Electronic Arts 2008 Annual Report Download - page 43

award a bonus payment at a participating executive officer’s target bonus level or at a lesser amount. However,
the Committee could not increase the bonus payment above the target bonus opportunity level.
In May 2007, the Committee established the corporate financial performance metric as a measure of non-
GAAP net income, adjusted to reflect, among other things, the impact of foreign exchange fluctuations, stock-
based compensation, acquisition-related expenses, restructuring charges, and tax rate fluctuations, and to
neutralize the impact of bonus accruals. Consistent with its historical practice, the Committee selected this
metric for fiscal 2008 as a key measure of our ability to execute on our operating plan for the year and sustain
achievement of the Company’s longer-term financial objectives. The non-GAAP net income fiscal 2008 target
level (adjusted as described above) was directly tied to the Company’s fiscal 2008 internal operating plan and
corresponded to the high end of the financial guidance for fiscal 2008 that the Company publicly disclosed in
May 2007. The Committee set this target at what it considered to be an aggressive level to motivate high
business performance and support our attainment of the Company’s longer-term financial objectives. Conse-
quently, this target was designed to be challenging to attain. For fiscal 2008, the Company generated non-
GAAP net income, adjusted as described above, sufficient to meet the minimum funding requirement under
the Executive Bonus Plan.
The Committee then used the factors set forth in the Discretionary Bonus Program to determine the amount of
each participating executive officer’s actual bonus payment. Under the Discretionary Bonus Program, bonus
payments for fiscal 2008 were determined by taking into consideration:
• the Company’s operating performance as a whole;
• in certain cases where appropriate, the performance of the executive officer’s business unit; and
• the executive officer’s individual performance, measured on the basis of his or her achievement of one
or more individual performance objectives and milestones identified for the fiscal year, such as creating
new label organizations and building leadership teams.
In fiscal 2008, the Company exceeded its internal net revenue target and made significant progress on a
number of strategic initiatives to help position us for long-term growth, but came in below its non-GAAP net
income target. For purposes of determining specific bonus amounts, the Company’s operating performance as
a whole was initially assessed using the same non-GAAP net income target level as used in the Executive
Bonus Plan but with a higher minimum payment threshold. Although the Company did not achieve the
minimum non-GAAP net income performance threshold for the Discretionary Bonus Program in fiscal 2008,
the Committee exercised its discretion and decided to award bonuses to our executive officers, including the
Named Executive Officers. In reaching this decision, the Committee was influenced by several factors,
including the Company’s strong revenue growth, the Company’s progress on its strategic, long-term initiatives
such as the reorganization of the Company, the formation of a new leadership team consisting of several new
executives, and our decision to delay the launch of several games in order to improve their quality. However,
since the bonus payments made to our executive officers were intended to reflect our fiscal 2008 operating
performance, they were less than they would have otherwise been had we achieved the non-GAAP net income
target that was established in May 2007.
In the case of Mr. Riccitiello, the Board, based on the Committee’s recommendation, awarded a cash bonus of
$625,350. This payment was based on the Company’s fiscal 2008 operating performance, Mr. Riccitiello’s
achievement of his individual performance objectives for fiscal 2008, and his target bonus opportunity of
100% of his base salary.
In the case of Mr. Jenson, the Committee approved a cash bonus of $203,024 based on the Company’s fiscal
2008 operating performance, his achievement of his individual performance objectives for fiscal 2008, and his
target bonus opportunity of 75% of his base salary.
In the case of Dr. Florin, the Committee approved a cash bonus of $349,358 based on the Company’s and
European and North America Publishing divisions’ fiscal 2008 operating performance, his achievement of
individual performance objectives for fiscal 2008, and his target bonus opportunity of 60% of his base salary.
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