Callaway 2006 Annual Report Download - page 95

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CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
during the years ended December 31, 2006, 2005 and 2004 was $1,344,000, $1,998,000 and $4,761,000,
respectively.
Cash received from the exercise of stock options for the year ended December 31, 2006 was approximately
$6,081,000. The Company settles the exercise of stock options through the Callaway Golf Company Grantor
Stock Trust (see Note 11—Capital Stock). The actual tax benefit realized (tax expense incurred) for the tax
deductions from option exercises for the year ended December 31, 2006 totaled approximately $578,000.
Restricted Stock, Restricted Stock Units and Performance Units
All Restricted Stock, Restricted Stock Units and Performance Units awarded under the 2004 Plan and the
Directors Stock Plan are recorded at the Company’s closing stock price on the date of grant. Restricted Stock
awards and Restricted Stock Units generally vest over a period of 3 to 5 years. Performance Units generally cliff-
vest at the end of a three year performance period. Performance Units are a form of stock-based award in which
the number of shares ultimately received depends on the Company’s performance against specified performance
targets over a three year period. At the end of the performance period, the number of shares of stock issued will
be determined by adjusting upward or downward from the target in a range between 50% and 150%. As of
December 31, 2006, share-based compensation expense related to Performance Units was calculated based on the
specified performance target of 50%. The final performance percentage payout is based upon performance
metrics established by the Compensation and Management Succession Committee of the Company’s Board of
Directors.
The Company recorded $1,448,000, $611,000, and $196,000 of compensation expense relating to Restricted
Stock shares as of December 31, 2006, 2005 and 2004, respectively. In connection with shares underlying
Restricted Stock Units and Performance Units, the Company recorded $156,000 and $333,000, respectively, as of
December 31, 2006. The Company did not award Restricted Stock Units or Performance Units during 2005 and
2004.
The table below summarizes the total number of Restricted Stock shares and shares underlying Restricted
Stock Units and Performance Units granted to certain employee participants and directors during the years ended
December 31, 2006, 2005 and 2004, as well as the related weighted average grant date fair value for each type of
award (number of shares are in thousands).
# of Shares
Granted
Weighted Average
Grant-Date Fair Value
2006 2005 2004 2006 2005 2004
Restricted Stock Awards ................................. 166 160 53 $14.91 $14.93 $10.69
Restricted Stock Units ................................... 52 — — $14.37 $ — $ —
Performance Units ...................................... 154 — — $14.90 $ — $ —
In addition, during the year ended December 31, 2004, the Company granted Restricted Stock shares to
certain non-employees.
F-27