Boeing 2014 Annual Report Download - page 107

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95
of the stock option will not vest and all rights to the non-vested portion will terminate. We discontinued
granting options in 2014, replacing them with performance-based restricted stock units.
Stock option activity for the year ended December 31, 2014 is as follows:
Shares
Weighted
Average Exercise
Price Per Share
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Number of shares under option:
Outstanding at beginning of year 23,767,743 $73.97
Granted 20,008 124.98
Exercised (4,584,615) 74.82
Forfeited (697,891) 75.70
Expired (600) 50.57
Outstanding at end of year 18,504,645 $73.75 5.93 $1,041
Exercisable at end of year 13,215,966 $72.74 5.10 $757
The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012
was $250, $546 and $89, respectively. Cash received from options exercised during the years ended
December 31, 2014, 2013 and 2012 was $343, $1,097 and $120 with a related tax benefit of $87, $190
and $29, respectively, derived from the compensation deductions resulting from these option exercises.
At December 31, 2014, there was $34 of total unrecognized compensation cost related to our stock option
plan which is expected to be recognized over a weighted average period of one year. The grant date fair
value of stock options vested during the years ended December 31, 2014, 2013 and 2012 was $87, $89
and $83, respectively.
The fair values of options were estimated using the Black-Scholes option-pricing model with the following
assumptions:
Grant Year Grant Date
Expected
Life
Expected
Volatility
Expected
Dividend
Yield
Risk Free
Interest Rate
Weighted-Average
Grant Date Fair
Value Per Share
2013 2/25/2013 6 years 29.0% 2.6% 1.0% $15.85
2012 2/27/2012 6 years 29.9% 2.4% 1.1% $16.89
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 six years, calculated using the “simplified”
method in accordance with the SEC Staff Accounting Bulletin 110. We use 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 prior to 2006 does not provide a reasonable basis upon which to
estimate expected term and we do not have enough option exercise data from our grants issued subsequent
to 2006 to support our own estimate as a result of vesting terms and changes in the stock price.