Callaway 2009 Annual Report Download - page 103

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The following table summarizes the Company’s stock option activities for the year ended December 31,
2009 (in thousands, except price per share and contractual term):
Options
Number of
Shares
Weighted-
Average
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding at January 1, 2009 ......................... 6,480 $15.75
Granted ....................................... 2,907 $ 7.84
Exercised ...................................... — $ —
Forfeited ...................................... (166) $ 9.23
Expired ....................................... (239) $16.92
Outstanding at December 31, 2009 ...................... 8,982 $13.28 5.97 $ 25
Vested and expected to vest in the future at December 31,
2009 ........................................... 8,829 $13.36 5.92 $ 23
Exercisable at December 31, 2009 ...................... 5,277 $15.86 4.00 $ —
The weighted-average grant-date fair value of options granted during the years ended December 31, 2009,
2008 and 2007 was $2.37, $3.95 and $3.93 per share, respectively. The total intrinsic value for options exercised
during the years ended December 31, 2008 and 2007 was $372,000 and $11,248,000, respectively. No options
were exercised during the year ended December 31, 2009.
At December 31, 2009, there was $5,168,000 of total unrecognized compensation expense related to options
granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized
over a weighted-average period of 1.8 years. The amount of unrecognized compensation expense noted above
does not necessarily represent the amount that will ultimately be realized by the Company in its consolidated
statement of operations.
Cash received from the exercise of stock options for the years ended December 31, 2008 and 2007 was
approximately $1,459,000 and $45,234,000, respectively. The Company settles the exercise of stock options
through the Callaway Golf Company Grantor Stock Trust (see Note 12—Capital Stock). The tax effect related to
option exercises for the years ended December 31, 2009, 2008 and 2007 totaled approximately $(237,000),
$(610,000) and $3,858,000, respectively.
Restricted Stock, Restricted Stock Units and Performance Units
All Restricted Stock, Restricted Stock Units and Performance Share Units awarded under the 2004 Plan and
the 2001 Directors Plan are recorded at the Company’s closing stock price on the date of grant. Restricted Stock
awards and Restricted Stock Units generally cliff-vest over a period of three years. Performance Share Units
generally cliff-vest at the end of a three-year performance period. Performance Share Units are a form of stock-
based award in which the number of shares ultimately received depends on the Company’s performance against
specified financial performance metrics over a three-year period. At the end of the performance period, the
number of shares of stock issued will be determined based upon the Company’s performance against those
metrics.
The Company recorded $1,346,000 and $1,327,000 of compensation expense related to Restricted Stock
awards for the years ended December 31, 2008 and 2007, respectively. As of December 31, 2009, the Company
reversed compensation expense of $223,000 related to cancelled Restricted Stock awards due to employee
terminations. The Company recorded $3,400,000, $2,350,000, and $1,241,000 of compensation expense in
connection with shares underlying Restricted Stock Units for the years ended December 31, 2009, 2008 and
2007, respectively. In connection with shares underlying Performance Share Units, the Company recorded
$326,000 of compensation expense as of December 31, 2007. In 2008, based on the Company’s evaluation of
F-27