Electronic Arts 2016 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2016 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 188

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188

PROPOSAL 2: APPROVAL OF AMENDMENTS TO OUR EXECUTIVE BONUS PLAN
The Electronic Arts Inc. Executive Bonus Plan (the “Executive Bonus Plan”) was originally approved by our
stockholders on May 16, 2012. It provides certain employees of EA with incentive compensation based on the
level of achievement of the financial, business and other performance criteria. The Executive Bonus Plan is
intended to permit the payment of bonuses that may qualify as “performance-based compensation” under
Section 162(m) of the Code. For more information regarding the Executive Bonus Plan, please refer to the
summary of its material terms, as proposed to be amended, included as Appendix B of this Proxy Statement, and
the full text of the Executive Bonus Plan, as proposed to be amended, filed with the SEC on June 10, 2016.
Our stockholders are requested to approve the amendments to the Executive Bonus Plan. However, if the
Executive Bonus Plan amendments are not approved by stockholders, the terms of the originally approved
Executive Bonus Plan will continue to apply to the fiscal 2017 bonus payments.
We are proposing an amendment to the Executive Bonus Plan that would:
•Increase the percentage of a participant’s base salary for the bonus target cap.
The maximum bonus payment any participant may receive in any fiscal year remains unchanged at
$5,000,000. Currently, the Executive Bonus Plan caps the bonus target at 150% of a participant’s base
salary. The Board of Directors recommends amending the Executive Bonus Plan to increase the bonus
target cap to 200% of a participant’s base salary. The amended cap will give the Compensation
Committee, or our Board of Directors in the case of our CEO, more flexibility to set bonus targets to
reflect the financial performance of the Company within the limit of the maximum bonus payment
previously approved by the stockholders.
•Increase the bonus payment cap.
The bonus payment made to each individual participant is currently capped at 200% of a participant’s
bonus target for a fiscal year. The Board of Directors recommends amending the Executive Bonus Plan to
increase the bonus payment cap to 300% of a participant’s bonus target. The amended bonus payment cap
will give the Compensation Committee the necessary flexibility to reward performance for extraordinary
financial results within the limit of the maximum bonus payment previously approved by the
stockholders.
•We are also proposing re-approval of the material terms of the performance goal criteria for awards
granted under the Executive Bonus Plan.
The Board of Directors recommends the re-approval of the material terms of the performance goals under
the Executive Bonus Plan for the purpose of preserving its ability to deduct compensation earned by
participants under the Executive Bonus Plan. To enable performance-based compensation paid under the
Executive Bonus Plan 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 Executive Bonus Plan 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. These provisions are set forth in
the Executive Bonus Plan under sections 2(c),(d),(e),(k),(l),(m), 3 and 7 (the full text of the Executive
Bonus Plan, as proposed to be amended, was filed with the SEC on June 10, 2016). They are also
described in the material summary of the Executive Bonus Plan set forth in Appendix B of this Proxy
Statement
New Plan Benefits
Awards under the Executive Bonus Plan are determined based on actual future performance. The maximum
bonus payment that any participant may receive is $5,000,000 during any fiscal year. For fiscal 2016, we paid
bonuses to certain of our NEOs pursuant to the terms of the Executive Bonus Plan. See “Cash Bonus Awards” in
the “Compensation Discussion and Analysis” and the “Fiscal 2016 Summary Compensation” table below for a
50