Callaway 2014 Annual Report Download - page 101

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F-33
The table below summarizes the average fair value assumptions used in the valuation of stock options granted during
the years ended December 31, 2013 and 2012.
2013 2012
Dividend yield................................................................................................................................. 0.6% 1.2%
Expected volatility .......................................................................................................................... 48.8% 50.6%
Risk-free interest rate ...................................................................................................................... 0.7% 0.8%
Expected life ................................................................................................................................... 4.3 years 4.9 years
The Company uses forecasted dividends to estimate the expected dividend yield. The expected volatility is based on the
historical volatility of the Company’s stock. The risk-free interest rate is based on the U.S. Treasury yield curve at the date of
grant with maturity dates approximately equal to the expected term of the options at the date of the grant. The expected life
of the Company’s options is based on evaluations of historical employee exercise behavior, forfeitures, cancellations and other
factors. The valuation model 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, 2014 (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
Valu e
Outstanding at January 1, 2014 ....................................................... 4,492 $ 9.42
Granted ..................................................................................... — $ —
Exercised .................................................................................. (302) $ 7.57
Forfeited ................................................................................... — $ —
Expired ..................................................................................... (531) $ 16.23
Outstanding at December 31, 2014 ................................................. 3,659 $ 8.59 5.65 $ 2,154
Vested and expected to vest in the future at December 31, 2014.... 3,612 $ 8.61 5.62 $ 2,100
Exercisable at December 31, 2014 .................................................. 2,501 $ 9.54 4.51 $ 806
The weighted-average grant-date fair value of options granted during the years ended December 31, 2013 and 2012 was
$2.47 and $2.63 per share, respectively. There were no stock options granted during 2014.
At December 31, 2014, there was $1,581,000 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 1.2 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.
The total intrinsic value for options exercised during the years ended December 31, 2014, 2013 and 2012 was $569,000,
$243,000 and $3,000, respectively. Cash received from the exercise of stock options for the years ended December 31, 2014,
2013 and 2012 was $2,291,000, $1,652,000 and $19,000, respectively.
Restricted Stock Units
Restricted stock units awarded under the 2004 Incentive Plan and the 2013 Directors Plan are recorded at the Company’s
closing stock price on the date of grant. Restricted stock units generally vest at the end of a three year period. At December 31,
2014, 2013 and 2012, the weighted average grant-date fair value of restricted stock units granted was $8.21, $6.55 and $6.36,
respectively. The Company recorded $2,530,000, $1,694,000 and $1,556,000 of compensation expense related to restricted
stock units in 2014, 2013 and 2012, respectively.