Thrifty Car Rental 2008 Annual Report Download - page 75

The following table summarizes information regarding fixed non-qualified option rights that were
outstanding at December 31, 2008:
Weighted-Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Life Exercise Exercisable Exercise
Prices (In Thousands) (In Years) Price (In Thousands) Price
$0.77 - $0.97 853 9.78 0.95$ - -
$11.45 - $19.375 460 3.21 16.71 373 17.35
$21.1875 - $24.38 289 7.69 24.09 56 22.91
$0.77 - $24.38 1,602 7.05 9.65$ 429 18.08$
Options Outstanding Options Exercisable
Performance Shares – Performance shares are granted to Company officers and certain key
employees. The awards granted in 2008, 2007 and 2006 established a target number of shares that
generally vest at the end of a three year requisite service period following the grant-date. The
number of performance shares ultimately earned will range from zero to 200% of the target award,
depending on the level of corporate performance over each of the three years, which is considered
the performance period. Values of the performance shares earned will be recognized as
compensation expense over the period the shares are earned. The maximum amount for which
performance shares may be granted under the LTIP during any year to any participant is 160,000
common shares. The Company recognized compensation costs of $2.8 million, $6.7 million and
$10.1 million in 2008, 2007 and 2006, respectively, for performance shares (included in the $3.9
million, $7.7 million and $11.1 million discussed above).
For the awards granted in 2008 and 2007, the expense related to performance shares is based on a
market based condition as defined in SFAS No. 123(R) for 50% of the target award and on defined
performance indicators for the other 50% of the target award. The grant-date fair value for the
performance indicator portion of the award was based on the closing market price of the Company’s
common shares at the date of grant. The market condition based portion of the award was
estimated on the date of grant using a lattice-based option valuation model and the assumptions
noted in the following table:
2008 2007
Weighted-average expected life (in years) 3 3
Expected price volatility 35.30% 28.10%
Risk-free interest rate 2.32% 4.88%
To arrive at the assumptions used to estimate the fair value of the Company’s market condition
based performance shares, as noted in the table above, the Company relies on observations of
historical trends, actual results and anticipated future changes. To determine expected volatility, the
Company examines historical volatility trends of the Company and its peers (defined as the Russell
2000 Index), as determined by an independent third party. In determining the expected term, the
Company observes the actual terms of prior grants and the actual vesting schedule of the grant.
The risk-free interest rate is the actual U.S. Treasury zero-coupon rate for bonds matching the
expected term of the award on the date of grant. The expected dividend yield was estimated based
on the Company’s current dividend yield, and adjusted for anticipated future changes.
Performance shares earned are delivered based upon vesting of the grant, provided the grantee is
then employed by the Company. For instances of retirement, involuntary termination without cause,
disability or death, performance share awards vest on a pro-rata basis at 100% of target, but will not
be issued until the end of the performance period or earlier, if needed to comply with the Internal
Revenue Code Section 409A. Any performance share installments not earned at the end of the
requisite service period are forfeited. In January 2008, the 2005 grant of performance shares
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