Award Distribution Determination
Award distributions are made from the increased stock value of the Trust and not directly from Boeing. The ShareValue Trust is managed by a bank trustee who is independent of Boeing management control or other third-party influences. The decision to make a distribution is not subject to management discretion or an extra amount of cash on hand. The trustee determines if a distribution will occur, based on external, objective criteria -- how the stock market values the Company's long-term performance. There are no guarantees a distribution will be made after every investment period. A distribution comes solely from the increase in the value of the trust's assets above a stated threshold at the end of the period.
The Boeing shares on the first day of a fund's investment period are valued at the average share price** of Boeing stock on the preceding trading day. This starting market value will be compared with the fund's total market value on the last day of the period. While the value of Boeing stock may fluctuate throughout the period, its long-term trend, as measured on the last day of the period, is what matters in determining if there will be a distribution.
For a distribution to occur, the fund's ending market value must be greater than the fund threshold -- the fund must grow from its starting value more than an average of three percent per year, compounded annually. Any increase or growth above this threshold is distributed to participants.
** Average Share Price is the average of the day's high and low per-share trading prices for Boeing common stock on the New York Stock Exchange. The Boeing Company shares are listed on the New York Stock Exchange and trade under ticker symbol "BA". Closing prices can be found in most major and local newspapers under the symbol "BA". You may also check the Boeing Investor Relations site for additional information on Boeing Common Stock.
How the Value of the Award Distribution is Calculated
ShareValue Trust's starting value at the beginning of a period is compared with its value on last day of the period.
The average share price of Boeing stock (the average of the day's high and low) on the last trading day of the period is multiplied by the number of shares in the fund to determine the total fund value.
The gain above the fund threshold is the distribution value for the period.
If the value of the fund at the end of the period exceeds the threshold, a distribution will be made. To determine the value of the distribution, the threshold amount is subtracted from the total fund value.
The distribution value (numerator) is divided by all the participants' months (denominator) to yield the value of one month of participation.
The distribution value is divided by the total number of participant months during the investment period. To determine this number, the company looks at each eligible participant and the number of months each participant was eligible. All of these months are added together to arrive at the total number of participant months for the period. Because the size of the company's population is always changing -- for example, through acquisitions or divestitures -- the actual number of participant months cannot be determined until the month following the end of a period. (To estimate the potential distribution throughout the period, an estimate of the number of participant months is used.) The distribution value divided by the total number of participant months results in the value of the distribution for one month of participation.
Distribution value ÷ Total number of participant months = value of one month of participation
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Determining an Individual's Distribution
A trust distribution is distributed among all the participants based on their months of eligibility. For a full distribution, the participant must have been eligible for all 48 months of an investment period. Participants not eligible for the full 48 months receive a pro-rated distribution.
Value of one month of participation × number of an individual's eligible months = individual distribution value
The value of each participant's distribution is determined by multiplying the number of eligible months of participation in a period by the value of one month of participation. After appropriate tax withholdings, the remaining value is then converted into shares of Boeing stock and distributed to the participant. International employees receive their distribution as cash. Any partial shares are paid as cash.
What Happens after a Distribution
After a distribution, the threshold amount is kept in the fund to help the fund grow in value over time. It also makes it possible for larger distributions in future investment periods because the initial base investment is not depleted.
Back to TopTable 2 - Award Distribution Profile
ShareValue Trust award distributions history is as described below:
| Period | Investment Period End Date | Pre-Tax Award Distribution Amount (Note 1) | Stock Issue Date | Cost Basis Per Share |
|---|---|---|---|---|
| 1 | June 30, 1998 | None | No award distribution | Not applicable |
| 2 | June 30, 2000 | None | No award distribution | Not applicable |
| 3 | June 30, 2002 | None | No award distribution | Not applicable |
| 4 | June 30, 2004 | $910 | July 30, 2004 | $50.82 |
| 5 | June 30, 2006 | $5,232 | August 2, 2006 | $82.28 |
| 6 | June 30, 2008 | $1,636.90 | July 31, 2008 | $66.15 |
| 7 | June 30, 2010 | Note 2 | Note 2 | Note 2 |
Note 1: Amount based on full 48-month participation.
Note 2: Any award distribution for the final investment period will not be known until after Period 7 closes on June 30, 2010.
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