Hertz 2014 Annual Report Download - page 156

Table of Contents


In addition to the 11,276,334 shares underlying outstanding awards as of December 31, 2014, the Company had 19,762,329 shares of its common
stock available for issuance of which 15,884,957 shares are available under the Omnibus Plan, and 3,877,372 shares are available under the
treasury stock. The shares of common stock to be delivered under the Omnibus Plan may consist, in whole or in part, of common stock held in
treasury or authorized but unissued shares of common stock, not reserved for any other purpose.
Shares subject to any award granted under the Omnibus Plan that for any reason are canceled, terminated, forfeited, settled in cash or otherwise
settled without the issuance of common stock after the effective date of the Omnibus Plan will generally be available for future grants under the
Omnibus Plan.
A summary of the total compensation expense and associated income tax benefits recognized under the Prior Plans and the Omnibus Plan,
including the cost of stock options, RSUs, and PSUs, is as follows (in millions of dollars):


 




Compensation expense $ 11

$ 35

$ 30
Income tax benefit (4)

(14)

(12)
Total $ 7

$ 21

$ 18
As of December 31, 2014, there was approximately $12 million of total unrecognized compensation cost related to non-vested stock options,
RSUs and PSUs granted by Hertz Holdings under the Prior Plans and the Omnibus Plan. The total unrecognized compensation cost is expected to
be recognized over the remaining 1.6 years, on a weighted average basis, of the requisite service period that began on the grant dates.

All stock options and stock appreciation rights granted under the Omnibus Plan will have a per-share exercise price of not less than the fair market
value of one share of Hertz Holdings common stock on the grant date. Stock options and stock appreciation rights will vest based on a minimum
period of service or the occurrence of events (such as a change in control, as defined in the Omnibus Plan) specified by the compensation
committee of the Company's Board of Directors. No stock options or stock appreciation rights will be exercisable after ten years from the grant
date.
The Company has accounted for its employee stock-based compensation awards in accordance with ASC 718, “Compensation-Stock
Compensation.” The options are being accounted for as equity-classified awards. The Company will recognize compensation cost on a straight-line
basis over the vesting period. The value of each option award is estimated on the grant date using a Black-Scholes option valuation model that
incorporates the assumptions noted in the following table. Because the stock of Hertz Holdings became publicly traded in November 2006 and had
a short trading history, it was not practicable for the Company to estimate the expected volatility of its share price, or a peer company share price,
because there was insufficient historical information about past volatility prior to 2013. Therefore, prior to 2013 the Company used the calculated
value method, substituting the historical volatility of an appropriate industry sector index for the expected volatility of its common stock price as an
assumption in the valuation model. The Company selected the Dow Jones Specialized Consumer Services sub-sector within the consumer
services industry, and the Company used the U.S. large capitalization component, which includes the top 70% of the index universe (by market
value).
The calculation of the historical volatility of the index was made using the daily historical closing values of the index for the preceding 6.25 years,
because that is the expected term of the options using the simplified approach.
144
Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.