UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2005
CALLAWAY GOLF COMPANY
(Exact name of registrant as specified in its charter)
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| DELAWARE
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1-10962
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95-3797580 |
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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| 2180 Rutherford Road, Carlsbad, California
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92008-7328 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (760) 931-1771
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
SECTION 1 — REGISTRANT’S BUSINESS AND OPERATIONS
Item 1.01 Entry into a Material Definitive Agreement.
The information regarding the Employment Agreement with George Fellows provided in Item 5.02 of
this Current Report is incorporated into this Item 1.01 by reference.
SECTION 5 — CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
(b) William C. Baker submitted his resignation as Callaway Golf Company’s (the “Company”) Chief
Executive Officer and as Chairman of the Board, which resignation became effective upon the
appointment of George Fellows as President and Chief Executive Officer of the Company effective
August 1, 2005. Mr. Baker remains a director of the Company, a role in which he has served since
1994. In light of Mr. Baker’s resignation as Chairman of the Board, the Board of Directors
appointed its Lead Independent Director, Ronald S. Beard, as Chairman of the Board effective as of
August 1, 2005.
(c) The Board of Directors approved the appointment, effective August 1, 2005, of Mr. Fellows as
its principal executive officer (within the meaning of federal securities laws), giving him the
titles President and Chief Executive Officer. Mr. Fellows is 62 years old. During the period 2000
through July 2005 he served as President and Chief Executive Officer of GF Consulting, a management
consulting firm, and served as Senior Advisor to Investcorp International, Inc. and J.P. Morgan
Partners, LLC. Previously, Mr. Fellows was a member of senior management of Revlon, Inc. from 1993
to 1999, including his term as President commencing 1995 and Chief Executive Officer commencing
1997. He is a member of the board of directors of VF Corporation; Mr. Fellows is also chair of the
Audit Committee and a member of the Nominating and Governance Committee of VF Corporation.
Previously, he has served on the boards of directors of Revlon, Inc., the National Association of
Chain Drug Stores, the Cosmetics, Toiletries and Fragrance Association, and has served on the New
York Stock Exchange Listed Company Advisory Committee. Mr. Fellows graduated in 1964 with a B.S.
degree from City College of New York, received an MBA from Columbia University in 1966 and
completed the Harvard Advanced Management Program in 1981.
As of July 29, 2005, the Company entered into an employment agreement (the “Employment Agreement”)
with Mr. Fellows to memorialize the terms of the compensation Mr. Fellows will receive as President and Chief Executive Officer of the Company. The Employment Agreement covers a
term of employment commencing August 1, 2005 and ending December 31, 2008.
Pursuant to the Employment Agreement, the Company has agreed to provide Mr. Fellows: (i) a base
salary of $850,000 per year; (ii) an opportunity to earn an annual bonus based upon participation
in the Company’s applicable bonus plan as it may or may not
exist from time to time (with the target annual bonus opportunity for
Mr. Fellows being equal to 100% of his base salary); however, for
the year 2005 Mr. Fellows is guaranteed an annual bonus of no less than 65% of the base salary paid
to him in 2005; (iii) certain other benefits generally available to other members
of senior management; (iv) an opportunity to participate in the
annual and (beginning January 1, 2007) long-term compensation
programs and benefit plans generally available to other members of senior management; and (v) a
benefits package to assist with temporary living expenses and relocation to San Diego County,
California.
In
addition, the Company agreed to grant Mr. Fellows
160,000 shares of restricted common stock. These shares are scheduled to vest on December 31,
2008, subject to accelerated vesting upon certain change in control
and termination of employment events. Until vested, the shares may not be
transferred and are subject to forfeiture if Mr. Fellows’
employment is terminated by the Company for Substantial Cause (as such term is
defined in the Employment Agreement) or by
Mr. Fellows without Good Reason (as such term is defined in
the Employment Agreement). The Company also agreed to grant to Mr. Fellows a
non-qualified stock option to purchase up to 400,000 shares of
the Company’s common stock at an exercise price equal to the
fair market value of the Company’s common stock on the effective
date of grant (i.e. $14.93), subject to accelerated vesting upon
certain change in control and termination of employment events.
In the
event his employment is terminated by the Company without Substantial Cause or by Mr. Fellows for Good Reason, including the failure to renew his
employment contract through December
31, 2010, then Mr. Fellows is generally entitled to the following termination benefits: (i) the
immediate vesting of all unvested stock-based long-term
incentive awards held by him as of the date of such termination; (ii) a lump sum amount equal to
his target annual bonus opportunity pro rated for service through the date of termination; (iii)
severance payments (payable over 24 months) equal to a total of 1.0 times his then-current base salary
and annual target bonus, provided he executes a release of claims in favor of the
Company; (iv) incentive payments (payable over 24 months) equal to a total of 1.0 times his
then-current base salary and annual target bonus, provided he chooses not to engage in any
business or venture that competes with the business of the Company or any of its affiliates; and
(v) the payment of premiums of COBRA or Cal-COBRA insurance benefits for 24 months.
Upon a Termination Event (as such term is defined in the Employment Agreement) within one year
following a Change in Control (as such term is defined in the Employment
Agreement), the Employment Agreement generally provides for the following
termination benefits: (i) the immediate vesting of all unvested stock-based long-term incentive
awards held by him as of the date of such termination; (ii) a lump sum amount equal to his target
annual bonus opportunity pro rated for service through the date of termination; (iii) severance
payments (payable over 36 months) equal to a total of 1.5 times his then-current base salary and annual
target bonus, provided he executes a release of claims in favor of the
Company; (iv) incentive payments (payable over 36 months) equal
to a total of 1.5 times his then-current base salary and annual target
bonus, provided he chooses not to engage in
any business or venture that competes with the business of the
Company or any of its affiliates; (v) the payment of premiums of
COBRA or Cal-COBRA insurance benefits for 36 months; and
(vi) indemnification by the Company for any excise tax
obligations.
The description of the terms of the Employment Agreement with Mr. Fellows is qualified in its
entirety by reference to the Employment Agreement, which is attached
hereto as Exhibit 10.55 and
incorporated in this Item 5.02(c) by reference.
(d) Effective as of Mr. Fellows accepting his appointment as President and Chief Executive Officer
of the Company, the Board of Directors appointed Mr. Fellows as a director to fill a vacancy
created by the Board’s action increasing the number of members of the Board of Directors from 7 to
8.
On August 1, 2005, the Company issued a press release captioned “Callaway Golf Company Appoints New
CEO and Director.” A copy of the press release is attached hereto as Exhibit 99.1 and incorporated
in this Item 5.02 by reference.
SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits.
The following exhibits are being filed or furnished herewith:
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Exhibit 10.55 Callaway Golf Company Chief Executive Officer Employment Agreement, entered
into as of July 29, 2005, by and between Callaway Golf Company and George Fellows. |
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Exhibit 99.1 Press Release, dated August 1, 2005, captioned “Callaway Golf Company Appoints
New CEO and Director.” |