Callaway 2015 Annual Report Download - page 105

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F-35
The table below summarizes the total number of SARs granted to employees during the year ended December 31, 2015
(in thousands):
Stock Appreciation Rights Units
Weighted-
Average
Exercise Price
Per Share
Nonvested and Outstanding at January 1, 2015 ................................................................................. 2,372 $ 6.39
Granted........................................................................................................................................ — —
Exercised..................................................................................................................................... (1,874) 6.35
Forfeited ...................................................................................................................................... — —
Outstanding at December 31, 2015 .................................................................................................... 498 $ 6.51
Share-Based Compensation Expense
The table below summarizes the amounts recognized in the financial statements for the years ended December 31, 2015,
2014 and 2013 for share-based compensation, including expense for stock options, restricted stock units, performance share
units, phantom stock units and cash settled stock appreciation rights (in thousands):
2015 2014 2013
Cost of sales.......................................................................................................................... $ 754 $ 240 $ 473
Operating expenses............................................................................................................... 10,466 5,087 7,711
Total cost of employee share-based compensation included in income (loss) before
income tax ....................................................................................................................... $11,220 $ 5,327 $ 8,184
Note 14. Employee Benefit Plan
The Company has a voluntary deferred compensation plan under Section 401(k) of the Internal Revenue Code (the “401
(k) Plan”) for all employees who satisfy the age and service requirements under the 401(k) Plan. Each participant may elect
to contribute up to 75% of annual compensation, up to the maximum permitted under federal law, and the Company is obligated
to contribute annually an amount equal to 50% of the participant’s contributions up to 6% of their eligible annual compensation.
For the years ended December 31, 2015, 2014 and 2013 there were no discretionary contributions.
The portion of the participant’s account attributable to elective deferral contributions and rollover contributions are 100%
vested and nonforfeitable. Participants vest in employer contributions at a rate of 50% per year, becoming fully vested after
the completion of two years of service. In accordance with the provisions of the 401(k) Plan, the Company matched employee
contributions in the amount of $1,744,000, $1,687,000 and $1,589,000 during 2015, 2014 and 2013, respectively. Additionally,
the Company can make discretionary contributions based on the profitability of the Company.
Note 15. Fair Value of Financial Instruments
Certain of the Company’s financial assets and liabilities are measured at fair value on a recurring and nonrecurring basis.
Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price)
in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants.
Assets and liabilities carried at fair value are classified using the three-tier hierarchy (see Note 2). The following table
summarizes the valuation of the Company’s foreign currency forward contracts (see Note 16) that are measured at fair value
on a recurring basis as of December 31, 2015 and 2014 (in thousands):