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.


Maybe they should outsource the management of the company as well. Mexico factories are so 1980's, didn't they know the hot place to take advantage of cheap desperate third world labor was China?

Callaway management can't keep the ball in the fairway and gets paid like pros. Best, Don Bauder

This whole pattern of paying top management for superlative performance, even when it is actually in the cellar, is a sickening feature of 21st century corporate life. At one time, there was a barrier or series of barriers to such egregious conduct. The securities analysts and fund managers on Wall Street should scream bloody murder when they hear of this sort of thing. But they don't even make much mention of it.

Government policing of this is NOT the answer; it will take some self-policing within industry. Yet now we see nobody and nothing that will change this abuse of compensation. It is the Achilles heel of American corporate life.

I agree 100%. I have been writing that top management compensation was a disgrace for two decades. So have other journalists such as Graef Crystal. So disclosure is not helping. Best, Don Bauder

Someone will likely school me in the ways of current corporate practice, but bonuses should always be based on profit. If I'm not making my bosses Mercedes payments, then I don't expect to get that ten dollar discount on a turkey come Christmas time. That's how it has always worked in my lifetime. I can't imagine an alternate work universe.

Yes, but Callaway's shenanigans were classic for fiscal year 2009. The company claimed it bases top management compensation on performance. But 2009 performance was dismal. So the Callaway board changed, and said it was basing compensation on retention of management. But it continued to say that it based pay on performance. Top management actually got RAISES even after the dismal year. Something similar seems to be true for the 2010 fiscal year. Best, Don Bauder

the guys that wrap the shafts probably have more talent then the executives

Don't you think the shafts are wrapped by machine? Best, Don Bauder

yeh, give the roll-wrap machine operator a raise

That's not the American way. You give top management, already raking in far more than it deserves, even more, and cut the roll-wrap machine operator's pay. Best, Don Bauder

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