
At the present time, the Company intends to grant equity awards to participants which are either outside the
scope of Section 409A of the U.S. Internal Revenue Code or are exempted from the application of Section 409A.
If an equity award is subject to Section 409A and the requirements of Section 409A are not met, participants may
suffer adverse tax consequences with respect to the equity award. Such consequences may include taxation at the
time of the vesting of the award, an additional 20% tax penalty on the non-compliant deferred income and
interest and penalties on any deferred income.
Tax Treatment of the Company
To the extent that the participant recognizes ordinary income and the Company properly reports such income to
the Internal Revenue Service (the “IRS”), the Company generally will be entitled to a deduction in connection
with the exercise of a NQSO or a SAR by a participant or upon the lapse of restrictions with respect to a
participant’s restricted stock or restricted stock unit award. The Company will be entitled to a deduction in
connection with the disposition of ISO Shares only to the extent that the participant recognizes ordinary income
on a disqualifying disposition of the ISO Shares and provided that the Company properly reports such income to
the IRS.
ERISA
The Equity Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974
and is not qualified under Section 401(a) of the Code.
Proposed Amendments to the Equity Plan
At the 2009 Annual Meeting, stockholders will be asked to approve amendments to the Equity Plan as follows:
• Increase the number of shares authorized under the Equity Plan by 20,800,000 shares; and
• Replace the 1.82 multiple that is currently used to reduce the number of shares remaining available for
issuance under the Equity Plan upon issuance of restricted stock and restricted stock unit awards with
1.43, so that each share of restricted stock or restricted stock unit awards granted after July 29, 2009 will
reduce the number of shares remaining available for issuance by 1.43 shares.
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