UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(D) of The
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) June 7, 2012
ELECTRONIC ARTS INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 0-17948 | 94-2838567 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
209 Redwood Shores Parkway, Redwood City, California 94065-1175
(Address of Principal Executive Offices) (Zip Code)
(650) 628-1500
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
Adoption of EA Bonus Plan Addendum
On June 7, 2012, the Board of Directors (the Board) of Electronic Arts Inc. (EA or the Company), upon the recommendation of the Executive Compensation and Leadership Committee (Committee), approved a Bonus Formula Addendum for the fiscal year ending March 31, 2013 (the Addendum) pursuant to the EA Bonus Plan (the Plan). Although EA generally expects to pay bonuses to our named executive officers pursuant to the terms of the Electronic Arts Inc. Executive Bonus Plan (the Executive Bonus Plan), the Committee or Board may use the criteria described in the Addendum as a guideline to determine the final amount of the bonus awards paid to the named executive officers under the Executive Bonus Plan or to award discretionary bonus payments to the named executive officers in accordance with the terms of the EA Bonus Plan.
Except as modified by the Addendum, the Plan and its material features remain unchanged. A copy of the full text of the Plan was filed on November 8, 2010 as Exhibit 10.1 to EAs Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. A copy of the full text of the Addendum is filed as Exhibit 10.1 hereto and is incorporated by reference herein.
The terms of the Addendum provide for the funding of a Company-wide bonus pool for the payment of Plan bonuses for fiscal 2013. Bonus pool funding will be approved, at the discretion of the Committee based on the following: (i) 20% of the funding is based on the Companys performance; and (ii) 80% of the funding is based on business unit performance and the achievement of measurable business objectives, including, but not limited to, business unit financial and operational performance metrics, such as profit and revenue targets. Management will then allocate, at its discretion, a percentage of the approved bonus pool funding to each business unit.
There are two types of bonus award payouts that may be awarded from the bonus pool funding to eligible participants for fiscal 2013: (1) annual bonus awards; and (2) mid-year bonus awards. Annual bonus award payouts for fiscal 2013 will be payable in or around June 2013 to all eligible regular status employees, including executive officers of the Company (and its subsidiaries and affiliates). In the discretion of management, some participants may be selected to receive a mid-year bonus award payout, which may either be in addition to, or in place of, all or part of a participants annual bonus award. Mid-year bonus awards, if any, may be paid at any time prior to the end of the fiscal year.
Each eligible participant has an annual target bonus amount that is expressed as a percentage of his or her annual base salary. A participants annual bonus award payout is generally determined based on an assessment of: (i) the participants target bonus; (ii) the percentage of bonus pool funding allocated to a participants business unit; and (iii) the participants individual achievement factor, as determined by the participants manager. Mid-year bonus award payouts may be based on factors such as the achievement of short-term performance goals, outstanding individual accomplishments or such other terms and conditions as may be determined at the discretion of management or the Committee.
With respect to the Companys Chief Executive Officer, Mr. Riccitiello, a total of 75% of his fiscal 2013 bonus may be funded based upon the achievement of financial performance objectives with the key metrics being: (i) the Companys non-GAAP earnings per share, (ii) the Companys non-GAAP net revenue, (iii) the Companys digital revenue; and (iv) profit and revenue targets for the PopCap business unit. The remaining 25% of Mr. Riccitiellos fiscal 2013 bonus will be funded based on his individual performance and the achievement of measurable business objectives, including, but not limited to, strategic and operational objectives. Bonus components based on Company or business unit financial objectives may be funded between zero and 200% based on the Companys actual performance versus fiscal year targets. Bonus components based on non-financial objectives will be funded at the discretion of the Board.
Mr. Riccitiellos annual bonus award payout will be determined by the Board based upon an overall assessment of the following: (i) his target bonus amount; (ii) the funding of Financial and Individual Performance bonus components; and (iii) the Companys total stockholder return (TSR) for fiscal 2013 relative to the performance of those companies in the NASDAQ-100 Index on April 1, 2012 (the NASDAQ-100).
The Companys TSR will determine a multiplier ranging from 50% to 150% based on the relative TSR percentile ranking of the Company as compared to the NASDAQ-100 for fiscal 2013. TSR will be calculated using the closing stock prices of the NASDAQ-100 for the last 90 days of the Companys fiscal year 2013 as compared to the average closing stock prices of the NASDAQ-100 for the first 90 days of the Companys fiscal year 2013. To determine the Companys relative TSR percentile ranking, the TSR of the NASDAQ-100 will be ranked from the highest to lowest according to each companys respective TSR. The TSR multiplier will equal 100% if the Companys TSR is at the 60th percentile of the NASDAQ-100. If EAs TSR is above the 60th percentile, the TSR multiplier will increase by 3% for each percentile above up to a maximum of 150% at the 77th percentile. If EAs TSR is below the 60th percentile, the TSR multiplier will decrease by 2% for each percentile below to a minimum of 50% at the 35th percentile. In addition, Mr. Riccitiellos bonus payout for fiscal 2013 is subject to an overall cap equal to 200% of his fiscal 2013 target bonus amount.
The foregoing description of the Addendum does not purport to be complete and is qualified in its entirety by reference to the Addendum, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
Description | |
10.1 | EA Bonus Plan Addendum* |
* | Management contract or compensatory plan or arrangement. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ELECTRONIC ARTS INC. | ||
Dated: June 11, 2012 | By: /s/ Stephen G. Bené | |
Stephen G. Bené | ||
Senior Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
Exhibit No. |
Description | |
10.1 | EA Bonus Plan Addendum* |
* | Management contract or compensatory plan or arrangement |
Exhibit 10.1
EA Bonus Plan
Addendum
FY13 Bonus Formula
Subject to all other terms and conditions of the EA Bonus Plan (Plan)*, those Plan Participants who have been specifically identified by Electronic Arts Inc. (the Company) as eligible to receive a discretionary bonus pursuant to the terms of this Addendum shall have such bonus determined as follows:
1. | Additional Eligibility Criteria, If Any: |
n/a (see Plan eligibility criteria)
2. | Fiscal Year 2013 Bonus Pool |
Funding for a Company-wide bonus pool (Bonus Pool) for Fiscal Year 2013 will be approved, on a discretionary basis, by the Executive Compensation and Leadership Committee of the Companys Board of Directors (the Committee).
3. | Bonus Awards for Eligible Participants Other than the Chief Executive Officer (CEO) |
Bonus |
Weight |
Performance Measure(s) |
Measurement Period(s) | |||
Company Performance | 20% | EAs external guidance targets for Non-GAAP Earnings Per Share and Non-GAAP Net Revenue | Fiscal Year 2013 | |||
Business Unit Performance | 80% | The achievement of measurable business objectives, including, but not limited to, business unit financial and operational performance metrics, profit and revenue targets | Fiscal Year 2013 |
The Company Performance component is funded based on the Companys performance against Non-GAAP Earnings Per Share and Non-GAAP Revenue targets for the Measurement Period.
The Business Unit Performance component is funded at the discretion of the Committee.
a. | Allocation of Bonus Pool Funding To Business Units: |
Following the completion of the Measurement Period, Company management will allocate, at its discretion, a percentage of the Bonus Pool funding to each business unit. Such allocation will be based upon the achievement of measurable business unit objectives or such other factors as Company management deems relevant to the business units performance.
Subject to local laws, rules and regulations, Company management may also allocate, at its discretion, a percentage of any approved Bonus Pool funding to business units for the payment of bonus awards to selected Participants at any time prior to the end of the Measurement Period (Mid-Year Bonus Awards).
b. | Individual Bonus Award Payouts: |
Annual Bonus Award payouts: in most circumstances, Annual Bonus Award payouts will be determined based upon an assessment of:
(1) | the Participants target bonus amount; |
(2) | the percentage of the Bonus Pool allocated to a Participants business unit; and |
(3) | the Participants Individual Achievement Factor, as determined by the Participants manager. |
The Individual Achievement Factor is a multiplier (generally ranging from zero to 200%) which takes into account the Participants contributions to the Company for the fiscal year relative to individual performance expectations.
Mid-Year Bonus Award payouts: Subject to local laws, rules and regulations, some Participants may receive a Mid-Year Bonus Award payout. Mid-Year Bonus Awards may be either: (1) in addition to; or (2) in place of, all or part of a Participants Annual Bonus Award. The actual earning and payout of a Mid-Year Bonus Award is discretionary and may be based on factors such as the achievement of short-term performance goals, outstanding individual accomplishments or such other terms and conditions as may be determined at the discretion of Management and/or the Committee.
Where applicable, the Committee will approve individual Participant bonus award payouts.
4. | Bonus Awards for the CEO: |
Bonus |
Weight |
Performance Measure(s) |
Measurement Period(s) | |||
Financial Performance |
75% | Non-GAAP Earnings Per Share, Non-GAAP Net Revenue, Non-GAAP Digital Revenue, and PopCap profit and revenue targets | Fiscal Year 2013 | |||
Individual Performance | 25% | The achievement of measurable business objectives, including, but not limited to, strategic and operational performance metrics | Fiscal Year 2013 |
The Financial Performance component is funded based on the Companys performance against Non-GAAP Earnings Per Share, Non-GAAP Revenue, Non-GAAP Digital Revenue and PopCap profit and revenue targets for the Measurement Period.
The Individual Performance component is funded at the discretion of the Companys Board of Directors.
Annual Bonus Award payout: An Annual Bonus Award payout for the CEO will be determined based upon an overall assessment of the following:
(1) | the CEOs target bonus amount; |
(2) | the funding of the Financial Performance and Individual Performance components; |
(3) | the Companys relative total stockholder return (TSR) for Fiscal Year 2013 as compared to those companies in the NASDAQ-100 Index on April 1, 2012 (the NASDAQ-100). |
The Companys relative TSR will determine an overall bonus multiplier to be applied to the CEOs bonus, ranging from 50% to 150%, with the multiplier percentage to be determined as follows:
| TSR for Fiscal Year 2013 for each company in the NASDAQ-100 will be calculated as the percentage change in the average closing stock price of the company for the last 90 days of Fiscal Year 2013 as compared to the average closing stock price of the company for the first 90 days of Fiscal Year 2013. |
| To determine the Companys relative TSR percentile ranking, the TSR for Fiscal 2013 of each company in the NASDAQ-100 will be ranked from the highest (100th percentile) to lowest (1st percentile) according to each companys respective TSR as determined above. |
| The TSR multiplier will be determined based on the relative TSR percentile ranking of the Company within the rankings of the companies in the NASDAQ-100, as follows: |
Companys TSR Percentile Ranking |
TSR Multiplier for CEO Bonus | |||
MAXIMUM | 77th percentile or greater | 150% | ||
61st to 76th percentile | 100% plus 3% for each percentile over 60th | |||
TARGET | 60th percentile | 100% | ||
36th to 59th percentile | 100% minus 2% for each percentile under 60th | |||
MINIMUM | 35th percentile or less | 50% |
The Companys Board of Directors will approve the Annual Bonus Award payout for the CEO after assessing the factors set forth above, and has discretion to increase or decrease the final bonus payout based on any such other factors it deems applicable, provided that the final bonus payout shall not exceed 200% of the CEOs Fiscal Year 2013 target bonus amount.
5. | Payment Schedule: |
1. | Annual Bonus Awards will be paid as soon as administratively practicable following the completion of the Measurement Period and the Committees approval of the Bonus Pool. |
2. | Mid-Year Bonus Awards: Mid-year Bonus Awards will be paid in accordance with the specific terms and conditions applicable to such awards. |
* Including, but not limited to: (1) the Plan Participant must be actually employed by EA or one of its subsidiaries or affiliates on the date that each payment is made pursuant to the Plan in order to earn the right to receive each such payment, (2) except where otherwise required by local law, at any time until the date that bonuses are paid under the Plan, the individual must not have (i) violated any provision of EAs Code of Conduct, any other written EA policy and any law, rule or regulation applicable to EA and EA employees, or (ii) entered into an employment termination or separation agreement (not including agreements entered into in connection with the commencement or continuation of employment), and (3) eligibility to receive a bonus calculated pursuant to this Addendum does not guarantee the payment of any bonus for a specific Performance Period, nor does it guarantee employment for any specific period of time. Capitalized terms in this Addendum shall have the meanings set forth in the Plan, except where such terms are separately defined in this Addendum.