SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant ࠚ Filed by a Party other than the Registrant □ Check the appropriate box: □ Confidential, for Use of the Commission Only □ Preliminary Proxy Statement (as Permitted by Rule 14a-6(e)(2)) ࠚ Definitive Proxy Statement □ Definitive Additional Materials □ Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12 ELECTRONIC ARTS INC. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): ࠚ No Fee Required. □ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. □ $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). □ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: □ Fee paid previously with preliminary materials. □ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Notes: February 28, 2000 DEAR FELLOW STOCKHOLDERS: You are cordially invited to join us at a Special Meeting of Stockholders that will be held at Electronic Arts’ auditorium, located at 207 Redwood Shores Parkway in Redwood City, California on March 22, 2000 at 10:00 a.m. At this meeting the stockholders will be asked to approve our Tracking Stock Proposal by which we will create a new class of our common stock that is designed to reflect the performance of our online games business. We are also seeking stockholder approval of a new equity plan to enable equity awards in the new class of common stock and of a new equity plan for awards in our existing common stock. Enclosed with this Proxy Statement are your voting instructions. We know that it is not practical for most stockholders to attend the Special Meeting in person. Whether or not you attend, your vote is important. You can vote your shares via the Internet, or a toll-free telephone number. Instructions as to using these services are provided on your proxy card. Of course you may still vote your shares on the proxy card. I look forward to seeing you at the meeting. Sincerely, LAWRENCE F. PROBST III CHAIRMAN AND CHIEF EXECUTIVE OFFICER Whether or not you plan to attend the Special Meeting, we strongly encourage you to designate the proxies shown on the enclosed card to vote your shares. We are pleased to offer you three options for designating the proxies and indicating your voting preferences: (1) you may complete, sign, date and return by mail the enclosed proxy card OR (2) you may follow the instructions found on the proxy card and vote by telephone OR (3) you may follow the instructions found on the proxy card and vote via the Internet If you choose to vote via telephone or the Internet, you will have a PIN number assigned to you on the proxy card that you will use to safeguard your vote. NOTICE OF SPECIAL STOCKHOLDERS MEETING AND PROXY STATEMENT PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY Notice of Special Meeting of Stockholders DATE: March 22, 2000 TIME: 10:00 a.m. PLACE: ELECTRONIC ARTS HEADQUARTERS Auditorium—North Pole/South Pole 207 Redwood Shores Parkway Redwood City, CA 94065 MATTERS TO BE VOTED UPON: 1. Amendment and restatement of our certificate of incorporation so that it reads in its entirety as set forth on Appendix II to this Proxy Statement (the Tracking Stock Proposal). 2. Approval of the Electronic Arts Inc. 2000 Class B Equity Incentive Plan. 3. Approval of the Electronic Arts Inc. 2000 Class A Equity Incentive Plan. 4. Any other matters that may properly come before the meeting. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL. Stockholders owning Company shares at the close of business on February 1, 2000 are entitled to attend and vote at the meeting. A complete list of these stockholders will be available at the Company’s headquarters prior to the meeting. By Order of the Board of Directors, RUTH A. KENNEDY SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY PROXY STATEMENT TABLE OF CONTENTS Page QUESTIONS AND ANSWERS ABOUT OUR SPECIAL MEETING ......................... 1 PROXY STATEMENT SUMMARY ................................................. 4 RISK FACTORS ............................................................... 14 Risk Factors Relating to the Tracking Stock Proposal ................................... 14 Risk Factors Relating to EA.com .................................................. 20 Risk Factors Relating to Electronic Arts ............................................. 24 Forward Looking Statements ..................................................... 27 GENERAL .................................................................... 28 PROPOSAL 1—THE TRACKING STOCK PROPOSAL .................................. 29 Background of and Reasons for the Tracking Stock Proposal .............................. 29 Allocation Policies ............................................................ 31 Fiduciary Responsibilities and Management .......................................... 31 Intercompany Agreements ....................................................... 31 Dividends ................................................................... 32 Treasury Activities ............................................................ 32 Corporate General and Administrative Expense ........................................ 33 Description of Class A Common Stock and Class B Common Stock ........................ 33 Certain Other Provisions of the Restated Certificate and By-laws ........................... 45 Certain Provisions of Delaware Law ................................................ 46 No Appraisal Rights ........................................................... 46 Stock Transfer Agent and Registrar ................................................ 46 Issuance of Class B Common Stock to America Online, Inc. and News America Incorporated ..... 46 Federal Income Tax Considerations ................................................ 50 PROPOSAL 2—2000 CLASS B EQUITY INCENTIVE PLAN ............................. 51 General Description of the 2000 Class B Equity Incentive Plan ............................ 51 PROPOSAL 3—2000 CLASS A EQUITY INCENTIVE PLAN ............................. 56 General Description of the 2000 Class A Equity Incentive Plan ............................ 56 PRINCIPAL STOCKHOLDERS .................................................... 61 EXECUTIVE COMPENSATION ................................................... 62 OTHER INFORMATION ......................................................... 65 APPENDIX I—ILLUSTRATION OF CERTAIN TERMS ................................. I-1 APPENDIX II—THE TRACKING STOCK PROPOSAL .................................. II-1 APPENDIX III—ELECTRONIC ARTS ............................................... III-1 Selected Historical Consolidated Financial Data ....................................... III-1 Management’s Discussion and Analysis of Financial Condition and Results of Operations ........ III-2 Description of Business ......................................................... III-19 Consolidated Financial Statements ................................................. III-27 APPENDIX IV—EA.COM ........................................................ IV-1 Selected Historical Consolidated Financial Data ....................................... IV-1 Management’s Discussion and Analysis of Financial Condition and Results of Operations ........ IV-2 Description of Business ......................................................... IV-11 Consolidated Financial Statements ................................................. IV-17 APPENDIX V—2000 CLASS B EQUITY INCENTIVE PLAN ............................. V-1 APPENDIX VI—2000 CLASS A EQUITY INCENTIVE PLAN ............................ VI-1 Voting materials, which include the Proxy Statement and proxy card, will be mailed to stockholders on or about February 28, 2000. i QUESTIONS AND ANSWERS ABOUT OUR SPECIAL MEETING Q: What is the Tracking Stock Proposal? A: The Tracking Stock Proposal is a proposal approved by our Board of Directors to create a so-called tracking stock that is intended to reflect the performance of our online business, EA.com. Our existing common stock will be reclassified as Class A common stock, and it is intended to reflect both the value of all of our business other than that of EA.com and the value of our retained interest in EA.com. Q: Why am I receiving this proxy statement? A: The Tracking Stock Proposal is an amendment to our charter to authorize the Class B common stock and reclassify our existing common stock as Class A common stock. This amendment cannot be adopted without the approval of a majority of our outstanding shares, and we have called a Special Meeting of our stockholders