Avis 2007 Annual Report Download - page 107

Table of Contents
The table below summarizes information regarding the Company’s outstanding and exercisable stock options as of December 31, 2007 (in
thousands of shares):
The weighted-average grant-
date fair value of common stock options granted during 2005 was $5.89. The fair values of these stock options
estimated on the dates of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend
yield—1.7%; expected volatility—30.0%; risk-free interest rate—3.8%; and expected holding period—5.5 years.
Restricted Stock Units
RSUs currently granted by the Company entitle the employee to receive one share of Avis Budget common stock upon vesting, which
occurs ratably over a four-year period for the majority of currently outstanding RSUs. The Company also employs performance and time
vesting criteria for RSU grants made to certain of the Company’s executives. The predetermined performance criteria determine the
number of RSUs that will ultimately vest and are based on growth in earnings before taxes and certain other metrics over varying periods
of three to four years. The number of performance-based RSUs that will ultimately vest may range from 0% to 100% of the target award.
The annual activity related to the Company’s RSU plan consisted of (in thousands of shares):
Outstanding and Exercisable Options
Range of
Exercise Prices
Number
of
Options
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Less than $20.00
1,438
2.5
$
15.15
$20.01 to $25.00
232
2.3
22.18
$25.01 to $30.00
2,733
2.3
26.73
$30.01 to $35.00
1,190
1.9
31.77
$35.01 and above
370
0.1
49.31
5,963
2.2
26.16
2007
2006
2005
Number
of RSUs
Weighted
Average
Exercise
Price
Number
of RSUs
Weighted
Average
Exercise
Price
Number
of RSUs
Weighted
Average
Exercise
Price
Balance at beginning of year
1,774
$
24.33
2,299
$
(*)
1,618
$
(*)
Granted at fair market value
(a)
1,143
25.83
1,799
(*)
1,402
(*)
Granted in connection with PHH spin-
off
(b)
-
-
-
(*)
77
(*)
Vested
(c)
(382)
24.31
(1,129)
(*)
(341)
(*)
Canceled
(c)
(205)
24.79
(1,195)
(*)
(457)
(*)
Balance at end of year
(d)
2,330
25.03
1,774
24.33
2,299
(*)
(*)
Weighted average grant date prices for 2005 and for RSU activity prior to the Cendant Separation are not meaningful due to the
impact of the Cendant Separation on the weighted average grant price of RSUs.
(a)
Reflects the maximum number of RSUs assuming achievement of all performance and time vesting criteria.
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(b)
As a result of the spin-
off of PHH, the closing price of Cendant common stock was adjusted downward on January 31, 2005. In order
to provide an equitable adjustment to holders of its RSUs, the Company granted incremental RSUs to achieve a balance of 1.0477
RSUs outstanding subsequent to the spin-off for each RSU outstanding prior to the spin-off.