strategic-management

Pacific PTY Ltd., Callaway Golf (Shanghai) Trading Company, Ltd., Callaway Golf
Malaysia Sdn. Bhd. (formerly known as Titanium Winners Sdn. Bhd.), and Callaway Golf
(Thailand) Ltd. CGC distributes directly to the retailers or to the wholly owned subsidiaries
and third-party distributors. The company also licenses its trademarks and service marks to
third parties in exchange for royalty fees. Exhibit 5 presents CGC’s organizational chart.
Manufacturing golf clubs is primarily done at CGC’s facilities in Carlsbad,
California. Some of the products are assembled outside the United States. Assembly of the
clubs is done using components from suppliers from both within and outside the United
States. The golf club assembly process is “very labor intensive.”
Prior to the Top-Flite acquisition, CGC manufactured its golf balls in its Carlsbad,
California, facility, and Top-Flite manufactured their golf balls primarily in its Chicopee,
Massachusetts, and Gloversville, New York, facilities. Since the acquisition, however, the
company has moved the majority of its golf ball manufacturing to the Chicopee and
Gloversville facilities and is in the process of moving the remainder to those facilities over
the course of this year. The golf ball manufacturing process is “much more automated”
than the golf club assembly process, although, the company points out, much labor is still
used in the golf ball manufacturing process.
The golf business is highly seasonal. In the busy summer season, CGC employees are
required to work many hours of overtime, whereas in the winter, production capacity is only
about 68 percent. These special conditions require a special employment contract based on
a working-hours account, which allows employees to use overtime work hours, gathered
during high production, to make up the unused work time in the off season. As of year-end
2008, CGC and its subsidiaries employed 2,700 employees full time and part time. CGC
employees “historically have not been represented by unions,” according to the company’s
annual report. The manufacturing employees at the Top-Flite plant are represented by a
union. CGC had approximately 480 employees covered under a collective bargaining agreement,
as of December 31, 2008. Callaway has renegotiated a new collective bargaining
agreement with the union in Chicopee, which is scheduled to expire on September 30, 2011.
The production employees in Canada and Australia are also unionized. According to CGC,
the company “considers its employee relations to be good.”
EXHIBIT 5 Calloway Organizational Chart
David A. Laverty
Senior VP,
Operations
George Fellows
President and
CEO, Director
Steven C. McCracken
Senior Executive VP
Chief Administrative
Officer
Bradley J. Holiday
Senior Executive VP
Chief Financial Officer
CASE 28 • CALLAWAY GOLF COMPANY — 2009 277
Board of Directors: Ronald S. Beard*, Chairman
Samuel H Armacost*; John C. Cushman, III*
Yotaro Kobayashi*; Richard L. Rosenfield;
Anthony S. Thornley*; John F. Lundgren*
* indicates independent status on board
Audit
Committee
Compensation
& Mgmt.
Succession
Thomas Yang
Senior VP,
International
Executive
Committee
Nominating &
Corporate
Governance