Avis 2014 Annual Report Download - page 101

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F-34
Stock Unit Awards
Stock unit awards entitle the holder to receive shares of common stock upon vesting on a one-to-one basis.
Performance-based RSUs principally vest based upon the level of performance attained, but vesting can
increase by up to 20% if certain relative total shareholder return goals are achieved. Market-based RSUs
generally vest based on the level of total shareholder return or absolute stock price attainment.
The grant date fair value of the performance-based RSUs incorporates the total shareholder return metric,
which is estimated using a Monte Carlo simulation model to estimate the Company’s ranking relative to an
applicable stock index. The weighted average assumptions used in the Monte Carlo simulation model to
calculate the fair value of the Company’s stock unit awards are outlined in the table below.
2014 2013 2012
Expected volatility of stock price 40% 43% 50%
Risk-free interest rate 0.83% 0.39% 0.30% - 0.42%
Valuation period 3 years 3 years 2½ - 3 years
Dividend yield 0% 0% 0%
Annual activity related to stock units and cash units, consisted of (in thousands of shares):
Time-Based RSUs
Performance-Based
and Market Based
RSUs Cash Unit Awards
Number
of Shares
Weighted
Average
Grant
Date
Fair Value
Number
of Shares
Weighted
Average
Grant
Date
Fair Value
Number
of Units
Weighted
Average
Grant
Date
Fair Value
Outstanding at January 1, 2014 1,308 $ 17.92 2,043 $ 13.79 267 $ 14.90
Granted (a) 381 42.05 326 42.03 — —
Vested (b) (606) 16.71 (438) 10.91 — —
Forfeited/expired (85) 24.83 (47) 21.36 — —
Outstanding at December 31, 2014 (c) 998 $ 27.26 1,884 $ 19.17 267 $ 14.90
__________
(a) Reflects the maximum number of stock units assuming achievement of all performance-, market- and time-vesting criteria and
does not include those for non-employee directors, which are discussed separately below. The weighted-average fair value of
time-based RSUs, performance-based and market-based RSUs, and cash units granted in 2013 was $21.77, $20.04 and $18.04,
respectively, and the weighted-average fair value of time-based RSUs, performance-based and market-based RSUs, and cash
units granted in 2012 was $14.39, $12.66 and $12.65, respectively.
(b) The total fair value of RSUs vested during 2014, 2013 and 2012 was $15 million, $13 million and $16 million, respectively.
(c) The Company’s outstanding time-based RSUs, performance-based and market-based RSUs, and cash units had aggregate
intrinsic value of $66 million, $125 million and $18 million, respectively. Aggregate unrecognized compensation expense related to
time-based RSUs and performance-based and market-based RSUs amounted to $28 million and will be recognized over a
weighted average vesting period of 0.6 years. The Company assumes that substantially all outstanding awards will vest over
time.