Thrifty Car Rental 2010 Annual Report Download - page 79

The Company has bonus plans for its executive and middle management based on Company
performance. Expense related to these plans was $11.2 million and $10.0 million in 2010 and
2009, respectively. For the year ended December 31, 2008, the Company fell short of the
stated performance objectives; consequently, no expense related to these plans was recorded.
Deferred Compensation and Retirement Plans
Prior to 2009, the Company had deferred compensation and retirement plans, which were
defined contribution plans that provided key executives with the opportunity to defer
compensation. Under these plans, the Company made discretionary contributions, based on
Company performance, to the executives’ deferred accounts. These deferred compensation
and retirement plans were suspended in 2008 and no further contributions will be made under
these plans.
In 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. 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 each of 2010 and 2009.
The balance in the deferred compensation and retirement plans, which is reflected in accrued
liabilities, was $3.9 million and $1.5 million as of December 31, 2010 and 2009, 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 employees 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, 2010, the Company’s common stock
authorized for issuance under the LTIP was 2,909,728 shares. The Company has 348,058
shares available for future LTIP awards at December 31, 2010 after reserving for the maximum
potential shares that could be awarded under existing LTIP grants.
The Company recognized compensation costs of $4.8 million, $6.2 million and $3.9 million
during 2010, 2009 and 2008, respectively, related to LTIP awards. The total income tax benefit
recognized in the statements of operations for share-based compensation payments was $1.9
million, $2.7 million and $1.6 million for 2010, 2009 and 2008, 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. 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.
The Company recognized $1.9 million, $2.7 million and $1.0 million in compensation costs
(included in the $4.8 million, $6.2 million and $3.9 million discussed above) during 2010, 2009
and 2008, respectively, related to the 2009 and 2008 stock option awards. The Black-Scholes
option valuation model was used to estimate the fair value of the options at the date of the
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