Electronic Arts 2012 Annual Report Download - page 27

Proxy Statement
PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE 2000 EQUITY INCENTIVE PLAN
The 2000 Equity Incentive Plan (“Equity Plan”), which 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, 114,685,000 shares of common stock have been reserved for
issuance. For more information regarding the Equity Plan, please read the summary of its material terms, as
proposed to be amended, included as Appendix B of this Proxy Statement, and full text of the Equity Plan, as
proposed to be amended, filed with the SEC on or about June 8, 2012.
We are proposing amendments to the Equity Plan that would:
• Increase the number of shares authorized under the Equity Plan by 6,180,000 shares to a total of
120,865,000 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 (“RSUs”) 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 RSU
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.
During fiscal 2012, we granted stock options to purchase a total of approximately 470,231 shares. During
fiscal 2012, we also granted RSUs to acquire a total of 12,818,835 shares. Together these stock option and
RSU grants represented approximately 4.15% of the 320,149,568 total shares outstanding (excluding unvested
restricted stock awards) as of March 31, 2012.
As of May 19, 2012, the Company had 9,429,922 outstanding stock options under all plans with a weighted
average exercise price of $33.79 and a weighted average remaining contractual life of 4.73 years. Also, as of that
same date, there were 15,599,743 granted but unvested shares of restricted stock and RSUs, including all time-
based RSUs, performance-based RSUs (including 693,336 performance-based RSUs that were granted at the
maximum 200% of the number of shares targeted to vest) and restricted stock awards, but excluding 77,475
RSUs awarded to directors that have vested but have been deferred and remain unreleased. As a result, as of
May 19, 2012, the number of shares remaining available for future grant under all plans was 15,180,536 shares
available for issuance as stock options or 10,615,759 shares available for issuance as restricted stock and RSUs.
Going forward, we intend to continue to responsibly manage issuance 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 percent 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.
• Provide that eligible persons may receive awards offered under the Equity Plan covering up to 2,000,000
shares per fiscal year, all of which may be granted as awards of stock options, restricted stock, restricted
stock units, stock appreciation rights, or any combination thereof.
The eligibility provisions of the Equity Plan currently have an annual award limitation, for purposes of meeting
certain requirements under section 162(m) of the Internal Revenue Code, whereby eligible persons, other than
newly hired employees, can receive awards covering up to a maximum of 1,400,000 shares per calendar year (the
“Annual Award Limit”). Of the Annual Award Limit, no more than 400,000 shares shall be covered by awards of
restricted stock or RSUs (the “Annual RSU Limit”). New employees of the Company are currently eligible to
receive up to twice the amount of the Annual Award Limit and Annual RSU Limit, respectively.
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