Callaway 2006 Annual Report Download - page 93

CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
awards outstanding as of the adoption date is based on the grant date fair value estimated in accordance with the
original provisions of SFAS 123. The valuation provisions of SFAS 123R apply to new share-based awards
granted subsequent to December 31, 2005.
On November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position
No. FAS 123R-3, “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.”
The Company has elected to adopt the alternative transition method provided in the FASB Staff Position for
calculating the tax effects of share-based compensation pursuant to SFAS 123R. The alternative transition
method includes simplified methods to establish the beginning balance of the additional paid-in capital pool
(“APIC Pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent
impact on the APIC Pool and Consolidated Statements of Cash Flows of the tax effects of employee and director
share-based awards that were outstanding upon adoption of SFAS 123R.
Stock Plans
As of December 31, 2006, the Company had the following two shareholder approved stock plans under
which shares were available for equity-based awards: the 2004 Equity Incentive Plan (the “2004 Plan”) and the
2001 Non-Employee Directors Stock Incentive Plan (the “2001 Directors Plan”). The 2004 Plan permits the
granting of stock options, stock appreciation rights, restricted stock/units, performance units and other equity-
based awards to the Company’s officers, employees, consultants and certain other non-employees who provide
services to the Company. All grants under the 2004 Plan are discretionary, although no participant may receive
awards in any one year in excess of 1,000,000 shares. The 2001 Directors Plan permits the granting of stock
options, restricted stock and restricted stock units. Directors receive an initial equity award grant not to exceed
20,000 shares upon their initial appointment to the Board and thereafter an annual grant not to exceed 10,000
shares upon being re-elected at each annual meeting of shareholders. The maximum number of shares issuable
over the term of the 2004 Plan and 2001 Directors Plan is 8,000,000 shares and 500,000 shares, respectively.
The following table presents shares authorized, available for future grant and outstanding under each of the
Company’s plans as of December 31, 2006:
Authorized Available Outstanding
(In thousands)
1991 Stock Incentive Plan .............................. 10,000 — 100
Promotion, Marketing and Endorsement Stock Incentive
Plan ............................................. 3,560 — 600
1995 Employee Stock Incentive Plan ..................... 10,800 — 3,442
1996 Stock Option Plan ................................ 9,000 — 2,287
1998 Stock Incentive Plan .............................. 500 — 67
2001 Directors Plan ................................... 500 260 240
2004 Plan ........................................... 8,000 1,463 2,601
Non-Employee Directors Stock Option Plan ................ 840 — 120
Total ............................................... 43,200 1,723 9,457
Stock Options
All stock option grants made under the 2004 Plan and the 2001 Directors Plan are made at exercise prices no
less than the Company’s closing stock price on the date of grant. Outstanding stock options generally vest over a
three year period from the grant date and generally expire up to 10 years after the grant date. The Company
F-25