Boeing 2006 Annual Report Download - page 68

66 The Boeing Company and Subsidiaries
Notes to Consolidated Financial Statements
and the participants’ share of the cost, which is funded by par-
ticipant contributions. OPB payments reflect our portion only.
Other
Postretirement
Pensions Benefits
2007 $««2,469 $«««542
2008 2,548 567
2009 2,626 593
2010 2,718 622
2011 2,792 649
2012-2016 15,696 3,466
Termination Provisions
Certain of the pension plans provide that, in the event there is
a change in control of the Company which is not approved by
the Board of Directors and the plans are terminated within five
years thereafter, the assets in the plan first will be used to pro-
vide the level of retirement benefits required by ERISA, and then
any surplus will be used to fund a trust to continue present and
future payments under the postretirement medical and life
insurance benefits in our group insurance benefit programs.
We have an agreement with the U.S. Government with respect
to certain pension plans. Under the agreement, should we
terminate any of the plans under conditions in which the plan’s
assets exceed that plan’s obligations, the U.S. Government
will be entitled to a fair allocation of any of the plan’s assets
based on plan contributions that were reimbursed under
U.S. Government contracts.
401(k)
We provide certain defined contribution plans to all eligible
employees. The principal plans are the Company-sponsored
401(k) plans. The expense for these defined contribution
plans was $514, $483 and $468 in 2006, 2005 and 2004,
respectively.
Note 16 – Share-Based Compensation and
Other Compensation Arrangements
Share-Based Compensation
On April 28, 2003, the shareholders approved The Boeing
Company 2003 Incentive Stock Plan (2003 Plan). The 2003
Plan permits awards of incentive stock options, nonqualified
stock options, restricted stock, stock units, Performance
Shares, performance units and other incentives to our
employees, officers, consultants and independent contractors.
The aggregate number of shares of our stock available for
issuance under the 2003 Plan will not exceed 60,000,000.
Under the terms of the 2003 Plan, no more than an aggregate
of 6,000,000 shares are available for issuance as restricted
stock awards.
Our 1997 Incentive Stock Plan (1997 Plan) permits the grant
of stock options, stock appreciation rights (SARs) and restricted
stock awards (denominated in stock or stock units) to employ-
ees and contract employees. Under the terms of the plan,
64,000,000 shares are authorized for issuance upon exercise
of options, as payment of SARs and as restricted stock
awards, of which no more than an aggregate of 6,000,000
shares are available for issuance as restricted stock awards.
This authorization for issuance under the 1997 Plan will termi-
nate on April 30, 2007.
Shares issued as a result of stock option exercise or conversion
of stock unit awards will be funded out of treasury shares
except to the extent there are insufficient treasury shares in
which case new shares will be issued. We believe we currently
have adequate treasury shares to meet any requirements to
issue shares during 2007.
Share-based plans expense is primarily included in general and
administrative expense since it is incentive compensation
issued primarily to our executives. The share-based plans
expense and related income tax benefit follow:
2006 2005 2004
Performance Shares $473 $«««723 $449
Stock options, other 173 234 132
ShareValue Trust 97 79 74
Share-based plans expense $743 $1,036 $655
Income tax benefit $291 $«««322 $238
Adoption of SFAS No. 123R
We early adopted the provisions of SFAS No. 123R as of
January 1, 2005 using the modified prospective method. Upon
adoption of SFAS No. 123R, we recorded an increase in net
earnings of $21, net of taxes of $12, as a cumulative effect of
accounting change due to SFAS No. 123R’s requirement to
apply an estimated forfeiture rate to unvested awards.
Previously, we expensed forfeitures as incurred. SFAS No. 123R
also resulted in changes in our methods of measuring and
amortizing compensation cost of our Performance Shares.
For Performance Shares granted prior to 2005, share-based
expense was measured based on the market price of our stock
on the award date and was generally amortized over a five-year
period. For Performance Shares granted in 2005, the fair value
of each award was measured on the date of grant using a
Monte Carlo simulation model. The Monte Carlo model also
computed an expected term for each Performance Share.
We changed our valuation method based on further clarification
provided in SFAS No. 123R and the fact that our Performance
Shares contain a market condition, which should be reflected
in the grant date fair value of an award. The Monte Carlo
simulation model utilizes multiple input variables that determine
the probability of satisfying each market condition stipulated in
the award grant.