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EA Offers Extra Stock To Retain Employees

According to a report on business website The Street, enhanced and new stock options are being offered to certain Electronic Arts employees in order to compensate for the...

David Jenkins, Blogger

July 5, 2006

2 Min Read

According to a report on business website The Street, enhanced and new stock options are being offered to certain Electronic Arts employees in order to compensate for the company’s poorly performing stock price, which has dropped by 18 percent in the past two years. As part of the new scheme, employees will be able to exchange stock options which are currently underwater (i.e. below the price at which they were initially issued) for full shares of stock. Various “key [EA] employees” will also be awarded additional shares of stock and options, in an attempt to incentivize them to remain at the company. The Street cites a proxy statement from the company which says: “Underwater options may not be sufficiently effective as performance and retention incentives. We believe that to enhance long-term stockholder value we need to maintain competitive employee compensation and incentive programs that will assist us to motivate and retain our employees." The plan will need shareholder approval in order to exchange the options, although not the retention awards, which will be sought at the company’s annual meeting on July 27th. With shareholders likely to be dissatisfied with the performance of their own stock, it is not immediately clear how amenable they will be to the proposals. Nonetheless, this issue will also come to the fore at a number of other major game companies whose employees may have been partly paid in company shares. For example, Activision is currently trading at $11.69, down from a 52-week high of $18.03, and even the relatively stable THQ is at $21.84, down from a 52-week high of $28.17. Worst of all, the embattled Take-Two is at $10.60, down massively from a 52-week high of $28.16, though this is more due to the company's continuing legal troubles than just the state of the console transition.

About the Author(s)

David Jenkins

Blogger

David Jenkins ([email protected]) is a freelance writer and journalist working in the UK. As well as being a regular news contributor to Gamasutra.com, he also writes for newsstand magazines Cube, Games TM and Edge, in addition to working for companies including BBC Worldwide, Disney, Amazon and Telewest.

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