Callaway 2010 Annual Report Download - page 107

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applied in this calculation utilizes highly subjective assumptions that could potentially change over time.
Changes in the subjective input assumptions can materially affect the fair value estimates of an option.
Furthermore, the estimated fair value of an option does not necessarily represent the value that will ultimately be
realized by the employee holding the option.
The following table summarizes the Company’s stock option activities for the year ended December 31,
2010 (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, 2010 ......................... 8,982 $13.28
Granted ........................................ 1,239 $ 7.52
Exercised ...................................... (62) $ 7.72
Forfeited ....................................... (110) $ 8.28
Expired ........................................ (317) $16.00
Outstanding at December 31, 2010 ...................... 9,732 $12.55 5.50 $1,270
Vested and expected to vest in the future at December 31,
2010 ............................................ 9,649 $12.59 5.47 $1,237
Exercisable at December 31, 2010 ....................... 6,457 $14.64 4.05 $ 208
The weighted-average grant-date fair value of options granted during the years ended December 31, 2010,
2009 and 2008 was $2.84, $2.37 and $3.95 per share, respectively. The total intrinsic value for options exercised
during the years ended December 31, 2010 and 2008 was $85,000 and $372,000, respectively. No options were
exercised during the year ended December 31, 2009.
At December 31, 2010, there was $3,576,000 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 1.4 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, 2010 and 2008 was
approximately $564,000 and $1,459,000, respectively. During 2010, the Company settled the exercise of stock
options through the Callaway Golf Company Grantor Stock Trust (see Note 13—Capital Stock). The tax deficit
related to option exercises for the years ended December 31, 2010, 2009 and 2008 totaled approximately
$564,000, $237,000 and $610,000, 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 $51,000 and $1,346,000 of compensation expense related to Restricted Stock
awards for the years ended December 31, 2010 and 2008, respectively. As of December 31, 2009, the Company
F-29