Electronic Arts 2010 Annual Report Download - page 47

Proxy Statement
• full and immediate vesting of all outstanding and unvested equity awards (other than certain portions of
performance-based awards, which may be subject to acceleration depending on the specific terms of such
awards, as described below).
The cash severance payment that Mr. Riccitiello, company-level presidents (including the presidents of our labels
and our president of publishing), and executive vice presidents (including Mr. Brown, our Chief Financial
Officer) are entitled to receive upon a qualifying termination of employment under the CoC Plan is equal to
150% of the sum of that executive officer’s annual base salary and target annual bonus or incentive opportunity.
We believe that this level of severance benefits will assist us in recruiting talented individuals to join and remain
a part of our management team.
Upon a change of control of the Company, an executive officer may be subject to certain excise taxes imposed
under Section 280G of the Internal Revenue Code (“Section 280G”). The CoC Plan does not provide for any
additional payments (for example, tax gross-ups or reimbursements) in the event that the benefits under the CoC
Plan and other arrangements offered by the Company or its affiliates cause an executive officer to owe an excise
tax under Section 280G. However, the CoC Plan provides that, if an executive officer would receive a greater net
after-tax benefit by having CoC Plan benefits reduced to an amount that would avoid the imposition of the
Section 280G excise tax, his or her cash severance payment will be reduced accordingly.
As a condition to each executive officer’s right to receive the benefits provided under the CoC Plan, the
executive officer is required to execute a waiver of claims against the Company and will be bound by the terms
of a non-solicitation agreement prohibiting the executive officer, for a one-year period following his or her
termination of employment, from soliciting our employees to leave the Company.
Performance-Based RSUs — Treatment Upon Change of Control
In the event of a change of control of the Company (as defined in the Performance-Based RSU award
agreement), the Performance-Based RSUs discussed above will be automatically converted into time-based
restricted stock units, which will vest on June 30, 2013 subject to two exceptions. If the recipient’s employment
is terminated without “cause” by the Company or for “good reason” by the recipient (as such terms are defined in
the Performance-Based RSU award agreement), within one year of the change of control event, his or her
Performance-Based RSUs will vest upon the termination date of the recipient’s employment and if, during the
two months immediately preceding a change of control, the recipient’s employment is terminated by the
Company without “cause”, and such termination is made in connection with the change of control, as determined
by the Committee in its sole discretion, then his or her Performance-Based RSUs will vest on the date of the
change of control event. The Committee believes that these terms will allow the recipients of the Performance-
Based RSUs to focus on the Company’s business, rather than the potential treatment of their awards, and keep
their interests aligned with the Company’s in the event of a potential change of control.
Severance Plan
We maintain an ERISA-governed severance plan (the “Severance Plan”) that applies to (a) all of our U.S.-based
employees whose jobs are terminated due to a reduction in force and (b) any other employee we select to
participate in the plan upon his or her termination of employment. Under the Severance Plan, eligible employees
may receive a cash severance payment equal to two weeks of pay, with any additional payments to be determined
solely at our discretion. In addition, under the Severance Plan, we will pay the premiums for continued health
benefits, if such benefits are continued pursuant to COBRA, for a time period equal to the number of weeks of
cash severance paid.
Any severance arrangements with our executive officers, including the NEOs, whether paid pursuant to the
Severance Plan or otherwise, require the prior approval of the Committee. In the event of a change of control of
the Company, the cash severance payment payable under the Severance Plan may be reduced, in whole or in part,
by any amount paid under the CoC Plan.
Treatment of Stock Options Upon Retirement
We maintain a special retirement provision in connection with the exercise of outstanding vested stock options
following a qualifying termination of employment. All stock option grants made after April 2004 to employees,
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