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215,000 Boeing workers nearing bullish bonus

By David Bowermaster
Seattle Times aerospace reporter

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The bonuses would come from the ShareValue Trust, a stock-incentive plan established eight years ago by then-Chief Executive Phil Condit to align the interests of Boeing workers and investors.

Boeing's stock price must exceed $44 on June 30 for a distribution to occur, based on a formula set when the trust was created.

Anyone who has worked at the company since July 1, 2000, would be eligible, except for executives, but the size of each payout would depend on the length of each person's tenure at Boeing.

Boeing shares closed yesterday at $48.66, up 26 percent since late March and at the highest level since early September 2001. At that price, a worker who has spent all of the past four years at Boeing would receive more than $600 worth of stock, or about 13 shares.

Howard Rubel, an aerospace analyst with Schwab Soundview Capital Markets, discussed the trust yesterday in a research note to clients. He expects Boeing stock will maintain its momentum.

"With three weeks to go, we think a payout is likely," Rubel wrote.

A distribution from the fund would be a boon not only to Boeing workers, but also to the Puget Sound area's economy, which is still struggling to shake off one of the nation's most prolonged economic downturns.

Boeing's decision to cut 35,000 workers after the Sept. 11 attacks has contributed mightily to the region's woes.

The ShareValue Trust has been easy to overlook, even for longtime Boeing workers.

One reason: No one at Boeing ever has earned a dime from it.
 
That is because Boeing shares never have been high enough on the required dates — every other year on June 30 — to trigger a distribution.

The trust is also easy to forget because it is guided by arcane rules that are difficult to follow.

Boeing created the trust with $1 billion of stock on July 1, 1996. It added $700 million more stock later to cover employees of Rockwell and McDonnell Douglas who became part of Boeing after transactions in the mid-1990s.

The number of shares held by the trust increases whenever Boeing issues a stock dividend because the proceeds are used to buy more shares on the open market.

An independent trustee administers the program and buys the shares.

At the end of May, the trust held more than 41 million shares, distributed equally across two funds: Fund 1 and Fund 2.

Each of the funds reaches its target date once every four years on June 30. Boeing has staggered the two funds so that a date comes every two years. Fund 2's is June 30; Fund 1's next date is June 30, 2006.

If a distribution takes place this year, its size would depend on how much Boeing's stock price exceeds $44 on June 30.

If the stock slips from its current price to $46 a share, the average distribution would be about $253 for a person who has worked at Boeing from July 1, 2000, to June 30, 2004, without quitting or being laid off. If the stock jumps to $52 a share, the average distribution would exceed $1,000.

An employee who worked two years at Boeing could expect to receive half the distribution. Someone who had worked a month would get 1/48 of the amount.

If the stock drops below $44, no distribution will occur, and all the shares will be held by the trust until Fund 2's next vesting date: June 30, 2008.

All the math will be a moot point if Boeing stock nosedives in the next three weeks.

All a current or former worker can do now is keep an eye on Wall Street and cheer for the bulls to propel Boeing stock higher — just like a mutual-fund manager or an executive with millions of dollars on the line.

"The ShareValue Program is intended to focus the attention of all Boeing people on what we can do — both as individuals and all of us working together — to increase the return to the people who invest their money in Boeing," said Condit when the trust was created. "If we do that, the people of Boeing will share directly in the success they help create."

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com