Electronic Arts 2016 Annual Report Download - page 41

Proxy Statement
OUR ELEMENTS OF PAY
We believe that our compensation programs reflect our three compensation principles described under
“Compensation Principles — Promoting Pay-for-Performance” and are designed to reward achievement of
Company-wide financial objectives, individual operational and strategic objectives and the creation of long-term
value for our stockholders, while also recognizing the dynamic and highly competitive nature of our business and
the market for top executive talent. The elements of our compensation programs are set forth below:
Base Salary
On an annual basis, the Compensation Committee reviews and approves any base salary adjustments considering
such factors as individual performance, pay relative to market, level of responsibilities, complexity of role, and
internal compensation alignment.
As part of its May 2016 compensation review, the Compensation Committee (and Board of Directors for
Mr. Wilson) increased the base salaries of certain NEOs for fiscal 2017. As part of the process described above,
effective June 1, 2016, the base salaries of our NEOs will be: Mr. Wilson, $1,100,000; Mr. Jorgensen, $765,000;
Mr. Söderlund, $643,213(1); Mr. Moore $705,000; and Mr. Moss, $625,000.
Cash Bonus Awards
Cash bonus awards for each of our NEOs, with the exception of Mr. Söderlund, were funded under the Executive
Bonus 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. Mr. Söderlund’s cash
bonus award was funded under the EA Bonus Plan as he resides in Sweden, and his compensation is not subject
to Section 162(m). At the beginning of each fiscal year, the Compensation Committee selects the Executive
Bonus Plan participants and the Section 16 officer participants of the EA Bonus Plan, performance period,
performance measures, and the formula used to determine maximum bonus funding. In fiscal 2016, all of our
NEOs, with the exception of Mr. Söderlund, were selected to participate in this Executive Bonus Plan. The
Compensation Committee approved Mr. Söderlund’s participation in the EA Bonus Plan. For all NEOs,
including Mr. Söderlund, the Compensation Committee selected non-GAAP net income as the performance
measure because the level of profitability is a key business focus in any year. The performance period was
established as fiscal 2016, and the formula to determine the maximum bonus funding for each NEO was the
lower of: (1) 300% of their annual base salary or (2) 0.5% of our fiscal 2016 non-GAAP net income for each
NEO other than our CEO, for whom the maximum was 1% of our fiscal 2016 non-GAAP net income. For fiscal
2016, the Company reported non-GAAP net income of $1.018 billion which resulted in a maximum bonus award
funding of 300% of annual base salary for each of our NEOs.(2) The Compensation Committee then exercised its
discretion to reduce actual bonus awards for each individual based on the Company’s overall financial
performance, the terms of the Executive Bonus Plan and EA Bonus Plan, target bonus award and individual
performance against strategic and operational objectives, as discussed in “Our NEOs’ Fiscal 2016
Compensation” above.
Subject to stockholder approval of Proposal 2, the Executive Bonus Plan will be amended, effective for cash
bonus awards granted to our NEOs starting in fiscal 2017. If amended, the maximum bonus amount of $5 million
under the Executive Bonus Plan remains unchanged; however, the cap on participants’ bonus target will be
increased from 150% to 200% of a participant’s base salary and the cap on the bonus payment will be increased
from 200% to 300% of the bonus target to provide the Compensation Committee (or our Board of Directors in
the case of our CEO) increased flexibility in determining Section 16 officers’ cash bonus awards. Subject to
stockholder approval of Proposal 2, our Board of Directors approved an increase to Mr. Wilson’s fiscal 2017
bonus target from 150% to 175% of his base salary. If stockholders do not approve Proposal 2, Mr. Wilson’s
bonus target for fiscal 2017 will remain 150% of his fiscal 2017 base salary. For more information on the
proposed Executive Bonus Plan amendments, please refer to the information included under Proposal 2
beginning on page 50 of this Proxy Statement.
(1) This amount reflects Mr. Söderlund’s base salary based on the exchange rate of SEK to the USD as of May 25, 2016.
(2) Appendix A to this Proxy Statement provides a calculation of non-GAAP financial measures from the Company’s audited financial
statements.
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