Hertz 2008 Annual Report Download - page 175

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contributions
Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable
laws, regulations and union agreements. From time to time we make contributions beyond those legally
required. In 2008, we made a discretionary cash contribution to our U.S. qualified pension plan of
$1.5 million. In 2007, no contribution was made. Based upon the significant decline in asset values in
2008, which were in line with the overall market declines, it is likely we will have to make cash
contributions in 2009 and future years. The actual level of contributions is uncertain and is dependent
upon a final valuation of the plan liabilities, which will be completed later in the year. In addition, under the
Pension Protection Act of 2006, there are a number of choices in valuing assets and liabilities to
determine the required level of funding that can produce a wide range of potential contributions. The
level of future contributions will vary, and is dependent on a number of factors including investment
returns, interest rate fluctuations, plan demographics and funding regulations.
Estimated Future Benefit Payments
The following table presents estimated future benefit payments (in millions of dollars):
Postretirement
Pension Benefits Benefits (U.S.)
2009 .............................................. $ 32.6 $1.0
2010 .............................................. 29.7 1.0
2011 .............................................. 31.0 1.1
2012 .............................................. 31.4 1.0
2013 .............................................. 37.9 1.1
2014-2017 .......................................... 247.0 5.1
Note 5—Stock-Based Compensation
On February 15, 2006, the Boards of Directors of Hertz and Hertz Holdings jointly approved the Hertz
Global Holdings, Inc. Stock Incentive Plan, or the ‘‘Stock Incentive Plan,’’ which was approved by the
stockholders of Hertz Holdings on March 8, 2006. The Stock Incentive Plan provided for the sale of Hertz
Holdings common stock to our executive officers, other key employees and directors as well as the grant
of stock options to purchase shares of Hertz Holdings common stock to those individuals. The Board of
Directors of Hertz Holdings, or a committee designated by it, selected the officers, employees and
directors eligible to participate in the Stock Incentive Plan and either the Board or the Compensation
Committee of Hertz Holdings determined the specific number of shares to be offered or options to be
granted to an individual employee or director. A maximum of 25 million shares were reserved for
issuance under the Stock Incentive Plan. We satisfied the need for shares of our common stock
associated with the exercise of options issued under the Stock Incentive Plan through new shares
reserved for issuance, not through the use of Treasury shares or open market purchases of shares.
All option grants were non-qualified options with a per-share exercise price no less than fair market value
of one share of Hertz Holdings stock on the grant date. Any stock options granted have a term of ten
years, and unless otherwise determined by the Board or the Compensation Committee of Hertz
Holdings, vest in five equal annual installments. The options granted in 2006 vest over five years; the
options granted in 2007 vest over three years, except for the grants to Mark P. Frissora, our Chief
Executive Officer, and certain key executives, which vest over four years. The options granted to the
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