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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
THE BOEING COMPANY
(Name of Registrant as Specified in Its Charter)
------------------------
(Names of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Investment Company Act Rule 20a-1(c).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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THE BOEING COMPANY
March 7, 1996
Dear Shareholder:
You are invited to attend your Company's 1996 Annual Meeting of
Shareholders.
It will be held on Monday, April 29, 1996, in the second-floor
auditorium of the Company's 2-22 Building, located at 7755 East Marginal Way
South, Seattle, Washington. The meeting will begin at 11:00 a.m., Seattle time.
A map and directions to the 2-22 Building are on the back of this proxy
statement. The Annual Meeting will be accessible through the use of a sign
language interpreter.
At the meeting there will be reports on the activities of the Company
and an opportunity to submit questions or comments on matters of interest to
shareholders generally.
Whether or not you attend in person, it is important that your shares
be voted on matters that come before the meeting. I urge you to specify your
choices by marking, dating, and signing the accompanying proxy card and
returning it promptly. If you sign and return your proxy card without marking
choices, it will be understood that you wish to have your shares voted in
accordance with the directors' recommendations.
Very truly yours,
FRANK SHRONTZ
Chairman of the Board
and Chief Executive Officer
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THE BOEING COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1996
The Annual Meeting of Shareholders of The Boeing Company will be held on April
29, 1996, at 11:00 a.m., Seattle time, in the second-floor auditorium of the
Company's 2-22 Building, at 7755 East Marginal Way South, Seattle, Washington.
Shareholders at the close of business on February 29, 1996, will be entitled to
vote at the Annual Meeting. The only item on the agenda is the election of four
people to the Board of Directors, each for a three-year term expiring in 1999.
Management does not expect any other business to come before the Meeting.
For admission to the meeting, shareholders who own shares in their own names
should come to the Registered Shareholders check-in tables, where their
ownership will be verified. Those who have beneficial ownership of stock through
a bank or broker should come to the Beneficial Owners table and must bring
account statements or letters from their banks or brokers indicating that they
owned Boeing stock as of February 29, 1996. SHAREHOLDER ADMISSION TICKETS WILL
NOT BE USED THIS YEAR.
HEATHER HOWARD
Corporate Secretary and Corporate Counsel
Seattle, Washington
March 7, 1996
IF YOU CANNOT ATTEND THE MEETING, PLEASE SIGN, DATE, AND RETURN THE ENCLOSED
PROXY CARD APPOINTING CHARLES M. PIGOTT, FRANK SHRONTZ, AND
GEORGE H. WEYERHAEUSER AS YOUR PROXIES.
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
General Information for Shareholders.........................................................................1
Outstanding Securities..................................................................................1
Attendance at the Meeting...............................................................................1
Voting at the Meeting or by Proxy.......................................................................2
Voting by Fund E Participants...........................................................................2
Vote Required and Method of Counting Votes..............................................................3
Confidential Voting Policy..............................................................................3
Expenses of Solicitation................................................................................4
Independent Auditors....................................................................................4
Election of Directors........................................................................................4
Nominees 5
Continuing Directors....................................................................................6
Compensation of Directors...............................................................................9
Retirement Policy.......................................................................................9
Committees of the Board of Directors...................................................................10
Board and Committee Meetings...........................................................................11
Related Party Transactions.............................................................................11
Compliance with Section 16(a) of the Securities Exchange Act...........................................11
Security Ownership.....................................................................................12
Executive Compensation.................................................................................14
Summary Compensation Table.........................................................................14
Option Grants in Last Fiscal Year Table............................................................16
Aggregated Option/SAR Exercises and Fiscal Year-End Values Table...................................17
Pension Plan Table.................................................................................17
Compensation Committee Report on Executive Compensation............................................19
Shareholder Return on Performance Graphs...........................................................23
Annual Report and Form 10-K.................................................................................24
Shareholder Proposals for 1997..............................................................................24
</TABLE>
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THE BOEING COMPANY
P.O. BOX 3707
SEATTLE, WASHINGTON
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1996
This proxy statement is issued in connection with solicitation of the enclosed
proxy by the Board of Directors of The Boeing Company (the "Company" or
"Boeing") for use at the Company's 1996 Annual Meeting of Shareholders (the
"Annual Meeting"). The approximate date on which this proxy material is first to
be sent to shareholders is March 15, 1996.
GENERAL INFORMATION FOR SHAREHOLDERS
OUTSTANDING SECURITIES
The Company's only class of capital stock outstanding is common stock with
voting rights. The Board of Directors has fixed the close of business on
February 29, 1996, as the record date for identifying shareholders of the
Company entitled to vote at the Annual Meeting. On February 29, 1996, there were
345,185,580 shares of common stock outstanding and entitled to vote. The last
sale price of the Company's common stock for that date, as reported in The Wall
Street Journal, was $81.125 per share.
ATTENDANCE AT THE MEETING
For admission to the meeting, shareholders who own shares in their own names
should come to the Registered Shareholders check-in tables, where their
ownership will be verified. Those who have beneficial ownership of stock that is
held by a bank or broker (often referred to as "holding in street name") should
come to the Beneficial Owners tables; they must bring account statements or
letters from their banks or brokers indicating that they owned Boeing stock as
of February 29, 1996. Shareholder admission tickets will not be used this year.
The doors to the 2-22 Building will be opened at 9:30 a.m. and the meeting will
begin at 11:00 a.m. It is expected to be finished no later than 12:30 p.m. A map
and directions to the meeting facility are on the back of this proxy statement.
Please note that there will be no parking on the west side of East Marginal Way
South this year, because of construction work on the site.
The Annual Meeting will be accessible through the use of a sign language
interpreter. Anyone who wishes to bring a translator to provide simultaneous
translation of the proceedings into another language is asked to contact the
Assistant Secretary of the Company no later than April 15, 1996, at The Boeing
Company, P.O. Box 3707, Mail Stop 10-13, Seattle, Washington 98124-2207.
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VOTING AT THE MEETING OR BY PROXY
At the date of this statement, the only matter that management intends to
present is the election of four directors, each for a three-year term expiring
in 1999.
Shares represented by a properly executed proxy in the accompanying form will be
voted at the meeting and, when instructions are given by the shareholder, will
be voted in accordance with those instructions. If no instructions are given,
the shares will be voted according to the recommendation of the Board of
Directors. That recommendation is reported later in this statement.
The enclosed proxy card gives discretionary authority to the persons named on
the proxy card to vote the shares in their best judgment, if any matters other
than that shown on the proxy card are properly brought before the meeting.
A shareholder who executes a proxy may revoke it at any time before its exercise
by delivering a written notice of revocation to the Secretary of the Company or
by signing and delivering another proxy that is dated later. If the shareholder
attends the meeting in person, either giving notice of revocation to an
inspector of election at the meeting or voting at the meeting will revoke the
proxy.
VOTING BY FUND E PARTICIPANTS
Most Boeing employees may participate in The Boeing Company Voluntary Investment
Plan (the "VIP Plan"), which is a retirement plan established under Section
401(k) of the Internal Revenue Code. One of the five funds into which employees
may direct their investments is Fund E, which invests in Boeing common stock.
The shares of stock held in that fund are registered in the name of The Chase
Manhattan Bank, N.A., which is the trustee of the VIP Plan. The participants do
not acquire ownership of the shares and therefore are not eligible to vote the
shares directly or attend the Annual Meeting (unless they are also registered or
beneficial owners of Boeing stock). However, the participants are allocated
units in the fund and may instruct the trustee how to vote the shares
represented by their units.
The proxy card that is being sent with this proxy statement to registered
shareholders is also being sent to Fund E participants. (Beneficial owners
receive proxy cards from their brokers or other agents; some brokers use the
Company's proxy card and some prepare their own proxy cards.) The number of
common shares held is shown on the back of the proxy card, above the boxes to be
marked, with the notation "COM." The number of Fund E shares, if any, is shown
with the notation "VIP." If one person has both common shares and Fund E shares,
both will appear on the card and that person may vote both the common and Fund E
shares by signing and returning the single card. Fund E shares can be voted only
by signing and returning the proxy card; they cannot be voted at the meeting and
prior votes cannot be revoked at the meeting.
Fund E shares will be voted by the trustee according to each participant's
instructions. It is the trustee's intention, when a card is signed and returned
but no voting instructions are given, to vote such shares for the nominees of
the Board of Directors.
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VOTE REQUIRED AND METHOD OF COUNTING VOTES
Under Delaware law and the Company's Restated Certificate of Incorporation, the
presence at the Annual Meeting, in person or by duly authorized proxy, of the
holders of one-third of the outstanding shares of stock entitled to vote
constitutes a quorum for the transaction of business. Each share of common stock
entitles the holder to one vote on each matter presented for shareholder action.
With respect to the election of directors, shareholders may vote in favor of all
nominees, or withhold their votes as to all nominees, or withhold their votes as
to specific nominees. There is no box for "abstain," but checking the box that
withholds authority to vote for a nominee is the equivalent of abstaining. The
four nominees who receive the greatest number of votes cast for the election of
directors by shares entitled to vote and present in person or by proxy at the
Annual Meeting will be elected directors. In an uncontested plurality election,
such as this, abstentions have no effect, since approval by a percentage of
shares present or outstanding is not required.
With respect to any proposal other than the election of directors, shareholders
may vote in favor of the proposal, or against the proposal, or abstain from
voting. The affirmative vote of the majority of shares entitled to vote and
present in person or by proxy at the Annual Meeting is required for approval. A
shareholder who signs and submits a ballot or proxy is "present," so an
abstention will have the same effect as a vote against the proposal.
Brokers who hold shares for the accounts of their clients may vote such shares
either as directed by their clients or in their own discretion if permitted by
the stock exchange or other organization of which they are members. Members of
the New York Stock Exchange are permitted to vote their clients' proxies in
their own discretion as to the election of directors if the clients have not
furnished voting instructions within ten days of the meeting. Certain proposals
other than the election of directors are "non-discretionary" and brokers who
have received no instructions from their clients do not have discretion to vote
on those items. When a broker votes a client's shares on some but not all of the
proposals at a meeting, the missing votes are referred to as "broker non-votes."
Those shares will be included in determining the presence of a quorum at the
meeting, but are not considered "present" for purposes of voting on the
non-discretionary proposals. They have no impact on the outcome of such
proposals.
CONFIDENTIAL VOTING POLICY
It is the policy of the Company that all proxy, ballot, and voting materials
that identify the vote of a specific shareholder on any matter submitted for a
vote of shareholders will be kept secret from directors and executive officers
of the Company except (1) when disclosure is required by applicable law or
regulation, (2) when a shareholder expressly requests such disclosure, and (3)
in a contested proxy solicitation. If the shareholder is an employee of the
Company or a participant in Fund E of the Company's VIP Plan, the information
will not be disclosed to management unless (1) or (2) above applies.
Proxies and ballots will be received and tabulated by the Company's transfer
agent, an independent entity that is not affiliated with the Company. The
inspectors of election also will be independent of the Company. Comments written
on proxy cards will be provided to the Secretary
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of the Company without disclosing the vote unless the vote is necessary to
understand the comment.
EXPENSES OF SOLICITATION
All expenses for soliciting proxies will be paid by the Company. The Company has
retained D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, to
aid in the solicitation of proxies, for a fee of $17,500, plus reasonable
out-of-pocket expenses. Proxies may be solicited by personal interview, mail,
and telephone. D.F. King has contacted brokerage houses, other custodians, and
nominees to ask whether other persons are the beneficial owners of the shares
that 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. The
Company will reimburse such parties for their reasonable expenses in sending
proxy materials to the beneficial owners of the shares.
INDEPENDENT AUDITORS
As recommended by the Audit Committee of the Board of Directors, the board has
appointed Deloitte & Touche LLP as independent auditors to audit the financial
statements of the Company for the fiscal year ending December 31, 1996. Deloitte
& Touche LLP and predecessor firms have served continuously since 1934 as
independent auditors for the Company. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting to respond to appropriate questions and to
make a statement if they so desire.
ELECTION OF DIRECTORS
The Board of Directors currently consists of fourteen people. Twelve of them are
independent directors and two are members of management. In accordance with the
Company's By-Laws, directors are divided into three classes, each of which is
composed of approximately one-third of the directors. At the Annual Meeting,
four directors will be elected to serve for terms of three years, expiring on
the date of the annual meeting of shareholders in 1999. Each director elected
will continue in office until a successor has been elected or until resignation
or removal in the manner provided by the By-Laws of the Company. The nominees
for the Board of Directors, recommended by its Organization and Nominating
Committee, are all currently board members. The nominees for re-election and the
directors whose terms will continue after the Annual Meeting are listed below.
Shares represented by a properly executed proxy card will be voted for the
nominees unless such authority is withheld. Should any nominee become
unavailable for election, the Board of Directors may vote all proxies given in
response to this solicitation for the election of a substitute nominee of its
choice, or may in its discretion reduce the size of the Board of Directors
rather than nominate a substitute.
Board policy requires a nonmanagement director to resign at the annual meeting
of shareholders following that director's 72nd birthday. Accordingly, George
Keller has announced his intention to retire from the board effective on the
date of the Annual Meeting. The board has, in accordance with the By-Laws,
reduced the size of the board to thirteen, to be effective at the time of the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
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NOMINEES
ROBERT A. BECK Director since 1985
CHAIRMAN EMERITUS, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. Age 70. Mr. Beck
served as Chairman of the Board and Chief Executive Officer of The Prudential
Insurance Company of America (a diversified insurance company) from 1978 until
his retirement from those positions in 1987. Currently he serves as Chairman
Emeritus of Prudential. He is also a director of Texaco, Inc. and Xerox
Corporation.
Shares, including Deferred Compensation Plan shares..................14,046
PHILIP M. CONDIT Director since 1992
PRESIDENT, THE BOEING COMPANY. Age 54. Mr. Condit was elected President of The
Boeing Company in August 1992. From 1989 to 1992, he was Executive Vice
President of Boeing Commercial Airplane Group and General Manager of its 777
Division (previously called the New Airplane Division). Mr. Condit is also a
director of Fluke Corporation and Nordstrom Inc. Subject to Mr. Condit's
re-election as a director, he will assume the additional duties of Chief
Executive Officer on April 29, 1996.
Shares................................................................6,589
JOHN B. FERY Director since 1989
RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, BOISE CASCADE
CORPORATION. Age 66. Mr. Fery served as Chairman of the Board of Boise Cascade
Corporation (wood and paper products) from 1978 to 1995, and as Chief Executive
Officer from 1972 until 1994. He is also a director of Albertson's, Inc.,
Hewlett-Packard Company, and U.S. Bancorp.
Shares................................................................2,250
DONALD E. PETERSEN Director since 1990
RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, FORD MOTOR COMPANY.
Age 69. Mr. Petersen served as Chairman of the Board and Chief Executive Officer
of Ford Motor Company (automobile manufacturer) from 1985 to 1990. He had served
as President of Ford Motor Company from 1980 to 1985. Mr. Petersen is a director
of Dow Jones & Co., Inc. and Hewlett-Packard Company.
Shares, including Deferred Compensation Plan shares...................4,942
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CONTINUING DIRECTORS
JOHN E. BRYSON Director since 1995
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF EDISON INTERNATIONAL
(FORMERLY SCECORP). Age 52. Mr. Bryson has served as Chairman of the Board and
Chief Executive Officer of Edison International and its principal subsidiary,
Southern California Edison Company (electric utility), since 1990. He is also
Chairman of The Mission Group, which is a nonutility subsidiary of Edison
International. He is a director of First Interstate Bancorp, The Times Mirror
Company, and the Council on Foreign Relations, and a trustee of Stanford
University. Mr. Bryson is also Chairman of the California Business Roundtable.
His current term expires in 1998.
Shares, including Deferred Compensation Plan shares...................1,872
PAUL E. GRAY Director since 1990
CHAIRMAN OF THE CORPORATION, MASSACHUSETTS INSTITUTE OF TECHNOLOGY. Age 64. Dr.
Gray served as President of Massachusetts Institute of Technology (education)
from 1980 until he retired in 1990. He was Chancellor of MIT from 1971 to 1980
and Dean of the School of Engineering from 1970 to 1971. Dr. Gray is a director
of Eastman Kodak Company, New England Mutual Life Insurance Co., and Arthur D.
Little, Incorporated.
His current term expires in 1997.
Shares................................................................1,000
HAROLD J. HAYNES Director from 1974 to 1982 and since 1984
RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, CHEVRON CORPORATION.
Age 70. Mr. Haynes served Chevron Corporation (petroleum products) as President
from 1969 to 1974 and as Chairman of the Board and Chief Executive Officer from
1974 until his retirement in 1981. He currently serves as a director of and
Senior Counselor to Bechtel Group, Inc. Mr. Haynes is also a director of
Citicorp, PACCAR Inc, and Saudi Arabian Oil Company. His current term expires in
1997.
Shares................................................................8,000
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CONTINUING DIRECTORS
STANLEY HILLER, JR. Director since 1976
PARTNER, HILLER INVESTMENT COMPANY. Age 71. Mr. Hiller has been a senior partner
in Hiller Investment Company (private investments) since 1968. He is currently
Chairman of the Board of Key Tronic Corporation (manufacturer of computer
keyboards and other input devices). Previously, he was Chairman of the Board of
Baker International, Reed Tool, York International, and other corporations. His
current term expires in 1998.
Shares...............................................................10,630
CHARLES M. PIGOTT Director since 1972
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, PACCAR INC. Age 66. Mr.
Pigott has been Chairman of the Board and Chief Executive Officer of PACCAR Inc
(manufacturer of transportation equipment) since 1986. He served as President of
that company from 1965 to 1987. He is also a director of Chevron Corporation and
The Seattle Times Company. His current term expires in 1998.
Shares, including Deferred Compensation Plan shares..................15,230
FRANKLIN D. RAINES Director since 1995
VICE CHAIRMAN OF FANNIE MAE (FEDERAL NATIONAL MORTGAGE ASSOCIATION). Age 47.
Since 1991, Mr. Raines has been Vice Chairman of Fannie Mae (a company that
provides a secondary market for residential mortgages through portfolio
purchases, issuance of mortgage-backed securities, and other services). He was
with the investment banking firm of Lazard Freres & Co. from 1979 to 1990,
becoming a General Partner in 1985. Mr. Raines served on the White House staff
and with the U.S. Office of Management and Budget from 1977 to 1979. He is also
a director of Fannie Mae and Pfizer, Inc. His current term expires in 1998.
Shares, including Deferred Compensation Plan shares...................1,679
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CONTINUING DIRECTORS
ROZANNE L. RIDGWAY Director since 1992
CO-CHAIR, THE ATLANTIC COUNCIL OF THE UNITED STATES. Age 60. Ambassador Ridgway,
Co-Chair of The Atlantic Council of the United States (an association to promote
better understanding of international issues), was its President from 1989
through 1992. She served 32 years with the U.S. State Department, including
service as Ambassador to the German Democratic Republic and to Finland, and,
from 1985 until her retirement in 1989, as Assistant Secretary of State for
European and Canadian Affairs. She is also a director of Bell Atlantic
Corporation, Citicorp, Emerson Electric Company, RJR Nabisco, Inc., 3M
Corporation, The Sara Lee Corporation, and Union Carbide Corporation. Her
current term expires in 1998.
Shares, including Deferred Compensation Plan shares...................2,644
FRANK SHRONTZ Director since 1985
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, THE BOEING COMPANY. Age 64.
Mr. Shrontz was named Chairman of the Board of The Boeing Company in 1988. He
has been Chief Executive Officer since 1986 and was President of the Company
from 1985 until 1988. He has been employed by the Company since 1958, except for
the period from 1973 through 1976, when he served as Assistant Secretary of the
Air Force and as Assistant Secretary of Defense. Mr. Shrontz is also a director
of Boise Cascade Corporation, Citicorp, and 3M Corporation. His current term
expires in 1997.
Shares...............................................................28,478
GEORGE H. WEYERHAEUSER Director since 1962
CHAIRMAN OF THE BOARD, WEYERHAEUSER COMPANY. Age 69. Mr. Weyerhaeuser has been
Chairman of the Board of Weyerhaeuser Company (forest products) since 1988. He
joined Weyerhaeuser Company in 1949, became its President in 1966, and was its
Chief Executive Officer from 1966 to 1991. He has been a director of that
corporation since 1960 and is also a director of Chevron Corporation and SAFECO
Corporation. His current term expires in 1997.
Shares................................................................9,112
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COMPENSATION OF DIRECTORS
The Company pays each non-employee director an annual board retainer fee of
$26,000 and a fee of $2,000 for each day on which that director attends a board
meeting. Additionally, the Company pays each non-employee director an annual
committee retainer of $6,000 for all committee service and a daily fee of $1,000
for attendance at one or more committee meetings on a day on which a board
meeting is not also held. The Company reimburses non-employee directors for
actual travel and out-of-pocket expenses incurred in connection with service to
the Company.
In addition to the cash compensation described above, at the time of a
non-employee director's first annual meeting, the director receives an initial
option to purchase 1,500 shares of Boeing stock. After each subsequent annual
meeting during the non-employee director's term, the director receives an option
to purchase an additional 1,200 shares. The exercise price is determined by the
Fair Market Value of Boeing common stock. "Fair Market Value" is the mean of the
high and low per share trading prices as reported in The Wall Street Journal for
the New York Stock Exchange - Composite Transactions for a single trading day.
The exercise price of an option is equal to the average of the Fair Market
Values for the fifth through ninth business days following the date of grant.
Options vest approximately one year after grant, provided the recipient remains
a director. Options become exercisable in installments one, three, and five
years after the date of grant.
The Company also has a Deferred Compensation Plan for Directors. Participating
directors may elect to defer all or a portion of their cash compensation for
service as directors in a cash-based account that bears interest or a stock unit
account that earns dividends.
Directors who are employees of the Company do not receive any compensation for
their service as directors.
RETIREMENT POLICY
The retirement policy of the Board of Directors is as follows: (1) each director
who is not an officer of the Company will resign permanently as a director at
the annual meeting of shareholders following that director's 72nd birthday, and
(2) each director who is an officer of the Company will tender to the
Organization and Nominating Committee a resignation as a director on the first
to occur of the following: (a) the officer retires under The Boeing Company
Employee Retirement Plan or (b) the officer no longer fulfills a primary role in
the Company, as determined by the Organization and Nominating Committee. In any
case, such director will retire permanently as a director no later than the
annual meeting of shareholders following that director's 72nd birthday. This
policy applies without regard to whether a director has completed his or her
term.
The Company does not provide any retirement benefits to non-employee directors.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has standing Audit, Compensation, Finance, and
Organization and Nominating Committees. Additionally, from time to time, the
board establishes special committees for specific purposes. The membership of
the standing committees is usually determined at the organizational meeting of
the board in conjunction with the annual meeting of shareholders. Only
independent directors currently serve on standing committees. The membership of
the committees is as follows, with the chairman of each committee listed first:
<TABLE>
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ORGANIZATION
AUDIT COMPENSATION FINANCE AND NOMINATING
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<S> <C> <C> <C>
Stanley Hiller, Jr. George M. Keller John B. Fery Charles M. Pigott
John E. Bryson Robert A. Beck John E. Bryson Robert A. Beck
John B. Fery Harold J. Haynes Paul E. Gray Harold J. Haynes
Paul E. Gray Donald E. Petersen Stanley Hiller, Jr. George M. Keller
Franklin D. Raines Charles M. Pigott Franklin D. Raines Donald E. Petersen
Rozanne L. Ridgway George H. Weyerhaeuser Rozanne L. Ridgway George H. Weyerhaeuser
</TABLE>
AUDIT COMMITTEE
The Audit Committee selects and engages the independent auditors. The committee
reviews the audit plans and audit findings of both the independent auditors and
the internal auditors, the independent auditors' opinion of the financial
statements, and the internal auditors' reports on the effectiveness of internal
controls. The committee also reviews the Company's compliance with laws,
regulations, and Company policies relating to political contributions, sales
consultants, and government affairs consultants; the Company's ethics and
business conduct program; compliance with the principles of the Defense Industry
Initiative on Business Ethics and Conduct; and the Company's annual disclosure
documents. The committee monitors the adequacy and effectiveness of the
Company's financial controls and financial reporting processes, meets with
counsel as to significant pending and threatened litigation, and assesses the
Company's risk management program. The Audit Committee held five meetings in
1995.
COMPENSATION COMMITTEE
The Compensation Committee establishes and administers the Company's executive
compensation plans. It sets policy for employee benefit programs and plans. The
committee oversees administration of the employee retirement and various other
benefit plans. The Committee makes recommendations to the Board of Directors
concerning the salaries of elected Company officers. The committee determines
the number of stock options awarded to certain officers of the Company and the
terms and conditions on which options will be granted. It administers the
Incentive Compensation Plan, stock option plans, and Deferred Compensation
Plans. The Compensation Committee held four meetings in 1995.
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FINANCE COMMITTEE
The Finance Committee reviews and makes recommendations concerning proposed
dividend actions, current and projected capital requirements, and issuance of
debt or equity securities. It reviews the Company's credit agreements and
short-term investment policy. The committee also reviews the investment
policies, administration, and performance of the trust investments of the
Company's employee benefit plans. In 1995 the Finance Committee held six
meetings.
ORGANIZATION AND NOMINATING COMMITTEE
The Organization and Nominating Committee reviews and makes recommendations to
the board with respect to the responsibilities and functions of the board and
board committees, and with respect to board compensation. The committee makes
recommendations to the Board of Directors concerning the composition and
governance of the board, including recommending candidates to fill vacancies on,
or to be elected or reelected to the board. The committee will consider the
names and qualifications of candidates for the board submitted by shareholders
in accordance with the procedures referred to on page 24 of this proxy
statement. The committee oversees evaluation of the directors, board committees
and the board. The committee also makes recommendations to the board concerning
candidates for election as Chief Executive Officer and other corporate officers,
and counsels on succession planning for senior management. The Organization and
Nominating Committee held four meetings in 1995.
BOARD AND COMMITTEE MEETINGS
During 1995, the board held eight meetings and the committees described above
held 19 meetings. Average attendance at all such meetings was 96%. Each
incumbent director attended at least 81% of the total number of board and
committee meetings he or she was eligible to attend.
RELATED PARTY TRANSACTIONS
The Company and its subsidiaries have transactions in the ordinary course of
business with other corporations of which certain Boeing directors are executive
officers. The Company does not consider the amounts involved in such
transactions to be material in relation to its business and believes that such
amounts are not material in relation to the business of such other corporations
or the interests of the directors involved.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain of its officers to send reports of their ownership of
Boeing stock and of changes in such ownership to the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. SEC regulations also
require the Company to identify in this proxy statement any person subject to
this requirement who failed to file any such report on a timely basis. Based
solely on the Company's review of the copies of such reports it has received,
the Company believes that all of its directors and officers complied with all
reporting requirements applicable to them with respect to transactions during
1995.
11
<PAGE> 16
SECURITY OWNERSHIP
The table below shows ownership of the Company's common stock as of February 27,
1996, by each director, by the Chief Executive Officer and the other four most
highly compensated executive officers (collectively, the "named executive
officers"), and by all directors and executive officers as a group.
The first column, "Number of Shares Beneficially Owned," shows for each person
the number of shares of common stock directly and indirectly owned on February
27, 1996, including shares owned by, or jointly with, his or her spouse. The
second column shows the number of shares that such person may acquire on or
before April 27, 1996, by exercising stock options awarded by the Company. The
third column shows the number of shares, share equivalents, and interests in
shares held pursuant to the Company's compensation and benefit plans, on
February 27, 1996. All numbers in the table are rounded to whole shares.
No family relationship exists between any of the directors or executive officers
of the Company.
All amounts shown in the table together represent less than one percent of the
outstanding shares of common stock. The Company is not aware of any person who
beneficially owns five percent or more of the Company's common stock.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES THAT NUMBER OF
SHARES MAY BE SHARE
BENEFICIALLY ACQUIRED BY EQUIVALENTS
NAME OF BENEFICIAL OWNER OWNED EXERCISING OPTIONS HELD
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS
Robert A. Beck 1,125 2,010 12,921(1)
John E. Bryson 1,000 0 872(1)
John B. Fery 2,250 2,010 0
Paul E. Gray 1,000 1,510 0
Harold J. Haynes 8,000 2,010 0
Stanley Hiller, Jr 10,630 2,010 0
George M. Keller 4,375 2,010 0
Donald E. Petersen 1,500 2,010 3,442(1)
Charles M. Pigott 15,093 2,010 137(1)
Franklin D. Raines 1,000 0 679(1)
Rozanne L. Ridgway 580 1,530 2,064(1)
George H. Weyerhaeuser 9,112 2,010 0
NAMED EXECUTIVE OFFICERS
(*also serve as directors)
Frank Shrontz* 28,478 577,162 32,115(2)
Philip M. Condit* 6,589 176,253 13,492(2)
Boyd E. Givan 10,767(3) 133,201 10,769(2)
C. Gerald King 13,247 113,444 9,658(2)
Ronald B. Woodard 554 75,474 6,019(2)(4)
All directors and executive
officers as a group (23 168,852(3) 1,395,754 129,789
persons)
</TABLE>
12
<PAGE> 17
Footnotes to Security Ownership Table
...............................................................................
(1) Each number represents stock units in the Deferred Compensation Plan for
Directors, which is described on page 9. The owners of such units do not
have the right to vote or to transfer them.
(2) Each number includes both Boeing Stock Units ("BSUs"), issued pursuant to
the Company's Incentive Compensation Plan, and performance shares, issued
pursuant to the Long-Term Incentive Program. BSUs are payable in cash or in
shares of stock three years after they are awarded. Performance shares are
converted into shares of stock four years after they are awarded. The
officers cannot vote these share equivalents or transfer them until they
are converted into common shares, and they may be forfeited on termination
of employment. For further description of these interests, see the
Compensation Committee Report on Executive Compensation, which begins on
page 9. The numbers held by each named executive officer as of February 27,
1996, are as follows:
<TABLE>
<CAPTION>
Boeing Performance
Stock Units Shares
---------------------------------------------------------
<S> <C> <C>
Frank Shrontz 6,775 25,340
Philip M. Condit 3,432 10,060
Boyd E. Givan 1,989 8,780
C. Gerald King 1,928 7,730
Ronald B. Woodard 1,859 4,160
</TABLE>
(3) This number does not include 3,641,364 shares for which Mr. Givan has
shared investment power as a member of the Retirement Committee, which is
appointed by the Board of Directors to oversee employee retirement matters.
Mr. Givan does not have beneficial ownership of these shares.
(4) Mr. Woodard also has units equivalent to 3,038 shares in Fund E of the VIP
Plan, a 401(k) retirement plan, and may instruct the trustee how to vote
his units. See page 2 for additional information on VIP Fund E.
13
<PAGE> 18
EXECUTIVE COMPENSATION
The following table summarizes the annual and long-term compensation of the
named executive officers for fiscal years 1995, 1994, and 1993. All numbers in
the table are rounded to the nearest dollar or whole share. The Compensation
Committee Report on Executive Compensation begins on page 19.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
ANNUAL LONG-TERM COMPENSATION
-----------------------------------------
COMPENSATION AWARDS PAYOUTS
-----------------------------------------------------------------
SECURITIES
UNDER- ALL
NAME AND RESTRICTED LYING LTIP OTHER
PRINCIPAL SALARY BONUS STOCK OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(1) ($)(2) (#) ($)(3) ($)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank Shrontz 1995 $944,062 $712,000 $287,122 120,000 $ 85,289
Chairman of the 1994 844,828 600,000 149,194 31,875 $404,813 74,959
Board & CEO 1993 796,935 624,000 170,233 231,875(5) 218,426 66,669
Philip M. Condit 1995 558,622 373,800 150,739 57,883 47,249
President 1994 499,714 292,000 72,608 21,250 139,613 40,514
1993 464,063 312,000 97,595 147,750(5) 79,765 35,782
Boyd E. Givan 1995 393,870 213,600 86,137 33,076 35,315
Senior Vice President 1994 372,874 172,000 42,769 57,750(5) 131,325 31,102
& CFO 1993 342,625 178,950 60,718 12,750 76,519 27,064
C. Gerald King 1995 374,330 206,800 82,946 29,548 33,049
Senior Vice President- 1994 333,143 168,000 41,774 57,750(5) 137,700 27,316
Pres., Defense & Space 1993 297,319 172,100 57,738 12,750 73,736 23,303
Group
Ronald B. Woodard 1995 383,755 203,600 86,137 35,000 29,728
Senior Vice President- 1994 316,476 148,000 36,801 57,750(5) 71,400 22,592
Pres., Commercial 1993 213,410 130,200 49,543 12,750 38,955 11,110
Airplane Group
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Incentive compensation is based on performance in the year shown but
determined and paid the following year.
(2) The amount reported for each officer for 1995 is the value of the BSUs
awarded on February 26, 1996. The number of BSUs awarded was the number of
shares that could be purchased with 30% of the officer's target incentive
award, adjusted for Company performance, using as the purchase price the
Fair Market Value of Boeing stock on that date, which was $82.00. (For a
discussion of target incentive awards, see the Compensation Committee
Report on Executive Compensation, at page 20.) In accordance with the SEC's
proxy rules, the value of those BSUs is shown here using the closing market
price of Boeing stock on February 26, 1996, which was $81.75. The amount
reported for each officer for 1994 is the number of BSUs awarded to that
officer on February 27, 1995, multiplied by the closing market price of
Boeing stock on that date. The amount reported for each officer for 1993 is
the number of executive investment performance shares credited to that
officer in 1993, under the
14
<PAGE> 19
Company's Long-Term Incentive Program, multiplied by the closing market
price of Boeing stock on the date of the award.
BSUs earn dividends, which are reinvested in BSUs each quarter. BSUs vest
and are payable three years after the award. The officer may choose to
receive for each BSU one share of Boeing stock or cash equal to the Fair
Market Value of one share at the time of vesting. Performance shares earn
dividend equivalents and interest on dividend equivalents, payable after
four years, when each performance share is converted into one share of
Boeing stock.
The following table shows (a) the total number of BSUs credited to each of
the named executive officers as of February 26, 1996, (b) the value of
those BSUs, based on the closing market price of Boeing stock on February
26, 1996, (c) the total number of performance shares credited to each of
the named executive officers as of December 29, 1995, and (d) the value of
those performance shares, based on the closing market price of Boeing stock
on December 29, 1995.
<TABLE>
<CAPTION>
NUMBER OF 12/29/95 VALUE
NUMBER 2/26/96 VALUE PERFORMANCE OF PERFORMANCE
OF BSUs OF BSUs SHARES SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank Shrontz 6,775 $553,878 25,340 $1,986,023
Philip M. Condit 3,432 280,559 10,060 788,453
Boyd E. Givan 1,989 162,606 8,780 688,133
C. Gerald King 1,928 157,637 7,730 605,839
Ronald B. Woodard 1,859 151,935 4,160 326,040
</TABLE>
The Long-Term Incentive Program is described in the Compensation Committee
Report on Executive Compensation, at page 21.
(3) The amount reported for each officer on the line for 1994 reflects the
award of performance-based performance shares (under the Long-Term
Incentive Program) by the Compensation Committee in 1995, for performance
in the three-year period ended December 31, 1994. The amount reported for
each officer on the line for 1993 reflects the award of performance-based
performance shares by the Compensation Committee in 1994, for performance
in the three-year period ended December 31, 1993. The amount shown in each
year is equal to the number of performance-based performance shares awarded
multiplied by the closing market price of Boeing stock on the date of the
award. The Compensation Committee is expected to determine in August 1996
any awards of performance-based performance shares with respect to the
three-year period ended December 31, 1995.
(4) Amounts of "All Other Compensation" are the sum of the value of (a)
dividend equivalents and interest on dividend equivalents on performance
shares under the Long-Term Incentive Program, (b) Company contributions to
the Company's Financial Security Plan, Supplemental Benefit Plan, and
Voluntary Investment Plan, and (c) premiums paid by the Company for term
life insurance for the benefit of the insured. The amounts described in
(a), (b), and (c) above, for the named executive officers, are as follows
for 1995:
<TABLE>
<CAPTION>
(a) (b) (c)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Frank Shrontz $28,185 $55,004 $2,100
Philip M. Condit 11,309 33,840 2,100
Boyd E. Givan 9,797 23,418 2,100
C. Gerald King 8,600 22,349 2,100
Ronald B. Woodard 4,615 23,013 2,100
</TABLE>
(5) Supplemental stock options were issued to Messrs. Shrontz and Condit in
December 1993 with an exercise price of $40.5625, and to Messrs. Givan,
King, and Woodard in February 1994, with an exercise price of $47.25. Each
of those prices was the Fair Market Value of Boeing stock on the date
15
<PAGE> 20
on which the options were awarded. The options did not become exercisable
until the closing price of Boeing stock, as reported in The Wall Street
Journal for the New York Stock Exchange - Composite Transactions, averaged
or exceeded specified prices for 20 consecutive trading days. At $64 per
share, 50% of each option became exercisable, at $67, an additional 25%
became exercisable, and at $70, the remaining 25% became exercisable. The
stock's price reached those levels on July 11, 1995, September 21, 1995,
and November 21, 1995, respectively, and therefore all the supplemental
options became exercisable. The options expire in 1998. The total number of
shares that could be acquired by each officer through the exercise of the
supplemental options was as follows:
<TABLE>
<S> <C>
Frank Shrontz 200,000
Philip M. Condit 125,000
Boyd E. Givan 45,000
C. Gerald King 45,000
Ronald B. Woodard 45,000
</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT
UNDER- OF TOTAL POTENTIAL REALIZABLE VALUE
LYING OPTIONS AT ASSUMED RATES OF STOCK PRICE
OPTIONS GRANTED TO EXERCISE OR EXPIRA- APPRECIATION FOR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE TION --------------------------------------------
NAME (#) (1) FISCAL YEAR ($/Sh) DATE 0% ($) 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
F. Shrontz 120,000 4.19 $46.5000 2/27/05 $0 $3,509,232 $8,893,083
P.M. Condit 57,883 2.02 46.5000 2/27/05 0 1,692,707 4,289,653
B.E. Givan 33,076 1.15 46.5000 2/27/05 0 967,261 2,451,230
C.G. King 29,548 1.03 46.5000 2/27/05 0 864,090 2,189,773
R.B. Woodard 35,000 1.22 46.5000 2/27/05 0 1,023,526 2,593,816
Share price 46.5000 75.7436 120.6090
All optionees (more than 12,000 employees and retirees) 0 84,000,000 212,000,000
All shareholders(3) 0 9,975,000,000 25,278,000,000
Gain of all optionees as % of gain of all shareholders 0 0.84% 0.84%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options shown for the named executive officers were granted pursuant to
the 1993 Incentive Stock Plan for Employees. The per share exercise price
is the Fair Market Value of Boeing stock (as defined on page 9) on the date
of grant, and the term of each option is ten years, subject to earlier
termination in the event of termination of employment. The options vest
after one year's employment from the date of the grant. As to each grant,
40% becomes exercisable after one year from the date of grant, an
additional 30% after three years, and the remaining 30% after five years.
The exercise price may be paid by cash or by delivery of shares already
owned. The schedule on which options become exercisable is subject to
acceleration for retirement, death, or disability after vesting.
(2) Potential realizable values are based on assumed compound annual
appreciation rates specified by the Securities and Exchange Commission.
These increases in value are based on speculative assumptions and are not
intended to forecast possible future appreciation, if any, of the Company's
stock price.
16
<PAGE> 21
(3) Each amount represents the increase in total market value of outstanding
Boeing stock consistent with the stock price appreciation assumptions
above. On the date on which these options were granted, February 27, 1995,
there were 341,097,529 shares of stock outstanding.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/
ON VALUE SARs AT FISCAL YEAR-END(#) SARs AT FISCAL YEAR-END ($)(2)
EXERCISE REALIZED --------------------------------------------------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank Shrontz 92,968 $3,333,999 550,057 177,376 $24,039,274 $5,858,258
Philip M. Condit 10,000 249,375 168,450 91,933 6,205,691 3,080,299
Boyd E. Givan 10,616 409,270 116,178 56,026 4,285,492 1,867,588
C. Gerald King 14,275 495,939 107,587 50,586 4,085,172 1,697,295
Ronald B. Woodard 13,950 287,475 58,062 49,888 1,809,695 1,628,862
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The value realized is the difference between the Fair Market Value of the
underlying stock at the time of exercise and the exercise price.
(2) Amounts are based on the Fair Market Value of Boeing stock on the last
trading day of the year, December 29, 1995, which was $78.375. There is no
guarantee that if and when these options are exercised they will have this
value.
PENSION PLAN TABLE
The following table shows the estimated annual benefits payable to an employee,
assuming retirement on January 1, 1996, at age 65 after selected periods of
service, including amounts to be paid pursuant to the Employee Retirement Plan,
the Supplemental Benefit Plan, and the Supplemental Retirement Plan, based on
straight life annuity amounts. The plans also permit selection of a joint and
survivor annuity with reductions in the benefits shown. The benefits shown in
the table are not subject to any deduction for Social Security or other offset
amounts.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE(1)
REMUNERATION(2) 15 20 25 30 35 40
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 300,000 $ 65,600 $ 87,400 $109,300 $131,100 $ 153,000 $ 174,800
600,000 133,100 177,400 221,800 266,100 310,500 354,800
900,000 200,600 267,400 334,300 401,100 468,000 534,800
1,200,000 268,100 357,400 446,800 536,100 625,500 714,800
1,500,000 335,600 447,400 559,300 671,100 783,000 894,800
1,800,000 403,100 537,400 671,800 806,100 940,500 1,074,800
2,100,000 470,600 627,400 784,300 941,100 1,098,000 1,254,800
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For pension plan purposes, "credited" service begins after one year of
employment with the Company. Credit for the first year is made up during
the 20th, 21st, and 22nd years of employment. The named executive officers
have the following years of credited service:
<TABLE>
<S> <C>
Frank Shrontz 37.5
Philip M. Condit 30.5
Boyd E. Givan 29.9
C. Gerald King 37.5
Ronald B. Woodard 29.4
</TABLE>
17
<PAGE> 22
(2) Pension benefits are based on earnings in the last ten years of employment,
which equal (a) the average annual salary for the highest consecutive 60
months, plus (b) the average annual incentive compensation for the five
highest years. The total annual averages for the named executive officers
are currently as follows:
<TABLE>
<S> <C>
Frank Shrontz $1,564,416
Philip M. Condit 772,334
Boyd E. Givan 544,667
C. Gerald King 502,000
Ronald B. Woodard 412,650
</TABLE>
In the Bonus column of the Summary Compensation Table on page 14, amounts
shown for 1995 are net of approximately 30% of the incentive award that was
converted into BSUs, and amounts shown for 1994 are net of approximately
20% that was converted into BSUs. Amounts shown for 1993 are net of 20% of
the incentive award that was invested in performance shares under the
Long-Term Incentive Program. The values of BSUs and performance shares at
the time they were awarded are shown in the Restricted Stock column.
Compensation covered under the plans referred to above (the Employee
Retirement Plan, the Supplemental Benefit Plan, and the Supplemental
Retirement Plan) includes the full incentive award, which is the total of
the Bonus and Restricted Stock columns.
18
<PAGE> 23
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes and administers
the Company's executive compensation programs. The goals of the Company's
integrated executive compensation programs are to:
1. Align executive compensation with shareholder interests;
2. Attract, retain, and motivate a highly competent executive team;
3. Link pay to individual, operating group, and Company performance; and
4. Achieve a balance between short-term and long-term results.
The full Board of Directors reviews the Committee's recommendations and approves
the salaries of all elected officers, including the executive officers named in
the Summary Compensation Table on page 14. The Committee is responsible for all
other elements of executive compensation, including annual incentive awards,
stock options, and the Long-Term Incentive Program for key executives.
Boeing executive officers are assigned to pay grades with established salary
ranges, annual incentive award target percentages, and stock option grant
guidelines. Assignment to a pay grade is determined by comparing individual
responsibilities with industry survey data and internal executive job
relationships. It is the Committee's objective to maintain a competitive
compensation structure for Boeing executives.
Boeing executive compensation programs are designed to provide awards based on
individual, operating group, and overall Company performance measures. To the
extent that there is no adverse effect on this performance-related approach or
on the Company's ability to provide competitive compensation, it is the
Committee's policy to minimize executive compensation expense that is
non-deductible by the Company for tax purposes. In 1995, none of the named
executive officers received compensation that was non-deductible by the Company.
SALARIES
The Committee annually reviews the salary levels of executive officers,
utilizing data provided by an outside consulting firm, and comparing Boeing
salaries to those for comparable jobs in major aerospace and large industrial
corporations. These companies are selected on the basis of their comparable size
and operating performance, and include approximately half of the aerospace and
defense companies in the Standard & Poor's Aerospace Index used in the
performance comparison graphs on page 23. Boeing executive officer salary levels
are targeted for the median position of this benchmark company group.
Executive officer salary adjustments are determined by a subjective evaluation
of performance and by comparisons to peers inside and outside the Company.
Survey data indicate that 1995 base salaries of the named executive officers,
including Mr. Shrontz, are on average slightly below the median of the benchmark
companies.
19
<PAGE> 24
ANNUAL INCENTIVE AWARDS
Annual incentive awards are designed to focus management attention on Company
performance. Each pay grade has an assigned incentive award percentage (which is
a percentage of annual salary) that provides an incentive opportunity based on
Company, operating group, and individual performance. The 1995 incentive award
percentages assigned to the named executive officers' pay grades range from 60%
to 80% of salary. The annual incentive award an executive officer is eligible to
receive can range from zero to two times the incentive award percentage assigned
to that officer's pay grade. The 1995 annual incentive awards for the named
executive officers were paid out approximately 70% in cash and 30% in Boeing
Stock Units ("BSUs"), which are discussed below.
The actual incentive awards approved by the Committee were based on evaluation
of Company and operating group performance, coupled with a subjective evaluation
of individual performance. Company performance was evaluated based on the
achievement of operating group goals, as well as progress toward specific
long-term goals of quality, profitability, and growth. Operating group
performance was evaluated based primarily on operating plan measures of (a)
customer, employee, and community satisfaction; (b) productivity and cost
performance; (c) specified profit contributions; and (d) market share or new
product orders.
Evaluation of Company performance each year takes into consideration a
comparison with the performance of peer and premier companies and the overall
industry environment. The resulting performance evaluation produces a percentage
factor that may increase or decrease the incentive awards for executive
officers. For 1995, the Committee assessment was that the Company performed
well, with major productivity gains in a year in which a significant number of
experienced employees accepted an early retirement offer and operations were
affected by a fourth-quarter labor dispute and strike by production and
maintenance workers. Awards for the named executive officers other than Mr.
Shrontz averaged 124% of their assigned percentages.
CASH AWARDS. The cash portion of each incentive award is shown in the Bonus
column of the Summary Compensation Table on page 14.
The cash portion of Mr. Shrontz's annual incentive award was based on his
leadership and contributions to the Company's operating performance, including
excellent results in commercial aircraft market share and solid technical and
cost performance in all sectors of the business. With regard to shareholder
value, the Company in 1995 outperformed the S&P Aerospace Index and
significantly outperformed the S&P 500. The cash portion of the incentive award
made by the Committee for Mr. Shrontz's outstanding leadership over all
operations is shown in the Bonus column of the Summary Compensation Table on
page 14.
BOEING STOCK UNITS. The number of BSUs awarded was determined by crediting each
executive with the number of shares that could be purchased with 30% of that
officer's target incentive award, adjusted for Company performance, based on the
Fair Market Value of Boeing stock (as defined on page 9) on the day of the
award. The BSUs vest three years after the award and each executive may choose
to have them paid out in either shares of Boeing stock or cash. The values
20
<PAGE> 25
of the BSUs at the time of grant to Mr. Shrontz and the other named executive
officers are shown in the Restricted Stock column of the Summary Compensation
Table on page 14.
STOCK OPTIONS
Stock options are granted to provide a long-term incentive that is directly
linked to shareholder value. To recognize the different levels of
responsibilities within the Company, the number of stock options an executive
officer is granted is determined by the officer's pay grade, salary, and the
price of Boeing stock. However, all stock option grants are subject to
discretionary adjustments based on individual performance or for purposes of
retention.
Stock options are granted with an exercise price equal to the Fair Market Value
of Boeing stock on the date of grant, and become exercisable in 40%, 30%, and
30% increments after one, three, and five years, respectively. To encourage
stock retention, and consistent with past practice, stock options are granted as
incentive stock options to the extent permitted under the Internal Revenue Code.
Mr. Shrontz's stock option grant in 1995 was consistent with these guidelines.
In approving annual stock option grants, the number of outstanding stock options
held by an individual did not influence the Committee's decision.
LONG-TERM INCENTIVE PROGRAM
Prior to 1994, certain senior executives were chosen by the Committee to
participate in the Long-Term Incentive Program. Under the Program, executive
investment performance shares were allocated in the first year of a seven-year
performance cycle. After completion of the third year of the cycle, the
Committee, in its discretion, could award additional performance shares in an
amount from 0% to 200% of the number of each participant's initial shares for
the cycle, depending on the Committee's assessment of management's achievement
of certain performance targets. Each performance share is converted into one
share of Boeing stock four years after it is awarded and earns dividend
equivalents and interest on dividend equivalents, which are payable when the
performance share is converted into stock.
New performance cycles under the Long-Term Incentive Program were discontinued
in 1994, although the Committee will consider awards in 1996 for the final
performance cycle. The size of the performance-based awards will be based on an
assessment of overall performance against the Company's long-range strategic
plan for that performance cycle. The performance measures used are return on
equity, real sales growth, and quality improvement as measured by customer,
employee, and community satisfaction, as well as consideration of total
shareholder return. Although the Committee does not assign relative weights to
these factors, each factor has specific targets and measures.
In evaluating performance for the three-year period that ended December 31,
1994, the Committee concluded that the Company produced excellent results for
most of the performance cycle. The Committee decided that management responded
well to dramatic changes in the external environment, achieved very favorable
performance in the defense and aerospace programs, successfully implemented the
777 program, took appropriate steps in consolidating the
21
<PAGE> 26
workforce, positioned the Company well for future success, and significantly
influenced the strong improvement in shareholder value. As a result, the
Committee, based on its subjective assessment of Company performance, awarded
performance-based shares at 1.4 times the number of executive investment
performance shares awarded at the beginning of the cycle in 1992. The percentage
awarded is the same for all participants.
This formula, applied to Mr. Shrontz's 1992 executive investment performance
shares, produced an award to him of 6,350 performance shares. The value at the
time of grant of the additional performance shares awarded to Mr. Shrontz and
the other named executive officers is shown on the line for 1994 in the LTIP
Payouts column of the Summary Compensation Table on page 14.
COMPENSATION COMMITTEE:
George M. Keller, Chairman
Robert A. Beck
Harold J. Haynes
Donald E. Petersen
Charles M. Pigott
George H. Weyerhaeuser
22
<PAGE> 27
SHAREHOLDER RETURN ON PERFORMANCE GRAPHS
The following graphs show changes in the value of $100 invested at year-end 1990
and 1985, respectively, in (1) the Company's stock, (2) Standard & Poor's 500
Stock Index, and (3) Standard & Poor's Aerospace Index. The investment values
are based on share price appreciation plus dividends paid in cash, assuming that
dividends were reinvested on the date on which they were paid.
FIVE-YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Boeing S&P 500 S&P Aerospace
<S> <C> <C> <C>
1990 100 100 100
1991 107 130 119
1992 93 139 125
1993 102 153 162
1994 114 154 175
1995 193 212 289
</TABLE>
TEN-YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Boeing S&P 500 S&P Aerospace
<S> <C> <C> <C>
1985 100 100 100
1986 100 118 109
1987 75 124 89
1988 126 145 112
1989 189 191 144
1990 221 185 151
1991 237 240 180
1992 204 258 188
1993 226 282 244
1994 251 285 264
1995 425 392 435
</TABLE>
The Board of Directors and its Compensation Committee recognize that the market
price of stock is influenced by many factors, only one of which is issuer
performance. The Company's stock price is significantly influenced by cyclical
fluctuations in the commercial jet aircraft global market environment, and to a
lesser degree, changes in national defense priorities. The stock price
performance shown in the graphs is not necessarily indicative of future price
performance.
23
<PAGE> 28
ANNUAL REPORT AND FORM 10-K
The 1995 Annual Report of the Company was mailed to shareholders together with
this proxy statement. UPON REQUEST, THE COMPANY WILL FURNISH WITHOUT CHARGE A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES. The Form 10-K
has been filed with the SEC. It may be obtained by writing to the Data Shipping
Department, The Boeing Company, P.O. Box 3707, Mail Stop 3T-33, Seattle,
Washington 98124-2207, or calling (206) 393-4964. The 1995 Annual Report is also
available at the Company's World Wide Web site, HTTP://WWW.BOEING.COM.
SHAREHOLDER PROPOSALS FOR 1997
The Company's next annual meeting will be held on April 28, 1997. An eligible
shareholder who wants to have a qualified proposal considered for inclusion in
the proxy statement for that meeting must notify the Secretary of the Company.
The proposal must be received at the Company's executive offices no later than
November 15, 1996. A shareholder must have been a registered or beneficial owner
of at least one percent of the Company's outstanding stock or stock with a
market value of $1,000 for at least one year prior to submitting the proposal,
and the shareholder must continue to own such stock through the date on which
the meeting is held.
The Company's By-Laws outline procedures, including minimum notice provisions,
for shareholder nomination of directors and other shareholder business to be
brought before the annual meeting. A copy of the pertinent By-Law provisions is
available on request to Heather Howard, Corporate Secretary, The Boeing Company,
P.O. Box 3707, Mail Stop 10-13, Seattle, Washington 98124-2207.
THE BOEING COMPANY
24
<PAGE> 29
SOLICITED BY THE BOARD OF DIRECTORS
THE BOEING COMPANY
ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1996
The undersigned hereby appoints Charles M. Pigott, Frank Shrontz, and
George H. Weyerhaeuser (the "Proxy Committee"), and each or any of them, with
power of substitution, proxies for the undersigned and authorizes them to
represent and vote all of the shares of stock of the Company which the
undersigned may be entitled to vote at the Annual Meeting of Shareholders to be
held on April 29, 1996 (the "Meeting"), and at any adjournment thereof, as
indicated on the reverse side of this card with respect to the election of
directors, and with discretionary authority as to any other matters that may
properly come before the Meeting, in accordance with and as described in the
Notice and Proxy Statement for the Meeting.
If there are shares of stock allocated to the undersigned in Fund E of
The Boeing Company Voluntary Investment Plan, the undersigned hereby instructs
the Trustee to vote all of such shares at the Meeting and any adjournment
thereof, as indicated on the reverse side of this card with respect to the
election of directors, and authorizes the Trustee to vote in its judgment or to
empower the Proxy Committee to vote in the Proxy Committee's judgment, on such
other business as may properly come before the Meeting and any adjournment
thereof.
If no direction is given, this proxy will be voted FOR all of the
nominees for election as directors.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE.
...............................................................................
|X| Please mark votes as in this example.
- ---------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BOEING
FOR EACH OF THE FOLLOWING NOMINEES:
- ---------------------------------------------------
Election of Directors: Robert A. Beck, Philip M.
Condit, John B. Fery, and Donald E. Petersen.
For Withheld
Mark here / / Mark here / /
__________________ for address / / for comments / /
For all nominees, except as noted above. change and / / and note / /
note at left / / above / /
- ---------------------------------------------------
Please sign exactly as your name
appears on your account. If the
shares are registered in the names
of two or more persons, each should
sign. If acting as attorney,
executor, trustee or in another
representative capacity, sign name
and title.
Signature: Date Signature: Date
--------------- ------------ -----------------
