UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Soliciting Material Pursuant to §240.14a-12
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THE BOEING COMPANY
(Name of registrant as specified in its charter)
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Form, Schedule or Registration Statement No.:
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2017 ANNUAL MEETING
OF SHAREHOLDERS
Monday, May 1, 2017
9:00 a.m., Central Time
The Field Museum
1400
South Lake Shore Drive
Chicago, Illinois
Notice of 2017 Annual Meeting of Shareholders
March 17, 2017
Dear Fellow Shareholder,
You are cordially invited to attend The Boeing Companys 2017 Annual Meeting of Shareholders to be held on Monday, May 1, 2017, at 9:00 a.m., Central Time, at The Field Museum, 1400 South Lake Shore
Drive, Chicago, Illinois. At the meeting, shareholders will be asked to:
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elect the 13 director nominees named in the proxy statement;
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approve, on an advisory basis, named executive officer compensation;
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recommend the frequency of future advisory votes on named executive officer compensation;
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ratify the appointment of our independent auditor for 2017; and
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transact such other business, including certain shareholder proposals, as may properly come before the meeting and any postponement or adjournment thereof.
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The meeting will also include a report on our operations. Shareholders of record at the close of business on March 2, 2017 are
entitled to vote at the annual meeting and any postponement or adjournment thereof. Your vote is important. Please vote by internet, telephone or mail as soon as possible to ensure your vote is recorded promptly. Please also note that, if you wish
to attend the meeting, you must request an admission ticket in advance. To obtain an admission ticket, please follow the instructions on page 62 of the proxy statement.
Thank you for your ongoing support of The Boeing Company.
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Very truly yours,
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Dennis A. Muilenburg
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Chairman, President and
Chief Executive
Officer
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Grant M. Dixton
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Vice President, Deputy General Counsel and Corporate Secretary
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REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
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VIA THE INTERNET
Visit
www.proxyvote.com
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BY MAIL
Sign, date, and return your proxy card or voting instruction form
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BY TELEPHONE
Call the telephone number on your proxy card, voting instruction form or notice
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IN PERSON
Attend the annual meeting in Chicago
See page
62
for details regarding how to register in advance and obtain an admission ticket
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 1,
2017: This Notice of Annual Meeting and Proxy Statement and the 2016 Annual Report are available at www.proxyvote.com.
This proxy statement is issued in connection with the solicitation of proxies by the Board of Directors of The Boeing
Company for use at the 2017 Annual Meeting of Shareholders and at any adjournment or postponement thereof. On or about March 17, 2017, we will begin distributing print or electronic materials regarding the annual meeting to each shareholder
entitled to vote at the meeting. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the shareholder.
Table of Contents
PROXY SUMMARY
This summary sets forth certain performance highlights, as well as information contained elsewhere in this proxy statement. You should read the entire proxy
statement before casting your vote.
Performance Highlights
Annual Meeting of Shareholders
When
g
May 1, 2017, 9:00 a.m., Central Time
Where
g
The Field Museum, Chicago, Illinois
You are entitled to vote at the meeting if
you were a holder of record of our common stock at the close of business on March 2, 2017. Please see page 63 for instructions on how to vote your shares. If you wish to attend the meeting in person, you must register no later than
April 21, 2017 to obtain an admission ticket. You must present an admission ticket, along with government-issued photo identification, in order to attend the meeting. See page 62 for additional instructions.
Voting Recommendations of the Board
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Item
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Description
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For
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Against
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Page
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1
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Elect directors
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4
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2
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Approve, on an advisory basis, named executive officer compensation
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23
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3
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Approve, on an advisory basis, the frequency of future advisory votes on named executive officer compensation
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EVERY
YEAR
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24
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4
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Ratify appointment of the independent auditor
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53
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5
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Shareholder proposal additional report on lobbying activities
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56
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6
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Shareholder proposal reduce threshold to call special shareholder meetings from 25% to 15%
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58
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7
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Shareholder proposal report on arms sales to Israel
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59
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8
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Shareholder proposal implement Holy Land Principles
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60
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The
Boeing Company
2017 Proxy Statement
1
PROXY SUMMARY
Director Nominees
This years Board nominees include one new
directorRobert Bradway, Chairman and CEO of Amgen Inc. Since August 2015, three independent directors have joined the Board, reflecting our ongoing board refreshment strategy and further strengthening and diversifying the skills and
experiences of the Board. Each director nominee is listed below, and you can find additional information under Election of Directors (Item 1) beginning on page 4.
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Name
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Age
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Director
Since
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Professional Background
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Board Committees
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Robert A. Bradway
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54
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2016
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Chairman & CEO, Amgen
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Audit, Finance
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David L. Calhoun
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59
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2009
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Senior Managing Director, Blackstone Group; Former Chairman & CEO, Nielsen
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Compensation, GON
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Arthur D. Collins, Jr.
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69
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2007
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Senior Advisor, Oak Hill Capital Partners; Former Chairman & CEO, Medtronic
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Compensation, GON
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Kenneth M. Duberstein
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72
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1997
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Chairman & CEO, The Duberstein Group;
Former White House Chief of Staff
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Compensation, GON
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Edmund P. Giambastiani, Jr.
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68
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2009
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Seventh Vice Chairman of the U.S. Joint Chiefs of Staff; Former NATO Supreme Allied Commander Transformation and Former Commander, U.S. Joint Forces Command
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Audit, Finance, Special Programs
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Lynn J. Good
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57
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2015
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Chairman, President & CEO, Duke Energy
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Audit, Finance
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Lawrence W. Kellner
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58
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2011
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President, Emerald Creek Group;
Former
Chairman & CEO, Continental Airlines
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Audit, Finance
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Edward M. Liddy
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71
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2010
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Former Chairman & CEO, Allstate
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Audit, Finance
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Dennis A. Muilenburg
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53
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2015
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Chairman, President & CEO, Boeing
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Special Programs
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Susan C. Schwab
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61
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2010
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Professor, University of Maryland School of Public Policy; Former U.S. Trade Representative
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Audit, Finance
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Randall L. Stephenson
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56
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2016
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Chairman & CEO, AT&T
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Audit, Finance,
Special
Programs
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Ronald A. Williams
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67
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2010
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Former Chairman & CEO, Aetna
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Compensation, GON, Special Programs
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Mike S. Zafirovski
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63
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2004
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Executive Advisor, Blackstone Group; Former President & CEO, Nortel
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Compensation, GON
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Key Features of Our Executive Compensation Program
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Pay-for-performance
strategy aligns executive compensation with execution of
business strategy (page 26)
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Incentive pay programs feature multiple performance metrics (page 28)
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Approximately 89% of target CEO pay in 2016 was variable (page 31)
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No accelerated vesting of equity awards in connection with a change in control (page 34)
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Rigorous stock ownership requirements for officers and directors (pages 37 and 20)
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No pledging or hedging of Boeing stock by officers or directors (page 38)
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Robust clawback policy that permits recoupment of incentive compensation in certain cases of misconduct even absent a financial restatement (page 38)
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Stock holding requirements for executive officers (page 37)
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No employment or
change-in-control
agreements
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Governance Highlights
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Three new independent directors in last 18 months (page 4)
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Majority voting for all directors, each of whom is elected for a
one-year
term
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Shareholders meeting certain requirements may nominate directors and have such nominees included in the proxy statement, known as proxy access (page
17)
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Extensive Board oversight of risk management, with particular focus on Boeings key strategic, operational, and compliance risks (page 16)
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2
The Boeing Company
2017 Proxy Statement
PROXY SUMMARY
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Strong independent Lead Director with broad responsibilities and significant governance duties (page 13)
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Executive sessions of independent directors conducted after every regularly scheduled Board meeting
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Board leadership structure
re-evaluated
annually (page 13)
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Robust succession planning process for senior leadership positions
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Strict limits on director service on outside boards (page 12)
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Comprehensive annual self-assessments of Board and its committees
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No supermajority voting
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Shareholder right to call special meetings
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Publicly disclosed policies and practices regarding political advocacy
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Shareholder Outreach
We meet with many of our shareholders throughout the year to ensure that management and the Board are focused on, and responsive to, investor priorities and concerns. For additional information, see
Shareholder Outreach on page 17.
Environmental Stewardship and Corporate Citizenship
Boeings commitment to innovation extends to how we
care for our environment and engage with the communities in which we operate. See Environmental Stewardship and Corporate Citizenship on page 17 for additional information.
The
Boeing Company
2017 Proxy Statement
3
ELECTION OF DIRECTORS (ITEM 1)
PROPOSAL SUMMARY
Shareholders are being asked to elect the
13 director nominees below to serve until the 2018 annual meeting of shareholders.
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The Board recommends that you vote FOR each of the 13 director nominees.
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Board Composition and Engagement
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Engagement
Significant involvement in developing Boeings business strategy
Executive session of independent directors after every Board meeting
>98% average meeting attendance
Extensive
role in succession planning, including
in-depth
meetings between individual directors and senior executives at Boeing locations
Comprehensive oversight of strategic, operational, and compliance risks
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12 of 13
Independent
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Skills and Experience Highlights
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Fortune
500
Board Experience
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Current or Former
CEO
of Global Public Company
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Senior
U.S.
Government Experience
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12
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10
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3
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Complex Manufacturing
Expertise
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Technology/Innovation
Leadership
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Fortune
500
Former CFO
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6
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7
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5
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4
The Boeing Company
2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
Director Nominees
For information on the factors the Board considers when
evaluating candidates for nomination, see Board Composition on page 12. Mr. Bradway, who joined the Board within the last year, was referred to the Governance, Organization and Nominating, or GON, Committee by a third-party search
firm. Set forth below are the ages, principal occupations, directorships within the past five years, and other details about each nominee.
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ROBERT A. BRADWAY
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Chairman & CEO,
Amgen Inc.
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Boeing director since:
2016
Professional highlights:
Chairman & CEO, Amgen Inc. (Chairman 2013-present; CEO 2012-present)
President &
COO, Amgen Inc. (2010-2012)
Executive VP & CFO, Amgen Inc. (2007-2010)
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Independent:
Yes
Age:
54
Other current directorships:
Amgen Inc.
Norfolk Southern Corporation
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Mr. Bradway brings to the Board critical skills in the areas of high technology, product development, financial oversight, and risk management. His experience as a senior
executive in the biotechnology industry, including as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of Amgen, provide him with an extensive understanding of the strategic considerations and challenges associated with a
complex, highly regulated industry. In recognition of Mr. Bradways experience in corporate finance, risk management, and executive leadership, as well as his service on Norfolk Southerns audit committee, the Board elected him to
serve on our Audit and Finance committees.
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DAVID L. CALHOUN
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Senior Managing Director & Head of Private Equity
Portfolio Operations, The Blackstone Group
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Boeing director since:
2009
Professional highlights:
Senior Managing Director & Head of Private Equity Portfolio Operations, The
Blackstone Group (2014-present)
Chairman & CEO, Nielsen Holdings plc. (Chairman 2014-2016; CEO 2010-2014)
Chairman & CEO,
The Nielsen Company B.V. (2006-2014)
Vice Chairman, General Electric Company, & President and CEO, GE Infrastructure
(2005-2006)
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Independent:
Yes
Age:
59
Other current directorships:
Caterpillar Inc.
Nielsen Holdings plc.
Prior directorships:
Medtronic, Inc.
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Mr. Calhoun provides valuable insight and perspective on a wide array of strategic and business matters, stemming from his vast executive, management, and operational
experience at Blackstone, Nielsen and GE. Mr. Calhoun also has significant global aerospace, aircraft, manufacturing, and high-technology industry expertise as evidenced by his leadership of GEs aircraft engines and transportation
businesses, as well as his tenure on Caterpillars board. Mr. Calhouns executive leadership and experience in corporate governance matters at Nielsen and his service on Caterpillars compensation committee enable him to serve a
crucial role on our Governance, Organization and Nominating and Compensation Committees.
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The
Boeing Company
2017 Proxy Statement
5
ELECTION OF DIRECTORS (ITEM 1)
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ARTHUR D. COLLINS, JR.
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Senior Advisor, Oak Hill Capital Partners
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Boeing director since:
2007
Professional highlights:
Senior Advisor, Oak Hill Capital Partners (2009-present)
Chairman & CEO,
Medtronic, Inc. (Chairman 2002-2008; CEO 2002-2007)
President & CEO, Medtronic, Inc. (2001-2002)
President & COO, Medtronic, Inc. (1996-2001)
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Independent:
Yes
Age:
69
Other current directorships:
Arconic, Inc.
U.S. Bancorp
Prior directorships:
Alcoa Inc.
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Mr. Collins provides guidance to the Board and oversight of our Company on a wide variety of corporate and strategic matters based on his extensive senior executive and
business leadership experience. Mr. Collins also brings his perspective from experience on other corporate boards, including as the lead director of U.S. Bancorp and as chair of Arconics compensation and benefits committee. In addition,
the Board benefits from Mr. Collins years of executive leadership at Medtronic and his experience managing the operations of a large, global, high-technology company. As a result of his extensive executive and management expertise, as
well as his independence, Mr. Collins fellow directors elected him to serve as Chair of the Compensation Committee.
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KENNETH M. DUBERSTEIN
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Chairman & CEO,
The Duberstein
Group; Former White
House Chief of Staff
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Boeing director since:
1997
Professional highlights:
Chairman & CEO, The Duberstein Group (1989-present)
Chief of Staff, The
White House (1988-1989)
Boeing Independent Lead Director
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Independent:
Yes
Age:
72
Other current directorships:
Mack-Cali Realty Corporation
The Travelers Companies, Inc.
Prior directorships:
Dell Inc.
ConocoPhillips
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Mr. Duberstein provides independent leadership to the Board
as our Lead Director. In addition to having extensive knowledge of Boeing and its businesses, Mr. Duberstein brings to the Board a wide range of experiences in U.S. government, Congressional and international matters and as a member of other
Fortune 500 boards. Mr. Dubersteins vast experience, both in the highest levels of the U.S. government and as an outside strategic advisor, enables him to advise the Board and senior management on key issues of corporate strategy and
government policy, as well as a wide range of issues related to Boeings government interactions. In recognition of Mr. Dubersteins skills in overseeing Boeings corporate governance policies and practices as well as his strong
leadership abilities, his fellow directors elected him both as independent Lead Director of the Board and as Chair of the Governance, Organization and Nominating Committee.
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The Boeing Company
2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
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EDMUND P. GIAMBASTIANI, JR.
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CEO,
The Giambastiani Group LLC
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Boeing director since:
2009
Professional highlights:
CEO, The Giambastiani Group LLC
(2009-present)
Seventh Vice Chairman, U.S. Joint Chiefs of Staff
(2005-2007)
Supreme Allied Commander Transformation, NATO (2003-2005)
Commander, U.S. Joint
Forces Command
(2002-2005)
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Independent:
Yes
Age:
68
Other current directorships:
THL Credit, Inc.
New York Board of the Oppenheimer Funds (51 funds)
Prior directorships:
Monster Worldwide, Inc.
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Admiral Giambastiani brings a wide breadth of experience with
major program development, program resourcing, and other aspects of managing large U.S. armed forces acquisition programs, including in high-technology areas. During his distinguished U.S. military career of over 40 years, Admiral Giambastiani
developed extensive strategic, leadership, operational, and engineering experience that complements Boeings diverse business needs. These skills enable him to provide expert advice to senior management and his fellow directors on a range of
technical and operational matters, including in his capacity as a member of the Special Programs Committee. Admiral Giambastianis experience as a senior military leader in strategy development and program risk oversight and his expertise with
respect to cybersecurity enhances the Boards strategic and management oversight abilities.
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LYNN J. GOOD
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Chairman,
President & CEO,
Duke Energy Corporation
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Boeing director since:
2015
Professional highlights:
Chairman, President & CEO, Duke Energy Corporation (Chairman 2016-present; President
and CEO 2013-present)
Vice Chairman, Duke Energy Corporation, (2013-2016)
Executive Vice
President & CFO, Duke Energy Corporation (2009-2013)
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Independent:
Yes
Age:
57
Other current directorships:
Duke Energy Corporation
Prior directorships:
Hubbell Incorporated
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Ms. Good brings to the Board substantial experience in
executive leadership, corporate governance, financial management, and accounting. Ms. Goods record of executive leadership and board experience as Chief Executive Officer and Chairman of Duke Energy, and as a director of Hubbell
Incorporated, enables her to advise management on a wide range of strategic, financial, and governance matters, including the challenges associated with operating in heavily regulated industries. Ms. Good also has vast financial management
experience, gained principally from her prior service as Chief Financial Officer and Treasurer of Duke Energy and as chair of Hubbells Audit Committee. Ms. Good also has extensive accounting and auditing skills, including nearly 30 years
of experience as a Certified Public Accountant and 11 years as an audit partner at Arthur Anderson LLP and Deloitte & Touche LLP. As a result of Ms. Goods extensive auditing experience and skills in corporate finance and
strategic matters, the Board elected Ms. Good to serve on the Boards Audit and Finance Committees.
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The
Boeing Company
2017 Proxy Statement
7
ELECTION OF DIRECTORS (ITEM 1)
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LAWRENCE W. KELLNER
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President, Emerald
Creek Group
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Boeing director since:
2011
Professional highlights:
President, Emerald Creek Group, LLC (2010-present)
Chairman & CEO,
Continental Airlines, Inc. (2004-2009)
President & COO, Continental Airlines, Inc. (2003-2004)
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Independent:
Yes
Age
: 58
Other current directorships:
Sabre Corporation
Marriott International, Inc.
Prior directorships:
Chubb Limited
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Mr. Kellner brings to the Board extensive airline industry
experience developed during his 14 years of service in key leadership positions at Continental Airlines, including Chairman, Chief Executive Officer, Chief Financial Officer and Chief Operating Officer. In addition to his deep understanding of
strategic planning, customer requirements, and operational management in the airline industry, Mr. Kellner has detailed knowledge in the fields of finance and accounting, gained principally from his experience as Chief Financial Officer at
Continental Airlines and American Savings Bank. Mr. Kellner also brings to the Board corporate governance expertise and experience gained from his service as lead director of Marriott and as chairman of Sabre as well as on the boards of other
Fortune 500 companies. As a result of his finance and accounting expertise, Mr. Kellners fellow directors elected him to serve as Chair of the Finance Committee.
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EDWARD M. LIDDY
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Former Chairman
& CEO, The Allstate Corporation
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Boeing director since:
2010
Professional highlights:
Partner, Clayton, Dubilier & Rice, LLC (2008 and 2010-2015)
Interim
Chairman & CEO, American International Group, Inc. (2008-2009)
Chairman & CEO, The Allstate Corporation (Chairman 1999-2008; CEO 1999-2006)
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Independent:
Yes
Age:
71
Other current directorships:
3M Company
Abbott Laboratories
AbbVie Inc.
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Mr. Liddy brings to the Board the benefits of his
significant experience as a senior executive and board member of several Fortune 100 companies across a range of industries. Mr. Liddys extensive executive leadership experience at Allstate and service at the request of the Secretary of
the U.S. Department of the Treasury as Interim Chairman and Chief Executive Officer of American International Group enables him to provide the Board with valuable insights on corporate strategy, risk management, corporate governance, and many other
issues facing large, global enterprises. Additionally, as a former Chief Financial Officer of Sears, chair of the audit committees of Goldman Sachs and 3M, and partner at Clayton, Dubilier & Rice, Mr. Liddy provides the Board with
significant knowledge and understanding of corporate finance, capital markets, financial reporting, and accounting matters. In recognition of this expertise, the Board elected Mr. Liddy to serve as Chair of the Audit
Committee.
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8
The Boeing Company
2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
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DENNIS A. MUILENBURG
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Chairman, President
& CEO, The Boeing
Company
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Boeing director since:
2015
Professional highlights:
Chairman, President & CEO, The Boeing Company (Chairman 2016-present; CEO
2015-present; President 2013-present)
Vice Chairman, President & COO, The Boeing Company (2013-2015)
Executive Vice
President, President & CEO, Boeing Defense, Space & Security (2009-2013)
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Independent:
No
Age:
53
Other current directorships:
Caterpillar Inc.
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Mr. Muilenburg brings unparalleled experience and knowledge
of Boeings operations and markets to the Board. Mr. Muilenburgs experience as Chief Executive Officer, together with his achievements while serving as President and Chief Operating Officer as well as President of Boeings
Defense, Space & Security unit, uniquely position him to identify and address key aerospace industry challenges and opportunities, assist in the Boards deliberations with respect to enhancing Boeings global footprint, pursuing
opportunities for continued innovation, and other strategic imperatives, and provide overall leadership to the Board in his role as Chairman. Mr. Muilenburg also acts as the principal intermediary between management and the Boards
independent directors. In addition, Mr. Muilenburgs background as a Boeing engineer strengthens the Boards manufacturing, program development, and technology expertise, and his service on the Caterpillar board and its audit
committee enables him to provide the Board with key insights on risk management, corporate finance, and other issues facing large global, complex manufacturing companies.
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SUSAN C. SCHWAB
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Professor, University
of Maryland School
of Public Policy
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Boeing director since:
2010
Professional highlights:
Professor, University of Maryland School of Public Policy (2009-present)
Strategic Advisor, Mayer
Brown LLP (2010-present)
U.S. Trade Representative, Executive Office of the President (2006-2009)
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Independent:
Yes
Age:
61
Other current directorships:
Caterpillar Inc.
FedEx Corporation
Marriott International, Inc.
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Ambassador Schwab brings unique global and governmental
perspectives and experience to the Board and its deliberations. Ambassador Schwabs extensive experience leading large international trade negotiations positions her well to advise her fellow directors and our senior management on a wide range
of key issues facing Boeing through its relationships with
non-U.S.
companies and governments. Ambassador Schwabs vast experience in the U.S. government and in public policy formulation also allows her
to advise Boeing on the many challenges and opportunities in government relations. In addition, as a result of Ambassador Schwabs prior business experience and current service on other Fortune 100 corporate boards, she brings expertise to the
Board on a wide range of strategic, financial, corporate governance, and compensation matters.
|
The
Boeing Company
2017 Proxy Statement
9
ELECTION OF DIRECTORS (ITEM 1)
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RANDALL L. STEPHENSON
|
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Chairman & CEO, AT&T
Inc.
|
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Boeing director since:
2016
Professional highlights:
Chairman & CEO, AT&T Inc. (2007-present)
COO, AT&T Inc.
(2004-2007)
Senior Executive VP & CFO, AT&T (2001-2004)
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Independent:
Yes
Age:
56
Other current directorships:
AT&T Inc.
Emerson Electric Co.
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Mr. Stephenson brings to the Board vast expertise in high
technology, global operations, product innovation, and large program risk management. In particular, his years of service as AT&Ts Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer provide him with senior
leadership experience and insight into the operations, challenges and complex issues facing large technology companies with extensive multinational operations and markets. As a result of Mr. Stephensons expertise in accounting and
financial reporting and oversight matters, the Board elected Mr. Stephenson to serve on the Audit and Finance Committees.
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RONALD A. WILLIAMS
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Chairman & CEO,
RW2 Enterprises, LLC
|
|
Boeing director since:
2010
Professional highlights:
Chairman & CEO, RW2 Enterprises, LLC (2011-present)
Chairman,
President & CEO, Aetna Inc. (Chairman 2006-2011; President 2002-2007; CEO 2006-2010)
Executive VP & Chief of Health Operations, Aetna Inc. (2001-2002)
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Independent:
Yes
Age:
67
Other current directorships:
American Express Company
Envision Healthcare Holdings, Inc.
Johnson &
Johnson
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Mr. Williams brings to the Board significant strategic,
leadership, operations, and management experience from his tenure at Aetna, including as Chairman and Chief Executive Officer. With more than 25 years of experience in the health care industry, Mr. Williams provides valuable insight into health
insurance and employee benefits best practices, as well as the many related areas associated with managing the requirements of companies in industries with large numbers of employees in U.S. and
non-U.S.
locations. In addition, his service as chair of the risk committee of American Express has enhanced his expertise in risk management at large, global companies. Mr. Williams also brings corporate governance and compensation expertise gained
from his service on the boards of other Fortune 100 companies, including as chair of the compensation committee of Johnson & Johnson.
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10
The Boeing Company
2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
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MIKE S. ZAFIROVSKI
|
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Executive Advisor,
The Blackstone Group
|
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Boeing director since:
2004
Professional highlights:
Executive Advisor, The Blackstone Group (2011-present)
President, The Zaf Group
(2012-present)
Director, President & CEO, Nortel Networks Corporation (2005-2009)
Director,
President & COO, Motorola, Inc. (2002-2005)
|
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Independent:
Yes
Age:
63
Other current directorships:
Stericycle, Inc.
|
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Mr. Zafirovski provides guidance to the Board on a wide
variety of strategic, operational, and business matters based on his vast experience leading high-technology enterprises with significant international operations. Mr. Zafirovskis senior executive leadership positions at Nortel, Motorola,
and GE enable him to provide unique perspectives on strategic planning, technology development, manufacturing, security, and financial matters. Mr. Zafirovski has emphasized corporate governance and quality leadership teams throughout his
career, which is particularly valuable given his service as a member of our Governance, Organization and Nominating Committee.
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THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE
FOR
EACH OF THESE NOMINEES.
|
The
Boeing Company
2017 Proxy Statement
11
CORPORATE GOVERNANCE
Our corporate governance materials, including our Corporate Governance Principles, the charters of each of the Boards standing committees, our Director
Independence Standards and our codes of conduct for directors, finance employees and all employees, may be viewed on our website at www.boeing.com/company/general-info/corporate-governance.page. The GON Committee regularly reviews our governance
practices and policies and proposes appropriate modifications for adoption by the Board.
Board Composition
The GON Committee is responsible for identifying and
assessing potential candidates and recommending nominees for the Boards approval. The GON Committee assesses the qualifications of incumbent directors and other candidates for nomination on an ongoing basis, including with respect to the
following factors:
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Experience.
The GON Committee considers each candidates experience and leadership record in such areas as operations, international business,
manufacturing, risk management, finance, government, marketing, technology, and public policy.
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Industry Expertise.
The GON Committee ensures that a number of directors possess aerospace and/or defense industry, as well as technology, expertise. This
broad industry expertise allows the Board to assess Company performance and provide strategic guidance with respect to each of our principal businesses.
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Diversity.
The Board seeks diversity of background, experience, skills, and perspectives among its members. Further, the GON Committee reviews how
effectively it balances these considerations when it assesses the overall composition of the Board.
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Outside Board Memberships.
Directors are expected to ensure that other commitments, including outside board memberships, do not interfere with their
duties and responsibilities as members of the Board. Consequently, directors may not serve on more than four public company boards in addition to Boeing (two if a public company CEO).
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Independence.
In addition to any regulatory limitations with respect to independence, the GON Committee also considers other positions the director holds
or has held, and evaluates each nominee with respect to Boeings publicly-disclosed Director Independence Standards, as well as with respect to any potential conflicts of interest.
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Professional Reputation.
As set forth in our Corporate Governance Principles, our directors are expected to have a reputation for personal and
professional integrity, honesty, and adherence to the highest ethical standards.
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Length of Service.
The Board believes that regular refreshment of the Board is critical for us to gain fresh perspectives and maintain our position as a
global leader in aerospace. At the same time, with decades-long product cycles and lengthy development periods, Boeing also benefits from directors with extensive Boeing experience. As a result, the GON Committee focuses on maintaining a balance
between directors of short, medium, and long tenure. In addition, no director may serve if he or she would be 74 years of age or older at the time of election.
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Regulatory Compliance.
All director nominees must satisfy regulatory requirements for Board service, including those with respect to any committee on
which such director would be asked to serve.
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Prior Contributions to the Board.
When evaluating the candidacy of an incumbent director, the Board also considers the directors ongoing
contributions to the Board. This evaluation includes consideration of the results of both formal and informal assessments provided by fellow directors.
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Director Independence
Board Independence
Our
Corporate Governance Principles require that at least 75% of the Board satisfy the New York Stock Exchange, or NYSE, criteria for independence. In order for a director to be considered independent, the Board must determine, after consideration of
all relevant facts and circumstances, that he or she has no material relationship with us other than as a director, either directly or as a partner, shareholder, or executive officer of another entity that has a relationship with Boeing. In
addition, the Board has adopted Director Independence Standards to assist the Board in its assessment of director independence. These standards are designed to supplement the requirements of the NYSE listing standards. If a director or nominee has a
relationship with Boeing that is not addressed in the Director Independence Standards, the members of the Board who have already been determined to be independent shall consider all relevant facts and circumstances and determine whether the
relationship is material.
12
The Boeing Company
2017 Proxy Statement
CORPORATE GOVERNANCE
The Board has reviewed all direct and indirect relationships between Boeing and each of our directors, and has
determined that all of our director nominees, other than Mr. Muilenburg, are independent. Accordingly, independent directors constitute more than 92% of our current Board. W. James McNerney, Jr., who served as Chairman of the Board until
March 1, 2016, was not independent due to his service as our Chief Executive Officer until June 30, 2015. In January 2009, Nortel Networks Corporation, for which Mr. Zafirovski served until August 2009 as Director, President and Chief
Executive Officer, and subsidiary companies filed for bankruptcy. The Board has concluded that these events do not impair Mr. Zafirovskis ability to continue to serve as an independent director.
Committee Independence
The
Corporate Governance Principles require that all members of the Audit, GON, and Compensation Committees be independent, both under the Director Independence Standards and pursuant to any regulatory requirements. The Board has determined that all
members of these committees satisfy all applicable independence requirements.
Leadership Structure
The GON Committee annually evaluates and makes
recommendations to the Board concerning the Boards leadership structure, including whether the roles of Chairman and CEO should be separated or combined. The Board, in accordance with our
By-Laws,
elects
a chairman from among the directors. The Board believes that it is in the best interests of the Company and its shareholders for the Board to determine which director is best qualified to serve as Chairman in light of the circumstances at the time,
rather than based on a fixed policy. In the event that the Chairman is not an independent director, an independent Lead Director must be elected on an annual basis by a majority of the independent directors upon a recommendation of the GON
Committee.
The formal duties of the independent Lead Director are as follows:
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approving Board meeting agendas;
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in consultation with the Chairman and the nonemployee directors, approving Board meeting schedules to ensure there is sufficient time for discussion of all
agenda items;
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approving the type of information to be provided to directors for Board meetings;
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presiding at all meetings at which the Chairman is not present, including executive sessions of the nonemployee directors (which are held after every Board
meeting), and apprising the Chairman of the issues considered;
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serving as liaison between the Chairman and the independent directors;
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being available for consultation and direct communication with the Companys shareholders;
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calling meetings of the nonemployee directors when necessary and appropriate; and
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performing such other duties as the Board may from time to time designate.
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Mr. Kenneth Duberstein, our current independent Lead Director, performs the following additional duties:
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speaks with the CEO before and after each stated meeting of the Board to review presentation materials, address matters discussed during executive sessions of
the Boards independent directors, and/or discuss important strategic matters;
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ensures that the Boards governance policies are responsive to shareholder concerns, including with respect to matters such as proxy access, succession
planning, and limits on outside Board memberships for directors;
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meets regularly with members of senior management other than the CEO; and
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oversees the Boards self-evaluation process in his capacity as GON Committee Chair.
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Finally, the independent Lead Director also is responsible for performing such other duties as the other independent directors may requestwhether related to
succession planning leadership (with respect to CEO succession and developing second- and third-level leaders), regularly scheduled meetings with the CEO, risk oversight, meeting with investors, or long-term enterprise strategy.
In February 2016, the Board first elected Mr. Dennis Muilenburg, our President and Chief Executive Officer, to serve as Chairman of the Board.
Mr. Muilenburg has extensive knowledge of, and decades-long experience at, Boeing, knowledge of and unrivaled experience in the aerospace industry, exceptional leadership abilities, and unquestioned integrity.
Our 12 independent directors, with their vast senior leadership experience and technology, manufacturing, and aerospace expertiseindividually and
collectivelyprovide demonstrated, strong, and responsible oversight of the management of Boeing.
Mr. Duberstein, our independent Lead
Directorelected annually by the other independent directorsbrings to the Board extensive experience at the highest levels of both government and business and similarly continues to provide proven independent and active leadership to the
Company.
The
Boeing Company
2017 Proxy Statement
13
CORPORATE GOVERNANCE
Based upon the combination of Mr. Muilenburgs knowledge, experience, leadership, and integrity; the
strength, independence, experience, and integrity of the other 12 directors on the Board; and our Lead Directors demonstrated independent leadership, the Board has determined that Boeings shareholders are best served at this time by
having Mr. Muilenburg serve as Chairman.
Board Committees
The Board has five standing committees. Each committee
operates under a charter that has been approved by the Board, and the Chair of each committee reports to the Board on actions taken at each committee meeting. The Board also has established a Stock Plan Committee, to which the Compensation Committee
has delegated the authority to approve certain limited stock issuances to employees other than executive officers. The table below sets forth the current membership of each of the standing committees, the independence of each director, and the
number of meetings each committee held in 2016.
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Independent
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Audit
Committee
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Compensation
Committee
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Finance
Committee
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Governance,
Organization and
Nominating
Committee
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Special
Programs
Committee
|
Number of Meetings in 2016
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11
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7
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6
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6
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0
|
Robert A. Bradway
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✓
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David L.
Calhoun
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✓
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Arthur D. Collins,
Jr.
|
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✓
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Kenneth M. Duberstein
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✓
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Edmund P. Giambastiani,
Jr.
|
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✓
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Lynn J. Good
|
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✓
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Lawrence W. Kellner
|
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✓
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Edward M. Liddy
|
|
✓
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Dennis A. Muilenburg
|
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Susan C.
Schwab
|
|
✓
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Randall L. Stephenson
|
|
✓
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Ronald A.
Williams
|
|
✓
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|
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Mike S. Zafirovski
|
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✓
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Audit Committee
The Audit Committee oversees our independent auditor and accounting and internal control matters. Its principal responsibilities include oversight of:
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the integrity of our financial statements;
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our compliance with legal and regulatory requirements;
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our independent auditors qualifications and independence;
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the performance of our internal audit function;
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the performance of our independent auditor; and
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our risk assessment and risk management processes.
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At each meeting, representatives of Deloitte & Touche LLP, our independent registered public accounting firm, are present to review accounting, control, auditing, and financial reporting matters. In
addition, during certain meetings, the
14
The Boeing Company
2017 Proxy Statement
CORPORATE GOVERNANCE
Audit Committee meets in executive session with our Chief Financial Officer, General Counsel, Senior Vice President, Office of Internal Governance and Administration, Vice President, Corporate
Audit, and representatives of Deloitte & Touche LLP. The Audit Committee also oversees key risks on behalf of the Board; those particular responsibilities are set forth under Risk Oversight on page 16. The Audit Committee also
prepares the Audit Committee Report included on page 51. The Audit Committee is composed entirely of directors who satisfy NYSE director independence standards and our Director Independence Standards, as well as additional independence standards
applicable to audit committee members established pursuant to applicable law. The Board has determined that each Audit Committee member is financially literate as defined by NYSE listing standards, and that Ms. Good and Messrs. Bradway,
Kellner, Liddy, and Stephenson are audit committee financial experts as defined by the rules of the Securities and Exchange Commission, or SEC.
Compensation Committee
The Compensation Committee oversees our executive and
equity compensation programs. The Compensation Committee is composed entirely of directors who satisfy NYSE director independence standards and our Director Independence Standards, as well as additional independence standards applicable to
compensation committee members established pursuant to applicable law. Additional information about the Compensation Committee, including a more detailed list of its principal responsibilities, is set forth under Compensation Discussion and
Analysis, which begins on page 25. In addition, certain of the Compensation Committees risk oversight responsibilities are set forth under Risk Oversight on page 16.
Finance Committee
The Finance Committees principal responsibilities
include reviewing and, where appropriate, making recommendations to the Board with respect to:
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proposed dividend actions, stock splits, and repurchases, and issuances of debt or equity securities;
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strategic plans and transactions, including mergers, acquisitions, and divestitures, as well as joint ventures and other equity investments;
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customer financing activities;
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our funding plans and funding plans of our subsidiaries;
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our significant financial exposures, contingent liabilities, and major insurance programs;
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our credit agreements and short-term investment policies; and
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employee benefit plan trust investment policies, administration, and performance.
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In addition, the Finance Committee has key risk oversight responsibilities that are described under Risk Oversight on page 16. The Finance Committee is composed entirely of directors who satisfy NYSE
director independence standards and our Director Independence Standards.
Governance, Organization and Nominating
Committee
The GON Committees principal responsibilities include:
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making recommendations to the Board concerning the organization, leadership structure, size, and composition of the Board, as well as the compensation and
benefits of nonemployee directors;
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identifying and recommending to the Board candidates who are qualified to become directors under the criteria set forth in our Corporate Governance Principles;
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assessing the independence of directors on an annual basis and making recommendations to the Board with respect to such assessments;
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pre-approving,
and monitoring on an ongoing basis, directors service on the boards of other
for-profit
companies;
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overseeing the annual performance evaluation process for the Board;
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senior management succession planning, including recommending to the Board nominees for CEO and other senior leadership roles;
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monitoring and reviewing the performance of our CEO;
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monitoring compliance with stock ownership requirements for directors;
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considering possible conflicts of interest of directors and officers; and
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reviewing corporate governance developments and, where appropriate, making recommendations to the Board on corporate governance, including any revisions to our
Corporate Governance Principles.
|
The
Boeing Company
2017 Proxy Statement
15
CORPORATE GOVERNANCE
The GON Committee also oversees key risks on behalf of the Board, which are set forth below under Risk
Oversight. The GON Committee works with a third-party search firm to identify potential candidates to serve on the Board. The GON Committee is composed entirely of directors who satisfy NYSE director independence standards and our Director
Independence Standards.
Special Programs Committee
The Special Programs Committee reviews on a periodic basis our programs that the U.S. government has designated as classified for purposes of national security.
Risk Oversight
Senior management is responsible for
day-to-day
management of strategic, operational, and compliance risks we face, including the creation of appropriate risk management policies and procedures. The Board is
responsible for overseeing management in the execution of its risk management responsibilities and for assessing the Companys approach to risk management. The Board regularly assesses significant risks to the Company in the course of reviews
of corporate strategy and our long-range business plan, including significant new development programs.
As part of its responsibilities, the Board and
its standing committees also regularly review material strategic, operational, financial, compensation, and compliance risks with senior management. Examples of risk oversight activities conducted by the Boards Committees, subject to Committee
report-outs and full discussion at the Board level, are set forth below.
Audit Committee Risk Oversight
|
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Evaluate overall risk assessment and risk management practices;
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Perform central oversight role with respect to financial statement, disclosure, and compliance risks;
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Receive regular reports from our Senior Vice President, Office of Internal Governance and Administration with respect to compliance with our ethics and risk
management policies;
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Meet in executive session after every committee meeting with Deloitte & Touche LLP, our outside auditors, as well as periodically with our Vice
President, Corporate Audit, our Senior Vice President, Office of Internal Governance and Administration, and our Executive Vice President and General Counsel to discuss financial and/or compliance risks, and report any findings to the Board; and
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Oversee the Boards oversight of cybersecurity risk.
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GON Committee Risk Oversight
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Oversee risks related to the Companys corporate governance, including overseeing managements shareholder outreach efforts on governance-related
matters and ensuring the Boards continued ability to provide independent oversight of management.
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Finance Committee Risk Oversight
|
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Evaluate risk related to Boeings capital structure, significant financial exposures, major insurance programs, and our employee pension plan policies and
performance and regularly evaluates financial risks associated with such programs.
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Compensation
Committee Risk Oversight
|
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Evaluate risk in connection with the design and oversight of compensation programs, in consultation with Committees independent compensation consultant.
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For more information on oversight of risks related to our compensation practices, see Compensation and Risk on page 39.
Additional information about the Boards responsibilities related to the management of risk is set forth in our Corporate Governance Principles.
16
The Boeing Company
2017 Proxy Statement
CORPORATE GOVERNANCE
Shareholder Outreach
Boeing has long believed that the continued delivery of
sustainable, long-term value to our shareholders requires regular dialogue with our shareholders. During 2016, we discussed governance, executive compensation, and many other issues with shareholders representing more than 40% of our outstanding
shares. We believe that these meetings ensure that management and the Board are aware of our shareholders priorities and equipped to address them effectively. The Board considers feedback from these conversations during its deliberations, and
we regularly review and adjust our corporate governance structure and/or executive compensation policies and practices in response to comments from our shareholders.
For example, discussions with our shareholders played a significant role in our adoption of a proxy access
by-law
in 2015. Our shareholders expressed a wide range
of views on this topic, but most expressed support for a
by-law
with a maximum shareholder group of 20 and for up to 20% of available Board seats, with significant flexibility regarding other terms.
Accordingly, we adopted a
by-law
allowing a shareholder, or a group of up to 20 shareholders, that has owned at least 3% of our outstanding common stock for at least three years to nominate and include in the
Companys annual meeting proxy materials directors constituting the greater of two individuals and 20% of the Board. Feedback from shareholders in 2016 was also incorporated in Board discussions on a variety of other topics, including approach
to shareholder proposals, executive compensation, and board refreshment.
Environmental Stewardship and Corporate
Citizenship
Boeings commitment to
innovation means more than just game-changing aerospace products and services. We extend that commitment to how we take care of the environment and engage with the communities in which we operate. Boeing believes that taking care of the environment
is crucial to our aerospace and technology leadership. Boeing employees are actively working on many fronts to improve the environmental performance of our products and services as well as our operations. For additional information, including a link
to our 2016 Environment Report, visit www.boeing.com/principles/environment.
In addition, through purposeful investments, employee engagement, and
thoughtful advocacy efforts, Boeing and its employees support innovative partnerships and programs that align with our strategic objectives, create value, and help build better communities worldwide. This includes improving access to globally
competitive learning as well as workforce and skills development, sustaining the environment, and supporting our military and veteran communities. For additional information, including a link to our report on corporate citizenship, visit
www.boeing.com/principles/community-engagement.page.
Meeting Attendance
During 2016, the Board held seven meetings. Each director
nominee attended at least 86% of the meetings of the Board and the committees on which he or she served during 2016, and average attendance at these meetings exceeded 98%. Absent extenuating circumstances, directors are required to attend our annual
meetings of shareholders, and all but one director attended our 2016 Annual Meeting.
Communication with the Board
The Board of Directors has established a
process whereby shareholders and other interested parties can send communications to our independent Lead Director, to the nonemployee directors as a group or to the Audit Committee. This process is described at
www.boeing.com/company/general-info/corporate-governance.page.
Codes of Conduct
The Board expects directors, officers and employees to act
ethically, including by adhering to all applicable codes of conduct, at all times. Shareholders may view Boeings codes of conduct at www.boeing.com/company/general-info/corporate-governance.page. Waivers with respect to these codes for
directors and officers may be granted only by the Board, and any such waiver will be promptly disclosed on our website. No waivers were requested during 2016. Directors are required to promptly inform the Chairman of the Board or the Chair of the
GON Committee of any actual or potential conflicts of interest and to recuse themselves from any discussion or decision affecting their personal, business or professional interests.
The
Boeing Company
2017 Proxy Statement
17
CORPORATE GOVERNANCE
Compensation of Directors
We have designed our nonemployee director compensation
program to achieve the following objectives:
|
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align directors interests with the long-term interests of our shareholders;
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attract and retain outstanding director candidates with diverse backgrounds and experiences; and
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recognize the substantial time commitment required to serve as a Boeing director.
|
The GON Committee reviews Boeings director compensation program on an annual basis. When making its recommendations, the GON Committee considers director compensation levels at the peer companies we use for
purposes of executive compensation benchmarking. See Benchmarking Against Our Peer Group on page 36 for more information. Compensation Advisory Partners LLC, or CAP, serves as the GON Committees independent consultant with
respect to the compensation of our directors. Independent directors may not receive, directly or indirectly, any consulting, advisory or other compensatory fees from us.
Our nonemployee director compensation program consists of cash (board, committee chair, and lead director retainer fees) and retainer stock units. In addition, we match director contributions to eligible
non-profit
organizations or educational institutions, up to a maximum of $31,000 per year. We also reimburse directors for travel and other
out-of-pocket
expenses incurred in connection with their services, if any. Directors who are Boeing employees do not participate in the nonemployee director compensation
program.
2016 Director Compensation Table
The following table sets forth 2016 compensation for each nonemployee director and for W. James McNerney, Jr., our former CEO, who served as an employee director until March 1, 2016. Compensation for
Mr. Muilenburg is set forth in the Summary Compensation Table on page 40.
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Director
|
|
Fees Earned
or Paid in
Cash ($)
(8)
|
|
|
Stock
Awards
($)
(9)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Robert A.
Bradway
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(11)
|
|
|
30,000
|
|
David L. Calhoun
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
326,000
|
|
Arthur D. Collins,
Jr.
(2)
|
|
|
150,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
346,000
|
|
Kenneth M.
Duberstein
(3)
|
|
|
175,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
371,000
|
|
Edmund P. Giambastiani, Jr.
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
6,800
|
(11)
|
|
|
301,800
|
|
Lynn J. Good
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
30,000
|
(11)
|
|
|
325,000
|
|
Lawrence W.
Kellner
(4)
|
|
|
145,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
341,000
|
|
Edward M.
Liddy
(5)
|
|
|
155,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
|
|
|
|
320,000
|
|
W. James McNerney,
Jr.
(6)
|
|
|
525,000
|
|
|
|
|
|
|
|
6,926,502
|
(10)
|
|
|
704,160
|
(12)
|
|
|
8,155,662
|
|
Susan C. Schwab
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
22,000
|
(11)
|
|
|
317,000
|
|
Randall L.
Stephenson
(7)
|
|
|
113,128
|
|
|
|
143,586
|
|
|
|
|
|
|
|
25,000
|
(11)
|
|
|
281,714
|
|
Ronald A. Williams
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
326,000
|
|
Mike S. Zafirovski
|
|
|
130,000
|
|
|
|
165,000
|
|
|
|
|
|
|
|
31,000
|
(11)
|
|
|
326,000
|
|
(1)
|
Mr. Bradway joined the Board on October 14, 2016, after the payment date for the fourth quarter 2016 installment of retainer fees and retainer stock units.
|
(2)
|
Compensation Committee Chair.
|
(3)
|
Lead Director; GON Committee Chair.
|
(4)
|
Finance Committee Chair.
|
(5)
|
Audit Committee Chair.
|
(6)
|
Mr. McNerney served as Chairman of the Board until March 1, 2016, and was compensated as an employee director in accordance with the transition and retirement
agreement, dated June 22, 2015.
|
(7)
|
Mr. Stephenson joined the Board on February 17, 2016.
|
(8)
|
Reflects total cash compensation paid in 2016 and includes amounts deferred at the directors election pursuant to our Deferred Compensation Plan for Directors. Cash
compensation for nonemployee directors is paid in four quarterly installments as of the first business day of each quarter and is
pro-rated
for directors who join the Board during a quarter. For
Mr. McNerney, the amount represents base salary paid in 2016 and cash paid in lieu of accrued vacation pursuant to his transition and retirement agreement.
|
18
The Boeing Company
2017 Proxy Statement
CORPORATE GOVERNANCE
(9)
|
Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for the retainer stock units awarded to each nonemployee director in 2016. Retainer
stock units are awarded in four quarterly installments as of the first business day of each quarter and are
pro-rated
for directors who join the Board during a quarter. The grant date fair value for these
awards is equal to the Fair Market Value of the underlying Boeing stock on the grant date. The Fair Market Value for a single trading day is the average of the high and low per share trading prices for Boeing stock as reported by The
Wall Street Journal for the New York Stock Exchange Composite Transactions. The following table sets forth the aggregate number of deferred stock units accumulated in each directors account as of December 31, 2016 from deferrals of cash
compensation and retainer stock units, including additional deferred stock units credited as a result of dividend equivalents earned with respect to the deferred stock units. Amount for Mr. McNerney reflects deferrals made during his service as
a nonemployee director from 2001 to 2005.
|
|
|
|
|
|
Director
|
|
Accumulated
Deferred Stock Units (#)
|
|
Robert A. Bradway
|
|
|
|
|
David L. Calhoun
|
|
|
20,446
|
|
Arthur D. Collins, Jr.
|
|
|
36,368
|
|
Kenneth M. Duberstein
|
|
|
54,966
|
|
Edmund P. Giambastiani, Jr.
|
|
|
13,114
|
|
Lynn J. Good
|
|
|
1,789
|
|
Lawrence W. Kellner
|
|
|
8,221
|
|
Edward M. Liddy
|
|
|
19,014
|
|
W. James McNerney, Jr.
|
|
|
15,311
|
|
Susan C. Schwab
|
|
|
12,052
|
|
Randall L. Stephenson
|
|
|
2,028
|
|
Ronald A. Williams
|
|
|
13,245
|
|
Mike S. Zafirovski
|
|
|
43,385
|
|
(10)
|
Consists of (a) $357,800 paid pursuant to our annual incentive plan and (b) $6,568,702 of performance awards pursuant to our long-term incentive program while Mr. McNerney
served as CEO and payable in respect of the three-year performance period that ended in 2016.
|
(11)
|
Consists of gift matching of charitable contributions under the Board Member Leadership Gift Match Program. Directors derive no financial benefit from these charitable
contributions.
|
(12)
|
Consists of $31,000 of gift matching of charitable contributions, $1,494 in premiums paid by us for term life insurance for Mr. McNerneys benefit, $353,578 in Company
contributions under our retirement plans, and $318,088 for perquisites and other personal benefits. Perquisites and personal benefits consisted of use of Company aircraft for personal travel or to attend outside board meetings, personal use of
ground transportation, tax preparation and planning services, annual physical, home security expenses, use of office, assistant, and computing equipment, and retirement gifts. We determine the incremental cost to us for these benefits based on the
actual costs or charges incurred by us for the benefits. The cost of any personal benefit for Mr. McNerney did not exceed the greater of $25,000 or 10% of total perquisites and personal benefits, except as follows: $122,463 for use of Company
aircraft, and $179,627 for office support. See footnote (6)(a) to the Summary Compensation Table on page 41 for information on the calculation of the incremental cost.
|
Cash Retainers
In 2016, nonemployee directors received an annual cash retainer
fee of $130,000. We also pay the following additional annual cash retainer fees to directors serving in leadership positions: Lead Director $30,000, Audit Committee Chair $25,000, Compensation Committee Chair $20,000 and GON and Finance Committee
Chairs $15,000. We do not pay additional fees for attending Board or committee meetings. Based on analysis of director compensation trends among our peer group companies by CAP, the GON Committee recommended and the Board approved, effective
January 1, 2017, an increase in the annual cash retainer fee to $135,000, and an increase in the GON Committee Chair annual cash retainer fee to $20,000, in each case to more closely align cash compensation with that of our peer group.
Our Deferred Compensation Plan for Directors gives nonemployee directors the opportunity to defer all or part of their cash compensation into an
interest-bearing, cash-based account or a stock unit account as deferred stock units. Directors do not have the right to vote or transfer deferred stock units. Deferred stock units earn dividend equivalents, which are credited as additional deferred
stock units, and will be distributed as shares of Boeing stock. Directors may elect to receive the distribution in a lump sum or in annual payments over a maximum of 15 years beginning no earlier than the January following the year of the
directors termination of Board service. Directors elected to defer 2016 cash compensation into deferred stock units as follows: $130,000 and 986 units each for Messrs. Calhoun, Williams and Zafirovski; Mr. Collins, $150,000 for 1,138
units; and Mr. Stephenson, $113,128 for 879 units. Ambassador Schwab elected to defer $130,000 of her 2016 cash compensation into an interest-bearing, cash-based account.
The
Boeing Company
2017 Proxy Statement
19
CORPORATE GOVERNANCE
Retainer Stock Units
In 2016, our nonemployee directors received equity compensation valued at $165,000 per year in the form of retainer stock units, which are distributed as shares of Boeing stock after termination of Board service.
The Board believes that retainer stock units further align directors interests with the long-term interests of our shareholders. Each nonemployee director received an aggregate of 1,252 retainer stock units during 2016, except for
(1) Mr. Bradway, who was not awarded retainer stock units because he joined the Board after the award date for the fourth quarter 2016; and (2) Mr. Stephenson, who was awarded 1,115 retainer stock units representing units earned
for service during 2016. Directors do not have the right to vote or transfer retainer stock units. Retainer stock units earn dividend equivalents, which are credited as additional retainer stock units. Directors may elect to receive the distribution
of shares in respect of these units in a lump sum or in annual payments over a maximum of 15 years beginning no earlier than the January following the year of the directors termination of Board service. Based on CAPs analysis of director
compensation trends among our peer group companies, the GON Committee recommended and the Board approved an increase in the value of retainer stock units, effective January 1, 2017, to $180,000 per year to more closely align nonemployee
director equity compensation with that of our peer group.
Director Stock Ownership Requirements
In order to further align the interests of directors with
the long-term interests of our shareholders, our Corporate Governance Principles require that, by the end of his or her third and sixth year as a director, each nonemployee director should own stock or stock equivalents with a value equal to three
and five times, respectively, the annual cash retainer fee. The GON Committee annually reviews nonemployee directors ownership relative to the stock ownership requirements, and makes recommendations as appropriate. Each director currently
exceeds his or her applicable stock ownership requirement.
Compensation Consultants
The Compensation Committee and GON Committee have engaged
CAP to serve as their independent compensation consultant. In this capacity, CAP provides peer group pay practices and other relevant benchmarks with respect to chief executive officer and nonemployee director compensation to the Compensation
Committee and the GON Committee, respectively, as well as an ongoing overview of regulatory developments and compensation trends. In addition, CAP advises the Compensation Committee concerning managements compensation data and recommendations.
CAP takes direction from the Compensation and GON Committees, as appropriate, reports directly to the committees, and does not provide any other services to Boeing. See discussion on page 35 under Governance of
Pay-Setting
Process Role of Board, Management and Consultants. The Compensation Committee has assessed the independence of CAP pursuant to SEC and NYSE rules and determined that no conflict of
interest exists that would prevent CAP from independently representing the Compensation and GON Committees. In making this assessment, the Compensation Committee considered each of the factors set forth by the SEC and the NYSE with respect to the
compensation consultants independence, including that CAP provides no services for Boeing other than pursuant to its engagement by the Compensation and GON Committees. The Compensation Committee also determined that there were no other factors
that the Committee should consider in connection with the assessment or that were otherwise relevant to the Committees engagement of CAP.
Related-Person Transactions
Some of our
directors, executive officers, greater than 5% shareholders and their immediate family members may be directors, officers, partners, employees or shareholders of entities with which we do business in the ordinary course. We carry out transactions
with these firms on customary terms, and, in many instances, our directors and executive officers may not have knowledge of them.
Policies and Procedures
We
regularly review transactions with related persons, including sales, purchases, transfers of realty and personal property, services received or furnished, use of property and equipment by lease or otherwise, borrowings and lendings, guarantees,
filings of consolidated tax returns and employment arrangements. Under our policies and procedures, related persons include our executive officers, directors, director nominees and holders of more than 5% of our stock, as well as their immediate
family members. Any findings are furnished to the Vice President, Accounting and Financial Reporting, who reviews potential related-person transactions for materiality and evaluates the need for disclosure under SEC rules.
20
The Boeing Company
2017 Proxy Statement
CORPORATE GOVERNANCE
In addition, the GON Committee assesses possible conflicts of interest of directors and executive officers, and
considers for review and approval or ratification any transaction or proposed transaction required to be disclosed under SEC rules in which Boeing is or is to be a participant and the amount involved exceeds $120,000, and in which a director,
director nominee, executive officer, or an immediate family member of such persons has or will have an interest.
Executive officers are also subject to
our policies and procedures applicable to all employees, which require them to disclose potential conflicts of interest and us to conduct reviews and make determinations with respect to specified transactions. Our Vice President, Ethics and Business
Conduct, oversees these reviews and determinations, and refers to the GON Committee for review and approval or ratification possible conflicts of interest involving executive officers. The factors considered in making the determination include the
executive officers duties and responsibilities for us and, if the transaction includes another company, (1) the company or business involved in the transaction, including the product lines and market of the company or business,
(2) the relationship between us and the other company or business, if any (for example, if the other company is one of our suppliers, customers or competitors), and (3) the relationship between the executive officer or his or her immediate
family and the other company or business (for example, owner,
co-owner,
employee or representative).
Directors
are required to disclose to the Chairman of the Board or the Chair of the GON Committee any situation that involves, or may reasonably be expected to involve, a conflict of interest with us, including:
|
|
engaging in any conduct or activities that would impair our relationship with any person or entity with which we have proposed or propose to enter into a
business or contractual relationship;
|
|
|
accepting compensation from us other than compensation associated with his or her activities as a nonemployee director unless such compensation is approved in
advance by the Chair of the GON Committee;
|
|
|
receiving improper gifts from persons or entities that deal with us; and
|
|
|
using our assets, labor or information for personal use except as outlined in our policies and procedures or unless approved by the Chair of the GON Committee or
as part of a compensation or expense reimbursement program available to all directors.
|
Directors must recuse themselves from any
discussion or decision affecting their personal, business or professional interests. Finally, pursuant to our Corporate Governance Principles, we may not, directly or indirectly, extend or maintain credit or arrange for or renew an extension of
credit in the form of a personal loan to or for any director or executive officer.
Certain Transactions
The following transactions were reviewed and considered in light of the policies and procedures discussed above:
BlackRock, Inc., or BlackRock, is a beneficial holder of more than 5% of our outstanding common stock according to a Schedule 13G filed by BlackRock with the SEC on
January 30, 2017. BlackRock provided investment management services and analytics to the Retirement Plans Trust and the Savings Plans Trust, and received approximately $10.9 million for such services in 2016. In addition, BlackRock managed
mutual fund assets for subsidiary retirement plans and received approximately $71,000 for such services in 2016.
Capital World Investors, or Capital
World, which collectively includes Capital Research and Management, American Funds, and Capital International, among other business units, is a beneficial holder of more than 5% of our outstanding common stock according to Amendment No. 8 to a
Schedule 13G filed by Capital World with the SEC on February 13, 2017. Capital World provided investment management services to the Retirement Plans Trust and received approximately $2.5 million for such services in 2016. Additionally,
Capital World managed mutual fund assets for subsidiary retirement plans and received fees of approximately $0.1 million for such services in 2016.
Evercore Trust Company, N.A., or Evercore, is a beneficial holder of more than 5% of our outstanding common stock according to Amendment No. 10 to a Schedule
13G filed by Evercore with the SEC on February 13, 2017. Evercore is the investment manager for shares of our common stock held by the Savings Plans Trust and is entitled to an annual fee based on the market value of our common stock in the
Savings Plans Trust. In 2016, these fees totaled approximately $1.0 million.
State Street Bank and Trust Company, or State Street, is a beneficial
holder of more than 5% of our outstanding common stock according to a Schedule 13G filed by State Street Corporation with the SEC on February 14, 2017. State Street is the trustee of the Savings Plans Trust. During 2016, the Savings Plans Trust
paid State Street approximately $4.0 million for its services as trustee of the Savings Plans Trust and for services relating to the Savings Plans Trusts custody accounts held at State Street containing cash and investable securities. In
addition, State Street Global Advisors and State Street Global Markets, divisions of State Street, acted as investment managers for various investment fund options within the Savings Plans Trust, and received approximately $3.1 million in fees
for such services in 2016. State Street also provides benefits administration services on behalf of certain of the Retirement Plans Trust and received approximately $2.5 million in fees for such services in 2016.
The
Boeing Company
2017 Proxy Statement
21
CORPORATE GOVERNANCE
The Vanguard Group, or Vanguard, is a beneficial holder of more than 5% of our outstanding common stock according
to Amendment No. 2 to a Schedule 13G filed by Vanguard with the SEC on February 10, 2017. Vanguard received an aggregate of approximately $143,000 for management fees in 2016 from certain of our subsidiary retirement plans and a trust that
funds a portion of our health and welfare plans.
From time to time, we may enter into customary relationships and/or purchase services in the ordinary
course of business from one or more of the financial institutions named above and/or their respective affiliates.
Steven Caret has been employed by us
since 2004, and is the husband of Leanne Caret, who became an executive officer in 2016. His compensation, which was approximately $148,000 in 2016, has been established in accordance with our employment and compensation practices applicable to
employees with equivalent qualifications, experience and responsibilities. He is also eligible to participate in our employee benefit programs on the same basis as other eligible employees.
22
The Boeing Company
2017 Proxy Statement
APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER
COMPENSATION (ITEM 2)
PROPOSAL SUMMARY
Shareholders are being asked to approve, on an advisory basis, the compensation of the named executive officers as set forth under the heading Compensation Discussion and Analysis.
|
|
|
|
|
The Board recommends that you vote FOR the resolution approving named executive officer compensation.
|
We have designed our
executive compensation program to attract and retain superior leaders, reward performance, and align our executives interests with the long-term interests of our shareholders. Our Compensation Discussion and Analysis describes in detail our
executive compensation program, highlights of which include the following:
Pay for Performance
|
|
3-year
total shareholder return of 44%, reflecting strong performance;
|
|
|
annual and long-term incentive metrics that align with our business strategy, focus our executives on the balanced objectives of increasing revenues, reducing
costs, and effectively managing net assets, as well as total shareholder return as compared to group of peer companies;
|
|
|
approximately 89% of our CEOs 2016 target compensation was variable;
|
|
|
capped payouts and other protections to avoid excessive risk;
|
Alignment with Shareholder Interests
|
|
25% of our named executive officers target long-term incentive compensation is tied to Boeings total shareholder return as compared to a group of
peer companies;
|
|
|
forfeiture of unearned portion of all annual and long-term incentive program awards upon termination or retirement;
|
|
|
rigorous stock ownership requirements, including 6x base salary for our CEO, ensuring that our senior executives maintain a significant stake in our long-term
success;
|
|
|
no accelerated vesting of equity awards in connection with a change in control;
|
|
|
no employment or
change-in-control
agreements;
|
|
|
no pledging or hedging of Boeing stock;
|
|
|
stock holding requirements for executive officers;
|
Responsible Pay Practices
|
|
robust clawback policy that permits recoupment of incentive compensation in certain cases of misconduct even absent a financial restatement;
|
|
|
no tax
gross-ups
to our executives other than for relocation expenses; and
|
|
|
no repricing or buybacks of stock options.
|
We
believe that our executive compensation program plays a key role in driving Boeings long-term performance, as evidenced by Boeings recent strong financial and operating results. In future years, we expect to continue to reward executives
who deliver strong results by tying compensation to demonstrated individual and Company performance as well as total shareholder return.
In 2016, our
shareholders approved the compensation of our named executive officers with a FOR vote of 93%. This year, we once again request your vote supporting the following nonbinding resolution:
RESOLVED: That the compensation paid to the named executive officers, as disclosed pursuant to the compensation disclosure rules of
the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.
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|
|
|
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|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
FOR
THIS PROPOSAL.
|
The
Boeing Company
2017 Proxy Statement
23
APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE ADVISORY VOTES ON
NAMED EXECUTIVE OFFICER COMPENSATION (ITEM 3)
PROPOSAL SUMMARY
Shareholders are being asked to recommend the frequency every one, two or three years with which to hold future advisory votes on the compensation of named executive officers.
|
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|
The Board recommends that you vote to hold advisory votes on named executive officer compensation
|
EVERY YEAR.
|
The Board seeks your
recommendation on the frequency every one, two, or three years with which to hold future advisory votes on our executive compensation.
Our
shareholders voted on a similar proposal in 2011, with the highest number of votes cast to hold future advisory votes on named executive officer compensation every year. Based on recent feedback from our largest shareholders and the Boards
experience with prior advisory votes on executive compensation, the Board recommends that you vote for holding the advisory vote on executive compensation every year.
This vote is
non-binding.
However, the Board and the Compensation Committee will consider the outcome of this vote in connection with decisions concerning the frequency with
which to hold advisory votes on executive compensation. Consistent with applicable law, you will have the opportunity to recommend the frequency of future advisory votes on executive compensation at least every six years.
You may vote for every one, two or three years, or may abstain from voting on the following resolution:
RESOLVED: That the option of every year, two years or three years that receives the highest number of votes cast for this resolution
will be the frequency with which the shareholders of The Boeing Company recommend by advisory vote that the Company hold an advisory vote on the compensation of our named executive officers.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
FOR
EVERY YEAR
.
|
24
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Principal Components of
2016 Executive Compensation
Performance Measures Driving 2016 Compensation
Opportunities for Shareholder Feedback
The Board and the Compensation Committee continue to encourage shareholder feedback, and executive compensation remains a key focus area in our year-round
discussions with shareholders. In those discussions, investors have largely viewed Boeings pay practices and overall
pay-for-performance
strategy as strongly
aligned with shareholder interests. Additional information on our shareholder engagement program is set forth under Shareholder Outreach on page 17.
We believe that recent enhancements to our executive compensation program, such as the introduction of total shareholder return, or TSR, as a performance metric and increasing the performance-based portion of our
long-term incentive compensation, have been well-received by shareholders, as evidenced by our
say-on-pay
vote results. In 2016, our executive compensation program
received 93% approval from our shareholders. The favorable shareholder vote and positive feedback from investors were two factors contributing to the Compensation Committees decision to refrain from making substantial changes to our
compensation practices and policies in 2016. However, as described below in Key Compensation Decisions, the Compensation Committee did change the performance metrics used in our incentive programs as well as enhance the Companys
policy requiring executives to hold Boeing stock. Each of
The
Boeing Company
2017 Proxy Statement
25
COMPENSATION DISCUSSION AND ANALYSIS
these changes was made following consultations with our shareholders about our executive compensation program. The Compensation Committee will continue to consider results from future
say-on-pay
votes and feedback from shareholders when considering further enhancements to Boeings executive compensation programs and practices.
Key Compensation Decisions
Changes to Performance Metrics
Beginning in 2017,
annual incentive awards and performance awards under our long-term incentive program will no longer pay out based on
one-
and three-year economic profit. Instead, they will pay out based 50% on free cash flow,
25% on core earnings per share, or EPS, and 25% on revenue, in each case during the appropriate performance period. The Compensation Committee believes that the new metrics will further sharpen executives focus on the elements of operational
and financial performance that we believe best drive long-term shareholder value, while retaining many of the advantages of economic profit, such as the strong historical correlation with shareholder value. Our long-term incentive program will
continue to use total shareholder return compared to our peers as the performance metric for performance-based restricted stock units. For additional information, see page 29.
Compensation of New Boeing Commercial Airplanes President and CEO
In November 2016, Boeing announced
changes to our senior leadership as well as the launch of Boeing Global Services, our integrated services business. As part of these changes, Boeing named Kevin G. McAllister, formerly CEO of GE Aviation Services, Boeings new Executive Vice
President, President and CEO of Boeing Commercial Airplanes. In order to compensate Mr. McAllister for unvested RSUs that were forfeited upon his departure from GE, the Compensation Committee awarded Mr. McAllister 20,000 RSUs that are
scheduled to vest in 2018. He also received an additional 100,000 RSUs, scheduled to vest between 2021 and 2025. This grant was designed to replace GE pension benefits that Mr. McAllister forfeited to join Boeing. Mr. McAllister also
received a signing bonus of $2,000,000 upon his joining the Company.
Enhancement of Stock Holding Requirements
The Board remains committed to ensuring that executives maintain meaningful stock ownership in the Company, which further aligns the interests of executives with
the interests of shareholders. As evidence of this long-standing commitment, senior executives must own Boeing stock valued at three to six times their annual base salary, depending on executive grade. In 2016, the Board enhanced these requirements
by requiring executive officers to hold all newly-vested stock until their stock holding requirements are met.
Program
Objectives
|
|
|
Pay for Performance
|
|
|
100% of annual and 75% of long-term incentive awards are performance-based.
|
|
|
Our annual incentive plan pays based on individual achievement and Company performance against financial targets set by the Compensation Committee.
|
|
|
Our long-term incentive program awards are tied to stock price performance, TSR relative to a group of
peer companies set by the Compensation Committee, and financial targets set by the Compensation Committee.
|
Attract and Retain World-Class Talent
|
|
|
Compensation elements and award opportunities are designed to position us to compete effectively for engineering, business, financial and other executive talent.
|
|
|
High performing executives may earn above-target pay when performance goals are exceeded.
|
Shareholder Alignment
|
|
|
Approximately 85% of named executive officer target compensation is linked to share price, TSR, or achievement of rigorous performance targets.
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|
Senior executives must own significant amounts of Boeing stock throughout the term of their employment, and executive officers must hold vested stock until share ownership requirements are
met.
|
|
|
We do not accelerate vesting of equity awards in connection with a change in control.
|
|
|
Executives receive 25% of their long-term incentive target in PBRSUs, which pay out based upon
Boeings TSR performance over a three-year period relative to our peer companies.
|
Reduce Risk
|
|
|
Our annual incentive awards, performance awards, and PBRSUs are capped.
|
|
|
All incentive compensation is subject to a rigorous clawback policy.
|
|
|
Executive officers may not engage in pledging, hedging or other speculative trading activity.
|
|
|
The Compensation Committee and its independent consultant annually review our executive compensation plans and programs.
|
|
|
Compensation risk considerations are discussed in additional detail on page 39.
|
26
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Program Design and Principal Elements
2016 Target
Compensation
We design our executive compensation program to attract and retain the talent needed to achieve our business and financial objectives,
reward executives who achieve those objectives, and align executives interests with the long-term interests of our shareholders. The Compensation Committee reviews our executive compensation program on at least an annual basis and, with the
assistance of its independent compensation consultant, compares our executive compensation practices to those of our peers. Individual executive pay is benchmarked against the median of our peer group, but actual target pay also takes into account
job requirements, the executives experience and performance, and business needs.
The table below sets forth our 2016 named executive officers, or
NEOs, with their target compensation elements and target total compensation based on their base salary as of December 31, 2016. In each case, target amounts are those amounts that would have been earned by the executive assuming that the
Company and the executive achieved target performance levels set by the Compensation Committee. The 2016 Target Long-Term Incentive Compensation column reflects target values of all awards under our long-term incentive program, which consists of
performance awards, PBRSUs and RSUs. Supplemental equity awards are not included; for additional information on such awards, see page 34.
|
|
|
|
|
|
|
|
|
|
|
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|
(Dollars in thousands)
Name
|
|
2016
Annualized
Base
Salary
(a)
|
|
|
2016 Target
Annual
Incentive as
a % of Base
Salary
(b)
|
|
|
2016
Target
Annual
Incentive
Compensation
(c)=(a)x(b)
|
|
|
2016 Target
Long-Term
Incentive as
a % of Base
Salary
(d)
|
|
|
2016
Target
Long-Term
Incentive
Compensation
(e)=(a)x(d)
|
|
|
2016 Total
Annualized
Target
Direct
Compensation
(f)=(a)+(c)+(e)
|
|
Dennis A. Muilenburg
Chairman,
President
and Chief Executive Officer
|
|
$
|
1,650
|
|
|
|
170
|
%
|
|
$
|
2,805
|
|
|
|
650
|
%
|
|
$
|
10,725
|
|
|
$
|
15,180
|
|
Gregory D. Smith
Chief Financial Officer,
Executive Vice President, Corporate Development and Strategy
|
|
$
|
925
|
|
|
|
110
|
%
|
|
$
|
1,018
|
|
|
|
400
|
%
|
|
$
|
3,700
|
|
|
$
|
5,643
|
|
Raymond L. Conner
Vice Chairman, Former
President and Chief Executive Officer, Commercial Airplanes
|
|
$
|
1,075
|
|
|
|
110
|
%
|
|
$
|
1,183
|
|
|
|
425
|
%
|
|
$
|
4,569
|
|
|
$
|
6,826
|
|
J. Michael Luttig
Executive Vice
President
and General Counsel
|
|
$
|
910
|
|
|
|
110
|
%
|
|
$
|
1,001
|
|
|
|
400
|
%
|
|
$
|
3,640
|
|
|
$
|
5,551
|
|
Kevin G. McAllister
President and Chief Executive Officer, Commercial Airplanes*
|
|
$
|
1,000
|
|
|
|
110
|
%
|
|
$
|
1,100
|
|
|
|
400
|
%
|
|
$
|
4,000
|
|
|
$
|
6,100
|
|
*
|
Mr. McAllister joined Boeing on November 21, 2016.
|
The
Boeing Company
2017 Proxy Statement
27
COMPENSATION DISCUSSION AND ANALYSIS
Performance Metrics for Incentive Plans
Economic Profit
Economic profit was the primary
metric we used to measure our executives performance in 2016. The
one-
and three-year economic profit metrics are calculated as follows:
|
|
Net operating profit after tax (operating earnings, adjusted to exclude share-based plans expense and Boeing Capital Corporation interest expense, and reduced
for taxes using an effective tax rate),
less
|
|
|
Capital charge (average net assets multiplied by a targeted cost of capital, where average net assets excludes cash, marketable securities, debt and certain
pension and other post-retirement benefit obligations).
|
The three-year performance targets for purposes of the performance award
portion of our long-term incentive program will differ from the sum of the three
one-year
performance targets covering the same period, and typically project growth throughout the three-year performance
period.
To better reflect the core operating performance of the Company and its businesses, the Compensation Committee may adjust
one-year
or three-year economic profit to account for certain items not forecasted at the outset of a performance period such as (1) significant external events outside managements control,
(2) management decisions intended to drive long-term value but with short-term financial impacts, such as major acquisitions or dispositions, and (3) significant changes to market conditions. References to economic profit in this proxy
statement mean economic profit if and as adjusted to account for such items. See 2016 Annual Incentive Assessment on page 32 and 2014-2016 Performance Award Assessment on page 33. Adjustments to the annual awards
considered in a given year may or may not be applied to the long-term performance awards.
Total Shareholder Return (TSR) Relative to Peer
Companies
The long-term incentive program also includes PBRSUs, which are paid in shares of stock after the end of a three-year performance
period and are earned based on Boeings TSR relative to a group of peer companies determined by the Compensation Committee. For additional information on our peer group, see Benchmarking Against our Peer Group on page 36.
Adjusted Operating Cash Flow (For 162(m) Purposes)
We measure our adjusted operating cash flow in order to determine the deductibility of annual and long-term incentive awards for our NEOs (except for the CFO) under Section 162(m) of the Internal Revenue Code.
Adjusted operating cash flow means the net cash provided by operating activities of the Company as reported in our consolidated statement of cash flows included in our Annual Report on Form
10-K,
adjusted to
eliminate the effect of net customer financing cash flows. Incentive deductibility is discussed in more detail under Limitations on Deductibility of Compensation on page 38.
28
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Changes to Performance Metrics Beginning in 2017
In order to further sharpen executives focus on the elements of operational and financial performance that we believe best drive long-term shareholder value,
the Compensation Committee replaced economic profit as a performance metric with free cash flow, core EPS and revenue. The following charts illustrate the impact of these changes on the annual incentive plan and the long-term incentive program.
We believe that these metrics will drive accountability and performance, as well as enable employees at every level to see the
connection between individual and Company performance and results. These same performance metrics will be used in our broad-based,
non-executive
incentive programs, further ensuring that each employee pursues
the same financial and operational goals. Like economic profit, these metrics measure the strength of Boeings cash and earnings generation, while at the same time ensuring that we meet productivity targets, continue to invest in innovation,
and manage our assets efficiently. However, by tracking them individually, we believe that we can ensure all employees maintain a stronger and more direct line of sight to operational and financial performance.
Because of the long product cycles in our business, the Compensation Committee believes that the
one-year
and three-year
versions of these metrics, like economic profit, create complementary, yet different, incentives for our employees. The table below outlines some of the key drivers impacting our operational and financial performance on a
one-
and three-year basis.
|
|
|
|
|
Drivers of
One-Year
Performance
|
|
|
|
Additional Drivers of Three-Year Performance
|
Operating cost management
Disciplined asset, inventory and cash management
Business execution
First-time quality
New orders
Achievement of annual productivity targets
|
|
|
|
Efficient use of long-term assets
Technology innovation
Sustained productivity
Long-term risk reduction
|
The
Boeing Company
2017 Proxy Statement
29
COMPENSATION DISCUSSION AND ANALYSIS
A key reason for the Compensation Committees use of the three new metrics is to drive the linkage between
business objectives and improved and sustained performance. For example, key drivers impacting revenue include new orders and our ability to deliver on our commitments to customers. Likewise, drivers of core earnings per share include first-time
engineering and manufacturing quality, continued innovationparticularly for purposes of the long-term incentive programand achievement of productivity targets. Finally, drivers of free cash flowat 50%, the metric that will have the
most significant impact on executive compensationinclude efficient long-term asset utilization and disciplined investments in productivity and innovation, as well as many of the other drivers described above. In some cases, these drivers will
have enhanced significance for either
one-year
or three-year performance. For example, new orders can have a significant impact on core earnings per share within a single
one-year
performance period; however, as commercial airplanes are often delivered one or more years after they are ordered, new orders tend to have a more significant impact on revenue in the context of the
three-year performance periods.
Determination of Economic Profit Goals and Awards
Each year, after the Board has reviewed our long-range business plan, the Compensation Committee sets
one-
and three-year
financial goals for our compensation program. These goals incorporate expectations regarding the probability of achieving performance goals, key risks, and a degree of stretch to push our executives to achieve a higher level of
performance. When setting performance goals for the annual incentive and long-term performance awards, the Compensation Committee seeks to ensure that the target payout is achievable if the Company executes according to its long-range business plan
during the applicable period. It is expected that both maximum performance and less-than-threshold (
i.e.
, zero payout) performance would be infrequent.
After the conclusion of each performance period, the Compensation Committee evaluates the Companys performance and approves final awards. Set forth below are our economic profit goals and actual performance
for the 2016 annual incentive plan and 2014-2016 performance awards, together with key drivers of our performance.
|
|
|
|
|
Compensation Element
|
|
Key Drivers of Actual Performance
|
2016 Annual Incentive Plan
Goal: $4.143B
Result: $4.282B
Company Performance Score: 108%*
|
|
|
|
Solid core operating execution across business units driving record operating cash flow
|
|
|
|
Increased cost savings and improved efficiency from productivity initiatives
|
|
|
|
Improved working capital performance and disciplined asset and cash management
|
|
|
|
Higher than estimated costs for the
KC-46
Tanker program
|
|
|
|
|
Lower than expected growth in the global air cargo market, resulting in 747 production rate plan adjustments
|
|
|
|
|
Softening demand for the current-generation 777, driving the decision for a further production rate plan adjustment
|
2014-2016 Performance Awards
Goal: $11.561B
Result: $12.852B
Company Performance Score: 145%
|
|
|
|
Strong execution of production programs across business units, including record three-year commercial airplane deliveries
|
|
|
|
Increased cost savings and improved efficiency from productivity initiatives
|
|
|
|
Disciplined asset and cash management
|
|
|
|
Higher than estimated costs for the
KC-46
Tanker program
|
|
|
|
|
Lower than expected growth in the global air cargo market, resulting in 747 production rate plan adjustments
|
|
|
|
|
Soft demand for the current-generation 777, driving the decision for a further production rate plan adjustment
|
|
|
|
|
Changes in commodity price indices that impacted price escalation formulas at Commercial Airplanes
|
|
|
|
|
Enterprise-wide mitigation of development, production, and market risks.
|
*
|
Actual payout for executives not affiliated with a business unit was 97% of target, subject to further adjustment for individual performance. For additional information on how
annual incentive targets are calculated, see pages 31 and 32.
|
30
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Mix of Pay
Approximately 89% of the CEOs target compensation and 84% of the other NEOs target compensation is variable based on Company and individual performance. Variable compensation consists of the target
annual incentive and the target value of performance awards, PBRSUs and RSUs granted. The percentages below are calculated by dividing each compensation element by target total compensation, which consists of base salary plus variable compensation.
Base Salary
Base
salaries are designed to provide a fixed level of cash compensation for each executive. Salaries may be adjusted based on competitive market data and individual factors such as competencies, skills, experience, contributions, performance, and the
assumption of new responsibilities or promotions. There are no specific weightings assigned to these individual factors. Annual salary adjustments generally take effect in March. When setting base salaries, the Compensation Committee and the Board
also consider the impact of base salary on other compensation elements, such as the size of target incentive awards.
In 2016, the base salary of
Mr. Smith increased by 8.82% reflecting his strong performance over the period. The base salaries of Messrs. Muilenburg, Conner and Luttig increased between 3% and 5% during the same period. Mr. McAllisters base salary was set when
he joined the Company in November 2016.
Annual Incentive Plan
Features
of Annual Incentive Plan
|
|
|
2016 payout based on economic profit and individual performance
|
The annual incentive plan is designed to drive near-term program execution, operational excellence, and sustainable growth, as well as to create differential rewards for executives based on individual performance.
The Compensation Committee assigned each executive a target incentive award based on competitive market data and on the executives pay grade, responsibilities and role. Actual incentive awards are determined by Company, business unit, and
individual performance scores and paid 100% in cash. For executives in the two principal business units, Company results are weighted 75% and business unit results are weighted 25%. For other executives, Company results are weighted 75% and the
average of the results of the two principal business units are weighted 25%. The mechanics of the annual incentive plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Annual
Incentive Award
(%
of
Base
Salary)
|
|
X
|
|
0.0 to 2.0 Score Based on
Company & Business Unit
Performance
|
|
X
|
|
0.0 to 2.0 Score Based on
Individual
Performance
|
|
=
|
|
Actual Award
(Capped at 200% of
target)
|
The CEOs individual performance score is determined by the Compensation and GON Committees and reviewed with the other independent directors of the Board. The
CEO presents the Compensation Committee with recommendations for individual performance scores for each of the other elected officers, including the NEOs. The Compensation Committee reviews the CEOs recommendations, makes such adjustments as
it deems appropriate, and approves the individual performance scores. Individual performance scores typically fall between 0.8 and 1.2 and generally average to 1.0 for each executive grade. Individual performance scores reflect the Compensation
Committees assessment of each executives business achievements, contributions and overall organization performance, including performance with respect to several key leadership behaviors that Boeing believes are critical to business
success.
Beginning in 2017, business unit results will not be included as a separate score in the annual incentive plan. Instead, our three new
performance metricsfree cash flow, core earnings per share, and revenuewill be combined to
The
Boeing Company
2017 Proxy Statement
31
COMPENSATION DISCUSSION AND ANALYSIS
produce a single Company performance score for all employees. The Compensation Committee believes that this shift to one enterprise-wide score will drive even greater integration between our
business units and further align executives and employees interests with those of our shareholders.
2016 Annual Incentive Assessment
Economic profit for 2016 was $4.282 billion versus a target of $4.143 billion, resulting in a Company performance score of 108%. The
Commercial Airplanes performance score was 56%, largely due to charges on the 747 program and the U.S. Air Force Tanker program, partially offset by strong execution and core performance, yielding a combined score of 95% for Commercial Airplanes
executives. The Defense, Space & Security performance score was 72%, largely due to charges on the U.S. Air Force Tanker and Commercial Crew programs, partially offset by strong cost and delivery performance, yielding a combined score of
99% for Defense, Space & Security executives. All other executives received a combined score of 97%. For additional information on key drivers of Company and business unit performance, see Determination of Economic Profit Goals and
Awards on page 30.
In order to better reflect the Companys core operating performance, the Compensation Committee, consistent with its
authority and past practices, increased economic profit for the 2016 annual incentive plan to exclude or partially exclude the financial impact of reclassification of two early-build flight test 787 aircraft to research and development expense,
deterioration in the air cargo market, and changes in commodity price indices that impacted price escalation formulas at Commercial Airplanes. The Compensation Committee decreased economic profit to exclude the financial impact of lower-than-planned
tax rates.
In 2016, NEO individual performance scores ranged from 0.95 to 1.20, averaging 1.05. Messrs. Luttig, Muilenburg and Smith received scores
above 1.0. The performance scores were primarily the result of the Companys and each individuals significant financial, operational and business achievements, as well as the executives progress on key initiatives, leadership
strength and overall contributions to the Company during 2016. The scores also reflect the Companys significant operational and financial achievements during the year, offset by wide-body market challenges and financial impacts attributable to
development programs. In addition to these factors, the individual performance scores also reflect the following:
|
|
Mr. Muilenburgs success in maintaining strong profitability and improving operating cash flow while executing Boeings business strategies,
including strengthening the Companys market leadership at Commercial Airplanes through effective management of production rates, strong capture of new orders, and achievement of product-development milestones; while also continuing to advance
productivity and cost-reduction goals at Boeing Defense, Space & Securitys production and services programs, advancing product development, and capturing new business. Mr. Muilenburg also ensured continued positive progress on
enterprise-wide strategic initiatives to further improve productivity, safety, quality, and leadership development.
|
|
|
Mr. Smiths leadership in strengthening Boeings financial position through improved productivity and affordability, disciplined management of
working capital that contributed to record operating cash flow, efficient cash deployment, strong liquidity, and reduction of financial risk. Mr. Smiths leadership of Corporate Development and Strategy also positioned Boeing for the
launch of its Boeing Global Services business in 2017.
|
|
|
Mr. Conners achievements as leader of the Commercial Airplanes business, including delivery of 748 commercial airplanes, while successfully managing
production-rate changes strengthening profitability and reducing risk. Mr. Conner also led the business through several major product development milestones including the first flight of the 737 MAX and the commencement of final assembly for
the
787-10;
while also ensuring continued overall improvements in safety, productivity, and quality.
|
|
|
Mr. Luttigs leadership with respect to several substantial and strategic legal matters, including resolution of key litigation claims.
|
|
|
Mr. McAllisters transition to leading the Commercial Airplanes business near
year-end,
successfully meeting
commitments on customer deliveries, orders, safety, productivity and quality goals.
|
Based on 2016 Company, business unit and
individual performance results (as detailed above), the Compensation Committee believes the annual incentive compensation awarded to the NEOs for 2016 was appropriate and achieved the objectives of the executive compensation program.
Long-Term Incentive Program
Features
of Long-Term Incentive Program
|
|
|
Performance awards (50%, payout in cash or stock based on
3-year
economic profit)
|
|
|
|
Performance-based restricted stock units (25%, payout based on relative TSR)
|
|
|
|
Restricted stock units (25%, vest 3 years after issuance)
|
32
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
The long-term incentive program is designed to drive achievement of long-term operational and financial goals and
increased shareholder value, as well as to encourage retention of key talent over a sustained time period. Target long-term incentive awards are based on a percentage of base salary. The Board increased Mr. Smiths long-term incentive
target from 375% to 400% in 2016. The long-term incentive targets of Messrs. Muilenburg, Conner and Luttig did not change in 2016. Mr. McAllisters target was set when he joined the Company in November 2016.
Performance Awards.
Performance awards reward executives to the extent that the Company meets or exceeds target performance thresholds for the
relevant three-year performance period. Three-year financial targets are set by the Compensation Committee at the beginning of each performance period based on the Companys Board-reviewed long-range business plan. Final awards may range from
0% to 200% of an individuals target. Performance awards are designed to pay 100% of target at the end of the three-year performance cycle if performance goals are achieved. Payment, if earned, is made in cash, stock or a combination of both,
at the Compensation Committees discretion. It is expected that both maximum performance and less-than-threshold (
i.e.
, zero payout) performance would be infrequent.
Beginning in 2017, our performance awards will pay out based 50% on free cash flow, 25% on core earnings per share and 25% on revenue, in each case over a three-year performance period. For additional information,
see page 29.
Performance-Based Restricted Stock Units.
PBRSUs drive business performance by tying award payout levels to TSR performance
as compared to our industry competitors and other companies against which we compete for capital and executive talent. PBRSUs vest based on the achievement of TSR over rolling three-year periods (typically beginning and ending in late February)
relative to the performance of our peer group for calculating PBRSUs. PBRSU payouts are capped at 400% (200% of target plus two times stock price) of the targeted value as of the grant date. As with RSUs, PBRSUs facilitate increased stock ownership
by our executives, further aligning the interests of our leaders with our shareholders.
The following table details the payout schedule that results
from each level of relative TSR performance:
|
|
|
Relative TSR Percentile Rank
|
|
Payout as a Percent of Target
|
91
st
percentile or higher
|
|
200%
|
81
st
90
th
percentile
|
|
175%
|
71
st
80
th
percentile
|
|
150%
|
61
st
70
th
percentile
|
|
125%
|
51
st
60
th
percentile
|
|
100%
|
41
st
50
th
percentile
|
|
75%
|
31
st
40
th
percentile
|
|
50%
|
21
st
30
th
percentile
|
|
25%
|
020
th
percentile
|
|
0%
|
Restricted Stock Units.
RSUs reward continued and sustained performance. RSUs provide an immediate sense of ownership
because the value of these units is equal to Boeings stock price. As such, the ultimate value realized upon vesting (three years after grant) will be based on the stock price at that point in time. The use of RSUs is consistent with our
objective of facilitating significant stock ownership and providing a mix of equity and cash-settled awards.
2014-2016 Performance Award
Assessment
Boeings 2014-2016 cumulative economic profit was $12.852 billion versus a target of $11.561 billion. This resulted in
a performance award payout factor of 45% above the target amount. The performance awards were paid to executives in cash. For information on key drivers of Company performance during this period, see Determination of Economic Profit Goals and
Awards on page 30.
For the 2014-2016 performance period, the Compensation Committee increased economic profit to exclude or partially exclude the
financial impact of historically low discount rates that caused higher pension expense, reclassification of two early-build flight test 787 aircraft to research and development expense, deterioration in the air cargo market, and changes in commodity
price indices that impacted price escalation formulas at Commercial Airplanes. The Compensation Committee decreased economic profit to exclude or partially exclude the financial impact of lower-than-planned tax rates and favorable medical claims and
subsidies under the Affordable Care Act that reduced post-retirement expense.
2014-2016 Performance-Based Restricted Stock Units Assessment
Boeings TSR for the 2014-2016 performance cycle was 44.44%, producing a relative TSR rank of 9th out of 24 companies, or the 65th
percentile, and a payout factor of 125%. The performance-based restricted stock units were
The
Boeing Company
2017 Proxy Statement
33
COMPENSATION DISCUSSION AND ANALYSIS
paid to executives in shares of Boeing stock. The TSR measurement period for the 2014-2016 PBRSUs was from February 25, 2014 to February 23, 2017.
Supplemental Equity Awards
From time to time the
Compensation Committee may grant equity awards to executives to attract and retain high-performing leaders, reward exceptional performance, or recognize expanded responsibility. These equity awards have vesting and other provisions designed to
promote retention of the services and skills of the recipient. For example, these awards generally do not vest until two to four years after the grant date and are forfeited in full if the executive resigns, retires or is terminated for cause prior
to vesting. During 2016, the Compensation Committee approved a supplemental grant of RSUs for Mr. Luttig in recognition of his strong continued performance as General Counsel and as a means of retention, and to Mr. McAllister in an effort
to offset the forgone value from certain equity and pension programs provided by his former employer.
No Accelerated Vesting or Tax
Gross-up
in Connection with a Change in Control
We do not accelerate the vesting of any equity awards in
connection with a change in control. In addition, the unearned portion of all annual incentive plan and long-term incentive program awards are forfeited upon termination or retirement. We also do not provide tax
gross-ups
in connection with a change in control.
Other Design Elements
As part of a comprehensive and competitive
executive compensation package, executives may be eligible for additional benefits as summarized below. These benefits are designed to attract and retain the executive talent needed to achieve our business and financial objectives.
Retirement Benefits
Our
executives participate in our Voluntary Investment Plan, or VIP, a broad-based,
tax-qualified
defined contribution pension plan, and are eligible to participate in our Supplemental Benefit Plan, or SBP, a
nonqualified defined contribution plan. The SBP, among other things, provides certain executives with additional retirement benefits and allows eligible participants to receive Company contributions that would otherwise exceed Internal Revenue Code
limits applicable to the VIP. For more information on the SBP, see Supplemental Benefit Plan on page 46. Executives hired prior to 2009 earned benefits under our Pension Value Plan, or PVP, a broad-based defined benefit pension plan, and
our Supplemental Executive Retirement Plan, or SERP, in each case until the end of 2015.
The Deferred Compensation Plan for Employees also allows
executives to voluntarily defer, on a nonqualified basis, receipt of a portion of salary, earned annual incentive awards and earned performance awards. In addition, Mr. Luttig has accrued a supplemental pension benefit in connection with an
arrangement entered into when he joined Boeing in 2006, and Mr. Smith has accrued benefits pursuant to a Canadian subsidiary pension in connection with his prior service with the Company. Each of these arrangements, as well as each of our
broad-based pension plans for which executives are eligible, is described beginning on page 45.
Perquisites and Other
Executive Benefits
Consistent with our executive compensation philosophy and our commitment to emphasize performance-based pay, we limit the
perquisites and other benefits that we provide to executives, and any such benefits are provided to help achieve our business objectives. In 2016, these perquisites consisted of:
|
|
Security Our CEO is required, and certain senior executives are encouraged, to use Company aircraft for business and personal travel for security reasons.
We provide ground transportation services to the CEO so that he may conduct business during his commute and for security purposes. In addition, home security is provided to certain senior executives.
|
|
|
Productivity Relocation assistance services (when applicable), and tax preparation and planning services.
|
|
|
Health Annual physical exam.
|
|
|
Other Supplemental life insurance, Company contributions to retirement plans, charitable gift matching program, event tickets, commemorative gifts, and
travel planning assistance.
|
Mr. McAllister is also eligible for a supplemental disability benefit of $30,000 per month until age
60 in the event Mr. McAllister becomes disabled.
34
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
No tax
gross-ups
are provided except in connection with certain relocation
expenses, of which none were paid to the NEOs in 2016. The Compensation Committee annually reviews perquisites and other executive benefits to ensure that they are reasonable and consistent with our executive compensation philosophy.
Severance Benefits
We have
maintained an Executive Layoff Benefit Plan since 1997 to provide a reasonable separation package for executives who are involuntarily laid off and do not become employed elsewhere within the Company or refuse any offer of employment with the
Company as an executive. The plan provides a layoff benefit equal to one year of base salary plus an amount equal to the executives target annual incentive multiplied by the Company performance score and business unit score for the year in
which the layoff occurs, less any amounts paid pursuant to an individual employment, separation, or severance agreement (if applicable). The plan does not provide enhanced
change-in-control
benefits or tax
gross-ups.
The Compensation Committee believes that the benefits provided under the plan are
consistent with those provided by our peers and other companies with whom we compete for executive talent. In addition to the benefits under the plan, executives may continue to participate in certain incentive award programs after a separation
based on service and the terms and conditions of the award.
Governance of
Pay-Setting
Process
The Company applies the following approach in setting compensation for its executives:
|
|
All executives are assigned to pay grades by comparing position-specific duties and responsibilities with market data and our internal management structure.
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|
Each pay grade has a salary range with corresponding target annual and long-term incentive award opportunities, executive benefits and perquisites.
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Salary ranges and incentive opportunities by pay grade are benchmarked annually against our peer group to ensure they are competitive.
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Individual executive pay is benchmarked against the median of our peer group, but actual target pay also takes into account job requirements, the
executives experience, contribution and performance, and business needs.
|
Role of Board,
Management and Consultants
The Compensation Committee establishes, reviews and approves all elements of the executive compensation program. The
Compensation Committee works with an independent executive compensation consultant, Compensation Advisory Partners LLC, or CAP, for advice and perspective regarding market trends that may affect decisions about our executive compensation program and
practices. CAP also advises the GON Committee in connection with nonemployee director compensation matters. CAP provided no services to Boeing outside of its duties as the independent consultant to these two Board committees. The Compensation
Committee has assessed the independence of CAP pursuant to SEC and NYSE rules and determined that no conflict of interest exists that would prevent CAP from independently representing the Compensation and GON Committees. For more information on this
conflicts of interest assessment, see Corporate Governance Compensation Consultants on page 20.
Boeing management has the
responsibility for effectively implementing the executive compensation program. Meridian Compensation Partners, LLC served as managements compensation consultant during 2016.
Additional responsibilities of the Board of Directors, Compensation Committee, management and the compensation consultants include:
Board of Directors and Compensation Committee
|
|
The Compensation Committee reviews and approves the CEOs business goals and objectives relevant to executive compensation, evaluates the performance of the
CEO in light of those goals and objectives in coordination with the GON Committee, and recommends the CEOs compensation level to the other independent members of the Board based on this evaluation. The Compensation Committee reviews and
approves the CEOs annual and long-term incentive targets and payouts.
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|
The Board reviews all components of compensation and approves all executive officer base salaries.
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|
Based on a review of peer data, pay tally sheets (as described below), individual performance and internal pay comparisons, the Compensation Committee sets, in
the case of the CEO, and reviews and approves, in the case of other NEOs, all other elements of pay.
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A supermajority
(two-thirds)
of the Board must approve any incentive awards that are granted to NEOs under an incentive
or other compensation plan not previously approved by a supermajority of the Board.
|
The
Boeing Company
2017 Proxy Statement
35
COMPENSATION DISCUSSION AND ANALYSIS
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|
The Compensation Committee sets incentive compensation targets based on the Companys long range business plan and the achievement of financial targets and
related payouts for our annual and long-term incentive programs.
|
Management
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|
The CEO and the Senior Vice President, Human Resources make recommendations on program design and pay levels, where appropriate, and implement the program
approved by the Compensation Committee.
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|
The CEO makes recommendations with respect to the compensation of other officers, including the other NEOs, and is assisted in pay administration by the Senior
Vice President, Human Resources.
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|
The CFO provides the financial information used by the Compensation Committee to make decisions with respect to incentive compensation goals based on achievement
of financial targets and related payouts for our annual and long-term incentive programs.
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Compensation Consultants
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Compensation Committees Independent Consultant
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Managements Consultant
|
Presents peer group pay practices and other relevant benchmarks for CEO and nonemployee director compensation to the Compensation Committee and GON Committee, respectively, as well as management.
Reviews and provides recommendations concerning managements data and work product and compensation-related practices and proposals.
Advises the Compensation Committee Chair and the Compensation Committee with respect to managements proposals.
Meets with the Compensation Committee in executive session following regular meetings of the Committee.
Available on
as-needed
basis throughout the year to consult with directors or management.
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Presents peer group pay practices and other relevant compensation and performance benchmarks (except for the CEO and nonemployee directors) for the Compensation Committee and management.
Prepares comprehensive pay tally sheets for elected officers for Compensation Committee review. The pay tally sheets provide total annual compensation and accumulated wealth (value of equity holdings,
outstanding long-term incentives, deferred compensation and pension).
Provides periodic updates regarding tax, accounting and regulatory issues that may impact
executive compensation design, administration and/or disclosure.
|
Benchmarking Against Our Peer Group
Peer group benchmarking is one of several factors considered in the pay setting process. Peer group practices are analyzed annually for target total direct compensation and for other pay elements (such as executive
benefits and perquisites). We benchmark executive compensation against a peer group of leading U.S.-based companies (with an emphasis on aerospace and industrial manufacturing companies) that have a technology focus, large global operations, a
diversified business, and roughly comparable annual sales and market capitalizations. Each year the Compensation Committee, working with its independent consultant, reviews the composition of the peer group and determines whether any changes should
be made. In 2016, Boeings peer group consisted of the 21 companies listed below. Beginning in 2017, DuPont will not be included in the peer group.
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|
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|
3M
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|
Ford
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|
Lockheed Martin
|
AT&T
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|
General Dynamics
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Northrop Grumman
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Caterpillar
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|
General Electric
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|
Procter & Gamble
|
Chevron
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|
Honeywell
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Raytheon
|
Cisco Systems
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IBM
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|
United Parcel Service
|
DuPont
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|
Intel
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|
United Technologies
|
Exxon Mobil
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|
Johnson & Johnson
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Verizon Communications
|
The median revenue of our peer group for the year ended December 31, 2016 was approximately $59.4 billion as compared to
our revenues of $94.6 billion. As of December 31, 2016, the median market capitalization of our peer group was $107.4 billion as compared to our market capitalization of $96.1 billion. The Compensation Committee reviews our peer
group and executive compensation program on at least an annual basis and, with the assistance of its independent compensation consultant, compares our executive compensation practices to those of our peers. Individual executive pay is generally
targeted at the median of our peer group, but can vary based on the requirements of the job (competencies and skills), the executives experience, contribution, and performance, and the organizational structure of the businesses (internal
alignment and pay relationships).
36
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
PBRSUs issued under our long-term incentive program in 2016 will pay out based on Boeings TSR during the
three-year performance period, as measured against the companies in the above-described peer group plus Airbus, subject to any required changes set forth in the notice of terms, such as a peer companys removal from the group if its stock
ceases to trade on a public exchange. Airbus is included as a comparator for TSR purposes due to the availability of Airbus equivalent financial information compared to U.S.-listed companies, but is not included in our benchmarking peer group
due to the lack of publicly available and comparable compensation and benefit program information. For additional information on PBRSUs, see page 33.
Additional Considerations
Executive Stock Ownership
In order to further align the interests of our senior executives with the long-term interests of shareholders, we require NEOs and other senior
executives to own significant amounts of Boeing stock. Senior executives are required to attain and maintain throughout their term of employment with us the following investment position in Boeing stock and stock equivalents:
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|
Vice Chairmen and Executive Vice Presidents: 4x base salary
|
|
|
Senior Vice Presidents: 3x base salary
|
|
|
Vice Presidents: 1x or 2x base salary based on executive grade
|
Senior executives must fulfill this requirement within five years after joining the executive grade to which the requirement applies. During the five-year period, executives are expected to accumulate qualifying
equity until they meet the minimum stock ownership requirement. In addition, during 2016, the Compensation Committee instituted a requirement that executive officers must hold all newly-vested stock until their minimum stock ownership requirement
has been satisfied. Shares owned directly by the executive as well as stock units, RSUs, deferred stock units and shares held through our savings plans are included in calculating ownership levels. Shares underlying stock options and PBRSUs do not
count toward the ownership guidelines. As of December 31, 2016, each NEO exceeded the applicable stock ownership requirement.
Each year, the
Compensation Committee reviews the ownership position of each elected officer as well as a summary covering all senior executives. In assessing stock ownership, the average daily closing stock price over a
one-year
period (ending September 30 of each year) is used. This approach mitigates the effect of stock price volatility and is consistent with the objective of requiring long-term, sustained stock
ownership. The Compensation Committee may, at its discretion, elect at any time to pay some or all performance awards in stock, including for executives who are currently not in compliance with the applicable ownership requirement.
Granting Practices
The
Compensation Committee typically grants long-term incentive awards each February at a regular meeting of the Compensation Committee. The Compensation Committee meeting date, or the next business day if the meeting falls on a day when the NYSE is
closed for trading, is the effective grant date for the grants.
New executives hired or internally promoted after the February grant date but on or
before December 31 will receive a
pro-rated
long-term incentive award, if any, for that year. Grants are
pro-rated
based on the time remaining in the
36-month
performance or vesting period as of the date of hire or promotion. This approach was adopted to better align our program with peer practices and provide the executive with an immediate tie to Boeings
long-term performance.
We also may grant supplemental equity awards to retain high-performing leaders, reward exceptional performance, or recognize
expanded responsibility. The effective date of these grants is generally based on the timing of the recognition and is set by the Compensation Committee. The exercise/grant price is the fair market value of Boeing stock on the effective date.
Accounting and Tax Implications
The Compensation Committee considers the accounting and tax impact reflected in our financial statements when establishing the amount and forms of long-term and equity compensation. The forms of long-term
compensation selected are intended to be cost-efficient. We account for all awards settled in equity in accordance with FASB ASC Topic 718, pursuant to which the fair value of the grant, net of estimated forfeitures, is expensed over the
service/vesting period based on the number of options, shares or units, as applicable, that vest. This includes our PBRSUs and RSUs for U.S.-based executives. The estimated payout amount of performance awards, along with any changes in that
estimate, is recognized over the performance period under liability accounting. Our ultimate expense for performance awards will equal the value earned by/paid to the executives and, accordingly, will not be determinable until the end of
the three-year performance period.
The
Boeing Company
2017 Proxy Statement
37
COMPENSATION DISCUSSION AND ANALYSIS
Securities Trading Policy
We have a policy that prohibits executive officers and directors from trading in Boeing securities while aware of material
non-public
information, pledging Boeing securities, or engaging in hedging transactions or short sales and trading in puts and calls involving Boeing securities. This policy is
described in our Corporate Governance Principles, which may be viewed in the corporate governance section of our website at www.boeing.com/company/general-info/corporate-governance.page.
Clawback Policy
We will require reimbursement of any incentive payments to an
executive officer if the Board determines that the executive engaged in intentional misconduct that caused or substantially caused the need for a substantial restatement of financial results and a lower payment would have been made to the executive
based on the restated financial results. This policy is described in our Corporate Governance Principles. In 2015, the Board expanded the scope of the Companys clawback policy such that even absent a financial restatement, the Compensation
Committee may now require reimbursement of incentive compensation from any executive officer who has engaged in fraud, bribery, or illegal acts like fraud or bribery, or knowingly failed to report such acts of an employee over whom such officer had
direct supervisory responsibility. The revised policy also gives the Compensation Committee the flexibility to direct the Company to publicly disclose any recoupment made pursuant to the policy. These revisions were made following an extensive
review of the Companys policy, including discussions with several of our principal shareholders and peer benchmarking.
In addition, in 2016 we
amended The Boeing Company 2003 Incentive Stock Plan and certain other executive compensation plans to provide that awards under the plans may be forfeited or recovered in the event an award recipient engages in various types of conduct deemed
detrimental to the Companys interest, including theft or fraud against the Company and engaging in competition with the Company.
Tax
Gross-Ups
We do not provide tax
gross-ups
other than for certain relocation expenses, of which none were paid to the NEOs in 2016.
Limitations on Deductibility of Compensation
Section 162(m) limits the tax deductibility of compensation paid by a public company to its CEO and certain other highly compensated executive officers to $1 million. There is an exception to the limit on
deductibility for performance-based compensation that meets certain requirements. We consider the impact of this rule when developing and implementing our executive compensation program. Annual incentive awards, performance awards and PBRSUs are
generally designed to meet the deductibility requirements. We also believe that it is important to preserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Accordingly, we have not adopted
a policy that all compensation must qualify as deductible under Section 162(m). Amounts awarded or paid under any of our compensation programs, including salaries, annual incentive awards, performance awards, PBRSUs and RSUs may not qualify as
performance-based compensation that is excluded from the limitation on deductibility.
There are different means by which the Board may pay executives.
One such means is the Elected Officer Annual Incentive Plan, which was established to allow for the payment of annual incentive awards that are designed to be deductible under Section 162(m). However, that plan is not the exclusive means by
which annual or long-term incentive payments may be made to NEOs. The Board at its discretion may make such awards. When awards are made outside the Elected Officer Annual Incentive Plan they may not be tax deductible. For 2016, we met the plan
requirements for the Elected Officer Annual Incentive Plan. As a result, payments made under this plan are considered performance-based compensation under Section 162(m).
Compensation Committee Report
Management has prepared the Compensation Discussion and Analysis, beginning on page 25. The Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
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|
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|
Compensation Committee
Arthur D. Collins,
Jr., Chair
David L. Calhoun
Kenneth M.
Duberstein
Ronald A. Williams
Mike S.
Zafirovski
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38
The Boeing Company
2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee during 2016 had a
relationship that requires disclosure as a Compensation Committee interlock.
Compensation and Risk
We believe that our compensation programs create
appropriate incentives to drive sustained, long-term increases in shareholder value. These programs have been designed and administered in a manner that discourages undue risk-taking by employees. Relevant features of these programs include:
|
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Compensation Committee-approved limits on annual incentive awards, performance awards, and PBRSUs;
|
|
|
Compensation Committee annual and ongoing review of our compensation plans and programs advised by the Committees independent compensation consultant;
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|
Individual executive pay targeted at median level against comparable executive roles at an appropriate set of peer companies;
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|
Revised clawback/recoupment policy adopted in 2015 that authorizes the Compensation Committee to recover past incentive pay from executive officers in the event
of certain kinds of misconduct, even if there has been no restatement of financial results, and in 2016 further amendments to executive compensation plans providing that awards may be forfeited or recovered in the event an award recipient engages in
various types of conduct deemed detrimental to the Companys interests, including theft or fraud against the Company and engaging in competition with the Company;
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|
With each increase in executive pay level, a proportionately greater award opportunity is derived from the long-term incentive program, reflecting
executives enhanced ability and responsibility to positively impact Company performance over time;
|
|
|
No employment agreements with executive officers;
|
|
|
The use of economic profit or, beginning in 2017, a balanced portfolio of three financial measures free cash flow, core earnings per share, and revenue
as our principal performance metrics, which incents employees to increase earnings and manage net assets efficiently;
|
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|
Use of three distinct long-term incentive vehicles performance awards, PBRSUs, and RSUs that vest in three year periods and in the case of
PBRSUs based on TSR relative to a group of peer companies thereby providing strong incentives for sustained operational and financial performance;
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|
A long-term incentive program that has overlapping performance periods, such that at any one time three separate and distinct potential long-term awards are
affected by current year performance, thereby requiring sustained and enduring high levels of performance year over year to achieve a payout;
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|
Significant share ownership requirements for senior executives, and a holding requirement for certain senior executives, each monitored by the Compensation
Committee, that ensure alignment with shareholder interests over the long term;
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|
Limited Compensation Committee discretion to adjust financial results to reflect certain extraordinary circumstances affecting the core operating performance of
the Company and its businesses, but not to authorize payouts above stated maximum awards;
|
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|
Incorporation of an individual performance score for each executive as a critical factor in the annual incentive calculation, thereby enabling the Compensation
Committee to direct a zero payout to any executive in any year if the executive is deemed to have sufficiently poor performance or is found to have engaged in activities or misconduct that pose a financial, operational or other undue risk to the
Company; and
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Restrictions on trading by senior executives to reduce insider trading compliance risk, as well as prohibitions on pledging and hedging Boeing stock.
|
In light of these features, we conclude that the risks arising from our executive and employee compensation policies and practices are
not reasonably likely to have a material adverse effect on the Company.
The
Boeing Company
2017 Proxy Statement
39
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth information regarding
compensation for each of our 2016 named executive officers.
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Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
(2)
|
|
|
Stock
Awards
($)
(3)
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|
|
Non-Equity
Incentive Plan
Compensation
($)
(4)
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|
Change in
Pension
Value
($)
(5)
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|
All
Other
Compensation
($)
(6)
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|
Total
($)
|
|
Dennis A. Muilenburg
|
|
|
2016
|
|
|
|
1,640,962
|
|
|
|
|
|
|
|
5,200,019
|
|
|
|
6,431,450
|
|
|
|
956,711
|
|
|
|
837,148
|
|
|
|
15,066,290
|
|
Chairman, President and
Chief Executive Officer
|
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|
2015
2014
|
|
|
|
1,354,269
1,135,389
|
|
|
|
|
|
|
|
5,105,064
2,474,990
|
|
|
|
4,568,549
4,117,900
|
|
|
|
1,849,002
3,917,410
|
|
|
|
349,449
152,712
|
|
|
|
13,226,333
11,798,401
|
|
Gregory D. Smith
|
|
|
2016
|
|
|
|
911,442
|
|
|
|
|
|
|
|
1,700,010
|
|
|
|
3,071,725
|
|
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|
140,668
|
|
|
|
396,216
|
|
|
|
6,203,915
|
|
Chief Financial Officer,
Executive Vice
President,
Corporate Development and Strategy
|
|
|
2015
2014
|
|
|
|
841,154
809,231
|
|
|
|
|
|
|
|
1,500,009
6,495,646
|
|
|
|
2,248,649
2,663,600
|
|
|
|
122,333
498,085
|
|
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|
107,670
112,989
|
|
|
|
4,819,815
10,579,551
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|
Raymond L. Conner
|
|
|
2016
|
|
|
|
1,065,962
|
|
|
|
|
|
|
|
2,178,146
|
|
|
|
3,986,360
|
|
|
|
925,659
|
|
|
|
795,598
|
|
|
|
8,951,725
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Vice Chairman, Former President and
Chief Executive Officer,
Commercial Airplanes
|
|
|
2015
2014
|
|
|
|
1,016,154
1,002,500
|
|
|
|
|
|
|
|
2,071,912
8,497,786
|
|
|
|
2,843,850
2,072,500
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|
|
|
2,993,344
4,576,995
|
|
|
|
160,326
271,533
|
|
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|
9,085,586
16,421,314
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J. Michael Luttig
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|
2016
|
|
|
|
903,673
|
|
|
|
|
|
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|
4,100,005
|
|
|
|
3,258,280
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|
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|
628,114
|
|
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|
475,852
|
|
|
|
9,365,924
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|
Executive Vice President and
General
Counsel
|
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2015
2014
|
|
|
|
870,577
877,480
|
|
|
|
|
|
|
|
1,700,094
1,548,377
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|
|
|
2,787,846
3,359,100
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|
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|
918,922
1,463,810
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|
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|
212,991
199,677
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|
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|
6,490,430
7,448,444
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Kevin G. McAllister
Executive Vice President,
President
and Chief Executive Officer,
Commercial Airplanes
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2016
|
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92,308
|
|
|
|
2,000,000
|
|
|
|
17,700,600
|
|
|
|
1,045,000
|
|
|
|
|
|
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|
27,912
|
|
|
|
20,865,820
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(1)
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Amounts reflect base salary paid in the year, before any deferrals at the executives election and including salary increases effective during the year, if any.
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(2)
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Amount reflects cash signing bonus provided to Mr. McAllister at time of hire.
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(3)
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Amounts reflect the aggregate grant date fair value of PBRSUs and RSUs granted in the year computed in accordance with FASB ASC Topic 718. These amounts are not paid to or
realized by the executive. The grant date fair value of each PBRSU and RSU award in 2016 is set forth in the 2016 Grants of Plan-Based Awards table on page 42.
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(4)
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Amounts reflect (a) annual incentive compensation, which is based on Company, business unit, and individual performance, and (b) any payout of long-term incentive
performance awards for the three-year performance period that ended in the relevant year, in each case including amounts deferred under our deferred compensation plan. The following table sets forth the elements of
Non-Equity
Incentive Plan Compensation.
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Name
|
|
Year
|
|
Annual Incentive
Compensation ($)
|
|
|
Long-Term Incentive
Performance Awards ($)
|
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Total Non-Equity Incentive
Plan Compensation
($)
|
|
Dennis A. Muilenburg
|
|
2016
|
|
|
2,842,700
|
|
|
|
3,588,750
|
|
|
|
6,431,450
|
|
|
2015
|
|
|
1,962,400
|
|
|
|
2,606,149
|
|
|
|
4,568,549
|
|
|
2014
|
|
|
1,557,900
|
|
|
|
2,560,000
|
|
|
|
4,117,900
|
|
Gregory D. Smith
|
|
2016
|
|
|
1,168,600
|
|
|
|
1,903,125
|
|
|
|
3,071,725
|
|
|
|
2015
|
|
|
859,300
|
|
|
|
1,389,349
|
|
|
|
2,248,649
|
|
|
|
2014
|
|
|
1,038,600
|
|
|
|
1,625,000
|
|
|
|
2,663,600
|
|
Raymond L. Conner
|
|
2016
|
|
|
1,059,100
|
|
|
|
2,927,260
|
|
|
|
3,986,360
|
|
|
|
2015
|
|
|
942,600
|
|
|
|
1,901,250
|
|
|
|
2,843,850
|
|
|
|
2014
|
|
|
1,296,500
|
|
|
|
776,000
|
|
|
|
2,072,500
|
|
J. Michael Luttig
|
|
2016
|
|
|
1,013,100
|
|
|
|
2,245,180
|
|
|
|
3,258,280
|
|
|
2015
|
|
|
872,400
|
|
|
|
1,915,446
|
|
|
|
2,787,846
|
|
|
2014
|
|
|
1,177,100
|
|
|
|
2,182,000
|
|
|
|
3,359,100
|
|
Kevin G. McAllister
|
|
2016
|
|
|
1,045,000
|
|
|
|
|
|
|
|
1,045,000
|
|
|
The estimated target and maximum amounts for annual incentive awards for 2016 and for performance awards granted in 2016 are reflected in the 2016 Grants of Plan-Based Awards
table on page 42.
|
(5)
|
No defined benefits have accrued since the end of 2015. Amounts reflect the aggregate increase in the actuarial present value of the executives accumulated benefits under
all pension plans (including Mr. Luttigs supplemental pension benefit) during the year. These amounts were determined using interest rate and mortality rate assumptions consistent with those used in our audited financial statements. The
degree of change in the present value depends on the age of the employee, when the benefit payments begin, and how long the benefits are expected to last. For 2016, present values increased due to the passage of time and decreases in applicable
discount rates. Additional information regarding our pension plans is set forth in the 2016 Pension Benefits table on page 45.
|
40
The Boeing Company
2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
(6)
|
The following table sets forth the elements of All Other Compensation provided in 2016 to our NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Perquisites and
Other Personal
Benefits ($)
(a)
|
|
|
Life Insurance
Premiums
($)
|
|
|
Company Contributions to
Retirement
Plans
($)
(b)
|
|
|
Total All Other
Compensation
($)
|
|
Dennis A. Muilenburg
|
|
|
224,409
|
|
|
|
9,811
|
|
|
|
602,928
|
|
|
|
837,148
|
|
Gregory D. Smith
|
|
|
88,173
|
|
|
|
5,453
|
|
|
|
302,590
|
|
|
|
396,216
|
|
Raymond L. Conner
|
|
|
72,484
|
|
|
|
6,374
|
|
|
|
716,740
|
|
|
|
795,598
|
|
J. Michael Luttig
|
|
|
87,655
|
|
|
|
5,403
|
|
|
|
382,794
|
|
|
|
475,852
|
|
Kevin G. McAllister
|
|
|
13,568
|
|
|
|
498
|
|
|
|
13,846
|
|
|
|
27,912
|
|
|
(a)
|
Perquisites and other personal benefits provided to one or more of our NEOs in 2016 consisted of use of Company aircraft for personal travel or to attend outside board meetings,
personal use of ground transportation services, tax preparation and planning services, charitable donations, home security expenses, annual physicals, event tickets, commemorative gifts, and travel planning assistance. We determine the incremental
cost to us for these benefits based on the actual costs or charges incurred. The incremental cost to us for use of Company aircraft equals the variable operating cost, including the cost of fuel, trip-related maintenance, crew travel expenses,
on-board
meals, landing fees, and parking costs. Year over year costs per statute mile increased by 4.7% in 2016. Since our aircraft are used predominately for business travel, the calculation does not include costs
that do not change based on usage, such as pilots salaries, aircraft acquisition costs, and the cost of maintenance not related to trips. The cost of any category of the listed perquisites and other personal benefits did not exceed the greater
of $25,000 or 10% of total perquisites and other personal benefits for any NEO, except as follows: (i) $147,721 for use of Company aircraft (including $5,318 to attend outside board meetings), $33,002 for use of Company transportation services for
personal travel, and $28,500 in charitable gift matching donations for Mr. Muilenburg; (ii) $50,287 for use of Company aircraft and $25,190 in charitable gift matching donations for Mr. Smith; (iii) $48,472 for use of Company aircraft
(including $27,133 to attend outside board meetings) for Mr. Conner; and (iv) $76,738 for use of Company aircraft (including $51,666 to attend outside board meetings) for Mr. Luttig.
|
|
(b)
|
In the case of all NEOs other than Mr. McAllister, includes additional contributions to defined contribution plans as part of a transition benefit established in connection
with the cessation of accruals under our defined benefit plans. This transition benefit will phase out at the end of 2018. See further details on pages 45 - 46.
|
CEO Actual Compensation Realized
The supplemental table below, which sets forth
our Mr. Muilenburgs actual compensation realized for 2016 and 2015, is not a substitute for the Summary Compensation Table above. Total Actual Compensation Realized differs substantially from Total Compensation as set
forth in the Summary Compensation Table. For example, the table below does not include Change in Pension Value or All Other Compensation and reports the actual value realized during the year on equity compensation, including
exercises of stock options granted in prior years, in lieu of the grant date fair market value of awards that were granted in that year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Salary
(1)
|
|
|
Annual
Incentive
Award
(2)
|
|
|
Long-Term
Incentive Plan
Performance
Award
Payout
(3)
|
|
|
Equity Compensation
|
|
|
Total Actual
Compensation
Realized
|
|
|
|
|
|
Stock Option
Exercises
|
|
|
Stock Award
Vesting
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
$
|
1,640,962
|
|
|
$
|
2,842,700
|
|
|
$
|
3,588,750
|
|
|
$
|
3,844,764
|
|
|
$
|
12,251,139
|
|
|
$
|
24,168,315
|
|
2015
|
|
$
|
1,354,269
|
|
|
$
|
1,962,400
|
|
|
$
|
2,606,149
|
|
|
$
|
2,140,656
|
|
|
$
|
2,055,223
|
|
|
$
|
10,118,697
|
|
(1)
|
Effective March 1, 2016, the Board increased Mr. Muilenburgs base salary to $1,650,000 from $1,600,000.
|
(2)
|
In 2016, Company
one-year
economic profit in 2016, as adjusted by the Compensation Committee to reflect core operating performance, was
$4.282B versus a target of $4.143B, resulting in a Company performance score of 108%. The payout factor, which reflects both Company and business unit performance scores, was 97%. In 2015, the payout factor was 90%.
|
(3)
|
Company three-year economic profit for the 2014-2016 performance period, as adjusted by the Compensation Committee to reflect core operating performance, was $12,852B versus a
target of $11.561B, resulting in a payout factor of $145 per unit. The 2013-2015 payout factor was $169 per unit.
|
(4)
|
Represents the value of RSUs that vested in the year. Values are based on the average of the high and low prices on the vesting date.
|
The
Boeing Company
2017 Proxy Statement
41
COMPENSATION OF EXECUTIVE OFFICERS
2016 Grants of Plan-Based Awards
The following table provides information for each of our
NEOs regarding 2016 annual and long-term incentive award opportunities, including the range of potential payouts under our incentive plans. Specifically, the table presents the 2016 grants of annual incentive awards, performance awards, PBRSUs and
RSUs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of Award
|
|
Grant
Date
|
|
|
Committee
Action
Date
(1)
|
|
|
Number
of Units
Granted
(#)
|
|
|
Estimated Future
Payouts Under Non-
Equity Incentive
Plan
Awards
(2)
|
|
|
Estimated Future
Payouts Under Equity
Incentive
Plan
Awards
(3)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
Grant Date
Fair Value
of Stock
Awards ($)
|
|
|
|
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
Dennis A. Muilenburg
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,791,066
|
|
|
|
5,582,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
|
|
|
|
|
|
|
|
|
|
|
52,000
|
|
|
|
5,200,000
|
|
|
|
10,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,128
|
|
|
|
2,600,040
|
|
|
|
PBRSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,515
|
|
|
|
41,030
|
|
|
|
|
|
|
|
2,599,979
|
|
Gregory D. Smith
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,003,975
|
|
|
|
2,007,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
1,700,000
|
|
|
|
3,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,234
|
|
|
|
849,995
|
|
|
|
PBRSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,707
|
|
|
|
13,414
|
|
|
|
|
|
|
|
850,015
|
|
Raymond L. Conner
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,173,484
|
|
|
|
2,346,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
|
|
|
|
|
|
|
|
|
|
|
21,781
|
|
|
|
2,178,100
|
|
|
|
4,356,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,269
|
|
|
|
1,089,108
|
|
|
|
PBRSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,593
|
|
|
|
17,186
|
|
|
|
|
|
|
|
1,089,038
|
|
J. Michael Luttig
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
994,689
|
|
|
|
1,989,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
1,750,000
|
|
|
|
3,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,447
|
|
|
|
875,023
|
|
|
|
RSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
2,350,000
|
|
|
|
PBRSUs
|
|
|
2/22/2016
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,904
|
|
|
|
13,808
|
|
|
|
|
|
|
|
874,982
|
|
Kevin G. McAllister
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,100,000
|
|
|
|
2,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
11/21/2016
|
|
|
|
11/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
17,700,600
|
|
|
|
PBRSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
PBRSU and RSU awards that were approved by the Compensation Committee on Sunday, February 21, 2016 had a grant date of Monday, February 22, 2016, the first trading day
following the date of the approval. The Compensation Committee approved a RSU award on November 15, 2016 for Mr. McAllister with a grant date of November 21, 2016, Mr. McAllisters hire date.
|
(2)
|
Payouts of annual incentive awards and performance awards may range from $0 to the applicable maximum as set forth above. Therefore, we have omitted the Threshold
column.
|
(3)
|
Payouts of PBRSU awards may range from zero shares to the applicable maximum as set forth above. Therefore, we have omitted the Threshold column.
|
Annual Incentive Awards
The amounts shown for annual incentive awards represent the target and maximum amounts of annual cash incentive compensation that, depending on Company, business unit, and individual performance, might have been
paid to each NEO for 2016 performance. The actual amount paid for 2016 is included in the
Non-Equity
Incentive Plan Compensation column and corresponding footnote of the Summary Compensation Table
on page 40. These awards may be deferred at the election of the executive. If employment is terminated due to death, disability, layoff or retirement during the year, the executive (or beneficiary) remains eligible to receive a
pro-rated
payout based on the number of days employed during the year. Upon any other type of termination, all rights to the annual incentive awards would terminate completely. Annual incentive awards are described
in further detail beginning on page 31.
Performance Awards
The amounts shown for performance awards represent the target and maximum amounts that, depending on performance results, might be paid to each NEO pursuant to
performance awards granted in 2016. The performance awards shown are units that pay out based on the achievement of economic profit goals for the three-year period ending December 31, 2018. Individual target awards are based on a multiple of
base salary, which is then converted into a number of units. Each unit has an initial value of $100. The amount payable at the end of the three-year performance period may be from $0 to $100 at target and up to $200 at maximum per unit, depending on
Company performance. The Compensation Committee has the discretion to pay these awards in cash, stock or a combination of both. These awards may be deferred at the election of the executive. If employment is terminated due to death, disability,
layoff or retirement during the performance period, the executive (or beneficiary) remains eligible to receive a
pro-rated
payout based on the number of months employed during the period. Upon any other type
of termination, all rights to the performance awards would terminate completely. Performance awards are described in further detail on page 33.
42
The Boeing Company
2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
Performance-Based Restricted Stock Units
The amounts shown for PBRSUs represent the number of PBRSUs awarded to each NEO in 2016 and the grant date fair value of the PBRSUs determined in accordance with
FASB ASC Topic 718. The grant date fair values are calculated using the average of the high and low prices on the grant date along with the PBRSU valuation factor (an economic discount factor that takes into account the present value of future
payments as well as the risks associated with achieving the performance goals established in the program). PBRSUs vest based on Boeings TSR over rolling three-year periods as measured against a group of peer companies set by the Compensation
Committee. The final number of PBRSUs issuable at vesting may range from 0% to 200% of the targeted amount depending on relative TSR performance, subject to an additional cap of 400% of the targeted monetary value. If employment is terminated due to
death, disability, layoff or retirement during the performance period, the executive (or beneficiary) remains eligible to receive a
pro-rated
amount of stock units based on the number of months employed during
the period. Upon any other type of termination, the PBRSUs would not vest and would be forfeited. PBRSUs are described in further detail on page 33.
Restricted Stock Units
The amounts shown for RSUs represent the number of RSUs
awarded to each NEO in 2016 and the grant date fair value of the RSUs determined in accordance with FASB ASC Topic 718. The grant date fair values are calculated using the average of the high and low prices on the grant date. RSUs generally vest and
settle on a
one-for-one
basis in shares of stock on the third anniversary of the grant date, except in the case of certain supplemental RSU awards. For RSUs granted as
part of our long-term incentive program, if an executive terminates employment due to death, disability, layoff or retirement, the executive (or beneficiary) would receive a
pro-rated
amount of stock units
based on active employment during the three-year performance period. Upon any other type of termination, the RSUs would not vest and would be forfeited. RSUs that are granted in order to retain or attract the services of a senior leader, reward
exceptional performance, or recognize expanded responsibility (supplemental equity awards) vest in full upon death, disability or layoff, but are forfeited in their entirety if the executive retires or otherwise terminates prior to the end of the
vesting period. Messrs. Luttig and McAllister received supplemental RSU grants of 20,000 RSUs and 120,000 RSUs, respectively, during 2016 for the reasons described on page 34. RSUs are described in further detail on page 33.
Outstanding Equity Awards at 2016 Fiscal
Year-End
The following table provides information regarding
outstanding stock options and unvested stock awards held by each of our NEOs as of December 31, 2016. Market values for outstanding stock awards, which include 2016 grants and prior-year grants, are based on the closing price of Boeing stock on
December 30, 2016 of $155.68. Performance awards, which are not stock-based, are not presented in this table. Our last stock option grant was in 2013, and all outstanding options became exercisable by 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Year
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
Number of Shares
or Units of Stock
That
Have Not Vested
(#)
(1)
|
|
|
Market Value of
Shares or Units
of Stock That
Have Not Vested
($)
(1)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That
Have
Not Vested (#)
(2)
|
|
|
Equity Incentive
Plan Awards:
Market Value of
Unearned Shares,
Units or Other
Rights
That Have
Not Vested ($)
(2)
|
|
Dennis A. Muilenburg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,841
|
(3)
|
|
|
11,339,887
|
|
|
|
38,753
|
(4)
|
|
|
6,033,067
|
|
|
|
|
2013
|
|
|
|
72,969
|
|
|
|
75.97
|
|
|
|
2/25/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
56,838
|
|
|
|
75.40
|
|
|
|
2/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory D. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,099
|
(5)
|
|
|
9,511,892
|
|
|
|
16,879
|
(6)
|
|
|
2,627,723
|
|
|
|
|
2013
|
|
|
|
38,902
|
|
|
|
75.97
|
|
|
|
2/25/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
36,079
|
|
|
|
75.40
|
|
|
|
2/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
9,385
|
|
|
|
71.44
|
|
|
|
2/22/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
10,372
|
|
|
|
63.83
|
|
|
|
2/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond L. Conner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,095
|
(7)
|
|
|
14,804,390
|
|
|
|
23,442
|
(8)
|
|
|
3,649,451
|
|
|
|
|
2013
|
|
|
|
53,233
|
|
|
|
75.97
|
|
|
|
2/25/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
17,229
|
|
|
|
75.40
|
|
|
|
2/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Michael Luttig
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,348
|
(9)
|
|
|
6,281,377
|
|
|
|
18,656
|
(10)
|
|
|
2,904,366
|
|
|
|
|
2013
|
|
|
|
53,633
|
|
|
|
75.97
|
|
|
|
2/25/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
48,447
|
|
|
|
75.40
|
|
|
|
2/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin G. McAllister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(11)
|
|
|
18,681,600
|
|
|
|
|
|
|
|
|
|
The
Boeing Company
2017 Proxy Statement
43
COMPENSATION OF EXECUTIVE OFFICERS
(1)
|
The following table shows the aggregate number and market value of unvested Career Shares, RSUs, and Matching Deferred Stock Units, or MDSUs, held by each of the NEOs as of
December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or Units of Stock
That Have Not Vested
(#)
|
|
|
Market Value of Shares or Units of Stock
That Have Not
Vested ($)
|
|
Name
|
|
Career
Shares
(a)
|
|
|
RSUs
|
|
|
MDSUs
(b)
|
|
|
Total
|
|
|
Career
Shares
(a)
|
|
|
RSUs
|
|
|
MDSUs
(b)
|
|
|
Total
|
|
Dennis A. Muilenburg
|
|
|
4,775
|
|
|
|
60,985
|
|
|
|
7,081
|
|
|
|
72,841
|
|
|
|
743,372
|
|
|
|
9,494,145
|
|
|
|
1,102,370
|
|
|
|
11,339,887
|
|
Gregory D. Smith
|
|
|
|
|
|
|
61,099
|
|
|
|
|
|
|
|
61,099
|
|
|
|
|
|
|
|
9,511,892
|
|
|
|
|
|
|
|
9,511,892
|
|
Raymond L. Conner
|
|
|
9,403
|
|
|
|
78,850
|
|
|
|
6,842
|
|
|
|
95,095
|
|
|
|
1,463,859
|
|
|
|
12,275,368
|
|
|
|
1,065,163
|
|
|
|
14,804,390
|
|
J. Michael Luttig
|
|
|
|
|
|
|
40,348
|
|
|
|
|
|
|
|
40,348
|
|
|
|
|
|
|
|
6,281,377
|
|
|
|
|
|
|
|
6,281,377
|
|
Kevin G. McAllister
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
18,681,600
|
|
|
|
|
|
|
|
18,681,600
|
|
|
(a)
|
Career Shares, which were granted prior to 2006, are stock units that earn dividend equivalents that accrue in the form of additional Career Shares. Career Shares vest upon
termination of employment due to retirement, death, disability or layoff and are paid out in stock upon vesting.
|
|
(b)
|
Under the Matching Deferred Stock Units program, which was discontinued in 2005, if an executive elected to defer certain compensation into Boeing deferred stock units (an
unfunded stock unit account), we provided a 25% matching contribution when the awards vested that will be paid out in stock upon termination of employment due to retirement, death, disability or layoff. MDSUs earn dividend equivalents that accrue in
the form of additional MDSUs. MDSUs are paid under our Deferred Compensation Plan for Employees, which is described in further detail under 2016 Nonqualified Deferred Compensation on page 46.
|
(2)
|
Assumes target-level payout of PBRSUs. PBRSUs are described on page 43.
|
(3)
|
Reflects (a) 4,775 Career Shares and 7,081 MDSUs that vest as described in footnote (1) above, (b) 10,294 RSUs that vested on February 24, 2017; (c) 8,434 RSUs that
vest on February 23, 2018; (d) 19,592 RSUs that vest on July 1, 2018; and (e) 22,665 RSUs that vest on February 22, 2019.
|
(4)
|
Reflects (a) 9,800 PBRSUs that vested on February 27, 2017; (b) 7,940 PBRSUs that vest on February 26, 2018; and (c) 21,013 PBRSUs that vest on February 25, 2019.
|
(5)
|
Reflects (a) 27,018 RSUs that vested on February 24, 2017; (b) 5,112 RSUs that vest on February 23, 2018; (c) 21,559 RSUs that vest on February 24, 2018; and (d)
7,410 RSUs that vest on February 22, 2019.
|
(6)
|
Reflects (a) 5,197 PBRSUs that vested on February 27, 2017; (b) 4,812 PBRSUs that vest on February 26, 2018; and (c) 6,870 PBRSUs that vest on February 25, 2019.
|
(7)
|
Reflects (a) 9,403 Career Shares and 6,842 MDSUs that vest as described in footnote (1) above, (b) 8,397 RSUs that vested on February 24, 2017; (c) 53,898 RSUs that
vest on December 1, 2017; (d) 7,061 RSUs that vest on February 23, 2018; and (e) 9,494 RSUs that vest on February 22, 2019.
|
(8)
|
Reflects (a) 7,993 PBRSUs that vested on February 27, 2017; (b) 6,647 PBRSUs that vest on February 26, 2018; and (c) 8,802 PBRSUs that vest on February 25, 2019.
|
(9)
|
Reflects (a) 6,441 RSUs that vested on February 24, 2017; (b) 20,486 RSUs that vest on February 22, 2018; (c) 5,793 RSUs that vest on February 23, 2018; and (d)
7,628 RSUs that vest on February 22, 2019.
|
(10)
|
Reflects (a) 6,130 PBRSUs that vested on February 27, 2017; (b) 5,454 PBRSUs that vest on February 26, 2018; and (c) 7,072 PBRSUs that vest on February 25, 2019.
|
(11)
|
Reflects (a) 20,000 RSUs that vest on November 21, 2018; (b) 25,000 RSUs that vest on June 11, 2021; (c) 50,000 RSUs that vest on June 11, 2023; and (d) 25,000
RSUs that vest on June 11, 2025.
|
Option Exercises and Stock Vested
The following table provides information for each of our
NEOs regarding stock option exercises and vesting of stock awards during 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise (#)
|
|
|
Value Realized
on Exercise ($)
|
|
|
|
|
Number of Shares
Acquired on Vesting (#)
(1)
|
|
|
Value Realized on
Vesting ($)
(2)
|
|
Dennis A. Muilenburg
|
|
|
59,724
|
|
|
|
3,844,764
|
|
|
|
|
|
82,606
|
|
|
|
2,251,139
|
|
Gregory D. Smith
|
|
|
20,000
|
|
|
|
1,229,222
|
|
|
|
|
|
8,702
|
|
|
|
1,015,930
|
|
Raymond L. Conner
|
|
|
14,031
|
|
|
|
956,622
|
|
|
|
|
|
56,097
|
|
|
|
8,287,187
|
|
J. Michael Luttig
|
|
|
163,106
|
|
|
|
12,358,997
|
|
|
|
|
|
55,939
|
|
|
|
6,607,783
|
|
Kevin G. McAllister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Consists of time-based vesting of RSUs. Includes shares withheld for payment of applicable taxes associated with the vesting.
|
(2)
|
Calculated based on the average of the high and low prices on the date of vesting.
|
44
The Boeing Company
2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
2016 Pension Benefits
Each of our NEOs, other than Mr. McAllister, have
earned benefits under the following pension plans:
|
|
the Pension Value Plan, or PVP, a
pre-funded,
qualified defined benefit plan generally available to salaried U.S.
employees hired before 2009 who were not covered by certain collective bargaining agreements; and
|
|
|
the Supplemental Executive Retirement Plan, or SERP, an unfunded, nonqualified defined benefit plan.
|
Benefits ceased to accrue under each of these plans at the end of 2015. In addition, Mr. Smith has accrued benefits under the Boeing Toronto Supplemental
Executive Retirement Income Plan, or Toronto SERIP, and Mr. Luttig has accrued benefits pursuant to a supplemental pension arrangement. The following table provides information as of December 31, 2016 with respect to accumulated benefits
under each of these plans and arrangements. No pension payments were made to any NEO during 2016.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of Years of
Credited Service
(#)
(1)
|
|
|
Present Value of
Accumulated Benefit
($)
(2)
|
|
Dennis A. Muilenburg
|
|
Pension Value Plan
|
|
|
30.00
|
|
|
|
917,065
|
|
|
|
SERP
|
|
|
30.00
|
|
|
|
10,766,116
|
|
Gregory D. Smith
|
|
Pension Value Plan
|
|
|
13.01
|
|
|
|
409,894
|
|
|
|
SERP
|
|
|
13.01
|
|
|
|
893,487
|
|
|
|
Toronto SERIP
|
|
|
9.52
|
|
|
|
214,707
|
|
Raymond L. Conner
|
|
Pension Value Plan
|
|
|
37.57
|
|
|
|
1,381,951
|
|
|
|
SERP
|
|
|
37.57
|
|
|
|
13,057,853
|
|
J. Michael Luttig
|
|
Pension Value Plan
|
|
|
9.64
|
|
|
|
452,930
|
|
|
|
SERP
|
|
|
9.64
|
|
|
|
4,154,096
|
|
|
|
Supplemental Pension Agreement
|
|
|
9.64
|
|
|
|
3,146,112
|
|
Kevin G. McAllister
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of December 31, 2015, plan participants no longer accrue additional years of credited service, except in order to determine early retirement eligibility. The years of
actual Company service are as follows: Mr. Muilenburg, 30 years; Mr. Smith, 26 years; Mr. Conner, 38 years; and Mr. Luttig, 10 years.
|
(2)
|
Present values were calculated assuming no
pre-retirement
mortality or termination. The values for the PVP, the SERP, and the Toronto
SERIP are the actuarial present values as of December 31, 2016 of the benefits earned as of that date and payable as a single life annuity beginning at age 65 for the PVP, age 62 for the SERP, and age 55 for the Toronto SERIP. The discount
assumption is 4.01% for the PVP, the SERP and Mr. Luttigs supplemental pension agreement benefit, and 3.60% for the Toronto SERIP. The post-retirement mortality assumption is RP2000
sex-specific
generational mortality setback 18 months and projected using scale AA for the PVP and SERP, and UP 1994 fully generational for the Toronto SERIP. The value for Mr. Luttigs supplemental pension agreement benefit is a lump sum payable at
age 65.
|
In order to determine changes in pension values for the Summary Compensation Table on page 40, the values of these
benefits were also calculated as of December 31, 2015. For the values as of December 31, 2015, the discount assumption was 4.22% for the PVP, 3.90% for the Toronto SERIP, and 4.24% for both the SERP and Mr. Luttigs supplemental
pension agreement benefit, which was the assumption used for financial reporting purposes for 2015. Other assumptions used to determine the value as of December 31, 2015 were the same as those used for December 31, 2016. The assumptions
reflected in this footnote are the same as those used for the PVP, the SERP, and the Toronto SERIP for financial reporting purposes.
The amount of the
PVP benefit is based on the participants pay and service prior to 2016. PVP participants earned annual benefit credits prior to the ceasing of accruals. Interest credits on the account balance continue to be earned based on the yield of the
30-year
U.S. Treasury bond in effect during November of the previous year, except that the rate may not be lower than 5% or higher than 10%. Normal retirement age under the PVP is 65, and pension benefits vested
after three years of service. Several forms of payment are available to participants including a single lump sum. To determine a participants annual pension benefit, the participants accumulated benefit credits are divided by 11.
Participants who have at least ten years of service and are at least age 55, or at least one year of service and are at least age 62, are eligible for early retirement. Enhanced early retirement benefits are available to participants on amounts that
accrued during 2014 and 2015, and early retirement benefits are retained for amounts transferred to the PVP from certain heritage plans. Messrs. Conner and Luttig are eligible for early retirement. Participants who terminate employment before they
are eligible for early retirement will receive a reduced benefit depending on the age they begin to receive the benefit. The reduced benefit is determined by dividing the accumulated benefit credits by 11 plus 0.4 for each year before age 65 that
the benefit commences. For example, the factor for benefit commencement at age 60 for a participant whose employment terminates before retirement is 13 rather than 11.
The
Boeing Company
2017 Proxy Statement
45
COMPENSATION OF EXECUTIVE OFFICERS
The SERP provides an excess benefit equal to additional amounts the PVP would have paid absent limitations
mandated by federal tax laws and regulations. For employees hired before 2008, the SERP pays the greater of the excess benefit or a supplemental target benefit that may enhance the benefits that would otherwise have been received under the PVP
absent these limitations. For employees hired during 2008, including Mr. Smith, the SERP pays only the excess benefit. Unmarried participants receive the SERP benefit as a single life annuity. Married participants can elect to receive the SERP
benefit as a single life annuity or a 50%, 75% or 100% joint and survivor annuity that is actuarially equivalent to the single life annuity. Under the SERP, the supplemental target benefit would be reduced 3% for each year the employee retires prior
to age 62 and 6% for each year the benefit commences prior to age 65 if the employee terminates employment prior to being eligible for retirement. The SERP benefits are subject to forfeiture and clawback for five years following termination if the
executive leaves the Company to work in a capacity that is determined to be in competition with a significant aspect of our business or commits certain criminal acts. SERP benefits accrued after 2007 are also subject to forfeiture and clawback if
the executive solicits or attempts to solicit our employees, representatives or consultants to work for the executive or a third party without our consent, or disparages us, our products or our employees.
The Toronto SERIP provides an excess benefit equal to the additional amounts participants would have received under a Canadian subsidiary pension plan absent
limitations by applicable Canadian laws and regulations. Mr. Smiths Toronto SERIP benefit would be reduced for each year that he retires before age 65 by the lesser of 2.5% per point before attaining 85 points (based on age plus
years of service), 2.5% per year before attaining age 65 and 6.0% per year before attaining age 62.
Pursuant to a supplemental pension
agreement between us and Mr. Luttig, Mr. Luttig will be paid a lump sum at the earlier of termination or age 65 or such later date as required by Section 409A of the Internal Revenue Code. The lump sum is the equivalent of a
20-year
certain and continuous annuity of $225,000 per year that commences at age 65. The value of the lump sum is based on the same interest and mortality assumptions that are used for
lump-sum
payments in the PVP. The benefit became fully vested in May 2009.
2016
Nonqualified Deferred Compensation
Deferred Compensation Plan
Our Deferred Compensation Plan for Employees is a
nonqualified, unfunded defined contribution plan under which eligible executives may defer up to 50% of base salary, 100% of annual incentive awards and 100% of performance awards. Investment elections available under the Deferred Compensation Plan
include an interest-bearing account, a Boeing stock fund account and 21 other notional investment funds that track those available to employees under our 401(k) plan. The interest-bearing account is credited with interest daily during the calendar
year at a rate that is equal to the mean between the high and the low yields on
AA-rated
industrial bonds as reported by Moodys Investors Service, Inc. during the first 11 months of the preceding year,
rounded to the nearest 1/4 of 1 percent. The rate was 4.0% for 2016 and is 3.75% for 2017. Executives may change how deferrals are invested in the funds at any time, subject to insider trading rules and other Deferred Compensation Plan
restrictions that limit the transfer of funds into or out of the Boeing stock fund.
Executives choose how and when to receive payments under the
Deferred Compensation Plan. Executives may elect either a
lump-sum
payment or annual payments over two to 15 years. Annual payments are calculated based on the number of years of remaining payments. Payments
to an executive under the Deferred Compensation Plan begin on the later of (1) the January following the age the executive elected or (2) the January after the executive separates from service with us, as defined in the Deferred
Compensation Plan (generally, when the executives employment with us ends).
Supplemental Benefit Plan
Our Supplemental Benefit Plan, or SBP, is a nonqualified, unfunded defined contribution plan that is intended to supplement the retirement benefits
of eligible executives under the 401(k) plan. The SBP has three components: a restoration benefit component, an executive SBP+ component, and a defined contribution SERP component. The restoration benefit component allows eligible executives to
receive Company contributions that would otherwise exceed Internal Revenue Code limits under the 401(k) plan.
The executive SBP+ component provides
eligible executives hired on or after January 1, 2009 with Company contributions to the SBP totaling 3%, 4%, or 5% (depending on age) of annual incentive compensation. Eligible executives hired prior to 2009 receive Company contributions to the
SBP totaling 9%, 8% and 7% of annual incentive compensation for 2016, 2017, and 2018, respectively. Thereafter, these executives will generally receive the same Company contributions to the SBP under the executive SBP+ component as those hired on or
after January 1, 2009.
46
The Boeing Company
2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
The defined contribution SERP component provides a supplemental retirement benefit to eligible senior executives
hired on or after January 1, 2009 equal to 2% or 4% of base salary and annual incentive compensation (depending on executive grade). The defined contribution SERP component was extended, effective January 1, 2016, to certain executives who
were hired prior to 2009 in the form of an additional contribution equal to 5% of eligible earnings plus, for those participants who are 55 or over, an incremental amount (payable for up to seven years) based on years of service as of
January 1, 2016.
Investment elections available under the SBP are the same as those available under the Deferred Compensation Plan described above.
Payments to an executive under the SBP (which will be either one
lump-sum
payment or annual payments over two to 15 years based on the executives election) begin on the later of (1) the January
following the age the executive elected and (2) the January after the executive separates from service with us, as defined in the SBP (generally, when the executives employment with us ends). Annual payments are calculated based on the
number of years of remaining payments.
The benefits under the defined contribution SERP component are subject to forfeiture and clawback if the
executive (1) leaves the Company to work in a capacity that is determined to be in competition with a significant aspect of our business, (2) commits certain criminal acts, (3) solicits or attempts to solicit our employees,
representatives or consultants to work for the executive or a third party without our consent, (4) disparages us, our products or our employees, or (5) for benefits attributable to contributions made on or after January 1, 2017, uses
or discloses the Companys proprietary or confidential information. In addition, benefits under the executive SBP+ component attributable to contributions made on or after January 1, 2017 are subject to forfeiture and clawback in the event
of any of the above circumstances. These forfeiture and clawback provisions continue to apply for five years after the executives termination of employment.
2016 Deferred Compensation Table
The following table provides information for
each of our NEOs regarding aggregate executive and Company contributions, aggregate earnings for 2016, and
year-end
account balances under the Deferred Compensation Plan and the SBP. As of December 31,
2016, Messrs. Smith and McAllister had not elected to participate in the Deferred Compensation Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Executive
Contributions
in Last
FY
($)
(1)
|
|
|
Company
Contributions
in Last
FY
($)
(2)
|
|
|
Aggregate
Earnings
in
Last FY
($)
(3)
|
|
|
Aggregate
Balance
at Last
FYE ($)
(4)
|
|
Dennis A. Muilenburg
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
471,064
|
|
|
|
4,912,236
|
|
|
Supplemental Benefit Plan
|
|
|
148,953
|
|
|
|
580,214
|
|
|
|
156,741
|
|
|
|
1,777,899
|
|
Gregory D. Smith
|
|
Supplemental Benefit Plan
|
|
|
146,955
|
|
|
|
276,090
|
|
|
|
31,353
|
|
|
|
1,007,730
|
|
Raymond L. Conner
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
223,922
|
|
|
|
4,106,841
|
|
|
Supplemental Benefit Plan
|
|
|
182,907
|
|
|
|
694,026
|
|
|
|
36,815
|
|
|
|
1,318,222
|
|
J. Michael Luttig
|
|
Deferred Compensation Plan
|
|
|
90,367
|
|
|
|
|
|
|
|
236,802
|
|
|
|
4,788,175
|
|
|
Supplemental Benefit Plan
|
|
|
57,673
|
|
|
|
355,380
|
|
|
|
46,251
|
|
|
|
1,360,191
|
|
Kevin G. McAllister
|
|
Supplemental Benefit Plan
|
|
|
|
|
|
|
3,692
|
|
|
|
5
|
|
|
|
3,697
|
|
(1)
|
Amounts reflect elective deferrals of salary.
|
(2)
|
Amounts reflect Company contributions under the Supplemental Benefit Plan.
|
(3)
|
Amounts reflect dividends on deferred stock units and changes in the market value of the underlying stock, interest credited on interest account holdings and change in value of
other investment holdings.
|
(4)
|
Reflects
year-end
account balances of deferred compensation, including deferrals of certain equity awards granted or earned prior to 2006.
Of the amounts in this column, the following amounts were also included in the Total Compensation column of the Summary Compensation Table for 2016, 2015, and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Reported for
2016 ($)
|
|
|
Reported for
2015 ($)
|
|
|
Reported for
2014 ($)
|
|
|
Total ($)
|
|
Dennis A. Muilenburg
|
|
Supplemental Benefit Plan
|
|
|
729,167
|
|
|
|
183,849
|
|
|
|
149,663
|
|
|
|
1,062,679
|
|
Gregory D. Smith
|
|
Supplemental Benefit Plan
|
|
|
423,045
|
|
|
|
153,081
|
|
|
|
146,019
|
|
|
|
722,146
|
|
Raymond L. Conner
|
|
Supplemental Benefit Plan
|
|
|
876,933
|
|
|
|
106,928
|
|
|
|
105,683
|
|
|
|
1,089,544
|
|
J. Michael Luttig
|
|
Deferred Compensation Plan
|
|
|
90,367
|
|
|
|
87,058
|
|
|
|
807,920
|
|
|
|
985,345
|
|
|
|
Supplemental Benefit Plan
|
|
|
413,053
|
|
|
|
84,781
|
|
|
|
86,447
|
|
|
|
584,281
|
|
Kevin G. McAllister
|
|
Supplemental Benefit Plan
|
|
|
3,692
|
|
|
|
|
|
|
|
|
|
|
|
3,692
|
|
The
Boeing Company
2017 Proxy Statement
47
COMPENSATION OF EXECUTIVE OFFICERS
Potential Payments upon Termination
Executive Layoff Benefit
Plan
Our NEOs are eligible to participate in the Boeing Executive Layoff Benefit Plan (the Layoff Plan), which provides the following
benefits to eligible executives who are terminated involuntarily and meet the other plan requirements for a qualifying layoff:
|
|
one year of base salary; plus
|
|
|
an annual incentive award, subject to Company performance; minus
|
|
|
if applicable, any amounts payable pursuant to an individual employment, separation or severance agreement.
|
Layoff Plan benefits are subject to forfeiture and clawback for five years following termination if the executive (1) engages in an activity that is determined
to be in competition with a significant aspect of our business, (2) commits certain criminal acts, (3) solicits or attempts to solicit our employees, representatives or consultants to work for the executive or a third party without our
consent, (4) disparages us, our products or our employees, or (e) uses or discloses the Companys proprietary or confidential information.
Table I: Estimated Potential Incremental Payments Upon Termination
Table I sets
forth the estimated incremental compensation payable to each of the NEOs upon termination of the officers employment in the event of layoff, retirement, disability or death. Messrs. Conner and Luttig are the only NEOs who are
retirement-eligible, and therefore they are the only NEOs with amounts disclosed in the Retirement column of Table I. The amounts shown assume that the termination was effective as of December 31, 2016, the price of Boeing stock as
of termination was the closing price of $155.68 on December 30, 2016, and, in the case of PBRSUs and performance awards, that performance was at target. The total actual amounts to be paid can be determined only following the officers
termination and the conclusion of all relevant incentive plan performance periods. We do not provide any benefits to NEOs in connection with a change in control.
In the event of termination due to layoff, retirement, death or disability, the NEO will receive any or all of the following benefits as reflected in Table I:
|
|
Cash severance pursuant to a qualifying layoff under the Layoff Plan;
|
|
|
Pro rata vesting of PBRSUs, to the extent earned, and RSUs granted under the long-term incentive program based on the number of months employed during the
three-year performance period;
|
|
|
Vesting of any supplemental RSUs, other than in the case of retirement;
|
|
|
Distribution of shares of Boeing stock represented by Career Shares;
|
|
|
Continued eligibility for performance awards, which will be paid pro rata to the extent earned based on the number of months employed during the relevant
performance period;
|
|
|
Continued eligibility for tax preparation and planning services through the calendar year following year of termination;
|
|
|
Life insurance benefit equal to three times base salary up to $6 million;
|
|
|
In the case of Mr. McAllister, a supplemental disability benefit; and
|
Table I excludes the
following amounts:
|
|
Pension and nonqualified deferred compensation benefits, which are set forth in the 2016 Pension Benefits and 2016 Nonqualified Deferred Compensation tables
beginning on page 45;
|
|
|
Annual incentive and long-term performance awards earned in 2016, which are set forth in the Summary Compensation Table beginning on page 40; and
|
|
|
Benefits generally available to salaried employees, such as distributions under our 401(k) plan, certain disability benefits, and accrued vacation.
|
48
The Boeing Company
2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Benefits
|
|
Layoff
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
Dennis A. Muilenburg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
4,370,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
$
|
3,105,008
|
|
|
|
|
|
|
$
|
3,105,008
|
|
|
$
|
3,105,008
|
|
RSUs/Career Shares
|
|
$
|
7,089,518
|
|
|
|
|
|
|
$
|
7,089,518
|
|
|
$
|
7,089,518
|
|
Performance Awards
|
|
$
|
3,383,333
|
|
|
|
|
|
|
$
|
3,383,333
|
|
|
$
|
3,383,333
|
|
Life Insurance Death Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,950,000
|
|
Tax Preparation/Planning Services
|
|
$
|
8,848
|
|
|
|
|
|
|
$
|
8,848
|
|
|
$
|
8,848
|
|
Outplacement Services
|
|
$
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory D. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
1,911,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
$
|
1,519,018
|
|
|
|
|
|
|
$
|
1,519,018
|
|
|
$
|
1,519,018
|
|
RSUs
|
|
$
|
8,322,055
|
|
|
|
|
|
|
$
|
8,322,055
|
|
|
$
|
8,322,055
|
|
Performance Awards
|
|
$
|
1,477,778
|
|
|
|
|
|
|
$
|
1,477,778
|
|
|
$
|
1,477,778
|
|
Life Insurance Death Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,775,000
|
|
Tax Preparation/Planning Services
|
|
$
|
8,358
|
|
|
|
|
|
|
$
|
8,358
|
|
|
$
|
8,358
|
|
Outplacement Services
|
|
$
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond L. Conner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
2,222,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
$
|
2,188,262
|
|
|
$
|
2,188,262
|
|
|
$
|
2,188,262
|
|
|
$
|
2,188,262
|
|
RSUs/Career Shares
|
|
$
|
12,171,743
|
|
|
$
|
3,780,868
|
|
|
$
|
12,171,743
|
|
|
$
|
12,171,743
|
|
Performance Awards
|
|
$
|
1,989,244
|
|
|
$
|
1,989,244
|
|
|
$
|
1,989,244
|
|
|
$
|
1,989,244
|
|
Life Insurance Death Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,225,000
|
|
Tax Preparation/Planning Services
|
|
$
|
14,540
|
|
|
$
|
14,540
|
|
|
$
|
14,540
|
|
|
$
|
14,540
|
|
Outplacement Services
|
|
$
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Michael Luttig
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
1,880,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
$
|
1,726,064
|
|
|
$
|
1,726,064
|
|
|
$
|
1,726,064
|
|
|
$
|
1,726,064
|
|
RSUs
|
|
$
|
5,017,235
|
|
|
$
|
1,828,051
|
|
|
$
|
5,017,235
|
|
|
$
|
5,017,235
|
|
Performance Awards
|
|
$
|
1,620,833
|
|
|
$
|
1,620,833
|
|
|
$
|
1,620,833
|
|
|
$
|
1,620,833
|
|
Life Insurance Death Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,730,000
|
|
Tax Preparation/Planning Services
|
|
$
|
8,455
|
|
|
$
|
8,455
|
|
|
$
|
8,455
|
|
|
$
|
8,455
|
|
Outplacement Services
|
|
$
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin G. McAllister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
2,045,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBRSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
$
|
18,681,600
|
|
|
|
|
|
|
$
|
18,681,600
|
|
|
$
|
18,681,600
|
|
Performance Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Death Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,000,000
|
|
Tax Preparation/Planning Services
|
|
$
|
10,000
|
|
|
|
|
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Outplacement Services
|
|
$
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disability Payment
|
|
|
|
|
|
|
|
|
|
$
|
2,340,000
|
|
|
|
|
|
The
Boeing Company
2017 Proxy Statement
49
COMPENSATION OF EXECUTIVE OFFICERS
Table II: Estimated Potential Annual SERP Payments Upon Termination
Table II below shows the estimated SERP benefits payable for the employment termination reasons given in the corresponding columns for each of the
NEOs. PVP payments, which are generally available to salaried employees hired before 2009 are not set forth in the table below. There are no additional disability benefits provided under the SERP.
Table II shows the annual SERP annuity that would have been received after a termination of employment on December 31, 2016, expressed as a life annuity, and
the present value of such annuity benefit (based on the same factors used for the 2016 Pension Benefits table on page 45). The present value was calculated assuming a benefit commencement date of December 31, 2016 for each NEO except Messrs.
Muilenburg and Smith, the present value of whose benefits were calculated assuming a benefit commencement date upon their attainment of age 55.
|
|
|
|
|
Name
|
|
Benefit Payable Upon Termination Due to
Retirement, Layoff or Disability
(1)
Annuity/Present Value
|
|
Death Benefit Payable to
Spouse
(2)
Annuity/Present Value
|
Dennis A. Muilenburg
|
|
$396,821 / $6,251,081
(3)
|
|
$168,382 / $3,094,806
|
Gregory D. Smith
|
|
$64,883 / $941,155
(4)
|
|
$18,319 / $608,175
(5)
|
Raymond L. Conner
|
|
$890,194 / $13,259,022
|
|
$772,332 / $11,922,570
|
J. Michael Luttig
|
|
$285,854 / $4,154,095
|
|
$241,289 /$3,886,576
|
Kevin G. McAllister
|
|
|
|
|
(1)
|
Messrs. Conner and Luttig are eligible for retirement benefits under the SERP. Messrs. Muilenburg and Smith are not eligible to commence benefits under the SERP; however, if they
were laid off, they would commence their benefits at age 55 using the early retirement reduction factors as if retiring from active status. Mr. McAllister is not eligible to participate in the SERP because he was hired after 2009.
|
(2)
|
If the participant dies while an active employee and eligible for retirement, the death benefit paid is a 100% surviving spouse annuity. If the participant is an active employee
and not eligible for retirement, the death benefit is a 50% surviving spouse annuity. Surviving spouse annuities commence as of the month after death.
|
(3)
|
For Mr. Muilenburg, the amount shown is the amount that would be paid starting at age 55 for all terminations except layoff and death. The SERP provides that if a
participant is laid off on or after age 49 with at least 10 years of service, the benefit payable at age 55 will be calculated using the more generous factors for early retirement from active employment. If Mr. Muilenburg were laid off as of
December 31, 2016, this layoff provision would have applied to his SERP benefit and at age 55, he would be paid $807,018 annually and the present value of that annuity would be $12,712,864.
|
(4)
|
For Mr. Smith, $50,533 of the annuity amount is related to the SERP and $14,350 is related to the Toronto SERIP. $726,448 of the present value amount is related to the SERP
and $214,707 of the present value amount is related to the Toronto SERIP. The amount shown is the amount that would be paid starting at age 55 for all termination reasons except layoff and death. SERP provides a provision applicable to all
participants that if they are laid off on or after age 49 with at least ten years of service, the benefit payable at age 55 will be calculated using the more generous factors for early retirement from active employment. If Mr. Smith were laid
off as of December 31, 2016, this layoff provision would have applied to his SERP benefit and at age 55 he would be paid $88,618 annually and the present value of that annuity would be $1,273,954.
|
(5)
|
The annuity amount is related to the SERP, because benefits under the Toronto SERIP must be paid in a lump sum. $331,447 of the present value amount is related to the SERP and
$276,729 of the present value amount is related to the Toronto SERIP.
|
50
The Boeing Company
2017 Proxy Statement
AUDIT COMMITTEE
Audit Committee Report
The Audit Committee of the Board of Directors serves as the
representative of the Board for general oversight of our financial accounting and reporting, systems of internal control, audit process, and monitoring compliance with laws and regulations and standards of business conduct. The Board has adopted a
written charter for the Audit Committee. Management has responsibility for preparing our financial statements as well as for our financial reporting process. Deloitte & Touche LLP, acting as independent auditor, is responsible for
expressing an opinion on the conformity of our audited financial statements with generally accepted accounting principles in the United States.
In this
context, the Audit Committee hereby reports as follows:
1.
|
The Audit Committee has reviewed and discussed the audited financial statements for fiscal 2016 with management.
|
2.
|
The Audit Committee has discussed with the independent auditor the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standards
No. 16,
Communication with Audit Committees
.
|
3.
|
The Audit Committee has received the written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent auditors communications with the Audit Committee concerning independence, and has discussed with the independent auditor the independent auditors independence.
|
4.
|
Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Annual Report on Form
10-K
for the year ended December 31, 2016, for filing with the Securities and Exchange Commission.
|
Each member of the Audit Committee meets the independence and financial literacy requirements of the SEC and the NYSE. The Board has determined that Ms. Good
and Messrs. Bradway, Kellner, Liddy and Stephenson are audit committee financial experts under SEC rules and have accounting or related financial management expertise.
|
|
|
|
|
|
|
Audit Committee
Edward M. Liddy,
Chair
Robert A. Bradway
Edmund P. Giambastiani,
Jr.
Lynn J. Good
Lawrence W. Kellner
Susan C. Schwab
Randall L. Stephenson
|
|
|
The
Boeing Company
2017 Proxy Statement
51
AUDIT COMMITTEE
Principal Accountant Fees and Services
The following table sets forth the aggregate fees billed to
us by Deloitte & Touche LLP, our independent auditor, in 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
Fees
(in millions)
|
|
Services Rendered
|
|
2016
|
|
|
2015
|
|
Audit
Fees
(1)
|
|
$
|
28.0
|
|
|
$
|
26.6
|
|
Audit-Related
Fees
(2)
|
|
$
|
0.4
|
|
|
$
|
|
|
Tax
Fees
(3)
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
All Other Fees
(4)
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
(1)
|
For professional services rendered for the audits of our 2016 and 2015 annual financial statements, and the reviews of our financial statements included in our Quarterly Reports
on Forms
10-Q
during 2016 and 2015. Includes fees for statutory audits of $3.8 million in 2016 and $3.4 million in 2015.
|
(2)
|
For consultations on the new revenue standard.
|
(3)
|
For tax compliance and other services to expatriates and expatriate tax software licenses and related support.
|
(4)
|
For human resource database subscription services.
|
All of the
audit, audit-related and tax services are
pre-approved
by the Audit Committee. The amounts shown in the above table do not include fees paid to Deloitte & Touche LLP by our employee benefit plans in
connection with audits of the plans. Such fees amounted to approximately $0.3 in 2016 and $0.3 in 2015. Although employee benefit plan fees charged directly to the plans do not require
pre-approval
by the
Audit Committee, they were
pre-approved.
The Audit Committee has considered whether the provision of
non-audit
services is compatible with maintaining the independence
of our independent auditor.
The Audit Committee has adopted a policy governing its
pre-approval
of audit and
non-audit
services to be provided by our independent auditor in order to facilitate compliance with the requirements of the Sarbanes-Oxley Act of 2002. Permitted audit services may include, among other things,
audit, review or attest services required under the securities laws, opinions on our financial statements and internal control systems and processes, comfort letters and other services performed to fulfill the independent auditors
responsibility under generally accepted auditing standards. Permitted
non-audit
services may include, among other things, consultations and tax services.
Pursuant to this policy, the Audit Committee (or, in the case of services involving fees of less than $250,000, the Chair of the Audit Committee) must
pre-approve
all audit and
non-audit
services to be provided by the independent auditor. The Office of the Corporate Controller periodically provides written updates to the
Audit Committee on fees for audit and
non-audit
services.
52
The Boeing Company
2017 Proxy Statement
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITOR (ITEM 4)
PROPOSAL SUMMARY
Shareholders are being asked to ratify the
selection of Deloitte & Touche LLP (Deloitte), an independent registered public accounting firm, to serve as our independent auditor for 2017.
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The Board recommends that you vote FOR this proposal.
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The Audit Committee is
directly responsible for the appointment, compensation, retention and oversight of Boeings independent registered public accounting firm. The Audit Committee has appointed Deloitte & Touche LLP, an independent registered public
accounting firm, to serve as our independent auditor for 2017. Deloitte & Touche LLP served in this capacity in 2016. The Audit Committee and the Board believe that the retention of Deloitte & Touche LLP to serve as our independent
external auditor is in the best interests of Boeing and its shareholders.
As a matter of good corporate governance, the Audit Committee hereby submits
its selection of our independent auditor to shareholders for ratification. If the shareholders do not ratify the selection of Deloitte & Touche LLP, the Audit Committee will review its future selection of an independent auditor in light of
that result.
For additional information concerning the Audit Committee and its activities with Deloitte & Touche LLP, see Audit
Committee beginning on page 51. Representatives of Deloitte & Touche LLP are expected to be present at the annual meeting, where they will respond to appropriate questions and, if they wish, make a statement.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
FOR
THIS PROPOSAL.
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The
Boeing Company
2017 Proxy Statement
53
STOCK OWNERSHIP INFORMATION
Directors and Executive Officers
The following table sets forth beneficial ownership of
Boeing stock, as of March 1, 2017, of each director, director nominee and NEO, and all directors and executive officers as a group. The table also sets forth stock units held by such persons pursuant to our compensation and benefit plans. Each
director, director nominee and NEO, and all directors and executive officers as a group, owned less than 1% of the outstanding Boeing stock as of March 1, 2017.
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Directors and Nominees
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Shares Beneficially Owned
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Stock Units
(1)
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Total
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Robert A. Bradway
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0
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732
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732
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David L. Calhoun
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2,450
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20,950
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|
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23,400
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Arthur D. Collins, Jr.
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0
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|
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36,904
|
|
|
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36,904
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Kenneth M. Duberstein
|
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6,160
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|
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55,253
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|
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61,413
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Edmund P. Giambastiani, Jr.
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|
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0
|
|
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13,401
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13,401
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Lynn J. Good
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483
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2,077
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2,560
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Lawrence W. Kellner
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2,500
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8,508
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11,008
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Edward M. Liddy
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3,944
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19,302
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23,246
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Susan C. Schwab
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1,707
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|
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12,339
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14,046
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Randall L. Stephenson
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3,721
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2,532
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6,253
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Ronald A. Williams
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4,200
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(2)
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13,749
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17,949
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Mike S. Zafirovski
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0
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43,889
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43,889
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Named Executive Officers
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Shares Beneficially Owned
(3)
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Stock Units
(4)
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Total
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Dennis A. Muilenburg
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202,102
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(5)
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93,579
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295,681
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Gregory D. Smith
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147,288
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(6)
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39,256
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186,544
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Raymond L. Conner
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11,339
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93,088
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|
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104,427
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J. Michael Luttig
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8,642
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38,998
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47,640
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Kevin G. McAllister
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0
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134,733
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134,733
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All directors and executive officers as a group (28 people)
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756,208
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1,002,121
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(7)
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1,758,328
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(1)
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Consists of stock units credited to the account of the nonemployee director under our Deferred Compensation Plan for Directors. See Compensation of Directors on page
18.
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(2)
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Consists of shares held in trust for members of Mr. Williams family.
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(3)
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Includes shares held in the VIP, as well as shares issuable upon the exercise of stock options that are vested as of, or will vest within 60 days of, March 1, 2017 as
follows:
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Number of Shares
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Dennis A. Muilenburg
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131,586
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Gregory D. Smith
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95,429
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Raymond L. Conner
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673
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J. Michael Luttig
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715
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Kevin G. McAllister
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0
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All directors and executive officers as a group (28 people)
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479,021
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(4)
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Consists of RSUs, Career Shares, MDSUs and deferred stock units held by the NEO.
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(5)
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Includes 20 shares held by Mr. Muilenburgs spouse.
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(6)
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Includes 62 shares held by Mr. Smiths spouse.
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(7)
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Consists of RSUs, Career Shares, MDSUs, retainer stock units and deferred stock units held by all directors and executive officers as a group.
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54
The Boeing Company
2017 Proxy Statement
STOCK OWNERSHIP INFORMATION
Principal Shareholders
The following table sets forth information as to any person
known to us to be the beneficial owner of more than 5% of Boeing stock as of December 31, 2016. Information is based on a review of filings made with the SEC on Schedules 13G. As of December 31, 2016, there were 617,154,511 shares of
Boeing stock outstanding.
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Name and Address
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Shares Beneficially Owned
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Percent of Stock Outstanding
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State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, Massachusetts 02111
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64,162,883
(1)
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10.4%
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Capital World Investors
333 South Hope Street
Los Angeles, California 90071
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51,613,636
(2)
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8.4%
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The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
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38,801,412
(3)
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6.3%
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Evercore Trust Company, N.A.
55 East 52nd Street, 36th Floor
New York, New York 10055
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35,811,634
(4)
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5.8%
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BlackRock, Inc.
55 East 52
nd
Street
New York, New York 10055
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33,572,413
(5)
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5.4%
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(1)
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As of December 31, 2016, State Street Corporation and its direct and indirect subsidiaries in their various fiduciary and other capacities had shared voting power with
respect to 64,162,883 shares of Boeing stock and shared dispositive power with respect to 28,351,249 shares of Boeing stock. This total includes 35,811,634 shares of Boeing stock then held in The Boeing Company Voluntary Investment Plan on behalf of
The Boeing Company Employee Savings Plans Master Trust, for which State Street Bank and Trust Company acts as trustee.
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(2)
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As of December 31, 2016, Capital World Investors, a division of Capital Research and Management Company, had sole voting and dispositive power with respect to 51,613,636
shares of Boeing stock. Capital World Investors is deemed to be the beneficial owner of these shares as a result of Capital Research and Management Company acting as investment adviser to various investment companies registered under Section 8
of the Investment Company Act of 1940. Capital World Investors disclaims beneficial ownership of these shares.
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(3)
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As of December 31, 2016, The Vanguard Group had sole voting power with respect to 903,442 shares of Boeing stock, sole dispositive power with respect to 37,825,676 shares of
Boeing stock, shared voting power with respect to 93,211 shares of Boeing stock and shared dispositive power with respect to 975,736 shares of Boeing stock.
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(4)
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As of December 31, 2016, Evercore Trust Company, N.A. had shared dispositive power with respect to 35,811,634 shares of Boeing stock held in The Boeing Company Voluntary
Investment Plan on behalf of The Boeing Company Employee Savings Plans Master Trust, for which Evercore Trust Company, N.A. acts as investment manager.
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(5)
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As of December 31, 2016, BlackRock, Inc. had sole voting power with respect to 29,100,434 shares of Boeing stock and sole dispositive power with respect to 33,572,413 shares
of Boeing stock.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934,
as amended, requires our directors, certain of our officers and beneficial owners of more than 10% of Boeing stock to file with the SEC reports of their initial ownership and changes in their ownership of Boeing stock and other equity securities.
Based solely on a review of copies of reports filed by the reporting persons furnished to us, and written representations from reporting persons, we believe that the reporting persons complied with all Section 16(a) filing requirements on a
timely basis during 2016, except that Ms. Leanne Carets Form 3 failed to timely reflect beneficial ownership of 1,208 shares of Boeing stock.
The
Boeing Company
2017 Proxy Statement
55
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
PROPOSAL SUMMARIES
ITEM 5 ADDITIONAL REPORT ON
LOBBYING ACTIVITIES.
Shareholders are being asked to vote on a shareholder proposal calling for additional disclosure of Boeings lobbying activity.
ITEM 6 REDUCE THRESHOLD TO CALL SPECIAL SHAREHOLDER MEETINGS FROM 25% TO 15%.
Shareholders are being asked to vote on a shareholder proposal calling for the threshold to call a special shareholder
meeting to be reduced from 25% to 15%.
ITEM 7 REPORT ON ARMS SALES TO ISRAEL.
Shareholders are being asked to vote on a shareholder
proposal calling for management to prepare and publish a special report detailing all sales of weapons-related products and services to Israel.
ITEM
8 IMPLEMENT HOLY LAND PRINCIPLES.
Shareholders are being asked to vote on a shareholder proposal calling for the Company to adopt seven employment-related principles that would cover our employees in Israel and, thereafter, to publicly
report on and appoint staff to monitor that effort.
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The Board recommends that you vote AGAINST each of these proposals.
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The following shareholder
proposals will be voted on at the annual meeting if properly presented by the proponent or one who is qualified under state law to present the proposal on such proponents behalf. Some of these shareholder proposals contain assertions about
Boeing that we believe are incorrect. We have not attempted to refute all of the inaccuracies. We will provide the name, address and number of shares of Boeing stock held by each proponent promptly upon written or oral request by any shareholder to
the Corporate Secretary.
Shareholder Proposal Additional Report on Lobbying Activities (Item 5)
Whereas, we believe in full disclosure of Boeings direct and indirect lobbying activities and expenditures to assess whether Boeings lobbying is
consistent with its expressed goals and in the best interests of shareholders.
Resolved, the shareholders of Boeing request the preparation of a report,
updated annually, disclosing:
1.
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Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
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2.
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Payments by Boeing used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the
recipient.
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3.
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Boeings membership in and payments to any
tax-exempt
organization that writes and endorses model legislation.
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4.
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Description of managements and the Boards decision making process and oversight for making payments described in sections 2 and 3 above.
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For purposes of this proposal, a grassroots lobbying communication is a communication directed to the general public that (a) refers to specific
legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. Indirect lobbying is lobbying
engaged in by a trade association or other organization of which Boeing is a member.
Both direct and indirect lobbying and grassroots
lobbying communications include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee or other
relevant oversight committees and posted on Boeings website.
Supporting Statement
As shareholders, we encourage transparency and accountability in the use of corporate funds to influence legislation and regulation. Boeing spent $38.721 million in 2014 and 2015 on direct federal lobbying
activities (opensecrets.org). These figures do not include lobbying expenditures to influence legislation in states, where Boeing also lobbies but disclosure is uneven or absent. For example, in 2014 and 2015, Boeing spent $193,000 on lobbying in
California and had contracts with lobbyists worth a total of $700,000 to $1,070,000 in Texas. Boeings lobbying on safety record reporting has attracted media scrutiny (Boeing, Lockheed Lobby against Wage, Safety Executive Order,
Bloomberg, July 27, 2016), as has a Boeing directors ties to the Business Roundtable (Lobbyists as Directors Test Rules for Corporate Boards, Wall Street Journal, October 4, 2016).
Boeing is a member of the Business Roundtable and serves on the board of the National Association of Manufacturers, which together spent over $63 million on
lobbying in 2014 and 2015. Boeing restricts its trade associations from using its payments for political contributions, but this does not cover payments used for lobbying. This leaves a serious
56
The Boeing Company
2017 Proxy Statement
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
disclosure gap, as trade associations generally spend far more on lobbying than on political contributions. Boeing does not disclose its memberships in, or payments to, trade associations, or the
amounts used for lobbying.
We are concerned that Boeings current lack of trade association lobbying disclosure presents reputational risk for
Boeing. Transparent reporting would reveal whether company assets are being used for objectives contrary to Boeings long-term interests.
Board of Directors Statement Against the Shareholder Proposal
The Board has carefully considered this proposal and believes that it is not in the best interests of our shareholders. We have in
the past discussed the subject matter of this proposal with many of our largest shareholders. The Boards deliberations with respect to this proposal reflect those discussions as well as the outcomes of similar proposals that have been
presented in recent years. Those similar proposals received support from holders of less than 20% of our outstanding shares. The Board recommends that you vote
AGAINST
Item 5 for the following reasons.
The proposal is unnecessary, due to the transparency of Boeings lobbying expenditures and strong risk mitigation
procedures.
Boeing regularly engages in policy debates at the federal, state and local levels on a variety of
issues, including aviation safety and national security. The Board requires that all of Boeings public policy advocacy comply with all applicable laws and regulations, sound corporate practice and Boeings high standards of ethical
conduct. Consistent with these objectives, Boeing has instituted full transparency intoand extensive oversight ofany political expenditures by the Company, and has implemented additional policies and procedures with respect to its
lobbying and advocacy activities, including expenditures to trade associations. Information about the Boards and the Companys oversight of lobbying activities is available at
www.boeing.com/company/key-orgs/government-operations/.
We believe that this approach enhances shareholder value, minimizes financial and reputational risk, and reflects our commitment to legal compliance,
strong corporate governance and high ethical standards. These policies and practices include the following:
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Boeing files both quarterly and semi-annual federal Lobbying Disclosure Act reports with Congress, which are publicly available at http://disclosures.house.gov/,
detailing lobbying expenditures, issues lobbied on, government entities lobbied, Company lobbyists, and expenditures of the Boeing Political Action Committee, a voluntary,
non-partisan,
employee-sponsored
political action committee. Boeing files similar reports when required at the state level.
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Complete information about federal, state and local political expenditures by both Boeing and the Boeing Political Action Committee is available at
www.boeing.com/company/key-orgs/government-operations/.
The website also describes the Companys policies and procedures for Company political contributions, including Board oversight procedures and other
internal authorizations required before contributions are made.
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Boeing has not made any contributions from corporate funds to federal, state or local candidates or political parties or ballot initiatives in the last five
years.
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Boeings policy is to prohibit trade associations and other third-party organizations from using Boeings funds for any election-related political
expenditure.
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In part due to the policies described above, the 2016
CPA-Zicklin
Index of Corporate Political Accountability and Disclosure once again listed Boeing as a first-tier company for political transparency and accountability. In addition, during many discussions with our
largest shareholders as part of our regular engagement on governance issues, shareholders uniformly expressed satisfaction with Boeings level of disclosure and the rigor of its oversight in this area.
Boeing works with trade associations for many reasons unrelated to political or issue advocacy, and the proposals
mandatory reporting requirements would mislead shareholders and the public, and potentially undermine Boeings business strategies, by suggesting otherwise.
The Board supports Boeings involvement in trade, industry and civic groups that provide technical,
business, professional and related expertise on matters critical to our success. Certain of these organizations may also promote Boeings interests on matters of public policy, but their views may not always reflect Boeings views. As a
result, it would be misleading to suggest that those associations lobbying activities were directed by Boeing, or that Boeings dues were paid either partially or entirely to fund lobbying. The disclosure sought by the proposal would
purport to send just such a message. In addition, the reporting sought by the proposal could reveal to our competitorsfor reasons wholly unrelated to political advocacysensitive aspects of our corporate strategy.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
AGAINST
THIS PROPOSAL.
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The
Boeing Company
2017 Proxy Statement
57
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
Shareholder ProposalReduce Threshold to Call Special Shareholder Meetings from 25% to 15% (Item 6)
Resolved, Shareowners ask our board to take the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing
document to give holders in the aggregate of 15% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our boards current power to call a special meeting.
Dozens of Fortune 500 companies allow 10% of shares to call a special meeting. Special meetings allow shareowners to vote on important matters, such as electing new
directors that can arise between annual meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This is important because there could
be
15-months
or more between annual meetings.
This proposal is particularly important because we do not have the
opportunity to act by written consent. A majority of Fortune 500 companies provide for shareholders to call special meetings and to act by written consent. We as shareholders need to be empowered especially since the price of our stock has been dead
money for the year preceding the submission of this proposalincluding a dip below $110. Perhaps a proxy advisory firm will recommend that companies like ours, with no written consent opportunity for shareholders, in turn allow for at least 15%
of shareholders to call a special meeting.
Please vote to enhance shareholder value: Special Shareowner MeetingsProposal 6
Board of Directors Statement Against the Shareholder Proposal
The Board has carefully considered this proposal and believes that it is not in the best interests of our shareholders. We have in the past discussed the subject matter of this proposal with many of our largest
shareholders. The Boards deliberations with respect to this proposal reflect those discussions as well as the outcomes of similar proposals that have been presented in recent years. The Board recommends that you vote
AGAINST
Item 6
for the following reasons.
Boeings current ownership threshold balances the preservation of this important
shareholder right with the financial and administrative burdens that would result from misuse of the process by a small minority of shareholders with narrow interests.
Special shareholder meetings cost millions of dollars, demand significant attention from the Board and senior management, and can
disrupt normal business operations. As a result, these meetings should be limited to when there are urgent and important strategic matters or profound fiduciary concerns. Boeing continues to believe that either the Board or at least 25% of our
shareholders should agree that a matter requires urgent discussion before a special meeting is called. If the proposal were adopted, a relatively small minority of shareholderspotentially with narrow, short-term interestscould call an
unlimited number of special meetings, without regard to how the direct costs and other burdens might impact the Companys future success or the interests of the vast majority of shareholders.
Boeings commitment to shareholder engagement and governance best practices, including the existing right to call special
meetings, already ensures Board accountability without unnecessary risk.
Boeing continues to view direct
shareholder engagement as key to the Companys success. To that end, Boeing leaders meet regularly with shareholders to discuss our strategy, operational performance, and business practices. We also meet with shareholders throughout the year to
share perspectives on corporate governance and executive compensation matters (see page 17). This commitment to ongoing dialogue with our shareholders, together with practices such as annual director elections, a proxy access right for
nominating directors, no supermajority voting provisions, and shareholders existing right to call special meetings, preserves the Boards accountability without the expense and risk associated with a lower special meeting threshold.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST
THIS
PROPOSAL.
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58
The Boeing Company
2017 Proxy Statement
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
Shareholder Proposal Report on Arms Sales to Israel (Item 7)
WHEREAS: Israel experienced a 50% drop in foreign investment following Operation Protective Edge and, according to a report from the United Nations, the
decline was primarily caused by the fallout from the Israel Defense Forces (IDF) Operation Protective Edge and international boycotts against the country for alleged violations of international law.
WHEREAS: July 21st-31st, 2014 Boeing was a target in a nationwide
call-in
campaign demanding cessation of weapons sales to
Israel. Seven major universities in the United States alone have passed divestment resolutions that included Boeing due to Boeings ongoing arms sales to Israel.
WHEREAS: On July 23rd 2014, 24 doctors and scientists published an open letter in a renown medical journal stating, In the aggression of Gaza by Israel
we witnessed targeted weaponry used
indiscriminately and on children and we constantly see that so called intelligent weapons fail to be precise, unless they are deliberately used to destroy innocent lives.
WHEREAS: A new report by Amnesty International about war crimes committed by Israel during Operation Protective Edge is entitled Black Friday, and documents the attack on the city of Rafah on August
1st. The report finds that The single most deadly strike of this day occurred
when two
one-tonne
bombs were dropped on a residential area in the
al-Tannur
neighbourhood
The report continues and found,
the bombs
consistent with
MK-84
bombs,
the largest and most destructive guided bombs of their kind
WHEREAS: Boeing
manufactures the Joint Direct Attack Munitions (JDAM) tail kit guidance systems that make the
MK-84
bomb a guided weapon. In May 2015, Boeing agreed to a contract to provide JDAMs to Israel, including 10,000
for
MK-84s.
RESOLVED: Shareholders request that, within six months of the annual meeting, the Board of Directors
provide a comprehensive report, at reasonable cost and omitting proprietary and classified information, of Boeings sales of weapons related products and services to Israel.
Supporting Statement
We believe it is reasonable that the report include
1.
|
Processes used to determine and promote sales to Israel
|
2.
|
Procedures used to negotiate arms sales to Israel,
government-to-government
and direct commercial
sales and the percentage of sales for each category
|
3.
|
Disclosure of sales and other arrangements with local security forces
|
4.
|
Categories of military equipment or components with as much statistical information as permissible such as contracts for servicing/maintaining equipment
|
5.
|
Detailed risk analysis surrounding business relations with countries, like Israel, that have been accused of violating Geneva and Hague conventions and international human rights
law.
|
In light of the flight of investment from Israel, the worrisome prospects of growth, including maintaining partnerships with higher
education institutions, for a company that is at the center of Israels controversial wars, contributing to the deaths of thousands of civilians and children; and the overall moral and ethical questions raised by selling weapons that contribute
directly to illegal occupation, apartheid, and human rights violations, we urge you to vote for this proposal.
Board of Directors Statement Against the Shareholder Proposal
The Board has carefully considered this proposal and believes that it is not in the best interests of our shareholders. We have in
the past discussed the subject matter of this proposal with many of our largest shareholders. The Boards deliberations with respect to this proposal reflect those discussions as well as the outcome of an identical proposal that was presented
at last years annual meeting and only received support from holders of 5% of our outstanding shares. The Board recommends that you vote
AGAINST
Item 7 for the following reasons.
Information about Boeings defense sales to
non-U.S.
countries, including Israel,
is already publicly available.
Boeings defense sales to Israel are generally made
through the U.S. Department of Defense Foreign Military Sales (FMS) program, which facilitates U.S. foreign policy and military aid and assistance activities with allied and friendly nations. Under this program, Boeing contracts directly with the
U.S. Department of Defense, which acts on behalf of the foreign government
end-user.
U.S. law already requires public disclosure of the vast majority of FMS activity. Less often, when Boeing sells directly to
non-U.S.
governments, those transactions also are often a matter of public record, pursuant to Congressional notification requirements established by U.S. export control regulations or other means. For example, the
Defense Security Cooperation Agencys website (www.dsca.mil) issues public notices of proposed major foreign military sales as well as announcements of FMS activity and certain direct sales of defense products. In addition, the U.S.
Department of State often informs the U.S. Congress and the news media about direct sales of defense products to
non-U.S.
governments. Therefore, much if not all of the information this shareholder proposal
seeks is already readily accessible to the public, making the proposal unnecessary.
The
Boeing Company
2017 Proxy Statement
59
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
The proposal seeks to micromanage key elements of Boeings business, including its relationship with the
U.S. federal government, thereby undermining our ability to act in the best interest of shareholders.
When
deciding whether to sell defense products to any defense customers, Boeing management must consider many complex and competing factors, such as:
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overall demand for the specified products;
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the competitive landscape;
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the impact of the sale on Boeings reputation;
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U.S. and relevant
non-U.S.
regulatory requirements; and
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our broader relationship with the U.S. federal government as both a customer and regulator.
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|
In addition, sales of defense products to
non-U.S.
countries are subject to extensive procurement regulations, export control requirements and U.S. and foreign government oversight. In order to properly address this complex network of strategic and
compliance risks, decisions regarding Boeings customers or how Boeing engages in FMS activity with the U.S. Department of Defense properly belong with management, subject to active Board oversight. Moreover, singling out one particular
customer for detailed disclosures would serve no purpose other than to allow a small number of individual shareholders to second-guess these important decisions to the detriment of long-term shareholder value.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
AGAINST
THIS PROPOSAL.
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Shareholder Proposal Implement Holy Land Principles (Item 8)
Whereas, Boeing has operations in Palestine/Israel;
Whereas,
achieving a lasting peace in the Holy Landwith security for Israel and justice for Palestiniansencourages us to promote a means for establishing justice and equality;
Whereas, fair employment should be the hallmark of any American company at home or abroad and is a requisite for any just society;
Whereas, Holy Land Principles Inc., a
non-profit
organization, has proposed a set of equal opportunity employment principles to serve as guidelines for corporations in
Israel/Palestine.
These are:
1.
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Adhere to equal and fair employment practices in hiring, compensation, training, professional education, advancement and governance without discrimination based on national,
racial, ethnic or religious identity.
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Identify underrepresented employee groups and initiate active recruitment efforts to increase the number of underrepresented employees.
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Develop training programs that will prepare substantial numbers of current minority employees for skilled jobs, including the expansion of existing programs and the creation of
new programs to train, upgrade, and improve the skills of minority employees.
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Maintain a work environment that is respectful of all national, racial, ethnic and religious groups.
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5.
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Ensure that layoff, recall and termination procedures do not favor a particular national, racial, ethnic or religious group.
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Not make military service a precondition or qualification for employment for any position, other than those positions that specifically require such experience, for the
fulfillment of an employees particular responsibilities.
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Not accept subsidies, tax incentives or other benefits that lead to the direct advantage of one national, racial, ethnic or religious group over another.
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Appoint staff to monitor, oversee, set timetables, and publicly report on their progress in implementing the Holy Land Principles.
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Resolved: Shareholders request the Board of Directors to:
Make all
possible lawful efforts to implement and/or increase activity on each of the eight Holy Land Principles.
Supporting Statement
The proponent believes that Boeing benefits by hiring from the widest available talent pool. An employees ability to do the job should be the primary
consideration in hiring and promotion decisions. Implementation of the Holy Land Principleswhich are
pro-Jewish,
pro-Palestinian
and
pro-companywill
demonstrate concern for human rights and equality of opportunity in its international operations. Please vote your proxy FOR these concerns.
60
The Boeing Company
2017 Proxy Statement
SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
Board of Directors Statement Against the Shareholder Proposal
The Board has carefully considered this proposal and believes that it is not in the best interests of our shareholders, and
recommends that you vote
AGAINST
Item 8 for the following reasons.
Boeings existing diversity
and equal employment opportunity policies fully address the proposals concerns.
Boeing has a long-standing
commitment to
non-discrimination,
employee development, and diversity. We believe that diverse employees, business partners and community relationships are vital to creating advanced aerospace products and
services for our diverse customers around the world. One key element of this commitment is providing a work environment for all employees that is welcoming, respectful and engaging, with ample opportunities for personal and professional advancement.
We believe that this environment increases productivity, quality, creativity and innovation, and creates a competitive advantage for us in the marketplace.
Our robust policies, including our Equal Employment Opportunity Policy, Code of Conduct, and Code of Basic Working Conditions and Human Rights, demonstrate this commitment. Among other things, the policy on equal
employment opportunity prohibits discrimination based on race, color, religion, national origin, gender, sexual orientation, gender identity, age, physical or mental disability, genetic factor or military/veteran status. Boeing also has systems in
place to monitor compliance with each of these policies in every jurisdiction where we operate, including Israel. Moreover, Boeing has extensive training and continuing education programs for our global workforce, including an acclaimed company-wide
tuition-assistance program that helps employees secure advanced degrees and certifications. Because these existing policies, programs, and compliance tools fully address the proposals concerns, we do not believe it is necessary or useful to
adopt a second set of policies, programs, and compliance tools for one geographic area.
Adoption of the proposal
would require Boeing to maintain two duplicative set of policiesone for our Israel operations and one for the rest of the world.
Boeings existing policies are customized to best promote our core values, as well as reflect our global
reach and generate shareholder value. The proposal asks that we maintain a second,
off-the-shelf
set of policies in Israel. We believe that our policies are
most effective when they are applied in a consistent manner to all of our approximately 150,000 employees worldwide, including in Israel, and maintaining separate policies and monitoring systems would make enforcement of our company-wide standards
more costly and difficult. The proposal asks Boeing to devote additional resourcesbeyond those we currently deploy to enforce our existing global policiesto monitor, oversee, and publicly report on what would become separate employment
rules and programs that apply to less than 25 Boeing employees in Israel. Given the breadth and depth of Boeings existing policies and programs, this additional spending would reduce shareholder value and undermine our ability to promote
non-discrimination,
employee development, and diversity worldwide.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE
AGAINST
THIS PROPOSAL.
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The
Boeing Company
2017 Proxy Statement
61
ANNUAL MEETING INFORMATION
Attending the Annual Meeting
Time and Location
Boeings 2017 Annual Meeting of Shareholders will take place on Monday, May 1, 2017, beginning at 9:00 a.m., Central Time, in The James
Simpson Theatre at The Field Museum, 1400 South Lake Shore Drive, Chicago, Illinois 60605-2496. Directions to the meeting, a map, and parking information are provided on the back inside cover of this proxy statement.
Admission Policy
All holders
of Boeing shares as of the record date are encouraged to attend the annual meeting. In order to ensure the safety of all attendees, we have implemented the following security and admission policies.
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Eligible Attendees.
Attendance is limited to registered and beneficial Boeing shareholders as of the record date and to one immediate family member
accompanying each such shareholder.
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Admission Procedures.
In order to be admitted to the meeting, you must present both an admission ticket and valid government-issued photo identification,
such as a drivers license or passport. You must register on or prior to April 21, 2017 in order to obtain an admission ticket.
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Obtaining an Admission Ticket.
In order to obtain an admission ticket, please access Register for Meeting at www.proxyvote.com and follow the
instructions provided. If you do not have internet access, you can register by calling
1-844-318-0137.
You will need the
16-digit
voting control number found on your proxy card, email, notice of internet availability of proxy materials or voting instruction form. Seating at the annual meeting is limited, and requests for tickets will
be processed in the order in which they are received. In any event, you must register on or prior to April 21, 2017 if you wish to attend the annual meeting.
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Additional Security Measures.
Upon entering the meeting facility, you will be required to proceed through a security checkpoint. In addition, no cameras,
recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the annual meeting.
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Frequently Asked Questions
Why is it
so important that I promptly vote my shares?
We value your input. Regardless of the number of shares you hold and whether you plan to attend the annual meeting, we encourage you to vote your shares as soon as
possible to ensure that your vote is recorded promptly and so that we can avoid additional solicitation costs.
How does the Board of Directors
recommend that I vote?
The Board of
Directors recommends that you vote:
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FOR the election of each of the 13 director nominees named in this proxy statement (Item 1);
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FOR the approval, on an advisory basis, of named executive officer compensation (Item 2);
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FOR conducting future advisory votes on named executive officer compensation EVERY YEAR (Item 3);
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FOR the ratification of the appointment of Deloitte & Touche LLP as independent auditor for 2016 (Item 4); and
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AGAINST each of the shareholder proposals (Items 5 through 8).
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How may I expedite delivery of future proxy materials by receiving them electronically?
Registered Shareholders
Instead of receiving copies of our proxy materials in the mail, registered shareholders can elect to receive these communications electronically.
Your election to receive future proxy materials electronically would result in expedited delivery of your materials, conserve natural resources, and reduce Boeings printing and mailing costs by approximately $5.00 per year per household. For
additional information or to elect this option, please access www.computershare.com/investor.
62
The Boeing Company
2017 Proxy Statement
ANNUAL MEETING INFORMATION
Beneficial Shareholders
Many brokers and banks offer electronic delivery of proxy materials to their clients. For additional information, please contact your broker, bank or other holder
of record.
How may I vote my shares?
Beneficial Shareholders
If you own shares through a broker, bank or other holder of record, you must instruct the holder of record how to vote your shares. In order to
provide voting instructions to the holder of record of your shares, please refer to the materials forwarded by your broker, bank or other holder of record. Many brokers provide the option of voting by internet at www.proxyvote.com or by calling
1-800-454-8683.
You will need your
16-digit
voting control number, which can be found on the
notice of internet availability of proxy materials, email or voting instruction form provided by your broker, bank or other holder of record. Proxies submitted by internet or telephone must be received by 10:59 p.m., Central Time, on Sunday,
April 30, 2017.
Registered Shareholders
If you own shares that are registered in your name, you may vote by proxy before the annual meeting by internet at www.proxyvote.com, by calling
1-800-690-6903
or by signing and returning your proxy card. To vote by internet or telephone, you will need your
16-digit
voting control number, which can be
found on your proxy card, email or notice of internet availability of proxy materials. Proxies submitted by internet or telephone must be received by 10:59 p.m., Central Time, on Sunday, April 30, 2017. If you return a signed proxy card but do
not provide voting instructions for some or all of the matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board.
The Boeing Company Voluntary Investment Plan Participants
If you have an
interest in Boeing stock through participation in the VIP, you do not have actual ownership of the shares held in the VIP (the Plan Shares). The Plan Shares are registered in the name of the trustee. As a VIP participant, you have been
allocated interests in the Plan Shares and may instruct the trustee how to vote those interests by submitting a proxy at www.proxyvote.com, by calling
1-800-690-6903
or by signing and returning your proxy card. To vote by internet or telephone, you will need your
16-digit
voting control number, which can be found on your proxy card, email or notice of internet availability of proxy materials. However, you may not vote Plan Shares in person at the annual meeting. The number
of shares of Boeing stock shown on your proxy card includes all shares registered in your name and all Plan Shares in which you have an interest. In order to allow sufficient time for the trustee to tabulate the vote of the Plan Shares, your proxy
instructions must be received no later than 10:59 p.m., Central Time, on Wednesday, April 26, 2017. If you do not submit voting instructions before the deadline, the trustee will vote your Plan Shares in the same manner and proportion as the
Plan Shares with respect to which voting instructions have been received before the deadline, unless contrary to applicable law. If you return a signed proxy card that covers Plan Shares but do not provide voting instructions for some or all of the
matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board.
May I revoke my
proxy or change my vote?
Beneficial Shareholders
Beneficial shareholders should contact their broker, bank or other holder of record for instructions on how to revoke their proxies or change their vote.
Registered Shareholders
Registered shareholders may revoke their proxies or change their voting instructions at any time before 10:59 p.m., Central Time, on Sunday, April 30, 2017, by submitting a proxy via internet, telephone or
mail that is dated later than the original proxy or by delivering written notice of revocation to the Corporate Secretary. Registered shareholders may also revoke their proxies or change their vote by attending the annual meeting and voting by
ballot.
The Boeing Company Voluntary Investment Plan Participants
VIP participants may revoke their proxies or change their voting instructions at any time before 10:59 p.m., Central Time, on Wednesday, April 26, 2017, by
submitting a proxy via internet, telephone or mail that is dated later than the original proxy. VIP participants cannot revoke their proxies or change their voting instructions in person at the annual meeting because the trustee will not be present.
The
Boeing Company
2017 Proxy Statement
63
ANNUAL MEETING INFORMATION
What vote is required to approve each proposal?
Each share of Boeing stock entitles the holder to one vote
on each proposal presented for shareholder action.
Election of Directors (Item 1)
To be elected in an uncontested election, a director nominee must receive more FOR votes than AGAINST votes. Because we did not receive
proper advance notice in accordance with our
By-Laws
of any shareholder nominees for director, this election of directors is an uncontested election. Abstentions and broker
non-votes
will have no effect on the election of directors.
Recommendation on the Frequency of Advisory Votes on Named Executive Officer Compensation (Item 3)
Shareholders may vote for ONE YEAR, TWO YEARS, or THREE YEARS, or may abstain from voting. The frequency that receives the
greatest number of votes cast will be the frequency selected by our shareholders. Abstentions and broker
non-votes
will have no effect on this item.
All Other Proposals (Items 2 and 4 through 8)
Shareholders may vote FOR or AGAINST each of the other proposals, or may abstain from voting. Delaware law requires the affirmative vote of the majority of shares present in person or by
proxy and entitled to vote at the annual meeting for the approval of Items 2 and 4 through 8. A shareholder who signs and submits a proxy is present, so an abstention will have the same effect as a vote AGAINST Items 2
and 4 through 8. Broker
non-votes,
if any, will have no effect on these items.
What are
broker
non-votes?
If a broker or other financial institution holds your shares in its name and you do not provide voting instructions to it, NYSE rules allow that firm to vote your shares only on routine matters. Item 4, the
ratification of the appointment of our independent auditor for 2017, is the only matter for consideration at the meeting that NYSE rules deem to be routine. For all matters other than Item 4, you must submit voting instructions to the firm that
holds your shares if you want your vote to count. When a firm votes a clients shares on some but not all of the proposals, the missing votes are referred to as broker
non-votes.
Who is entitled to vote at the 2017 Annual Meeting?
Holders of Boeing stock at the close of business on
March 2, 2017 are entitled to receive a formal Notice of the Annual Meeting and to vote their shares at the annual meeting. As of that date, there were approximately 608,084,979 shares of common stock outstanding, of which approximately
608,082,393 were eligible to vote. (Shares issued in exchange for shares of Rockwell International Corporation or McDonnell Douglas Corporation that have not been exchanged are not eligible to vote.) There were 113,791 registered shareholders on the
record date and approximately 1,016,628 beneficial shareholders whose shares were held in street name through a broker or bank.
A list of
shareholders of record entitled to vote at the annual meeting will be available at the annual meeting and for ten days prior to the annual meeting between the hours of 9:00 a.m. and 4:00 p.m., Central Time, at the Office of the Corporate Secretary,
The Boeing Company, 100 North Riverside Plaza, MC 5003-1001, Chicago, Illinois 60606-1596. A shareholder may examine the list for any legally valid purpose related to the annual meeting.
How many votes must be present in order to hold the annual meeting?
A quorum must be present in order for business to be conducted at the annual meeting. A quorum consists of the holders of
one-third
of the outstanding shares of stock entitled to vote at the meeting. Shares of Boeing stock present in person or by duly authorized proxy (including any abstentions and broker
non-votes)
will be counted for the purpose of establishing a quorum at the meeting.
64
The Boeing Company
2017 Proxy Statement
ANNUAL MEETING INFORMATION
What if I return my proxy but do not vote for all of the proposals?
Shares represented by a properly executed proxy will be
voted at the annual meeting in accordance with the shareholders instructions. If you are a registered shareholder or have an interest in Boeing stock through the VIP and return a signed proxy card that omits voting instructions for some or all
of the matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board. If a broker or other financial institution holds your shares in its name, NYSE rules prohibit your shares from
being voted on all items other than Item 4 absent your instruction, so you must provide instructions on these items for your vote to count.
Are
there any other items of business that will be addressed at the annual meeting?
The Board is not aware of any business that may properly be brought before the annual meeting other than those matters described in this proxy statement. If any matters other than those shown on the proxy card are
properly brought before the annual meeting, the proxy card gives discretionary authority to the persons named on the proxy card to vote the shares in their best judgment.
Who pays for this proxy solicitation?
We bear the costs of soliciting proxies. We have hired Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902, to aid in the solicitation of proxies for a fee of $25,000, plus reasonable
out-of-pocket
expenses. Proxies may be solicited by personal interview, mail, telephone, email and other online methods. Morrow Sodali has contacted brokerage houses,
other custodians and nominees to ask whether other persons are the beneficial owners of the shares they hold in street name and, if that is the case, will supply additional copies of the proxy materials for distribution to such beneficial owners. We
will reimburse these parties for their reasonable expenses in sending proxy materials to the beneficial owners of the shares.
Where can I find the
voting results of the annual meeting?
We
will announce preliminary voting results at the annual meeting. We will file with the SEC a Current Report on Form
8-K
containing the final voting results within four business days of the annual meeting or, if
final results are not available at that time, within four business days of the date on which final voting results become available.
What if a
director nominee does not receive the required vote?
Boeing is a Delaware corporation and, under Delaware law, if an incumbent director is not elected, that director remains in office until the directors successor is duly elected and qualified or until the
directors earlier resignation or removal. To address this potential outcome, all director nominees have executed irrevocable resignations that would be effective upon (1) such nominees failure to receive the required vote at the
annual meeting and (2) the Boards acceptance of such resignation. As set forth in our director resignation policy, which is described in our Corporate Governance Principles, the Board will act upon, and publicly disclose its decision with
respect to, any tendered resignation within 90 days from the date of the certification of the election results.
How may I recommend individuals to
serve as directors?
Shareholders may
recommend qualified candidates for consideration by the GON Committee by writing at any time to the Office of the Corporate Secretary, The Boeing Company, 100 North Riverside Plaza, MC 5003-1001, Chicago, Illinois 60606-1596. The correspondence must
state the name, age and qualifications of the person proposed for consideration. The GON Committee evaluates the qualifications of candidates properly submitted by shareholders on the same basis as those of other director candidates.
How may I obtain a copy of Boeings Annual Report on Form
10-K
and other financial information?
Boeings 2016 annual report, which includes a copy
of the Annual Report on Form
10-K,
was delivered to shareholders with this proxy statement. Our Notice of Annual Meeting, this proxy statement and the 2016 annual report are also available on the internet at
www.proxyvote.com. In addition, our Annual Report on Form
10-K,
including financial statements, is available at http://investors.boeing.com/investors/financial-reports/ and on the SECs website at
www.sec.gov. Shareholders also may request an additional copy of the Annual Report on Form
10-K,
which we will furnish without charge, by calling
(425) 965-4550
or
writing Mail Services, The Boeing Company, P.O. Box 3707, Mail
Code 3T-06,
Seattle, Washington 98124-2207.
The
Boeing Company
2017 Proxy Statement
65
ANNUAL MEETING INFORMATION
Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of
proxy materials?
Pursuant to rules adopted
by the SEC, we may provide you with access to proxy materials over the internet rather than by mailing the materials to you. To reduce costs and conserve resources, we are sending a Notice of Internet Availability of Proxy Materials to some of our
shareholders. The notice provides instructions for accessing this proxy statement and our 2016 annual report at www.proxyvote.com. The notice also explains how shareholders may request printed proxy materials for this or future annual meetings.
Several shareholders live at my address. Why did we receive only one set of proxy materials?
We deliver only one annual report and one proxy statement
to multiple shareholders at the same address unless we have received contrary instructions from one or more of the shareholders. We will, upon written or oral request, promptly deliver a separate copy of the annual report or proxy statement to a
shareholder at a shared address to which a single copy of the annual report or proxy statement was delivered. Registered shareholders who wish to receive a separate annual report or proxy statement in the future, or registered shareholders sharing
an address who wish to receive a single copy of the annual report or proxy statement in the future, should contact our Transfer Agent at Computershare Investor Services, P.O. Box 30170, College Station, Texas 77842-3170 or by calling
888-777-0923
(toll-free for domestic U.S. callers) or
781-575-3400
(non-U.S.
callers may call collect). Beneficial shareholders who have the same address and wish to receive a separate copy of the annual report or proxy statement in the future should contact their broker, bank or
other holder of record.
Shareholder Proposals and Director Nominations for the 2018 Annual Meeting
Proposals for Inclusion in
2018 Proxy Statement
If you wish to submit a proposal for inclusion in our 2018 proxy statement, you must follow the procedures set forth in Rule
14a-8
of the Securities Exchange Act of 1934. To be eligible for inclusion, we must receive your proposal at the address below no later than Friday, November 17, 2017.
Director Nominations for Inclusion in 2018 Proxy Statement
Our
By-Laws
permit a shareholder, or a group of up to 20 shareholders, that has owned at least 3% of our outstanding common stock for at least three years to nominate and
include in our proxy statement candidates for the Board, subject to certain requirements. Any such nomination must be received at the address below no earlier than the close of business on Wednesday, October 18, 2017 and no later than the close
of business on Friday, November 17, 2017. Any such notice must meet the other requirements set forth in our
By-Laws,
which are publicly available on our website.
Other Proposals or Nominations
Our
By-Laws
require that we receive advance written notice for any shareholder proposal or director nomination that is not
submitted for inclusion in our proxy statement. Any such proposal or nomination must be received at the address below no earlier than the close of business on Monday, January 1, 2018 and no later than the close of business on Wednesday,
January 31, 2018. Any such notice must meet the other requirements set forth in our
By-Laws,
which are publicly available on our website.
Where to Send All Proposals and Nominations
Office of the Corporate Secretary
The Boeing Company
100 North Riverside Plaza
MC 5003-1001
Chicago, Illinois 60606-1596
66
The Boeing Company
2017 Proxy Statement
The Boeing Company 2017 Annual Meeting of Shareholders
Monday, May 1, 2017 at 9:00 a.m., Central Time
The James Simpson Theatre at The Field Museum
1400 South
Lake Shore Drive Chicago, Illinois 60605-2496
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Public Transportation:
The Field Museum is easily accessible by public transportation. For directions, please see
www.fieldmuseum.org or call the Regional Transportation Authority at
(312) 836-7000.
From OHare Airport:
Take
I-90
East to the Kennedy Expressway,
I-90/94
East toward Chicago. Take the Roosevelt Road exit and turn left at the second
traffic light onto Roosevelt Road. Turn right onto Columbus Drive (which becomes Lake Shore Drive
(US-41)).
Take the 18th Street exit. Turn left onto 18th Street and continue as it bends left, becoming Museum
Campus Drive. The entrance to the North Garage will be on your left on Museum Campus Drive.
From Midway Airport:
Go north on Cicero
Ave. to
I-55
North/Stevenson Expressway. Take
I-55
North to the exit on the left for Lake Shore Drive
(US-41
North). Take the
Lake Shore Drive
(US-41
North) exit. Turn right onto 18th Street and continue as it bends left, becoming Museum Campus Drive. The entrance to the North Garage will be on your left on Museum Campus
Drive.
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Meeting Admission Policy:
If you plan to attend the meeting in person, you must present an admission ticket and valid photo identification. In order
to obtain a ticket, you must register no later than April 21, 2017. To register, please follow the instructions on page 62.
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Please use the West entrance to The Field Museum and proceed to the James Simpson Theatre.
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If you have a disability that requires a reasonable accommodation, please send an email to shareholderservices@boeing.com or call
(312) 544-2835
at least two weeks in advance of the meeting.
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Self-parking is available at the North Garage, which is across the street from The Field Museum.
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THE BOEING COMPANY
100 N. RIVERSIDE PLAZA
MC 5003-1001
CHICAGO, IL 60606-1596
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DEADLINE TO VOTE
Your internet or phone vote must be received by 10:59 p.m. CT on Sunday, April 30, 2017. If you own Plan shares, your vote must be
received by 10:59 p.m. CT on Wednesday, April 26, 2017 in order to provide the trustee sufficient time to tabulate the vote of the Plan shares.
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VOTE BY INTERNET -
www.proxyvote.com
Use the internet to transmit your voting instructions. Have this proxy card in hand when you access the website and follow the instructions.
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VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions. Have this proxy card in hand when you call and follow the instructions.
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VOTE BY MAIL
Mark, sign and date your
proxy card and return it in the postage-paid envelope provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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MEETING ADMISSION POLICY
In order to attend the meeting, you must obtain an admission ticket by registering no later than April 21, 2017. Click the
Register for Meeting link at www.proxyvote.com or call
1-844-318-0137
to register.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E17261-P85631-Z69243-Z69242 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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THE BOEING COMPANY
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The Board of Directors recommends you vote
FOR
the following 13 director nominees:
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1.
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Election of Directors
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For
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Abstain
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1a.
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Robert A. Bradway
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☐
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☐
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1b.
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David L. Calhoun
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☐
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COMPANY PROPOSAL: The Board of Directors recommends you vote
FOR
proposal 2.
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Abstain
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1c.
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Arthur D. Collins, Jr.
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☐
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☐
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☐
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1d.
1e.
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Kenneth M. Duberstein
Edmund P. Giambastiani, jr.
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☐
☐
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☐
☐
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☐
☐
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2.
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Approve, on an Advisory Basis, Named Executive Officer Compensation.
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☐
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☐
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☐
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1f.
1g.
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Lynn J. Good
Lawrence W. Kellner
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☐
☐
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☐
☐
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☐
☐
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COMPANY PROPOSAL: The Board of Directors recommends you vote
1 YEAR
on proposal 3.
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1 Year
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2 Years
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3 Years
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Abstain
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1h.
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Edward M. Liddy
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☐
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☐
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☐
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3.
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Approve, on an Advisory Basis, the Frequency of Future Advisory Votes on Named Executive Compensation.
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☐
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☐
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☐
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☐
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1i.
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Dennis A. Muilenburg
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☐
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☐
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☐
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1j.
1k.
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Susan C. Schwab
Randall L. Stephenson
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☐
☐
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☐
☐
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☐
☐
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COMPANY PROPOSAL: The Board of Directors recommends you
vote
FOR
proposal 4.
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For
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Against
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Abstain
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1l.
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Ronald A. Williams
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☐
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☐
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☐
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4.
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Ratify the Appointment of Deloitte & Touche LLP as Independent Auditor for 2017.
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☐
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☐
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☐
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1m.
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Mike S. Zafirovski
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☐
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☐
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☐
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SHAREHOLDER PROPOSALS: The Board of Directors recommends you vote
AGAINST
proposals 5, 6, 7 and 8.
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5.
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Additional Report on Lobbying Activities.
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☐
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☐
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☐
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6.
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Reduce Threshold to Call Special Shareholder Meetings from 25% to 15%.
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☐
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☐
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☐
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7.
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Report on Arms Sales to Israel.
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☐
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☐
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☐
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8.
|
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Implement Holy Land Principles.
|
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☐
|
|
☐
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☐
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
|
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Date
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Signature (Joint Owners)
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Date
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V.1.1
The Boeing Company 2017 Annual Meeting of Shareholders
Monday, May 1, 2017
9:00 a.m., Central Time
The Field Museum
1400
South Lake Shore Drive
Chicago, Illinois 60605-2496
Meeting Admission Policy: Advance Registration Required
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If you would like to attend the Annual Meeting, you must obtain an admission ticket by
registering no later than April 21, 2017, as described in more detail in the Proxy Statement.
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Your vote is important. Please vote by internet, telephone or mail as soon as possible to ensure that your vote is recorded promptly.
|
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Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting:
The Notice of 2017 Annual Meeting and Proxy Statement and the 2016 Annual Report
are available at www.proxyvote.com.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
|
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|
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To save resources and reduce Boeings printing and mailing costs,
you can elect to receive
future proxy materials and other shareholder communications electronically
at
www.computershare.com/investor.
|
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IF YOU WISH TO VOTE BY MAIL, FOLD ALONG PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
E17262-P85631-Z69243-Z69242
|
THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS
THE BOEING COMPANY ANNUAL MEETING OF SHAREHOLDERS
MONDAY, MAY 1, 2017
The undersigned hereby appoints Arthur D. Collins, Jr., Kenneth M. Duberstein and Edward M. Liddy, and each of them, with full power of
substitution, to act as proxies for the undersigned and authorizes them to represent and vote all of the shares of stock of The Boeing Company that the undersigned is entitled to vote at the 2017 Annual Meeting of Shareholders, and any adjournment
or postponement thereof, with respect to all of the matters indicated on the reverse side of this card, and with discretionary authority as to any other matters that may properly come before the meeting or any adjournment or postponement
thereof.
The number of shares of Boeing stock shown on this proxy
card includes shares held in The Boeing Company Voluntary Investment Plan (the Plan) as well as any other shares you may own outside of the Plan. If you are a participant in the Plan, you hereby instruct the Plan trustee to vote all of
the Plan share interests allocated to you at the meeting and any adjournment or postponement thereof, with respect to the proposals indicated on the reverse side of this card, and you authorize the trustee to empower the proxies named above to vote
in their judgment on such other business as may properly come before the Meeting and any adjournment or postponement thereof. You may not vote the Plan share interests allocated to you at the Meeting; the trustee must vote the Plan share interests.
The Plan trustee must receive your proxy instructions no later than 10:59 p.m., Central Time, on Wednesday, April 26, 2017, or the trustee will vote the Plan shares in the same manner and proportion as Plan shares for which it has received
instructions, unless contrary to applicable law.
If this proxy
card is signed and no direction is given, this proxy for both registered shares and Plan shares will be voted in accordance with the recommendations of the Board of Directors.
If you wish to vote by mail, please mark, sign, date and return
this proxy card promptly using the enclosed reply envelope.
|
V.1.1
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