Frequently Asked Questions and Answers

Provided below are answers to the most frequently asked questions about the ShareValue Trust.

What is ShareValue Trust?

ShareValue Trust (SVT) is an employee incentive plan that allows eligible participants to share in the success of their efforts to improve productivity and grow the business. By fully funding the trust from day one, The Company demonstrated its commitment to share with employees the success that they help create. ShareValue Trust is a 14-year irrevocable trust that Boeing created in July 1996, with an initial investment of $1 billion of Boeing stock. Later, $700 million of stock was added for the participation of eligible Boeing North America and pre-merger McDonnell Douglas employees.

Who is eligible to participate in ShareValue Trust?

For Period 7, ShareValue Trust includes over 197,000 participants across the United States and in 70 countries (current employees, former employees, retirees, and beneficiaries of deceased employees).

Do union members participate in ShareValue Trust?

Union participation in ShareValue Trust is negotiated during the collective bargaining process. There are units that participate and ones that do not.

How does the Trust work?

The ShareValue Trust investment is divided into two separate funds. Each fund has its own time period or four-year investment period for measuring the growth of its shares above a set threshold. The Boeing shares held by the trust are legally outstanding and receive dividends that are declared by the Company. During an investment period, the trust investment can grow in two ways:

1. 1. When the market value of the shares increases.
2. 2. When the number of shares increases as quarterly dividends on the existing shares are reinvested.

Does Boeing benefit from a lower ShareValue Trust award to employees?

Not at all. No matter what their size, awards paid out from ShareValue Trust have no significant financial impact on Boeing. Under the terms of the plan, we put $1.7 billion in a restricted trust fund and set specific dates for the potential payouts to employees based upon the price of our stock. And, by law, the timing of the awards cannot be changed. So, Boeing has absolutely no incentive, or chance, to influence anything related to the payouts. We always hope for healthy ShareValue Trust awards to our employees because they signal that our stock price has risen significantly over time, which makes all our shareholders happy.

Why offer an incentive plan based on stock price as opposed to our own performance?

When it was created in 1996, ShareValue Trust was intended to engage employees in the company's longer-term stock performance and help them become shareholder "owners" in the process. In reality, though, ShareValue Trust hasn't worked out they way we wanted it to. As we're seeing now and have seen in prior periods, events beyond our control can affect the payout -- even when we are performing extremely well. That wasn't the idea, and it's one of the reasons why we adopted other programs that directly reward employees' contributions to our operational and financial performance, including the Employee Incentive Plan, gain sharing and other programs that are linked to team productivity and performance improvement over periods of one year or less.

How is an award distribution determined?

Award distributions are made from the increased stock value of the Trust and not directly from Boeing. The ShareValue Trust is managed by a bank trustee who is independent of Boeing management control or other third-party influences. The decision to make a distribution is not subject to management discretion or an extra amount of cash on hand. The trustee determines if a distribution will occur, based on external, objective criteria -- how the stock market values the Company's long-term performance. There are no guarantees a distribution will be made after every investment period. A distribution comes solely from the increase in the value of the trust's assets above a stated threshold at the end of the period.

Why isn't the award distribution in cash?

ShareValue Trust was designed to give eligible employees on a U.S. payroll the opportunity to become Boeing shareholders and benefit from future growth in the value of Boeing stock. After they receive it, employees may manage their award distribution in any way they choose including selling the stock.

There are exceptions to the statement above. All participants will receive some sort of cash award distribution. Circumstances for a cash payout include:

• Full name of the person whose address or phone is changing.
• When after stock is purchased for the employee there is a cash value remaining that is less than the price of a full share of Boeing stock.
• Participants who don't have enough months of eligibility in the investment period to make their after-tax distribution amount large enough to be payable in at least one share of Boeing stock.
• Participants paid through a non-U.S. payroll.
• Beneficiaries of deceased employees.

What options will employees have if they receive shares through the Period 7 distribution?

1. 1. Hold their shares
2. 2. Sell their shares
3. 3. Transfer them to another personal account
4. 4. Buy additional Boeing stock

What do I do if I want to hold on to my stock award distribution?

If you want to hang on to your shares, no action is required.

How do I sell my stock award distribution?

A short-term selling/purchasing program has been set up to assist you should you want to sell your stock award distribution or buy enough shares to be eligible to participate in the Dividend Reinvestment Program (DRP). You will be receiving step-by-step directions from Computershare, the Boeing stock transfer agent at your home address on Boeing record.

How is sale or purchase price determined?

Shares submitted for sale will be matched to shares requested for purchase by other shareholders participating in the program. The balance of shares not matched will be traded in the open market within a few days of receipt. A weighted average price will be determined by these market trades and that is the price shareholders will be paid or will pay. Weighted averaging means the per share price is obtained by dividing the aggregate dollar amount of all market sales (or purchases) of shares for participants during the respective day by the total number of shares sold (or purchased) on behalf of such participants during the respective day. Neither the actual price nor the day your shares will be traded can be guaranteed in advance.

Is the ShareValue Trust Award Distribution taxed?

Yes. Any award distribution is treated as supplemental wages under current IRS regulations. For additional information refer to the section on General Tax Information on Award Distributions on the ShareValue web site.

 

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How does ShareValue Trust relate to the Employee Incentive Plan that paid out in February?

Both programs allow employees to share in the long-term growth of The Boeing Company and financial success. However, there are significant differences between the two plans:

	ShareValue Trust	Employee Incentive Plan
Timing	Opportunity every two years to earn shares of Boeing stock	Annual opportunity for employees to earn up to 20 additional days of pay
Measure	Growth of shareholder value over the long term (four year investment period)	Annual economic profit goals established under the annual business plan
Participation	Non-Executive employees of the company or a participating subsidiary. Employees represented by a collective bargaining agent can participate if the collective bargaining agreement provides for participation.	Non-Executive employees of the company or a participating subsidiary. Employees represented by a collective bargaining agent can participate if the collective bargaining agreement provides for participation. Employees who voluntarily terminate during the performance year or are terminated for cause forfeit eligibility.
Award Distribution	Eligible U.S.-based employees receive a stock distribution, International locally hired and subsidiary employees receive a cash payout.	Eligible employees' award distribution is based on eligible earnings and the number of days awarded. In 2008 the award was 15 days.

Does a payout seem likely for Period 7 (ending in 2010)?

Whether or not there’s a payout depends on the stock price on June 30, 2010. The threshold for Period 7 is $87 per share. If Boeing stock is above $87 on June 30, 2010, an award distribution will be triggered.

What happens in 2010 when Period 7 of ShareValue Trust ends? Will SVT be renewed?

Share Value Trust (SVT) is a 14 year trust running from 1996 to 2010. Period 7 (the last period) legally ends June 30, 2010, at which time SVT as designed is scheduled to end as an employee incentive program. Whether or not the Trust should continue or be replaced by another program is currently under review. That decision will be made in 2009. Communications will be released advising employees of the decision at that time.

What are my choices regarding the shares of stock I received?

You have several choices for managing any stock received from an award distribution. These choices include:

• Hold the shares in your Computershare personal account
• Sell your stock
• Buy additional Boeing stock
• Transfer shares to another personal account

Also refer to the section on the Boeing Voluntary Selling/Purchasing Program to have an understanding of the opportunities available regarding selling your shares or purchasing additional shares immediately following a ShareValue Trust award distribution.

What happens if Boeing stock drops below the issue price (cost basis per share price) and I want to sell my shares?

The "issue price" on your Share Account Statement is the price of the stock when it was issued to you. When you decide to sell your stock, you will get the trading price on the day your transaction is processed by Computershare, which is not necessarily the day your request was received. If that price is above the issue (or basis) price, you share in the company's success and will have a gain on your ShareValue Trust distribution. However, if the price is lower than the issue (or basis) price, you will receive less than the value of your ShareValue Trust distribution and will have a net loss on your distribution. Note: Selling your stock is treated under IRS regulations as a Sale of Asset and is reported by Computershare to the IRS. You should consult with your tax advisor concerning the concerning the treatment of gains or losses on your ShareValue Trust award distribution and the impact on your federal, state, and local tax filings.

How is sale or purchase price determined?

Shares submitted for sale will be matched to shares requested for purchase by other shareholders participating in the program on that day. The balance of shares not matched will be traded in the open market within a few days of receipt. A weighted average price will be determined by these market trades and that is the price shareholders will be paid or will pay. Weighted averaging means the per share price is obtained by dividing the aggregate dollar amount of all market sales (or purchases) of shares for participants during the respective day by the total number of shares sold (or purchased) on behalf of such participants during the respective day. Neither the actual price nor the day your shares will be traded can be guaranteed in advance.

Why can't I just get cash instead of shares?

ShareValue Trust was designed to give employees the opportunity to become Boeing shareholders, have an ownership stake in the company and benefit from future growth in the value of their Boeing stock. Employees may manage their stock award after they receive it in any way they choose--including selling the stock upon its receipt. Also refer to the information above regarding the Boeing Voluntary Selling/Purchasing Program.

What is the impact of ShareValue Trust on my Savings Plan or Pension?

There is no impact to either your Savings Plan or Pension and funds received from a ShareValue Trust award distribution may not be transferred to your Savings Plan or Pension. ShareValue Trust is an irrevocable trust established by the Company and is not a qualified plan as defined by IRS regulations for the purpose of meeting rollover requirements.

What elements of compensation are included in "Box 1" of the Form w-2?

Box 1 includes all taxable income amounts you received. This includes the gross (pretax) distribution amount from the ShareValue Trust. An itemized list of the components of box 1 (Wages, other compensation) can be found under the heading "w-2 Wage, Other Compensation" in the "W-2 Addendum" section.

What is a prorated distribution?

If you were an eligible participant less than 48 months in the investment period, or weren't eligible to participate all 48 months, you would receive a prorated distribution, based on the ratio of your number of months of participation to the total 48 months in the period.

For example, if you left the Company and had 7 months of participation in the investment period, you would receive 7/48 months of a full distribution.

 

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