How will the Supplemental Benefit Plan (SBP) change?

Beginning in 2009, participants in the SBP will have more investment flexibility. They will be allowed to elect to invest their account balances among the same array of funds (excluding the Boeing Stock Fund and the Stable Value Fund) available in the Deferred Compensation Plan for Employees and the company's 401(k) plan (VIP). Additionally, the deferral election rate for the SBP will be set to the maximum percentage an employee can contribute to the VIP.

What is the 'executive clawback policy' and how does it affect these plans?

The executive clawback policy, adopted by Boeing in 2006 and detailed in its Corporate Governance Principles, allows the company to recover certain incentive compensation paid to executives under specific circumstances. This policy has been incorporated into the Incentive Stock Plan (ISP), the Elected Officer Annual Incentive Plan (AIP), and the Incentive Compensation Plan (ICP), meaning these plans will now include provisions for such clawbacks.

When do these amendments become effective?

The amendments to most of the compensation plans are generally effective starting January 1, 2008. However, the changes allowing participants to elect investments in the SBP are effective beginning in 2009.

BA/BA-PA 8-K: Leadership Changes

Q: What is the main reason for these compensation plan amendments?

The primary reason for amending these compensation plans is to comply with the final regulations and transition rules issued under Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation plans. Boeing is making these changes to ensure that payments made under these plans meet the requirements for exemption from Section 409A.

Summary

The Boeing Company (BA) filed an 8-K on October 31, 2007, reporting significant amendments to several executive and director compensation plans. These changes, primarily effective January 1, 2008, are largely driven by the need to comply with final regulations under Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation. The amendments aim to ensure that payments under these plans meet the requirements for exemption from Section 409A. Key adjustments include modifications to deferred compensation plans (DCP, Directors' Plan, SBP) and incentive stock plans (ISP, 1997 ISP, AIP, ICP, 2004 Variable Comp Plan, Executive Layoff Benefits Plan). Notably, the Supplemental Benefit Plan (SBP) will allow participants to elect investments from a broader range of funds, similar to the 401(k) plan, and will set deferral rates to the maximum permissible percentage. Additionally, the ISP, AIP, and ICP will incorporate Boeing's executive clawback policy.

Key Highlights

1Amendments to multiple Boeing compensation plans (DCP, SBP, ISP, AIP, ICP, etc.) are effective January 1, 2008.
2Primary driver for amendments is to ensure compliance with Section 409A of the Internal Revenue Code regarding deferred compensation.
3Supplemental Benefit Plan (SBP) will allow participants to select investment options from a wider range of funds, including those available in the 401(k) plan.
4SBP deferral election rates will be set to the maximum permissible percentage an employee can contribute to the 401(k) plan (VIP).
5Boeing's executive clawback policy has been incorporated into the ISP, AIP, and ICP.
6These changes affect compensation for named executive officers and directors.
7The full details of the amended plans are filed as exhibits to the 8-K.

BOEING CO 8-K Report, Executive Changes (Nov 1, 2007)

Summary

Key Highlights

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