Electronic Arts 2016 Annual Report Download - page 78

the Compensation Committee’s original intent regarding the Performance Factors at
the time of the initial grant.
Transferability Awards granted under the EIP are generally not transferable other than by will or the
laws of decent or distribution.
Corporate
Transactions
In the event of a merger, consolidation, dissolution or liquidation of the Company,
the sale of substantially all of its assets or any other similar corporate transaction, the
successor corporation may assume, replace or substitute equivalent awards in
exchange for those granted under the EIP or provide substantially similar
consideration, shares or other property as was provided to our stockholders (after
taking into account the provisions of the Awards). In the event that the successor
corporation does not assume, replace or substitute Awards, such Awards will
accelerate and all options will become exercisable in full prior to the consummation
of the transaction at the time and upon the conditions as the Compensation
Committee determines. Any Awards not exercised or vested prior to the
consummation of the transaction will terminate.
Amendment/
Termination of the
EIP
The Board of Directors may at any time terminate or amend the EIP in any respect,
including without limitation any form of award agreement, provided however, the
Board of Directors will not, without stockholder approval, amend the EIP in any
manner which would require such approval.
Compliance with Section 409A of the Code
To the extent applicable, it is intended that the EIP and any Awards granted under the EIP will comply with or be
exempt from the provisions of Section 409A of the Code, such that the income inclusion provisions of
Section 409A(a)(1) of the Code do not apply to the participants. The EIP and any Awards granted under the EIP
will be administered and interpreted in a manner consistent with this intent.
Certain U.S. Federal Income Tax Consequences
We believe that, based on the laws as in effect on the date of this Proxy Statement, the following are the principal
U.S. federal income tax consequences to participants and to us of Options and other Awards granted under the
EIP. This summary is not a complete analysis of all potential tax consequences relevant to participants and to
us and does not describe tax consequences based on particular circumstances. State, local, and foreign tax
laws are not discussed.
Options. When a nonqualified Option is granted, there are no income tax consequences for the Participant or
us. When a nonqualified Option is exercised, in general, the Participant recognizes compensation equal to the
excess of the fair market value of the underlying shares on the date of exercise over the exercise price. We are
entitled to a deduction equal to the compensation recognized by the Participant for our taxable year that ends
with or within the taxable year in which the Participant recognized the compensation.
When an ISO is granted, there are no income tax consequences for the Participant or us. When an ISO is
exercised, the Participant does not recognize income and we do not receive a deduction. The Participant,
however, must treat the excess of the fair market value of the underlying Shares on the date of exercise over the
exercise price as an item of adjustment for purposes of the alternative minimum tax. If the participant disposes of
the underlying Shares after the Participant has held the Shares for at least two years after the ISO was granted
and one year after the ISO was exercised, the amount the Participant receives upon the disposition over the
exercise price is treated as long-term capital gain for the Participant. We are not entitled to a deduction. If the
Participant makes a “disqualifying disposition” of the underlying Shares by disposing of the Shares before they
have been held for at least two years after the date the ISO was granted and one year after the date the ISO was
exercised, the Participant recognizes compensation income equal to the excess of (i) the fair market value of the
underlying Shares on the date the ISO was exercised or, if less, the amount received on the disposition over
(ii) the exercise price. We are entitled to a deduction equal to the compensation recognized by the Participant for
our taxable year that ends with or within the taxable year in which the Participant recognized the compensation.
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