Boeing 2008 Annual Report Download - page 111

Liability award payments relating to Boeing Stock Units totaled $42, $40 and $57 for the years ended
December 31, 2008, 2007 and 2006, respectively.
ShareValue Trust
The ShareValue Trust, established effective July 1, 1996, is a 14-year irrevocable trust that holds our
common stock, receives dividends, and distributes to employees the appreciation in value above a
3% per annum threshold rate of return at the end of each period. The total compensation expense to
be recognized over the life of the trust was determined using a binomial option-pricing model and was
not affected by adoption of SFAS No. 123R.
The Trust was split between two funds, “fund 1” and “fund 2”, upon its initial funding. Each fund
consists of investment periods which result in overlapping periods as follows:
Period 1 (fund 1): July 1, 1996 to June 30, 1998
Period 2 (fund 2): July 1, 1996 to June 30, 2000
Period 3 (fund 1): July 1, 1998 to June 30, 2002
Period 4 (fund 2): July 1, 2000 to June 30, 2004
Period 5 (fund 1): July 1, 2002 to June 30, 2006
Period 6 (fund 2): July 1, 2004 to June 30, 2008
Period 7 (fund 1): July 1, 2006 to June 30, 2010
An initial investment value is established for each investment period based on the lesser of either
(1) fair market value of the fund or (2) the prior ending balance of that fund. This amount is then
compounded by the 3% per annum to determine the threshold amount that must be met for that
investment period. At the end of the investment period, the value of the investment in excess of the
threshold amount will result in a distribution to 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, 2008, the Trust held
28,460,769 shares of our common stock in the two funds.
Based on the average stock price of $66.15 as of June 30, 2008, the market value of fund 2 exceeded
the threshold of $1,028 by $236. 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 was
paid in cash. After employee withholding taxes of $81, which were recorded as a liability in the second
quarter of 2008 and were paid in the third quarter of 2008, 2.1 million shares of common stock were
distributed to participants during the third quarter of 2008. These distributions were recorded as a
deduction to Additional paid-in capital. In addition, related employer payroll taxes of $18 were
expensed in the second quarter of 2008.
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 during the third quarter of 2006. These distributions were
recorded 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, 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, 2008 the market
values of Fund 1 was $538.
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