Leading publisher Electronic Arts has proved not to be as generous as previously reported. Last week, EA announced it would allow its employees to exchange their older stock options, currently priced above the stock’s current value, for shares of lucrative restricted stock. However, according to regulatory documents filed with the Securities and Exchange Commission, EA has altered their terms.
In an effort to appease shareholders, the new terms see significantly less options for employees. The revised plan reduces the number of shares that can be exchanged by employees by potentially several million.
Under the new plan, according to TheStreet.com, "employees would be able to exchange options that carried an exercise price 25% or more above the average closing price of EA’s shares on the five days prior to the day the exchange program begins. Previously, the company proposed that employees would be able to exchange options that carried an exercise price of 15% or more above the average closing price of EA shares over that period."
Additionally, EA also has the option to cancel the entire plan should stock continue to rise. According to company spokesman Jeff Brown, the decisions were made after gaining input from investors and Institutional Shareholder Services.
"People felt the floor needed to be slightly higher" for the options eligible for the exchange, Brown said. "We wanted this to be a win for employees and shareholders."
However, the entire program is still up for review. The plan needs company approval at EA’s annual meeting being held on July 27th. Interestingly enough, other terms of the plan remain the same. These include handing out 2.2 million new options and 600,000 additional restricted shares to a "select group" of employees. Does anyone else want to guess that these will include mostly top executives?
