Callaway Golf Shafts Its Shareholders Again
Carlsbad's Callaway Golf has a habit of boasting to its shareholders that it compensates executives based on performance. Not so. In a column April 28, 2010, I pointed out that while Callaway says it ties the money it pays its officials to performance, it did not do so in 2009. The company had a horrible year, losing 33 cents a share. But it awarded its executives based on INCENTIVE to stay with the company (emphasis mine), not on performance. So, despite the lousy year, the chief executive, George Fellows, got a hefty raise. Just recently, Callaway came out with 2010 results. They were worse than 2009. The company lost 46 cents a share.
So what did Callaway's board do? The same trick as in 2009. "Apparently the board of directors believes the solution is to follow up last year's highly criticized management retention bonus with more compensation awards," wrote analyst Casey Alexander. Fellows got another huge bonus of stock options. "Apparently, now shareholders must simply be expected to pay management regardless of the level of performance." In July, Callaway announced it would move its North American golf club assembly operations to Mexico to save money. It appears that money will go to management, despite the company's woeful performance.