Documents filed with the Securities and Exchange Commission on Thursday by Electronic Arts indicate that the company has modified its stock option plan to help compensate for its reduced stock price, according to a new report
Under the new plan, employees of Electronic Arts will be permitted to exchange their options for safer 'restricted shares' for any options whose price was 25 percent or more above EA's average share price, on the five days prior to the day the exchange program begins.
As TheStreet explains: "With the company's stock off 16% over the last two years, insiders now hold millions of options with exercise prices far above the current share price, meaning that they may not be able to cash them in for years, if ever."
In addition, the report noted that under the new terms, fewer options would qualify for the exchange, and EA would cancel the program outright should the company's stock meet or exceed $55 for the the five-day period.
The report noted that, according to EA spokesman Jeff Brown, the decision was made “after gaining input on the program from investors and Institutional Shareholder Services, the leading proxy voting advisor.” “We wanted this to be a win for employees and shareholders,” he added. This new proposal is a 10 percent share difference increase over the previous proposal, since the company is currently deciding exactly how to give its employees incentives.