Hertz 2011 Annual Report Download - page 147

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
governed by the terms of the Prior Plans. As of December 31, 2011, there were 9.3 million shares of our
common stock underlying awards outstanding under the Prior Plans. In addition, as of December 31,
2011, there were 10.9 million shares of our common stock underlying awards outstanding under the
Omnibus Plan.
In addition to the 20.2 million shares underlying outstanding awards as of December 31, 2011, we had
18.1 million shares of our common stock available for issuance under the Omnibus Plan. The shares of
common stock to be delivered under the Omnibus Plan may consist, in whole or in part, of common
stock held in treasury or authorized but unissued shares of common stock, not reserved for any other
purpose.
Shares subject to any award granted under the Omnibus Plan that for any reason are canceled,
terminated, forfeited, settled in cash or otherwise settled without the issuance of common stock after the
effective date of the Omnibus Plan will generally be available for future grants under the Omnibus Plan.
Impact on Results
A summary of the total compensation expense and associated income tax benefits recognized under
our Prior Plans and the Omnibus Plan, including the cost of stock options, restricted stock units, or
‘‘RSUs,’’ and performance stock units, or ‘‘PSUs,’’ is as follows (in millions of dollars):
Years ended December 31,
2011 2010 2009
Compensation Expense .................................... $31.0 $ 36.6 $ 34.5
Income Tax Benefit ........................................ (12.0) (14.2) (13.4)
Total ................................................. $19.0 $ 22.4 $ 21.1
As of December 31, 2011, there was approximately $35.6 million of total unrecognized compensation
cost related to non-vested stock options, RSUs and PSUs granted by Hertz Holdings under the Prior
Plans and the Omnibus Plan. The total unrecognized compensation cost is expected to be recognized
over the remaining 1.5 years, on a weighted average basis, of the requisite service period that began on
the grant dates.
Stock Options and Stock Appreciation Rights
All stock options and stock appreciation rights granted under the Omnibus Plan will have a per-share
exercise price of not less than the fair market value of one share of Hertz Holdings common stock on the
grant date. Stock options and stock appreciation rights will vest based on a minimum period of service or
the occurrence of events (such as a change in control, as defined in the Omnibus Plan) specified by the
compensation committee of our Board of Directors. No stock options or stock appreciation rights will be
exercisable after ten years from the grant date.
We have accounted for our employee stock-based compensation awards in accordance with ASC 718,
‘‘Compensation—Stock Compensation.’’ The options are being accounted for as equity-classified
awards. We will recognize compensation cost on a straight-line basis over the vesting period. The value
of each option award is estimated on the grant date using a Black-Scholes option valuation model that
incorporates the assumptions noted in the following table. Because the stock of Hertz Holdings became
publicly traded in November 2006 and has a short trading history, it is not practicable for us to estimate
the expected volatility of our share price, or a peer company share price, because there is not sufficient
historical information about past volatility. Therefore, we have used the calculated value method,
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