Boeing Setting Up Employee Stock Fund
Boeing Co. said Thursday that it is establishing a $1-billion stock fund for its 108,000 employees that could lead to significant worker bonuses in the next decade.
The announcement comes after a bruising 10-week strike by the company’s biggest union last year that virtually halted commercial airplane production, and it came the same day 900 workers at a Canadian assembly plant walked off the job.
Boeing Chief Executive Phil Condit said the decision to put the stock program into effect was part of a broader program to improve worker satisfaction and understanding of the company’s business.
“This provides a really good way of educating everybody in the company about what makes the company run,” Condit said.
Under the program, dubbed “ShareValue,” Boeing will establish an investment trust fund of 11.3 million shares of its stock, of which about 7.8 million will be purchased on the open market over the next several months.
Any returns over an average 3% a year, including appreciation and reinvested dividends, will be distributed to employees every two years beginning in 1998, Boeing executives said.
“This is the first time anything like this has been done anywhere in the country,” said analyst Nick Heymann of NatWest Securities. “The accounting implications haven’t even been figured out.” He said the program was a precursor to a likely bigger stock buyback program expected as early as this year.
Condit said the company will consider a stock buyback or dividend increase as its cash position improves. He didn’t give a timetable.
Under the plan, an average annual total stock return of 15% would result in a before-tax distribution of $1,150 in stock for each worker in 1998 and another $2,750 in 2000, according to figures provided by Boeing.
“We are happy to see Boeing has finally agreed to offer their employees this benefit,” said Bill Johnson, president of the Machinists union local whose 32,000 members struck the world’s biggest airplane manufacturer last year.
The Machinists have long sought stock options as part of the union’s compensation package and complained bitterly last year about the millions of dollars in stock options earned by Condit and Boeing Chairman Frank Shrontz as the company was laying off thousands of employees.
Condit said he hoped the stock program would help prevent further labor strife at the company, although he said it would be only part of a broader effort to improve communication between management and unionized workers.
Boeing stock fell $2.125 to close at $88.125 on the New York Stock Exchange. The stock is below its peak of $94 hit last week but still up about 12% this year.
