Thrifty Car Rental 2011 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2011 Thrifty Car Rental annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

Deferred Compensation and Retirement 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 $0.9 million, $0.8 million and $0.8 million in 2011,
2010 and 2009, respectively.
The balance in the deferred compensation and retirement plans, which is reflected in accrued
liabilities, was $5.8 million and $3.9 million as of December 31, 2011 and 2010, 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 issues new shares from remaining authorized common stock to satisfy option
exercises and grants under the LTIP. At December 31, 2011, the Company’s common stock
authorized for issuance under the LTIP was 2,083,550 shares. The Company has 247,517
shares available for future LTIP awards at December 31, 2011 after reserving for the maximum
potential shares that could be awarded under existing LTIP grants.
Compensation cost for non-qualified option rights, performance shares and restricted stock
awards is recognized based on the fair value of the awards granted at the grant-date and is
amortized to compensation expense on a straight-line basis over the requisite service periods
of the stock awards, which are generally the vesting periods. The Company recognized
compensation costs of $4.1 million, $4.8 million and $6.2 million during 2011, 2010 and 2009,
respectively, for such awards. The Company deems a tax benefit to be realized when the
benefit provides incremental benefit by reducing current taxes payable that it otherwise would
have had to pay absent the share-based compensation deduction (the “with-and-without”
approach). Under this approach, share-based compensation deductions are, effectively,
always considered last to be realized. The total income tax benefit recognized in the
statements of income for share-based compensation payments was $1.6 million, $1.9 million
and $2.7 million for 2011, 2010 and 2009, 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.
During 2011 and 2010, there were no stock option awards granted. The Black-Scholes option
valuation model was used to estimate the fair value of the 2009 stock option awards at the date
of the grant. The Company used the simplified method to estimate the weighted-average
expected life of the options granted. The Company used a blended volatility rate that combines
market-based measures of implied volatility with historical price volatility as the most
appropriate indicator of the Company’s expected price volatility in 2009. The risk-free interest
rate is the implied zero-coupon yield for U.S. Treasury securities having a maturity
approximately equal to the expected life at the time of grant. The expected dividend payments