Electronic Arts 2011 Annual Report Download - page 36

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the fiscal 2011 compensation paid to our named executive
officers (the “NEOs”), the compensation decisions made by our Executive Compensation and Leadership
Committee (the “Committee”), and the financial, strategic, and operational performance factors that guided those
compensation decisions. Our NEOs for fiscal 2011 were:
• John S. Riccitiello, Chief Executive Officer;
• Eric F. Brown, Executive Vice President, Chief Financial Officer;
• Frank D. Gibeau, President, EA Games;
• Peter Moore, President, EA SPORTS; and
• John C. Schappert, former Chief Operating Officer.
Mr. Schappert resigned and ceased being EA’s Chief Operating Officer effective April 25, 2011.
COMPENSATION PRINCIPLES AND STRUCTURE
Our compensation programs are designed to motivate our NEOs to achieve annual financial, strategic, and
operational objectives and create long-term stockholder value. We structure and review our NEO compensation
in accordance with a compensation philosophy that is based on three core principles, each of which is intended to
promote a pay-for-performance approach to executive compensation:
• Principle 1 — Cash Compensation: A significant portion of each NEO’s cash compensation should be
based on the annual financial, strategic and operational performance of the Company and the NEO’s
business unit (if applicable) and be “at risk”;
• Principle 2 — Equity Compensation: A significant portion of each NEO’s total compensation should be
provided in the form of long-term equity to enhance the alignment between NEO and stockholder
interests; and
• Principle 3 —Target Total Direct Compensation: The target total direct compensation package for each
NEO should be consistent with market practices for executive talent, as well as each NEO’s individual
experience, responsibilities and performance.
We believe these principles promote the long-term profitable growth of the Company and align compensation
with the long-term interests of the Company’s stockholders. In addition, these principles are in place to help us
retain a strong leadership team in an industry that is highly competitive for executive talent. The Company has
faced recruiting pressures from our named peer companies (as discussed further below), as well as from
emerging start-up companies and other very large, diversified technology and entertainment companies.
Each of these core principles guided the Company’s compensation program designs for fiscal 2011 as follows:
Principle 1 — Cash Compensation: The cash compensation of each NEO consists of a competitive base salary
and the opportunity to earn an annual cash bonus based on Company and business unit (if applicable) financial,
strategic and operational performance. Cash bonuses represent approximately half of our NEOs’ targeted cash
compensation, and serve to put a significant portion of their cash compensation “at risk.” Each NEO is assigned a
target bonus (expressed as a percentage of base salary), and then the actual bonus payout is determined with
regard to the financial and operational performance of the Company, the NEO’s business unit (if applicable), as
well as the NEO’s achievement of strategic and operational objectives during the fiscal year.
Our bonus program is designed so that actual payouts are awarded at target levels only if the Company and the
NEO meet pre-determined financial, strategic and operational fiscal year objectives. For example, in fiscal 2009
and 2010, financial performance was below expectations and, consequently, the cash bonuses paid to our NEOs
were below target levels. The initial phases of our transformation occurred in these prior years as we adopted
new strategies and shifted focus to digital revenue models.
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