8-KLeadership ChangesExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (May 18, 2012)

Filed May 18, 2012For Securities:EA

Summary

Electronic Arts Inc. (EA) filed an 8-K on May 18, 2012, detailing the approval of performance-based restricted stock unit (RSU) awards for its executive officers, effective May 15, 2012. These awards, scheduled for grant on June 18, 2012, are tied to EA's relative Total Stockholder Return (TSR) compared to the NASDAQ-100 Index over a three-year performance period (fiscal years 2013-2015). The key feature of these Performance-Based RSUs is their direct link to the company's stock performance against a significant market benchmark. The vesting of these units will be determined by EA's TSR over one, two, and three-year measurement periods, calculated using a 90-day trailing average of closing stock prices. This structure aims to align executive compensation with shareholder value creation and market performance, offering potential payouts ranging from 0% to 200% of target RSUs based on percentile rankings within the NASDAQ-100.

Key Highlights

  • 1Approval of Performance-Based Restricted Stock Unit (RSU) awards for executive officers (EVP level and above).
  • 2Awards are performance-based, contingent on EA's Total Stockholder Return (TSR) relative to the NASDAQ-100 Index.
  • 3Performance measured over three fiscal years (2013-2015) with one, two, and three-year measurement periods.
  • 4Vesting can range from 0% to 200% of the target RSU amount, with 100% vesting at the 60th percentile of NASDAQ-100 TSR.
  • 5TSR calculation uses a 90-day trailing average of closing stock prices.
  • 6RSUs are subject to continued employment, with specific provisions for change of control scenarios and potential excise tax implications.
  • 7Grants are expected to be made on June 18, 2012.

Frequently Asked Questions

The primary purpose is to incentivize and reward executive officers based on the company's stock performance relative to a major market index (NASDAQ-100). This is designed to align executive compensation with shareholder interests and drive long-term value creation.

Performance is measured by EA's Total Stockholder Return (TSR) compared to the TSR of the companies in the NASDAQ-100 Index. This comparison will be made over three distinct fiscal year periods (2013, 2013-2014, and 2013-2015) using a 90-day trailing average of closing stock prices.

The number of RSUs that vest can range from 0% to 200% of the target number granted. A target payout of 100% is achieved if EA's TSR reaches the 60th percentile of the NASDAQ-100. Payouts increase or decrease based on EA's performance relative to that percentile.

Yes, recipients must generally remain employed by EA until the vesting date. The award agreements also include specific provisions for situations like a change of control of EA, and potential adjustments to prevent excise taxes under Section 280G of the Internal Revenue Code, although executives can opt to receive the full amount if it results in a better net after-tax benefit.