8-KLeadership ChangesExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (Jun 28, 2016)

Filed June 28, 2016For Securities:EA

Summary

Electronic Arts Inc. (EA) filed an 8-K on June 28, 2016, detailing the adoption of its Bonus Plan Addendum for the fiscal year ending April 1, 2017. This addendum outlines the performance metrics and weighting that will determine bonus payouts for eligible employees, including the Chief Executive Officer (CEO), Andrew Wilson. The plan aims to align executive and employee compensation with both financial and strategic business objectives, providing a framework for variable compensation in the upcoming fiscal year. For most employees, bonus pool funding is split between financial performance (20%, based on non-GAAP EPS and net revenue) and business objectives (80%). The CEO's bonus structure is more heavily weighted towards financial performance (60%), with key metrics including net revenue, gross profit, operating expenses, earnings per share, and operating cash flow. The remaining 40% for the CEO is tied to strategic and operational goals. The Board retains discretion in determining final payouts, with a provision for potentially withholding bonuses if net income falls below a specific threshold.

Key Highlights

  • 1EA adopted a Bonus Plan Addendum for fiscal year ending April 1, 2017.
  • 2Bonus funding for most employees is 20% financial performance (non-GAAP EPS, net revenue) and 80% business objectives.
  • 3CEO Andrew Wilson's bonus is 60% financial performance (net revenue, gross profit, operating expenses, EPS, operating cash flow) and 40% strategic/operational objectives.
  • 4The Board of Directors has discretion over the CEO's final bonus payout.
  • 5A minimum net income threshold may be required for the CEO to receive a bonus.
  • 6The addendum aligns compensation with company and business unit performance.
  • 7The full Addendum is filed as Exhibit 10.1 to the 8-K.

Frequently Asked Questions

The primary purpose is to establish the criteria and weighting for determining bonus payouts for eligible employees, including the CEO, for the fiscal year ending April 1, 2017. It aims to link compensation to both the company's financial performance and the achievement of specific business objectives.

CEO Andrew Wilson's bonus is structured with 60% tied to financial performance metrics such as net revenue, gross profit, operating expenses, earnings per share, and operating cash flow. The remaining 40% is based on the achievement of strategic and operational objectives.

Yes, the Board of Directors has the discretion to determine not to pay the CEO a bonus if the company's net income falls below a certain threshold, as determined by the Compensation Committee.

For most employees, 20% of their bonus pool funding is based on the company's financial performance, specifically non-GAAP earnings per share and non-GAAP net revenue. The remaining 80% is based on business performance and the achievement of measurable business objectives.