Thrifty Car Rental 2010 Annual Report Download - page 81

The following table summarizes information regarding fixed non-qualified option rights that were
outstanding at December 31, 2010:
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 - $0.97 829 7.78 0.95$ 548 0.95$
$4.44 - $11.45 1,113 8.27 4.52 229 4.83
$13.98 - $24.38 335 4.94 21.61 47 18.29
$0.77 - $24.38 2,277 7.61 5.73$ 824 3.02$
Options Outstanding Options Exercisable
Performance Shares – Performance share awards, which may take the form of performance
shares or performance units, are granted to Company officers and certain key employees. The
maximum amount of performance share awards that may be granted under the LTIP during any
year to any participant is 160,000 common shares. Values of the performance shares earned
were recognized as compensation expense over the period the shares were earned. The
Company recognized compensation costs of $2.3 million, $1.9 million and $2.8 million in 2010,
2009 and 2008, respectively, for performance share awards (included in the $4.8 million, $6.2
million and $3.9 million discussed above).
In December 2010, a target number of performance units was granted. These performance
units, which will settle in Company shares, will vest over a three-year requisite service period
following the grant date with 25% vesting on December 31, 2012 and the remaining 75%
vesting on December 31, 2013. The grant-date fair value for the awards was based on the
closing market price of the Company’s common shares at the date of grant. The number of
performance units ultimately earned will depend upon the level of corporate performance
against a pre-established target in 2011. No awards were granted in 2009.
The awards granted in 2008 established a target number of shares that generally vest at the
end of the 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 upon specified metrics. For the awards granted in 2008, the expense related to
performance shares was based on a market based condition and on defined performance
indicators. The market condition based portion of the award was estimated on the date of grant
using a lattice-based option valuation model and the following assumptions: weighted-average
expected life of awards of three years, volatility factor of 35.30% and risk-free rate of 2.32% for
2008. To arrive at the assumptions used to estimate the fair value of the Company’s market
condition based performance shares, as noted above, the Company relied on observations of
historical trends, actual results and anticipated future changes. To determine expected
volatility, the Company examined 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 observed the actual terms of prior grants and the
actual vesting schedule of the grant. The risk-free interest rate was 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 share awards earned are settled 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 based on
the current accounting accrual, 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 award installments not earned at the end of the requisite service period are forfeited. In
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