Share-Based Employee Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Topgolf Replacement Awards

In connection with the merger with Topgolf (see Note 5), which was completed on March 8, 2021, the Company converted stock options previously held by former equity holders of Topgolf into 3.2 million options to purchase shares of Callaway common stock, and certain outstanding restricted stock awards of Topgolf into 0.2 million shares of Callaway common stock. During three months ended March 31, 2022 and 2021, the Company recognized compensation expense, net of estimated forfeitures, of $0.8 million and $0.4 million, respectively, related to these awards.

The Company did not grant stock options or restricted stock awards during the three months ended March 31, 2022.

Restricted Stock Units

During the three months ended March 31, 2022 and 2021, the Company granted 0.5 million and 1.0 million shares underlying restricted stock units at a weighted average grant-date fair value of $23.43 and $29.61 per share, respectively.

Compensation expense, net of estimated forfeitures, for shares underlying restricted stock units was $4.1 million and $2.2 million for the three months ended March 31, 2022 and 2021, respectively.

Performance Based Awards

During the three months ended March 31, 2022, the Company granted 0.6 million shares underlying total shareholder return performance restricted stock units at a weighted average grant-date fair value of $30.73 per share. During the three months ended March 31, 2021, the Company granted 1.3 million restricted stock units underlying various performance metrics, including adjusted pre-tax income; earnings before interest, tax, depreciation, amortization and stock compensation; and total shareholder return, at a weighted average grant-date fair value of $29.58 per share.

Performance restricted stock units granted by the Company cliff-vest after three years. The number of shares that may ultimately be issued upon vesting is based on the achievement of the respective metrics for each award, which may range from 0% to 200%. As of March 31, 2022, all performance restricted stock units are within the probable range of achievement.

Compensation expense, net of estimated forfeitures, for shares underlying performance stock units was $8.9 million and $2.0 million for the three months ended March 31, 2022 and 2021, respectively.

Share-Based Compensation Expense

The table below summarizes the amounts recognized in the financial statements for the three months ended March 31, 2022 and 2021 for share-based compensation, including expense for stock options, restricted stock awards, restricted stock units and performance based restricted stock units (in millions).


	Three Months Ended March 31,
		2022		2021
Cost of products		$	0.5	$	0.2
Selling, general and administrative expenses		12.8		4.2
Research and development expenses		0.4		0.2
Other venue expenses		0.1		—
Total cost of share-based compensation included in income before income tax		13.8		4.6
Income tax benefit		3.3		1.1
Total cost of share-based compensation, after tax		$	10.5	$	3.5