Callaway 2000 Annual Report Download - page 41

Callaway Golf Company | 41
The exercise price of all options granted during 2000 was equal to the market value on the date of grant. The following table summa-
rizes additional information about outstanding stock options at December 31, 2000:
OPTIONS OUTSTANDING AND EXERCISABLE BY PRICE RANGE AS OF DECEMBER 31, 2000:
Weighted-Average
Number Remaining Number
Range of Outstanding Contractual Weighted-Average Exercisable Weighted-Average
Exercise Price (in thousands) Life - Years Exercise Price (in thousands) Exercise Price
$2.50 - $10 494 1.53 $ 3.39 482 $ 3.22
$10 - $15 7,145 6.17 $12.50 4,915 $12.12
$15 - $25 2,916 5.05 $18.20 2,185 $18.46
$25 - $40 6,203 4.50 $29.88 4,812 $30.39
$2.50 - $40 16,758 5.22 $19.66 12,394 $19.99
During 2000, the Company, at its discretion, extended the
expiration terms or accelerated the vesting of 622,000 options
held by certain employees and officers. Also, during 1999, the
Company, at its discretion, extended the expiration terms of
1,532,000 options held by certain employees and officers. At the
time of the modifications, the exercise prices of the options were
in excess of the then-current market price and accordingly this
action did not result in compensation expense for the Company.
During 1998, the Company modified certain terms of 720,000
options held by directors, certain officers and employees. These
modifications, which largely resulted from the Company’s restruc-
turing plan, included acceleration of vesting and extension of
expiration terms at the Company’s discretion. At the time of mod-
ification, the exercise prices of the options were in excess of the
then-current market price and accordingly this action did not
result in compensation expense for the Company.
Also during 1998, the Company canceled 150,000 options held
by non-employees with option prices in excess of the then-current
market price of the Company’s stock. The Company then reissued
an equivalent number of options to these non-employees at the
then-current market price and extended certain expiration terms,
and recorded the related compensation expense of $71,000. An
additional $195,000 was recorded in unearned compensation, and
is being amortized over the remaining vesting periods.
Rights
The Company has granted officers, consultants, and employees
rights to receive an aggregate of 826,800 shares of Common Stock
for services or other consideration. During 1998, 80,000 rights
were exercised while none were granted. No rights were granted
or exercised during 2000 or 1999. At December 31, 2000, no rights
to receive shares of Common Stock remained outstanding.
The Company has a plan to protect shareholders’ rights in the
event of a proposed takeover of the Company. Under the plan,
each share of the Company’s outstanding Common Stock carries
one right to purchase one one-thousandth of a share of the
Company’s Series “A” Junior Participating Preferred Stock (the
“Right”). The Right entitles the holder, under certain circum-
stances, to purchase Common Stock of Callaway Golf Company or
of the acquiring company at a substantially discounted price ten
days after a person or group publicly announces it has acquired or
has tendered an offer for 15% or more of the Company’s out-
standing Common Stock. The Rights are redeemable by the
Company at $.01 per Right and expire in 2005.
Restricted Common Stock
During 1998, the Company granted 130,000 shares of Restricted
Common Stock to 26 officers of the Company. Of these shares,
68,250 shares have been canceled due to the service requirement
not being met. The shares, which are restricted as to sale or trans-
fer until vesting, will vest on January 1, 2003. The related net
compensation expense of $1,914,000 is being recognized ratably
over the vesting period, based on the difference between the exer-
cise price and market value of the stock on the measurement date.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (“ESPP”)
whereby eligible employees may purchase shares of Common Stock
at 85% of the lower of the fair market value on the first day of a
two year offering period or the last day of each six month exer-
cise period. Employees may authorize the Company to withhold
compensation during any offering period, subject to certain limi-
tations. In May 1999, the Company’s shareholders approved a new
ESPP (the “1999 ESPP”) with substantially the same terms as the
ESPP. This plan was effective February 1, 2000 upon the termina-
tion of the ESPP.
During 2000, 1999 and 1998, approximately 412,000, 378,000
and 386,000 shares, respectively, of the Company’s Common Stock
were purchased under the 1999 ESPP or the ESPP. As of December
31, 2000, 1,588,000 shares were reserved for future issuance under
the 1999 ESPP.