8-KLeadership ChangesOther EventsExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (May 16, 2013)

Filed May 16, 2013For Securities:EA

Summary

This 8-K filing from Electronic Arts Inc. (EA) on May 16, 2013, primarily announces key changes to its Board of Directors and updates to executive compensation plans. Gregory B. Maffei, a long-serving director, will retire at the upcoming annual meeting. In his place, Denise F. Warren, an EVP from The New York Times Company, has been appointed as an independent director, increasing the Board's size to nine members. Ms. Warren will also serve on the Audit Committee. Additionally, EA has approved an addendum to its bonus plan for fiscal year 2014, largely mirroring the previous year's structure but removing specific CEO bonus provisions. The funding for the bonus pool will be weighted 20% on company performance and 80% on business unit performance. The filing also details the approval of Performance-Based Restricted Stock Unit (PRSU) awards for senior executives, tied to EA's Total Shareholder Return (TSR) performance relative to the NASDAQ-100 over a three-year period. The vesting of these PRSUs is contingent on EA's relative TSR achieving specific percentile thresholds.

Key Highlights

  • 1Gregory B. Maffei to retire from the Board of Directors at the 2013 Annual Meeting.
  • 2Denise F. Warren appointed as a new independent director, increasing Board size to nine.
  • 3Denise F. Warren joins the Audit Committee.
  • 4EA Bonus Plan Addendum for FY2014 approved, with 20% of bonus pool tied to company performance and 80% to business unit performance.
  • 5Performance-Based Restricted Stock Units (PRSUs) approved for senior executives.
  • 6PRSU vesting is contingent on EA's Total Shareholder Return (TSR) relative to the NASDAQ-100 over a three-year performance period (FY14-FY16).
  • 7Specific CEO bonus provisions removed from the FY2014 Bonus Plan Addendum.

Frequently Asked Questions

Gregory B. Maffei is retiring from the Board of Directors at the upcoming annual meeting. In his place, Denise F. Warren has been appointed as a new independent director, expanding the Board to nine members. Ms. Warren will also be a member of the Audit Committee.

The bonus pool funding for fiscal year 2014 will be based 20% on the Company's overall performance and 80% on business unit performance and the achievement of specific business objectives. This structure is similar to the prior year, with an exception for the removal of specific CEO bonus provisions.

The PRSUs are equity awards granted to senior executives (EVP and higher) where the number of shares that vest is tied to EA's Total Shareholder Return (TSR) performance relative to the NASDAQ-100 Index over a three-year period (fiscal years 2014-2016). Vesting depends on achieving specific percentile ranks of EA's TSR compared to the NASDAQ-100, with a target requiring EA to be at the 60th percentile.

Yes, there are limitations. If EA's TSR is negative in a given measurement period, the maximum vesting is capped at 100% of the target award for that period, even if the relative performance is higher. Additionally, the number of shares vesting will not exceed five times the per-share value at the grant date. Vesting is also contingent on continued employment with EA, with specific provisions for change of control scenarios and accelerated vesting under certain termination conditions.