This excerpt taken from the ATVI DEF 14A filed Jul 28, 2006.
Compensation Committee Philosophy on Option Grants
The Compensation Committee first sets its annual grant guidelines at a company-wide compensation review meeting generally held in February. Final guidelines for the Company's middle managers and any specific grants for senior managers, when warranted, are approved by the Compensation Committee at its fiscal year-end review meeting typically scheduled in late April or at follow-up meetings in May and June. These Compensation Committee meetings and their respective agendas are established well in advance and are also sequenced to coordinate with the Board's review and approval of the Company's annual operating plan. In addition to the annual grant program for the Company's managers, the Compensation Committee's practice recently has been to substitute annual option grants to the Company's Co-Chairmen in lieu of cash payments for their earned annual bonuses. This substitution has tied to an even greater degree Messrs Kotick and Kelly's compensation to the achievement of enhanced shareholder values. Accordingly, these substitution grants are approved by the Compensation Committee only after the final year-end results are available.
In addition to the annual grant process, the Compensation Committee may award options to any senior executives in connection with new or extended contractual agreements. The timing of these awards necessarily are a function of the contractual process and are granted expressly for the purpose of (a) incentivizing senior managers over the long term, (b) aligning part of their compensation to improved stockholder values and (c) seeking stability in the Company's senior management.