Afternoon, and welcome to EA's 2015 Annual Meeting of Stockholders. My name is Chris Emden, and I'm Vice President of Investor Relations here at EA. Before we begin, I'd just like to go briefly over the agenda for today. We'll start with the formal business of the meeting, and then we'll move on to a short presentation by Blake Jorgensen, our CFO, followed by a Q and A session. And we ask you further questions and answer session if you could ask your questions from these 2 mics here.
So now I'd like to read our Safe Harbor statement. During the course of this meeting, officers and directors of the company may make forward looking statements regarding future events or the future financial performance of the company. We caution you that the actual events or results may differ materially. We refer you to the company's most recently filed Form 10 ks and Form 10 Q for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. Now I'd like to turn the meeting over to Andrew Wilson.
Thanks, Chris. Good afternoon, and welcome to the Electronic Arts 2015 Annual Meeting of Stockholders. Before turning to formal items of business, I would like to introduce the members of our Board of Directors, corporate officers and a few others who are here today. Would you please stand up when I call your name? In addition to me, the current Board members, Board of Directors with us here today are Lawrence Probst, Chairman Rick Simonson, Chairman of the Audit Committee and our Lead Director Jay Hogue, Chairman of the Compensation Committee Luis Rubinis, Chairman of the Nominating and Governance Committee Len Coleman Jeff Huber, Vivek Paul and Denise Warren.
Each of the nominated directors has consented to serve a 1 year term. Their biographies can be found beginning on page 10 of your proxy statement. The members of our existing of our executive staff joining us here today are Blake Jorgensen, Chief Financial Officer Peter Moore, Chief Operating Officer Ken
Moss,
Chief Technology Officer Ken Moss, Chief Technology Officer Chris Bruzzo, Chief Marketing Officer Joel Lindsner, Executive Vice President, Business and Legal Affairs Gabriel Toledano, Executive Vice President, Chief Talent Officer Samantha Ryan, Senior Vice President, EA Mobile Lucy Bradshaw, Senior Vice President, EA EA Maxis Ken Barker, Senior Vice President, Chief Accounting Officer and Jake Schatz, Senior Vice President, General Counsel and Corporate Secretary. I would also like to introduce Lisa Munro and Gary Foulson from KPMG LLP, the company's independent auditors. They will be available during the Q and A session if you have any more questions. I will now begin the formal business of the meeting. After the voting results have been announced, we will adjourn of the meeting.
Jake Schatz has been appointed Secretary of this meeting and Andrew Wilcox representing Broadbridge Financial Solutions has been appointed as Inspector of Elections.
If you have not already voted by proxy, then please register now with Andrew Wilcox, who is sitting at the table. He will hand you a ballot to vote on the matters to be considered at this meeting. A list of EA stockholders as of the record date June 22, 2015 has been available at the company's headquarters for the past 10 days and is available for examination by any stockholder present or by any proxy holder representing a stockholder. A copy of the notice of this meeting and a declaration of the mailing to each stockholder of record as of the record date is also available for inspection. I'm advised by the Inspector of Elections that over 280,000,000 or over 90% of the outstanding shares eligible to vote are present in person or by proxy.
A quorum is present and the meeting is authorized to transact business. It is 2:0:5 p. M. And the polls are now open. The first item of business is to elect the members of the Board of Directors for a term of 1 year.
Based in part on the recommendation of the Nominating and Governance Committee, the Board of Directors has nominated the following persons: Leonard Coleman, Jay Hoag, Jeffrey Huber, Vivek Paul, Lawrence Probst, Richard Simonson, Luis Ubinas, Denise Warren and Andrew Wilson. The second item of the business is to cast an advisory vote on the compensation of the company's named executive officers. The compensation committee of the Board unanimously has approved the compensation of the named executive officers, which is described in more detail in the proxy statement. The 3rd item of business is to ratify the appointment of KPMG LLP as the company's independent auditors for fiscal year 2016. The Audit Committee and the Board of Directors recommend a vote for the ratification of the appointment of KPMG LLP.
Further information about this proposal may be found in the proxy statement. The last item of formal business is to cast a vote on a stockholder proposal for proxy access. This stockholder proposal was submitted jointly by the Comptroller of the City of New York and the Illinois State Board of Investment. Tiffany Polk, a representative of the proponents is here to present the proposal. Ms.
Polk, would you please approach the microphone in the aisle to make your statement?
I'm Tiffany Fokken, I'm here to present for Focal 4 on behalf of New York City Comptroller, Scott Stringer and Attorney of the New York City The New York City Pension Fund are long term Electronic Arts Inc. Sharener with 8 80,000 3.68 shares. Proposal 4 calls for proxy access bylaws to enable shareowners that have flexibly held at least 3% of the company for 3 years to include a limited number of to give substantial long term share and meaningful voice in nominees and electing directors. Electronic Arts received the proposal due to concerns with its excessive executive compensation. Excessive pay is not only an inappropriate use of corporate assets, it is also a symptom of a force that lacks independence.
We acknowledge that the company after engaging with shareowners have taken steps to better align pace with performance. But the fact is, is that we believe proxy access is a fundamental right that should be in place at all companies regardless of their governance, compensation or performance. A 2014 report by the CFA Institute found that proxy access, if adopted market wide, has the potential to raise U. S. Market capitalization by as much as $140,000,000,000 We did not select the proposed terms arbitrarily.
It was the SEC following the extensive analysis and public comment that determined that the 3% threshold ownership threshold and other terms were most appropriate. Finally and most importantly, any shareowner known me would still have garnered still have to garner support before he or she could join the Board. This year, a growing number of companies in various industries and of various sizes have agreed to voluntarily adopt proxy access for shareowners that has collectively held 3 percent for 3 years. Recent examples include Abercrombie Fitch, Big Lots, General Electric, Prudential Financial, Staples and Ms. Pope.
The Board Ms. Pope. The Board of Directors recommend a vote against this proposal. Further information about this proposal may be found in the proxy statement. We now turn to voting on these matters.
If you have already sent in your proxy, you do not need to cast a vote unless you wish to change your vote on the proxy. The proxy holders will vote your shares as indicated on the proxy. If anyone here today has requested to vote by ballot, please mark your ballots now and give them to the Inspector of Elections. It is now 2:10 p. M.
The polls for voting are now closed and no further proxies or ballots may be accepted. I've been advised by the Inspector of Elections that over 90% of the shares outstanding were voted by proxy and counted prior to the meeting. Proposal 1, a majority of the votes eligible to vote in voting either in person or by proxy has been voted for each of the 9 nominees for Director. Accordingly, each has been elected as a Director of the company to serve a 1 year term until the next annual meeting or until their successors are elected. Proposal 2, the advisory vote on the compensation of the company's named executive officers has been approved by a majority of the votes cast in favor of the proposal.
Proposal 3, the ratification of the appointment of KPMG as the company's independent auditors for fiscal year 2016 has been approved by majority of the votes cast in favor of the proposal. Proposal 4, the stockholder proposal for proxy access has received an affirmative vote of a majority of the votes cast. The final voting results will be reported in a Form 8 ks within 4 business days of the annual meeting. This now concludes the formal business portion of the meeting. Andrew and I would like to express our sincere appreciation to the stockholders who attended the meeting as well as those who submitted their proxies, but were not able to present in person.
I declare that the 2015 Annual Meeting of Stockholders is adjourned. We will now move on to a short presentation by Blake Jorgensen, our CFO, to be followed by a brief Q
and A session. Thank you.
Pretty exciting. For those who like video games, we have quite a lineup over the next year to 2 years and that was just a brief example of some of the great games we have coming. Star Wars Battlefront, one of the most beloved titles of all time, coming back this fall. All of our sports titles led by FIFA, Madden, NHL, NBA, great titles, PGA, which is already out and there's some samples outside on the desk if you'd like one as well as Need for Speed, the driving game which you saw and Plants versus Zombies: Garden Warfare 2. And that little guy, Yarny, he's the little Yarn gentleman, he's in Unravel, a new title that we've just brought out.
It's a fabulous year for us and it's been a fabulous few years, I think, for us and for shareholders. I briefly want to just cover the financials of the company and then we'll go into Q and A. Over the last three years, we've been on a very exciting journey. And that journey has been on really focusing 1st and foremost on our players and driving products that the players can really enjoy over a long period of time. We're building great games and driving great long term live services for our game players.
Along the way, we're operating much more as one company. And in doing so, we've driven a huge amount of shareholder value creation. If you see the revenue, you can see the biggest driver of that has been the growth of our digital business. That is consumers consuming our business digitally versus as a packaged goods buying it in a store over time. And that's not just digital full games, that's live services associated with it like our FIFA Ultimate team or Madden Ultimate team or NHL Ultimate team, extending the life of gameplay, dramatic improvements in how we deliver games and dramatic excitement for our consumer base.
Along the way, that drive to digital has been driving our gross margins, a critical factor in driving our profitability. We've been managing our ability to deliver digitally, and we've been letting the consumers buy the games they wish to buy digitally and it's a much better experience for them across the board. That in turn has enabled us to quadruple our cash flow. A very short period of time, we've been able to manage costs much more aggressively than we have historically and thus create a dramatic different cash flow profile for the company. And that has turned into great earnings growth, as you can see, and has added almost $20,000,000,000 to our market cap in less than 3 years.
We see this as just the start of a long term transformation of the company and we're very excited about where we're going, changing how people consume games and how people play games over time. With that, turn it to the audience for any Q and A that people may have.
And almost all male. What are you doing to address this lack of diversity? And do you care about?
We care very much about diversity. I would say it's not 100% in any way. And our biggest focus has been on building out more women in our management team. We've recently added Samantha Orion. We have Lucy Bradshaw, who runs a very large portion of our business Gabrielle, who runs all of our HR.
We've also just recently added 1 of 2 of the best game makers in the world, both women, Amy Hennig and Jade Raymond, to join our team. And we have a great group of women all through our organization and a great diverse organization, quite a few diversity broad spectrum of diversities inside the management team. And we're very global. So people need to remember they may see something right here, but we operate in many countries around the world and that creates a natural diversity for our business as well.
And again, other than Luis, is there something that you're going to do to improve the lack of color on your Board of Directors and Executive team, just specifically?
Len, do you
want to
stand up? We're constantly looking for to diversify our Board members and we're very happy with the Board members that we have today and we'll continue to look for new Board members over time.
Thank you. Next question. I volunteered in elementary, middle and high school. And what I noticed is the fact that 100% of the boys it was shocking to me at first, but 100% had PlayStations and or Xboxes often both. It doesn't surprise me one bit that your stock has been skyrocketing over the last several years.
Every one of them would come up to me and talk about GTA and Call of Duty and of course your sports titles. So given that obviously is a coup for you, But at the same time, it tells me that there's saturation in the market. In other words, you've already got 100% of the teenage market. Where do you go from here? I mean, obviously, I've got a limited sample, but you really have outdone yourselves over the last several years in capturing the teenage market.
So it tells me that you need to find new audiences. And this isn't just in the U. S. When I went to go to Bangkok at 10 pm on the way back from my bus stop, you've got 100 maybe quite a few males at the communal Internet Cafe playing video games. So once again, it just seems like this is saturation at its finest.
Yes. So for us, the interesting thing is our core market is actually between 20 30 years old, not teenagers. But we like that we have a strong market in the teenage world as well. For us, the real strategy is to diversify the revenue base. We have a $500 plus 1,000,000 mobile business, which we continue to grow year in and year out, rates close to 20% or greater.
We're going to continue to grow that out. And that's mobile and tablet business, which is a different style of gameplay than the immersive console business. 2nd is we're continuing to diversify geographically. Our share in Asian markets is relatively small. Most of those markets are non console markets.
And so we've rolled out this past year with partner Tencent in China a FIFA online free to play game. We have a similar game in Korea with our partner NEXON and those two businesses are growing very fast. And we'll continue to do those types of free to play games in markets where there's free to play. And if console markets grow, we'll grow in those markets as well. But we see that there's an ever growing population of people that are interested in all types of gameplay, immersive console all the way through very quick play mobile.
Thank you very much. Great question. Other questions? With that, I appreciate everyone coming. Good to see everyone.
We'll see everyone again next