Electronic Arts 2016 Annual Report Download - page 61

Proxy Statement
(1) Includes all RSUs and PRSUs, including 635,473 PRSUs that were granted at the maximum number of shares targeted to vest; at target
vesting, the shares reflected in the table would be reduced by 317,737. Excludes 181,576 RSUs awarded to directors that have vested but
have been deferred and remain unreleased.
As a result, as of May 27, 2016, the number of shares of common stock remaining available for future grant
under the EIP was 15,290,637 shares of common stock available for issuance as stock options or 10,692,753
shares available for issuance as RSUs or PRSUs. Going forward, we intend to continue to responsibly manage
issuance of equity incentive awards under the EIP. The EIP is the Company’s only active plan with shares
available for future grants.
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 and we believe that an additional 12,900,000 shares is sufficient to support
our equity incentive programs for approximately three years based on historical granting practices. We have not
proposed a share increase for the EIP since the 2013 Annual Meeting. If this share amount is approved by the
stockholders, we do not anticipate asking stockholders to approve another share increase for the EIP until the
2019 Annual Meeting.
In addition, the EIP contains several features designed to protect stockholders’ interests, including:
• Options may not be granted at less than 100 percent of fair market value on the grant date;
• The exercise price of outstanding options may not be reduced without stockholder approval;
• No “evergreen” provision whereby the number of authorized shares is automatically increased on
a regular basis; and
• No loaning, or guaranteeing the loan of, funds to participants.
• Provide that non-employee directors may not be granted equity awards in excess of $1,200,000, in
aggregate, in any fiscal year of the company for (1) shares-in-lieu of cash compensation and
(2) annual equity grants.
Currently there are no limits in the EIP on the number of awards or value of awards granted to non-
employee directors. In order to align non-employee director grants with stockholder interests and ensure
best practices, we propose amending the EIP to include a provision, which shall provide that no non-
employee director may be granted in any fiscal year of the Company, awards with a grant date fair value
of more than $1,200,000 whereby (1) shares-in-lieu of cash compensation may not have a grant date fair
value of more than $600,000; and (2) an annual equity grant award may not have a grant date fair value of
more than $600,000.
The value of historical grants made to our non-employee directors remain significantly below these
thresholds but these amounts provide the Board of Directors with flexibility in the future to manage
director fees or equity grants based on the needs of the Company.
• Approvals related to the Company’s ability to deduct equity-based compensation for income tax
purposes.
For the purpose of preserving the Company’s ability to deduct equity-based compensation earned by
participants for income tax purposes for performance-based equity awards, certain stockholder approvals
are required to be received for certain terms of the EIP.
To enable performance-based equity awards granted under the EIP to constitute “qualified performance-
based” compensation within the meaning of Section 162(m) of the Code, the stockholders of the
Company are required to re-approve the material terms of the performance goals every five years.
The material terms of the performance goals under the EIP include (i) the employees eligible to receive
the performance-based compensation, (ii) the performance criteria under which the performance-based
compensation will be determined, and (iii) the maximum amount of performance-based compensation
that could be paid to any participant in a fiscal year.
In addition, we are asking stockholders to approve the maximum number of shares that may be awarded
to an individual for Section 162(m) purposes. Stockholders have previously approved a maximum limit of
53