Avis 2011 Annual Report Download - page 90

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F-36
The annual activity related to the Company’s time- and performance-based RSUs consisted of (in thousands of shares):
2011 2010 2009
Weighted Weighted Weighted
Number Average Number Average Number Average
of Grant of Grant of Grant
RSUs
Price RSUs Price RSUs Price
Balance at beginning of year 3,059 $ 13.64 1,855 $ 19.32 2,673 $ 20.18
Granted at fair market value (a) 1,009 14.45 1,960 11.55 - -
Vested
(b) (729) 14.41 (585) 21.89 (620) 21.93
Canceled (341) 22.32 (171) 23.10 (198) 22.84
Balance at end of year (c) 2,998 12.74 3,059 13.64 1,855 19.32
__________
(a) Reflects the maximum number of RSUs assuming achievement of all performance- and time-vesting criteria. During 2011, 2010
and 2009, the Company granted 652,000, 989,000 and 0 time-based RSUs, respectively. The number of RSUs granted does not
include those for non-employee directors, which are discussed separately below.
(b) No performance-based RSUs vested during 2011 and 2010; 7,000 vested in 2009.
(c) As of December 31, 2011, the Company’s outstanding RSUs had aggregate intrinsic value of $32 million. Aggregate
unrecognized compensation expense related to RSUs amounted to $17 million as of December 31, 2011, recognized over the
weighted average vesting period of 1.7 years. The Company had approximately 1,281,000, 1,393,000 and 1,016,000 time-based
awards outstanding at December 31, 2011, 2010 and 2009, respectively. Performance- and market-based awards outstanding at
December 31, 2011, 2010 and 2009 were approximately 1,717,000, 1,666,000 and 839,000, respectively. Approximately 637,000
time-based and 614,000 performance-based RSUs are eligible to vest in 2012, if applicable service and performance criteria are
satisfied.
Stock Appreciation Rights
In 2006, the Company issued stock-settled SARs to certain executives. Such SARs are settled in Company stock, have a
seven-year term, and vest ratably over a four-year period or after three years with no graded vesting prior thereto. The
Company’s policy is to grant SARs with exercise prices at then-current fair market value. At December 31, 2011, the
Company had approximately 0.5 million SARs outstanding with a weighted average exercise price of $24.40 and a
weighted average contractual life of 1.6 years.
Non-employee Directors Deferred Compensation Plan
The Company grants RSUs annually to members of its Board of Directors representing annual retainer, committee chair
and membership stipends, which are payable in the form of Avis Budget common stock upon termination of service.
During 2011, 2010 and 2009, the Company granted 54,000, 51,000 and 119,000 RSUs under the 2007 Equity and
Incentive Plan to its Board of Directors. The RSU grants are included in the calculation of basic and diluted earnings per
share as common stock equivalents.
Employee Stock Purchase Plan
The Company is authorized to sell shares of its Avis Budget common stock to eligible employees under its non-
compensatory employee stock purchase plan (“ESPP”). In June 2009, stockholders approved the adoption of the Avis
Budget Group Inc. Employee Stock Purchase Plan. Under the 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 is calculated at 95% of
the fair market value of Avis Budget common stock. The Company reserved 2.5 million shares of Avis Budget common
stock for potential purchases under the ESPP. In any given period, up to 125,000 shares purchased may be either newly
issued shares or existing treasury shares, and in the aggregate, up to 1 million shares of Avis Budget common stock
purchased under the ESPP 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, RSUs 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 awards the Company believes it will ultimately provide. The Company records amortization expense related to