Electronic Arts 2011 Annual Report Download - page 43

Proxy Statement
Mr. Schappert was granted 130,000 time-based restricted stock units in fiscal 2011. However, at the time of his
resignation he had not yet vested in any shares from this award, and the award was cancelled as of the date of his
resignation.
See the Summary Compensation Table below for further details regarding Mr. Schappert’s fiscal 2011
compensation.
COMPENSATION PROGRAMS AND PLANS
This section provides more detail on the various compensation plans and programs discussed above, as well as
others that apply to our NEOs and other executive officers.
Base Salary
A competitive base salary is a crucial component in providing an attractive total compensation package for our
NEOs. The Committee initially sets each NEO’s base salary at a level which reflects the NEO’s position,
responsibilities and experience, as compared to similar executives at comparable companies. On an annual basis,
the Committee reviews and approves any base salary adjustments, considering such factors as individual
performance, pay relative to market, level of responsibilities, complexity of role and internal compensation
alignment.
As part of its May 2011 compensation review, the Committee decided to increase the base salaries of certain
NEOs for fiscal 2012. Effective June 1, 2011, Mr. Riccitiello’s base salary will increase to $880,000,
Mr. Brown’s base salary will increase to $620,000, Mr. Gibeau’s base salary will increase to $630,000, and
Mr. Moore’s base salary will increase to $620,000. These increases were consistent with the compensation-
setting process described above and in-line with our target position within the Peer Group, with the exception of
Mr. Riccitiello whose base salary remains below our target position.
Executive Bonus Plan
Our NEOs participate in the Executive Bonus Plan and this was the only bonus plan that was utilized to pay
bonuses to our NEOs for fiscal 2011. Cash bonuses payable under the Executive Bonus Plan are intended to
qualify as tax deductible “performance-based compensation” under Section 162(m) of the Internal Revenue
Code. Funding for the Executive Bonus Plan is contingent upon the achievement of one or more pre-established
Company financial performance measures. If the performance measure is achieved, the maximum individual
bonus amount is funded for each NEO and this amount represents the maximum bonus payout that may be
awarded to that individual. The Committee may then exercise its discretion to reduce, but not increase, actual
bonus payouts based on the performance of the Company, the performance of each NEO’s business unit (if
applicable), and the NEO’s individual performance.
The Company uses certain adjusted non-GAAP financial measures when establishing performance-based bonus
and equity award targets, such as non-GAAP earnings per share, non-GAAP net revenue, non-GAAP net income
and non-GAAP profit before tax to exclude the following items (as applicable, in a given reporting period):
stock-based compensation, acquisition-related expenses, restructuring and other charges, income tax adjustments,
changes in deferred net revenue (packaged goods and digital content), gains (losses) on strategic investments,
and goodwill impairment, among others. In addition, the Company makes further adjustments to the publicly
disclosed non-GAAP measures to add back bonus expense.
In May 2010, the Committee set the fiscal 2011 performance measure needed for funding under the Executive
Bonus Plan as non-GAAP earnings per share of $0.50. The Committee selected this funding threshold because it
reflected a key measure of our ability to execute on our operating plan for the year. The Company reported
non-GAAP diluted earnings per share of $0.70 for fiscal 2011, and therefore funded the maximum individual
bonus amount for each NEO under the Executive Bonus Plan. The Committee then exercised its discretion to
reduce actual bonus payouts to amounts they determined were appropriate based on the Company’s actual
financial performance, and the NEO’s individual performance against strategic and operational objectives, as
discussed above.
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