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Management’s
Discussion and Analysis Shareholder
Value as Corporate Management performance measures are designed to provide a good balance between short-term and long-term measures and financial and non-financial measures to align all decision processes and operating objectives to increase shareholder value over the long term. Beginning in 1998, the Company implemented a new stock-award plan in place of stock options for executive compensation. Under this plan, rights to receive stock, referred to as Performance Shares, have been issued to plan participants. An increasing portion of the Performance Shares awarded will be convertible to shares of common stock as the stock price reaches and maintains certain threshold levels. These threshold stock price levels represent predetermined compound five-year growth rates relative to the stock price at the time the Performance Shares are granted. This plan is intended to increase executive management’s focus on improving shareholder value. During 1996, the Company established a self-sufficient, irrevocable trust, the “ShareValue Trust,” designed to allow all employees to share in the results of increasing shareholder value over the long term. Funding of the ShareValue Trust totaled $1,150 million in 1996. (See Note 16 to the consolidated financial statements.) Additional funding of $550 million was made effective January 1, 1998, because of the merger with McDonnell Douglas Corporation. Potential share appreciation distributions, which are solely the responsibility of the Trust, occur every two years. On June 30, 1998, the first investment period of the trust ended with a fund appreciation insufficient to generate a distribution to employees. In 1998 the Company adopted the expense recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, which will principally affect the accounting for Performance Share awards, the ShareValue Trust plan, and stock options. The Boeing Company and Subsidiaries |
