A few months ago, Michelle wrote a post about Barry Cottle, an executive at Electronic Arts, Inc. (EA) who jumped ship and fled to Zynga, Inc. (ZNGA), where he got a bundle of stock, salary, and bonuses worth about $30 million. We can’t top that number in today’s post, but we can reassure you that you need not pity the remaining executives at Electronic Arts too much.
EA filed its proxy late last Friday afternoon, and the compensation that the executives received is noteworthy for a few reasons. But first, here are a couple of examples:
CEO John Riccitiello’s total compensation rose from $5.9 million in fiscal 2011 to $9.5 million in fiscal 2012. The lion’s share of that, $7.1 million, came in the form of Restricted Stock Units (RSUs). But he also got $865,538 in salary (which includes a raise of $65,538 from the $800,000 salary he got the prior year) and a non-equity incentive bonus worth more than $1.5 million.
And the total compensation for Frank Gibeau, president, EA Labels, shot up to nearly $9.8 million from the nearly $4.1 million that he received the prior fiscal year. Gibeau received $8.38 million of that amount in RSUs, which split out to roughly 58% time-based and 42% performance-based awards.
For Riccitiello, this compensation package — while substantially more than what he got last year — is really a return to the ballpark of the $9.8 million total compensation that he received in fiscal 2009. For Gibeau, on the other hand, the increase is more than double what he got last year and more than 265% of what he received in fiscal 2009. However, we note that the role of President of EA Labels was a new one for Gibeau in fiscal 2012.
One thing that hasn’t changed much in the past couple years is the relevance of (MercuryNews.com reporter) Steve Johnson’s 2010 article entitled, “The boss’s pay isn’t always linked to company’s size or profitability.” But other factors have changed: The stock price for Electronic Arts has continued to tank. Compared to 1 year ago, the stock is trading nearly 41% lower; expand that view to a 5-year window, and it’s down more than 72%. About a month ago, the Wall Street Journal noted that although fourth-quarter earnings beat expectations, the company’s outlook was “disappointing.” And the company recently admitted that although it will soon be jumping on the “freemium” bandwagon, it lagged behind competitors, according to this AllThingsD article by reporter Tricia Duryee.
So why the big increase? Well, Electronic Arts gives various reasons for its decisions on pages 33 – 54 of the proxy, including successfully executing on its multi-year strategy, meeting or exceeding financial goals, and achieving operational and structural goals. But whether any of those reasons will mollify grumpy investors, we simply can’t say.
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