EXHIBIT 10.60

CALLAWAY GOLF COMPANY

2004 EQUITY INCENTIVE PLAN

PERFORMANCE UNIT PROGRAM

1. Purposes of the Program. This Callaway Golf Company Performance Unit Program
(“Program”), established pursuant to Section 10.2 of the Callaway Golf Company
2004 Equity Incentive Plan (“Plan”) sets forth a program for payment of
performance awards to those Participants designated for participation and is
intended to increase stockholder value and the success of the Company by
attracting, retaining and motivating Participants to perform to the best of
their abilities and to achieve the Company’s objectives. The Program’s goals are
to be achieved by providing such Participants with performance awards based on
the achievement of goals relating to the performance of the Company or one of
its business units or upon the achievement of objectively determinable
performance goals. The Program is intended to permit the payment of awards under
the Plan that may qualify as performance-based compensation under Code
Section 162(m).

2. Definitions.

(a) “Award” means, with respect to each Participant, the award determined
pursuant to Section 8(a) below for a Performance Period. Each Award is
determined by a Payout Formula for a Performance Period, subject to the
Committee’s authority under Section 8(a) to eliminate or reduce the Award
otherwise payable.

(b) “Base Salary” means, as to any Performance Period, the Participant’s salary
actually earned during the Performance Period (including without limitation any
compensation that is deferred by Participant into a Company-sponsored retirement
or deferred compensation plan, but excluding any employer matching contributions
by the Company associated with any such retirement or deferred compensation plan
and excluding any other Company contributions) and excludes all bonuses,
incentives, commissions, expatriate premiums, fringe benefits (including without
limitation car allowances), relocation allowances, stock option grants, equity
awards, employee benefits and other similar items of compensation. Such Base
Salary shall be before both (i) deductions for taxes or benefits, and
(ii) deferrals of compensation pursuant to Company-sponsored plans.

(c) “Board” means the Board of Directors of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means the Compensation and Management Succession Committee of
the Board or any successor thereto, or another sub-committee of the Board, which
shall, with respect to payments hereunder intended to qualify as
performance-based compensation under Code Section 162(m), consist solely of two
or more members of the Board who are not employees of the Company and who
otherwise qualify as “outside directors” within the meaning of Section 162(m),
appointed pursuant to Section 3.1 of the Plan or per section 3, Company
employees to whom the Committee delegates specific administrative tasks.

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(f) “Company” means Callaway Golf Company or any of its subsidiaries (as such
term is defined in Code Section 424(f)).

(g) “Extraordinary Items” means (i) extraordinary, unusual and/or nonrecurring
items of gain or loss, (ii) gains or losses on the disposition of a business,
(iii) changes in tax or accounting regulations or laws, or (iv) the effects of a
merger or acquisition, (v) asset write-downs, (vi) litigation or claim judgments
or settlements, (vii) any accruals for reorganization and restructuring
programs, and (viii) any extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30, all of which must be identified in
the audited financial statements, including footnotes, or in the Management’s
Discussion and Analysis section of the Company’s annual report.

(h) “Fiscal Year” means a fiscal year of the Company.

(i) “Maximum Award” means as to any Participant for any Performance Period, $3
million, as required by Section 10.2 of the Plan.

(j) “Participant” means an eligible executive, member of senior management, and
other employees of the Company selected by the Committee, in its sole
discretion, to participate in the Program for a Performance Period, pursuant to
the eligibility criteria established by the Committee in accordance with
Section 4.

(k) “Payout Determination Date” means the date upon which the Committee or the
Chief Executive Officer, as applicable, determines the amounts payable pursuant
to the Target Award and Payout Formula with respect to any previously completed
Performance Period, in accordance with Section 8(a).

(l) “Payout Formula” means, as to any Performance Period, the formula or payout
matrix established by the Committee pursuant to Section 7 in order to determine
the Awards (if any) to be paid to Participants, which is generally expressed as
a percentage (which may be more than 100%) of the Target Award. The formula or
matrix may differ from Participant to Participant.

(m) “Performance-Based Compensation” means compensation that is intended to
qualify as “performance-based compensation” within the meaning of
Section 162(m).

(n) “Performance Criteria” means the one or more criteria that the Committee
shall select for purposes of establishing the Performance Goals for a
Performance Period. The Performance Criteria that shall be used to establish
such Performance Goals may be based on any one of, or combination of, the
following: (i) cash flow; (ii) earnings (including gross margin, earnings before
interest and taxes (“EBIT”), earnings before taxes (“EBT”), and net earnings);
(iii) earnings per share; (iv) growth in earnings or earnings per share;
(v) stock price; (vi) return on equity or average stockholders’ equity;
(vii) total stockholder return; (viii) return on capital; (ix) return on assets
or net assets; (x) return on investment; (xi) sales, growth in sales or return
on sales; (xii) income or net income; (xiii) operating income or net operating
income; (xiv) operating profit or net operating profit; (xv) operating margin;
(xvi) return on operating revenue; (xvii) economic profit, (xviii) market share;
(xix) overhead or other expense reduction; (xx) growth in stockholder value
relative to various indices, and (xxi) strategic plan development and
implementation.

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(o) “Performance Goals” means, for a Performance Period, the one or more goals
(or combined goals) based upon the Performance Criteria and established by the
Committee (in its discretion) to be applicable to a Participant with respect to
an Award. Performance Goals may be based on a Company-wide basis, with respect
to one or more business units, divisions, or business segments, and in either
absolute terms or relative to the performance of one or more comparable
companies or the performance of one or more relevant indices. As determined by
the Committee, the Performance Goals applicable to an Award may provide for a
targeted level or levels of achievement using one or more of the Performance
Criteria. The Performance Goals may be based on absolute target numbers or
growth in one or more such categories compared to a prior Performance Period.
The Performance Criteria which constitute the Performance Goals may, as the
Committee specifies, either include or exclude the effect of payment of awards
under this Program and any other bonus or incentive plans of the Company. The
Performance Goals may differ from Participant to Participant and from Award to
Award. In establishing a Performance Goal on the Target Determination Date, the
Committee may provide that the attainment of the Performance Goal shall be
measured by appropriately adjusting the evaluation of Performance Goal
performance to exclude any of the Extraordinary Items.

(p) “Performance Period’ means any Fiscal Year or such other period as
determined by the Committee in its sole discretion.

(q) “Program” means this Callaway Golf Company Performance Unit Program.

(r) “Program Year” means the Company’s Fiscal Year.

(s) “Section 162(m)” means Section 162(m) of the Code, or any successor to
Section 162(m), as that Section may be interpreted from time to time by the
Internal Revenue Service, whether by regulation, notice or otherwise.

(t) “Target Award’ means the target award payable under the Program to a
Participant for the Performance Period, expressed as a percentage of
Participant’s Base Salary or a specific dollar amount, as determined by the
Committee in accordance with Section 6.

(u) “Target Determination Cutoff Date” means the latest possible date that the
Committee may set a Target Award and Payout Formula that will not jeopardize a
Target Award’s qualification as Performance-Based Compensation.

(v) “Target Determination Date” means the date upon which the Committee sets the
Target Award and Payout Formula with respect to any Performance Period, in
accordance with Section 7.

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3. Program Administration.

(a) The Committee shall be responsible for the general administration and
interpretation of the Program and for carrying out its provisions. Subject to
the requirements for qualifying compensation as Performance-Based Compensation,
the Committee may delegate specific administrative tasks to Company employees or
others as appropriate for proper administration of the Program. Subject to the
limitations on Committee discretion imposed under Section 162(m), the Committee
shall have such powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following powers and duties, but
subject to the terms of the Program:

(i) discretionary authority to adopt Target Awards and Payout Formula under this
Program for a given Performance Period on or prior to the Target Determination
Cutoff Date;

(ii) discretionary authority to construe and interpret the terms of the Program,
and to determine eligibility, Awards and the amount, manner and time of payment
of any Awards hereunder;

(iii) to prescribe forms and procedures for purposes of Program participation
and distribution of Awards; and

(iv) to adopt rules, regulations and bylaws, to formally amend the Program and
to take such actions as it deems necessary or desirable for the proper
administration of the Program.

(b) Any rule or decision by the Committee that is not inconsistent with the
provisions of the Program shall be conclusive and binding on all persons, and
shall be given the maximum deference permitted by law.

4. Eligibility. The employees eligible to participate in the Program for a given
Performance Period shall be determined by the Committee for each Program Year
and set forth in a writing on or prior to the Target Determination Cutoff Date
in a format substantially similar to the attached Exhibit A or such other format
as is approved by the Committee for such Program Year, and are generally
expected to include executive officers of the Company who are subject to
Section 16 of the Securities and Exchange Act of 1934 and any other members of
senior management of the Company who are specifically designated by the
Committee, in its sole discretion, for participation in the Program. Unless
specifically excepted, a Participant must be actively employed on the Payout
Determination Date to be eligible to receive a payment hereunder. No person
shall be automatically entitled to participate in the Program.

5. Performance Goal Determination. On the Target Determination Date, the
Committee, in its sole discretion, shall establish the Performance Goals for
each Participant for the Performance Period. Such Performance Goals shall be set
forth in writing on or prior to the Target Determination Cutoff Date in a format
substantially similar to the attached Exhibit B or such other format as is
approved by the Committee for such Program Year.

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6. Target Award Determination. On the Target Determination Date, the Committee,
in its sole discretion, shall establish a Target Award for each Participant.
Each Participant’s Target Award shall be determined by the Committee, in its
sole discretion, and each Target Award shall be set forth in writing on or prior
to the Target Determination Cutoff Date in a format substantially similar to the
attached Exhibit B or such other format as is approved by the Committee for such
Program Year.

7. Determination of Payout Formula. On the Target Determination Date, the
Committee, in its sole discretion, shall establish a Payout Formula for purposes
of determining the Award (if any) payable to each Participant in a format
substantially similar to the attached Exhibit B or such other format as is
approved by the Committee for such Program Year. Each Payout Formula (a) shall
be set forth in writing on or prior to the Target Determination Cutoff Date,
(b) shall provide for the payment of a Participant’s Award if the Performance
Goals for the Performance Period are achieved, and (c) may provide for an Award
payment greater than or less than the Participant’s Target Award, depending upon
the extent to which the Performance Goals are achieved. Notwithstanding the
preceding, in no event shall a Participant’s Award for any Performance Period
exceed the Maximum Award.

8. Payout Determination; Award Payment.

(a) Payout Determination and Certification. On the Payout Determination Date,
the Committee shall certify in writing (which may be by approval of the minutes
in which the certification was made) the extent to which the Performance Goals
applicable to each Participant for the Performance Period were achieved or
exceeded. The Award for each Participant shall be determined by applying the
Payout Formula to the level of actual performance that has been certified by the
Committee. Notwithstanding any contrary provision of the Program, the Committee,
in its sole discretion, may eliminate or reduce the Award payable to any
Participant that which otherwise would be payable under the Payout Formula.
Notwithstanding any contrary provision of the Program, the Company’s Chief
Executive Officer may determine whether and to the extent the Performance Goals
applicable to Participants who are not Section 16 officers were achieved or
exceeded, and may, in his or her sole discretion, eliminate or reduce the Award
payable to any such Participants that which otherwise would be payable under the
Payout Formula.

(b) Right to Receive Payment. Each Award under the Program shall be paid solely
from the general assets of the Company. Nothing in this Program shall be
construed to create a trust or to establish or evidence any Participant’s claim
of any right to payment of an Award other than as an unsecured general creditor
with respect to any payment to which he or she may be entitled.

(c) Form of Distributions. The Company shall distribute all Awards to the
Participant in cash, unless the Committee determines to substitute shares of the
Company’s Common Stock for the cash payment in accordance with Section 10.2 of
the Plan.

(d) Timing of Distributions. Subject to Section 8(e) below, the Company shall
distribute amounts payable to Participants as soon as is practicable following
the determination and written certification of the Award for a Performance
Period, but in no event later than 2  1/2 months after the end of the calendar
year that includes the applicable Payout Determination Date.

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(e) Deferral. The Committee may defer payment of Awards, or any portion thereof,
to Participants as the Committee, in its discretion, determines to be necessary
or desirable to preserve the deductibility of such amounts under Section 162(m).
In addition, the Committee, in its sole discretion, may permit a Participant to
defer receipt of the payment of Awards that would otherwise be delivered to a
Participant under the Program. Any such deferral elections shall be subject to
such rules and procedures as shall be determined by the Committee in its sole
discretion, which shall comply with the requirements of Section 409A of the Code
and the regulations and other guidance thereunder.

(f) Withholding. In accordance with Section 13 of the Plan, the Company may
withhold from the Awards payable to Participants under this Program amounts
necessary to satisfy any federal, state, local or foreign tax withholding
obligation relating to such payments.

9. Term of Program. The Program shall become effective on January 1, 2007 and
shall first apply to the 2007 Program Year. The Program shall continue until the
earlier of (a) the date as of which the Committee terminates the Program, or
(b) the date the Company’s shareholders fail to re-approve the Program
provisions contained in the Plan in accordance with the requirements of Treasury
Regulation 1.162-27(e)(4)(vi), the first re-approval of which must occur no
later than the first Company shareholder’s meeting during the 2009 Program Year.

10. Amendment and Termination of the Program. The Committee may amend, modify,
suspend or terminate the Program, in whole or in part, at any time, including
adopting amendments deemed necessary or desirable to correct any defect or to
supply omitted data or to reconcile any inconsistency in the Program or in any
Award granted hereunder; provided, however, that no amendment, alteration,
suspension or discontinuation shall be made which would (i) increase the amount
of compensation payable pursuant to such Award or (ii) cause compensation that
is, or may become, payable hereunder to fail to qualify as Performance-Based
Compensation. Notwithstanding the foregoing, the Committee may amend Exhibits A
and B with respect to any Program Year at any time prior to the Target
Determination Cutoff Date for such Program Year. To the extent necessary or
advisable under applicable law, including Section 162(m), Program amendments
shall be subject to stockholder approval. At no time before the actual
distribution of funds to Participants under the Program shall any Participant
accrue any vested interest or right whatsoever under the Program except as
otherwise stated in this Program.

11. Governing Plan Document. The Program is subject to all the provisions of the
Plan and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted by the
Committee, the Board or the Company pursuant to the Plan. In the event of any
conflict between the provisions of this Program and those of the Plan, the
provisions of the Plan shall control.

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EXHIBIT A

2004 EQUITY INCENTIVE PLAN

EXECUTIVE CASH PERFORMANCE UNIT PROGRAM

ELIGIBILITY CRITERIA

             PROGRAM YEAR

The following employees are eligible to be Participants under the Program for
the              Program Year:

{Name and Title of Employees}

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EXHIBIT B

2004 EQUITY INCENTIVE PLAN

EXECUTIVE CASH PERFORMANCE UNIT PROGRAM

AWARD CALCULATION METHODOLOGY

FOR PROGRAM YEAR

TARGET AWARDS

A minimum threshold level of corporate performance is required before any Award
will be paid pursuant to this Program. As the metric for that threshold, the
Company will use              as the Performance Goal.

Target Awards as a percentage of Base Salary will vary by the employee’s
position. The Committee has set a separate Target Awards for the Participants
covered by this Program based upon their positions. Target Awards as a
percentage of Base Salary are as follows:

{Insert Name and Target Award}

PAYOUT FORMULA

Corporate And Subsidiary/Group Accomplishments

The Committee has identified an allocation formula for Awards based upon
corporate and subsidiary/group objectives. This allocation has been set as
follows.

{Insert Formula}

Notwithstanding the foregoing, as provided in Section 8(a) of the Plan, the
Committee, in its sole discretion, may eliminate or reduce the Award payable to
any Participant that otherwise would be payable under the Payout Formula,
including without limitation the amount calculable under the Payout Formula
resulting from the foregoing adjustment.

 

1.