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Stock Plans and Share-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock Plans and Share-Based Compensation | Stock Plans and Share-Based Compensation Equity Compensation Plans and Replacement Awards As of December 31, 2023, we had two shareholder approved stock plans under which shares were available for equity-based awards; the Callaway Golf Company Amended and Restated 2004 Incentive Plan (the “2004 Incentive Plan”) and the Callaway Golf Company 2022 Incentive Plan (the “2022 Incentive Plan”). We also had one non-shareholder approved stock plan, the 2021 Employment Inducement Plan (the “2021 Inducement Plan”), which was adopted in connection with our merger with Topgolf on March 8, 2021. The 2021 Inducement Plan has substantially the same terms as our 2004 Incentive Plan, with the exception that awards can only be made to new employees in connection with their commencement of employment and incentive stock options cannot be granted under the 2021 Inducement Plan. Upon the effective date of the 2022 Incentive Plan, we ceased granting awards under the 2004 Incentive Plan and the 2021 Inducement Plan and, except for shares subject to awards under those plans on the effective date of the 2022 Incentive Plan, any shares remaining for future issuance under such Plans were canceled. The 2004 Incentive Plan permitted the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share units and other equity-based awards to our officers, employees, consultants and certain other non-employees who provide services to us. All grants under the 2004 Incentive Plan were discretionary, although no participant may receive awards in any one year in excess of 2.0 million shares. No new awards may be granted under the 2004 Incentive Plan. The 2021 Inducement Plan was adopted in connection with our merger with Topgolf on March 8, 2021. The plan permitted the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share units and other equity-based awards to our officers, employees, consultants and certain other non-employees who provide services to us. No new awards may be granted under the 2021 Inducement Plan. The 2022 Incentive Plan permits the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share units and other equity-based awards to our officers, employees, consultants, eligible directors serving on our Board of Directors and certain other non-employees who provide services to us. All grants under the 2022 Incentive Plan are discretionary. Directors may receive a one-time grant upon their initial appointment to our Board of Directors and may receive an annual grant thereafter upon being re-elected at each annual meeting of shareholders. The maximum number of shares issuable over the term of the 2022 Incentive Plan is 16.0 million shares, plus any shares underlying awards made under the 2004 Incentive Plan to the extent such awards lapse, expire, terminate or are canceled. In connection with the merger with Topgolf which was completed on March 8, 2021, we assumed two equity compensation plans and a stock option agreement between Topgolf and a third party (collectively, the “Topgolf Equity Compensation Plans and Option Agreement”) in connection with the merger. No additional awards may be granted by the Company under the assumed Topgolf Equity Compensation Plans and Option Agreement. The following table presents shares authorized, available for future grant and outstanding under each of our plans as of December 31, 2023 (in millions):
| Authorized |  | Available(1) |  | Outstanding(2)
2004 Incentive Plan | 33.0 |  |  | — |  |  | 2.0 |
2021 Inducement Plan | 1.3 |  |  | — |  |  | 0.3 |
2022 Incentive Plan | 16.0 |  |  | 12.0 |  |  | 1.3 |
Topgolf Equity Compensation Plans and Option Agreement | 3.4 |  |  | — |  |  | 1.1 |
Total | 53.7 |  |  | 12.0 |  |  | 4.7 |
(1) Includes shares subject to a full award value under the 2022 Incentive Plan’s fungible share ratio.
(2) Excludes 0.8 million of issued restricted stock awards which are not outstanding.
Stock Options There were no stock options granted in 2023 or 2022. In 2021, we granted 3.2 million stock options related to the replacement awards that were issued in connection with our merger with Topgolf. These awards had a weighted average grant-date fair value of $25.93 per share and a total acquisition date fair value of $5.3 million. The following table summarizes our stock option activities for the year ended December 31, 2023 (in millions, except per share amounts 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, 2023 |  | 1.9 |  |  | $ | 26.97 |  |  |  |  |
Granted |  | — |  |  | $ | — |  |  |  |  |
Exercised |  | (0.3) |  |  | $ | 15.11 |  |  |  |  |
Forfeited(1) |  | — |  |  | $ | 35.14 |  |  |  |  |
Expired |  | (0.5) |  |  | $ | 29.93 |  |  |  |  |
Outstanding at December 31, 2023 |  | 1.1 |  |  | $ | 28.44 |  |  | 3.18 |  | $ | 0.1 |
Vested and expected to vest in the future at December 31, 2023 |  | 1.1 |  |  | $ | 28.44 |  |  | 3.18 |  | $ | 0.1 |
Exercisable at December 31, 2023 |  | 1.0 |  |  | $ | 28.20 |  |  | 3.07 |  | $ | 0.1 |
(1) A nominal number of stock options were forfeited during the year ended December 31, 2023.
The following table summarizes information related to outstanding stock options as of December 31, 2023 (in millions, except option price and remaining life amounts):
|  |  |  | Weighted Average
Range of Option Prices |  | Options Outstanding |  | Remaining Life (Years) |  | Exercise Price
$6.91 to $35.14 |  | 1.1 |  | 3.18 |  | $28.44
As of December 31, 2023, there was less than $0.1 million of unamortized compensation expense related to stock options granted to employees under our share-based payment plans. The following table summarizes information related to intrinsic value and cash received related to option exercises for the periods presented below (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Intrinsic value for options exercised | $ | 1.7 |  |  | $ | 0.6 |  |  | $ | 26.3 |
Cash received from exercise of options | $ | 4.2 |  |  | $ | 0.7 |  |  | $ | 22.3 |
The fair value of the stock options granted in connection with the merger was based on the Black-Scholes option-pricing model. The table below summarizes the range and the weighted averages of the fair value assumptions used in the Black-Scholes valuation as of March 8, 2021.
Assumptions: |  | Range |  | Weighted Averages
Expected term (in years) |  | 0.3 - 7.1 |  | 3.7
Volatility |  | 43.0% - 85.4% |  | 55.1%
Risk-free interest rate |  | 0.1% -1.3% |  | 0.6%
Dividend yield |  | — |  | —
RSUs, RSAs, and PRSUs The following table represents activity for restricted stock units, restricted stock awards, and performance based awards for the year ended December 31, 2023 (in millions, except fair value amounts):
|  | RSUs |  | RSAs |  | PRSUs
|  | Units |  | Weighted- Average Grant-Date Fair Value |  | Units |  | Weighted- Average Grant-Date Fair Value |  | Units |  | Weighted- Average Grant-Date Fair Value
Unvested at January 1, 2023 |  | 1.4 |  |  | $ | 25.47 |  |  | 0.1 |  |  | $ | 29.52 |  |  | 2.1 |  |  | $ | 30.24 |
Granted |  | 0.8 |  |  | $ | 22.78 |  |  | 0.8 |  |  | $ | 19.60 |  |  | 0.6 |  |  | $ | 36.58 |
Vested |  | (0.7) |  |  | $ | 25.21 |  |  | (0.1) |  |  | $ | 29.52 |  |  | (0.4) |  |  | $ | 20.74 |
Target Award Adjustment(1) |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | 0.1 |  |  | $ | 19.85 |
Forfeited(2) |  | (0.1) |  |  | $ | 25.09 |  |  | — |  |  | $ | 29.52 |  |  | (0.1) |  |  | $ | 32.44 |
Unvested at December 31, 2023 |  | 1.4 |  |  | $ | 24.13 |  |  | 0.8 |  |  | $ | 19.83 |  |  | 2.3 |  |  | $ | 32.71 |
(1) Represents incremental shares earned by participants at a performance achievement in excess of 100% for awards previously granted.
(2) A nominal number of RSAs were forfeited during the year ended December 31, 2023.
The following table summarizes fair value of awards vested and the weighted average grant date fair value per share of awards granted during the periods presented below (in millions, except for per share amounts):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
RSUs: |  |  |  |  |
Total fair value of RSUs vested | $ | 17.3 |  |  | $ | 17.2 |  |  | $ | 6.5 |
Per share weighted average grant date fair value of RSU grants | $ | 22.78 |  |  | $ | 22.81 |  |  | $ | 29.60 |
RSAs: |  |  |  |  |
Total fair value of RSAs vested | $ | 1.3 |  |  | $ | 2.1 |  |  | $ | 0.8 |
Per share weighted average grant date fair value of RSA grants(1) | $ | 19.60 |  |  | $ | — |  |  | $ | 28.74 |
PRSUs: |  |  |  |  |
Total fair value of PRSUs vested | $ | 7.8 |  |  | $ | 6.9 |  |  | $ | 8.2 |
Per share weighted average grant date fair value of PRSU grants | $ | 36.58 |  |  | $ | 34.68 |  |  | $ | 30.35 |
(1) There were no RSAs granted during the year ended December 31, 2022.
The following table summarizes the unamortized compensation expense, net of estimated forfeitures, of awards granted under our share-based plans as of December 31, 2023, as well as their related weighted-average remaining recognition period (in millions, except for periods):
| December 31, 2023
RSUs: |
Unamortized compensation expense for RSUs | $ | 16.2 |
Weighted-average remaining recognition period (in years) | 1.4
PRSUs: |
Unamortized compensation expense for PRSUs | $ | 25.0 |
Weighted-average remaining recognition period (in years) | 1.0
Share-Based Compensation Expense The table below summarizes amounts recognized for share-based compensation by award-type, net of estimated forfeitures, in our consolidated statement of operations for the periods presented (in millions):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Stock options | $ | 0.4 |  |  | $ | 1.4 |  |  | $ | 2.6 |
Restricted stock units | 18.9 |  |  | 17.6 |  |  | 14.0 |
Restricted stock awards | 0.6 |  |  | 1.3 |  |  | 2.4 |
Performance based restricted share unit awards | 26.8 |  |  | 26.7 |  |  | 19.7 |
Total share-based compensation expense, before tax | 46.7 |  |  | 47.0 |  |  | 38.7 |
Income tax benefit | (11.2) |  |  | (11.3) |  |  | (8.9) |
Total share-based compensation expense, after tax | $ | 35.5 |  |  | $ | 35.7 |  |  | $ | 29.8 |
The table below summarizes amounts recognized for share-based compensation, net of estimated forfeitures, in our consolidated statement of operations for the periods presented (in millions):
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Cost of products | $ | 1.9 |  |  | $ | 1.6 |  |  | $ | 1.2 |
Selling, general and administrative expenses | 39.8 |  |  | 44.0 |  |  | 36.5 |
Research and development expenses | 1.6 |  |  | 1.1 |  |  | 1.0 |
Other venue expenses | 3.4 |  |  | 0.3 |  |  | — |
Total share-based compensation expense, before tax | 46.7 |  |  | 47.0 |  |  | 38.7 |
Income tax benefit | (11.2) |  |  | (11.3) |  |  | (8.9) |
Total share-based compensation expense, after tax | $ | 35.5 |  |  | $ | 35.7 |  |  | $ | 29.8 |

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