Business Context and Reporting Period
This Form 8-K filing by The Boeing Company (Boeing) was submitted on February 27, 2006, reporting events occurring on that same date. The filing details the entry into a material definitive agreement regarding executive compensation under the Company's long-term incentive program.
Key Financial Metrics
This filing does not report operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The financial data presented is limited to the valuation of executive compensation awards.
- Stock Option Exercise Price: $74.45 per share (Fair Market Value on grant date).
- Performance Unit Initial Value: $100 per unit.
- Performance Unit Payout Range: $0 to $200 per unit based on performance.
Material Changes
The material change reported is the approval and grant of new stock options and cash-based performance awards to five named executive officers. These grants are tied to a three-year performance period ending December 31, 2008.
| Executive Officer | Performance Units | Target Payout ($) | Stock Options (Shares) |
|---|---|---|---|
| W. James McNerney, Jr. | 56,875 | $5,687,500 | 261,000 |
| James A. Bell | 12,675 | $1,267,500 | 66,000 |
| James F. Albaugh | 16,088 | $1,608,800 | 66,000 |
| Laurette T. Koellner | 6,600 | $660,000 | 20,000 |
| Alan R. Mulally | 16,088 | $1,608,800 | 66,000 |
Guidance, Outlook, and Risks
Management Commentary: The Compensation Committee approved these awards to align executive compensation with long-term financial goals and economic performance. Final payouts for performance awards may range from 0% to 200% of the target amount.
Terms: Stock options vest annually over three years and expire ten years after the grant date. Performance awards are payable in cash, stock, or a combination at the Committee's discretion.
Future Filings: Boeing intends to provide additional compensation details in the definitive proxy statement for the 2006 annual meeting of shareholders, expected to be filed in March 2006.
Risks/Contingencies: The filing text does not provide specific risk factors or contingencies beyond the performance-based nature of the awards.
Investor Verification Checklist
- Verify the final payout percentage for performance awards once the 2006-2008 performance period concludes.
- Review the definitive proxy statement (expected March 2006) for comprehensive compensation details.
- Monitor Boeing's stock price relative to the $74.45 exercise price to assess the intrinsic value of the granted options.
- Confirm the specific long-term financial goals used to calculate the performance award multipliers.