Electronic Arts 2010 Annual Report Download - page 44

(3) The Performance-Based RSUs vest in three equal amounts, with the vesting of each amount being contingent upon
the Company’s achievement of one of three progressively higher adjusted non-GAAP net income targets (as
measured on a trailing-four-quarter basis). As of May 18, 2010, none of the Performance-Based RSUs had vested.
(4) Represents the aggregate grant-date fair value of one-third of the Performance-Based RSUs granted in May
2008. At the time the Performance-Based RSUs were granted, we believed that the vesting of one third of the
award was probable based upon the achievement of the first non-GAAP net income target. Assuming the
highest level of performance condition is probable, the maximum grant-date fair value for the Performance-
Based RSUs would be $9,920,000.
Other NEO Equity Awards
In connection with our annual performance review process at the start of fiscal 2010, certain executive officers
(other than Mr. Riccitiello) were granted time-based restricted stock units in June 2009. These restricted stock units
vest ratably on an annual basis over a three-year period. The size of these time-based restricted stock unit grants was
determined in conjunction with the previously issued Performance-Based RSUs and intended to correspond to 30%
of the total equity award value for fiscal 2010 that each executive officer would have received had we continued to
grant stock options (instead of the Performance-Based RSUs). This combination of Performance-Based and time-
based restricted stock units was intended to motivate our executive officers to help us achieve our long-term
business objectives and to strengthen our retention of these individuals. These time-based restricted stock units are
also provided based on established guidelines per position level. Messrs. Gibeau and Moore each were granted
awards in the amount of 19,000 shares, Mr. Brown was awarded 15,225 shares and Dr. Florin was awarded 9,000
shares.
The Committee reviewed the equity holdings of certain of our key employees during fiscal 2010 to ensure that
the equity component of their total compensation packages continues to provide a sufficiently strong incentive to
remain with the Company and increase shareholder value. The Committee reviewed and approved additional
equity grants to certain individuals, including certain of our NEOs. These equity awards were determined after
taking into consideration a number of factors, including performance, an evaluation of the market value of their
equity holdings, external equity compensation practices and internal equity compared to peers, the aggressive
recruiting efforts of our competitors and the need to maintain stability and consistency among the executive
management team. Awards were granted as 100% restricted stock units and vest ratably on an annual basis over a
three-year period. In connection with this review, in August 2009 Mr. Gibeau and Mr. Moore each were awarded
restricted stock unit grants in the amount of 120,000 shares and Mr. Brown was awarded 100,000 shares.
In connection with our annual performance review process at the start of fiscal 2011, certain executive officers
were granted time-based restricted stock units in May 2010. These restricted stock units vest ratably on an annual
basis over a three-year period. The Committee approved these equity awards in February 2010, for issuance in
May 2010, based on established guidelines per position level, and the desire to provide equity holdings to key
business leaders that would be comparable to the total target direct compensation levels of the third quartile of
the Peer Group. Messrs. Gibeau, Moore, and Schappert each were awarded grants in the amount of 130,000
shares and Mr. Brown was awarded 100,000 shares for fiscal 2011.
Exchange Program
Our fiscal 2009 NEOs, including Messrs. Riccitiello, Brown, Gibeau and Moore were not eligible to participate
in the Exchange Program. Other executive officers, including Dr. Florin, were eligible to participate. As part of
the Exchange Program, Dr. Florin tendered “underwater” stock options to purchase an aggregate of 600,973
shares of common stock. In exchange, in accordance with the terms of the Exchange Program, Dr. Florin
received an aggregate of 179,376 restricted stock units to acquire shares of common stock on the grant date
(November 19, 2009) under our Equity Plan, and in accordance with SEC rules, $1,990,117 of fair value
(determined under applicable accounting rules) associated with these restricted stock units was included in
Dr. Florin’s total compensation for fiscal 2010. Under the terms of Dr. Florin’s termination agreement with the
Company, described in more detail under “Executive Changes” below, Dr. Florin will vest in 154,441 of the
179,376 restricted stock units that he received in connection with the Exchange Program. These restricted stock
units would not have vested had he terminated employment on November 19, 2009, the effective date of his
termination agreement. Accordingly, in accordance with SEC rules, an additional $2,691,907 of fair value
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