1997 SHAREHOLDER PROPOSAL
ON ANNUAL ELECTION OF DIRECTORS
The Ray T. Chevedden and Veronica G. Chevedden Family Trust has
advised the Company that it intends to present the following
resolution at the Annual Meeting. In accordance with applicable
proxy regulations, the proposed resolution and supporting
statement, for which the Board of Directors and the Company
accept no responsibility, are set forth below. Approval of this
proposal would require the affirmative vote of a majority of the
outstanding shares of common stock present in person or by proxy
and entitled to vote at the Annual Meeting.
Recommend that the Directors and Management take the
necessary steps to start annual election of Board members,
instead of waiting 3 years for election of each Board member.
This includes eliminating any by-laws that may hinder annual
PROPONENT'S SUPPORTING STATEMENT
The rational [sic] begins with highlighting Boeing's
Financial World, March 25, 1996, honored Boeing Chairman
Frank Shrontz for preeminence in competition and service to
country. FW said Boeing is America's most important exporter, the
Boeing 777 is the first airplane designed entirely by computer
and Boeing is global in every sense of the word.
Consequently, the entire world is a Boeing stakeholder.
Boeing is important to everyone in the world including all
airlines, everyone who flies, makes business trips, every company
that depends on business travel, everyone that buys a product
from a company that relies on business trips.
With this Boeing achievement, comes a great
responsibiity. There are events that could make Boeing
complacent. For instance, McDonnell Douglas, Boeing's chief
airliner competitor for most of the years since the early 1930s,
is exiting-out of the airliner business, leaving only Boeing and
Airbus. Shareholders don't want complacency even if there is
still one remaining competitor in the entire world for 100+ seat
A significant step in ensuring management vigilance is
the annual election of Board members. Annual Board elections will
heighten the accountability and performance of Boeing and its
Board of Directors.
Additionally, this is a small selection of issues of
concern regarding safety, profitability and management of
Boeing's essential high-skill workforce:
Boeing's first-quarter net fell 34% due to strike.
Wall Street Journal April 30, 1996
50% of Boeing machinist [sic] said their
Cult of the "tough" executive firing subordinates without
sentiment or hesitation replaces "Human resources management."
Harper's Magazine January 1996
Top Boeing executives now eligible for as much as $5 million
stock options each.
Boeing production nearly halted.
Workers continue 7-week strike.
New York Times November 25, 1995
NTSB called for sweeping changes in Boeing 737 equipment and
training because of the unknown cause of he Boeing 737 Pittsburgh
New York Times October 17, 1996
NTSB Chairman accuses Boeing of failing to tell the Board
everything Boeing knew about the Boeing 737 Pittsburgh USAir
crash, killing all 132 people on board.
The 2,600 Boeing 737s in use by 250 airlines make the
New York Times January 28, 1995
The most intense investigation in aviation history has not yet
discovered the cause of the 747 TWA Flight 800 crash and there is
still potential of finding mechanical fault in the Boeing 747
aircraft, with 800 aircraft in service and 350 seats each.
VOTE FOR ANNUAL ELECTION OF BOARD MEMBERS TO IMPROVE BOARD
ACCOUNTABILITY AND MANAGEMENT PERFORMANCE:
FOR CONTINUED PROFITABILITY, GREATER WORLD AIRLINER SAFETY AND
EFFECTIVE RECRUITING & RETAINING OF HIGH-SKILL EMPLOYEES
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING
Under the Company's By-Laws, as approved by Boeing shareholders,
the Board of Directors is divided into three classes with
directors elected to staggered three-year terms. Approximately
one-third of the directors stand for election each year and the
entire Board can be replaced in the course of three annual
meetings, all held within approximately two years. At the same
time, a majority of directors will have prior experience as
directors of the Company. This is important for ensuring the
Board has solid knowledge of the Company's complex products, its
product strategy, its long-range plans and progress, and its
evolving role in the global aerospace market.
The Board believes the classified board ensures directors'
accountability to shareholders while it also ensures continuity
in the composition and long-range planning of the Board. The
Board believes this is particularly important with a company like
Boeing that has high technology products and programs that
require major investments to be made over long periods of time.
The Board also believes that a classified board reduces the
ability of a third party to effect a sudden, unsolicited change
in the Company's direction. The staggered board system would
permit the Company time to negotiate with the proponent of the
change, permitting the Board to consider alternative proposals
and seek the best results for all shareholders.
The staggered board is also a part of the Agreement and Plan of
Merger between Boeing and the McDonnell Douglas Corporation.
Subject to Boeing shareholder approval of the issuance of Boeing
stock to effect the Merger and subject to McDonnell Douglas
shareholder approval of the Merger itself (both such shareholder
votes to be held later this year) and subject to governmental
approvals, the Merger would result in one third of the Boeing
Board being made up of directors who are currently McDonnell
Douglas directors, with those new directors being spread as
evenly as possible throughout the three classes of directors.
The Company expects to honor the terms of the Merger Agreement
with respect to the classified board.
Further, the Board finds the supporting rationale for this
proposal to be misleading and inaccurate. It is based on
incomplete information, misstates published reports, and
perpetuates inaccuracies in the press.
The Board of Directors believes that a classified board is
appropriate for a company like Boeing and that it ensures
responsible, knowledgeable representation of the long-term
interests of Boeing shareholders.
Approval of this proposal would require the affirmative vote of a
majority of the outstanding shares of common stock present in
person or by proxy and entitled to vote at the Annual Meeting.
However, approval of the proposal would not automatically
eliminate the classified board, as this proposal is only a
recommendation. Eliminating the classified board would require
the affirmative vote of at least 75% of the outstanding shares on
a proposal to amend Article II, Section 1 of the Company's
By-Laws, which provides for a classified board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE AGAINST PROPOSAL 7.
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