Boeing 2015 Annual Report Download - page 113

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97
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.
Restricted Stock Units
In February 2015, 2014 and 2013, we granted to our executives 590,778, 695,651 and 1,375,414 restricted
stock units (RSUs) as part of our long-term incentive program with grant date fair values of $154.64,
$129.58 and $75.97 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, 2015 was as follows:
Long-Term
Incentive
Program Other
Number of units:
Outstanding at beginning of year 3,032,539 1,147,098
Granted 634,960 223,282
Dividends 64,705 28,849
Forfeited (128,628) (64,542)
Distributed (1,256,936) (213,686)
Outstanding at end of year 2,346,640 1,121,001
Unrecognized compensation cost $92 $43
Weighted average remaining contractual life (years) 1.8 2.0
The number of vested but undistributed RSUs at December 31, 2015 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.