Orbitz 2009 Annual Report Download - page 103

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Travelport Equity-Based Long-Term Incentive Program
Travelport introduced an equity-based long-term incentive program in 2006 for the purpose of retaining
certain key employees, including certain of our employees. Under this program, key employees were granted
restricted equity units and interests in the partnership that indirectly owns Travelport. Travelport’s board of
directors approved the grant of up to 100 million units under the plan. The equity awards issued consisted of
four classes of partnership interest. The Class A-2 equity units vested at a pro-rata rate of 6.25% per quarter
through May 2010. The Class B partnership interests vested annually over a four-year period beginning in
August 2007. The Class C and D partnership interests were scheduled to vest upon the occurrence of certain
liquidity events.
On July 18, 2007, the unvested restricted equity units and Class B partnership interests held by our
employees were converted to restricted stock units and restricted shares in Orbitz Worldwide under its 2007
Equity and Incentive Plan. This conversion affected 14 employees of Orbitz Worldwide. The conversion of the
restricted equity units was based on the relative value of the shares of our common stock compared to that of
Travelport’s Class A-2 capital interests at the time of the IPO. The conversion of the Class B partnership
interests was based on the relative value of the shares of our common stock compared to the aggregate
liquidation value of the Class B partnership interests at the time of the IPO. The Class C and D partnership
interests were deemed to have no fair value as of the conversion date and as such were forfeited. Subsequent
to the conversion, we also granted restricted stock units and stock options as additional compensation to the
employees who previously held the Travelport interests. This compensation was granted as an award in
consideration of potential future increases in value of the awards previously granted under the Travelport Plan.
No incremental compensation expense was recognized as a result of the conversion.
The fair value of the Class A-2 capital interests granted under the Travelport Plan was estimated on the
date of grant based on the fair market value of Travelport’s common equity relative to the number of Class A
shares then outstanding. The fair value of the Class B, Class C and Class D partnership interests was estimated
on the date of grant using the Monte-Carlo valuation model with the weighted average assumptions outlined in
the table below.
Assumptions: 2007 2006
Partnership
Interests
Granted In
Dividend yield ...................................................... — —
Expected volatility ................................................... 45% 40%
Expected life (in years) . . ............................................. 6.2 6.6
Risk-free interest rate................................................. 4.64% 4.73%
103
ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)