8-KLeadership ChangesExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (Feb 15, 2017)

Filed February 15, 2017For Securities:EA

Summary

Electronic Arts Inc. (EA) filed an 8-K on February 15, 2017, to announce significant amendments to its Key Employee Continuity Plan, now renamed the Electronic Arts Inc. Change in Control Plan. The primary objective of this amendment is to extend the plan's duration to February 9, 2023, and to enhance its provisions for key employees in the event of a change in control coupled with a termination of employment without cause or for good reason. These amendments introduce updated definitions, benefits, and administrative procedures. Notably, eligible employees terminated under these specific circumstances within a defined window around a change in control will be entitled to enhanced severance packages. These packages include lump-sum cash payments based on their salary and target bonus, accelerated vesting of unvested equity awards (both stock options and RSUs), pro-rata acceleration of performance-based equity, pro-rata payouts of performance cash awards, and continued medical, dental, and vision coverage for a specified period. These changes aim to provide a robust retention and protection mechanism for critical talent during potential transition periods.

Key Highlights

  • 1Electronic Arts Inc. (EA) amended and restated its Key Employee Continuity Plan, renaming it the Electronic Arts Inc. Change in Control Plan.
  • 2The plan's term has been extended from its original expiration on February 7, 2018, to February 9, 2023.
  • 3The Amended Plan provides enhanced severance benefits to eligible employees terminated without cause or for good reason in connection with a change in control.
  • 4Severance includes a lump-sum cash payment (2x base salary + target bonus for CEO, 1.5x for EVPs, 1.0x for SVPs).
  • 5Unvested stock options and non-performance-based RSUs will receive 100% acceleration.
  • 6Performance-based RSUs and performance cash awards will receive pro-rata acceleration based on defined terms.
  • 7Eligible employees will receive extended medical, dental, and vision coverage, ranging from six to 24 months post-termination.

Frequently Asked Questions

The plan is designed to provide financial security and benefits to key employees in the event their employment is terminated without cause or for good reason following a change in control of the company. This aims to ensure retention of critical talent during periods of potential transition and uncertainty.

Eligible employees are entitled to a lump-sum cash payment (calculated as a multiple of base salary and target bonus depending on their position), 100% acceleration of unvested stock options and restricted stock units, pro-rata acceleration of performance-based equity awards, pro-rata payout of performance cash awards, and extended medical, dental, and vision coverage for six to 24 months.

Eligibility applies to employees classified as CEO, Executive Vice Presidents (EVPs), and Senior Vice Presidents (SVPs) who experience termination of employment without 'cause' or for 'good reason' within a specific timeframe (three months before or 18 months after) a 'change in control,' provided they execute a severance agreement and release.

The Amended Plan is effective as of February 9, 2017, and is set to terminate on February 9, 2023, unless the Board decides to extend or terminate it earlier.