Period 5 Award Distribution and Supplemental Distribution
General Information
Period 5 (July 1, 2002 to June 30, 2006) ended with an average high and low stock price of $82.29. This resulted in a full participant with eligibility during the entire four-year period receiving a pre-tax distribution of $5,231.46.
The stock award cost basis per share issued on August 2, 2006 was $82.285.
Supplemental Distribution Information and FAQs
As part of the accounting and payroll reconciliation process, a very small amount of undistributed Period 5 funds were identified. Under the terms of the trust, these funds were distributed to the over 190,000 participants based on their eligibility between July 1, 2002 to June 30, 2006. The maximum pre-tax distribution was $3.64, which included additional Company funding (no costs were charged against the Trust) to reflect dividends paid on the shares and the appreciation of Boeing stock from June 30, 2006 to June 30, 2008.
This supplemental distribution had no impact on any award distribution resulting from Period 6 (July 1, 2004 to June 30, 2008).
Some questions and answers regarding this supplemental distribution are provided below.
Why are we receiving a supplemental award distribution from ShareValue Trust Period 5 now, when it ended June 30, 2006?
As part of the accounting and payroll-review process, we discovered a small under-distribution of Period 5 funds. Two subsidiaries had returned undistributed funds and we discovered that some current and former employees had received full 48-month award distributions when they should have received smaller, prorated awards. The money from both those instances was returned to the Period 5 award distribution pool and is now being paid out to all P5 participants according to the number of months they were eligible during Period 5.
Please note: The P5 supplemental award has been adjusted to reflect dividends paid on the shares that were not distributed and the increase in the value of Boeing stock from June 30, 2006 to June 30, 2008. The costs to provide the potential stock appreciation and dividends are being paid by the Company and no ShareValue Trust funds are being used for this purpose.
Why did it take from 2006 until now to discover and tell us about this?
Upon discovery of the two issues, we conducted additional reviews and tests to both Period 4 (ended June 30, 2004) and Period 5 award distributions. No other issues were found. Since the amount of money is relatively small, we explored a number of possible ways to correct the error. We determined that distributing the cash directly was the right thing to do. To minimize the expense of such a small payment we opted to take advantage of the lean opportunity to coordinate the Period 5 supplemental award distribution within the same general time frame as a potential Period 6 award distribution.
Who is eligible for this Period 5 additional award distribution?
Current and former employees who were eligible participants of ShareValue between July 1, 2002 and June 30, 2006.
How much is the additional award distribution?
Based on the discoveries mentioned above, plus potential stock appreciation and dividends, an eligible employee who had the full 48-month participation (July 1, 2002 to June 30, 2006), will receive a maximum of about $3.64 in cash. Those employees who had less than the full 48-months of participation will receive a smaller, prorated amount depending on their actual months of Period 5 eligibility.
Why all this trouble for such a small amount?
Making sure employees receive the total amount to which they were entitled is the right thing to do. The ShareValue Trust Committee determined eligible employees are entitled to these funds. The Committee also authorized the undistributed funds be increased to include missed dividends and stock appreciation since the original Period 5 award distribution.
Back to Top
Why wasn't this additional award distribution combined with the Period 6 award distribution?
There are accounting policies and investment trust provisions that prevent the commingling of Period 5 and Period 6 funds into one award distribution. However, there is some lean synergy in coordinating the Period 5 additional payment within the same general time frame as a potential Period 6 award distribution.
What's been done to prevent this from happening again?
The SVT team has completed additional training and program testing resulting in improved processes. These enhanced processes are now in place and have been further tested by completing "mock" distributions for a possible Period 6 award distribution over the last several months.
Will this affect a possible award distribution from Period 6?
No. This additional award distribution from SVT Period 5 does not affect any possible award distribution for individuals eligible for SVT Period 6, which ended June 30, 2008. Communications regarding SVT Period 6 started in the BNN July 1 with other articles planned for July 14 and 22.
Is this payment taxable?
Yes, the Period 5 residual payment is taxable and reportable income. While the payment amount is relatively small, it is subject to applicable taxes.
Will I receive a Form W-2 for 2008?
Since the payment is reportable income, it will be reflected on your 2008 W-2 Form. Termed employees will have a 2008 Form W-2 mailed to their home address of record in January 2009 for tax preparation and filing for the 2008 tax year.
What if I have more questions?
- Use Contact Boeing TotalAccess online at www.boeing.com/express.
- Online www.boeing.com/express at 866-473-2016. You must have your TotalAccess password and BEMS ID (or SSN). When the phone system asks "How may I help you?" say "ShareValue Trust".
Back to Top