8-KMaterial AgreementsExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Material Agreement (May 31, 2011)

Filed May 31, 2011For Securities:EA

Summary

Electronic Arts Inc. (EA) has filed an 8-K report detailing a significant agreement entered into on May 27, 2011, with Relational Investors LLC and its affiliates (the "Relational Group"). This agreement primarily addresses board composition and shareholder engagement. Key to the filing is EA's commitment to appoint Ralph V. Whitworth to its Board of Directors, with a provision for his inclusion in the Executive Compensation and Leadership Committee, contingent on the Relational Group maintaining a significant shareholding. In exchange for this board seat and potential committee role, the Relational Group has agreed to withdraw its director nominations for the 2011 Annual Meeting and to vote in favor of EA's nominated directors and board recommendations on proposals. The agreement also includes crucial standstill provisions, limiting the Relational Group's ability to engage in proxy solicitations, initiate shareholder proposals, or seek control of EA, while capping their ownership at 9.9%. This resolution aims to bring stability and alignment between EA's management and a key activist investor.

Key Highlights

  • 1EA has entered into a material definitive agreement with activist investor Relational Investors LLC and its affiliates.
  • 2Ralph V. Whitworth is to be appointed to EA's Board of Directors, with potential placement on the Executive Compensation and Leadership Committee.
  • 3The Relational Group has withdrawn its director nominations for the 2011 Annual Meeting.
  • 4The Relational Group has agreed to vote in favor of EA's director nominees and board recommendations on shareholder proposals.
  • 5Standstill provisions are in place, restricting the Relational Group's ability to solicit proxies, initiate proposals, or seek control of EA.
  • 6The Relational Group's ownership stake is capped at 9.9% of EA's voting securities.
  • 7The agreement's continuation is contingent on the Relational Group maintaining a minimum ownership of 6 million shares of EA common stock.

Frequently Asked Questions

This 8-K filing announces a significant agreement between Electronic Arts (EA) and an activist investor group, Relational Investors LLC. The agreement resolves a proxy contest by appointing a representative from the investor group to EA's Board of Directors and outlining mutual understandings regarding voting and corporate governance.

Ralph V. Whitworth is a representative of Relational Investors LLC. His appointment to EA's Board of Directors signifies a resolution of activist pressure and brings a potentially influential voice with an investor perspective onto the board, with possible involvement in executive compensation decisions.

The Relational Group has agreed to withdraw its director nominations for the upcoming 2011 Annual Meeting, vote in favor of EA's director slate, and abide by standstill provisions. These provisions limit their ability to initiate further activist campaigns, solicit proxies, or seek to control the company, while also capping their ownership.

Yes, EA's obligation to appoint and re-nominate Mr. Whitworth is conditional upon the Relational Group continuing to hold at least 6 million shares of EA common stock. The agreement also outlines termination clauses related to Mr. Whitworth's board tenure and future nomination decisions.