Electronic Arts 2016 Annual Report Download - page 83

Purchase of Shares On each Purchase Date, a participating employee will purchase up to the number of
shares determined by dividing the total amount of payroll deductions withheld from
the employee during the Purchase Period pursuant to the ESPP by the purchase price,
subject to the limitations described above.
Withdrawal An employee may withdraw from any Offering Period at any time at least 15 days
prior to the end of an Offering Period. No further payroll deductions for the purchase
of shares will be made for the succeeding Offering Period unless the employee
enrolls in the new Offering Period in the same manner as for initial participation in
the ESPP.
Termination of
Eligibility
Termination of an employee’s eligibility for any reason, including termination due to
retirement or death, immediately cancels the employee’s participation in the ESPP.
Return of Payroll
Deductions
In the event an employee’s interest in the ESPP is terminated by withdrawal,
termination of employment or otherwise, or in the event the ESPP is terminated by
the Board of Directors, the Company shall promptly deliver to the employee all
payroll deductions credited to his account. No interest shall accrue on the payroll
deductions of a participant in the ESPP, unless otherwise required by the laws of a
local jurisdiction
Nonassignability The option to purchase shares may not be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution) by
the participant.
Capital Changes In the event of a proposed dissolution or liquidation of the Company, the Offering
Period will terminate and the Board of Directors may, in its sole discretion, give
participants the right to purchase shares that would not otherwise be purchasable until
the last day of the applicable Purchase Period.
Amendment/
Termination of the
ESPP
The Board of Directors may generally amend or terminate the ESPP at any time,
subject to the restrictions set forth in the ESPP.
Certain U.S. Federal Income Tax Consequences
The following summarizes only the U.S. federal income tax consequences of participation under the ESPP based
upon federal income tax laws in effect on the date of this Proxy Statement. 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.
The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions
of Sections 421 and 423 of the Code (except to comply with applicable foreign or local law). Under these
provisions, no income will be taxable to a participant at the time of grant of the option or purchase of shares.
Amounts deducted from a participant’s pay under the ESPP are part of the employee’s regular compensation and
remain subject to federal, state and local income and employment withholding taxes.
Upon disposition of the shares, the participant will generally be subject to tax, the amount of which will depend
upon the participant’s holding period. If the participant disposes of his or her shares more than two years after the
date of option grant and more than one year after the purchase of the shares, the lesser of (i) fifteen percent of the
fair market value of the shares on the date the option was granted or (ii) the excess (or zero if there is no excess)
of the sale price of the shares on the date of the disposition of the shares over the purchase price will be treated as
ordinary income, and any further gain will be treated as long-term capital gain. If the participant disposes of the
shares before the expiration of these holding periods (a “disqualifying disposition”), the excess of the fair market
value of the shares on the purchase date over the purchase price will be treated as ordinary income, and any
further gain or loss on such disposition will be long-term or short-term capital gain or loss, depending on the
holding period.
D-3
Proxy Statement