Electronic Arts 2016 Annual Report Download - page 43

Proxy Statement
grants; however after applying the cap described above, the number of shares earned from our June 2013 PRSU
grant was reduced to 200% of target shares. If the Company’s TSR at any Vesting Opportunity is negative on an
absolute basis, the number of shares that can be earned is capped at 100% of the target regardless of the
Company’s Relative NASDAQ-100 TSR Percentile.
In addition, as an incentive to keep our executives focused on long-term TSR performance, our PRSU program
provides an opportunity for our executives to earn shares at the second and third Vesting Opportunities that were
not earned at the first and second Vesting Opportunities in an amount up to 100% of the target number of shares
unearned from the previous Vesting Opportunities. These shares are earned in the event that Company’s Relative
NASDAQ-100 TSR Percentile subsequently improves over the cumulative 24-month and/or 36-month Vesting
Measurement Periods. This feature has never been applied to PRSUs granted to our NEOs, and given our
Relative NASDAQ-100 TSR Percentile in fiscal 2016, this feature will not be applicable until, at the earliest, for
the PRSUs vesting in fiscal 2019.
For fiscal 2016, the Compensation Committee made a change to the PRSU design to remove the maximum
payout value cap of five times the stock price on the date of grant. This design feature was originally included in
the program upon its inception to reduce the accounting valuation of the awards. The Compensation Committee
determined that the cap was not a market standard provision for performance award programs. Further, in light of
the Company’s TSR performance in recent years, the removal of the cap better aligned the interest of
management with those of our stockholders.
Use of Non-GAAP Financial Measures
The Company’s management team is evaluated on the basis of non-GAAP financial measures and these measures
also facilitate comparisons of the Company’s performance to prior periods. In connection with the evaluation of
management, the Company uses certain adjusted non-GAAP financial measures when establishing performance-
based bonus targets, such as non-GAAP net revenue, non-GAAP digital net revenue, non-GAAP gross profit,
non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP
diluted shares. These non-GAAP financial measures exclude the following items (other than shares from the
convertible bond hedge, which are included) as applicable, in a given reporting period: acquisition-related
expenses, amortization of debt discount and loss on conversion of notes, change in deferred net revenue (online-
enabled games), income tax adjustments, shares from convertible bond hedge and stock-based compensation,
among others. In addition, for these purposes, we make further adjustments to our publicly disclosed non-GAAP
measures to add back bonus expense.
OTHER COMPENSATION INFORMATION
Benefits and Retirement Plans
We provide a wide array of significant employee benefit programs to all of our regular, full-time employees,
including our NEOs, including medical, dental, prescription drug, vision care, disability insurance, life insurance,
accidental death and dismemberment (“AD&D”) insurance, a flexible spending plan, business travel accident
insurance, an educational reimbursement program, an adoption assistance program, an employee assistance
program, an employee stock purchase plan, paid time off, and a monthly car allowance or use of a company car
for employees in certain positions and locations, including in Sweden where Mr. Söderlund resides. We also
offer a sabbatical program for regular full-time employees who commenced employment prior to October 7,
2009. If employees, including our NEOs, are unable to utilize their full sabbatical benefit within the eligibility
period, they receive a cash payout for up to 50% of their accrued, but unused, sabbatical.
We offer retirement plans to our employees based upon their country of employment. In the United States, our
employees, including our U.S.-based NEOs, are eligible to participate in a tax-qualified section 401(k) plan, with
an annual Company discretionary matching contribution of up to 6% of eligible compensation. The amount of the
matching contribution is determined each year based on the Company’s fiscal year performance. We also
maintain a nonqualified deferred compensation plan in which executive-level employees, including our NEOs
and our directors, are eligible to participate. None of our NEOs participated in the deferred compensation plan
during fiscal 2016. In Sweden, where Mr. Söderlund resides, the Company contributes to supplementary ITP
occupational pension plans (the “ITP Plans”) for eligible employees, which provide retirement, life insurance and
disability benefits. Eligible employees above certain income thresholds also may elect to participate in an
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