What is Budget's expected dividend yield on common stock for stock-based compensation calculations?

According to Budget's 2025 Franchise Disclosure Document, the company does not currently pay or plan to pay recurring dividends on its common stock. Therefore, for stock-based compensation calculations, the expected dividend yield is zero. This information is relevant when Budget estimates the fair value of stock-based and cash unit awards that contain a market condition, using a Monte Carlo simulation model.

Key inputs for this model include the stock price on the grant date, the expected term, the risk-free interest rate over the expected term, the expected annual dividend yield, and the expected stock price volatility. The expected volatility is based on a combination of historical and implied volatility of Budget's publicly traded stock options, and the valuation period aligns with the vesting period of the awards. The risk-free interest rate is derived from the U.S. Treasury yield curve at the time of grant.

For a prospective franchisee, this detail from the FDD is more relevant in understanding how Budget values its employee and director compensation packages rather than directly impacting the franchise operations. The dividend yield is a factor in determining the overall cost of stock-based compensation, which can affect the company's financial statements. However, it does not directly influence the franchisee's day-to-day business or profitability.

It's worth noting that while Budget does not plan to pay recurring dividends, they did pay a special cash dividend in December 2023. This indicates that while regular dividends are not part of their strategy, the company may consider special dividends under certain circumstances. This information is useful for understanding Budget's overall capital allocation strategy.