Shareholder Resolution

RESOLVED: Limit Stock Dilution. Boeing shareholders recommend that the company not present any stock option proposal to shareholders that could make Boeing total stock option dilution greater than Boeing's industry peer group. Boeing's peer group is based on standard industrial code groups.

Management recommended shareholder approval for a stock option plan in its Year 2000 proxy that could dilute Boeing stock 37% higher than the level recommended by Institutional Shareholder Services. (Source: ISS Proxy Analysis, Boeing Company, April 21, 2000). The 37% higher dilution is based on a Boeing stock dilution comparison with Boeing's industry peers.

The 37% higher dilution calculation is based on the cost as top executives and others exercise options at fixed prices--below current market prices. The calculation is a comparison between Boeing and the top quartile of Boeing's industry peers.

Furthermore, the Year 2000 proposal to add shares to the stock option plan:

(1) Benefits consultants, agents, advisors and independent contractors in addition to senior executives.

(2) The Compensation Committee can lower the target price if Boeing stock does not reach the target price for senior executives to receive stock.

(3) Previous stock option plans already had 36 million shares remaining to be exercised.

(4) The 2000 stock option proposal received an 18% no--vote at the annual meeting-a substantial no-vote for a proposal recommended by management.

The public perception of the company stock option plan is:

Boeing executives are to reap riches. Boeing gave 2,000 senior executives $140 million in stock last week under an incentive plan triggered by the company's recent stock price.

The plan could give the managers stock valued at $850 million in coming months if shares trade at $75. Boeing Chairman Phil Condit stands to get about $23 million, according to company regulatory filings.
   Seattle Times, Oct. 3, 2000

Meanwhile, the shareholder lawsuit filed in Seattle Federal Court, that Boeing executives allegedly concealed production problems in an attempt to preserve the company's stock price, remains unresolved.

To maintain and increase shareholder value, vote yes to:

LIMIT STOCK DILUTION
YES ON 9

Board of Directors' Response

The Board of Directors recommends a vote AGAINST this proposal because it fails to adequately define essential terms and would therefore be impossible to implement. Moreover, the Board believes that any attempt by the Company to implement the proposal, based on the Company's best efforts to decipher the proponent's intent, could impede the Company's ability to maintain appropriate equity incentive compensation programs for its executives. The proposal would also disenfranchise current and future shareholders by prohibiting the Company from presenting executive compensation programs to shareholders for their approval if certain ill-defined dilution standards were exceeded.

The proposal would forbid the Board from presenting "any stock option proposal to shareholders that could make Boeing total stock option dilution greater than Boeing's industry peer group." The proponent does not identify the companies he believes would constitute the Company's peer group, but merely states that "Boeing's peer group is based on standard industrial code groups." Standard industrial code groups ("SIC groups") are used by governmental agencies for reporting purposes and to compile and produce data with respect to the national economy and its sectors. Many companies, including Boeing, report under numerous different SIC groups. Moreover, of the SIC groups Boeing reports under, the population of any one group is not necessarily the same as the next.

Even if the proponent had identified one or more specific SIC groups, the companies that make up the group would not constitute the Company's "peers," as that term is commonly understood, since SIC groups do not take into consideration the capitalization, size, revenues, or profits of the companies in the groups. For purposes of comparing the dilutive effects of a stock option-related proposal on its stock option pool, Boeing should not be required to consider as peers all companies included in a SIC group.

In addition to these concerns, the proposal presents several other barriers to implementation. It provides no guidance as to the point in time the percentage dilution is to be measured, or what the Company would be required to do if for reasons beyond its control its percentage dilution came to exceed that of the other companies in the SIC groups. The Board cannot foretell what, if any, increases in the Plan may be more dilutive than its peers' plans, since the Board has no control over how other companies manage their plans. Also, the dilutive effects of a stock option-related proposal may be more dilutive than those of one of the SIC groups Boeing reports under, but not another.

Aside from the mechanical difficulties inherent in the proposal, its implementation would unnecessarily undermine the Board's flexibility in maintaining the Company's compensation programs and its ability to submit changes in those programs for shareholder consideration. Last year, the Board submitted a proposal to shareholders to amend the 1997 Incentive Stock Plan to increase the number of authorized shares. The Board stated its belief that adoption of the proposal would, among other things, enhance the long-term shareholder value of the Company by offering opportunities to the Company's employees, officers, consultants, agents, and advisors to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company's shareholders. Over 81 percent of the shares present and eligible to vote at the 2000 Annual Meeting approved the proposal.

The proponent claims that the 1997 Incentive Stock Plan presented at last year's annual meeting "could dilute Boeing stock 37% higher than the level recommended by Institutional Shareholder Services," citing an April 2000 "ISS Proxy Analysis." This simply is not true. There is nothing in the ISS Proxy Analysis that speaks of such 37% higher dilution. Furthermore, the Company believes that the proponent has misstated the method by which ISS analyzed the level of dilution.

The Board believes that the overwhelming support manifested for last year's proposal was a strong and positive endorsement of the Company's compensation program objectives and goals. The goals of the compensation program are discussed in detail in the Compensation Committee Report of the Proxy Statement. The Company's ability to continue to meet these goals is dependent on continued flexibility and sound management of the various components of its compensation program. This includes periodic reevaluation of the number of shares available under its compensation plans.

To continue its market leadership, the Company must provide compensation and incentive programs that will retain and continue to attract the best employees. Accordingly, the Board must be permitted to effectively manage those programs. When circumstances require, the Board must also be able to submit issues related to those programs for shareholder consideration. The Board believes that the proposal would impede the Company's ability to maintain appropriate equity incentive compensation programs for its employees.

The Company will provide the names and addresses of the proponents of the shareholder proposals above and the number of shares they hold upon oral or written request for such information. Requests may be sent to the Corporate Secretary, The Boeing Company, P.O. Box 3707, Mail Code 13-08, Seattle, Washington 98124-2207, or submitted by calling (206) 544-1056.