Thrifty Car Rental 2009 Annual Report Download - page 73

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The Company has bonus plans for its executive and middle management based on Company
performance. Expense related to these plans was $10.0 million in 2009. For the years ended
December 31, 2008 and 2007, the Company fell short of the stated performance objectives;
consequently, no expense related to these plans was recorded.
Deferred Compensation and Retirement Plans
The Company has deferred compensation and retirement plans, which are defined contribution
plans that provide key executives with the opportunity to defer compensation, including related
investment income. Under the deferred compensation plan, the Company contributes up to 7% of
participant cash compensation. The Company also contributes annually to the retirement plan.
Participants generally become fully vested in the Company contribution under both the deferred
compensation and retirement plans after five years of service. Contributions to the deferred
compensation and retirement plans are at the discretion of the Board of Directors based on the
Company’s performance. In 2008, the Company suspended the contributions to the deferred
compensation plan, in conjunction with the suspension of the matching contributions in the
Company’s 401(k) plan in 2008. Likewise, the Company did not fund the retirement plan in 2008.
Expense related to these plans for contributions made by the Company totaled $2.1 million in 2007.
No expense related to these plans was recorded in 2008.
Effective January 1, 2009, the Company adopted a 2009 Deferred Compensation Plan wherein key
executives will receive contributions equal to 15% of such executives’ current annual base
compensation for the year ended December 31, 2009 and thereafter. Beginning in 2009, all
Company contributions will be made into this plan. Under this Plan, participants are immediately
vested in the Company’s contributions. Expense related to these plans for contributions made by
the Company totaled $0.8 million in 2009.
The balance in the deferred compensation and retirement plans, which is reflected in accrued
liabilities, was $1.5 million and $0.4 million as of December 31, 2009 and 2008, respectively.
Share-Based Payment Plans
Long-Term Incentive Plan
The Company has a long-term incentive plan (“LTIP”) for employees and non-employee directors
under which the Human Resources and Compensation Committee of the Board of Directors of the
Company (the “Committee”) is authorized to provide for grants in the form of incentive option rights,
non-qualified option rights, tandem appreciation rights, free-standing appreciation rights, restricted
stock, restricted stock units, performance shares, performance units and other awards to key
employee and non-employee directors that may be payable or related to common stock or factors
that may influence the value of common stock. The Company’s policy is to issue shares of
remaining authorized common stock to satisfy option exercises and grants under the LTIP. At
December 31, 2009, the Company’s common stock authorized for issuance under the LTIP was
3,137,271 shares. The Company has 442,711 shares available for future LTIP awards at December
31, 2009 after reserving for the maximum potential shares that could be awarded under existing
LTIP grants.
The Company recognized compensation costs of $6.2 million, $3.9 million and $7.7 million during
2009, 2008 and 2007, respectively, related to LTIP awards. The total income tax benefit recognized
in the statements of operations for share-based compensation payments was $2.7 million, $1.6
million and $3.1 million for 2009, 2008 and 2007, respectively.
Option Rights Plan – Under the LTIP, the Committee may grant non-qualified option rights to key
employees and non-employee directors. The exercise prices for non-qualified option rights are
equal to the fair market value of the Company’s common stock at the date of grant, except for the
initial grant, which was made at the initial public offering price. The non-qualified option rights have a
term not exceeding ten years from the date of grant. The maximum number of shares for which
option rights may be granted under the LTIP to any participant during any calendar year is 285,000.
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