Avis 2009 Annual Report Download - page 105

Table of Contents
In June 2009, stockholders approved the adoption of the Avis Budget Group Inc. Employee Stock Purchase Plan, which became effective on
January 1, 2010. Under the new terms of the ESPP, the fair market value of the shares of Avis Budget common stock which may be
purchased by any employee cannot exceed $25,000 during any calendar year or 10% of the employee’s annual base salary. The purchase
price of Avis Budget common stock shall be calculated at 95% of the fair market value of Avis Budget common stock at the end of the
option period. The Company reserved a maximum of 2.5 million shares of which up to 125,000 shares of Avis Budget common stock
purchased under the offer period may be either newly issued shares or existing treasury shares, and up to 1 million shares of Avis Budget
common stock purchased under the ESPP in the aggregate may be either newly issued shares or existing treasury shares. Subject to the
preceding limitation, shares purchased under the ESPP may be either newly issued shares, existing treasury shares, or new purchases in the
open market.
Compensation Expense
Compensation expense for all outstanding employee stock awards is based on the estimated fair value of the award at the grant date and is
recognized as an expense in the Consolidated Statements of Operations over the requisite service period. The Company’s policy is to record
compensation expense related to the issuance of stock options and SARs to its employees on a straight-line basis over the vesting period of
the award and based on the estimated number of stock options or SARs the Company believes it will ultimately provide. The Company
records amortization expense of the deferred compensation related to RSUs on a straight-
line basis over the remaining vesting periods of the
respective RSUs and based on the estimated performance goals the Company believes it will ultimately achieve.
The Company recorded pretax stock-based compensation expense of $15 million, $15 million and $17 million ($9 million, $9 million and
$10 million, net of tax) during 2009, 2008 and 2007, respectively, related to employee stock awards that were granted by the Company.
Defined Contribution Savings Plans
The Company sponsors several defined contribution savings plans that provide certain eligible employees of the Company an opportunity to
accumulate funds for retirement. The Company matches portions of the contributions of participating employees on the basis specified by
the plans. The Company’s contributions to these plans were $6 million, $15 million and $14 million during 2009, 2008 and 2007,
respectively.
In 2008, the Company made changes to various defined contribution savings plans. Included among these changes, effective January 1,
2009, were modifications to the Company’s matching contribution and of certain vesting criteria and the merger of certain plans.
Defined Benefit Pension Plans
The Company sponsors domestic non-contributory defined benefit pension plans covering certain eligible employees and contributory
defined benefit pension plans in certain foreign subsidiaries with participation in the plans at the employees’ option. Under these plans,
benefits are based on an employee’
s years of credited service and a percentage of final average compensation. However, the majority of such
plans are frozen and are no longer accruing benefits.
The funded status of the defined benefit pension plans is recognized on the Consolidated Balance Sheets and the gains or losses and prior
service costs or credits that arise during the period, but are not recognized as components of net periodic benefit cost, are recognized as a
component of accumulated other comprehensive income (loss), net of tax.
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Employee Benefit Plans