Electronic Arts 2016 Annual Report Download - page 34

COMPENSATION PRINCIPLES AND SAY ON PAY VOTE
Compensation Principles — Promoting Pay-for-Performance
The design of our compensation programs is guided by a compensation philosophy based on three core principles
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
at risk, based on the annual financial and operational performance of the Company, in addition to the
NEO’s individual performance;
•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 alignment between the interests of our NEOs and our
stockholders and to promote long-term retention of a strong leadership team in an industry and
geographic area that is highly competitive for executive talent; 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, and reflect each NEO’s
individual experience, responsibilities and performance.
Fiscal 2016 Say On Pay Vote and Our Investor Outreach Program
In response to stockholder concerns with certain of our past executive compensation programs, in connection
with the say on pay vote at our 2014 Annual Meeting we engaged with stockholders representing over 53% of
our outstanding shares to solicit their perspective on our executive compensation programs. The Compensation
Committee considered this input, along with a variety of other factors, and adopted changes to our executive
compensation program in fiscal 2015, which were implemented in fiscal 2016. We eliminated stock options,
which had comprised 25% of the equity awards in fiscal 2015, and proportionally increased the percentage of
performance-based equity awards by 25% to 50% in lieu of the stock options. In addition, we added a cash flow
metric to the financial objectives of our NEOs’ fiscal 2016 cash bonuses. Our stockholders responded well to
those changes and we received a favorable 98% of votes cast for our annual say on pay advisory proposal at our
2015 Annual Meeting. EA’s management, the Compensation Committee and the Board of Directors are
committed to maintaining a pay-for-performance alignment in our executive compensation programs and
continue to solicit feedback from our stockholders regarding our programs and practices.
THE PROCESS FOR DETERMINING OUR NEOS’ COMPENSATION
Role of the Board of Directors, Compensation Committee and Management
Our Board of Directors approves the target total direct compensation and makes compensation decisions for our
CEO, in consultation with the Compensation Committee and the Compensation Committee’s independent
compensation consultant, Compensia. Our Compensation Committee approves the target total direct
compensation and makes compensation decisions for all other NEOs after input, at the Compensation
Committee’s request, from our CEO, our Chief Talent Officer, and Compensia.
Compensation decisions made by the Board of Directors and the Compensation Committee are based on several
factors, including the Company’s financial performance, the financial and operating performance of each NEO’s
business unit (if applicable), individual performance, market trends, and other factors unique to each individual.
The impact of the Company’s financial performance and individual considerations in our fiscal 2016
compensation decisions are detailed in the section of this CD&A entitled “Our NEOs’ Fiscal 2016
Compensation.” The Compensation Committee and the Board of Directors also reference certain market-based
considerations, such as peer group data, benchmarking and percentiles when making compensation decisions.
Selection and Use of Peer Group
To assess market compensation practices, each year the Compensation Committee selects a group of comparable
companies (“peer group”) to use as a reference for compensation decisions. Our peer group is comprised of
companies across related industries, with comparable revenue, market capitalization, geographic markets,
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