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Finance

EA adopts new bonus scheme

By Phil Elliott

Tue 12 May 2009 8:02am GMT / 4:02am EDT / 1:02am PDT
FinancePublishing

Cash plan intended to "attract, motivate and retain talent" with incentives

Electronic Arts

ea.com

An Electronic Arts financial filing has unveiled the new bonus scheme that the company has adopted, offering details on the framework upon which cash incentives will be paid to high-performing employees.

The scheme, which is an amendment of the previous version, will cover the performance of selected staff from the beginning of July to the end of March and has been implemented with the intention to "attract, motivate and retain talent by providing eligible employees with incentive compensation based upon the achievement of selected performance goals."

The plan will be open to "regular status employees... who are chosen solely at the discretion of the Company" and the amount paid will depend on five factors:

  • - The participant's annual target bonus
  • - The participant's individual performance
  • - The Company's financial performance as compared to pre-determined performance targets
  • - The participant's business unit's performance as compared to pre-determined targets
  • - Such other business-related performance measures as the Company deems appropriate to accomplish a business purpose

There are various other conditions attached to the scheme, including the amount of bonus-applicable work undertaken, but the plan also outlines the possibilities for staff that overachieve.

"In the event a performance measure is achieved above the pre-determined targets, the bonus payable for that component could exceed 100 per cent of the target payment applicable to that component but not more than 200 per cent," reads the filing. "In the case of extraordinary job performance and with CEO approval, a participant may receive up to a maximum bonus payment of 300 per cent of base salary."

The publisher reported last week that its full year 2009 revenues were up 15 per cent over the previous year, despite a fall in Q4 numbers. The company's share price was down 0.1 per cent to USD 20.17 at close yesterday.

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9 Comments

David Braben Chairman, Frontier Developments

12 0 0.0
It sounds invidious to me.

A good game is not just the product of key high profile people but the entire team, whereas this approach sounds like it rewards the 'glory hounds' only.


Posted:7 years ago

#1

Roger Batchelor Consultant, gamebusinessdaily.com

13 0 0.0
The plan will be open to "regular status employees... who are chosen solely at the discretion of the Company" ?

Looks like this sort of scheme might create a lot of bad feeling and resentment amongst the lower ranks, the very people who need to do a good job so that the "glory hounds" can reach their targets!

Posted:7 years ago

#2

Alex Wright-Manning Senior Talent Acquisition Specialist, Datascope

172 2 0.0
You have to also look at the implications for the rest of the industry when a heavyweight like EA starts to utilise a bonus scheme such as this. There's been a lot of talk recently about a skills gap fast approaching in the industry, will this sort of thing perpetuate it by channeling the brightest and the best to a few specific companies?

EA already do their level best to monopolise the most talented new graduates with their EA Academy system, and the new bonus system will make them an even more attractive proposition. Admittedly EA are the sort of organisation that most grads will aspire to work for, but what of the smaller studios who want to recruit good developers etc straight from college? Are they going to have to fight over the scraps? Will the rest of the development community suffer as a result? Only time will tell.

On a positive note, it goes some way to improving the chances of stopping the best people from leaving the industry - something that is becoming more widespread over the last few years.

From a neutral standpoint, it's good to see incentives being offered within an industry that has long relied on unpaid overtime and taken advantage of the simple passion that exists within those working in games. It's good to see the games industry beginning to operate more on a par with traditional IT and art sectors, and the more incentives like EA's bonus scheme and Realtime Worlds' paid 'crunch' the better for those working in our beloved industry.

Edited 1 times. Last edit by Alex Wright-Manning on 12th May 2009 2:10pm

Posted:7 years ago

#3

Roger Batchelor Consultant, gamebusinessdaily.com

13 0 0.0
I don't want to criticise EA or comment on what implications their bonus schemes might have on smaller companies but, in my experience,the bigger the company you are, the harder it is to implement schemes like this.

I am sure EA have done the maths but problems usually occur when the specified targets on particular projects are not met. Teams start feeling resentful and start blaming eachother for failing to reach the targets and team morale is subsequently weakened. There also tends to be a lot of different opinions regarding what constitutes a fair target and what constitutes a fair reward.

In EA's case,defining the boundaries of what is successful is very complicated : is it budget related, perfomance related or sales related? How do you differentiate between 1 million sales of Dead Space and over 8 million for FIFA 09? Both games reached their targets in terms of perfomance but will the FIFA producer (for example) earn a bigger bonus than the producer of Dead Space? It's very hard to define "selected performance goals" on paper and make them fair and applicable to such a wide range of different development projects but I hope they succeed!


Edited 2 times. Last edit by Roger Batchelor on 12th May 2009 8:09pm

Posted:7 years ago

#4

Nicholas Lovell Founder, Gamesbrief

245 323 1.3
I think that the trend of rewarding a few "stars" at the expense of hardworking people further down the ladder is only just beginning in games. It happens in most other industries (TV, film, magazines - the only way to get started is to work for free or a pittance to get experience), and games will be the same.

We work in an industry that many people want to work in and that increasingly, in my view, rewards the people who are at the top of the game. Will Wright's recent departure to set up a production company (which takes him out of EA's bonus scheme but makes it easier for them to pay him megabucks) is one example of a trend.

The gulf between the top and the bottom is about to get wider. And before you say that this is disastrous for getting talent into the games industry, think of the thousands of poorly-paid hopefuls in Hollywood or the magazine world, who continue working in the *hope* of one day becoming one of the well-rewarded "talent"

Edited 1 times. Last edit by Nicholas Lovell on 13th May 2009 3:59pm

Posted:7 years ago

#5

David Braben Chairman, Frontier Developments

12 0 0.0
All good points.

Don't get me wrong, I think bonuses are a very good idea, but they should go to everybody, as we have always done at Frontier, rather than the few, as I think is the implication here.

Posted:7 years ago

#6

Alex Wright-Manning Senior Talent Acquisition Specialist, Datascope

172 2 0.0
Very succinctly put David. Singling out particular teams or individuals for rewards - even if warranted - can easily sow seeds of discord within a studio. The games industry has a reputation for being very close knit and fostering an almost family environment within the workplace. The sort of bonus structure proposed by EA could shatter that, demotivating staff and driving wedges between teams.

Posted:7 years ago

#7

Barry Meade , Fireproof Studios Ltd.

374 1,057 2.8
Well, it's swings and roundabouts. There is not much more demoralising for an individual or a team than to have worked hard to produce a No.1 game only to be told they're getting a risible bonus due to the other EA teams' games failing to sell. I'm sure there are many people in EA frankly gagging for a bonus structure that would "sow the seeds of discord" :P

It's just not rational that on a team of 50, 80, 100+ staff, everybody contributes equally and is equally talented. It seems this new scheme allows EA to became discerning about just who can make money within their structure. It at least allows some small sliver of cash through to the development teams, whereas previously an individuals' bonus relied on the percieved talent and brains of 3,000 people spread over the world who they'll never meet.

Posted:7 years ago

#8

Alex Wright-Manning Senior Talent Acquisition Specialist, Datascope

172 2 0.0
That is true Barry, and it's the sort of topic that could rumble on for some time. Ultimately, I think any kind of bonus for productivity is a good thing, but EA will have to be very delicate in it's implementation and make sure the guidelines and criteria are very black and white; there's no room for grey areas when dealing with a scheme on this scale.

Edited 1 times. Last edit by Alex Wright-Manning on 14th May 2009 6:33pm

Posted:7 years ago

#9

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