Boeing 2007 Annual Report Download - page 73

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Notes to Consolidated Financial Statements
participants. A distribution is proportionally distributed in the
ratio each participant’s number of months of participation
which relates to the total number of months earned by all
participants in the investment period. At December 31, 2007,
the Trust held 31,362,850 shares of our common stock in the
two funds.
Based on the average stock price of $82.285 as of June 30,
2006, the market value of fund 1 exceeded the threshold of
$1,004 by $758. This excess was paid in Boeing common
stock, except for partial shares and distributions to non-U.S.
employees and beneficiaries of deceased participants, which
were paid in cash. After employee withholding taxes of $265,
which were recorded as a liability in the second quarter of
2006 and were paid in the third quarter of 2006, 5.6 million
shares of common stock were distributed to participants dur-
ing the third quarter of 2006. These distributions were record-
ed as a deduction to Additional paid-in capital. In addition,
related employer payroll taxes of $59 were expensed in the
second quarter of 2006.
If on June 30, 2008, the market value of fund 2 exceeds
$1,028, the amount in excess of the threshold will be distrib-
uted 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,
2007 the market values of Fund 1 and 2 were $1,094
and $1,658.
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, 2007,
there was $180 of total unrecognized compensation cost relat-
ed to the ShareValue Trust which is expected to be recognized
over a period of 2.5 years.
Other Compensation Arrangements
Performance Awards 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 a three-year period. The Compensation
Committee has the discretion to pay these awards in cash,
stock, or a combination of both after the three-year perform-
ance period. Compensation expense, based on the estimated
performance payout, is recognized ratably over the perform-
ance period.
During the first quarter of 2006, we granted Performance
Awards to our executives with the payout based on the
achievement of financial goals for the three-year period ending
December 31, 2008. The minimum amount is zero and the
maximum amount we could be required to payout for the
2006 Performance Awards is $252.
During the first quarter of 2007, we granted Performance
Awards to our executives with the payout based on the
achievement of financial goals for the three-year period ending
December 31, 2009. The minimum amount is zero and the
maximum amount we could be required to payout for the
2007 Performance Awards is $282.
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
$51, $210 and $149 in 2007, 2006, and 2005, 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. This modification resulted in no incremental compen-
sation. As of December 31, 2007 and 2006, the deferred
compensation liability which is being marked to market was
$1,415 and $1,505.
Note 17 – Shareholders’ Equity
On August 28, 2006, our Board of Directors approved the
repurchase of $3,000 of common stock (the 2006 Program).
On October 29, 2007, the Board approved a new repurchase
plan (the 2007 Program) for up to $7,000 of common stock
that commenced following the completion of the 2006
Program. Unless terminated earlier by a Board resolution, the
2007 Program will expire when we have used all authorized
funds for repurchase. At December 31, 2007 $6,597 in shares
may still be purchased under the 2007 Program.
As of December 31, 2007 and 2006, there were
1,200,000,000 common shared authorized. Twenty million
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, 2005 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
Issued (8,300,606)
Acquired 28,995,600 459,824
Payout
Balance December 31, 2007 1,012,261,159 244,217,170 31,362,850
The Boeing Company and Subsidiaries