Boeing 2014 Annual Report Download - page 108

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96
Restricted Stock Units
In February 2014, 2013 and 2012, we granted to our executives 695,651, 1,375,414 and 1,369,810
restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of
$129.58, $75.97 and $75.40 per unit, respectively. The RSUs granted under this program will vest and
settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive
terminates employment because of retirement, involuntary layoff, disability, or death, the employee (or
beneficiary) will receive a proration of stock units based on active employment during the three-year service
period. In all other cases, the RSUs will not vest and all rights to the stock units will terminate. In addition
to RSUs awarded under our long-term incentive program, we grant RSUs to certain executives and
employees to encourage retention or to reward various achievements. These RSUs are labeled other
RSUs in the table below. The fair values of all RSUs are estimated using the average of the high and low
stock prices on the date of grant.
RSU activity for the year ended December 31, 2014 was as follows:
Long-Term
Incentive
Program Other
Number of units:
Outstanding at beginning of year 3,722,317 1,132,930
Granted 729,603 288,600
Dividends 72,387 25,833
Forfeited (177,986) (13,962)
Distributed (1,313,782) (286,303)
Outstanding at end of year 3,032,539 1,147,098
Unrecognized compensation cost $94 $41
Weighted average remaining contractual life (years) 1.7 2.3
The number of vested but undistributed RSUs at December 31, 2014 was not significant.
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units (PBRSUs) are stock units that pay out based on the Company’s
total shareholder return as compared to a group of peer companies over a three-year period. The award
payout can range from 0% to 200% of the initial PBRSU grant, but will not exceed 400% of the initial value
(excluding dividend equivalent credits). The PBRSUs granted under this program will vest at the payout
amount and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If
an executive terminates employment because of retirement, involuntary layoff, disability, or death, the
employee (or beneficiary) remains eligible under the award and, if the award is earned, will receive a
proration of stock units based on active employment during the three-year service period. In all other cases,
the PBRSUs will not vest and all rights to the stock units will terminate.
In February 2014, we granted to our executives 662,215 initial PBRSUs as part of our long-term incentive
program with a grant date fair value of $136.12 per unit. Compensation expense for the award is recognized
over the three-year performance period based upon the grant date fair value estimated using a Monte-
Carlo simulation model. The model used the following assumptions: expected volatility of 24.2% based
upon our historical stock volatility, a risk-free interest rate of 0.72%, and no expected dividend yield because
the units earn dividend equivalents.