Hertz 2008 Annual Report Download - page 140

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
governed by the terms of the Omnibus Plan. See Note 14 to the Notes to our consolidated financial
statements included in this Annual Report under the caption ‘‘Item 8—Financial Statements and
Supplementary Data.’’
In August 2008, we granted options to acquire 861,300 shares of our common stock to key executives
and employees at an exercise price of $8.61 per share under the Omnibus Plan.
In November 2008, we granted options to acquire 43,000 shares of our common stock at an exercise
price of $4.96 per share, and in December we granted options to acquire 5,000 shares of our common
stock at an exercise price of $2.73 per share, to newly hired key executives and employees under the
Omnibus Plan. Options granted to our employees and key executives in 2008 under the Omnibus Plan
generally have the terms set forth in the Omnibus Plan, however, following a termination without cause,
vested options remain exercisable through the earliest of the expiration of their term or 90 days following
termination of employment other than for death or disability.
For the year ended December 31, 2008, we recognized compensation cost of approximately
$27.8 million ($17.1 million, net of tax) for options granted pursuant to our Prior Plans and the Omnibus
Plan. As of December 31, 2008, there was approximately $64.5 million of total unrecognized
compensation cost related to non-vested stock options granted by Hertz Holdings under our Prior Plans
and the Omnibus Plan, including costs related to modifying the exercise prices of certain option grants in
order to preserve the intrinsic value of the options, consistent with applicable tax law, to reflect special
cash dividends of $4.32 per share paid on June 30, 2006 and $1.12 per share paid on November 21,
2006. These remaining costs are expected to be recognized over the remaining 1.7 years, on a weighted
average basis, of the requisite service period that began on the grant dates.
On February 28, 2008, upon recommendation of the compensation committee of our Board of Directors,
our Board of Directors adopted the Hertz Global Holdings, Inc. Employee Stock Purchase Plan, or the
‘‘ESPP,’’ and the plan was approved by our stockholders on May 15, 2008. The ESPP is intended to be
an ‘‘employee stock purchase plan’’ within the meaning of Section 423 of the Internal Revenue Code.
The maximum number of shares that may be purchased under the ESPP is 3,000,000 shares of our
common stock, subject to adjustment in the case of any change in our shares, including by reason of a
stock dividend, stock split, share combination, recapitalization, reorganization, merger, consolidation or
change in corporate structure. As of December 31, 2008, the closing price of our common stock was
$5.07.
An eligible employee may elect to participate in the ESPP each quarter (or other period established by
the Committee) through a payroll deduction. The maximum and minimum contributions that an eligible
employee may make under all of our qualified employee stock purchase plans will be determined by the
Committee, provided that no employee may be permitted to purchase stock with an aggregate fair
market value greater than $25,000 per year. At the end of the offering period, the total amount of each
employee’s payroll deduction will be used to purchase shares of our common stock. The purchase price
per share will be not less than 85% of the market price of our common stock on the date of purchase; the
exact percentage for each offering period will be set in advance by the Committee.
For the year ended December 31, 2008, we recognized compensation cost of approximately $0.1 million
($0.1 million, net of tax) for the amount of the discount on the stock purchased by our employees.
Approximately 1,400 employees participated in the ESPP as of December 31, 2008.
In November, 2008 we granted 525,000 Restricted Stock Units, or ‘‘RSUs,’’ to key executives and
employees at a fair value of $5.04 and 760,000 Performance Stock Units, or ‘‘PSUs,’’ at fair values
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