COMPENSATION OF DIRECTORSThe Company pays each non-employee director an annual board retainer fee of $26,000 and a fee of $2,000 for each day on which that director attends a board meeting. Additionally, the Company pays each non-employee director an annual committee retainer of $6,000 for all committee service and a daily fee of $1,000 for attendance at one or more committee meetings on a day on which a board meeting is not also held. The Company reimburses non-employee directors for actual travel and out-of-pocket expenses incurred in connection with service to the Company.In addition to the cash compensation described above, at the time of a non-employee director's first annual meeting, the director receives an initial option to purchase 1,500 shares of Boeing stock. After each subsequent annual meeting during the non-employee director's term, the director receives an option to purchase an additional 1,200 shares. The exercise price is determined by the Fair Market Value of Boeing common stock. "Fair Market Value" is the mean of the high and low per share trading prices as reported in The Wall Street Journal for the New York Stock Exchange - Composite Transactions for a single trading day. The exercise price of an option is equal to the average of the Fair Market Values for the fifth through ninth business days following the date of grant. Options vest approximately one year after grant, provided the recipient remains a director. Options become exercisable in installments one, three, and five years after the date of grant. The Company also has a Deferred Compensation Plan for Directors. Participating directors may elect to defer all or a portion of their cash compensation for service as directors in a cash-based account that bears interest or a stock unit account that earns dividends. Directors who are employees of the Company do not receive any compensation for their service as directors. RETIREMENT POLICYThe retirement policy of the Board of Directors is as follows: (1) each director who is not an officer of the Company will resign permanently as a director at the annual meeting of shareholders following that director's 72nd birthday, and (2) each director who is an officer of the Company will tender to the Organization and Nominating Committee a resignation as a director on the first to occur of the following: (a) the officer retires under The Boeing Company Employee Retirement Plan or (b) the officer no longer fulfills a primary role in the Company, as determined by the Organization and Nominating Committee. In any case, such director will retire permanently as a director no later than the annual meeting of shareholders following that director's 72nd birthday. This policy applies without regard to whether a director has completed his or her term.The Company does not provide any retirement benefits to non-employee directors.
COMMITTEES OF THE BOARD OF DIRECTORSThe Board of Directors has standing Audit, Compensation, Finance, and Organization and Nominating Committees. Additionally, from time to time, the board establishes special committees for specific purposes. The membership of the standing committees is usually determined at the organizational meeting of the board in conjunction with the annual meeting of shareholders. Only independent directors currently serve on standing committees. The membership of the committees is as follows, with the chairman of each committee listed first:
Audit CommitteeThe Audit Committee selects and engages the independent auditors. The committee reviews the audit plans and audit findings of both the independent auditors and the internal auditors, the independent auditors' opinion of the financial statements, and the internal auditors' reports on the effectiveness of internal controls. The committee also reviews the Company's compliance with laws, regulations, and Company policies relating to political contributions, sales consultants, and government affairs consultants; the Company's ethics and business conduct program; compliance with the principles of the Defense Industry Initiative on Business Ethics and Conduct; and the Company's annual disclosure documents. The committee monitors the adequacy and effectiveness of the Company's financial controls and financial reporting processes, meets with counsel as to significant pending and threatened litigation, and assesses the Company's risk management program. The Audit Committee held five meetings in 1995.Compensation CommitteeThe Compensation Committee establishes and administers the Company's executive compensation plans. It sets policy for employee benefit programs and plans. The committee oversees administration of the employee retirement and various other benefit plans. The Committee makes recommendations to the Board of Directors concerning the salaries of elected Company officers. The committee determines the number of stock options awarded to certain officers of the Company and the terms and conditions on which options will be granted. It administers the Incentive Compensation Plan, stock option plans, and Deferred Compensation Plans. The Compensation Committee held four meetings in 1995.Finance CommitteeThe Finance Committee reviews and makes recommendations concerning proposed dividend actions, current and projected capital requirements, and issuance of debt or equity securities. It reviews the Company's credit agreements and short-term investment policy. The committee also reviews the investment policies, administration, and performance of the trust investments of the Company's employee benefit plans. In 1995 the Finance Committee held six meetings.Organization and Nominating CommitteeThe Organization and Nominating Committee reviews and makes recommendations to the board with respect to the responsibilities and functions of the board and board committees, and with respect to board compensation. The committee makes recommendations to the Board of Directors concerning the composition and governance of the board, including recommending candidates to fill vacancies on, or to be elected or reelected to the board. The committee will consider the names and qualifications of candidates for the board submitted by shareholders in accordance with the procedures referred to in this proxy statement. The committee oversees evaluation of the directors, board committees and the board. The committee also makes recommendations to the board concerning candidates for election as Chief Executive Officer and other corporate officers, and counsels on succession planning for senior management. The Organization and Nominating Committee held four meetings in 1995.BOARD AND COMMITTEE MEETINGSDuring 1995, the board held eight meetings and the committees described above held 19 meetings. Average attendance at all such meetings was 96%. Each incumbent director attended at least 81% of the total number of board and committee meetings he or she was eligible to attend.RELATED PARTY TRANSACTIONSThe Company and its subsidiaries have transactions in the ordinary course of business with other corporations of which certain Boeing directors are executive officers. The Company does not consider the amounts involved in such transactions to be material in relation to its business and believes that such amounts are not material in relation to the business of such other corporations or the interests of the directors involved.COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACTSection 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and certain of its officers to send reports of their ownership of Boeing stock and of changes in such ownership to the Securities and Exchange Commission (the "SEC") and the New York Stock Exchange. SEC regulations also require the Company to identify in this proxy statement any person subject to this requirement who failed to file any such report on a timely basis. Based solely on the Company's review of the copies of such reports it has received, the Company believes that all of its directors and officers complied with all reporting requirements applicable to them with respect to transactions during 1995. |