Electronic Arts 2013 Annual Report Download - page 37

Proxy Statement
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the fiscal 2013 compensation paid to our named executive
officers ( “NEOs”), the compensation decisions made by our Compensation Committee (the “Committee”), and
the financial, strategic, and operational performance factors that guided those decisions. Our NEOs for fiscal
2013 were:
• Lawrence F. Probst III, Executive Chairman;
• Blake Jorgensen, Executive Vice President, Chief Financial Officer;
• Frank D. Gibeau, President, EA Labels;
• Patrick Söderlund, Executive Vice President, EA Games Label;
• Andrew Wilson, Executive Vice President, EA Sports;
• Kenneth A. Barker, Senior Vice President, Chief Accounting Officer, and former Interim Chief Financial
Officer; and
• John S. Riccitiello, former Chief Executive Officer (“CEO”).
EXECUTIVE SUMMARY
The core principles that guide our compensation programs seek to align the interests of our NEOs with the
interests of our stockholders. Accordingly, individual compensation decisions and the financial incentives that
we establish are designed to link NEO compensation to the annual financial and strategic performance of the
Company and the creation of long-term stockholder value. The specific decisions made for fiscal 2013 reflect
these principles, as well as input we received from our stockholders and are discussed in this Compensation
Discussion and Analysis.
While the basic principles and structure of our NEO compensation programs did not change for fiscal 2013, the
Board made several key modifications to the cash and equity incentives of our former CEO, John Riccitiello.
Those changes were motivated, in part, by feedback we received from our stockholders, prior to and after the
2012 Annual Meeting of Stockholders; this feedback was primarily focused on Mr. Riccitiello’s compensation.
For fiscal 2013, we modified Mr. Riccitiello’s cash and equity incentives to place additional focus on the
Company’s relative total shareholder return (“TSR”) and approved a bonus structure that was formulaic and
based on the attainment of pre-set financial goals and operational objectives.
In fiscal 2013, the Company continued to execute on our multi-year strategy to transform from a business
predominately based on packaged goods sales to a business that is centered on the digital distribution of
interactive entertainment directly to consumers. Although we achieved significant growth in digital revenue for
the fourth consecutive year, and accomplished many of our operational objectives, the Company’s overall
performance was mixed as we did not achieve the Company-wide financial goals that we set at the beginning of
the fiscal year. The compensation decisions we made for our NEOs in fiscal 2013 reflect these mixed results.
Most significantly, Mr. Riccitiello resigned as CEO, citing his personal accountability for failing to execute the
Company’s fiscal 2013 operating plan successfully.
The Company entered into a separation agreement (“Separation Agreement”) with Mr. Riccitiello, which
included cash and equity severance components to be paid over time and, where applicable, in alignment with the
performance of the Company. The Board determined that this severance arrangement was consistent with market
practice, and appropriate given Mr. Riccitiello’s role in driving key strategic initiatives during his tenure that
positioned the Company to take advantage of future opportunities beyond fiscal 2013. The terms of
Mr. Riccitiello’s severance arrangement are described in more detail in the “Individual NEO Compensation”
section below.
Lawrence F. Probst III was appointed Executive Chairman while the Company conducts a search for a permanent
CEO to replace Mr. Riccitiello.
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