8-KLeadership ChangesExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (May 18, 2018)

Filed May 18, 2018For Securities:EA

Summary

Electronic Arts Inc. (EA) filed an 8-K on May 17, 2018, detailing amendments to several executive compensation and benefit plans, primarily driven by changes in U.S. tax law. The company amended its Executive Bonus Plan and EA Bonus Plan to remove provisions related to Section 162(m) of the Internal Revenue Code, which became inapplicable to performance-based cash awards due to the U.S. Tax Cuts and Jobs Act. These amendments do not alter the material terms or bonus caps of these plans. Furthermore, EA approved performance-based restricted stock unit (PRSU) awards for employees at the senior vice president level and above, also removing Section 162(m) provisions to align with tax law changes. These PRSUs are scheduled for grant on June 18, 2018. The company also updated its Change in Control Plan by revising the specified employee list in Schedule A to reflect recent organizational changes and officer title updates, including the addition of Matt Bilbey. The core terms of the Change in Control Plan remain unchanged.

Key Highlights

  • 1Amendments to Executive Bonus Plan and EA Bonus Plan to comply with new U.S. tax law (Tax Cuts and Jobs Act) by removing provisions related to Section 162(m) of the Internal Revenue Code.
  • 2No change in material terms or bonus caps for the Executive Bonus Plan and EA Bonus Plan.
  • 3Approval of performance-based restricted stock unit (PRSU) awards for senior executives (SVP and above), with grants expected June 18, 2018.
  • 4PRSU awards also updated to remove Section 162(m) provisions due to tax law changes.
  • 5Revision of Schedule A of the Change in Control Plan to update the list of specified employees.
  • 6Addition of Matt Bilbey, EVP of Strategic Growth, to the Change in Control Plan's specified employee list.
  • 7Material terms of the Change in Control Plan remain unchanged.

Frequently Asked Questions

EA amended these plans primarily due to changes in U.S. tax law, specifically the Tax Cuts and Jobs Act. This legislation rendered certain provisions related to Section 162(m) of the Internal Revenue Code inapplicable to performance-based cash awards, necessitating the removal of these specific clauses from the bonus plans.

No, the filing explicitly states that all other material terms of the Executive Bonus Plan and EA Bonus Plan remain unchanged, including the bonus caps. Therefore, these amendments related to tax law do not alter the maximum potential bonus amounts payable under these plans.

The approval signifies EA's continued use of performance-based restricted stock units as a component of executive compensation. The awards, to be granted to senior executives, are structured to align with company performance while adapting to the revised tax landscape by removing Section 162(m) related provisions.

The employee list in Schedule A of the Change in Control Plan was updated to reflect recent organizational changes and title adjustments for certain officers. This ensures the plan accurately designates individuals covered by its provisions in the event of a change in control.