Boeing 2006 Annual Report Download - page 72

70 The Boeing Company and Subsidiaries
Notes to Consolidated Financial Statements
If on June 30, 2008, the market value of fund 2 exceeds
$1,028, the amount in excess of the threshold will be
distributed to employees in shares of common stock.
Similarly, if on June 30, 2010, the market value of fund 1
exceeds $1,130, the amount in excess of the threshold
will be distributed to employees in shares of common stock. As
of December 31, 2006 the market values of Fund 1 and 2 were
$1,094 and $1,659.
The ShareValue Trust is accounted for as a contra-equity
account and stated at market value. Market value adjustments
are offset to additional paid-in capital. At December 31, 2006,
there was $252 of total unrecognized compensation cost
related to the ShareValue Trust which is expected to be
recognized over a period of 3.5 years.
Other Compensation Arrangements
Performance Awards During the first quarter of 2006, we
granted Performance Awards to our executives. Performance
Awards are cash units that payout based on the achievement
of long-term financial goals at the end of a three-year period.
Each unit has an initial value of $100 dollars. The amount
payable at the end of the three-year performance period may
be anywhere from zero to $200 dollars per unit, depending on
the Company’s performance against plan for the three years
ended December 31, 2008. The Compensation Committee has
the discretion to pay these awards in cash, stock, or a combi-
nation of both after the three-year performance period.
The 2009 payout assuming target performance would be
approximately $132. The minimum amount is zero and the
maximum amount we could be required to payout for the
Performance Awards is $263. Compensation expense, based
on the estimated performance payout, is recognized ratably
over the performance period.
Deferred Stock Compensation The Company has a deferred
compensation plan which permits executives to defer receipt of
a portion of their salary, bonus, and certain other incentive
awards. Prior to May 1, 2006, employees who participated in
the deferred compensation plan could choose to defer in either
an interest earning account or a Boeing stock unit account.
Effective May 1, 2006, participants can diversify deferred com-
pensation among 19 investment funds including the interest
earning account and the Boeing stock unit account.
Total expense related to deferred stock compensation was
$210, $149, and $26 in 2006, 2005, and 2004, respectively.
Additionally, for employees who elected to defer their compen-
sation in stock units prior to January 1, 2006, the Company
matched 25% of the deferral with additional stock units. Upon
retirement, the 25% match is settled in cash or stock; however,
effective January 1, 2006 all matching contributions are settled
in stock. As a result, we reclassified $102 from Other liabilities
to Additional paid-in capital at December 31, 2005 related to
the 25% matching contribution. This modification resulted in
no incremental compensation. As of December 31, 2006 and
2005, the deferred compensation liability which is being marked
to market was $1,505 and $1,348.
Note 17 – Shareholders’ Equity
The Company’s 2005 stock repurchase program was termi-
nated by resolution of our Board of Directors on August 28, 2006
and replaced with a program approving the repurchase of $3
billion of additional common stock (the “2006 program”). Unless
terminated earlier by resolution of our Board of Directors, the
2006 Program will expire when we have used all funds author-
ized for repurchase. At December 31, 2006, $2,374 in shares
may still be purchased under the program.
As of December 31, 2006 and 2005, there were 1,200,000,000
common shares authorized. 20,000,000 shares of authorized
preferred stock remain unissued.
Changes in Share Balances
The following table shows changes in each class of shares:
Common Treasury ShareValue
Stock Stock Trust
Balance January 1, 2004 1,011,870,159 170,388,053 41,203,694
Issued (5,410,678)
Acquired 14,708,856 645,866
Payout (2,867,355)
Balance December 31, 2004 1,011,870,159 179,686,231 38,982,205
Issued 391,000 (12,812,111)
Acquired 45,217,300 611,258
Payout
Balance December 31, 2005 1,012,261,159 212,091,420 39,593,463
Issued (13,502,823)
Acquired 24,933,579 524,563
Payout (9,215,000)
Balance December 31, 2006 1,012,261,159 223,522,176 30,903,026
Accumulated Other Comprehensive Loss
The components of Accumulated other comprehensive loss
were as follows:
December 31, December 31,
2006 2005
Foreign currency translation adjustments $««««157 $««««««84
Unrealized gains/(losses) on certain investments,
net of reclassification adjustments (3)(14)
Unrealized gains/(losses) on derivative instruments,
net of reclassification adjustments 18 32
Minimum pension liability adjustments (1,880)
Pension and postretirement adjustments (8,389)
Accumulated other comprehensive loss $(8,217)$(1,778)