Electronic Arts 2013 Annual Report Download - page 48

Bonus Funding
Cash bonus awards for our NEOs were funded under the Electronic Arts Inc. Executive Bonus Plan (the
“Executive Bonus Plan”), based on the attainment of a pre-determined non-GAAP net-income performance
measure (as described below under “Executive Bonus Plan”), and at the discretion of the Committee under the
EA Bonus Plan.
Executive Bonus Plan
At the beginning of each fiscal year, the Committee designates which executive officers will participate in the
Executive Bonus Plan; for fiscal 2013, each of our NEOs (excluding Mr. Probst) participated in this plan. 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.
Based on our performance, a maximum bonus award is calculated for each NEO. The Committee may then
exercise its discretion to reduce, but not increase, actual bonus awards based on discretionary factors such as the
performance of the Company, the performance of each NEO’s business unit (if applicable), and the NEO’s
individual performance.
In May 2012, the Committee set the fiscal 2013 performance measure for funding the Executive Bonus Plan. The
maximum bonus funding for each participating NEO is the lower of: (1) 300% of the NEO’s annual base salary
and (2) 0.5% of non-GAAP net income for each NEO other than our CEO, for whom this maximum is 1% of
non-GAAP net income. The Committee selected this funding metric because the level of profitability is a key
business focus in any year. The Company reported non-GAAP net income of $264 million for fiscal 2013, which
resulted in the maximum bonus award funding shown in the “Target and Actual Bonus Awards for Fiscal 2013
Named Executive Officers” table below. The Committee then exercised its discretion to reduce actual bonus
awards to amounts they determined were appropriate based on the Company’s overall actual financial
performance, and the NEO’s target bonus award and individual performance against strategic and operational
objectives, as discussed above.
The Executive Bonus Plan was approved by the Company’s stockholders in July 2012 and by its terms will
terminate five years from the date of stockholder approval in accordance with the requirements of
Section 162(m) of the Internal Revenue Code.
EA Bonus Plan
The EA Bonus Plan is a discretionary bonus program in which executive and non-executive employees of the
Company may participate. Cash bonuses paid under the EA Bonus Plan do not qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Internal Revenue Code.
Awards under the EA Bonus Plan are discretionary and take into consideration the amount of overall funding
approved by the Committee for the fiscal year, a discretionary allocation of bonus funding to an individual’s
business unit and an assessment of an individual’s overall performance during the fiscal year. For fiscal 2013,
20% of the bonus pool funding was determined taking into consideration non-GAAP diluted earnings per share
and non-GAAP net revenue targets and 80% of the bonus pool funding was determined on a discretionary basis
considering the achievement of measurable business objectives including, but not limited to, profitability, non-
GAAP net revenue and digital revenue, as well as individual contributions. For additional information regarding
the specific items excluded from the non-GAAP financial measures used by the Company in fiscal 2013, see the
Company’s Form 8-K Current Report dated May 7, 2013 containing the press release announcing the Company’s
financial results for the fiscal year ended March 31, 2013.
The Committee approved funding for the EA Bonus Plan for fiscal 2013 at approximately 71% of the Company’s
aggregate employee bonus targets; this was largely due to the mixed financial performance of the Company.
While the Company’s non-GAAP digital revenue increased by 36%, our non-GAAP earning per share was
slightly below fiscal 2012, and the Company missed the financial goals that we set at the beginning of the year.
The funding also took into account some of our operational successes — among these were: the development of
blockbuster titles such as FIFA 13,Madden NFL 13, and Need for Speed: Most Wanted; having two of the top
five and five of the top 20 titles in North American and Europe (combined) on high-definition game platforms
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