UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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THE BOEING COMPANY
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Message from Our Chairman
To my fellow shareholders:
| As your board chairman, I stand with Boeing’s people in mourning the lives lost in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents. We are deeply humbled by these tragedies and committed to fulfilling our responsibilities to all of our stakeholders. Your board and management team are dedicated to restoring trust with airline customers and the flying public, our employees, global regulators and our shareholders. We recognize this renewal begins by staying true to our word, listening and delivering positive, lasting change. Over the past year, our board and our company have done this in several ways. In addition to transitioning company leadership, we created a permanent Aerospace Safety Committee to oversee the design, development, manufacturing, operation, maintenance and delivery of products and services. Inside the company, we are installing | |
a new design requirements program that will ensure we act on lessons learned and continuously improve. We are also adding new safety roles and expanding safety reporting systems both inside Boeing and within our supply chain. In addition, we are looking for new ways to enable and prioritize actions that improve safety, strengthen our culture and help us meet customer commitments. We have a strong mix of expertise and tenure on our board today. Since our last annual meeting, Admiral John Richardson, the 31st Chief of Naval Operations for the U.S. Navy, has joined our board, and we are pleased that Akhil Johri, former Chief Financial Officer of United Technologies, and Steven Mollenkopf, Chief Executive Officer of Qualcomm, have agreed to be nominated for election to the board at this year’s meeting. With these changes, we have supplemented the nominated board’s safety, engineering, and aerospace expertise. At the same time, I want to extend my personal thanks to our two retiring directors, who have provided leadership and exemplary service to the board. Ed Liddy has reached the board’s mandatory retirement age, and Mike Zafirovski has decided not to stand forre-election after 15 years on our board. We are grateful for their many contributions over the years. As you will read in the pages that follow, your board has been actively overseeing the company’s efforts toward restoring trust with stakeholders and recommitting to our core values. But we know that there is more work to do. You have my word that we will continue to evaluate additional actions in 2020 and beyond to strengthen our culture of transparency and accountability. This includes recommitting to Boeing’s values at every level of the company. Safety, quality and integrity are paramount in service to the company and the communities where Boeing’s people live and work. The challenges of the past 18 months have reinforced that Boeing is more than a company. We are accountable across the globe for safely connecting people and places, serving men and women in uniform, enabling space exploration, and driving innovation throughout the aerospace industry. Our duty to all stakeholders is based on this trust. Building that trust and delivering sustainable, long-term value requires regular dialogue with our shareholders. We completed extensive outreach in 2019, during which time members of the board and management engaged with shareholders representing approximately 45% of our outstanding stock. The input from these conversations informed the decision-making process and many of the recent actions we have taken, and it will continue to influence our path forward. Finally, we hold our deep gratitude to Boeing’s more than 160,000 employees. Their ongoing contributions will continue to strengthen Boeing. Ultimately, it is Boeing’s people and the pride they take in their work that fills me with hope and confidence for the future. | ||
Lawrence W. Kellner
Chairman of the Board
The Boeing Company
Message from Our CEO
2017 ANNUAL MEETING
OF SHAREHOLDERSTo our shareholders:
 | As Boeing’s new president and CEO, I am now experiencing each day the values Boeing stands for. Our people are tirelessly devoted to the customers who purchase, fly on and use our products and services. They are devastated, as I am, by the loss of life in the 737 MAX accidents and feel the deepest sorrow for the loved ones of those who died. Together, we are determined to implement the lessons we continue to learn from that experience. Those lessons are reshaping the way we do business and making us stronger as a company. We are engaging one another and our stakeholders with greater transparency and humility; asking and answering tough questions throughout the company; and focusing our efforts and our organizational structure more sharply on what matters most. Above all, we are holding ourselves accountable to the highest standards of safety, quality and integrity. The aviation industry and | |
Boeing have a rich history of learning from each and every tragedy we have faced. This is a crucial time for Boeing. Foremost among our priorities is returning the 737 MAX safely to service and earning back trust with our stakeholders. We are committed to delivering excellence across our three businesses, restoring our production health, investing in our future and further strengthening our culture. We will get these things done, and we will get them done right. Throughout my first months, I have met with our people, our customers, our partners, our regulators and other stakeholders to ensure we understand their expectations. In these conversations I have seen deep support for our company and appreciation for the changes we are making to improve. Know also that we are committed to delivering on the high expectations you as shareholders have for us and that we set for ourselves. Even through the 737 MAX crisis, our Boeing team continued to deliver quality programs and provide highly engineered products and services that improve the lives and enhance the security of people around the world. And we have taken decisive steps to improve our ability to deliver safe products and services for our customers. For example, we have established a new Product and Services Safety organization that reviews all aspects of product safety. And we are strengthening our engineering teams by organizing them into a single function with a direct reporting line to Boeing’s chief engineer. We have also launched an enhanced reporting channel for employees to speak up about safety, quality and ethics concerns. I am determined to ensure that accountability begins with our leaders — and that starts with me. I am proud to be part of the Boeing team, and I am confident in our future. | ||
Monday, May 1, 2017
9:00 a.m., Central TimeDavid L. Calhoun
President and CEO
The Field MuseumBoeing Company
1400 South Lake Shore Drive
Chicago, Illinois
Notice of 20172020 Annual Meeting of Shareholders
March 17, 2017To the Shareholders of The Boeing Company:
Dear Fellow Shareholder,
You are cordially invited to attend The Boeing Company’s 20172020 Annual Meeting of Shareholders towill be held on Monday, May 1, 2017,April 27, 2020, 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:
elect the 13 director nominees named in the proxy statement;directors;
approve, on an advisory basis, named executive officer compensation;
recommend the frequency of future advisory votes on named executive officer compensation;
ratify the appointment of Deloitte & Touche LLP as our independent auditor for 2017;auditors; and
transact such other business, including certain shareholder proposals, as may properly come before the meeting and any postponement or adjournment thereof.
The meeting will also include a report on our operations. Shareholders of record at the close of business on March 2, 2017February 27, 2020 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
By Order of the proxy statement.
Thank you for your ongoing supportBoard of The Boeing Company.Directors,
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| Grant M. Dixton |
| Vice President, Deputy General Counsel and Corporate Secretary |
March 13, 2020
PLEASE REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
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 | VIA THE INTERNET Visit www.proxyvote.com |  | BY MAIL Sign, date, and return your proxy card or voting instruction form | |||
 | BY TELEPHONE Call the telephone number on your proxy card, voting instruction form or notice |  | IN PERSON
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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:April 27, 2020: This Notice of Annual Meeting and Proxy Statement and the 20162019 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 20172020 Annual Meeting of Shareholders and at any adjournment or postponement thereof. On or about March 17, 2017,13, 2020, 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.
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THE BOEING BOARD: LEARNING AND TAKING ACTION
The Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents continue to weigh heavily on everyone at Boeing. Our directors and senior leadership are learning from these accidents, listening to our internal and external stakeholders — including you, the shareholders — and taking action. We are committed to increased transparency as we work to return the 737 MAX to service and rebuild stakeholder trust one step at a time. For the latest updates on the MAX, visithttp://www.boeing.com/737-max-updates/.
The Board of Directors and management have talked to many shareholders since the 737 MAX accidents.Several directors, including our Chief Executive Officer while he served as independent Lead Director, our Non-Executive Chairman, and the Chairs of the Aerospace Safety Committee and Compensation Committee, have participated in certain of these engagements. All in all, we had substantive discussions with holders representing approximately 45% of Boeing stock in the last year, and all investor and other stakeholder feedback has been shared with, and discussed by, the full Board. For additional information, see “Shareholder Outreach” on page 19. Below are some of the key themes of these discussions. The pages that follow describe many of the actions the Board has taken to improve safety, strengthen our culture, and meet our commitments to our stakeholders.
| Topic | Shareholder Feedback | |
Response to 737 MAX Accidents | You asked for more information regarding the Board’s role in responding to the 737 MAX tragedies, including the actions it has taken and will take to prevent future accidents. Many of you also expressed concern over the level of Board oversight in the wake of the 737 MAX accidents. | |
Risk Oversight | You sought to understand the Board’s role in risk oversight and the Company’s reporting lines for potential safety issues, expressing particular interest in the recent creation of the Product and Services Safety organization and the decision to realign the engineering function around a single Chief Engineer role with a direct reporting relationship to the CEO. | |
Board Leadership | You supported the Board’s decision to separate the CEO and Chairman roles and sought more information on the timing and process behind that decision. | |
Board Composition | You expressed continued interest in understanding key emerging skill areas for Board members. Many of you focused in particular on the need to ensure that the Board has the skills and experience needed to exercise adequate oversight of the Company’s commitment to safety and its engineering function. | |
Company Culture | You expressed concerns regarding media reports on whistleblower complaints and internal messages, seeking to understand whether these incidents reflect the broader company culture and how Boeing internally promotes its values, including safety, quality and integrity. | |
Executive Compensation | You inquired about the structure and elements of our executive compensation program, particularly with respect to how the program incentivizes safety. Several of you asked the Board to consider potential safety-related performance metrics. Many of you also made clear that the Board should review potential actions to sharpen executive accountability for safety-related matters. | |
 | 2020 Proxy Statement | 1 |
THE BOEING BOARD: LEARNING AND TAKING ACTION
Promptly after the grounding of the 737 MAX, the Board established a temporary Committee on Airplane Policies and Processes. This committee of independent directors, chaired by Admiral Edmund P. Giambastiani Jr., conducted a comprehensive, five-month review of Boeing’s policies and processes for airplane design and development. This committee’s activities includedin-depth consultation with Boeing engineers as well as outside experts from aerospace and other industries where safety is of paramount importance. After that review, the Board took or drove management to take the following actions:
Actions taken to strengthen the culture of safety throughout Boeing and the broader aerospace industry | ||||
1 | Established a permanent Aerospace Safety Committee | Established in August 2019, this Board committee oversees and ensures the safe design, development, manufacture, production, operation, maintenance and delivery of our products and services. | ||
2 | Strengthened the Engineering function | To further strengthen engineering and elevate product and services safety, engineers across Boeing now report to the Chief Engineer. | ||
3 | Created a product and services safety organization | Reporting directly to the Company’s Chief Engineer and the Aerospace Safety Committee, this organization reviews all aspects of product safety. | ||
4 | Establishing a Design Requirements Program | This program incorporates historical design materials, data and information, best practices, lessons learned and detailed after-action reports to reinforce our commitment to continuous improvement. | ||
5 | Enhancing the Continued Operation Safety Program | To increase transparency and ensure visibility of safety-related issues, the Continued Operation Safety Program requires the Chief Engineer’s review of all reports on safety and potential safety issues. | ||
6 | Reexamining flight deck design and operation | To anticipate the needs of future pilot populations, we are reexamining assumptions around flight deck design and operation in partnership with our airline customers and industry members. | ||
7 | Expanding the Safety Promotion Center | The Safety Promotion Center, established in 2017, is a place for employees to learn and reflect on our safety culture and renew personal commitments to safety. We are extending its role and reach to our global network. | ||
8 | Strengthening safety systems | New safety leadership roles, empowered safety review boards and an expanded anonymous safety reporting system are strengthening safety management systems at Boeing and throughout our supply chain. | ||
9 | Leading in new capabilities | Additional investments are being made in enhanced flight simulation and computing as well as advanced research and development for future flight decks. Broader plans are underway for improving the global aviation safety ecosystem. | ||
10 | Investing in talent | To address the global need for aerospace talent, we are sharpening our focus on pilot and maintenance technician training and STEM education. | ||
2 | | 2020 Proxy Statement |
THE BOEING BOARD: LEARNING AND TAKING ACTION
Since the grounding of the 737 MAX, the Board announced the following regarding executive accountability:
Former President and CEO Dennis Muilenburg was not paid any severance or other benefits in connection with his retirement,
No annual incentive payouts for 2019 performance, and
No long-term incentive performance award payouts for 2017-2019 performance.
In addition, in 2020 the Board enhanced Boeing’s clawback policy to cover instances of misconduct that compromise the safety of our products or services. The Compensation Committee also strengthened its process for assessing the performance of executives with respect to safety and our other core values, including by ensuring formal consultations with the Aerospace Safety Committee in connection with individual performance reviews.
For additional information on executive compensation, including detail on Mr. Muilenburg’s 2019 compensation, see “Compensation Discussion and Analysis” beginning on page 33 and “Compensation of Executive Officers” beginning on page 51.
Making Senior Leadership Changes
During the course of the last year, the Board has implemented several changes to Boeing’s leadership. These changes are designed to help rebuild the trust of our stakeholders, commit to a culture of greater transparency, and strengthen our company around our core values, including safety, quality and integrity. In addition, the Board has sharpened its focus on board refreshment in order to ensure that our Board consists of a diverse, highly-skilled group of leaders focused on sustainable, long-term business success. Affirmative leadership-related actions taken by the Board to date include the following (in order of occurrence):
Amended our Corporate Governance Principles to explicitly identify safety-related experience as a criterion when considering potential director nominees
Separated the roles of CEO and Chairman
Elected Stanley Deal to serve as President and CEO, Boeing Commercial Airplanes
| • | Elected Admiral John Richardson, the 31st Chief of Naval Operations for the U.S. Navy, to our Board |
Elected Larry Kellner to serve as Chairman of the Board
Elected Dave Calhoun to serve as the Company’s President and CEO
Nominated Akhil Johri, former Chief Financial Officer of United Technologies, and Steven Mollenkopf, Chief Executive Officer of Qualcomm, for election to the Board at this year’s Annual Meeting of Shareholders
For more information on the nominees for election to the Board and our continued efforts to maintain a skilled and diverse Board, see “Election of Directors” beginning on page 9.
We understand thatre-establishing trust and increasing transparency with all stakeholders, not just our shareholders, is the only path forward; we will continue to listen, seek feedback, and respond — appropriately, urgently and respectfully.
Stakeholders | Company Actions | |
| Families and Communities | • Recommitment to transparency with all stakeholders • Extensive personal outreach by senior management to the families of those impacted by the 737 MAX accidents • Pledged $100 million to the families and communities affected by the accidents | |
| Regulators | • Working closely with the FAA and other global regulators to safely return the 737 MAX to service • Recommitting to transparency and accounting for rigorous scrutiny by regulatory authorities | |
| 2020 Proxy Statement | 3 |
THE BOEING BOARD: LEARNING AND TAKING ACTION
| Stakeholders | Company Actions | |
| Customers | • Extensive customer engagement regarding impact of the 737 MAX grounding on their operations • Recognized liabilities of $8.3 billion in 2019, net of insurance, related to customer concessions and other considerations • Continual learning and focus on safety, first-time quality, and delivering on commitments | |
| Pilots | • Met with hundreds of airline pilots to discuss 737 MAX software updates • Recommended robust simulator training for all 737 MAX pilots • Conducted hundreds of simulator sessions with pilots | |
| Suppliers | • Closely engaging with more than 600 737 suppliers to ensure supply chain stability • Working with supply chain to minimize disruption related to the continued grounding | |
The Boeing family includes more than 160,000 employees, an extensive network of customers and suppliers as well as community stakeholders across the globe. We continue to humbly reflect on learnings from the past year to strengthen our actions aligned with our values. We believe that cultivating an open, inclusive and accountable culture is a journey that we must always advance. Through our focus on values, including safety, quality and integrity, we will meet our commitments and stakeholders’ expectations.
We have recommitted ourselves to Boeing’s core values, which define who we are and guide us on our journey of continuous improvement. | ||
Safety | We value human life and well-being above all else. | |
Quality | We strive for first-time quality and continuous improvement. | |
Integrity | We hold ourselves to the highest ethical standards. | |
Diversity and Inclusion | We value the skills, strengths and perspectives of our diverse team. | |
Trust and Respect | We act with honesty and treat everyone fairly. | |
Corporate Citizenship | We are a responsible partner to our communities. | |
Stakeholder Success | We strive to deliver excellence to all we serve. | |
4 | | 2020 Proxy Statement |
THE BOEING BOARD: LEARNING AND TAKING ACTION
President and CEO Dave Calhoun has asked Boeing employees to focus on the following priorities:
Safely return the 737 MAX to service, following the lead of regulators and working with them to ensure they are completely satisfied with the airplane and our work, so we can continue to meet our customer commitments.
Rebuild trust among stakeholders by recommitting to transparency, listening and responding to feedback, and meeting and exceeding expectations.
Focus on our values while further strengthening our culture, fostering an inclusive environment that embraces oversight and accountability.
Operate with excellence to deliver safe products and services to customers, continuously improving quality performance and remaining focused on what is important.
Restore production health by taking steps to preserve the supply chain and workforce expertise, ensuring we are ready to restart 737 MAX production and increase rate safely, smartly and with the highest standards of quality.
Invest in our futureand keep innovating to succeed, building our global workforce and developing new processes and technologies to improve safety and efficiency.
| 2020 Proxy Statement | 5 |
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
| Item | Description | For | Against | Page | Description | For | Against | Page | ||||||||||||
1 | Elect directors |  | 4 |
Election of directors
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2 | Approve, on an advisory basis, named executive officer compensation | | 23 |
Approve, on an advisory basis, named executive officer compensation
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3 | Approve, on an advisory basis, the frequency of future advisory votes on named executive officer compensation | EVERY YEAR | 24 |
Ratify the appointment of independent auditor
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64
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4 | Ratify appointment of the independent auditor | | 53 |
Shareholder proposal – disclosure of director skills, ideological perspectives, and experience and minimum director qualifications
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68
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5 | Shareholder proposal – additional report on lobbying activities |  | 56 |
Shareholder proposal – additional report on lobbying activities
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70
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6 | Shareholder proposal – reduce threshold to call special shareholder meetings from 25% to 15% | | 58 |
Shareholder proposal – policy requiring independent Board Chairman
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71
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7 | Shareholder proposal – report on arms sales to Israel | | 59 |
Shareholder proposal – written consent
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8 | Shareholder proposal – implement Holy Land Principles | | 60 |
Shareholder proposal – mandatory retention of significant stock by executives
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Shareholder proposal – additional disclosure of compensation adjustments
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75
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The Boeing Company 2017 Proxy Statement1
PROXY SUMMARY
Director Nominees
This year’s Board nominees include one new director—Robert Bradway, Chairman and CEOThree of Amgen Inc. Since August 2015, threeour independent directors have joined the Board reflectingin the last three years, and two additional director nominees—Akhil Johri and Steve Mollenkopf—are up for election this year for the first time. These new additions reflect our ongoing boardBoard refreshment strategy and our commitment to 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 4.9.
| Name | Age | Director Since | Professional Background | Board Committees | ||||||||
Robert A. Bradway | 54 | 2016 | Chairman & CEO, Amgen | Audit, Finance | ||||||||
David L. Calhoun | 59 | 2009 | Senior Managing Director, Blackstone Group; Former Chairman & CEO, Nielsen | Compensation, GON | ||||||||
Arthur D. Collins, Jr. | 69 | 2007 | Senior Advisor, Oak Hill Capital Partners; Former Chairman & CEO, Medtronic | Compensation, GON | ||||||||
Kenneth M. Duberstein | 72 | 1997 | Chairman & CEO, The Duberstein Group; Former White House Chief of Staff | Compensation, GON | ||||||||
Edmund P. Giambastiani, Jr. | 68 | 2009 | 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 | Audit, Finance, Special Programs | ||||||||
Lynn J. Good | 57 | 2015 | Chairman, President & CEO, Duke Energy | Audit, Finance | ||||||||
Lawrence W. Kellner | 58 | 2011 | President, Emerald Creek Group; Former Chairman & CEO, Continental Airlines | Audit, Finance | ||||||||
Edward M. Liddy | 71 | 2010 | Former Chairman & CEO, Allstate | Audit, Finance | ||||||||
Dennis A. Muilenburg | 53 | 2015 | Chairman, President & CEO, Boeing | Special Programs | ||||||||
Susan C. Schwab | 61 | 2010 | Professor, University of Maryland School of Public Policy; Former U.S. Trade Representative | Audit, Finance | ||||||||
Randall L. Stephenson | 56 | 2016 | Chairman & CEO, AT&T | Audit, Finance, Special Programs | ||||||||
Ronald A. Williams | 67 | 2010 | Former Chairman & CEO, Aetna | Compensation, GON, Special Programs | ||||||||
Mike S. Zafirovski | 63 | 2004 | Executive Advisor, Blackstone Group; Former President & CEO, Nortel | Compensation, GON | ||||||||
Key Features of Our Executive Compensation Program
| Name | Age | Director Since | Professional Background | Board Committees | ||||||||
Robert A. Bradway
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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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2009
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President & CEO, The Boeing Company
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Arthur D. Collins Jr.
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72
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2007
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Former Chairman & CEO, Medtronic
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Compensation, GON
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Edmund P. Giambastiani Jr.
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71
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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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Aerospace Safety, Audit, Special Programs
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Lynn J. Good
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60
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2015
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Chairman, President & CEO, Duke Energy
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Aerospace Safety, Audit
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Nikki R. Haley
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48
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2019
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Former U.S. Permanent Representative to the United Nations
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Audit, Finance
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Akhil Johri
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58
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Former CFO, United Technologies
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Lawrence W. Kellner*
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61
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2011
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Former Chairman & CEO, Continental Airlines
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Aerospace Safety, Audit
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Caroline B. Kennedy
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62
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2017 |
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Former U.S. Ambassador to Japan
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Audit, Finance
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Steven M. Mollenkopf
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51
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CEO, Qualcomm
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John M. Richardson
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59
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2019
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31st Chief of Naval Operations, U.S. Navy; Former Director of the Naval Nuclear Propulsion Program, U.S. Navy
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Aerospace Safety, Special Programs
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Susan C. Schwab
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64
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2010
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Former U.S. Trade Representative
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Compensation, GON
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Ronald A. Williams
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70
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2010
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Former Chairman & CEO, Aetna
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Audit, Finance, Special Programs
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| * | Non-Executive Chairman |
Pay-for-performance strategy aligns executive compensation with execution of business strategy (page 26)
Incentive pay programs feature multiple performance metrics (page 28)
Approximately 89% of target CEO pay in 2016 was variable (page 31)
No accelerated vesting of equity awards in connection with a change in control (page 34)
Rigorous stock ownership requirements for officers and directors (pages 37 and 20)
No pledging or hedging of Boeing stock by officers or directors (page 38)
Robust clawback policy that permits recoupment of incentive compensation in certain cases of misconduct even absent a financial restatement (page 38)
Stock holding requirements for executive officers (page 37)
No employment orchange-in-control agreements
Governance Highlights
Three new independent directors in last 18 months (page 4)
Majority voting for all directors, each of whom is elected for aone-year term
Shareholders meeting certain requirements may nominate directors and have such nominees included in the proxy statement, known as “proxy access” (page 17)
Extensive Board oversight of risk management, with particular focus on Boeing’s key strategic, operational, and compliance risks (page 16)
6 2020 Proxy Statement2 The Boeing Company 2017
PROXY SUMMARY
Strong independent Lead Director with broad responsibilities and significant governance duties (page 13)
Executive sessions of independent directors conducted after every regularly scheduled Board meeting
Board leadership structurere-evaluated annually (page 13)
Robust succession planning process for senior leadership positions
Strict limits on director service on outside boards (page 12)
Comprehensive annual self-assessments of Board and its committees
No supermajority voting
Shareholder right to call special meetings
Publicly disclosed policies and practices regarding political advocacy
We meet with many of our shareholders throughout the year to ensure that managementthe Board and the Boardmanagement are focused on, and responsive to, investor priorities and concerns. For additional information, see “Shareholder Outreach” on page 17.19.
Environmental Stewardship and Corporate CitizenshipGovernance Checklist
| ✓ | Five independent director nominees with tenure of less than three years (page 10) |
| ✓ | Balanced and diverse group of Board nominees (page 9) |
| ✓ | Independent Chairman of the Board (page 18) |
| ✓ | Robust succession planning process for senior leadership positions, includingin-depth meetings between individual directors and senior executives |
| ✓ | Extensive Board oversight of key strategic, operational, and compliance risks, with a sharpened focus on risks that could impact the safety and quality of our products and services (page 22) |
| ✓ | Significant involvement in strategy development |
| ✓ | Active engagement by directors and management with shareholders throughout the year (page 19) |
| ✓ | Comprehensive annual self-assessments of Board and its committees (page 23) |
| ✓ | 12 of 13 director nominees are independent (page 10) |
| ✓ | Executive sessions of independent directors conducted after every regularly scheduled Board meeting |
| ✓ | Approximately 98% average attendance at Board and committee meetings during 2019 (page 24) |
| ✓ | Robust Board refreshment process that takes into account diversity and expertise, as well as the evolving needs and circumstances of the Company |
| ✓ | Multiple visits to Boeing production sites by each director every year |
| ✓ | Proxy access right for shareholders seeking to nominate directors (page 81) |
| ✓ | Limits on director service on outside boards (page 10) |
| ✓ | Publicly disclosed policies and practices regarding political advocacy, including enhanced disclosure of key trade association relationships beginning in 2020 (seehttps://www.boeing.com/company/key-orgs/government-operations/#/political) |
| ✓ | Board oversight of political and charitable contributions |
| ✓ | Directors required to hold equity until they leave the Board |
| ✓ | Majority voting for all directors, each of whom is elected for aone-year term and is subject to a resignation policy in the event he or she fails to receive a majority vote |
| ✓ | No supermajority voting requirements |
| ✓ | Shareholder right to call special meetings |
| ✓ | No poison pill and any future poison pill must be submitted to shareholders |
Executive Compensation Checklist
| ✓ | No annual incentive payouts for 2019 performance |
| ✓ | No long-term incentive performance award payouts for 2017-2019 performance |
| ✓ | Former CEO provided with no severance or separation payments (page 35) |
| ✓ | Enhanced clawback policy designed to address instances of misconduct that compromise the safety of our products or services |
| ✓ | Enhanced focus on safety when evaluating individual executive performance, including formal consultation between Aerospace Safety and Compensation committees |
| ✓ | Incentive pay programs that feature multiple Company performance metrics and account for individual performance with the majority of target incentive compensation tied to long-term performance (page 38) |
| ✓ | Approximately 86% of target NEO pay in 2019 was variable and at risk (page 33) |
| ✓ | No accelerated vesting of equity awards in connection with a change in control |
| ✓ | No pledging or hedging of Boeing stock by officers or directors (page 48) |
| ✓ | Rigorous stock holding and ownership requirements for executive officers (page 47) |
| ✓ | Nochange-in-control agreements |
| ✓ | No employment agreements (except where required bynon-U.S. local law) |
| 2020 Proxy Statement | 7 |
PROXY SUMMARY
Boeing’s commitment to innovation extends to how we care for our environment, and engage with the communities in which we operate.operate, and build and sustain a corporate culture that promotes accountability and aligns with our values. See “Environmental Stewardship and Corporate Citizenship”“Sustainability” on page 1724 for additional information.
ENVIRONMENTAL | SOCIAL | GOVERNANCE | ||||||
| Global environmental leadership through aerospace innovation — companywide focus on emitting less carbon, using less energy and water, and creating less waste while protecting human and environmental health in communities across the globe. | Create positive changes in our workplace and local communities for our employees, customers and partners, focused on the way we operate our business. | Managing our company in a manner that upholds our values, addresses key risks, and takes into account the long-term interests of our employees, shareholders, customers, suppliers, and communities | ||||||
48 BILLION POUNDS of fuel saved by the 787 Dreamliner family since it entered service, compared to the airplane it replaces | $240 MILLION invested in our communities | SAFETY Established Board Aerospace Safety Committee and Product and Services Safety organization | ||||||
The Boeing Company 2017 Proxy Statement3
8 | | 2020 Proxy Statement |
ELECTION OF DIRECTORS (ITEM 1)
PROPOSAL SUMMARY
Shareholders are being asked to elect the 13 director nominees belowunder “Director Nominees” beginning on page 11 to serve until the 2018 annual meeting2021 Annual Meeting of shareholders.Shareholders.
 | The Board recommends that you vote FOR each of the 13 director nominees. |
Board Composition and Engagement
Background
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Aerospace Expertise | 4 | Substantial knowledge of | ||
Engineering/ Technology Leadership | 8 | Experience in precision engineering or in leading teams working on cutting-edge technologies enables directors
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| 5 | Understanding of multifaceted industrial processes allows directors to critically evaluate manufacturing | ||
Safety | 7 | Expertise in establishing and overseeing safety processes and procedures provides the Board with the proper perspectives to effectively monitor Boeing’s operations | ||
Highly-Regulated Industry Experience | 7 | Familiarity with highly-regulated industries allows directors to advise on how to most effectively work with regulators, meet their expectations, and achieve mutual goals | ||
Current or Former CEO of a Global Public Company | 7 | Understanding of and experience navigating key challenges of the chief executive role at large, multi-national companies allows directors to effectively advise and oversee the performance of our CEO | ||
Fortune 500 Board Experience | 10 | Work on other large, public company boards provides directors with similar oversight experience | ||
International Leadership | 7 | Experience leading large, global teams and significant experience managing global relationships and/or international stakeholders enables directors to advise management on key risks involving our global customer and supply bases, oversee the Company’s processes for managing global compliance systems, and identify strategic opportunities for future international growth | ||
Senior Leadership Experience | 13 | Awareness of intricacies of effectively running teams enables directors to advise and assess the performance of our management team | ||
Senior U.S. Government / Military Experience | 5 | Experience in large-scale operations, strategy development, international relations, defense contracting, and/or risk oversight in sectors where safety is a key priority enables directors to critically examine and shape policies and procedures, as well as advise on strategic considerations involving our global defense and commercial operations | ||
Former Fortune 500 CFO | 4 | Expertise in large-scale financial decision making helps guide capital allocation and other financial decisions | ||
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ELECTION OF DIRECTORS (ITEM 1)
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12 of 13 Independent
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Data reflect 2020 nominees. |
SkillsDirector Qualification Criteria
The Governance, Organization and Experience HighlightsNominating Committee, or the GON Committee, is responsible for identifying and assessing potential candidates and recommending nominees for the Board’s 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 key factors:
Experience. The GON Committee considers each candidate’s experience and leadership record in such areas as operations, international business, engineering, manufacturing, safety, risk management, finance, government, marketing, international affairs, technology, and public policy.
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.
Diversity.The Board is deeply committed to seeking broad diversity of background, experience, skills, and perspectives among its members.
Safety. The Board is committed to safety as a core value of the Company—both with respect to the safety of our aerospace products and services and the safety of our employees in the workplace. One manifestation of this commitment is ensuring that the Board includes members with a wide range of experience in industries and professions where safety is paramount.
Outside Board Memberships. Directors are expected to ensure that other commitments, including outside board memberships, do not interfere with their duties and responsibilities as Boeing directors. Consequently, directors may not serve on more than four public company boards in addition to Boeing (two if a public company CEO). In addition, the GON Committee reviews directors’ outside commitments even when they do not exceed these limits, to ensure that all directors are able to devote sufficient time to Boeing.
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 Boeing’s publicly-disclosed Director Independence Standards, the NYSE director independence standards, and any potential conflicts of interest.
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.
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 aerospace leader. At the same time, with decades-long product cycles and lengthy development periods, we also benefit from directors with extensive Boeing experience. As a result, the GON Committee’s strategy is to maintain a balance among directors of short, medium and longer tenures.
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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10
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Complex Manufacturing
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Technology/Innovation
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Fortune 500 Former CFO
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5
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10 2020 Proxy Statement4 The Boeing Company 2017
ELECTION OF DIRECTORS (ITEM 1)
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.
Prior Contributions to the Board. When evaluating the candidacy of an incumbent director, the Board also considers the director’s ongoing contributions to the Board, including attendance and participation at meetings and ongoing relevance of their skills and experience, as well as the results of both formal and informal assessments provided by fellow directors.
Moving forward, the GON Committee will continue to seek out highly qualified director candidates as part of the Board succession plan. By identifying and electing directors with safety-related experience, expertise in areas like risk management, software development, engineering, leadership, and finance, and diverse backgrounds and perspectives, the Board seeks to continue to effectively fulfill its oversight responsibilities and uphold Boeing’s core values, all while enabling Boeing to achieve its evolving strategic imperatives.
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. Admiral Richardson, who joined the Board in 2019, was referred to the GON Committee by another independent director. Messrs. Johri and Mollenkopf, who are new nominees to the Board, were referred to the GON Committee by independent search firms.
ROBERT A. BRADWAY | ||||
Chairman & CEO, Amgen Inc. | 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) | Independent:Yes
Age:
Other current directorships:
• Amgen Inc. Prior directorships:
• Norfolk Southern Corporation | ||
Mr. Bradway brings to the Board critical skills in the areas of high technology, product development, financial oversight, product safety, 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, | ||||
| 2020 Proxy Statement | 11 |
ELECTION OF DIRECTORS (ITEM 1)
DAVID L. CALHOUN | ||||
The | Boeing director since:2009
Professional highlights: • President & CEO, The Boeing Company (2020-present)
• Senior Managing Director & Head of Private Equity Portfolio Operations, The Blackstone Group
• 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) | Independent:
Age:
Other current directorships:
• Caterpillar Inc.
Prior directorships: • Gates Industrial Corporation plc • Nielsen Holdings plc.
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Mr. Calhoun | ||||
The Boeing Company 2017 Proxy Statement5
ELECTION OF DIRECTORS (ITEM 1)
ARTHUR D. COLLINS JR. | ||||
| Boeing director since:2007
Professional highlights:
• Senior Advisor, Oak Hill Capital Partners
• Chairman & CEO, Medtronic, Inc. (Chairman 2002-2008; CEO 2002-2007)
• President & CEO, Medtronic, Inc. (2001-2002)
• President & COO, Medtronic, Inc. (1996-2001) | Independent:Yes
Age:
Other current directorships:
• U.S. Bancorp
Prior directorships:
• Alcoa Inc. • Arconic, Inc. | ||
Mr. Collins provides | ||||
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6 The Boeing Company 2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
EDMUND P. GIAMBASTIANI JR. | ||||
| Boeing director since:2009
Professional highlights:
•
• 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) • Admiral, U.S. Navy (retired); career nuclear trained submarine officer with commands at the submarine, squadron and fleet levels | Independent:Yes
Age:
Other current
• THL Credit, Inc.
•
Prior directorships:
• Monster Worldwide, Inc. | ||
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, | ||||
LYNN J. GOOD | ||||
Chairman, President & CEO, Duke Energy Corporation | 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) | Independent:Yes
Age:
Other current directorships:
• Duke Energy Corporation
Prior directorships:
• Hubbell Incorporated | ||
Ms. Good brings to the Board substantial experience in executive leadership, safety, corporate governance, financial management, and | ||||
2020 Proxy Statement 13The Boeing Company 2017 Proxy Statement7
ELECTION OF DIRECTORS (ITEM 1)
NIKKI R. HALEY | ||||
Former U.S. Permanent Representative to the United Nations | Boeing director since:2019 Professional highlights: • U.S. Permanent Representative to the United Nations (2017-2019) • Governor, South Carolina (2011-2017) • Member, South Carolina House of Representatives (2005-2011) | Independent:Yes Age:48 | ||
Ambassador Haley brings to the Board extensive experience in government and international affairs. During Ambassador Haley’s distinguished career as a legislator, Governor, and ambassador, she demonstrated strong leadership abilities, significant achievements in both domestic and foreign policy, and a commitment to a vibrant and sustainable U.S. industrial base. During her tenure as U.S. Permanent Representative to the United Nations, Ambassador Haley served as a member of the President’s cabinet and as a member of his National Security Council. In this capacity, she led an international U.S. Presidential delegation, represented the President in meetings with world leaders across multiple continents and convened the first council session dedicated to human rights. Ambassador Haley has a record of accomplishment in areas that are critical to Boeing’s long-term success, such as industrial policy, education, human rights, and international relations, which strengthen the Board’s oversight of Boeing’s long-term business strategy as well as its relationships with its global customer base and other key partners. She earned a bachelor of science degree in accounting from Clemson University. | ||||
AKHIL JOHRI | ||||
Former Executive Vice President and CFO, United Technologies Corporation | Boeing director since:N/A Professional highlights: • Special Advisor to the Chairman and Chief Executive Officer, United Technologies Corporation (2019-2020)* • Executive Vice President and Chief Financial Officer, United Technologies Corporation (2015-2019) • Chief Financial Officer, Pall Corporation (2013-2014) • Vice President, Finance and Chief Financial Officer, UTC Propulsion & Aerospace Systems, United Technologies Corporation (2011-2013) • Vice President, Financial Planning and Investor Relations, United Technologies Corporation(2009-2011) | Independent:Yes Age:58 Other current directorships: • Cardinal Health Inc. | ||
Mr. Johri brings to the board extensive aerospace industry expertise from his more than 30 years at United Technologies, as well as critical skills developed while serving as Chief Financial Officer at multiple Fortune 500 companies. These skills will enable Mr. Johri to provide critical insights to the Board in areas as diverse as financial strategy, strategic operations, the dynamics of managing a complex, global supply chain, articulating corporate strategy to investors and other stakeholders, and mitigating risks associated with the development of new products and services at a large industrial manufacturer. Mr. Johri also brings to the Board unique insights relating to his senior leadership experience at a major supplier to aerospace companies like Boeing. In addition, in his capacity as an independent director and audit committee member at Cardinal Health, Mr. Johri will bring to the Board experience in risk oversight and corporate governance of a large company in a highly regulated industry. Mr. Johri is a graduate of the Indian Institute of Management, Ahmedabad, and is a Chartered Accountant. * Mr. Johri is retiring from United Technologies on March 31, 2020. | ||||
14 | | 2020 Proxy Statement |
ELECTION OF DIRECTORS (ITEM 1)
LAWRENCE W. KELLNER | ||||
| Boeing director since:
Professional highlights:
• President, Emerald Creek Group, LLC (2010-present)
• Chairman & CEO, Continental Airlines, Inc. (2004-2009)
• President & COO, Continental Airlines, Inc. (2003-2004) | Independent:Yes
Other current directorships:
• Marriott International, Inc.
• Sabre Corporation* Prior directorships:
• Chubb Limited | ||
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. * Mr. Kellner has informed Sabre that he will resign from the | ||||
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Former
| Boeing director since:
Professional highlights:
•
•
• | Independent:Yes
Age:
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2020 Proxy Statement 158 The Boeing Company 2017
ELECTION OF DIRECTORS (ITEM 1)
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| Boeing director since:
Professional highlights:
•
•
• | Independent:
Age:
Other current directorships:
• Prior directorships: • General Electric Company | ||
Mr. | ||||
JOHN M. RICHARDSON | ||||
31st Chief of Naval Operations, U.S. Navy; Former Director of the Naval Nuclear Propulsion Program, U.S. Navy | Boeing director since:2019 Professional highlights: • 31st Chief of Naval Operations, U.S. Navy (2015-2019) • Director of the Naval Nuclear Propulsion Program, U.S. Navy (2012-2015) | Independent:Yes Age:59 Other current directorships: • The Exelon Corporation | ||
Admiral Richardson brings deep expertise in safety, regulation, and oversight of complex, high-risk systems, as well as extensive crisis management and national security experience. During his 37 years of service in the U.S. Navy, Admiral Richardson gained valuable operational and national security experience, safely managing over 100 nuclear power plants operating on nuclear-powered warships, serving in four nuclear submarines, including commanding the submarine USS Honolulu, and serving as naval aide to the President of the United States. Admiral Richardson brings extensive experience managing operations on a global basis. As Chief of Naval Operations, he was responsible for the management of a $160 billion budget covering 600,000 sailors and civilians, over 70 installations, 290 warships and over 2,000 aircraft worldwide. As a result of his safety and operational knowledge, the Board elected Admiral Richardson to the Aerospace Safety Committee, as well as Chair of the Special Programs Committee. He earned a bachelor of science degree in physics from the U.S. Naval Academy, a master’s degree in electrical engineering from the Massachusetts Institute of Technology and Woods Hole Oceanographic Institution and a master’s degree in National Security Strategy from the National War College. | ||||
16 | | 2020 Proxy Statement |
ELECTION OF DIRECTORS (ITEM 1)
SUSAN C. SCHWAB | ||||
| Boeing director since:2010
Professional highlights:
• Professor,
• Strategic Advisor, Mayer Brown LLP (2010-present)
• U.S. Trade Representative, Executive Office of the President (2006-2009) • Deputy U.S. Trade Representative (2005-2006) • President and CEO, University System of Maryland Foundation (2004-2005) | Independent:Yes
Age:
Other current directorships:
• Caterpillar Inc.
• FedEx Corporation
• Marriott International, Inc. | ||
Ambassador Schwab brings unique global and governmental perspectives and experience to the Board and its deliberations. Ambassador Schwab’s 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 withnon-U.S. companies and governments. Ambassador Schwab’s vast experience in the U.S. government and in both public policy formulation and the management and leadership of a global network of trade offices also | ||||
The Boeing Company 2017 Proxy Statement9
ELECTION OF DIRECTORS (ITEM 1)
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RONALD A. WILLIAMS | ||||
Former Chairman, President & CEO,
| 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) | Independent:Yes
Age:
Other current directorships:
• American Express Company
• Prior directorships:
• | ||
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. andnon-U.S. locations. Mr. Williams also brings experience in significant corporate transformations from his time at Aetna. In addition, his service as lead director and chair of the risk committee of American Express has enhanced his expertise in risk management at large, global companies. In recognition of Mr. | ||||
10 The Boeing Company 2017 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
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  | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEFOR EACH OF THESE NOMINEES. |
2020 Proxy Statement 17The Boeing Company 2017 Proxy Statement11
Our corporate governance materials, including our Corporate Governance Principles, the charters of each of the Board’s 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.
The GON Committee is responsible for identifying As we discuss elsewhere in this proxy statement, we have made several enhancements to our practices and assessing potential candidatespolicies in the last year, including changes designed to sharpen our focus on safety and recommending nominees forensure that the Board’s approval. The GON Committee assesses the qualificationsleadership structure and roster of incumbent directorsstanding committees best enables adequate oversight of key risks. Meanwhile, we continue to engage with shareholders, customers, suppliers, and other candidates for nomination on an ongoing basis, including with respect to the following factors:
Experience. The GON Committee considers each candidate’s experience and leadership record in such areas as operations, international business, manufacturing, risk management, finance, government, marketing, technology, and public policy.
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.
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.
Outside Board Memberships. Directors are expectedstakeholders to ensure that other commitments, including outside board memberships, do not interfere with their dutiesour governance practices evolve as our business and responsibilities as membersthe future 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).aerospace evolve.
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 Boeing’s publicly-disclosed Director Independence Standards, as well as with respect to any potential conflicts of interest.
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.
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.
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.
Prior Contributions to the Board. When evaluating the candidacy of an incumbent director, the Board also considers the director’s ongoing contributions to the Board. This evaluation includes consideration of the results of both formal and informal assessments provided by fellow directors.
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 forFor 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 director nominees, and has determined that all of our directors and director nominees, other than Mr. Muilenburg,Calhoun, 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. Zafirovski’s ability to continue to serve as an independent director.nominees are independent.
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.
The GON Committee, annuallyin consultation with the other independent directors, evaluates on an ongoing basis whether the Board’s leadership structure is appropriate to effectively address the evolving needs of our business and the long-term interests of our shareholders. The Committee then makes recommendations to the Board concerning the Board’s leadership structure, including whether the roles of Chairman and CEO should be separated or combined. The Board, in accordance with ourBy-Laws, elects a chairmanChairman 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. As a result, the roles of Chairman and CEO have been split at some times, while at other times the roles have been combined. In the event that the Chairman is not an independent director, our Corporate Governance Principles require that an independent Lead Director must be elected on an annual basis by a majority of the independent directors uponfollowing a recommendation offrom the GON Committee.
The formal dutiesFor the first part of the2019, Dennis Muilenburg, our former President and CEO, served as Chairman, while David Calhoun, then an independent Lead Director are as follows:
approving Board meeting agendas;
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;
approving the type of information to be provided to directors for Board meetings;
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;
serving as liaison between the Chairman and the independent directors;
being available for consultation and direct communication with the Company’s shareholders;
calling meetings of the nonemployee directors when necessary and appropriate; and
performing such other duties as the Board may from time to time designate.
Mr. Kenneth Duberstein, our current independent Lead Director, performs the following additional duties:
speaks with the CEO before and after each stated meetingmember of the Board, to review presentation materials, address matters discussed during executive sessions of the Board’s independent directors, and/or discuss important strategic matters;
ensures that the Board’s governance policies are responsive to shareholder concerns, including with respect to matters suchserved as proxy access, succession planning, and limits on outside Board memberships for directors;
meets regularly with members of senior management other than the CEO; and
oversees the Board’s self-evaluation process in his capacity as GON Committee Chair.
Finally, the independent Lead Director also is responsible for performing such other duties as the other independent directors may request—whether 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.
Director. In February 2016,October 2019, the Board first elected Mr. Dennis Muilenburg, our President and Chief Executive Officer,Calhoun to serve as Chairman, with Mr. Muilenburg continuing to serve as President and CEO as well as a member of the Board. In December 2019, Mr. Muilenburg has extensive knowledge of,Calhoun was elected President and decades-long experience at, Boeing, knowledge of and unrivaled experienceCEO. In conjunction with this transition 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 expertise—individually and collectively—provide demonstrated, strong, and responsible oversight of the management of Boeing.
Mr. Duberstein, our independent Lead Director—elected annually by the other independent directors—brings 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 Statement13
CORPORATE GOVERNANCE
Based upon the combination of Mr. Muilenburg’s knowledge, experience, leadership, and integrity; the strength, independence, experience, and integrity of the other 12 directors on the Board; and our Lead Director’s demonstrated independentexecutive leadership, the Board has determined that Boeing’s shareholders are best served at this time by having Mr. Muilenburgelected Larry Kellner to serve as Chairman.
The Board believes that it is currently in the best interests of our shareholders that the Chairman role be held by Mr. Kellner, who is an independent director. This leadership structure allows Mr. Calhoun to focus on executing our strategic imperatives, including safely returning the 737 MAX to service, sharpening our focus on our core values of
18 | | 2020 Proxy Statement |
CORPORATE GOVERNANCE
safety, quality, and integrity, and increasing transparency with each of our stakeholders. Meanwhile, in his capacity asNon-Executive Chairman, Mr. Kellner can focus on leading the Board, ensuring that it provides strong oversight of management and that all directors have access to the resources required to discharge their duties appropriately.
| Boeing has long believed that the delivery of sustainable, long-term value requires regular dialogue with, and accountability to, our shareholders. As a result, our management team participates in numerous investor meetings to discuss our business, strategy, and financial results each year. These meetings generally includein-person, telephone, and webcast engagements, as well as investor conferences and tours of certain Boeing facilities. In addition, during 2019, we discussed governance, executive compensation, sustainability, corporate culture, and other matters with a substantial number of shareholders representing holdings both large and small. Several of our directors, including our | ||
| current CEO when he served as Lead Director,Non-Executive Chairman and the Chairs of the Compensation Committee and Aerospace Safety Committee, participated in some of these discussions. We believe these meetings help ensure that the Board and management understand our shareholders’ priorities and work to address them effectively. The Board considers feedback from these conversations, as well as the results of management and shareholder proposals voted on at our shareholders’ meetings, during its deliberations. Feedback from shareholders has been addressed in recent Board discussions on a variety of topics, including shareholder proposals, company culture, executive compensation, board refreshment, and proxy disclosures, often resulting in changes to our policies and practices. In addition, for detail on the how the Board has acted, and continues to act, in response to shareholder concerns discussed following the 737 MAX tragedies, see “The Boeing Board: Learning and Taking Action” beginning on page 1. | |
The Board has fivesix standing committees. Each committeecommittees, each of which operates under a charter that has been approved byBoard-approved charter. In April 2019 the Board created the temporary Committee on Airplane Policies and Processes. The Board assigned this committee of independent directors, which was chaired by Admiral Giambastiani, the responsibility to recommend improvements to the Company’s policies and procedures in order to ensure the highest level of safety for our products and services. Between its formation and the delivery of its final recommendations, this Committee held four formal meetings and more than a dozen informal sessions with participation from various members of the Committee, other independent directors, and Boeing experts as well as independent experts in safety-related matters both in aerospace and other industries. One of the Committee’s recommendations was the formation of a permanent Aerospace Safety Committee. For information on the other recommendations of the Committee on Airplane Policies and Processes, see “The Boeing Board: Learning and Taking Action” beginning on page 1.
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The Chair of each committee reviews and discusses the agendas and materials for meetings with senior management in advance of distribution to the other committee members, and reports to the Board on topics reviewed and 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 2016.2019.
| Independent | Audit Committee | Compensation Committee | Finance Committee | Governance, Organization and Nominating Committee | Special Programs Committee | |||||||
Number of Meetings in 2016 |
11 |
7 |
6 |
6 |
0 | |||||||
Robert A. Bradway | ✓ |
|
| |||||||||
David L. Calhoun | ✓ |
|
| |||||||||
Arthur D. Collins, Jr. | ✓ |
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Kenneth M. Duberstein | ✓ |
|
| |||||||||
Edmund P. Giambastiani, Jr. | ✓ |
|
|
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Lynn J. Good | ✓ |
|
| |||||||||
Lawrence W. Kellner | ✓ |
|
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Edward M. Liddy | ✓ |
|
| |||||||||
Dennis A. Muilenburg |
| |||||||||||
Susan C. Schwab | ✓ |
|
| |||||||||
Randall L. Stephenson | ✓ |
|
|
| ||||||||
Ronald A. Williams | ✓ |
|
|
| ||||||||
Mike S. Zafirovski | ✓ |
|
|
Independent Director | Aerospace Safety Committee | Audit Committee | Compensation Committee | Finance Committee | GON Committee | Special Programs Committee | ||||||||
Number of Meetings in 2019 |
— |
2# |
11 |
8 |
7 |
6 |
1 | |||||||
Robert A. Bradway |
✓ |
|
| |||||||||||
David L. Calhoun | ||||||||||||||
Arthur D. Collins Jr. |
✓ |
|
| |||||||||||
Edmund P. Giambastiani Jr. |
✓ |
|
|
| ||||||||||
Lynn J. Good |
✓ |
|
| |||||||||||
Nikki R. Haley |
✓ |
|
| |||||||||||
Lawrence W. Kellner |
✓ |
|
| |||||||||||
Caroline B. Kennedy |
✓ |
|
| |||||||||||
Edward M. Liddy* |
✓ |
|
| |||||||||||
John M. Richardson |
✓ |
|
| |||||||||||
Susan C. Schwab |
✓ |
|
| |||||||||||
Ronald A. Williams |
✓ |
|
|
| ||||||||||
Mike S. Zafirovski* |
✓ |
|
|
| * | Messrs. Liddy and Zafirovski will retire from the Board at the annual meeting. |
| # | In addition, the Board’s temporary Committee on Airplane Policies and Processes held four formal meetings and more than a dozen informal meetings between its formation in April 2019 and its dissolution in August 2019, at which time it was replaced with the permanent Aerospace Safety Committee. |
|  Chair |
| 
|
|
Aerospace Safety Committee
The Aerospace Safety Committee, established by the Board in 2019, is responsible for directly overseeing our engineering, design, development, manufacture, production, operations, maintenance, and delivery of aerospace products and services, in order to ensure the safety of our commercial, defense, space, and other aerospace products and services.
In order to fulfill this responsibility, the Aerospace Safety Committee provides direct oversight over:
our safety-related policies and processes;
certification activities;
our policies and processes for engaging with and supporting the regulatory oversight of the Federal Aviation Administration, the Department of Defense, the National Aeronautics and Space Administration, andnon-U.S. commercial, defense, and space aviation safety regulators;
our participation in and support of accident investigations conducted by the National Transportation Safety Board and other domestic and international investigatory authorities, including our responses to material findings and conclusions of such investigations;
our pilot training programs and services; and
cybersecurity with respect to our aerospace products.
In addition, the Aerospace Safety Committee consults with the Compensation Committee in connection with the safety review portion of executive individual performance evaluations. The Aerospace Safety Committee is composed entirely of directors who satisfy NYSE director independence standards and our Director Independence Standards.
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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:
the integrity of our financial statements;
our internal control environment and compliance with legal and regulatory requirements;
our independent auditor’s qualifications and independence;
our processes for assessing key strategic, operational and compliance risks;
the performance of our internal audit function;
the performance of our independent auditor; and
our risk assessment and risk management processes.auditor.
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 after every meeting with representatives of Deloitte & Touche LLP, our independent auditors, and also meets regularly in executive session with one or more of our Chief Financial Officer, our Chief Accounting Officer, our General Counsel, our Senior Vice President, Office of Internal Governance and Administration, and our Vice President, Corporate Audit, and representatives of Deloitte & Touche LLP.Audit. The Audit Committee also oversees key strategic, operational and compliance risks on behalf of the Board;Board including those particular responsibilities are set forth under “Risk“Audit Committee Risk Oversight” on page 16.22. The Audit Committee also prepares the Audit Committee Report included on page 51.65. 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 StephensonWilliams 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“Governance ofPay-Setting Process” on page 25.45. In addition, certain of the Compensation Committee’s risk oversight responsibilities are set forth under “Risk“Compensation Committee Risk Oversight” on page 16.23.
Finance Committee
The Finance Committee’s principal responsibilities include reviewing and, where appropriate, making recommendations to the Board with respect to:
our funding plans and funding plans of our subsidiaries;
our significant financial exposures, contingent liabilities, and major insurance programs;
proposed dividend actions, stock splits, and repurchases, and issuances of debt or equity securities;
strategic plans and transactions, including mergers, acquisitions, and divestitures, as well as joint ventures and other equity investments;
customer financing activities;
our funding plans and funding plans of our subsidiaries;
our significant financial exposures, contingent liabilities, and major insurance programs;
our credit agreements and short-term investment policies; and
employee benefit plan trust investment policies, administration, and performance.
In addition, the Finance Committee has key risk oversight responsibilities that are described under “Risk“Finance Committee Risk Oversight” on page 16.23. 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 Committee’s principal responsibilities include:
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;
identifying and recommending to the Board candidates who are qualified to become directors under the criteria set forth in our Corporate Governance Principles;
| 2020 Proxy Statement | 21 |
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assessing the independence of directors on an annual basis and making recommendations to the Board with respect to such assessments;
pre-approving, and monitoring on an ongoing basis, directors’ service on the boards of otherfor-profit companies;
overseeing the annual performance evaluation process for the Board;
senior management succession planning, including recommending to the Board nominees for CEO and other senior leadership roles;
monitoring and reviewing the performance of our CEO;
monitoring compliance with stock ownership requirements for directors;
considering possible conflicts of interest of directors and officers; and
reviewing corporate governance developments and, where appropriate, making recommendations to the Board on corporate governance policies and practices, including any revisions to our Corporate Governance Principles.
The Boeing Company 2017 Proxy Statement15
CORPORATE GOVERNANCE
The GON Committee also oversees key risks on behalf of the Board, which areincluding those set forth below under “Risk Oversight.” The“GON Committee Risk Oversight” on page 23. From time to time, 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 Boeing’s work on a periodic basis our programs that theclassified U.S. government has designated as classified for purposes of national security.programs.
As a company at the forefront of innovation, Boeing takes calculated risks each day. It is the responsibility of the Board and senior management to ensure that we avoid imprudent risks and mitigate the many strategic, technological, operational, and compliance risks we face, all with our core values of safety, quality, and integrity at the forefront. Senior management is responsible forday-to-day management of strategic, operational, and compliance risks we face,risk, 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 Company’s approach to risk management. The Board regularly assesses significant risks to the Company in the course of reviews of corporate strategy and the development of 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 Board’s Committees,committees, subject to Committeecommittee report-outs and full discussion at the Board level, are set forth below.
Aerospace Safety Committee Risk Oversight
Evaluate key risks related to the safety of the Company’s aerospace products and services
For more information on oversight of these risks, see “Aerospace Safety Committee” on page 20.
Audit Committee Risk Oversight
Evaluate overall risk assessment and risk management practices;practices
Perform central oversight role with respect to financial statement, disclosure, and compliance risks;risks
ReceiveEvaluate the effectiveness of our ethics and compliance program, including through regular reports from our Senior Vice President, Office of Internal Governance and Administration with respect
Lead the Board’s oversight of risks related to compliance with our ethics and risk management policies;cybersecurity
Meet in executive session after every committee meeting with Deloitte & Touche LLP, our outsideindependent auditors, as well as periodicallyregularly with one or more of our Vice President, Corporate Audit,Chief Financial Officer, our Chief Accounting Officer, our General Counsel, our Senior Vice President, Office of Internal Governance and Administration, and our Executive Vice President, and General CounselCorporate Audit to discuss financial and/or compliance risks, and report any findings to the Board; andBoard
22 | | 2020 Proxy Statement |
Oversee the Board’s oversight of cybersecurity risk.CORPORATE GOVERNANCE
GON Committee Risk Oversight
Oversee risks related to the Company’s corporate governance, including overseeing management’s shareholder outreach efforts on governance-related matters and ensuring the Board’s continued ability to provide independent oversight of management.management
Oversee risks related to the Company’s succession planning process
Evaluate related party transactions
Evaluate risks in connection with the Company’s nonemployee director compensation program, in consultation with the Committee’s independent compensation consultant
Finance Committee Risk Oversight
Evaluate risk related to Boeing’s capital structure, significant financial exposures, and major insurance programs
Oversee risks related to investments in and costs related to our employee pension plan policies and performance and regularly evaluates financialbenefit retirement plans
Oversee risks associated with such programs.related to the Company’s cash deployment strategy
Compensation Committee Risk Oversight
Evaluate risk in connection with the design and oversight of compensation programs, in consultation with the Committee’s independent compensation consultant.consultant and the Aerospace Safety Committee
For more information on oversight of risks related to our compensation practices, see “Compensation and Risk” on page 39.49.
Additional information about the Board’s responsibilities related to the management of risk is set forth in our Corporate Governance Principles.
Our Corporate Governance Principles generally require that no director may serve if he or she would be 74 years of age or older at the time of election. In connection with this policy, Mr. Liddy is not standing for reelection at this meeting.
The Board and its standing committees perform thorough self-evaluations that are overseen by the GON Committee and are designed to enhance the Board’s effectiveness and identify areas of potential improvement. In 2019, these self-evaluations included the distribution of questionnaires to each director, wide-ranging Board and committee discussions in executive session led by the independent Lead Director, the independent16Non-Executive Chairman, or relevant committee chair, and opportunities for discussions between individual directors and the Corporate Secretary, the independent Lead Director, the independentNon-Executive Chairman, and/or any relevant committee chair. Topics covered by these self-evaluations included:
whether the structure of the Board and its committees is appropriate in light of the Company’s strategic objectives;
the Board’s effectiveness in overseeing and monitoring Boeing’s long-term strategy, including its long-range business plan;
the effectiveness of the Board’s oversight of key strategic, operational, and compliance risks;
the adequacy of the written materials and presentations prepared by management for the Board;
the quality of the Board’s deliberations, as well as whether there are adequate open lines of communication between directors and members of management;
whether executive sessions are held with the appropriate frequency and cover an appropriate range of topics;
the extent to which the mix of skills, attributes, and qualifications of the individual directors enable the Board to perform effectively; and
whether individual directors are prepared for each meeting and contribute substantively to the deliberations of the Board and any relevant committee.
Following these self-evaluations, the GON Committee Chair discusses areas for potential improvement with the Board and/or relevant committees and, if necessary, identifies steps required to implement these improvements. The Boeing Company Board has made several changes to how it operates based in part on the results of recent self-evaluations, including replacing the role of independent Lead Director with an independentNon-Executive2017 Chairman, creating the Aerospace Safety Committee, and identifying safety expertise as a key skill to consider when recruiting director candidates, as well as
| 2020 Proxy Statement | 23 |
CORPORATE GOVERNANCE
continuing to increase the frequency ofone-on-one director interaction with senior management succession candidates and increasing frequency of reviews of key risks such as cybersecurity.
During 2019, the Board held ten meetings. Each incumbent director nominee attended at least 94% of the meetings of the Board and the committees on which he or she served during 2019, and average attendance at these meetings was approximately 98%. In addition, during 2019 our directors participated in extended discussions outside of formal meetings, both as a group and in informal sessions, and both amongst themselves and with members of management and outside experts. Many of these activities took place at Boeing facilities around the U.S. The Board also received very frequent briefings on the 737 MAX program following the 737 MAX accidents, and was deeply involved in decisions regarding the Company’s response to these tragedies, the subsequent grounding of the aircraft, and the Company’s efforts to safely return the 737 MAX to service and rebuild stakeholder trust.
Absent extenuating circumstances, directors are required to attend our annual meetings of shareholders, and all of the directors attended our 2019 Annual Meeting.
Shareholder OutreachCommunication with the Board
The Board has established a process whereby shareholders and other interested parties can send communications to our independent Chairman, 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.
Boeing has long believed that the continued delivery ofis helping to build a more sustainable long-term valuefuture for our industry and our planet. For more information and resources, visit http://www.boeing.com/principles/esg/index. page.
Environmental
We are committed 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 aby-lawglobal environmental leadership through aerospace innovation with a maximum shareholder group of 20companywide focus on emitting less carbon, using less energy and for up to 20% of available Board seats, with significant flexibility regarding other terms. Accordingly, we adopted aby-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 nominatewater, and includecreating less waste while protecting human and environmental health in communities across the Company’s 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.globe.
Environmental Stewardship and Corporate Citizenship
Boeing’s 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.operate as well as the processes that govern our environmental strategy and policy. Boeing believesis pursuing innovation and leadership that taking care of the environment is crucialwill build a brighter, more sustainable future for our employees, customers, industry, communities, and people who fly on our airplanes. For a link to our aerospacemost recent Environment Report and technology leadership. Boeing employees are actively workingadditional information on many fronts to improvethe progress we have made at improving the environmental performance of our products and services, as well as our operations. For additional information, including a link to our 2016 Environment Report,operations, visit www.boeing.com/principles/environment.
In addition, through
24 | | 2020 Proxy Statement |
CORPORATE GOVERNANCE
Social
Boeing Global Engagement
Through purposeful community 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 accessFirst, we are committed to globally competitive learninghelping children and youth achieve their potential through educational enrichment and support programs that promote academic success, independence, and economic sustainability. Second, through hiring and employment programs as well as workforcegrants and skills development, sustainingvolunteer activities, we help armed forces veterans and their families’ transition successfully into civilian life. Third, we believe that maintaining a local focus and flexibility to respond to local needs is vital to Boeing’s charitable investment and employee engagement strategy. As a result, we focus our expertise and employee volunteerism on issues that are of importance to each site and region of the environment, and supportingworld where our military and veteran communities.company operates. For additional information, includingand to see how Boeing and its employees give their time, talent, and resources in communities around the world, visit https://www.boeing.com/principles/global-engagement-summary.page and download our most recent Global Engagement Portfolio.
Global Equity, Diversity and Inclusion
Diversity and inclusion are core values at Boeing, and we have a linkdemonstrated record of living those values every day. We continue to see growth in our diverse representation and number of global employees at Boeing. We know that there is still work to be done, but we continually strive to meet and exceed our commitments in this area. For example, we continue to fuel the diversity of our workforce through education, outreach, transparency and accountability. These commitments will help us reach our goal of creating enduring change at Boeing and in our world. For additional information, visithttp://www.boeing.com/principles/diversity-and-inclusion/index.page.
| 2020 Proxy Statement | 25 |
CORPORATE GOVERNANCE
Ethics
At Boeing, ethical business conduct is at the core of how we operate. We have reflected on events of the past year and are committed to improving transparency and accountability to earn the trust of all stakeholders. Our employees sign the Boeing Code of Conduct annually, highlighting that all employees are held accountable for ensuring that our values remain foundational to our work and that we follow all applicable laws, regulations, and company policies. We are committed to creating an open and accountable workplace where employees feel empowered to speak up and raise issues. With this in mind, we provide multiple channels to speak up, ask for guidance, and report on corporate citizenship,concerns. In 2019, Boeing employees submitted approximately 9,800 requests to Ethics and Business Conduct. From answering questions about conflicts of interest and business courtesies to formally investigating and addressing concerns, we are committed to helping employees navigate challenging situations and uphold our values. For additional information, visithttps://www.boeing.com/principles/community-engagement.page.
Meeting Attendanceethics-and-compliance.page.
During 2016, the Board held seven meetings. Each director nominee attended at least 86% of the meetings of the BoardHuman Rights
Boeing is committed to responsible business practices 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 attendpromotion of positive changes in peoples’ lives while simultaneously creating value for our annual meetings of shareholders, and all but one director attended our 2016 Annual Meeting.
The Board of Directors has established a process wherebycustomers, shareholders, and other interested parties can send communicationsstakeholders. We view human dignity and freedom from oppression as fundamental to a principled and productive work environment. Boeing’s Code of Basic Working Conditions and Human Rights articulates these principles, and we have developed policies and practices designed to enforce the Code’s provisions throughout our independent Lead Director, tooperations around the nonemployee directors as a group or toworld. We also expect similar behavior from our suppliers, and we require that the Audit Committee. This process is described at principles set forth in the Code are mandated in all of our supplier contracts. We also monitor our suppliers’ compliance with these principles. To learn more about Boeing’s position on human rights issues, visit http://www.boeingsuppliers.com/index.html and https://www.boeing.com/company/general-info/corporate-governance.page.principles/human-rights.page.
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 Boeing’sThe codes of conduct are available 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 willmust be promptly disclosed on our website. No waivers were requested during 2016.2019. 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 Statement17
CORPORATE GOVERNANCE
We have designed our nonemployee director compensation program to achieve the following objectives:
align directors’ interests with the long-term interests of our shareholders;
attract and retain outstanding director candidates with diverse backgrounds and experiences; and
recognize the substantial time commitment required to serve as a Boeing director.
The GON Committee reviews Boeing’s director compensation program on an annual basis. When making its recommendations, the GON Committee considers director compensation levels at the peersame group of companies we use for purposes ofused to benchmark the named executive compensation benchmarking.officers’ compensation. See “Benchmarking Against Our Peer Group” on page 3647 for more information. Compensation Advisory PartnersPay Governance LLC, or CAP, servesPay Governance, served during 2019 as the GON Committee’s 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.
26 | | 2020 Proxy Statement |
CORPORATE GOVERNANCE
Our nonemployee director compensation program consists of cash (board, committee chair, and lead directorNon-Executive Chairman retainer fees) and retainer stock units.units that are not distributed until after termination of Board service. In addition, we match director contributions to eligiblenon-profit organizations, or educational institutions, up to a maximum match of $31,000 per year. We also reimburse directors for travel and otherout-of-pocket expenses incurred in connection with their services, if any. Directors who are Boeing employees do not participate in the nonemployee director compensation program.
2016 Director Compensation Table
The following table sets forth 2016 compensation for each nonemployee director and for W. James McNerney, Jr., our former CEO, who served as an employee director until March 1, 2016. Compensation for Mr. Muilenburg is set forth in the Summary Compensation Table on page 40.
| Director | Fees Earned or Paid in Cash ($)(8) | Stock Awards ($)(9) | Non-Equity ($) | 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 | ||||||||||||||
18 The Boeing Company 2017 Proxy Statement
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Cash Retainers
In 2016,2019, our nonemployee directors receivedearned an annual cash retainer fee of $130,000.$135,000. We also paypaid the following additional annual cash retainer fees to directors serving in leadership positions,pro-rated to reflect time in those positions: Lead Director $30,000,$35,000; Aerospace Safety Committee (and its temporary predecessor committee) Chair $50,000; Audit Committee Chair $25,000,$25,000; Compensation, Committee Chair $20,000 and GON, and Finance Committee Chairs $20,000; and Special Programs Committee Chair $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, theThe GON Committee recommended, and the Board approved, an additional annual retainer fee of $250,000 for thenon-executive Chairman of the Board 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.10, 2020.
Our Deferred Compensation Plan for Directors gives nonemployeeNonemployee directors the opportunity tomay defer all or part of their cash compensation into an interest-bearing, cash-based account or a stock unit account as deferred stock units.units or in an interest-bearing, cash-based account. 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.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 director’s termination of Board service. Directors elected to defer 20162019 cash compensation into deferred stock units as follows: $130,000for each of Ms. Good, Ambassador Schwab, and 986 units eachMessrs. Bradway and Zafirovski, $135,000 for Messrs.376 units; for Mr. Calhoun, Williams and Zafirovski;$190,279 for 529 units; for Mr. Collins, $150,000$155,000 for 1,138432 units; and for Mr. Stephenson, $113,128Williams, $155,279 for 879432 units. Ambassador Schwab elected to defer $130,000 of her 2016 cash compensation into an interest-bearing, cash-based account.
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CORPORATE GOVERNANCE
Retainer Stock Units
In 2016,2019, our nonemployee directors receivedearned equity compensation valued at $165,000$200,000 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 1,252567 retainer stock units during 2016, except for (1) Mr. Bradway, who was not awarded retainer stock units because he joinedservices provided to the Board afterin 2019, except Mr. Duberstein who received 286 units, Ambassador Haley who received 367 units, and Admiral Richardson who received 264 units (granted to him in early 2020), based on each director’s partial year of service on 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.Board. 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 director’s termination of Board service. Based on CAP’s analysis of director
2019 Director Compensation Table
The following table sets forth 2019 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 $180,000 per year to more closely alignfor each nonemployee director equity compensation with that of our peer group.director.
| Director | Fees Earned Cash ($)(10) | Stock Awards | All Other Compensation ($)(12) | Total ($) | ||||||||||||||||
Robert A. Bradway | 135,000 | 201,111 | 17,500 | 353,611 | ||||||||||||||||
David L. Calhoun(1) | 190,279 | 201,111 | 31,000 | 422,390 | ||||||||||||||||
Arthur D. Collins Jr.(2) | 155,000 | 201,111 | 31,000 | 387,111 | ||||||||||||||||
Kenneth M. Duberstein(3) | 67,500 | 101,111 | 123,903 | 292,514 | ||||||||||||||||
Edmund P. Giambastiani Jr.(4) | 182,247 | 201,111 | 10,550 | 393,908 | ||||||||||||||||
Lynn J. Good(5) | 135,000 | 201,111 | 31,000 | 367,111 | ||||||||||||||||
Nikki R. Haley(6) | 90,801 | 134,521 | 31,000 | 256,322 | ||||||||||||||||
Lawrence W. Kellner(7) | 160,000 | 201,111 | 31,000 | 392,111 | ||||||||||||||||
Caroline B. Kennedy | 135,000 | 201,111 | 2,100 | 338,211 | ||||||||||||||||
Edward M. Liddy | 135,000 | 201,111 | — | 336,111 | ||||||||||||||||
John M. Richardson(8) | 25,151 | — | — | 21,151 | ||||||||||||||||
Susan C. Schwab | 135,000 | 201,111 | 21,064 | 357,175 | ||||||||||||||||
Ronald A. Williams(9) | 155,279 | 201,111 | 21,000 | 377,390 | ||||||||||||||||
Mike S. Zafirovski | 135,000 | 201,111 | 31,000 | 367,111 | ||||||||||||||||
| (1) | Mr. Calhoun served as Lead Director until October 11, 2019, as GON Committee Chair until December 22, 2019, and asnon-executive Chairman of the Board from October 11, 2019 until December 22, 2019. Mr. Calhoun ceased to serve as a member of any Board committee on December 23, 2019. |
| 2020 Proxy Statement | 27 |
CORPORATE GOVERNANCE
| (2) | Mr. Collins served as Compensation Committee Chair for all of 2019. |
| (3) | Mr. Duberstein retired from the Board on April 29, 2019. |
| (4) | Admiral Giambastiani began serving as Special Programs Committee Chair on April 29, 2019. He served as Chair of the Committee on Airplane Policies and Processes from April 4, 2019 until August 26, 2019 (when the temporary committee was replaced with a permanent Aerospace Safety Committee). He began serving as Aerospace Safety Committee Chair on August 26, 2019. |
| (5) | Ms. Good began serving as Audit Committee Chair on December 23, 2019. |
| (6) | Ambassador Haley was elected to the Board on April 29, 2019. |
| (7) | Mr. Kellner served as Audit Committee Chair from January 1, 2019 until December 23, 2019, and asnon-executive Chairman of the Board beginning on December 22, 2019. |
| (8) | Admiral Richardson joined the Board on October 25, 2019, after the payment date for the fourth quarter 2019 installment of retainer fees. The amounts shown reflect cash compensation paid for 2019 service during the first quarter of 2020. Mr. Richardson was also granted retainer stock units with a grant date fair value of $37,260 in the first quarter of 2020 for services in 2019. |
| (9) | Mr. Williams served as Finance Committee Chair for all of 2019. |
| (10) | Reflects total cash compensation paid in 2019 and includes amounts deferred at the director’s 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 ispro-rated for directors who join the Board during a quarter. |
| (11) | 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 2019. Retainer stock units are awarded in four quarterly installments as of the first business day of each quarter and arepro-rated for directors who join the Board during a quarter. Due to an administrative error, 2019’s first quarterly installment was paid based on 2018 compensation levels and, as a result, additional units were issued to each director in the second quarterly installment. Because the value of the stock retainer units increased during the quarter, the grant date fair value of those units was higher than they would have been had they been issued in the prior installment. As a result, the reported amounts are slightly in excess of the $200,000 annual stock retainer fee. 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 director’s account as of December 31, 2019 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. |
| Director | Accumulated Deferred Stock Units | ||||
Robert A. Bradway | 3,933 | ||||
David L. Calhoun | 25,918 | ||||
Arthur D. Collins Jr. | 42,849 | ||||
Kenneth M. Duberstein | 60,695 | ||||
Edmund P. Giambastiani Jr. | 16,170 | ||||
Lynn J. Good | 4,852 | ||||
Nikki R. Haley | 371 | ||||
Lawrence W. Kellner | 10,932 | ||||
Caroline B. Kennedy | 1,420 | ||||
Edward M. Liddy | 22,486 | ||||
John M. Richardson | — | (a) | |||
Susan C. Schwab | 15,414 | ||||
Ronald A. Williams | 18,019 | ||||
Mike S. Zafirovski | 50,129 | ||||
(a) Admiral Richardson had no accumulated deferred stock units as of December 31, 2019, because he was not paid any director fees for his 2019 service until the first quarter of 2020. | |||||
| (12) | Consists of gift matching of charitable contributions under the Board Member Leadership Gift Match Program. Directors derive no financial benefit from these charitable contributions. For Mr. Duberstein, the amount shown also includes $92,903 in consulting fees earned by Mr. Duberstein pursuant to a consulting arrangement entered into between him and the Company in August 2019 following his retirement from the Board. |
Director Stock Ownership Requirements
In order to further align the interests of directors with the long-term interests of our shareholders, ourOur Corporate Governance Principles require that, by the end of his or her third and sixth year as a director, each nonemployee director shouldwith more than three years of Board service to own stock or stock equivalents with a value equalof at least three times the annual cash retainer fee, and directors with more than six years of Board service to three andown stock or stock equivalents with a value of at least five times respectively, the annual cash retainer fee. The GON Committee annually reviews whether each nonemployee directors’ ownership relative todirector has met the stock ownership requirements,applicable requirement, and makes recommendations as appropriate. Each director currently exceeds his or her applicable stock ownership requirement. Directors also are prohibited from engaging in hedging or pledging transactions involving Boeing securities.
28 | | 2020 Proxy Statement |
CORPORATE GOVERNANCE
Compensation ConsultantsConsultant
The Compensation Committee and GON Committee have engaged CAPPay Governance to serve as theirits independent compensation consultant.consultant during 2019. In this capacity, CAP providesPay Governance advised on 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,(including compensation decisions in connection with leadership transitions), as well as an ongoing overview of regulatory developments and compensation trends. In addition, CAP advisesPay Governance advised the Compensation Committee concerning management’s compensation data and recommendations. CAP takesThe GON Committee also engaged Pay Governance during 2019 to serve as its independent compensation consultant relating to nonemployee director compensation, including with respect to the retainer fee for the Chair of the Aerospace Safety Committee and, beginning in January 2020, for the Board’sNon-Executive Chairman. In connection with performing these roles, Pay Governance took direction from the Compensation and GON Committees, as appropriate, reportsreported directly to the committees, and doesdid not provide any other services to Boeing. See discussion on page 3545 under “Governance ofPay-Setting Process — Role of Board, Management and Consultants.Process.” The Compensation Committee has assessed the independence of CAPPay Governance pursuant to SEC and NYSE rules and determined that no conflict of interest exists that would prevent CAPthe compensation consultant 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 consultant’s independence, including that CAP providesthe consultant provided 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 Committee’s engagement of CAP.Pay Governance.
Some of our directors, executive officers, greater than 5% shareholders, and their immediate family members may be directors, officers, partners, employees or shareholders ofaffiliated with 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,loans, 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 usthe Company 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 officer’s 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
| 2020 Proxy Statement | 29 |
CORPORATE GOVERNANCE
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 Amendment No. 3 to a Schedule 13G filed by BlackRock with the SEC on January 30, 2017.February 5, 2020. BlackRock provided investment management services and analytics to the Retirement Plans Trust and the Savings Plans Trust, and received approximately $10.9$10.4 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 2016.2019.
Capital World Investors,Newport Trust Company, or Capital World, which collectively includes Capital Research and Management, American Funds, and Capital International, among other business units,Newport, is a beneficial holder of more than 5% of our outstanding common stock according to Amendment No. 82 to a Schedule 13G filed by Capital WorldNewport 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. Evercore11, 2020. Newport 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 2016,2019, these fees totaled approximately $1.0$2.1 million.
State Street Bank and Trust Company,T. Rowe Price Associates, Inc., or State Street,T. Rowe, is a beneficial holder of more than 5% of our outstanding common stock according to Amendment No. 1 to a Schedule 13G filed by State Street CorporationT. Rowe with the SEC on February 14, 2017. State Street is the trustee2020. T. Rowe received an aggregate of the Savings Plans Trust. During 2016, the Savings Plans Trust paid State Street approximately $4.0 million$132,000 for its services as trustee of the Savings Plans Trust and for services relating to the Savings Plans Trust’s 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 millionmanagement fees 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 Statement21
CORPORATE GOVERNANCE
2019 from a subsidiary retirement plan.
The Vanguard Group, or Vanguard, is a beneficial holder of more than 5% of our outstanding common stock according to Amendment No. 25 to a Schedule 13G filed by Vanguard with the SEC on February 10, 2017.12, 2020. Vanguard received an aggregate of approximately $143,000$512,000 for management fees in 20162019 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. Mr. Caret’s 2019 compensation was approximately $216,000. He is also eligible to participate in our employee benefit programs on the same basis as other eligible employees. Tony Toulouse has been employed by us since 1989, and is the husband of Anne Toulouse, who served as an executive officer in 2019. His compensation was established in accordance with our employment and compensation practices applicable to executives with equivalent qualifications, experience, and responsibilities. Mr. Toulouse’s 2019 compensation was approximately $574,000. He is also eligible to participate in our employee benefit programs on the same basis as other eligible employees. Neither Mr. Caret nor Mr. Toulouse reported up to his executive officer spouse, directly or indirectly.
30 2020 Proxy Statement22 The Boeing Company 2017
APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION (ITEM 2)
PROPOSAL SUMMARY
ShareholdersPursuant to Section 14A of the Securities Exchange Act of 1934, 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.”Analysis” and in the accompanying compensation tables and material. The next advisory vote on executive compensation will occur at our 2021 Annual Meeting of Shareholders.
| The Board recommends that you vote FOR the resolution approving named executive officer compensation. |
We
In our ongoing efforts to strengthen our enduring commitment to product and services safety and quality, and to the safety of the millions of individuals who use our products every day, we have designedscrutinized the role that 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.plays in fulfilling that commitment. Our Compensation Discussion and Analysis, together with the compensation tables and narrative discussion that follow, describes the compensation earned by our named executive officers in detail2019. 2019 was a challenging year for Boeing, and as a result, the named executive officers earned no payments under our annual incentive program or the performance award portion of our long-term incentive program for the 2017-2019 performance period. Due to the Company’s strong total shareholder return performance for the three-year period beginning in 2017, our performance-based restricted stock units for 2017-2019, which comprise 25% of our long-term incentive program, paid at 175% of target.
During 2019, we discussed our executive compensation program highlightswith many of our shareholders, and we have worked to improve our policies and practices in response to that feedback. We have enhanced our clawback policy as well as created a role for our Aerospace Safety Committee to ensure that the safety of our products and services is a key consideration when making individual compensation decisions. 2020 compensation for our new CEO, David Calhoun, includes a special award of performance-based restricted stock units that will pay out only upon achievement of several specific business milestones, and all of his incentive compensation for 2020 and beyond will be subject to our enhanced clawback policy. Our Compensation Committee also provided no severance or separation payments to our former CEO, Dennis Muilenburg.
These actions build on our existing executive compensation program, which includeis fundamentally strong, reflects our commitment to achieving financial and operating business goals consistent with our values, stakeholder interests, and responsible pay practices, and includes the following:
Pay for Performancefollowing features:
3-year total shareholder return of 44%, reflecting strong performance;
challenging 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;drive operational excellence, sustainable growth, and responsible risk management;
approximately 89%86% of our CEO’s 2016NEOs’ 2019 target compensation was variable;variable and at risk, with 100% of the annual incentive and 75% of long-term incentives tied topre-set performance goals;
capped incentive payouts and other protections to avoid excessive risk;risk-taking;
no guaranteed bonuses;enhanced focus on safety when evaluating individual executive performance, including formal consultation between Aerospace Safety and Compensation committees;
Alignment with Shareholder Interests
25%a robust clawback policy, which has been expanded to apply to instances of misconduct that compromise the safety of our named executive officers’ target long-term incentive compensation is tied to Boeing’s total shareholder return as compared to a group of peer companies;products or services;
forfeiture of unearned portion of all annual and long-termunvested incentive program awards upon termination of employment, withpro-rated vesting only upon death, disability, layoff, or retirement;
rigorous stock holding period and ownership requirements, including a 6x base salary requirement for our CEO, ensuring that our senior executivesexecutive officers maintain a significant stake in our long-term success;success and sustainable growth;
no accelerated vesting of equity awards in connection with a change in control;
no employment, orexcept where required bynon-U.S. local law;
nochange-in-control agreements;
no pledging or hedging of Boeing stock;
stock holding requirements for executive officers;
benchmarking design practices and pay levels against industry peers and otherResponsible Pay Practices
robust clawback policy that permits recoupment of incentive compensation in certain cases of misconduct even absent a financial restatement;
no taxgross-upssimilarly-sized to our executives other than for relocation expenses;companies, with pay opportunities generally targeted at or near the median; and
no repricing or buybacks of stock options.taxgross-ups other than for certain relocation expenses.
We believe that our executive compensation program plays a key role in driving Boeing’s long-term performance, as evidenced by Boeing’s 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.
| 2020 Proxy Statement | 31 |
APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION (ITEM 2)
In 2016,2019, our shareholders approved the compensation of our named executive officers with a FOR vote of 93%92%. In future years, we will continue to work to attract, reward, and retain executives who share our focus on our enduring values of safety, quality, and integrity, operational and financial excellence and sustainable growth. As we demonstrated in 2019, we will also continue to tie compensation to demonstrated individual and Company performance.
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.
 | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. |
The Boeing Company 2017 Proxy Statement23
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.
| ||
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 Board’s 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 isnon-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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24 The Boeing Company 2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation programs for our named executive officers (“NEOs”) for 2019, who are listed below.
| Name | Roles During 2019 | |
Dennis A. Muilenburg | Former President and Chief Executive Officer | |
Gregory D. Smith | Chief Financial Officer and Executive Vice President, Enterprise Performance and Strategy; Former Interim President and Chief Executive Officer | |
Stanley A. Deal | Executive Vice President, President and Chief Executive Officer, Commercial Airplanes; Former Executive Vice President, President and Chief Executive Officer, Global Services | |
Timothy J. Keating | Executive Vice President, Government Operations | |
J. Michael Luttig | Executive Vice President, Counselor and Senior Advisor to the Board of Directors; Former Executive Vice President and General Counsel | |
Kevin G. McAllister | Former Executive Vice President, President and Chief Executive Officer, Commercial Airplanes |
Effective January 13, 2020, David Calhoun was elected as the Company’s President and Chief Executive Officer. Additional details regarding Mr. Calhoun’s compensation is provided below under “2020 Leadership Changes.” Mr. Calhoun served as a director of the Company in 2019, and information regarding his nonemployee director compensation is set forth in “Compensation of Directors” beginning on page 26. Mr. Calhoun resigned from the Compensation Committee in connection with his election as CEO, and he did not participate in any of the Committee or Board’s deliberations with respect to his compensation.
Mr. Muilenburg ceased to serve as President and Chief Executive Officer of the Company on December 22, 2019. Mr. Luttig ceased to serve as Executive Vice President, Counselor and Senior Advisor to the Board on January 1, 2020. Mr. McAllister ceased to serve as Executive Vice President, President and Chief Executive Officer, Commercial Airplanes on October 22, 2019. Additional details are provided below under “2019 Leadership Changes” and “2020 Leadership Changes.”
Principal Components of 2016Named Executive Officer Total Target Compensation in 2019
| 2020 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS
Performance Measures Driving 20162019 Compensation
Applicable to
|
2019 Target
|
2019 Actual
| 2017-2019 Target
|
2017-2019 Actual
| ||||||
Free Cash Flow* |
Annual Incentive
| $15.0B | -$4.3B | $26.5B | $20.9B | |||||
Performance Awards (3 year performance period)
| ||||||||||
Revenue* |
Annual Incentive
| $111.0B | $76.6B | $293.8B | $271.1B | |||||
Performance Awards (3 year performance period)
| ||||||||||
Core Earnings Per Share* |
Annual Incentive
| $20.10 | -$3.47 | $34.95 | $24.58 | |||||
Performance Awards (3 year performance period)
| ||||||||||
Total Shareholder Return |
PBRSUs (3 year performance period) | n/a
| n/a | 51st to 60th percentile (against peers) | 90th percentile (ranked #3 of 22) |
| * | As discussed below, the Compensation Committee has discretion to adjust performance metrics to better reflect the Company’s core performance. No adjustments were made to the 2019 annual or 2017-2019 long-term performance metrics. Free cash flow and core EPS are defined on page 40. |
2019 Annual Incentive Award
| 2017-2019 Performance Award Payout | 2017-2019 PBRSU Payout | ||
| 0% | 0% | 175% |
Opportunities for Shareholder Feedback on Executive Compensation
The Board and the Compensation Committee continue to encouragehave a long-standing practice of encouraging shareholder feedback, and executive compensation remains a key focus area in our year-round discussions with shareholders. In those discussions, investors have largely viewed Boeing’sDuring 2019, we engaged more frequently and directly with our shareholders to discuss our pay for performance philosophy, alignment with stakeholder interests, and opportunities for enhancing the core features of our program. We also discussed the Compensation Committee’s decisions connected to the recent leadership changes. Recent changes made to our compensation practices and overallpay-for-performance strategy as strongly alignedpolicies include enhancing our clawback policy to cover incentive compensation paid to executives who are found to have violated, or engaged in negligent conduct in connection with the supervision of someone who violated, any Company policy, law, or regulation that has compromised the safety of the Company’s products or services and has (or could reasonably be expected to have) a material adverse effect on the Company, our customers, or the public. Shareholders have generally been supportive of past enhancements to our executive compensation program, including the introduction of three performance metrics that pay executive officers based on our performance and how well we deliver shareholder interests.value relative to our peers, and more stringent stock holding periods. Many shareholders also asked the Compensation Committee to consider additional means by which executives’ pay can be impacted by the Company’s performance with respect to safety. Additional information on our shareholder engagement program is set forth under “Shareholder Outreach” on page 17.19.
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 oursay-on-pay vote results. In 2016,2019, our executive compensation program received 93%92% approval from our shareholders. The favorable shareholder vote and positive feedback from investors were two factors contributing to the Compensation Committee’s 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 Company’s policy requiring executives to hold Boeing stock. Each of
The Boeing Company 2017 Proxy Statement25
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 futuresay-on-pay votesvote results and feedback from shareholders when considering further enhancements to Boeing’sreviewing our executive compensation programs and practices.
Key Compensation Decisions
2019 Leadership Changes to Performance Metrics
BeginningMr. Muilenburg ceased to serve as President and Chief Executive Officer of the Company on December 22, 2019. He was not entitled to any severance or separation payments in 2017, annualconnection with his retirement. Under thepre-existing terms of the Company’s plans, Mr. Muilenburg vested inpro-rated portions of previously granted long-term incentive awards and performance awards under our long-term incentive program will no longer pay out based onone- 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 the number of months he was employed during the appropriateapplicable vesting or 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, suchHe also fully vested in certain additional stock unit awards earned prior to his service 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 CEOCEO.
In November 2016, Boeing announced changesconnection with Mr. Muilenburg’s departure, Mr. Smith was appointed as interim President and Chief Executive Officer. Mr. Smith did not receive any additional compensation with respect to our senior leadershipthis role.
34 | | 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Mr. McAllister ceased to serve 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, Boeing’s new Executive Vice President, President and CEOChief Executive Officer of BoeingCommercial Airplanes in October 2019, and terminated employment with the Company on December 31, 2019. In connection with his termination, Mr. McAllister forfeited 100,000 unvested restricted stock units that were granted in connection with his hire in 2016, as well as all unvested RSUs he had received pursuant to our long-term incentive program. Mr. McAllister received a lump sum payment of $14.75 million from the Company, which approximated the value of a pension benefit that Mr. McAllister forfeited when he left a former employer. Mr. McAllister received no other compensation from the Company in connection with his separation.
In connection with Mr. McAllister’s departure, Mr. Deal was appointed as Executive Vice President, President and Chief Executive Officer, Commercial Airplanes. In orderconnection with that appointment, his annual base salary rate, annual incentive target, and long-term incentive target were increased.
2020 Leadership Changes
Mr. Luttig ceased to serve as Executive Vice President, Counselor and Senior Advisor to the Board effective January 1, 2020, and retired from the Company effective March 9, 2020. Under thepre-existing terms of the Company’s plans, Mr. Luttig vested inpro-rated portions of previously granted long-term incentive awards based on the number of months he was employed during the applicable vesting or performance period. Additional detail is provided under “Potential Payments Upon Termination” on page 60, as well as in the footnotes to the executive compensation tables below.
As disclosed in Current Reports on Form8-K filed with the SEC on December 23, 2019 and January 10, 2020, Mr. Calhoun was appointed as President and Chief Executive Officer of the Company effective January 13, 2020. The terms of Mr. Calhoun’s compensation as set forth below were determined by the independent directors and the Compensation Committee in consultation with the Compensation Committee’s compensation consultant, Pay Governance, and were benchmarked against market practices with respect to the compensation of chief executive officers at comparable companies with leadership transitions. Mr. Calhoun receives a base salary at an annual rate of $1,400,000. In addition, Mr. Calhoun is eligible to receive an annual incentive award with a target value of 180% of base salary, which for 2020 only will pay out at no less than target, and a long-term incentive award with a target value of 500% of base salary.
Mr. Calhoun also received two additional long-term incentive awards in connection with his hire. The first is an award of restricted stock units with a grant date value of $10,000,000, which was designed to compensate Mr. McAllisterCalhoun for unvested RSUs that wereamounts forfeited upon his departure from GE,his prior employer. This award will vest in three equal installments over a three-year period contingent on Mr. Calhoun’s continued employment through the applicable vesting dates. The second is an award of performance-based restricted stock units with a grant date value of $7,015,000. This award is scheduled to vest, at the earliest, 50% after two years of service as CEO and 50% after three years of service as CEO. However, in no event will either installment of PBRSUs vest unless and until the Compensation Committee awardedcertifies that the performance goals set forth below have been substantially achieved. If Mr. McAllister 20,000 RSUsCalhoun terminates employment prior to the award vesting for any reason other than death or disability, any unvested PBRSUs as of that are scheduleddate will be forfeited. If the performance goals have not been substantially achieved by December 31, 2023, the award will be forfeited in its entirety. The performance goals are:
the safe return to vestservice of the 737 MAX (including regulatory clearance, ungrounding of previously delivered aircraft, and delivery of aircraft manufactured during the grounding),
successful engineering realignment 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 executivesaccordance with the interestsrecommendations of shareholders. As evidencethe Board’s Committee on Airplane Policies and Processes,
successful entry into service of this long-standingthe 777X andramp-up of aircraft production and delivery,
a successful crewed flight of the Starliner spacecraft,
achievement of specific milestones for theT-7A,MQ-25, andVC-25B programs andKC-46 production stabilization,
successful execution of the Board’s long-range business plan objectives for Boeing Global Services established in 2020, and
achievement of closing and post-closing milestones under our joint ventures with Embraer (assuming regulatory approvals are obtained).
Mr. Calhoun’s 2020 target compensation reflects the Company’s strong commitment senior executives must own Boeing stock valuedto performance-based compensation, with approximately 86% of his target compensation 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.risk.
| 2020 Proxy Statement | 35 |
COMPENSATION DISCUSSION AND ANALYSIS
| Pay for Performance | ||
| • | Each element of our executives’ compensation is designed to align with our long-term business strategy and drive sustainable operating and financial results. | |
| • | 100% of annual and 75% of long-term incentive awards are | |
| • | Our annual incentive plan pays based on | |
| • | Our long-term incentive program awards are tied to | |
| • | Individual performance evaluations, which affect both annual incentive payouts and long-term incentive awards, incorporate safety considerations and the | |
| Attract and Retain World-Class Talent | ||
| • | Compensation elements and award opportunities are designed to position us to compete effectively for engineering, business, information technology, financial, product safety, and other executive talent. | |
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| • | Beginning in 2019, the Aerospace Safety Committee advises the Compensation Committee with respect to senior executives’ individual performance as it may impact the safety of our products and services. | |
| Support our Commitment to Safety | ||
| • | In 2020, we expanded our clawback policy to cover instances of misconduct that compromise the safety of our products or services. | |
| • | Beginning for 2019, the Compensation Committee has strengthened its process for assessing the performance of executives with respect to safety and our other core values, including by ensuring formal consultation with the Aerospace Safety Committee in connection with individual performance reviews. | |
| Shareholder Alignment | ||
| • | Approximately | |
| • | ||
| • | We do not accelerate vesting of equity awards solely in connection with a change in control. | |
| • | Executives receive 25% of their long-term incentive target in PBRSUs, which pay out based | |
| Reduce Risk | ||
| • | Our annual incentive awards, performance awards, and PBRSUs are | |
| • | 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 | |
| • | Compensation risk considerations are discussed in additional detail on page | |
36 2020 Proxy Statement26 The Boeing Company 2017
COMPENSATION DISCUSSION AND ANALYSIS
Program Design and Principal Elements
What We Do | |||
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| Challenging performance targets | ||
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| Active engagement with shareholders | ||
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| Independent compensation consultant reports directly to Compensation Committee | ||
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| No employment agreements (except where required bynon-U.S. local law) | ||
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| Nochange-in-control arrangements | ||
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| No pledging or hedging of Boeing stock | ||
| No excessive perquisites | ||
| No performance-based incentive payouts ifpre-established performance levels are not achieved | ||
| No uncapped incentive award payouts | ||
20162019 Target Compensation
We design our executive compensation program to attract and retain the talent needed to achieve our business and financiallong-term strategic 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 annualongoing 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 benchmarked against the median of our peer group, but actual target pay also takes into account job requirements, the executive’s experience and performance, and business needs.the evolving needs of the business.
The table below sets forth our 2016 named executive officers, or2019 NEOs, with their target compensation elements and target total compensation based on their base salary as of December 31, 2016.2019 (or, for Messrs. Muilenburg and McAllister, as of their respective separation dates). In each case, target amounts are those amounts that would have been earned by the executive assuming thathad the Company and the executive achieved target performance levels set by the Compensation Committee. The 2016 Target Long-Term Incentive Compensation column reflectsCommittee; however, actual 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.
(Dollars in thousands) Name | 2016 (a) | 2016 Target (b) | 2016 Target | 2016 Target (d) | 2016 Target | 2016 Total | ||||||||||||||||||
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 | ||||||||||||
The Boeing Company 2017 Proxy Statement27
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. Theone- and three-year economic profit metrics are calculated as follows:
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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 willmay differ from the sumamounts shown below due to changes in base salary during the year as well as through application of the threeone-yearindividual 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 adjustone-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 management’s control, (2) management decisions intended to drive long-term value but with short-term financialscore (which 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 Boeing’s 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 ofboth 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 Form10-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.awards).
Name | 2019 Annualized Base Salary | 2019 Target Annual Incentive | 2019 Target Long-Term Incentive Compensation | 2019 Total | ||||||||||||||||
Dennis A. Muilenburg
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| 1,700,000
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| $3,060,000 (180% of base salary)
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| $13,175,000 (775% of base salary)
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Gregory D. Smith
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| 1,150,000
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| $1,322,500 (115% of base salary)
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| $ 4,887,500 (425% of base salary)
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| 7,360,000
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Stanley A. Deal
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| 1,000,000
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| $1,100,000 (110% of base salary)
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| $ 4,100,000 (410% of base salary)
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| 6,200,000
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Timothy J. Keating
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| 700,000
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| $ 665,000 (95% of base salary)
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| $ 2,625,000 (375% of base salary)
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| 3,990,000
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J. Michael Luttig
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| 989,000
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| $1,087,900 (110% of base salary)
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| $ 3,956,000 (400% of base salary)
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| 6,032,900
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Kevin G. McAllister
| $ | 1,110,000 |
| $1,221,000 (110% of base salary)
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| $ 4,440,000 (400% of base salary)
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| 6,771,000
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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 theFor 2019, no annual incentive planawards were paid to any NEOs, and thepayouts under our 2019 long-term incentive program.
We believe that these metrics will drive accountability andprogram (for the 2019-2021 performance as well as enable employees at every levelperiod) are expected to see the connection between individual and Companybe significantly negatively impacted by our 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 Boeing’s 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 theone-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 aone- and three-year basis.during 2019.
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The Boeing Company 2017 Proxy Statement29
COMPENSATION DISCUSSION AND ANALYSIS
A key reason for the Compensation Committee’s 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 innovation—particularly for purposes of the long-term incentive program—and achievement of productivity targets. Finally, drivers of free cash flow—at 50%, the metric that will have the most significant impact on executive compensation—include 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 eitherone-year or three-year performance. For example, new orders can have a significant impact on core earnings per share within a singleone-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 setsone- 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 Company’s 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.
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30 The Boeing Company 2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Mix of Pay
Approximately 89%86% of the CEO’s target compensation and 84% of the otherour 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.RSUs.
Base Salary
Base salaries are designed to provide a fixed level of cash compensation for each executive. Salaries may be adjustedexecutive 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,Principal Components of Variable Compensation in 2019
All annual incentive payouts and long-term incentive awards are impacted by individual performance, including—beginning in 2019—formal consultation with the base salaryAerospace Safety Committee to ensure that individual performance scores reflect achievement of Mr. Smith increased by 8.82% reflecting his strong performance over the period. The base salaries of Messrs. Muilenburg, Connersafety and Luttig increased between 3% and 5% during the same period. Mr. McAllister’s base salary was set when he joined the Company in November 2016.quality-related objectives.
Annual Incentive Plan
Features of Annual Incentive Plan
100%Awards are payable in cash awards
2016 payoutPayout based on economic profitCompany and individual performance
Company performance metrics: 50% Free Cash Flow, 25% Core EPS, 25% Revenue
The annual incentive plan is designed to drive near-term program execution, operational excellence, and sustainable growth, as well as to create differential rewards fordifferentiate executives based on individual performance. The Compensation Committee assignedassigns each executive a target incentive award, determined as a percentage of base salary, based on competitive market data and on the executive’s pay grade, responsibilities and role. Adjustments to annual incentive targets are generally approved by the Compensation Committee in February for the applicable year, although additional adjustments may occur at other times of the year.
Actual incentive awards arein 2019 were 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 (% of Base Salary) | X | Company Performance Score (0—200%) | X | Individual Performance Score
| = | Final Annual Incentive Award
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The CEO’s individual performance score is generally determined by the Compensation and GON Committees and reviewed with the other independent directors of the Board.Board (Mr. Muilenburg did not receive an individual performance score for 2019). The CEO presents the Compensation Committee with recommendations for individual performance scores for each of the other electedexecutive officers, including the NEOs.other NEOs (Mr. McAllister did not receive an individual
38 | | 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
performance score for 2019). The Compensation Committee reviews the CEO’s 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 Committee’s assessment of each executive’s business achievements, contributions, and overall organization performance, including performance with respect to several key leadership behaviorsbehaviors. The Aerospace Safety Committee also has a role in determining individual performance scores, as that Boeing believes are criticalcommittee provides input to business success.
Beginning in 2017, business unit results will not be includedthe Compensation Committee with respect to senior executives’ individual performance as a separate score in the annual incentive plan. Instead,it may impact safety of our three new performance metrics—free cash flow, core earnings per share,products and revenue—will be combined to
services. The Boeing Company 2017 Proxy Statement31
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 chargesis determined based 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”metrics described on page 30.40 under “Company Performance Metrics for 2019 Incentive Plans.”
In order to better reflect the Company’s 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 Company’s and each individual’s 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 Company’s 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. Muilenburg’s success in maintaining strong profitability and improving operating cash flow while executing Boeing’s business strategies, including strengthening the Company’s 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 & Security’s 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. Smith’s leadership in strengthening Boeing’s 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. Smith’s leadership of Corporate Development and Strategy also positioned Boeing for the launch of its Boeing Global Services business in 2017.
Mr. Conner’s 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 the787-10; while also ensuring continued overall improvements in safety, productivity, and quality.
Mr. Luttig’s leadership with respect to several substantial and strategic legal matters, including resolution of key litigation claims.
Mr. McAllister’s transition to leading the Commercial Airplanes business nearyear-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%, payoutpayable in cash or stock based on3-year economic profit) Company financial performance)
Performance-based restricted stock units (25%, payout based on three-year relative TSR)
Restricted stock units (25%, vest 3three years after issuance)
Initial award values subject to individual performance
32 The Boeing Company 2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
The long-term incentive program, which provides a mix of equity and cash-settled awards, 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-termLong-term incentive awardstargets are based onset as a fixed percentage of base salary. The Board increased Mr. Smith’s long-term incentive target from 375%Adjustments to 400% in 2016. The long-term incentive targets are generally approved by the Compensation Committee in February, although additional adjustments may occur at other times of Messrs. Muilenburg, Connerthe year. Long-term incentive award targets are also impacted by individual performance, as the initial value of awards may be increased or decreased based on each executive’s individual performance score for the prior year. The Compensation Committee recently adopted this practice in order to drive further connection between pay and Luttig did not change in 2016. Mr. McAllister’s target was setindividual performance, as well as to enable executives to remain incentivized even during periods (such as 2019) when he joined the Company performance score results in November 2016.low payouts.
Performance Awards. Performance awards reward executives to the extent that the Company meets or exceeds targetthe Company’s performance thresholdsgoals for the relevant three-year performance period. Three-year financial targets are set by theThe Compensation Committee sets performance targets at the beginning of each performance period based on the Company’s Board-reviewed long-range business plan. Performance awards are denominated in units, each with a target (initial) value of $100. Final awardspayouts in respect of the 2019-2021 performance period may range from 0% to 200% of an individual’s target.initial award value. Performance awards are designed to pay 100% of targetthe initial award value at the end of the three-year performance cycle if performance goals are achieved.achieved at target. Payment, if earned, is made in cash, stock, or a combination of both, at the Compensation Committee’s discretion. It is expected that both maximumPerformance awards in respect of the 2019-2021 performance and less-than-threshold (i.e., zero payout) performance would be infrequent.
Beginning in 2017, our performance awards willperiod pay out based 50% on free cash flow, 25% on core earnings per sharerevenue, and 25% on revenue,core EPS, in each case over a three-year performance period. For additional information, seeperiod, as described on page 29.40 under “Company Performance Metrics for 2019 Incentive Plans.”
Performance-Based Restricted Stock Units. PBRSUs drive business performanceare designed to align our executives’ interests with those of our shareholders by tying award payout levels to TSR performance as compared to our industry competitors and otherthe companies against which we compete for customers, capital, andand/or executive talent. For information on our benchmarking peer group, see “Benchmarking Against Our Peer Group” on page 47. PBRSUs vestpay out in shares of Boeing stock based on the achievement ofBoeing’s TSR over rollinga three-year periods (typically beginningperiod (beginning and ending in late February) relative to those peer companies. TSR performance at less than the 21st percentile results in a 0% payout, with payouts increasing at 25% increments up to a maximum of 200% for performance ofexceeding the 91st percentile. PBRSUs will be paid at target for TSR performance between the 51st and 60th percentile (the same target level as under our peer groupPBRSU awards for calculating PBRSUs. PBRSU payouts are capped at 400% (200% of target plus two times stock price)the 2017-2019 performance period). Under the terms 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.awards, peer companies may be subject to removal if, for example, they cease to trade on a public exchange.
The following table details the payout schedule that results from each level of relative TSR performance:
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Restricted Stock Units. RSUs are designed to encourage executive retention and reward continued and sustained performance. RSUs provide an immediate sense of ownership because the value of these units is equal to Boeing’s stock price. As such, theThe ultimate value realized upon vesting (three years after grant) will bethe grant date) is based on the stock price, at that point in time. The use ofdriving increased focus on sustainable business performance. RSUs is consistent with our objective of facilitatingalso facilitate significant long-term stock ownership and providing a mix of equity and cash-settled awards.by our executives.
2014-2016 Performance Award Assessment
Boeing’s 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
Boeing’s 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 Statement33
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 twothree 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,
| 2020 Proxy Statement | 39 |
COMPENSATION DISCUSSION AND ANALYSIS
Company Performance Metrics for 2019 Incentive Plans
Free Cash Flow, Core Earnings Per Share, and Revenue
Each year, the Compensation Committee setsone- and three-year financial goals for our annual and long-term compensation programs based on our long-range business plan. These goals incorporate expectations regarding the probability of achieving performance goals, key risks, and a degree of “stretch” to push our executives to achieve superior performance. When setting performance goals, 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 performance resulting in zero payout would be infrequent. Following each performance period, the Compensation Committee evaluates our performance and approves final awards.
For 2019, our annual incentive plan measured Company performance using a combination of free cash flow, revenue, and core earnings per share. The performance award portion of our 2019 long-term incentive program will also measure performance based on these metrics over the three-year performance period. We use these metrics, together with assessments of individual performance, to drive the linkage between business objectives and improved and sustained performance as shown below.
2019 Performance
| Free Cash Flow(1)
| Revenue
| Core Earnings Per Share(2)
| |||
Weighting
|
50%
|
25%
|
25%
| |||
Drivers | • Business execution • First-time quality and safety • On-time delivery • Disciplined asset, inventory, and cash management • Disciplined investments in productivity and innovation | • Business execution • First-time quality and safety • On-time delivery • New orders | • Business execution • First-time quality and safety • On-time delivery • Continued innovation • Operating cost management and achievement of productivity targets |
| (1) | Free Cash Flow is defined as GAAP operating cash flow, less capital expenditures for property, plant, and equipment additions. |
| (2) | Core Earnings per Share is defined as GAAP diluted earnings per share, excluding the net impact of unallocated pension and other postretirement benefit expense. |
The Compensation Committee determined that these performance metrics would sharpen executives’ focus on the elements of operational and financial performance that we believe best drive long-term shareholder value. Our broad-based,non-executive incentive programs also used these metrics for 2019, so that all employees were aligned in pursuit of the same goals. We believe that these metrics drove accountability and performance and enabled employees at every level to maintain a stronger and more direct line of sight to operational and financial performance.
To better reflect the core operating performance of the Company, the Compensation Committee retained discretion to adjust one or more of these metrics to account for (1) significant external events outside management’s control, such as tax or regulatory changes, (2) management decisions intended to increase long-term value but that create short-term financial impacts, such as major acquisitions or dispositions or unplanned share repurchases, and (3) significant changes to market conditions that were not foreseeable at the outset of a performance period. References to these metrics in this proxy statement mean such metrics as adjusted to account for such items. None of these metrics was adjusted for 2019 (or the 2017-2019 performance period, which utilized the same metrics for performance awards granted in 2017).
Because of the long product cycles in our business, the Compensation Committee believes that theone-year and three-year versions of these metrics created differentiated yet complementary incentives for our employees. In some cases, these drivers have enhanced significance for eitherone-year or three-year performance. For example, 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. The table below outlines some of the key drivers impacting our operational and financial performance on aone- and three-year basis, and underscores the reasons why the 737 MAX grounding and our inability to deliver aircraft to our customers during the grounding has had a significant impact on our annual and long-term financial results.
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COMPENSATION DISCUSSION AND ANALYSIS
Principal Drivers ofOne-Year Performance | Principal Drivers of Three-Year Performance | |||
• Business execution • First-time quality and safety • On-time delivery • Operating cost management • Disciplined asset, inventory and cash management • Achievement of annual productivity targets • Strong services order capture | • Efficient use of long-term assets • Technology innovation • First-time quality and safety • Sustained productivity • Long-term risk reduction • New orders with favorable terms • Business model enhancements |
Total Shareholder Return Relative to Peer Companies
The long-term incentive program also includes PBRSUs, which are paid in shares of stock after a three-year performance period and are earned based on Boeing’s TSR relative to a group of peer companies determined by the Compensation Committee. For peer group information, see “Benchmarking Against Our Peer Group” on page 47.
2019 Compensation Decisions and Results
Base Salary
In February 2019, the Compensation Committee approved increases to the base salaries of the following NEOs: Mr. Smith’s from $1,040,000 to $1,150,000; Mr. Deal’s from $825,000 to $950,000, Mr. Keating’s from $675,000 to $700,000, Mr. Luttig’s from $965,000 to $989,000, and Mr. McAllister’s from $1,050,000 to $1,110,000. These adjustments were made based on the Compensation Committee’s review of market practices for comparable executive roles within our peer group and its evaluation of each NEO’s individual performance and contributions. In November 2019, the Compensation Committee increased Mr. Deal’s base salary to $1,000,000 in connection with his move from Global Services to Commercial Airplanes. Mr. Muilenburg’s base salary was not adjusted during 2019.
Annual Incentive Plan Award Targets
In February 2019, the Compensation Committee approved increases to the annual incentive targets for the following NEOs: Mr. Muilenburg’s from 175% to 180% of his base salary, Mr. Smith’s from 110% to 115% of his base salary, Mr. Deal’s from 100% to 105% of his base salary, and Mr. Keating’s from 90% to 95% of his base salary. These adjustments were made based on the Compensation Committee’s review of market practices for comparable executive roles within our peer group and its evaluation of each NEO’s individual performance and contributions. In November 2019, the Compensation Committee increased Mr. Deal’s annual incentive target from 105% to 110% in connection with his move from Global Services to Commercial Airplanes. The annual incentive targets for Messrs. Luttig and McAllister were not adjusted in 2019. As discussed below, no annual incentive awards were paid for 2019 performance.
2019 Annual Incentive Assessment
The Company performance score was determined by comparing the Company’s free cash flow, revenue, and core EPS to targets set at the beginning of the year by the Compensation Committee, with free cash flow weighted at 50% and the other two metrics weighted at 25% each. Actual performance that was higher or lower than target for any particular metric was assigned a percentage score from 0% to 200% based on a curve established by the Compensation Committee. 2019 Company performance with respect to each metric, and the resulting Company performance score, is set forth below:
Metric |
Weighting |
Target |
Result | Company Performance | ||||
Free Cash Flow | 50% | $15.0B | -$4.3B | 0% | ||||
Revenue | 25% | $111.0B | $76.6B | |||||
Core EPS | 25% | $20.10 | -$3.47 | |||||
The performance set forth above resulted in no payouts for 2019, which we believe is an appropriate outcome in light of our commitment to pay for performance. The Compensation Committee made no adjustments to the performance measures above.
In 2019, individual performance scores for the NEOs ranged from 95% to 107%, averaging 102%. Messrs. Smith and Deal both received scores over 100%. Messrs. Muilenburg and McAllister did not receive individual performance
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COMPENSATION DISCUSSION AND ANALYSIS
scores for 2019 in connection with their separations from the Company in 2019 (like the other NEOs, they did not receive any annual incentive award for 2019). The performance scores were primarily the result of each executive’s financial, operational, and business achievements, as well as their progress on key initiatives, leadership strength, and overall contributions to the Company during 2019. Since the Company performance score was 0% and no annual incentives were earned or paid, the NEO’s 2019 individual performance scores did not have any impact on 2019 compensation. However, these individual performance scores were used to determine long-term incentive awards granted in 2020 for the 2020-2022 performance period. The individual performance scores reflect the following:
Mr. Smith’s leadership during a period of uncertainty in the areas of enterprise strategy, business operations, and managing financial risk and ensuring liquidity.
Mr. Deal’s strong performance as President and CEO of Boeing Global Services, leading to his selection to succeed Mr. McAllister as the leader for Boeing Commercial Airplanes in late 2019.
Mr. Keating’s leadership of efforts to practice transparent partnership with multiple U.S. and international government agencies and global regulatory bodies.
Mr. Luttig’s counsel to the Board and CEO as Senior Advisor after transitioning from the Executive Vice President and General Counsel role inmid-2019.
Long-Term Incentive Program Award Targets
In February 2019, the Compensation Committee approved increases to the long-term incentive targets for the following NEOs: Mr. Muilenburg’s 750% to 775%, Mr. Deal’s from 375% to 400%, Mr. Keating’s from 350% to 375%, and Mr. McAllister’s from 400% to 410%. These adjustments were made based on the Compensation Committee’s review of market practices for comparable executive roles within our peer group and its evaluation of each NEO’s individual performance and contributions. In November 2019, the Compensation Committee increased Mr. Deal’s long-term incentive target from 400% to 410% in connection with his move from Global Services to Commercial Airplanes. The long-term incentive targets for Messrs. Smith and Luttig were not adjusted in 2019. Messrs. Muilenburg and Luttig forfeited a portion of their 2019 long-term incentive awards in connection with their respective retirements, and Mr. McAllister forfeited all of his 2019 long-term incentive awards in connection with his separation.
2017-2019 Performance Award Assessment
For the 2017-2019 performance awards, performance was measured based 50% on free cash flow, 25% on revenue, and 25% on core EPS over the three-year performance period. Actual performance that was higher or lower than target for any particular metric was assigned a percentage score from 0% to 200% based on a curve established by the Compensation Committee. Company performance with respect to each metric for the three-year performance period, and the resulting Company performance score is set forth below.
| Metric | Weighting | Target | Result | Company Performance | ||||
Free Cash Flow | 50% | $26.5B | $20.9B | 0% | ||||
Revenue | 25% | $293.8B | $271.1B | |||||
Core EPS | 25% | $34.95 | $24.58 | |||||
The performance set forth above resulted in no payouts for the 2017-2019 period, which we believe is an appropriate outcome in light of our commitment to pay for performance. The Compensation Committee made no adjustments to the performance measures above.
2017-2019 Performance-Based Restricted Stock Units Assessment
Boeing’s relative TSR rank was third out of 22 companies, placing us at the 90th percentile of our peer group for the 2017-2019 performance cycle. Based on these metrics, the PBRSUs paid out at 175% of target.
Supplemental Equity Awards
In February 2019, the Compensation Committee approved a supplemental grant of 4,000 RSUs for Mr. LuttigKeating in recognition of his strong continued performance as General Counsel and as a means of retention,retention. This award will vest in full three years following the grant date and will be forfeited if Mr. Keating resigns, retires, or is terminated for cause prior to Mr. McAllister in an effortthe vesting date.
2020 Changes to offsetour Program Design
In early 2020, we made several changes to our executive compensation program design. These changes are designed to reflect the forgone value from certain equitycurrent challenges to our business and pension programsfeedback provided by his former employer.shareholders over the last year.
No Accelerated Vesting
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COMPENSATION DISCUSSION AND ANALYSIS
First, we updated our clawback policy to provide that all incentive pay is subject to clawback or TaxGross-upforfeiture if an executive violates, or engages in Connection with a Change in Control
We do not accelerate the vesting of any equity awardsnegligent conduct in connection with the supervision of someone who violated, any Company policy, law, or regulation that has compromised the safety of the Company’s products or services and has (or could reasonably be expected to have) a material adverse effect on the Company, our customers, or the public. To complement this change, we amended our incentive plans to strengthen our ability to enforce the clawback policy globally.
Second, in control. In addition,accordance with our standard practice, the unearned portion of allCompensation Committee has setone- and three-year performance goals for our 2020 annual incentive plan and the performance award portion of our 2020 long-term incentive program; however, the performance metrics used will differ from in previous years. These changes have no impact on 2019 compensation or on any awards granted prior to 2020.
2020 Annual Incentive Plan
For 2020, payouts under our annual incentive plan will continue to be based on Company and individual performance. However, payouts will be calculated differently than in 2019, as described below.
2019
| 2020
|
Rationale for Change
| ||||
Performance metrics and weightings |
100% based on Company performance score:
• Free cash flow (50%) • Revenue (25%) • Core EPS (25%) |
50% based on Boeing performance score and 50% based on business unit score
Boeing performance score based on free cash flow (75%) and core EPS (25%).
Business unit performance score based on
• Commercial Airplanes: free cash flow (75%) and operating earnings (25%) • Defense, Space & Security and Global Services: free cash flow (50%), operating earnings (25%), and revenue (25%)
For executives who are not dedicated to one business unit, the business unit score will be the average of the three business unit scores |
Enhances focus on free cash flow, both at the Company level and the Commercial Airplanes business unit level, to ensure that management is highly focused on executing our business plan, with particular emphasis on managing our liquidity and overall financial health as we safely return the 737 MAX to service | |||
Threshold performance score (by metric) | N/A (performance score for any metric could range from 0% to 200%) | 50% (performance below 50% for any metric will result in a 0% score for that metric)
If the Boeing performance score is below threshold for both metrics, the business unit performance scores will also be reduced to below threshold (resulting in no payout)
| Reflects commitment to pay for performance philosophy and responsible pay practices, in a year where significant uncertainty has resulted in broader-than-usual performance ranges between threshold and target, and between target and maximum performance
| |||
Target performance score (by metric) | 100% | No change | ||||
Maximum performance score (by metric) | 200% | 150% | ||||
Individual performance score range | 0% to 200% | No change | N/A | |||
Payout range
| 0% to 200% of individual target award
| No change (although Boeing/business unit score results in maximum 150% payout at 100% individual performance level)
| N/A
| |||
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COMPENSATION DISCUSSION AND ANALYSIS
2020 performance goals incorporate the ongoing financial and operational impacts related to the 737 MAX grounding and assume that 737 MAX return to service begins in 2020. Because of the significant uncertainty regarding when we will resume 737 MAX deliveries, including many factors outside of our control, the Compensation Committee established a range of targets for each Boeing and Commercial Airplanes performance metric. The actual target that will be used for purposes of these metrics will depend on when 737 MAX deliveries resume.
Our broad-based,non-executive annual incentive programs will also use this structure for 2020 so that our employees are aligned in pursuit of the same goals. As described above under “2020 Leadership Changes,” our CEO’s 2020 annual incentive award payout is guaranteed to be no less than his individual target award.
2020-2022 Performance Awards
The 2020-2022 performance award component of our long-term incentive program awards are forfeited upon termination or retirement. We also do not provide taxgross-upswill continue to be based on performance across the same three financial metrics as used in connectionprior years. However, similar to our 2020 annual incentive plan structure, we have made the structural changes set forth below.
2019-2021 Performance Period
| 2020-2022 Performance Period
| Rationale for Change
| ||||
Performance metrics and weightings |
100% based on Company performance:
• Free cash flow (50%) • Revenue (25%) • Core EPS (25%)
|
No change |
N/A | |||
Threshold performance score (by metric)
| N/A (performance score for any metric could range from 0% to 200%)
| 50% (performance below 50% for any metric will result in a 0% score for that metric)
| Reflects commitment to pay for performance philosophy and responsible pay practices, in a year where significant uncertainty has resulted in broader-than-usual performance ranges between threshold and target, and between target and maximum performance.
| |||
Target performance score (by metric)
|
100% |
No change | ||||
Maximum performance score (by metric)
|
200% |
150% | ||||
Payout range |
0% to 200% of target performance award
|
0% to 150% of target performance award
| ||||
Due to uncertainty with respect to when we expect to resume 737 MAX deliveries, including many factors outside of our control, the Compensation Committee established a changerange of targets for each performance metric. The actual target that will be used for purpose of these metrics will depend on when 737 MAX deliveries resume.
2020 Individual Performance Scoring
Awards under our annual incentive plan and under our long-term incentive program will continue to be directly impacted by each executive’s individual performance score as described under “Mix of Pay” beginning on page 38. As was the case in control.2019, individual performance scores in 2020 and beyond will include formal consideration of performance against safety-related objectives and will reflect the input of the Aerospace Safety Committee.
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 are401(k) retirement plan. During 2019, they were also eligible to participate in our Executive Supplemental BenefitSavings Plan,
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COMPENSATION DISCUSSION AND ANALYSIS
or SBP,Executive SSP, a nonqualified defineddeferred contribution plan. The SBP, among other things,Executive SSP 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. Effective January 1, 2020, we eliminated the DC SERP contribution (a supplemental Company contribution determined as a certain percentage of base salary and annual incentive compensation) under the Executive SSP for all executive officers. The Executive SSP also allows executives to voluntarily defer, on a nonqualified basis, receipt of a portion of salary and/or cash-based incentive payouts. For more information on the SBP,our nonqualified deferred compensation benefits, see “Supplemental Benefit Plan”“2019 Nonqualified Deferred Compensation” beginning on page 46. 58.
Executives hired prior to 2009 earned benefits under our Pension Value Plan, or PVP, a broad-based defined benefit pension plan, until the end of 2015, and if they had a PVP benefit or were hired prior to 2008, also earned benefits under our defined benefit Supplemental Executive Retirement Plan, or DB 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.Company, and Mr. Luttig accrued a supplemental pension benefit in connection with an arrangement entered into when he joined Boeing in 2006 (this benefit was fully paid out in 2019 upon his attainment of age 65). Each of these arrangements, as well as each of our broad-based pension plans for which executives are eligible, is described under “2019 Pension Benefits” beginning on page 45.56.
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 2016,2019, these perquisites consisted of:
Security — 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 — Productivity—Relocation assistance services (when applicable), and tax preparation and planning services.
Health — Health—Annual physical exam.
Other — Other—Supplemental life insurance, Company contributions to retirement plans, charitable gift matching program, event tickets, commemorative gifts, and travel planning assistance.certain ground transportation services.
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 taxgross-ups are provided except in connection with certain relocation expenses, of which none were paid to the NEOs in 2016.expenses. 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
No NEO received any benefits under the Executive Layoff Benefit Plan in 2019. We have maintainedmaintain an Executive Layoff Benefit Plan since 1997 to provide a reasonable separation package for executives who are involuntarily laid off due to a job elimination and do notwho neither become employed elsewhere within the Company ornor 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 executive’s 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 enhancedchange-in-control benefits or taxgross-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 with respect to their outstanding awards after a separation based on service and the terms and conditions of the award.
Governance ofPay-Setting Process
The Company applies the following approach in setting compensation for its executives:executive officers:
All executivesExecutive officers are assigned to pay grades by comparing position-specific duties and responsibilities with market data and our internal management structure.
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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COMPENSATION DISCUSSION AND ANALYSIS
Salary ranges and incentive opportunities by pay grade are benchmarked annually against our peer group to ensure they are competitive.
Individual executive pay is benchmarked against the median of our peer group, but actual target pay also takes into account job requirements, business needs, and the executive’sexecutive officer’s experience, contribution, and performance, and business needs.performance.
Role of Board, Management and Consultants
The Compensation Committee establishes, reviews, and approves all elements of NEO compensation. During 2019, the executive compensation program. The Compensation Committee worksworked with an independent executive compensation consultant, Compensation Advisory Partners LLC, or CAP,Pay Governance, for advice and perspective regarding market trends that may affect decisions about our executive compensation program and practices. CAPPay Governance also advisesadvised the GON Committee in connection with nonemployee director compensation matters. CAPPay Governance 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 CAPPay Governance pursuant to SEC and NYSE rules and determined that no conflict of interest exists that would prevent CAPPay Governance from independently representing the Compensation and GON Committees. For more information on this conflicts of interest assessment, see “Corporate Governance — Compensation Consultants”“Compensation Consultant” on page 20.29. Pay Governance is serving as the Compensation Committee’s independent consultant in 2020.
Boeing management has the responsibility for effectively implementing practices and policies approved by the executive compensation program.Compensation Committee. Meridian Compensation Partners, LLC, or Meridian, served as management’s compensation consultant during 2016.2019.
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 approvesin coordination with the CEO’s business goals and objectives relevant to executive compensation,GON Committee, evaluates the performance of the CEO in light of thosehis business goals and objectives, in coordinationand reviews his performance with the GON Committee, and recommends the CEO’s compensation level to the other independent members of the Board basedBoard. Based on this evaluation.evaluation, and following consultation with the Aerospace Safety Committee, the Compensation Committee recommends the CEO’s base salary for approval by the other independent members of the Board. The Compensation Committee also reviews and approves the CEO’s annual and long-term incentive targets and payouts.
The Board reviews all components of compensation and approves all executive officer base salaries.
Based on a review of peer data, pay tally sheets (as described below), individual performance, and internal pay comparisons, the Compensation Committee sets,determines, in the case of the CEO, and reviews and approves, in the case of other NEOs, all other elements of pay.
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. No such awards were granted in 2019.
The Boeing Company 2017 Proxy Statement35
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee sets incentive compensation targets based on the Company’s long rangelong-range business plan and the achievement of financial targets and related payouts for our annual and long-term incentive programs.
Management
The CEO and the Senior Vice President, Human Resources make recommendations on program design and pay levels, where appropriate, and implement the programpractices and policies approved by the Compensation Committee.
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.
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 DISCUSSION AND ANALYSIS
Compensation Consultants
Compensation Committee’s Independent Consultant
|
Management’s 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 management’s data and work product and compensation-related practices and proposals.
•Advises the Compensation Committee Chair and the Compensation Committee with respect to management’s proposals.
•Meets with the Compensation Committee in executive session following regular meetings of the Committee.
•Available onas-needed basis throughout the year to consult with directors or management. | •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.
•
•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, Boeing’s peer group consisted of the 21 companies listed below. Beginning in 2017, DuPont will not be included in the peer group.
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/or roughly comparable annual sales and market capitalizations. On at least an annual basis, the Compensation Committee, working with its independent consultant, reviews the composition of the peer group and determines whether any changes should be made. In 2019, Boeing’s peer group consisted of the 20 companies listed in the box to the right, which (along with General Electric) were included in the peer group used for 2018. The 2019 peer group will also be used for 2020. The median revenue of our peer group for the year ended December 31, 2019 was approximately $73 billion as compared to our revenue of $76.56 billion. As of December 31, 2019, the median market capitalization of our peer group was approximately $127 billion as compared to our market capitalization of $183.34 billion. 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 executive’s experience, contribution, and performance, and the organizational structure of the businesses (internal alignment and pay relationships). This peer group, plus Airbus, is also used to measure our relative TSR performance for purposes of our PBRSUs. For additional information on the PBRSUs, see page 39. Airbus is not included in our compensation benchmarking peer group due to the lack of publicly available and comparable compensation and benefit program information. | Peer Companies | |||
| 3M | ||||
| AT&T | ||||
| Caterpillar | ||||
| Chevron | ||||
| Cisco Systems | ||||
| Exxon Mobil | ||||
| Ford | ||||
| General Dynamics | ||||
| Honeywell | ||||
| IBM | ||||
| Intel | ||||
| Johnson & Johnson | ||||
| Lockheed Martin Microsoft | ||||
| Northrop Grumman | ||||
| Procter & Gamble | ||||
| Raytheon | ||||
| United Parcel Service | ||||
| United Technologies | ||||
| 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 executive’s experience, contribution, and performance, and the organizational structure of the businesses (internal alignment and pay relationships).Additional Considerations
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 Boeing’s 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 company’s 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.
Executive Stock Ownership and Stock Holding Requirements
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:
CEO: 6x base salary
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
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COMPENSATION DISCUSSION AND ANALYSIS
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, 2016,2019, each NEO employed as of that date exceeded the applicable stock ownership requirement.
Each year, the Compensation Committee reviews the ownership position of each electedexecutive officer as well as a summary covering all senior executives. In assessing stock ownership, the average daily closing stock price over aone-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.February. 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 afterExecutive officers who join the February grant date but on or before December 31Company aftermid-February will generally receive apro-rated long-term incentive award, if any, for that year. Grants arepro-rated based on the time remaining in the36-month performance or vesting period as of the date of hire or promotion.hire. This approach was adopted to better alignaligns our program with peer practices and provide the executive with an immediate tie tostake in Boeing’s long-term performance.
We also may grant supplemental equity awards to attract and 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.
Securities Trading Policy
We have a policy that prohibits all employees from trading in Boeing securities while aware of materialnon-public information, and that further prohibits executive officers and directors from engaging in hedging, pledging, or monetization transactions (such aszero-cost collars) 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 a senior executive 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 addition, even absent a financial restatement, the Compensation Committee may require reimbursement of incentive compensation from any executive officer (or, beginning in 2020, any other executive) 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. In 2020, the policy was enhanced to provide that the Compensation Committee may require reimbursement of incentive compensation from any executive who has violated, or engaged in negligent conduct in connection with the supervision of someone who violated, any Company policy, law, or regulation that has compromised the safety of the Company’s products or services and has (or could reasonably be expected to have) a material adverse effect on the Company. The Compensation Committee has the flexibility under this policy to direct the Company to publicly disclose any recoupment made pursuant to the policy.
In addition, The Boeing Company 2003 Incentive Stock Plan and certain other executive compensation plans provide that certain compensation payable under the plans may be forfeited or recovered in the event an award recipient engages in various types of conduct deemed detrimental to the Company’s interest, including theft or fraud against the Company and engaging in competition with the Company. In 2020, these clawback and forfeiture provisions were further revised to enhance enforceability in certain jurisdictions.
48 | | 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
TaxGross-Ups
We do not provide taxgross-ups other than for certain relocation expenses, in accordance with our standard relocation policies.
Accounting and Tax Implications, Including Limitations on Deductibility of Compensation
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.RSUs. 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 Statement37
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 materialnon-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 Company’s 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 Company’s 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 Company’s interest, including theft or fraud against the Company and engaging in competition with the Company.
TaxGross-Ups
We do not provide taxgross-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 isPrior to 2018, there was an exception to the limit on deductibility for performance-based compensation that meetsmet certain requirements. We considerThe Tax Cut and Jobs Act of 2017, or TCJA, largely eliminated that exception starting in 2018. As such, compensation paid to our CEO and the impactother NEOs in 2018 and thereafter is presumed to be subject to the Section 162(m) deductibility limits as amended by the TCJA, with the exception of this rule when developing and implementing our executive compensation program. Annual incentive awards, performance awards and PBRSUs are generally designedcertain amounts payable pursuant to meeta written binding contract in effect as of November 2, 2017 that has not been materially modified thereafter (as permitted by the deductibility requirements. We also believe that it is important to preserve flexibilityTCJA). Compensation granted 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 RSUsthe past may not qualify as performance-based“performance-based compensation” under certain circumstances. We have historically retained flexibility to award compensation that is excluded from the limitation on deductibility.consistent with our corporate objectives even if it does not qualify for a tax deduction.
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).
Management has prepared the Compensation Discussion and Analysis, beginning on page 25.33. 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.
Compensation Committee Arthur D. Collins Jr., Chair
Mike S. Zafirovski |
Mr. Calhoun and Ms. Good served on the Compensation Committee until December 23, 2019.
38 The Boeing Company 2017 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee during 20162019 had a relationship that requires disclosure as a Compensation Committee interlock.
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:
Compensation Committee-approved limits on annual incentive awards, performance awards, and PBRSUs;
Compensation Committee annual and ongoing review of our compensation plans and programs as advised by the Compensation Committee’s independent compensation consultant;
Individual executive pay generally targeted at median level against comparable executive roles at an appropriate set of peer companies;
| 2020 Proxy Statement | 49 |
Revised clawback/recoupment policy adoptedCOMPENSATION DISCUSSION AND ANALYSIS
Incorporation of an individual performance score for each executive as a critical factor in 2015 that authorizesthe annual incentive calculation, thereby enabling the Compensation Committee to recoverdirect a zero payout to any executive in any year if the executive is deemed to have sufficiently poor performance, is found to have engaged in activities or misconduct that pose a financial, operational, or other undue risk to the Company, or otherwise fails to adhere to our enduring values including safety, quality and integrity;
Incorporation of each executive’s prior-year individual performance score into the calculation of target awards under our long-term incentive program, driving further connection between pay and individual performance;
Robust clawback policies permitting the recoupment of past incentive pay from executive officers in the event of certain kindsinstances of misconduct, even if there has been noabsent a restatement of financial results, including misconduct that has compromised the safety of our products or services, and in 2016 further amendments to executiveforfeiture of incentive awards and certain other compensation plans providing that awards may be forfeited or recovered in the event an award recipientthe executive engages in various types of conduct deemed detrimental to the Company’s interests, including theft or fraud against the Company and engaging in competition with the Company;
With each increase in executive pay level, a proportionately greater award opportunity is derived from the long-term incentive program, reflecting more senior executives’ enhanced ability and responsibility to positively impactdrive long-term Company performance over time;performance;
No employment agreements with executive officers;officers (except where required bynon-U.S. local law);
The use of economic profit or, beginning in 2017, a balanced portfolio of three financial measures — free cash flow, revenue, and core earnings per share, and revenue —EPS as our principal performance metrics, which incents employees to increase earningssharpens executives’ focus on the elements of operational and manage net assets efficiently;financial performance that the Compensation Committee believes best drive long-term shareholder value;
Use of three distinct long-term incentive vehicles — performance awards, PBRSUs, and RSUs — that vest inafter three year periods — and in the case of PBRSUs based on TSR relative to a group of peer companies — therebyyears, providing strong incentives for sustained operational and financial performance;
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;
Significant share ownership requirements for senior executives, and a holding requirement for certain senior executives, each monitored by the Compensation Committee, thatto ensure alignment with shareholder interests over the long term;
Limited Compensation Committee discretion to adjust financial resultsperformance metrics 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;
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
Restrictions on trading by senior executivesin Boeing stock 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.
50 2020 Proxy StatementThe Boeing Company 2017 Proxy Statement39
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information regarding compensation for each of our 20162019 named executive officers.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||||||||||||||||||
| 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 | | 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 | 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 | | | 107,670 112,989 | | | 4,819,815 10,579,551 | | ||||||||
| Raymond L. Conner | 2016 | 1,065,962 | — | 2,178,146 | 3,986,360 | 925,659 | 795,598 | 8,951,725 | ||||||||||||||||||||||||
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 | | | 2,993,344 4,576,995 | | | 160,326 271,533 | | | 9,085,586 16,421,314 | | ||||||||
| J. Michael Luttig | 2016 | 903,673 | — | 4,100,005 | 3,258,280 | 628,114 | 475,852 | 9,365,924 | ||||||||||||||||||||||||
Executive Vice President and General Counsel | | 2015 2014 | | | 870,577 877,480 |
| | — — |
| | 1,700,094 1,548,377 | | | 2,787,846 3,359,100 | | | 918,922 1,463,810 | | | 212,991 199,677 | | | 6,490,430 7,448,444 | | ||||||||
Kevin G. McAllister Executive Vice President, Presidentand Chief Executive Officer, Commercial Airplanes | 2016 | 92,308 | 2,000,000 | 17,700,600 | 1,045,000 | — | 27,912 | 20,865,820 | ||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Value and | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||
Dennis A. Muilenburg | 2019 | 2,013,846 | 7,246,100 | (6) | — | 2,790,155 | 2,200,094 | 14,250,195 | |||||||||||||||||||||||||||
Former President and Chief Executive Officer | | 2018 2017 | | 1,700,000 1,690,769 | | 7,330,916 5,775,049 | | 13,076,350 8,450,270 | | — 1,549,137 | | 1,284,921 985,191 | | 23,392,187 18,450,416 | |||||||||||||||||||||
Gregory D. Smith | 2019 | 1,128,846 | 2,430,699 | — | 411,242 | 545,016 | 4,515,803 | ||||||||||||||||||||||||||||
Chief Financial Officer and Executive Vice President, Enterprise Performance and Strategy; Former Interim President and Chief Executive Officer | | 2018 2017 | | 1,032,462 974,308 | | 2,550,173 11,779,769 | | 4,574,957 3,782,592 | | — 241,461 | | 524,466 447,484 | | 8,682,058 17,225,614 | |||||||||||||||||||||
Stanley A. Deal | 2019 | 934,423 | 1,732,642 | — | 830,045 | 708,196 | 4,205,306 | ||||||||||||||||||||||||||||
Executive Vice President, President and Chief Executive Officer, Commercial Airplanes | | 2018 2017 | | 793,904 658,154 | | 1,299,478 5,605,346 | | 2,072,832 1,783,236 | | — 457,084 | | 339,332 1,310,358 | | 4,505,546 9,814,178 | |||||||||||||||||||||
Timothy J. Keating | 2019 | 695,192 | 3,016,610 | — | 322,739 | 335,843 | 4,370,384 | ||||||||||||||||||||||||||||
Executive Vice President, Government Operations | |||||||||||||||||||||||||||||||||||
J. Michael Luttig | 2019 | 984,385 | 1,930,360 | (7) | — | 3,841,126 | 549,048 | 7,304,919 | |||||||||||||||||||||||||||
Former Executive Vice President, Counselor and Advisor to the Board of Directors
|
| 2018 2017
|
|
| 959,346 930,385
|
|
| 1,907,572 1,819,983
|
|
| 4,325,735 3,806,282
|
|
| — 356,410
|
|
| 617,945 473,447
|
|
| 7,810,598 7,386,507
|
| ||||||||||||||
Kevin G. McAllister
Former Executive Vice President, President and Chief Executive Officer, Commercial Airplanes | | 2019 2018 2017 | | 1,230,007 1,043,404 1,012,231 | | 2,045,063 2,131,531 3,499,936 | (8) | | — 3,934,889 2,187,011 | | — — — | | 15,154,248 566,333 520,120 | | 18,429,318 7,676,157 7,219,298 | ||||||||||||||||||||
| (1) | Amounts reflect base salary paid in the year, before any deferrals at the executive’s election and including salary increases effective during the year, if any. For Messrs. Muilenburg and McAllister, the amounts shown include $313,846 and $131,546, respectively, in payment of accrued but unused vacation in connection with them ceasing to be employed by the Company in 2019. |
| (2) |
| 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. If the maximum level of performance were to be achieved for the PBRSUs granted in 2019, the grant date value for those PBRSUs would be $7,245,862 for Mr. Muilenburg, $2,430,822 for Mr. Smith, $1,732,706 for Mr. Deal, $1,303,958 for Mr. Keating, $1,930,304 for Mr. Luttig, and $2,044,948 for Mr. McAllister. The grant date fair value of each PBRSU and RSU award in |
| 2020 Proxy Statement | 51 |
COMPENSATION OF EXECUTIVE OFFICERS
| (3) | Amounts reflect (a) annual incentive compensation, which is based on Company |
| Name | Year | Annual Incentive Compensation ($) | Long-Term Incentive Performance Awards ($) | Total Non-Equity Incentive Plan Compensation ($) | Year | Annual Incentive Compensation ($) | Long-Term Incentive Performance Awards ($) | Total Non-Equity Incentive Plan Compensation ($) | ||||||||||||||||||||||||||
| Dennis A. Muilenburg | 2016 | 2,842,700 | 3,588,750 | 6,431,450 | 2019 | — | — | — | ||||||||||||||||||||||||||
| 2015 | 1,962,400 | 2,606,149 | 4,568,549 | |||||||||||||||||||||||||||||||
| 2014 | 1,557,900 | 2,560,000 | 4,117,900 | |||||||||||||||||||||||||||||||
| 2018 | 5,432,350 | 7,644,000 | 13,076,350 | |||||||||||||||||||||||||||||||
| 2017 | 5,752,520 | 2,697,750 | 8,450,270 | |||||||||||||||||||||||||||||||
Gregory D. Smith | 2016 | 1,168,600 | 1,903,125 | 3,071,725 | 2019 | — | — | — | ||||||||||||||||||||||||||
| 2015 | 859,300 | 1,389,349 | 2,248,649 | 2018 | 2,075,957 | 2,499,000 | 4,574,957 | |||||||||||||||||||||||||||
| 2014 | 1,038,600 | 1,625,000 | 2,663,600 | 2017 | 2,147,592 | 1,635,000 | 3,782,592 | |||||||||||||||||||||||||||
Raymond L. Conner | 2016 | 1,059,100 | 2,927,260 | 3,986,360 | ||||||||||||||||||||||||||||||
Stanley A. Deal | 2019 | — | — | — | ||||||||||||||||||||||||||||||
| 2015 | 942,600 | 1,901,250 | 2,843,850 | 2018 | 1,391,487 | 681,345 | 2,072,832 | |||||||||||||||||||||||||||
| 2014 | 1,296,500 | 776,000 | 2,072,500 | �� | 2017 | 1,292,736 | 490,500 | 1,783,236 | ||||||||||||||||||||||||||
Timothy J. Keating | 2019 | — | — | — | ||||||||||||||||||||||||||||||
| J. Michael Luttig | 2016 | 1,013,100 | 2,245,180 | 3,258,280 | 2019 | — | — | — | ||||||||||||||||||||||||||
| 2015 | 872,400 | 1,915,446 | 2,787,846 | |||||||||||||||||||||||||||||||
| 2014 | 1,177,100 | 2,182,000 | 3,359,100 | |||||||||||||||||||||||||||||||
| 2018 | 1,753,235 | 2,572,500 | 4,325,735 | |||||||||||||||||||||||||||||||
| 2017 | 1,953,282 | 1,853,000 | 3,806,282 | |||||||||||||||||||||||||||||||
| Kevin G. McAllister | 2016 | 1,045,000 | — | 1,045,000 | 2019 | — | — | — | ||||||||||||||||||||||||||
| 2018 | 1,811,621 | 2,123,268 | 3,934,889 | |||||||||||||||||||||||||||||||
|
| 2017
|
|
| 2,187,011
|
|
| —
|
|
| 2,187,011
|
| |||||||||||||||||||||||
The estimated target and maximum amounts for annual incentive awards for |
No defined benefits have accrued since the end of 2015. Amounts for 2019 and 2017 reflect |
40 The Boeing Company 2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the elements of “All Other Compensation” provided in |
| Name | Perquisites and Other Personal Benefits ($)(a) | Life Insurance Premiums ($) | Company Contributions to ($)(b) | Total All Other Compensation ($) | Perquisites and Other Personal Benefits ($)(a) | Life Insurance Premiums ($) | Company Contributions to Retirement Plans ($) | Separation Payments(b) | Total All Other Compensation ($) | ||||||||||||||||||||||||||||||||
| Dennis A. Muilenburg | 224,409 | 9,811 | 602,928 | 837,148 | 310,417 | (i) | 4,590 | 1,885,087 | — | 2,200,094 | |||||||||||||||||||||||||||||||
| Gregory D. Smith | 88,173 | 5,453 | 302,590 | 396,216 | 153,749 | (ii) | 3,056 | 388,211 | — | 545,016 | |||||||||||||||||||||||||||||||
| Raymond L. Conner | 72,484 | 6,374 | 716,740 | 795,598 | |||||||||||||||||||||||||||||||||||||
| Stanley A. Deal | 83,362 | (iii) | 10,550 | 614,284 | — | 708,196 | |||||||||||||||||||||||||||||||||||
| Timothy J. Keating | 59,347 | (iv) | 3,850 | 272,646 | — | 335,843 | |||||||||||||||||||||||||||||||||||
| J. Michael Luttig | 87,655 | 5,403 | 382,794 | 475,852 | 87,766 | (v) | 5,264 | 456,018 | — | 549,048 | |||||||||||||||||||||||||||||||
| Kevin G. McAllister | 13,568 | 498 | 13,846 | 27,912 | 71,492 | (vi) | 4,941 | 327,815 | 14,750,000 | 15,154,248 | |||||||||||||||||||||||||||||||
| (a) | Perquisites and other personal benefits provided to one or more of our NEOs in |
| (b) | Mr. McAllister |
CEO Actual Compensation Realized2019.
The supplemental table below, which sets forth our Mr. Muilenburg’s 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 | ||||||||||||
| | 2020 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS
| (6) | Mr. Muilenburg retired from the Company in December 2019 and, in accordance with the terms of these awards, was eligible for |
Mr. Luttig retired from the Company |
Mr. McAllister forfeited these awards when he ceased to be employed by the |
The Boeing Company 2017 Proxy Statement41
COMPENSATION OF EXECUTIVE OFFICERS
20162019 Grants of Plan-Based Awards
The following table provides information for each of our NEOs regarding 20162019 annual and long-term incentive award opportunities, including the range of potential payouts under our incentive plans. Specifically, the table presents the 20162019 grants of annual incentive awards, performance awards, PBRSUs, and RSUs.
| Name | Type of Award | Grant Date | Committee Action Date(1) | Number (#) |
Estimated Future |
Estimated Future | All Other (#) | Grant Date Fair Value of Stock Awards ($) | Type of Award | Grant Date | Committee Action | Number (#) |
Estimated Future Equity Incentive Plan | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other (#) | Grant Date ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Target ($) | Maximum ($) | Target (#) | Maximum (#) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dennis A. Muilenburg | Annual Incentive | — | 2,791,066 | 5,582,131 | — | — | — | — | Annual Incentive | — | 3,060,000 | 6,120,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | 52,000 | 5,200,000 | 10,400,000 | — | — | — | — | Performance Award | 72,463 | 7,246,300 | 14,492,600 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 2/22/2016 | 2/21/2016 | — | — | — | — | — | 22,128 | 2,600,040 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 8,461 | 3,623,169 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs | 2/22/2016 | 2/21/2016 | — | — | — | 20,515 | 41,030 | — | 2,599,979 | PBRSUs | 02/25/2019 | 02/24/2019 | — | — | — | 1,944 | 7,774 | 15,548 | — | 3,622,931 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gregory D. Smith | Annual Incentive | — | 1,003,975 | 2,007,951 | — | — | — | — | Annual Incentive | — | 1,298,173 | 2,596,346 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | 17,000 | 1,700,000 | 3,400,000 | — | — | — | — | Performance Award | 24,310 | 2,431,000 | 4,862,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 2/22/2016 | 2/21/2016 | — | — | — | — | — | 7,234 | 849,995 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 2,838 | 1,215,288 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs | 2/22/2016 | 2/21/2016 | — | — | — | 6,707 | 13,414 | — | 850,015 | PBRSUs | 02/25/2019 | 02/24/2019 | — | — | — | 652 | 2,608 | 5,216 | — | 1,215,411 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Raymond L. Conner | Annual Incentive | — | 1,173,484 | 2,346,967 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stanley A. Deal | Annual Incentive | — | 989,423 | 1,978,846 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | 21,781 | 2,178,100 | 4,356,200 | — | — | — | — | Performance Award | 17,325 | 1,732,500 | 3,465,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 2/22/2016 | 2/21/2016 | — | — | — | — | — | 9,269 | 1,089,108 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 2,023 | 866,289 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs | 2/22/2016 | 2/21/2016 | — | — | — | 8,593 | 17,186 | — | 1,089,038 | PBRSUs | 02/25/2019 | 02/24/2019 | — | — | — | 465 | 1,859 | 3,718 | — | 866,353 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| J. Michael Luttig | Annual Incentive | — | 994,689 | 1,989,377 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Timothy J. Keating | Annual Incentive | — | 660,433 | 1,320,866 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | 17,500 | 1,750,000 | 3,500,000 | — | — | — | — | Performance Award | 13,036 | 1,303,600 | 2,607,200 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 2/22/2016 | 2/21/2016 | — | — | — | — | — | 7,447 | 875,023 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 4,000 | 1,712,880 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 2/22/2016 | 2/21/2016 | — | — | — | — | — | 20,000 | 2,350,000 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 1,522 | 651,751 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs | 2/22/2016 | 2/21/2016 | — | — | — | 6,904 | 13,808 | — | 874,982 | PBRSUs | 02/25/2019 | 02/24/2019 | — | — | — | 350 | 1,399 | 2,798 | — | 651,979 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kevin G. McAllister | Annual Incentive | — | 1,100,000 | 2,200,000 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| J. Michael Luttig(4) | Annual Incentive | — | 1,082,823 | 2,165,646 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | — | — | — | — | — | — | — | Performance Award | 19,300 | 1,930,000 | 3,860,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 11/21/2016 | 11/15/2016 | — | — | — | — | — | 120,000 | 17,700,600 | RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 2,254 | 965,208 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs | — | — | — | — | — | — | — | PBRSUs | 02/25/2019 | 02/24/2019 | — | — | — | 518 | 2,071 | 4,142 | — | 965,152 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kevin G. McAllister(4) | Annual Incentive | — | 1,208,308 | 2,416,615 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance Award | 20,449 | 2,044,900 | 4,089,800 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs | 02/25/2019 | 02/24/2019 | — | — | — | — | — | — | 2,388 | 1,022,589 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBRSUs
|
|
| 02/25/2019
|
|
| 02/24/2019
|
|
| —
|
|
| —
|
|
| —
|
|
| 549
|
|
| 2,194
|
|
| 4,388
|
|
| —
|
|
| 1,022,474
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | PBRSU and RSU awards that were approved by the Compensation Committee on Sunday, February |
| (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. No annual incentive awards were paid to NEOs for 2019 performance. |
| (3) | PBRSUs pay out in shares of |
| (4) | In connection with their separations from the Company, all or portions of these NEOs’ 2019 awards |
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 20162019 performance. The actual amount paid for 2016 is includedAs shown in the“Non-Equity Incentive Plan Compensation” column and corresponding footnote of the Summary Compensation Table on page 40. These51, no annual incentive awards were paid to NEOs for 2019.
| 2020 Proxy Statement | 53 |
COMPENSATION OF EXECUTIVE OFFICERS
Annual incentive awards, if payable, 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 apro-rated payout based on the number of days employed during the year. Upon any other type of employment termination, all rights to the annual incentive awards would terminate completely. Annual incentive awards are described in further detail beginning on page 31.38.
Performance Awards
The amounts shown for performance awards represent the target and maximum amounts that, depending on performance results, mightwould be paidpayable to each NEO pursuant to performance awards granted in 2016.2019. The performance awards shown are units that pay out based on the achievement of economic profitthe Company’s free cash flow, revenue, and core EPS performance 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.2021. Each unit has an initial target value of $100. The amount payable at the end of the three-year performance period may berange 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 apro-rated payout based on the number of months employed during the period. Upon any other type of employment termination, all rights to the performance awards would terminate completely. Performance awards are described in further detail on page 33.
39.
42 The Boeing Company 2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
Performance-Based Restricted Stock Units
The amounts shown for PBRSUs represent the threshold, target, and maximum number of PBRSUs awarded to each NEO in 20162019 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 accountdiscounted to reflect the present value of future payments as well as the risks associated with achieving the performance goals established in the program).criteria. PBRSUs vestare earned based on Boeing’s TSR over rollingfor the three-year periodsperformance period as measured against a group of peer companies set by the Compensation Committee. The final number of PBRSUsshares issuable at vesting pursuant to PBRSUs may range from 0% to 200% of the targetedtarget amount depending on relative TSR performance. The threshold level of performance subject to an additional capprovides for payouts at 25% of 400% oftarget. If the targeted monetary value.threshold level is not achieved, no shares are issued. If employment is terminated due to death, disability, layoff, or retirement during the performance period, the executive (or beneficiary) remains eligible to receive apro-rated amount of stock unitsshares based on the number of months employed during the period. Upon any other type of employment termination, the PBRSUs would not vest and would be forfeited. PBRSUs are described in further detail on page 33.39.
Restricted Stock Units
The amounts shown for RSUs represent the number of RSUs awarded to each NEO in 20162019 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 aone-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 apro-rated amount of stock units based on active employment during the three-year performancevesting period. Upon any other type of employment termination, the RSUs would not vest and would be forfeited. RSUs that are granteddescribed in order to retain or attract the servicesfurther detail on page 39. Mr. Keating received a supplemental grant of 4,000 RSUs in February 2019 in recognition of strong performance and as a senior leader, reward exceptional performance, or recognize expanded responsibility (supplemental equity awards)means of retention. These supplemental 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.
54 | | 2020 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS
Outstanding Equity Awards at 20162019 FiscalYear-End
The following table provides information regarding outstanding stock options and unvested stock awards held by each of our NEOs as of December 31, 2016.2019. Market values for outstanding stock awards, which include 20162019 grants and prior-year grants, are based on the closing price of Boeing stock on December 30, 201631, 2019 of $155.68.$325.76. Performance awards, which are not stock-based but which may ultimately be paid in shares of common stock at the Compensation Committee’s discretion, are not presented in this table. Our last stock option grant was in 2013, and all outstanding options became exercisable by 2016.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Grant Year | Number of (#) | Option Exercise Price ($) | 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 Statement43
COMPENSATION OF EXECUTIVE OFFICERS
| Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Year | Number of (#) | 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 ($)(2) | |||||||||||||||||||||||||||||||||||||
Dennis A. Muilenburg | — | — | — | — | — | — | 36,967 | (3) | 12,042,370 | ||||||||||||||||||||||||||||||||||||
| 2013 | 72,969 | 75.97 | 2/25/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Gregory D. Smith | — | — | — | — | 64,762 | (4) | 21,096,869 | 14,385 | (5) | 4,686,058 | |||||||||||||||||||||||||||||||||||
| 2013 | 19,402 | 75.97 | 2/25/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Stanley A. Deal
| — | — | — | — | 46,674 | (6) | 15,204,522 | 8,554 | (7) | 2,786,551 | |||||||||||||||||||||||||||||||||||
Timothy J. Keating | — | — | — | — | 10,201 | (8) | 3,323,078 | 7,255 | (9) | 2,363,389 | |||||||||||||||||||||||||||||||||||
| 2012 | 23,806 | 75.40 | 2/27/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| 2011 | 21,737 | 71.44 | 2/22/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
J. Michael Luttig | — | — | — | — | 10,442 | (10) | 3,401,586 | 13,227 | (11) | 4,308,828 | |||||||||||||||||||||||||||||||||||
Kevin G. McAllister(12) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| (1) | The following table shows the aggregate number and market value of unvested Career Shares, RSUs, and Matching Deferred Stock Units, or MDSUs, held by each of the NEOs as of December 31, |
| Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | Career Shares(a) | RSUs | MDSUs(b) | Career Shares(a) | RSUs | MDSUs(b) | ||||||||||||||||||||||||||||||||||||||||||
| Dennis A. Muilenburg | 4,775 | 60,985 | 7,081 | 72,841 | 743,372 | 9,494,145 | 1,102,370 | 11,339,887 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dennis A. Muilenburg(c)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||||||||||||||||||||||||||||||||
| Gregory D. Smith | — | 61,099 | — | 61,099 | — | 9,511,892 | — | 9,511,892 |
| —
|
|
| 64,762
|
|
| —
|
|
| —
|
|
| 21,096,869
|
|
| —
|
| ||||||||||||||||||||||||||||||
| Raymond L. Conner | 9,403 | 78,850 | 6,842 | 95,095 | 1,463,859 | 12,275,368 | 1,065,163 | 14,804,390 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stanley A. Deal
|
| 4,286
|
|
| 33,858
|
|
| 8,530
|
|
| 1,396,207
|
|
| 11,029,582
|
|
| 2,778,733
|
| ||||||||||||||||||||||||||||||||||||||
Timothy J. Keating
|
| —
|
|
| 10,201
|
|
| —
|
|
| —
|
|
| 3,323,078
|
| |||||||||||||||||||||||||||||||||||||||||
| J. Michael Luttig | — | 40,348 | — | 40,348 | — | 6,281,377 | — | 6,281,377 |
| —
|
|
| 10,442
|
|
| —
|
|
| —
|
|
| 3,401,586
|
|
| —
|
| ||||||||||||||||||||||||||||||
| Kevin G. McAllister | — | 120,000 | — | 120,000 | — | 18,681,600 | — | 18,681,600 | ||||||||||||||||||||||||||||||||||||||||||||||||
Kevin G. McAllister(d)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||||||||||||||||||||||||||||||||
| (a) | Career Shares, which were granted prior to 2006, |
| (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 |
| (c) | In connection with Mr. Muilenburg’s retirement in 2019, he fully vested in his Career Shares and MDSUs outstanding on his termination date, and vestedpro-rata (based on his employment during the applicable vesting period) in his RSUs outstanding on his termination date. In accordance with the terms of the applicable awards, all remaining unvested RSUs were forfeited. |
| (d) | In connection with Mr. McAllister’s separation in 2019, he forfeited all unvested RSUs outstanding on his termination date, in accordance with the terms of the applicable awards. Mr. McAllister did not have any Career Shares or MDSUs. |
| (2) | Assumes |
| (3) | Reflects (a) |
| (4) | Reflects (a) 5,498 RSUs that vested on February 27, 2020; (b) 3,663 RSUs that vest on February 26, 2021; (c) 52,713 RSUs that vest on July 3, 2021; and (d) 2,888 RSUs that vest on February 25, 2022. |
| 2020 Proxy Statement | 55 |
COMPENSATION OF EXECUTIVE OFFICERS
| (5) | Reflects (a) 10,333 PBRSUs that vested on February 24, 2020; (b) 3,389 PBRSUs that vest on or around February 2021; and (c) 663 PBRSUs that vest on or around February 2022. |
| (6) | Reflects (a) 4,286 Career Shares and |
2022.
| (7) | Reflects (a) |
| (8) | Reflects (a) |
| (9) | Reflects (a) |
| (10) | Reflects (a) |
| (11) | Reflects (a) |
| (12) | Mr. McAllister forfeited all outstanding equity awards when he ceased to be employed by the Company in 2019. |
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 2016.2019.
| Stock Options | Stock Awards | 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 ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | 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 |
|
— |
|
|
— |
|
|
89,409 |
|
|
34,536,457 |
| ||||||||||||||||||||||||
Gregory D. Smith | 20,000 | 1,229,222 | 8,702 | 1,015,930 |
|
19,500 |
|
|
6,345,637 |
|
|
16,897 |
|
|
7,129,397 |
| ||||||||||||||||||||||||
Raymond L. Conner | 14,031 | 956,622 | 56,097 | 8,287,187 | ||||||||||||||||||||||||||||||||||||
Stanley A. Deal |
|
— |
|
|
— |
|
|
6,762 |
|
|
2,852,990 |
| ||||||||||||||||||||||||||||
Timothy J. Keating |
|
26,557 |
|
|
8,485,216 |
|
|
8,647 |
|
|
3,648,500 |
| ||||||||||||||||||||||||||||
J. Michael Luttig | 163,106 | 12,358,997 | 55,939 | 6,607,783 |
|
— |
|
|
— |
|
|
17,394 |
|
|
7,339,174 |
| ||||||||||||||||||||||||
Kevin G. McAllister | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Kevin G. McAllister(3) |
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||||||||||||||||||||
| (1) | Consists of |
| (2) | Calculated based on the average of the high and low prices on the date of vesting. |
| (3) | Mr. McAllister did not vest in any stock awards during 2019. |
44 The Boeing Company 2017 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
Each of our NEOs, other than Mr. McAllister, havehas earned benefits under the following pension plans:
the Pension Value Plan, or PVP, apre-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 defined benefit Supplemental Executive Retirement Plan, or DB SERP, an unfunded, nonqualified defined benefit plan.plan generally available to executives hired before 2008 and salaried U.S. employees hired before 2009 who have a PVP benefit.
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.SERIP. The following table provides information as of December 31, 20162019 with respect to accumulated benefits under each of these plans and arrangements. NoMr. Luttig received a lump sum distribution of his entire accrued benefit under his supplemental pension
56 | | 2020 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS
agreement, which was paid upon his attainment of age 65 during 2019. Otherwise, no pension payments were made to any NEO during 2016.2019.
Name | Plan Name | Number of Years of | Present Value of ($)(2) | Plan Name | Number of Years of Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year | ||||||||||||||||||||
Dennis A. Muilenburg | Pension Value Plan | 30.00 | 917,065 |
Pension Value Plan |
30.00 |
$ |
1,181,929 |
|
|
— |
| ||||||||||||||||
| SERP | 30.00 | 10,766,116 |
SERP |
30.00 |
$ |
13,680,438 |
|
|
— |
| |||||||||||||||||
Gregory D. Smith | Pension Value Plan | 13.01 | 409,894 |
Pension Value Plan |
13.01 |
$ |
537,705 |
|
|
— |
| ||||||||||||||||
| SERP | 13.01 | 893,487 |
SERP |
13.01 |
$ |
1,181,958 |
|
|
— |
| |||||||||||||||||
| Toronto SERIP | 9.52 | 214,707 |
Toronto SERIP |
9.52 |
$ |
270,096 |
|
|
— |
| |||||||||||||||||
Raymond L. Conner | Pension Value Plan | 37.57 | 1,381,951 | ||||||||||||||||||||||||
Timothy Keating |
Pension Value Plan |
7.59 |
$ |
451,002 |
|
|
— |
| |||||||||||||||||||
| SERP | 37.57 | 13,057,853 |
SERP |
7.59 |
$ |
1,286,607 |
|
|
— |
| |||||||||||||||||
J. Michael Luttig | Pension Value Plan | 9.64 | 452,930 |
Pension Value Plan |
9.64 |
$ |
543,929 |
|
|
— |
| ||||||||||||||||
| SERP | 9.64 | 4,154,096 |
SERP |
9.64 |
$ |
4,107,146 |
|
|
—
|
| |||||||||||||||||
| Supplemental Pension Agreement | 9.64 | 3,146,112 | Supplemental Pension Agreement
|
9.64
|
|
—
|
|
$
|
3,510,688
|
| |||||||||||||||||
Kevin G. McAllister | — | — | — | ||||||||||||||||||||||||
Stanley A. Deal |
Pension Value Plan |
28.06 |
$ |
1,081,396 |
|
|
— |
| |||||||||||||||||||
SERP |
28.06 |
$ |
3,224,822 |
|
|
— |
| ||||||||||||||||||||
Kevin 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, |
| (2) | Present values were calculated assuming nopre-retirement mortality or termination. The values for the PVP, the DB SERP, and the Toronto SERIP are the actuarial present values as of December 31, |
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. Luttig’s 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.
In order to determine changes in pension values for the Summary Compensation Table on page 51, the values of these benefits were also calculated as of December 31, 2018. For the values as of December 31, 2018, the discount assumption was 4.22% for the PVP, 4.2% for the DB SERP, and 3.00% for the Toronto SERIP, which were the assumptions used for financial reporting purposes for 2018. Other assumptions used to determine the value as of December 31, 2018 were the same as those used for December 31, 2019. The assumptions reflected in this footnote are the same as those used for the PVP, the DB SERP, and the Toronto SERIP for financial reporting purposes. |
The amount of the PVP benefit is based on the participant’s pay and service prior to 2016.through the end of 2015. PVP participants earned annual benefit credits prior to the ceasing of accruals. Interest credits on the account balance continue to be earnedapplied based on the yield of the30-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 participant’s annual pension benefit upon retirement from the Company, the participant’s accumulated benefit credits are divided by a conversion factor of 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. ConnerMuilenburg, Deal, and Luttig areKeating were eligible for early retirement.retirement during 2019. 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 Statement45
COMPENSATION OF EXECUTIVE OFFICERS
The DB SERP provides an excess benefit equal to additional amounts the PVP would have paid absent limitations mandated by U.S. federal tax laws and regulations.laws. For employeesparticipants hired before 2008, the DB 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 employeesparticipants hired during 2008, including Mr.Messrs. Smith and Keating, the DB SERP pays only the excess benefit. Unmarried participants receive the DB SERP benefit as a single life annuity. Married participants can elect to receive the DB 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 DB SERP, the supplemental target benefit would be reduced 3%0.25% for each yearmonth the employeeparticipant retires prior to age 62 and 6%0.5% for each yearmonth the benefit commences prior to age 65 if the employeeparticipant terminates employment prior to being eligible for early retirement.
| 2020 Proxy Statement | 57 |
COMPENSATION OF EXECUTIVE OFFICERS
The DB SERP benefits are subject to forfeiture and clawback for five years following an executive’s 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. DB 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.laws. Mr. Smith’s 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 behe was paid a lump sum at the earlier of termination orupon his attaining age 65 or such later date as required by Section 409A of the Internal Revenue Code. The lump sum is the equivalent of a20-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 forlump-sum payments in the PVP. The2019. This benefit became fully vested in May 2009.
20162019 Nonqualified Deferred Compensation
Deferred Compensation Plan
Our Deferred Compensation Plan for Employees is a nonqualified, unfunded defined contribution plan under which eligible executives may(prior to 2019) were permitted to defer up to 50% of base salary, 100% of annual incentive awards and 100% of performance awards. InvestmentNotional 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 thosemany of the funds 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 onAA-rated industrial bonds as reported by Moody’s Investors Service, Inc. during the first 11 months of the preceding year, rounded to the nearest 1/4 of 1one percent. The rate was 4.0%4% for 20162019 and is 3.75%3.5% for 2017.2020. 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 alump-sumone 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 (1) the age the executive elected or (2) the January afteryear when the executive separates from service with us, as defined in the Deferred Compensation Plan (generally, when the executive’s employment with us ends). The Deferred Compensation Plan was frozen to new contribution elections effective January 1, 2019. The features of the Deferred Compensation Plan were incorporated into our Executive Supplemental Savings Plan effective January 1, 2019.
Executive Supplemental BenefitSavings Plan
Our Executive Supplemental BenefitSavings Plan, or SBP,Executive SSP, is a nonqualified, unfunded defined contribution plan that is intended to supplement the retirement benefits of eligible executives under the 401(k) plan. The SBPExecutive SSP has threefour components: a restoration benefit component, an executive SBP+SSP+ component, and a defined contribution SERP component.supplemental executive retirement plan (DC SERP) component, and an elective deferral component previously provided under ournow-frozen Deferred Compensation Plan. 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+SSP+ component provides eligible executives hired on or after January 1, 2009 with Company contributions to the SBPExecutive SSP 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 contributionDC 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 contributionDC 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 earningsbase salary and annual incentive compensation plus, for those participants who are 55 or over, an incremental amount (payable for up to seven years) based on years of certain pension service as of January 1, 2016. Effective January 1, 2020, no elected officers of the Company or individuals who are hired into or promoted to executive roles after that date are eligible to receive DC SERP contributions.
Investment elections available under the SBPExecutive SSP are the same as those available under the Deferred Compensation Plan described above. Payments to an executive under the SBPExecutive SSP (which will be either onelump-sum lump sum payment or annual payments over two to 15 years based on the executive’s 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 SBPExecutive SSP (generally, when the executive’s employment with us ends). Annual payments are calculated based on the number of years of remaining payments.
58 | | 2020 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS
The benefits under the defined contributionDC 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 Company’s proprietary or confidential information. In addition, benefits under the executive SBP+SSP+ 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 executive’s termination of employment.
20162019 Deferred Compensation Table
The following table provides information for each of our NEOs regarding aggregate executive and Company contributions, aggregate earnings for 2016,2019, andyear-end account balances under the Deferred Compensation Plan and the SBP. As of December 31, 2016,Executive SSP. Messrs. Keating, McAllister, and Smith and McAllister had not elected to participatehave never participated in the Deferred Compensation Plan.Plan (which has been frozen to new contribution elections since January 1, 2019).
| Name | Plan Name | Executive Contributions in Last FY ($)(1) | Company Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate FYE ($)(4) | Plan Name | Executive Contributions in Last FY ($)(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 |
Deferred Compensation Plan |
|
— |
|
|
— |
|
|
686,120 |
|
|
9,713,223 |
| ||||||||||||||||||||||
Supplemental Benefit Plan | 148,953 | 580,214 | 156,741 | 1,777,899 |
Executive Supplemental Savings Plan
|
|
151,935
|
|
|
1,865,217
|
|
|
1,219,727
|
|
|
7,015,665
|
| |||||||||||||||||||||||
Gregory D. Smith | Supplemental Benefit Plan | 146,955 | 276,090 | 31,353 | 1,007,730 |
Executive Supplemental Savings Plan
|
|
182,692
|
|
|
364,519
|
|
|
101,693
|
|
|
2,835,311
|
| ||||||||||||||||||||||
Raymond L. Conner | Deferred Compensation Plan | — | — | 223,922 | 4,106,841 | |||||||||||||||||||||||||||||||||||
Supplemental Benefit Plan | 182,907 | 694,026 | 36,815 | 1,318,222 | ||||||||||||||||||||||||||||||||||||
Stanley A. Deal |
Deferred Compensation Plan |
|
— |
|
|
— |
|
|
678,052 |
|
|
6,997,051 |
| |||||||||||||||||||||||||||
Executive Supplemental Savings Plan
|
|
82,913
|
|
|
587,501
|
|
|
277,336
|
|
|
1,781,646
|
| ||||||||||||||||||||||||||||
Timothy J. Keating |
Executive Supplemental Savings Plan
|
|
37,695
|
|
|
248,006
|
|
|
51,845
|
|
|
1,438,529
|
| |||||||||||||||||||||||||||
J. Michael Luttig | Deferred Compensation Plan | 90,367 | — | 236,802 | 4,788,175 |
Deferred Compensation Plan |
|
— |
|
|
— |
|
|
1,666,781 |
|
|
7,337,834 |
| ||||||||||||||||||||||
Supplemental Benefit Plan | 57,673 | 355,380 | 46,251 | 1,360,191 | ||||||||||||||||||||||||||||||||||||
Executive Supplemental Savings Plan
|
|
157,711
|
|
|
429,235
|
|
|
116,877
|
|
|
3,216,399
|
| ||||||||||||||||||||||||||||
Kevin G. McAllister | Supplemental Benefit Plan
| — | 3,692 | 5 | 3,697 |
Executive Supplemental Savings Plan
|
|
65,477
|
|
|
297,015
|
|
|
31,802
|
|
|
963,918
|
| ||||||||||||||||||||||
| (1) | Amounts reflect elective deferrals of |
| (2) | Amounts reflect Company contributions under the |
| (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) | Reflectsyear-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 |
| Name | Plan Name | Reported for 2016 ($) | Reported for 2015 ($) | Reported for 2014 ($) | Total ($) | Plan Name | Reported for 2019 ($) | Reported for years prior to 2019 ($) | Total ($) | ||||||||||||||||||||||||||
Dennis A. Muilenburg | Supplemental Benefit Plan | 729,167 | 183,849 | 149,663 | 1,062,679 | Executive Supplemental Savings Plan
|
| 2,017,152
|
|
| 3,337,217
|
|
| 5,354,369
|
| ||||||||||||||||||||
Gregory D. Smith | Supplemental Benefit Plan | 423,045 | 153,081 | 146,019 | 722,146 | Executive Supplemental Savings Plan
|
| 547,211
|
|
| 1,944,421
|
|
| 2,491,632
|
| ||||||||||||||||||||
Raymond L. Conner | Supplemental Benefit Plan | 876,933 | 106,928 | 105,683 | 1,089,544 | ||||||||||||||||||||||||||||||
Stanley A. Deal
| Executive Supplemental Savings Plan
|
| 670,415
|
|
| 338,406
|
|
| 1,008,820
|
| |||||||||||||||||||||||||
Timothy J. Keating
| Executive Supplemental Savings Plan
|
| 285,702
|
|
| —
|
|
| 285,702
|
| |||||||||||||||||||||||||
J. Michael Luttig | Deferred Compensation Plan | 90,367 | 87,058 | 807,920 | 985,345 | Deferred Compensation Plan
|
| —
|
|
| 2,570,488
|
|
| 2,570,488
|
| ||||||||||||||||||||
| Supplemental Benefit Plan | 413,053 | 84,781 | 86,447 | 584,281 | |||||||||||||||||||||||||||||||
Executive Supplemental Savings Plan
|
| 586,946
|
|
| 2,080,734
|
|
| 2,667,681
|
| ||||||||||||||||||||||||||
Kevin G. McAllister | Supplemental Benefit Plan | 3,692 | — | — | 3,692 | Executive Supplemental Savings Plan
|
| 362,492
|
|
| 549,724
|
|
| 912,216
|
| ||||||||||||||||||||
2020 Proxy Statement 59The Boeing Company 2017 Proxy Statement47
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”),or the Layoff Plan, which provides the following benefits to eligible executives who are terminated involuntarily as a result of a job elimination 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 an executive’s termination of employment 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)(5) uses or discloses the Company’s proprietary or confidential information.
Table I: Estimated Potential Incremental Payments Upon Termination of Employment
Table I sets forth the estimated incremental compensation payable to each of theour currently employed NEOs upon termination of the officer’s 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 each such NEO ceased to be employed by the termination was effectiveCompany as of December 31, 2016,2019, the price of Boeing stock as of termination was the closing price of $155.68$325.76 on December 30, 2016,31, 2019, 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 officer’s 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 of employment due to layoff, retirement, death, or disability, theeach NEO willwould 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 $6 million;
In the case of Mr. McAllister, a supplemental disability benefit; and
Outplacement services.
Table I excludes the following amounts:
Pension and nonqualified deferred compensation benefits, which are set forth in the 20162019 Pension Benefits and 20162019 Nonqualified Deferred Compensation tables beginning on page 45;
Annual incentive and long-term performance awards earned in 2016, which are set forth in the Summary Compensation Table beginning on page 40;56; and
Benefits generally available to salaried employees, such as distributions under our 401(k) plan, certain disability benefits, and accrued vacation.
60 2020 Proxy Statement48 The Boeing Company 2017
COMPENSATION OF EXECUTIVE OFFICERS
| Name and Benefits | Layoff ($) | Retirement ($) | Disability ($) | Death ($) | ||||||||||||
Gregory D. Smith
| ||||||||||||||||
Cash Severance
|
|
1,150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
PBRSUs
|
|
2,504,343
|
|
|
—
|
|
|
2,504,343
|
|
|
2,504,343
|
| ||||
RSUs
|
|
19,853,795
|
|
|
—
|
|
|
19,853,795
|
|
|
19,853,795
|
| ||||
Performance Awards
|
|
2,439,500
|
|
|
—
|
|
|
2,439,500
|
|
|
2,439,500
|
| ||||
Life Insurance Death Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,450,000
|
| ||||
Tax Preparation/Planning Services
|
|
8,300
|
|
|
—
|
|
|
8,300
|
|
|
8,300
|
| ||||
Outplacement Services
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
Stanley A. Deal
| ||||||||||||||||
Cash Severance
|
|
1,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
PBRSUs
|
|
1,492,451
|
|
|
1,492,451
|
|
|
1,492,451
|
|
|
1,492,451
|
| ||||
RSUs/Career Shares
|
|
11,644,014
|
|
|
2,999,845
|
|
|
11,644,014
|
|
|
11,644,014
|
| ||||
Performance Awards
|
|
1,443,767
|
|
|
1,443,767
|
|
|
1,443,767
|
|
|
1,443,767
|
| ||||
MDSUs
|
|
2,778,733
|
|
|
2,778,733
|
|
|
2,778,733
|
|
|
2,778,733
|
| ||||
Life Insurance Death Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,000,000
|
| ||||
Tax Preparation/Planning Services
|
|
14,961
|
|
|
14,961
|
|
|
14,961
|
|
|
14,961
|
| ||||
Outplacement Services
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
Timothy J. Keating
| ||||||||||||||||
Cash Severance
|
|
700,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
PBRSUs
|
|
1,265,400
|
|
|
1,265,400
|
|
|
1,265,400
|
|
|
1,265,400
|
| ||||
RSUs/Career Shares
|
|
2,680,777
|
|
|
1,355,006
|
|
|
2,680,777
|
|
|
2,680,777
|
| ||||
Performance Awards
|
|
1,233,975
|
|
|
1,233,975
|
|
|
1,233,975
|
|
|
1,233,975
|
| ||||
Life Insurance Death Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,100,000
|
| ||||
Tax Preparation/Planning Services
|
|
2,524
|
|
|
2,524
|
|
|
2,524
|
|
|
2,524
|
| ||||
Outplacement Services
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
Messrs. Muilenburg, Luttig, and McAllister are not included in the table above due to their separations from the Company.
In connection with his retirement from the Company on December 22, 2019, Mr. Muilenburg was not entitled to—and did not receive—any severance or separation payments. As he was eligible for retirement under thepre-existing terms of the Company’s incentive plans, Mr. Muilenburg vested inpro-rated portions of previously granted long-term incentive awards based on the number of months he was employed during the applicable vesting or performance period. These consist of RSUs, PBRSUs, and performance award units, valued at $8,542,853, $12,691,088, and $13,077,900, respectively, as of his retirement date and assuming performance at target for the outstanding PBRSUs (other than 2017-2019 PBRSUs, which paid out at 175% of target) and the performance award units. Mr. Muilenburg also vested in his outstanding Career Shares and MDSUs, valued at $4,330,463 as of his separation date. Like the other NEOs, Mr. Muilenburg did not receive any payment under our annual incentive plan for 2019 performance.
In connection with his separation from the Company on October 22, 2019, Mr. McAllister forfeited all of his unvested long-term incentive awards. Mr. McAllister received a lump sum cash payment of $14.75 million from the Company, an amount designed to approximate the value of a pension benefit that Mr. McAllister forfeited when he left a former employer. He received no other compensation from the Company in connection with his separation. Like the other NEOs, Mr. McAllister did not receive any payment under our annual incentive plan for 2019 performance.
In connection with his retirement from the Company on March 9, 2020, Mr. Luttig was not entitled to—and did not receive—any severance or separation payments. Like Mr. Muilenburg, Mr. Luttig was retirement-eligible under thepre-existing terms of the Company incentive plans, and accordingly vested inpro-rated portions of previously granted long-term incentive awards based on the number of months he was employed during the applicable vesting or performance period. These consist of RSUs, PBRSUs, and performance award units, valued at $917,674, $846,522, and $2,346,567, respectively, assuming a stock price of $325.76 (the closing price of Boeing stock on December 31, 2019) for the outstanding RSUs and PBRSUs and assuming performance at target for the outstanding PBRSUs and the performance award units. Like the other NEOs, Mr. Luttig did not receive any payment under our annual incentive plan for 2019 performance.
| 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 | — | |||||||||||
2020 Proxy Statement 61The Boeing Company 2017 Proxy Statement49
COMPENSATION OF EXECUTIVE OFFICERS
Table II: Estimated Potential Annual DB SERP Payments Upon Termination of Employment
Table II below shows the estimated DB 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 DB SERP.
Table II shows the annual DB SERP annuity that would have been received after a termination of employment on December 31, 2016,2019, expressed as a life annuity, and the present value of such annuity benefit (based on the same factors used for the 20162019 Pension Benefits table on page 45)56). The present value was calculated assuming a benefit commencement date of December 31, 20162019 for each NEO except Messrs. Muilenburg andMr. Smith, the present value of whose benefits were calculated assuming a benefit commencement date upon theirhis attainment of age 55. With respect to Messrs. Muilenburg and Luttig, Table II shows the same information as for the other NEOs, but based on their actual separation dates and expected benefit commencement dates. Mr. McAllister did not participate in the Company’s defined benefit pension plans.
| Name | Benefit Payable Upon Termination Due to Annuity/Present Value | Death Benefit Payable to Annuity/Present Value | ||
Dennis A. Muilenburg | $ | $ | ||
Gregory D. Smith | $ | $ | ||
Stanley A. Deal | $ | $ | ||
Timothy J. Keating | $85,080 / $1,486,184 | $75,372 / $1,359,506 | ||
J. Michael Luttig | $ | $ | ||
Kevin G. McAllister | — | — |
| (1) | Messrs. |
| (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. Smith, |
The annuity amount is related to the DB SERP, because benefits under the Toronto SERIP must be paid in a lump sum. |
50 The Boeing Company 2017 Proxy Statement
The Audit CommitteeAs required by Section 953(b) of the BoardDodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Directors serves asRegulationS-K, we are providing the representativefollowing information about the relationship of the Board for general oversightmedian of the annual total compensation of our financial accountingemployees 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 conformityannual total compensation of our audited financial statements with generally accepted accounting principlesCEO.
For 2019, the annual total compensation of our median employee (other than our CEO), was $158,869, and the annual total compensation of our CEO, Mr. Muilenburg, was $14,250,195 as reported in the United States.
InSummary Compensation Table on page 51. Although Mr. Muilenburg retired just prior to the end of 2019, he would not have received any additional paychecks or other pay amounts in 2019 even if he had remained employed throughyear-end. Based on this context, the Audit Committee hereby reports as follows:
Each member of the Audit Committee meetsmedian employee. The median employee’s 2019 total compensation is calculated in the independencesame manner as would be required by Item 402(c)(2)(x) of RegulationS-K if the employee was a NEO for 2019, and financial literacy requirementsthe 2019 annual total compensation of the SEC andCEO represents 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.amount reported in the “Total” column of the Summary Compensation Table on page 51.
62 | | 2020 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS
As required by SEC rules, the annual total compensation for both the median employee and the CEO includes the change in pension value during the year. The change in pension value is subject to several external variables, including interest rates, which can fluctuate significantly and result in significantyear-to-year changes in the value of accumulated pension benefits (especially for long-tenured employees), but do not impact the actual benefit that participants in our pension plans will receive once they commence retirement. No defined benefits have accrued under our pension plans since the end of 2015. Of the annual total compensation amount reported above for our median employee (who has approximately 22 years of tenure) and our CEO (who had approximately 33 years of tenure), $49,763 and $2,790,155, respectively, was attributable to an increase in the actuarial present value of the employee’s accumulated benefits under Company pension plans during 2019. Excluding the impact of these pension accruals, the annual total compensation of our median employee was $109,106 and, for our CEO, $11,460,040, resulting in a CEO pay amount estimated to be 105 times that of our median employee.
We have elected to identify our median employee every three years, unless a significant change in our employee population or employee compensation arrangements has occurred. Our median employee was identified for the twelve-month period ending September 30, 2017, based on our employee population (including employees of our consolidated subsidiaries) which consisted of approximately 140,600 full-time, part-time, and temporary employees in the U.S and foreign jurisdictions as of October 1, 2017. We first determined each employee’s federal taxable wages (or its equivalent fornon-U.S. employees) for the twelve-month period noted above, as reflected in our payroll records and systems. We then identified our median employee from our employee population based on this compensation measure. Although there has been no change in our employee population or our employee compensation arrangements that we believe would significantly impact our pay ratio disclosure, in 2019, the median employee identified through this process in 2017 was promoted to a position with a higher pay grade. Therefore, in accordance with SEC rules, we identified an alternate median employee with substantially similar compensation to the originally identified median employee, based on the same compensation measure.
Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
| 2020 Proxy Statement | 63 |
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITOR (ITEM 3)
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 2020.
| The Board recommends that you vote FOR this proposal. |
The Audit Committee is directly responsible for the appointment, compensation (includingpre-approval of the audit fee), retention, and oversight of the independent registered public accounting firm that audits Boeing’s financial statements and internal controls over financial reporting. The Audit Committee engaged in a comprehensive review of Deloitte’s performance during the engagement for the 2019 audit in connection with its consideration of whether to reappoint Deloitte for the 2020 audit. In addition, the Audit Committee considered, among other things, Deloitte’s extensive knowledge of and expertise in Boeing’s complex, global operations, the qualifications of key members of the engagement team including the lead partner, Deloitte’s robust rotation policy with respect to its engagement team, the quality of Deloitte’s communications with the Audit Committee, management, and the internal auditors, Deloitte’s tenure as independent auditor, external data, and the appropriateness of Deloitte’s fees. Based on the results of this review, the Audit Committee and the Board believe that the retention of Deloitte as independent auditor is in the best interests of Boeing and its shareholders. Accordingly, the Audit Committee has reappointed Deloitte to serve as our independent auditor for 2020.
The Audit Committee submits its selection of our independent auditor to shareholders for ratification. If the shareholders do not ratify the selection of Deloitte, the Audit Committee will review its future selection of an independent auditor in light of that result. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different registered public accounting firm at any time.
For additional information concerning the Audit Committee and its activities with Deloitte, see “Independent Auditor Fees” and “Audit Committee Report” set forth below. Representatives of Deloitte are expected to be present at the annual meeting, where they will have an opportunity to make a statement and be available to respond to appropriate questions.
|
|
The Boeing Company 2017 Proxy Statement51
AUDIT COMMITTEE
Principal AccountantIndependent Auditor Fees and Services
The following table sets forth the aggregate fees billed or expected to be billed to us by Deloitte & Touche LLP, our independent auditor, in 2016for the fiscal years 2019 and 2015:2018:
| Fees(in millions) |
Fees(in millions)
| |||||||||||||||
| Services Rendered | 2016 | 2015 | 2019
| 2018
| ||||||||||||
Audit Fees(1) | $ | 28.0 | $ | 26.6 |
$ |
31.1 |
|
$ |
30.2 |
| ||||||
Audit-Related Fees(2) | $ | 0.4 | $ | — | $ | 0.5 | $ | 0.3 | ||||||||
Tax Fees(3) | $ | 0.1 | $ | 0.1 | — | $ | 0.1 | |||||||||
All Other Fees(4) | $ | 0.1 | $ | 0.1 | $
| 0.1
|
| $
| 0.1
|
| ||||||
| (1) | For professional services rendered for the audits of our |
| (2) | Fees billed in 2019 relate to accounting consultations |
| (3) | For tax compliance and other tax services to |
| (4) | For human resource and accounting research database subscription services and translation services. |
64 | | 2020 Proxy Statement |
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITOR (ITEM 3)
All of the audit, audit-related, and tax services arepre-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$1.0 million in 20162019 and $0.3$0.4 million in 2015.2018. Although employee benefit plan fees charged directly to the plans do not requirepre-approval by the Audit Committee, they werepre-approved. The Audit Committee has considered whether theconcluded that Deloitte’s provision ofnon-audit services is compatible with maintaining the independence of our independent auditor.Deloitte’s independence.
The Audit Committee has adopted a policy governing itspre-approval of audit andnon-audit services to be provided by our independent auditorauditor. Pursuant to this policy, the Audit Committee (or, in order to facilitate compliance with the requirementscase of services involving fees of less than $250,000, the Chair of the Sarbanes-Oxley Act of 2002.Audit Committee) mustpre-approve all audit andnon-audit services to be provided by the independent auditor. Permitted audit services may include, among other things, audit, review, or attestattestation 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 auditor’s responsibility under generally accepted auditing standards. Permittednon-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) mustpre-approve all audit andnon-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 andnon-audit services.
52 The Boeing Company 2017 Proxy Statement
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITOR (ITEM 4)Audit Committee Report
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.
|
The Audit Committee serves as the representative of the Board for general oversight of Boeing’s financial accounting and reporting, systems of internal control, audit process, and compliance standards. Management is directly responsible for the appointment, compensation, retentionfinancial reporting process, establishing and oversightmaintaining adequate internal financial controls, and preparing the financial statements. The independent auditor is responsible for performing independent audits of those financial statements and internal controls over financial reporting and for expressing an opinion on the conformity of Boeing’s independent registered publicaudited financial statements with U.S. generally accepted 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 inprinciples and on the effectiveness of Boeing’s internal controls over financial reporting.
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,context, the Audit Committee hereby submits its selectionreports as follows:
| 1. | The Audit Committee has reviewed and discussed with management and Deloitte the audited financial statements for the year ended December 31, 2019, including discussions related to critical accounting policies, financial reporting principles and practices, the reasonableness of significant judgments and estimates, and the effectiveness of internal control over financial reporting. |
| 2. | The Audit Committee has discussed with Deloitte the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 1301,Communication with Audit Committees. |
| 3. | The Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent auditor the independent auditor’s independence. |
| 4. | Based on the review and discussions 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 Form10-K for the year ended December 31, 2019, for filing with the Securities and Exchange Commission. |
Each member 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 selectionmeets the independence and financial literacy requirements of an independent auditor in light ofthe SEC and the NYSE. The Board has determined that result.
For additional information concerning the Audit CommitteeMs. Good 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 questionsMessrs. Bradway, Kellner, and if they wish, make a statement.Williams qualify as audit committee financial experts under SEC rules and have accounting or related financial management expertise.
| Audit Committee Lynn J. Good, Chair* Robert A. Bradway Edmund P. Giambastiani Jr. Nikki R. Haley Lawrence W. Kellner Caroline B. Kennedy Ronald A. Williams |
| * | Mr. Kellner served as Audit Committee Chair until December 23, 2019. Ms. Good has served as Audit Committee Chair since December 23, 2019. |
|
|
|
The Boeing Company 2017 Proxy Statement53
Directors and Executive Officers
The following table sets forth, as of February 29, 2020, 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.February 29, 2020.
| Directors and Nominees | Shares Beneficially Owned | Stock Units(1) | Total | Shares Beneficially Owned | Stock Units(1) | Total | ||||||||||||||||||
Robert A. Bradway | 0 | 732 | 732 | 0 | 4,187 | 4,187 | ||||||||||||||||||
David L. Calhoun | 2,450 | 20,950 | 23,400 | 39,280 | 25,918 | 65,198 | ||||||||||||||||||
Arthur D. Collins, Jr. | 0 | 36,904 | 36,904 | |||||||||||||||||||||
Kenneth M. Duberstein | 6,160 | 55,253 | 61,413 | |||||||||||||||||||||
Edmund P. Giambastiani, Jr. | 0 | 13,401 | 13,401 | |||||||||||||||||||||
Arthur D. Collins Jr. | 0 | 43,117 | 43,117 | |||||||||||||||||||||
Edmund P. Giambastiani Jr. | 0 | 16,321 | 16,321 | |||||||||||||||||||||
Lynn J. Good | 483 | 2,077 | 2,560 | 483 | 5,127 | 5,610 | ||||||||||||||||||
Nikki R. Haley | 0 | 624 | 624 | |||||||||||||||||||||
Akhil Johri | 150 | 0 | 150 | |||||||||||||||||||||
Lawrence W. Kellner | 2,500 | 8,508 | 11,008 | 2,500 | 10,932 | 13,432 | ||||||||||||||||||
Caroline B. Kennedy | 0 | 1,571 | 1,571 | |||||||||||||||||||||
Steven M. Mollenkopf | 0 | 0 | 0 | |||||||||||||||||||||
Edward M. Liddy | 3,944 | 19,302 | 23,246 | 4,222 | 22,637 | 26,859 | ||||||||||||||||||
John M. Richardson | 0 | 264 | 264 | |||||||||||||||||||||
Susan C. Schwab | 1,707 | 12,339 | 14,046 | 1,828 | 15,668 | 17,496 | ||||||||||||||||||
Randall L. Stephenson | 3,721 | 2,532 | 6,253 | |||||||||||||||||||||
Ronald A. Williams | 4,200 | (2) | 13,749 | 17,949 | 4,200 | (2) | 18,287 | 22,487 | ||||||||||||||||
Mike S. Zafirovski | 0 | 43,889 | 43,889 | 0 | 50,383 | 50,383 | ||||||||||||||||||
| Named Executive Officers | Shares Beneficially Owned(3) | Stock Units(4) | Total | Shares Beneficially Owned(3) | Stock Units(4) | Total | ||||||||||||||||||
Dennis A. Muilenburg | 202,102 | (5) | 93,579 | 295,681 | 221,175 | (5) | 23,503 | 244,678 | ||||||||||||||||
Gregory D. Smith | 147,288 | (6) | 39,256 | 186,544 | 110,564 | (6) | 63,285 | 173,849 | ||||||||||||||||
Raymond L. Conner | 11,339 | 93,088 | 104,427 | |||||||||||||||||||||
Stanley A. Deal | 22,452 | 33,456 | 55,908 | |||||||||||||||||||||
Timothy J. Keating | 116,873 | 9,369 | 126,242 | |||||||||||||||||||||
J. Michael Luttig | 8,642 | 38,998 | 47,640 | 23,006 | 8,133 | 31,139 | ||||||||||||||||||
Kevin G. McAllister | 0 | 134,733 | 134,733 | 0 | 0 | 0 | ||||||||||||||||||
All directors and executive officers as a group (28 people) | 756,208 | 1,002,121 | (7) | 1,758,328 | ||||||||||||||||||||
All directors and executive officers as a group (26 people) | 431,908 | 477,689 | (7) | 909,597 | ||||||||||||||||||||
| (1) | Consists of stock units credited to the account of the nonemployee director under our Deferred Compensation Plan for Directors. See “Compensation of Directors” beginning on page |
| (2) | Consists of shares held in trust for members of Mr. Williams’ family. |
| (3) | 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, |
| Number of Shares | ||||
Dennis A. Muilenburg | ||||
Gregory D. Smith | ||||
| ||||
| ||||
| ||||
All directors and executive officers as a group | ||||
| (4) | Consists of RSUs, Career Shares, MDSUs, and deferred stock units, if any, held by the NEO. |
| (5) | Includes 20 shares held by Mr. Muilenburg’s spouse. |
| (6) | Includes 62 shares held by Mr. Smith’s spouse. |
| (7) | Consists of RSUs, Career Shares, MDSUs, retainer stock units, and deferred stock units held by all directors and executive officers as a group. |
66 2020 Proxy Statement54 The Boeing Company 2017
STOCK OWNERSHIP INFORMATION
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, 2016.2019. Information is based on a review of filings made with the SEC on SchedulesSchedule 13G. As of December 31, 2016,2019, there were 617,154,511562,908,717 shares of Boeing stock outstanding.
| Name and Address | Shares Beneficially Owned | Percent of Stock Outstanding | ||
| ||||
| ||||
The Vanguard Group | ||||
| ||||
| ||||
T. Rowe Price Associates, Inc. | 29,962,780(4) | 5.3% |
| (1) | As of December 31, |
| (2) | As of December 31, |
Section 16(a) Beneficial Ownership Reporting Compliance
| (3) | As of December 31, 2019, Newport Trust Company had shared dispositive power with respect to 30,713,384 shares of Boeing stock. |
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 Caret’s Form 3 failed to timely reflect beneficial ownership of 1,208
| (4) | As of December 31, 2019, T. Rowe Price Associates, Inc. had sole voting power with respect to 12,865,838 shares of Boeing stock and sole dispositive power with respect to 29,951,097 shares of Boeing stock. |
2020 Proxy Statement 67The Boeing Company 2017 Proxy Statement55
SHAREHOLDER PROPOSALS (ITEMS 54 THROUGH 8)9)
PROPOSAL SUMMARIES
ITEM 4— DISCLOSURE OF DIRECTOR SKILLS, IDEOLOGICAL PERSPECTIVES, AND EXPERIENCE AND MINIMUM DIRECTOR QUALIFICATIONS.Shareholders are being asked to vote on a shareholder proposal to adopt a policy requiring disclosure of the skills, ideological perspectives, and experience of each director nominee, as well as minimum director qualifications.
ITEM 5 — ADDITIONAL REPORT ON LOBBYING ACTIVITIES.Shareholders are being asked to vote on a shareholder proposal calling for additional disclosure of Boeing’s lobbying activity.
ITEM 6— REDUCE THRESHOLD TO CALL SPECIAL SHAREHOLDER MEETINGS FROM 25% TO 15%POLICY REQUIRING INDEPENDENT BOARD CHAIRMAN.Shareholders are being asked to vote on a shareholder proposal requiring our existing practice of having an independent Board Chairman to be adopted on a permanent basis.
ITEM 7 —WRITTEN CONSENT.Shareholders are being asked to vote on a shareholder proposal calling for the threshold to call a special shareholder meetingenable shareholders to be reduced from 25% to 15%.act by written consent.
ITEM 78 — REPORT ON ARMS SALES TO ISRAEL.MANDATORY RETENTION OF SIGNIFICANT STOCK BY EXECUTIVES.Shareholders are being asked to vote on a shareholder proposal calling for managementthat would require the Compensation Committee to prepare and publishadopt a special report detailingpolicy requiring senior executives to retain a fixed percentage of all sales of weapons-related products and services to Israel.equity-based compensation until reaching retirement age.
ITEM 89 — IMPLEMENT HOLY LAND PRINCIPLES.ADDITIONAL DISCLOSURE OF COMPENSATION ADJUSTMENTS.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,require disclosure of adjustments to publicly report on and appoint staff to monitor that effort.compensation performance metrics.
| The Board recommends that you vote AGAINST each of these proposals. |
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 proponent’s behalf.presented. 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 –— Disclosure of Director Skills, Ideological Perspectives, and Experience and Minimum Director Qualifications (Item 4)
True Diversity Board Policy
Resolved, that the shareholders of The Boeing Company (the “Company”) request the Board adopt a policy to disclose to shareholders the following:
| 1. | A description of the specific minimum qualifications that the Board’s nominating committee believes must be met by a nominee to be on the board of directors; and |
| 2. | Each nominee’s skills, ideological perspectives, and experience presented in a chart or matrix form. |
The disclosure shall be presented to the shareholders through the annual proxy statement and the Company’s website within six (6) months of the date of the annual meeting and updated on an annual basis.
Supporting Statement
We believe that boards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively. By providing a meaningful disclosure about potential Board members, shareholders will be better able to judge how well-suited individual board nominees are for the Company and whether their listed skills, experience and attributes are appropriate in light of the Company’s overall business strategy.
The Company’s compliance with Item 407(c)(2)(v) of SEC RegulationS-K requires it to identify the minimum skills, experience, and attributes that all board candidates are expected to possess.
Ideological diversity contemplates differences in political/policy beliefs.
True diversity comes from diversity of thought. There is ample evidence that the many companies operate in ideological hegemony that eschews conservative people, thoughts, and values. This ideological echo chamber can result in groupthink that is the antithesis of diversity. This can be a major risk factor for shareholders.
We believe a diverse board is a good indicator of sound corporate governance and a well- functioning board. Diversity in board composition is best achieved through highly qualified candidates with a wide range of skills, experience, beliefs, and board independence from management.
We are requesting comprehensive disclosures about board composition and what qualifications the Company seeks for its Board, therefore we urge shareholders to vote FOR this proposal.
68 | | 2020 Proxy Statement |
SHAREHOLDER PROPOSALS (ITEMS 4 THROUGH 9)
Board of Directors’ Statement Against the Shareholder Proposal
Boeing is committed to transparency with all of its stakeholders with respect to the skills and backgrounds of our director nominees. Having considered this proposal in light of that commitment, as well as our existing robust disclosures in this area, the Board believes that the proposal is not in the best interests of our shareholders. For the following reasons, the Board recommends that you voteAGAINST Item 4.
Diversity is a core component of our assessment of the skills and qualifications of potential director nominees, and our existing public disclosures regarding the skills and qualifications of our director nominees are already comprehensive.
The Board is committed to seeking broad and diverse backgrounds, experiences, skills, and perspectives among its members. Boeing’s Corporate Governance Principles, which are available at http://www.boeing.com/company/general-info/corporate-governance.page, set forth a comprehensive list of the skills and qualifications we seek individually and collectively for the Board, and includes those attributes which are required of all directors, such as personal and professional integrity, honesty, and adherence to the highest ethical standards. A summary of these skills, qualifications, and attributes is included on page 10 of the proxy statement. The alignment between director skills and backgrounds to our business strategy and oversight needs is also made clear in our proxy disclosure. Within the “Election of Directors” section on pages 9 - 17, we summarize the breadth of the skills and experience of our director nominees, together with key factors we find most important and the Board’s rationale for each nomination. In addition, pages 9 and 10 discuss the breadth of the Board’s diversity in a number of areas, including with respect to such factors as industry expertise, gender, and tenure. Furthermore, we value the diverse perspectives each director brings to our Board, but we do not believe that identifying and disclosing each nominee’s “ideological perspectives” would be practical or appropriate. Because we already provide robust disclosure on the diversity of the Board across many relevant attributes and maintain and disclose minimum qualifications for our directors, we do not believe that any additional information requested by this proposal would provide meaningful information to shareholders.
The Board conducts regular self-assessments so that the Board functions effectively and identifies areas of potential improvement.
We perform thorough director, committee, and Board evaluations and maintain an ongoing Board refreshment strategy so that the Board continues to benefit from a wide variety of backgrounds and experiences, as well as includes the skills and experiences necessary to effectively oversee management and implement Boeing’s long-term strategy.
The Governance, Organization and Nominating Committee, in consultation with the Chairman of the Board, evaluates the ongoing contributions, qualifications, and skills of each director in light of the Board’s composition, evolving business requirements, and the long-term interests of the Company and its shareholders. The Board’s robust evaluation and refreshment process is designed to provide for a Board with directors who bring diverse perspectives, skills and qualifications.
 | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. |
| 2020 Proxy Statement | 69 |
SHAREHOLDER PROPOSALS (ITEMS 4 THROUGH 9)
Shareholder Proposal — Additional Report on Lobbying Activities (Item 5)
Whereas, we believe in full disclosure of Boeing’s direct and indirect lobbying activities and expenditures to assess whether Boeing’s lobbying is consistent with its expressed goals and in theshareholders’ best interests of shareholders.interests.
Resolved, the shareholders of Boeing request the preparation of a report, updated annually, disclosing:
Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
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. |
Boeing’s membership in and payments to anytax-exempt organization that writes and endorses model legislation. |
Description of management’s and the Board’s |
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 Boeing’s website.
Supporting Statement
As shareholders, weWe encourage transparency and accountability in theBoeing’s use of corporate funds tofor lobbying. Boeing is described as “one of the biggest players in the Washington influence legislationgame”1 and regulation. Boeing spent $38.721 million in 2014 and 2015$152,795,000 from 2010—2018 on direct federal lobbying activities (opensecrets.org). These figures dolobbying. This does not include state 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 totalIn the wake of $700,000 to $1,070,000 in Texas.the two 737 Max jet crashes, questions have been raised whether Boeing’s lobbying on safety record reporting has attracted media scrutiny (“led to relaxed Federal Aviation Administration oversight,2 including “long-standing concerns about industry capture of the FAA, from lobbying by the aerospace industry—Boeing Lockheed Lobby against Wage, Safety Executive Order,” Bloomberg, July 27, 2016), as has aspends millions lobbying Congress and federal agencies each year—to the revolving door between the FAA and Boeing director’s tiesand other companies and lobbying groups in the industry.”3
Boeing belongs 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(BRT) and serves on the board of the National Association of Manufacturers (NAM), which together spent over $63 million$68,128,048 on lobbying in 2014for 2017 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 on2018. Both the BRT and NAM are lobbying than on political contributions.against shareholder rights to file resolutions. Boeing does not disclose its memberships in, or payments to, trade associations, or the amounts used for lobbying.
Investors participating in the Climate Action 100+ representing $34 trillion in assets are asking companies to align their lobbying with the goals of the Paris agreement. We are concerned that Boeing’s current lack of trade association lobbying disclosure presentscreates reputational risk forrisks. We also believe the reputational damage stemming the 737 Max crashes and any misalignment between general policy positions and actual direct and indirect lobbying efforts harms long-term value creation by Boeing. Transparent reporting would reveal whether company assets are being used for objectives contraryThus, we urge Boeing to Boeing’s long-term interests.expand its lobbying disclosure.
| 1 | https://www.cnn.com/2019/03/12/politics/boeing-capitol-hill-lobbying/index.html |
| 2 | https://www.nytimes.com/2019/07/27/business/boeing-737-max-faa.html |
| 3 | https://www.pogo.org/analysis/2019/03/how-the-faa-ceded-aviation-safety-oversight-to-boeing/ |
70 | | 2020 Proxy Statement |
SHAREHOLDER PROPOSALS (ITEMS 4 THROUGH 9)
Board of Directors’ Statement Against the Shareholder Proposal
The Company firmly believes in the importance of transparency regarding its political advocacy. The Board has carefully considered this proposal in light of that commitment, 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. Theshareholders, and the Board’s deliberationsview with respect to this proposal reflect those discussions proposal—as well as its recent decision to provide additional disclosures regarding key trade association relationships—was informed by those discussions. For 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. Thefollowing reasons, the Board recommends that you voteAGAINST Item 5 for the following reasons.5.
The proposalBoard is unnecessary, duecommitted to the transparency of Boeing’s lobbying expenditures and strong risk mitigation procedures.oversight with respect to its political advocacy efforts, and believes that the Company’s existing practices render the proposal unnecessary.
Boeing regularly engages in public policy debates at the federal, state, and local levelslevels. We also work with trade, industry, and civic groups that provide technical, business, professional, and related expertise on a variety of issues, including aviation safety and national security.matters critical to our long-term success. The Board requires that all of Boeing’s public policy advocacythese activities comply with all applicable laws and regulations sound corporate practice and Boeing’s high standards of ethical conduct. Consistent with these objectives,In addition, Boeing has instituted full transparency into—and extensive oversight of—any 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 Board’s and the Company’s oversight of lobbying activities is available atwww.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:as detailed below.
| • | Boeing files both quarterly and semi-annual federal Lobbying Disclosure Act reports with Congress, which are publicly available at http://disclosures.house.gov/ |
| • |
|
| • | Boeing’s Executive Vice President, Government Operations, reports regularly to the Board on Boeing’s lobbying and other advocacy activities. |
| • | Boeing has not made any contributions from corporate funds to federal, state, or local candidates or political parties or ballot initiatives in the last |
| • |
|
Additional information about the oversight of Boeing’s lobbying activities is available athttps://www.boeing.com/company/key-orgs/government-operations/#/political. We believe that these robust policies and procedures enhance shareholder value, minimize financial and reputational risk, and reflect our commitment to legal compliance, strong corporate governance, and ethical standards. In part due toaddition, the policies described above, the 20162019CPA-Zicklin Index of Corporate Political Accountability and Disclosure once again listed Boeing as a first-tier company“trendsetter” for its efforts with respect to 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 Boeing’s 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 proposal’s mandatory reporting requirements would mislead shareholders and the public, and potentially undermine Boeing’s business strategies, by suggesting otherwise.
The Board supports Boeing’s 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 Boeing’s interests on matters of public policy, but their views may not always reflect Boeing’s views. As a result, it would be misleading to suggest that those associations’ lobbying activities were directed by Boeing, or that Boeing’s 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 competitors—for reasons wholly unrelated to political advocacy—sensitive aspects of our corporate strategy.
 | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |||
Shareholder Proposal — Policy Requiring Independent Board Chairman (Item 6)
The Boeing Company 2017 Proxy Statement57Proposal 6 – Independent Board Chairman
Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require that the Chairman of the Board be an independent member of the Board whenever possible.
If the Board determines that an independent Chairman is no longer independent, the Board shall select a new Chairman who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived in the unlikely event that no independent director is available and willing to serve as Chairman.
This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix. These 5 majority votes would have been still higher if more shareholders had access to independent proxy voting advice.
This proposal was adopted on a temporary basis, with the belated appointment of David Calhoun as flawed independent Chairman in October 2019. Mr. Calhoun has too much on his plate given the current 737 MAX crisis.
| 2020 Proxy Statement | 71 |
SHAREHOLDER PROPOSALS (ITEMS 54 THROUGH 8)
Shareholder Proposal—Reduce Threshold to Call Special Shareholder Meetings from 25% to 15% (Item 6)
Resolved, Shareowners ask our board to takeMr. Calhoun’s day job is as a top executive and a member of the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holdersmanagement committee at publicly traded Blackstone Group, the largest private equity firm in the aggregate of 15% of our outstanding common stockworld with ownership stakes in some 200 companies. Mr. Calhoun is also the Lead Director at Caterpillar (CAT) and the inside related Chairman at Gates Industrial Corp (GTES). Mr. Calhoun sits next to Dennis Muilenburg and Susan Schwab on the Caterpillar board. Thus Mr. Calhoun has the power to callgo easy on Mr. Muilenburg at Boeing if Mr. Muilenburg will side with him at Caterpillar.
Mr. Calhoun chairs a special shareowner meeting. This proposal does not impact our board’s current powerflawed Boeing board. Only 3 Boeing board members have experience in the airline business. Much of Boeing’s board seems more connected to call a special meeting.Washington, D.C., than anywhere else, including former trade representative Schwab, former U.N. ambassador Haley, two retired admirals, and former ambassador to Japan Caroline Kennedy.
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 thatOn Chairman Calhoun, Ralph Nader, whose grandniece died in the Ethiopia crash said: “There is no way he can arise between annual meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quicklydo this job and issues may become moot by the next annual meeting. This is important because there could be15-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 proposal—including 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.all those other jobs.”
Please vote to enhance shareholder value: Special Shareowner Meetings—Proposalthe oversight of the Boeing CEO: Independent Board Chairman-Proposal 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. Theshareholders, and the Board’s deliberationsview with respect to this proposal reflectwas informed by those discussions as well asdiscussions. For the outcomes of similar proposals that have been presented in recent years. Thefollowing reasons, the Board recommends that you voteAGAINST Item 6 for6.
The Board has an independent Chairman as well as a demonstrated record of adjusting its leadership structure in a thoughtful manner depending on circumstances. It would be inappropriate to impose irrevocable limits on the following reasons.Board’s future flexibility.
Boeing’s current ownership threshold balancesLawrence Kellner, an independent director, currently serves as Board Chairman. The Board separated the preservationroles of Chairman and CEO in October 2019 in order to enable the then-current CEO to focus full-time on managing Boeing as it works to return the 737 MAX safely to service, support its customers around the world, and sharpen its focus on product and services safety. The Board determined to maintain this important shareholder right withleadership structure when David Calhoun was elected President and CEO in December 2019. Prior to 2019, Boeing has had periods where anon-independent director served as Chairman and has had other periods where the financial and administrative burdensChairman role was held by an independent director. The independent directors also reevaluate the Board’s leadership structure in executive session on at least an annual basis. In each case, the independent directors select the leadership structure that would result from misuse ofbest enable Boeing to oversee management and help execute our long-term business strategy. This long-standing record demonstrates that the process by a small minority of shareholders with narrow interests.independent directors discharge this responsibility thoughtfully, and that they should be not be irrevocably bound to one particular structure as the Company’s needs evolve.
Special shareholder meetings cost millions of dollars, demand significant attention fromIf the Board once again elected anon-independent Board Chairman, Company policy already requires the election of a lead independent director to help promote effective oversight of management.
The Board recognizes that opinions differ on whether, generally speaking, boards are always better served by having a Chairman who is independent. Shareholders with whom we discuss this issue have a variety of views, but most tell us they prefer to defer to particular boards’ judgment rather than rely on a“one-size-fits-all” policy. Shareholders have consistently held that boards where anon-independent director serves as Chairman must ensure effective oversight of management through, among other things, a strong independent Lead Director. We have a policy requiring an independent Lead Director with robust, well-defined duties in those instances when anon-independent director serves as Chairman. Other practices that we believe help ensure effective oversight of management, no matter who serves as Chairman, include the following:
| • | independent directors meet without management in connection with every stated Board meeting; |
| • | extensive director involvement in executive succession planning; |
| • | populating each of our six standing Board committees with independent directors only, with regular executive sessions without management present; |
| • | each of our independent directors has direct access to management; and |
| • | independent oversight of all executive compensation matters, including CEO compensation. |
We believe that these practices, as well as the collective skills, experience, and seniorintegrity of our directors and the requirement to elect an independent Lead Director when anon-independent director serves as Chairman, ensure effective oversight of management and can disrupt normal business operations.the Company. 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 shareholders—potentially with narrow, short-term interests—could call an unlimited number of special meetings, without regardis unnecessary and would only serve to howlimit the direct costs and other burdens might impact the Company’s future success or theindependent directors’ ability to pursue what they believe to be shareholders’ long-term best interests of the vast majority of shareholders.
Boeing’s 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 Company’s 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 Board’s accountability without the expense and risk associated with a lower special meeting threshold.in each relevant circumstance.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |||
72 2020 Proxy Statement58 The Boeing Company 2017
SHAREHOLDER PROPOSALS (ITEMS 54 THROUGH 8)
Shareholder Proposal – Report on Arms Sales to Israel— Written Consent (Item 7)
WHEREAS: Israel experiencedProposal 7 – Adopt 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.”New Shareholder Right – Written Consent
WHEREAS: July 21st-31st, 2014 Boeing was a target in a nationwidecall-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 Boeing’s 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 twoone-tonne bombs were dropped on a residential area in theal-Tannur neighbourhood…”
The report continues and found, “…the bombs…consistent withMK-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 theMK-84 bomb a guided weapon. In May 2015, Boeing agreed to a contract to provide JDAMs to Israel, including 10,000 forMK-84s.
RESOLVED: Shareholders request that within six monthsour board of directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
This proposal topic won majority shareholder support at 13 large companies in a single year. This included 67%-support at both Allstate and Sprint. This proposal topic also won 63%-support at Cigna Corp. (CI) in 2019.
Taking action by written consent is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. The right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. New directors are important for Boeing.
The Fortune article, “Governance Experts on Boeing: ‘There Is Something Wrong with the Board,’” made a number of important observations about the Boeing directors.
By virtue of the annual meeting,fact that this company has ended up where it is, there is something wrong with the Boardboard, said corporate governance expert Nell Minow, Vice Chair of Directors provideValueEdge Advisors.
According to performance analytics research firm MSCI, which ranks the quality of governance, Boeing scored 5.4 on a comprehensive report, at reasonable costscale of1-10. Based on that assessment, Boeing’s board falls in the bottom third of S&P 500 companies.
Three Boeing directors sit on the board of Caterpillar: Boeing Chairman, David Calhoun, who is also the lead director of Caterpillar, Boeing’s CEO Dennis Muilenburg, and omitting proprietary and classified information,Susan Schwab. Two of Boeing’s salesdirectors sit on the board of weapons related productsMarriott International: Lawrence Kellner and services to Israel.Susan Schwab.
Supporting Statement
We believe“Any cross relationship is a problem because it interferes with objectivity,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Coziness and objectivity are related. The closer you are, the harder it is reasonable thatto step back and make the report includehard decisions because of those relationships.”
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 Israel’s controversial wars, contributingNikki Haley strikes me as an odd choice to add to the deathsBoeing board at this point of thousandstime, says Ric Marshall, executive director at MSCI. Another warning sign for Elson is that Kennedy, scion of civiliansa famous political family, and children;Haley are political celebrities. Hiring board members with strong name recognition is viewed with suspicion by corporate governance experts.
Elson said: “In an aerospace company, do either [Kennedy or Haley] have those necessary skills?” “Hire them as a consultant,” he says.
Elson said. “There are a lot of engineering questions, and that’s why you would want people on the overall moral and ethical questions raised by selling weapons that contribute directlyboard who have some specialized knowledge to illegal occupation, apartheid, and human rights violations, we urge you tomonitor it.”
Please vote for this proposal.yes: Adopt a New Shareholder Right- Written Consent- Proposal 7
Board of Directors’ Statement Against the Shareholder Proposal
The Board has carefullyconsidered this proposal and believes that it is not in the best interests of our shareholders. For the following reasons, the Board recommends that you voteAGAINST Item 7.
The proposal, if implemented, could prevent you from being consulted or helping to decide on key matters impacting your investment in Boeing.
The Board believes that all shareholders should be permitted to discuss and vote on pending shareholder actions. Action by written consent would circumvent the important deliberative process of a shareholder meeting. As a result, up to 49% of Boeing shareholders could be prevented from voting, or even receiving information, on important pending actions. Shareholder meetings, by contrast, offer important protections and advantages that are absent from the written consent process under this proposal. An unfettered right to act by written consent could also encourage short-term stock ownership and manipulation, allowing a small group of shareholders to quietly accumulate large voting positions (including in derivative transactions) and take important corporate action without the waiting periods, disclosure rules and other protections inherent in the shareholder meeting and voting process. There are limited circumstances in which shareholder action by written consent may be in the long-term interest of Boeing’s shareholders, such as rapidly-changing business requirements that mandate revisions to Boeing’s certificate of incorporation on a time-sensitive basis. As a result, Boeing’s governing documents already permit shareholder action by written consent on the prior recommendation of the Board.
| 2020 Proxy Statement | 73 |
SHAREHOLDER PROPOSALS (ITEMS 4 THROUGH 9)
Boeing’s commitment to shareholder engagement and governance best practices, including the right of shareholders to call special meetings, already establishes Board accountability.
OurBy-Laws permit holders of 25% or more of Boeing’s shares to call a special shareholder meeting. The Board believes that this right to call a special meeting, as well as the right to propose items for consideration at our annual meeting, offers a transparent and equitable mechanism for shareholders to raise matters for consideration by the Company. In addition, we maintain the following governance practices that afford our shareholders the right to regularly express their views and feedback:
| • | each of our directors is elected annually by majority voting; |
| • | shareholders have the ability to nominate directors through proxy access; and |
| • | we maintain a robust shareholder outreach program that provides an open and constructive forum for shareholders to express and raise concerns. |
Moreover, as described on Boeing’s website, all shareholders may communicate directly with the Chairman, the nonemployee directors as a group, or the Audit Committee. We believe that this long-standing and comprehensive package of robust governance practices and policies enables shareholders bring issues to the attention of the Board, hold the Board accountable and, where necessary, take quick action to support their interests. However, our policies implement those goals without the significant governance risk for shareholders associated with the ability to act by written consent without a meeting. For additional information about our corporate governance practices, see “Corporate Governance” beginning on page 18.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEAGAINST THIS PROPOSAL. | |||
Shareholder Proposal — Mandatory Retention of Significant Stock by Executives (Item 8)
Share Buybacks and Share Retention
Resolved:Shareholders of The Boeing Company (“Company”) urge the Compensation Committee of the Board of Directors (“Committee”) to adopt a policy, allowing for consideration of reasonable exceptions, requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age. For the purpose of this policy, normal retirement age shall be defined by the Company’s qualified retirement plan that has the largest number of plan participants.
Shareholders recommend the Committee adopt a share retention percentage requirement of at least 25 percent of netafter-tax shares awarded. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented so as not to violate the Company’s existing contractual obligations or the terms of any compensation or benefit plan currently in effect.
Supporting Statement:
Equity-based compensation is an important component of senior executive compensation at our Company. While we encourage the use of equity-based compensation for senior executives, we are concerned that our Company’s senior executives are generally free to sell shares received from equity compensation plans Our proposal seeks to better link executive compensation with long-term performance by requiring meaningful retention of shares senior executives receive from the Company’s equity compensation plans. Requiring senior executives to hold a significant percentage of shares obtained through equity compensation plans until they reach retirement age, regardless of when the CEO actually retires, will better align the interests of executives with the interests of shareholders and the Company. In addition, when company senior executives sell their shares during a share buyback, it sends a mixed message toshareholders-on one hand, the board is saying that the company stock is undervalued enough to make the buyback worthwhile while management is saying it is valued highly enough to be worth selling.
In our opinion, the Company’s current share ownership guidelines for senior executives do not go far enough to ensure that the Company’s equity compensation plans continue to build stock ownership by senior executives over the long-term. We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity compensation.
For example, our Company’s share ownership guidelines require its CEO to hold shares equal to six times base salary, equal to $10.2 million in 2018. Our Company granted CEO Dennis A. Muilenburg equity awards with total grant date fair
74 | | 2020 Proxy Statement |
SHAREHOLDER PROPOSALS (ITEMS 4 THROUGH 9)
value of $7.3 million in 2018 and $5.7 million in 2017, enabling him to satisfy the ownership requirement in just two years. Without stronger retention requirements, the CEO is generally free to sell any additional equity awards granted. We believe that requiring executives to retain a portion of all annual stock awards provides incentives to avoid short-term thinking and to promote long-term shareholder value.
Board of Directors’ Statement Against the Shareholder Proposal
The Board has 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. Theshareholders, and the Board’s deliberationsview with respect to this proposal reflectwas informed by those discussions as well asdiscussions. For the outcome of an identical proposal that was presented at last year’s annual meeting and only received support from holders of 5% of our outstanding shares. Thefollowing reasons, the Board recommends that you voteAGAINST Item 78.
Senior executives are already required to own significant amounts of Boeing stock throughout the term of their employment.
Our minimum ownership requirements for executives are based on pay grade and range from three times base salary for senior vice presidents to six times base salary for the following reasons.CEO. Our Compensation Committee annually reviews officers’ ownership relative to these requirements, and may adjust the cash/equity mix of an executive’s compensation if needed. Many of our senior executives own Boeing stock at levels far in excess of these requirements. Executive officers must hold all newly-vested stock (net of shares withheld for tax purposes) until their minimum stock ownership has been satisfied. The Company also prohibits executives from pledging Boeing stock and from reducing their economic exposure to Boeing stock through hedging transactions. As a result, our policies already ensure that executives’ interests are aligned with those of our shareholders. The Compensation Committee also believes that these policies compare favorably with those of our peer companies.
Information about Boeing’s defense salesOur executive compensation program already emphasizes long-term equity ownership by executives, which the Board believes is the best way tonon-U.S. countries, including Israel, is already publicly available. motivate management to build sustained shareholder value.
Boeing’s defense sales to Israel areBoeing delivers a significant percentage of its executive compensation in long-term incentive-based equity awards. Our restricted stock units reward long-term value creation because they generally made throughdo not vest until 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 behalfthird anniversary of the foreign governmentend-user. U.S. law already requires public disclosuregrant date and increase in value only to the extent the value of Boeing stock increases. Similarly, our performance-based restricted stock units pay out in shares of Boeing stock based on Boeing’s total shareholder return over the three-year performance period relative to a group of peer companies. Finally, our performance awards pay out only upon achievement of the vast majorityCompany’s long-term financial performance goals over a three-year period. The Board believes that each of FMS activity. Less often, when Boeing sells directlythese compensation elements ties executive pay tonon-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 Agency’s 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 tonon-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.
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SHAREHOLDER PROPOSALS (ITEMS 5 THROUGH 8)
The proposal seeks to micromanage key elements of Boeing’s 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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In addition, sales of defense products tonon-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 Boeing’s 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.value, rendering unnecessary additional requirements such as mandatory post-termination stock ownership. Additional detail about our executive compensation program is set forth in “Compensation Discussion and Analysis,” beginning on page 33.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |||
Shareholder Proposal — Implement Holy Land PrinciplesAdditional Disclosure of Compensation Adjustments (Item 8)9)
Whereas, Boeing has operations in Palestine/Israel;
Whereas, achieving a lasting peace in the Holy Land—with security for Israel and justice for Palestinians—encourages 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., anon-profit organization, has proposed a set of equal opportunity employment principles to serve as guidelines for corporations in Israel/Palestine.
These are:
Resolved: Shareholders requestof The Boeing Company (the “Company”) urge the Board of Directors to:
Make all possible lawful efforts(the “Board”) to implement and/adopt a policy that when the Company adjusts or increase activity on eachmodifies any generally accepted accounting principles (“GAAP”) financial performance metric for determining senior executive compensation, the Compensation Committee’s Compensation Discussion and Analysis shall include a specific explanation of the eight Holy Land Principles.Compensation Committee’s rationale for each adjustment and a reconciliation of the adjusted metrics to GAAP.
Supporting StatementStatement:
The proponent believes that Boeing benefits by hiring from the widest available talent pool. An employee’s abilityOur Company selects several metrics to do the job should be the primary consideration in hiring and promotion decisions. Implementationassess senior executive performance for purposes of determining incentive compensation. On page 28 of the Holy Land Principles—which arepro-Jewish,pro-Palestinian2019 Proxy Statement the Company detailed the metrics sued for the 2018 Annual Incentive Plan andpro-company—will demonstrate concern for human rights the 2016-2018 Performance Awards. However, several of these metrics were “adjusted by the Compensation Committee to better reflect core operating performance.”
For example, the 2018 Annual Incentive Plan used Free Cash Flow, Core EPS, and equality of opportunity inRevenue as the performance metrics. The Company excluded capital expenditures from GAAP operating cash flow to calculate free cash flow. (2019 Proxy Statement, Page 27) In addition, “the Compensation Committee, consistent with its international operations. Please vote your proxy FOR these concerns.authority and past practices,
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SHAREHOLDER PROPOSALS (ITEMS 54 THROUGH 8)9)
adjusted core EPS upward to exclude or partially exclude the impact of strategic investments in theMQ-25 andT-X programs and a litigation outcome, and adjusted core EPS downward to exclude the financial impact of lower-than-planned tax rates.” (2019 Proxy Statement, Page 30)
The 2016-2018 Performance Awards used Economic Profit as the only performance metric. The Company calculated Economic Profit as the difference between adjusted operating earnings and a capital charge. Economic Profit was further adjusted upwards 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, a litigation outcome, and changes in commodity price indices that impacted price escalation formulas for our Commercial Airplanes business. The Compensation Committee decreased economic profit to exclude the financial impact of lower-than-planned tax rates.” (2019 Proxy Statement, Pages31-32)
We believe that the Company’s explanation for using these GAAP-adjusted metrics for executive pay in the 2019 Proxy Statement was vague and unsatisfactory. We are concerned that the use of GAAP-adjusted metrics may inflate senior executive compensation by overstating the Company’s financial performance as measured by GAAP. In our view, the Compensation Committee should provide a specific explanation for why these adjustments were made.
Many investors believe that companies should do a better job disclosing the purpose of using adjusted-GAAP metrics for executive compensation. For example, the Council of Institutional Investors has petitioned the SEC to address this lack of transparency. The petition seeks “ ... a requirement for clear explanations and GAAP reconciliations that would permit a shareholder to understand the company’s approach and factor that into itssay-on-pay vote and/or buy/sell decision.” (https://www.sec. gov/rules/petitions/2019/petn4-745.pdf)
For these reasons, we urge a vote FOR this resolution.
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, andshareholders. For the following reasons, the Board recommends that you voteAGAINST Item 8 for9.
The proposal is unnecessary, as we already identify all adjustments made to our incentive performance metrics, including whether each adjustment had the following reasons.effect of increasing or decreasing executives’ compensation.
Boeing’s existing diversity and equal employment opportunity policies fully address the proposal’s concerns.
BoeingThe Compensation Committee has a long-standing commitmentlong prohibited any adjustment tonon-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 proposal’s concerns, we do not believe performance metrics unless it is necessary in order to more accurately reflect the Company’s core operating performance. Specifically, any adjustments are limited to those addressing the impact of:
| • | significant external events outside management’s control, such as tax or regulatory changes; |
| • | management decisions intended to drive long-term shareholder value that generate short-term financial impacts, such as acquisitions and unplanned share repurchases; or |
| • | significant changes to market conditions that were not foreseeable at the outset of the performance period. |
These events can distort the extent to which final metrics properly reflect the Company’s core performance, unless their impact is addressed through adjustments. In order to be transparent about those impacts, we have consistently disclosed all such adjustments, whether each one has the effect of increasing or usefuldecreasing the relevant performance level, and whether the net effect of all adjustments was positive or negative. Quantifying each individual adjustment would not provide meaningful additional information to adoptinvestors.
The proposal inaccurately implies that Boeing may be adjusting performance metrics in order to increase executives’ compensation, rather than to more effectively reflect actual performance.
The Compensation Committee made no adjustments to the 2019 annual incentive score or 2017-2019 performance award score, both of which paid out at $0 for all senior executives. In 2018, the net effect of adjustments resulted in lower payments to senior executives in that year than if the Compensation Committee did not act. As a second setresult, there is no evidence to suggest that the Compensation Committee adjusts performance in order to increase executive compensation, let alone that it does so to reward executives who fail to achieve desired levels of policies, programs, and compliance tools for one geographic area.
Adoptionperformance. On the contrary, the Compensation Committee only makes adjustments to performance metrics that reflect our core operating performance, regardless of the proposal would require Boeingdirection or magnitude of impact to maintain two duplicative set of policies—one for our Israel operations and one for the rest of the world.
Boeing’s 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 resources—beyond those we currently deploy to enforce our existing global policies—to 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 Boeing’s existing policies and programs, this additional spending would reduce shareholder value and undermine our ability to promotenon-discrimination, employee development, and diversity worldwide.incentive payments.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. | |||
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Time and Location
Boeing’s 20172020 Annual Meeting of Shareholders will take place on Monday, May 1, 2017,April 27, 2020, 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 and a map and parking information are provided on the back inside cover of this proxy statement.
Admission Policy
All holdersHolders of Boeing shares as of the record date are encouragedinvited to attend the annual meeting. In order to ensure the safety of all attendees, we have implemented the following security and admission policies.
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.shareholder (or, in the case of shareholder with a joint account, the other account holder).
Admission Procedures. In order to be admitted to the meeting, you and your guest must each present both an admission ticket and valid government-issued photo identification, such as a driver’s license or passport. You must registerpreregister on or prior to April 21, 201717, 2020 in order to obtain an admission ticket.
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 registerpreregister by calling1-844-318-0137. You will need the16-digit voting control number found on your proxy card, email, notice of internet availability of proxy materials or voting instruction form. Please note that a letter from your bank or broker confirming your beneficial ownership of Boeing stock does not constitute an admission ticket. 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 registerpreregister on or prior to April 21, 201717, 2020 if you wish to attend the annual meeting.
Additional Security Measures.Upon entering the meeting facility, you will be required to proceed through a security checkpoint.checkpoint and pass through metal detection screening. In addition, no cameras, recording equipment, electronic devices, posters, signs, large bags, briefcases, orand packages will not be permitted in the annual meeting.
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:
| FOR the election of each of the 13 director nominees named in this proxy statement (Item 1); | |
| FOR the approval, on an advisory basis, of named executive officer compensation (Item 2); | |
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| FOR the ratification of the appointment of Deloitte & Touche LLP as independent auditor for | |
| AGAINST each of the shareholder proposals (Items |
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 Boeing’s 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.
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ANNUAL MEETING INFORMATION
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 calling1-800-454-8683. You will need your16-digit voting control number, which can be found in the box next to the arrow 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, 2017.26, 2020.
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 calling1-800-690-6903, or by signing and returning your proxy card. To vote by internet or telephone, you will need your16-digit voting control number, which can be found in the box next to the arrow 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, 2017.26, 2020. 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 (VIP) 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 calling1-800-690-6903, or by signing and returning your proxy card. To vote by internet or telephone, you will need your16-digit voting control number, which can be found in the box next to the arrow 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, 2017.22, 2020. 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, 2017,26, 2020, 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, 2017,22, 2020, 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.
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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 ourBy-Laws of any shareholder nominees for director, this election of directors is an uncontested election. Abstentions and “brokernon-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 “brokernon-votes” will have no effect on this item.
All Other Proposals (Items 2 and 4 through 8)9)
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 8.9. 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 8.9. “Brokernon-votes,” if any, will have no effect on these items.
What are “brokernon-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 4,3, the ratification of the appointment of our independent auditor for 2017,2020, is the only matter for consideration at the meeting that NYSE rules deem to be routine. For all matters other than Item 4,3, you must submit voting instructions to the firm that holds your shares if you want your vote to count. When a firm votes a client’s shares on some but not all of the proposals, the missing votes are referred to as “brokernon-votes.”
Who is entitled to vote at the 20172020 Annual Meeting?
Holders of Boeing stock at the close of business on March 2, 2017February 27, 2020 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 608,084,979564,225,853 shares of common stock outstanding, of which approximately 608,082,393564,223,418 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 113,791101,050 registered shareholders on the record date and approximately 1,016,6281,836,646 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 ofone-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 “brokernon-votes”) will be counted for the purpose of establishing a quorum at the meeting.
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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 shareholder’s 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 43 absent your instruction, so you must provide instructions on these items for your vote to count.
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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 reasonableout-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 onForm8-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 director’s successor is duly elected and qualified or until the director’s earlier resignation or removal. To address this potential outcome, all director nominees have executed irrevocable resignations that would be effective upon (1) such nominee’s failure to receive the required vote at the annual meeting and (2) the Board’s 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 Boeing’s Annual Report on Form10-K and other financial information?
Boeing’s 20162019 annual report, which includes a copy of the Annual Report on Form10-K, was delivered to shareholders with this proxy statement. Our Notice of Annual Meeting, this proxy statement and the 20162019 annual report are also available on the internet at www.proxyvote.com. In addition, our Annual Report onForm10-K, including financial statements, is available at http://investors.boeing.com/investors/financial-reports/ and on the SEC’s website at www.sec.gov. Shareholders also may request an additional copy of the Annual Report on Form10-K, which we will furnish without charge, by calling(425) 965-4550 or writing Mail Services, The Boeing Company, P.O. Box 3707, MailCode 3T-06,3T-00, Seattle, Washington 98124-2207.
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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
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statement and our 20162019 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 77842-3170505005, Louisville, Kentucky 40233-5005 or by calling888-777-0923 (toll-free for domestic U.S. callers) or781-575-3400(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 2018The 2021 Annual Meeting
Proposals for Inclusion in 20182021 Proxy Statement
If you wish to submit a proposal for inclusion in our 20182021 proxy statement, you must follow the procedures set forth in Rule14a-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, 2017.13, 2020.
Director Nominations for Inclusion in 20182021 Proxy Statement (Proxy Access)
OurSubject to certain requirements, ourBy-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 annual meeting proxy statement candidates formaterials directors constituting the Board, subject to certain requirements.greater of two individuals and 20% of the Board. Any such nomination must be received at the address below no earlier than the close of business on Wednesday, October 18, 201714, 2020 and no later than the close of business on Friday, November 17, 2017.13, 2020. Any such notice must meet the other requirements set forth in ourBy-Laws, which are publicly available on our website.
Other Proposals or Nominations
OurBy-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, 2018December 28, 2020 and no later than the close of business on Wednesday, January 31, 2018.27, 2021. Any such notice must meet the other requirements set forth in ourBy-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
2020 Proxy Statement 8166 The Boeing Company 2017
The Boeing Company 20172020 Annual Meeting of Shareholders
Monday, May 1, 2017April 27, 2020 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 O’Hare Airport:
TakeI-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. toI-55 North/Stevenson Expressway. TakeI-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. |
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 registerpreregister no later than April 21, 2017.17, 2020. To register,preregister, please follow the instructions on page 62.77.
Please use the West entrance to The Field Museum and proceed to the James Simpson Theatre.
If you have a disability that requires a reasonable accommodation, please send an email to shareholderservices@boeing.com or call(312) 544-2835544-2836 at least two weeks in advance of the meeting.
Self-parking is available at the North Garage, which is across the street from The Field Museum.
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
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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. | |||
| 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. | |||
|  | 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
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E17261-P85631-Z69243-Z69242E90605-P32447-Z76247-Z76248 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| The Board of Directors recommends you voteFOR the following 13 director nominees: | ||||||||||||||||||||||||||||||||||||
| 1. | Election of Directors | For | Against | Abstain | ||||||||||||||||||||||||||||||||
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☐ | COMPANY PROPOSALS: The Board of Directors recommends you voteFOR proposals 2 and 3. | For | Against | Abstain | ||||||||||||||||||||||||||||
| 1c. | Arthur D. Collins Jr. | ☐ | ☐ | ☐ | 2. | Approve, on an Advisory Basis, Named Executive Officer Compensation. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
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| ☐ | ☐ | ☐ | 4. | Disclosure of | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
1h. | Lawrence W. Kellner | ☐ | ☐ | ☐ | 5. | Additional Report on Lobbying Activities. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
1i. | Caroline B. Kennedy | ☐ | ☐ | ☐ | 6. | Policy Requiring Independent Board | ||||||||||||||||||||||||||||||
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| 1j. | Steven M. Mollenkopf | ☐ | ☐ | ☐ | 7. | Written Consent. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
| 1k. | John M. Richardson | ☐ | ☐ | ☐ | 8. | Mandatory Retention of Significant Stock by Executives. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
| 1l. | Susan C. Schwab | ☐ | ☐ | ☐ | 9. | Additional Disclosure of Compensation Adjustments. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
1m. | Ronald A. Williams | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||
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] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||||||
V.1.1
The Boeing Company 20172020 Annual Meeting of Shareholders
Monday, May 1, 2017April 27, 2020
9:00 a.m., Central Time
The Field Museum
1400 South Lake Shore Drive
Chicago, Illinois 60605-2496
Meeting Admission Policy: Advance Registration Required
If you would like to attend the Annual Meeting, you must obtain an admission ticket by registering no later than April | ||||
Your vote is important. Please vote by internet, telephone or mail as soon as possible to ensure that your vote is recorded promptly. |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of 20172020 Annual Meeting and Proxy Statement and the 20162019 Annual Report
are available at www.proxyvote.com.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
To save resources and reduce Boeing’s printing and mailing costs, you can elect to receive future proxy materials and other shareholder communications electronically at www.computershare.com/investor. |
IF YOU WISH TO VOTE BY MAIL, FOLD ALONG PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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E17262-P85631-Z69243-Z69242E90606-P32447-Z76247-Z76249
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS THE BOEING COMPANY ANNUAL MEETING OF SHAREHOLDERS MONDAY,
The undersigned hereby appoints Arthur D. Collins Jr.,
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
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.
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V.1.1
