Electronic Arts 2010 Annual Report Download - page 26

PROPOSAL 2. AMENDMENTS TO THE 2000 EQUITY INCENTIVE PLAN
The 2000 Equity Incentive Plan, which initially was approved by the stockholders on March 22, 2000, continues
EA’s program of providing equity incentives to eligible employees, officers and directors. We offer these
incentives in order to assist in recruiting, retaining and motivating qualified employees, officers and directors.
Since the Equity Plan’s adoption, 99,385,000 shares of common stock have been reserved for issuance. The
following summary of the proposed amendments to the Equity Plan is subject to the specific provisions contained
in the full text of the Equity Plan, as proposed to be amended, which we have filed with the SEC along with this
proxy statement. For more information regarding the Equity Plan, we urge you to read the full text of the Equity
Plan, as proposed to be amended, or the summary of its material terms, as proposed to be amended, included as
Appendix A of this proxy statement.
We are proposing amendments to the 2000 Equity Incentive Plan that would:
• Increase the number of shares authorized under the Equity Plan by 5,300,000 shares to a total of
104,685,000 shares.
We believe that alignment of the interests of our stockholders and our employees, officers and directors is best
advanced through the issuance of equity incentives as a portion of their total compensation. In this way, we
reinforce the link between our stockholders and our employees’, officers’ and directors’ focus on personal
responsibility, creativity and stockholder returns. Equity incentives such as stock options and restricted stock
units also play an important role in our recruitment and retention strategies, as the competition for creative and
technical talent and leadership in our industry is intense.
While equity is a strategic tool for recruitment and retention, we also carefully manage stock option and
restricted stock unit issuances and strive to keep the dilutive impact of the equity incentives we offer within a
reasonable range. Historically, we have made a significant portion of our equity grants in a given fiscal year in
connection with our annual reviews and merit increases.
On October 21, 2009, we launched a voluntary Employee Stock Option Exchange Program (“Exchange
Program”), that was approved by our stockholders at the 2009 Annual Meeting, to permit our eligible
employees to exchange outstanding eligible options for a lesser number of restricted stock units, shares of
restricted stock awards (in Canada only), or new options (in China only) to be granted under the Equity Plan.
The Exchange Program offer period began on October 21, 2009 and ended on November 18, 2009.
The Exchange Program resulted in options to purchase approximately 16,561,000 shares of our common stock
being exchanged for restricted stock units to acquire approximately 4,996,000 shares, approximately 923,000
shares of restricted stock awards and new options to purchase approximately 18,000 shares. The surrendered
options were cancelled and the shares subject to the surrendered options are not available for future issuance
under our Equity Plan.
Excluding the impact of the Exchange Program, during fiscal 2010, we granted stock options to purchase a
total of approximately 4,419,884 shares, restricted stock units to acquire a total of 4,363,087 shares, and
1,175,077 shares of restricted stock. Together these stock option, restricted stock unit, and restricted stock
grants represented approximately 3% of our total shares outstanding as of March 31, 2010. As of the end of
fiscal 2010 the Company had 16,130,929 outstanding options under all plans with a weighted average exercise
price of $30.28 and a weighted average remaining contractual life of 5.70 years. Also as of that same date,
there were 16,626,130 granted but unvested shares of restricted stock and/or restricted stock units, and the
number of shares remaining available for future grant under all plans was 17,715,996. Going forward, we
intend to continue to responsibly manage issuances of equity incentive awards under the Equity Plan.
The Equity Plan contains several features designed to protect stockholders’ interests. For example, the Equity
Plan does not allow any options to be granted at less than 100% of fair market value, and the exercise price of
outstanding options issued under the Equity Plan may not be reduced without stockholder approval. The
Equity Plan does not contain an “evergreen” provision whereby the number of authorized shares is
automatically increased on a regular basis. In addition, the Equity Plan prohibits us from loaning, or
guaranteeing the loan of, funds to participants under the Equity Plan.
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