Boeing 2008 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2008 Boeing annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

Note 15 – Share-Based Compensation and Other Compensation Arrangements
Share-Based Compensation
On May 1, 2006, the shareholders approved an amendment to 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 amended 2003 Plan will not exceed 60,000,000. Under the
terms of the amended 2003 Plan, no more than an aggregate of 12,000,000 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 employees 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 terminated 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 2009.
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:
Years ended December 31, 2008 2007 2006
Performance Shares $4$ 94 $473
Stock options, other 144 115 173
ShareValue Trust 61 78 97
Share-based plans expense $209 $287 $743
Income tax benefit $79 $118 $291
Adoption of SFAS No. 123R
We early adopted the provisions of SFAS No. 123R as of January 1, 2005 using the modified
prospective method. Prior to the adoption of SFAS No. 123R, we amortized compensation cost for
share-based awards over the stated vesting period for retirement eligible employees and, if an
employee retired before the end of the vesting period, we recognized any remaining unrecognized
compensation cost at the date of retirement. Had we applied the non-substantive vesting approach to
awards granted prior to 2005, compensation expense would have been $0, $6 and $50 lower for the
years ended December 31, 2008, 2007 and 2006.
Performance Shares
Performance Shares are stock units that are convertible to common stock, on a one-to-one basis,
contingent upon stock price performance. If, at any time up to five years after award, the stock price
reaches and maintains for twenty consecutive days a price equal to stated price growth targets, a
stated percentage (up to 125%) of the Performance Shares awarded are vested and convertible to
common stock.
93