Callaway Reluctantly Yields the Helm


The latest:
Ely Callaway has finally felt the need to do what he resisted for so long. With his recovery from gall bladder surgery taking longer than expected, the 81-year-old founder of Callaway Golf resigned from two of his three top executive posts to save his company ' and Wall Street ' from a breath-holding wait for the beginning of Callaway Golfs next chapter.
The successor, picked from a deep pool of inside executive talent, is Ron Drapeau, 54, Callaways manufacturing chief. Drapeau brings a solid industry reputation and varied experience to the helm. He was chief of Lynx Golf all the way back to the days when it was a division of Zurn Industries, the plumbing fixtures company. He also served at Odyssey Golf, which is now a part of Callaway, before becoming a Callaway executive in 1996.
Drapeau inherits something akin to an enormous cruise ship whose engine is so finely tuned it seems to require little maintenance, or even stoking. It simply parts the sea before it with its prodigious bow, sailing along at full speed. (Callaway posted record sales of $261 million for the first quarter of 2001.)
But he will never be the host at the captains table that Ely was. Drapeau is certainly not a drip; on the contrary, he is an energetic, intelligent and engaging man who has earned his confidence with long experience. But no one could easily follow the one-of-a-kind act of the charismatic Mr. Callaway, who in his active career combined razor-sharp business acumen with a folksy southern charm ingrained in him from birth near Lagrange, Ga. in 1919.
Ely Callaway at the podiumNobody in the industry has walked the Wall Street walk more effectively than Mr. Callaway. His policy of easy press accessibility helped launch the career of more than one golf journalist, and his frequent appearances in the mainstream press and on financial and golf television ' including The Golf Channel ' helped cement his reputation as a business media star since the days of the first Big Bertha in the early 1990s.
Journalists and business colleagues in and out of golf marveled at Mr. Callaways vitality, a seemingly ceaseless verve that belied his lined face and rich experience. Thats why many were shocked in the days following April 23, when his company announced that Mr. Callaway had his gall bladder removed. During surgery, doctors discovered a tumor on Mr. Callaways pancreas. This raised fears that Mr. Callaway might be suffering from a very quick-killing form of cancer. (Metalwood pioneer Gary Adams lived for years with the wasting condition, but his case was an exception. Once discovered, pancreatic cancer can kill in a matter of weeks.)
Company officials refuse to discuss pathology results on the tumor, saying it will be Mr. Callaways personal decision whether to reveal them. But it appears now that even if the tumor is malignant, it has been discovered early enough to prevent a quick demise. Company officials continue to describe Mr. Callaways condition as manageable, even though minor post-operative complications have kept him in the hospital longer than planned. In the first week after surgery, both doctors and the company believed Mr. Callaway would be back at his desk in two weeks.
His desk is where he longs to be; Ely Callaway may be the happiest workaholic in golf. And his company will not be entirely without him. He will continue in the less-demanding position of chairman of the board, perhaps because of his sense of his value as an icon to his shareholders and to Wall Street.
The executive succession committee of Callaways board chose Drapeau in accordance with Mr. Callaways recommendation, and reportedly that advice was based on research. Before his illness, Mr. Callaway privately polled each member of his executive team as to who should succeed him. Drapeau was the overwhelming choice.
What Drapeau inherits is one of the most successful brands, not only in golf, but in consumer products. Mr. Callaways cherished business principles have always included the notion that people will pay premium prices for premium products, and so far he has not broken the rim of any price envelope he has chosen to push. That confidence (some competitors have called it arrogance) has moved Callaway closer every year to $1 billion in sales. One could say that all Drapeau has to do is not screw it up.
But sure there is more to it than that. Callaways club operation may be cruising, but its golf ball operation is still a child in need of guidance. Even though the 2000 introduction of the Callaway Rule 35 ball was the most successful golf ball launch (from scratch) ever, Callaways market share foothold is still in the single digits.
Ely Callaway debates with David FayAnd Callaways gentlemanly but heated conflict with the U.S. Golf Association over nonconforming drivers is a situation that will require special management skills over the short and long terms. The introduction of the ERC II nonconforming driver set off many sparks, some of which still float in the air, looking for something to fall on and ignite. Callaway sees the conflict as nothing less than a battle for control over the future of the game, and was moved to create a special department to steer efforts toward that objective.
That departments chief, Chuck Yash, was at one time tapped as Elys successor. But plans changed after Mr. Callaway changed his mind about retiring before a self-imposed deadline of Dec. 31, 2000. Yash, a former naval officer who plays things close to the vest, would never admit it even if he did feel passed over for this latest appointment. But he is just one of a number of talented executives Drapeau will have at his disposal ' and have to manage.