Callaway 2012 Annual Report Download - page 107

shares are designated 7.50% Series B Cumulative Perpetual Convertible Preferred Stock, $0.01 par value. The
remaining shares of preferred stock are undesignated as to series, rights, preferences, privileges or restrictions.
The holders of common stock are entitled to one vote for each share of common stock on all matters
submitted to a vote of the Company’s shareholders. Although to date no shares of Series A Junior Participating
Preferred Stock have been issued, if such shares were issued, each share of Series A Junior Participating
Preferred Stock would entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Company. The 7.50% Series B Cumulative Perpetual Convertible Preferred Stock has no
maturity date or, except in limited circumstances, voting rights prior to conversion to common stock. The holders
of Series A Junior Participating Preferred Stock and the holders of common stock shall generally vote together as
one class on all matters submitted to a vote of the Company’s shareholders. Shareholders entitled to vote for the
election of directors are entitled to vote cumulatively for one or more nominees.
Treasury Stock and Stock Repurchases
In November 2007, the Company’s Board of Directors authorized a share repurchase program with a
maximum cost to the Company of $100,000,000 (the “November 2007 repurchase program”). Under this
program, the Company is authorized to repurchase shares of its common stock in the open market or in private
transactions, subject to the Company’s assessment of market conditions and buying opportunities. The November
2007 repurchase program supersedes all prior stock repurchase authorizations and will remain in effect until
completed or otherwise terminated by the Board of Directors.
During 2012, the Company repurchased approximately 122,000 shares of its common stock under the
November 2007 repurchase program at an average cost per share of $6.40 for a total cost of $783,000. These
shares were repurchased to settle shares withheld for taxes due by holders of restricted stock awards. The
Company’s repurchases of shares of common stock are recorded at cost and result in a reduction of shareholders’
equity. As of December 31, 2012, the Company remained authorized to repurchase up to an additional
$72,795,000 of its common stock under the November 2007 repurchase program.
Grantor Stock Trust
The Callaway Golf Company Grantor Stock Trust (the “GST”) was established for the purpose of funding
the Company’s obligations with respect to one or more of the Company’s nonqualified or qualified employee
benefit plans. The GST shares were used primarily for the settlement of employee equity-based awards, including
restricted stock awards and units, stock option exercises and employee stock plan purchases. In 2011, the GST
was terminated upon the release of the remaining shares held by the trust.
The following table presents shares released from the GST for the years ended December 31, 2011 and
2010:
Year Ended December 31,
2011 2010
(In thousands)
Employee stock option exercises ............................................. — 62
Employee restricted stock units vested ........................................ 205 221
Employee stock plan purchases .............................................. 86 409
Total shares released from the GST ....................................... 291 692
Note 15. Share-Based Compensation
The Company accounts for its share-based compensation arrangements in accordance with ASC Topic 718,
which requires the measurement and recognition of compensation expense for all share-based payment awards to
employees and directors based on estimated fair values. ASC Topic 718 further requires a reduction in share-
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