Callaway 2003 Annual Report Download - page 66

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CALLAWAY GOLF COMPANY 63
The following summarizes stock option transactions for the
years ended December 31, 2003, 2002 and 2001:
The exercise price of all options granted during 2003, 2002, and
2001 was generally equal to the market value on the date of
grant. The following table summarizes additional information
about outstanding stock options at December 31, 2003:
Years Ended December 31,
(In thousands, except per share data) 2003 2002 2001
Weighted- Weighted- Weighted-
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Outstanding at beginning of year 14,936 $ 20.19 14,753 $ 20.57 16,758 $ 19.66
Granted 1,820 $ 12.73 2,458 $ 16.46 3,475 $ 19.72
Exercised (1,174) $ 11.71 (1,077) $ 12.10 (3,634) $ 12.39
Canceled (2,344) $ 25.18 (1,198) $ 24.45 (1,846) $ 26.77
Outstanding at end of year 13,238 $ 19.04 14,936 $ 20.19 14,753 $ 20.57
Options exercisable at end of year 9,922 $ 20.56 11,522 $ 21.11 11,484 $ 21.20
Price range of outstanding options $5.25 - $40.00 $5.00 - $40.00 $5.00 - $40.00
Remaining
Range of Number Contractual Weighted-Average Number Weighted-Average
Exercise Price Outstanding Life-Years Exercise Price Exercisable Exercise Price
(in thousands) (in thousands)
$5.25 - $10 18 2.87 $ 7.26 18 $ 7.26
$10 - $15 4,356 6.44 $ 12.88 2,695 $ 13.17
$15 - $25 5,843 6.55 $ 17.65 4,188 $ 18.07
$25 - $40 3,021 1.88 $ 30.68 3,021 $ 30.68
$5.25 - $40 13,238 5.44 $ 19.04 9,922 $ 20.56
During 2002 and 2001, the Company, at its discretion, extended
the expiration terms or accelerated the vesting of 683,000 and
1,422,000 options, respectively, 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 these actions did not result in compensation
expense for the Company. Also during 2001, the Company, at
its discretion, cancelled and re-granted 17,000 options and
recognizes compensation expense, if any, related to these
options in accordance with variable plan accounting.
Shareholders’ Rights Plan
The Company has a plan to protect shareholders’ rights in the
event of a proposed takeover of the Company. This plan is not
intended to prevent transactions which provide full and fair
value to shareholders. It is intended to discourage abusive
takeover tactics and to provide time for the Company’s Board
of Directors to review and evaluate what is in the best interests
of shareholders. 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 circumstances, to purchase Common
Stock of Callaway Golf Company or of the acquiring company
at a substantially discounted price 10 days after a person or
group publicly announces it has acquired or has tendered an
offer for 15% or more of the Company’s outstanding Common
Stock. The Rights are redeemable by the Company at $0.01 per
Right and expire in 2005.