8-KLeadership ChangesShareholder MattersOther Events+1

ELECTRONIC ARTS INC. 8-K Report, Executive Changes (Aug 3, 2018)

Filed August 3, 2018For Securities:EA

Summary

Electronic Arts Inc. (EA) filed an 8-K report on August 2, 2018, detailing key events including the adoption of a new bonus plan addendum for Fiscal Year 2019 and the outcomes of their Annual Stockholder Meeting. The Fiscal 2019 Bonus Plan Addendum introduces material changes to bonus calculations, with a significant shift in weighting for bonus pool funding towards business performance rather than financial metrics for employees other than the CEO. The CEO's bonus will be assessed based on a combination of financial and strategic objectives, with specific caps and a net income threshold for any payout. The company also reported on its Annual Stockholder Meeting held on August 2, 2018, where all nominated directors were re-elected, advisory votes to executive compensation were approved, and the appointment of KPMG LLP as the independent auditor for FY2019 was ratified. Additionally, the Board made changes to committee compositions, appointing Ms. Talbott Roche to the Audit Committee and Ms. Heidi Ueberroth to the Compensation Committee. Executive Vice President Jacob J. Schatz also established a pre-arranged stock trading plan.

Key Highlights

  • 1Adoption of a revised Bonus Plan Addendum for Fiscal Year 2019, with significant changes to bonus pool funding allocation.
  • 2For employees other than the CEO, bonus pool funding will be 50% based on company financial performance (25% non-GAAP EPS, 25% non-GAAP net revenue) and 50% on business performance objectives (up from 20% financial, 80% business).
  • 3CEO Andrew Wilson's bonus payout determination will be based 60% on financial performance (non-GAAP net revenue, gross profit, operating expenses, non-GAAP EPS, operating cash flow) and 40% on strategic/operational objectives.
  • 4CEO bonus payout is capped at the lesser of 300% of target bonus or $5 million, with no bonus payable if net income falls below a certain threshold.
  • 5All incumbent directors were re-elected at the Annual Stockholder Meeting.
  • 6Stockholders provided an advisory vote to approve the compensation of named executive officers.
  • 7KPMG LLP was ratified as the independent registered public accounting firm for Fiscal Year 2019.

Frequently Asked Questions

The Fiscal 2019 bonus plan significantly alters the funding of the bonus pool. For employees other than the CEO, the bonus pool will be funded 50% by company financial performance (non-GAAP EPS and net revenue) and 50% by business performance and strategic objectives. This is a shift from the prior year's 20% financial and 80% business performance weighting. For the CEO, the bonus is weighted 60% on financial metrics and 40% on strategic/operational objectives.

The CEO's bonus payout for Fiscal Year 2019 is subject to a cap, not exceeding the lesser of 300% of his target bonus or $5 million. Additionally, no bonus will be payable if the company's net income falls below a specified threshold, ensuring alignment with overall company profitability.

Yes, the Board appointed Ms. Talbott Roche to the Audit Committee and Ms. Heidi Ueberroth to the Compensation Committee, effective August 2, 2018. Ms. Roche stepped down from the Compensation Committee upon her appointment to the Audit Committee. Both appointees meet independence requirements.

The advisory vote on the compensation of the named executive officers was approved by the stockholders, indicating general shareholder support for the company's executive compensation practices.