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Share-Based Compensation And Other Compensation Arrangements
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
Share-Based Compensation And Other Compensation Arrangements Share-Based Compensation and Other Compensation Arrangements
Share-Based Compensation
Our 2003 Incentive Stock Plan, as amended and restated, permits awards of incentive and non-qualified stock options, stock appreciation rights, restricted stock or units, performance shares, performance restricted stock or units, performance units and other stock and cash-based awards to our employees, officers, directors, consultants, and independent contractors. The aggregate number of shares of our stock authorized for issuance under the plan is 87,000,000.
Shares issued as a result of stock option exercises or conversion of stock unit awards will be funded out of treasury shares, except to the extent there are insufficient treasury shares, in which case new shares will be issued. We believe we currently have adequate treasury shares to satisfy these issuances during 2021.
Share-based plans expense is primarily included in Total costs and expenses and General and administrative expense, as well as a portion allocated to production as inventoried costs. The share-based plans expense and related income tax benefit were as follows:
Years ended December 31,202020192018
Restricted stock units and other awards$243 $217 $213 
Income tax benefit$53 $47 $46 
Stock Options
We discontinued granting options in 2014, replacing them with performance-based restricted stock units. Options granted through January 2014 had an exercise price equal to the fair market value of our stock on the date of grant and expire 10 years after the date of grant. The stock options vested over a period of three years and were fully vested as of December 31, 2017.
Stock option activity for the year ended December 31, 2020 is as follows:
SharesWeighted Average Exercise Price Per ShareWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Number of shares under option:
Outstanding at beginning of year2,375,583$74.79 
Exercised(515,063)71.47 
Outstanding at end of year1,860,520$75.71 1.65$257 
Exercisable at end of year1,860,520$75.71 1.65$257 
The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $90, $279 and $320, with a related tax benefit of $32, $61 and $70, respectively. No options vested during the years ended December 31, 2020, 2019 and 2018.
Restricted Stock Units
In February 2020, 2019 and 2018, we granted to our executives 325,108, 233,582 and 260,730 restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of $319.04, $428.22 and $361.13 per unit, respectively. In December 2020, we granted to our executives 721,734 RSUs as part of our long-term incentive program with a grant date fair value of $233.00 per unit. The RSUs granted under this program will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the employee (or beneficiary) will receive a proration of stock units based on active employment during the three-year service period, except in the case of the December 2020 grant, which will vest in full for executives that terminate employment due to retirement after attaining certain age and service conditions. In all other cases, the RSUs will not vest and all rights to the stock units will terminate. These RSUs are labeled executive long-term incentive program in the table below.
In December 2020, we granted to our employees (excluding executives and certain union-represented employees), a one-time grant of 5,163,425 RSUs with a grant date fair value of $233.00 per unit. The RSUs granted under this program will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an employee terminates employment because of retirement, layoff, disability, or death, the employee (or beneficiary) will receive a proration of stock units based on active
employment during the three-year service period. In all other cases, the RSUs will not vest and all rights to the stock units will terminate. These RSUs are labeled employee long-term incentive program in the table below.
In addition to RSUs awarded under our long-term incentive program, we grant RSUs to certain executives and employees to encourage retention or to reward various achievements. These RSUs are labeled other RSUs in the table below. The fair values of all RSUs are estimated using the average of the high and low stock prices on the date of grant.
RSU activity for the year ended December 31, 2020 was as follows:
Executive Long-Term Incentive Program Employee Long-Term Incentive ProgramOther
Number of units:
Outstanding at beginning of year905,025 908,321 
Granted1,103,608 5,163,425 196,818 
Dividends7,091 7,303 
Forfeited(104,374)(33,896)
Distributed(487,749)(329,227)
Outstanding at end of year1,423,601 5,163,425 749,319 
Unrecognized compensation cost$237 $973 $102 
Weighted average remaining contractual life (years)
2.53.02.0
The number of vested but undistributed RSUs at December 31, 2020 was not significant.
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units (PBRSUs) are stock units that pay out based on the Company’s total shareholder return as compared to a group of peer companies over a three-year period. The award payout can range from 0% to 200% of the initial PBRSU grant. The PBRSUs granted under this program will vest at the payout amount and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the employee (or beneficiary) remains eligible under the award and, if the award is earned, will receive a proration of stock units based on active employment during the three-year service period. In all other cases, the PBRSUs will not vest and all rights to the stock units will terminate.
In February 2020, 2019 and 2018, we granted to our executives 290,202, 214,651 and 241,284 PBRSUs as part of our long-term incentive program. Compensation expense for the award is recognized over the three-year performance period based upon the grant date fair value. The grant date fair values were estimated using a Monte-Carlo simulation model with the assumptions presented below. The model includes no expected dividend yield as the units earn dividend equivalents.
Grant YearGrant DatePerformance PeriodExpected VolatilityRisk Free Interest RateGrant Date Fair Value
20202/24/20203 years27.04 %1.21 %$357.38 
20192/25/20193 years23.88 %2.46 %466.04 
20182/26/20183 years22.11 %2.36 %390.27 
PBRSU activity for the year ended December 31, 2020 was as follows:
Executive Long-Term Incentive Program
Number of units:
Outstanding at beginning of year826,126 
Granted290,202 
Performance based adjustment(1)
293,203 
Dividends27,299 
Forfeited(83,055)
Distributed(732,216)
Outstanding at end of year621,559 
Unrecognized compensation cost$93 
Weighted average remaining contractual life (years)
1.8
(1)Represents net incremental number of units issued at vesting based on TSR for units granted in 2017.
Performance Awards
During 2020, 2019 and 2018, we granted Performance Awards to our executives, which are cash units that pay out based on the achievement of long-term financial goals at the end of a three-year period. Each unit has an initial value of $100 dollars. The amount payable at the end of the three-year performance period may be anywhere from $0 to $200 dollars per unit for the 2019 and 2018 Performance Awards and $0 to $150 dollars for 2020 Performance Awards, depending on the Company’s performance against plan for a three-year period. The Compensation Committee has the discretion to pay these awards in cash, stock, or a combination of both after the three-year performance period. Compensation expense, based on the estimated performance payout, is recognized ratably over the performance period.
The minimum payout amount is $0 and the maximum amount we could be required to pay out for the 2020, 2019 and 2018 Performance Awards is $274, $341 and $331, respectively.
Deferred Compensation
The Company has deferred compensation plans which permit certain employees to defer a portion of their salary, bonus, certain other incentive awards, and retirement contributions. Participants can diversify these amounts among 23 investment funds including a Boeing stock unit account.
Total expense related to deferred compensation was $93, $174 and $19 in 2020, 2019 and 2018, respectively. As of December 31, 2020 and 2019, the deferred compensation liability which is being marked to market was $1,718 and $1,779.