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The 2000 Equity Incentive Plan ("Equity Plan"), which was approved by the stockholders on March 22, 2000,
continues EA's program of providing equity incentives to eligible employees, officers and directors. We offer
these incentives in order to assist in recruiting, retaining and motivating qualified employees, officers and
directors. Since the Equity Plan's adoption, 120,865,000 shares of common stock have been reserved for
issuance. For more information regarding the Equity Plan, please read the summary of its material terms, as
proposed to be amended, included as Appendix A of this Proxy Statement, and full text of the Equity Plan, as
proposed to be amended, filed with the SEC on or about June 14, 2013.
We are proposing amendments to the Equity Plan that would:
Increase the number of shares authorized under the Equity Plan by 18,000,000 shares to a total of
We believe that alignment of the interests of our stockholders and our employees, officers and directors is best
advanced through the issuance of equity incentives as a portion of their total compensation. In this way, we
reinforce the link between our stockholders and our employees', officers' and directors' focus on personal
responsibility, creativity and stockholder returns. Equity incentives such as stock options and RSUs also play
an important role in our recruitment and retention strategies, as the competition for creative and technical
talent and leadership in our industry is intense.
While equity is a strategic tool for recruitment and retention, we also carefully manage stock option and RSU
issuances and strive to keep the dilutive impact of the equity incentives we offer within a reasonable range.
The proposal to increase the number of shares authorized by 18,000,000 was determined based on the results
of an internal calculation of the cost of the Equity Plan based on a shareholder value transfer model used by
some advisors; the current request of 18,000,000 shares, together with the total value of stock option and RSU
awards outstanding, and shares available to grant under the Equity Plan as of May 20, 2013, represents less
than 12% of our market capitalization.
During fiscal 2013, we granted stock options to purchase a total of 296,087 shares, 9,151,411 RSUs and
performance-based RSUs with target vesting of 970,000 shares (of which a maximum of 200% of target or
1,940,000 shares could be earned if the highest level of performance is attained). Together, these grants of
stock options, RSUs and performance-based RSUs (assuming target vesting) represented approximately 3.4%
of our fiscal 2013 weighted average common shares outstanding; further, taking into consideration options,
RSUs and performance-based RSUs that were cancelled, forfeited or expired during fiscal 2013, these grants
represents approximately 1.7% of our fiscal 2013 weighted average common shares outstanding.
As of May 20, 2013, the Company had 7,220,236 outstanding stock options under all plans with a weighted
average exercise price of $35.1966 and a weighted average remaining contractual life of 4.32 years. Also, as of
that same date, there were 14,190,022 granted but unvested shares of restricted stock and RSUs, including all
time-based RSUs, performance-based RSUs (including 1,173,339 performance-based RSUs that were granted at
the maximum 200% of the number of shares targeted to vest), but excluding 114,000 RSUs awarded to directors
that have vested but have been deferred and remain unreleased. As a result, as of May 20, 2013, the number of
shares remaining available for future grant under all plans was 12,586,905 shares available for issuance as stock
options or 8,802,031 shares available for issuance as restricted stock and RSUs. Going forward, we intend to
continue to responsibly manage issuance of equity incentive awards under the Equity Plan.
Historically, we have made a significant portion of our equity grants in a given fiscal year in connection with
our annual reviews and merit increases and we believe that an additional 18,000,000 shares is sufficient to
support our equity incentive programs for approximately two years based on historical granting practices.
However, our practice has been to propose an annual increase to the number of shares authorized under the
Equity Plan based on the allowable industry limits under the shareholder value transfer model and it is
expected that we will continue to follow this practice and request additional shares at the 2014 Annual
The Equity Plan contains several features designed to protect stockholders' interests. For example, the Equity
Plan does not allow any options to be granted at less than 100 percent of fair market value, and the exercise