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Gaming the housing bust at Electronic Arts __»

The news this morning that existing home sales slipped 2.2% last month is a cold reminder that the housing crisis is still with us. Most of us, anyway — at the rarified heights of the executive suite, the economics sometimes look a little different.

That’s illustrated by the real-estate fortunes of John Schappert, an in-demand software executive at Electronic Arts (ERTS) who spent a two-year hiatus at Mircosoft (MSFT) before heading back to EA last year. Parts of the proxy that Electronic Arts (ERTS) filed just after 4 p.m. on Friday served as a vivid reminder of an observation that we’ve made before: pay at video-game companies can require some of the same suspension of disbelief that their games do.

Among other tidbits, the proxy laid out the cost of the relocation benefits provided to Schappert, who was wooed back to EA after jumping ship to Microsoft in 2007 to become a corporate vice-president there. Now, back at EA, he’s chief operating officer.

EA clearly wanted him back pretty badly, and he managed to drive a decent bargain to accommodate them. In addition to $600,000 a year in salary, the proxy shows he got an estimated $2.5 million in restricted-stock awards (much of which will vest over time), options valued at $4.1 million, and a $1 million cash sign-on bonus “to offset for foregone cash bonus and equity awards that he was eligible to receive from his prior employer.” (Frankly, these days, we’d probably pick cash over Microsoft stock, too.)

Then there’s his “other compensation” — a cool $1.98 million. A smidgen of that is from company contributions to his retirement and insurance benefits. But the vast majority suggests that the once-and-future EA executive can pretend a big chunk of recent history never happened: the housing crisis.

EA reported spending $1.24 million on “relocation-related costs,” which the proxy describes as including ” a house-hunting trip, temporary housing, home sale costs, home purchase costs, shipping of household goods and a miscellaneous relocation allowance.”

None of those costs are broken out by value. But the relo package also includes an unspecified amount

“related to the loss in value resulting from the sale of his home, measured as the difference between the original purchase price of the home and the fair market value, assessed using independent appraisals, immediately prior to marketing the home for sale.”

In other words, whatever Schappert bought his house for, and whenever he bought it, Electronic Arts paid him that much. Never mind that the S&P Case-Schiller index of average U.S. home prices was falling pretty steadily until recently, and remains down 29% from its peak and a good 16.5% from the summer Schappert joined Microsoft.

Then, in addition to the $1.24 million of actual relocation costs, EA also paid $736,210 to cover Schappert’s tax bill on the benefits. Most of that, or $649,287, appears to have gone to cover the loss on sale.

For what it’s worth, it looks like a John and Kelly Schappert bought this house in Clyde Hill, Washington, on August 2007 for $3.5 million, and sold it again in August 2009 for $2.5 million, according to this report from Blockshopper.com. The Clyde Hill house is a little under eight miles from Schappert’s former employer’s campus at 1 Microsoft Way in Redmond, Washington. If it’s the right one, then it seems EA swallowed a cool $1 million loss on the house, plus $649,287 for his tax bill. Schappert, meantime, seems to be living in a 6-bedroom, 5,420 square-foot house in Atherton, California, that recently sold for $5.4 million. (A John Schappert, identified at the time as a Microsoft executive, also reportedly bought a 8,759-square-foot house in Coral Gables, Florida, in February 2009.)

We’ve contacted the company, and we’ll update the post if we get a statement. In the meantime, maybe under Schappert’s guidance, EA can update its line of Monopoly video games. We suggest letting players dodge housing busts by landing in the C-suite — passing Go and collecting a few million along the way.

Image source: lumaxart via Flickr

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