Boeing 2008 Annual Report Download - page 110
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The activity of stock options issued to directors, officers, and other employees for the year ended
December 31, 2008 is as follows:
(Shares in thousands) Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (years)
Aggregate
Intrinsic
Value
(in millions)
Number of shares under option:
Outstanding at beginning of year 15,840 $68.36
Granted 6,530 83.78
Exercised (862) 51.56
Forfeited (821) 83.51
Expired (110) 56.55
Outstanding at end of year 20,577 $73.42 7.06 $15
Exercisable at end of year 9,682 $61.45 5.21 $15
The total intrinsic value of options exercised was $22, $192 and $216 during the years ended
December 31, 2008, 2007 and 2006, respectively. Cash received from options exercised for the years
ended December 31, 2008, 2007 and 2006 was $44, $209 and $294 with a related tax benefit of $6,
$65 and $52, respectively, derived from the compensation deductions resulting from these option
exercises. At December 31, 2008, there was $134 of total unrecognized compensation cost related to
the Stock Option plan which is expected to be recognized over a weighted average period of 1.8 years.
The total fair value of stock options vested during the years ended December 31, 2008, 2007 and 2006
was $82, $43 and $8, respectively.
The fair value of stock-based compensation awards were estimated using the Black-Scholes option-
pricing model with the following assumptions:
Grant
Year
Grant
Date
Expected
Life
Expected
Volatility
Dividend
Yield
Risk Free
Interest Rate
Weighted-Average
Grant Date Fair
Value
2008 2/25/08 6 years 28.8% 1.7% 3.20% $23.47
2007 2/26/07 6 years 28.4% 1.7% 4.62% 27.31
2006 2/27/06 6 years 29.5% 1.8% 4.64% 23.00
The expected volatility of the stock options is based on a combination of our historical stock volatility
and the volatility levels implied on the grant date by actively traded option contracts on our common
stock. We determined the expected term of the stock option grants to be 6 years, calculated using the
“simplified” method in accordance with the SEC Staff Accounting Bulletin 107, Valuation of Share-
Based Payment Arrangements for Public Companies. We used the “simplified” method since we
changed the vesting terms, tax treatment and the recipients of our stock options beginning in 2006
such that we believe our historical data no longer provides a reasonable basis upon which to estimate
expected term.
Other Stock Unit Awards
The total number of other stock unit awards that are convertible either to common stock or cash
equivalents and are not contingent upon stock price were 1,839,730, 1,997,763, 1,871,559 at
December 31, 2008, 2007 and 2006, respectively.
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